REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of January 17, 2000,
between the investor or investors signatory hereto (each an "Investor" and
together the "Investors"), and Eco Soil Systems, Inc., a Nebraska corporation
(the "Company").
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Investors are purchasing from the Company, pursuant to a
Convertible Debentures and Warrants Purchase Agreement dated the date hereof
(the "Purchase Agreement"), $4,500,000 principal amount of Convertible
Debentures and Warrants to purchase shares of the Company's Common Stock
(terms not defined herein shall have the meanings ascribed to them in the
Purchase Agreement); and
WHEREAS, the Company desires to grant to the Investors the
registration rights set forth herein with respect to the Conversion Shares of
Common Stock issuable upon conversion of the Convertible Debentures purchased
pursuant to the Purchase Agreement or issued as interest thereon, and shares
of Common Stock issuable upon exercise of the Warrants (hereinafter referred
to as the "Stock" or "Securities" of the Company).
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. REGISTRABLE SECURITIES. As used herein the term
"Registrable Security" means the Securities until (i) the Registration
Statement has been declared effective by the SEC, and all Securities have
been disposed of pursuant to the Registration Statement, (ii) all Securities
have been sold under circumstances under which all of the applicable
conditions of Rule 144 (or any similar provision then in force) under the
Securities Act ("Rule 144") are met, (iii) all Securities have been otherwise
transferred to holders who may trade such Securities without restriction
under the Securities Act, and the Company has delivered a new certificate or
other evidence of ownership for such Securities not bearing a restrictive
legend or (iv) such time as, in the opinion of counsel to the Company, all
Securities may be sold within a three-month period pursuant to Rule 144 (or
any similar provision then in effect). The term "Registrable Securities"
means any and/or all of the securities falling within the foregoing
definition of a "Registrable Security." In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be deemed to be
made in the definition of "Registrable Security" as is appropriate in order
to prevent any dilution or enlargement of the rights granted pursuant to this
Agreement.
Section 2. RESTRICTIONS ON TRANSFER. Each Investor acknowledges
and understands that prior to the registration of the Securities as provided
herein, the Securities are "restricted securities" as defined in Rule 144
promulgated under the Act. Each Investor understands that no disposition or
transfer of the Securities may be made by Investor in the absence of (i) an
opinion of counsel to the Investor, in form and substance reasonably
satisfactory to the Company, that such transfer may be made without
registration under the Securities Act or (ii) such registration.
With a view to making available to the Investors the
benefits of Rule 144 under the Securities Act or any other similar rule or
regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration ("Rule 144"),
the Company agrees to:
(a) comply with the provisions of paragraph (c)(1) of Rule
144; and
(b) file with the SEC in a timely manner all reports and
other documents required to be filed with the SEC pursuant to Section 13 or
15(d) under the Exchange Act by companies subject to either of such sections,
irrespective of whether the Company is then subject to such reporting
requirements.
Section 3. REGISTRATION RIGHTS WITH RESPECT TO THE SECURITIES.
(a) The Company agrees that it will prepare and file with
the SEC, at the earliest opportunity, but in no event later than the earlier
of forty-five (45) days after the Closing Date or the filing of another
registration statement for another purpose on a form which would allow
registration of the Registrable Securities sold at the Closing, a
registration statement (on Form S-3, or other appropriate registration
statement form) under the Securities Act (the "Registration Statement"), at
the sole expense of the Company (except as provided in Section 3(c) hereof),
in respect of the Investors, so as to permit a public offering and resale of
the Securities issuable in connection with the Convertible Debentures and
Warrants under the Act by the Investors as selling stockholders and not as
underwriters.
The Company shall use its best efforts to cause the
Registration Statement to become effective within ninety (90) days from the
Closing Date (or 120 days if such Registration Statement receives a "full
review" from the SEC staff, which shall not include a "plain English" or
"Plan of Distribution" review), or, if earlier, within five (5) days of SEC
clearance to request acceleration of effectiveness. The number of shares
designated in the Registration Statement to be registered shall include all
the Warrant Shares, at least the number of shares initially issuable upon
conversion of the Convertible Debentures at the minimum Conversion Price, and
such number of shares as the Company deems prudent for the purpose of issuing
shares of Common Stock as interest on the Convertible Debentures, and shall
include appropriate language regarding reliance upon Rule 416 to the extent
permitted by the SEC. The Company will notify the Investors of the
effectiveness of each Registration Statement within one Trading Day of such
event.
