EXHIBIT 10.12
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of June 30, 2005, by and between Windswept Environmental Group,
Inc., a Delaware corporation (the "Company"), and Laurus Master Fund, Ltd.
(the "Purchaser").
This Agreement is made pursuant to the Securities Purchase Agreement,
dated as of the date hereof, by and between the Purchaser and the Company (as
amended, modified or supplemented from time to time, the "Securities Purchase
Agreement"), and pursuant to the Note, the Option and the Warrants referred to
therein.
The Company and the Purchaser hereby agree as follows:
1. DEFINITIONS. Capitalized terms used and not otherwise defined herein
that are defined in the Securities Purchase Agreement shall have the meanings
given such terms in the Securities Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
"AUDIT COMPLETION DATE" means the earlier to occur of (i) the
seventy-fifth (75th) day following the date hereof and (ii) the date upon which
the audit of the Company's and its Subsidiaries' interim financial statements
for the Company's fiscal year 2005 shall have been completed by Deloitte &
Touche LLP, Xxxxxxxx & Associates, CPA, PLLC or such other independent certified
public accountants of recognized national standing reasonably satisfactory to
the Purchaser.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means shares of the Company's common stock, par value
$0.0001 per share.
"EFFECTIVENESS DATE" means (i) with respect to the initial
Registration Statement required to be filed hereunder, a date no later than
sixty (60) days following the Filing Date in respect of the initial Registration
Statement required to be filed hereunder and (ii) with respect to each
additional Registration Statement required to be filed hereunder, a date no
later than thirty (30) days following the applicable Filing Date.
"EFFECTIVENESS PERIOD" has the meaning set forth in Section 2(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and any successor statute.
"FILING DATE" means, with respect to (i) the initial Registration
Statement required to be filed hereunder in respect of the shares of Common
Stock issuable upon conversion of the Note, a date no later than ten (10) days
following the Audit Completion Date, (ii) the shares of Common Stock issuable
upon exercise of the Option and Warrant issued on date hereof, the date which is
ten (10) days following the Audit Completion Date, (iii) the shares of Common
Stock issuable upon exercise of an additional Option or Warrant issued after the
date hereof, the date
which is thirty (30) days after the date of the issuance of such Option or
Warrant, as applicable, and (iv) the shares of Common Stock issuable to the
Holder as a result of adjustments to the Fixed Conversion Price or Exercise
Price, as the case may be, made pursuant to Section 3.4 of the Note or Section 4
of the Warrant or otherwise, thirty (30) days after the occurrence such event or
the date of the adjustment of the Fixed Conversion Price or Exercise Price, as
the case may be.
"HOLDER" or "HOLDERS" means the Purchaser or any of its affiliates
or transferees to the extent any of them hold Registrable Securities,
other than those purchasing Registrable Securities in a market transaction.
"INDEMNIFIED PARTY" has the meaning set forth in Section 5(c).
"INDEMNIFYING PARTY" has the meaning set forth in Section 5(c).
"NOTE" has the meaning set forth in the Securities Purchase
Agreement.
"PROCEEDING" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"PROSPECTUS" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
"REGISTRABLE SECURITIES" means the shares of Common Stock issued
upon the conversion of the Note, issuable upon exercise of the Option and
issuable upon exercise of the Warrants.
"REGISTRATION STATEMENT" means each registration statement required
to be filed hereunder, including the Prospectus therein, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.
"RULE 144" means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"RULE 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
2
"OPTIONS" has the meaning given to such term in the Securities
Purchase Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
any successor statute.
"SECURITIES PURCHASE AGREEMENT" has the meaning given to such term
in the Preamble hereto.
"TRADING MARKET" means any of the NASD's Over The Counter Bulletin
Board, NASDAQ SmallCap Market, the NASDAQ National Markets System, the American
Stock Exchange or the New York Stock Exchange.
"WARRANTS" means the Common Stock purchase warrants issued in
connection with the Securities Purchase Agreement, whether on the date hereof
or thereafter.
