Page 13 of 17 Pages
Exhibit 2
Registration Rights Agreement
This Registration Rights Agreement (the Agreement) is made and entered
into as of March 11, 1998 by and between Imperial Petroleum Recovery
Corporation, a Nevada corporation (the Company), and Maya LLC, a Nevada limited
liability company (the Holder).
This Agreement is made in connection with the private sale of 500,000
shares of the Company's common stock, $.001 par value per share (together with
any other equity securities that may be issued by the Company with respect to or
in substitution for such common stock, the Common Stock) and a Warrant to
purchase up to 3,500,000 shares of the Common Stock (the Warrant) pursuant to a
Subscription Agreement between the Company and the Holder effective as of
March 11, 1998 (the Subscription Agreement). To induce the Holder to enter
into the Subscription Agreement, the Company has agreed to provide the Holder
with the registration rights set forth in this Agreement. The execution and
delivery of this Agreement are conditions of the closing under the Subscription
Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. Registration under the Securities Act of 1933.
(a) If before the earlier of March 11, 2003 and the date on which 85%
or more of the aggregate of the 500,000 shares of Common Stock purchased under
the Subscription Agreement and the 3,500,000 shares of Common Stock purchasable
under the Warrant (together with the 500,000 shares of Common Stock purchased
under the Subscription Agreement, the Registrable Shares) may be sold without
regard to the volume limitations in Rule 144(e) under the Securities Act of
1933, as amended (the Securities Act), or any successor provision, the Holder
requests that the Company file a registration statement under the Securities Act
covering the public offer and sale of the Registrable Shares, the Company will
(i) promptly notify all the holders of Registrable Shares that such registration
statement will be filed and that all Registrable Shares will be included in the
registration statement at each such holder's request if such request is received
within 30 days of the notice to the holder, (ii) cause such registration
statement to cover all Registrable Shares which it has been so requested to
include, (iii) use its commercially reasonable efforts to cause such
registration statement to become effective as soon as practicable, and (iv) take
all other action necessary under any federal or state law or regulation of any
governmental authority to permit all Registrable Shares that it has been so
requested to include in such registration statement to be sold or otherwise
disposed of, and will maintain compliance with each such federal and state law
and regulation for 180 days or for the period necessary for the requesting
holders to effect their proposed sales or other dispositions, whichever is
shorter. The Company shall be required to effect a registration pursuant to this
Subsection 1(a) with respect to the Registrable Shares on one occasion only.
(b) If at any time the Holder or any holder of Registrable Shares agrees
to bear the out-of-pocket costs to the Company solely attributable to the
registration of Registrable Shares of the Holder or holder, such Holder or
holders shall notify the company and the Company will (i) promptly prepare and
file a registration statement under the Securities Act and include therein all
Registrable Shares requested by the Holder or holder to be so included, (ii) use
its commercially reasonable efforts to cause such registration statement to
become effective as soon as practicable, (iii) take all other action necessary
-1-
Page 14 of 17 Pages
under any federal or state law or regulation of any governmental authority to
permit all Registrable Shares included in the registration statement to be sold
or otherwise disposed of, and (iv) maintain compliance with each such federal
and state law and regulation for the period necessary for the Holder or holder
to effect its proposed sale or other disposition.
(c) The Company shall not be obligated, however, to take any actions
pursuant to Subsection 1(a) or Subsection 1(b):
(i) In any particular jurisdiction (A) in which the Company
would be required to execute a general consent to service of process in
effecting registration, qualification, or compliance unless the Company is
already subject to general service in such jurisdiction and except as may be
required by the Securities Act or (B) which refuses to qualify the shares of the
Common Stock after the Company has duly applied for such qualification and has
taken all commercially reasonable steps necessa effect such qualification.
(ii) During the period starting with the date 60 days before the
Company's estimated date of filing of, and ending on the date 90 days
immediately following the effective date of, any registration statement
pertaining to securities of the Company (other than a registration on Form S-4
or S-8 or successor forms) if the Company is actively employing in good faith
all commercially reasonable efforts to cause such registration statement to
become effective and the Company's estimate of the date of filing the
registration statement is made in good faith.
