EXHIBIT 10.6
REGISTRATION RIGHTS AGREEMENT
dated as of
October 15, 1997
among
ENVIRONMENTAL REMEDIATION HOLDING CORP.
and
THE PURCHASERS LISTED ON EXHIBIT A HERETO
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is dated as of
October 15, 1997 between ENVIRONMENTAL REMEDIATION HOLDING CORP., a Colorado
corporation (the "Company") and each of the Purchasers of the Company's 5.5%
Senior Subordinated Convertible Secured Notes due 2002 (the "Notes") pursuant to
that certain Securities Purchase Agreement, dated of even date herewith (the
"Securities Purchase Agreement"), whose names are set forth on Exhibit A hereto
(individually, a "Purchaser" and collectively, the "Purchasers").
RECITALS
WHEREAS, it is a condition precedent to the obligations of each
Purchaser under the Securities Purchase Agreement that the Company grant
registration rights to the holders of the Company's Notes, and
WHEREAS, in connection with resales by the Purchasers of the Company's
Common Stock upon or after conversion of the Notes, the Company and the
Purchasers now desire to enter into this Agreement in order to facilitate such
resales.
AGREEMENT
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. The following terms, as used herein, have the following
meanings.
"Board" means the Board of Directors of the Company.
"Business Day" means any day except a Saturday, Sunday or other day on
which banks in New York, New York are authorized by law to close.
"Closing Date" shall mean the Closing Date of the Securities Purchase
Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock, par value $0.0001 per share, of
the Company.
"Company" means Environmental Remediation Holding Corp., a Colorado
corporation.
"Company Registration Statement" means the Registration Statement of
the Company relating to the registration for sale of shares of the Company's
Common Stock contemplated by Section 2.3, including the Prospectus included
therein, all amendments and supplements thereto (including post-effective
amendments) and all exhibits and material incorporated by reference therein.
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"Effective Time" means the date of effectiveness of any Registration
Statement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holders" has the meaning given to it in Section 2.1(b) hereof.
"NASD" means the National Association of Securities Dealers, Inc.
"Note(s)" means the individual or collective reference to any one or
more of the 5.5% senior subordinated convertible secured notes of the Company
due 2002, in $5,000,000 aggregate principal amount.
"Person" means an individual, corporation, partnership, association,
trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement and by all
other amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
"Registration Statements" means the Company Registration Statement and
the Shelf Registration Statement.
"Restricted Securities" means any Securities until (i) a registration
statement covering such Securities has been declared effective by the Commission
and such Securities have been disposed of pursuant to such effective
registration statement, (ii) such Securities are sold under circumstances in
which all the applicable conditions of Rule 144 (or any similar provisions then
in force) under the Securities Act are met, or such Securities may be sold
pursuant to Rule 144(k) (or any similar provision then in force) under the
Securities Act, and are freely tradable after such sale by the transferee, (iii)
such Securities are otherwise transferred, the Company has delivered a new
certificate or other evidence of ownership for such Securities not bearing a
legend restricting further transfer and such Securities may be resold without
registration under the Securities Act, or (iv) such Securities shall have ceased
to be outstanding.
"Securities" means the shares of the Company's Common Stock issuable
upon conversion of the Notes or upon exercise of the Warrants.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration Statement" means the registration statement of the
Company relating to the shelf registration for resale of Restricted Securities
contemplated by Section 2.2 herein, including the Prospectus included therein,
all amendments and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.
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"Securities Purchase Agreement" has the meaning given to it in the
recitals to this Agreement.
"Warrants" means the warrants to purchase up to 300,000 shares of
Company Common Stock (if all $5.0 million of Notes are sold pursuant to the
Securities Purchase Agreement) at an exercise price of $3.17 per share, subject
to adjustment as provided therein, which are issuable pursuant to the Securities
Purchase Agreement on the basis of warrants to purchase 60 shares of Company
Common Stock for each $1,000 principal amount of Notes purchased by a Purchaser.
As used in this Agreement, words in the singular include the plural,
and in the plural include the singular.
ARTICLE 2
REGISTRATION RIGHTS
2.1 Securities Subject to this Agreement.
(a) The Securities entitled to the benefits of this Agreement are the
Restricted Securities, but only for so long as they remain Restricted
Securities.
(b) A Person is deemed to be a holder of Restricted Securities (each,
a "Holder") whenever such Person is the registered holder of such Restricted
Securities on the Company's books and records.
