Exhibit 10.1
STOCK PURCHASE & REGISTRATION RIGHTS AGREEMENT
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This STOCK PURCHASE & REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is
entered into as of January 22, 2004, by and among STARTECH ENVIRONMENTAL
CORPORATION, a Colorado corporation (the "Company"), and party listed on
Schedule A annexed hereto that executes and delivers this Agreement (each
individually, a "Purchaser" and collectively, the "Purchasers" and together (but
on a several and not joint basis) with the Company, the "Parties" or each
individually, a "Party").
1. Purchase and Sale of Shares and Warrants.
(a) Subject to the terms and conditions hereof, at the Closing identified
in Section 2(a) hereof, the Company shall issue and sell to each Purchaser, and
each Purchaser shall purchase from the Company, the number of shares (the
"Shares") of common stock, no par value, of the Company (the "Common Stock") set
forth opposite such Purchaser's name on Schedule A hereto, for a price per share
equal to $2.26 (the "Share Price"), which Share Price is equal a twenty five
percent (25%) discount to the average closing price per share of the Common
Stock for the thirty (30) consecutive trading days immediately preceding the
date hereof.
(b) In addition to the foregoing and subject to the terms and conditions
hereof, at the Closing identified in Section 2(a) hereof, the Company shall
issue to each Purchaser warrants to purchase shares of Common Stock (the
"Warrants"), in substantially the form of Exhibit A annexed hereto, which
Warrants shall expire on the third anniversary of the date hereof (the
"Expiration Date"). Of the total Warrants to be issued to each such Purchaser at
the Closing, such Warrants shall be divided into and issued as three separate
Warrants, each of which shall entitle the holder thereof to purchaser up to
one-third of the total number of Shares set forth opposite such Purchaser's name
on Schedule A hereto. The exercise price for each of the three Warrants to be
issued to a Purchaser shall be as follows: (i) the first Warrants to be issued
at the Closing shall have an exercise price equal to $1.00 above (x) the average
closing price per share of the Common Stock for the thirty (30) consecutive
trading days immediately preceding the date hereof (the "Average Price") or (y)
the closing price per share of the Common Stock on the date immediately
preceding the date hereof (the "Closing Price"), whichever is higher; (ii) the
second Warrants to be issued at the Closing shall have an exercise price equal
to $2.00 above the above the greater of (x) the Average Price or (y) the Closing
Price, whichever is higher; and (iii) the third Warrants to be issued at the
Closing shall have an exercise price equal to $3.00 above the above the greater
of (x) the Average Price or (y) the Closing Price, whichever is higher. The
foregoing notwithstanding, in the event that there are any unexercised Warrants
outstanding on the Expiration Date and the exercise price for such Warrants
exceeds the closing price per share of the Common Stock on the trading day
immediately preceding the Expiration Date, the Company will agree to extend the
term of such Warrants for an additional one-year from the Expiration Date.
(c) The purchase and sale of the Shares and the Warrants pursuant to the
terms hereof will be made in reliance upon the provisions of Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act"), Regulation D
promulgated thereunder by the United States Securities and Exchange Commission
(the "SEC"), or such other exemptions from the
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registration requirements of the Securities Act as may be available with respect
to the investment in the Shares and the Warrants to be made hereunder.
2. Closings and Deliverables.
(a) The closing of the purchase and sale of the Shares and the Warrants
shall take place at 12:00 p.m. (Eastern Standard Time) no later than Friday,
February 6, 2004 (the "Closing Date") at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ (the "Closing"). At the Closing,
or as soon as is reasonably practicable thereafter, the Company (or its transfer
agent) shall deliver to each Purchaser a stock certificate (or certificates)
representing the Shares, as well as the Warrants, in each case registered in the
name of such Purchaser, and such other documents and certificates as are
required by this Agreement at the Closing. At the Closing, each Purchaser shall
deliver to the Company an amount equal to the product of (x) the number of
Shares set forth opposite such Purchaser's name on Schedule A hereto and (y) the
Share Price (the "Purchase Price"), by wire transfer in immediately available
funds to the account set forth on Schedule B hereto.
(b) The Company shall use the cash proceeds from the issuance of the
Shares for working capital and general corporate purposes.
(c) In the event that a Purchaser shall fail to wire its respective
Purchase Price to the account set forth on Schedule B hereto on the Closing
Date, the Share Price shall not be set as of the date immediately preceding the
date hereof and the Company shall have the rights and remedies set forth herein.
3. Representations and Warranties by the Company. The Company hereby
represents and warrants to each Purchaser, as of the date hereof and as of the
Closing Date, as follows:
(a) Incorporation and Qualification. The Company has been duly organized
and is validly existing as a Corporation and in good standing under the laws of
the State of Colorado with full corporate power and authority to carry on its
business as now conducted and as proposed to be conducted and to own and lease
the properties and assets it now owns or holds under lease.
(b) Authority. The Company has the requisite corporate power and authority
to enter into this Agreement and to issue and deliver the Shares and the
Warrants and, upon exercise of the Warrants in accordance with the terms
thereof, the shares of Common Stock issuable upon exercise of the Warrants (the
"Warrant Shares"). The execution and delivery of this Agreement and the issuance
and delivery of the Shares and the Warrants hereunder and thereunder and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action by the Company. This Agreement has
been duly and validly executed and delivered by and on behalf of the Company and
are the valid and binding agreements of the Company, enforceable against the
Company in accordance with their respective terms, except as enforceability may
be limited by general equitable principles, bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other laws affecting creditors' rights
generally. Upon delivery thereof at the Closing, the Shares and the
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Warrants will be duly authorized, validly issued, fully paid and non-assessable.