(b) The Company will maintain the Registration Statement
or post-effective amendment filed under this Section 3 effective under the
Securities Act until the earlier of (i) the date that none of the Securities
covered by such Registration Statement are or may become issued and
outstanding, (ii) the date that all of the Securities have been sold pursuant
to such Registration Statement, (iii) the date that all of the Securities
that have not been sold thereunder may be sold under the provisions of Rule
144 within a three-month period, (iv) all Securities have been otherwise
transferred to persons who may trade such shares without restriction under
the Securities Act, and the Company has delivered a new certificate or other
2
evidence of ownership for such securities not bearing a restrictive legend,
or (v) all Securities may be sold without any time, volume or manner
limitations pursuant to Rule 144(k) or any similar provision then in effect
under the Securities Act (the "Effectiveness Period").
(c) All fees, disbursements and out-of-pocket expenses and
costs incurred by the Company in connection with the preparation and filing
of the Registration Statement under subparagraph 3(a) and in complying with
applicable securities and Blue Sky laws (including, without limitation, all
attorneys' fees of the Company) shall be borne by the Company. The Investors
shall bear the cost of underwriting and/or brokerage discounts, fees and
commissions, if any, applicable to the Securities being registered and the
fees and expenses of their counsel. The Investors and their counsel shall
have a reasonable period, not to exceed five (5) Trading Days, to review the
proposed Registration Statement or any amendment thereto, prior to filing
with the SEC, and the Company shall provide each Investor with copies of any
comment letters received from the SEC with respect thereto within two (2)
Trading Days of receipt thereof. The Company shall qualify any of the
securities for sale in such states as any Investor reasonably designates and
shall furnish indemnification in the manner provided in Section 6 hereof.
However, the Company shall not be required to qualify in any state which will
require an escrow or other restriction relating to the Company and/or the
sellers, or which will require the Company to qualify to do business in such
state or require the Company to file therein any general consent to service
of process. The Company at its expense will supply the Investors with copies
of the Registration Statement and the prospectus included therein and other
related documents in such quantities as may be reasonably requested by the
Investors.
(d) The Company shall not be required by this Section 3 to
include an Investor's Securities in any Registration Statement which is to be
filed if, in the opinion of counsel for both the Investor and the Company
(or, should they not agree, in the opinion of another counsel experienced in
securities law matters acceptable to counsel for the Investor and the
Company) the proposed offering or other transfer as to which such
registration is requested is exempt from applicable federal and state
securities laws and would result in all purchasers or transferees obtaining
securities which are not "restricted securities", as defined in Rule 144
under the Securities Act.
(e) In the event that (i) the Registration Statement is
not filed with the SEC within forty-five (45) days from the Closing Date,
(ii) such Registration Statement is not declared effective by the SEC within
the earlier of ninety (90) days from the Closing Date (or 120 days in the
event of a "full review") or five (5) days of clearance by the SEC to request
effectiveness, or (iii) such Registration Statement is not maintained as
effective by the Company for the period set forth in Section 3(b) above and
subject to Section 3(g) below (each a "Registration Default") then the
Company will pay Investor (pro rated on a daily basis), as liquidated damages
for such failure and not as a penalty two percent (2%) of the aggregate
market value of shares of Common Stock purchased from the Company (including
the Conversion Shares which would be issuable upon conversion of the
Convertible Debentures on any date of determination, and whether or not the
Convertible Debentures are then convertible pursuant to their terms) and held
by the Investor for the first month and three percent (3%) for every month
thereafter until such Registration Statement has been filed, and in the event
of late effectiveness (in case of clause (ii) above) or lapsed effectiveness
(in the case of clause (iii)
3
above), two percent (2%) of the aggregate market value of shares of Common
Stock purchased from the Company and held by the Investor (including the
Conversion Shares which would be issuable upon conversion of the Convertible
Debentures on any date of determination, and whether or not the Convertible
Debentures are then convertible pursuant to their terms) for the first month
and three percent (3%) for every month thereafter (provided only one set of
liquidated damages shall be payable whether one or more such Registration
Defaults are then in existence) until such Registration Statement has been
declared effective. Such payment of the liquidated damages shall be made to
the Investors in cash, within five (5) calendar days of demand, provided,
however, that the payment of such liquidated damages shall not relieve the
Company from its obligations to register the Securities pursuant to this
Section. The market value of the Common Stock for this purpose shall be the
closing price (or last trade, if so reported) on the Principal Market for
each day during such Registration Default.
