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Exhibit 99.1
STOCK PURCHASE AND REGISTRATION RIGHTS AGREEMENT
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STOCK PURCHASE AND REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated
as of July 18, 2003, between STARTECH ENVIRONMENTAL CORPORATION, a Colorado
corporation and NORTHSHORE ASSET MANAGEMENT, LLC, a Delaware limited liability
company (the "Purchaser"). Capitalized terms used in this Agreement but not
otherwise defined shall have the meanings assigned to such terms on Schedule 1
hereto.
1. Purchase and Sale of Shares.
(a) Subject to the terms and conditions hereof, at the Closing (as
defined below), the Company shall issue and shall sell to the Purchaser, and the
Purchaser shall purchase from the Company, 2,133,333 shares (the "Shares") of
common stock, no par value (the "Common Stock") for a price per share equal to
$0.75 (the "Price Per Share"), or an aggregate purchase price of $1,600,000.00
(the "Purchase Price").
(b) The purchase and sale of the Shares to the Purchaser pursuant to the
terms hereof will be made in reliance upon the provisions of Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act"), Regulation D
promulgated thereunder by the United States Securities and Exchange Commission
(the "SEC"), or such other exemptions from the registration requirements of the
Securities Act as may be available with respect to the investment in the Shares
to be made hereunder.
(c) The purchaser will not be entitled to any warrants and there will be
no commissions required to close this transaction.
2. Closing.
(a) The closing of the purchase and sale of the Shares shall take place
at 12:00 p.m. on July 18, 2003 at the offices of Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx
LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, 00000 (the "Closing").
(b) At the Closing, or as soon as is reasonably practicable thereafter,
the Company (or its transfer agent) shall deliver to the Purchaser a stock
certificate representing the Shares registered in the name of the Purchaser and
such other documents and certificates as are required by this Agreement at the
Closing.
(c) At the Closing, the Purchaser shall deliver to the Company the
Purchase Price by wire transfer in immediately available funds to the account
designated below:
Wire transfer information for: Startech Environmental Corp.
00 Xxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xx. 00000-0000
Financial Institution: Chase Manhattan Bank
00 Xxx Xxxxxxxxx Xxxx
Xxxxxx, Xx. 00000
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Financial Institution Contact: Xx. Xxxxx X. Xxxxxxx
(000) 000-0000
FAX: (000) 000-0000
Accounting Number: 6991501609
ABA/Routing Number: 000000000
(d) The Company, shall use the cash proceeds from the issuance of the
Shares for working capital and general corporate purposes.
3. Representations and Warranties by the Company. The Company hereby
represents and warrants to the Purchaser as of the date of this Agreement that:
(a) Incorporation and Qualification. The Company has been duly organized
and is validly existing as a Corporation and in good standing under the laws of
the State of Colorado with full corporate power and authority to carry on its
business as now conducted and as proposed to be conducted and to own and lease
the properties and assets it now owns or holds under lease. The Company is not
and is not required to be qualified to do business as a foreign corporation in
any other jurisdiction except where the failure to be so qualified would not
individually, or in the aggregate, have a Material Adverse Effect on the
Company.
(b) Title to Properties and Assets; Liens, etc.
(i) Except as otherwise disclosed in the SEC Filings, or through
other due diligence material made available to the Purchaser, the Company has
good and marketable title to its material properties and assets, and good title
to its material leasehold estates, in each case subject to no material Liens,
other than (A) those identified on the Balance Sheet (as defined herein), (B)
those resulting from taxes which have not yet become delinquent, (C) minor Liens
which do not materially detract from the value of the property or materially
impair the operations of the Company and (D) those that have otherwise arisen in
the ordinary course of business.
(ii) All material facilities, machinery, equipment, fixtures,
vehicles and other properties owned, leased or used by the Company are in good
operating condition and repair and are reasonably fit and usable for the
purposes for which they are being used.
(iii) The SEC Filings sets forth true, complete and correct
descriptions of each leasehold interest of the Company in real property that is
material to the business and operations of the Company. The Company enjoys
peaceful and undisturbed possession of all such real property.
(iv) The Company has never owned, nor does the Company currently own
any real property.
(c) Authority. The Company has all necessary corporate power and
authority to execute and deliver the Agreement and to carry out and perform its
obligations hereunder. The execution, delivery and performance by the Company of
the Agreement and the consummation of the transactions contemplated hereby,
including the issuance of the Shares, have been duly authorized by all necessary
corporate action on the part of the Company and no further authorization on the
part of the Company, or the Company's stockholders, is necessary to authorize
such execution, delivery and performance. The Agreement, when executed and
delivered by the Company, will be duly executed and delivered by the Company.
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The Agreement, when so executed, will constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except as the same may be limited by bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of creditors'
rights generally now or hereafter in effect and subject to the application of
equitable principles and the availability of equitable remedies. The issuance of
the Shares is not and will not be subject to preemptive rights or rights of
first refusal that have not been properly waived or complied with prior to the
date hereof.
(d) No Conflicts. The execution, delivery and performance of the
Agreement and the other instruments and agreements to be executed, delivered and
performed by the Company pursuant hereto and the consummation of the
transactions contemplated hereby by the Company, including the issuance of the
Shares, do not and will not with or without the giving of notice or the passage
of time or both, (i) violate or conflict with or result in a breach of or a
right of termination by any Person of any provision of, or constitute a default
under, or create a Lien upon any properties or assets of the Company or any of
its subsidiaries pursuant to (A) the Articles of Incorporation or the By-Laws of
the Company or any of its subsidiaries or (B) any order, judgment, decree,
statute, regulation, contract, agreement or any other restriction of any kind or
description to which the Company or any of its subsidiaries or its assets may be
bound or subject; (ii) violate any applicable law, rule, regulation, judgment,
injunction, order or decree binding upon the Company or any of its subsidiaries
or to which any of their properties and assets is subject; (iii) result in the
loss or impairment of any approval, license, franchise, permit, legal privilege
or legal right enjoyed or possessed by the Company or any of its subsidiaries;
(iv) otherwise result in the creation of any Lien; or (v) require the consent or
approval of any Person other than the consent of the Board of Directors and
those consents or approvals set forth in Section 3(k). The Company is not in
violation of or (with or without notice or lapse of time or both) in default
under, any material term or provision of its Articles of Incorporation or
By-Laws or any indenture, loan or credit agreement, note agreement, mortgage,
security agreement or other agreement, lease or other instrument, commitment or
arrangement to which the Company is a party or by which the Company's assets are
bound.
(e) Capital Stock; Fully Paid and Non-Assessable. As of the date hereof
and immediately prior to the Closing, the authorized capital stock of the
Company consists and will consist, respectively, of (i) 10,000,000 shares of
Preferred Stock, of which 5,773 shares are issued and outstanding and designated
as Series A 8% Cumulative Convertible Redeemable Preferred Stock (the "Series A
Preferred Stock") and (ii) 800,000,000 shares of Common Stock of which:
(A) 11,544,454 shares are issued and outstanding;
(B) 3,000,000 shares are authorized for issuance under the
Company's stock option plans, of which 731,089 shares
are reserved for issuance upon the exercise of options
granted and issuable by the Company thereunder;
(C) 298,820 shares are reserved for issuance upon the
conversion of the Series A Preferred Stock; and
(D) 2,206,789 shares are reserved for issuance upon the
exercise of warrants.
All such outstanding shares of Common Stock and Preferred Stock and other
securities have been duly authorized and validly issued and are fully paid and
nonassessable and were issued in compliance with all applicable Federal and
state securities laws. Except as contemplated by this Agreement or as set forth
in the SEC Filings, the Company has no outstanding subscription, option,
warrant, right of first refusal, preemptive right, call, contract, demand,
commitment, convertible security or other instrument, agreement or arrangement
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of any character or nature whatever under which the Company is or may be
obligated to issue Common Stock, Preferred Stock or any other equity security of
any kind or which otherwise relates to the Company's securities.
(f) Compliance with Other Instruments. The Company is not: (i) in
violation of its Articles of Incorporation or By-Laws, or any applicable law;
(ii) in default under any mortgage, lease, indenture, contract, agreement or
instrument; (iii) in default with respect to any order; or (iv) in default in,
any material respect under any order, license, franchise, regulation or demand
of any Federal, State, municipal or other governmental agency.
(g) Securities Laws. Subject to the accuracy of the representations
and warranties of the Purchaser contained in Section 4 hereof, the offer, issue
and sale of the Shares (i) are and will be exempt from the registration
requirements of the Securities Act and (ii) are and will be issued in compliance
with all applicable Federal and state securities laws. Neither the Company nor
any agent on its behalf has solicited or will solicit any offers to sell or has
offered to sell or will offer to sell all or any part of the Shares to any
Person or Persons other than the Purchaser or has taken or will take any other
action that would require the Company to register the sale of such Shares under
the Securities Act.
(h) Financial Statements; Liabilities.
(a) Included in the Form 10-Q for the three months ended April
30, 2003 ("Form 10-Q") are the Company's consolidated unaudited balance sheet
(the "Balance Sheet") as of April 30, 2003 (the "Balance Sheet Date"), and the
consolidated unaudited statement of operations for the three-month period then
ended ("Operating Statement"). Included in its annual report on Form 10-K for
the year ended October 31, 2002 ("Annual Report") are the Company's consolidated
audited balance sheets as of October 31, 2002 and the consolidated audited
statements of operations, cash flow and changes of stockholders' equity for the
period then ended, together with the related report of Xxxxxx, Ruffkess &
Company, LLC(a) , independent certified public accountants such year-end balance
sheet, statement of operations, cash flow and changes of stockholders' equity
and report, together with the Balance Sheet and Operating Statement, the
"Financial Statements"). The Financial Statements (including any notes thereto):
(i) are complete and correct in all material respects
and are in accordance with the books and records
of the Company;
(ii) present fairly the consolidated financial
condition, results of operations and cash flows
of the Company and its subsidiaries at the
respective dates therein specified and the
results of operations and changes in financial
position of the Company and its subsidiaries for
the respective periods therein specified; and
(iii) were prepared in accordance with generally
accepted accounting principles applied on a
basis consistent with prior accounting periods
(except that the unaudited financial statements
are subject to year-end audit adjustments which
will not be material in amount and do not
contain complete footnotes).