2. REGISTRATION.
(a) On or prior to the Filing Date the Company shall prepare and
file with the Commission a Registration Statement covering the
Registrable Securities for a selling stockholder resale offering to be
made on a continuous basis pursuant to Rule 415. The Registration
Statement shall be on Form S-3 (except if the Company is not then
eligible to register for resale the Registrable Securities on Form
S-3, in which case such registration shall be on another appropriate
form in accordance herewith, including, without limitation, on Form
S-1). The Company shall cause each Registration Statement to become
effective and remain effective as provided herein. The Company shall
use its reasonable commercial efforts to cause each Registration
Statement to be declared effective under the Securities Act as
promptly as possible after the filing thereof, but in any event no
later than the Effectiveness Date. The Company shall use its
reasonable commercial efforts to keep each Registration Statement
continuously effective under the Securities Act until the date which
is the earlier date of when (i) all Registrable Securities have been
sold or (ii) all Registrable Securities covered by such Registration
Statement may be sold immediately without registration under the
Securities Act and without volume restrictions pursuant to Rule
144(k), as determined by the counsel to the Company pursuant to a
written opinion letter to such effect, addressed and acceptable to the
Company's transfer agent and the affected Holders (the "Effectiveness
Period").
(b) If: (i) any Registration Statement is not filed on or prior
to the applicable Filing Date; (ii) a Registration Statement filed
hereunder is not declared effective by the Commission by the
applicable Effectiveness Date; (iii) after a Registration Statement is
filed with and declared effective by the Commission, a Discontinuation
Event (as hereafter defined) shall occur and be continuing, or such
Registration Statement ceases to be effective (by suspension or
otherwise) as to all Registrable Securities to which it is required to
relate at any time prior to the expiration of the Effectiveness Period
(without being succeeded immediately by an additional registration
statement filed and declared effective), for a period of time which
shall exceed 30 days in the aggregate per year or more than 20
consecutive calendar days (defined as a period of 365 days commencing
on
3
the date the Registration Statement is declared effective); or (iv)
the Common Stock is not listed or quoted, or is suspended from trading
on any Trading Market for a period of three (3) consecutive Trading
Days (provided the Company shall not have been able to cure such
trading suspension within 30 days of the notice thereof or list the
Common Stock on another Trading Market); (any such failure or breach
being referred to as an "Event," and for purposes of clause (i) or
(ii) the date on which such Event occurs, or for purposes of clause
(iii) the date which such 30 day or 20 consecutive day period (as the
case may be) is exceeded, or for purposes of clause (iv) the date on
which such three (3) Trading Day period is exceeded, being referred to
as "Event Date"), then as partial relief for the damages to the
Purchaser by reason of the occurrence of any such Event (which remedy
shall not be exclusive of any other remedies available at law or in
equity), the Company shall pay to the Purchaser for each day that an
Event has occurred and is continuing, an amount in cash equal to
one-thirtieth (1/30th) of the product of: (A) the then outstanding
principal amount of the Note multiplied by (B) 0.02 (or, with respect
to an Event of the type referred to in clause (ii) of this Section
2(b) that occurs in connection with the initial Registration Statement
required to be filed hereunder, 0.015 for the first 30 day period
following the applicable Effectiveness Date, and 0.02 thereafter). In
the event the Company fails to make any payments pursuant to this
Section 2(b) in a timely manner, such payments shall bear interest at
the rate of 1.5% per month (prorated for partial months) until paid in
full.
(c) Within three business days of the Effectiveness Date, the
Company shall cause its counsel to issue a blanket opinion in the form
attached hereto as Exhibit A, to the transfer agent stating that the
shares are subject to an effective registration statement and can be
reissued free of restrictive legend upon notice of a sale by the
Purchaser and confirmation by the Purchaser that it has complied with
the prospectus delivery requirements, provided that the Company has
not advised the transfer agent orally or in writing that the opinion
has been withdrawn. Copies of the blanket opinion required by this
Section 2(c) shall be delivered to the Purchaser within the time frame
set forth above.
