Exhibit 10.23
This STOCK PURCHASE & REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is
made and entered into as of March 19, 2007 by and between STARTECH ENVIRONMENTAL
CORPORATION, a Colorado corporation (the "Company"), and Nutmeg/Mercury Fund,
L.L.L.P. (the "Purchaser").
RECITALS
The Company desires to issue and sell to the Purchaser in a private
placement (the "Offering"), and the Purchaser desire to purchase from the
Company, on the terms and subject to the conditions set forth herein, 231,482
shares of common stock (the "Shares"), no par value ("Common Stock"), of the
Company, along with 462,964 three-year warrants (the "Warrants" and, together
with the Shares, the "Securities"), the terms of such Warrants being as set
forth in the Warrant Agreement substantially in the form attached as Exhibit A
hereto. This Agreement and the Warrants shall be referred to herein collectively
as the "Transaction Documents".
The Purchaser desires, upon the terms and conditions set forth in this
Agreement, to purchase Securities in the Offering.
The Company and the Purchaser are executing and delivering this Agreement
in reliance upon the exemption from securities regulation afforded by Section
4(2) of the Securities Act (as defined in Section 3 hereof) and Rule 506 under
Regulation D.
IN CONSIDERATION of the premises and mutual covenants contained in this
Agreement and other good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, the Company and the Purchaser agree as
follows:
1. Purchase and Sale of Securities.
(a) Purchase and Sale of Shares. Subject to the terms and conditions
hereof, at the Closing identified in Section 2 hereof, the Company shall issue
and sell to the Purchaser, and the Purchaser shall purchase from the Company
231,482 Shares, which number of Shares have been calculated by dividing $555,555
(the "Purchase Price") by $2.40 per Share (the "Share Price"), which said Share
Price is TWO DOLLARS and FORTY CENTS per share ($2.40).
(b) Purchase and Sale of Warrants. In addition to the foregoing and subject
to the terms and conditions hereof, at the Closing identified in Section 2
hereof, the Company shall issue to the Purchaser One Warrant to purchase shares
of Common Stock on the following terms:
1
Warrant Coverage: The Purchaser will be entitled to receive TWO warrants (the
"Purchased Warrants"), for each of the common Shares of the
Company purchased. The Shares of Common Stock purchased into
which the Warrants are exercisable (the "Warrant Shares")
will have piggyback registration rights as provided in this
Agreement.
Term: The Purchased Warrants shall be exercisable for a term of
three-years from the Closing Date (as defined below).
Exercise Price: The Warrants will be exercisable into 231,482 shares of
Common Stock at a warrant-price of $3.40 each (the "Series A
Warrants"), and also 231,482 shares of Common Stock at a
warrant-price of $4.40 each (the "Series B Warrants").
(c) Exemption. The purchase and sale of the Securities pursuant to the
terms hereof will be made in reliance upon the provisions of Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act"), Rule 506 of
Regulation D promulgated thereunder by the United States Securities and Exchange
Commission (the "SEC"), or such other exemptions from the registration
requirements of the Securities Act as may be available with respect to the
investment in the Securities to be made hereunder.
(d) Excess Holdings. The Purchaser shall not be entitled to exercise
warrants and take delivery of common shares, if such exercise and delivery of
common shares would result in beneficial ownership by the Purchaser and its
affiliates of more than 4.99% of the outstanding shares of common stock of the
Company on such exercise date (an "Excess Holding Occurrence"), including:
(i) the number of shares of common stock beneficially owned by the
Purchaser and its affiliates, and
(ii) the number of shares of common stock issuable upon the exercise of the
warrant and/or options.
For the purposes of this provision as set forth in the immediately
preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation
13d-3 thereunder. Subject to the foregoing, the Purchaser shall not be limited
to aggregate warrant and/or option exercises of only 4.99% and aggregate warrant
and/or option exercises by the Purchaser may exceed 4.99%. The Purchaser may
void the exercise limitation described in this Section upon 61 days prior
written notice to the Company. The Purchaser may allocate which of the equity of
the Company deemed beneficially owned by the Purchaser shall be included in the
4.99% amount described above and which shall be allocated to the excess above
4.99%. Notwithstanding any provision herein to the contrary, the Purchaser may
exercise, but may not take delivery of common shares to the extent that such
delivery may result in an Excess Holding Occurrence.
2
2. Closings and Deliverables.
(a) Payment. At the Closing, the Purchaser will make a wire transfer
payment to the Company, to the account set forth on Exhibit B hereto, in an
amount equal to the Purchase Price, which Purchase Price shall entitle the
Purchaser, subject to the satisfaction of the terms and conditions herein, to
receive the Shares and the Purchased Warrants. Together with the Purchase Price,
at the Closing, the Purchaser shall deliver to the Company a fully completed and
executed copy of the Investor Questionnaire, in the form attached as Exhibit C
hereto (the "Investor Questionnaire").
(b) Closing. The closing of the purchase and sale of the Securities shall
take place at 12:00 p.m. (Eastern Standard Time) on the date hereof (the
"Closing Date"), at the offices of the Company (the "Closing").
(c) Deliverables. At the Closing, or as soon as is reasonably practicable
thereafter, and assuming the Company has received the Purchase Price and the
Investor Questionnaire, the Company (or its transfer agent) shall deliver to the
Purchaser a stock certificate (or certificates) representing the Shares so
purchased at the Closing, as well as one or more Warrant Agreements representing
the Series A Warrants and Series B Warrants and, in each case registered in the
name of the Purchaser, and such other documents and certificates as are required
by this Agreement at the Closing.
3. Representations and Warranties by the Company. The Company hereby
represents and warrants to the Purchaser, as of the date hereof, as follows:
(a) Incorporation and Qualification. The Company has been duly organized
and is validly existing as a Corporation and in good standing under the laws of
the State of Colorado with the requisite corporate power and authority to own
and use its properties and assets and to carry on its business as currently
conducted.
(b) Authority. The Company has the requisite corporate power and authority
to enter into this Agreement and to issue and deliver the Shares and the
Warrants and, upon exercise of the Warrants in accordance with the terms
thereof, the Warrant Shares. The execution and delivery of this Agreement and
the issuance and delivery of the Shares and the Warrants hereunder and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action by the Company. This Agreement has
been duly and validly executed and delivered by and on behalf of the Company and
constitutes a valid, legal and binding agreement, enforceable against the
Company in accordance with its terms, except as enforceability may be limited by
general equitable principles, bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other laws affecting creditors' rights generally.
