REGISTRATION RIGHTS AGREEMENT MADE AND ENTERED INTO AS OF THE 16TH DAY OF
OCTOBER, 1997
BY AND AMONG: COMPOSITECH LTD., a body corporate, duly
incorporated according to the laws of
the State of Delaware, having its head
office and principal place of business
in the Hamlet of Hauppauge, State of New
York
(hereinafter referred to as the
"Company" or "Compositech")
PARTY OF THE FIRST PART
AND: SOCIETE INNOVATECH DU GRAND MONTREAL, a
body politic, duly constituted according
to An Act respecting Societe Innovatech
du Grand Montreal, R.S.Q., ch. S-17.2,
having its head office and principal
place of business in the City of
Montreal, Province of Quebec,
(hereinafter referred to as
"Innovatech")
PARTY OF THE SECOND PART
AND: INDUSTRIES DEVMA INC., a body politic,
duly incorporated according to the
Companies Act (Quebec), having its head
office and principal place of business
in the City of Montreal, Province of
Quebec,
(herein after referred to as "DEVMA")
PARTY OF THE THIRD PART
AND: FONDS DE SOLIDARITE DES TRAVAILLEURS DU
QUEBEC (F.T.Q.), a body politic, duly
incorporated according to the Act
establishing the Fonds De Solidarite des
Travailleurs du Quebec (F.T.Q.), having
its head office and principal place of
business in the City of Montreal,
Province of Quebec,
(hereinafter referred to as "Fonds")
PARTY OF THE FOURTH PART
AND: FONDS REGIONAL DE SOLIDARITE ILE DE
MONTREAL, limited partnership, a limited
partnership organized under the laws of
the Province of Quebec, herein
represented by Gestion du Fonds Regional
de Solidarite Ile de Montreal, Inc., its
general partner, having its head office
and principal place of business in the
City of Montreal, Province of Quebec.
(hereinafter refereed to as "FR")
PARTY OF THE FIFTH PART
SECTION 1. - PREAMBLE
1.1 WHEREAS, concurrently with the execution of this Agreement,
Innovatech, Devma, Fonds and FR have subscribed for shares of the common stock
of the Company, par value $.01 per share ("Company Shares");
1.2 WHEREAS concurrently with the execution of this Agreement, Innovatech,
Devma, Fonds, FR and the Company have subscribed for common shares in the
capital stock of CTEK Laminates Inc., a Canadian corporation ("CTEK"), and
whereas each of the Investors may from time to time subscribe for additional
common shares in the capital stock of CTEK (the common shares in the capital
stock of CTEK being hereinafter referred to as the "CTEK Shares");
1.3 WHEREAS the Company has agreed to grant to each of Innovatech, Devma,
Fonds and FR the right to exchange its CTEK Shares for shares of the Common
Stock of the Company (the "Exchange Shares") on the terms and conditions set out
in the Stock Exchange Agreement;
1.4 WHEREAS Innovatech, Devma, Fonds and FR have agreed to grant to the
Company the right to cause Innovatech, Devma, Fonds and FR to exchange their
CTEK Shares for Exchange Shares on the terms and conditions set out in the Stock
Exchange Agreement;
1.5 WHEREAS the Company has agreed to provide for the registration of the
Company Shares and the Exchange Shares on the terms and conditions hereinafter
set forth;
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
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SECTION 2. - DEFINITIONS
2.1 Definitions. In this Agreement:
2.1.1 Capitalized terms used but not otherwise defined herein shall have
the meanings ascribed thereto in that certain Shareholders Agreement of even
date hereof by and among the parties hereto and CTEK.
2.1.2 "Investors" shall mean, collectively, Innovatech, Devma, Fonds and
FR.
2.1.3 "Management Lock-ups" shall mean all those certain agreements
entered into by Xxxxx Xxxxxx, Xxxx X. Xxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxxx X.
Xxxxx, Xxxx X. Xxxxxx, and Xxxxx Xxxxxx, the forms of which agreements was filed
as Exhibit 10.21 to Compositech's Registration Statement on Form SB-2 File No.
333-3564-NY.
2.1.4 "Other Securities" shall have the meaning set forth in Section 4.4
below.
2.1.5 "Registering Investors" shall have the meaning set forth in Section
5.1(a)(ii) below.
