Exhibit 10(hh)
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") modified, dated this 15th
day July, 1996, by and between Sytron, Inc., f/k/a MHB Technology, Inc., a
Pennsylvania corporation, 0000 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx
00000 (the 'Company") and Katonah West Pension Plan ("Katonah"), Springhill
Holdings, Ltd., ("Springhill") a corporation organized pursuant to the laws of
the British Virgin Islands, Xxxxxx Holdings, Ltd., ("Xxxxxx"),a corporation
organized pursuant to the laws of the British Virgin Islands and Xxxxxx
hereinafter jointly referred to as a "Holder or the "Holders"), with Holders
principal place of businss or purposes herein located at 0000 Xxxxxxxxx Xxxxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000 for Katonah and at the Channel Islands for
Springhill and Xxxxxx.
The Company and Holders hereby agree as follows:
R E C I T A L S
WHEREAS, Holders have each agreed to loan to the Company certain amounts as
included and represented by those certain Promissory Notes dated even date
hereof (the "Notes"), of which this Agreement is a part; and
WHEREAS, as-part of the terms of the Notes, the Company has agreed to issue
to Holders a specific number of shares of the Company's common stock, which
number of shares is subject to when the Company elects to repay the Notes (the
shares of the Company's Common Stock presently held by and to be issued to
Holders hereinafter referred to as the "Shares"); and
WHEREAS, Holders have also agreed to pledge certain shares of U.S.
Environmental Systems, Inc. owned by each Holder in order to guarantee an
oblioation of the Company to pay Dorado, Inc. ("Dorado"), the principal sum of
$200,000. In consideration therefore, the Company has agreed to issue to Holders
certain Shares. In the event Dorado elects to enforce such guarantee, the
Company has agreed to issue to Holders additional Shares; and
WHEREAS, as part of the consideration give to the Holders by the Company
for issuance of the Notes and pledging the aforesaid stock, the Company's Board
of Directors has agreed to grant to Holders certain registration rights, wherein
the Company will grant to the Holders the right to cause to be registered the
Shares pursuant to and under the Securities Act of 1933, as amended (the "33
Act"),
NOW, THEREFORE, the parties hereby agree as follows: 1. Definitions. As
used in this Agreement, the following terms will have the following definitions
unless the context requires otherwise. Additional definitions may be found in
the preamble, introduction and throughout this Agreement.
"Commission" means the Securities and Exchange Commission, or any other
federal agency at the time administering the 33 Act.
"Exchange" as defined in section 3(a) of the Securities Exchange Act of
1934,15 U.S.C. sections 78a, et seq.
"Registration Expenses" means the expenses described in Section 8 of this
Agreement.
"Registration Statement" means any filing by the Company with the
Commission, on forms prescribed by the 33 Act, to register its securities for
public sale thereof (except for registration statements filed under Form S-B).
"33 Act" means the Securities Act of 1933, as amended, or any similar
federai statute, and the rules and regulations of the Commission promulgated
under that legislation, all as the same shall be in effect at the time.
2. Description of Shares. As referenced above, the Holders have both loaned
certain funds to the Company and guaranteed certain indebtedness of the Company.
The parties hereto hereby agree and acknowledge that the following include all
of the Shares subject to this Agreement, including a description as to how and
when additional Shares will be issued to the Holders and become subject to this
Agreement in the future:
Springhill: 17,156 Shares - in consideration for the guarantee;
47,150 Shares - if guarantee enforced;
up to 34,200 Shares - in consideraton for the Note.
21,374 Shares - in consideration for Note 2.
Katonab: 5,700 Shares - in consideration for the guarantee;
15,700 Shares - if guarantee is enforced;
up to 186,208 Shares - in consideration for the Note.
41,794 Shares - in consideration for Note 2.
Xxxxxx: 17,150 Shares - in consideration for the guarantee;
47,150 Shares - if guarantee is enforced;
up to 7,592 Shares - in consideration for the Note.
