EXHIBIT 10.11
REGISTRATION RIGHTS AGREEMENT
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This Registration Rights Agreement (this "Agreement") is made and
entered into as of May 8, 2006, by and between Occidental Engineering
Consultants Limited, a Republic of Cyprus corporation ("Investor"), and
WaterChef, Inc., a Delaware corporation (the "Company")
WHEREAS, pursuant to a Forbearance Agreement, dated as of May 8, 2006
by and between the Company and Investor (the "Forbearance Agreement"), the
Company has agreed to issue Investor 3,000,000 shares of the Company's common
stock (the "Shares"); and
WHEREAS, to induce Investor to execute and deliver the Forbearance
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, with respect to the Shares.
NOW, THEREFORE, in consideration of the representations, warranties
and agreements contained herein and other good and valuable consideration, the
receipt and legal adequacy of which are hereby acknowledged by the parties, the
Company and Investor hereby agree as follows:
1. Definitions.
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As used in this Agreement, the following terms shall have the
following meanings:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
respect to any Person, means the possession, direct or indirect, 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 "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
"Blackout Period" shall have the meaning set forth in Section 3(m).
"Board" shall have the meaning set forth in Section 3(m).
"Business Day" means any day except Saturday, Sunday and any day which
is a legal holiday or a day on which banking institutions in the state of
California generally are authorized or required by law or other government
actions to close.
"Commission" means the Securities and Exchange Commission. ----------
"Common Shares" shall have the meaning set forth in the definition of
"Registrable Securities."
"Common Stock" means the Company's Common Stock, $0.0001 par value.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Investor" means, collectively, each Investor from time to time of
Registrable Securities including, without limitation, Investor and its
assignees. To the extent this Agreement refers to an election, consent, waiver,
request or approval of or by the Investor, such reference shall mean an
election, consent, waiver, request or approval by the Investors of a majority in
interest of the then-outstanding Registrable Securities (on an as exercised
basis).
"Indemnified Party" shall have the meaning set forth in Section 6(c).
"Indemnifying Party" shall have the meaning set forth in Section 6(c).
"Losses" shall have the meaning set forth in Section 6(a).
"NASDAQ" shall mean the NASDAQ Stock Market.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference in such Prospectus.
"Registrable Securities" means the Shares, and upon any stock split,
stock dividend, recapitalization or similar event with respect to such Shares
and any other securities issued in exchange of or replacement of such Shares
(collectively, the "Common Shares"); until in the case of any of the Common
Shares (a) a Registration Statement covering such Common Shares has been
declared effective by the Commission and continues to be effective, or (b) such
Common Shares are sold in compliance with Rule 144 or may be sold pursuant to
Rule 144(k), after which time such Common Shares shall not be considered
Registrable Securities.
"Registration Statement" means the registration statement, including
the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference in such registration statement, for
the Shares.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
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"Rule 158" means Rule 158 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Special Counsel" means an attorney selected by and acting as special
counsel to Investor.
2. Registration.
(a) Mandatory Registration. The Company shall prepare and file with the SEC, as
soon as possible after the Closing Date, but no later than May 15, 2006, a
Registration Statement on Form SB-2, or other available form, registering for
resale by the Investor all of the Registrable Securities. The Registration
Statement shall also state that, in accordance with Rules 416 and 457 under the
Securities Act, it also covers such indeterminate number of additional shares of
Common Stock to prevent dilution resulting from stock splits, or stock
dividends. The Company will use its best efforts to cause the Registration
Statement to be declared effective, as soon as possible (which shall include a
request by the Company for acceleration to the SEC), but no later than ninety
(90) days after the Closing Date. The Company is not entitled to register for
resale pursuant to the Registration Statement securities issued by the Company
that are held by persons other than the Investor, without the Investors consent,
which may be withheld in its sole and absolute discretion.
(b) Payments by the Company.