2.1.6 "Registrable Securities" shall mean the Company Shares and the
Exchange Shares and any securities of Compositech distributed with respect to
such shares.
2.1.7 "Registration Expenses" shall mean all expenses incident to the
Company's performance of or compliance with the registration and other
requirements set forth in this Agreement including, without limitation, the
following: (i) the fees, disbursements and expenses of all counsel to the
Company and all accountants in connection with the registration statement, any
preliminary prospectus or final prospectus, any other offering documents and
amendments and supplements thereto and the mailing and delivery of copies
thereof to underwriters and dealers; (ii) all expenses in connection with the
preparation, printing and filing of the registration statement, any preliminary
prospectus or final prospectus, any other offering document and amendments and
supplements thereto and the mailing and delivery of copies thereof to
underwriters and dealers; (iii) the cost of printing or producing any agreements
among underwriters, underwriting agreements, and blue sky or legal investment
memoranda, any selling agreements and any other documents in connection with the
offering, sale or delivery of the Registrable Securities to be disposed of; (iv)
all expenses in connection with the qualification of the Registrable Securities
to be disposed of for offering and sale under state securities laws, including
the fees and disbursements of counsel for the underwriters in connection with
such qualification and in connection with any blue sky and legal investment
surveys; (v) fees, including, without limitation, any filing fees, incident to
securing any required review by the National Association of Securities Dealers,
Inc. of the terms of the sale of the Registrable Securities to be disposed of
(or any similar review required by any other market or exchange on which the
Registrable Securities then trade); (vi) the cost and charges of any transfer
agent or registrar in connection with the registration of exchange or transfer
of the Registrable Securities to be disposed of; (vii) the fees of any
nationally recognized rating agency for rating the Registrable Securities to be
disposed of; and (viii) all stock exchange listing fees; provided, however,
that,
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notwithstanding any of the above, under no circumstances shall Registration
Expenses include fees, disbursements or expenses of counsel to the Registering
Investors.
2.1.8 "SA Person" shall have the meaning set forth in Section 4.2 below.
2.1.9 "SEC" shall have the meaning set forth in Section 4.1 below.
2.1.10 "Total Number of Includible Securities" shall have the meaning set
forth in Section 4.4(b) below.
SECTION 3. - EFFECTIVENESS
3.1 Effectiveness of Registration Rights. The registration rights pursuant
to Section 4 hereof shall become effective on July 2, 1998, or such earlier date
that any of the Management Lock-ups expire, as the case may be (the "Effective
Date"), and terminate (a) in the case of the Company Shares, two (2) years from
the date hereof, and (b) in the case of each Exchange Share, two (2) years after
its issuance pursuant to the Stock Exchange Agreement (it being understood that
the Exchange Shares may be issued from time to time for so long as any CTEK
Shares remain outstanding).
3.2 Registration Not Required. The Company shall not be obligated to
effect any registration pursuant to Section 4 hereof if the intended method or
methods of disposition of the Registrable Securities by the Investors may be
effected without registration under the Securities Act of 1993, as amended (the
"Securities Act"), and any certificate evidencing the Registrable Securities so
to be disposed need not bear the restrictive legend with respect thereto set
forth in the Subscription Agreement among the Investors and the Company dated
the date hereof (the "U.S. Subscription Agreement") and/or the Stock Exchange
Agreement, as the case may be, and the Company agrees to promptly take all
customary actions necessary to permit such disposition, including, without
limitation, providing the Company's transfer agent with all necessary
instructions, and, to the extent necessary, causing counsel to the Company to
deliver an opinion that the Registrable Securities may be reissued without such
legend.