Upon issuance of the Warrant Shares upon the exercise of the Warrants in
accordance with the terms thereof, the Warrant Shares will be duly authorized,
validly issued, fully paid and non-assessable. The Shares and the Warrants and,
upon exercise of the Warrants in accordance with the terms thereof, the Warrant
Shares do not subject the holders thereof to personal liability by reason of
being such holders.
(c) No Conflicts. The execution, delivery and performance of the Agreement
and the consummation of the transactions contemplated hereby by the Company do
not and will not with or without the giving of notice or the passage of time or
both, violate or conflict with or result in a breach or termination of any
provision of, or constitute a default under any organizational instrument of the
Company or any order, judgment, decree, statute, regulation, contract, agreement
or any other restriction of any kind or description to which the Company is a
party or by which the Company is or may be bound.
(d) Capital Stock; Fully Paid and Non-Assessable.
(i) As of the date and immediately prior to the Closing Date, the
authorized capital stock of the Company consists and will
consist, respectively, of (A) 10,000,000 shares of Preferred
Stock, of which 2,645 shares are issued and outstanding and
designated as Series A 8% Cumulative Convertible Redeemable
Preferred Stock (the "Series A Preferred Stock") and (B)
800,000,000 shares of Common Stock of which:
(1) 16,334,169 shares are issued and outstanding;
(2) 3,000,000 shares are authorized for issuance under the
Company's stock option plans, of which 691,089 shares are
reserved for issuance upon the exercise of options granted and
issuable by the Company thereunder;
(3) 14,694 shares are reserved for issuance upon the conversion of
the Series A Preferred Stock; and
(4) 2,206,789 shares are reserved for issuance upon the exercise
of warrants.
(ii) All such outstanding shares of Common Stock and Preferred Stock
and other securities have been duly authorized and validly issued and are fully
paid and nonassessable and were issued in compliance with all applicable Federal
and state securities laws. Except as contemplated by this Agreement or as set
forth in all forms, reports and documents filed with the SEC pursuant to the
Securities Act and Securities Exchange Act of 1934, as amended from January 1,
2003 through the date hereof (collectively, the "SEC Filings"), the Company has
no outstanding subscription, option, warrant, right of first refusal, preemptive
right, call, contract, demand, commitment, convertible security or other
instrument, agreement or arrangement of any character or nature whatever under
which the Company is or may be obligated to issue Common Stock, Preferred Stock
or any other equity security of any kind or which otherwise relates to the
Company's securities.
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(e) No Legal Proceedings. Except as may be described in the SEC Filings,
there is no action, suit or proceeding before or by any court or any
governmental agency or body, domestic or foreign, now pending or, to the
knowledge of the Company, threatened against or affecting the Company, or any of
its properties or assets, which is reasonably likely to result in any material
adverse change in the condition (financial or otherwise) or in the earnings or
business affairs of the Company, or which is reasonably likely to materially and
adversely affect the properties or assets thereof.
4. Representations and Warranties of each Purchaser. Each Purchaser
represents and warrants to the Company, as of the date hereof and as of the
Closing Date, as follows:
(a) Power. To the extent such Purchaser is an individual, such Purchaser
has all requisite power, capacity and authority to enter into this Agreement and
to execute, deliver and perform its obligations under this Agreement. To the
extent such Purchaser is a limited liability company, partnership or
corporation, such Purchaser has been duly organized, is validly existing and is
in good standing under the laws of its state of incorporation, with limited
liability, partnership or corporate power and authority, as the case may be, to
execute, deliver and perform its obligations under this Agreement.
(b) Authority. The execution, delivery and performance by such Purchaser
of the Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary action on the part of such Purchaser,
and the Agreement constitutes the legal, valid and binding obligation of such
Purchaser, enforceable against such Purchaser in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, reorganization or
other laws affecting the enforcement of creditors' rights generally now or
hereafter in effect and subject to the application of equitable principles and
the availability of equitable remedies.
(c) No Conflicts. The execution, delivery and performance of the Agreement
and the consummation of the transactions contemplated hereby by such Purchaser
do not and will not with or without the giving of notice or the passage of time
or both, violate or conflict with or result in a breach or termination of any
provision of, or constitute a default under any organizational instrument of
such Purchaser or any order, judgment, decree, statute, regulation, contract,
agreement or any other restriction of any kind or description to which such
Purchaser is a party or by which such Purchaser is or may be bound.
(d) Purchaser Representations and Acknowledgments.
(i) Such Purchaser is acquiring the Shares, the Warrants, and upon
exercise of the Warrants, the Warrant Shares, for such Purchaser's own account
for investment only and not as nominee or agent and not with a view to, or for
sale in connection with, a distribution of the Shares, the Warrants or the
Warrant Shares or as dividends thereon and with no present intention of selling,
transferring, granting a participation in or otherwise distributing the same,
all within the meaning of the Securities Act and any applicable state,
securities or blue-sky laws.
