Exhibit 10.23
REGISTRATION RIGHTS AGREEMENT
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This Agreement dated as of December 19, 1997 is entered into by and
among Xxxxxxx Waste Systems, Inc., a Delaware corporation (the "Buyer"), and the
persons listed on Schedule I attached hereto (the "Company Stockholders").
WHEREAS, the Buyer, JC Acquisition, Inc. and WB Acquisition, Inc., each
a Vermont corporation and a wholly-owned subsidiary of the Buyer, All Cycle
Waste, Inc., a Vermont corporation, and Xxxxxxx Brothers, Inc., a Vermont
corporation, and the Company Stockholders have entered into an Agreement and
Plan of Merger of even date herewith (the "Merger Agreement"), pursuant to which
the Company Stockholders will receive shares of Common Stock (as defined below)
as a result of the Mergers (as defined in the Merger Agreement); and
WHEREAS, the Buyer and the Company Stockholders desire to provide for
certain arrangements with respect to the registration under the Securities Act
of 1933 of certain of the shares of the Common Stock received by the Company
Stockholders in the Mergers;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Commission" means the Securities and Exchange Commission, or
any other Federal agency at the time administering the Securities Act.
"Common Stock" means the Class A Common Stock, $.01 par value
per share, of the Buyer.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
"Registration Statement" means a registration statement filed
by the Buyer with the Commission for a public offering and sale of Common Stock
(other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a similar limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).
"Registration Expenses" means the expenses described in
Section 5.
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"Registrable Shares" means (i) the Shares (as defined below),
and (ii) any other shares of Common Stock issued in respect of such Shares
(because of stock splits, stock dividends, reclassifications, recapitalizations,
or similar events); provided, however, that shares of Common Stock which are
Registrable Shares shall cease to be Registrable Shares upon any sale of the
Shares by a Company Stockholder to any other person.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar Federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
"Shares" shall mean fifty percent (50%) of the Merger Shares
(as defined in Subsection 1.5(a) of the Merger Agreement) received by each of
the Company Stockholders.
2. Required Registrations.
(a) Upon the written request of Company Stockholders holding
not fewer than 35% of the Registrable Shares given to the Buyer on or before
October 31, 1998, the Buyer shall use its best efforts to promptly effect the
registration of Registrable Shares owned by such Company Stockholders under the
Securities Act. If the holders initiating the registration intend to distribute
the Registrable Shares by means of an underwriting, they shall so advise the
Buyer in their request. In the event such registration is underwritten, the
right of other Company Stockholders to participate shall be conditioned on such
Company Stockholders' participation in such underwriting. Upon receipt of any
such request, the Buyer shall promptly give written notice of such proposed
registration to all Company Stockholders. Such Company Stockholders shall have
the right, by giving written notice to the Buyer within 20 days after the Buyer
provides its notice, to elect to have included in such registration such of
their Registrable Shares as such Company Stockholders may request in such notice
of election; provided that if the underwriter (if any) managing the offering
determines that, because of marketing factors, all of the Registrable Shares
requested to be registered by all Company Stockholders may not be included in
the offering, then all Company Stockholders who have requested registration
shall participate in the registration pro rata based upon the number of
Registrable Shares owned by them.
(b) The Buyer shall not be required to effect more than one
registration pursuant to paragraph (a) above.
