EXHIBIT 10.35
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of
July 7, 2001, but effective as of the Effective Time (as that term is defined in
the Merger Agreement) by and among DALECO RESOURCES CORPORATION, Delaware
Corporation whose principal place of business is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ corporation ("Company") and the shareholders of
16/6, Inc., a Pennsylvania Corporation ("Shareholders"), merged with and into
DRC Acquistion, Inc. pursuant to that certain Agreement and Plan of Merger dated
July7,2001 ("Merger Agreement")
1. DEFINITIONS. For purposes of this Agreement:
(a) The term "register", "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended (the
"Act"), and the declaration or ordering of effectiveness of such registration
statement or document;
(b) The term "Registrable Securities" means the Common Stock
issuable or issued to the Shareholders as part of the Merger Consideration;
(c) The term "Holder" means any person owning or having the right
to acquire Registrable Securities or any permitted assignee thereof
(d) The term "Common Stock" means the common stock of the
Company, par value $.01.
2. DEMAND REGISTRATION.
(a) If, after the closing price of the Common Stock equals or
exceeds $5.00 per sharefor ▇▇▇▇▇▇ (30) consecutive business days, the Holders of
Registrable Securities obtained through and under the Merger Agreement with a
market value of not less than $500,000 may notify the Company in writing that
they demand that the Company file a registration statement under the Act
covering the registration of all of the Registrable Securities then outstanding.
Upon receipt of such notice, the Company shall, within ten (10) days, give
written notice of such request to all Holders and shall, subject to the
limitations of subsection 2(b), effect as soon as practicable, and in any event
within 90 days of the receipt of such request, the registration under the Act of
all Registrable Securities which the Holders request, by notice given to the
Company within (10) days of receipt of the Company's notice (a "Demand
Registration").
(b) If the Holders initiating the registration request hereunder
("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 this Section 2 and the Company shall
include such information in the written notice referred to in subsection 2(a).
In such event, the right of any Holder to include his Registrable Securities in
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such registration 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) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company as provided in subsection 6) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by a majority in interest of the Initiating
Holders, and reasonably acceptable to the Company.
(c) The Company is obligated to effect only one demand
registration pursuant to Section 2 of this Agreement. The Company agrees to
include all Registrable Securities held by all Holders in such Registration
Statement without cutback or reduction. In the event the Company breaches its
obligation of the preceding sentences, any Holders of the Registrable Securities
which were not included in such Registration Statement shall be entitled to a
second Demand Registration for such excluded securities and the Company shall
keep the Registration Statement effective as required by this Agreement.
3. PIGGYBACK REGISTRATION. If the Registration Statement
described in Section 2 is not effective, and if (but without any obligation to
do so) the Company proposes to register (including for this purpose a
registration effected by the Company for shareholders other than the Holders)
any of its Common Stock under the Act in connection with the public offering of
such securities solely for cash (other than a registration relating solely to
the sale of securities to participants in a Company stock plan or a registration
on Form S-4 promulgated under the Act or any successor or similar form
registering stock issuable on upon a reclassification, upon a business
combination involving an exchange of securities or upon an exchange offer for
securities of the issuer or another entity), the Company shall, at such time,
promptly give each Holder written notice of such registration. Upon the written
request of each Holder given by fax within ten (10) days after mailing of such
notice by the Company, which request shall state the intended method of
disposition of such shares by such Holder, the Company shall cause to be
registered under the Act all of the Registrable Securities that each such Holder
has requested to be registered (a "Piggyback Registration").
4. LIMITATION ON OBLIGATIONS TO REGISTER.
(a) In the case of a Piggyback Registration on an underwritten
public offering by the Company, if the managing underwriter determines and
advises in writing that the inclusion in the registration statement of all
Registrable Securities which the Holders have requested be included therein
would interfere with the successful marketing of the securities proposed to be
registered by the Company, then the number of such Registrable Securities which
the Holders have requested be included in the registration statement shall be
allocated among all Holders who had requested Piggyback Registration, (i) in the
proportion that the number of Registrable Securities which each such Holder,
including Placement Agent, seeks to register bears to the total number of
Registrable Securities sought to be included by all Holders, and (ii) as to the
Holders as a group, on a pro-rata allocation basis with all other persons
holding securities that have piggyback registration rights in such registration
statement.