3. REGISTRATION PROCEDURES. Subject to Section 2, if and whenever
the Company is required by the provisions hereof to effect the registration of
any Registrable Securities under the Securities Act, the Company will, as
expeditiously as possible:
(a) prepare and file with the Commission a Registration Statement
with respect to such Registrable Securities, respond as promptly as
possible to any comments received from the Commission, and use its
best efforts to cause the Registration Statement to become and remain
effective for the Effectiveness Period with respect thereto, and
promptly provide to the Purchaser copies of all filings and Commission
letters of comment relating thereto;
(b) prepare and file with the Commission such amendments
(including post-effective amendments) and supplements to the
Registration Statement and the Prospectus used in connection therewith
as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Securities
covered by such Registration Statement and to keep such Registration
Statement effective until the expiration of the Effectiveness Period
applicable to such Registration Statement (in the
4
case of amendments and supplements to a Registration Statement
that are required to be filed pursuant to this Agreement (including,
without limitation, pursuant to this Section 3(b) by reason of the
Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any
analogous report under the Exchange Act), the Company shall file such
amendments and supplements with the SEC on the same day on which the
related Exchange Act filing giving rise to the need to file such
amendment or supplement is filed);
(c) furnish to the Purchaser such number of copies of the
Registration Statement and the Prospectus included therein (including
each preliminary Prospectus) promptly after same is prepared and filed
with the SEC and as the Purchaser reasonably may request thereafter to
facilitate the public sale or disposition of the Registrable
Securities covered by the Registration Statement;
(d) use its commercially reasonable efforts to register or
qualify the Purchaser's Registrable Securities covered by such
Registration Statement under the securities or "blue sky" laws of such
jurisdictions within the United States as the Purchaser may reasonably
request, provided, however, that the Company shall not for any such
purpose be required to qualify generally to transact business as a
foreign corporation in any jurisdiction where it is not so qualified
or to consent to general service of process in any such jurisdiction;
(e) to the extent required by any securities exchange on which
the Common Stock of the Company is then listed, list the Registrable
Securities covered by such Registration Statement with such securities
exchange;
(f) immediately notify the Purchaser at any time when a
Prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event of which the Company has
knowledge as a result of which the Prospectus contained in such
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 not misleading in light of the circumstances then existing;
and
(g) make available for inspection by the Purchaser and any
attorney, accountant or other agent retained by the Purchaser, all
publicly available, non-confidential financial and other records,
pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all publicly
available, non-confidential information reasonably requested by the
attorney, accountant or agent of the Purchaser.
4. REGISTRATION EXPENSES. All expenses relating to the Company's
compliance with Sections 2 and 3 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees and expenses
(including reasonable counsel fees) incurred in connection with complying with
state securities or "blue sky" laws, fees of the NASD, transfer taxes, fees of
transfer agents and registrars, fees of, and disbursements incurred by, one
counsel for the Holders, are called "Registration Expenses". All selling
commissions applicable to the sale of Registrable Securities, including any fees
and disbursements of any special counsel to the
5
Holders beyond those included in Registration Expenses, are called "Selling
Expenses." The Company shall only be responsible for all Registration Expenses.
5. INDEMNIFICATION.
(a) In the event of a registration of any Registrable Securities
under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless the Purchaser, and its officers, directors
and each other person, if any, who controls the Purchaser within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which the Purchaser, or such persons
may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any
Registration Statement under which such Registrable Securities were
registered under the Securities Act pursuant to this Agreement, any
preliminary Prospectus or final Prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon 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, and will reimburse the Purchaser, and each such person for
any reasonable legal or other expenses incurred by them in connection
with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be
liable in any such case if and to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission
so made in conformity with information furnished by or on behalf of
the Purchaser or any such person in writing specifically for use in
any such document.
(b) In the event of a registration of the Registrable Securities
under the Securities Act pursuant to this Agreement, the Purchaser
will indemnify and hold harmless the Company, and its officers,
directors and each other person, if any, who controls the Company
within the meaning of the Securities Act, against all losses, claims,
damages or liabilities, joint or several, to which the Company or such
persons may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact which was furnished
in writing by the Purchaser to the Company expressly for use in (and
such information is contained in) the Registration Statement under
which such Registrable Securities were registered under the Securities
Act pursuant to this Agreement, any preliminary Prospectus or final
Prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon 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, and will
reimburse the Company and each such person for any reasonable legal or
other expenses incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action, provided,
however, that the Purchaser will be liable in any such case if and
only to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with
information furnished in writing to the Company by or on behalf of the
Purchaser specifically for use in any such
6
document. Notwithstanding the provisions of this paragraph, the
Purchaser shall not be required to indemnify any person or entity in
excess of the amount of the aggregate net proceeds received by the
Purchaser in respect of Registrable Securities in connection with any
such registration under the Securities Act.
