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Exhibit 4.4
REGISTRATION RIGHTS AGREEMENT
This agreement is made as of April 26, 1996, by and between Waterlink,
Inc., a Delaware corporation (the "Company"), and Xxxxxxxx X. Xxxxxx (the
"Investor").
BACKGROUND INFORMATION
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A. Pursuant to the terms of an Asset Purchase Agreement of even date
herewith by and among the Company, A-M Acquisition Corp., a Delaware corporation
("Acquisition"), Aero-Mod Incorporated, a Kansas corporation ("Aero-Mod"),
Resi-Tech, Inc., a Kansas corporation ("Resi-Tech"), and the Investor (the
"Purchase Agreement"), Aero-Mod, Resi-Tech and the Investor are selling to the
Company and Acquisition the "Subject Assets" (as defined in the Purchase
Agreement);
B. As part of the purchase price for the Subject Assets, Acquisition
has executed, in favor of the Investor, a Convertible Subordinated Note in the
aggregate principal amount of Four Hundred Thousand Dollars ($400,000) (the
"Convertible Note");
C. The Note is, or under certain circumstances may be, convertible into
shares of common stock, par value $.001 per share of the Company (the "Common
Stock"), as provided in the Note;
D. As a condition of the Purchase Agreement, and in order to induce
Aero-Mod, Resi-Tech and the Investor to sell the Subject Assets in exchange, in
part, for the Note, the Company desires to grant registration rights to the
Investor for shares of Company Common Stock which the Investor will have the
right to acquire upon conversion of the Note.
STATEMENT OF AGREEMENT
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The parties acknowledge the accuracy of the foregoing Background
Information and hereby agree as follows:
Section 1. DEFINITIONS.
(a) As used herein the following defined terms shall have the
following meanings:
(i) The term "Holders" means any registere holder or holders
of shares of Common Stock issued upon conversion of the Note or
upon transfer of the shares after conversion of the Note and to
whom the rights hereunder are granted or may be assigned pursuant
to Section 9 of this agreement.
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(ii) Unless the context otherwise requires, the terms
"register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration
statement in compliance with the Securities Act (as defined
below) and the declaration or ordering of the effectiveness of
such registration statement.
(iii) The term "Registrable Shares" means all shares of
Common Stock of the Company that may be acquired by any Holder
upon conversion of the Note.
(iv) The term "Securities Act" means the Securities Act of
1933, as amended.
(v) The term "Shares" means shares of Common Stock of the
Company.
(b) All other capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Purchase Agreement.
Section 2. Piggyback Registration.
(a) If at any time or from time to time, the Company shall
determine to register any of its securities for its own account in a
registration statement covering the sale of Common Stock to the
general public pursuant to an underwritten public offering (except
with respect to any registration filed on Form X-0, Xxxx X-0 or any
successor forms thereto) the Company shall: (i) give to the Investor
written notice thereof at least thirty (30) days before the initial
filing of such registration (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); PROVIDED, HOWEVER, in the case of a registration statement on
Form S-3, the Company shall give the Investor written notice of the
proposed filing thereof promptly after a decision to make such filing
has been made and in no event less than ten (10) business days prior
to filing; and (ii) use its best efforts to include in such
registration (and any related qualification under blue sky laws) and
in any underwriting involved therein, all the Registrable Shares
specified in a written request or requests, made within ten (10) days
after receipt of such written notice from the Company, by any Holder
or Holders, except as set forth in Section 2(b) below.
(b) The right of any Holder to registration pursuant to this
Section 2 shall be conditioned upon such Holder's participation in the
underwriting to the extent provided herein. Any Holder proposing to
distribute his or its securities through such underwriting shall
(together with the Company) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company. Notwithstanding any other provision of
this Section 2, if the underwriter determines that marketing factors
require a limitation of the number of shares to be underwritten, the
underwriter may limit the number of Registrable Shares to be included
in the registration and underwriting. The Company shall so advise all
Holders, and the number of shares
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that may be included in the registration and underwriting shall be
allocated (i) first, among the securities the Company proposes to
sell; (ii) second, among the Preferred Securities (as defined in that
certain Registration Rights Agreement dated August 30, 1995 by and
among the Company, Xxxxxxxx Venture Partners III, L.P., Xxxxxxxx X.