2.2 Shelf Registration.
(a) The Company shall:
(i) as expeditiously as practicable, but no later than 45
calendar days from the Closing Date, cause to be filed a Shelf
Registration Statement on Form S-1 or Form S-3, as applicable, pursuant
to Rule 415 under the Securities Act, which Shelf Registration
Statement shall provide for resales of all Restricted Securities the
Holders of which shall have provided to the Company the information
required pursuant to Section 2.2(c) herein; and
(ii use its best efforts to cause such Shelf Registration
Statement to be declared effective by the Commission within 120
calendar days from the Closing Date.
(b) In connection with the Shelf Registration Statement, the Company
shall comply with all the provisions of Section 2.4 below and shall use its
reasonable efforts to effect such registration to permit the sale of the
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof (as indicated in the information furnished to
the Company pursuant to Section 2.2.(c)). Subject to Section 2.2(d), the Company
shall use its best efforts to keep such Shelf Registration Statement
continuously effective, supplemented and amended as required by the provisions
of Section 2.2(d) to the extent necessary to ensure that it is available for
resales of Restricted Securities by the Holders of Restricted Securities, and to
ensure that it conforms with the requirements of this Agreement, the Securities
Act and the policies, rules and regulations of the Commission as announced from
time to time, for a period of three (3) years from the Effective Time or such
longer period as required by Section 2.2(d) or such shorter period that will
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terminate when all the Securities covered by the Shelf Registration Statement
have been sold pursuant to the Shelf Registration Statement or otherwise cease
to be Restricted Securities. Upon the occurrence of any event that would cause
any Shelf Registration Statement or the Prospectus contained therein (i) to
contain a material misstatement or omission or (ii) not to be effective and
usable for sale or resale of Restricted Securities during the period required by
this Agreement, the Company shall file promptly an appropriate amendment to such
Shelf Registration Statement or the related Prospectus or any document
incorporated therein by reference, in the case of clause (i), correcting any
such misstatement or omission, and, in the case of either clause (i) or (ii),
use its reasonable efforts to cause such amendment to be declared effective and
such Registration Statement and the related Prospectus to become usable for its
intended purpose(s) as soon as practicable thereafter.
(c) No Holder of Restricted Securities may include any of its
Restricted Securities in the Shelf Registration Statement pursuant to this
Agreement unless and until such Holder furnishes to the Company in writing,
within 10 Business Days after receipt of a written request therefor, such
information specified in Item 507 of Regulation S-K under the Securities Act or
such other information as the Company may reasonably request for use in
connection with the Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein and in any application to the NASD. Each Holder as
to which the Shelf Registration Statement is being effected agrees to furnish
promptly to the Company all information required to be disclosed in order to
make the information previously furnished to the Company by such Holder not
materially misleading.
(d) Notwithstanding anything to the contrary contained herein, if (x)
the Board determines in good faith that the registration and distribution of
Restricted Securities (or the use of such Shelf Registration Statement or the
Prospectus contained therein) would interfere with any proposed or pending
material corporate transaction involving the Company or any of its subsidiaries
or would require premature disclosure thereof or would require the Company to
disclose information that the Company has not otherwise made public and that the
Company reasonably determines is in the best interests of the Company not to
disclose at such time, and (y) the Company notifies the Holders in writing not
later than three (3) days following such determination (such notice a "Blackout
Notice"), the Company may (A) postpone the filing of such Shelf Registration
Statement or (B) allow such Shelf Registration Statement to fail to be effective
and usable or elect that such Shelf Registration Statement not be usable for a
reasonable period of time, but not in excess of 30 days (a "Blackout Period");
provided, however, that the aggregate number of days included in all Blackout
Periods shall not exceed 90 during any consecutive 12 months and shall not
exceed 150 during the period specified in Section 2.2(b) of this Agreement; and
provided, further, that the period referred to in Section 2.2(b) during which
the Shelf Registration Statement is required to be effective and usable shall be
extended by the aggregate number of days during which the Shelf Registration
Statement was not effective or usable pursuant to the foregoing provisions.
(e) The Company represents that, as at the date hereof, it qualifies
for a Form S-3 Registration Statement.
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2.3 Piggyback Registration.
