EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is made and
entered into as of 4th the day of March, 2004 by and among PDG ENVIRONMENTAL,
INC., a corporation organized and existing under the laws of the State of
Delaware ("PDG ENVIRONMENTAL" or the "COMPANY"), and XXXXXX PARTNERS, L.P., a
Delaware limited partnership (the "INVESTOR"). Unless defined otherwise,
capitalized terms herein shall have the identical meaning as in the Stock
Purchase Agreement.
PRELIMINARY STATEMENT
WHEREAS, pursuant to the Stock Purchase Agreement, of even date
herewith, by and among PDG ENVIRONMENTAL and the Investor, as part of the
consideration, Investor shall receive shares of the Common Stock, par value
$0.02 per share, of PDG ENVIRONMENTAL and warrants to purchase shares of common
stock of PDG ENVIRONMENTAL; and
WHEREAS, the ability of the Investor to sell their shares of Common
Stock is subject to certain restrictions under the 1933 Act; and
WHEREAS, as a condition to the Stock Purchase Agreement, PDG
ENVIRONMENTAL has agreed to provide the Investor with a mechanism that will
permit the Investor, subject to a market stand-off agreement, to sell its shares
of Common Stock in the future.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements, and subject to the terms and conditions herein
contained, the parties hereto hereby agree as follows:
ARTICLE I
INCORPORATION BY REFERENCE, SUPERSEDER
1.1 Incorporation by Reference. The foregoing recitals and the Exhibits
attached hereto and referred to herein, are hereby acknowledged to be true and
accurate, and are incorporated herein by this reference.
1.2 Superseder. This Agreement, to the extent that it is inconsistent with
any other instrument or understanding among the parties governing the affairs of
the Company, shall supersede such instrument or understanding to the fullest
extent permitted by law. A copy of this Agreement shall be filed at the
Company's principal office.
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ARTICLE II
DEMAND REGISTRATION RIGHTS
2.1 "REGISTRABLE SHARES" means and includes the Shares of PDG ENVIRONMENTAL
issued to the Investor pursuant to the Stock Purchase Agreement. As to any
particular Registrable Shares, such securities will cease to be Registrable
Shares when (a) they have been effectively registered under the 1933 Act and
disposed of in accordance with the registration statement covering them, (b)
they are or may be freely traded without registration pursuant to Rule 144 under
the 1933 Act (or any similar provisions that are then in effect), or (c) they
have been otherwise transferred and new certificates for them not bearing a
restrictive legend have been issued by PDG ENVIRONMENTAL and PDG ENVIRONMENTAL
shall not have "stop transfer" instructions against them. "SHARES" shall mean,
collectively, the shares of Common Stock of the Company being issued pursuant to
the Stock Purchase Agreement and the Warrant Shares. "WARRANT SHARES" means the
shares of Common Stock issuable to the Investor upon exercise of the Warrants
being issued to the Investor pursuant to the Stock Purchase Agreement.
2.2 REGISTRATION OF REGISTRABLE SECURITIES. The Company shall prepare and
file within ninety (90) days following the date hereof (the "FILING DATE") a
registration statement (the "SHELF REGISTRATION STATEMENT") covering the resale
by the Investor of the Registrable Securities. The Company shall use its
commercially reasonable efforts to cause the Shelf Registration Statement to be
declared effective by the SEC on the earlier of (i) the six month anniversary of
the Closing Date, (ii) ten (10) days following the receipt of a "No Review" or
similar letter from the SEC relating to the Shelf Registration Statement or
(iii) the first day following the day the SEC determines the Shelf Registration
Statement eligible to be declared effective (the "REQUIRED EFFECTIVENESS DATE").
Nothing contained herein shall be deemed to limit the number of Registrable
Securities required to be registered for resale under the 1933 Act by the
Company under this Section 2.2. As a result, should the Shelf Registration
Statement not relate to the maximum number of Registrable Securities acquired by
(or potentially acquirable by) the Investor pursuant to the Stock Purchase
Agreement, the Company shall be required to promptly file a separate
registration statement (utilizing Rule 462 promulgated under the Exchange Act,
where applicable) relating to such Registrable Securities which then remain
unregistered. The provisions of this Agreement shall relate to any such separate
registration statement as if it were an amendment to the Shelf Registration
Statement.
