REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of December 16, 1999,
by and among Evercel, Inc., a Delaware corporation (the "Company"), and the
persons listed on Schedule 1 to this Agreement (the "Purchasers").
RECITALS:
WHEREAS, Purchasers are acquiring shares of the Company's
Preferred Stock and the Warrants to purchase shares of the Company's Common
Stock; and
WHEREAS, the Purchasers wish to acquire, and the Company is
willing to grant, certain registration rights with respect to the shares of the
Company's Common Stock which such Purchasers now or may hereafter own, which
rights are set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual
covenants and agreements of the parties as set forth herein and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
Section 1. Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Company's Common Stock, $.01 par
value per share.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder, and shall include any
successor statute.
"Holder" shall mean any holder of outstanding Registrable
Securities.
"Initiating Holders" shall mean, with respect to the request
for registration pursuant to Section 2 hereof, any Holder or group of Holders
who in the aggregate are Holders of a majority of the shares of Common Stock
then owned by the Holders. For purposes of this definition, shares of Common
Stock issuable upon conversion of the Preferred Stock and/or upon exercise of
the Warrants shall be deemed shares of Common Stock owned by such Purchaser.
"Other Stockholders" has the meaning given such term in
Section 2(a).
"Preferred Stock" shall mean the Series A Cumulative
Convertible Preferred Stock of the Company, $.01 par value and the Series B
Cumulative Convertible Preferred Stock of the Company, $.01 par value.
"Register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registered Securities" shall mean Registrable Securities
which have been registered under the Securities Act pursuant to a registration
statement filed with and declared effective by the Commission.
"Registrable Securities" shall mean issued shares of Common
Stock or shares of Common Stock then issuable (i) upon conversion of the
Preferred Stock, (ii) upon exercise of the Warrants and (iii) with respect to
shares of Common Stock issued by way of any stock split, stock dividend,
recapitalization, pre-emptive rights or similar event with respect to the
Preferred Stock or Warrants. For purposes of this Agreement, a Person shall be
deemed to be a holder of Registrable Securities, and the Registrable Securities
shall be deemed to be in existence, whenever such Person has the right to
acquire directly or indirectly such Registrable Securities (upon conversion or
exercise, in connection with a transfer of securities or otherwise, but
disregarding any restrictions or limitations upon the exercise of such right),
whether or not such acquisition has actually been effected, and such Person
shall be entitled to exercise the rights of a holder of Registrable Securities
hereunder. As to any particular Registrable Securities, such securities will
cease to be Registrable Securities when they have ceased to be Restricted
Securities; provided, however, that any securities which cease to be Restricted
Securities solely because they have become eligible for transfer pursuant to
Rule 144 will not cease to be Registrable Securities until they have actually
been sold in compliance with Rule 144 or become subject to Rule 144(k).
"Registration Expenses" shall mean all expenses incurred by
the Company in compliance with Sections 2, 3, 5 and 6 hereof, including, without
limitation, all registration, filing and National Association of Securities
Dealers fees, all fees and expenses of complying with securities or blue sky
laws, all word processing, duplicating and printing expenses, messenger,
telecommunications, mailing and delivery expenses, the fees and disbursements of
counsel for the Company and of its independent public accountants, including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance, the fees and disbursements incurred by the
holders of Registrable Securities to be registered (including the fees and
disbursements of one law firm retained by such Holders in accordance with
Sections 2 or 3 hereof), premiums and other costs of policies of insurance
against liabilities arising out of the public offering of the Registrable
Securities being registered and any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities, but excluding Selling
Expenses, if any, provided that, in any case where Registration Expenses are not
to be borne by the Company, such expenses shall not include salaries of Company
personnel or general overhead expenses of the Company, auditing fees, premiums
or other expenses relating to liability insurance required by underwriters of
the Company or other expenses for the preparation of financial statements or
other data normally prepared by the Company in the ordinary course of its
business or which the Company would have incurred in any event.
"Restricted Securities" shall mean the securities of the
Company required to bear or bearing the legend set forth in Section 6(a)(ix) of
the Subscription Agreement of even date herewith by and among the Company and
the other parties named therein.
"Rule 144" shall mean Rule 144 promulgated under the
Securities Act, or any successor rule then in force.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations thereunder, and shall include any
successor statute.
"Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities.
"Warrants" shall mean the warrants to purchase shares of
Common Stock issued pursuant to the Subscription Agreement dated the date
herewith and the warrants to purchase shares of Common Stock issued to Xxxxxxx
Securities Inc., as placement agent.
Section 2. Requested Registration.