Assuming payment of the Purchase Price in full at the Closing, the Shares and
the Warrants will be duly authorized, validly issued, fully paid and
non-assessable. Upon exercise of the Warrants in accordance with the terms
thereof, including payment of the exercise price in full, the Warrant Shares
will be duly authorized, validly issued, fully paid and non-assessable.
3
(c) No Conflicts. The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the Offering do not and
will not: (i) conflict with or violate any provision of the Company's articles
of incorporation or bylaws, or (ii) subject to obtaining the Required Approvals
(as defined below), conflict with, or constitute a default (or an event that
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation (with
or without notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument (evidencing a Company debt or otherwise) to which the
Company is a party or by which any property or asset of the Company is bound or
affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority as currently in effect to which the Company is subject (including
federal and state securities laws and regulations), or by which any property or
asset of the Company is bound or affected; except in the case of each of clauses
(ii) and (iii), such as could not, individually or in the aggregate (x)
adversely affect the legality, validity or enforceability of the Offering, (y)
have or result in a material adverse effect on the results of operations,
assets, business or condition (financial or otherwise) of the Company, taken as
a whole (other than any change, effect, event or condition that arises from
changes in general economic conditions or conditions affecting the industry of
the business of the Company generally, or such changes, events or conditions
resulting directly from the announcement of or the consummation of the Offering
contemplated hereby), or (z) adversely impair the Company's ability to perform
fully on a timely basis its obligations under this Agreement (any of (x), (y) or
(z), a "Material Adverse Effect").
(d) Capital Stock; Fully Paid and Non-Assessable.
(i) As of the date hereof, the authorized capital stock of the Company
consists of 10,000,000 shares of preferred stock, no par value (the
"Preferred Stock"), of which there are no shares issued and outstanding,
and 800,000,000 shares of Common Stock, of which 26,517,745 shares are
issued and 19,320,845 are outstanding, of which: (x) 1,000,000 shares are
authorized for issuance under the Company's stock option plans; (y)
1,557,500 shares are reserved for issuance upon the exercise of options
granted and issuable by the Company thereunder; and (z) 2,363,611 shares
are reserved for issuance upon the exercise of warrants to purchase shares
of Common Stock.
(ii) All outstanding shares of Common Stock have been duly authorized
and validly issued and are fully paid and nonassessable and were issued in
compliance with all applicable Federal and state securities laws. Except as
contemplated by this Agreement or as set forth in all forms, reports and
documents filed with the SEC pursuant to the Securities Act and Securities
Exchange Act of 1934, as amended (the "Exchange Act") from January 1, 2003
through the date hereof (collectively, the "SEC Reports"), the Company has
no outstanding subscription, option, warrant, right of first refusal,
preemptive right, call, contract, demand, commitment, convertible security
or other instrument, agreement or arrangement of any character or nature
whatever under which the Company is or may be obligated to issue Common
Stock or any other equity security of any kind or which otherwise relates
to the Company's securities.
4
(e) Filings, Consents and Approvals. The Company is not required to obtain
any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other person or entity in connection with the
execution, delivery and performance by the Company of this Agreement, other than
(i) the filing with the SEC of a Form D pursuant to Regulation D of the
Securities Act, and (iii) applicable state securities law Blue Sky filings
(collectively, the "Required Approvals").
(f) SEC Reports; Financial Statements. Since January 1, 2003, the Company
has filed (i) all reports required to be filed by it under the Securities Act;
(ii) all annual reports on Form 10-K and all quarterly reports on Form 10-Q
required to be filed by it under the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof, in order for it to satisfy its filing requirements under
the Exchange Act for the periods to which each such report relates; (iii) an
annual report on Form 10-K, covering the fiscal year ended October 31, 2003,
which was filed with the SEC on January 29, 2004; (iv) a quarterly report on
Form 10-Q, covering the fiscal quarter ended January 31, 2004, which was filed
with the SEC on March 15, 2004; and (v) a quarterly report on Form 10-Q,
covering the fiscal quarter ended April 30, 2004, which was filed with the SEC
on June 2, 2004; (the foregoing materials, as amended, where applicable, being
collectively referred to herein as the "SEC Reports"). As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act and the Exchange Act and the rules and regulations of the
SEC promulgated thereunder, and to the Knowledge (as defined below) of the
Company, none of the SEC Reports, when filed, contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations
of the SEC with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
("GAAP"), except as may be otherwise specified in such financial statements or
the notes thereto, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.
(g) No Legal Proceedings. Except as may be described in the SEC Filings,
there is no action, suit or proceeding before or by any court or any
governmental agency or body, domestic or foreign, now pending or, to the actual
knowledge (without the need for inquiry or special investigation) of the Chief
Financial Officer, Chief Operating Officer or Chief Executive Officer of the
Company ("Knowledge"), threatened against or affecting the Company, or any of
its properties or assets, which is reasonably likely to have a Material Adverse
Effect.
4. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Company, as of the date hereof, as follows:
(a) Power. The Purchaser has been duly organized, is validly existing and
is in good standing under the laws of its state of incorporation, with all
limited liability company power and authority to execute, deliver and perform
its obligations under the Agreement.
5
(b) Authority. The Purchaser has the requisite power and authority to enter
into this Agreement and to purchase the Shares and the Warrants and, upon
exercise of the Warrants in accordance with the terms thereof, the Warrant
Shares. The execution and delivery of this Agreement and the purchase of the
Shares and the Warrants hereunder and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
action by the Purchaser. This Agreement has been duly and validly executed and
delivered by or on behalf of the Purchaser and constitutes a valid, legal and
binding agreement, enforceable against the Purchaser in accordance with its
terms, except as enforceability may be limited by general equitable principles,
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other laws affecting creditors' rights generally.
(c) No Conflicts. The execution, delivery and performance of this Agreement
by the Purchaser and the consummation by the Purchaser of the purchase of the
Securities do not and will not: (i) conflict with or violate any provision of
the Purchaser's organizational or charter documents, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company debt or otherwise) to which the Purchaser is a party or by
which any property or asset of the Purchaser is bound or affected, or (iii)
result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority as currently
in effect to which the Purchaser is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Purchaser is bound or affected; except in the case of each of clauses (ii) and
(iii), such as could not, individually or in the aggregate result in a Material
Adverse Effect.