(i) If the Registration Statement covering the Registrable
Securities is not filed with the SEC on or before June 1, 2006 (the "Required
Filing Date"), then the Company shall pay Investor a late filing penalty
(collectively "Late Penalties"), (i) on the first day after the Required Filing
Date, an amount equal to $5,000, and (ii) on each subsequent monthly anniversary
of the Required Filing Date, if the Registration Statement has not been filed,
in proper form, on or before such date, an amount equal to $5,000.
(ii) By way of illustration and not in limitation of the
foregoing, if the Registration Statement is filed on June 20, 2006, the
aggregate Late Penalty will equal $10,000 ($5,000 on May 15, 2006 and $5,000 on
June 15, 2006).
(iv) In addition to and not in lieu of the payment of penalties
hereunder, if the Registration Statement is not filed on or before June 1, 2006,
or the Registration Statement is not declared effective by August 1, 2006,
Investor may, at its option, declare this Agreement in default (which shall also
be a default under the Forbearance Agreement) and may, at its option, terminate
the Forbearance Period (as defined in the Forbearance Agreement).
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(v) Late Penalties will be payable to the Investor by the Company
in cash or other immediately available funds on the date such Late Penalty is
incurred.
(vi) The parties acknowledge that the damages which may be
incurred by the Investor if the Registration Statement is not filed by the
Required Filing Date or if the Registration Statement has not been declared
effective by the Required Registration Date may be difficult to ascertain. The
parties agree that the Late Penalties represent a reasonable estimate on the
part of the parties, as of the date of this Agreement, of the amount of such
damages. The payment of the Late Penalties to the Investor shall not limit the
Investor's other rights and remedies hereunder or under any other document
entered into in connection herewith.
(vii) Notwithstanding the foregoing, the amounts payable by the
Company pursuant to this provision shall not be payable to the extent any delay
in the effectiveness of the Registration Statement occurs because of an act of,
or a failure to act or to act timely by the Investor or its counsel if the
Company timely forwards to counsel any required documents or in the event all of
the Registrable Securities may be sold pursuant to Rule 144 or another available
exemption under the Act.
3. Registration Procedures; Company's Obligations.
In connection with the registration of the Registrable Securities, the
Company shall:
(a) Prepare and file with the Commission the Registration Statement
on Form S-3 (or if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3 such registration shall be on another
appropriate form in accordance with the Securities Act and the Rules promulgated
thereunder) that shall include a description of the method or methods of
distribution of the Registrable Securities as specified by the Investor, and use
its commercially reasonable best efforts to cause the Registration Statement to
become effective and remain effective for a period of two years from the
effective date of the Registration Statement as provided herein; provided,
however, that not less than two (2) Business Days prior to the filing of the
Registration Statement or any related Prospectus or any amendment or supplement
thereto (including any document that would be incorporated therein by
reference), the Company shall (i) furnish to the Investor and any Special
Counsel, copies of all such documents proposed to be filed, which documents
(other than those incorporated by reference) will be subject to the timely
review of and comment by such Special Counsel, and (ii) at the request of the
Investor cause its officers and directors, counsel and independent certified
public accountants to respond to such inquiries, and to make available for
inspection by the Investor all financial and other records, pertinent corporate
documents and properties of the Company, as shall be necessary, in the
reasonable opinion of such Special Counsel, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not
file the Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Investor or any Special Counsel shall
reasonably object in writing within two (2) Business Days of their receipt
thereof.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective as to the
applicable Registrable Securities for the two-year period from the effective
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date of the Registration Statement; (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424 (or any similar
provisions then in force) promulgated under the Securities Act; (iii) respond
promptly to any comments received from the Commission with respect to the
Registration Statement or any amendment thereto and promptly provide the
Investor true and complete copies of all correspondence from and to the
Commission relating to the Registration Statement; and (iv) comply in all
material respects with the provisions of the Securities Act and the Exchange Act
with respect to the disposition of all Registrable Securities covered by the
Registration Statement during the applicable period in accordance with the
intended methods of disposition by the Investor set forth in the Registration
Statement as so amended or in such Prospectus as so supplemented.