Xxxxxxxxx, and River Cities Capital Fund Limited Partnership and the
Addendum to the Registration Rights Agreement dated September 15, 1995
by and among the Company, Xxxxxxxx Venture Partners III, L.P. Xxxxxxxx
X. Xxxxxxxxx, River Cities Capital Fund Limited Partnership and IPP95,
L.P. (such Registration Rights Agreement and Addendum thereto are
collectively referred to as the "First Registration Rights
Agreement")) in accordance with the terms set forth in the First
Registration Rights Agreement, as that agreement may be amended from
time to time; (iii) third, among the Other Investor Shares, the
Xxxxxxxxx Shares (each as defined in the First Registration Rights
Agreement) and among the Holders of Registrable Shares (as defined in
that certain Registration Rights Agreement by and between the Company
and Mass Transfer Systems, Inc. dated January 31, 1996, hereinafter
referred to as the "Second Registration Rights Agreement") in
accordance with the terms set forth in the Second Registration Rights
Agreement, as that agreement may be amended from time to time; (iv)
fourth, among all Holders of Registrable Shares in proportion, as
nearly as practicable, to the respective amounts of Registrable Shares
held by such Holders at the time of filing the registration statement
and among holders of other registration rights that may be granted by
the Company in connection with business acquisitions, mergers,
combinations, and the like; and (v) fifth, among other securities
requested to be included in such registration. The registration rights
of the Holders pursuant to this agreement are fully subordinated to
the rights of the holders under the First Registration Rights
Agreement and Second Registration Rights Agreement. If any Holder
disapproves of the terms of any such underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company and the
underwriter. In the event of any such withdrawal, the Company will
include, on a proportionate basis (determined in accordance with the
preceding sentence), in any such registration in lieu thereof any
additional Registrable Shares which were requested to be included by a
Holder and which were excluded pursuant to the above-described
underwriter limitation up to the maximum set by such underwriter.
Section 3. EXPENSES OF REGISTRATION. All expenses incurred in
connection with any registration or qualification pursuant to this agreement
including, without limitation, all registration filing and qualification fees,
fees and expenses associated with registration or qualification under state
securities or "Blue Sky" laws, printing expenses, fees and disbursements of
counsel for the Company and the Holders, and expenses and fees of any special
audits incidental to or required by such registration, shall be borne by the
Company; provided, however, that the Company in any event shall not be required
to pay the underwriters' discounts or commissions relating to Registrable Shares
(such underwriters' discounts or commissions are to be borne by the Holders, on
a pro rata basis, based on the number of Registrable Shares sold by each of
them).
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Section 4. REGISTRATION PROCEDURES.
(a) In the case of each registration effected by the Company
pursuant to this agreement, the Company will keep each Holder
participating therein advised in writing as to the initiation of such
registration (and any state qualifications) and as to the completion
thereof.
(b) Also in the case of each registration effected by the Company
pursuant to this agreement, the Company will:
(i) keep such registration or qualification pursuant to
Section 2 effective for a period of 180 days or until all the
Holders have completed the distribution described in the
registration statement relating thereto, whichever occurs first;
(ii) furnish such number of copies of such registration
statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each
preliminary prospectus) and such other documents incident thereto
as a Holder from time to time may reasonably request in order to
facilitate the disposition of the Registrable Shares owned by
such Holder;
(iii) use its best efforts to register or qualify such
Registrable Shares under such other securities or blue sky laws
of such jurisdictions as may be reasonably necessary and do any
and all other acts and things which may be reasonably necessary
or advisable to enable such Holder to consummate the disposition
in such jurisdictions of the Registrable Shares owned by such
Holder;
(iv) notify each Holder of Registrable Shares, at any time
when a prospectus relating thereto is required to be delivered
under the Securities Act, of the occurrence 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 statements therein not
misleading, and, at the request of any such Holder, the Company
will prepare a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such
Registrable Shares, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary
to make the statements therein not misleading;
(v) promptly notify the Holders of Registrable Shares and
the underwriters of the following events and (if requested by any
such person) confirm such notification in writing: (a) the filing
of the prospectus or any prospectus supplement and the
registration statement and any amendment or post-effective
amendment thereto and, with respect to the registration statement
or any post-effective amendment thereto, the declaration of the
effectiveness of such documents, (b) any requests by the
Securities and Exchange Commission for amendments or supplements
to the registration statement or the prospectus or for
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additional information, (c) the issuance or threat of issuance by
the Securities and Exchange Commission of any stop order
suspending the effectiveness of the registration statement or the
initiation of any proceedings for that purpose, and (d) the
receipt by the Company of any notification with respect to the
suspension of the qualification of the Registrable Shares for
sale in any jurisdiction or the initiation or threat of
initiation of any proceeding for such purpose;
(vi) cause all such Registrable Shares to be listed on each
securities exchange on which similar securities issued by the
Company are then listed;
(vii) make available for inspection by any Holder of
Registrable Shares, any underwriter participating in any
disposition pursuant to such registration statement and any
attorney, accountant or other agent retained by any such Holder
or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the
Company's officers, directors, employees and independent
accountants to supply all information reasonably requested by any
such Holder, underwriter, attorney, accountant or agent in
connection with such registration statement;
(viii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Securities and Exchange
Commission, and make available to the Holders, as soon as
reasonably practicable, an earnings statement covering the period
of at least twelve months beginning with the first day of the
Company's first full calendar quarter after the effective date of
the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder.