2.3 DEMAND REGISTRATION. Subject to the limitations of Section 2.2, at any
time after the Required Effectiveness Date until the date upon which the
Warrants have been exercised with respect to not less than 80% of the Warrant
Shares, the holder of a majority of the Shares (the "MAJORITY HOLDERS") may
request the registration, once and only once, under the 1933 Act of all or part
of the Registrable Shares which remain unsold and are not subject to an
effective registration statement (a "DEMAND REGISTRATION STATEMENT"). The
Majority Holders may exercise their rights under this Section 2.3 by providing
written notice thereof (which notice shall specify the Registrable Securities
intended to be disposed of by the Majority Holders and the intended method of
disposition thereof) ("DEMAND REGISTRATION REQUEST"). Subject to the
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conditions of Section 3, the Company shall use its commercially reasonable
efforts to file the Demand Registration Statement under the 1933 Act as promptly
as practicable after the date any such request is received by the Company and to
cause the Demand Registration Statement to be declared effective; provided,
however, that the Company shall have the right to postpone or defer the
registration thereof for a period of not more than 30 calendar days. The Company
shall notify the holders of Registrable Securities registering their securities
hereunder promptly when the Demand Registration Statement has been declared
effective.
2.4 REGISTRATION STATEMENT FORM. Registrations under Section 2.2 and
Section 2.3 shall be on Form SB-2 or such other appropriate registration form of
the SEC as shall permit the disposition of such Registrable Securities in
accordance with the intended method or methods of disposition specified in the
Shelf Registration Statement or the Demand Registration Statement (each, a
"REGISTRATION STATEMENT"); provided, however, such intended method of
disposition shall not include an underwritten offering of the Registrable
Securities.
2.5 EXPENSES. The Company will pay all registration expenses in connection
with any registration required by under Sections 2.2 and Section 2.3 herein;
except that the holders of the holders of the Registrable Securities shall pay
all selling commissions and stock transfer taxes applicable to the sale of such
holder's Registrable Securities and any fees and disbursements of counsel to
such holders.
2.6 EFFECTIVE REGISTRATION STATEMENT. A registration requested pursuant to
Sections 2.2 and Section 2.3 shall not be deemed to have been effected (i)
unless a registration statement with respect thereto has become effective within
the time period specified in Section 2.2 or 2.3, as applicable, provided that a
registration which does not become effective after the Company filed a
registration statement with respect thereto solely by reason of the refusal to
proceed of any holder of Registrable Securities (other than a refusal to proceed
based upon the advice of counsel in the form of a letter signed by such counsel
and provided to the Company relating to a disclosure matter unrelated to such
holder) shall be deemed to have been effected by the Company unless the holders
of the Registrable Securities shall have elected to pay all Registration
Expenses in connection with such registration) or (ii) if, after it has become
effective, such registration (x) becomes subject to any stop order, injunction
or other order or extraordinary requirement of the SEC or other governmental
agency or court or (y) otherwise ceases to be effective, in the case of either
(ii)(x) or (ii)(y), for a period in excess of the allowable Black-Out Period (as
defined herein).
2.7 PLAN OF DISTRIBUTION. The Company hereby agrees that the Registration
Statement shall include a plan of distribution section reasonably acceptable to
the Holder; provided, however, such plan of distribution section shall be
modified by the Company so as to not provide for the disposition of the
Registrable Securities on the basis of an underwritten offering.
2.8 LIQUIDATED DAMAGES.
(a) If the Company has not filed a Shelf Registration Statement
pursuant to Section 2.2 with the SEC by the Filing Date, then the Company shall,
for each day until the Shelf
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Registration Statement is filed with the SEC, pay the Investor, as liquidated
damages and not as a penalty, an amount equal to eighteen percent (18%) of the
Purchase Price per annum; and for any such day, such payment shall be made no
later than the first business day of the calendar month next succeeding the
month in which such day occurs.
(b) If (1) the Company does not register the Registrable
Securities pursuant to an effective Registration Statement under the 1933 Act by
the Required Effectiveness Date or (2) if the Company does register the
Registrable Securities pursuant to an effective Registration Statement under the
1933 Act by the Required Effectiveness Date but such registration is
subsequently deemed not to be effective as set forth in Section 2.6 above during
any time after the Required Effectiveness Date until the Effectiveness
Termination Date (subject to the Company's right to suspend use of the
registration statement during the allowable Black-Out Periods pursuant to
Sections 4.1 and 4.5 below), then the Company shall, for each such day, pay the
Purchaser, as liquidated damages and not as a penalty, an amount equal to
eighteen percent (18%) of the Purchase Price per annum; and for any such day,
such payment shall be made no later than the first business day of the calendar
month next succeeding the month in which such day occurs.