(a) At any time that the Company proposes to file a Company
Registration Statement, either for its own account or for the account of a
stockholder or stockholders, the Company shall give the Holders written notice
of its intention to do so and of the intended method of sale (the "Registration
Notice") within a reasonable time prior to the anticipated filing date of the
Company Registration Statement effecting such Company Registration. Each holder
may request inclusion of any Restricted Securities in such Company Registration
by delivering to the Company, within ten (10) Business Days after receipt of the
Registration Notice, a written notice (the "Piggyback Notice") stating the
number of Restricted Securities proposed to be included and that such shares are
to be included in any underwriting only on the same terms and conditions as the
shares of Common Stock otherwise being sold through underwriters under such
Company Registration Statement. The Company shall use its best efforts to cause
all Restricted Securities specified in the Piggyback Notice to be included in
the Company Registration Statement and any related offering, all to the extent
requisite to permit the sale by the Holders of such Restricted Securities in
accordance with the method of sale applicable to the other shares of Common
Stock included in such Company Registration Statement; provided, however, that
if, at any time after giving written notice of its intention to register any
securities and prior to the effective date of the Company Registration Statement
filed in connection with such registration, the Company shall determine for any
reason not to register or to delay registration of such securities, the Company
may, at its election, give written notice of such determination to each Holder
of Restricted Securities and, thereupon:
(ii) in the case of a determination not to register, shall be
relieved of its obligation to register any Restricted Securities in
connection with such registration (but not from its obligation to pay
the Registration Expenses in connection therewith), and
(ii) in the case of a delay in registering, shall be
permitted to delay registering any Restricted Securities for the same
period as the delay in registering such other securities.
(b) The Company's obligation to include Restricted Securities in a
Company Registration Statement pursuant to Section 2.3(a) shall be subject to
the following limitations:
(i) The Company shall not be obligated to include any
Restricted Securities in a registration statement filed on Form X-0,
Xxxx X-0 or such other similar successor forms then in effect under the
Securities Act.
(ii) If a Company Registration Statement involves an
underwritten offering and the managing underwriter advises the Company
in writing that, in its opinion, the number of securities requested to
be included in such Company Registration Statement exceeds the number
which can be sold in such offering without adversely affecting the
offering, the Company will include in such Company Registration
Statement the number of such Securities which the Company is so advised
can be sold in such offering without adversely affecting the offering,
determined as follows:
(A) first, the securities proposed by the
Company to be sold for it own account, and
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(B) second, any Restricted Securities
requested to be included in such registration and any other
securities of the Company in accordance with the priorities,
if any, then existing among the holders of such securities pro
rata among the holders thereof requesting such registration on
the basis of the number of shares of such securities requested
to be included by such holders.
(iii) The Company shall not be obligated to include
Restricted Securities in more than two (2) Company Registration
Statement(s).
(c) No Holder of Restricted Securities may include any of its
Restricted Securities in the Company Registration Statement pursuant to this
Agreement unless and until such Holder furnishes to the Company in writing,
within 10 business days after receipt of a written request therefor, such
information specified in Item 507 of Regulation S-K under the Securities Act or
such other information as the Company may reasonably request for use in
connection with the Company Registration Statement or Prospectus or preliminary
Prospectus included therein and in any application to the NASD. Each Holder as
to which the Company Registration Statement is being effected agrees to furnish
promptly to the Company all information required to be disclosed in order to
make all information previously furnished to the Company by such Holder not
materially misleading.
2.4 Registration Procedures. In connection with any Registration Statement and
any Prospectus required by this Agreement to permit the sale or resale of
Restricted Securities, the Company shall:
(a) prepare and file with the Commission such amendments and
post-effective amendments to such Registration Statement as may be necessary to
keep such Registration Statement effective (i) if such Registration Statement is
a Company Registration Statement, until the earlier of such time as all of such
securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such Company
Registration Statement or (ii) if such Registration Statement is a Shelf
Registration Statement, for the applicable period set forth in Section 2.2(b)
herein; cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under the
Securities Act, and to comply fully with the applicable provisions of Rules 424
and 430A, as applicable, under the Securities Act in a timely manner; and comply
with the provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable period
in accordance with the intended method or methods of distribution by the sellers
thereof set forth in such Registration Statement or supplement or the
Prospectus;
(b) promptly (and in respect of events covered by clause (i) hereof,
on the same day as the Company shall receive notice of effectiveness) advise the
Holders covered by such Registration Statement and, if requested by such
Persons, to confirm such advice in writing, (i) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and when the
same has become effective, (ii) of any request by the Commission for
post-effective amendments to such Registration Statement or post-effective
amendments to such Registration Statement or post-effective amendments or
supplements to the Prospectus or for additional information relating thereto,
(iii) of the issuance by the Commission of any stop order suspending the
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effectiveness of any such Registration Statement under the Securities Act or of
the suspension by any state securities commission of the qualification of the
Restricted Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, and (iv) of the
existence of any fact or the happening of any event that makes any statement of
a material fact made in any such Registration Statement, the related Prospectus,
any amendment or supplement thereto, or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes in
any such Registration Statement or the related Prospectus in order to make the
statements therein not misleading. If at any time the Commission shall issue any
stop order suspending the effectiveness of such Registration Statement, or any
state securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the Restricted
Securities under state securities or Blue Sky laws, the Company shall use its
reasonable efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(c) promptly furnish to each Holder of Restricted Securities covered
by any Registration Statement, and each underwriter, if any, without charge, at
least one conformed copy of any Registration Statement, as first filed with the
Commission, and of each amendment thereto, including all documents incorporated
by reference therein and all exhibits (including exhibits incorporated therein
by reference) and such other documents as such Holder may reasonably request;
(d) deliver to each Holder covered by any Registration Statement, and
each underwriter, if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such person reasonably may request.
