PIGGYBACK REGISTRATION RIGHTS AGREEMENT
Exhibit
10.72
THIS
REGISTRATION RIGHTS AGREEMENT, dated as of August 1, 2007 (this "Agreement"),
is
made by and between STRATUS SERVICES GROUP, INC., a Delaware corporation (the
"Company"), and Xxxxxxxx X. Xxxxxxxx. (the "Holder").
W
I T N E
S S E T H:
WHEREAS,
the Company has issued to Holder 2,000,000 shares of the common stock, $.01
par
value (the "Common Stock"), of the Company (the "Shares"); and
WHEREAS,
the Company has agreed to provide certain piggyback registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "Securities
Act"), with respect to the Shares;
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the Company and the Holder hereby agree as
follows:
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1.
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Definitions.
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(a)
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As
used in this Agreement, the following terms shall have the following
meanings:
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(i)
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"Register,"
"Registered," and "Registration" refer to a registration effected
by
preparing and filing a Registration Statement or Statements in compliance
with the Securities Act and pursuant to Rule 415 under the Securities
Act
or any successor rule providing for offering securities on a continuous
basis ("Rule 415"), and the declaration or ordering of effectiveness
of
such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
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(ii)
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“Potential
Material Event” means any of the following: (a) the possession by the
Company of material information not ripe for disclosure in a registration
statement, which shall be evidenced by determinations in good faith
by the
Board of Directors of the Company that disclosure of such information
in
the registration statement would be detrimental to the business and
affairs of the Company; or (b) any material engagement or activity
by the
Company which would, in the good faith determination of the Board
of
Directors of the Company, be adversely affected by disclosure in
a
registration statement at such time, which determination shall be
accompanied by a good faith determination by the Board of Directors
of the
Company that the registration statement would be materially misleading
absent the inclusion of such
information.
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(iii)
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"Registrable
Securities" means the Shares.
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(iv)
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"Registration
Statement" means a registration statement of the Company under the
Securities Act.
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(b)
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Capitalized
terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase
Agreement.
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2.
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Piggyback
Registration Rights.
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(a)
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Grant
of Rights. If the Company at any time proposes to file a
Registration Statement (other than upon Form X-0, Xxxx X-0, or any
successor form) with the Securities and Exchange Commission (the
"SEC" or
the “Commission”) relating to the Company’s Common Stock, the Company
shall give the Holder prompt written notice thereof. If
requested by the Holder in writing within 15 days receipt of any
such
notice, the Company shall, at the Company’s sole expense (other than the
fees and disbursements of counsel for such holder and the underwriting
discounts and commissions, if any, payable in respect of the shares
of
Common Stock to be sold by such holder), include in such registration
the
Shares.
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(b)
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Underwriter
Cutbacks. If the registration relates to an underwritten
public offering and the good faith judgment of the managing underwriter
the inclusion of all of the Registrable Securities requested to be
registered under this Section 2 would adversely affect the marketing
of
the shares for which the registration statement was to be filed,
the
number of Registrable Securities otherwise to be included in the
underwritten public offering may be reduced pro rata (by number of
shares
requested to be registered) among the Holder and, subject to any
registration rights existing as of the date of this Agreement, any
other
holders of Common Stock requesting registration. If the
Registrable Securities are to be distributed through such underwriting
the
Holder shall (together with the Company) enter into an underwriting
agreement in customary form with the underwriter or underwriters
selected
by the Company.
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3.
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Obligations
of the Company. In connection with the registration of the
Registrable Securities, the Company shall do each of the
following.
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(a)
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The
Company shall keep effective the registration or qualification
contemplated by Section 2 and shall from time to time amend or supplement
each applicable registration statement, preliminary prospectus, final
prospectus, application, document and communication for such period
of
time as shall be required to permit the Holder to complete the offer
and
sale of the Registrable Securities covered thereby or, in the case
of an
underwritten offering, until such time as the offering has been
terminated. The Company shall in no event be required to keep
any such registration or qualification in effect after the Registrable
Securities can be sold without
restriction.