(c) Notify the Investor of Registrable Securities to be sold and
any Special Counsel promptly (and, in the case of (i)(A) below, not less than
two (2) Business Days prior to such filing and, in the case of (i)(C) below, no
later than the first Business Day following the date on which the Registration
Statement becomes effective) and (if requested by any such Person) confirm such
notice in writing no later than two (2) Business Days following the day (i)(A)
when a Prospectus or any Prospectus supplement or post-effective amendment to
the Registration Statement is proposed to be filed, (B) when the Commission
notifies the Company whether there will be a "review" of such Registration
Statement and whenever the Commission comments in writing on such Registration
Statement, and (C) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to the Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; and (v) of the occurrence of any
event that makes any statement made in the Registration Statement or Prospectus
or any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
The Company shall promptly furnish to the Special Counsel, without
charge, (i) any correspondence from the Commission or the Commission's staff to
the Company or its representatives relating to any Registration Statement, and
(ii) promptly after the same is prepared and filed with the Commission, a copy
of any written response to the correspondence received from the Commission.
(d) Use its commercially reasonable best efforts to avoid the
issuance of, or, if issued, obtain the withdrawal of, (i) any order suspending
the effectiveness of the Registration Statement, or (ii) any suspension of the
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qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any U.S. jurisdiction, at the earliest practicable
moment.
(e) If requested by the Investor, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment to the Registration Statement
such information as the Company reasonably agrees should be included therein,
and (ii) make all required filings of such Prospectus supplement or such
post-effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus supplement or
post-effective amendment.
(f) Furnish to the Investor and any Special Counsel, without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to the extent requested by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with the
Commission.
(g) Promptly deliver to the Investor and any Special Counsel,
without charge, as many copies of the Registration Statement, Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request; and the Company
hereby consents to the use of such Prospectus and each amendment or supplement
thereto by the selling Investor in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.
(h) Prior to any public offering of Registrable Securities, use its
commercially reasonable best efforts to register or qualify or cooperate with
the selling Investor and any Special Counsel in connection with the registration
or qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as the Investor reasonably
requests in writing, to keep each such registration or qualification (or
exemption therefrom) effective during the two-year period from the effective
date of the Registration Statement and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by the Registration Statement; provided, however,
that the Company shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified or to take any action that
would subject it to general service of process in any such jurisdiction where it
is not then so subject or subject the Company to any tax in any such
jurisdiction where it is not then so subject.
(i) Cooperate with the Investor to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to the Registration Statement and to enable such Registrable
Securities to be in such denominations and registered in such names as the
Investor may request at least two (2) Business Days prior to any sale of
Registrable Securities.
(j) Upon the occurrence of any event contemplated by Section
3(c)(v), promptly prepare a supplement or amendment, including a post-effective
amendment, to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by
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reference, and file any other required document so that, as thereafter
delivered, neither the Registration Statement nor such Prospectus will contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(k) Cause all Registrable Securities relating to such Registration
Statement to be quoted by NASDAQ or any other securities exchange, quotation
system, market or over-the-counter bulletin board, if any, on which the same
securities issued by the Company are then listed.
(l) Comply in all material respects with all applicable rules and
regulations of the Commission and make generally available to its security
Investors earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than forty-five (45) days after the end of
any twelve (12) month period (or ninety (90) days after the end of any twelve
(12) month period if such period is a fiscal year) commencing on the first day
of the first fiscal quarter of the Company after the effective date of the
Registration Statement, which statement shall conform to the requirements of
Rule 158.
(m) If (i) there is material non-public information regarding the
Company which the Company's Board of Directors (the "Board") reasonably
determines not to be in the Company's best interest to disclose and which the
Company is not otherwise required to disclose, or (ii) there is a significant
business opportunity (including, but not limited to, the acquisition or
disposition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or other similar transaction) available to
the Company which the Board reasonably determines not to be in the Company's
best interest to disclose and which the Company would be required to disclose
under the Registration Statement, then the Company may suspend effectiveness of
the Registration Statement and suspend the sale of Registrable Securities under
the Registration Statement one (1) time every three (3) months or three (3)
times in any twelve month period, provided that the Company may not suspend its
obligation for more than sixty (60) days in the aggregate in any twelve month
period (each, a "Blackout Period"); provided, however, that no such suspension
shall be permitted for more than twenty (20) consecutive days, arising out of
the same set of facts, circumstances or transactions, and that there shall be at
least two business days between each Blackout Period.