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(ii) Such Purchaser acknowledges that:
(A) The Company has advised such Purchaser that the Shares,
the Warrants and the Warrant Shares have not been registered under the
Securities Act or under the laws of any state on the basis that the
issuance thereof contemplated by this Agreement is exempt from such
registration in accordance with Section 4(2) of the Securities Act, or
such other applicable exemption;
(B) The Company's reliance on the availability of an exemption
under the Securities Act for the issuance of the Shares, the Warrants and
the Warrant Shares without registration is, in part, based upon the
accuracy and truthfulness of such Purchaser's representations and
warranties contained herein;
(C) The Shares, the Warrants and the Warrant Shares cannot be
resold without registration or an exemption from registration under the
Securities Act and any applicable state securities laws, and that
certificates representing the Shares will bear a restrictive legend to
such effect in substantially the following form and any legend required by
applicable state laws:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR THE AVAILABILITY OF AN EXEMPTION FROM
REGISTRATION UNDER SAID ACT.
(D) Such Purchaser has evaluated the merits and risks of
purchasing the Shares, the Warrants and the Warrant Shares and has such
knowledge and experience in financial and business matters that such
Purchaser is capable of evaluating the merits and risks of such purchase,
is aware of and has considered the financial risks and hazards of
purchasing the Shares, the Warrants and the Warrant Shares and is able to
bear the economic risk of purchasing the Shares, the Warrants and the
Warrant Shares including the possibility of a complete loss with respect
thereto;
(E) Such Purchaser has had access to such information
regarding the business and finances of the Company, and has been provided
the opportunity to discuss with the Company's management the business,
affairs and financial condition of the Company and such other matters with
respect to the Company as would concern a reasonable person considering
the transactions contemplated by this Agreement and/or concerned with the
operation of the Company; and
(F) Such Purchaser is an "Accredited Investor," as such term
is defined in Rule 501 of Regulation D promulgated under the Securities
Act.
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(e) Brokers and Finders. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of such Purchaser who might be entitled to any fee or commission from such
Purchaser, the Company, any of their respective Affiliates upon consummation of
the transactions contemplated by this Agreement.
(f) Front-Running and Short-Selling. Neither such Purchaser nor any of its
Affiliates has engaged in any "short-selling" of the Common Stock, as such term
is defined in Rule 3b-3 of the Exchange Act. In addition, neither such Purchaser
nor its Affiliates has purchased or sold any equity position in the Company in
advance of the Closing based on the receipt or use of advance knowledge of
confidential information that has not previously been disclosed to the public.
5. Certain Covenants.
(a) Delisting. In the event that the Common Stock, for any reason, is not
listed on the Nasdaq SmallCap Market, the Over-the-Counter Bulletin Board or a
similar national exchange, (absent any time frame applicable to any transition
from one exchange to another) and the Company is no longer subject to the
reporting requirements of the Exchange Act, the Company hereby covenants and
agrees with such Purchaser that, so long as such Purchaser owns at least fifty
percent (50%) of the Shares, the Warrants or the Warrants Shares acquired by
such Purchaser hereunder, except as otherwise required in this Agreement, the
Company shall provide such Purchaser with customary and reasonable financial
information on at least a quarterly basis and such other information rights as
provided to an investor in a privately held corporation.
(b) Financial Information.
(i) As soon as practicable, and in any event within 90 days after
the close of each fiscal year of the Company, the Company will deliver to
such Purchaser (A) a consolidated balance sheet of the Company and its
subsidiaries as of the end of such fiscal year and (B) consolidated
statements of income, changes in financial position and common stock and
other shareholders' equity of the Company and its subsidiaries for such
fiscal year, in each case setting forth in comparative form the
corresponding figures for the preceding fiscal year and to be in
reasonable detail and audited by independent public accountants selected
by the Company.
(ii) As soon as practicable, and in any event within 45 days after
the close of each of the first three fiscal quarters of the Company, the
Company will deliver to the such Purchaser (A) a consolidated balance
sheet of the Company and its subsidiaries as of the end of such fiscal
quarter and (B) consolidated statements of income and changes in financial
position of the Company and its subsidiaries for the portion of the fiscal
year ended with the end of such quarter, in each case setting forth in
comparative form the corresponding figures for the comparable period of
the preceding fiscal year (subject to normal year-end adjustments).
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(c) Confidentiality. Such Purchaser covenants and agrees to keep
confidential any and all material non-public information which it has heretofore
obtained or shall hereafter obtain, directly or indirectly, from the Company
pursuant to this Agreement or otherwise, and agrees not to use the same except
for the purpose of this Agreement or to disclose the same to any party except as
provided below, without the Company's prior written consent; provided that the
terms of this Section 5(c) shall not extend to any such information that: (i) is
already publicly known; (ii) has become publicly known without any fault of such
Purchaser or anyone to whom such Purchaser has made disclosure in compliance
with the terms of this Section 5(c); or (iii) is required to be disclosed to any
governmental authorities or courts of law as a result of operation of law,
regulation, or court order; provided, however, that such Purchaser shall have
first given prompt written notice of such requirement to the Company (if
permissible) and cooperates with the Company to restrict such disclosure and/or
obtain confidential treatment thereof.
(d) Front-Running and Short-Selling. Each Purchaser covenants and agrees
that it will not, and shall cause each of each Affiliates not to (i) engage in
(i) any "short-selling" of the Common Stock, as such term is defined in Rule
3b-3 of the Exchange Act; or (ii) purchase or sell any shares of Common Stock
based on the receipt or use of advance knowledge of confidential information.