(c) The parties agree that the only damages payable for a
violation of the terms of this Agreement with respect to which liquidated
damages are expressly provided shall be such liquidated damages. Nothing shall
preclude the Investor from pursuing or obtaining specific performance or other
equitable relief with respect to this Agreement. The parties hereto agree that
the liquidated damages provided for in this Section 2.8 constitute a reasonable
estimate of the damages that may be incurred by the Investor by reason of the
failure of the Registration Statement to be filed or declared effective in
accordance with the provisions hereof.
(d) The obligation of the Company under this Section 2.8
terminates when the holder of shares of Registrable Securities no longer holds
more than twenty percent (20%) of their shares of Registrable Securities.
2.9 EFFECTIVENESS TERMINATION DATE; DEMAND EFFECTIVENESS TERMINATION DATE.
For purposes of this Agreement, (a) "EFFECTIVENESS TERMINATION DATE" means the
earlier of (i) the date that is the second anniversary of the Closing Date; (ii)
such time as all of such Registrable Securities have been sold and (iii) such
time as any remaining unsold Registrable Securities may be sold pursuant to
Securities Act Rule 144 in any three-month period and (b) "DEMAND EFFECTIVENESS
TERMINATION DATE" means the earlier of (i) the date that is the second
anniversary of the Demand Registration Notice; (ii) such time as all of such
Registrable Securities have been sold and (iii) such time as any remaining
unsold Registrable Securities may be sold pursuant to Securities Act Rule 144 in
any three-month period
ARTICLE III
INCIDENTAL REGISTRATION RIGHTS
3.1 RIGHT TO INCLUDE ("PIGGY-BACK") REGISTRABLE SECURITIES. Provided that
the Registrable Securities have not been registered, if at any time after the
date hereof but before
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the Effectiveness Termination Date the Company proposes to register any of its
securities under the 1933 Act (other than by a registration in connection with
an acquisition in a manner which would not permit registration of Registrable
Securities for sale to the public, on Form S-8, or any successor form thereto,
on Form S-4, or any successor form thereto and other than pursuant to Section
2), on an underwritten basis (either best-efforts or firm-commitment), then, the
Company will each such time give prompt written notice to the Investor of its
intention to do so and of the Investor's rights under this Section 3.1. Upon the
written request of the Investor made within ten (10) days after the receipt of
any such notice (which request shall specify the Registrable Securities intended
to be disposed of by the Investor and the intended method of disposition
thereof), the Company will, subject to the terms of this Agreement, use its
commercially reasonable efforts to include such Registrable Securities specified
in such request in such registration under the 1933 Act, to the extent requisite
to permit the disposition (in accordance with the intended methods thereof as
aforesaid) of such Registrable Securities so to be registered. Notwithstanding
anything contained herein to the contrary, if, at any time after written notice
of its intention to register any securities and prior to the effective date of
the registration statement filed in connection with such registration, the
Company shall determine for any reason either not to register or to delay
registration of such securities, the Company may, at its election, give written
notice of such determination to each holders of Registrable Securities and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of this obligation to register any Registrable Securities in connection with
such registration (but not from its obligation to pay the Registration Expenses
in connection therewith), without prejudice, however, to the rights of the
Investor to request that such registration be effected as a registration under
Section 2, and (ii) in the case of a determination to delay registering, shall
be permitted to delay registering any Registrable Securities, for the same
period as the delay in registering such other securities. No registration
effected under this Section 3.1 shall relieve the Company of its obligation to
effect any registration upon request under Section 2. The Company will pay all
Registration Expenses in connection with each registration of Registrable
Securities requested pursuant to this Section 3.1. The right provided the
Investor pursuant to this Section 3.1 shall be exercisable at its sole
discretion.
3.2 PRIORITY IN INCIDENTAL REGISTRATIONS. If the managing underwriter of
the underwritten offering contemplated by this Section 3 shall inform the
Company and the Investor by letter of its belief that marketing factors require
a limitation on the number of securities requested to be included in such
registration and underwriting, then the shares included in the registration and
underwriting shall be allocated as follows: (i) first, securities proposed by
the Company to be sold for its own account, and (ii) second, Registrable
Securities and securities of other selling security holders requested to be
included in such registration pro rata on the basis of the number of shares of
such securities so proposed to be sold and so requested to be included;
provided, however, the holders of Registrable Securities shall have pro rata
rights of registration with all shares sought to be included by officers and
directors of the Company as well as holders of ten percent (10%) or more of the
Company's Common Stock.