(c) Promptly after receipt by a party entitled to claim
indemnification hereunder (an "Indemnified Party") of notice of the
commencement of any action, such Indemnified Party shall, if a claim
for indemnification in respect thereof is to be made against a party
hereto obligated to indemnify such Indemnified Party (an "Indemnifying
Party"), notify the Indemnifying Party in writing thereof, but the
omission so to notify the Indemnifying Party shall not relieve it from
any liability which it may have to such Indemnified Party other than
under this Section 5(c) and shall only relieve it from any liability
which it may have to such Indemnified Party under this Section 5(c) if
and to the extent the Indemnifying Party is prejudiced by such
omission. In case any such action shall be brought against any
Indemnified Party and it shall notify the Indemnifying Party of the
commencement thereof, the Indemnifying Party shall be entitled to
participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel satisfactory to such
Indemnified Party, and, after notice from the Indemnifying Party to
such Indemnified Party of its election so to assume and undertake the
defense thereof, the Indemnifying Party shall not be liable to such
Indemnified Party under this Section 5(c) for any legal expenses
subsequently incurred by such Indemnified Party in connection with the
defense thereof; if the Indemnified Party retains its own counsel,
then the Indemnified Party shall pay all fees, costs and expenses of
such counsel, provided, however, that, if the defendants in any such
action include both the Indemnified Party and the Indemnifying Party
and the Indemnified Party shall have reasonably concluded that there
may be reasonable defenses available to it which are different from or
additional to those available to the Indemnifying Party or if the
interests of the Indemnified Party reasonably may be deemed to
conflict with the interests of the Indemnifying Party, the Indemnified
Party shall have the right to select one separate counsel and to
assume such legal defenses and otherwise to participate in the defense
of such action, with the reasonable expenses and fees of such separate
counsel and other expenses related to such participation to be
reimbursed by the Indemnifying Party as incurred.
(d) In order to provide for just and equitable contribution in
the event of joint liability under the Securities Act in any case in
which either (i) the Purchaser, or any officer, director or
controlling person of the Purchaser, makes a claim for indemnification
pursuant to this Section 5 but it is judicially determined (by the
entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in
such case notwithstanding the fact that this Section 5 provides for
indemnification in such case, or (ii) contribution under the
Securities Act may be required on the part of the Purchaser or such
officer, director or controlling person of the Purchaser in
circumstances for which indemnification is provided under this Section
5; then, and in each such case, the Company and the Purchaser will
contribute to the aggregate losses, claims, damages or liabilities to
which they may be subject (after contribution from others) in such
proportion so that the Purchaser is responsible only for the portion
represented by the percentage that the public offering price of its
securities offered by the Registration Statement bears to the public
offering price of all securities offered by such Registration
7
Statement, provided, however, that, in any such case, (A) the
Purchaser will not be required to contribute any amount in excess of
the public offering price of all such securities offered by it
pursuant to such Registration Statement; and (B) no person or entity
guilty of fraudulent misrepresentation (within the meaning of Section
10(f) of the Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.
6. REPRESENTATIONS AND WARRANTIES.
(a) The Common Stock is registered pursuant to Section 12(b) or
12(g) of the Exchange Act and, except with respect to certain matters
which the Company has disclosed to the Purchaser on Schedule 4.21 to
the Securities Purchase Agreement, the Company has timely filed all
proxy statements, reports, schedules, forms, statements and other
documents required to be filed by it under the Exchange Act. The
Company has filed (i) its Annual Report on Form 10-K for its fiscal
year ended June 29, 2004 and (ii) its Quarterly Report on Form 10-Q
for the fiscal quarters ended September 28, 2004 and December 28, 2004
(collectively, the "SEC Reports"). Each SEC Report was, at the time of
its filing, in substantial compliance with the requirements of its
respective form and none of the SEC Reports, nor the financial
statements (and the notes thereto) included in the SEC Reports, as of
their respective filing dates, contained any untrue statement of a
material fact or omitted 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. The
financial statements of the Company included in the SEC Reports comply
as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission
or other applicable rules and regulations with respect thereto. Such
financial statements have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis
during the periods involved (except (i) as may be otherwise indicated
in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include
footnotes or may be condensed) and fairly present in all material
respects the financial condition, the results of operations and the
cash flows of the Company and its subsidiaries, on a consolidated
basis, as of, and for, the periods presented in each such SEC Report.