SECTION 4. - REGISTRATION
4.1 Demand Registration. Upon written notice from time to time by any of
the Investor(s) (the "Registering Investors") given no earlier than 90 days
prior to the Effective Date requesting that the Company effect the registration
under the Securities Act of all or part of the Registrable Securities owned
beneficially and of record by the Registering Investors, which notice shall
specify the intended method or methods of disposition of such Registrable
Securities, and be simultaneously copied to any Investor not included in said
Registering Investors (the "Request Notification"), the Company shall be obliged
to file with the U.S. Securities and Exchange Commission (the "SEC") a
registration statement within 60 days of the Request Notification and use its
commercially reasonable best efforts to cause such registration statement to be
declared effective (as promptly as reasonably practicable, but in no event prior
to the Effective Date), under the Securities Act, for disposition of such
Registrable Securities and the Registrable Securities of any other Investor(s)
requesting to include all or part of the Registrable Securities
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owned beneficially and of record by it in such registration within 10 days of
receipt of the Request Notification (such Investor(s) upon such request, shall
also be "Registering Investors"), in accordance with the intended method or
methods of disposition stated in such request notification; provided that:
(a) if the Company shall have previously effected a registration with
respect to Registrable Securities pursuant to this Section 4.1 or Section
4.4 below (and, in the case of registration pursuant to Section 4.4 below,
provided that, subject to Section 4.4(b), the Company has registered all
Registrable Securities requested by the Investors pursuant to Section 4.4)
the Company shall not be required to effect a registration pursuant to this
Section 4.1 until a period of 120 days shall have elapsed from the
effective date of the most recent such previous registration;
(b) if, in the reasonable judgment of the Company, a registration at
the time and on the terms requested would adversely affect any financing by
the Company that had been planned by the Company prior to the Request
Notification, the Company shall not be required to file any registration
statement pursuant to this Section 4.1 until 120 days after completion or
abandonment of such financing, provided that the Company may not defer the
filing of a registration statement pursuant to this clause (b) or clause
(d) below for more than 120 days in the aggregate in any 12-month period;
(c) the Company shall not be required to file a registration statement
if, as a result, the Company would be required to include in such
registration statement (i) audited financial statements as of any date
other than a fiscal year end or any other date as of which the Company
shall have audited financial statements or (ii) pro forma financial
statements pursuant to Regulation S-X under the Securities Act if such pro
forma statements cannot be reasonably prepared in a timely fashion, until
such audited financial statements or such pro forma financial statements
have been prepared; provided that the Company shall use its best efforts to
prepare within 90 days from the Request Notification any audited financial
statements or pro forma financial statements required to be included;
(d) if the Company determines in good faith that the filing of a
registration statement would require the disclosure of material information
which the Company has a good faith business purpose for preserving as
confidential or the Company is unable to comply with the SEC requirements,
the Company shall not be required to file any registration statement
pursuant to this Section 4.1 until the earlier of (i) the date upon which
such material information is disclosed to the public (it being understood
that nothing herein shall require such disclosure) or ceases to be material
or (ii) 90 days after the Company makes such good faith determination,
provided that the Company may not defer the filing of a registration
statement pursuant to this clause (d) or clause (b) above for more than 120
days in the aggregate in any 12-month period; and
(e) any Investor which is not included among the Registering Investors
in a given demand and who had not notified the Company within 10 days of
receipt of a copy of the Request Notification that it wished to include all
or part of the Registrable Securities owned beneficially and of record by
it shall be deemed for all purposes to have
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waived, and be precluded from exercising, any registration rights in the
applicable registration pursuant to this Section 4.1; and
(f) if, in any case, the Company shall under any of foregoing clauses
(a) through (d) postpone the filing of a registration statement requested
by the Registering Investors, it shall be a condition to such postponement
that no executive officer or director of the Company sell any shares owned
beneficially or of record by him during the period of such postponement,
and the Registering Investors shall have the right for 30 days after
receipt of the notice of postponement to withdraw the request for
registration by giving written notice to the Company, and, in the event of
such withdrawal, such request for registration shall not be counted as one
of the three (3) registrations contemplated under Section 4.3(b) below.
4.2 Third Person Shares. The Company shall have the right to cause the
registration of securities for sale for the account of any Person within the
meaning of the Securities Act (an "SA Person") in any registration of
Registrable Securities requested pursuant to this Section 4.
4.3 Registration Expenses.
(a) Subject to the limitations set forth under Section 4.3(b) below,
the Company shall pay any and all Registration Expenses with respect to any
such registration; provided the Registering Investors shall bear (i) any
and all transfer taxes applicable to their respective Registrable
Securities registered thereunder, and (ii) their respective shares (pro
rata in accordance with their respective numbers of Registrable Securities
relative to all securities included in such registration) of any and all
commissions, discounts or other compensation payable to any underwriters
(including fees and expenses of underwriters' counsel) in respect of such
Registrable Securities and the fees and expenses of their own counsel;
provided, however, that in no event shall the Investors be required to pay
any internal costs of the Company or shall the Company be required to pay
any internal costs of the Investors.