(c) Notwithstanding the foregoing, the Company Stockholders
shall have no right to sell Registrable Shares prior to April 27, 1998, and in
no event shall the Buyer be required to request that a Registration Statement
filed hereunder be
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declared effective by the Commission before April 27, 1998. If at the time of
any request to register Registrable Shares pursuant to this Section 2, the Buyer
is engaged or has fixed plans to engage within 30 days of the time of the
request in a registered public offering as to which the Company Stockholders may
include Registrable Shares pursuant to Section 3, then the Company may instead
include the Registrable Shares so requested to be registered in such other
registered public offering, in which case the Buyer shall have no further
obligations under this Section 2 unless and until such Registration Statement
pursuant to Section 3 is withdrawn (provided, however, that if fewer than all of
the Registrable Shares which the Company Stockholders have requested to be
registered pursuant to Section 3 are actually so registered, then the Buyer's
obligations under Section 2 shall be reinstated (provided that no Registration
Statement shall be required to be filed under Section 2 before the expiration of
60 days following the completion of any offering under Section 3)). If at the
time of any request to register Registrable Shares pursuant to this Section 2,
the Buyer is engaged in any other activity which, in the good faith
determination of the Buyer's Board of Directors would be required to be
disclosed by the Buyer in the Registration Statement relating to such requested
registration, and such disclosure would, in the good faith determination of the
Buyer's Board of Directors interfere with the ability of the Buyer to consummate
such transaction, then the Buyer may at its option direct that such request be
delayed until the Board of Directors determines in good faith that delay is no
longer necessary.
3. Incidental Registration.
(a) If at any time prior to October 31, 1998 the Buyer
proposes to file a Registration Statement (other than pursuant to Section 2), it
will, at least 14 days prior to such filing, give written notice to all Company
Stockholders of its intention to do so and, upon the written request of a
Company Stockholder or Company Stockholders given within 10 days after the Buyer
provides such notice (which request shall state the intended method of
disposition of such Registrable Shares), the Buyer shall use its best efforts to
cause all Registrable Shares which the Buyer has been requested by such Company
Stockholder or Company Stockholders to register to be promptly registered under
the Securities Act to the extent necessary to permit their sale or other
disposition in accordance with the intended methods of distribution specified in
the request of such Company Stockholder or Company Stockholders; provided that
the Buyer shall have the right to postpone or withdraw any registration effected
pursuant to this Section 3 without obligation to any Company Stockholder.
(b) In connection with any registration under this Section 3
involving an underwriting, the Buyer shall not be required to include any
Registrable Shares in such registration unless the holders thereof accept the
terms of the underwriting as agreed upon between the Buyer and the underwriters
selected by it. If in the written advice of the managing underwriter (a copy of
which is provided to the Buyer and
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the holders of the Registrable Shares requested to be included in the offering)
it is appropriate because of marketing factors to limit the number of
Registrable Shares to be included in the offering, then the Buyer shall be
required to include in the registration only that number of Registrable Shares,
if any, which the managing underwriter believes should be included therein. If
the number of Registrable Shares to be included in the offering in accordance
with the foregoing is less than the total number of shares which the holders of
Registrable Shares have requested to be included, then the holders of
Registrable Shares who have requested registration and other holders of
securities entitled to include them in such registration shall participate in
the registration pro rata based upon their total ownership of shares of Common
Stock (giving effect to the conversion into Common Stock of all securities
convertible thereinto). If any holder would thus be entitled to include more
securities than such holder requested to be registered, the excess shall be
allocated among other requesting holders pro rata in the manner described in the
preceding sentence.
(c) Notwithstanding anything to the contrary contained in this
Section 3, in connection with any registration under this Section 3 involving an
underwriting, in the event that a Company Stockholder does not elect to sell
his, her or its Registrable Shares to the underwriters in connection with such
offering, such holder shall refrain from selling such Registrable Shares so
registered pursuant to this Section 3 during the period of distribution of the
Buyer's securities by such underwriters and the period in which the underwriting
syndicate participates in the aftermarket; provided however, that such holder
shall, in any event, be entitled to sell its Registrable Shares in connection
with such registration commencing on the 90th day after the effective date of
such registration statement.
