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EXHIBIT 2
TRANSFER AND REGISTRATION AGREEMENT
This Transfer and Registration Agreement ("Agreement") is entered into
as of April 30, 1997 between MPM Technologies, Inc., a Washington corporation
(the "Company"), and United States Filter Corporation, a Delaware corporation
("USF"), with reference to the Series A Cumulative Convertible Preferred Stock
(the "Series A Preferred Shares") of the Company.
1. Certain 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.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Restricted Securities" shall mean the securities of the
Company required to bear the legend set forth in paragraph (a) of Section 3
hereof.
"Registrable Securities" shall mean the Series A Preferred
Shares and the Company's Common Stock issued or issuable upon conversion of the
Series A Preferred Shares; provided, however, that Common Stock shall be treated
as Registrable Securities only if and so long as they have not been (A) sold to
or through a broker or dealer or underwriter in a public distribution or a
public securities transaction, or (B) sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act under
Section 4(1) thereof so that all transfer restrictions and restrictive legends
with respect thereto are removed upon the consummation of such sale.
The terms "register", "registered" and "registration" 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.
"Registration Expenses" shall mean all expenses incurred by
the Company in complying with Sections 5 and 6 hereof, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company, blue sky fees
and expenses, and the expense of any special audits incident to or required by
any such registration (but excluding the compensation of regular employees of
the Company which shall be paid in any event by the Company).
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"Selling Expenses" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Holders and all fees and disbursements of counsel for the
Holders (as limited by Section 7).
"Holder" shall mean any person (including USF) holding
Registrable Securities, including any person holding Registrable Securities to
whom the rights under this Agreement have been transferred in accordance with
this Agreement.
"Initiating Holders" shall mean any person or persons who in
the aggregate are Holders of at least 150,000 shares of the Registrable
Securities.
2. Restrictions on Transferability. The Series A Preferred
Shares and the Common Stock issuable upon conversion of the Series A Preferred
Shares may be sold, assigned, transferred or pledged in accordance with the
conditions specified in this Agreement, which conditions are intended to ensure
compliance with the provisions of the Securities Act. Each Holder will cause any
proposed purchaser, assignee, transferee or pledgee of Series A Preferred Shares
or any such Common Stock of a Holder to agree to take and hold such securities
subject to the provisions of this Agreement.
3. Restrictive Legends. (a) Each certificate representing Series
A Preferred Shares, or Common Stock issuable upon conversion of the Series A
Preferred Shares may be sold, assigned, transferred or pledged in accordance
with the conditions specified in this Agreement, which conditions are intended
to ensure compliance with the provisions of the Securities Act. Each Holder will
cause any proposed purchaser, assigned, transferee or pledgee of Series A
Preferred Shares or any such Common Stock of a Holder to agree to take and hold
such securities subject to the provisions of this Agreement.
3. Restrictive Legends. (a) Each certificate representing Series
A Preferred Shares, or Common Stock issued upon conversion of Series A Preferred
Shares, or any other securities issued in respect of the Series A Preferred
Shares or Common Stock issued upon conversion of the Series A Preferred Shares
upon any stock split, stock dividend, recapitalization, merger or similar event,
shall (unless otherwise permitted by the provisions of Section 4 below) be
stamped with the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL (WHICH
MAY BE COUNSEL FOR THE COMPANY) REASONABLY ACCEPTABLE TO IT STATING THAT SUCH
SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SAID ACT.
(b) Each certificate representing Series A Preferred Share shall be
stamped with the following legend:
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE TERMS AND CONDITIONS OF AN AGREEMENT BETWEEN THE SHAREHOLDER AND THE
CORPORATION WHICH INCLUDES A RIGHT OF FIRST REFUSAL ON CERTAIN SALES OF THE
SECURITIES. COPIES OF THE AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE
SECRETARY OF THE CORPORATION.