(n) Within two (2) Business Days after the Registration Statement
which includes the Registrable Securities is ordered effective by the
Commission, the Company shall deliver to the transfer agent for such Registrable
Securities (with copies to the Investor whose Registrable Securities are
included in such Registration Statement) confirmation that the Registration
Statement has been declared effective by the Commission.
2. Registration Procedures; Investor's Obligations
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In connection with the registration of the Registrable Securities, the
Investor shall:
(a) If the Registration Statement refers to the Investor by name or
otherwise as the Investor of any securities of the Company, have the right to
require (if such reference to the Investor by name or otherwise is not required
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by the Securities Act or any similar federal statute then in force) the deletion
of the reference to the Investor in any amendment or supplement to the
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.
(b) (i) not sell any Registrable Securities under the Registration
Statement until it has received copies of the Prospectus as then amended or
supplemented as contemplated in Section 3(g) and notice from the Company that
such Registration Statement and any post-effective amendments thereto have
become effective as contemplated by Section 3(c), (ii) comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration
Statement, and (iii) furnish to the Company information regarding such Investor
and the distribution of such Registrable Securities as is required by law to be
disclosed in the Registration Statement, and the Company may exclude from such
registration the Registrable Securities of the Investor if it fails to furnish
such information within a reasonable time prior to the filing of each
Registration Statement, supplemented Prospectus and/or amended Registration
Statement.
(c) upon receipt of a notice from the Company of the occurrence of
any event of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv),
3(c)(v) or 3(m), forthwith discontinue disposition of such Registrable
Securities under the Registration Statement until the Investor's receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(j), or until it is advised in writing by the Company
that the use of the applicable Prospectus may be resumed, and, in either case,
has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.
3. Registration Expenses
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All reasonable fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not the Registration Statement is filed or becomes effective and
whether or not any Registrable Securities are sold pursuant to the Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, the following: (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with NASDAQ and each securities exchange or other market on
which Registrable Securities are required hereunder to be listed, (B) with
respect to filings required to be made with the Commission, and (C) in
compliance with state securities or Blue Sky laws); (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses if the printing of
prospectuses is requested by the Investors of a majority of the Registrable
Securities included in the Registration Statement); (iii) messenger, telephone
and delivery expenses incurred by the Company; (iv) fees and disbursements of
counsel for the Company; and (v) fees and expenses of all other Persons retained
by the Company in connection with the consummation of the transactions
contemplated by this Agreement, including, without limitation, the Company's
independent public accountants (including the expenses of any comfort letters or
costs associated with the delivery by independent public accountants of a
comfort letter or comfort letters). In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
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without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, and the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder. The Company shall
not be responsible for the payment of any commissions or other expenses incurred
by the Investor in connection with their sales of Registrable Securities or for
the fees of any Special Counsel.
4. Indemnification
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(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
Investor, its permitted assignees, officers, directors, agents, brokers
(including brokers who offer and sell Registrable Securities as principal as a
result of a pledge or any failure to perform under a margin call of Common
Stock), investment advisors and employees, each Person who controls Investor or
a permitted assignee (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, and the respective successors,
assigns, estate and personal representatives of each of the foregoing, to the
fullest extent permitted by applicable law, from and against any and all claims,
losses, damages, liabilities, penalties, judgments, costs (including, without
limitation, costs of investigation) and expenses (including, without limitation,
reasonable attorneys' fees and expenses) (collectively, "Losses"), as incurred,
arising out of or relating to any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any Prospectus, as
supplemented or amended, if applicable, or arising out of or relating to any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in the light of the circumstances under
which they were made) not misleading, except (i) to the extent, but only to the
extent, that such untrue statements or omissions are based upon information
regarding the Investor furnished in writing to the Company by the Investor
expressly for use in the Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto, or (ii) as a result of the
failure of the Investor to deliver a Prospectus, as amended or supplemented, to
a purchaser in connection with an offer or sale (provided that copies of the
Prospectus, as amended or supplemented, have been provided to the Investor by
the Company for delivery to such purchaser). The Company shall notify the
Investor promptly of the institution, threat or assertion of any Proceeding of
which the Company is aware in connection with the transactions contemplated by
this Agreement. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of an Indemnified Party (as defined in
Section 6(c) hereof) and shall survive the transfer of the Registrable
Securities by the Investor.