6. Registration Rights.
(a) Defined Terms. The following capitalized terms, when used in this
Section 6, have the respective meanings set forth below:
"Affiliate" means, with respect to any Person, any other Person,
directly or indirectly, controlling, controlled by, or under common
control with, such Person, and shall include (a) any Person who is an
executive officer, director or beneficial holder of at least 10% of the
outstanding capital stock of the Company (or other specified Person), (b)
any Person of which the Company (or other specified Person) or an
Affiliate of the Company (or other specified Person) shall, directly or
indirectly, either beneficially own at least 10% of the outstanding equity
securities or constitute at least a 10% participant, and (c) in the case
of a specified Person who is an individual, each parent, spouse, child,
brother, sister or the spouse of a child, brother or sister of such
Person, and each trust or family limited partnership created for the
benefit of one or more of such Persons. For the purposes of this
definition, "control" when used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing. Notwithstanding the foregoing, the term "Affiliate" as used
elsewhere in this Agreement shall have the same meaning as given to such
term in this Section 6(a).
"Business Day" means any day, other than a Saturday or a Sunday,
that is neither a legal holiday nor a day on which banking institutions
are generally authorized or required by law or regulation to close in the
State of Connecticut.
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"Holder" shall mean any Person that owns Registrable Securities,
including such successors and assigns as acquire Registrable Securities,
directly or indirectly, from such Person. For purposes of this Agreement,
the Company may deem the registered holder of a Registrable Security as
the Holder thereof.
"Other Approved Holders" shall mean holders of Common Stock having
registration rights with respect to the Common Stock, other than pursuant
to the terms of this Agreement.
"Person" means any individual, company, corporation, partnership,
limited liability company, trust, division, governmental,
quasi-governmental or regulatory entity or authority or other entity.
Notwithstanding the foregoing, the term "Person" as used elsewhere in this
Agreement shall have the same meaning as given to such term in this
Section 6(a).
"Prospectus" shall mean the prospectus (including a preliminary
prospectus) included in any Registration Statement, as amended or
supplemented by a prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material
incorporated by reference in such prospectus.
"Registrable Securities" shall mean the Shares, the Warrant Shares
and any other capital stock or other securities issued or issuable as a
result of or in connection with any stock dividend, stock split or reverse
stock split, combination, recapitalization, reclassification, merger or
consolidation, exchange, distribution or similar transaction in respect of
the Shares or the Warrant Shares.
"Registration Statement" shall mean any registration statement which
covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus included therein, all amendments
and supplements to such Registration Statement, including post-effective
amendments, and all exhibits and all material incorporated by reference in
such Registration Statement.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act,
as amended from time to time, or any similar successor rule thereto that
may be promulgated by the SEC.
"Rule 144A" shall mean Rule 144A promulgated under the Securities
Act, as amended from time to time, or any similar successor rule thereto
that may be promulgated by the SEC.
(b) Piggyback Registration Rights.
(i) Whenever the Company proposes to register any of its securities
under the Securities Act, either pursuant to an underwritten primary
registration on behalf of the Company or pursuant to an underwritten
secondary registration on behalf of a holder or holders of the Company's
securities (other than on Form ▇-▇, ▇▇▇▇ ▇-▇ or any successor
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form) and the registration form to be used may be used for the
registration of any Registrable Securities (a "Piggyback Registration"),
the Company will give prompt written notice to each holder of Registrable
Securities of its intention to effect such a registration and will include
in such registration all Registrable Securities (subject to, and in
accordance with, the priorities set forth in Section 6(b)(ii) hereof),
with respect to which the Company has received written requests for
inclusion within ten (10) days after delivery of the Company's notice to
each holder of Registrable Securities.
(ii) If the managing underwriter(s) advise the Company in writing that
in their opinion, the number of Registrable Securities requested to be
included in such registration exceeds the number which can be sold in such
offering without adversely affecting the marketability or pricing thereof,
the Company will include in such registration up to an aggregate amount
determined advisable by such underwriter(s): (i) first, any shares of
Common Stock that the Company desires to register; (ii) second, any shares
of Common Stock requested to be registered by the holder(s) of Common
Stock pursuant to which the Registration Statement is being filed and to
which the holders of Registrable Securities hereunder are receiving
Piggyback Registration; and (iii) pro rata among the holders of
Registrable Securities on the basis of the number of Registrable
Securities which are requested to be registered hereunder.
(iii) Notwithstanding anything herein to the contrary, the Company may
withdraw any registration statement referred to in this Section 6(b) at
any time in its sole discretion without thereby incurring any liability to
the holders of Registrable Securities.
(c) Registration Procedures. In connection with the Company's
registration obligations pursuant to Sections 6(b) hereof, the Company will use
its commercially reasonable efforts to:
(i) use its commercially reasonable efforts to register or qualify
such Registrable Securities under the securities or blue sky laws of the
jurisdictions as any seller reasonably requests in writing and do any and
all other acts and things which may be reasonably necessary or advisable
to enable such seller to consummate the disposition in such jurisdictions
of the Registrable Securities owned by such seller (provided that the
Company will not be required to (A) qualify generally to do business in
any jurisdiction where it would not otherwise be required to qualify but
for this subparagraph or (B) consent to general service of process in any
such jurisdiction);
(ii) notify each seller of Registrable Securities 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 contains an untrue
statement of a material fact or omits any fact necessary to make the
statements therein not misleading, and, at the request of any such seller,
the Company will prepare a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus will not contain any untrue statement of a
material fact or omit to state any fact necessary to make the statements
therein not misleading;
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(iii) cause all such Registrable Securities to be listed on each
securities exchange, if any, on which similar securities issued by the
Company are then listed;
(iv) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration
statement; and
(v) advise each seller of such Registrable Securities promptly after
it shall receive notice or obtain knowledge thereof, of the issuance of
any stop order by the Commission suspending the effectiveness of such
registration statement or the initiation or threatening of any proceeding
for such purpose and use commercially reasonable efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop order
should be issued.