(b) Notwithstanding anything to the contrary herein, the Company
shall have the right (i) to defer the initial filing or request for acceleration
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of effectiveness of any Demand Registration or Piggyback Registration or (ii)
after effectiveness, to suspend effectiveness of any such registration
statement, if, in the good faith judgment of the board of directors of the
Company and upon the advice of counsel to the Company, such delay in filing or
requesting acceleration of effectiveness or such suspension of effectiveness is
necessary in light of the existence of material non-public information
(financial or otherwise). Concerning the Company disclosure of which at the time
is not, in the opinion of the board of directors of the Company upon the advice
of counsel, (A) otherwise required and (B) in the best interests of the Company;
provided however that the Company will not delay or suspend effectiveness of
such registration for more than three months from the date of the demand, unless
it is then engaged in an acquisition that would make such registration
impracticable, in which case it will use its best efforts to eliminate such
impracticability as soon as possible.
(c) The Company is not obligated to effect a Demand Registration
if in the opinion of counsel to the Company reasonably acceptable to the person
or persons from whom written request for registration has been received (and
satisfactory to the Company's transfer agent to permit the transfer) that
registration under the Act is not required for the immediate transfer of the
Registrable Securities (with no further restrictions on resale) pursuant to Rule
144 or other applicable provision.
5. OBLIGATIONS TO INCREASE AVAILABLE SHARES. In the event that
the number of shares available under a Demand Registration statement is
insufficient to cover all of the Registrable Securities requesting registration
under Section 2(a), the Company shall amend that registration statement, or file
a new registration statement, or both, so as to cover all shares of Registrable
Securities requesting registration under Section 2(a). The Company shall effect
such amendment or new registration as soon as possible, but in no event later
than ninety days of the date the registration statement filed under Section 2 is
insufficient to cover all the shares of Registrable Securities then outstanding.
6. OBLIGATIONS OF THE COMPANY. Whenever required under this
Agreement to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) With respect to any Demand Registration, use best efforts to
keep such registration statement effective for a period of at least 180 days and
in any event until the distribution contemplated by that Registration Statement
has been completed.
(b) Furnish to Placement Agent, at least three days prior to
filing, copies of the Registration Statements drafts, and allow Placement Agent
and its counsel reasonable ability to comment and perform due diligence prior to
the filing of that registration statement;
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
(d) Register and qualify the securities covered by such
registration statement under such other securities or Blue Sky laws of such
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jurisdictions as shall be reasonably requested by the Holders of the Registrable
Securities covered by such registration statement, provided that the Company
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the 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 not misleading in the light of the circumstances then existing.
(g) Furnish, at the request of any Holder requesting registration
of Registrable Securities pursuant to this Agreement, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Agreement, if such securities are being
sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities,
7. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition of such securities as shall be required to effect the registration
of their Registrable Securities or to determine that registration is not
required pursuant to Rule 144 or other applicable provision of the Act.
8. EXPENSES OF REGISTRATION. In the event of a sale of securities
pursuant to a registration statement under this Agreement, the underwriting
discounts and commissions shall be borne by the selling Holders. All other costs
and expenses incurred in connection with registrations, filings or
qualifications pursuant to Section 2 and Section 3, including (without
limitation) all registration, filing and qualification fees, printers' and
accounting fees, fees and disbursements of counsel for the Company, and
including the reasonable fees and disbursements (not to exceed $5,000 per
registration) incurred of only one counsel for the selling Holders, shall be
borne by the Company.