(d) Investment in Securities. The Purchaser represents and warrants to, and
covenants with, the Company that: (i) the Purchaser, either individually, or
together with a purchaser representative, is knowledgeable, sophisticated and
experienced in making, and is qualified to make, decisions with respect to
investments in shares representing an investment decision like that involved in
the purchase of the Securities, including investments in securities issued by
the Company and comparable entities, and has requested, received, reviewed and
considered all information it deems relevant in making an informed decision to
purchase the Securities; (ii) the Purchaser is acquiring the Securities in the
ordinary course of its business and for its own account for investment only and
with no present intention or view toward the public sale or distribution
thereof, and no arrangement or understanding exists with any other persons
regarding the public sale or distribution of any Securities; (iii) the Purchaser
will not, directly or indirectly, except in compliance with the Securities Act,
the rules and regulations promulgated thereunder and such other securities or
blue sky laws as may be applicable, offer, sell, pledge, transfer or otherwise
dispose of (or solicit any offers to buy, purchase or otherwise acquire or take
a pledge of) any of the Securities or engage in any Short Sale (as defined
below); (iv) the Purchaser has completed or caused to be completed the Investor
Questionnaire and the answers thereto are true and correct in all respects as of
the date hereof; (v) the Purchaser has, in connection with its decision to
purchase the Securities, relied solely upon its own independent investigation of
the Company and the representations and warranties of the Company contained
herein; and (vi) the Purchaser is an "accredited investor" within the meaning of
Rule 501(a) of Regulation D promulgated under the Securities Act.
6
(e) Short Sales. Neither the Purchaser nor any affiliate of the Purchaser
(as defined in Rule 405 of the Securities Act (each a "Purchaser/Affiliate") and
which (i) had knowledge about the transactions contemplated hereby, (ii) has or
shares discretion relating to the Purchaser's investments or trading or
information concerning Purchaser's investments, including the Units, or (iii) is
subject to the Purchaser's review or input concerning such Purchaser/Affiliate's
investments or trading) has or will, directly or indirectly, engage (A) in any
"short sale" (as defined in Rule 3b-3 promulgated under the Exchange Act),
including, without limitation, the maintaining of any short position with
respect to, establishing or maintaining a "put equivalent position" (within the
meaning of Rule 16a-1(h) under the Exchange Act) with respect to, entering into
any swap, derivative transaction or other arrangement (whether any such
transaction is to be settled by delivery of Common Stock, other securities, cash
or other consideration) that transfers to another, in whole or in part, any of
the economic consequences of ownership, or otherwise dispose of, any of the
Securities by the Purchaser or (B) in any hedging transaction which establishes
a net short position with respect to the Securities (clauses (A) and (B)
together, a "Short Sale"); except for (1) Short Sales by a Purchaser/Affiliate
which was, prior to the date on which the Purchaser was first notified that the
Company intended to engage in the transactions contemplated by this Agreement, a
market maker for the Common Stock, provided that such Short Sales are in the
ordinary course of such Purchaser/Affiliate's business and are in compliance
with the Securities Act, and the rules and regulations promulgated thereunder,
and such other securities or blue sky laws as may be applicable or (2) Short
Sales by a Purchaser/Affiliate which by virtue of the procedures of the
Purchaser are made without knowledge of the transactions contemplated in this
Agreement and were not induced or encouraged by the Purchaser).
(f) Exemptions. The Purchaser understands that the Securities are being
offered and sold to it in reliance upon specific exemptions from the
registration requirements of Securities Act, the rules and regulations and state
securities laws, and that the Company is relying upon the truth and accuracy of,
and the Purchaser's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Purchaser set forth herein
in order to determine the availability of such exemptions and the eligibility of
the Purchaser to acquire the Securities.
(g) Use of Information. The Purchaser acknowledges that it is prohibited
from and has not reproduced or distributed this Agreement or any other offering
materials or other information provided by the Company in connection with the
Purchaser's consideration of its investment in the Company, in whole or in part,
or divulged or discussed any of their contents except to its advisors and
representatives for the purpose of evaluating such investment. The foregoing
shall not apply to any information that is or becomes publicly available through
no fault of the Purchaser, or that the Purchaser is legally required to
disclose; provided, however, that if the Purchaser is requested or ordered to
disclose any such information pursuant to any court or other government order or
any other applicable legal procedure, it shall provide the Company with prompt
notice of any such request or order in time sufficient to enable the Company to
seek an appropriate protective order and shall provide the Company with
reasonable assistance in obtaining such protective order.
(h) Investment Risk. The Purchaser understands that its investment in the
Securities involves a significant degree of risk and that the market price of
the Common Stock has been and continues to be volatile, that no representation
7
is being made as to the future value of the Common Stock and that the Purchaser
has carefully read and considered the matters set forth in the SEC Reports. The
Purchaser has the knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of an investment in the
Securities and has the ability to bear the economic risks of an investment in
the Securities. The Purchaser has had a reasonable opportunity to ask questions
of the Company and its representatives; and the Company has answered all
inquiries that the Purchaser or the Purchaser's representatives have put to it,
and all such inquiries have been answered to the full satisfaction of the
Purchaser.
(i) Reliance. The Purchaser is not relying on the Company or any of its
employees or agents with respect to the legal, tax, economic and related
considerations as to an investment in the Securities, and the Purchaser has
relied on the advice of, or has consulted with, only his own advisors as it
deems necessary or advisable.
(j) No General Solicitation. The Purchaser is unaware of, is in no way
relying on, and did not become aware of the offering of the Securities through
or as a result of, any form of general solicitation or general advertising
including, without limitation, any article, notice, advertisement or other
communication published in any newspaper, magazine or similar media or broadcast
over television or radio, in connection with the offering and sale of the
Securities and is not subscribing for Securities and did not become aware of the
Offering through or as a result of any seminar or meeting to which the Purchaser
was invited by, or any solicitation of a subscription by, a person not
previously known to the Purchaser in connection with investments in securities
generally.
(k) No Endorsement of Securities. The Purchaser understands that no United
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.