(b) The Company has no liabilities or obligations of any
nature, either actual or absolute, contingent or otherwise, which are not
reflected or provided for in the Financial Statements or related notes.
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(i) Changes. Since October 31, 2002, except as disclosed in SEC
Filings, including without limitation, the Form 10-Q and current reports on Form
8-K or the Annual Report, or through direct disclosure to Purchaser during this
due diligence period, there has been no event which was has had, or could
reasonably be expected to have, a Material Adverse Effect. Since the Balance
Sheet Date, the Company has conducted its business in all material respects in
the ordinary course consistent with past practices, and without limiting the
generality of the foregoing, other than those items disclosed to the Purchaser
during the due diligence process, there has not been any:
(1) change, occurrence or circumstance in or affecting
the business, assets, liabilities, financial
condition, operations or prospects of the Company
or any of its subsidiaries that has had or may
reasonably be expected to have a Material Adverse
Effect;
(2) resignation or termination of any key officers,
employees or consultants of the Company or any of
its subsidiaries;
(3) material change, except in the ordinary course of
business, in the contingent obligations of the
Company or any of its subsidiaries by way of
guaranty, endorsement, indemnity, warranty or
otherwise which has had or may reasonably be
expected to have a Material Adverse Effect;
(4) damage, destruction or loss, whether or not
covered by insurance, that has had or may
reasonably be expected to have a Material Adverse
Effect on the Company;
(5) waiver by the Company or any of its subsidiaries
of a material right or of a material debt owed to
any of them which has had or may reasonably be
expected to have a Material Adverse Effect;
(6) direct or indirect loans or advances made by the
Company or any of its subsidiaries to any
stockholder, employee, consultant, officer,
director or Affiliate of the Company or any of its
subsidiaries in violation of Section 402 of the
Xxxxxxxx-Xxxxx Act of 2002;
(7) material change in any compensation arrangement or
agreement with any employee, consultant, officer,
director or shareholder has had or may reasonably
be expected to have a Material Adverse Effect;
(8) declaration or payment of any dividend or other
distribution of assets of the Company or any of
its subsidiaries or any direct or indirect
redemption, purchase, retirement or other
acquisition of any shares of its capital stock has
had or may reasonably be expected to have a
Material Adverse Effect;
(9) debt, obligation or liability incurred, assumed or
guaranteed by the Company or any of its
subsidiaries, except those for amounts not
exceeding $250,000 in the aggregate or for current
liabilities incurred in the ordinary course of
business;
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(10) sale, assignment or transfer of any of the assets
or rights of the Company or any of its
subsidiaries (other than the sale of their
respective inventory in the ordinary course of
business), including patents, trademarks,
copyrights, trade secrets or other intangible
assets or intellectual property, or any mortgage
or pledge of or Lien imposed upon any of the
assets or properties of the Company or any of its
subsidiaries, except in the ordinary course of
business except any such sales, assignments,
transfers, mortgages, pledges or liens which, in
the aggregates, have had, or may reasonably be
expected to have, a Material Adverse Effect;
(11) change in or event of default under any material
agreement to which the Company or any of its
subsidiaries is a party or by which any of them is
bound which modification or event of default has
had or may reasonably be expected to have, a
Material Adverse Effect;
(12) purchase or other acquisition of any operating
business or a material amount of assets or the
capital stock of any other Person; or
(13) other event or condition of any character that,
either individually or cumulatively, has had or
may reasonably be expected to have a Material
Adverse Effect.
(j) Intellectual Property.
(i) The Company has the right, title and interest to all
material licenses and sublicenses (whether as licensee, sublicensee, licensor or
sublicensor) and other agreements as to which the Company is a party and
pursuant to which any Person is authorized to use any such Intellectual Property
Right, including the identity of all parties thereto. As used herein, the term
"Intellectual Property Right" means any and all material trademarks, service
marks, and trade names, patents, copyrights (whether or not registered and
whether or not published), (including any registrations or applications for
registration of any of the foregoing) or any other material Intellectual
Property Right, in any country or jurisdiction in the world, in each case which
is owned or licensed by and either used or held for use or otherwise related and
material to the conduct of the business of the Company.
(ii) Except as indicated in any of the SEC Filings, (A) the
Company owns or has the legally enforceable right to use, sell, execute,
reproduce, display, perform, modify, enhance, distribute, prepare derivative
works of, and license and sublicense without further payment to any other
Person, all material Intellectual Property Rights, free and clear of all Liens;
(C) the execution, delivery and performance of the Agreement will not conflict
with, result in a breach of, constitute an event of default under (or an event
that, with notice or lapse of time or both, would constitute a conflict, breach
or default under), or accelerate the performance required by, or create in any
Person the right to accelerate, terminate, modify, or cancel (with notice or
lapse of time or both), or require any notice under, any contract involving any
Intellectual Property Rights, which default, conflict, breach or event has had,
or may reasonably be expected to have, a Material Adverse Effect; and (C) will
not cause the forfeiture or termination of or give rise to a right of forfeiture
or termination (with notice or lapse of time or both) of any Intellectual
Property Rights or otherwise impair the rights of the Company to use, sell or
license any Intellectual Property Rights which forfeiture, termination, right of
forfeiture or termination or impairment has had, or could reasonably be expected
to have, a Material Adverse Effect.
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(iii) Except as indicated in any of the SEC Filings (A) all
current and former employees, officers and consultants of the Company that,
during the term of such Persons' respective employment or consultancy with the
Company has contributed to or participated in the conception and development of
products currently offered by the Company and the products which the Company
proposes to offer have acted during such respective terms within the scope of
their employment in so contributing or participating; and (B) no current and
former officers, employees or consultants of the Company has a right to claim an
ownership interest in any Intellectual Property Rights as a result of having
been involved in the development, creation or licensing of any Intellectual
Property Rights while employed or serving as consultants to the Company which
claim has had or could reasonably be expected to have a Material Adverse Effect.
(iv) Except as indicated in the SEC Filings, (A) the Company
has not been sued, or been a party in any claim, suit, action or proceeding
relating to its business that has not been the subject of a final disposition
prior to the date hereof and that involves a claim of interference,
infringement, misappropriation or opposition by the Company of any trademark,
patent, trade secret, copyright, know-how or other proprietary information or
intellectual property right of any other Person which claim, if subject of a
final disposition adverse to the Company, could reasonably be expected to have a
Material Adverse Effect, and the Company has no knowledge of any reasonable
basis for any such claims, (B) no Intellectual Property Right is subject to any
outstanding order, judgment, injunction, decree, stipulation or agreement
prohibiting or restricting the use thereof by the Company or prohibiting or
restricting the assignment, licensing or transfer thereof by the Company to any
Person which has had or could reasonably be expected to have a Material Adverse
Effect; and (C) no Intellectual Property Rights are currently the subject of any
re-examination, opposition, cancellation or invalidation proceeding before any
governmental authority which re-examination, opposition, cancellation or
invalidation proceeding could reasonably be expected to have a Material Adverse
Effect, and all Intellectual Property Rights registered or, to the best
knowledge of the Company, filed with a governmental authority are currently in
compliance with all material formal legal requirements and, to the best
knowledge of the Company, are valid and enforceable.
(v) With respect to software licensed to the Company from
third parties, such as operating systems and databases required by the Company
to deliver services to its customers, to the best of the Company's knowledge,
all such licenses are in good standing and the Company is authorized to deliver
such services to its customers, except to the extent that the failure of any
license or licenses to be in good standing or the absence of such authorization
would not have, or could not reasonably be expected to have, a Material Adverse
Effect.
(vi) To the best of the Company's knowledge, none of the
operations of the Company involves the unlicensed or unauthorized use of
confidential or proprietary information. The Company has taken all reasonable
measures to protect the trade secrets and the confidential and proprietary
information of third Persons used in or related to the Company's operations. To
the best of the Company's knowledge, to the extent that information of a
confidential nature has been used in the operations of the Company in the five
year period prior to the date hereof, such information (except insofar as it has
fallen into the public domain through no fault of the Company or is not
material) has been kept strictly confidential and has not been disclosed
otherwise than subject to an obligation of confidentiality being imposed on the
Person to whom such information was disclosed.
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(k)Litigation. Except as disclosed in the SEC Filings, there is
no action pending and, to the best knowledge of the Company, there is no action
threatened against the Company or any of its directors, officers or employees or
to which any of the properties or assets of the Company are subject or which
challenges the validity of the Agreement, the issuance of the Shares or any
action taken or to be taken pursuant hereto or thereto, which seeks to impose or
confirm any limitation on the ability of the Purchaser effectively to acquire,
hold or exercise full rights of ownership of the Shares, which action, in the
aggregate with all other such investigations, claims, actions and proceedings
would have a Material Adverse Effect. Except as disclosed in the Form 10-Q or
the Annual Report or any other SEC Filing, the Company is not a party or subject
to the provisions of any order, writ, judgment, injunction, decree,
determination or award of any court or of any governmental entity or regulatory
authority. Except as disclosed in the SEC Filings or any press release of the
Company, there is no action, suit, proceeding or investigation by the Company
currently pending which has had, or if finally determined in a manner adverse to
the Company could reasonably be expected to have, a Material Adverse Effect.