(b) Notwithstanding anything to the contrary herein, the Company (i)
shall only be required to pay Registration Expenses in respect of three (3)
registrations pursuant to Section 4.1, and (ii) shall be required to pay
all the Registering Investors' Registration Expenses in respect of any
registration pursuant to Section 4.4 if the Company receives the Piggyback
Request (as such term is defined below) in respect of such registration on
a date prior to the date that it receives the Request Notification in
respect of the third registration pursuant to Section 4.1 (such date, the
"Third Notification Date"). Accordingly, if the Company (x) shall be
required to effect more than three (3) registrations pursuant to Section
4.1, or (y) shall be required to effect a registration pursuant to Section
4.4 pursuant to a Piggyback Request made on or after Third Notification
Date, each Registering Investor agrees to pay its portion of the expenses
of any such additional registration pro rata in proportion that its
Registrable Securities included in such registration statement bear to the
whole number of securities included in such registration statement.
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4.4 Piggyback Registration. If the Company proposes to register any of its
voting securities ("Other Securities") for public sale under the Securities Act,
on a form and in a manner which would permit registration of Registrable
Securities for sale to the public under the Securities Act, it will give prompt
written notice to each of the Investors of its intention to do so, and upon the
written request (which request shall specify the Registrable Securities intended
to be disposed of by such Investor and the intended method of disposition
thereof) of any Investor delivered to the Company within 10 days after the
giving of any such notice (the "Piggyback Request") the Company will use its
reasonable efforts to effect, in connection with the registration of the Other
Securities, the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the Investors,
to the extent required to permit the disposition (in accordance with the
intended method or methods thereof as aforesaid) of the Registrable Securities
so to be registered; provided that:
(a) If, at any time after giving such written notice of its intention
to register any Other Securities and prior to the effective date of the
registration statement filed in connection with such registration, the
Company shall determine for any reason not to register the Other
Securities, the Company may, at its election, give written notice of such
determination to the Investors and thereupon the Company shall be relieved
of its obligations to register such Registrable Securities in connection
with the registration of such Other Securities (but not from its obligation
to pay Registration Expenses to the extent incurred in connection therewith
as provided in Section 4.3), without prejudice, however, to the rights of
the Investors, to request that such registration be effected as a
registration under Section 4.1.
(b) The Company will not be required to effect any registration of
Registrable Securities under this Section 4.4 if, and to the extent that,
the underwriters (or any managing underwriter) shall advise the Company in
writing that, in their reasonable opinion, inclusion of such number of
shares of Registrable Securities (after excluding from such registration
any Registrable Securities proposed to be included by any executive officer
or director of the Company) will adversely affect the price or distribution
of the securities to be offered solely for the account of the Company. Such
advice shall include a statement as to the underwriters' (or any managing
underwriter's) opinion as to the number of shares which may be included
without adversely affecting the price or distribution of the securities
solely for the account of the Company (such total number of shares which
such advice states may be so included being the "Total Number of Includible
Securities"). The Company shall promptly furnish the Investors with a copy
of such written advice. In the event that the number of shares requested to
be included by Investors together with the number of other shares requested
to be included by any selling securityholders (after excluding from such
registration any Registrable Securities proposed to be included by any
executive officer or director of the Company) requesting inclusion of such
securityholders' securities pursuant to registration rights granted by the
Company exceeds the Total Number of Includible Securities, the aggregate
number of shares of Registrable Securities held by any Investors entitled
to be included in the public sale shall be the product of (i) a fraction,
the numerator of which is the total number of such shares of Registrable
Securities held by such Investors requested to be included in such public
sale and the denominator of which is the total number of such Investor's
shares of
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Registrable Securities requested to be included in such public sale plus
the number of other shares requested to be included by other
securityholders (including, but not limited to other Investors, if
applicable (after excluding from such registration any Registrable
Securities proposed to be included by any executive officer or director of
the Company)) pursuant to registration rights granted by the Company and
(ii) the Total Number of Includible Securities.
(c) The Company shall not be required to effect any registration of
Registrable Securities under this Section 4.4 incidental to the
registration of any of its securities in connection with mergers,
acquisitions, exchange offers, subscription offers, dividend reinvestment
plans or stock option or other employee benefit plans.
(d) No registration of Registrable Securities effected under this
Section 4.4 shall relieve the Company of its obligation to effect
registrations of Registrable Securities pursuant to Section 4.1.