(iii) If the Company furnishes to the requesting Holder or
holders or their representative a certificate signed by its President stating
that in the good faith judgment of the Board of Directors it would be seriously
detrimental to the Company or its stockholders for a registration statement to
be filed in the near future, in which case the Company's obligation to take any
actions pursuant to Subsection 1(a) or Subsection 1(b) shall be deferred for a
period not to exceed 90 days from the date of receipt of the written request
from the Holder or holders.
(iv) If the Company determines that compliance with the request
for registration will not permit the use of regular audited year-end financial
statements with supplemental short period financial statements. In such a case,
however, the Company may only postpone a registration under Subsection 1(a) or
Subsection 1(b) for the period of time, not exceeding 90 days, that will permit
their use, unless the Holder or holders proposing to distribute shares agree to
bear the costs of any special audits.
(d) Notwithstanding anything herein to the contrary, if the holders
proposing to distribute their Registrable Shares desire a registration requested
pursuant to Subsection 1(a) or 1(b) to involve an underwriting, such holders
shall so advise the Company as part of the notice given pursuant to Subsection
1(a) or 1(b) and shall have the right to select the underwriter or underwriters,
which choice shall be subject to the approval by the Company.
-2-
Page 15 of 17 Pages
(e) The Company shall (together with all holders proposing to distribute
their Registrable Shares through such underwriting) enter into an underwriting
agreement in customary form with any managing underwriter selected for such
underwriting pursuant to Subsection 1(d). Notwithstanding any other provision of
this Section 1, if the managing underwriter advises the holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Company will so advise all holders of Registrable Shares
and the number of Registrable Shares that may be included in the registration
and underwriting will be allocated among all holders thereof in proportion as
nearly as practicable to the respective amounts of Registrable Shares requested
to be included by such holders at the time of filing the registration statement.
No Registrable Shares excluded from the underwriting by reason of the
underwriter's marketing limitation are required to be included in such
registration, and the Registrable Shares so excluded will no longer be entitled
to be registered on demand of the holders thereof under the terms of Subsection
1(a). To facilitate the allocation of shares in accordance with the above
provisions, the Company or the underwriters may round the number of shares
allocated to any holder to the nearest 100 shares. If any holder of Registrable
Shares disapproves of the terms of the underwriting, such person may elect to
withdraw therefrom by written notice to the Company.
(f) If at any time and from time to time within two years after the last
purchase of Registrable Shares under the Warrant, the Board of Directors of the
Company authorizes the filing of a registration statement under the Securities
Act (otherwise than under Subsection 1(a) or Subsection 1(b) hereof and other
than a registration statement on Form S-4 or Form S-8 or other form that may not
be used by the holders to distribute their Registrable Shares) in connection
with the proposed offer of any of its equity securities by it or any of its
security holders, the Company will (i) promptly notify the Holder of this
Warrant and each holder of Registrable Shares that such registration statement
will be filed and that Registrable Shares will, at such holder's request within
20 days of the giving of notice to the holder, be included in such registration
statement, (ii) include in the securities covered by such registration statement
all Registrable Shares that it has been so requested to include, (iii) use its
commercially reasonable efforts to cause such registration statement to become
effective as soon as practicable, and (iv) take all other action necessary under
any federal or state law or regulation of any governmental authority to permit
all Registrable Shares that it has been requested to include in such
registration statement to be sold or otherwise disposed of, and will maintain
compliance with each such federal and state law and regulation for the period
necessary for such holders to effect the proposed sale or other disposition, but
shall not be required to maintain such compliance for longer than 90 days. If
the registration of which the Company gives notice is for a registered public
offering involving an underwriting, the Company shall so advise the holders. In
such event, the right of any holder to registration shall be conditioned upon
such holder's participation in such underwriting and the inclusion of such
holder's Registrable Shares in the underwriting to the extent provided herein.