(l) No Governmental Consent or Approval Required. Assuming the
truth and accuracy of the representations made by the Purchaser in Section 4
hereof, no authorization, consent, approval or other order of, declaration to,
or registration, qualification, designation or filing with, any federal, state
or local governmental agency or body is required by or from the Company for the
valid and lawful authorization, execution and delivery by the Company of the
Agreement and consummation of the transactions contemplated hereby, or for the
valid and lawful authorization, issuance, sale and delivery of the Shares, other
than the qualification (or taking of such action as may be necessary to secure
an exemption from qualification, if available) of the offer and sale of the
Shares under applicable state and Federal securities laws, which filings and
qualifications, if required, will be accomplished in a timely manner so as to
comply with such qualification or exemption from qualification requirements.
(m) Reporting Status. The Company has filed in a timely manner
all forms, reports and other documents that the Company was required to file
under the Exchange Act and the Securities Act during the 12 months preceding the
date of this Agreement and such documents complied, and as of the date hereof
comply, as to form in all material respects with the SEC's requirements as of
their respective filing dates, and the information contained therein as of the
respective dates thereof and to the best of the Company's knowledge did 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 in
light of the circumstances under which they were made not misleading.
(n) Eligibility to File Form S-3. The Company is currently
eligible to register the resale of Common Stock in a secondary offering on a
registration statement on Form X-0, X-0 or S-3 under the Securities Act.
(o) Subsidiaries. Except as set forth in the SEC Filings, (i)
the Company does not have, and is not committed to purchase or acquire, any
equity interest or equivalent interest (direct or indirect) in any Person other
than the subsidiaries of the Company listed therein, (ii) all outstanding shares
of capital stock of each subsidiary are owned of record and beneficially solely
by the Company and have been duly authorized and validly issued and are fully
paid and non-assessable and (iii) the Company owns all of the issued and
outstanding capital stock of each of its subsidiaries free and clear of any and
all Liens.
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(p) Brokerage. No placement agent, banker, broker or finder has
acted directly or indirectly for the Company in connection with this Agreement
or the transactions contemplated hereby, and no placement agent, banker, broker
or finder is entitled to any commission, brokerage or finder's fee in respect
thereof based in any way on agreements, arrangements or understandings made by
or on behalf of the Company.
(q) Employees. The Company does not have a collective bargaining
agreement with any of its employees. There is no labor union organizing activity
pending or, to the Company's best knowledge, threatened with respect to the
Company or any of its subsidiaries. Except as disclosed in any of the SEC
Filings, or otherwise disclosed by the Company to the Purchaser, to the
Company's best knowledge, no employee of the Company, nor any consultant with
whom the Company has contracted, is in violation of any term of any employment
contract, proprietary information agreement or any other agreement relating to
the right of any such individual to be employed by, or to contract with, the
Company because of the nature of the business to be conducted by the Company;
and, to the Company's best knowledge, the continued employment by the Company of
its current officers and significant employees, will not result in any such
violation. Except as disclosed in any of the SEC Filings or as otherwise
disclosed by the Company to the Purchaser: (A) the Company has not received any
written notice alleging that any such violation has occurred; and (B) no
employee of or consultant to the Company has been granted the right to continued
employment by the Company or to any material compensation following termination
of employment with or by the Company.
(r) Taxes. "Taxes" shall mean all taxes, charges, fees, Liens,
duties or other assessments, however denominated, including any interest or
penalties that may become payable in respect thereof, imposed by the United
States government, any state, local or foreign government or any agency or
political subdivision of any such government (a "Tax Authority"), which shall
include, without limiting the generality of the foregoing, all income taxes,
payroll and employee withholding taxes, unemployment insurance, social security,
sales and use taxes, excise taxes, capital taxes, franchise taxes, gross receipt
taxes, occupation taxes, real and personal property taxes, value added taxes,
stamp taxes, transfer taxes, workers' compensation taxes and other obligations
of the same or of a similar nature. All tax returns or reports required to be
filed by or on behalf of the Company have been timely filed or requests for
extensions have been timely filed or any amounts due and unpaid have been
accrued on the Financial Statements and, to the best knowledge of the Company,
any such extension has been granted and has not expired, and all such filed
returns are complete and accurate in all material respects. All Taxes due from
the Company or any of its subsidiaries through the date hereof have been paid in
full or an adequate provision has been made for any such Taxes on the Financial
Statements (in accordance with generally accepted accounting principles). Except
as otherwise disclosed in any of the SEC Filings, there is no audit,
examination, deficiency, or refund litigation pending or threatened, with
respect to any Taxes of the Company; all Taxes due with respect to completed and
settled examinations or concluded litigation relating to it have been paid in
full or adequate provision has been made for any such Taxes on the Financial
Statements (in accordance with generally accepted accounting principles); the
Company has not executed an extension or waiver of any statute of limitations on
the assessment or collection of any Tax that is currently in effect; and no
rulings have been issued by or agreements entered into with any Tax Authority
with respect to the Company.
(s) ERISA and Employee Benefit Plans.
(i) The SEC Filings identify each Plan applicable to the
employees of the Company.
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(ii) No transaction prohibited by Section 406 of ERISA or
Section 4975 of the Code, has occurred with respect to any employee benefit plan
or arrangement which is covered by Title I of ERISA which transaction has or
will cause the Company to incur any liability under ERISA, the Code or
otherwise, excluding transactions effected pursuant to and in compliance with a
statutory or administrative exemption. No "accumulated funding deficiency", as
defined in Section 412 of the Code, has been incurred with respect to any Plan
subject to such Section 412, whether or not waived. No "reportable event",
within the meaning of Section 4043 of ERISA, other than a "reportable event"
that will not have a Material Adverse Effect, and no event described in Section
4062 or 4063 of ERISA, has occurred in connection with any Plan. Neither the
Company nor any ERISA Affiliate of the Company has (A) engaged in, or is a
successor or parent corporation to an entity that has engaged in, a transaction
described in Sections 4069 or 4212(c) of ERISA or (B) incurred, or reasonably
expects to incur prior to the date of the Closing, (1) any liability under Title
IV of ERISA arising in connection with the termination of, or a complete or
partial withdrawal from, any plan covered or previously covered by Title IV of
ERISA or (2) any liability under Section 4971 of the Code that in either case
could become a liability of the Company or the Purchaser or any of its ERISA
Affiliates after the date of the Closing. No condition exists that (A) could
constitute grounds for termination by the PBGC of any employee benefit plan that
is subject to Title IV of ERISA that is maintained by the Company or any of
their ERISA Affiliates or (B) presents a material risk of complete or partial
withdrawal from any multiemployer plan, as defined in Section 3(37) of ERISA,
which could result in the Company or the Purchaser or any ERISA Affiliate of any
of them incurring a withdrawal liability within the meaning of Section 4201 of
ERISA.
(iii) Each Plan that is intended to be qualified under
Section 40l(a) of the Code is so qualified and has been so qualified during the
period since its adoption; each trust created under any such Plan is exempt from
tax under Section 501(a) of the Code and has been so exempt since its creation.
Each Plan has been maintained in substantial compliance with its terms and with
the requirements prescribed by any and all applicable statutes, orders, rules
and regulations, including but not limited to ERISA and the Code.
(t) Transactions with Related Persons. Except as otherwise
disclosed herein or any of the SEC Filings:
(i) The Company has not entered into any agreement with, and
no debts, obligations or liabilities of the Company are owed to, any of their
respective officers, directors, stockholders, employees, consultants or
Affiliates or any Affiliate thereof other than:
(A) for payment of salary, consulting or director's
fees for services rendered;
(B) reimbursement for reasonable expenses incurred on
behalf of the Company; and
(C) for other standard employee benefits made
generally available to all employees (including
stock option agreements outstanding under any
stock option plan approved by the board of
directors either of the Company);
(ii) None of the officers, directors or stockholders of the
Company or any of its Affiliates, is indebted to, or has any cause of action or
legal claim against, the Company or, to the best knowledge of the Company, has
any direct or indirect ownership interest in any Person with which the Company
is affiliated or with which the Company has a business relationship, or any
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Person which competes with the Company, except that officers, directors and/or
stockholders of the Company or any of its subsidiaries may own less than two
percent (2%) of the issued and outstanding capital stock in publicly traded
companies which may compete with the Company;
(iii) No officer, director or stockholder of the Company or
any of their Affiliates, is, directly or indirectly, interested in any material
contract with the Company; and
(iv) The Company is not a guarantor, indemnitor or
contributor of any indebtedness or liability of any other Person involving any
guaranty, indemnification or contribution required to be disclosed in any such
SEC Filings.
(u) Permits. The Company has all franchises, permits, licenses,
consents and approvals and any similar authorization required for their
operations, the absence of which could not be reasonably expected to have alone,
or in the aggregate, a Material Adverse Effect, and all authorizations they have
are in full force and effect.
(v) Environmental Matters.
(i) As used herein, "Subject Premises" means the real
property now owned, operated, used or leased or previously owned, operated, used
or leased (but only through the date of termination of such ownership,
operation, use or lease) by, to or for the Company.
(ii) To the best knowledge of the Company, none of the
Subject Premises has any condition or conditions which would require
notification or remediation by the Company or any of its subsidiaries under any
Environmental Law (collectively, "Environmental Defects").
(iii) Neither the Company nor, to the Company's best
knowledge, any other Person has at any time during its possession of the Subject
Premises disposed of any wastes, Hazardous Waste or otherwise, other than in
accordance with applicable Environmental Laws and Environmental Permits.
(iv) Neither the Company nor any of its subsidiaries has
received any written communication from the Federal Environmental Protection
Agency or any other local, state or Federal regulatory agencies or any other
Person relating to the existence of Environmental Defects at the Subject
Premises.
(v) Except as disclosed in any of the SEC Filings, to the
best knowledge of the Company, there do not exist any judgments, orders,
directives, decrees or awards of any court, arbitrator or administrative or
governmental agency or entity or any other Person concerning the Company or any
of its agents' or contractors' compliance with any Environmental Law or
Environmental Permit (in the case of agents and contractors, relating to the
Company or the Subject Premises).
