Exhibit 4(ii)
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement dated as of August 1, 1999 among Enviro-
Clean of America, Inc., a Nevada corporation (the "Company"), ▇▇▇▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (collectively, the Shareholders):
WHEREAS, Company, the Shareholders, Cleaning Ideas Corp., a Nevada
corporation which is a wholly owned subsidiary of the Company ("Company
Subsidiary"), Cleaning Ideas, Inc., a Texas corporation ("Cleaning Ideas") and
Sanivac, Inc. ("Sanivac"), a Texas corporation d/b/a ▇▇▇▇▇ Manufacturing and a
wholly owned subsidiary of Cleaning Ideas (Cleaning Ideas and Sanivac are
sometimes collectively referred to herein as the "______________") have entered
into an Agreement and Plan of Merger dated of even date herewith (the "Merger
Agreement"); and
WHEREAS, pursuant to the terms of the Merger Agreement, it is a condition
of the obligations of the Shareholders and the Company that they enter into a
registration rights agreement providing for certain rights to the Shareholders
relative to the registration of certain shares of the Company's common stock,
par value $.001 per share (the "Common Stock") reserved for issuance under
shares of the Company's Series D Cumulative Convertible Preferred Stock (the
"Preferred Stock"):
NOW, THEREFORE, the parties hereto in consideration of the mutual promises
contained herein and intending to be legally bound do hereby agree as follows:
1. Piggy-back Registration.
(a) So long as the Shareholders are the holders of any shares of Preferred
Stock or Common Stock received upon the conversation of the Preferred Stock
(such shares of common stock being referred to herein as the "Registrable
Securities"), if the Company shall register any of its securities for sale
pursuant to any appropriate registration statement under the Securities Act of
1933, as amended (the "Securities Act"), the Company shall be required to offer
to such Share holders the opportunity to register any or all the Registrable
Securities, without cost to the Share holders thereof. In connection with these
piggy-back registration rights, the Company shall give all of the Shareholders
notice by certified mail at least thirty (30) business days prior to the filing
of such Registration Statement under the Act. The Shareholders shall then have
twenty-five (25) days to elect to include all or a portion of its Registrable
Securities for sale in the Registration Statement.
(b) The registration requirement shall not apply to a Registration
Statement filed by the Company pursuant to Form S-8 or S-4 or any successor form
or forms with the sole and express
purpose of registering shares in connection with acquisition transactions or for
employees or for stock incentive plans, or any other inappropriate form.
(c) If the registration statement as to which the Company gives notice to
the Shareholders under Paragraph 1(a), above, is to be a registered public
offering involving an underwriting, the Company will so advise the Shareholders.
In such event, these registration rights shall be conditioned upon such
Shareholder's participation in such underwriting and the inclusion of such
Shareholder's Registrable Securities in the underwriting to the extent provided
herein. All Shareholders proposing to distribute their securities through such
underwriting shall enter into an underwriting agreement in customary form with
the underwriter selected by the Company. If any Shareholder disapproves of the
terms of any such underwriting, he may elect to withdraw there from by written
notice to the Company and the underwriter, provided such notice is delivered on
or prior to the date upon which such Shareholder is obligated to notify the
Company of his intention to participate, or to decline to participate in such
registration statement. Nothing in this Paragraph 1(c) is intended to affect any
right of such Shareholder to participate in subsequent offerings hereunder.
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2. Demand Registration.
If, and to the extent that, any Shareholder has not exercised his
"piggyback" registration rights pursuant to Paragraph 1, above, the Company
agrees that, on one (1) occasion from any date that is one year from the
Closing Date under the Merger Agreement, it shall promptly upon the written
request of the Shareholder, at the Company's sole cost and expense, file such
registration statement pursuant to the Securities Act to register such
Shareholder's Registrable Securities for continuous resale under Rule 415
promulgated by the Commission under the Securities Act. The Company shall use
its best efforts to ensure that such registration statement becomes and remains
effective (including the taking of such steps as are reasonably necessary to
obtain the removal of any stop order) on a timely basis. The Company shall also
execute an undertaking to file post-effective amendments, appropriate
qualification filings under applicable state securities (blue sky) laws and
appropriate compliance with applicable regulations issued under the Securities
Act.
