REGISTRATION RIGHTS AGREEMENT
Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of August 23, 2007, by and between
Environmental Tectonics Corporation, a corporation organized under the laws of the Commonwealth of
Pennsylvania (the “Company”), and X. X. Xxxxxxx (“Xxxxxxx”), a resident of the Commonwealth of
Pennsylvania.
WHEREAS:
A. In connection with the Series C Preferred Stock Purchase Agreement of even date herewith by
and between the Company and Xxxxxxx (the “Preferred Stock Purchase Agreement”), the Company has
agreed, upon the terms and subject to the conditions contained therein, to issue and sell to
Xxxxxxx shares of Series C Cumulative Convertible Participating Preferred Stock of the Company (the
“Preferred Stock”) which are convertible into shares of the Company’s common stock (the “Common
Stock”).
B. To induce Xxxxxxx to execute and deliver the Preferred Stock Purchase Agreement, the
Company has agreed to provide certain registration rights under the Securities Act of 1933, as
amended, and the rules and regulations thereunder, or any similar successor statute (collectively,
the “Securities Act”), and applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, intending to be legally bound hereby, the Company and Xxxxxxx hereby agree as
follows:
1. DEFINITIONS.
(a) As used in this Agreement, the following terms shall have the following meanings:
(i) “Investors” means Xxxxxxx and any transferees or assignees who agree to become bound by
the provisions of this Agreement in accordance with Section 9 hereof.
(ii) “register,” “registered,” and “registration” refer to a registration effected by
preparing and filing a Registration Statement or Registration Statements in compliance with the
Securities Act and pursuant to Rule 415 under the Securities Act or any successor rule providing
for offering securities on a continuous basis (“Rule 415”), and the declaration or ordering of
effectiveness of such Registration Statement by the United States Securities and Exchange
Commission (the “SEC”).
(iii) “Registrable Securities” means the Common Stock issuable upon conversion of the
Preferred Stock.
(iv) “Registration Statement” means a registration statement of the Company under the
Securities Act.
(b) Capitalized terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Preferred Stock Purchase Agreement.
2. REGISTRATION.
(a) Demand Registration. Upon receipt of a written request (a “Demand Request”) from
Investors holding a majority of the Registrable Securities, which Demand Request shall set forth
the number of Registrable Securities the Investors are seeking to have registered, the Company
shall prepare and file with the SEC as soon as practicable, but in no event later than sixty (60)
days from the date of its receipt of a Demand Request, a Registration Statement on Form S-3 (or, if
Form S-3 is not then available, on such form of Registration Statement as is then available to
effect a registration of all of the Registrable Securities) covering the resale of the Registrable
Securities which are the subject of the Demand Request. The Registration Statement filed
hereunder, to the extent allowable under the Securities Act and the rules promulgated thereunder
(including Rule 416), shall state that such Registration Statement also covers such indeterminate
number of additional shares of Common Stock as may become issuable to prevent dilution resulting
from stock splits, stock dividends or similar transactions. The Investors shall not be entitled to
make more than four (4) Demand Requests pursuant to this Agreement. A registration request
pursuant to this Section 2(a) shall not be deemed to have been effected and shall not be
considered a demand registration which may be requested pursuant to this Section 2(a)
unless a registration statement filed pursuant to this Section 2(a) has been declared
effective by the SEC.
(b) Piggy-Back Registrations. If at any time prior to the expiration of the
Registration Period (as hereinafter defined), the Company shall file with the SEC a Registration
Statement relating to an offering for its own account or the account of others under the Securities
Act of any of its equity securities (other than the amendment of a registration statement now on
file, registration statements on Form S-4 or Form S-8 or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee benefit plans), the
Company shall send to each Investor written notice of such filing and, if within fifteen (15) days
after the receipt of such notice, an Investor shall so request in writing, the Company shall
include in such Registration Statement all or any part of the Registrable Securities such Investor
requests to be registered, except that if, in connection with any underwritten public offering, the
managing underwriter(s) thereof shall impose a limitation on the number of shares of Common Stock
which may be included in the Registration Statement because, in such underwriter(s)’ judgment,
marketing or other factors dictate such limitation is necessary to facilitate public distribution,
then the Company shall be obligated to include in such Registration Statement only such limited
portion of the Registrable Securities with respect to which such Investor has requested inclusion
hereunder as the underwriter shall permit. Any exclusion of Registrable Securities shall be made
pro rata among the Investors seeking to include Registrable Securities, in proportion to the number
of Registrable Securities sought to be included by such Investors; provided,
however, that the Company shall not exclude any Registrable Securities unless the Company
has first excluded all outstanding securities, the holders of which are not contractually
2
entitled to inclusion of such securities in such Registration Statement or are not
contractually entitled to pro rata inclusion with the Registrable Securities; and provided,
further, however, that, after giving effect to the immediately preceding proviso,
any exclusion of Registrable Securities shall be made pro rata with holders of other securities
having the contractual right to include such securities in the Registration Statement other than
holders of securities contractually entitled to inclusion of their securities in such Registration
Statement by reason of demand registration rights. If an offering in connection with which an
Investor is entitled to registration under this Section 2(b) is an underwritten offering,
then each Investor whose Registrable Securities are included in such Registration Statement shall
offer and sell such Registrable Securities in an underwritten offering using the same underwriter
or underwriters and, subject to the provisions of this Agreement, on the same terms and conditions
as other shares of Common Stock included in such underwritten offering.