(vi) Except as disclosed in any of the SEC Filings, no
claims have been asserted or, to the best knowledge of the Company, are
threatened against the Company relating to any Environmental Defect or condition
which with the passage of time could become an Environmental Defect.
(vii) Except as disclosed in any of the SEC Filings, to the
best knowledge of the Company, there do not exist any consent decrees,
administrative orders, settlement agreements or other settlement documents
entered into with any administrative or governmental agency or entity or any
other Person concerning compliance with any Environmental Law or Environmental
Permit applicable to the Company or any of the Subject Premises.
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(ix) Except as disclosed in any of the SEC Filings, the
Subject Premises and all operations conducted thereon by the Company are and
have at all times been in compliance in all material respects with all
Environmental Laws and Environmental Permits.
(x) The Company has obtained and currently maintain in full
force and effect all material environmental permits, approvals, authorizations,
licenses, variances, registrations and permissions (collectively, "Environmental
Permits") required for the conduct of its business and operations.
(xi) To the best knowledge of the Company, there are no
Hazardous Substances or Hazardous Waste on, under or about the Subject Premises
other than those customarily used in or incident to the business of the Company,
which in any event are used or maintained by the Company in all material
respects in accordance with all applicable Environmental Laws and Environmental
Permits.
(w) Customers and Suppliers. Except as disclosed on in the SEC
Filings, no customer or supplier of the Company has taken, and the Company has
not received any written notice, and the Company does not have any knowledge
that any customer or supplier of the Company contemplates taking, any steps that
could disrupt the business relationship of the Company with such customer or
supplier or could result in a diminution in the value of the Company in a manner
that, in either event, would be reasonably likely to have a Material Adverse
Effect. The Company has no knowledge of any activities by ex-employees that have
disrupted the business relationship of the Company with its customers or
suppliers in any material respect.
(x) Directors and Officers Insurance. The Company has furnished
to the Purchaser a true, correct and complete copy of the Company's directors
and officers insurance policy. There is no claim by the Company or any of its
directors or officers pending under such policy as to which coverage has been
questioned, denied or disputed by the underwriters of such policy. All premiums
due and payable under such policy have been paid and the Company have in all
material respects complied fully with the terms and conditions of such policy.
Such policy is in full force and effect. The Company knows, to its best
knowledge, of no threatened termination of such policy.
(y) Resignation of Directors. Prior to the Closing, each of
Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxx
X. Xxxxxx and Xxxxxx Xxxxxx submitted their resignation from the Board of
Directors of the Company.
4. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Company as of the date of this Agreement as
follows:
(a) Status. The Purchaser is a limited liability company duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with full power and authority to execute, deliver and perform its
obligations under this Agreement.
(b) Authority. The Purchaser has the power and authority to execute and
deliver the Agreement and to carry out its obligations hereunder and thereunder.
The execution, delivery and performance by the Purchaser of the Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary limited liability company action on the part of the
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Purchaser, and the Agreement constitutes the legal, valid and binding obligation
of the Purchaser, enforceable against the Purchaser in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally now or hereafter in effect and subject to the application of equitable
principles and the availability of equitable remedies.
(c) No Conflicts. The execution, delivery and performance of the
Agreement and the consummation of the transactions contemplated hereby by the
Purchaser do not and will not with or without the giving of notice or the
passage of time or both, violate or conflict with or result in a breach or
termination of any provision of, or constitute a default under any
organizational instrument of the Purchaser or any order, judgment, decree,
statute, regulation, contract, agreement or any other restriction of any kind or
description to which the Purchaser is a party or by which the Purchaser is or
may be bound.
(d) Purchaser Representations and Acknowledgments.
(i) The Purchaser is acquiring the Shares for the Purchaser's own
account for investment only and not as nominee or agent and not with a view to,
or for sale in connection with, a distribution of the Shares or as dividends
thereon and with no present intention of selling, transferring, granting a
participation in or otherwise distributing the Shares, all within the meaning of
the Securities Act and any applicable state, securities or blue-sky laws.
(ii) The Purchaser acknowledges that:
(A) The Company has advised the Purchaser that the Shares have
not been registered under the Securities Act or under the laws of any state on
the basis that the issuance thereof contemplated by this Agreement is exempt
from such registration in accordance with Section 4(2) of the Securities Act, or
such other applicable exemption;
(B) The Company's reliance on the availability of an exemption
under the Securities Act for the issuance of the Shares without registration is,
in part, based upon the accuracy and truthfulness of the Purchaser's
representations contained herein;
(C) The Shares cannot be resold without registration or an
exemption from registration under the Securities Act and any applicable state
securities laws, and that certificates representing the Shares will bear a
restrictive legend to such effect in substantially the following form and any
legend required by applicable state laws:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY
MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR THE
AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER SAID ACT.
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(D) The Purchaser has evaluated the merits and risks of
purchasing the Shares, and has such knowledge and experience in financial and
business matters that the Purchaser is capable of evaluating the merits and
risks of such purchase, is aware of and has considered the financial risks and
hazards of purchasing the Shares, and is able to bear the economic risk of
purchasing the Shares, including the possibility of a complete loss with respect
thereto;
(E) The Purchaser has had access to such information regarding
the business and finances of the Company, and has been provided the opportunity
to discuss with the Company's management the business, affairs and financial
condition of the Company and such other matters with respect to the Company as
would concern a reasonable person considering the transactions contemplated by
this Agreement and/or concerned with the operation of the Company;
(F) The Purchaser represents that it is an Accredited Investor.
5. Certain Covenants.
(a) Board Representation. At the Closing, or a soon as practicable
thereafter under applicable laws, Xxxxxx X. Xxxxx, as the sole remaining member
of the Board of Directors, shall appoint each of Xxxxx X. Xxxxxxx, Xxxxx X.
Xxxxxx, Xxxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxx to fill the vacancies created
on the Board of Directors, to serve until their respective successors are duly
elected and qualified or their respective earlier resignation or removal.
(b) Delisting. In the event that the Common Stock, for any reason, is
not listed on the Nasdaq SmallCap Market, the Over-the-Counter Bulletin Board or
a similar national exchange, (absent any time frame applicable to any transition
from one exchange to another) and the Company is no longer subject to the
reporting requirements of the Exchange Act, the Company hereby covenants and
agrees with the Purchaser that, so long as the Purchaser or any of its
Affiliates owns the Shares, except as otherwise required in this Agreement, the
Company shall provide the Purchaser with customary and reasonable financial
information on at least a quarterly basis and such other information rights as
provided to an investor in a privately held corporation.
(c) Financial Information.
(i) As soon as practicable, and in any event within 90 days after
the close of each fiscal year of the Company will file, (A) a consolidated
balance sheet of the Company and its subsidiaries as of the end of such fiscal
year and (B) consolidated statements of income, changes in financial position
and common stock and other shareholders' equity of the Company and its
subsidiaries for such fiscal year, in each case setting forth in comparative
form the corresponding figures for the preceding fiscal year and to be in
reasonable detail and audited by independent public accountants selected by the
Company.
(ii) As soon as practicable, and in any event within, 45 days after
the close of each of the first three fiscal quarters of the Company, during such
fiscal year, (A) a consolidated balance sheet of the Company and its
subsidiaries as of the end of such fiscal quarter and (B) consolidated
statements of income and changes in financial position of the Company and its
subsidiaries for the portion of the fiscal year ended with the end of such
quarter, in each case setting forth in comparative form the corresponding
figures for the comparable period of the preceding fiscal year (subject to
normal year-end adjustments).
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(d) Confidentiality. The Purchaser covenants and agrees to keep
confidential any and all material non-public information which it has heretofore
obtained or shall hereafter obtain, directly or indirectly, from the Company
pursuant to this Agreement or otherwise, and agrees not to use the same except
for the purpose of this Agreement or to disclose the same to any party except as
provided below, without the Company's prior written consent; provided that the
terms of this Section 5(d). shall not extend to any such information that:
(i) is already publicly known;
(ii) has become publicly known without any fault of the Purchaser or
anyone to whom the Purchaser has made disclosure in compliance with the terms of
this Section 5(d); or
(iii) is required to be disclosed to any governmental authorities or
courts of law as a result of operation of law, regulation, or court order;
provided, however, that the Purchaser shall have first given prompt written
notice of such requirement to the Company (if permissible) and cooperates with
the Company to restrict such disclosure and/or obtain confidential treatment
thereof.
6. Registration Rights.
a) Demand Registration.
(i) Upon written notice of the Holders of a majority of the then
outstanding Registrable Securities (on a common stock equivalent basis)
requesting that the Company effect a registration under the Securities Act of
Registrable Securities and specifying the intended method or methods of
distribution thereof (which may include a continuous or delayed offering), the
Company shall prepare and file a Registration Statement on Form S-3 under the
Securities Act, or other appropriate Form in the event Form S-3 is not
available, covering the Registrable Securities then outstanding and shall use
commercially reasonable efforts to cause such Registration Statement to become
effective as expeditiously as possible and to remain effective until the earlier
to occur of (i) the date on which all Registrable Securities covered by such
Registration Statement have been sold and the distribution contemplated thereby
has been completed or (ii) the date by which all the Registrable Securities
covered thereby may be sold under Rule 144(k) (the "Effectiveness Period");
provided, however, that the Purchaser shall not be entitled to make more than
two (2) demands to register the Registrable Securities pursuant to this Section
6(a)(i). A demand registration requested pursuant to this Section 6(a)(i) will
not be deemed to have been effected unless the Registration Statement relating
thereto has become effective under the Securities Act and remains effective for
the period described above.
(ii) A Holder (including the Purchaser) or Holders requesting a
registration pursuant to this Section 6(a) may, at any time prior to the
effective date of the Registration Statement relating to such registration,
revoke such request by providing a written notice to the Company revoking such
request.