Notwithstanding the provisions of the immediately preceding paragraph, the
Company shall not be under any obligation to register any Registrable Securities
on demand if the Company receives an opinion of counsel to the Company to the
effect that the Shareholders may resell the Registrable Securities under the
provisions of Rule 144 promulgated by the Securities and Exchange Commission
(the "Commission")under the Securities Acts ( a "Rule 144 Opinion"). The
Company agrees to promptly notify the Shareholders in writing in the event that
any such Rule 144 Opinion.
3. Covenants of the Company.
In the case of each registration effected by the Company pursuant to this
Registration Rights Agreement, the Company will keep each Shareholder advised in
writing as to the initiation, progress, and declaration of effectiveness of
each registration and as to the completion thereof. At its expense, the Company
will:
(a) Keep such registration effective until the earliest to occur of (i)
the date that is two (2) years from its effective date, (ii) the date upon which
the Shareholder or Shareholders have completed the distribution described in the
registration statement relating thereto or (iii) the date the Company receives a
Rule 144 Opinion. In the case of any registration of Registrable Securities on
Form S-3 which are intended to be offered on a continuous or delayed basis,
applicable rules under the Securities Act governing the obligation to file a
post-effective amendment, permit, in lieu of filing a post-effective amendment
which (1) includes any prospectus required by Section 10(a)(3) of the Securities
Act, or (2) reflects facts or events representing a material or fundamental
change in the information set forth in the registration statement, the
incorporation by reference of information required to be included in (1) and (2)
above to be contained in periodic reports filed pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act') in the
registration statement;
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(b) Furnish such number of prospectuses and other documents incident
thereto as a Shareholder from time to time may reasonably request;
(c) Furnish the Shareholders with copies of all correspondence with the
Commission; and
(d) In connection with any underwritten offering, the Company and the
Shareholders will enter into any underwriting agreement reasonably necessary to
effect the offer and sale of Registrable Securities, provided such agreement
contains customary underwriting provisions.
4. Blue Sky Registration.
(a) In the event that the Company registers the Registrable Securities,
the Company will register or qualify the Registrable Securities covered by any
registration statement under the Securities Act and under such securities or
blue sky laws in such jurisdictions within the United States as the Shareholders
may reasonably request; provided, however, that the Company reserves the right,
in its sole discretion, not to register or qualify such shares of Common Stock
in any jurisdiction in which such shares of Common Stock do not satisfy the
requirements of such jurisdiction, or in which such registration would submit
the Company to consent to service of process in any state in which it would not
otherwise be subject to such service of process. The Company covenants that
notwithstanding the above, that it shall use its best efforts, at a mini mum, to
register or qualify the Registrable Securities in the State of Texas.
(b) The Company shall (i) advise the Shareholders promptly after obtaining
knowledge thereof, and, if requested by the Shareholders, confirm such advice in
writing, of the issuance by the Commission or any state securities commission of
any stop order suspending the qualification or exemption from qualification of
the Registrable Securities for offer or sale in any jurisdiction, or the
initiation of any proceeding for such purpose the Commission or by any state
securities commission or other regulatory authority, (ii) use its best efforts
to prevent the issuance of any stop order or order suspending the qualification
or exemption from qualification of the Registrable Securities under any state
securities or Blue Sky laws, and (iii) if at any time the Commission or any
state securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the Registrable
Securities under any such laws, use its best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time.
5. Deregistration.
In the event the Shareholders have not sold all of the Registrable
Securities included in the registration statement prior to the second
anniversary of the effective date of such registration statement, the
Shareholders hereby agree that the Company may deregister by post-effective
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amendment any Registrable Securities covered by the registration statement but
not sold on or prior to such date.
6. Post-Effective Amendments.
The Company agrees that it will notify the Shareholders of the filing and
effective date of each such post-effective amendment.
7. Selection of Underwriters.
If a Demand Registration pursuant to Paragraph 2 hereof involves an
underwritten offering, either the Shareholders or the Company shall have the
right to select the investment banker or investment bankers and manager or
managers that will serve as the underwriter with respect to the underwritten
offering; provided, however that the party not selecting such underwriter shall
--------
have the right to approve the underwriter and such approval shall not be
unreasonably withheld or delayed without a material reason stated in writing.
In the event of an underwritten offering that triggers the "Piggyback"
registration rights under Paragraph 1 hereof, the Company shall have the sole
and exclusive discretion to appoint the underwriter or underwriters.
8. Indemnification
(a) By the Company.