(c) Registrations on Form S-3. Upon receipt of a written request (an “S-3 Request”)
from Investors holding a majority of the Registrable Securities, which S-3 Request shall set forth
the number of Registrable Securities the Investors are seeking to have registered, if the Company
is eligible at the time of such request to use Form S-3, the Company shall prepare and file with
the SEC as soon as practicable, but in no event later than sixty (60) days from the date of its
receipt of an S-3 Request, a Registration Statement on Form S-3 covering the resale of the
Registrable Securities which are the subject of the S-3 Request. The Registration Statement filed
hereunder, to the extent allowable under the Securities Act and the rules promulgated thereunder
(including Rule 416), shall state that such Registration Statement also covers such indeterminate
number of additional shares of Common Stock as may become issuable to prevent dilution resulting
from stock splits, stock dividends or similar transactions. The Investors shall not be entitled to
make more than two (2) S-3 Requests during any twelve (12) month period. The Investors shall not
be entitled to make an S-3 Request prior to the Initial Demand Request Date.
3. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities, the Company shall have the
following obligations:
(a) The Company shall prepare and file with the SEC the Registration Statement in accordance
with Section 2, and cause such Registration Statement relating to Registrable Securities to
become effective as soon as practicable after such filing, and keep such Registration Statement
effective pursuant to Rule 415 at all times until such date as is the earlier of (i) the date on
which all of the Registrable Securities have been sold and (ii) the date on which all of the
Registrable Securities (in the opinion of counsel to the Investors, which shall be sought upon the
request of the Company) may be immediately sold to the public without registration or restriction
pursuant to Rule 144(k) under the Securities Act or any successor provision (the “Registration
Period”), which Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein and all documents incorporated by reference therein) shall not
contain any untrue statement of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein not misleading, and (iii) shall comply
in all material respects with the requirements of the Securities Act and the rules and regulations
of the SEC promulgated thereunder. The financial statements
3
of the Company included in the Registration Statement or incorporated by reference therein
will comply in all material respects with the applicable accounting requirements and the published
rules and regulations of the SEC applicable with respect thereto. Such financial statements will
be prepared in accordance with U.S. generally accepted accounting principles, consistently applied,
during the periods involved (except in the case of unaudited interim statements, to the extent they
may not include footnotes or may be condensed on summary statements) and fairly present in all
material respects the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited statements, to immaterial
year-end adjustments).
(b) The Company shall prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to the Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary to keep the Registration Statement effective at
all times during the Registration Period, and, during such period, comply with the provisions of
the Securities Act with respect to the disposition of all Registrable Securities of the Company
covered by the Registration Statement until the earlier of (i) such time as all of such Registrable
Securities have been disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof as set forth in the Registration Statement or (ii) the expiration of the
Registration Period.
(c) The Company shall furnish to each Investor whose Registrable Securities are included in
the Registration Statement and its legal counsel (i) promptly after the same is prepared and
publicly distributed, filed with the SEC, or received by the Company, one copy of the Registration
Statement and any amendment thereto, each preliminary prospectus and prospectus and each amendment
or supplement thereto, and, in the case of the Registration Statement referred to in Section
2(a), each letter written by or on behalf of the Company to the SEC or the staff of the SEC
(including, without limitation, any request to accelerate the effectiveness of the Registration
Statement or amendment thereto), and each item of correspondence from the SEC or the staff of the
SEC, in each case relating to the Registration Statement (other than any portion, if any, thereof
which contains information for which the Company has sought confidential treatment), (ii) on the
date of effectiveness of the Registration Statement or any amendment thereto, a notice stating that
the Registration Statement or amendment has been declared effective, and (iii) such number of
copies of a prospectus, including a preliminary prospectus, and all amendments and supplements
thereto and such other documents as such Investor may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Investor.