Section 5. HOLDBACK AGREEMENTS. Each Holder of Registrable Shares
agrees not to effect any public sale or distribution (including sales pursuant
to Rule 144 promulgated pursuant to the Securities Act) of equity securities of
the Company or any securities convertible into or exchangeable or exercisable
for such equity securities, during the seven (7) days prior to and during the
one hundred eighty (180) day period beginning on the effective date of the
underwritten registration pursuant to Section 2 hereof in which Registrable
Shares are included (except for sales of such securities as part of such
underwritten registered offering), unless the underwriters managing the
registered public offering otherwise agree.
Section 6. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Holder may
participate in any registration hereunder which is underwritten unless such
Holder completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under the
terms of such underwriting agreement referred to in Section 2 hereof; provided,
that no holder of Registrable Shares included in any underwritten registration
shall be required to make any representations or warranties to the Company or
the underwriters other than representations and warranties regarding such Holder
and such Holder's intended method of distribution.
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Section 7. INDEMNIFICATION.
(a) The Company shall indemnify each Holder, each of the Holder's
officers, directors, partners and employees, and each person
controlling such Holder, with respect to such registration or
qualification effected pursuant to this agreement and in which Shares
are included, against all claims, losses, damages, and liabilities (or
actions in respect thereto) arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained
in any prospectus, registration statement or other document incident
to any such registration or qualification, or based on 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 any rule or regulation
promulgated pursuant to any Federal, state or common law rule or
regulation including, without limitation, the Securities Act,
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 such
Holder's officers, directors, heirs and employees, and each person
controlling such Holder, for any legal and any other expenses incurred
in connection with investigating or defending any such claim, loss,
damage, liability or action, including reasonable attorneys' fees;
PROVIDED, HOWEVER, that the Company will not be liable in any such
case to the extent that any such claim, loss, damage or liability
arises out of or is based on any untrue statement or omission based
upon and in conformity with written information furnished to the
Company by such Holder, in a signed document stating that such
information is specifically for use in the registration statement.
Such indemnity shall be effective notwithstanding any investigation
made by or on behalf of any Holder, or any such officer, director,
partner, employee or controlling person, and shall survive any
transfer by the same of any of the Shares.
(b) Each Holder shall, if Registrable Shares held by or issuable
to such Holder are included in the securities as to which such
registration or qualification is being effected, indemnify the
Company, each of its directors, officers and employees, against all
claims, losses, damages and liabilities (or actions in respect
thereto) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such
registration statement, prospectus 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, such Holders, such
directors, officers, partners, employees, persons or underwriters for
any legal or any other expenses incurred in connection with
investigating or defending any such claim, loss, damage, liability or
action, including reasonable attorneys' fees, 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 or other document in reliance upon
and in conformity with written information furnished to the Company by
such Holder in a signed document stating that such information is
specifically for use therein. Notwithstanding the foregoing, the
liability of any such Holder shall not exceed an amount equal to the
net proceeds realized by each
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such Holder of Registrable Shares sold as contemplated herein. Such
indemnity shall be effective notwithstanding any investigation made by
or on behalf of the Company, any such director, officer, partner,
employee, or controlling person and shall survive the transfer of such
securities by such seller.