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ARTICLE IV
REGISTRATION PROCEDURES
4.1 REGISTRATION PROCEDURES. If and whenever the Company is required to
effect the registration of any Registrable Securities under the 1933 Act as
provided in Section 2.2 and, as applicable, 2.3, the Company shall, as
expeditiously as possible:
(i) prepare and file with the SEC the Registration Statement, or
amendments thereto, to effect such registration (including such audited
financial statements as may be required by the 1933 Act or the rules and
regulations promulgated thereunder) and thereafter use its commercially
reasonable efforts to cause such registration statement to be declared effective
by the SEC, as soon as practicable, but with respect to a registration pursuant
to Section 2.2 in no event later than the Required Effectiveness Date; provided,
however, that before filing such registration statement or any amendments
thereto, the Company will furnish to the counsel selected by the holders of
Registrable Securities which are to be included in such registration, copies of
all such documents proposed to be filed;
(ii) prepare and file with the SEC such amendments and supplements to
such Registration Statement and the prospectus used in connection therewith as
may be necessary to keep such Registration Statement effective and to comply
with the provisions of the 1933 Act (subject to the right of the Company to
suspend the effectiveness thereof pursuant to Section 4.5 for not more than an
aggregate of 60 calendar days during each year (each a "BLACK-OUT PERIOD") or
such time as all of the securities which are the subject of such Registration
Statement cease to be Registrable Securities;
(iii) furnish to each holder of Registrable Securities covered by such
Registration Statement such number of conformed copies of such Registration
Statement and of each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus contained in
such Registration Statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424 under the 1933
Act, in conformity with the requirements of the 1933 Act, and such other
documents, as such holder of Registrable Securities and underwriter, if any, may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Securities owned by such holder of Registrable Securities;
(iv) use its commercially reasonable efforts to register or qualify all
Registrable Securities and other securities covered by such Registration
Statement under such other securities laws or blue sky laws as any holder of
Registrable Securities thereof shall reasonably request, to keep such
registrations or qualifications in effect for so long as such Registration
Statement remains in effect, and take any other action which may be reasonably
necessary to enable such holder of Registrable Securities to consummate the
disposition in such jurisdictions of the securities owned by such holder of
Registrable Securities, except that the Company shall not for any such purpose
be required to qualify generally to do business as a foreign
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corporation in any jurisdiction wherein it would not but for the requirements of
this subdivision (iv) be obligated to be so qualified or to consent to general
service of process in any such jurisdiction;
(v) use its commercially reasonable efforts to cause all Registrable
Securities covered by such Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the holder of Registrable Securities thereof to consummate the
disposition of such Registrable Securities, subject to the right of the Company
to suspend the effectiveness thereof for and during the Black-Out Period;
(vi) notify the Investor and its counsel promptly and confirm such
advice in writing promptly after the Company has knowledge thereof:
(A) when the Registration Statement, the prospectus or any
prospectus supplement related thereto or post-effective amendment to the
Registration Statement has been filed, and, with respect to the Registration
Statement or any post-effective amendment thereto, when the same has become
effective;
(B) of any request by the SEC for amendments or supplements to
the Registration Statement or the prospectus or for additional information;
(C) of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings by any Person for that purpose; and
(D) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable Securities for
sale under the securities or blue sky laws of any jurisdiction or the initiation
or threat of any proceeding for such purpose;
(vii) notify the Investor at any time when a prospectus relating to any
Registration Statement covering any Registrable Securities is required to be
delivered under the 1933 Act, upon the Company's discovery that the prospectus
included in such Registration Statement, as then in effect, includes, or the
occurrence of any event relating to the Company that would reasonably be
expected to result in such prospectus including, an untrue statement of a
material fact or omits to state any material facts required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing, and at the request of the Investor promptly prepare
and furnish to such holder of Registrable Securities a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(viii) use its commercially reasonable efforts to obtain the withdrawal
of any order suspending the effectiveness of the Registration Statement at the
earliest possible moment;
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(ix) use its commercially reasonable efforts to comply with all
applicable rules and regulations of the SEC;
(xi) enter into such agreements and take such other actions as the
Investor shall reasonably request in writing (at the expense of the requesting
or benefiting Investors) in order to expedite or facilitate the disposition of
such Registrable Securities; and
(xii) use its commercially reasonable efforts to list all Registrable
Securities covered by such Registration Statement on any securities exchange on
which any of the Registrable Securities are then listed.
The obligations of the Company in this Section 4.1 shall expire (x)
with respect to any registration effected pursuant to Section 2.2 on the earlier
of the Effectiveness Termination Date and such time as all of the securities
which are the subject of such Registration Statement cease to be Registrable
Securities or (y) with respect to registration effected pursuant to Section 2.3,
on the earlier of the Demand Effectiveness Termination Date and such time as all
of the securities which are the subject of such Registration Statement cease to
be Registrable Securities.