All holders proposing to distribute their securities through such underwriting
shall enter into an underwriting agreement in customary form with the managing
underwriter selected for such underwriting by the Company. Notwithstanding any
other provision herein, if the managing underwriter determines that marketing
-3-
Page 16 of 17 Pages
factors require a limitation of the number of shares to be underwritten, the
managing underwriter may limit such Registrable Shares to be included in such
registration, it being understood that the shares proposed to be sold by the
Company and such security holders in such underwriting shall be given priority
and shall not be subject to any such limitation applicable to Registrable
Shares. The Company shall so advise all holders of Registrable Shares proposing
to distribute securities through such underwriting, and the number of
Registrable Shares that may be included in the registration and underwriting
shall be allocated among all such holders in proportion, as nearly as
practicable, to the respective amount of Registrable Shares proposed be
distributed by each such holder.
(g) Whenever the Company is required pursuant to the provisions of this
Section 1 to include shares in a registration statement, the Company is required
to (i) furnish each holder of Registrable Shares included in the registration
statement and each underwriter with such copies of the prospectus, including any
preliminary prospectus, conforming to the Securities Act (and such other
documents as each such holder or each such underwriter may reasonably request)
in order to facilitate the sale or distribution of the shares, (ii) use its best
efforts to register or qualify such Registrable Shares under the law (to the
extent applicable) of such jurisdictions as such holders and each underwriter of
shares being sold by such holders shall reasonably request, and (iii) take such
other actions as may be reasonably necessary or advisable to enable such holders
and such underwriters to consummate the sale or distribution in such
jurisdictions in which such holders shall have reasonably requested that the
shares be sold.
(h) The Company shall pay all expenses incurred in connection with any
registration or other action pursuant to the provisions of Subsection 1(a) or
Subsection 1(f), other than (i) underwriting discounts and applicable transfer
taxes relating to the Registrable Shares and (ii) fees and expenses of counsel,
accountants, advisers, and other persons separately retained by the holders of
Registrable Shares included in the registration statement.
(i) The Company will agree to indemnify the holders of Registrable
Shares that are included in each registration statement filed pursuant to this
Section 1 and such holders will agree to indemnify the Company and any
underwriters, to the extent customary.
(j) The Holder shall have no right to take any action to restrain,
enjoin, or otherwise delay any registration as a result of any controversy that
might arise with respect to the interpretation or implementation of this Section
1.
(k) The holders of Registrable Shares included in any registration
shall, as a condition precedent to the Company's obligation to register such
securities, furnish to the Company such information regarding themselves, the
shares of Common Stock held by them, and the distribution proposed by such
holders as the Company may reasonably request in writing and as shall be
required in connection with any registration, qualification, or compliance
referred to in this Agreement. At the request of the Company, each holder who is
including any Registrable Shares in the registration shall deposit in escrow
with an escrow agent chosen by the Company those Registrable Shares that such
Holder proposes to sell, accompanied by an irrevocable power of attorney
authorizing the escrow agent to, without limitation, sell such Registrable
Shares to the underwriter upon the effectiveness of the registration statement.
-4-
Page 17 of 17 Pages
2. Transferability. This Agreement is transferable or assignable by the
Holder in whole, but not in part.
3. Communications. No notice, or other communication under this
Agreement shall be effective unless, but any notice or other communication shall
be effective and shall be deemed to have been given or delivered if and when,
the same is in writing and is physically delivered or mailed by first-class
mail, postage prepaid, addressed to:
(a) the Company at 0000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000,
Xxxxxxx, Xxxxx 00000, or such other address as the Company has designated in
writing to the Holder, or
(b) the Holder at 0000-X Xxxxxxxxxxx Xxxxx, Xxx Xxxxx,
Xxxxxx 00000, or such other address as the Holder has designated in writing to
the Company.
4. Headings. The headings of this Agreement have been inserted as a
matter of convenience and shall not affect the construction hereof.
5. Applicable Law. This Agreement shall be governed by and construed in
accordance with the law of the State of Nevada, without giving effect to the
principles of conflicts of law thereof.
IN WITNESS WHEREOF, the parties have caused this Warrant to be signed as
of the 11th day of March 1998.
IMPERIAL PETROLEUM RECOVERY
CORPORATION
By: /s/ C. Xxxxx Xxxxxxxxx
---------------------------
C. Xxxxx Xxxxxxxxx
Vice President
MAYA LLC
By: /s/ Xxx X. Xxxxx
----------------------------
Xxx X. Xxxxx
Managing Member
-5-