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(a) Request for Registration. If, on or after six months after
the date hereof, the Company shall receive from any Initiating Holder entitled
to make such request a written request that the Company effect any registration
with respect to all or part of the Registrable Securities, the Company will:
(1) promptly give written notice of the proposed
registration to all other Purchasers other than the Initiating Holders;
and
(2) as soon as practicable, use its diligent best
efforts to effect such registration (including, without limitation, the
execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with the Securities Act) as
may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Securities as
are specified in such request, together with all or such portion of the
Registrable Securities of any Holder or Holders joining in such request
as are specified in a written request given within twenty-five (25)
days after receipt of such written notice from the Company pursuant to
Sections 2 or 3 hereof; provided, however, that the Company shall not
be obligated to effect, or to take any action to effect, any such
registration pursuant to this Section 2 after the Company has effected
a total of two registrations pursuant to this Section 2, and all such
registrations have been declared or ordered effective, maintained
effective for at least nine months (or less if all the Registrable
Securities included therein are sooner sold).
Subject to the foregoing subsection (2), the Company shall file a registration
statement covering the Registrable Securities so requested to be registered as
soon as practicable after receipt of the request or requests of the Initiating
Holders. For purposes of a registration under this Section 2, a
majority-in-interest of the Initiating Holders requesting any registration
pursuant to this Section 2 shall have the right to select the counsel for all of
the selling Holders.
Notwithstanding the foregoing, the Company may delay the
filing of any registration statement requested pursuant to this Section 2 for a
reasonable period of time (not to exceed 60 days) if within five days of the
decision of the board of directors of the Company to delay such filing, the
Company provides the Initiating Holders with a certificate signed by the
Chairman of the Board of Directors of the Company stating that, in the good
faith judgment of the board of directors of the Company, the filing of the
registration statement would require disclosure of information not otherwise
then required to be disclosed and that such disclosure would adversely affect
any material business opportunity, transaction or negotiation then contemplated
by the Company. The Company shall give prompt notice to the Initiating Holders
of the end of any delay period under this subsection.
The registration statement filed pursuant to the request of
the Initiating Holders may, subject to the provisions of Section 2(b) below,
include Registrable Securities for which inclusion in the registration statement
is requested pursuant to Section 3, securities (other than Registrable
Securities) of the Company which are held by officers or directors of the
Company or which are held by persons who, by virtue of agreements with the
Company, are entitled to include their securities in any such registration (the
"Other Stockholders"), or securities of the Company for its own account.
Notwithstanding the foregoing, the Company shall not be
required to effect registration under this Section 2 if counsel for the Company,
reasonably acceptable to the Holders requesting registration, shall deliver an
opinion reasonably acceptable to the Holders requesting registration that,
pursuant to Rule 144 under the Securities Act or otherwise, such Holders can
publicly sell the Registrable Securities as to which registration has been
requested without registration under the Securities Act and without any
limitation with respect to offerees, manner of offering or the size of the
transaction.
(b) Underwriting. If the Initiating Holders intend to
distribute the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to Section 2 and the Company shall include such information in the
written notice referred to in Section 2(a)(1) above. A majority-in-interest of
the Initiating Holders included in any registration pursuant to this Section 2
shall have the right to select the lead investment banker and manager, and any
co-managers, to administer the offering, subject to the Company's approval which
will not be unreasonably withheld. The right of any Holder to registration
pursuant to this Section 2 shall be conditioned upon such Holder's participation
in such underwriting and the inclusion of such Holder's Registrable Securities
in the underwriting (unless otherwise mutually agreed by a majority-in-interest
of the Initiating Holders and such Holder with respect to such participation and
inclusion) to the extent provided herein.
