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REGISTRATION RIGHTS AGREEMENT
DATED AS OF NOVEMBER 30, 1998
BY AND AMONG
MOSSIMO, INC.
AND
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
AND
▇▇▇▇▇ ▇. ▇▇▇▇▇
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into
as of November 30, 1998, by and between MOSSIMO, INC., a Delaware corporation
(the "Company"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, an individual ("Giannulli"), and ▇▇▇▇▇
▇. ▇▇▇▇▇, an individual ("▇▇▇▇▇," and, together with Giannulli, the
"Stockholders").
RECITALS
A. The Company and ▇▇▇▇▇ entered into the Incentive Stock Option
Agreement, the Nonqualified Stock Option Agreement, the Performance Incentive
Stock Option Agreement and the Nonqualified Performance Stock Option Agreement,
each dated as of November 30, 1998 (the "Option Agreements"), pursuant to which
the Company has granted to ▇▇▇▇▇ options to purchase up to an aggregate of
6,186,111 shares of Common Stock, par value $.001 per share, of the Company (the
"Common Stock") subject to the terms and conditions set forth in the Option
Agreements.
B. Pursuant to the terms of the Contribution Agreement dated as of
November 30, 1998, by and between the Company and Giannulli, Giannulli agreed to
contribute to the Company, upon each exercise by ▇▇▇▇▇ of an option pursuant to
any Option Agreement, a number of shares of Common Stock equal to the number of
shares of Common Stock issuable upon such exercise.
C. Pursuant to the terms of the Escrow Agreement dated as of
November 30, 1998, by and between the Company and Giannulli, Giannulli placed
into an escrow account 6,186,111 shares of Common Stock (the "Escrowed Shares").
D. The Company and the Stockholders desire to enter into this
Agreement for the purpose of granting to the Stockholders certain rights with
respect to registering under the Securities Act of 1933, as amended, shares of
Common Stock, par value $.001 per share, of the Company.
AGREEMENT
In consideration of the Recitals and mutual promises contained herein,
and other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties, intending to be legally bound, hereby agree as
follows:
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
"Advice" shall have the meaning set forth in Section 5 hereof.
"Assignee" shall have the meaning set forth in Section 8(e) hereof.
"Business Day" means any day that is not a Saturday, a Sunday or a
legal holiday on which banking institutions in the State of California are not
required to be open.
"Capital Stock" means, with respect to any person, any and all shares,
interests, participations or other equivalents (however designated) of corporate
stock issued by such person, including each class of common stock and preferred
stock of such person.
"Common Stock" shall have the meaning set forth in Recital A hereof.
"Company" shall have the meaning set forth in the heading hereof.
"Delay Period" shall have the meaning set forth in Section 2(d)
hereof.
"Demand Notice" shall have the meaning set forth in Section 2(a)
hereof.
"Demand Registration" shall have the meaning set forth in Section 2(b)
hereof.
"Effectiveness Period" shall have the meaning set forth in Section
2(d) hereof.
"Escrowed Shares" shall have the meaning set forth in Recital C
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Giannulli" shall have the meaning set forth in the heading hereof.
"Giannulli Stock" means (i) the Escrowed Shares and (ii) the 4,186,111
other shares of Common Stock owned by Giannulli as of the date of this Agreement
and any other shares of Capital Stock or other securities of the Company into
which such shares of Common Stock shall be reclassified or changed, including,
by reason of a merger, consolidation, reorganization or recapitalization. If
the Common Stock has been so reclassified or changed, or if the Company pays a
dividend or makes a distribution on the Common Stock in shares of Capital Stock
or subdivides (or combines) its outstanding shares of Common Stock into a
greater (or smaller) number of shares of Common Stock, a share of Common Stock
shall be deemed to be such number of shares of stock and amount of other
securities to which a holder of a share of Common Stock outstanding immediately
prior to such change, reclassification, exchange, dividend, distribution,
subdivision or combination would be entitled.
"Hold Back Period" shall have the meaning set forth in Section 4
hereof.
"Holder" means a person who owns Registrable Shares and is either (i)
a Stockholder, (ii) an heir of a Stockholder, or (iii) an Assignee; PROVIDED
THAT, with respect to each Stockholder, the Stockholder and the heirs of such
Stockholder who own Registrable Shares collectively shall be considered a single
Holder for purposes of determining the number of demand and piggyback
registrations the Company is obligated to accommodate pursuant to this
Agreement.
"Inclusion Notice" shall have the meaning set forth in Section 2(a)
hereof.
"Indemnified Party" shall have the meaning set forth in Section 7(c)
hereof.
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"Indemnifying Party" shall have the meaning set forth in Section 7(c)
hereof.
"Inspectors" shall have the meaning set forth in Section 5(l) hereof.
"Interruption Period" shall have the meaning set forth in Section 5
hereof.
"▇▇▇▇▇" shall have the meaning set forth in the heading hereof.