Private Capital Group 98,663 Shares - in consideration for Note.
The Company hereby represents that, by execution hereof, it has agreed to
register up to an aggregate of 378,000 Shares on behalf of the Holders, which
obiigation is contingent as the same relates to a portion of the Shares as more
fully described in each Holders applicabie Note, at which this Agreement is a
part, as well as that certain letter of guarantee dated September 25, 1995,
issued by the Company and attached hereto and incorporated herein as Exhibits 1,
2 and 3.
3. Incidental Registration. If the Company at any time subsequent to the
date of this Agreement (other than pursuant to Section 4 of this Agreement),
proposes to register any of its securities under the 33 Act far sale to the
public, whether for its own account or for the account of other security holders
or both (except with respect to registration statements not available for
registering the Shares for sale to the public), it will give written notice to
each of the Holders of its intent, which notice shall include a list of the
jurisdictions in which the Company intends to qualifyits Common Stock under the
applicable state securities laws. Upon the written request of each Holder, given
within 10 days after receipt of notice from the Company, to register any of the
Holders Shares (which request shall state the intended method of disposition),
the Company will cause the Shares as to which registration shall have been so
requested to be included in the securities to be covered by the registration
statement proposed to be filed by the Company to the extent requisite to permit
the sale or other disposition by the Holders (in accordance with their
respective written request) of the Shares so registered. Each Holder shall each
be entitled to two (2) exercises of the piggyback registration itghts provided
in this Section t3. In the event that any registration pursuant to this Section
3 shall be, in whole or in part, an underwritten public offering of Common
Stock, any request by Holders pursuant to this Section 3 to register a Holders
Shares shall specify that either: (i) the Shares are to be included in the
underwriting on the same terms and conditions as the shares of Common Stock
otherwise being said through underwriters under such registration; or (ii) the
Shares are to be said in the open market without any underwriting.
Notwithstanding anything to the contrary contained in this Section 3, in the
event that there is a firm commitment underwritten offering of securities of the
Company pursuant to a registration covering shares of the Company's Common Stock
and any of the Holders do not elect to sell their respective Shares to the
underwriters of the Company's securities in connection with such offering, that
Holder shall refrain from xxxxxxx any of its withheld Shares so registered
pursuant to this Section 3 during the period of distribution of the Company's
securities by the underwriters and the period in which the underwriting
syndicate participates in the after market; provided, however, that such Holder
shall, in any event, be entitled to sell its Shares in connection with the
registration commencing on the 90th day after the effective date of the
registration statement.
2
4. Demand Registration Rights.
4.1 Required Registration. At any time following the date of this
Agreement and provided that the Company has not provided notice to the Holders
of its intent to file a registration statement pursuant to Section 3, above
herein and subject to the terms included herein, the Holders of Shares
constituting a least a majority of the total Shares then outstanding may tender
demand that the Company register under then Securities Act all or any portion of
the Shares held by that requesting Holder or Hoiders for sale in the manner
specified in the notice. A Holder may tender written demand on the Company to
cause all or any portion of that Holders Shares to be registered under the 33
Act, registering for sale those securities as required pursuant to the terms of
the applicable notice. The Company shall be obligated to register its Common
Stock pursuant to this Section 4 on oniy two occasions.
4.2 Participation by the Company. The Company shall be entitled to
include in any Registration Statement referred to in this Section 4, for sale in
accordance with the method of disposition specified by the Holders and in
accordance with applicable provisions of the 33 Act, its securities for its awn
account, except as and to the extent that, in the opinion of the managing
underwriter (if such method of disposition shall be an underwritten public
offering), inclusion would adversely affect marketing of the proposed offering.
Except as provided in this Section 4, the Company will not effect any other
registration of its Common Stock, whether for its awn account or that of other
holders until compietion of the period of distribution of the contempiated
registration of the Holders Shares relevant herein.