If officers or directors of the Company or Other Stockholders
holding securities of the Company shall request inclusion in any registration to
be effected pursuant to Section 2, the Initiating Holders shall offer to include
the securities of such officers, directors and Other Stockholders in the
underwriting and may condition such offer on their acceptance of the further
applicable provisions of this Agreement. The Company shall (together with all
officers, directors and Other Stockholders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting. Notwithstanding any other provision of this Section 2, if the
managing underwriter advises the Initiating Holders that marketing factors
require a limitation on the number of shares to be underwritten, the securities
of the Company (other than Registrable Securities) held by officers or directors
of the Company shall be excluded from such registration to the extent so
required by such limitation (pro rata based upon the number of securities
requested to be included in such registration by each such person), and if a
further limitation of the number of shares is required, the securities of the
Company (other than Registrable Securities) held by Other Stockholders shall be
excluded from such registration to the extent so required by such limitation
(pro rata based upon the number of securities requested to be included in such
registration by each such person) and if a further limitation of the number of
shares is required, the Initiating Holders shall so advise all Holders of
Registrable Securities requesting registration pursuant to this Section 2, and
the number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among all such Holders in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities which they had requested to be included in such registration at the
time of filing the registration statement. No Registrable Securities or any
other securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall be included in such registration. If any Holder of
Registrable Securities, officer, director or Other Stockholder who has requested
inclusion in such registration as provided above disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and the Initiating Holders. The securities
so withdrawn shall also be withdrawn from registration. If the managing
underwriter has not limited the number of Registrable Securities or other
securities to be underwritten, the Company may include its securities for its
own account in such registration if the managing underwriter so agrees and if
the number of Registrable Securities and other securities which would otherwise
have been included in such registration and underwriting will not thereby be
limited unless the inclusion of Company securities in such registration will, in
the reasonable judgment of the managing underwriter, have a material adverse
affect on the anticipated offering price.
Section 3. Piggyback Registration.
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(a) If the Company shall determine to register any of its
securities either for its own account or the account of a security holder or
holders exercising their respective demand registration rights, including any
rights granted pursuant to Section 2 hereof, other than a registration on any
form which does not permit secondary sales or does not include substantially the
same information as would be required to be included in a registration statement
covering the sale of Registrable Securities, the Company will:
(i) promptly give to each Holder written notice
thereof (which shall include a list of the jurisdictions in
which the Company intends to attempt to qualify such
securities under the applicable blue sky or other state
securities laws); and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in
any underwriting involved therein, all the Registrable
Securities specified in a written request or requests made by
any Holder within twenty-five (25) days after receipt of the
written notice from the Company described in clause (i) above,
except as set forth in Section 3(b) below. Such written
request may specify all or a part of a Holder's Registrable
Securities.
For purposes of any registration pursuant to this Section 3 the Holders of a
majority-in-interest of the Registrable Securities to be registered shall choose
the counsel for all of the selling Holders.
(b) Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 3(a)(i). All Holders proposing to distribute their
securities through such underwriting shall (together with the Company and the
Other Stockholders distributing their securities through such underwriting)
enter into an underwriting agreement mutually agreeable to the underwriter or
underwriters selected by the Company and each selling Holder, it being
understood that the Company shall have no liability to any selling Holder which
cannot reach agreeable terms with the underwriter(s) and the sole remedy
available to any selling Holder which does not agree with the terms of the
underwriting agreement is to not participate in such underwriting.
Notwithstanding any other provision of this Section 3, if the managing
underwriter advises the Company that marketing factors require a limitation on
the number of shares to be underwritten, the Company shall so advise all holders
of securities requesting registration, and the number of shares of securities
that are entitled to be included in the registration and underwriting shall be
allocated in the following manner: the securities of the Company (other than
Registrable Securities) held by officers and directors of the Company shall be
excluded from such registration and underwriting to the extent required by such
limitation (pro rata based upon the number of securities requested to be
included in such registration by each such person), and, if a further limitation
on the number of shares is required, the securities of the Company (other than
Registrable Securities) held by Other Stockholders shall be excluded from such
registration to the extent required by such limitation (pro rata based upon the
number of securities requested to be included in such registration by each such
person), and if a further limitation on the number of shares is required, the
number of shares that may be included in the registration and underwriting shall
be allocated among all such Holders requesting inclusion in the registration
pursuant to this Section 3 in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities which they had requested to be
included in such registration at the time of filing the registration statement.
If any Holder of Registrable Securities or any officer or director of the
Company or Other Stockholder disapproves of the terms of any such underwriting,
he may elect to withdraw therefrom by written notice to the Company and the
managing underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration. Any
registration solely pursuant to this Section 3 shall not constitute a demand
registration under Section 2(a)(2) hereof.
Section 4. Expenses of Registration. All Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to this Agreement shall be borne by the Company, and all Selling
Expenses shall be borne by the Holders of the securities so registered pro rata
on the basis of the number of their shares so registered; provided, however,
that the Company shall not be required to pay any Registration Expenses if, as a
result of the withdrawal of a request for registration by a majority-in-interest
of the Initiating Holders (other than as a result of a material adverse change
in the Company's business, financial condition or operating results or the
market for the Company's stock or as a result of an event which materially and
adversely affects the Holders' ability to sell their shares in compliance with
the Federal securities laws), the registration statement does not become
effective, in which case the Initiating Holders (other than Holders requesting
inclusion in such registration pursuant to Section 3) and Other Stockholders
requesting registration shall bear such Registration Expenses pro rata on the
basis of the number of their shares so included in the registration request, and
provided, further, that such registration shall not be counted as a registration
pursuant to Section 2(a)(2). Notwithstanding the proviso in the preceding
sentence, the Initiating Holders may elect to have such withdrawn registration
count as a registration pursuant to Section 2(a)(2), in which event the Company
shall bear all Registration Expenses relating to such withdrawn registration.