If the Company does not remit the payment to the Investors
as set forth above, the Company will pay the Investors reasonable costs of
collection, including attorneys' fees, in addition to the liquidated damages.
The registration of the Securities pursuant to this provision shall not
affect or limit the Investors' other rights or remedies as set forth in this
Agreement.
(f) The Company shall not include any securities other
than the Registrable Securities in any Registration Statement which it is
required to file pursuant to this Section 3, except with the prior written
consent of all Investors, other than (i) 402,208 shares held by Albion
Alliance Mezzanine Fund LP and Paribas Capital Funding LLC, provided that
such holders shall have agreed in writing with the Company and the Investors
that they shall not sell more than 100,000 shares every ninety (90) days from
the Effective Date, and their stock certificates shall have been legended to
such effect, (ii) up to one million shares privately issued to other
institutional investors, provided such other transaction closes within the
initial filing deadline provided for herein and does not cause any delay in
the filing of the Registration Statement and (iii) other issued and
outstanding shares of Common Stock and shares of Common Stock issuable upon
exercise of issued and outstanding warrants and options, held by persons with
rights to require the inclusion of such shares in the Registration Statement,
but, except as set forth in clause (i) above, not including shares held by or
issuable to Albion or Paribas.
(g) If at any time or from time to time after the
effective date of the Registration Statement, the Company notifies the
Investors in writing of the existence of a Potential Material Event (as
defined in Section 3(h) below), the Investors shall not offer or sell any
Securities or engage in any other transaction involving or relating to
Securities, from the time of the giving of notice with respect to a Potential
Material Event until the Investors receive written notice from the Company
that such Potential Material Event either has been disclosed to the public or
no longer constitutes a Potential Material Event; provided, however, that the
Company may not so suspend the right to such holders of Securities for more
than twenty (20) days in the aggregate during any twelve month period, during
the period the Registration Statement is required to be in effect, without
such event being a Registration Default. If a Potential Material Event shall
occur prior to the date the Registration Statement is required to be filed,
then the Company's obligation to file the Registration Statement shall be
delayed without penalty for not more than thirty (30) days, and such delay or
delays shall not constitute a
4
Registration Default. The Company must, if lawful, give the Investors notice
in writing at least two (2) Trading Days prior to the first day of the
blackout period.
(h) "Potential Material Event" means any of the following:
(a) the possession by the Company of material information not ripe for
disclosure in a registration statement, as determined in good faith by the
Chief Executive Officer or the Board of Directors of the Company that
disclosure of such information in a Registration Statement would be
detrimental to the business and affairs of the Company; or (b) any material
engagement or activity by the Company which would, in the good faith
determination of the Chief Executive Officer or the Board of Directors of the
Company, be adversely affected by disclosure in a registration statement at
such time, which determination shall be accompanied by a good faith
determination by the Chief Executive Officer or the Board of Directors of the
Company that the applicable Registration Statement would be materially
misleading absent the inclusion of such information.
Section 4. COOPERATION WITH COMPANY. The Investors will cooperate
with the Company in all respects in connection with this Agreement, including
timely supplying all information reasonably requested by the Company (which
shall include all information regarding the Investors and proposed manner of
sale of the Registrable Securities required to be disclosed in the
Registration Statement) and executing and returning all documents reasonably
requested in connection with the registration and sale of the Registrable
Securities and entering into and performing their obligations under any
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering. Nothing in this Agreement shall obligate any Investor
to consent to be named as an underwriter in any Registration Statement. The
obligation of the Company to register all of the Registrable Securities shall
be absolute and unconditional as to those Securities which the SEC will
permit to be registered without naming the Investors as underwriters.