"▇▇▇▇▇ Stock" means the Common Stock issued by the Company to ▇▇▇▇▇
upon exercise of the options under the Option Agreements and any other shares of
Capital Stock or other securities of the Company into which such shares of
Common Stock shall be reclassified or changed, including, by reason of a merger,
consolidation, reorganization or recapitalization. If the Common Stock has been
so reclassified or changed, or if the Company pays a dividend or makes a
distribution on the Common Stock in shares of Capital Stock or subdivides (or
combines) its outstanding shares of Common Stock into a greater (or smaller)
number of shares of Common Stock, a share of Common Stock shall be deemed to be
such number of shares of stock and amount of other securities to which a holder
of a share of Common Stock outstanding immediately prior to such change,
reclassification, exchange, dividend, distribution, subdivision or combination
would be entitled.
"Losses" shall have the meaning set forth in Section 7(a) hereof.
"Option Agreements" shall have the meaning set forth in Recital A
hereof.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Piggyback Registration" shall have the meaning set forth in Section 3
hereof.
"Prospectus" means the prospectus included in any Registration
Statement (including a prospectus that discloses information previously omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Shares covered by such Registration Statement and all other
amendments and supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
"Records" shall have the meaning set forth in Section 5(l) hereof.
"Registrable Shares" means (i) with respect to ▇▇▇▇▇, the ▇▇▇▇▇ Stock,
and (ii) with respect to Giannulli, the Giannulli Stock, unless, in each case,
all of such securities of a Holder have been effectively registered under
Section 5 of the Securities Act and disposed of pursuant to an effective
Registration Statement; PROVIDED, HOWEVER, to the extent an amount of ▇▇▇▇▇
Stock is issued to ▇▇▇▇▇ by the Company in excess of the amount of Capital Stock
contributed to the
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Company by Giannulli (herein referred to as "Excess ▇▇▇▇▇ Stock"), the Excess
▇▇▇▇▇ Stock shall not be considered Registrable Shares until it ceases to be
Excess ▇▇▇▇▇ Stock.
"Registration" means registration under the Securities Act of an
offering of Registrable Shares pursuant to a Demand Registration or a Piggyback
Registration.
"Registration Expenses" means all expenses incurred in connection with
a Registration, including, without limitation, (i) all registration and filing
fees, including National Association of Securities Dealers, Inc. filing fees,
(ii) all fees and expenses of compliance with securities or Blue Sky laws,
including reasonable fees and disbursements of counsel in connection therewith,
(iii) printing expenses (including expenses of printing certificates for
Registrable Shares and of printing preliminary and final prospectuses if the
printing of prospectuses is requested by the Holders or the managing
underwriter, if any), (iv) messenger, telephone and delivery expenses, (v)
reasonable fees and disbursements of counsel, (vi) fees and disbursements of all
independent certified public accountants of the Company (including expense of
any "cold comfort" letters required in connection with this Agreement) and all
other persons retained by the Company and Holders in connection with such
Registration Statement, (vii) discounts, commissions or brokers' fees or fees
of similar securities industry professionals, and (viii) any transfer taxes
relating to the disposition of Registrable Shares by any Holder.
"Registration Period" means, as to any Holder, the period beginning on
November 30, 2000 and ending on the earlier to occur of the date when such
Holder (i) no longer beneficially owns (as defined in Rule 13d-3 under the
Exchange Act) Registrable Shares representing at least 10% of the outstanding
Common Stock or (ii) has exercised his right to make one Demand Registration and
two Piggyback Registrations.
"Registration Statement" means any registration statement under the
Securities Act of the Company that covers any of the Registrable Shares pursuant
to the provisions of this Agreement, including the related Prospectus, all
amendments and supplements to such registration statement, including pre- and
post-effective amendments, all exhibits thereto and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Shelf Registration" shall have the meaning set forth in Section 2(b)
hereof.
"Stockholder" shall have the meaning set forth in the heading hereof.
"Underwritten Registration or Underwritten Offering" means a
registration under the Securities Act in which securities of the Company are
sold to an underwriter for reoffering to the public.
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2. DEMAND REGISTRATION.
(a) Each Holder (other than Assignees) shall have the right
during the Registration Period, by written notice (the "Demand Notice") given to
the Company, to request the Company to register under and in accordance with the
provisions of the Securities Act all or any portion of the Registrable Shares
designated by such Holder; PROVIDED, HOWEVER, that the aggregate value (at the
respective dates of such notices) of Registrable Shares requested to be
registered pursuant to any Demand Notice and pursuant to any related Inclusion
Notice received pursuant to the following sentence shall be at least $ 5
million. Upon receipt of any such Demand Notice, the Company shall promptly
notify each Holder (other than Assignees) of the receipt of such Demand Notice
and allow him the opportunity to include Registrable Shares held by him in the
proposed registration by submitting his own written notice to the Company
requesting inclusion of a specified number of such Holder's Registrable Shares
(the "Inclusion Notice"). In connection with any Demand Registration in which
more than one Holder participates, in the event that such Demand Registration
involves an underwritten offering and the managing underwriter or underwriters
participating in such offering advise the Holders in writing that the total
number of Registrable Shares to be included in such offering exceeds the amount
that can be sold in (or during the time of) such offering without delaying or
jeopardizing the success of such offering (including the price per share of the
Registrable Shares to be sold), then the amount of Registrable Shares to be
offered for the account of the Holders shall be reduced pro rata on the basis of
the number of Registrable Shares to be registered by each Holder. Each Holder
shall be entitled to one Demand Registration pursuant to this Section 2. A
registration shall not count as a Demand Registration until it has become
effective. It is agreed that the registration of Registrable Shares pursuant to
an Inclusion Notice shall not be deemed to be a Demand Registration or a
Piggyback Registration. Nothing in this Section 2(a) shall limit any rights of
the Holders pursuant to Section 3 hereof.