(d) The Company shall (i) register and qualify the Registrable Securities covered by the
Registration Statement under such other securities or “blue sky” laws of such jurisdictions in the
United States as each Investor who holds Registrable Securities being offered reasonably requests,
(ii) prepare and file in those jurisdictions such amendments (including post-effective amendments)
and supplements to such registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other actions as may be
necessary to maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify
the Registrable Securities for sale in such jurisdictions; provided, however,
4
that the Company shall not be required in connection therewith or as a condition thereto to
(A) qualify to do business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (B) subject itself to general taxation in any such jurisdiction,
(C) file a general consent to service of process in any such jurisdiction, (D) provide any
undertakings that cause the Company undue expense or burden, or (E) make any change in its charter
or bylaws, which in each case the Board of Directors of the Company determines to be contrary to
the best interests of the Company and its shareholders.
(e) As promptly as practicable after becoming aware of such event, the Company shall notify
each Investor of the happening of any event, of which the Company has knowledge, as a result of
which the prospectus included in the Registration Statement, as then in effect, includes an untrue
statement of a material fact or omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and, promptly prepare a supplement or
amendment to the Registration Statement to correct such untrue statement or omission, and deliver
such number of copies of such supplement or amendment to each Investor as such Investor may
reasonably request.
(f) The Company shall use reasonable best efforts (i) to prevent the issuance of any stop
order or other suspension of effectiveness of a Registration Statement, and, if such an order is
issued, to obtain the withdrawal of such order at the earliest practicable moment (including in
each case by amending or supplementing such Registration Statement) and (ii) to notify each
Investor who holds Registrable Securities being sold (or, in the event of an underwritten offering,
the managing underwriters) of the issuance of such order and the resolution thereof (and if such
Registration Statement is supplemented or amended, deliver such number of copies of such supplement
or amendment to each Investor as such Investor may reasonably request).
(g) The Company shall permit a single firm of counsel designated by the Investors to review
the Registration Statement and all amendments and supplements thereto a reasonable period of time
prior to its filing with the SEC, and not file any document in a form to which such counsel
reasonably objects.
(h) At the request of an Investor in the case of an underwritten public offering, the Company
shall furnish, on the date of effectiveness of the Registration Statement (i) an opinion, dated as
of such date, from counsel representing the Company addressed to each Investor and in form, scope
and substance as is customarily given in an underwritten public offering and (ii) a letter, dated
such date, from the Company’s independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and each Investor.
(i) The Company shall hold in confidence and not make any disclosure of information concerning
an Investor provided to the Company unless (i) disclosure of such information is necessary to
comply with federal or state securities laws, (ii) the disclosure of such information is necessary
to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other order from a court or governmental body
of competent jurisdiction, (iv) such information has been
5
made generally available to the public other than by the Company or disclosure in violation of
this or any other agreement, or (v) such Investor consents to the form and content of any such
disclosure. The Company agrees that it shall, upon learning that disclosure of such information
concerning an Investor is sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to such Investor prior to making such disclosure, and allow
the Investor, at its expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, such information.
(j) The Company shall, prior to the declaration of effectiveness of any registration statement
covering Registrable Securities, cause all of the Registrable Securities covered by the
Registration Statement to be listed, at its option, on the American Stock Exchange (“AMEX”) or
another national securities exchange and on each additional national securities exchange on which
securities of the same class or series issued by the Company are then listed, if any, if the
listing of such Registrable Securities is then permitted under the rules of such exchange.
(k) The Company shall provide a transfer agent and registrar, which may be a single entity,
for the Registrable Securities.
(l) The Company shall cooperate with the Investors who hold Registrable Securities being
offered and the managing underwriter or underwriters, if any, to facilitate the timely preparation
and delivery of certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to the Registration Statement and enable such certificates to be
in such denominations or amounts, as the case may be, as the managing underwriter or underwriters,
if any, or the Investors may reasonably request and registered in such names as the managing
underwriter or underwriters, if any, or the Investors may request, and, within five (5) business
days after the Registration Statement which includes Registrable Securities is ordered effective by
the SEC, the Company shall deliver, and shall cause legal counsel selected by the Company to
deliver, to the transfer agent for the Registrable Securities (with copies to the Investors whose
Registrable Securities are included in such Registration Statement), an opinion of such counsel in
the form reasonably satisfactory to the transfer agent.