The Company will indemnify each Shareholder with respect to whom
registration has been effected hereunder against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any prospectus, offering statement, notification or the like incident to any
such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or any violation by
the Company of the Securities Act or any rule or regulation thereunder
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance,
and will reimburse each such Shareholder, each of its officers, directors and
partners, and each person controlling such Shareholder, each such underwriter
and each person who controls any such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating and defending any
such claim, loss, damage, liability or action, provided that the Company will
not be liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission based upon written information furnished to the Company by such
Shareholder or underwriter and stated to be specifically for use therein.
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(b) By the Shareholders.
Each Shareholder will, if Registrable Securities or other securities held
by him are included in the securities as to which such registration,
qualification, or compliance is being effected, indemnify the Company, each of
its directors and officers and each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of the Securities Act and the
rules and regulations thereunder, each other such Shareholder and each of their
officers, directors, and partners, and each person controlling such Shareholder,
for a period of one (1) year from the effective date of such registration
statement, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Company and such Shareholders, directors, officers, partners, persons,
underwriters or control persons for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by such Shareholder and stated to be specifically for
use therein; provided, however, that the obligations of such Shareholders
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hereunder shall be limited to an amount equal to the proceeds to each such
Shareholder of securities sold pursuant to a registration statement required by
this Registration Rights Agreement.
(c) Notice of Indemnity and Defense.
Each party entitled to indemnification under this Paragraph 9 (the
"Indemnified Party") shall give notice to the party requiring to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
be unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnified Party of its obligations under this Registration Rights Agreement.
No Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation. Each
Indemnified Party shall furnish such information regarding itself or the claim
in question as an
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Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with the defense of such claim and litigation resulting
therefrom.
9. Miscellaneous Provisions.
(a) Amendment and Modification. Subject to applicable law, this Agreement
may only be amended, modified and supplemented by written agreement of the
Shareholders and the Company.
(b) Waiver of Compliance. Any failure of the Shareholders or the Company
to comply with any obligation, covenant, agreement or condition herein may be
expressly waived in writing by the Shareholders or the Company, but such waiver
or failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
(c) Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand or mailed, certified or registered mail
with postage prepaid:
If to the Shareholders, to:
Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇
c/o Cleaning Ideas, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone:
Fax:
(with a copy to:)
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as the Shareholders shall furnish to the
Company in writing.
If to the Company, to:
Enviro-Clean of America, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(with a copy to:)
▇▇▇▇▇▇▇▇▇▇, Ocko & Monk, LLP
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as the Company shall furnish to the
Shareholders in writing.
(d) Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties, except by
operation of law and except that the Company may assign its rights and its
obligations under this Agreement to any successor to the business of the
Company.
(e) Governing Law. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the laws of
the State of New York with out regard to its conflicts of law doctrine.
(f) Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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(g) Headings. The headings used in this Agreement are inserted for
convenience only and shall not constitute a part hereof or affect in any way the
meaning or interpretation of this Agreement.
(h) Third Parties. Except as specifically set forth or referred to
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or give to any person or corporation other than the parties hereto
and their permitted successors or assigns, any rights or remedies under or by
reason of this Agreement.
(i) Severability. Should any provision of this Agreement be held by a
court or arbitration panel of competent jurisdiction to be enforceable only if
modified, such holding shall not affect the validity of the remainder of this
Agreement, the balance of which shall continue to be binding upon the parties
hereto with any such modification to become a part hereof and treated as though
originally set forth in this Agreement. The parties further agree that any such
court or arbitration panel is expressly authorized to modify any such
unenforceable provision of this Agreement in lieu of severing such unenforceable
provision from this Agreement in its entirety, whether by rewriting the
offending provision, deleting any or all of the offending provision, adding
additional language to this Agreement, or by making such other modifications as
it deems warranted to carry out the intent and agreement of the parties as
embodied herein to the maximum extent permitted by law. The parties expressly
agree that this Agreement as modified by the court or the arbitration panel
shall be binding upon and enforceable against each of them. In any event, should
one or more of the provisions of this Agreement be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, and if such provision or provisions
are not modified as provided above, this Agreement shall be construed as if such
invalid, illegal or unenforceable provisions had never been set forth herein.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
ENVIRO-CLEAN OF AMERICA, INC.
By:_____________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
President
THE SHAREHOLDERS:
_________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇
_________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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