4.3 Underwriting. If the Holders demand registration of their Shares
pursuant to the terms included herein and the Holders intend to distribute their
Shares by means of an underwriting, Holders shall so advise the Company within
thirty (30) days after the date at the notice referenced in Section 4.1, above.
The Company, the Holders and the proposed underwriter xxxxx enter into an
underwriting agreement in customaryform and shall execute powers of attorney and
custodial agreements in customary form for selling shareholders. A draft of the
underwriting agreement shall be sent to Holders at least five days after the
signing of the Letter of Intent with the underwriter. x x Xxxxxx, prior to the
filing of the registration statement, disapproves of the terms of the
underwriting, such Holder may elect to withdraw from the offering by written
notice to the Company and the underwriter within 10 days after receipt of the
proposed underwriting agreement. If a Holder elects to withdraw, with the
results being that less than a majority of the outstanding unregistered Shares
have demanded registration, the Company shall abandon such registration, but
shall remain obligated to cause the Shares to be registered upon receipt of such
a demand from the Holders of a majority of the unregistered Shares at the time
of such demand.
5. Registration Procedures. If the Company undertakes to effect the
registration of its Common Stock under the 33 Act, either pursuant to the
provisions of Section 3 or 4 hereinabove, the Company will, as expeditiously as
possible:
(i) prepare and file wit[f the Commission a registration statement
(which, in the case of an underwritten public offering, shall be on a form of
generai appiicabiiity satisfactory to the managing underwriter) with respect to
the Shares and use its best efforts to cause the registration statement to
become and remain effective for the period of the contemplated distribution;
(ii) prepare and file with the Commission amendments and supplements
to the registration statement and the related prospectus as necessary to keep
the registration statement effective for the period of distribution and as may
be necessary to comply with the provisions of the 33 Act with respect to the
disposition of all Shares covered by that registration statement in accordance
with the intended method of disposition provided in the registration statement;
(iii) furnish to the Holders and to each underwriter a number of
copies of the registration statement and the included prospectus (including each
preliminary prospectus) reasonably requested in order to facilitate the public
sale or other disposition of the Shares covered by the registration statement.
3
(iv) register or qualify the Shares covered by the registration
statement under the securities or bJue sky laws of those jurisdictions as each
Holder arid, in the case of an underwritten public offering, the managing
underwriter, shall reasonably request;
(v) immediately notify each Holder and underwriter under the
registration statement at any time when a prospectus relating thereto is
required to be delivered under the 33 Act, of the happening of any event as a
result of which the prospectus contained in the registration statement, as then
in effect, includes an untrue statement of material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misieading in the light of the circumstances then existing;
(vi) it the offering is underwritten, to use its best efforts to
furnish, at the request of the Holders, on the date that Shares are delivered to
the underwriters for sale pursuant to such registration; (1) an opinion of that
date of counsel representing the Company for purposes of the registration,
addressed to the underwriters and Holders, stating that the registration
statement has become effective under the 33 Act and that (A) to the best
knowiedge of counsei, no stop order suspending the effectiveness of the
registration statement has been issued and no proceedings for that purpose have
been instituted or are pending or contemplated under the 33 Act, (B) the
registration statement, the related prospectus, and each amendment or
supplement. comply as to form in all material respects with the requirements of
the 33 Act and the appilcable rules and regulations of the Commission (except
that counsel need express no opinion as to financial statements), and (C) to
such other effects as may reasonably be requested by counsei for the
underwriters or Holders; and (2) a letter of that date from the independent
public accountants retained by the Company, addressed to the underwriters and to
the Holders, stating that they are independent public accountants within the
meaning of the 33 Act and that, in the opinion of the accountants, the financiai
statements of the Company included in the registration statement or the
prospectus, or any amendment or supplement, comply as to form in all materiai
respects with the applicable accounting requirements of the 33 Act, and the
letter shall additionafly cover such other financial matters (including
information as to the period ending no more than five business days prior to the
date of such letter) with respect to the registration far which the letter is
being given as the underwriters or Holders may reasonably request; and
(vii) make avaliabie for inspection by Holders, any underwriter
participating in any distribution pursuant to the registration statement, and
any attorney, accountant, or other agent retained by Hoiders or the underwriter,
all financial and other records, pertinent corporate documents and properties of
the Company, and cause the Company's officers, directors, and employees to
supply all information reasonably requested by any at the Hoiders, underwriter,
attorney, accountant or agent in connection with the registration statement.