SECTION 5. - REGISTRATION PROCEDURES.
5.1 Registration and Qualification.
(a) If and whenever the Company is required to undertake to effect the
registration of any Registrable Securities under the Securities Act as
provided hereunder, the Company will as promptly as is reasonably
practicable:
(i) prepare, file and cause to become effective a registration
statement under the Securities Act for such Registrable Securities in
accordance with the applicable time periods and other conditions set
forth in the relevant provision hereof;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable
Securities until the earlier of such time as all of such Registrable
Securities have been disposed of in accordance with the intended
methods of disposition by the Investor(s) included in such
registration (as the case may be, the "Registering Investors") set
forth in such registration statement or the expiration of 365 days
after such registration statement becomes effective;
(iii) furnish to the Registering Investors and to any underwriter
of such Registrable Securities such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto (in the case of the Registering Investors or any managing
underwriter, including all exhibits), such number of copies of the
prospectus included in such registration statement (including each
preliminary prospectus and any summary prospectus) or filed under the
Securities Act, in conformity with the requirements of the Securities
Act, such
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documents as may be incorporated by reference in such registration
statement or prospectus, and such other documents, as the Registering
Investors or such underwriter may reasonably request;
(iv) undertake to register or qualify all Registrable Securities
covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as the Registering Investors or
any underwriter of such Registrable Securities shall reasonably
request, and do any and all other acts and things which may be
necessary or reasonably advisable to enable the Registering Investors
or any underwriter to consummate the disposition in such jurisdictions
of the Registering Investors' Registrable Securities covered by such
registration statement, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified, or to
subject itself to taxation in any such jurisdiction, or to consent to
general service of process in any such jurisdiction;
(v) in the case of any underwritten offering, cause to be
furnished to the Registering Investors and the underwriters, addressed
to them, (A) an opinion of counsel for the Company, dated the date of
the closing under the underwriting agreement relating to any
underwritten offering, and (B) a "comfort" letter signed by the
independent accountants who have reported the Company's financial
statements included in such registration statement, covering
substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of
such accountants' letter, with respect to events subsequent to the
date of such financial statements, as are customarily covered in
opinions of issuer's counsel and in accountants' letters,
respectively, delivered to underwriters in underwritten public
offerings of securities;
(vi) immediately notify the Registering Investors at any time
when a prospectus relating to a registration hereunder is or was
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 or included an
untrue statement of a material fact or omits or omitted to state any
material fact required to be stated therein or necessary, in the light
of the circumstances then existing, to make the statements therein not
misleading, and promptly prepare and furnish to the Registering
Investors 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 Registrable Securities,
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, in light of the circumstances then existing, to make the
statements therein not misleading; and
(vii) use reasonable efforts to do any and all other acts the
Registering Investors may reasonably request and which are customary
for a registration of equity securities.
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(b) The Company may require the Registering Investors to furnish such
information regarding the Registering Investors and the distribution of
such securities as the Company may from time to time reasonably request in
writing and as shall be required by law or by the SEC in connection with
any registration.
(c) Each of the Registering Investors agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described
in Section 5.1(a)(vi) hereof, such Registering Investor shall use its best
efforts to discontinue forthwith disposition of Registrable Securities
pursuant to the registration statement covering such Registrable Securities
until the Registering Investor's receipt of the copies of the supplemented
or amended prospectus contemplated by Section 5.1(a)(vi) hereof.
5.2 Underwriting.
(a) If requested by the managing underwriter for any underwritten
offering of Registrable Securities pursuant to a registration requested
hereunder, the Company will enter into an underwriting agreement with the
underwriters for such offering, such agreement to contain such
representations and warranties by the Company and such other terms and
provisions as are customarily contained in underwriting agreements with
respect to secondary distributions, including, without limitation,
indemnities and contribution to the effect provided in Section 7 hereof and
the provision of opinions of counsel and accountants' letters to the effect
provided in Section 5.1(a)(v) hereof. The Registering Investors shall be a
party to any such underwriting agreement and the representations and
warranties by, and the other agreements on the part of, the Company to and
for the benefit of such underwriters, shall also be made to and for the
benefit of the Registering Investors.