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(iii) The Company may include any other securities in any demand
registration effected pursuant to this Section 6(a); provided, however, that if
the managing underwriter(s) or the representative(s) of the several underwriters
(the "Managing Underwriter") of a proposed underwritten public offering of
Common Stock advises the Holder or Holders intending to participate in such
offering in writing that the total amount or kind of securities which such
Holders and the Company intend to include in such offering is sufficiently large
to materially adversely affect the success of such offering, then the amount or
kind of securities to be offered for the accounts of the Company shall be
reduced pro rata to the extent necessary to reduce the total amount or kind of
securities to be included in such proposed public offering to the amount or kind
recommended by such Managing Underwriter and, if such reduction results in no
securities being offered for the accounts of the Company in such proposed public
offering, then the amount or kind of securities to be offered for the account of
the Company shall be reduced to the extent necessary to reduce the total amount
or kind of securities to be included in such proposed public offering to the
amount or kind recommended by such managing underwriter or underwriters.
(b) Piggyback Registration. If the Company at any time proposes to file
a registration statement with respect to any class of its equity securities,
whether for its own account (other than in connection with the Registration
Statement contemplated by Section 6(a) or a registration statement on Form S-4
or S-8 (or any successor or substantially similar form), or the registration of
(A) an employee stock option, stock purchase or compensation plan or of
securities issued or issuable pursuant to any such plan or (B) a dividend
reinvestment plan) or for the account of an Other Approved Holder (a "Requesting
Securityholder"), then the Company shall in each case give written notice of
such proposed filing to all Holders at least twenty (20) days prior to the
anticipated filing date of any such registration statement by the Company, and
such notice shall offer to all Holders the opportunity to have any or all of the
Registrable Securities held by such Holders included in such registration
statement. Each Holder desiring to have its Registrable Securities registered
under this Section 6(b) shall so advise the Company in writing within fifteen
(15) days after the date of receipt of such notice (which request shall set
forth the amount of Registrable Securities for which registration is requested),
and the Company shall include in such Registration Statement all such
Registrable Securities so requested to be included therein on the same terms and
conditions as the securities being registered by the Company. Any Holder's
request for such inclusion may be withdrawn, in whole or in part, at any time
prior to the effective date of such Registration Statement. Notwithstanding the
foregoing, if the Managing Underwriter of any such proposed public offering
advises the Company in writing that the total amount or kind of securities which
the Holders, the Company and the Other Approved Holders intend to be included in
such proposed public offering is sufficiently large to materially adversely
affect the success of such proposed public offering, then the amount or kind of
securities to be offered for the accounts of Holders and the Other Approved
Holders (other than the Requesting Securityholder) shall be reduced pro rata to
the extent necessary to reduce the total amount or kind of securities to be
included in such proposed public offering to the amount or kind recommended by
such Managing Underwriter before the securities offered by the Company or any
Requesting Securityholder are so reduced.
(c) Registration Procedures. In connection with the Company's
registration obligations pursuant to Sections 6(a) and 6(b) hereof, the Company
will, as expeditiously as practicable:
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(i) prepare and file with the SEC a new Registration Statement or
such amendments and post-effective amendments to an existing Registration
Statement as may be necessary to keep such Registration Statement effective for
the time periods set forth in Section 6(a) (in connection with a demand
registration); provided, that as soon as practicable, but in no event later than
three (3) business days before filing such Registration Statement, any related
Prospectus or any amendment or supplement thereto, other than any amendment or
supplement made solely as a result of incorporation by reference of documents
filed with the Commission subsequent to the filing of such Registration
Statement, the Company shall furnish to the Holders covered by such Registration
Statement and the Managing Underwriter, if any, copies of all such documents
proposed to be filed, which documents shall be subject to the review of such
Holders and underwriters;
(ii) the Company shall not file any Registration Statement or
amendment thereto or any Prospectus or any supplement thereto (other than any
amendment or supplement made solely as a result of incorporation by reference of
documents filed with the Commission subsequent to the filing of such
Registration Statement) to which the Managing Underwriter of the applicable
offering, if any, or the Purchaser (if it is participating in such offering) or
the Holders of a majority of the Registrable Securities (on a Common Stock
equivalent basis) covered by such Registration Statement shall have reasonably
objected in writing within three (3) business days after receipt of such
documents to the effect that such Registration Statement or amendment thereto or
Prospectus or supplement thereto does not comply in all material respects with
the requirements of the Securities Act (provided that the foregoing shall not
limit the right of any Holder whose Registrable Securities are covered by a
Registration Statement to reasonably object, within two (2) business days after
receipt of such documents, to any particular information that is to be contained
in such Registration Statement, amendment, Prospectus or supplement that relates
specifically to such Holder, including any information describing the manner in
which such Holder acquired such Registrable Securities and the intended method
or methods of distribution of such Registrable Securities), and if the Company
is unable to file any such document due to the objections of such Managing
Underwriter, the Purchaser or such Holders, the Company shall use its best
efforts to cooperate with such Managing Underwriter, the Purchaser and Holders
to prepare, as soon as practicable, a document that is responsive in all
material respects to the reasonable objections of such underwriters, the
Purchaser and Holders;
(iii) cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424;
and comply with the provisions of the Securities Act applicable to the Company
with respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such Registration
Statement, Prospectus or supplement to the Prospectus;
(iv) notify the selling Holders and the Managing Underwriter, if
any, promptly (providing confirmation in writing):
(1) when a new Registration Statement, Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with
respect to any new Registration Statement or post-effective
amendment, when it has become effective;
(2) of any request by the SEC for amendments or supplements to any
Registration Statement or Prospectus or for additional information;
(3) of the issuance by the SEC of any written comments with respect to
any filing;
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(4) of any stop order suspending the effectiveness of any Registration
Statement or the initiation of any proceedings for that purpose and
the Company agrees that it will make every reasonable effort to
obtain as soon as possible the withdrawal of any such order or other
action suspending the effectiveness of any Registration Statement or
suspending the qualification or registration (or exemption
therefrom) of the Registrable Securities for sale in any
jurisdiction;
(5) in the case of an underwritten offering, if at any time the
representations and warranties of the Company contemplated by
paragraph (xiv) below cease to be true and correct as of any time
they are required to be true and correct;
(6) of any suspension of the qualification or registration (or exemption
therefrom) of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose; and
(7) of the happening of any event which makes any statement of a
material fact made in any Registration Statement, Prospectus or any
document incorporated therein by reference untrue or which requires
the making of any changes in any Registration Statement, Prospectus
or any document incorporated therein by reference so that it will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading;
(v) if reasonably requested by the Managing Underwriter or a Holder
of Registrable Securities being sold in connection with an underwritten
offering, promptly incorporate in a Prospectus supplement or post-effective
amendment such information as the Managing Underwriter, the Purchaser (if it is
participating in such offering) and the Holders of a majority of the Registrable
Securities (on a Common Stock equivalent basis) being sold in such underwritten
offering reasonably agree should be included therein relating to the sale of the
Registrable Securities, including information with respect to the aggregate
number of shares of Registrable Securities being sold to the underwriters, the
purchase price being paid therefor by such underwriters and with respect to any
other terms of the underwritten offering of the Registrable Securities to be
sold in such offering; and promptly make all required filings of such Prospectus
supplement or post-effective amendment;
(vi) promptly after the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus relating
to Registrable Securities covered by a Registration Statement filed pursuant to
this Section 6, provide copies of such document to the selling Holders covered
thereby and the underwriters, if any;
(vii) promptly after the filing of such documents with the
Commission, furnish to each selling Holder and each Managing Underwriter, if
any, without charge, at least one manually signed or "edgarized" copy (but not
to exceed five (5) manually signed copies of any document to all selling Holders
and the Managing Underwriter in the aggregate), and as many conformed copies as
may reasonably be requested, of the then effective Registration Statement and
any post-effective amendments thereto, including financial statements and
schedules, all documents incorporated therein by reference and all exhibits
(including those previously furnished or incorporated by reference);
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(viii) deliver to each selling Holder and the Managing Underwriter,
if any, without charge, as many copies of the then effective Prospectus
(including each prospectus subject to completion) and any amendments or
supplements thereto as such Persons may reasonably request;
(ix) register or qualify (or obtain exemption therefrom) or
cooperate with the selling Holders, the Managing Underwriter, if any, and their
respective counsel in connection with the registration or qualification (or
exemption therefrom) of such Registrable Securities for the offer and sale under
the securities or blue sky laws of such jurisdictions as any selling Holder or
Managing Underwriter, if any, reasonably requests in writing;
(x) use its best efforts to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness
Period; and do any and all other acts or things reasonably necessary or
advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the then effective Registration Statement; provided,
however, that the Company will not be required to qualify to do business in any
jurisdiction where it would not otherwise be required to qualify, but for this
paragraph (x);
(xi) cooperate with the selling Holders and the Managing
Underwriter, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
restrictive legends; and enable such Registrable Securities to be in such
denominations and registered in such names as the Managing Underwriter may
request at least two (2) business days prior to any sale of Registrable
Securities to the underwriters;
(xii) upon the occurrence of any event contemplated by clause (7) of
paragraph (iv) above, promptly prepare a supplement or post-effective amendment
to the Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities being
sold thereunder, the Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which they are made,
not misleading; if any event described in clause (2) of paragraph (iv) above
occurs, use its best efforts to cooperate with the SEC to prepare, as soon as
practicable, any amendment or supplement to such Registration Statement or such
related Prospectus and any other additional information, or to take other action
that may have been requested by the SEC;
(xiii) cause all Registrable Securities covered by the Registration
Statement to be listed on each securities exchange (or quotation system operated
by a national securities association) on which identical securities issued by
the Company are then listed (or included) if requested by the Purchaser (if it
is participating in such offering) or the Holders of a majority of the
Registrable Securities (on a Common Stock equivalent basis) covered by such
Registration Statement or the Managing Underwriter, if any, and enter into
customary agreements including, if necessary, a listing application and