(b) The Company, within 60 days of the date on which the Company
receives a Demand Notice given by a Holder in accordance with Section 2(a)
hereof, shall file with the SEC a Registration Statement on the appropriate form
for the registration and sale, in accordance with the intended method or methods
of distribution and subject to the restrictions of Sections 2(a) and 2(d)
hereof, of the total number of Registrable Shares specified by the Holders in
such Demand Notice and any Inclusion Notice, which may include a "shelf"
registration (a "Shelf Registration") pursuant to Rule 415 under the Securities
Act (a "Demand Registration").
(c) The Company shall use commercially reasonable efforts to
cause each Registration Statement filed pursuant to Section 2(b) to be
declared effective and to keep each such Registration Statement continuously
effective and usable for the resale of the Registrable Shares covered thereby
until the earlier of (i) such time as all of the Registrable Securities
included in such Registration Statement have been sold and (ii) 180 days (or,
if the filing was on a Form S-3 registration statement, 365 days) after such
Registration Statement becomes effective.
(d) The Company shall be entitled to postpone the filing of any
Registration Statement otherwise required to be prepared and filed by the
Company pursuant to this Section 2, or suspend the use of any effective
Registration Statement under this Section 2, for a reasonable period of time,
but not in excess of 120 days (a "Delay Period"), if (i) the Company
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proposes to file a registration statement or a preliminary prospectus supplement
relating to an existing shelf registration statement, in either case, pertaining
to an underwritten public offering of equity securities of the Company for the
account of the Company, or (ii) the Company determines in good faith that the
registration and distribution of the Registrable Shares covered or to be covered
by such Registration Statement would materially interfere with any pending
material financing, acquisition or corporate reorganization or other material
corporate development involving the Company or any of its subsidiaries or would
require premature disclosure thereof and promptly gives the Holders written
notice of such determination, containing a general statement of the reasons for
such postponement and an approximation of the period of the anticipated delay;
PROVIDED, HOWEVER, that (i) the aggregate number of days included in all Delay
Periods during any consecutive 12 months shall not exceed the aggregate of (x)
150 days minus (y) the number of days occurring during all Hold Back Periods and
Interruption Periods during such consecutive 12 months, and (ii) a period of at
least 60 days shall elapse between the termination of any Delay Period, Hold
Back Period or Interruption Period and the commencement of the immediately
succeeding Delay Period. The time period for which the Company is required to
maintain the effectiveness of any Registration Statement shall be extended by
the aggregate number of days of all Delay Periods, all Hold Back Periods and all
Interruption Periods occurring during such Registration and such period and any
extension thereof is hereinafter referred to as the "Effectiveness Period."
(e) The Holder of a majority in number of the Registrable Shares
to be included in a Registration Statement pursuant to this Section 2 may, at
any time prior to the effective date of the Registration Statement relating to
such Registration, revoke such request by providing a written notice to the
Company revoking such request, and in the event of such revocation, such
registration shall not count against the maximum number of Demand Registrations
to which the Holders are entitled under Section 2(a).
(f) All Registration Expenses incurred in connection with any
Demand Registration pursuant to this Section 2 shall be borne pro rata by the
Holders participating in such Demand Registration. The Company shall bear no
responsibility for any Registration Expense incurred in connection with a Demand
Registration.
3. PIGGYBACK REGISTRATION.
(a) RIGHT TO PIGGYBACK. If at any time during the Registration
Period the Company proposes to file a registration statement under the
Securities Act with respect to a public offering of securities of the same type
as the Registrable Shares pursuant to a firm commitment underwritten offering
solely for cash (other than a registration relating solely to the sale of
securities to participants in a dividend reinvestment plan, a registration on
Form S-4 relating to a business combination or similar transaction permitted to
be registered on Form S-4, a registration on Form S-8 relating solely to the
sale of securities to participants in a stock or employee benefit plan and a
registration permitted under Rule 462 of the Securities Act registering
additional securities of the same class as were included in an earlier
registration statement for the same offering, and declared effective), the
Company shall give written notice of such proposed filing to the Holders at
least 15 days before the anticipated effective date. Such notice shall offer
the Holders the opportunity to register such amount of Registrable Shares as
they may request (a "Piggyback Registration").
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Subject to Section 3(b) hereof, the Company shall include in each such Piggyback
Registration all Registrable Shares with respect to which the Company has
received written requests for inclusion therein within 10 days after notice has
been given to the Holders. Each Holder shall be permitted to withdraw all or
any portion of the Registrable Shares of such Holder from a Piggyback
Registration at any time prior to the effective date of such Piggyback
Registration. Each Holder shall be entitled to two Piggyback Registrations
pursuant to this Section 3.