(b) Indemnification by Investor. Investor and its permitted
assignees shall, jointly and severally, indemnify and hold harmless the Company,
its directors, officers, agents and employees, each Person who controls the
Company (within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, and the respective successors, assigns, estate and personal
representatives of each of the foregoing, to the fullest extent permitted by
applicable law, from and against any and all Losses, as incurred, arising out of
or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus, as supplemented or
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amended, if applicable, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, to the extent, but only to the extent, that (i) such
untrue statement or omission is contained in or omitted from any information so
furnished in writing by the Investor or the Special Counsel to the Company
specifically for inclusion in the Registration Statement or such Prospectus, and
(ii) such information was reasonably relied upon by the Company for use in the
Registration Statement, such Prospectus or such form of prospectus or, to the
extent that such information relates to the Investor or the Investor's proposed
method of distribution of Registrable Securities, was reviewed and expressly
approved in writing by the Investor expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus Supplement.
Notwithstanding anything to the contrary contained herein, the Investor shall be
liable under this Section 6(b) for only that amount as does not exceed the net
proceeds to the Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall
be brought or asserted against any Person entitled to indemnity pursuant to
Section 6(a) or 6(b) hereunder (an "Indemnified Party"), such Indemnified Party
promptly shall notify the Person from whom indemnity is sought (the
"Indemnifying Party) in writing, and the Indemnifying Party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and only) to the
extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have materially and adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
or Parties unless: (i) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (iii) the
named parties to any such Proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party, and such Indemnified
Party shall have been advised in writing by counsel that a conflict of interest
would exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld, conditioned or delayed. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, which consent shall not unreasonably be withheld, conditioned or delayed,
effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.
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All reasonable fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten (10) Business Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder or pursuant to applicable law).
(d) Contribution. If a claim for indemnification under Section 6(a)
or 6(b) is unavailable to an Indemnified Party because of a failure or refusal
of a governmental authority to enforce such indemnification in accordance with
its terms (by reason of public policy or otherwise), then each Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such Losses, in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such Indemnifying Party
and Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such Indemnifying Party
or Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in Section 6(c), any
reasonable attorneys' or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for under
Section 6(a) or 6(b) was available to such party in accordance with its terms.
Notwithstanding anything to the contrary contained herein, the Investor shall be
liable or required to contribute under this Section 6(d) for only that amount as
does not exceed the net proceeds to the Investor as a result of the sale of
Registrable Securities pursuant to the Registration Statement.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section
are in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
5. Rule 144.
--------
As long as the Investor owns Registrable Securities, the Company
covenants to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
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Act and to promptly furnish the Investor with true and complete copies of all
such filings. As long as the Investor owns Registrable Securities, if the
Company is not required to file reports pursuant to Section 13(a) or 15(d) of
the Exchange Act, it will prepare and furnish to the Investor and make publicly
available in accordance with Rule 144(c) promulgated under the Securities Act
annual and quarterly financial statements, together with a discussion and
analysis of such financial statements in form and substance substantially
similar to those that would otherwise be required to be included in reports
required by Section 13(a) or 15(d) of the Exchange Act, as well as any other
information required thereby, in the time period that such filings would have
been required to have been made under the Exchange Act. The Company further
covenants that it will take such further action as the Investor may reasonably
request, all to the extent required from time to time to enable the Investor to
sell the Common Shares without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 promulgated under the
Securities Act. Upon the request of any Investor, the Company shall deliver to
such Investor a written certification of a duly authorized officer as to whether
it has complied with such requirements.