The Company may require each holder of Registrable Securities as to
which any registration is being effected to furnish the Company such information
regarding such holder of Registrable Securities and the distribution of such
securities as the Company may from time to time reasonably request in writing.
4.2 SELLING PROCEDURES.
(a) The Company will not include any information regarding the
Investors in any registration statement to be filed pursuant to Section 2.2 or
Section 2.3, or amendment thereto or any prospectus or any supplement thereto,
to which the Investors shall reasonably object.
(b) The Company represents and warrants to each holder of
Registrable Securities that it has obtained all necessary waivers, consents and
authorizations necessary to execute this Agreement and consummate the
transactions contemplated hereby other than such waivers, consents and/or
authorizations specifically contemplated by the Stock Purchase Agreement.
(c) Following the date that a registration statement filed
pursuant to Section 2.2 or Section 2.3 is declared effective by the SEC, the
Investor shall be permitted, subject to the provisions hereof, to offer and sell
the Registrable Securities included thereon in the manner described in such
registration statement during the period of its effectiveness; provided however
that the Investor arranges for delivery of a current prospectus to the
transferee of the Registrable Securities.
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(d) As a condition precedent to the obligations of the Company to
include any Registrable Securities of the Investor in any registration statement
hereunder, the Investor shall furnish to the Company all such information and
materials regarding the Investor and the distribution proposed by the Investor
as the Company may reasonably request in writing in connection with any
registration hereunder. The Investor will promptly notify the Company in writing
of any changes in the information set forth in the registration statement after
it is prepared regarding the investor or its plan of distribution to the extent
required by law.
4.5 SUSPENSION OF USE OF REGISTRATION STATEMENTS. Notwithstanding anything
contained herein to the contrary, the Company may suspend offers and sales of
Registrable Securities pursuant to any registration statement filed pursuant to
Section 2.2, 2.3 or 3.1 at any time and from time to time upon the occurrence of
any event of the kind described in subdivision (vii) of Section 4.1. Each holder
of Registrable Securities agrees that, upon receipt of any notice from the
Company of the occurrence of such an event, such holder will forthwith
discontinue such holder of Registrable Securities' disposition of Registrable
Securities pursuant to the registration statement relating to such Registrable
Securities until such holder of Registrable Securities' receipt of the copies of
the supplemented or amended prospectus contemplated by subdivision (vi) of
Section 4.1 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such Holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
ARTICLE V
UNDERWRITTEN OFFERINGS
5.1 INCIDENTAL UNDERWRITTEN OFFERINGS. If the Company at any time proposes
to register any of its securities under the 1933 Act as contemplated by Section
3.1 and such securities are to be distributed by or through one or more
underwriters, the Company will, if requested by any holder of Registrable
Securities as provided in Section 3.1 and subject to the provisions of Section
3.2, use its commercially reasonable efforts to arrange for such underwriters to
include all the Registrable Securities to be offered and sold by such holder
among the securities to be distributed by such underwriters.
5.2 HOLDBACK AGREEMENTS. Subject to such other reasonable requirements as
may be imposed by the underwriter as a condition of inclusion of the Registrable
Securities in the registration statement, the Investor agrees by acquisition of
Registrable Securities, if so required by the managing underwriter, not to sell,
make any short sale of, loan, grant any option for the purchase of, effect any
public sale or distribution of or otherwise dispose of, except as part of such
underwritten registration, any equity securities of the Company, during such
reasonable period of time requested by the underwriter; provided however, such
period shall not exceed the 90 day period commencing with the completion of a
underwritten offering. Notwithstanding the foregoing, the Company agrees and
acknowledges that the Investor may
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sell Registrable Securities in the amount of up to one percent of the shares of
Common Stock held by the Holder of Registrable Securities per week during any
holdback period.
5.3 PARTICIPATION IN UNDERWRITTEN OFFERINGS. The Investor may not
participate in any underwritten offering under Section 3.1 unless it (i) agrees
to sell its securities on the basis provided in any underwriting arrangements
entered into by the Company; (ii) enters into an underwriting agreement
acceptable to the Company; and (iii) completes and executes all questionnaires,
indemnities, underwriting agreements and other documents (other than powers of
attorney) required under the terms of such underwriting arrangements.
Notwithstanding the foregoing, no underwriting agreement (or other agreement in
connection with such offering) shall require the Investor to make a
representation or warranty to or agreements with the Company or the underwriters
other than representations and warranties contained in a writing furnished by
the Investor expressly for use in the related registration statement or
representations, warranties or agreements regarding the Investor, the Investor's
Registrable Securities and the Investor's intended method of distribution and
any other representation required by law.