(l) No Registration of Securities. The Purchaser understands that the
Securities and the Warrant Shares have not been registered under the Securities
Act and will not sell, offer to sell, assign, pledge, hypothecate or otherwise
transfer any of the Securities or Warrant Shares unless (i) pursuant to an
effective registration statement under the Securities Act, (ii) the Purchaser
provides the Company with an opinion of counsel, in a generally acceptable form,
to the effect that a sale, assignment or transfer of the Securities may be made
without registration under the Securities Act and the transferee agrees to be
bound by the terms and conditions of this Agreement, (iii) the Purchaser
provides the Company with evidence of compliance with Rule 144 promulgated under
the Securities Act ("Rule 144"), including reasonable assurances (in the form of
seller and broker representation letters) that the Securities and Warrant Shares
can be sold pursuant to Rule 144 or (iv) pursuant to Rule 144(k) following the
applicable holding period.
(m) Legend. The Purchaser understands that, until such time as a
registration statement has been declared effective or the Securities and Warrant
Shares may be sold by non-affiliates of the Company pursuant to Rule 144 under
the Securities Act without any restriction as to the number of securities as of
a particular date that can then be immediately sold, the certificates for the
Securities and Warrant Shares shall bear a restrictive legend in substantially
the following form (and a stop-transfer order may be placed against transfer of
the certificates for the Securities and Warrant Shares):
8
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR UNDER THE SECURITIES LAWS OF ANY OTHER
JURISDICTION. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND
SCOPE REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS
NOT REQUIRED UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER THE
SECURITIES ACT."
(l) Executive Offices. The Purchaser's principal executive offices are
located in the State of Connecticut.
(m) Brokers and Finders. There is no investment banker, broker, finder or
other intermediary (other than any placement agent retained by the Company)
which has been retained by or is authorized to act on behalf of the Purchaser
who might be entitled to any fee or commission from the Purchaser, the Company,
any of their respective Affiliates upon consummation of the transactions
contemplated by this Agreement.
9
5. Certain Covenants.
(a) Delisting. In the event that the Company is no longer subject to the
reporting requirements of the Exchange Act, the Company hereby covenants and
agrees with the Purchaser that, so long as the Purchaser owns at least ten
percent (10%) of the issued and outstanding shares of Common Stock, except as
otherwise required in this Agreement, the Company shall provide the Purchaser
with customary and reasonable financial information on at least a quarterly
basis and such other information rights as provided to an investor in a
privately held corporation.
(b) Confidentiality. The Purchaser covenants and agrees to keep
confidential any and all material non-public information which it has heretofore
obtained or shall hereafter obtain, directly or indirectly, from the Company
pursuant to this Agreement or otherwise, and agrees that it has not: (i) used
the same except for the purpose of determining whether to purchase the
Securities in the Offering; or (ii) disclosed the same to any party except as
provided below, without the Company's prior written consent; provided that the
terms of this Section 5(b) shall not extend to any such information that: (A) is
already publicly known; (B) has become publicly known without any fault of the
Purchaser or anyone to whom the Purchaser has made disclosure in compliance with
the terms of this Section 5(b); or (C) is required to be disclosed to any
governmental authorities or courts of law as a result of operation of law,
regulation, or court order; provided, however, that the Purchaser shall have
first given prompt written notice of such requirement to the Company (if
permissible) and cooperates with the Company to restrict such disclosure and/or
obtain confidential treatment thereof.
(c) Short-Selling. The Purchaser covenants and agrees that it will not, and
shall cause each Purchaser/Affiliate not to, engage in any Short Sales.
6. Registration Rights.
(a) Defined Terms. The following capitalized terms, when used in this
Section 6, have the respective meanings set forth below:
"Affiliate" means, with respect to any Person (as defined below), any other
Person, directly or indirectly, controlling, controlled by, or under common
control with, such Person, and shall include (i) any Person who is an executive
officer, director or beneficial holder of at least 10% of the outstanding
capital stock of the Company (or other specified Person), (ii) any Person of
which the Company (or other specified Person) or an Affiliate of the Company (or
other specified Person) shall, directly or indirectly, either beneficially own
at least 10% of the outstanding equity securities or constitute at least a 10%
participant, and (iii) in the case of a specified Person who is an individual,
each parent, spouse, child, brother, sister or the spouse of a child, brother or
sister of such Person, and each trust or family limited partnership created for
the benefit of one or more of such Persons. For the purposes of this definition,
"control" when used with respect to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing. Notwithstanding the foregoing, the term
"Affiliate" as used elsewhere in this Agreement shall have the same meaning as
given to such term in this Section 6(a).
10
"Business Day" means any day, other than a Saturday or a Sunday, that is
neither a legal holiday nor a day on which banking institutions are generally
authorized or required by law or regulation to close in the State of
Connecticut.
"Holder" shall mean any Person that owns Registrable Securities, including
such successors and assigns as acquire Registrable Securities, directly or
indirectly, from such Person. For purposes of this Agreement, the Company may
deem the registered holder of a Registrable Security as the Holder thereof.
"Other Approved Holders" shall mean holders of Common Stock having
registration rights with respect to the Common Stock, other than pursuant to the
terms of this Agreement.
"Person" means any individual, company, corporation, partnership, limited
liability company, trust, division, governmental, quasi-governmental or
regulatory entity or authority or other entity. Notwithstanding the foregoing,
the term "Person" as used elsewhere in this Agreement shall have the same
meaning as given to such term in this Section 6(a).
"Prospectus" shall mean the prospectus (including a preliminary prospectus)
included in any Registration Statement, as amended or supplemented by a
prospectus supplement with respect to the terms of the offering of any portion
of the Registrable Securities covered by such Registration Statement and by all
other amendments and supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such prospectus.
"Registrable Securities" shall mean the Shares, the Warrant Shares and any
other capital stock or other securities issued or issuable as a result of or in
connection with any stock dividend, stock split or reverse stock split,
combination, recapitalization, reclassification, merger or consolidation,
exchange, distribution or similar transaction in respect of the Shares or the
Warrant Shares.
"Registration Statement" shall mean any registration statement which covers
any of the Registrable Securities pursuant to the provisions of this Agreement,
including the Prospectus included therein, all amendments and supplements to
such Registration Statement, including post-effective amendments, and all
exhibits and all material incorporated by reference in such Registration
Statement.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act, as
amended from time to time, or any similar successor rule thereto that may be
promulgated by the SEC.