(e) enter into such customary agreements and take all such other
reasonable action in connection therewith (including those reasonably requested
by the selling Holders or the underwriter(s), if any) required in order to
expedite or facilitate the disposition of such Restricted Securities pursuant to
such Registration Statement, including, but not limited to, dispositions
pursuant to an underwritten registration, and in such connection:
(i) make such representations and warranties to the selling
Holders and underwriter(s), if any, in form, substance and scope as are
customarily made by issuers to underwriters in underwritten offerings
(whether or not sales of securities pursuant to such Registration
Statement are to be to an underwriter(s)) and confirm the same if and
when requested;
(ii) obtain opinions of counsel to the Company (which counsel
and opinions, in form and substance, shall be reasonably satisfactory
to the selling Holders and the underwriter(s), if any, and their
respective counsel) addressed to each selling Holder and underwriter,
if any, covering the matters customarily covered in opinions requested
in underwritten offerings (whether or not sales of securities pursuant
to such Registration Statement are to be made to an underwriter(s)) and
dated the date of effectiveness of any Registration Statement (and, in
the case of any underwritten sale of securities pursuant to such
Registration Statement, each closing date of sales to the
underwriter(s) pursuant thereto);
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(iii) use reasonable efforts to obtain comfort letters dated
the date of effectiveness of any Registration Statement (and, in the
case of any underwritten sale of securities pursuant to such
Registration Statement, each closing date of sales to the
underwriter(s) pursuant thereto) from the independent certified public
accountants of the Company addressed to each selling Holder and
underwriter, if any, such letters to be in customary form and covering
matters of the type customarily covered in comfort letters in
connection with underwritten offerings (whether or not sales of
securities pursuant to such Registration Statement are to be made to an
underwriter(s));
(iv) provide for the indemnification provisions and procedures
of Section 2.6 hereof with respect to selling Holders and the
underwriter(s), if any, and;
(v) deliver such documents and certificates as may be
reasonably requested by the selling Holders or the underwriter(s), if
any, and which are customarily delivered in underwritten offerings
(whether of not sales of securities pursuant to such Registration
Statement are to be made to an underwriter(s), with such documents and
certificates to be dated the date of effectiveness of any Registration
Statement.
The actions required by clauses (i) through (v) above shall be done at
each closing under such underwriting or similar agreement, as and to the extent
required thereunder, and if at any time the representations and warranties of
the Company contemplated in clause (i) above cease to be true and correct, the
Company shall so advise the underwriter(s), if any, and each selling Holder
promptly, and, if requested by such Person, shall confirm such advice in
writing;
(f) prior to any public offering of Restricted Securities, cooperate
with the selling Holders, the underwriter(s), if any, and their respective
counsel in connection with the registration and qualification of the Restricted
Securities under the securities or Blue Sky laws of such U.S. jurisdictions as
the selling Holders or underwriter(s), if any, may reasonably request in writing
by the time any Registration Statement is declared effective by the Commission,
and do any and all other acts or filings necessary or advisable to enable
disposition in such U.S. jurisdictions of the Restricted Securities covered by
any Registration Statement and to file such consents to service of process or
other documents as may be necessary in order to effect such registration or
qualification; provided, however, that the Company shall not be required to
register or qualify as a foreign corporation in any jurisdiction where it is not
then so qualified or as a dealer in securities in any jurisdiction where it
would not otherwise be required to register or qualify but for this Section 2.4,
or to take any action that would subject it to the service of process in suits
or to taxation, in any jurisdiction where it is not then so subject;
(g) in connection with any sale of Restricted Securities that will
result in such securities no longer being Restricted Securities, cooperate with
the selling Holders and the underwriter(s), if any, to facilitate the timely
preparation and delivery of certificates representing Restricted Securities to
be sold and not bearing any restrictive legends; and enable such Restricted
Securities to be in such denominations and registered in such names as the
Holders or the underwriter(s), if any, may request at least two (2) Business
Days prior to any sale of Restricted Securities made by such underwriters;
(h) use its reasonable efforts to cause the disposition of the
Restricted Securities covered by any Registration Statement to be registered
with or approved by such other U.S. governmental agencies or authorities as may
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be necessary to enable the seller or sellers thereof or the underwriter(s), if
any, to consummate the disposition of such Restricted Securities, subject to the
proviso contained in Section 2.2(f);
(i) if any fact or event contemplated by Section 2.4(b) shall exist
or have occurred, prepare a supplement or post-effective amendment to any
Registration Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statement therein not misleading;
(j) cooperate and assist in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the rules and
regulations of the NASD, and use its reasonable efforts to cause any
Registration Statement to become effective and approved by such U.S.