(d) Material Development Election.
(i) Subject to Section 6(d)(ii) below, the Company shall be entitled,
for a period of time not to exceed thirty consecutive (30) days (a
"Suspension Period"), to postpone the filing of any Registration Statement
otherwise required to be filed by it pursuant to Section 6(b) and/or
request that the Holders refrain from effecting any public sales or
distributions of their Registrable Securities if the Company's Board of
Directors shall have reasonably determined in good faith and in its
reasonable business judgment that such registration would interfere in any
material respect with any financing (other than an underwritten secondary
offering of any securities of the Company), acquisition, corporate
reorganization or other transaction or development involving the Company
or any subsidiary of the Company that in the reasonable good faith
business judgment of such board is a transaction or development that is or
would be material to the Company (a "Material Development Election").
(ii) The Board of Directors shall, as promptly as practicable, give
the Holders written notice of any such Material Development Election. In
the event of a determination by the Board of Directors to postpone the
filing of a Registration Statement required to be filed pursuant to
Section 6(b) hereof, the Company shall be required to file such
Registration Statement as soon as practicable after the Board of Directors
of the Company shall determine, in its reasonable business judgment, that
the filing of such Registration Statement and the offering thereunder will
not interfere with the aforesaid material transaction or development, but
in any event no later than the end of such Suspension Period. In addition,
if the Board of Directors of the Company has requested that the Holders
refrain from making public sales or distributions of their Registrable
Securities, such board shall, as promptly as practicable following its
determination that the Holders may recommence such public sales and
distributions, notify such Holders in writing of such determination (but
in any event no later than the end of such Suspension Period). In the
event the Company shall exercise a Material Development Election during a
period when a Registration Statement filed pursuant to Section 6(b) hereof
is effective, the time period specified in Section 6(b) hereof during
which such Registration Statement is required to be kept effective shall
be extended by the number of days during which the Holders are prohibited
by the Company from publicly selling or distributing their securities.
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(iii) Each Purchaser agrees that, upon receipt of any notice from the
Company of a Suspension Period, such Purchaser shall forthwith discontinue
disposition of shares of Common Stock covered by such Registration
Statement or Prospectus until such Purchaser (A) is notified in writing by
the Company that the use of the applicable prospectus may be resumed, (B)
has received copies of a supplemental or amended prospectus, if
applicable, and (C) has received copies of any additional or supplemental
filings which are incorporated or deemed to be incorporated by reference
into such prospectus.
(iv) Notwithstanding the foregoing, no more than one Suspension Period
may occur during any twelve-month period, unless approved by a
majority-in-interest of the then outstanding Holders (on a common
equivalent basis). The Company shall use its best efforts to limit the
duration and aggregate number of any Suspension Periods.
(e) Registration Expenses. All expenses incident to the Company's
performance of or compliance with Section 6 of this Agreement, including all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualifications or registrations (or the obtaining of
exemptions therefrom) of the Registrable Securities), printing expenses
(including expenses of printing Prospectuses), messenger and delivery expenses,
internal expenses (including all salaries and expenses of its officers and
employees performing legal or accounting duties), fees and disbursements of its
counsel and its independent certified public accountants, securities acts
liability insurance (if the Company elects to obtain such insurance), fees and
expenses of any special experts retained by the Company in connection with any
registration hereunder, fees and expenses of other Persons retained by the
Company, (all such expenses being referred to as "Registration Expenses"), shall
be borne by the Company, whether or not any registration statement becomes
effective; provided that Registration Expenses shall not include any
underwriting discounts, commissions or fees attributable to the sale of the
Registrable Securities.
(f) Registration Rights Indemnification.
(i) Indemnification by the Company.
(1) The Company will indemnify and hold harmless, to the
fullest extent permitted by law, but without duplication, each Holder,
including any managed or advised accounts and any investment advisor or
agent therefore, officers, directors, employees, partners, representatives
and agents, and each Person who controls such Holder or such other Persons
(within the meaning of the Securities Act) (for purposes of this Section
6(f)(i), a "Holder Indemnified Person"), from and against, and will
reimburse such Holder Indemnified Person with respect to, any and all
claims, actions, demands, losses, damages, liabilities, costs and expenses
(including reasonable costs of investigation and reasonable legal fees and
expenses) ("Indemnifiable Costs and Expenses") to which such Holder
Indemnified Person may become subject under the Securities Act or
otherwise and arise out of or are based upon (A) violation of securities
laws or (B) any untrue statement or alleged untrue statement of any
material fact contained in, or any omission or alleged omission to state
therein a material fact required to be stated in, any such Registration
Statement, any Prospectus contained therein or any amendment or supplement
thereto or necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading; provided,
however, that the Company will not be liable in any such case to the
extent that any costs or expense covered by the preceding clauses (A) or
(B) arises out of or results from any untrue or alleged untrue statement
of any material fact contained in such Registration Statement, any
Prospectus contained therein or any amendment or supplement thereto or any
omission or alleged omission to state therein a material fact required
11
to be stated therein or necessary to make the statements therein, in light
of the circumstances in which they were made, not misleading, in each case
to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was so made
solely in reliance upon and in substantial conformity with written
information furnished by such Holder Indemnified Person specifically for
use in the preparation of any such Registration Statement, Prospectus or
amendment or supplement thereto.