Section 5. REGISTRATION PROCEDURES. If and whenever the Company is
required by any of the provisions of this Agreement to effect the
registration of any of the Registrable Securities under the Act, the Company
shall (except as otherwise provided in this Agreement), as expeditiously as
possible, subject to the Investors' assistance and cooperation as reasonably
required with respect to the Registration Statement:
(a) (i) prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration Statement
effective and to comply with the provisions of the Act with respect to the
sale or other disposition of all securities covered by such registration
statement whenever the Investors shall desire to sell or otherwise dispose of
the same (including prospectus supplements with respect to the sales of
securities from time to time in connection with a registration statement
pursuant to Rule 415 promulgated under the Act) and (ii) take all lawful
action such that each of (A) the Registration Statement and any amendment
thereto does not, when it becomes effective, 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 light of the circumstances
under which they were made, not misleading and (B) the prospectus forming
part of the Registration Statement, and any amendment or supplement thereto,
does not at any
5
time during the Registration Period include 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 light of the circumstances under
which they were made, not misleading;
(b) (i) prior to the filing with the SEC of any
Registration Statement (including any amendments thereto) and the
distribution or delivery of any prospectus (including any supplements
thereto), provide draft copies thereof to the Investors as required by
Section 3(c) and reflect in such documents all such comments as the Investors
(and their counsel) reasonably may propose respecting the Selling
Shareholders and Plan of Distribution sections (or equivalents) and (ii)
furnish to each Investor such numbers of copies of a prospectus including a
preliminary prospectus or any amendment or supplement to any prospectus, as
applicable, in conformity with the requirements of the Act, and such other
documents, as such Investor may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by such Investor;
(c) register and qualify the Registrable Securities
covered by the Registration Statement under such other securities or blue sky
laws of such jurisdictions as the Investors shall reasonably request (subject
to the limitations set forth in Section 3(c) above), and do any and all other
acts and things which may be necessary or advisable to enable each Investor
to consummate the public sale or other disposition in such jurisdiction of
the securities owned by such Investor;
(d) list such Registrable Securities on the Principal
Market, if the listing of such Registrable Securities is then permitted under
the rules of such Principal Market;
(e) notify each Investor at any time when a prospectus
relating thereto covered by the Registration Statement is required to be
delivered under the Act, of the happening of any event of which it has
knowledge as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing, and the Company shall prepare and file a
curative amendment under Section 5(a) as quickly as commercially possible;
(f) as promptly as practicable after becoming aware of
such event, notify each Investor who holds Registrable Securities being sold
(or, in the event of an underwritten offering, the managing underwriters) of
the issuance by the SEC of any stop order or other suspension of the
effectiveness of the Registration Statement at the earliest possible time and
take all lawful action to effect the withdrawal, recession or removal of such
stop order or other suspension;
(g) cooperate with the Investors to facilitate the timely
preparation and delivery of certificates for the Registrable Securities to be
offered pursuant to the Registration Statement and enable such certificates
for the Registrable Securities to be in such denominations or amounts, as the
case may be, as the Investors reasonably may request and registered in such
names as the Investors may request; and, within three (3) Trading Days after
a Registration Statement which includes Registrable Securities is declared
effective by the SEC, deliver and
6
cause legal counsel selected by the Company to deliver to the transfer agent
for the Registrable Securities (with copies to the Investors) an appropriate
instruction and, to the extent necessary, an opinion of such counsel;
(h) take all such other lawful actions reasonably
necessary to expedite and facilitate the disposition by the Investors of
their Registrable Securities in accordance with the intended methods therefor
provided in the prospectus which are customary for issuers to perform under
the circumstances;
(i) in the event of an underwritten offering, promptly
include or incorporate in a prospectus supplement or post-effective amendment
to the Registration Statement such information as the managers reasonably
agree should be included therein and to which the Company does not reasonably
object and make all required filings of such prospectus supplement or
post-effective amendment as soon as practicable after it is notified of the
matters to be included or incorporated in such Prospectus supplement or
post-effective amendment; and
(j) maintain a transfer agent and registrar for its Common
Stock.
Section 6. INDEMNIFICATION.