governmental agencies or authorities as may be necessary to enable the Holders
selling Restricted Securities to consummate the disposition of such Restricted
Securities;
(k) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make generally available
to its security holders with regard to such Registration Statement, as soon as
practicable, a consolidated earnings statement meeting the requirements of Rule
158 (which need not be audited) for the twelve-month period (i) commencing at
the end of any fiscal quarter in which Restricted Securities are sold to the
underwriter in a firm or best efforts underwritten offering or (ii) if not sold
to an underwriter in such an offering, beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of any
Registration Statement;
(l) provide a CUSIP number for all Restricted Securities not later than
the effective date of any Registration Statement;
(m) use its best efforts to list, not later than the effective date
of such Registration Statement, all Restricted Securities covered by such
Registration Statement on the American Stock Exchange or any other trading
market on which any Common Stock of the Company are then admitted for trading,
and
(n) provide promptly to each Holder covered by any Registration
Statement upon request each document filed with the Commission pursuant to the
requirements of Section 12 and Section 14 of the Exchange Act.
Each Holder agrees by acquisition of a Restricted Security that, upon
receipt of any notice from the Company of the existence of any fact of the kind
described in Section 2.4(b)(iv) or the commencement of a Black-Out Period, such
Holder will forthwith discontinue disposition of Restricted Securities pursuant
to any Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 2.4(i), or until it
is advised in writing, in accordance with the notice provisions of Section 5.3
herein (the "Advice"), by the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental fillings that
are incorporated by reference in the Prospectus. If so directed by the Company,
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each Holder will deliver to the Company all copies, other than permanent file
copies, then in such Holder's possession, of the Prospectus covering such
Restricted Securities that was current at the time of receipt of such notice. In
the event the Company shall give any such notice, the time period regarding the
effectiveness of the Shelf Registration Statement set forth in Section 2.2(b)
shall be extended by the number of days during the period from and including the
date of the giving of such notice pursuant to Section 2.4(b)(iv) or the
commencement of a Black-Out Period to and including the date when each selling
Holder covered by such Registration Statement shall have received the copies of
the supplemented or amended Prospectus contemplated by Section 2.4(i) or shall
have received (in accordance with the notice provisions of Section 5.3) the
Advice.
2.5 Preparation; Reasonable Investigation. In connection with preparation
and filing of each Registration Statement under the Securities Act, the Company
will give the Holders of Restricted Securities registered under such
Registration Statement, their underwriter, if any, and their respective counsel
and accountants, the opportunity to participate in the preparation of such
Registration Statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
to them access to its books and records and such opportunities to discuss the
business, finances and accounts of the Company and its subsidiaries with its
officers, directors and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of such Holders
and such underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.
2.6 Certain Rights of Holders. The Company will not file any registration
statement under the Securities Act which refers to any Holder of Restricted
Securities by name or otherwise without the prior approval of such Holder, which
consent shall not be unreasonably withheld or delayed.
2.7 Registration Expenses.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses (including filings
made with the NASD and reasonable counsel fees in connection therewith); (ii)
all reasonable fees and expenses of compliance with federal securities and state
Blue Sky or securities laws (including all reasonable fees and expenses of one
counsel to the underwriter(s) in any underwriting) in connection with compliance
with state Blue Sky or securities laws for up to 40 states; (iii) all expenses
of printing, messenger and delivery services and telephone calls; (iv) all fees
and disbursements of counsel for the Company; and (v) all fees and disbursements
of independent certified public accountants of the Company (including the
expenses of any special audit and comfort letters required by or incident to
such performance), but excluding from this paragraph, fees and expenses of
counsel to the underwriter(s), if any, unless otherwise set forth herein.
