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▇▇▇▇▇▇▇.▇▇▇, Inc.
(a Utah corporation)
Common Stock
REGISTRATION RIGHTS AGREEMENT
Dated: January 29, 2000
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") dated as of March 2, 2000
is by and among ▇▇▇▇▇▇▇.▇▇▇, Inc., a Utah corporation (the "Company") and First
Frontier Holdings, Inc., a New York corporation ("FFH").
RECITALS
WHEREAS, the Company and FFH have executed and delivered that certain Stock
Purchase Agreement, dated March 2, 2000 (the "Stock Purchase Agreement"),
pursuant to which the Company has agreed to issue and sell to FFH, and FFH has
agreed to purchase from the Company, certain shares of the Company's Common
Stock, par value $.001 per share (the "Shares"), specified therein;
WHEREAS, as an inducement to FFH to consummate the purchase of the Shares
in accordance with the Stock Purchase Agreement, the Company desires to grant to
FFH the registration rights set forth in this Agreement, subject to the terms
and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements herein contained, the receipt and sufficiency of which is hereby
acknowledged, and subject to the terms and conditions set forth herein, the
parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Business Day" shall mean any day except Saturday, Sunday and any day on
which banks in The City of New York are required or permitted by law or
executive order to close.
"Commission" shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Common Stock, $.001 par value per share, of
the Company.
"Eligible Founder" shall mean a Founder who holds Restricted Stock
following such time as sales or transfers of Shares by FFH result in the receipt
of aggregate net proceeds to each FFH (measured on a cumulative basis from the
date hereof) of an amount equal to the price originally paid to the Company for
the
Shares by FFH (such receipt of such amount being the ("FFH Threshold"). To the
extent that the aggregate net proceeds of any transaction covered by a
Registration Statement exceeds the amount required to satisfy the FFH Threshold,
each Founder shall become an Eligible Founder with respect to such excess.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Founders" shall mean ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
"Founders' Shares" shall mean shares of Common Stock held, as of the date
of this Agreement, by a Founder.
"Investor Transferee" shall mean, with respect to FFH, a transferee of
Preferred Stock or Restricted Stock of FFH if such transferee (i) has given the
Company written notice at the time of or within a reasonable time after such
transfer stating the name and address of such transferee and (ii) has executed
and delivered to the Company an instrument in the form reasonably prescribed by
the Company agreeing to be bound by the terms thereof and of this Agreement and
the Stockholders' Agreement; provided, however, that the rights of FFH under
this Agreement shall not be assignable to any competitor of the Company unless
such assignment is in connection with the sale by FFH of a majority of the
Shares held by them.
"Person" shall mean an individual, corporation, partnership, joint venture,
trust university, or unincorporated organization, or a government or any agency
or political subdivision thereof.
"Prospectus" shall mean the prospectus included in a Registration Statement
at the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
"Qualified Secondary Offering" shall mean a firm underwritten public
offering of Common Stock by a nationally recognized underwriter with aggregate
gross proceeds to the Company of at least $10,000,000 and reflecting a market
value of the Company of at least $200,000,000 immediately prior to such public
offering.
"Register," "registered," and "registration" shall mean a registration
effected by preparing and filing one or more
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Registration Statements in compliance with the Securities Act.
"Registration Delay Limit" shall mean the period, not to exceed, for so
long as this Agreement is in effect, ninety (90) consecutive days, subject to an
aggregate of one-hundred twenty (120) days in any twelve (12) month period,
wherein the Company may delay or suspend a registration of Restricted Stock;
provided, however, that the combined number of days in any such period and any
Lock-up Period contemplated by Section 13 of this Agreement shall not exceed One
Hundred Eighty (180) days in any twelve (12) month period.
"Registration Expenses" shall mean all expenses incurred by the Company in
complying with the Registration Provisions, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees and expenses
(including counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association of Securities
Dealers, Inc., transfer taxes, fees of transfer agents and registrars, and the
reasonable fees and disbursements of one counsel for the sellers of Restricted
Stock, but excluding any Selling Expenses.
"Registration Provisions" shall mean Sections 3, 4, and 5 of this
Agreement.