indemnification agreement in customary form, and provide a transfer agent for
such Registrable Securities no later than the effective date of such
Registration Statement;
(xiv) enter into customary agreements (including in the case of an
underwritten offering, an underwriting agreement with the Managing Underwriter
in form customary with respect to issuers of similar market capitalization and
reporting and financial histories) and take all such other actions in connection
therewith in order to expedite or facilitate the disposition of such Registrable
Securities included in such Registration Statement, in each case, in connection
with an underwritten offering, as the Managing Underwriter determines is
reasonable and customary, and in connection therewith:
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(1) make such representations and warranties to the selling Holders and
each of the underwriters in such form, substance and scope as are
customarily made by issuers to underwriters in secondary
underwritten offerings;
(2) obtain opinions of counsel to the Company addressed to each selling
Holder and to each of the underwriters and updates thereof (which
counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the underwriters and the selling Holders
and shall cover the matters customarily covered in opinions
requested in secondary underwritten offerings and such other matters
as may be reasonably requested by such Holders and underwriters);
(3) obtain "cold comfort" letters and updates thereof from the
independent certified public accountants of the Company addressed to
each selling Holder and each of the underwriters, such letters to be
in customary form and covering matters of the type customarily
covered in "cold comfort" letters in connection with secondary
underwritten offerings;
(4) the underwriting agreement shall contain indemnification and
contribution provisions and procedures no less favorable than those
set forth in Section 6(e) (and, to the extent applicable, Section
7(a)) hereof with respect to all parties to be indemnified pursuant
to Section 6(f) (and, to the extent applicable, Section 7(a)); and
(5) the Company shall deliver such documents and certificates as may be
reasonably requested by the selling Holders and the Managing
Underwriter to evidence compliance with clause (1) above and with
any customary conditions contained in the underwriting agreement or
other agreement entered into by the Company in respect of the
relevant offering;
(xv) provide a CUSIP number (if necessary) for the Registrable
Securities no later than the effective date of such registration statement;
(xvi) in the case of any non-underwritten offering:
(1) obtain opinions of counsel to the Company at the time of
effectiveness of such Registration Statement covering such offering
and updates thereof of customary frequency, addressed to each Holder
participating in such offering and covering matters that are no more
extensive in scope than would be customarily covered in opinions
obtained in secondary underwritten offerings by issuers with similar
market capitalization and reporting and financial histories;
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(2) obtain "cold comfort" letters from the independent certified public
accountants of the Company at the time of effectiveness of such
Registration Statement and, upon the request of the Purchaser (if it
is participating in such offering) or the Holders of a majority of
the Registrable Securities (on a Common Stock equivalent basis)
covered by such Registration Statement, updates thereof of customary
frequency, in each case addressed to each Holder participating in
such offering and covering matters that are no more extensive in
scope than would be customarily covered in "cold comfort" letters
and updates obtained in secondary underwritten offerings by issuers
with similar market capitalization and reporting and financial
histories; and
(3) deliver a certificate of an executive officer of the Company at the
time of effectiveness of such Registration Statement and, upon the
request of the Purchaser (if it is participating in such offering)
or the Holders of a majority of the Registrable Securities (on a
Common Stock equivalent basis) covered by such Registration
Statement, updates thereof of customary frequency, such certificates
to cover matters no more extensive in scope than those matters
customarily covered in officer's certificates delivered in
connection with underwritten offerings by issuers with similar
market capitalization and reporting and financial histories;
(xvii) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC relating to such registration and the
distribution of the securities being offered and make generally available to its
securities holders earnings statements satisfying the provisions of Section
11(a) of the Securities Act, no later than 60 days after the end of any 12-month
period (or 120 days, if such period is a fiscal year) commencing at the end of
any fiscal quarter in which the Registrable Securities are sold to underwriters
in a firm commitment or best efforts underwritten offering, or, if not sold to
underwriters in such an offering, beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of such
Registration Statement, which earnings statements shall cover such 12-month
periods;
(xviii) cooperate and assist in any filings required to be made with
the National Association of Securities Dealers, Inc. and in the performance of
any customary due diligence investigation;
(xix) make available, upon reasonable notice and during normal
business hours, for inspection by the Holders of the Registrable Securities
covered by such Registration Statement, any underwriter participating in any
disposition pursuant to such registration, and any attorney, accountant or other
representative retained by such sellers or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company and cause
the Company's officers, directors and employees to supply all information
reasonably requested by, and to cooperate fully with, any such representative,
underwriter, attorney or accountant in connection with such registration;
(xx) cause the Registrable Securities covered by the Registration
Statement to be registered with or approved by such other governmental agencies
or authorities as may be reasonably necessary to enable the seller or sellers
thereof or the underwriters, if any, to consummate the disposition of such
Registrable Securities; provided, however, that the Company shall not be
required to qualify to do business in any jurisdiction where it would not
otherwise be required to qualify, but for this paragraph (xx); and
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(xxi) use its best efforts to take all action necessary or advisable
to effect such registration in the manner contemplated by this Agreement.
(d) Material Development Election.
(i) Subject to Section 6(d)(ii) below, the Company shall be
entitled, for a period of time not to exceed thirty consecutive (30) days (a
"Suspension Period"), to postpone the filing of any Registration Statement
otherwise required to be filed by it pursuant to Section 6(a) and/or request
that the Holders refrain from effecting any public sales or distributions of
their Registrable Securities if the Company's Board of Directors shall have
reasonably determined in good faith and in its reasonable business judgment that
such registration would interfere in any material respect with any financing
(other than an underwritten secondary offering of any securities of the
Company), acquisition, corporate reorganization or other transaction or
development involving the Company or any subsidiary of the Company that in the
reasonable good faith business judgment of such board is a transaction or
development that is or would be material to the Company (a "Material Development
Election").
(ii) The Board of Directors shall, as promptly as practicable, give
the Holders written notice of any such Material Development Election. In the
event of a determination by the Board of Directors to postpone the filing of a
Registration Statement required to be filed pursuant to Section 6(a) hereof, the
Company shall be required to file such Registration Statement as soon as
practicable after the Board of Directors of the Company shall determine, in its
reasonable business judgment, that the filing of such Registration Statement and
the offering thereunder will not interfere with the aforesaid material
transaction or development, but in any event no later than the end of such
Suspension Period. In addition, if the Board of Directors of the Company has
requested that the Holders refrain from making public sales or distributions of
their Registrable Securities, such board shall, as promptly as practicable
following its determination that the Holders may recommence such public sales
and distributions, notify such Holders in writing of such determination (but in
any event no later than the end of such Suspension Period). In the event the
Company shall exercise a Material Development Election during a period when a
Registration Statement filed pursuant to Section 6(a) hereof is effective, the
time period specified in Section 6(a) hereof during which such Registration
Statement is required to be kept effective shall be extended by the number of
days during which the Holders are prohibited by the Company from publicly
selling or distributing their securities.
(iii) The Purchaser agrees that, upon receipt of any notice from the
Company of a Suspension Period, the Purchaser shall forthwith discontinue
disposition of shares of Common Stock covered by such Registration Statement or
Prospectus until the Purchaser (A) is notified in writing by the Company that
the use of the applicable prospectus may be resumed, (B) has received copies of
a supplemental or amended prospectus, if applicable, and (C) has received copies
of any additional or supplemental filings which are incorporated or deemed to be
incorporated by reference into such prospectus.
(iv) Notwithstanding the foregoing, no more than one Suspension
Period may occur during any twelve-month period, unless approved by a
majority-in-interest of the then outstanding Holders (on a common equivalent
basis). The Company shall use its best efforts to limit the duration and
aggregate number of any Suspension Periods.
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(e) Registration Expenses. All expenses incident to the Company's
performance of or compliance with Section 6 of this Agreement, including all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualifications or registrations (or the obtaining of
exemptions therefrom) of the Registrable Securities), printing expenses
(including expenses of printing Prospectuses), messenger and delivery expenses,
internal expenses (including all salaries and expenses of its officers and
employees performing legal or accounting duties), fees and disbursements of its
counsel and its independent certified public accountants (including the expenses
of any special audit or "comfort" letters required by or incident to such
performance or compliance), securities acts liability insurance (if the Company
elects to obtain such insurance), fees and expenses of any special experts
retained by the Company in connection with any registration hereunder, fees and
expenses of other Persons retained by the Company, (all such expenses being
referred to as "Registration Expenses"), shall be borne by the Company, whether
or not any registration statement becomes effective; provided that Registration
Expenses shall not include any underwriting discounts, commissions or fees
attributable to the sale of the Registrable Securities.
(f) Registration Rights Indemnification.
(i) Indemnification by the Company.
(1) The Company will indemnify and hold harmless, to the fullest
extent permitted by law, but without duplication, each Holder and each of their
respective Affiliates, including any managed or advised accounts and any
investment advisor or agent therefor, officers, directors, employees, partners,
representatives and agents, and each Person who controls such Holder or such
other Persons (within the meaning of the Securities Act) (for purposes of this
Section 6(f)(i), a "Holder Indemnified Person"), from and against, and will
reimburse such Holder Indemnified Person with respect to, any and all claims,
actions, demands, losses, damages, liabilities, costs and expenses (including
reasonable costs of investigation and reasonable legal fees and expenses)
("Indemnifiable Costs and Expenses") to which such Holder Indemnified Person may
become subject under the Securities Act or otherwise and arise out of or are
based upon (A) violation of securities laws or (B) any untrue statement or
alleged untrue statement of any material fact contained in, or any omission or
alleged omission to state therein a material fact required to be stated in, any
such Registration Statement, any Prospectus contained therein or any amendment
or supplement thereto or necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that the Company will not be liable in any such case to the extent that
any costs or expense covered by the preceding clauses (A) or (B) arises out of
or results from any untrue or alleged untrue statement of any material fact
contained in such Registration Statement, any Prospectus contained therein or
any amendment or supplement thereto or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was so
made solely in reliance upon and in substantial conformity with written
information furnished by such Holder Indemnified Person specifically for use in
the preparation of any such Registration Statement, Prospectus or amendment or
supplement thereto.