(b) In addition, in connection with the filing of the Shelf
Registration Statement required to be filed by this Agreement, the Company will
reimburse the Holders of the Restricted Securities being registered pursuant to
any Shelf Registration Statement for the reasonable fees and disbursements of
not more than one counsel to review such Registration Statement.
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(c) Notwithstanding the foregoing, the Company will not be
responsible for any underwriting discounts, commissions or fees attributable to
the sale of Restricted Securities or any legal fees or disbursements (other than
any such fees or disbursements relating to Blue Sky compliance or otherwise as
set for the under Section 2.7(a)) incurred by any underwriter(s) in any
underwritten offering if the underwriter(s) participates in such underwritten
offering at the request of the Holders of Restricted Securities, or any transfer
taxes that may be imposed in connection with a sale or transfer of Restricted
Securities.
(d) The Company shall, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Company.
2.8 Indemnification; Contribution.
(a) The Company agrees to indemnify and hold harmless (i) each Holder
covered by any Registration Statement, (ii) each other Person who participates
as an underwriter in the offering or sale of such securities, (iii) each person,
if any, who controls (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) any such Holder or underwriter (any of the
persons referred to in this clause (iii) being hereinafter referred to as a
"controlling person") and (iv) the respective officers, directors, partners,
employees, representatives and agents of any such Holder or underwriter or any
controlling person (any person referred to in clause (i), (ii), (iii) or (iv)
may hereinafter be referred to as an "indemnified Person"), to the fullest
extent lawful, from and against any and all losses, claims, damages,
liabilities, judgments or expenses, joint or several (or actions or proceedings,
whether commenced or threatened, in respect thereof) (collectively, "Claims"),
to which such indemnified Person may become subject under either Section 15 of
the Securities Act or Section 20 of the Exchange Act or otherwise, insofar as
such Claims arise out of or are based upon, or are caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus (or any amendment or supplement thereto),
or any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, or
a violation by the Company of the Securities Act or any state securities law, or
any rule or regulation promulgated under the Securities Act or any state
securities law, or any other law applicable to the Company relating to any such
registration or qualification, except insofar as such losses, claims, damages,
liabilities, judgments or expenses of any such indemnified Person; (x) are
caused by any such untrue statement or omission or alleged untrue statement or
omission that is based upon information relating to such indemnified Person
furnished in writing to the Company by or on behalf of any of such indemnified
Person expressly for use therein; (y) with respect to the preliminary
Prospectus, result from the fact that such Holder sold Securities to a person to
whom there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the Prospectus, as amended or supplemented, if the Company
shall have previously furnished copies thereof to such Holder in accordance with
this Agreement and said Prospectus, as amended or supplemented, would have
corrected such untrue statement or omission; or (z) as a result of the use by an
indemnified Person of any Prospectus when, upon receipt of a Black-Out Notice or
a notice from the Company of the existence of any fact of the kind described in
Section 2.4(b)(iv), the indemnified Person or the related Holder was not
permitted to do so. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of any indemnified Person
and shall survive the transfer of such securities by such Holder.
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In case any action shall be brought or asserted against any of the
indemnified Persons with respect to which indemnity may be sought against the
Company, such indemnified Person shall promptly notify the Company and the
Company shall assume the defence thereof. Such indemnified Person shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of the indemnified Person unless (i) the employment of such counsel
shall have been specifically authorized in writing by the Company, (ii) the
Company shall have failed to assume the defence and employ counsel or (iii) the
named parties to any such action (including any implied parties) include both
the indemnified Person and the Company and the indemnified Person shall have
been advised in writing by its counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the Company (in which case the Company shall not have the right to
assume the defense of such action on behalf of the indemnified Person), it being
understood, however, that the Company shall not, in connection with such action
or similar or related actions or proceedings arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) at
any time for all the indemnified Persons, which firm shall be (x) designated by
such indemnified Persons and (y) reasonably satisfactory to the Company. The
Company shall not be liable for any settlement of any such action or proceeding
effected without the Company's prior written consent, which consent shall not be
withheld unreasonably, and the Company agrees to indemnify and hold harmless any
indemnified Person from and against any loss, claim, damage, liability, judgment
or expense by reason of any settlement of any action effected with the written
consent of the Company. The Company shall not, without the prior written consent
of each indemnified Person, settle or compromise or consent to the entry of
judgment on or otherwise seek to terminate any pending or threatened action,
claim, litigation or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not any indemnified Person is a
party thereto), unless such settlement, compromise, consent or termination
includes an unconditional release of each indemnified Person from all liability
arising out of such action, claim litigation or proceeding.