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(b)
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The
Company shall permit a single firm of counsel designated by the Buyer
to
review the Registration Statement and all amendments and supplements
thereto a reasonable period of time prior to their filing with the
SEC,
and not file any document in a form to which such counsel reasonably
objects;
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(c)
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Furnish
to Holder and its legal counsel identified to the Company (i) promptly
after the same is prepared and publicly distributed, filed with the
SEC,
or received by the Company, one (1) copy of the Registration Statement,
each preliminary prospectus and prospectus, and each amendment or
supplement thereto, and (ii) such number of copies of a prospectus,
and
all amendments and supplements thereto and such other documents,
as Holder
may reasonably request in order to facilitate the disposition of
the
Registrable Securities owned by
Holder;
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(d)
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As
promptly as practicable after becoming aware of such event, notify
Holder
of the happening of any event of which the Company has knowledge,
as a
result of which the prospectus included in the Registration Statement,
as
then in effect, includes an untrue statement of a material fact or
omits
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, and use its best efforts promptly
to
prepare a supplement or amendment to the Registration Statement or
other
appropriate filing with the SEC to correct such untrue statement
or
omission, and deliver a number of copies of such supplement or amendment
to Holder as Holder may reasonably
request;
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(e)
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As
promptly as practicable after becoming aware of such event, notify
Holder
(or, in the event of an underwritten offering, the managing underwriters)
of the issuance by the SEC of a Notice of Effectiveness or any notice
of
effectiveness or any stop order or other suspension of the effectiveness
of the Registration Statement at the earliest possible
time;
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(f)
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Notwithstanding
the foregoing, if at any time or from time to time after the date
of
effectiveness of the Registration Statement, the Company notifies
the
Holder in writing of the existence of a Potential Material Event,
the
Holder shall not offer or sell any Registrable Securities, or engage
in
any other transaction involving or relating to the Registrable Securities,
from the time of the giving of notice with respect to a Potential
Material
Event until such Holder receives written notice from the Company
that such
Potential Material Event either has been disclosed to the public
or no
longer constitutes a Potential Material
Event;
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(g)
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Notwithstanding
anything to the contrary herein, the Company shall not be required
to
register the Registrable Securities if counsel for the Company delivers
an
opinion to the holders that the proposed sale of Registrable Securities
may be effected in its entirety within any 90 day period without
registration and without any further holding period pursuant to Rule
144
under the Securities Act of 1933, as
amended.
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4.
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Obligations
of the Holder. In connection with the registration of the
Registrable Securities, the Holder shall have the following
obligations:
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(a)
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It
shall be a condition precedent to the obligations of the Company
to
complete the registration pursuant to this Agreement with respect
to the
Registrable Securities that the Holder shall furnish to the Company
such
information regarding itself, the Registrable Securities held by
it, and
the intended method of disposition of the Registrable Securities
held by
it, as shall be reasonably required to effect the registration of
such
Registrable Securities and shall execute such documents in connection
with
such registration as the Company may reasonably request. At
least five (5) days prior to the first anticipated filing date of
the
Registration Statement, the Company shall notify the Holder of the
information the Company requires from the Holder (the "Requested
Information") if the Holder elects to have any of such Holder’s
Registrable Securities included in the Registration
Statement.
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(b)
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Holder
by its acceptance of the Registrable Securities agrees to cooperate
with
the Company as reasonably requested by the Company in connection
with the
preparation and filing of the Registration Statement hereunder, unless
Holder has notified the Company in writing of the Holder’s election to
exclude all of such Holder’s Registrable Securities from the Registration
Statement; and
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(c)
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Holder
agrees that, upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 3(d) or 3(f), above,
the
Holder will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable
Securities until the Holder’s receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(d) or 3(f) and, if so
directed by the Company, the Holder shall deliver to the Company
(at the
expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in the Holder’s possession, of the
prospectus covering such Registrable Securities current at the time
of
receipt of such notice.
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5.
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Expenses
of Registration. All expenses, other than underwriting
discounts and commissions, incurred in connection with registrations,
filings or qualifications pursuant to Section 3, but including, without
limitation, all registration, listing, and qualifications fees, printers
and accounting fees, the fees and disbursements of counsel for the
Company, shall be borne by the
Company.
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6.