Each Holder consents to the Company making a notation on its records
and giving instructions to any transfer agent of the Series A Preferred Shares
(or Common Stock issued upon conversion thereof) in order to implement the
restrictions on transfer established in this Agreement. The legend placed on any
certificate pursuant to Section 3(a) and any notations or instructions with
respect to the Series A Preferred Shares (or Common Stock issued upon conversion
thereof) represented by such certificate will be promptly removed, and the
Company will promptly issue a certificate without such legend to the holder of
such Series A Preferred Shares (or Common Stock issued upon conversion thereof)
(a) if such Series A Preferred Shares (or Common Stock issued upon conversion
thereof) are registered under the Securities Act in connection with a sale of
such securities and a prospectus meeting the requirements of Section 10
of the Securities Act is available, or (b) if the holder thereof satisfies the
requirements of Rule 144(k) and, where reasonably determined necessary by the
Company, provides the Company with an opinion of counsel for the holder of the
Series A Preferred Shares (or Common Stock issued upon conversion thereof),
reasonably satisfactory to the Company, to the effect that (i) the holder meets
the requirements of Rule 144(k) or (ii) a public sale, transfer or assignment of
the Series A Preferred Shares (or Common Stock issued upon conversion thereof)
may be made without registration.
4. Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 4. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities, unless there is in
effect a registrations statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to the Company of such
holder's intention to effect such transfer, sale, assignment or pledge. Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied at such holder's expense by either (i) an unqualified written
opinion of legal counsel who is, and whose legal opinion shall be, reasonably
satisfactory to the Company addressed to the Company, to the effect that the
proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, or (ii) a "no action" letter from the
Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action e taken with respect thereto, whereupon the holder of such
Registered Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of its notice to the Company. The Company will not
require such a legal opinion or "no action" letter in any transaction which
complies with Rule 144. Each certificate evidencing the Restricted Securities
transferred as above provided shall bear, except if such transfer is made
pursuant to Rule 144, the appropriate restrictive legend set forth in Section
3(a) above, except that such certificate shall not bear such
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restrictive legend if in the opinion of counsel for such holder and the Company
such legend is not required in order to establish compliance with any provisions
of the Securities Act.
5. Demand Registration.
(a) Demand. In case the Company shall receive from any Holder
a written request that the Company effect any registration with respect to at
least 150,000 Series A Preferred Shares and/or shares of Common Stock issued or
issuable upon conversion of Series A Preferred Shares, the Company will:
(i) promptly give written notice of the proposed
registration to all other Holders; and
(ii) file a registration statement with the
Commission within 120 days after USF's request and use its 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 applicable regulations issued under the Securities Act) as would
permit or facilitate the sale and distribution of such Registrable Securities as
are specified in such request, together with all Registrable Securities of any
Holder or Holders joining in such request as are specified in a written request
received by the Company within 30 days after receipt of such written notice from
the Company;
Provided, however, that the Company shall not be obligated to take any
action to effect any such registration, qualification or compliance pursuant to
this Section 5:
(A) In any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(B) After the Company has effected on such
registration pursuant to this Section 5(a), such registration has been declared
or ordered effective and the securities offered pursuant to such registration
have been sold (provided, however, that if the managing underwriter, in
accordance with the provisions of Section 5(b), has reduced by more than 50,000
shares the number of shares of Registrable Securities included in such
registration, the Holders thereof shall retain the right to request one
registration of such shares in accordance with the provisions of this Section 5,
and provided further that nothing contained herein shall restrict or limit the
rights of the Holders under Section 6); or
(C) During the period starting with the date 60 days
prior to the filing of, and ending on a date three months following the
effective date of, a registration statement (other than with respect to a
registration statement relating to a Rule 145 transaction, an offering solely to
employees or any other registration which is not appropriate for the
registration of Registrable Securities).
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(b) Underwriting. The right of any Holder to registration
pursuant to this Section 5 shall be conditioned upon such Holder's participation
in any underwriting arrangements required by USF pursuant to this Section 5.