5.4 PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of each registration statement under the 1933 Act
pursuant to this Agreement, the Company will give the Investor, and its counsel
and accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the SEC,
and each amendment thereof or supplement thereto, and will give it such access
to its books and records and such opportunities to discuss the business of the
Company with its officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the reasonable
opinion of such holders and such underwriters respective counsel, to conduct a
reasonable investigation within the meaning of the 1933 Act.
ARTICLE VI
INDEMNIFICATION
6.1 INDEMNIFICATION BY THE COMPANY. In the event of any registration of any
securities of the Company under the 1933 Act, the Company will, and hereby does
agree to indemnify and hold harmless the holder of any Registrable Securities
covered by such registration statement, its directors and officers, each other
Person who participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls such holder or any such
underwriter within the meaning of the 1933 Act against any losses, claims,
damages or liabilities, joint or several, to which such holder or any such
director or officer or underwriter or controlling person may become subject
under the 1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, 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 securities were registered under the 1933 Act, any preliminary
prospectus, final prospectus or
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summary prospectus contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Company will reimburse such holder and each such director, officer,
underwriter and controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, liability, action or proceeding, provided that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability, (or action or proceeding in respect thereof) or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by such holder or underwriter stating that it is for use in the
preparation thereof and, provided further that the Company shall not be liable
to any Person who participates as an underwriter in the offering or sale of
Registrable Securities or to any other Person, if any, who controls such
underwriter within the meaning of the 1933 Act, in any such case to the extent
that any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of such Person's failure to send or give a copy
of the final prospectus, as the same may be then supplemented or amended, within
the time required by the 1933 Act to the Person asserting the existence of an
untrue statement or alleged untrue statement or omission or alleged omission at
or prior to the written confirmation of the sale of Registrable Securities to
such Person if such statement or omission was corrected in such final prospectus
or an amendment or supplement thereto. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such holder
or any such director, officer, underwriter or controlling person and shall
survive the transfer of such securities by such holder.
6.2 INDEMNIFICATION BY THE HOLDERS. In the event of any registration of any
securities of the Company under the 1933 Act, each holder of Registrable
Securities will, and hereby does agree to indemnify and hold harmless the
Company, its directors and officers, each other Person who participates as an
underwriter in the offering or sale of such securities and each other Person, if
any, who controls the Company or any such underwriter within the meaning of the
1933 Act against any losses, claims, damages or liabilities, joint or several,
to which the Company or any such director or officer or underwriter or
controlling person may become subject under the 1933 Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions or proceedings,
whether commenced or threatened, 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 securities were
registered under the 1933 Act, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
each holder of Registrable Securities will reimburse the Company and each such
director, officer, underwriter and controlling person for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding, if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information
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furnished to the Company through an instrument duly executed by such holder of
Registrable Securities specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. Any such indemnity
shall remain in full force and effect, regardless of any investigation made by
or on behalf of the Company or any such director, officer or controlling person
and shall survive the transfer of such securities by such holder of Registrable
Securities.
6.3 NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified party
of notice of the commencement of any action or proceeding involving a claim
referred to in Sections 6.1 and Section 6.2, such indemnified party will, if
claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action, provided that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under Sections 6.1 and Section
6.2, except to the extent that the indemnifying party is actually prejudiced by
such failure to give notice. In case any such action is brought against an
indemnified party, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may exist
in respect of such claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that the indemnifying party
may wish, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
consent of the indemnified party, consent to entry of any judgment or enter into
any settlement of any such action which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability, or a covenant not to xxx, in respect to such
claim or litigation. No indemnified party shall consent to entry of any judgment
or enter into any settlement of any such action the defense of which has been
assumed by an indemnifying party without the consent of such indemnifying party.
6.4 OTHER INDEMNIFICATION. Indemnification similar to that specified in
Sections 6.1 and Section 6.2 (with appropriate modifications) shall be given by
the Company and each holder of Registrable Securities (but only if and to the
extent required pursuant to the terms herein) with respect to any required
registration or other qualification of securities under any Federal or state law
or regulation of any governmental authority, other than the 1933 Act.