"Registration Statement" shall mean any registration statement of the
Company relating to the registration for resale of Restricted Stock that is
filed pursuant to the provisions of this Agreement and including the Prospectus
included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
"Restricted Stock" shall mean the Founders' Shares and any other shares of
Common Stock outstanding, but excluding in each case shares of Common Stock
which have been (i)registered under the Securities Act pursuant to an effective
Registration Statement filed thereunder and disposed of in accordance with the
Registration Statement covering them or (ii) publicly sold pursuant to Rule 144
or Rule 701 under the Securities Act:
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"FFH Eligible Sellers" shall have the meaning attributed to such term in
Section 3(a).
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"FFH Demand Notice" shall have the meaning attributed to such term in
Section 3(a).
"Stockholders' Agreement" shall mean the Stockholders' Agreement, dated the
date hereof, among the Company and certain of its stockholders, as amended to
date and as the same may be amended from time to time hereafter.
2. Restrictive Legend. Each certificate representing Restricted Stock shall,
except as otherwise provided in the Registration Provisions, be stamped or
otherwise imprinted with a legend substantially in the form required under the
Stockholders' Agreement.
3. Required Registrations.
(a) Upon the expiration of the lock-up period required by an underwriter in
connection with a Qualified Secondary Offering by the Company of shares of its
Common Stock pursuant to the Securities Act (but in no event later than Six (6)
months following such Qualified Secondary Offering), the holders of Restricted
Stock then owned beneficially or of record by the FFH Investors and Investor
Transferees of FFH (collectively, the "FFH Eligible Sellers") constituting at
least 50% of the total Restricted Stock held by such FFH Eligible Sellers may
request (the "FFH Demand Notice") the Company to register under the Securities
Act all or any portion of the shares of Restricted Stock held by such requesting
holder or holders for sale in the manner specified in such FFH Demand Notice,
provided that the reasonably anticipated aggregate price to the public of such
public offering would be at least $10,000,000.
3. Incidental Registrations.
(a) If the Company proposes to register any of its securities under the
Securities Act for sale to the public, whether for its own account or for the
account of other security holders or both (except with respect to Registration
Statements on Forms ▇-▇, ▇-▇ or another form not available for registering the
Restricted Stock for sale to the public), each such time the Company will give
written notice to all holders of Restricted Stock then owned beneficially or of
record by the FFH Investors and Investor Transferees of FFH (collectively, the
"FFH Eligible Sellers") and Eligible Founders of its intention so to do and of
the proposed method of distribution of such securities (the "Company
Registration Notice"). Upon the written request of any such FFH Eligible Seller
or Eligible Founder, received by the Company within 30 days after the giving of
any such notice by the Company, to register any of its Restricted Stock, the
Company will use its best efforts to cause the Restricted Stock as to which
registration shall have been so requested to be included in the securities to be
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covered by the Registration Statement proposed to be filed by the Company, all
to the extent and under the conditions such registration is permitted under the
Securities Act.
(b) If the Registration Statement as to which the Company gives notice
under this Section 3 is for an underwritten offering, the Company shall so
advise the FFH Eligible Sellers and Eligible Founders. In such event, the right
of any FFH Eligible Seller and Eligible Founder to be included in a registration
pursuant to this Section 3 shall be conditioned upon such FFH Eligible Seller's
and Eligible Founder's participation in such underwriting and the inclusion of
such FFH Eligible Seller's and Eligible Founder's Restricted Stock in the
underwriting to the extent provided herein. All FFH Eligible Sellers and
Eligible Founders participating in an underwritten public offering pursuant to
this Section 3 shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the Company.
Notwithstanding any other provision of the Agreement, if the Company proposes to
register any of its securities under the Securities Act for its own account and
the underwriter determines in good faith that marketing factors require a
limitation of the number of securities to be underwritten, the number of shares
that may be included in the underwriting pursuant to this Section 3 shall be
allocated: first, to the Company; and second, on a pro rata basis among the FFH
Eligible Sellers, the Eligible Founders and security holders other than the FFH
Eligible Sellers and Eligible Founders with incidental registration rights
substantially equivalent to those set forth in this Section 4; provided,
however, that, if such registration is pursuant to an initial public offering of
Common Stock by the Company, the number of shares that may be included in the
underwriting may be limited solely to shares of the Company; and provided
further, however, that, if the FFH Eligible Sellers are limited, participation
in such underwritten offering shall be restricted to the Company and the FFH
Eligible Sellers.