If USF proposes to distribute its Registrable Securities by means of an
underwritten public offering, the Company (together with all Holders proposing
to distribute their securities through such underwriting) shall enter into an
underwriting agreement in customary form satisfactory to USF with the managing
underwriter selected for such underwriting by USF (which managing underwriter
shall be reasonably acceptable to the Company). Notwithstanding any other
provision of this Section 5, if the managing underwriter advises USF in writing
that marketing factors require a limitation of the number of shares to be
underwritten, then USF shall so advise all holders of Registrable Securities,
and the number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among all Holders thereof in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities held by such Holders at the time of filing the registration
statement. No registrable 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 disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and USF. If by the withdrawal of such
Registrable Securities a greater number of Registrable Securities held by other
Holders may be included in such registration (up to the maximum of any
limitation imposed by the underwriters), then the Company shall offer to all
Holders who have included Registrable Securities in the registration the right
to include additional Registrable Securities in the same proportion used in
determining the underwriter limitation in this Section 5(b).
6. Company Registration.
(a) Notice of Registration. If, at any time or from time to
time, 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, other than a registration relating solely
to employee benefit plans or a registration relating solely to a Securities Act
Rule 145 transaction, the Company will (i) promptly give to each Holder written
notice thereof, and (ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and (subject to this
Section 6) in any underwriting involved therein, all the Registrable Securities
specified in a written request or requests made by Holder within 30 days after
its receipt of such written notice from the Company; provided, however, that in
no event shall the Holders have the right, unless the Corporation otherwise
agrees, to include in such registration Registrable Securities amounting to more
than 25% of the total number (or total value, according to the respective
offering prices) of all securities to be included in such registration.
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(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 6(a)(i). In such event the right of any Holder to
registration pursuant to this Section 6 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. All Holders propose to
distribute all or a portion of their securities through such underwriting shall
(together with the Company and the other holders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the managing underwriter selected for such underwriting by the Company
(or by the holders who have demanded such registration). Notwithstanding any
other provision of this Section 6, if the managing underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the Registrable Securities to
be included in such registration. The Company shall so advise all Holders and
the other holders distributing their securities through such underwriting
pursuant to piggyback registration rights similar to this Section 6, and the
number of shares of Registrable Securities and other securities that may be
included in the registration and underwriting shall be allocated among all
Holders and other holders in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by such Holders and other
securities held by other holders at the time of filing the registration
statement. If any Holder or other holder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to the
Company and the managing underwriter.
(c) Right to Terminate Registration. The Company shall have
the right to terminate or withdraw any registration initiated by it under this
Section 6 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
7. Expenses of Registration. All Registration Expenses incurred
in connection with any registration pursuant to Sections 5 or 6 shall be borne
by the Company, provided that the Company shall not be required to pay the
Registration Expenses of any registration proceedings begun pursuant to Section
5, the request of which has been subsequently withdrawn by USF, in which event
the Holders of Registrable Securities to have been registered shall bear all
such Registration Expenses pro rata on the basis of the number of Registrable
Securities to have been registered. Unless otherwise stated, all other Selling
Expenses relating to securities registered on behalf of the Holders shall be
borne by the Holders of the Registrable Securities pro rata on the basis of the
number of shares so registered.
8. Indemnification.
(a) The Company will indemnify each Holder, each of its
officers, directors, partners, employees and agents and each person controlling
such Holder within the meaning of Section 15 of the Securities Act, with respect
to which registration, qualification or compliance has been effected pursuant to
this Agreement, against all expenses, claims, losses, damages or liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or based
on any untrue statement (or
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registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, 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, in the light of the circumstances in which they were
made, not misleading, or any violation by the Company of any rule or regulation
promulgated under the Securities Act or any other federal, state or common law
rule or regulation applicable to the Company in connection with any such
registration, qualification or compliance, and the Company will reimburse each
such Holder, person controlling such Holder for any legal and any other expenses
reasonably incurred in connection with investigating preparing or defending any
such claim, loss, damage, liability or action, provided 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 or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder or controlling person and stated to be specifically
for use therein.