(b) The Common Stock is quoted for trading on the NASD's Over The
Counter Bulletin Board and satisfies all requirements for the
continuation of such quotation for trading, and the Company shall do
all things necessary for the continuation of such quotation for
trading. The Company has not received any notice that its Common Stock
will no longer be quoted for trading on the NASD's Over The Counter
Bulletin Board (except for prior notices which have been fully
remedied) or that the Common Stock does not meet all requirements for
the continuation of such listing.
(c) Neither the Company, nor any of its affiliates, nor any
person acting on its or their behalf, has directly or indirectly made
any offers or sales of any security or solicited any offers to buy any
security under circumstances that would cause the offering of the
Securities pursuant to the Securities Purchase Agreement to be
integrated with
8
prior offerings by the Company for purposes of the Securities Act
which would prevent the Company from selling the Common Stock pursuant
to Rule 506 under the Securities Act, or any applicable
exchange-related stockholder approval provisions, nor will the Company
or any of its affiliates or subsidiaries take any action or steps that
would cause the offering of the Securities to be integrated with other
offerings.
(d) The Option, the Warrants, the Note and the shares of Common
Stock which the Purchaser may acquire pursuant to the Option, the
Warrants and the Note are all restricted securities under the
Securities Act as of the date of this Agreement. The Company will not
issue any stop transfer order or other order impeding the sale and
delivery of any of the Registrable Securities at such time as such
Registrable Securities are registered for public sale or an exemption
from registration is available, except as required by federal or state
securities laws.
(e) The Company understands the nature of the Registrable
Securities issuable upon the conversion of the Note, the exercise of
the Option and the exercise of the Warrant and recognizes that the
issuance of such Registrable Securities may have a potential dilutive
effect. The Company specifically acknowledges that its obligation to
issue the Registrable Securities is binding upon the Company and
enforceable regardless of the dilution such issuance may have on the
ownership interests of other shareholders of the Company.
(f) Except for agreements made in the ordinary course of
business, there is no agreement that has not been filed with the
Commission as an exhibit to a registration statement or to a form
required to be filed by the Company under the Exchange Act, the breach
of which could reasonably be expected to have a material and adverse
effect on the Company and its subsidiaries, or would prohibit or
otherwise interfere with the ability of the Company to enter into and
perform any of its obligations under this Agreement in any material
respect.
(g) The Company will at all times have authorized and reserved a
sufficient number of shares of Common Stock for the full conversion of
the Note, the exercise of the Option and the exercise of the Warrants.
7. MISCELLANEOUS.
(a) REMEDIES. In the event of a breach by the Company or by a
Holder, of any of their respective obligations under this Agreement,
each Holder or the Company, as the case may be, in addition to being
entitled to exercise all rights granted by law and under this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement.
(b) NO PIGGYBACK ON REGISTRATIONS. Except as and to the extent
specified in Schedule 7(b) hereto, neither the Company nor any of its
security holders (other than the Holders in such capacity pursuant
hereto) may include securities of the Company in any Registration
Statement other than the Registrable Securities, and the Company shall
not after the date hereof enter into any agreement providing any such
right for inclusion of
9
shares in the Registration Statement to any of its security
holders. Except as and to the extent specified in Schedule 7(b)
hereto, the Company has not previously entered into any agreement
granting any registration rights with respect to any of its securities
to any person or entity that have not been fully satisfied.
(c) COMPLIANCE. Each Holder covenants and agrees that it will
comply with the prospectus delivery requirements of the Securities Act
as applicable to it in connection with sales of Registrable Securities
pursuant to the Registration Statement.
(d) DISCONTINUED DISPOSITION. Each Holder agrees by its
acquisition of such Registrable Securities that, upon receipt of a
notice from the Company of the occurrence of a Discontinuation Event
(as defined below), such Holder will forthwith discontinue disposition
of such Registrable Securities under the applicable Registration
Statement until such Holder's receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement or until
it is advised in writing (the "Advice") by the Company that the use of
the applicable Prospectus may be resumed, and, in either case, has
received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such
Prospectus or Registration Statement. The Company may provide
appropriate stop orders to enforce the provisions of this paragraph.