(b) PRIORITY ON PIGGYBACK REGISTRATIONS. The Company shall
permit the Holders to include all such Registrable Shares on-the-same terms and
conditions as any similar securities, if any, of the Company included therein.
Notwithstanding the foregoing, if the managing underwriter or underwriters
participating in such offering advise the Holders in writing that the total
amount of securities requested to be included in such Piggyback Registration
exceeds the amount which can be sold in (or during the time of) such offering
without delaying or jeopardizing the success of the offering (including the
price per share of the securities to be sold), then the Company will include in
such registration (i) first, all the securities of the Company which the Company
proposes to sell for its own account, and (ii) second, to the extent of the
amount which the Company is so advised can be sold in (or during the time of)
such offering, Registrable Shares and other securities requested to be included
in such registration, pro rata among Holders and others exercising piggyback
registration rights, on the basis of the shares of Common Stock owned by all
such persons.
(c) RIGHT TO ABANDON. Nothing in this Section 3 shall create
any liability on the part of the Company to the Holders if the Company in its
sole discretion should decide not to file a registration statement proposed to
be filed pursuant to Section 3(a) hereof or to withdraw such registration
statement subsequent to its filing and prior to the later of its effectiveness
or the release of the Registrable Shares for public offering by the managing
underwriter, in the case of an underwritten public offering, regardless of any
action whatsoever that a Holder may have taken, whether as a result of the
issuance by the Company of any notice hereunder or otherwise.
(d) EXPENSES. The Company shall bear and pay all Registration
Expenses incurred in connection with any registration of securities for the
Company's own account referred to in the first sentence of Section 3(a), and
each Holder participating in the Piggyback Registration shall bear and pay pro
rata all expenses related to (i) registration and filing fees, including
National Association of Securities Dealers, Inc. filing fees, and (ii)
discounts, commissions and broker's fees incurred in connection with the
registration of Registrable Shares pursuant to this Section 3 for the account of
such Holder.
4. HOLDBACK AGREEMENT. If (i) the Company shall file a registration
statement with respect to the Common Stock or similar securities or securities
convertible into, or exchangeable or exercisable for, such securities and (ii)
the Company (in the case of a nonunderwritten public offering by the Company
pursuant to such registration statement) advises the Holders in writing that a
public sale or distribution of Registrable Shares would materially adversely
affect such offering or the managing underwriter or underwriters (in the case of
an underwritten public offering by the Company pursuant to such registration
statement) advises the Company in writing (in which case the Company shall
notify the Holders) that a public sale or
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distribution of Registrable Shares would have material adverse impact on such
offering, then each Holder shall, to the extent not inconsistent with applicable
law, refrain from effecting any public sale or distribution of Registrable
Shares (other than sales under Rule 144 under the Securities Act) during the 10
days prior to the effective date of such registration statement and until the
earliest of (A) the abandonment of such offering, (B) 90 days from the effective
date of such registration statement and (C) if such offering is an underwritten
offering, the termination of any "hold back" period obtained by the underwriter
or underwriters in such offering from the Company in connection therewith (each
such period, a "Hold Back Period").
5. REGISTRATION PROCEDURES. In connection with the registration
obligations of the Company pursuant to and in accordance with Sections 2 and 3
hereof (and subject to Sections 2 and 3 hereof), the Company shall use
commercially reasonable efforts to effect such registration to permit the sale
of such Registrable Shares in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Company shall as expeditiously as
possible (but subject to Sections 2 and 3 hereof):
(a) at least ten (10) days before filing a Registration
Statement or prospectus or any amendments or supplements thereto, furnish to the
Holders who are participating in such Registration Statement and the
underwriters, if any, copies of all such documents proposed to be filed, which
documents will be subject to the review of such Holders and such underwriters
(and their respective counsel), and, in the case of a Demand Registration, the
Company will not file any Registration Statement or amendment thereto or any
prospectus or any supplement thereof to which the registering Holder or the
underwriters, if any, shall reasonably object;
(b) prepare and file with the SEC a Registration Statement for
the sale of the Registrable Shares on any form for which the Company then
qualifies or which counsel for the Company shall deem appropriate in accordance
with the Holders' intended method or methods of distribution thereof, subject to
Section 2(d) hereof, include in the related Prospectus such customary
information as may be reasonably required by the Holders, their underwriters or
their counsel, and, subject to the Company's right to terminate or abandon a
registration pursuant to Section 3(c) hereof, use commercially reasonable
efforts to cause such Registration Statement to become effective and remain
effective as provided herein;
(c) prepare and file with the SEC such amendments (including
post-effective amendments) to such Registration Statement, and such supplements
to the related Prospectus, as may be required by the rules, regulations or
instructions applicable to the Securities Act during the applicable period in
accordance with the intended methods of disposition specified by the Holders of
the Registrable Shares covered by such Registration Statement, make generally
available earnings statements satisfying the provisions of Section 11(a) of the
Securities Act (provided that the Company shall be deemed to have complied with
this clause if it has complied with Rule 158 under the Securities Act), and
cause the related Prospectus as so supplemented to be filed pursuant to Rule 424
under the Securities Act; PROVIDED, HOWEVER, that before filing a Registration
Statement or Prospectus, or any amendments or supplements thereto (other than
reports required to be filed by it under the Exchange Act), the Company shall
furnish to the Holders of
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Registrable Shares covered by such Registration Statement and their counsel for
review and comment, copies of all documents required to be filed;
(d) notify the Holders of any Registrable Shares covered by such
Registration Statement promptly and (if requested) confirm such notice in