4. Registration Procedures. If and whenever the Buyer is required
by the provisions of this Agreement to use its best efforts to effect the
registration of any of the Registrable Shares under the Securities Act, the
Buyer shall:
(a) promptly prepare and file with the Commission a
Registration Statement with respect to such Registrable Shares and use its best
efforts to cause that Registration Statement to become and remain effective;
(b) as expeditiously as possible prepare and file with the
Commission any amendments and supplements to the Registration Statement and the
prospectus included in the Registration Statement as may be necessary to keep
the Registration Statement effective, in the case of a firm commitment
underwritten public offering, until each underwriter has completed the
distribution of all securities purchased by it and, in the case of any other
offering, until the earlier of the sale of all Registrable Shares covered
thereby or 120 days after the effective date thereof (but in no event after
January 31, 1999) (provided that if at any time during such 120-day period the
Buyer is engaged in any activity which, in the good faith determination of the
Buyer's Board of Directors would be required to be disclosed in such
Registration
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Statement and such disclosure would, in the good faith determination of the
Buyer's Board of Directors interfere with the ability of the Buyer to consummate
such transaction, then the Buyer shall have the right, by written notice to the
Company Stockholders, to require that the Company Stockholders cease making
offers of Registrable Shares and to return all prospectuses to the Buyer.
Following such time as the Buyer discloses such transaction or such transaction
is abandoned by the Buyer, the Buyer shall promptly use its best efforts to take
such actions as may be necessary to provide the Company Stockholders with
revised prospectuses, and following receipt of the revised prospectuses, the
Company Stockholders shall be free to resume making offers of the Registrable
Shares;
(c) as expeditiously as possible furnish to each selling
Company Stockholder such reasonable numbers of copies of the prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as the selling Company Stockholder may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Shares owned by the selling Company Stockholder;
(d) as expeditiously as possible use its best efforts to
register or qualify the Registrable Shares covered by the Registration Statement
under the securities or Blue Sky laws of such states as the selling Company
Stockholders shall reasonably request, and do any and all other acts and things
that may be necessary or desirable to enable the selling Company Stockholders to
consummate the public sale or other disposition in such states of the
Registrable Shares owned by the selling Company Stockholder; provided, however,
that the Buyer shall not be required in connection with this paragraph (d) to
qualify as a foreign corporation or execute a general consent to service of
process in any jurisdiction;
(e) in connection with an underwritten public offering, to
furnish to each selling Company Stockholder a signed counterpart, addressed to
all such selling Company Stockholders, of an opinion of counsel for the Buyer
experienced in securities law matters covering substantially the same matters
with respect to the registration statement and the prospectus as are customarily
covered in opinions of issuer's counsel delivered to underwriters in
underwritten public offerings of securities; and
(f) use its best efforts to comply with all applicable rules
and regulations of the Commission and make available to its security holders, as
soon as reasonably practicable, an earnings statement of the Buyer (in form
complying with the provisions of Rule 158 under the Securities Act) covering the
period of at least 12 months beginning with the first month following the
effective date of the registration statement.
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If the Buyer has delivered preliminary or final prospectuses to the
selling Company Stockholders and after having done so the prospectus is required
to be amended to comply with the requirements of the Securities Act, the Buyer
shall promptly notify the selling Company Stockholders and, if requested, the
selling Company Stockholders shall immediately cease making offers of
Registrable Shares and return all prospectuses to the Buyer. Subject to the
provisions of Section 4(b) above, the Buyer shall promptly provide the selling
Company Stockholders with revised prospectuses and, following receipt of the
revised prospectuses, the selling Company Stockholders shall be free to resume
making offers of the Registrable Shares.
5. Allocation of Expenses. The Buyer will pay all Registration
Expenses of all registrations under this Agreement; provided, however, that if a
registration under Section 2 is withdrawn at the request of the Company
Stockholders requesting such registration and if the requesting Stockholders
elect not to have such registration counted as the registration requested under
Section 2, the requesting Company Stockholders shall pay the Registration
Expenses of such registration pro rata in accordance with the number of their
Registrable Shares included in such registration. All Registration Expenses of
all registrations under Section 3 shall be paid by the Buyer. For purposes of
this Section 5, the term "Registration Expenses" shall mean all expenses
incurred by the Buyer in complying with this Agreement, including, without
limitation, all registration and filing fees, exchange listing fees, printing
expenses, fees and expenses of counsel for the Buyer and the fees and expenses
of one counsel selected by the selling Company Stockholders to represent the
selling Company Stockholders, state Blue Sky fees and expenses, and the expense
of any special audits incident to or required by any such registration, but
excluding underwriting discounts, selling commissions and the fees and expenses
of selling Company Stockholders' own counsel (other than the counsel selected to
represent all selling Company Stockholders).