(b) In the event that any registration pursuant to Section 4.4 shall
involve, in whole or in part, an underwritten offering, the Company may
require the Registrable Securities to be included in such underwriting on
the same terms and conditions as shall be applicable to the Other
Securities being sold through underwriters under such registration. In any
such case, the Registering Investors shall be party to any such
underwriting agreement, such agreement shall contain such representations,
warranties and covenants by the Registering Investors and such other terms
and provisions as are customarily contained in underwriting agreements with
respect to secondary distributions, including, without limitation,
indemnities and contribution to the effect provided in Section 7 hereof.
The representations and warranties in such underwriting agreement by, and
the other agreements on the part of, the Company to and for the benefit of
such underwriters, shall also be made to and for the benefit of the
Registering Investors.
SECTION 6. - PREPARATION; REASONABLE INVESTIGATION.
In connection with the preparation and filing of each registration
statement hereunder registering Registrable Securities under the Securities Act,
the Company will give the Registering Investors and the underwriters, if any,
and their respective counsel and accountants (collectively, the "Inspectors"),
such reasonable and customary access to its books and records
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(collectively, the "Records") and such opportunities to discuss the business of
the Company with its officers and the independent accountants who have its
financial statements as shall be necessary, in the opinion of the Registering
Investors and such underwriters or their respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act. Records which
the Company reasonably determines to be confidential and which it notifies the
Inspectors in writing are confidential shall not be disclosed by the Inspectors.
Each of the Investors agrees that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice to the
Company.
SECTION 7. - INDEMNIFICATION AND CONTRIBUTION.
(a) Indemnification by the Company. The Company agrees to indemnify
and hold harmless each SA Person who participates as an underwriter, each
of the Registering Investors, each of their respective officers and
directors and each SA Person, if any, who controls any such underwriter or
the Registering Investors within the meaning of Section 15 of the
Securities Act as follows:
(i) against any and all loss, claim, damage and expense
whatsoever, as incurred, arising out of or caused by any untrue
statement or alleged untrue statement of a material fact contained in
any registration statement (or any amendment thereto) pursuant to
which Registrable Securities were registered under the Securities Act,
including all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement or a material fact contained in any prospectus (or any
amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including fees and disbursements of one (1) counsel only chosen
collectively by the Registering Investors or by any underwriter),
reasonably incurred in investigating, preparing or defending against
any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based
upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid
under clause (i) or (ii) above; provided, however, that this indemnity
agreement does not apply to any loss, liability, claim, damage or
expense to the extent arising out of or
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caused by 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 the Registering Investors or
any underwriter expressly for use in a registration statement (or any
amendment thereto) or any prospectus (or any amendment or supplement
thereto); and provided further that this indemnity agreement does not
apply to any loss, liability, claim, damage or expense arising out of
or caused by the Registering Investor's continued circulation,
subsequent to the Registering Investor's receipt of the notice
described in Section 5.1(a)(vi) hereof, of a prospectus including the
untrue statement of a material fact or omission of a material fact as
to which such notice was provided.
(b) Indemnification by the Investors. Each of the Registering
Investors agrees to indemnify and hold harmless the Company and any
underwriter, and each of their respective directors and officers (including
each officer of the Company who signed the registration statement), and
each SA Person, if any, who controls the Company or any underwriter within
the meaning of Section 15 of the Securities Act, against any and all loss,
liability, claim, damage and expense described in the indemnity contained
in Section 7a) hereof, as incurred, with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the
registration statement (or any amendment thereto) or any prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such Registering Investor
expressly for use in the registration statement (or any amendment thereto)
or such prospectus (or any amendment or supplement thereto).
(c) Indemnification by Underwriter. Anything in Section 7(a) to the
contrary notwithstanding, the Company's obligation to indemnify any
underwriter pursuant to Section 7(a) in an underwritten offering (or any SA
Person controlling such underwriter within the meaning of Section 15 of the
Securities Act) shall be conditioned upon the underwriting agreement with
such underwriter containing an agreement by such underwriter to indemnify
and hold harmless the Company and the Registering Investors, and each of
their respective directors and officers (including each officer of the
Company who signed the registration statement), and each SA Person if any,
who controls the Company, or the Registering Investors within the meaning
of Section 15 of the Securities Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section
7(a) hereof, as incurred, with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the registration
statement (or any amendment thereto) or any prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by such underwriter expressly for use
in the registration statement (or any amendment thereto) or such prospectus
(or any amendment or supplement thereto).