4. OBLIGATIONS OF THE INVESTOR.
In connection with the registration of the Registrable Securities, each Investor shall have
the following obligations:
(a) It shall be a condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable Securities of a particular
Investor that such Investor shall furnish to the Company such information regarding himself or
itself, the Registrable Securities held by him or it and the intended method of disposition of the
Registrable Securities held by him or it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request. At least ten (10) days prior to the
anticipated filing date of the Registration Statement, the Company shall notify each Investor of
the information the Company requires from each such Investor.
6
(b) Each Investor, by such Investor’s acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection with the
preparation and filing of the Registration Statement hereunder. The Company shall not be required
to include in any Registration Statement the Registrable Securities of any Investor who fails to
cooperate with the Company as reasonably requested in connection with the preparation and filing of
the Registration Statement.
(c) Each Investor agrees that, upon receipt of any notice from the Company of the happening of
any event of the kind described in Sections 3(e) or 3(f), such Investor will
immediately discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities until such Investor’s receipt of the copies of the
supplemented or amended prospectus contemplated by Sections 3(e) or 3(f) and, if so
directed by the Company, such Investor shall deliver to the Company (at the expense of the Company)
or destroy (and deliver to the Company a certificate of destruction at the Company’s request) all
copies in such Investor’s possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice.
(d) No Investor may participate in any underwritten distribution hereunder unless such
Investor (i) agrees to sell such Investor’s Registrable Securities on the basis provided in any
underwriting arrangements in usual and customary form entered into by the Company, (ii) completes
and executes all customary questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents reasonably required under underwritten offerings for selling shareholders,
(iii) agrees to pay its pro rata share of all underwriting discounts and commissions and any
expenses in excess of those payable by the Company pursuant to Section 5 below, and (iv)
complies with all applicable laws in connection therewith.
(e) In the event that in the judgment of the Company, it is advisable to suspend the use of a
Prospectus included in the Registration Statement due to pending material developments or other
events which have not yet been publicly disclosed and as to which the Company believes public
disclosure would be detrimental to the Company, the Company shall notify each Investor to such
effect, and, upon receipt of such notice, each Investor shall immediately discontinue any sales of
Registerable Securities pursuant to the Registration Statement until such Investor receives copies
of a supplemental or amended Prospectus or until such Investor is advised in writing by the Company
that the then current Prospectus may be used and have received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference in such Prospectus
(a “Disclosure Delay Period”). Notwithstanding the foregoing, there shall not be more than an
aggregate of ninety (90) days in any twelve (12) month period during which the Company is in a
Disclosure Delay Period.
5. EXPENSES OF REGISTRATION. All reasonable expenses incurred by the Company or the
Investors in connection with registrations, filings or qualifications pursuant to Sections
2 and 3 above, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and the fees and disbursements of counsel for
the Investors shall be borne by the Company.
6. INDEMNIFICATION. In the event any Registrable Securities are included in a
Registration Statement under this Agreement:
7
(a) To the extent permitted by law, the Company will indemnify, hold harmless and defend (i)
each Investor who holds such Registrable Securities, and (ii) the directors, officers, partners,
members, employees and agents of such Investor and each person who controls any Investor within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, if
any, (each, an “Indemnified Person”), against any joint or several losses, claims, damages,
liabilities or expenses (collectively, together with actions, proceedings or inquiries by any
regulatory or self-regulatory organization, whether commenced or threatened, in respect thereof,
“Claims”) to which any of them may become subject insofar as such Claims arise out of or are based
upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration
Statement or the omission or alleged omission to state therein a material fact required to be
stated or necessary to make the statements therein not misleading, (ii) any untrue statement or
alleged untrue statement of a material fact contained in any preliminary prospectus if used prior
to the effective date of such Registration Statement, or contained in the final prospectus (as
amended or supplemented, if the Company files any amendment thereof or supplement thereto with the
SEC) or the omission or alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the statements therein were
made, not misleading, or (iii) any violation or alleged violation by the Company of the Securities
Act, the Exchange Act, any other law, including, without limitation, any state securities law, or
any rule or regulation thereunder relating to the offer or sale of the Registrable Securities (the
matters in the foregoing clauses (i) through (iii) being, collectively, “Violations”). The Company
shall reimburse the Investors and each other Indemnified Person, promptly as such expenses are
incurred and are due and payable, for any reasonable legal fees or other reasonable expenses
incurred by them in connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement contained in this
Section 6(a) shall not apply to a Claim arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in writing to the Company by
such Indemnified Person for use in the Registration Statement or any such amendment thereof or
supplement thereto. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by any Investor pursuant to Section 9 hereof.