For purposes of paragraphs (i) and (ii) above and of Section 3, the period
of distribution of Shares in a firm commitment underwritten public offering
shall be deemed to extend until each underwriter has completed the distribution
of all securities purchased by it, and the period of distribution of Shares in
any other registration shall be deemed to extend until the earlier of the sale
of all covered Shares covered or nine months after the effective date.
In connection with each registration, Holders will furnish to the Company
in writing information with respect to themselves and the proposed distribution
by them as shall be reasonably necessary in order to assure compliance with
federal and applicable state securities laws.
In connection with each registration covering an underwritten public
offering, the Company agrees to enter into a written agreement with the managing
underwriter in that form and containing those provisions as are customary in the
securities industry for such an arrangement between major underwriters and
companies of the Companys size and investment stature, provided that the
agreement shall not contain any provision applicable to the Company which is
inconsistent with the provisions of this Agreement and further, provided that
the time and place of the ciosing under the agreement shall be as mutually
agreed upon between the Company and the managing underwriter.
4
6. Expenses. All expenses incurred by the Company in complying with this
Agreement, including, without limitation, all registration, qualification, and
filing fees, blue sky fees and expenses, printing expense, fees and
disbursements of counsel and independent public accounts for the Company, fees
of the National Association of Securities Dealers, Inc., transfer taxes, escrow
fees, fees of transfer agents and registrars and costs of insurance, but
excluding any Selling Expenses are "Registration Expenses'. All underwriting
discounts and selling commissions applicable to the sale of Shares are "Selling
Expenses".
The Company will pay all Registration Expenses in connection with each
registration statement filed pursuant hereto. All Selling Expense relating to
the Shares sold in connection with any registration statement filed pursuant
hereto shall be borne by each Holder, pro rata to the number of Shares sold by
each Holder herein (except to the extent the Company or any other party which
holds similar registration rights shall be a xxxxxx).
7. Indemnification. Insofar as any indemnification is not held to be
against public policy, in the event of a registration of any of the Shares under
the 33 Act pursuant hereto, the Company will indemnify and hold harmless each
underwriter of Shares and each Holder against any losses, claims damages, or
liabilities, joint or several, to which each Holder or underwriter may become
subject under the 33 Act or otherwise, insofar as such losses, claims, damages,
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in any registration statement under which the Shares was registered under the 33
Act pursuant hereto, any preliminary prospectus or final prospectus contained in
that the registration statement, or any amendment or supplement, or arise out of
or are based upon the omission or alleged omission to state a material fact
required to be stated in the registration statement or necessary to make the
statements in the registration statement not misleading, or any violation by the
Company of any rule or regulation promulgatec under the 33 Act applicable to the
Company and relating to action or inaction by the Company in connection with any
registration, and will reimburse each Holder thereat far any legal or other
expenses reasonably incurred by him in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will riot be liable in any such case if and to the extent that
any such loss, claim, damage, or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omissions
made in conformity with information furnished by Holders in writing specifically
far use in the registration statement or prospectus.