writing, (i) when a Prospectus or any supplement or post-effective amendment has
been filed, and, with respect to such Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of any
request by the SEC for amendments or supplements to such Registration Statement
or the related Prospectus or for additional information regarding such Holders,
(iii) of the issuance by the SEC of any stop order suspending the effectiveness
of such Registration Statement 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 Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, and (v) of the happening of any
event that requires the making of any changes in such Registration Statement,
Prospectus or documents incorporated or deemed to be incorporated therein by
reference so that they 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 not misleading;
(e) use commercially reasonable efforts to obtain the withdrawal
of any order suspending the effectiveness of such Registration Statement, or the
lifting of any suspension of the qualification or exemption from qualification
of any Registrable Shares for sale in any jurisdiction in the United States;
(f) furnish to the Holder of any Registrable Shares covered by
such Registration Statement, each counsel for such Holders and each managing
underwriter, if any, without charge, one conformed copy of such Registration
Statement, as declared effective by the SEC, and of each post-effective
amendment thereto, in each case including financial statements and schedules and
all exhibits and reports incorporated or deemed to be incorporated therein by
reference; and deliver, without charge, such number of copies of the preliminary
prospectus, any amended preliminary prospectus, each final Prospectus and any
post-effective amendment or supplement thereto, as such Holder may reasonably
request in order to facilitate the disposition of the Registrable Shares of such
Holder covered by such Registration Statement in conformity with the
requirements of the Securities Act;
(g) prior to any public offering of Registrable Shares covered
by such Registration Statement, use commercially reasonable efforts to register
or qualify such Registrable Shares for offer and sale under the securities or
Blue Sky laws of such jurisdictions as the Holders of such Registrable Shares
shall reasonably request in writing; PROVIDED, HOWEVER, that the Company shall
in no event be required to qualify generally to do business as a foreign
corporation or as a dealer in any jurisdiction where it is not at the time so
qualified or to execute or file a general consent to service of process in any
such jurisdiction where it has not theretofore done so or to take any action
that would subject it to general service of process or taxation in any such
jurisdiction where it is not then subject;
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(h) upon the occurrence of any event contemplated by paragraph
5(d)(v) above, prepare a supplement or post-effective amendment to such
Registration Statement or the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference and file any other required
document so that, as thereafter delivered to the purchasers of the Registrable
Shares being sold thereunder (including upon the termination of any Delay
Period), such Prospectus will not contain an 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 light of the circumstances under which they were
made, not misleading;
(i) use commercially reasonable efforts to cause all Registrable
Shares covered by such Registration Statement to be listed on each securities
exchange or automated interdealer quotation system, if any, on which similar
securities issued by the Company are then listed or quoted;
(j) use commercially reasonable efforts to comply with all
applicable rules and regulations of the SEC and any securities exchange or
regulatory body;
(k) on or before the effective date of such Registration
Statement, provide the transfer agent of the Company for the Registrable Shares
with printed certificates for the Registrable Shares covered by such
Registration Statement which are in a form eligible for deposit with The
Depository Trust Company;
(l) if such offering is an underwritten offering, make available
by any Holder of Registrable Shares included in such Registration Statement, any
underwriter participating in any offering pursuant to such Registration
Statement, and any attorney, accountant or other agent retained by any such
Holder or underwriter (collectively, the "Inspectors"), such executives and
other personnel, and financial and other records and other information,
pertinent corporate documents and properties of any of the Company and its
subsidiaries and affiliates (collectively, the "Records"), as shall be
reasonably necessary to enable them to exercise their due diligence
responsibilities; PROVIDED, HOWEVER, that the Records that the Company
determines, in good faith, to be confidential and which it notifies the
Inspector in writing are confidential shall not be disclosed to any Inspector
unless such Inspector signs a confidentiality agreement reasonably satisfactory
to the Company, which agreement shall permit the disclosure of such Records in
such Registration Statement or the related Prospectus if either (i) the
disclosure of such Records is necessary to avoid or correct a misstatement or
omission in such Registration Statement or (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction; PROVIDED, HOWEVER, that (A) any decision regarding the disclosure
of information pursuant to subclause (i) shall be made only after consultation
with counsel for the applicable Inspectors and the Company and (B) with respect
to any release of Records pursuant to subclause (ii), each Holder of Registrable
Shares agrees that he shall, promptly after learning that disclosure of such
Records is sought in a court having jurisdiction, give notice to the Company so
that the Company, at the Company's expense, may undertake appropriate action to
prevent disclosure of such Records; and
(m) if such offering is an underwritten offering, enter into
such agreements (including an underwriting agreement in form, scope and
substance as is customary in
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underwritten offerings) and take all such other appropriate and reasonable
actions requested by the Holder of a majority of the Registrable Shares being
sold in connection therewith (including those reasonably requested by the
managing underwriters) in order to expedite or facilitate the disposition of
such Registrable Shares, and in connection therewith, (i) use commercially
reasonable efforts to obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters and counsel to the Holders
of the Registrable Shares being sold), addressed to each selling Holder of
Registrable Shares covered by such Registration Statement and each of the
underwriters as to the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested by
such counsel and underwriters, (ii) use commercially reasonable efforts to
obtain "cold comfort" letters and updates thereof from the independent certified