(c) Each party entitled to indemnification under this section
(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. Unless in the reasonable judgment of the
Indemnified Party a conflict of interest may exist between the
Indemnifying Party and the Indemnified Party, the Indemnifying Party
shall be permitted to assume the defense of any such claim or any
litigation resulting therefrom; PROVIDED, HOWEVER, that in any event
counsel for the Indemnifying Party or Indemnified Party who shall
conduct the defense of such claim or litigation as provided above
shall be approved by the other Party (whose approval shall not be
unreasonably withheld), and such other Party may participate in such
defense at such Party's expense; 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 section.
(d) The Indemnified Party shall make no settlement of any claim
or litigation which would give rise to liability on the part of the
Indemnifying Party under an indemnity contained in this section
without the written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld or delayed, and no Indemnifying
Party shall make any settlement of any such claim or litigation
without the consent of the Indemnified Party. If a firm offer is made
to settle a claim or litigation defended by the Indemnified Party and
the Indemnified Party notifies the Indemnifying Party in writing that
the Indemnified Party desires to accept and agree to such offer, but
the Indemnifying Party elects not to accept or agree to such offer
within ten days after receipt of written notice from the Indemnified
Party of the terms of such offer, then, in such event, the Indemnified
Party shall continue to contest or defend such claim or litigation
and, if such claim or litigation is within the scope of the
Indemnifying Party's indemnity contained in this section, the
Indemnified Party shall be indemnified pursuant to the terms hereof.
If a firm offer is made to settle a claim or litigation defended by
the Indemnifying Party and the Indemnifying Party notifies the
Indemnified Party in writing that the Indemnifying Party desires to
accept and agree to such offer, but the Indemnified Party elects not
to accept or agree to such offer within ten days after receipt of
written notice from the Indemnifying Party of the terms of such offer,
then, in such event, the Indemnified Party may continue to contest or
defend such claim or litigation and, in such event, the total maximum
liability of the Indemnifying Party to indemnify or otherwise
reimburse the Indemnified Party in accordance with this agreement with
respect to such claim or litigation shall be limited to and shall not
exceed the amount of such settlement offer, plus reasonable
out-of-pocket costs and expenses (including reasonable fees and
disbursements of counsel) to the date of notice that the Indemnifying
Party desired to accept such settlement offer.
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(e) The indemnification payments required pursuant to this
section for expenses of the investigation or defense of a claim or
lawsuit shall be made from time to time during the course of the
investigation or defense, as the case may be, upon submission of
reasonably sufficient documentation that any such expenses have been
incurred.
Section 8. REPORTS UNDER THE SECURITIES LAWS. With a view to making
available to the Holders of Registrable Shares the benefits of Rule 144
promulgated under the Securities Act and any other rule or regulation of the
Securities and Exchange Commission that may at any time permit such Holder to
sell securities of the Company to the public without registration, the Company
agrees to use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144, at all times subsequent to one
hundred eighty (180) days after the effective date of any registration
statement covering an underwritten public offering filed under the
Securities Act by the Company;
(b) File with the Securities and Exchange Commission in a timely
manner all reports and other documents required of the Company under
the Securities Act and the 1934 Act at any time after it is subject to
such registration requirements; and
(c) Furnish to any Holder so long as such Holder owns any of the
Registrable Shares forthwith upon request a written statement by the
Company that it has complied with the reporting requirements of Rule
144 (at any time after one hundred eighty (180) days after the
effective date of such registration statement filed by the Company),
and of the Securities Act and the 1934 Act (at any time after it has
become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other
reports and documents so filed by the Company as may be reasonably
requested by any such Holder in availing any such Holder of any rule
or regulation of the Securities and Exchange Commission permitting the
selling of any such securities without registration.
Section 9. TRANSFER OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Shares that are granted by the Company under
Section 2 may be assigned by a Holder to a Permitted Transferee (as defined in
that certain Stock Restriction Agreement dated ____________________, 1996
between the Company and Investor) of any of its Registrable Shares, provided
that the Company is given written notice by the Holder at the time of or within
a reasonable time after said transfer, stating the name and address of said
transferee and identifying the securities with respect to which such
registration rights are being assigned. Such rights may not be assigned other
than to a Permitted Transferee. Subject to the foregoing provision, this
agreement shall be binding upon, and inure to the benefit of, the parties hereto
and their respective successors and assigns.