(b) Each Holder of Restricted Securities covered by any Registration
Statement agrees, severally and not jointly, to indemnify and hold harmless the
Company and its directors, officers and any person controlling (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
the Company, and the respective officers, directors, partners, employees,
representatives and agents of each person, to the same extent as the foregoing
indemnity from the Company to each of the indemnified Persons, but only (i) with
respect to actions based on information relating to such Holder furnished in
writing by or on behalf of such Holder expressly for use in any Registration
Statement or Prospectus, and (ii) to the extent of the gross proceeds, if any,
received by such Purchaser from the sale or other disposition of his or its
Restricted Securities covered by such Registration Statement. In case any action
or proceeding shall be brought against the Company or its directors or officers
or any such controlling person in respect of which indemnity may be sought
against a Holder of Restricted Securities covered by any Registration Statement,
such Holder shall have the rights and duties given the Company in Section 2.8(a)
(except that the Holder may but shall not be required to assume the defense
thereof), and the Company or its directors or officers or such controlling
person shall have the rights and duties given to each Holder by Section 2.8(a).
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(c) If the indemnification provided for in this Section 2.8 is
unavailable to an indemnified party under Section 2.7(a) or (b) (other than by
reason of exceptions provided in those Sections) in respect of any losses,
claims, damages, liabilities, judgments or expenses referred to therein, then
each applicable indemnifying party (in the case of the Holders severally and not
jointly), in lieu of indemnifying such indemnified party, shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims damages, liabilities, judgments or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Holder on the other hand from sale of Restricted Securities or (ii)
if such allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company and such Holder in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities, judgments or expenses, as
well as any other relevant equitable considerations. The relative fault of the
Company on the one hand and of such Holder on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by such Holder and the parties
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid to a party as a result of
the losses, claims, damages, liabilities judgments and expenses referred to
above shall be deemed to include, subject to the limitations set forth in the
second paragraph of Section 2.8(a), any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim.
The Company and each Holder of Restricted Securities covered by any
Registration Statement agree that it would not be just and equitable if
contribution pursuant to this Section 2.8(c) were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation which does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 2.8(c) no Holder (and none of its
related indemnified Persons) shall be required to contribute, in the aggregate,
any amount in excess of the amount by which the dollar amount of proceeds
received by such Holder upon the sale of the Restricted Securities exceeds the
amount of any damages which such Holder has otherwise been required to pay by
reason of such untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentations (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
The indemnity, and contribution provisions contained in this Section
2.8 are in addition to any liability which the indemnifying person may otherwise
have to the indemnified persons referred to above.
2.9 Participation in Underwritten Registrations. No Holder may participate
in any underwritten registration hereunder unless such Holder (a) agrees to sell
such Holder's Restricted Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all reasonable questionnaires,
powers of attorney, indemnities, underwriting agreements, lock-up letters and
other documents required under the terms of such underwriting arrangements.
13
2.10 Selection of Underwriters. The Holders of Restricted Securities covered
by any Registration Statement who desire to do so may sell such Restricted
Securities in an underwritten offering. In any such underwritten offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority of the
Restricted Securities included in such offering if such registration is pursuant
to the Shelf Registration Statement, and by the Company if such registration is
pursuant to a Company Registration Statement; provided, however, that such
investment bankers and managers must be reasonably satisfactory to the Company
or the Holders, respectively. Such investment bankers and managers are referred
to herein as the "underwriters".