In the event of a registration of any of the Shares, under the 33 Act
pursuant hereto, Holders will indemnity and hold harmless the Company and its
affiliates, and each underwriter and each affiliate of any underwriter, against
all losses, ciaims, damages, or liabilities, joint or several, to which the
Company or underwriter or affiliate may become subject under the 33 Act or
otherwise, insofar as those lasses, claims, damages or liabilities arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the registration statement under which the Shares
were registered under the 33 Act pursuant hereto, any preiimiriary prospectus or
finai prospectus contained in the registration statement, or any amendment or
supplement of the registration statement, or arise cut of or are based upon the
omission or alleged omission to state in the registration statement a material
fact required to be stated or necessary to make the statements in the
registration statement not misleading, and will reimburse the Company, each
underwriter, and/or affiliate thereof for any legal or other expenses reasonabiy
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that Holders will be
liable hereunder in any case it and only to the extent that any such lass,
claim, damage or liability arises out of or is based upon an untrue statement or
aileged untrue statement or omission or aileged omission made in reliance upon
and in conformity with information pertaining to that Holder, as such, furnished
in writing to the Company by the Holders specifically for use in that
registration statement or prospectus; and provided further, however, that the
liability of each Holder hereunder shall be imited to the proportion of any such
loss, claim, damage, liability or expense which is equai to the proportion that
the public offering price of Shares sold by Holders under the registration
statement bears to the total public offering price of all securities sold under
the registration statement, but not to exceed the proceeds received by Holders
from the sale of Shares covered by that registration statement.
5
Promptly after receipt by an indemnified party of notice of the
commencement of any action, the indemnified party shall, if a claim is to be
made against the indemnifying party, so notify the indemnifying party in
writing, but the omission to notify the indemnifying party shall not relieve the
indemnifying party from any liability which the indemnifying party may have to
any indemnified party other than under this Section 7. In case any action shall
be brought against any indemnified party and the indemnified party shall notify
the indemnifying party of the commencement, the indemnifying party shall be
entitled to participate in and, to the extent the indemnifying party shall wish,
to assume and undertake the defense with counsel satisfactory to the indemnified
party, and, after notice from the indemnifying party to the indemnified party of
its election so to assume and undertake the defense, the indemnifying party
xxxxx not be Liable to the indemnified party under this Section 7 for any legal
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation and of liaison with
counsel so elected; provided, however, that, if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be reasonable
defenses availabieto the indemnified party which are different from or
additionai to those availableto the indemnifying party or if the interests of
the indemnified party reasonably may be deemed to conflict with the interests of
the indemnifying party, the indemnified party shall have the right to select
separate counsel and to assume such legal defenses and otherwise to participate
in the defense of such action, with the expenses and fees of separate counsel
and other expenses related to participation to be reimbursed by the indemnifying
party as incurred.
8. Changes in Common Stock. if, and as often as, there are any changes in
the Common Stock by way of stock split, stock dividend, combination, or
reclassification, or through merger, consolidation, reorganization, or
recapitalization, or by any other means, appropriate adjustment shall be made in
the provisions hereof, as may be required, so that the rights and privileges
granted hereby shall continue with respect to the Shares as so changed.
9. Representations and Warranties of the Company. The Company represents
and warrants to the Holders as follows:
9.1 Authorization, Default. The execution, delivery and performance of
this Agreement by the Company has been duly authorized by all requisite
corporate action and will not violate any provision of law, any order of any
court or other agency of government, the Articles of incorporation or Bylaws of
the Company, or any provision of any indenture, agreement, or other instrument
to which it or any of its properties or assets is bound, or conflict with,
result in a breach of, or constitute (with due notice or apse of time or both) a
default under any such indenture, agreement, or other instrument, or result in
the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties.
9.2 Enforceability. This Agreement has been duly executed and
delivered by the Company and constitutes fegal, valid and binding obligations of
the Company, enforceable in accordance with its terms, except as may be imited
by appiicabie bankruptcy, Insolvency or similar laws affecting creditors' rights
generally or the avaiJability of equitable remedies, or except as to the
enforceability of indemnification under the 33 Act.