For purposes of this Section 7(d), a "Discontinuation Event" shall
mean (i) when the Commission notifies the Company whether there will
be a "review" of such Registration Statement and whenever the
Commission comments in writing on such Registration Statement (the
Company shall provide true and complete copies thereof and all written
responses thereto to each of the Holders); (ii) any request by the
Commission or any other Federal or state governmental authority for
amendments or supplements to such Registration Statement or Prospectus
or for additional information; (iii) the issuance by the Commission of
any stop order suspending the effectiveness of such Registration
Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (iv) the receipt by
the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the initiation
or threatening of any Proceeding for such purpose; and/or (v) the
occurrence of any event or passage of time that makes the financial
statements included in such Registration Statement stale under
Regulation S-X of the Exchange Act or ineligible for inclusion therein
or any statement made in such Registration Statement or Prospectus or
any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any
revisions to such Registration Statement, Prospectus or other
documents so that, in the case of such Registration Statement or
Prospectus, as the case may be, 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 light of the circumstances under which they were made, not
misleading.
(e) PIGGY-BACK REGISTRATIONS. If at any time during the
Effectiveness Period there is not an effective Registration Statement
covering all of the Registrable Securities and the Company shall
determine to prepare and file with the Commission a registration
statement relating to an offering for its own account or the account
of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as
10
promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities
issuable in connection with stock option or other employee benefit
plans, then the Company shall send to each Holder written notice of
such determination and, if within fifteen (15) days after receipt of
such notice, any such Holder shall so request in writing, the Company
shall include in such registration statement all or any part of such
Registrable Securities such Holder requests to be registered to the
extent the Company may do so without violating registration rights of
others which exist as of the date of this Agreement, subject to
customary underwriter cutbacks applicable to all holders of
registration rights and subject to obtaining any required consent of
any selling stockholder(s) to such inclusion under such registration
statement.
(f) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the same shall be in
writing and signed by the Company and the Holders of the then
outstanding Registrable Securities. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to
a matter that relates exclusively to the rights of certain Holders and
that does not directly or indirectly affect the rights of other
Holders may be given by Holders of at least a majority of the
Registrable Securities to which such waiver or consent relates;
provided, however, that the provisions of this sentence may not be
amended, modified, or supplemented except in accordance with the
provisions of the immediately preceding sentence.
(g) NOTICES. Any notice or request hereunder may be given to the
Company or the Purchaser at the respective addresses set forth below
or as may hereafter be specified in a notice designated as a change of
address under this Section 7(g). Any notice or request hereunder shall
be given by registered or certified mail, return receipt requested,
hand delivery, overnight mail, Federal Express or other national
overnight next day carrier (collectively, "Courier") or telecopy
(confirmed by mail). Notices and requests shall be, in the case of
those by hand delivery, deemed to have been given when delivered to
any party to whom it is addressed, in the case of those by mail or
overnight mail, deemed to have been given three (3) business days
after the date when deposited in the mail or with the overnight mail
carrier, in the case of a Courier, the next business day following
timely delivery of the package with the Courier, and, in the case of a
telecopy, when confirmed. The address for such notices and
communications shall be as follows:
IF TO THE COMPANY: Windswept Environmental Group, Inc.
Attention: Chief Executive Officer
Facsimile: 000-000-0000
WITH A COPY TO:
Davidoff Xxxxxx & Xxxxxxx LLP
200 Garden City Plaza
Attention: Xxxx X. Xxxxxxx, Esq.
Facsimile: 000-000-0000
11
IF TO A PURCHASER: To the address set forth under such
Purchaser name on the signature
pages hereto.
IF TO ANY OTHER PERSON WHO IS
THEN THE REGISTERED HOLDER: To the address of such Holder as it
appears in the stock transfer books
of the Company
or such other address as may be designated in writing hereafter
in accordance with this Section 7(g) by such Person.
(h) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of
each of the parties and shall inure to the benefit of each Holder. The
Company may not assign its rights or obligations hereunder without the
prior written consent of each Holder. Each Holder may assign their
respective rights hereunder in the manner and to the persons and
entities as permitted under the Note and the Securities Purchase
Agreement.
(i) EXECUTION AND COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which when so executed shall be
deemed to be an original and, all of which taken together shall
constitute one and the same agreement. In the event that any signature
is delivered by facsimile transmission, such signature shall create a
valid binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect as
if such facsimile signature were the original thereof.