Section 5. Registration on Form S-3. After the Company has
qualified and for so long as the Company continues to be qualified for the use
of Form S-3 or any successor form, in addition to the rights contained in the
foregoing provisions of this Agreement, the Holders of Registrable Securities
shall have the right to request registrations on Form S-3 (such requests shall
be in writing and shall state the number of shares of Registrable Securities to
be disposed of and the intended methods of disposition of such shares by such
Holder or Holders); provided, however, that the Company shall not be obligated
to file more than one Form S-3 in any six-month period. Any such registration
shall not be counted as a registration pursuant to Section 2(a)(2).
Notwithstanding the foregoing, the Company shall not be
required to effect registration under this Section 5 if counsel for the Company,
reasonably acceptable to the Holders requesting registration, shall deliver an
opinion reasonably acceptable to the Holders requesting registration that,
pursuant to Rule 144 under the Securities Act or otherwise, such Holders can
publicly sell the Registrable Securities as to which registration has been
requested without registration under the Securities Act and without any
limitation with respect to offerees, manner of offering or the size of the
transaction.
Section 6. Registration Procedures. In the case of each
registration effected by the Company pursuant to this Agreement, the Company
will keep each Holder advised in writing as to the initiation of each
registration and as to the completion thereof. Whenever the holders of
Registrable Securities have requested that any Registrable Securities be
registered pursuant to this Agreement, the Company will use its best efforts to
effect the registration and the sale of such Registrable Securities in
accordance with the intended method of disposition thereof, and pursuant thereto
the Company will at its expense and as expeditiously as possible:
(a) Prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective; provided that before
filing a registration statement or prospectus or any amendment or supplement
thereto, including documents incorporated by reference after the initial filing
of any registration statement, the Company shall furnish to the Holders of the
Registrable Securities covered by such registration statement and the
underwriters, if any, copies of all such documents proposed to be filed, which
documents will be subject to the review of such Holders and underwriters;
(b) Prepare and file with the Commission such amendments and
post-effective amendments to a registration statement as may be necessary to
keep such registration effective for a period of nine (9) months or until the
Holder or Holders have completed the distribution described in the registration
statement relating thereto, whichever first occurs; provided, however, that the
Company, in good faith, may delay the filing of any amendment or supplement to
the Registration Statement for a reasonable period of time, not to exceed 120
days, in order to permit the Company (A) to effect disclosure or disposition or
consummation of any transaction requiring confidential treatment which is being
actively pursued at such time and which would require disclosure in the
Registration Statement or (B) to negotiate, effect or complete any transaction
which the Company reasonably believes might be jeopardized, delayed or made more
costly to the Company by disclosure in the Registration Statement; and provided
further, however, that (i) such 9 month period shall be extended for a period of
time equal to the period the Holder refrains from selling any securities
included in such registration in accordance with the provisions of Section 12
hereof; (ii) such 9 month period shall be extended by the number of days during
the period from and including the date of the giving of notice pursuant to
Section 6(e) hereof to and including the date when each Holder of Registrable
Securities covered by such registration statement shall have received the copies
of the supplemented or amended prospectus contemplated by Section 6(e) hereof;
and (iii) in the case of any registration of Registrable Securities on Form S-3
which are intended to be offered on a continuous or delayed basis, such 9 month
period shall be extended, if necessary, to keep the registration statement
effective until all such Registrable Securities are sold, provided that Rule
415, or any successor rule under the Securities Act, permits an offering on a
continuous or delayed basis, and provided further that applicable rules under
the Securities Act governing the obligation to file a post-effective amendment
permit, in lieu of filing a post-effective amendment which (y) includes any
prospectus required by Section 10(a)(3) of the Securities Act or (z) reflects
facts or events representing a material or fundamental change in the information
set forth in the registration statement, the incorporation by reference in the
registration statement of periodic reports filed pursuant to Section 13 or 15(d)
of the Exchange Act that contain the information required to be included in (y)
and (z) above;
(c) Cause the related prospectus to be supplemented by any
required prospectus supplement, and, as so supplemented, to be filed pursuant to
Rule 424 under the Securities Act; and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such registration
statement or supplement to such prospectus;
(d) Furnish such number of prospectuses and other documents
incident thereto, including any amendment of or supplement to the prospectus as
a Holder from time to time may reasonably request;
(e) Notify each seller of Registered Securities covered by
such registration statement 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, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and at the request of any such seller, prepare and furnish
to such seller a reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such shares, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(f) Cause all such Registered Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed or, if not then listed, cause such Registered Securities to be included