(a) To the maximum extent permitted by law, the Company
agrees to indemnify and hold harmless the Investors and each person, if any,
who controls an Investor within the meaning of the Securities Act (each a
"Distributing Investor") against any losses, claims, damages or liabilities,
joint or several (which shall, for all purposes of this Agreement, include,
but not be limited to, all reasonable costs of defense and investigation and
all reasonable attorneys' fees and expenses), to which the Distributing
Investor may become subject, under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration
Statement, or any related final prospectus or amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided, however, that the
Company will not be liable in any such case to the extent, and only to the
extent, that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement, preliminary prospectus,
final prospectus or amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to the Company by the
Distributing Investor, its counsel, affiliates or any underwriter,
specifically for use in the preparation thereof. In addition, the Company
shall not be liable hereunder to the extent a Distributing Investor caused
such losses etc. by failing to deliver the final prospectus or any amendment
or supplement thereto. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) To the maximum extent permitted by law, each
Distributing Investor agrees that it will indemnify and hold harmless the
Company, and each officer and director of the Company or person, if any, who
controls the Company within the meaning of the Securities Act, against any
losses, claims, damages or liabilities (which shall, for all purposes of
7
this Agreement, include, but not be limited to, all reasonable costs of
defense and investigation and all reasonable attorneys' fees and expenses) to
which the Company or any such officer, director or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, or any related final
prospectus or amendment or supplement thereto, or arise out of or are based
upon (i) failure by such Distributing Investor to deliver the final
prospectus or any amendment or supplement thereto, or (ii) the omission or
the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, but in
each case only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in such Registration
Statement, final prospectus or amendment or supplement thereto in reliance
upon, and in conformity with, written information furnished to the Company by
such Distributing Investor, its counsel, affiliates or any underwriter,
specifically for use in the preparation thereof. This indemnity agreement
will be in addition to any liability which the Distributing Investor may
otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section 6 of notice of the commencement of any action against such
indemnified party, such indemnified party will, if a claim in respect thereof
is to be made against the indemnifying party under this Section 6, notify the
indemnifying party in writing of the commencement thereof; but the omission
so to notify the indemnifying party will not relieve the indemnifying party
from any liability which it may have to any indemnified party except to the
extent the failure of the indemnified party to provide such written
notification actually prejudices the ability of the indemnifying party to
defend such action. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to
the extent that it may wish, jointly with any other indemnifying party
similarly notified, assume the defense thereof, subject to the provisions
herein stated 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 under this
Section 6 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation, unless the indemnifying party shall not
pursue the action to its final conclusion. The indemnified parties as a group
shall have the right to employ one separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying
party has assumed the defense of the action with counsel reasonably
satisfactory to the indemnified party unless (i) the employment of such
counsel has been specifically authorized in writing by the indemnifying
party, or (ii) the named parties to any such action (including any impleaded
parties) include both the indemnified party and the indemnifying party and
the indemnified party shall have been advised by its counsel that there may
be one or more legal defenses available to the indemnifying party different
from or in conflict with any legal defenses which may be available to the
indemnified party or any other indemnified party (in which case the
indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party, it being understood, however,
that the indemnifying party shall, in connection with any one such action or
separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable only for the reasonable fees and expenses of
8
one separate firm of attorneys for the indemnified party, which firm shall be
designated in writing by the indemnified party). No settlement of any action
against an indemnified party shall be made without the prior written consent
of the indemnified party, which consent shall not be unreasonably withheld so
long as such settlement includes a full release of claims against the
indemnified party.
Section 7. CONTRIBUTION. In order to provide for just and
equitable contribution under the Securities Act in any case in which (i) the
indemnified party makes a claim for indemnification pursuant to Section 6
hereof but is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification
may not be enforced in such case notwithstanding the fact that the express
provisions of Section 6 hereof provide for indemnification in such case, or
(ii) contribution under the Securities Act may be required on the part of any
indemnified party, then the Company and the applicable Distributing Investor
shall contribute to the aggregate losses, claims, damages or liabilities to
which they may be subject (which shall, for all purposes of this Agreement,
include, but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys' fees and expenses), in either
such case (after contribution from others) on the basis of relative fault as
well as any other relevant equitable considerations. The relative fault 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
Company on the one hand or the applicable Distributing Investor on the other
hand, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Distributing Investor agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in this Section 7. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in
this Section 7 shall be deemed to include any reasonable legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. 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.
Notwithstanding any other provision of this Section 7, in no event shall any
(i) Investor be required to undertake liability to any person under this
Section 7 for any amounts in excess of the dollar amount of the proceeds
received by such Investor from the sale of such Investor's Registrable
Securities (after deducting any fees, discounts and commissions applicable
thereto) pursuant to any Registration Statement under which such Registrable
Securities are registered under the Securities Act and (ii) underwriter be
required to undertake liability to any person hereunder for any amounts in
excess of the aggregate discount, commission or other compensation payable to
such underwriter with respect to the Registrable Securities underwritten by
it and distributed pursuant to such Registration Statement.