(c) Notwithstanding the foregoing provisions, the Company may withdraw any
Registration Statement referred to in this Section 3 which it initially proposed
to file to register newly issued securities for sale in its sole discretion
without thereby incurring any liability to the holders of Restricted Stock, and
the FFH Eligible Sellers holding Restricted Stock included in the offering
covered by such Registration Statement at the time of such withdrawal shall
thereupon continue to be entitled to the registration rights under this
Agreement in respect of such Restricted Stock.
5. Registration Procedures. If and whenever the Company is required to include
shares of Restricted Stock in a registration subject to Section 3, the Company
will, as expeditiously as possible:
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(a) use its best efforts to effect such registration to permit the sale of
the Restricted Stock being sold in accordance with the intended method or
methods of distribution thereof, and pursuant thereto prepare and file with the
Commission a Registration Statement on any appropriate form under the Securities
Act, which form shall be available for the sale of the Restricted Stock in
accordance with the intended method or methods of distribution thereof for the
period of the distribution contemplated hereby(determined as hereinafter
provided) and otherwise in accordance with the provisions hereof;
(b) use its reasonable best efforts to keep such Registration Statement
continuously effective for the period of the distribution contemplated hereby
(determined as hereinafter provided). Upon the occurrence of any event that
would cause any such Registration Statement or the Prospectus contained therein
(i) to contain an untrue statement of material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading or (ii) not to be
effective and usable for resale of the Restricted Stock during the period
required by this Agreement, the Company shall, subject to the Registration Delay
Limit, file promptly an appropriate amendment to such Registration Statement or
a supplement to the Prospectus, as applicable, curing such defect, and, in the
case of an amendment, use its best efforts to cause such amendment to be
declared effective as soon as practicable;
(c) prepare and file with the Commission such amendments and post-effective
amendments to the applicable Registration Statement as may be necessary to keep
such Registration Statement continuously effective for the period of
distribution as contemplated hereby (determined as hereinafter provided); cause
the Prospectus to be supplemented by any required Prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 under the Securities Act, and
to comply fully with Rules 424, 430A and 462, as applicable, under the
Securities Act in a timely manner; and comply with the provisions of the
Securities Act with respect to the disposition of all Restricted Stock covered
by such Registration Statement during the applicable period in accordance with
the participating FFH Eligible Sellers' and Eligible Founders' intended method
of disposition set forth in such Registration Statement for such period;
(d) advise the FFH and Eligible Founders promptly and, if requested by such
FFH Eligible Sellers and Eligible Founders, confirm such advice in writing, (i)
when the Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to any applicable Registration Statement or any
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post-effective amendment thereto, when the same has become effective, (ii) of
any request by the Commission for amendments to the Registration Statement or
amendments or supplements to the Prospectus or for additional information
relating thereto,(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the Securities
Act or of the suspension by any state securities commission of the qualification
of the Restricted Stock for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, and (iv) of the
existence of any fact or the happening of any event that makes any statement of
a material fact made in the Registration Statement, the Prospectus, any
amendment or supplement thereto or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes in
the Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes in the
Prospectus in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption from
qualification of the Restricted Stock under state securities or Blue Sky laws,
the Company shall use its best efforts to obtain the withdrawal or lifting of
such order at the earliest possible time;
(e) subject to Section 4(b) hereof, if any fact or event contemplated by
Section 4(d)(iv) hereof shall exist or have occurred, prepare a supplement or
post-effective amendment to the Registration Statement or related Prospectus or
any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Restricted Stock,
the Prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The FFH
Eligible Sellers and Eligible Founders agree, upon receipt of notice by the
Company of any fact or event contemplated by Section 6(d)(iv) hereof, forthwith
to cease making offers and sales of Restricted Stock pursuant to such
Registration Statement or deliveries of the Prospectus contained therein for any
purpose until the Company has prepared and furnished such amendment or
supplement to the Prospectus as may be necessary so that, as thereafter
delivered to purchasers of such Restricted Stock, such Prospectus shall not
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 not
misleading in the light of the circumstances then existing;
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(f) furnish to each participating FFH Eligible Seller and Eligible Founder
and to each underwriter, before filing with the Commission, copies of any