public accountants of the Company (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company or of any business
acquired by the Company for which financial statements and financial data are,
or are required to be, included in the Registration Statement), addressed to
each selling Holder of Registrable Shares covered by the Registration Statement
(unless such accountants shall be prohibited from so addressing such letters by
applicable standards of the accounting profession) and each of the underwriters,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings, and (iii) if requested and if an underwriting agreement is entered
into, provide indemnification provisions and procedures substantially to the
effect set forth in Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section. The above shall be done at each closing
under such underwriting or similar agreement, or as and to the extent required
thereunder. In addition, the Company agrees not to effect any public sale
or distribution of Common Stock, or any securities convertible into or
exchangeable or exercisable for Common Stock during the 10 days prior to the
effective date of any underwritten Demand Registration and until the earliest of
(i) the abandonment of such offering, or (ii) the termination of any Hold Back
Period reasonably requested by the underwriters (with exceptions for issuances
pursuant to outstanding options, warrants, and convertible or exchangeable
securities, pursuant to employee and dividend reinvestment plans, and such other
exceptions as are customary or agreed with the managing underwriter).
The Company may require each Holder of Registrable Shares covered by a
Registration Statement to furnish such information regarding such Holder and
such Holder's intended method of disposition of such Registrable Shares as it
may from time to time reasonably request in writing. If any such information is
not furnished within a reasonable period of time after receipt of such request,
the Company may exclude such Holder's Registrable Shares from such Registration
Statement.
Each Holder of Registrable Shares covered by a Registration Statement
agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 5(d)(ii), 5(d)(iii), 5(d)(iv) or 5(d)(v)
hereof, that such Holder shall forthwith discontinue disposition of any
Registrable Shares covered by such Registration Statement or the related
Prospectus until receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(h) hereof, or until such Holder is advised in writing
(the "Advice") by the Company that the use of the applicable Prospectus may be
resumed, and has received copies of any amended or
11
supplemented Prospectus or any additional or supplemental filings which are
incorporated, or deemed to be incorporated, by reference in such Prospectus
(such period during which disposition is discontinued being an "Interruption
Period") and, if requested by the Company, the Holder shall deliver to the
Company (at the expense of the Company) all copies then in its possession, other
than permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Shares at the time of receipt of such request.
Each Holder of Registrable Shares covered by a Registration Statement
further agrees not to utilize any material other than the applicable current
preliminary prospectus or Prospectus in connection with the offering such
Registrable Shares.
6. UNDERWRITING REQUIREMENTS.
(a) Subject to Section 6(b) hereof, any Holder who properly
requests a Demand Registration pursuant to Section 2 shall have the right, by
written notice, to request that such Demand Registration provide for an
underwritten offering.
(b) In the case of any underwritten offering pursuant to a
Demand Registration, the Holder of a majority of the Registrable Shares covered
by the Demand Notice to be disposed of in connection therewith shall select the
institution or institutions that shall manage or lead such offering, which
institution or institutions shall be reasonably satisfactory to the Company. In
the case of any underwritten offering pursuant to a Piggyback Registration, the
Company shall select the institution or institutions that shall manage or lead
such offering.
7. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company shall, without
limitation as to time, indemnify and hold harmless, to the full extent permitted
by law, each Holder of Registrable Shares whose Registrable Shares are covered
by a Registration Statement or Prospectus, and such Holder's directors,
officers, agents or employees, each Person who controls such Holder (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,
from and against any and all losses, claims, damages, liabilities, judgment,
costs (including, without limitation, costs of preparation and reasonable
attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising out
of or based upon any untrue or alleged untrue statement of a material fact
contained in such Registration Statement or Prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or based
upon any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as the same are based upon information furnished in writing to the
Company by or on behalf of such Holder expressly for use therein or by any
underwriter expressly for use in a Demand Registration; PROVIDED, HOWEVER, that
the Company shall not be liable to any such Holder to the extent that any such
Losses arise out of or are based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any preliminary prospectus if
(i) having previously been furnished by or on behalf of the Company with copies
of the Prospectus, such Holder failed to send or deliver a copy of the
Prospectus with or prior to the delivery of written
12
confirmation of the sale of Registrable Shares by such Holder to the person
asserting the claim from which such Losses arise, and (ii) the Prospectus would
have corrected in all material respects such untrue statement or alleged untrue
statement or such omission or alleged omission; and PROVIDED FURTHER, that the
Company shall not be liable in any such case to the extent that any such Losses
arise out of or are based upon an untrue statement or alleged untrue statement
or omission or alleged omission in the Prospectus, if (x) such untrue statement
or alleged untrue statement, omission or alleged omission is corrected in all
material respects in an amendment or supplement to the Prospectus and (y) having
previously been furnished by or on behalf of the Company with copies of the
Prospectus as so amended or supplemented, such Holder thereafter fails to
deliver such Prospectus as so amended or supplemented, prior to or currently
with the sale of Registrable Shares. In connection with any Underwritten
Offering, the Company will also indemnify underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, their officers and directors and each Person who controls such
Persons (within the meaning of Section 15 of the Securities Act) to the same
extent as provided above with respect to indemnification of Holders of
Registrable Shares, or on such other terms as are reasonable and customary and
requested by the managing underwriter.