(b) 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 and officers, 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 Section 15 of the
Securities Act, and each other such Holder, each of its officers and directors
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or actions
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 statement therein not misleading, and will reimburse
the Company, such Holders, such directors, officers, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, 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 an instrument duly executed by such Holder and
stated to be specifically for use therein.
(c) Each party entitled to indemnification under this Section
8 (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 litigation, 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
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Indemnifying Party of its obligations under this Agreement unless the failure to
give such notice is materially prejudicial to an 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 to such claim or
litigation.
9. 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) Prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use its diligent best
efforts to cause such registration statement to become effective, and, upon the
request of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to 120 days.
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such 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 Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, 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 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 not misleading in the light of the circumstances under which
the prospectus is used.
10. Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or
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Holders, the Registrable Securities held by them and the distribution proposed
by such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Agreement.
11. Standoff Agreement. Each Holder agrees in connection with
any registration of the Company's securities that, upon request of the Company
or the underwriters managing any underwritten offering of the Company's
securities, not to sell, make any short sale of, loan, grant any option for the
purchase or, or otherwise dispose of any Registrable Securities (other than
those included in the registration), except in a private sale or transfer,
without the prior written consent of the Company or such underwriters, as the
case may be, for such period of time (not to exceed 180 days) from the effective
date of such registration as may be requested by the Company or such managing
underwriters.
12. 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 then outstanding. Any amendment or
waiver effected in accordance with this Section 12 shall be binding upon each
holder of any Registrable Securities then outstanding, each future holder of all
such Registrable Securities, and the Company.
13. Company Right of First Refusal. USF will have the right
and option at any time to transfer all or any portion of the Series A Preferred
Shares to any other person, subject to applicable securities laws. However, in
the event that USF receives a proposal acceptable to USF to purchase, or
otherwise proposes to sell or transfer, Series A Preferred Shares representing
in the aggregate more than 4% of the voting power of the Company (other than a
transfer to a subsidiary or affiliate of USF), USF shall give written notice of
such proposal promptly to the Company setting forth the number and class of
shares, the fact that the proposal is a bona fide one and that USF proposes to
sell such shares pursuant thereto, the name and address of the real party in
interest (if actually known to USF) offering to purchase such shares or
accepting USF's proposal to sell, and the prices per share and terms of payment
specified in the offer or proposal. Shares so proposed to be sold are referred
to herein as the "Offered Shares."
For a period of 15 days following such notice to the Company, the
Company shall have the option to purchase all (but not less than all) of such
shares at the prices and on the terms stated in the notice. In order to exercise
such option, the Company must given notice to USF of that fact within such
15-day period. The Company shall then complete the purchase of said shares not
later than 45 days after its notification to USF of its exercise of such option
to purchase such shares. If the Company gives notice to USF of its election to
purchase such shares then fails to complete such purchase within said 45-day
period, then the Company shall pay to USF an amount equal to the amount, if any,
by which the per-share purchase price of the shares under this Section 13
exceeds the closing market price of the Common Stock on the American Stock
Exchange (or, if the Common Stock is not then listed on the American Stock
Exchange, on the principal national securities exchange on which the Common
Stock is then listed; or, if the Common Stock is not then listed on any national
securities exchange, then the last reported sale
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price in the over-the-counter market as reported by NASDAQ) as of the last day
of said 45-day period. If the Company does not elect to purchase such shares or
complete such purchase within the time periods specified herein, USF shall be
free, for a period of 60 days following the expiration of the period of election
(or the period of purchase, as the case may be) specified above, to consummate
the proposed sale at not less than the prices per share and on terms not
materially less favorable to USF than those set forth in USF's notice; and if
such sale is not consummated within such time, the Offered Shares shall again be
subject to all of the provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
UNITED STATES FILTER CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
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MPM TECHNOLOGIES, INC.
By:/s/ Xxxxxxx X. Xxxxxxx
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