on whatever exchange or national automated quotation system the Board of
Directors determines is appropriate;
(g) Provide a transfer agent and registrar for all Registered
Securities and a CUSIP number for all such Registered Securities, in each case
not later than the effective date of such registration;
(h) Make available for inspection during regular business
hours by any seller of Registrable Securities, any underwriter participating in
any disposition pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such seller or underwriter
(collectively, the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively the "Records")
as shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors, employees and
independent accountants to supply all information reasonably requested by such
seller, underwriter, attorney or accountant in connection with such registration
statement. Records which the Company determines, in good faith, to be
confidential and which it notifies the Inspectors are confidential shall not be
disclosed by the Inspectors unless (A) the disclosure of such Records is, in the
opinion of counsel for the selling Holders, reasonably necessary to avoid or
correct any misstatement or omission in the registration statement, (B) the
release of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction, or (C) the disclosure of such Records is
required by any governmental regulatory body with jurisdiction over any seller
of Registrable Securities. Such seller, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, shall notify the Company
and allow the Company, at its expense, to undertake appropriate action to
prevent disclosure of the Records deemed confidential;
(i) Cooperate with the sellers of Registered Securities and
the managing underwriter(s), if any, to facilitate the timely preparation and
delivery of certificates representing the Registered Securities to be sold,
without any restrictive legends, in such denominations and registered in such
names as the managing underwriter(s) may request at least two business days
prior to any sale thereof to the underwriters, if applicable;
(j) Obtain from its accountants "cold-comfort" letters, dated
the effective date of the registration statement and the date of the closing of
the sale of the Registered Securities, and addressed to the Company and the
selling Holders, in form and substance as are customarily issued in connection
with underwritten public offerings and otherwise reasonably satisfactory to the
Company and a majority-in-interest of (i) the Initiating Holders if the
registration is pursuant to Section 2 or (ii) the selling Holders in all other
cases;
(k) Obtain from its counsel an opinion, addressed to the
selling Holders, with respect to the offering in form and substance reasonably
satisfactory to a majority-in-interest of (i) the Initiating Holders if the
registration is pursuant to Section 2 or (ii) the selling Holders in all other
cases;
(l) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but not more than eighteen
months, beginning with the first month after the effective date of the
Registration Statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act;
(m) In connection with any underwritten offering pursuant to a
registration statement filed pursuant to Section 2 hereof, the Company will
enter into any underwriting agreement reasonably necessary to effect the offer
and sale of Common Stock, provided such underwriting agreement contains
customary underwriting, indemnification and contribution provisions, which
indemnification and contribution provisions shall be in all material respects
similar to the provisions of Section 7 hereof; provided, however, that no Holder
will be liable for indemnification or contribution in excess of the net proceeds
such Holder received in the offering;
(n) Use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable 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 (i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii) subject itself
to taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction);
(o) Use its best efforts to cause such Registrable Securities
covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
sellers thereof to consummate the disposition of such Registrable Securities;
and
(p) Take all such other actions as the underwriters, if any,
and a majority-in-interest of (i) the Initiating Holders if the registration is
pursuant to Section 2 or (ii) the selling Holders in all other cases reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities (including, without limitation, effecting a stock split or
combination of shares).
Section 7. Indemnification; Contribution.
(a) To the extent permitted by law, the Company will indemnify
each Holder, each of its officers, directors, members and partners, and each
person controlling such Holder, with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, each
director and controlling person of the Company and each officer of the Company
who signed the registration statement, and each underwriter, if any, and each
person who controls any underwriter, against all claims, losses, damages and
liabilities (or actions, proceedings or settlements, if such settlements are
effected with the written consent of the Company, in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance, or any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by the Company of the Securities Act or the Exchange Act or any rule
or regulation thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration,
qualification or compliance, and will reimburse each such Holder, each of its
officers, directors, members and partners, and each person controlling such
Holder, each such director, controlling person and officer, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating and
defending or settling any such claim, loss, damage, liability, action or
proceeding; provided, however, that the Company will not be liable in any such
case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by such Holder or underwriter and stated to be specifically for use
therein.