(2) The Company further agrees promptly upon demand by each
Holder Indemnified Person to reimburse each Holder Indemnified Person for
any Holder Indemnifiable Costs and Expenses as they are incurred by it;
provided that if the Company reimburses a Holder Indemnified Person
hereunder for any expenses incurred in connection with a lawsuit, claim,
inquiry or other proceeding or investigation for which indemnification is
sought, such Holder Indemnified Person agrees to refund such reimbursement
of Holder Indemnifiable Costs and Expenses to the extent it is finally
judicially determined that the indemnity provided for in this Section
6(f)(i) is not applicable to, or the Company is not otherwise obligated to
pay, such Holder Indemnified Person in accordance with the terms hereof or
otherwise. The indemnity, contribution and expense reimbursement
obligation of the Company under this Section 6(f)(i) shall be in addition
to any liability it may otherwise have. The obligations of the Company
hereunder shall survive the Closing and the termination of any
Registration Statement under which any Registrable Securities were
registered the termination of this Agreement and shall not be extinguished
with respect to any Person because any other Person is not entitled to
indemnity or contribution hereunder.
(ii) Indemnification by Holders of Registrable Securities. Each
Holder whose Registrable Securities are included in a Registration
Statement pursuant to the provisions of this Section 6 will indemnify and
hold harmless the Company and its officers, directors, employees,
partners, stockholders, agents, representatives, and any Person who
controls the Company or any of its subsidiaries or Affiliates (within the
meaning of the Securities Act) (each, a "Company Indemnified Person"),
from and against, and will reimburse such Company Indemnified Person with
respect to, any and all Indemnifiable Costs and Expenses to which the
Company or such Company Indemnified Person may become subject under the
Securities Act or otherwise and which arise out of or result from any
untrue or alleged untrue statement of any material fact contained in such
Registration Statement, any Prospectus contained therein or any amendment
or supplement thereto, or any omission or the alleged omission to state
therein any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they
were made, not misleading, in each case to the extent, but only to the
extent, that such untrue statement
12
or omission or alleged untrue statement or alleged omission was so made
solely in reliance upon and in substantial conformity with written
information furnished by such Holder specifically for use in the
preparation thereof; provided, however, that the liability of any Holder
pursuant to this subsection (ii) shall be limited to an amount not to
exceed the net proceeds received by such Holder pursuant to the
Registration Statement which gives rise to such obligation to indemnify.
(iii) Conduct of Indemnification Proceedings; Contribution.
(1) Each indemnifying party and indemnified party under this
Section 6(f) shall comply with the procedures set forth in Section
7(a)(iii) with respect to any indemnity sought pursuant to this Section
6(f).
(2) Each indemnifying party and indemnified party under this
Section 6(f) also agrees to comply with the provisions in Section
7(a)(iv) as they relate to contribution.
(g) Reporting Requirements Under the Exchange Act. The Company shall use
its commercially reasonable efforts to make publicly available and available to
the Holders, pursuant to Rule 144, such information as is necessary to enable
the Holders to make sales of Registrable Securities pursuant to that Rule. The
Company shall use its commercially reasonable efforts to file timely with the
SEC all documents and reports required of the Company under the Exchange Act.
The Company shall furnish to any Holder, upon request, a written statement
executed on behalf of the Company as to compliance with the current public
information requirements of Rule 144. In addition, the Company will provide to
any Holder of a Registrable Security, or any potential purchaser of a
Registrable Security, upon any such Person's reasonable request, the information
required by paragraph (d)(4) of Rule 144A.
(h) Stockholder Information. The Company may require each seller of
Registrable Securities as to which any registration is being effected to furnish
to the Company such information regarding such seller and the distribution of
such securities as the Company or the Managing Underwriter may from time to time
reasonably request in writing.
7. Miscellaneous.
(a) Indemnification. In addition, to any indemnification provided
elsewhere in this Agreement, the Parties hereto agree as follows:
(i) Company Indemnification.
(1) The Company will indemnify and hold harmless, to the
fullest extent permitted by law, but without duplication, such Purchaser,
including any managed or advised accounts and any investment advisor or
agent therefor, and their respective, officers, directors, employees,
partners, representatives, agents, and each Person who controls the
Company and each of its Affiliates within the meaning of the Securities
Act) (each of the foregoing Persons being a "Purchaser Indemnified
Person"), from and against any and all Indemnifiable Costs and Expenses to
which such Purchaser Indemnified Person may become subject under the
Securities Act or otherwise arising out of or based in any manner upon any
breach by the Company of any its representations,
13
warranties or covenants contained in the Agreement or in any agreement,
instrument or document delivered by the Company hereunder.
(2) The obligations of the Company hereunder shall survive
the Closing and any repurchase, conversion, exchange or transfer of the
Shares, the Warrants and the Warrant Shares and the termination of this
Agreement and shall not be extinguished with respect to any Person because
any other Person is not entitled to indemnity or contribution hereunder.
(ii) Purchaser Indemnification. Each Purchaser, severally and not
jointly, agrees and covenants to agree and covenant to and to hold
harmless and indemnify each Company Indemnified Person, from and against
any and all Indemnifiable Costs and Expenses to which such Company
Indemnified Person may become subject under the Securities Act or
otherwise which arises out of or is based in any manner upon any breach by
such Purchaser of any its representations, warranties or covenants
contained in the Agreement or in any agreement, instrument or document
delivered by such Purchaser hereunder.