6. Miscellaneous.
-------------
(a) Remedies. In the event of a breach by the Company or by the
Investor of any of their obligations under this Agreement, the Investor or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and the Investor each agree that monetary damages would not provide
adequate compensation for any losses incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further each agree that, in the
event of any action for specific performance in respect of such breach, it shall
waive the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any of its
Affiliates has as of the date hereof entered into, nor shall the Company or any
of its Affiliates, on or after the date of this Agreement, enter into, any
agreement with respect to its securities that is inconsistent with the rights
granted to the Investor in this Agreement or otherwise conflicts with the
provisions hereof. Without limiting the generality of the foregoing, without the
written consent of the Investor, the Company shall not grant to any Person the
right to request the Company to register any securities of the Company under the
Securities Act if the rights so granted are inconsistent with the rights granted
to the Investor set forth herein, or otherwise prevent the Company with
complying with all of its obligations hereunder.
(c) Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning this Agreement shall be
commenced in the state and federal courts sitting in New York City (Manhattan),
New York (the "New York Courts"). Each party hereto hereby irrevocably submits
to the exclusive jurisdiction of the New York Courts for the adjudication of any
dispute with respect to this Agreement, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, or such New York
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Courts are improper or inconvenient venue for such proceeding. Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement.
(d) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and Investor.
(e) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earlier of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice prior to 5:00 p.m., Pacific
Time, on a Business Day, (ii) the first Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice later than 5:00 p.m., Pacific
Time, on any date and earlier than 11:59 p.m., Pacific Time, on such date, (iii)
the Business Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) actual receipt by the party to whom such
notice is required to be given.
if to the Company:
WaterChef, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
if to Investor:
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇.▇▇▇▇▇▇▇ ▇▇▇., ▇▇-▇▇▇▇▇ ▇.▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇
Telecopier: ▇▇▇-▇▇-▇▇▇▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇-▇▇▇▇▇▇▇▇▇▇
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice.
(f) Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted
assigns.
(g) Assignment of Registration Rights. The rights of the Investor
hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, shall be
assignable by each Investor to any transferee of the Investor of all or a
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portion of the shares of Registrable Securities if: (i) the Investor agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
assignment; (ii) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (A) the name and address of such
transferee or assignee, and (B) the securities with respect to which such
registration rights are being transferred or assigned; (iii) following such
transfer or assignment the further disposition of such securities by the
transferee or assignees is restricted under the Securities Act and applicable
state securities laws; and (iv) at or before the time the Company receives the
written notice contemplated by clause (ii) of this Section, the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
of this Agreement. In addition, the Investor shall have the right to assign its
rights hereunder to any other Person with the prior written consent of the
Company, which consent shall not be unreasonably withheld, conditioned or
delayed. The rights to assignment shall apply to the Investor (and to
subsequent) successors and assigns. In the event of an assignment pursuant to
this Section 8(g), Investor shall pay all incremental costs and expenses
incurred by the Company in connection with filing a Registration Statement (or
an amendment to the Registration Statement) to register the shares of
Registrable Securities assigned to any assignee or transferee of Investor.
(h) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
and all of which taken together shall constitute one and the same Agreement. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.
(i) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(j) Termination. This Agreement shall terminate on the date on
which all of the Registrable Securities may be sold without restriction pursuant
to Rule 144(k) of the Securities Act.
(k) Severability. If any term, provision, covenant or restriction
of this Agreement is held to be invalid, illegal, void or unenforceable in any
respect, the remainder of the terms, provisions, covenants and restrictions set
forth herein shall remain in full force and effect and shall in no way be
affected, impaired or invalidated, and the parties hereto shall use their
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(l) Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized persons as of the date first
indicated above.
WaterChef, Inc., a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President & CEO
Occidental Engineering Consultants Limited, a
Republic of Cyprus corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Represenative