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(2) The Company further agrees promptly upon demand by each
Holder Indemnified Person to reimburse each Holder Indemnified Person for any
Holder Indemnifiable Costs and Expenses as they are incurred by it; provided
that if the Company reimburses a Holder Indemnified Person hereunder for any
expenses incurred in connection with a lawsuit, claim, inquiry or other
proceeding or investigation for which indemnification is sought, such Holder
Indemnified Person agrees to refund such reimbursement of Holder Indemnifiable
Costs and Expenses to the extent it is finally judicially determined that the
indemnity provided for in this Section 6(f)(i) is not applicable to, or the
Company is not otherwise obligated to pay, such Holder Indemnified Person in
accordance with the terms hereof or otherwise. The indemnity, contribution and
expense reimbursement obligation of the Company under this Section 6(f)(i) shall
be in addition to any liability it may otherwise have. The obligations of the
Company hereunder shall survive the Closing and the termination of any
Registration Statement under which any Registrable Securities were registered
the termination of this Agreement and shall not be extinguished with respect to
any Person because any other Person is not entitled to indemnity or contribution
hereunder.
(ii) Indemnification by Holders of Registrable Securities. Each
Holder whose Registrable Securities are included in a Registration Statement
pursuant to the provisions of this Section 6 will indemnify and hold harmless
the Company, each of its Affiliates, and their respective officers, directors,
employees, partners, stockholders, agents, representatives, and any Person who
controls the Company or any of its subsidiaries or Affiliates (within the
meaning of the Securities Act) (each, a "Company Indemnified Person"), from and
against, and will reimburse such Company Indemnified Person with respect to, any
and all Indemnifiable Costs and Expenses to which the Company or such Company
Indemnified Person may become subject under the Securities Act or otherwise and
which arise out of or result from any untrue or alleged untrue statement of any
material fact contained in such Registration Statement, any Prospectus contained
therein or any amendment or supplement thereto, or any omission or the alleged
omission to state therein any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, in each case to the extent, but only to the
extent, that such untrue statement or omission or alleged untrue statement or
alleged omission was so made solely in reliance upon and in substantial
conformity with written information furnished by such Holder specifically for
use in the preparation thereof; provided, however, that the liability of any
Holder pursuant to this subsection (ii) shall be limited to an amount not to
exceed the net proceeds received by such Holder pursuant to the Registration
Statement which gives rise to such obligation to indemnify.
(iii) Conduct of Indemnification Proceedings; Contribution.
(1) Each indemnifying party and indemnified party under this
Section 6(f) shall comply with the procedures set forth in Section 7(a)(iii)
with respect to any indemnity sought pursuant to this Section 6(f).
(2) Each indemnifying party and indemnified party under this
Section 6(f) also agrees to comply with the provisions in Section 7(a)(iv) as
they relate to contribution.
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(g) Reporting Requirements Under the Exchange Act. The Company shall use
its best efforts to make publicly available and available to the Holders,
pursuant to Rule 144, such information as is necessary to enable the Holders to
make sales of Registrable Securities pursuant to that Rule. The Company shall
use its best efforts to file timely with the Commission all documents and
reports required of the Company under the Exchange Act. The Company shall
furnish to any Holder, upon request, a written statement executed on behalf of
the Company as to compliance with the current public information requirements of
Rule 144. In addition, the Company will provide to any Holder of a Registrable
Security, or any potential purchaser of a Registrable Security, upon any such
Person's reasonable request, the information required by paragraph (d)(4) of
Rule 144A.
(h) Stockholder Information. The Company may require each seller of
Registrable Securities as to which any registration is being effected to furnish
to the Company such information regarding such seller and the distribution of
such securities as the Company or the Managing Underwriter may from time to time
reasonably request in writing.
(i) Participation in Underwritten Registrations.
(1) If any of the Registrable Securities covered by a Registration
Statement required to be filed pursuant to Section 6(a) hereunder are to be sold
in an underwritten offering, the Company shall select the Managing Underwriter
that will administer the offering, provided the Purchaser (if it is
participating in such offering) or, if such Purchaser is not so participating in
such offering, the Holders of a majority of the Registrable Securities (on a
Common Stock equivalent basis) included in such offering shall have the right to
consent to such selection, provided further that such consent may not be
unreasonably withheld.
(2) No Person may participate in any underwritten offering hereunder
unless such Person (i) agrees to sell such Person's Registrable Securities on
the basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the underwriting or other agreement between the
Company and the Managing Underwriter. Nothing in this Section 6(i) shall be
construed to create any additional rights regarding the registration of
Registrable Securities in any Person otherwise than as set forth herein.
7. Miscellaneous.
(a) Indemnification. In addition to any indemnification provided
elsewhere in this Agreement, the parties hereto agree as follows:
(i) Company Indemnification.
(1) The Company will indemnify and hold harmless, to the fullest
extent permitted by law, but without duplication, the Purchaser and each of its
Affiliates including any managed or advised accounts and any investment advisor
or agent therefor, and their respective, officers, directors, employees,
partners, representatives, agents, and each Person who controls the Company and
each of its Affiliates within the meaning of the Securities Act) (each of the
foregoing Persons being a "Purchaser Indemnified Person"), from and against any
and all Indemnifiable Costs and Expenses to which such Purchaser Indemnified
Person may become subject under the Securities Act or otherwise arising out of
or based in any manner upon any breach by the Company of any its
representations, warranties or covenants contained in the Agreement or in any
agreement, instrument or document delivered by the Company hereunder or
thereunder.
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(2) The Company further agrees promptly upon demand by each
Purchaser Indemnified Person to reimburse each Purchaser Indemnified Person for
any Purchaser Indemnifiable Costs and Expenses as they are incurred by it;
provided that if the Company reimburses a Purchaser Indemnified Person hereunder
for any Indemnifiable Costs and Expenses incurred in connection with a lawsuit,
claim, inquiry or other proceeding or investigation for which indemnification is
sought, such Purchaser Indemnified Person agrees to refund such reimbursement of
Indemnifiable Costs and Expenses to the extent it is finally judicially
determined that the indemnity provided for in this Section 7(a)(i) is not
applicable to such Purchaser Indemnified Person in accordance with the terms
hereof or otherwise or the Company is not otherwise obligated to indemnify such
Purchaser Indemnified Person. The indemnity, contribution and expense
reimbursement obligation of the Company under this Section 7(a) shall be in
addition to any liability it may otherwise have.
(3) The obligations of the Company hereunder shall survive the
Closing and any repurchase, conversion, exchange or transfer of the Preferred
Stock and the termination of this Agreement and shall not be extinguished with
respect to any Person because any other Person is not entitled to indemnity or
contribution hereunder.
(ii) Purchaser Indemnification. The Purchaser agrees and covenants
to agree and covenant to and to hold harmless and indemnify each Company
Indemnified Person, from and against any and all Indemnifiable Costs and
Expenses to which such Company Indemnified Person may become subject under the
Securities Act or otherwise which arises out of or is based in any manner upon
any breach by the Purchaser of any its representations, warranties or covenants
contained in the Agreement or in any agreement, instrument or document delivered
by the Purchaser hereunder or thereunder.
(iii) Conduct of Indemnification Proceedings. Promptly after receipt
by a party indemnified pursuant to the provisions of paragraph (i) or (ii) of
this Section 7(a) or paragraph (i) or (ii) of Section 6(f) of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of paragraph (i)
or (ii) of this Section 7(a) or paragraph (i) or (ii) of Section 6(f), notify
the indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability which it
may have to an indemnified party otherwise than under paragraph (i) or (ii) of
this Section 7(a) or paragraph (i) or (ii) of Section 6(f), and shall not
relieve the indemnifying party from liability under this Section 7(a) or Section
6(f) unless such indemnifying party is materially prejudiced by such omission.
In case such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall
have the right to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party pursuant to the provisions of such paragraph
(i) or (ii) of this Section 7(a) or paragraph (i) or (ii) of Section 6(f) for
any legal or other expense subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall be liable to an indemnified party for
any settlement of any action or claim without the consent of the indemnifying
party. No indemnifying party will 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 to such claim or litigation and no settlement can have
non-monetary remedies.
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(iv) Contribution. If the indemnification provided for in subsection
(i) or (ii) of this Section 7(a) or in subsection (i) or (ii) of Section 6(f) is
held by a court of competent jurisdiction to be unavailable to a party to be
indemnified with respect to any Indemnifiable Costs and Expenses, then each
indemnifying party under any such subsection, in lieu of indemnifying such
indemnified party thereunder, hereby agrees to contribute to the amount paid or
payable by such indemnified party as a result of Indemnifiable Costs and
Expenses, in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions, acts, facts matters or
circumstances which resulted in such Indemnifiable Costs and Expenses, as well
as any other relevant equitable considerations. To the extent applicable to
Section 6(f) hereof, the relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution hereunder from any Person who was not guilty
of such fraudulent misrepresentation.
(b) Entire Agreement; Survival of Provisions. The Agreement and the SEC
Filings referenced herein and therein constitute the entire agreement of the
parties with respect to the transactions contemplated hereby and supersede all
prior agreements and understandings with respect thereto, whether written or
oral. All of the covenants of the parties made herein shall remain operative and
in full force and effect pursuant to their respective terms regardless of
acceptance of the Shares and payment therefor. The representations and
warranties set forth herein shall survive the execution and delivery of this
Agreement, the issuance of the Shares in each case until the second anniversary
of the date of Closing (the "Expiration Date"), and shall in no way be affected
by any investigation of the subject matter thereof made by or on behalf of the
Purchaser or the Company. Notwithstanding the preceding sentence, any
representation or warranty in respect of which an indemnity may be sought hereof
shall survive the time at which it would otherwise terminate pursuant to the
preceding sentence, if a claim for indemnification shall have been given to the
party against whom such indemnity may be sought prior to the Expiration Date.