"Rule 144A" shall mean Rule 144A promulgated under the Securities Act, as
amended from time to time, or any similar successor rule thereto that may be
promulgated by the SEC.
11
(b) Piggyback Registration Rights.
(i) Whenever the Company proposes to register any of its securities
under the Securities Act, either pursuant to an underwritten primary
registration on behalf of the Company or pursuant to an underwritten
secondary registration on behalf of a holder or holders of the Company's
securities (other than on Form X-0, Xxxx X-0 or any successor form) and the
registration form to be used may be used for the registration of any
Registrable Securities (a "Piggyback Registration"), the Company will give
written notice to each holder of Registrable Securities of its intention to
effect such a registration and will include in such registration all
Registrable Securities (subject to, and in accordance with, the priorities
set forth in Section 6(b)(ii) hereof), with respect to which the Company
has received written requests for inclusion within ten (10) days after
delivery of the Company's notice to each holder of Registrable Securities.
(ii) If the managing underwriter(s) advise the Company in writing, or
the Board of Directors determines, that in their opinion, the number of
Registrable Securities requested to be included in such registration
exceeds the number which can be sold in such offering without adversely
affecting the marketability or pricing thereof, the Company will include in
such registration up to an aggregate amount determined advisable by such
underwriter(s): (i) first, any shares of Common Stock that the Company
desires to register; (ii) second, any shares of Common Stock requested to
be registered by the holder(s) of Common Stock pursuant to which the
Registration Statement is being filed and to which the holders of
Registrable Securities hereunder are receiving Piggyback Registration; and
(iii) pro rata among the holders of Registrable Securities on the basis of
the number of Registrable Securities which are requested to be registered
hereunder.
(iii) Notwithstanding anything herein to the contrary, the Company may
withdraw any registration statement referred to in this Section 6(b) at any
time in its sole discretion without thereby incurring any liability or
expense to the holders of Registrable Securities.
(c) Registration Procedures. In connection with the Company's registration
obligations pursuant to Sections 6(b) hereof, the Company will use its
commercially reasonable efforts to:
(i) register or qualify such Registrable Securities under the
securities or blue sky laws of the jurisdictions as any seller reasonably
requests in writing and do any and all other acts and things which may be
reasonably necessary to permit such seller to consummate the disposition in
such jurisdictions of the Registrable Securities owned by such seller
(provided that the Company will not be required to (A) qualify generally to
do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph or (B) consent to general service of
process in any such jurisdiction);
(ii) notify each seller of Registrable Securities at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the
12
statements therein not misleading, and, at the request of any such seller,
the Company will prepare a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus will not contain any untrue statement of a
material fact or omit to state any fact necessary to make the statements
therein not misleading;
(iii) cause all such Registrable Securities to be listed on each
securities exchange, if any, on which the same securities issued by the
Company are then listed;
(iv) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration
statement; and
(v) advise each seller of such Registrable Securities promptly after
it shall receive notice or obtain knowledge thereof, of the issuance of any
stop order by the SEC suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding for such
purpose and use commercially reasonable efforts to prevent the issuance of
any stop order or to obtain its withdrawal if such stop order should be
issued.
(d) Material Development Election.
(i) Subject to Section 6(d)(ii) below, the Company shall be entitled,
for a period of time not to exceed thirty consecutive (30) days (a
"Suspension Period"), to postpone the filing of any Registration Statement
otherwise required to be filed by it pursuant to Section 6(b) and/or
request that the Holders refrain from effecting any public sales or
distributions of their Registrable Securities if the Company's Board of
Directors shall have reasonably determined in good faith and in its
reasonable business judgment that such registration would interfere in any
material respect with any financing (other than an underwritten secondary
offering of any securities of the Company), acquisition, corporate
reorganization or other transaction or development involving the Company or
any subsidiary of the Company that in the reasonable good faith business
judgment of such board is a transaction or development that is or would be
material to the Company (a "Material Development Election").
(ii) The Board of Directors shall, as promptly as practicable, give
the Holders written notice of any such Material Development Election. In
the event of a determination by the Board of Directors to postpone the
filing of a Registration Statement required to be filed pursuant to Section
6(b) hereof, the Company shall be required to file such Registration
Statement as soon as practicable after the Board of Directors of the
Company shall determine, in its reasonable business judgment, that the
filing of such Registration Statement and the offering thereunder will not
interfere with the aforesaid material transaction or development, but in
any event no later than the end of such Suspension Period. In addition, if
the Board of Directors of the Company has requested that the Holders
refrain from making public sales or distributions of their Registrable
Securities, such board shall, as promptly as practicable following its
determination that the Holders may recommence such public sales and
distributions, notify such Holders in writing of such determination (but in
any event no later than the end of such Suspension Period). In the event
13
the Company shall exercise a Material Development Election during a period
when a Registration Statement filed pursuant to Section 6(b) hereof is
effective, the time period specified in Section 6(b) hereof during which
such Registration Statement is required to be kept effective shall be
extended by the number of days during which the Holders are prohibited by
the Company from publicly selling or distributing their securities.
(iii) The Purchaser agrees that, upon receipt of any notice from the
Company of a Suspension Period, the Purchaser shall forthwith discontinue
disposition of shares of Common Stock covered by such Registration
Statement or Prospectus until such Purchaser (A) is notified in writing by
the Company that the use of the applicable prospectus may be resumed, (B)
has received copies of a supplemental or amended prospectus, if applicable,
and (C) has received copies of any additional or supplemental filings which
are incorporated or deemed to be incorporated by reference into such
prospectus.
(iv) Notwithstanding the foregoing, no more than one Suspension Period
may occur during any twelve-month period, unless approved by a
majority-in-interest of the then outstanding Holders (on a common
equivalent basis). The Company shall use its best efforts to limit the
duration and aggregate number of any Suspension Periods.