(b) To the extent permitted by law, each Holder will, if
Registrable Securities held by such Holder are included in the securities as to
which such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors, officers and controlling persons,
and each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such underwriter
within the meaning of the Securities Act or the Exchange Act or the rules and
regulations thereunder, each other such Holder and Other Stockholder (if and to
the extent such Other Stockholder has agreed to indemnify the Holders as set
forth in this clause (b)) including Registrable Securities and other securities
in the securities as to which such registration, qualification or compliance is
being effected, and each of their officers, directors, members and partners, and
each person controlling such Holder or Other Stockholder, against all claims,
losses, damages and liabilities (or actions, proceedings or settlements in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Company and such Holders, Other Stockholders, directors, officers, members,
partners, persons, underwriters or control persons for any legal or any other
expenses reasonably incurred in connection with investigating and defending or
settling any such claim, loss, damage, liability, action or proceeding, in each
case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by such Holder and stated to be specifically for use therein; provided,
however, that the obligations of each such Holder hereunder shall be limited to
an amount equal to the net proceeds to each such Holder of securities sold as
contemplated herein.
(c) Each party entitled to indemnification under this Section
7 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement, unless such failure
to notify materially adversely affects the Indemnifying Party's ability to
defend such action. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, 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 of such claim or
litigation. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with the defense of
such claim and litigation resulting therefrom.
(d) If the indemnification provided for in this Section 7
shall for any reason be unenforceable by an Indemnified Party, although
otherwise available in accordance with its terms, then each Indemnifying Party
shall, in lieu of indemnifying such Indemnified Party, contribute to the amount
paid or payable by such Indemnified Party as a result of the losses, claims,
damages, liabilities or expenses with respect to which such Indemnified Party
has claimed indemnification, in such proportion as is appropriate to reflect the
relative fault of the Indemnified Party on the one hand and the Indemnifying
Party on the other in connection with the statements or omissions which resulted
in such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault, in the case of an untrue
statement, alleged untrue statement, omission or alleged omission, shall be
determined by, among other things, whether such statement, alleged statement,
omission or alleged omission relates to information supplied by the Indemnifying
Party or the Indemnified Party, and such parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement,
alleged statement, omission or alleged omission. The Company and each Holder
agree that it would not be just and equitable if contribution pursuant hereto
were to be determined by pro rata allocation or by any other method of
allocation which does not take into account such equitable considerations. The
amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages, liabilities or expenses referred to herein shall be deemed to
include any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending against any action or claim
which is the subject hereof. In no case, however, shall a Holder be responsible
for a portion of the contribution obligation in excess of the net proceeds to
such Holder of securities sold as contemplated herein. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation.
(e) Anything to the contrary contained in this Section 7
notwithstanding, no Holder shall be liable for any indemnification or
contribution in excess of the net proceeds received by it from any sale of
Registrable Securities which has been registered hereunder.
Section 8. Obligations of Holder.
(a) Each Holder of Registrable Securities included in any
registration shall furnish to the Company such information regarding such Holder
and the distribution proposed by such Holder as the Company may reasonably
request in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Agreement.
(b) Each Holder of the Registrable Securities agrees by
acquisition of such Registrable Securities that upon receipt of any notice from
the Company pursuant to Section 6(e), such Holder will forthwith discontinue
such Holder's disposition of Registered Securities pursuant to the registration
statement relating to such Registered Securities until such Holder's receipt of
the copies of the supplemented or amended prospectus contemplated by Section
6(e) and, if so directed by the Company, will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in such
Holder's possession of the prospectus relating to such Registered Securities at
the time of receipt of such notice.
Section 9. Limitations on Registration of Issues of
Securities. Any right given by the Company to any holder or prospective holder
of the Company's securities in connection with the registration of securities
shall be conditioned such that it shall be consistent with the rights of the
Holders provided in this Agreement.
Section 10. Rule 144 Reporting. With a view to making
available to the Holders the benefits of certain rules and regulations of the
Commission which may permit a Holder to sell securities of the Company to the
public without registration, the Company agrees to:
(a) Make and keep public information available,
as those terms are understood and defined in Rule 144 under the Securities Act;
(b) Use its best efforts to file with the Commission
in a timely manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act at any time following registration of
any of its securities under the Securities Act or Exchange Act; and
(c) So long as a Holder owns any Registrable
Securities, furnish to such Holder forthwith upon request a written statement by
the Company as to its compliance with the reporting requirements of Rule 144,
and of the Securities Act and the Exchange Act, a copy of the most recent annual
or quarterly report of the Company, and such other reports and documents so
filed as a Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Holder to sell any such securities
without registration.