6. Indemnification and Contribution.
(a) In the event of any registration of any of the Registrable
Shares under the Securities Act pursuant to this Agreement, the Buyer will
indemnify and hold harmless the seller of such Registrable Shares, each
underwriter of such Registrable Shares, and each other person, if any, who
controls such seller or underwriter within the meaning of the Securities Act or
the Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which such seller, underwriter or controlling person may become
subject under the Securities Act, the Exchange Act, state securities or Blue Sky
laws or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any Registration
Statement under which such Registrable Shares were registered under the
Securities Act, any preliminary prospectus or final prospectus contained in
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the Registration Statement, or any amendment or supplement to such Registration
Statement, or arise out of or are based upon the omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Buyer will reimburse such seller,
underwriter and each such controlling person for any legal or any other expenses
reasonably incurred by such seller, underwriter or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Buyer will not be liable in any
such case to the extent that any such loss, claim, damage or liability arises
out of or is based upon any untrue statement or omission made in such
Registration Statement, preliminary prospectus or final prospectus, or any such
amendment or supplement, in reliance upon and in conformity with information
furnished to the Buyer, in writing, by or on behalf of such seller, underwriter
or controlling person specifically for use in the preparation thereof.
(b) In the event of any registration of any of the Registrable
Shares under the Securities Act pursuant to this Agreement, each seller of
Registrable Shares, severally and not jointly, will indemnify and hold harmless
the Buyer, each of its directors and officers and each underwriter (if any) and
each person, if any, who controls the Buyer or any such underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages or liabilities, joint or several, to which the Buyer, such directors and
officers, underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities or Blue Sky laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement under which
such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information relating to such seller furnished in writing
to the Buyer by or on behalf of such seller specifically for use in connection
with the preparation of such Registration Statement, prospectus, amendment or
supplement; provided, however, that the obligations of such Company Stockholders
hereunder shall be limited to an amount equal to the proceeds to each Company
Stockholder of Registrable Shares sold in connection with such registration.
(c) Each party entitled to indemnification under this Section
6 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
Party, who
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shall conduct the defense of such claim or litigation, shall be approved by the
Indemnified Party (whose approval shall not be unreasonably withheld); and,
provided, further, that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 6. The Indemnified Party may participate in such defense at
such party's expense; provided, however, that the Indemnifying Party shall pay
such expense if representation of such Indemnified Party by the counsel retained
by the Indemnifying Party would be inappropriate due to actual or potential
differing interests between the Indemnified Party and any other party
represented by such counsel in such proceeding. No Indemnifying Party, in the
defense of any such claim or litigation shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect of such claim or litigation, and no Indemnified Party shall consent
to entry of any judgment or settle such claim or litigation without the prior
written consent of the Indemnifying Party.
(d) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i) any
holder of Registrable Shares exercising rights under this Agreement, or any
controlling person of any such holder, makes a claim for indemnification
pursuant to this Section 6 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 6 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any such holder of
Registrable Shares or any such controlling person in circumstances for which
indemnification is provided under this Section 6; then, in each such case, the
Buyer and such holder of Registrable Shares will contribute to the aggregate
losses, claims, damages or liabilities to which they may be subject (after
contribution from others) in such proportions as is appropriate to reflect the
relative fault of the holder and the Buyer as well as other equitable
considerations including, without limitation, the parties' relative knowledge
and access to information concerning the matter with respect to which any claim
is asserted and the opportunity to correct and prevent any such statement or
omission resulting in such loss, claim, damage or liability; provided, however,
that, in any such case, (A) no such holder will be required to contribute any
amount in excess of the proceeds to it of all Registrable Shares sold by it
pursuant to such Registration Statement, and (B) no person or entity guilty of
fraudulent misrepresentation, within the meaning of Section 11(f) of the
Securities Act, shall be entitled to contribution from any person or entity who
is not guilty of such fraudulent misrepresentation.