ARTICLE 3
LIQUIDATED DAMAGES
Each of the Company and the Purchasers (on behalf of themselves and
each subsequent Holder of Restricted Securities) agrees that each Holder of
Restricted Securities will suffer damages if the Shelf Registration Statement
covering all Registrable Securities is not filed with and declared effective by
the Commission and maintained in the manner and within the time period
contemplated by Article 2 hereof, and it would not be feasible to ascertain the
extent of such damages with precision. Accordingly, if (i) the Shelf
Registration Statement is not filed and declared effective by the Commission on
or prior to the date that is 120 days after the Closing Date, or (ii) the Shelf
Registration Statement is filed and declared effective but shall thereafter
cease to be effective (without being succeeded immediately by an additional
Shelf Registration Statement filed and declared effective) for a period of time
which shall exceed 120 days in the aggregate per year (defined as a period of
365 days commencing on the date the Shelf Registration Statement is declared
effective) (each such event referred to in clauses (i) and (ii) is referred to
herein as a "Registration Default"), then, for so long as such default shall
continue, the Company shall pay in cash as Liquidated Damages to each Holder of
Restricted Securities who has complied with such Holder's obligations hereunder
an amount equal to three (3%) percent per calendar month (or fraction thereof)
of the aggregate principal amount of Notes then owned of record by such Holder
under the Securities Purchase Agreement immediately following the occurrence of
such Registration Default.
ARTICLE 4
RULE 144A
The Company hereby agrees with each Holder of Restricted Securities,
for so long as any of the Restricted Securities remain outstanding and continue
to be "restricted securities" within the meaning of Rule 144 under the Act, and
during any period in which the Company is not subject to Section 13 or 15(d) of
the Exchange Act, to make available to the Holders of Restricted Securities in
connection with any sale thereof, and to any prospective purchaser of Common
Stock from such Holders of Restricted Securities or beneficial owner, the
information required by Rule 144A(d)(4) under the Act in order to permit resales
of such Restricted Securities pursuant to Rule 144A.
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ARTICLE 5
MISCELLANEOUS
5.1 Entire Agreement. This Agreement, together with the Securities Purchase
Agreement and the Certificate of Determination, constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreement and understandings, both oral and written, between the parties
with respect to the subject matter hereof.
5.2 Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Restricted Securities; provided, however, that this Agreement shall
not inure to the benefit of or be binding upon a successor or assign of a Holder
unless and to the extent such successor or assign acquired Restricted Securities
from such Holder at a time when such Holder could not transfer such Restricted
Securities pursuant to any Registration Statement or pursuant to Rule 144 under
the Securities Act as contemplated by clause (ii) of the definition of
Restricted Securities.
5.3 Notices. All notices and other communications given or made pursuant
hereto or pursuant to any other agreement among the parties, unless otherwise
specified, shall be in writing and shall be deemed to have been duly given or
made if sent by telecopy (with confirmation in writing), delivered personally or
by overnight courier or sent by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the telecopy number, if any, or
address set forth below or at such other addresses as shall be furnished by the
parties by like notice. Notices sent by telecopier shall be effective when
receipt is acknowledged, notices delivered personally or by overnight courier
shall be effective upon receipt and notices sent by registered or certified mail
shall be effective three days after mailing:
if to a Holder to such Holder at the address set forth on the
records of the Company pursuant to the
Securities Purchase Agreement. In addition,
copies of all such notices or other
communications shall be concurrently delivered
by the Person giving the same to each person who
has been identified to the Company by such
Holder as a Person who is to receive copies of
such notice.
if to the Company: at the address set forth in the Securities
Purchase Agreement.
with copies to: Xxxxxxx X. Xxxxx, Esq.
Xxxxxxxxx Traurig Xxxxxxx
Xxxxxx Xxxxx & Xxxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone Number: (000) 000-0000
Fax: (000) 000-0000 and (000) 000-0000
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5.4 Headings. The headings contained in this Agreement are for convenience
only and shall not affect the meaning or interpretation of this Agreement.
5.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
5.6 Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the state of New York, without giving
effect to the choice law provisions.
5.7 Specific Enforcement. Each party hereto acknowledges that the remedies
at law of the other parties for a breach or threatened breach of this Agreement
would be inadequate, and, in recognition of this fact, any party to this
Agreement, without posting any bond, and in addition to all other remedies which
may be available, shall be entitled to obtain equitable relief in the form of
specific performance, a temporary restraining order, a temporary to permanent
injunction or any other equitable remedy which may then be available.
5.8 Amendment and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless the Company has obtained the
written consent of Holders of a majority of the Restricted Securities.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
ENVIRONMENTAL REMEDIATION HOLDING CORP.
By:______________________________
Name: Xxx Xxxx
Its: Chief Executive Officer
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THE PURCHASERS
By:_______________________
Name:
Its:
Address:
By:_______________________
Name:
Its:
Address:
By:_______________________
Name:
Its:
Address:
By:_______________________
Name:
Its:
Address:
By:_______________________
Name:
Its:
Address:
By:_______________________
Name:
Its:
Address:
By:_______________________
Name:
Its:
Address:
17