(d) Conduct of Indemnification Proceedings. Each indemnified party
shall give prompt notice to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have otherwise than on account of this indemnity
agreement. An indemnifying party may, at its own expense, participate in
and
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direct the defense of such action. In no event shall the indemnifying
parties be liable for the fees and expenses of more than one counsel for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances.
(e) Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for
in this Section 7 is for any reason held to be unenforceable although
applicable in accordance with its terms, the Company, the Registering
Investors and any underwriter shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by
such indemnity agreement incurred by the Company, the Registering Investors
and any underwriter, in such proportions that the underwriters are
responsible for that portion represented by the percentage that the
underwriting discount appearing on the cover page of the prospectus bears
to the initial public offering price appearing thereon and the Company and
the Registering Investors are responsible for the balance; provided,
however, that no SA Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any SA Person who was not guilty of such fraudulent
misrepresentation, and provided further that as between the Company and the
respective Registering Investors, such parties shall contribute to the
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnity agreement in such proportion as shall be
appropriate to reflect (i) the relative benefits received by the Company,
on the one hand, and the respective Registering Investors on the other
hand, from the offering of the Registrable Securities and any other
securities included in such offering, and (ii) the relative fault of the
Company, on the one hand, and the respective Registering Investors, on the
other, with respect to the statements or omissions which resulted in such
loss, liability, claim, damage or expense, or action in respect thereof, as
well as any other relevant equitable considerations. The relative benefits
received by the Company, on the one hand, and the respective Registering
Investors on the other, with respect to such offering shall be deemed to be
in the same proportion as the sum of the total purchase price paid to the
Company by the Registering Investors in respect of the Registrable
Securities plus the total net proceeds from the offering of any securities
included in such offering (before deducting expenses) received by the
Company bears to the amount by which the total net proceeds from the
offering of Registrable Securities (before deducting expenses) received by
the Investors with respect to such offering exceeds the purchase price paid
to the Company in respect of the Registrable Securities, and in each case
the net proceeds received from such offering shall be determined as set
forth on the table to the cover page of the prospectus. The relative fault
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Company or the Registering Investors, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or
prevent such statement or omission. Each of the Company and the Investors
agrees that it would not be just and equitable if contribution pursuant to
this Section 7 were to be determined by pro rata allocation or by any other
method of allocation which does not take into account the equitable
-13-
considerations referred herein. For purposes of this Section 7, each SA
Person, if any, who controls Registering Investors or an underwriter within
the meaning of Section 15 of the Securities Act shall have the same rights
to contribution as Registering Investors or such underwriter, and each
director of the Company, each officer of the Company who signed the
registration statement, and each Person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act shall have the same
rights to contribution as the Company.
SECTION 8. - PERMITTED ASSIGNMENT.
An Investor may assign rights hereunder in connection with any sale of
Company Shares, CTEK Shares and/or Exchange Shares which is consistent with the
restrictions and representations contained in the U.S. Subscription Agreement,
the Stock Exchange Agreement and the Shareholders Agreement, provided that such
assignee shall have agreed in writing, satisfactory in form and substance to the
Company and its counsel, to be bound hereby. From and after any such assignment
pursuant to this Section 8, reference herein to the Investors shall include such
permitted assignee or assignee.
SECTION 9. - MISCELLANEOUS.
9.1 Governing Law. This Agreement shall be governed in all respects by the
laws of the State of New York as they are applied to agreements entered into in
New York between New York residents and performed entirely within New York.
9.2 Further Assurances. Each party upon the request of the others, shall
do, execute, acknowledge and deliver or cause to be done, executed, acknowledged
or delivered all such further acts, deeds, documents, assignments, transfers,
conveyances, powers of attorney and assurances as may be reasonably necessary or
desirable to effect complete consummation of the transactions contemplated by
this Agreement.
9.3 Successors and Assigns. The provisions hereof shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors, assigns, heirs, executors and administrators. The parties hereto
hereby confirm that each transferee of any CTEK Shares shall benefit from the
Registration Rights contemplated in this Agreement provided that the transfer of
such CTEK Shares was made in conformity with the Shareholders Agreement and this
Agreement.