Section 11. Transfer or Assignment of Registration Rights. The
rights to cause the Company to register the securities granted to the Purchasers
by the Company under Sections 2, 3 and 5 may be transferred or assigned by an
Purchaser to a transferee or assignee of any of such Purchaser's Registrable
Securities; provided, however, that the Company is given written notice by such
Purchaser at the time of or within a reasonable time after said transfer or
assignment, stating the name and address of said transferee or assignee and
identifying the securities with respect to which such registration rights are
being transferred or assigned; and provided, further, that the transferee or
assignee of such rights assumes the obligations of such Purchaser under this
Agreement.
Section 12. "Market Stand-off" Agreement. (a) Each Holder
agrees, if requested by the Company and an underwriter of Common Stock (or other
securities) of the Company, not to sell or otherwise transfer or dispose of any
Common Stock (or other securities) of the Company held by such Holder during the
period required by such underwriter (up to a maximum of 180 days) following the
effective date of a registration statement of the Company filed under the
Securities Act without the prior consent of such underwriter, provided, however,
that all Holders, Other Stockholders and officers and directors of the Company
enter into similar agreements on substantially similar terms.
(b) In the event of an underwritten public offering of
Registrable Securities pursuant to Section 2 hereof, the Company agrees, if
requested by the underwriter(s) of such offering, not to sell in the public
market any Common Stock (or other securities convertible into or exchangeable
for Common Stock) of the Company during the period required by such underwriter
following the effective date of the registration statement relating to such
offering filed under the Securities Act without the prior consent of such
underwriter, provided, however, that such period shall not exceed 90 days or, if
reasonably requested by such underwriter, such longer period as is then
customary.
(c) Such agreement shall be in writing in a form reasonably
satisfactory to the Company and such underwriter. The Company may impose
stop-transfer instructions with respect to the shares (or securities) subject to
the foregoing restriction until the end of said period.
Section 13. Adjustments Affecting Registrable Securities. The
Company will not take any action, or permit any change to occur, with respect to
the Registrable Securities which would adversely affect the ability of the
Holders of Registrable Securities to include such Registrable Securities in a
registration undertaken pursuant to this Agreement or which would adversely
affect the marketability of such Registrable Securities in any such
registration.
Section 14. Governing Law. This Agreement shall be
governed in all respects by the laws of the State of New York, without
application of the conflicts of laws principles thereof.
Section 15. Successors and Assigns. This Agreement
shall be binding upon, and inure to the benefit of, the successors, assigns,
heirs, executors and administrators of the parties hereto.
Section 16. Entire Agreement; Amendment. This Agreement
constitutes the full and entire understanding and agreement between the parties
with regard to the subjects hereof and supersedes any prior understandings,
agreements or representations by or between the parties, written or oral, which
conflicts with, or may have related to, the subject matter hereof in any way.
Neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated, except by a written instrument signed by the Company and the Holders
of not less than a majority-in-interest of the Registrable Securities.
Notwithstanding the foregoing, (a) this Agreement may not be amended to reduce
the number of demand registrations and "piggy-back" registrations granted
pursuant to Sections 2, 3 and 5, except by a written instrument signed by the
Company and a majority-in-interest of the Purchasers and (b) no amendment,
modification, supplement or waiver of, or departure from, Section 7 or this
sentence of this Section 17 shall be effective without the written consent of
all Purchasers then holding Registrable Securities.
Section 17. Attorney's Fees. In any action or proceeding
brought to enforce any provision of this Agreement, or where any provision
hereof or thereof is validly asserted as a defense, the successful party shall
be entitled to recover reasonable attorney's fees in addition to any other
available remedy.
Section 18. Notices, etc. All notices or other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally or sent by telex, telefax or telegraphic communication, by
recognized overnight courier marked for overnight delivery, or by registered or
certified mail, postage prepaid, addressed as follows: (a) if to an Purchaser,
as indicated on Schedule 1 attached hereto, or at such other address as such
Purchaser shall have furnished to the Company in writing, or (b) if to any other
holder of any shares of Common Stock at such address as such holder shall have
furnished the Company in writing, or, until any such holder so furnishes an
address to the Company, then to and at the address of the last holder thereof
who has so furnished an address to the Company, or (c) if to the Company, 0 Xxx
Xxx Xxxxxx, Xxxxxxx, XX 00000, Attention: President, or such other addresses as
shall be furnished by like notice by such party. All such notices and
communications shall, when telexed (provided the correct answerback has been
received) or telefaxed (immediately thereafter confirmed by telephone) or
telegraphed, be effective when telexed, telefaxed or delivered to the telegraph
company, respectively, or if sent by nationally recognized overnight courier
service, be effective one Business Day after the same has been delivered to such
courier service marked for overnight delivery, or, if mailed, be effective when
received.