Registration Statement or any Prospectus included therein or any amendments or
supplements to any such Registration Statement or Prospectus (including all
documents incorporated by reference after the initial filing of such
Registration Statement), which sections of such documents that are applicable to
the participating FFH Eligible Seller or Eligible Founder will be subject to the
review and comment of such persons, if any (any of which comments the Company,
in its reasonable discretion, may reject), for a period of at least five
Business Days, and the Company will not file any such Registration Statement or
Prospectus or any amendment or supplement to any such Registration Statement or
Prospectus (including all such documents incorporated by reference) to which a
participating FFH Eligible Seller or Eligible Founder shall reasonably object
within five Business Days after the receipt thereof;
(g) promptly prior to the filing of any document that is to be incorporated
by reference into a Registration Statement or Prospectus, provide copies of such
document to each participating FFH Eligible Seller and Eligible Founder and to
each underwriter, make the Company's representatives available for discussion of
such document and other customary due diligence matters, and include such
information in such document prior to the filing thereof as such participating
FFH Eligible Seller and Eligible Founder may reasonably request;
(h) make available for inspection upon reasonable notice during the
Company's regular business hours by each participating FFH Eligible Seller and
Eligible Founder, any underwriter participating in any distribution pursuant to
such Registration Statement, and any attorney, accountant or other agent
retained by such FFH Eligible Seller, Eligible Founder or underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such FFH Eligible Seller, Eligible
Founder, underwriter, attorney, accountant or agent in connection with such
Registration Statement or any post-effective amendment thereto subsequent to the
filing thereof and prior to its effectiveness;
(i) if requested by the participating FFH Eligible Sellers and Eligible
Founders, promptly include in the Registration Statement or Prospectus, pursuant
to a supplement or post-effective amendment if necessary, such corrective,
supplementary or like information as the participating FFH Eligible Sellers and
Eligible Founders may reasonably request to have included therein; and make all
required filings of such Prospectus supplement or post-effective amendment
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as soon as practicable after the Company is notified of the matters to be
included in such Prospectus supplement or post-effective amendment;
(j) furnish to each participating FFH Eligible Seller and Eligible Founder
and to each underwriter, without charge, such number of copies of the
Registration Statement and the Prospectus included therein (including each
preliminary prospectus) as such persons reasonably may request in order to
facilitate the public sale or other disposition of the Restricted Stock covered
by such Registration Statement;
(k) prior to any public offering of Restricted Stock, use its best efforts
to register or qualify the Restricted Stock covered by such Registration
Statement under the securities or "blue sky" laws of such jurisdictions as the
sellers of Restricted Stock or, in the case of an underwritten public offering,
the underwriter reasonably shall request and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Restricted Stock covered by the applicable Registration Statement; provided,
however, that the Company shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any jurisdiction
where it is not so qualified or to consent to general service of process in any
such jurisdiction other than as to matters and transactions relating to the
Registration Statement;
(l) use its best efforts to list the Restricted Stock covered by such
Registration Statement with any securities exchange on which the Common Stock of
the Company is then listed;
(m) use its best efforts to cause the disposition of the Restricted Stock
covered by the Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof to consummate the disposition of such Restricted
Stock, subject to the proviso contained in clause (k) above;
(n) in connection with any sale of Restricted Stock that will result in
such securities no longer being Restricted Stock, cooperate with the FFH to
facilitate the timely preparation and delivery of certificates representing
Restricted Stock to be sold and not bearing any restrictive legends; and to
register such Restricted Stock in such denominations and such names as the
selling FFH Shareholders may request at least two Business Days prior to such
sale of Restricted Stock;
(o) if the offering is underwritten and at the request of any participating
FFH Eligible Seller or Eligible Founder, enter into such agreements (including
underwriting agreements) and make
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such reasonable representations and warranties and take all such other
reasonable actions in connection therewith in order to expedite or facilitate
the disposition of the Restricted Stock pursuant to any applicable Registration
Statement contemplated by this Agreement as may be reasonably requested by the
participating FFH Eligible Seller or Eligible Founder in connection with any
sale or resale pursuant to any applicable Registration Statement; in such
connection, the Company shall upon request of any participating FFH Eligible
Seller or Eligible Founder, furnish (or in the case of clauses (ii) and (iii),
use its best efforts to cause to be furnished) to such FFH Eligible Seller and
Eligible Founder, on the date that Restricted Stock is delivered to the