(e) Registration Expenses. All expenses incident to the Company's
performance of or compliance with Section 6 of this Agreement, including all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualifications or registrations (or the obtaining of
exemptions therefrom) of the Registrable Securities), printing expenses
(including expenses of printing Prospectuses), messenger and delivery expenses,
internal expenses (including all salaries and expenses of its officers and
employees performing legal or accounting duties), fees and disbursements of its
counsel and its independent certified public accountants, securities acts
liability insurance (if the Company elects to obtain such insurance), fees and
expenses of any special experts retained by the Company in connection with any
registration hereunder, fees and expenses of other Persons retained by the
Company, (all such expenses being referred to as "Registration Expenses"), shall
be borne by the Company, whether or not any registration statement becomes
effective; provided that Registration Expenses shall not include any
underwriting discounts, commissions or fees attributable to the sale of the
Registrable Securities.
(f) Registration Rights Indemnification.
(i) Indemnification by the Company.
(1) The Company will indemnify and hold harmless, to the fullest
extent permitted by law, but without duplication, each Holder,
including any managed or advised accounts and any investment advisor
or agent therefore, officers, directors, employees, partners,
representatives and agents, and each Person who controls such Holder
or such other Persons (within the meaning of the Securities Act) (for
purposes of this Section 6(f)(i), a "Holder Indemnified Person"), from
14
and against, and will reimburse such Holder Indemnified Person with
respect to, any and all claims, actions, demands, losses, damages,
liabilities, costs and expenses (including reasonable costs of
investigation and reasonable legal fees and expenses) ("Indemnifiable
Costs and Expenses") to which such Holder Indemnified Person may
become subject under the Securities Act or otherwise and arise out of
or are based upon (A) violation of securities laws or (B) any untrue
statement or alleged untrue statement of any material fact contained
in, or any omission or alleged omission to state therein a material
fact required to be stated in, any such Registration Statement, any
Prospectus contained therein or any amendment or supplement thereto or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that the Company will not be liable in any such case to the
extent that any costs or expense covered by the preceding clauses (A)
or (B) arises out of or results from any untrue or alleged untrue
statement of any material fact contained in such Registration
Statement, any 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, in light of the circumstances in which
they were made, not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was so made solely in reliance upon
and in substantial conformity with written information furnished by
such Holder Indemnified Person specifically for use in the preparation
of any such Registration Statement, Prospectus or amendment or
supplement thereto.
(2) The Company further agrees promptly upon demand by each
Holder Indemnified Person to reimburse each Holder Indemnified Person
for any Holder Indemnifiable Costs and Expenses as they are incurred
by it; provided that if the Company reimburses a Holder Indemnified
Person hereunder for any expenses incurred in connection with a
lawsuit, claim, inquiry or other proceeding or investigation for which
indemnification is sought, such Holder Indemnified Person agrees to
refund such reimbursement of Holder Indemnifiable Costs and Expenses
to the extent it is finally judicially determined that the indemnity
provided for in this Section 6(f)(i) is not applicable to, or the
Company is not otherwise obligated to pay, such Holder Indemnified
Person in accordance with the terms hereof or otherwise. The
indemnity, contribution and expense reimbursement obligation of the
Company under this Section 6(f)(i) shall be in addition to any
liability it may otherwise have. The obligations of the Company
hereunder shall survive the Closing and the termination of any
Registration Statement under which any Registrable Securities were
registered the termination of this Agreement and shall not be
extinguished with respect to any Person because any other Person is
not entitled to indemnity or contribution hereunder.
(ii) Indemnification by Holders of Registrable Securities. Each Holder
whose Registrable Securities are included in a Registration Statement
pursuant to the provisions of this Section 6 will indemnify and hold
harmless the Company and its officers, directors, employees, partners,
stockholders, agents, representatives, and any Person who controls the
Company or any of its subsidiaries or Affiliates (within the meaning of the
Securities Act) (each, a "Company Indemnified Person"), from and against,
and will reimburse such Company Indemnified Person with respect to, any and
15
all Indemnifiable Costs and Expenses to which the Company or such Company
Indemnified Person may become subject under the Securities Act or otherwise
and which arise out of or result from any untrue or alleged untrue
statement of any material fact contained in such Registration Statement,
any Prospectus contained therein or any amendment or supplement thereto, or
any omission or the alleged omission to state therein any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading, in
each case to the extent, but only to the extent, that such untrue statement
or omission or alleged untrue statement or alleged omission was so made
solely in reliance upon and in substantial conformity with written
information furnished by such Holder specifically for use in the
preparation thereof; provided, however, that the liability of any Holder
pursuant to this subsection (ii) shall be limited to an amount not to
exceed the net proceeds received by such Holder pursuant to the
Registration Statement which gives rise to such obligation to indemnify.
(iii) Conduct of Indemnification Proceedings; Contribution.
(1) Each indemnifying party and indemnified party under this
Section 6(f) shall comply with the procedures set forth in Section
7(a)(iii) with respect to any indemnity sought pursuant to this
Section 6(f).
(2) Each indemnifying party and indemnified party under this
Section 6(f) also agrees to comply with the provisions in Section
7(a)(iv) as they relate to contribution.
(g) Reporting Requirements Under the Exchange Act. The Company shall use
its commercially reasonable efforts to make publicly available and available to
the Holders, pursuant to Rule 144, such information as is necessary to enable
the Holders to make sales of Registrable Securities pursuant to that Rule. The
Company shall use its commercially reasonable efforts to file timely with the
SEC all documents and reports required of the Company under the Exchange Act.
The Company shall furnish to any Holder, upon request, a written statement
executed on behalf of the Company as to compliance with the current public
information requirements of Rule 144. In addition, the Company will provide to
any Holder of a Registrable Security, or any potential purchaser of a
Registrable Security, upon any such Person's reasonable request, the information
required by paragraph (d)(4) of Rule 144A.
(h) Stockholder Information. The Company may require each seller of
Registrable Securities as to which any registration is being effected to furnish
to the Company such information regarding such seller and the distribution of
such securities as the Company or the Managing Underwriter may from time to time
reasonably request in writing.
7. Miscellaneous.
(a) Indemnification. In addition, to any indemnification provided elsewhere
in this Agreement, the parties hereto agree as follows:
(i) Company Indemnification.
16
(1) The Company will indemnify and hold harmless, to the fullest
extent permitted by law, but without duplication, the Purchaser,
including any managed or advised accounts and any investment advisor
or agent therefor, and their respective, officers, directors,
employees, partners, representatives, agents, and each Person who
controls the Company and each of its Affiliates within the meaning of
the Securities Act) (each of the foregoing Persons being a "Purchaser
Indemnified Person"), from and against any and all Indemnifiable Costs
and Expenses to which such Purchaser Indemnified Person may become
subject under the Securities Act or otherwise arising out of or based
in any manner upon any breach by the Company of any its
representations, warranties or covenants contained in the Agreement or
in any agreement, instrument or document delivered by the Company
hereunder.