9
Section 8. NOTICES. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be
delivered as provided in the Purchase Agreement.
Section 9. ASSIGNMENT. This Agreement is binding upon and inures
to the benefit of the parties hereto and their respective heirs, successors
and permitted assigns. The rights granted the Investors under this Agreement
may be assigned to any purchaser of any of the Registrable Securities (or the
rights thereto) from an Investor, as otherwise permitted by the Purchase
Agreement.
Section 10. ADDITIONAL COVENANTS OF THE COMPANY. The Company
agrees that at such time as it otherwise meets the requirements for the use
of Securities Act Registration Statement on Form S-3 for the purpose of
registering the Registrable Securities, it shall file all reports and
information required to be filed by it with the SEC in a timely manner and
take all such other action so as to maintain such eligibility for the use of
such form.
Section 11. COUNTERPARTS/FACSIMILE. This Agreement may be executed
in two or more counterparts, each of which shall constitute an original, but
all of which, when together shall constitute but one and the same instrument,
and shall become effective when one or more counterparts have been signed by
each party hereto and delivered to the other parties. In lieu of the
original, a facsimile transmission or copy of the original shall be as
effective and enforceable as the original.
Section 12. REMEDIES. The remedies provided in this Agreement are
cumulative and not exclusive of any remedies provided by law. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, 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 best 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.
Section 13. CONFLICTING AGREEMENTS. The Company shall not enter
into any agreement with respect to its securities that is inconsistent with
the rights granted to the holders of Registrable Securities in this Agreement
or otherwise prevents the Company from complying with all of its obligations
hereunder.
Section 14. HEADINGS. The headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 15. GOVERNING LAW, ARBITRATION. This Agreement shall be
governed by and construed in accordance with the laws of the State of New
York applicable to contracts made in New York by persons domiciled in New
York City and without regard to its principles of conflicts of laws. Any
dispute under this Agreement shall be submitted to arbitration under the
American Arbitration Association (the "AAA") in New York City, New York, and
shall be finally and conclusively determined by the decision of a board of
arbitration consisting of three (3)
10
members (hereinafter referred to as the "Board of Arbitration") selected as
according to the rules governing the AAA. The Board of Arbitration shall meet
on consecutive business days in New York City, New York, and shall reach and
render a decision in writing (concurred in by a majority of the members of
the Board of Arbitration) with respect to the amount, if any, which the
losing party is required to pay to the other party in respect of a claim
filed. In connection with rendering its decisions, the Board of Arbitration
shall adopt and follow the laws of the State of New York. To the extent
practical, decisions of the Board of Arbitration shall be rendered no more
than thirty (30) calendar days following commencement of proceedings with
respect thereto. The Board of Arbitration shall cause its written decision to
be delivered to all parties involved in the dispute. Any decision made by the
Board of Arbitration (either prior to or after the expiration of such thirty
(30) calendar day period) shall be final, binding and conclusive on the
parties to the dispute, and entitled to be enforced to the fullest extent
permitted by law and entered in any court of competent jurisdiction. The
Board of Arbitration shall be authorized and is hereby directed to enter a
default judgment against any party failing to participate in any proceeding
hereunder within the time periods set forth in the AAA rules. The
non-prevailing party to any arbitration (as determined by the Board of
Arbitration) shall pay the expenses of the prevailing party, including
reasonable attorneys' fees, in connection with such arbitration. Any party
shall be entitled to obtain injunctive relief from a court in any case where
such relief is available. The non-prevailing party to any injunctive
proceeding (as determined by the court) shall pay the expenses of the
prevailing party, including reasonable attorneys' fees, in connection with
such injunctive proceeding.
11
IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be duly executed, on the day and year first
above written.
Eco Soil Systems, Inc.
By:
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
Investor: BH Capital Investments, L.P.
By: HB and Co., Inc., its General Partner
By:
------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Authorized Signatory
Investor: Excalibur Limited Partnership
By: Excalibur Capital Management, Inc.,
its General Partner
By:
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
Investor: Gundyco in trust for RSP ▇▇▇-▇▇▇▇-▇▇
By:
------------------------------------------
Name: ▇▇▇▇ Shoom
Authorized Signatory
Investor: MB Capital Partners
By: MSM Management Corporation,
its General Partner
By:
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
12