underwriters for sale pursuant to such registration: (i) such documents and
certificates as may be reasonably requested by the participating FFH Eligible
Sellers and Eligible Founders to evidence compliance with the applicable matters
covered in this Section 4, (ii) a letter, dated such date, from the Company's
independent certified public accountants in form and substance as is customarily
given by independent certified public accountants to underwriters in an
underwritten public offering, and (iii) an opinion, dated as of such date, of
counsel representing the Company covering substantially the same matters with
respect to such Registration Statement as are customarily covered in opinions of
issuer's counsel delivered to underwriters with respect to similar registration
statements in underwritten public offerings, addressed to the participating FFH
Eligible Sellers and Eligible Founders and the underwriters;
(p) otherwise use its best efforts to comply with all applicable rules and
regulations of the Commission, and make generally available to its security
holders with regard to any applicable Registration Statement, as soon as
practicable (but not sooner than the filing deadline of the last quarterly
report included therein), a consolidated earnings statement meeting the
requirements of Rule 158 of the Securities Act (which need not be audited)
covering a twelve-month period beginning after the effective date of the
Registration Statement (as such term is defined in Rule 158(c) under the
Securities Act); and
(q) if such documents are not readily available on the Commission's ▇▇▇▇▇
database, or any successor thereto, provide promptly to FFH, upon request, each
document filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
For purposes of Section 3(b) the period of distribution of Restricted Stock
in a firm commitment underwritten public offering shall be deemed to extend
until the earlier of (i) one hundred twenty (120) days or (ii) the date on which
each underwriter has completed the distribution of all securities purchased by
it,
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and the period of distribution of Restricted Stock in any other registration
shall be deemed to extend until the earlier of (i) 120 days or (ii) the date
upon which the underwriter, if any, terminates the lock-up agreements applicable
to such distribution.
In connection with each registration hereunder, the FFH Eligible Sellers
and Eligible Founders participating shall (a) provide such information and
execute such documents as may reasonably be required in connection with such
registration, (b) agree to sell Restricted Stock on the basis provided in any
underwriting arrangements and (c) complete and execute all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements, which arrangements
shall not be inconsistent herewith.
In connection with each registration pursuant to any Registration Provision
covering an underwritten public offering, the Company and each participating FFH
Eligible Seller and Eligible Founder agree to enter into a written agreement
with the lead underwriter in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
underwriter and companies of the Company's size and investment stature.
5. Conditions to Registration Obligations. The Company shall not be obligated to
effect the registration of the Restricted Stock pursuant to Section 3 unless the
participating FFH Eligible Sellers and Eligible Founders consent to customary
conditions of a reasonable nature, including the following:
(a) conditions prohibiting the sale of Restricted Stock by the
participating FFH Eligible Sellers and Eligible Founders until the registration
is effective;
(b) conditions requiring the participating FFH Eligible Sellers and
Eligible Founders to comply with all applicable provisions of the Securities Act
and the Exchange Act including, but not limited to, the prospectus delivery
requirements of the Securities Act, and to furnish to the Company information
about sales made in such public offering;
(c) subject to the Registration Delay Limit, conditions prohibiting the
participating FFH Eligible Sellers and Eligible Founders upon receipt of
telegraphic or written notice from the Company that it is required by law to
correct or update the registration statement or prospectus from effecting sales
of the Restricted Stock until the Company has completed the necessary correction
or updating, provided, that the Company shall use its best efforts to promptly
complete such necessary correction or updating; and
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(d) conditions prohibiting the participating FFH Eligible Sellers and
Eligible Founders from selling all or substantially all of the Restricted Stock
of such participating FFH Eligible Sellers and Eligible Founders in a block
trade at a discount of more than the lesser of 10% and two (2) times the then
standard discount for block trades of similar size and of similar securities
issued by entities with financial condition and prospects similar to the Company
at such time.
6. Expenses. The Company will pay all Registration Expenses in connection with
each Registration Statement pursuant to Section 3 hereof. All Selling Expenses
attributable to the sale of securities by FFH Eligible Sellers or Eligible
Founders in connection with each Registration Statement under any Registration
Provision shall be borne by the participating FFH Eligible Sellers and Eligible
Founders in proportion to the number of shares sold by each, or by such
participating FFH Eligible Sellers and Eligible Founders as they may agree; and
all Selling Expenses attributable to the sale of securities by the Company in
connection with any Registration Provision shall be borne by the Company.