6.5 INDEMNIFICATION PAYMENTS. The indemnification required by Sections 6.1
and Section 6.2 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
6.6 CONTRIBUTION. If the indemnification provided for in Sections 6.1 and
Section 6.2 is unavailable to an indemnified party in respect of any expense,
loss, claim, damage or liability referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified
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party, shall contribute to the amount paid or payable by such indemnified party
as a result of such expense, loss, claim, damage or liability (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the holder of Registrable Securities or underwriter,
as the case may be, on the other from the distribution of the Registrable
Securities or (ii) if the 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 on the one hand and of the holder of Registrable Securities
or underwriter, as the case may be, on the other in connection with the
statements or omissions which resulted in such expense, loss, damage or
liability, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the holder of Registrable
Securities or underwriter, as the case may be, on the other in connection with
the distribution of the Registrable Securities shall be deemed to be in the same
proportion as the total net proceeds received by the Company from the initial
sale of the Registrable Securities by the Company to the purchasers bear to the
gain, if any, realized by all selling holders participating in such offering or
the underwriting discounts and commissions received by the underwriter, as the
case may be. The relative fault of the Company on the one hand and of the holder
of Registrable Securities or underwriter, as the case may be, on the other shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission to state a material fact relates
to information supplied by the Company, by the holder of Registrable Securities
or by the underwriter and the parties' relative intent, knowledge, access to
information supplied by the Company, by the holder of Registrable Securities or
by the underwriter and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission,
provided that the foregoing contribution agreement shall not inure to the
benefit of any indemnified party if indemnification would be unavailable to such
indemnified party by reason of the provisions contained herein, and in no event
shall the obligation of any indemnifying party to contribute under this Section
6.6 exceed the amount that such indemnifying party would have been obligated to
pay by way of indemnification if the indemnification provided for hereunder had
been available under the circumstances.
The Company and the holders of Registrable Securities agree that it
would not be just and equitable if contribution pursuant to this Section 6.6
were determined by pro rata allocation (even if the holders of Registrable
Securities and any underwriters were treated as one entity for such purpose) or
by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth herein, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6.6, no holder of
Registrable Securities or underwriter shall be required to contribute any amount
in excess of the amount by which (i) in the case of any such holder, the net
proceeds received by such holder from the sale of Registrable Securities or (ii)
in the case of an underwriter, the total price at which the Registrable
Securities purchased by it and distributed to the public were offered to the
public
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exceeds, in any such case, the amount of any damages that such holder or
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
ARTICLE VII
RULE 144
7.1 RULE 144. The Company shall timely file the reports required to be
filed by it under the 1933 Act and the 1934 Act (including but not limited to
the reports under Sections 13 and 15(d) of the Exchange Act referred to in
subparagraph (c) of Rule 144 adopted by the SEC under the 0000 Xxx) and the
rules and regulations adopted by the SEC thereunder (or, if the Company is not
required to file such reports, will, upon the request of the Investor, make
publicly available other information) and will take such further action as the
Investor may reasonably request, all to the extent required from time to time to
enable such holder to sell Registrable Securities without registration under the
1933 Act within the limitation of the exemptions provided by (a) Rule 144 under
the 1933 Act, as such Rule may be amended from time to time, or (b) any similar
rule or regulation hereafter adopted by the SEC. Upon the request of any holder
of Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with the requirements of this Section
7.1.
ARTICLE VIII
MISCELLANEOUS
8.1 AMENDMENTS AND WAIVERS. This Agreement may be amended and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the holder or
holders of the sum of the 51% or more of the shares of (i) Registrable
Securities issued at such time, plus (ii) Registrable Securities issuable upon
exercise or conversion of the Securities then constituting derivative securities
(if such Securities were not fully exchanged or converted in full as of the date
such consent if sought). Each holder of any Registrable Securities at the time
or thereafter outstanding shall be bound by any consent authorized by this
Section 8.1, whether or not such Registrable Securities shall have been marked
to indicate such consent.
8.2 NOMINEES FOR BENEFICIAL OWNERS. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election, be treated as the holder of such
Registrable Securities for purposes of any request or other action by any holder
or holders of Registrable Securities pursuant to this Agreement or any
determination of any number of percentage of shares of Registrable Securities
held by a holder or holders of Registrable Securities contemplated by this
Agreement. If the beneficial owner of
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any Registrable Securities so elects, the Company may require assurances
reasonably satisfactory to it of such owner's beneficial ownership or such
Registrable Securities.
8.3 NOTICES. Except as otherwise provided in this Agreement, all notices,
requests and other communications to any Person provided for hereunder shall be
in writing and shall be given to such Person (a) in the case of a party hereto
other than the Company, addressed to such party in the manner set forth in the
Stock Purchase Agreement or at such other address as such party shall have
furnished to the Company in writing, or (b) in the case of any other holder of
Registrable Securities, at the address that such holder shall have furnished to
the Company in writing, or, until any such other holder so furnishes to the
Company an address, then to and at the address of the last holder of such
Registrable Securities who has furnished an address to the Company, or (c) in
the case of the Company, at the address set forth on the signature page hereto,
to the attention of its President, or at such other address, or to the attention
of such other officer, as the Company shall have furnished to each holder of
Registrable Securities at the time outstanding. Each such notice, request or
other communication shall be effective (i) if given by mail, 72 hours after such
communication is deposited in the mail with first class postage prepaid,
addressed as aforesaid or (ii) if given by any other means (including, without
limitation, by fax or air courier), when delivered at the address specified
above, provided that any such notice, request or communication shall not be
effective until received.