(iii) Conduct of Indemnification Proceedings. Promptly after receipt
by a party indemnified pursuant to the provisions of paragraph (i) or (ii)
of this Section 7(a) or paragraph (i) or (ii) of Section 6(f) of notice of
the commencement of any action involving the subject matter of the
foregoing indemnity provisions, such indemnified party will, if a claim
thereof is to be made against the indemnifying party pursuant to the
provisions of paragraph (i) or (ii) of this Section 7(a) or paragraph (i)
or (ii) of Section 6(f), notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to an indemnified party
otherwise than under paragraph (i) or (ii) of this Section 7(a) or
paragraph (i) or (ii) of Section 6(f), and shall not relieve the
indemnifying party from liability under this Section 7(a) or Section 6(f)
unless such indemnifying party is materially prejudiced by such omission.
In case such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party shall have the right to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party pursuant to the provisions of such paragraph (i) or (ii)
of this Section 7(a) or paragraph (i) or (ii) of Section 6(f) for any
legal or other expense subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall be liable to an indemnified
party for any settlement of any action or claim without the consent of the
indemnifying party. No indemnifying party will 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 and no settlement can have non-monetary remedies.
14
(iv) Contribution. If the indemnification provided for in subsection
(i) or (ii) of this Section 7(a) or in subsection (i) or (ii) of Section
6(f) is held by a court of competent jurisdiction to be unavailable to a
party to be indemnified with respect to any Indemnifiable Costs and
Expenses, then each indemnifying party under any such subsection, in lieu
of indemnifying such indemnified party thereunder, hereby agrees to
contribute to the amount paid or payable by such indemnified party as a
result of Indemnifiable Costs and Expenses, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
statements or omissions, acts, facts matters or circumstances which
resulted in such Indemnifiable Costs and Expenses, as well as any other
relevant equitable considerations. To the extent applicable to Section
6(f) hereof, the relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution hereunder
from any Person who was not guilty of such fraudulent misrepresentation.
(b) Entire Agreement; Survival of Provisions. This Agreement constitutes
the entire agreement of the Parties with respect to the transactions
contemplated hereby and supersedes all prior agreements and understandings with
respect thereto, whether written or oral. All of the covenants of the Parties
made herein shall remain operative and in full force and effect pursuant to
their respective terms regardless of acceptance of the Shares, the Warrants and
the Warrant Shares, and payment therefor. The representations and warranties set
forth herein shall survive the execution and delivery of this Agreement until
the first anniversary of the date hereof (the "Expiration Date"), and shall in
no way be affected by any investigation of the subject matter thereof made by or
on behalf of such Purchaser or the Company. Notwithstanding the preceding
sentence, any representation or warranty in respect of which an indemnity may be
sought hereof shall survive the time at which it would otherwise terminate
pursuant to the preceding sentence, if a claim for indemnification shall have
been given to the Party against whom such indemnity may be sought prior to the
Expiration Date. The representations, warranties, agreements and covenants made
in the Agreement shall be deemed to have been relied upon by the Parties hereto.
(c) No Waiver; Modifications in Writing. No failure or delay by a Party in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. Except as otherwise expressly provided herein with
respect to any right of indemnification, the remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to any
Party at law or in equity or otherwise. No waiver of or consent to any departure
by a Party from any provision of this Agreement shall be effective unless signed
in writing by the Parties entitled to the benefit thereof. No amendment,
modification or termination of any provision of this Agreement shall be
effective unless signed in writing by all Parties. Any amendment, supplement or
modification of
15
or to any provision of this Agreement, any waiver of any provision of this
Agreement, and any consent to any departure from the terms of any provision of
this Agreement, shall be effective only in the specific instance and for the
specific purpose for which made or given.
(d) Notices. All notices, demands and other communications provided for
hereunder shall be in writing, shall be given by registered or certified mail,
return receipt requested, on the date sent by telecopy with electronic
confirmation of such transmission, the business day next following deposit with
a courier service for overnight delivery with written confirmation of such
delivery or upon personal delivery, addressed to the Parties, as follows:
If to the Company, to:
Startech Environmental Corporation
▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to a Purchaser, to the name and address of such Purchaser
as set forth in Schedule A hereto;
or to such other address as any Party shall designate in writing in compliance
with the provisions of this Section 7(d).
(e) Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different Parties hereto on separate counterparts,
each of which counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
but one and the same Agreement.
(f) Binding Effect; Assignment. The rights and obligations of the Parties
under this Agreement may not be assigned or otherwise transferred to any other
Person, without the prior written consent of the other Party hereto; provided
that a Purchaser may assign or otherwise transfer the Shares to any of its
Affiliates without obtaining any such consent, but only if such Affiliate: (i)
agrees to be bound by the terms of this Agreement; (ii) is, at the time of such
transfer, an Accredited Investor; (iii) provides the Company such written
certification as the Company may reasonably require as to the transferee's
status as an Accredited Investor and agreement to be so bound as the Company may
reasonably request; and (iv) such transfer to any such transferee does not
violate federal or state securities laws. Except as expressly provided in this
Agreement, this Agreement shall not be construed so as to confer any right or
benefit upon any Person other than the Parties to this Agreement, their
respective permitted heirs,
16
representatives, executors, successors and assigns, each Company Indemnified
Person and each Purchaser Indemnified Person. This Agreement shall be binding
upon and shall inure to the benefit of the Company, each Purchaser and their
respective permitted heirs, representatives, executors, successors and assigns.