(b) In connection with any Registration Statement in which an Investor is participating, each
such Investor agrees severally and not jointly to indemnify, hold harmless and defend, to the same
extent and in the same manner set forth in Section 6(a), the Company, each of its
directors, each of its officers who signs the Registration Statement, its employees, agents and
each person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and any other shareholder selling
securities pursuant to the Registration Statement or any of its directors or officers or any person
who controls such shareholder within the meaning of the Securities Act or the Exchange Act
(collectively and together with an Indemnified Person, an “Indemnified Party”), against any Claim
to which any of them may become subject, under the Securities Act, the Exchange Act or otherwise,
insofar as such Claim arises out of or is based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Investor expressly for use in connection with such
Registration Statement; and, subject to Section 6(c), such Investor will reimburse any
legal or other expenses reasonably incurred by them in connection with investigating or
8
defending any such Claim; provided, however, that the indemnity agreement contained in
this Section 6(b) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of such Investor, which consent shall not
be unreasonably withheld; provided, further, however, that the Investor
shall be liable in the aggregate to all Indemnified Parties under this Agreement (including this
Section 6(b) and Section 7) for only that amount as does not exceed the net
proceeds actually received by such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Notwithstanding anything to the contrary contained herein,
the indemnification agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact contained in the preliminary prospectus was corrected on a
timely basis in the prospectus, as then amended or supplemented.
(c) Promptly after receipt by an Indemnified Person or Indemnified Party under this
Section 6 of notice of the commencement of any action (including any governmental action),
such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to made
against any indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified
Party, as the case may be; provided, however, that such indemnifying party shall
not be entitled to assume such defense and an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel with the fees and expenses to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying
party would be inappropriate due to actual or potential conflicts of interest between such
Indemnified Person or Indemnified Party and any other party represented by such counsel in such
proceeding or the actual or potential defendants in, or targets of, any such action include both
the Indemnified Person or the Indemnified Party and the indemnifying party and any such Indemnified
Person or Indemnified Party reasonably determines that there may be legal defenses available to
such Indemnified Person or Indemnified Party which are in conflict with those available to such
indemnifying party. The indemnifying party shall pay for only one separate legal counsel for the
Indemnified Person or the Indemnified Parties, as applicable, and such legal counsel shall be
selected by Investors holding a majority-in-interest of the Registrable Securities included in the
Registration Statement to which the Claim relates (with the approval of the initial Investor if it
holds Registrable Securities included in such Registration Statement), if the Investors are
entitled to indemnification hereunder, or by the Company, if the Company is entitled to
indemnification hereunder, as applicable. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party
under this Section 6, except to the extent that the indemnifying party is actually
prejudiced in its ability to defend such action. The indemnification required by this Section
6 shall be made by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred and is due and
payable.
9
7. CONTRIBUTION. To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with
respect to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law as is appropriate to reflect the relative fault of the indemnifying
party, on the one hand, and the Indemnified Person or Indemnified Party, as the case may be, on the
other hand, with respect to the Violation giving rise to the applicable Claim; provided,
however, that (i) no contribution shall be made under circumstances where the party would
not have been liable for indemnification under the fault standards set forth in Section 6,
(ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any seller of Registrable Securities
who was not guilty of such fraudulent misrepresentation, and (iii) contribution (together with any
indemnification or other obligations under this Agreement) by any seller of Registrable Securities
shall be limited in the aggregate amount to the net amount of proceeds actually received by such
seller from the sale of such Registrable Securities.