The representations, warranties, agreements and covenants made in the Agreement
shall be deemed to have been relied upon by the parties hereto.
(c) No Waiver; Modifications in Writing. No failure or delay by a party
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. Except as otherwise expressly provided herein with
respect to any right of indemnification, the remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to any
party at law or in equity or otherwise. No waiver of or consent to any departure
by a party from any provision of this Agreement shall be effective unless signed
in writing by the parties entitled to the benefit thereof. No amendment,
modification or termination of any provision of this Agreement shall be
effective unless signed in writing by all parties. Any amendment, supplement or
modification of or to any provision of this Agreement, any waiver of any
provision of this Agreement, and any consent to any departure from the terms of
any provision of this Agreement, shall be effective only in the specific
instance and for the specific purpose for which made or given.
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(d) Notices. All notices, demands and other communications provided for
hereunder shall be in writing, shall be given by registered or certified mail,
return receipt requested, on the date sent by telecopy with electronic
confirmation of such transmission, the business day next following deposit with
a courier service for overnight delivery with written confirmation of such
delivery or upon personal delivery, addressed to the parties, as follows:
If to the Company, to:
Startech Environmental Corporation
00 Xxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxx 00000-0000
Attention: President
Telecopy: (000) 000-0000
If to the Purchaser, to:
Northshore Asset Management, LLC
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx Xxxxxxxx
or to such other address as any party shall designate in writing in compliance
with the provisions of this Section 7(d).
(e) Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto on separate counterparts,
each of which counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
but one and the same Agreement.
(f) Binding Effect; Assignment. The rights and obligations of the
parties under this Agreement may not be assigned or otherwise transferred to any
other Person, without the prior written consent of the other party hereto;
provided that the Purchaser may assign or otherwise transfer the Shares to any
of its Affiliates without obtaining any such consent, but only if such
Affiliate: (i) agrees to be bound by the terms of this Agreement; (ii) is, at
the time of such transfer, an Accredited Investor; (iii) provides the Company
such written certification as the Company may reasonably require as to the
transferee's status as an Accredited Investor and agreement to be so bound as
the Company may reasonably request; and (iv) such transfer to any such
transferee does not violate federal or state securities laws. Except as
expressly provided in this Agreement, this Agreement shall not be construed so
as to confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and permitted assigns. This Agreement
shall be binding upon and shall inure to the benefit of the Company, the
Purchaser and their respective permitted successors and assigns.
(g) Governing Law. This Agreement shall be deemed to be a contract made
under and shall be governed by and construed in accordance with the internal
laws of the State of Connecticut without reference to the principles of conflict
of laws.
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(h) Consent to Jurisdiction and Service of Process. Any suit, action or
proceeding arising out of or relating to the Agreement or the transactions
contemplated hereby may be instituted in any Federal court situated in the State
of Connecticut or any state court of the State of Connecticut, and each party
agrees not to assert, by way of motion, as a defense or otherwise, in any such
suit, action or proceeding, any claim that it is not subject personally to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is improper
or that the Agreement or the subject matter hereof or thereof may not be
enforced in or by such court. Each party further irrevocably submits to the
jurisdiction of such court in any such suit, action or proceeding. Any and all
service of process and any other notice in any such suit, action or proceeding
shall be effective against any party if given personally or by registered or
certified mail, return receipt requested if sent to such party at the address
for such party set forth in Section 7(d) hereof, or by any other means of mail
that requires a signed receipt, postage fully prepaid, mailed to such party as
herein provided. Nothing herein contained shall be deemed to affect the right of
any party to serve process in any manner permitted by law or to commence legal
proceedings or otherwise proceed against any other party in any other
jurisdiction.
(i) Further Assurances. Each of the parties hereto shall execute and
deliver such documents, instruments and agreements and take such further actions
as may be reasonably required or desirable to carry out the provisions of the
Agreement and the transactions contemplated hereby, and each of the parties
hereto shall cooperate with each other in connection with the foregoing.
(j) Severability of Provisions. Any provision hereof that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by law, the parties hereto waive any provision of law that renders any such
provision prohibited or unenforceable in any respect.
(k) Headings. The Article, Section and subsection headings used or
contained in this Agreement are for convenience of reference only and shall not
affect the construction of this Agreement.
(l) Costs, Expenses and Taxes.
(i) The Company shall pay any and all stamp, transfer and other
similar Taxes payable or determined to be payable in connection with the
execution and delivery of this Agreement or the original issuance of the Shares
and shall save and hold the Purchaser harmless from and against any and all
liabilities with respect to or resulting from any delay in paying, or omission
to pay, such Taxes.
(ii) Each party shall bear its own fees, costs and expenses in
connection with the execution, delivery and performance of the Agreement.
(m) Waiver of Jury Trial. The parties hereto hereby irrevocably waive
all right to a trial by jury in any action, proceeding or counterclaim arising
out of or relating to this Agreement or the transactions contemplated hereby.
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(n) Publicity. The parties agree that no public release or announcement
concerning the Agreement or the transactions contemplated hereby shall be made
without advance review and approval by each party hereto, except as otherwise
required by applicable law, and which review and approval shall not be
unreasonably withheld or delayed.
[SIGNATURE PAGE FOLLOWS]
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SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
STARTECH ENVIRONMENTAL CORPORATION
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Operating Officer
NORTHSHORE ASSET MANAGEMENT, LLC
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxxx
Title: General Managing Partner
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SCHEDULE 1
DEFINITIONS
"Accredited Investor" has the meaning set forth in Rule 501 of Regulation D
promulgated under the Securities Act.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control," when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Board of Directors" means the board of directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" shall mean Startech Environmental Corporation and each of its
subsidiaries, to the extent applicable.
"Environmental Law" means any federal, state, or local (including common
law), statute, code, ordinance, rule, regulation or other requirement relating
to the environment, or natural resources, and includes, but is not limited to,
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C.ss.9601 et seq., the Hazardous Materials Transportation Act, 49
U.S.C.ss.1801 et seq., the Resource Conservation and Recovery Act, 42 X.X.X.xx.
6901 et seq., the Clean Water Act, 33 U.S.C. Sectionss.1251 et seq., the Clean
Air Act, 33 U.S.C.ss.2601 et seq., the Toxic Substances Control Act, 15
X.X.X.xx. 2601 et seq., the Federal Insecticide, Fungicide, and Rodenticide Act,
7 X.X.X.xx. 136 et seq., the Oil Pollution Act of 1990, 33 U.S.C.ss.2701 et seq.
and the Occupational Safety and Health Act, 29 X.X.X.xx. 651 et seq., as such
laws have been and may from time to time be further amended or supplemented, and
the regulations promulgated pursuant thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Hazardous Substances" or "Hazardous Waste" means any pollutant,
contaminant, chemical or industrial or toxic substance or waste, petroleum
products, asbestos, urea formaldehyde, radon, polychlorinated biphenyls,
flammable explosives, nuclear radioactive fuel or waste or any other substance,
waste, material, substance, pollutant or contaminant that is defined as a
hazardous waste or substance under any applicable Environmental Law and/or any
substance for which the generation, manufacture, storage, treatment or release
is prohibited or regulated under any applicable Environmental Law.
"Holder" shall mean any Person that owns Registrable Securities, including
such successors and assigns as acquire Registrable Securities, directly or
indirectly, from such Person. For purposes of this Agreement, the Company may
deem the registered holder of a Registrable Security as the Holder thereof.
"Liens" means any and all security interests, liens, claims, encumbrances,
pledges, options, Taxes and charges of any kind or nature.
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"Material Adverse Effect" means, with respect to the Company, a material
adverse effect on the business, assets, condition (financial or otherwise),
results of operations or prospects of the Company and its subsidiaries taken as
a whole.
"Other Approved Holders" shall mean holders of Common Stock having
registration rights with respect to the Common Stock, other than pursuant to the
terms of this Agreement.
"Person" means any individual, company, corporation, partnership, limited
liability company, trust, division, governmental, quasi-governmental or
regulatory entity or authority or other entity.
"Plan" means any pension, profit sharing, thrift or other retirement plan,
employee stock ownership plan, deferred compensation, stock ownership, stock
purchase, performance share, bonus or other incentive plan, severance plan,
health or group insurance plan, welfare plan, or other similar plan, agreement,
policy, arrangement or understanding, whether written or oral, whether or not
such plan is intended to be qualified under Section 401(a) of the Code,
including any employee benefit plan within the meaning of Section 3(3) of ERISA,
which plan covers any employee or former employee of the Company.
"Prospectus" shall mean the prospectus (including a preliminary prospectus)
included in any Registration Statement, as amended or supplemented by a
prospectus supplement with respect to the terms of the offering of any portion
of the Registrable Securities covered by such Registration Statement and by all
other amendments and supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such prospectus.
"Registrable Securities" shall mean the Shares and any other capital stock
or other securities issued or issuable as a result of or in connection with any
stock dividend, stock split or reverse stock split, combination,
recapitalization, reclassification, merger or consolidation, exchange,
distrib ution or similar transaction in respect of the Shares.
"Registration Statement" shall mean any registration statement which covers
any of the Registrable Securities pursuant to the provisions of this Agreement,
including the Prospectus included therein, all amendments and supplements to
such Registration Statement, including post-effective amendments, and all
exhibits and all material incorporated by reference in such Registration
Statement.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act, as
amended from time to time, or any similar successor rule thereto that may be
promulgated by the Commission.
"Rule 144A" shall mean Rule 144A promulgated under the Securities Act, as
amended from time to time, or any similar successor rule thereto that may be
promulgated by the Commission.
"SEC Filings" means all forms, reports and documents filed with the
Commission pursuant to the Securities Act and Exchange Act from January 1, 2002
through the date hereof.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms. The use of the word "including" herein
shall be interpreted to mean "including, without limitation," unless the context
clearly requires another interpretation.
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