(g) Governing Law. This Agreement shall be deemed to be a contract made
under and shall be governed by and construed in accordance with the internal
laws of the State of Connecticut without reference to the principles of conflict
of laws.
(h) Consent to Jurisdiction and Service of Process. Any suit, action or
proceeding arising out of or relating to the Agreement or the transactions
contemplated hereby may be instituted in any Federal court situated in the State
of Connecticut or any state court of the State of Connecticut, and each Party
agrees not to assert, by way of motion, as a defense or otherwise, in any such
suit, action or proceeding, any claim that it is not subject personally to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is improper
or that the Agreement or the subject matter hereof or thereof may not be
enforced in or by such court. Each Party further irrevocably submits to the
jurisdiction of such court in any such suit, action or proceeding. Any and all
service of process and any other notice in any such suit, action or proceeding
shall be effective against any Party if given personally or by registered or
certified mail, return receipt requested if sent to such Party at the address
for such Party set forth in Section 7(d) hereof, or by any other means of mail
that requires a signed receipt, postage fully prepaid, mailed to such Party as
herein provided. Nothing herein contained shall be deemed to affect the right of
any Party to serve process in any manner permitted by law or to commence legal
proceedings or otherwise proceed against any other Party in any other
jurisdiction.
(i) Further Assurances. Each of the Parties hereto shall execute and
deliver such documents, instruments and agreements and take such further actions
as may be reasonably required or desirable to carry out the provisions of the
Agreement and the transactions contemplated hereby, and each of the Parties
hereto shall cooperate with each other in connection with the foregoing.
(j) Severability of Provisions. Any provision hereof that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by law, the Parties hereto waive any
provision of law that renders any such provision prohibited or unenforceable in
any respect.
(k) Headings. The Article, Section and subsection headings used or
contained in this Agreement are for convenience of reference only and shall not
affect the construction of this Agreement.
17
(l) Costs, Expenses and Taxes.
(i) The Company shall pay any and all stamp, transfer and other
similar Taxes payable or determined to be payable in connection with the
execution and delivery of this Agreement or the original issuance of the
Shares and shall save and hold such Purchaser harmless from and against
any and all liabilities with respect to or resulting from any delay in
paying, or omission to pay, such Taxes.
(ii) Each Party shall bear its own fees, costs and expenses in
connection with the execution, delivery and performance of the Agreement.
(m) Waiver of Jury Trial. TO THE EXTENT THEY MAY LEGALLY DO SO, THE
PARTIES HERETO EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION, CAUSE OF ACTION OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS
AGREEMENT OR IN ANY WAY CONNECTED WITH, OR RELATED TO, OR INCIDENTAL TO, THE
DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS AGREEMENT OR THE
TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. TO
THE EXTENT THEY MAY LEGALLY DO SO, THE PARTIES HERETO AGREE THAT ANY SUCH CLAIM,
DEMAND, ACTION, CAUSE OF ACTION OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL
WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS SECTION 7(m) WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
THE OTHER PARTY OR PARTIES HERETO TO WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY
JURY.
(n) Publicity. The Parties agree that no public release or announcement
concerning the Agreement or the transactions contemplated hereby shall be made
without advance review and approval by each Party hereto, except as otherwise
required by applicable law, and which review and approval shall not be
unreasonably withheld or delayed.
(o) Enforcement. Each Purchaser acknowledges that the Company will be
irreparably damaged if the provisions of this Agreement applicable to such
Purchaser are not specifically enforced. If a Purchaser shall default in any of
its obligations under this Agreement or if any representation or warranty made
by or on behalf of such Purchaser in this Agreement or in any certificate,
report or other instrument delivered under or pursuant to any term hereof or
thereof shall be untrue or misleading as of the date made, the Company may
proceed to protect and enforce its rights by suit in equity or action at law
(without the posting of any bond and without proving that damages would be
inadequate), whether for the specific performance of any term contained in this
Agreement, injunction against the breach of any such term or in furtherance of
the exercise of any power granted in this Agreement, or to enforce any other
legal or equitable right of the Company or to take any one of more of such
actions. The Company shall be permitted to enforce specifically the terms and
provisions hereof in any court of the United States or any state thereof or any
other court having jurisdiction, this being in addition to any other remedy to
which the Company may be entitled at law or in equity or otherwise.
18
(p) Further Assurances. Each Party shall execute and deliver such
documents, instruments and agreements and take such further actions as may be
reasonably required or desirable to carry out the provisions of this Agreement
and the transactions contemplated hereby, and each of the Parties hereto shall
cooperate with each other in connection with the foregoing.
[SIGNATURE PAGE FOLLOWS]
19
SIGNATURE PAGE
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of
the date first above written.
STARTECH ENVIRONMENTAL CORPORATION
By:
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Operating Officer
20
SIGNATURE PAGE
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of
the date first above written.
PURCHASER:
----------
ON BEHALF OF: ___________________________
By:
------------------------
Name:
Title:
21
SCHEDULE A
SCHEDULE OF PURCHASERS
----------------------
Name/Address Shares
------------ ------
================================================================================
TOTAL
22
SCHEDULE B
INTENTIONALLY OMITTED