(j) GOVERNING LAW, JURISDICTION AND WAIVER OF JURY TRIAL. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. The Company hereby consents and agrees
that the state or federal courts located in the County of New York,
State of New York shall have exclusion jurisdiction to hear and
determine any Proceeding between the Company, on the one hand, and the
Purchaser, on the other hand, pertaining to this Agreement or to any
matter arising out of or related to this Agreement; provided, that the
Purchaser and the Company acknowledge that any appeals from those
courts may have to be heard by a court located outside of the County
of New York, State of New York, and further provided, that nothing in
this Agreement shall be deemed or operate to preclude the Purchaser
from bringing a Proceeding in any other jurisdiction to collect the
obligations, to realize on the Collateral or any other security for
the obligations, or to enforce a judgment or other court order in
favor of the Purchaser. The Company expressly submits and consents in
advance to such jurisdiction in any Proceeding commenced in any such
court, and the Company hereby waives any objection which it may have
based upon lack of personal jurisdiction, improper venue or forum non
conveniens. The Company hereby waives personal service of the summons,
complaint and other process issued in any such Proceeding and agrees
that service of such summons, complaint and other process may be made
by registered or certified mail
12
addressed to the Company at the address set forth in Section 7(g)
and that service so made shall be deemed completed upon the earlier of
the Company's actual receipt thereof or three (3) days after deposit
in the U.S. mails, proper postage prepaid. The parties hereto desire
that their disputes be resolved by a judge applying such applicable
laws. Therefore, to achieve the best combination of the benefits of
the judicial system and of arbitration, the parties hereto waive all
rights to trial by jury in any Proceeding brought to resolve any
dispute, whether arising in contract, tort, or otherwise between the
Purchaser and/or the Company arising out of, connected with, related
or incidental to the relationship established between then in
connection with this Agreement. If either party hereto shall commence
a Proceeding to enforce any provisions of this Agreement, the
Securities Purchase Agreement or any other Related Agreement, then the
prevailing party in such Proceeding shall be reimbursed by the other
party for its reasonable attorneys' fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such
Proceeding.
(k) CUMULATIVE REMEDIES. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(l) SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their reasonable efforts
to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid,
illegal, void or unenforceable.
(m) HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning
hereof.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE FOLLOWS]
13
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
WINDSWEPT ENVIRONMENTAL GROUP, INC. LAURUS MASTER FUND, LTD.
By: /s/ Xxxxxxx X'Xxxxxx By: /s/ Xxxxx Grin
------------------------------- --------------------
Name: Xxxxxxx X'Xxxxxx Name: Xxxxx Grin
------------------------------- --------------------
Title: President Title: Director
------------------------------- --------------------
ADDRESS FOR NOTICES:
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Grin
Facsimile: 000-000-0000
14
EXHIBIT A
[__________ __, 200__]
OTC Corporate Transfer Service Co.
0 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxxx Xxxxxx
Re: Windswept Environmental Group, Inc. Registration Statement on
Form [S-1/S-3]
--------------------------------------------------------------
Ladies and Gentlemen:
As counsel to Windswept Environmental Group, Inc., a Delaware corporation
(the "Company"), in connection with the registration under the Securities Act of
1933, as amended, we have been requested to render our opinion to you in
connection with the resale by the individuals or entitles listed on Schedule A
attached hereto (the "Selling Stockholders"), of an aggregate of __________
shares (the "Shares") of the Company's Common Stock.
We are of the opinion that the Shares are duly authorized, legally issued ,
fully paid and non-assessable.
A Registration Statement on Form [S-1/S-3] under the Securities Act of
1933, as amended (the "Act"), with respect to the resale of the Shares was
declared effective by the Securities and Exchange Commission on [date]. Enclosed
is the Prospectus dated [date]. We understand that the Shares are to be offered
and sold in the manner described in the Prospectus.
Based upon the foregoing, upon request by the Selling Stockholders at any
time while the registration statement remains effective, it is our opinion that
the Shares have been registered for resale under the Act and new certificates
evidencing the Shares upon their transfer or re-registration by the Selling
Stockholders may be issued without restrictive legend. We will advise you if the
registration statement is not available or effective at any point in the future.
Very truly yours,
[Company counsel]
SCHEDULE A TO EXHIBIT A
Shares
Selling Stockholder Being Offered
------------------- -------------
SCHEDULE 7(b)
-------------
None.
----