(2) The obligations of the Company hereunder shall survive the
Closing and any repurchase, conversion, exchange or transfer of the
Shares, the Warrants and the Warrant Shares and the termination of
this Agreement and shall not be extinguished with respect to any
Person because any other Person is not entitled to indemnity or
contribution hereunder.
(ii) Purchaser Indemnification. The Purchaser agrees and covenants to
hold harmless and indemnify each Company Indemnified Person, from and
against any and all Indemnifiable Costs and Expenses to which such Company
Indemnified Person may become subject under the Securities Act or otherwise
which arises out of or is based in any manner upon any breach by the
Purchaser of any its representations, warranties or covenants contained in
the Agreement or in any agreement, instrument or document delivered by the
Purchaser hereunder.
(iii) Conduct of Indemnification Proceedings. Promptly after receipt
by a party indemnified pursuant to the provisions of paragraph (i) or (ii)
of this Section 7(a) or paragraph (i) or (ii) of Section 6(f) of notice of
the commencement of any action involving the subject matter of the
foregoing indemnity provisions, such indemnified party will, if a claim
thereof is to be made against the indemnifying party pursuant to the
provisions of paragraph (i) or (ii) of this Section 7(a) or paragraph (i)
or (ii) of Section 6(f), notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to an indemnified party
otherwise than under paragraph (i) or (ii) of this Section 7(a) or
paragraph (i) or (ii) of Section 6(f), and shall not relieve the
indemnifying party from liability under this Section 7(a) or Section 6(f)
unless such indemnifying party is materially prejudiced by such omission.
In case such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party shall have the right to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, 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
17
the defense thereof, the indemnifying party will not be liable to such
indemnified party pursuant to the provisions of such paragraph (i) or (ii)
of this Section 7(a) or paragraph (i) or (ii) of Section 6(f) for any legal
or other expense subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall be liable to an indemnified
party for any settlement of any action or claim without the consent of the
indemnifying party. No indemnifying party will consent to entry of any
judgment or enter into any settlement 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 in respect to such claim
or litigation and no settlement can have non-monetary remedies.
(iv) Contribution. If the indemnification provided for in subsection
(i) or (ii) of this Section 7(a) or in subsection (i) or (ii) of Section
6(f) is held by a court of competent jurisdiction to be unavailable to a
party to be indemnified with respect to any Indemnifiable Costs and
Expenses, then each indemnifying party under any such subsection, in lieu
of indemnifying such indemnified party thereunder, hereby agrees to
contribute to the amount paid or payable by such indemnified party as a
result of Indemnifiable Costs and Expenses, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
statements or omissions, acts, facts matters or circumstances which
resulted in such Indemnifiable Costs and Expenses, as well as any other
relevant equitable considerations. To the extent applicable to Section 6(f)
hereof, the relative fault of the indemnifying party and of the indemnified
party 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 indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution hereunder from any Person
who was not guilty of such fraudulent misrepresentation.
(b) Entire Agreement; Survival of Provisions. This Agreement constitutes
the entire agreement of the parties with respect to the transactions
contemplated hereby and supersedes all prior agreements and understandings with
respect thereto, whether written or oral. All of the covenants of the parties
made herein shall remain operative and in full force and effect pursuant to
their respective terms regardless of acceptance of the Securities and the
Warrant Shares, and payment therefor. The representations and warranties set
forth herein shall survive the execution and delivery of this Agreement until
the first anniversary of the date hereof (the "Expiration Date"), and shall in
no way be affected by any investigation of the subject matter thereof made by or
on behalf of the Purchaser or the Company. Notwithstanding the preceding
sentence, any representation or warranty in respect of which an indemnity may be
sought hereof shall survive the time at which it would otherwise terminate
pursuant to the preceding sentence, if a claim for indemnification shall have
been given to the party against whom such indemnity may be sought prior to the
Expiration Date. The representations, warranties, agreements and covenants made
in the Agreement shall be deemed to have been relied upon by the parties hereto.
(c) No Waiver; Modifications in Writing. No failure or delay by a party in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
18
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. Except as otherwise expressly provided herein with
respect to any right of indemnification, the remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to any
party at law or in equity or otherwise. No waiver of or consent to any departure
by a party from any provision of this Agreement shall be effective unless signed
in writing by the parties entitled to the benefit thereof. No amendment,
modification or termination of any provision of this Agreement shall be
effective unless signed in writing by all parties. Any amendment, supplement or
modification of or to any provision of this Agreement, any waiver of any
provision of this Agreement, and any consent to any departure from the terms of
any provision of this Agreement, shall be effective only in the specific
instance and for the specific purpose for which made or given.
(d) Notices. All notices, demands and other communications provided for
hereunder shall be in writing, shall be given by registered or certified mail,
return receipt requested, on the date sent by telecopy with electronic
confirmation of such transmission, the business day next following deposit with
a courier service for overnight delivery with written confirmation of such
delivery or upon personal delivery, addressed to the parties, as follows:
If to the Company, to:
Startech Environmental Corporation
00 Xxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Chief Financial Officer
Fax: (000) 000-0000
with a copy to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxx Esq.
Fax: (000) 000-0000
If to the Purchaser, to:
Nutmeg/Mercury Fund, L.L.L.P.
0000 Xxxxxxxxxx
Xxxxxxxxxx XX 00000
Phone:(000) 000-0000; Fax:(000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxxxx, Esq.
0000 Xxxxxxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
Fax: (000) 000-0000
19
or to such other address as any party shall designate in writing in compliance
with the provisions of this Section 7(d).
(e) Execution in Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto on separate counterparts, each
of which counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall constitute but one
and the same Agreement.