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Indemnification. In
the event any Registrable Securities are included in a Registration
Statement under this Agreement:
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(a)
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To
the extent permitted by law, the Company will indemnify and hold
harmless
the Holder, the directors, if any, of the Holder, the officers, if
any, of
the Holder, each person, if any, who controls the Holder within the
meaning of the Securities Act or the Securities Exchange Act
of 1934 (the
"Exchange Act") (each, an "Indemnified Person" or “Indemnified Party”),
against any losses, claims, damages, liabilities or expenses (joint
or
several) (including reasonable attorneys fees) incurred (collectively,
"Claims") to which any of them may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such Claims (or actions
or
proceedings, whether commenced or threatened, in respect thereof)
arise
out of or are based upon any of the following statements, omissions
or
violations in the Registration Statement, or any post-effective amendment
thereof, or any prospectus included therein: (i) any untrue statement
or
alleged untrue statement of a material fact contained in the Registration
Statement or any post-effective amendment thereof or the omission
or
alleged omission to state therein a material fact required to be
stated
therein or necessary to make the statements therein not misleading,
(ii)
any untrue statement or alleged untrue statement of a material fact
contained in the final prospectus (as amended or supplemented, if
the
Company files any amendment thereof or supplement thereto with the
SEC) or
the omission or alleged omission to state therein any material fact
necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading
or (iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any state securities law or any
rule or
regulation under the Securities Act, the Exchange Act or any state
securities law (the matters in the foregoing clauses (i) through
(iii)
being, collectively, "Violations"). Subject to clause (b) of
this Section 6, the Company shall reimburse the Holder, promptly
as such
expenses are incurred and are due and payable, for any legal fees
or other
reasonable expenses incurred by them in connection with investigating
or
defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained
in this
Section 6(a) shall not (I) apply to a Claim arising out of or based
upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any Indemnified
Person expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement
thereto, (II) be available to the extent such Claim is based on a
failure
of the Holder to deliver or cause to be delivered the prospectus
made
available by the Company; or (III) apply to amounts paid in settlement
of
any Claim if such settlement is effected without the prior written
consent
of the Company, which consent shall not be unreasonably
withheld. The Holder will indemnify the Company and its
officers, directors and agents against any claims arising out of
or based
upon a Violation which occurs in reliance upon and in conformity
with
information furnished in writing to the Company, by or on behalf
of the
Holder, expressly for use in connection with the preparation of the
Registration Statement, subject to such limitations and conditions
as are
applicable to the Indemnification provided by the Company to this
Section
6. Such indemnity shall remain in full force and effect regardless
of any
investigation made by or on behalf of the Indemnified Person and
shall
survive the transfer of the Registrable Securities by the Holder
pursuant
to Section 8;
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(b)
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Promptly
after receipt by an Indemnified Person or Indemnified Party under
this
Section 6 of notice of the commencement of any action (including
any
governmental action), such Indemnified Person or Indemnified Party
shall,
if a Claim in respect thereof is to be made against any indemnifying
party
under this Section 6, deliver to the indemnifying party a written
notice
of the commencement thereof and the indemnifying party shall have
the
right to participate in, and, to the extent the indemnifying party
so
desires, jointly with any other indemnifying party similarly noticed,
to
assume control of the defense thereof with counsel mutually satisfactory
to the indemnifying party and the Indemnified Person or the Indemnified
Party, as the case may be. In case any such action is brought
against any Indemnified Person or Indemnified Party, and it notifies
the
indemnifying party of the commencement thereof, the indemnifying
party
will be entitled to participate in, and, to the extent that it may
wish,
jointly with any other indemnifying party similarly notified, assume
the
defense thereof, subject to the provisions herein stated and after
notice
from the indemnifying party to such Indemnified Person or Indemnified
Party of its election so to assume the defense thereof, the indemnifying
party will not be liable to such Indemnified Person or Indemnified
Party
under this Section 6 for any legal or other reasonable out-of-pocket
expenses subsequently incurred by such Indemnified Person or Indemnified
Party in connection with the defense thereof other than reasonable
costs
of investigation, unless the indemnifying party shall not pursue
the
action of its final conclusion. The Indemnified Person or
Indemnified Party shall have the right to employ separate counsel
in any
such action and to participate in the defense thereof, but the fees
and
reasonable out-of-pocket expenses of such counsel shall not be at
the
expense of the indemnifying party if the indemnifying party has assumed
the defense of the action with counsel reasonably satisfactory to
the
Indemnified Person or Indemnified Party. The failure to deliver written
notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying
party
of any liability to the Indemnified Person or Indemnified Party under
this
Section 6, except to the extent that the indemnifying party is prejudiced
in its ability to defend such action. The indemnification
required by this Section 6 shall be made by periodic payments of
the
amount thereof during the course of the investigation or defense,
as such
expense, loss, damage or liability is incurred and is due and
payable.
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7.
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Contribution. To
the extent any indemnification by an indemnifying party is prohibited
or
limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise
be
liable under Section 6 to the fullest extent permitted by law;
provided, however, that (a) no contribution shall be made
under circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Section 6;
(b) no
seller of Registrable Securities guilty of fraudulent misrepresentation
(within the meaning of Section 10(f) of the Securities Act) shall
be
entitled to contribution from any seller of Registrable Securities
who was
not guilty of such fraudulent misrepresentation; and (c) contribution
by
any seller of Registrable Securities shall be limited in amount to
the net
amount of proceeds received by such seller from the sale of such
Registrable Securities.
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8.