Section 19. Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner so as to be effective and
valid under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision of this Agreement. If any provision contained in
this Agreement is determined to be invalid, illegal or unenforceable as written,
a court of competent jurisdiction shall, at any party's request, reform the
terms of this Agreement to the extent necessary to cause such otherwise invalid
provisions to be enforceable under applicable law.
Section 20. No Inconsistent Agreements. The Company will not
on or after the date of this Agreement enter into any agreement, and as of the
date of this Agreement the Company is not a party to any agreement, with respect
to its securities which is inconsistent with the rights granted to the holders
of Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof or impairs the rights granted hereunder. The Company has not
previously entered into any agreement with respect to its securities granting
any registration rights to any Person which has not been terminate on or prior
to the date hereof.
Section 21. Titles and Subtitles. The titles of the
sections, paragraphs and subparagraphs of this Agreement are for convenience of
reference only and are not to be considered in construing this Agreement.
Section 22. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be an original, but all of
which together shall constitute one instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day, month and year first written above.
EVERCEL, INC.
By:
------------------------------
Name:
Title:
PURCHASER
----------------------------------
Name:
Schedule I
ANB Associates
Delaware Charter Guarantee & TR CO
C/F Xxxxx X. Xxxxxx Xx. XXX
Xxxxxx Xxxx
Xxxxxxx X. Xxxxxxx
Willow Creek Offshore Fund
Willow Creek Capital Partners, LP
Xxxxx X. & Xxxxxx Xxxxxx
Xxxxxxx Asset Management Corporation
Xxxxxx Xxxxxxxxx
Xxxx X. Xxxxxx XXX Rollover #2
Delaware Charter GTY & TR CO TTEE
Xxxx X. Xxxxxxxxxx
Forum Capital Offshore Fund Ltd.
Forum Capital 2, Ltd.
Xxxxxxx Xxxxxxxx
Xxxxx Xxxx
Xxxxx Xxxxxxxx
Delaware Charter Guarantee & TR CO
C/F Xxxxx Xxxxxxxx XXX Rollover
Gelfenbein Family LP
Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxx
Xxxxxxx Xxxxxx c/f Xxxx Xxxxxx
Xxxxxxx Xxxxxx c/f Xxxxx Xxxxxx
Xxxxx Brothers LTD.
Xxxx Xxxxxxxxx
Xxxx Partners LP
Xxxxxx Xxxxx
Xxx Xxx Emerging Market Opportunity Portfolio
Jacombs Trading
Xxxx Xxxxx
Xxxxxxx & Xxxxxx Xxxxxx
Xxxx Xxxxxxx
Xxxxxx X. Xxxxxx XXX Rollover
Delaware Charter GTY & TR TTEE
LAMBDA IV, LLC
Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxx
Xxx X. Xxxxxxx
Xxxxx Family Limited Partnership
Xxxxxx Xxxxx XXX
Delaware Charter GTY & TR TTEE
Xxxxxxx Xxxxx
Xxxxxxx Xxxxxxxx III XXX R/O #2
Delaware Charter GTY & TR TTEE
Xxxx X. Xxxxxxx
Xxxxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxxxxxx & Co., Inc.
Xxxx Xxx Xxxxxx
Xxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxx Family Limited Partnership
Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxx, III
Xxxxxx Xxxxxxxxx
Mogen Investment
Xxxx & Xxxxxx Xxxxxxxxx
NTS Financial Services
Xxxxx X. X'Xxxxxxx
Xxx Xxxxxx
Xxxxxx Xxxxxxxxxxx
Xxxxxx Xxxxxx
Xxxxxxx & Xxxxxx Xxxxxx
Xxxxxxx Xxxxxx
Xxxxxxxxxx Xxxxxxxxx
Xxxx X. Xxxxxxxxx
Xxxx X. Xxxxxxxxx
Xxxxxx Xxxxxx
Sontek Industries Inc.
Xxxxx X. Xxxxxxxxxx
Xxxxx Xxxxxxx
Xxxxxxx X.X. Xxxxxxxx
Xxxx & Xxxx Xxxxxxxxxx
Xxxxxx & Xxxxxxx Xxxxxx
Xxxxxx X. & Xxxxx X. Xxxxxx