(f) Binding Effect; Assignment. The rights and obligations of the parties
under this Agreement may not be assigned or otherwise transferred to any other
person, without the prior written consent of the other party hereto; provided
that a Purchaser may assign or otherwise transfer the Shares to any of its
Affiliates without obtaining any such consent, but only if such Affiliate: (i)
agrees to be bound by the terms of this Agreement; (ii) is, at the time of such
transfer, an "accredited Investor" and provides a fully completed Investor
Questionnaire and such other written certification as the Company may reasonably
require as to the transferee's status as an "accredited investor"; and (iii)
such transfer to any such transferee does not violate federal or state
securities laws and counsel for transferee, at the Company's request, provides
and opinion of counsel as to the same. Except as expressly provided in this
Agreement, this Agreement shall not be construed so as to confer any right or
benefit upon any person other than the parties to this Agreement, their
respective permitted heirs, representatives, executors, successors and assigns,
each Company Indemnified Person and each Purchaser Indemnified Person. This
Agreement shall be binding upon and shall inure to the benefit of the Company,
the Purchaser and their respective permitted heirs, representatives, executors,
successors and assigns.
(g) Governing Law. This Agreement shall be deemed to be a contract made
under and shall be governed by and construed in accordance with the internal
laws of the State of Connecticut without reference to the principles of conflict
of laws.
(h) Consent to Jurisdiction and Service of Process. Any suit, action or
proceeding arising out of or relating to the Agreement or the transactions
contemplated hereby may be instituted in any Federal court situated in the State
of Connecticut or any state court of the State of Connecticut, and each party
agrees not to assert, by way of motion, as a defense or otherwise, in any such
suit, action or proceeding, any claim that it is not subject personally to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is improper
or that the Agreement or the subject matter hereof or thereof may not be
enforced in or by such court. Each party further irrevocably submits to the
jurisdiction of such court in any such suit, action or proceeding. Any and all
service of process and any other notice in any such suit, action or proceeding
shall be effective against any party if given personally or by registered or
certified mail, return receipt requested if sent to such party at the address
for such party set forth in Section 7(d) hereof, or by any other means of mail
that requires a signed receipt, postage fully prepaid, mailed to such party as
herein provided. Nothing herein contained shall be deemed to affect the right of
any party to serve process in any manner permitted by law or to commence legal
proceedings or otherwise proceed against any other party in any other
jurisdiction.
20
(i) Severability. Any provision hereof that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by law, the parties hereto waive any
provision of law that renders any such provision prohibited or unenforceable in
any respect.
(j) Headings. The Article, Section and subsection headings used or
contained in this Agreement are for convenience of reference only and shall not
affect the construction of this Agreement.
(k) Expenses. Each party shall bear its own fees, costs and expenses in
connection with the execution, delivery and performance of the Agreement.
(l) Waiver of Jury Trial. TO THE EXTENT THEY MAY LEGALLY DO SO, THE PARTIES
HERETO EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION,
CAUSE OF ACTION OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS AGREEMENT OR
IN ANY WAY CONNECTED WITH, OR RELATED TO, OR INCIDENTAL TO, THE DEALINGS OF THE
PARTIES HERETO WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS RELATED
HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE
OF WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. TO THE EXTENT THEY MAY
LEGALLY DO SO, THE PARTIES HERETO AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION,
CAUSE OF ACTION OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY
AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION 7(m) WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER
PARTY OR PARTIES HERETO TO WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY.
(m) Publicity. The parties agree that no public release or announcement
concerning the Agreement or the transactions contemplated hereby shall be made
without advance review and approval by each party hereto, except as otherwise
required by applicable law, and which review and approval shall not be
unreasonably withheld or delayed.
(n) Enforcement. The Purchaser acknowledges that the Company will be
irreparably damaged if the provisions of this Agreement applicable to the
Purchaser are not specifically enforced. If the Purchaser shall default in any
of its obligations under this Agreement or if any representation or warranty
made by or on behalf of the Purchaser in this Agreement or in any certificate,
report or other instrument delivered under or pursuant to any term hereof or
thereof shall be untrue or misleading as of the date made, the Company may
proceed to protect and enforce its rights by suit in equity or action at law
(without the posting of any bond and without proving that damages would be
inadequate), whether for the specific performance of any term contained in this
21
Agreement, injunction against the breach of any such term or in furtherance of
the exercise of any power granted in this Agreement, or to enforce any other
legal or equitable right of the Company or to take any one of more of such
actions. The Company shall be permitted to enforce specifically the terms and
provisions hereof in any court of the United States or any state thereof or any
other court having jurisdiction, this being in addition to any other remedy to
which the Company may be entitled at law or in equity or otherwise.
(o) Further Assurances. Each party shall execute and deliver such
documents, instruments and agreements and take such further actions as may be
reasonably required or desirable to carry out the provisions of this Agreement
and the transactions contemplated hereby, and each of the parties hereto shall
cooperate with each other in connection with the foregoing.
(p) Broker's Fee. The Purchaser acknowledges that the Company will pay a
$55,555 fee to Xxxxxxx X. Xxxxxxxx in respect of the sale of the Securities to
the Purchaser. The Purchaser and the Company hereby agree that the Purchaser
shall not be responsible for such fee and that the Company will indemnify and
hold harmless the Purchaser and each Purchaser/Affiliate against any losses,
claims, damages, liabilities or expenses, joint or several, to which the
Purchaser or Purchaser/Affiliate may become subject with respect to such fee.
Each of the parties hereto hereby represents that, on the basis of any actions
and agreements by it, there are no other brokers or finders entitled to
compensation in connection with the sale of the Securities to the Purchaser.
(q) Force Majeure. Neither party shall be deemed in default of any
provision of this Agreement (other than provisions regarding confidentiality),
to the extent that performance of its obligations or attempts to cure a breach
are materially delayed or prevented by any event reasonably beyond the control
of such party, including, without limitation, war, hostilities, acts of
terrorism, revolution, riot, civil commotion, national emergency, strike,
lockout, unavailability of supplies, epidemic, fire, flood, earthquake, force of
nature, explosion, embargo, or any other Act of God, or any law, proclamation,
regulation, ordinance, or other act or order of any court, government or
governmental agency, provided that such party gives the other party written
notice thereof promptly upon discovery thereof and uses reasonable efforts to
cure or mitigate the delay or failure to perform
[SIGNATURE PAGE FOLLOWS]
22
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Manager
Federal Taxpayer Identification Number:
------------------
STARTECH ENVIRONMENTAL CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Name: Xxxxx X. Xxxxxxx
Title: CFO
23