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Assignment
of the Registration Rights. The rights to have the Company
register Registrable Securities pursuant to this Agreement shall
be
automatically assigned by the Holder to any transferee of the Registrable
Securities (or all or any portion of the Warrant which is exercisable
for
such securities) only if: (a) the Holder agrees in writing with
the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company within a reasonable time after
such
assignment, (b) the Company is, within a reasonable time after such
transfer or assignment, furnished with written notice of (i) the
name and
address of such transferee or assignee and (ii) the securities with
respect to which such registration rights are being transferred or
assigned, (c) immediately following such transfer or assignment the
further disposition of such securities by the transferee or assignee
is
restricted under the Securities Act and applicable state securities
laws,
and (d) at or before the time the Company received the written notice
contemplated by clause (b) of this sentence the transferee or assignee
agrees in writing with the Company to be bound by all of the provisions
contained herein. In the event of any delay in filing or
effectiveness of the Registration Statement as a result of such
assignment, the Company shall not be liable for any damages arising
from
such delay.
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9.
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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
Holder.
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10.
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Miscellaneous.
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(a)
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Notices
required or permitted to be given hereunder shall be in writing and
shall
be deemed to be sufficiently given when personally delivered (by
hand, by
courier, by telephone line facsimile transmission, receipt confirmed,
or
other means) or sent by certified mail, return receipt requested,
properly
addressed and with proper postage pre-paid (i) if to the Company,
Stratus
Services Group, Inc., 000 Xxxxxx xx xxx Xxxxxx, Xxxxx 0, Xxxxxxxxxx,
Xxx
Xxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxxx, Telecopier No.:
(000) 000-0000; with a copy to Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.C., 000
Xxxx Xxxx Xxxx, X.X. Xxx 000, Xxxxxxxxxx, Xxx Xxxxxx 00000, Attention:
Xxxxxx X. Xxxxxxxx, Esq., Telecopier No.: (000) 000-0000; (ii) if
to the
Holder, at: ________________________________ or at such other address
as
each such party furnishes by notice given in accordance with this
Section
11(b), and shall be effective, when personally delivered, upon receipt
and, when so sent by certified mail, four (4) calendar days after
deposit
with the United states Postal
Service.
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(b)
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Failure
of any party to exercise any right or remedy under this Agreement
or
otherwise, or delay by a party in exercising such right or remedy,
shall
not operate as a waiver thereof.
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(c)
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This
Agreement shall be governed by and interpreted in accordance with
the laws
of the State of New Jersey. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any
part of
the State of New Jersey or the state courts of the State of New Jersey
in
connection with any dispute arising under this Agreement and hereby
waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non coveniens, to the bringing of
any such proceeding in such jurisdictions. A facsimile
transmission of this signed Agreement shall be legal and binding
on all
parties hereto. This Agreement may be signed in one or more
counterparts, each of which shall be deemed an original. The
headings of this Agreement are for convenience of reference and shall
not
form part of, or affect the interpretation of, this
Agreement. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability
shall not affect the validity or enforceability of the remainder
of this
Agreement or the validity or enforceability of this Agreement in
any other
jurisdiction. This Agreement may be amended only by an
instrument in writing signed by the party to be charged with
enforcement. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject
matter
hereof.
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(d)
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This
Agreement constitutes the entire agreement among the parties hereto
with
respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those
set
forth or referred to herein. This Agreement supersedes all
prior agreements and understandings among the parties hereto with
respect
to the subject matter hereof.
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(e)
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Subject
to the requirements of Section 9 hereof, this Agreement shall inure
to the benefit of and be binding upon the successors and assigns
of each
of the parties hereto.
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(f)
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All
pronouns and any variations thereof refer to the masculine, feminine
or
neuter, singular or plural, as the context may
require.
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(g)
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The
headings in this Agreement are for convenience of reference only
and shall
not limit or otherwise affect the meaning
thereof.
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(h)
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This
Agreement may be executed in two or more counterparts, each of which
shall
be deemed an original but all of which shall constitute one and the
same
agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by telephone line facsimile
transmission of a copy of this Agreement bearing the signature of
the
party so delivering this Agreement.
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(i)
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Neither
party shall be liable for consequential
damages.
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IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by
their respective officers thereunto duly authorized as of the day and year
first
above written.
STRATUS
SERVICES GROUP,
INC.
By:
/s/
Xxxxxx X.
Xxxxxxx
Name:
Xxxxxx X. Xxxxxxx
Title:
President and Chief Executive
Officer
/s/
Xxxxxxxx X.
Xxxxxxxx
Xxxxxxxx
X. Xxxxxxxx