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9. INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each "Holder Indemnified Persons" (defined for purposes of
this Section 9 as each Holder, the officers and directors of each Holder acting
in their capacity as such, any underwriter (as defined in the Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Act or the Securities Exchange Act of 1934, as amended (the
"1934 Act")), against any losses, claims, damages, expenses, or liabilities
(joint or several)("Losses") to which they may become subject under the Act, the
1934 Act or other federal or state law, insofar as such Losses (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any untrue statement
of a material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto ("Registration Statement"), (ii) the omission to state
therein a material fact required to be stated therein, or necessary to make the
statements therein not misleading, or (iii) any violation by the Company of the
Act, the 1934 Act, any state securities law or any rule or regulation
promulgated under the Act, the 1934 Act or any state securities law; and the
Company will reimburse each such Holder Indemnified Person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such Loss or action; provided, however, that the indemnity
agreement contained in this subsection 9(a) shall not apply to amounts paid in
settlement of any such Loss or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case for any such Loss or action to the
extent that it arises out of or is based upon a Violation which occurs (i) in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by any such Holder Indemnified Person,
or a Holder Indemnified Person's failure to provide such information as is
necessary to make the Registration Statement not misleading, or (ii) the failure
of such Holder Indemnified Person to deliver a copy of the Registration
Statement or the prospectus, or any amendments or supplements thereto, after the
Company or underwriters has furnished such person with a sufficient number of
copies of the same.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the "Company Indemnified Persons" (defined for the
purpose of this Section 9 as the Company, each of its directors in their
capacity as such, each of its officers who have signed the registration
statement in their capacity as such, each person, if any, who controls the
Company within the meaning of the Act in their capacity as such, any underwriter
and any other Holder Indemnified Person selling securities in such registration
statement), against any Loss (joint or several) to which the Company or any such
director, officer, controlling person, or underwriter or controlling person, or
other such Holder Indemnified Person may become subject, under the Act, the 1934
Act or other federal or state law, insofar as such Loss (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will reimburse
any legal or other expenses reasonably incurred by the Company and any such
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Company Indemnified Person in connection with investigating or defending any
such Loss or action; provided, however, that the indemnity agreement contained
in this subsection 9(b) shall not apply to amounts paid in settlement of any
such Loss or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; provided, that, in no
event shall any indemnity under this subsection 9(b) exceed the gross proceeds
from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the reasonably incurred fees and
expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if prejudicial
to its ability to defend such action, shall relieve such indemnifying party of
any liability to the indemnified party under this Section 9, but the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 9.
(d) The obligations of the Company and Holders under this Section
9 shall survive the redemption and conversion, if any, of the Debentures, the
completion of any offering of Registrable Securities in a registration statement
under this Agreement, and otherwise.
10. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Act and any other rule or regulation of the SEC that may at any time 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 SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company, if true, that it has complied with the reporting requirements of SEC
Rule 144 (at any time after ninety (90) days after the effective date of the
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first registration statement filed by the Company), the Act and the 1934 Act (at
any time after it has become subject to such reporting requirements), (ii) a
copy of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other information
as may be reasonably requested in availing any Holder of any rule or regulation
of the SEC which permits the selling of any such securities without
registration.
11. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Registrable Securities. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each Holder, each future
Holder, and the Company.
12. NOTICES. All notices required or permitted under this
Agreement shall be made in writing signed by the party making the same, shall
specify the section under this Agreement pursuant to which it is given, and
shall be addressed if to: (i) the Company at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, and (ii) the Holders at
their respective last address as the party shall have furnished in writing as a
new address to be entered on such register. Any notice, except as otherwise
provided in this Agreement, shall be made by fax and shall be deemed given at
the time of transmission of the fax.
13. TERMINATION. This Agreement shall terminate on the data that
is one year from the Effective Date of this Agreement; but without prejudice to
(i) the parties' rights and obligations arising from breaches of this Agreement
occurring prior to such termination or (ii) other indemnification obligations
under this Agreement.
14. ASSIGNMENT. No assignment, transfer or delegation, whether by
operation of law or otherwise, of any rights or obligations under this Agreement
by the Company or any Holder, respectively, shall be made without the prior
written consent of the majority in interest of the Holders or the Company,
respectively; provided that the rights of a Holder may be transferred to a
subsequent holder of the Holder's Registrable Securities (provided such
transferee shall provide to the Company, together with or prior to such
transferee's request to have such Registrable Securities included in a Demand
Registration or Piggyback Registration, a writing executed by such transferee
agreeing to be bound as a Holder by the terms of this Agreement); and provided
further that the Company may transfer its rights and obligations under this
Agreement to a purchaser of all or a substantial portion of its business if the
obligations of the Company under this Agreement are assumed in connection with
such transfer, either by merger or other operation of law (which may include
without limitation a transaction whereby the Registrable Securities are
converted into securities of the successor in interest) or by specific
assumption executed by the transferee.
15. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania,
applicable to agreements made in and wholly to be performed in that jurisdiction
without giving effect to conflicts of laws provisions, except for matters
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arising under the Act or the Securities Exchange Act of 1934, which matters
shall be construed and interpreted in accordance with such laws. Any action
brought to enforce, or otherwise arising out of, this Agreement shall be heard
an determined only in either a federal or state court sitting in the Eastern
District of Pennsylvania.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
DALECO RESOURCES CORPORATION
/s/
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President
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