9.4 Arbitration. All disputes or controversies between the parties in
respect of the validity, interpretation or performance of the provisions of this
Agreement shall be definitive dealt with using the rules of conciliation and
arbitration of the International Chamber of Commerce, by one or more arbitrators
appointed in accordance with said rules, and to the exclusion of any courts,
except for injunctive relief and any provisional remedy, including seizure
before judgment or attachment, which may be obtained from any court or tribunal.
Any arbitration proceeding required pursuant to the terms hereof shall take
place in New York, New York and shall be conducted in both the English and
French language.
-14-
9.5 Notices. All offers, acceptances, rejections, notices, requests,
authorizations, permissions, directions, demands and other communications
hereunder shall be given in writing and shall be given by telecopier, or
delivered by hand, to the other parties at the following addresses:
if to Devma: INDUSTRIES DEVMA INC.
000 xx xx Xxxxxxxxxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: President
Telecopier: (000) 000-0000
if to Innovatech: SOCIETE INNOVATECH DU GRAND MONTREAL
0000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: President and Chief Executive Officer
Telecopier: (000) 000-0000
if to Fonds: XXXXX XX XXXXXXXXXX XXX XXXXXXXXXXXX
XX XXXXXX (F.T.Q.)
0000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Vice President, Legal Affairs
Telecopier: (000) 000-0000
with a copy to: Senior Vice President, Investments
-15-
if to FR: FONDS REGIONAL DE SOLIDARITE ILE DE MONTREAL
000 Xx. Xxxxxxx Xxxxxx Xxxx
0xx Xxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention:
Telecopier:
if to the Company: COMPOSITECH LTD.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000-0000
Attention: Executive Vice President & Treasurer
Telecopier: (000) 000-0000
with a copy in all cases to: XXXXXXXX XXXXXXXXXX
0000 Xxxx-Xxxxxxxx Blvd. West
Suite 1400
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Me. Xxxxxx Xxxxxxxx
Telecopier: (000) 000-0000
with a copy in all cases to: XXXXXXX LEISURE XXXXXX & IRVINE
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxx, Esq.
Telecopier: (000) 000-0000
Or at such other address as the parties may have previously indicated to the
others parties in writing in conformity with the foregoing. Any such notice,
request, demand or other communication shall be deemed to have been received on
the date of delivery if delivered by hand, or the next Business Day immediately
following the date of transmission if sent by telecopier. The original copy of
any notice sent my telecopier shall be forwarded to the other parties by
registered mail, receipt return requested.
9.6 Delays. When calculating the period of time within which or following
which any act is to be done or step taken pursuant to this Agreement, the day
which is the reference day in calculating such period shall be excluded. If the
day on which such delay expires is not a Business Day, then the delay shall be
extended to the next succeeding Business Day.
9.7 Entire Agreement: Amendment. This Agreement and the other documents
delivered pursuant hereto constitutes the full and entire understanding and
agreement between the parties with regard to the subjects hereof, and no party
shall be liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or as
otherwise provided for herein. Except as expressly provided herein, neither this
-16-
Agreement nor any term hereof may be amended, other than by a written instrument
signed by all the parties hereto.
9.8 Gender. Any reference in this Agreement to any gender shall include
both genders and the neutral, and words used herein importing the singular
number only shall include the plural and vice versa.
9.9 Headings. The division of this Agreement into Sections, subsections
and other subdivisions, and the insertion of headings are for convenience of
reference only and shall not affect or be utilized in the construction or
interpretation of this Agreement.
9.10 Waiver. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any party, shall be cumulative
and not alternative.
9.11 Preamble. The preamble hereof shall form an integral part of this
Agreement.
9.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same document.
9.13 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision.
IN WITNESS WHEREOF, the parties have signed at the place and on the date
first hereinabove mentioned.
INDUSTRIES DEVMA INC. FONDS DE SOLIDARITE DES
TRAVAILLEURS DU QUEBEC (F.T.Q.)
Per: Per: /s/Xxxxxxx Xxxxxxx
------------------------------ ------------------------------
Xxxxxxx Xxxxxxx,
Senior Vice President, Investments
-00-
XXXXXXX XXXXXXXXXX XX XXXXX XXXXX XXXXXXXX XX SOLIDARITE
MONTREAL ILE DE MONTREAL, by its general
partner, Gestion du Fonds Regional
de Solidarite Ile de Montreal Inc.
Per: Per:
------------------------------ ------------------------------
COMPOSITECH LTD.
Per:
------------------------------
Name:
Title:
