Exhibit 99
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered
into as of September 20, 2001, by and between DALECO RESOURCES
CORPORATION, Delaware Corporation whose principal place of
business is 000 Xxxxx Xxxxxx Xxxxxx, Xxxx Xxxxxxx, Xxxxxxxxxxxx,
00000 corporation ("Company") and Terra Silex Holdings Ltd. Co.,
a Pennsylvania limited liability company whose address is 000
Xxxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxxx 00000 ("Terra Silex"), and
is being entered into pursuant to that certain Stock Purchase
Agreement dated September 20, 2001, by and among the Company and
Terra Silex ("Stock Agreement")
1. Definitions. For purposes of this Agreement:
(a) The term "register," "registered" and
"registration" refer to a registration effected by preparing and
filing a registration statement or similar document in compliance
with the Securities Act of 1933, as amended (the "Act"), and the
declaration or ordering of effectiveness of such registration
statement or document;
(b) The term "Registrable Securities" means the Common
Stock issued to Terra Silex upon its exercise of any of its
rights granted to Terra Silex by the Stock Agreement, to include
any Common Stock issued to Terra Silex upon exercise of the Price
Warrant.;
(c) The term "Holder" or "Holders" means any person or
persons owning or having the right to acquire Registrable
Securities or any permitted assignee thereof;
(d) The term "Common Stock" means the common stock of
the Company, par value $.01; and
(e) The term "Stock Right" means Terra Silex's right to
have Common Stock issued to Terra Silex in accordance with the
provisions of the Stock Agreement, whether directly upon purchase
of Common Stock or by subsequent exercise of the Price Warrant.
2. Demand Registration.
(a) At any time after Terra Silex's fully funding the
Third Traunche Funding, a Holder of Registrable Securities with a
market value of not less than $500,000 may notify the Company in
writing that it demands that the Company file a registration
statement under the Act covering the registration of all of the
Holder's Registrable Securities. Within ten days of receipt of
such notice, the Company shall give written notice of such
request to all Holders of Registrable Securities, should there be
more than one. The Holders shall give the Company written
election of their intention to have the Registrable Securities
owned by them included in such a registration statement within
ten (10) days of receipt of the Company's notice. The Company
shall, subject to the limitations of subsection 2(b), effect as
soon as practicable, and in any event within 120 days of the
receipt of a Holder's request, a registration of all Registrable
Securities which the Holder, or Holders have requested be made
part of such registration statement ("Demand Registration").
(b) If a Holder whose shares are included in the Demand
Registration intends to distribute the Registrable Securities
covered by his/her/its request by means of an underwriting,
he/she /it shall so advise the Company as a part of his/her/its
request made pursuant to Section 2(a) above. In such event, the
right of any Holder to include his/her/its Registrable Securities
in such registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent
provided herein. All Holders proposing to distribute their
Registrable Securities through such underwriting shall (together
with the Company as provided in Section 6) enter into an
underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company and
reasonably acceptable to such Holders participating in such a
Demand Registration.
(c) The Company is obligated to effect only one Demand
Registration pursuant to Section 2 of this Agreement regardless
of whether the Holder has elected to exercise all of its Stock
Rights. The Company agrees to include all Registrable Securities
held by all Holders in such registration statement without
cutback or reduction. In the event the Company breaches its
obligation of the preceding sentences, any Holder of a
Registrable Security which was to have been included in such
registration statement but was not shall be entitled to a second
Demand Registration for such excluded securities and the Company
shall keep such registration statement effective as required by
this Agreement.
3. Piggyback Registration. If the Demand Registration
described in Section 2 has not yet been requested, and if (but
without any obligation to do so) the Company proposes to register
any of its Common Stock under the Act (other than a registration
relating solely to the sale of securities to participants in a
Company stock plan or a registration on Form S-4 promulgated
under the Act or any successor or similar form registering stock
issuable upon a reclassification, upon a business combination
involving an exchange of securities or upon an exchange offer for
securities of the issuer or another entity), the Company shall
exercise its reasonable efforts, subject to all limitations and
restrictions set forth in this Agreement, to include in such
registration, to the extent requested by the Holders, any
Registrable Securities not yet registered pursuant to this
Agreement. The Company shall promptly give each Holder written
notice of the Company's intention to conduct such a registration
("Registration Notice"). Each Holder shall respond to the
Registration Notice, in writing, with ten (10) days of its
receipt stating the number and intended method of disposition, if
any, of the Registrable Securities that each such Holder requests
be included in such registration ("Piggyback Registration").
4. Limitation on Obligations to Register.
(a) In the case of a Piggyback Registration on an
underwritten public offering by the Company, if the managing
underwriter determines and advises in writing that the inclusion
in the registration of all securities which persons holding
securities that have piggyback registration rights have requested
be included therein would interfere with the successful marketing
of the securities proposed to be registered by the Company, then
the number of such Registrable Securities which the Holders
entitled to participate in a Piggyback Registration have
requested be included in such a registration shall be allocated
among all persons holding securities that have piggyback
registration rights on a pro-rata basis.
(b) Notwithstanding anything to the contrary herein,
the Company shall have the right (i) to defer the initial filing
or request for acceleration of effectiveness of any Demand
Registration or Piggyback Registration, or (ii) after
effectiveness, to suspend effectiveness of any such registration
statement, if, in the good faith judgment of the board of
directors of the Company and upon the advice of counsel to the
Company, such delay in filing or requesting acceleration of
effectiveness or such suspension of effectiveness is necessary in
light of the existence of material non-public information
(financial or otherwise) the disclosure of which at the time is
not, in the opinion of the board of directors of the Company upon
the advice of counsel, (A) otherwise required and (B) in the best
interests of the Company; provided however that the Company will
not delay or suspend effectiveness of such registration for more
than three months from the date of the demand unless it is then
engaged in an acquisition that would make such registration
impracticable, in which case it will use its best efforts to
eliminate such impracticability as soon as possible.
(c) The Company is not obligated to effect a Demand
Registration if, in the opinion of counsel to the Company
reasonably acceptable to the person or persons from whom written
request for a Demand Registration has been received (and
satisfactory to the Company's transfer agent to permit the
transfer), that registration under the Act is not required for
the immediate transfer of the Registrable Securities (with no
further restrictions on resale) pursuant to Rule 144 or other
applicable provision.
5. Obligations to Increase Available Shares. In the event
that the number of shares available under a Demand Registration
statement is insufficient to cover all of the Registrable
Securities requesting registration under Section 2(a), the
Company shall amend that registration statement, or file a new
registration statement, or both, so as to cover all shares of
Registrable Securities requesting registration under
Section 2(a). The Company shall effect such amendment or new
registration as soon as possible, but in no event later than
ninety days of the date the registration statement filed under
Section 2 is insufficient to cover all the shares of Registrable
Securities then outstanding and demanding registration.
6. Obligations of the Company. Whenever required under this
Agreement to effect the registration of any Registrable
Securities, the Company shall, as expeditiously as reasonably
possible:
(a) With respect to any Demand Registration, use best
efforts to keep such registration statement effective for a
period of at least 180 days and in any event until the
distribution contemplated by that registration statement has been
completed.
(b) Furnish to Holder or Holders, at least three days
prior to filing, copies of the registration statement's drafts,
and allow the Holder or Holder and its/their counsel reasonable
ability to comment and perform due diligence prior to the filing
of that registration statement;
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity
with the requirements of the Act, and such other documents as
they may reasonably request in order to facilitate the
disposition of Registrable Securities owned by them.
(d) Register and qualify the securities covered by such
registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by
the Holders of the Registrable Securities covered by such
registration statement, provided that the Company shall not be
required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.
(e) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing
underwriter of such offering. Each Holder participating in such
underwriting shall also enter into and perform its obligations
under such an agreement.
(f) Notify each Holder of Registrable Securities
covered by such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the
Act; of the happening of any event which would make a statement
in such registration statement or the prospectus included therein
to be an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the
circumstances then existing.
(g) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this
Agreement, on the date that such Registrable Securities are
delivered to the underwriters for sale in connection with a
registration pursuant to this Agreement, if such securities are
being sold through underwriters, or, if such securities are not
being sold through underwriters, on the date that the
registration statement with respect to such securities becomes
effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration,
in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters,
if any, and to the Holder requesting registration of Registrable
Securities and (ii) a letter dated such date, from the
independent certified public accountants of the Company, in form
and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the
Holders requesting registration of Registrable Securities,
7. Furnish Information. It shall be a condition precedent
to the obligations of the Company to take any action pursuant to
this Agreement that the selling Holder(s) shall furnish to the
Company such information regarding itself/themselves, the
Registrable Securities held by them, and the intended method of
disposition of such securities as shall be required to effect the
registration of their Registrable Securities or to determine that
registration is not required pursuant to Rule 144 or other
applicable provision of the Act.
8. Expenses of Registration. In the event of a sale of
securities pursuant to a registration statement under this
Agreement, the underwriting discounts and commissions shall be
borne proportionately by the selling Holder(s). All other costs
and expenses incurred in connection with registrations, filings
or qualifications pursuant to Section 2 and Section 3, including
(without limitation) all registration, filing and qualification
fees, printers' and accounting fees, fees and disbursements of
counsel for the Company, and including the reasonable fees and
disbursements (not to exceed $5,000 per registration) incurred
for only one counsel for the selling Holder(s), shall be borne by
the Company.
9. Indemnification. In the event any Registrable Securities
are included in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each "Holder Indemnified Persons"
(defined for purposes of this Section 9 as each Holder, the
officers and directors of each Holder acting in their capacity as
such, any underwriter (as defined in the Act) for such Holder and
each person, if any, who controls such Holder or underwriter
within the meaning of the Act or the Securities Exchange Act of
1934, as amended (the "1934 Act")), against any losses, claims,
damages, expenses, or liabilities (joint or several) ("Losses")
to which they may become subject under the Act, the 1934 Act or
other federal or state law, insofar as such Losses (or actions in
respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively, a
"Violation"): (i) any untrue statement of a material fact
contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission to state
therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii)
any violation by the Company of the Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the
Act, the 1934 Act or any state securities law; and the Company
will reimburse each such Holder Indemnified Person for any legal
or other expenses reasonably incurred by them in connection with
investigating or defending any such Loss or action; provided,
however, that the indemnity agreement contained in this
subsection 9(a) shall not apply to amounts paid in settlement of
any such Loss or action if such settlement is effected without
the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable in any
such case for any such Loss or action to the extent that it
arises out of or is based upon a Violation which occurs (i) in
reliance upon and in conformity with written information
furnished expressly for use in connection with such registration
by any such Holder Indemnified Person, or a Holder Indemnified
Person's failure to provide such information as is necessary to
make the registration statement not misleading, or (ii) the
failure of such Holder Indemnified Person to deliver a copy of
the registration statement or the prospectus, or any amendments
or supplements thereto, after the Company or underwriters has
furnished such person with a sufficient number of copies of the
same.
(b) To the extent permitted by law, each selling Holder
will indemnify and hold harmless the "Company Indemnified
Persons" (defined for the purpose of this Section 9 as the
Company, each of its directors in their capacity as such, each of
its officers who have signed the registration statement in their
capacity as such, each person, if any, who controls the Company
within the meaning of the Act in their capacity as such, any
underwriter and any other Holder Indemnified Person selling
securities in such registration statement), against any Loss
(joint or several) to which the Company or any such director,
officer, controlling person, or underwriter or controlling
person, or other such Holder Indemnified Person may become
subject, under the Act, the 1934 Act or other federal or state
law, insofar as such Loss (or actions in respect thereto) arise
out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with
such registration; and each such Holder will reimburse any legal
or other expenses reasonably incurred by the Company and any such
Company Indemnified Person in connection with investigating or
defending any such Loss or action; provided, however, that the
indemnity agreement contained in this subsection 9(b) shall not
apply to amounts paid in settlement of any such Loss or action if
such settlement is effected without the consent of the Holder,
which consent shall not be unreasonably withheld; provided, that,
in no event shall any indemnity under this subsection 9(b) exceed
the gross proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party
under this Section 9 of notice of the commencement of any action
(including any governmental action), such indemnified party will,
if a claim in respect thereof is to be made against any
indemnifying party under this Section 9, deliver to the
indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate
in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party shall have
the right to retain its own counsel, with the reasonably incurred
fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained
by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and
any other party represented by such counsel in such proceeding.
The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action,
if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the
indemnified party under this Section 9, but the omission so to
deliver written notice to the indemnifying party will not relieve
it of any liability that it may have to any indemnified party
otherwise than under this Section 9.
(d) The obligations of the Company and Holders under
this Section 9 shall survive the exercise, if any, of the Stock
Rights, the completion of any offering of Registrable Securities
in a registration statement under this Agreement, and otherwise.
10. Reports Under Securities Exchange Act of 1934. With a
view to making available to the Holders the benefits of Rule 144
promulgated under the Act and any other rule or regulation of the
SEC that may at any time permit a Holder to sell securities of
the Company to the public without registration, the Company
agrees to:
(a) make and keep public information available, as
those terms are understood and defined in SEC Rule 144, at all
times after ninety (90) days after the effective date of the
first registration statement filed by the Company for the
offering of its securities to the general public;
(b) file with the SEC in a timely manner all reports
and other documents required of the Company under the Act and the
1934 Act; and
(c) furnish to any Holder, so long as the Holder owns
any Registrable Securities, forthwith upon request (i) a written
statement by the Company, if true, that it has complied with the
reporting requirements of SEC Rule 144 (at any time after ninety
(90) days after the effective date of the first registration
statement filed by the Company), the Act and the 1934 Act (at any
time after it has become subject to such reporting requirements),
(ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the
SEC which permits the selling of any such securities without
registration.
11. Amendment of Registration Rights. Any provision of this
Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of
the Company and the holders of a majority of the Registrable
Securities. Any amendment or waiver effected in accordance with
this paragraph shall be binding upon each Holder, each future
Holder, and the Company.
12. Notices. All notices required or permitted under this
Agreement shall be made in writing signed by the party making the
same, shall specify the section under this Agreement pursuant to
which it is given, and shall be addressed if to: (i) the Company
at 000 Xxxxx Xxxxxx Xxxxxx, Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxx, and (ii) the Holder(s) at 000
Xxxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxxx 17517_ or at such other
last address as the Holder(s) shall have furnished in writing to
the Company. Any notice, except as otherwise provided in this
Agreement, shall be made by overnight messenger delivery and
shall be deemed given as of the first business day after the date
delivered to the messenger.
13. Termination. This Agreement shall terminate on a date
five years from the date hereof, or September 17, 2006, but shall
not be effective unless and until Terra Silex fully funds the
Third Traunche Funding. The termination of this Agreement shall
be without prejudice to (a) the parties' rights and obligations
accruing under, or arising from breaches of, this Agreement prior
to such termination or (b) other indemnification obligations
under this Agreement.
14. Assignment. No assignment, transfer or delegation,
whether by operation of law or otherwise, of any rights or
obligations under this Agreement by any Holder, shall be made
without the prior written consent of the Company; provided,
however, that the rights of a Holder may be transferred without
such consent to a subsequent holder of the Holder's Registrable
Securities provided such transferee shall provide to the Company,
together with or prior to such transferee's request to have such
Registrable Securities included in a Demand Registration or
Piggyback Registration, a writing executed by such transferee
agreeing to be bound as a Holder by the terms of this Agreement;
and provided further that the Company may transfer its rights and
obligations under this Agreement to a purchaser of all or a
substantial portion of its business if the obligations of the
Company under this Agreement are assumed in connection with such
transfer, either by merger or other operation of law (which may
include without limitation a transaction whereby the Registrable
Securities are converted into securities of the successor in
interest) or by specific assumption executed by the transferee.
15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Pennsylvania, applicable to agreements made in and wholly to be
performed in that jurisdiction without giving effect to conflicts
of laws provisions, except for matters arising under the Act or
the Securities Exchange Act of 1934, which matters shall be
construed and interpreted in accordance with such laws. Any
action brought to enforce, or otherwise arising out of, this
Agreement shall be heard and determined only in either a federal
or state court sitting in the Eastern District of Pennsylvania.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.
TERRA SILEX HOLDINGS LTD. CO.
By:________________________________
Xxxxxxx Xxxxx, Manager
DALECO RESOURCES CORPORATION
By:________________________________
Xxxx X. Xxxxxxxxx, President