8.4 ASSIGNMENT.
(a) Except as set forth in Section 8.4(b) below, this
Agreement shall not be assigned by operation of law or otherwise by either party
hereto without the consent of the other party hereto. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto. In addition, and whether or not any express assignment shall have been
made, the provisions of this Agreement which are for the benefit of the parties
hereto other than the Company shall also be for the benefit of and enforceable
by any subsequent holder of any Registrable Securities.
(b) The rights to cause the Company to register
securities granted to the Investor by the Company under this Agreement may be
transferred or assigned by a Holder only to a transferee or assignee of not less
than 100,000 shares of Registrable Securities (as presently constituted and
subject to subsequent adjustments for stock splits, stock dividends, reverse
stock splits, and the like); provided that (i) such transfer or assignment of
Registrable Securities is effected in accordance with the terms of Article VII
of the Stock Purchase Agreement and applicable securities laws, (ii) the Company
is given written notice prior to said transfer or assignment, stating the name
and address of the transferee or assignee and identifying the securities with
respect to which such registration rights are intended to be transferred or
assigned, (iii) the transferee or assignee of such rights assumes in writing the
obligations of the Investor under this Agreement and (iv) the Company shall not
be required to file or cause to become effective any post-effective amendment to
any registration statement filed with the SEC under this Agreement solely for
the purpose of adding such transferee or assignee as a selling stockholder under
such registration statement until such time as the Company is required to file
such post-effective amendment pursuant to Section 4.1(ii) for any
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other reason (provided, however, that the Company shall add such transferee or
assignee as a selling stockholder under such registration statement in the next
post-effective amendment the Company files with the SEC after such transfer or
assignment).
8.5 DESCRIPTIVE HEADINGS. The descriptive headings of the several sections
and paragraphs of this Agreement are inserted for reference only and shall not
limit or otherwise affect the meaning hereof.
8.6 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Pennsylvania, without giving
effect to applicable principles of conflicts of law.
8.7 JURISDICTION. This Agreement shall be exclusively governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania. If
any action is brought among the parties with respect to this Agreement or
otherwise, by way of a claim or counterclaim, the parties agree that in any such
action, and on all issues, the parties irrevocably waive their right to a trial
by jury. Exclusive jurisdiction and venue for any such action shall be the State
Courts of Pennsylvania. In the event suit or action is brought by any party
under this Agreement to enforce any of its terms, or in any appeal therefrom, it
is agreed that the prevailing party shall be entitled to reasonable attorneys
fees to be fixed by the arbitrator, trial court, and/or appellate court.
8.8 ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the Company and each other party hereto relating to the
subject matter hereof and supercedes all prior agreements and understandings
relating to such subject matter.
8.9 SEVERABILITY. If any provision of this Agreement, or the application of
such provisions to any Person or circumstance, shall be held invalid, the
remainder of this Agreement, or the application of such provision to Persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
8.10 BINDING EFFECT. All the terms and provisions of this Agreement whether
so expressed or not, shall be binding upon, inure to the benefit of, and be
enforceable by the parties and their respective administrators, executors, legal
representatives, heirs, successors and assignees.
8.11 PREPARATION OF AGREEMENT. This Agreement shall not be construed more
strongly against any party regardless of who is responsible for its preparation.
The parties acknowledge each contributed and is equally responsible for its
preparation.
8.12 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or
delay on the part of any party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty, covenant or agreement herein, nor
shall any single or partial exercise of any such right preclude other or further
exercise thereof or of any other right.
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8.13 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original, but all of which taken
together shall constitute one and the same agreement. A facsimile transmission
of this signed Agreement shall be legal and binding on all parties hereto.
[SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the Investor and the Company have as of the date
first written above executed this Agreement.
PDG ENVIRONMENTAL, INC.
By /s/ Xxxx X. Xxxxx
------------------------------
Title: President & CEO
XXXXXX PARTNERS, L.P.
By /s/ Xxxxxx Xxxxxx Xxxxxx
------------------------------
Title: Managing Partner
REGISTRATION RIGHTS AGREEMENT BETWEEN
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