7. Procedures with Respect to Underwritten Offering. In the event that
Registrable Shares are sold pursuant to a Registration Statement in an
underwritten
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offering pursuant to Section 2, the Buyer agrees to enter into an underwriting
agreement containing customary representations and warranties with respect to
the business and operations of an issuer of the securities being registered and
customary covenants and agreements to be performed by such issuer, including,
without limitation, the indemnification and contribution provisions of Section 6
and any other customary provisions with respect to indemnification by the Buyer
of the underwriters of such offering. Whenever a registration is for an
underwritten offering pursuant to Section 2, the Buyer will have the right to
select the managing underwriter or underwriters for the offering, which
selection shall be subject to the approval of the holders of a majority of the
Registrable Shares requesting the offering.
8. Information by Holder. Each Company Stockholder including
Registrable Shares in any registration shall furnish to the Buyer such
information regarding such Company Stockholder and the distribution proposed by
such Company Stockholder as the Buyer may reasonably request in writing and as
shall be required in connection with any registration, qualification or
compliance referred to in this Agreement.
9. "Stand-Off" Agreement. Each Company Stockholder, if requested by the
Buyer and the managing underwriter of an offering by the Buyer of Common Stock
or other securities of the Buyer pursuant to a Registration Statement, shall
agree not to sell publicly or otherwise transfer or dispose of any Registrable
Shares or other securities of the Buyer held by such Company Stockholder and not
sold in such offering for a period of time beginning on the date of pricing of
such offering and ending not more than 180 days thereafter; provided, that all
Company Stockholders holding not less than the number of shares of Common Stock
held by such Company Stockholder (including convertible securities, or upon the
exercise of options, warrants or rights) and all officers and directors of the
Buyer enter into similar agreements.
10. General.
(a) Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be delivered
by hand or mailed by first class certified or registered mail, return receipt
requested, postage prepaid:
If to the Buyer, at 00 Xxxxxx Xxxx Xxxx, Xxx 000, Xxxxxxx, XX 00000,
Attention: President, or at such other address or addresses as may have been
furnished in writing by the Buyer to the Company Stockholders, with a copy to
Xxxxxxx X. Xxxxx, Esq., Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000; or
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If to a Company Stockholder, at his or her address set forth on Exhibit
A, or at such other address or addresses as may have been furnished to the Buyer
in writing by such Company Stockholder, with a copy to B. Xxxxxxx Xxxx, Xxxx,
Xxxxx & Xxxxxxx, Inc., Xxx Xxxxxx Xxxxxx, X.X. Xxx 0000, Xxxxxxxxxx, XX
00000-0000.
Notices provided in accordance with this Section 10(a) shall be deemed
delivered upon personal delivery or two business days after deposit in the mail.
(b) Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
(c) Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Buyer and the holders of at
least 50% of the Registrable Shares; provided, that this Agreement may be
amended with the consent of the holders of less than all Registrable Shares only
in a manner which affects all Registrable Shares in the same fashion. No waivers
of or exceptions to any term, condition or provision of this Agreement, in any
one or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such term, condition or provision.
(d) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which shall be one and the same document.
(e) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(f) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Vermont.
[rest of page purposefully left blank]
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Executed as of the date first written above.
BUYER:
XXXXXXX WASTE SYSTEMS, INC.
By:_______________________________
Title:_____________________________
COMPANY STOCKHOLDERS:
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Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxx Xxxxxxx
-----------------------------------
Xxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
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Schedule I
List of Company Stockholders
Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxx Xxxxxxx
Xxxx Xxxxxxx
Xxxxxxx Xxxxxxx
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