Section 10. CONSENT; CHANGES. For purposes of this agreement, unless
otherwise specifically provided for in this agreement, all approvals and
consents of the Holders required or permitted
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under this agreement shall be deemed granted by the affirmative vote of the
holders of a majority of the Registrable Shares outstanding determined on a
fully diluted basis with respect to the Holder of the Note which have not
already been registered. The terms and provisions of this agreement may not be
modified or amended, except that they may be modified or amended with the
written consent of (a) the Company, and (b) all of the Holder(s) of the Note or
Shares outstanding. None of the terms and provisions of this agreement may be
waived except in writing by the person so waiving.
Section 11. GRANTING OF REGISTRATION RIGHTS. Notwithstanding anything
herein to the contrary, the Company may grant any rights to any persons to
register any shares of capital stock or other securities of the Company
notwithstanding the fact that such rights could reasonably be expected to
conflict with, or be on parity with or greater than, the rights of the Holders
provided hereunder.
Section 12. GOVERNING LAW. All questions concerning the validity or
meaning of this agreement or relating to the rights and obligations of the
parties with respect to performance under this agreement shall be construed and
resolved under the laws of Ohio.
Section 13. NOTICE. Any notice or other communication required or
desired to be given to any party under this agreement shall be in writing and
shall be deemed given: (a) when delivered personally to that party; (b) upon
receipt of a telephone facsimile transmission answer back, (c) three (3) days
after having been deposited in the United States mail, certified or registered,
return receipt requested, postage prepaid, or (d) one (1) business day after
having been dispatched by a nationally recognized overnight courier service,
addressed to the parties or their permitted assigns at the following addresses
(or at such other address or number as is given in writing by either party to
the other) as follows:
Investor:
Xxxxxxxx X. Xxxxxx
0000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
with copies to:
Arthur, Green, Arthur, Conderman,
Xxxxxxxx & Xxxxxxxx
Commerce Xxxx Xxxxx
Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx Xxxxxxxx, Esq.
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Company:
Waterlink, Inc.
000 Xxxxxx Xxxxxx, X.X.
Xxxxxx, Xxxx 00000
Facsimile No: (000) 000-0000
Attn: Xxxxxxxx X. Xxxxxxxxx, Chairman
with copies to:
Benesch, Friedlander, Xxxxxx & Aronoff
0000 XX Xxxxxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attn: Xxx X. Xxxxxx, Esq.
Section 14. TERMINATION. The registration right granted under this
agreement shall terminate with respect to any Holder one hundred eighty (180)
days after the effective date of a Registration Statement registering all of
such Holder's Registrable Shares under the Securities Act; provided, however,
that the indemnification provisions in Section 7 shall survive the termination
of such registration rights. Notwithstanding anything to the contrary in this
Agreement, the Company shall not be required to register any Registrable Shares
pursuant to a request under Section 2 hereof, if within twenty-five (25) days
after its receipt of a request therefor counsel for the Company delivers an
opinion to the requesting Holder, in form and substance satisfactory to counsel
to such Holder, that the proposed sale of Registerable Shares requested to be so
registered may be affected in its entirety within any ninety (90) day period
following registration and without regard to any holding period or volume
limitation pursuant to Rule 144 of the Securities Act.
Section 15. COUNTERPARTS. This agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute a single agreement.
Section 16. CAPTIONS. The captions of the various sections of this
agreement are not part of the context of this agreement, but are only labels to
assist in locating those sections, and shall be ignored in construing this
agreement.
Section 17. SEVERABILITY. The intention of the parties to this
agreement is to comply fully with all laws and public policies, and this
agreement shall be construed consistently with all laws and public policies to
the extent possible. If and to the extent that any court of competent
jurisdiction determines it is impossible to construe any provision of this
agreement consistently with any law or public policy and consequently holds that
provision to be invalid, such holding shall in no way affect the validity of the
other provisions of this agreement, which shall remain in full force and effect.
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Section 18. JURISDICTION AND VENUE. All parties to this agreement
hereby designate the Court of Common Pleas of Cuyahoga County, Ohio, as a court
of proper jurisdiction and venue for any actions or proceedings relating to this
agreement; hereby irrevocably consent to such designation, jurisdiction and
venue; and hereby waive any objections or defenses relating to jurisdiction or
venue with respect to any action or proceeding initiated in the Court of Common
Pleas of Cuyahoga County, Ohio.
WATERLINK, INC.
By /S/ Xxxxx Xxxxxxx
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Its: VP & CFO
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/S/ Xxxxxxxx X. Xxxxxx
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XXXXXXXX X. XXXXXX