10. Change in Commission Forms or Procedures. In the event that the
Commission shall adopt new forms or procedures which authorize or permit other
means of secondary distribution which may require action by the Company other
than registration under the 33 Act, the parties hereto agree that the foregoing
provisions shall apply, as nearly as may be, to such new forms or procedures so
long as the economic or other burden of compliance therewith to the Company or
the Holders is not materially greater than the burden contemplated by the
foregoing provisions.
11. Notice. Any notice provided or permitted to be given under this
Agreement must be in writing, but may be served by deposit in the mail,
addressed to the party to be notified, postage prepaid, and registered or
certified, with a return receipt requested. Notice given by registered mail
shall be deemed delivered and effective on the date of delivery shown on the
return receipt. Notice may be served
6
in any other manner, including telex, telecopy, telegram, etc., but shall be
deemed delivered and effective as of the time of actual deilvery. Far purposes
of notice, the addresses of the parties shall be as indicated herein, or such
other address as the parties hereto may so advise, in writing, in the future.
12. Entire Agreement. This Agreement, which incorporates all prior
understanding relating to its subject matter, contains the entire agreement of
the parties with respect to its subject matter and shall not be modified except
by written instrument executed by each party.
13. Waiver. The failure of a party to insist upon strict performance of any
provision of this Agreement shall not constitute a waiver of, or estoppel
against asserting, the right to require performance in the future. A waiver or
estoppel in any one instance shall not constitute a waiver or estoppel with
respect to a later breach.
14. Severability. If any of the terms and conditions of this Agreement are
held by any court of competent jurisdiction to contravene, or to be invalid
under, the laws of any political body having jurisdiction over this subject
matter, that contravention or invalidity shall not invalidate the entire
Agreement. Instead, this Agreement shall be construed as if it did not contain
the particular provision or provisions held to be invalid, the rights and
obligations of the parties shall be construed and enforced accordingly and this
Agreement shall remain in full force and effect.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal law and not the law of conflicts, of the State of
Colorado.
16. Construction. The headings in this Agreement are inserted for
convenience and identification only arid are not intended to describe,
interpret, define, or limit the scope, extent, or intent of this Agreement or
any other provision hereof. Whenever the context requires, the gender of all
words used in this Agreement shall include the masculine, feminine, and neuter,
and the number of all words shall include the singular and the plural.
17. Counterpart Execution. This Agreement may be executed in any number of
counterparts wAh the same effect as if all the parties had signed the same
document. All counterparts shall be construed together and shall constitute one
and the same instrument.
18. Successors and Assigns. Except as otherwiseprovided, this Agreement
shall apply to, and xxxxx be binding upon, the parties hereto, their respective
successors and assigns, and all persons claiming by, through, or under any of
these persons. The rights of Holder under this Agreement shall be freeiy
assignable.
19. Cumulative Rights. The rights and remedies provided by this Agreement
are cumulative, and the use of any right or remedy by any party shall not
preclude or waive its right to use any or all other remedies. These rights and
remedies are given in addition to any other rights a party may have by law,
statute, in equity or otherwise.
20. Reliance. All factual recitals, covenants, agreements, representations
and warranties made herein xxxxx be deemed to have been relied on by the parties
in entering this Agreement.
21. Drafting Party. This Agreement expresses the mutual intent of the
parties to this Agreement. Accordingly, regardless of the party preparing any
document, the rule of construction against the drafting party shall have no
application to this Agreement.
7
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals on the date set forth hereinabove.
SYTRON, INC.
/s/ Xxxxxx Xxxxxx
---------------------------------------
HOLDERS:
KATONAH WEST PENSION PLAN
By:
-------------------------------------
Trustee
SPRINGHILL HOLDINGS, LTD.
By:
-------------------------------------
XXXXXX HOLDINGS, LTD.
By:
-------------------------------------
PRIVATE CAPITAL GROUP LTD.
By:
------------------------------------