8. REPORTS UNDER THE EXCHANGE ACT. With a view to making available to each Investor
the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or
regulation of the SEC that may at any time permit each Investor to sell securities of the Company
to the public without registration (“Rule 144”), the Company agrees to:
(a) use its best efforts to file with the SEC in a timely manner and make and keep available
all reports and other documents required of the Company under the Securities Act and the Exchange
Act so long as the Company remains subject to such requirements and the filing and availability of
such reports and other documents is required for the applicable provisions of Rule 144; and
(b) furnish to each Investor so long as such Investor owns Registrable Securities, promptly
upon request, (i) a written statement by the Company that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested to permit each Investor to
sell such securities under Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights of the Investors hereunder,
including the right to have the Company register Registrable Securities pursuant to this Agreement,
shall be automatically assignable by each Investor to any transferee of Registrable Securities or
any assignee of the Preferred Stock Purchase Agreement if: (i) the Investor agrees in writing with
the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the
Company promptly after such assignment, (ii) the Company is furnished with written notice of (A)
the name and address of such transferee or assignee, and (B) the securities with respect to which
such registration rights are being transferred or assigned, and (iii) the transferee or assignee
agrees in writing for the benefit of the Company to be bound by all of the provisions contained
herein.
10. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may be amended and
the observance thereof may be waived only with written consent of the Company and Investors who
hold a majority in interest of the Registrable Securities or, in the
10
case of a waiver, with the written consent of the party charged with the enforcement of any
such provision.
11. MISCELLANEOUS.
(a) Any notices required or permitted to be given under the terms of this Agreement shall be
sent by certified or registered mail (return receipt requested), or delivered personally or by
courier, or by confirmed telecopy, or by a reputable overnight delivery service, and shall be
effective upon receipt or refusal of receipt, in each case addressed to a party. The addresses for
such communications shall be:
If to the Company:
Environmental Tectonics Corporation
000 Xxxxx Xxx
Xxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Chief Financial Officer
000 Xxxxx Xxx
Xxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Chief Financial Officer
with a copy simultaneously transmitted by like means to:
Klehr, Harrison, Xxxxxx, Branzburg & Xxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxx, III, Esquire
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxx, III, Esquire
and if to any Investor, at such address as such Investor shall have provided in writing to the
Company, or at such other address as each such party furnishes by notice given in accordance with
this Section 11(a).
with a copy simultaneously transmitted by like means to:
Xxxxx & Associates, LLC
000 Xxxxx Xxxx, Xxxxx 000
Xxxx xx Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxx, Xx., Esq.
Facsimile: (000) 000-0000
000 Xxxxx Xxxx, Xxxxx 000
Xxxx xx Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxx, Xx., Esq.
Facsimile: (000) 000-0000
(b) Failure of any party to exercise any right or remedy under this Agreement or otherwise, or
delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.
(c) This Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania applicable to contracts made and to be
11
performed in the Commonwealth of Pennsylvania. The Company and each Investor irrevocably
consent to the jurisdiction of the United States federal courts and the state courts located in the
Commonwealth of Pennsylvania in any suit or proceeding based on or arising under this Agreement and
irrevocably agrees that all claims in respect of such suit or proceeding may be determined in such
courts. The Company and each Investor irrevocably waive the defense of an inconvenient forum to the
maintenance of such suit or proceeding. The parties further agree that service of process upon
the other party, mailed by first class mail shall be deemed in every respect effective service of
process upon such party in any such suit or proceeding. Nothing herein shall affect the parties’
right to serve process in any other manner permitted by law. Each party agrees that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on such judgment or in any other lawful manner.
(d) This Agreement and, the Preferred Stock Purchase Agreement constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement supersedes all prior agreements and understandings between the
parties hereto with respect to the subject matter hereof and thereof.
(e) Subject to the requirements of Section 9 hereof, this Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties hereto.
(f) The headings in this Agreement are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof.
(g) This Agreement may be executed in two or more counterparts, each of which shall be deemed
an original but all of which shall constitute one and the same agreement. This Agreement, once
executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this Agreement.
(h) Each party shall do and perform, or cause to be done and performed, all such further acts
and things, and shall execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.
(i) All consents, approvals and other determinations to be made by the Investors pursuant to
this Agreement shall be made by the Investors holding a majority in interest of the Registrable
Securities held by all Investors.
(j) Each party to this Agreement has participated in the negotiation and drafting of this
Agreement. As such, the language used herein shall be deemed to be the language chosen by the
parties hereto to express their mutual intent, and no rule of strict construction will be applied
against any party to this Agreement.
[SIGNATURE PAGE FOLLOWS]
12
IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly
executed as of the date first above written.
| ENVIRONMENTAL TECTONICS CORPORATION | ||||||
| By: | ||||||
| Xxxxx Xxxxxx | ||||||
| Chief Financial Officer | ||||||
| X. X. Xxxxxxx | ||||||