(b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SHARES. In
connection with any Registration Statement in which a Holder is participating,
such Holder shall furnish to the Company in writing such information as the
Company reasonably requests for use in connection with such Registration
Statement or the related Prospectus and agrees to indemnify, to the full extent
permitted by law, the Company, any other participating Holder, their respective
directors, officers, agents or employees, each Person who controls the Company
or any other participating Holder (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, from and against all Losses
arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in such Registration Statement or the related Prospectus
or any amendment or supplement thereto, or any preliminary prospectus, or
arising out of or based upon any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, to the extent, but only to the extent, that such untrue or alleged
untrue statement or omission or alleged omission is based upon any information
so furnished in writing by or on behalf of such Holder to the Company expressly
for use in such Registration Statement or Prospectus; PROVIDED that in no event
shall any indemnity under this Section 7(b) exceed the net proceeds received by
the Holder from the offering related to the Registration Statement.
(c) NOTICE OF CLAIMS, ETC. If any Person shall be entitled to
indemnity hereunder (an "Indemnified Party"), the indemnified party shall give
prompt notice to the party from which such indemnity is sought (the
"Indemnifying Party") of any claim or of the commencement of any proceeding with
respect to which the Indemnified Party seeks indemnification or contribution
pursuant hereto; PROVIDED, HOWEVER, that the delay or failure to so notify the
Indemnifying Party shall not relieve the Indemnifying Party from any obligation
or liability except to the extent that the Indemnifying Party has been
prejudiced by such delay or failure. The Indemnifying Party shall have the
right, exercisable by giving written notice to an Indemnified Party promptly
after the receipt of written notice from such Indemnified Party of such claim or
proceeding, to assume, at the Indemnifying Party's expense, the defense of any
such claim
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or proceeding, with counsel reasonably satisfactory to such Indemnified Party;
PROVIDED, HOWEVER, that (i) an Indemnified Party shall have the right to employ
separate counsel in any such claim or 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 unless: (1) the Indemnifying Party agrees to
pay such fees and expenses; (2) the Indemnifying Party fails promptly to assume
the defense of such claim or proceeding or fails to employ counsel reasonably
satisfactory to such Indemnified Party; or (3) the named parties to any
proceeding (including impleaded parties) include both such Indemnified Party and
the Indemnifying Party, and such Indemnified Party shall have been advised by
counsel that there may be one or more legal defenses available to it that are
inconsistent with those available to the Indemnifying Party or that a conflict
of interest is likely to exist among such Indemnified Party and any other
Indemnified Parties (in which case the Indemnifying Party shall not have the
right to assume the defense of such action on behalf of such Indemnified Party);
and (ii) subject to clause (3) above, the Indemnifying Party shall not, in
connection with any one such claim or proceeding or separate but substantially
similar or related claims or proceedings in the same jurisdiction, arising out
of the same general allegations or circumstances, be liable for the fees and
expenses of more than one firm of attorneys (together with appropriate local
counsel) at any time for all of the Indemnified Parties, or for fees and
expenses that are not reasonable. Whether or not such defense is assumed by the
Indemnifying Party, such Indemnified Party shall not be subject to any liability
for any settlement made without its consent. The Indemnifying Party shall not
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release, in form and substance reasonably
satisfactory to the Indemnified Party, from all liability in respect of such
claim or litigation for which such Indemnified Party would be entitled to
indemnification hereunder.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 8 is unavailable to an Indemnified Party in respect of any Losses (other
than in accordance with its terms), then each applicable 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, on the one hand, and such Indemnified Party, on the other hand, 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, on the one hand, and Indemnified Party, on the
other hand, shall be determined by reference to, among other things, whether any
action in question, including any untrue statement of a material fact or
omission or alleged omission to state a material fact, has been taken 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 any such action, statement or omission. The
amount paid or payable by a party as a result of any Losses shall be deemed to
include any legal or other fees or expenses incurred by such party in connection
with any investigation or proceeding. The parties hereto agree that it would
not be just and equitable if contribution pursuant to this Section 7(d) were
determined by pro rata allocation or by any other method of allocation that does
not take account of 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.
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8. MISCELLANEOUS.
(a) TERMINATION. This Agreement and the obligations of the
Company and the Holders hereunder shall terminate at such time as the
Registration Period with respect to each Holder expires.
(b) NOTICES. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when received if
personally delivered; when transmitted if transmitted by telecopy, electronic or
digital transmission method; the day after it is sent, if sent for next day
delivery to a domestic address by recognized overnight delivery service (e.g.,
Federal Express); and upon receipt, if sent by certified or registered mail,
return receipt requested. In each case notice shall be sent to:
If to the Company:
Mossimo, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
If to Giannulli:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
c/o Mossimo, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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If to ▇▇▇▇▇:
▇▇▇▇▇ ▇. ▇▇▇▇▇
c/o Mossimo, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(c) INTERPRETATION. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the word "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation." This Agreement shall not be construed for or against either party
by reason of the authorship or alleged authorship of any provision hereof or by
reason of the status of the respective parties. All terms defined in this
Agreement in the singular shall have the same comparable meanings when used in
the plural and vice versa, unless otherwise specified.
(d) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof and is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder.
(e) ASSIGNMENT. Neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned (whether by operation of
law or otherwise) by any Holder without the consent of the Company, or by the
Company without the consent of the Holder of a majority in number of the
Registrable Shares then outstanding. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their heirs. In no event shall any transferee of Common Stock
be entitled, solely as a result of such transfer, to any of the benefits of this
Agreement or to enforce the same. Notwithstanding the foregoing provisions of
this Section 8(e), the rights of the Holders pursuant to this Agreement may be
assigned (but only with all related obligations) to transferees or assignees of
Registrable Securities who, after such assignment, hold at least 500,000
Registrable Shares (an "Assignee") provided the Company is, within 30 days after
such assignment, furnished with written notice of the name and address of such
Assignee and the Registrable Shares with respect to which such rights are being
assigned.
(f) GOVERNING LAW. This Agreement shall be construed,
interpreted and the rights of the parties determined in accordance with the laws
of the State of California (without reference to the choice of law provisions),
except with respect to matters of law concerning the internal corporate affairs
of any corporate entity which is a party to or the subject of this Agreement,
and as to those matters the law of the jurisdiction under which the respective
entity derives its powers shall govern.
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(g) SEVERABILITY. Each party agrees that, should any court or
other competent authority hold any provision of this Agreement or part hereof to
be null, void or unenforceable, or order any party to take any action
inconsistent herewith or not to take an action consistent herewith or required
hereby, the validity, legality and enforceability of the remaining provisions
and obligations contained or set forth herein shall not in any way be affected
or impaired thereby. Upon any such holding that any provision of this Agreement
is null, void or unenforceable, the parties will negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated by this Agreement are consummated to the extent possible. Except
as otherwise contemplated by this Agreement, to the extent that a party hereto
took an action inconsistent herewith or failed to take action consistent
herewith or required hereby pursuant to an order or judgment of a court or other
competent authority, such party shall incur no liability or obligation unless
such party did not in good faith seek to resist or object to the imposition or
entering of such order or judgment.
(h) INJUNCTIVE RELIEF. The parties acknowledge that it will be
impossible to measure in money the damages that would be suffered if the parties
fail to comply with any of the obligations herein imposed on them and that in
the event of any such failure, an aggrieved person or entity will be irreparably
damaged and will not have an adequate remedy at law. Any such person or entity
shall, therefore, be entitled to injunctive relief, including specific
performance, to enforce such obligations, and if any action should be brought in
equity to enforce any of the provisions of this Agreement, none of the parties
shall raise the defense that there is an adequate remedy at law.
(i) ATTORNEYS' FEES. If any party to this Agreement brings an
action to enforce its rights under this Agreement, the prevailing party shall be
entitled to recover its costs and expenses, including without limitation
reasonable attorneys' fees incurred in connection with such action, including
any appeal of such action.
(j) CUMULATIVE REMEDIES. All rights and remedies of either
party hereto are cumulative of each other and of every other right or remedy
such party may otherwise have at law or in equity, and the exercise of one or
more rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of other rights or remedies.
(k) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same instrument and
shall become effective when executed and delivered by each of the parties.
(l) AMENDMENTS AND WAIVERS. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless (i) the Company has consented in writing and (ii) the
Company has obtained the written consent of the Holders of a majority in number
of the Registrable Shares then outstanding or, in the case of a matter that
relates exclusively to the rights of Holders whose securities are being sold
pursuant to a Registration Statement, the written consent of the Holders of a
majority of the Registrable Shares being sold.
17
(m) PUBLICITY. No public release or announcement concerning the
transactions contemplated hereby shall be issued by any party without the prior
consent of the other parties, except to the extent that such party is advised by
counsel that such release or announcement is necessary or advisable under
applicable law or the rules or regulations of any securities exchange, in which
case the party required to make the release or announcement shall to the extent
practicable provide the other party with an opportunity to review and comment on
such release or announcement in advance of its issuance.
[Signatures Follow]
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.
THE COMPANY:
MOSSIMO, INC., a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Senior Vice President of Finance,
Secretary and Treasurer
STOCKHOLDERS:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, an individual
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇, an individual
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
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