7. Indemnification and Contribution.
(a) In the event of a registration of any of the Restricted Stock under the
Securities Act pursuant to any Registration Provision, the Company will
indemnify and hold harmless each FFH Eligible Seller and Eligible Founder
thereunder and each underwriter of such Restricted Stock thereunder and each
other Person, if any, who controls such FFH Eligible Seller, Eligible Founder or
underwriter (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act), against any losses, claims, damages, liabilities or
judgments, joint or several, as incurred (including, without limitation, any
legal or other expenses incurred in connection with investigating or defending
any matter, including any action that could give rise to any such losses,
claims, damages, liabilities or judgments), to which such FFH Eligible Seller,
Eligible Founder underwriter 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 (i)
any untrue statement or alleged untrue statement of any material fact contained
in any Registration Statement, preliminary prospectus or Prospectus (or any
amendment or supplement thereto) provided by the Company to any FFH Investor,
underwriter, each other Person, if any, who controls such FFH Eligible Seller,
Eligible Founder or underwriter within the meaning of the Securities Act or any
prospective purchaser of Restricted Stock, (ii) 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, or (iii) any violation by the
Company of the Securities
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Act, and will pay the legal fees and other expenses, as incurred, of each such
FFH Eligible Seller, each such Eligible Founder, each such underwriter and each
such controlling Person incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action, provided, however,
that the Company will not be liable in any such case if and to the extent that
any such loss, claim, damage, liability or judgment arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in reliance upon and in conformity with information furnished
by any such FFH Eligible Seller, any such Eligible Founder, any such underwriter
or any such controlling Person, in each case, in writing specifically for use in
such Registration Statement or Prospectus.
(b) In the event of a registration of any of the Restricted Stock under the
Securities Act pursuant to any Registration Provision, each FFH Eligible Seller
and Eligible Founder thereunder, severally and not jointly, will indemnify and
hold harmless the Company, its directors and officers, and each Person, if any,
who controls (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) the Company, to the same extent as the foregoing
indemnity from the Company set forth in Section 6(a) hereof, but only with
reference to information relating to such FFH Eligible Seller or such Eligible
Founder, as the case may be, furnished in writing to the Company by such FFH
Eligible Seller or such Eligible Founder expressly for use in any Registration
Statement. In no event shall any FFH Eligible Seller, Eligible Founder or its or
their directors, officers or any Person who controls such FFH Eligible Seller or
Eligible Founder be liable or responsible for any amount in excess of the gross
proceeds (after deducting underwriting discounts and selling commissions)
received by such FFH Eligible Seller or Eligible Founder with respect to its
sale of Restricted Stock pursuant to a Registration Statement.
(c) In case any action shall be commenced involving any Person in respect
of which indemnity may be sought pursuant to Section 7(a) or 9(b) (the
"indemnified party"), the indemnified party shall promptly notify the Person
against whom such indemnity may be sought (the "indemnifying Person") in
writing; provided, however, that failure of an indemnified party to provide such
notice shall not relieve an indemnifying Person of its obligations under this
Section 6 if such failure does not materially and adversely affect the rights of
such indemnifying Person. The indemnifying party may assume the defense of such
action provided that the expenses of the indemnified party are reimbursed as
they are incurred (including, without limitation, the payment of all fees and
expenses of counsel to the indemnified party) and such indemnifying party has
not failed to comply with any such reimbursement request. Any indemnified party
shall have the right to employ separate counsel
13
in any such action and participate in the defense thereof, but the reasonable
fees and expenses of such counsel shall be at the expense of the indemnified
party, unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or (iii) 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 reasonably advised by such counsel that the representation of the
indemnifying party and the indemnified party by the same counsel would be
inappropriate due to actual or potential differing interests between the
indemnifying party and the indemnified party (in which case the indemnifying
party shall not have the right to assume the defense of such action on behalf of
the indemnified party). In any such case, the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) for all
indemnified parties and all such reasonable fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in writing by a
majority of the FFH Eligible Sellers and Eligible Founders, in the case of the
parties indemnified pursuant to Section 9(a), and by the Company, in the case of
parties indemnified pursuant to Section 9(b). The indemnifying party shall
indemnify and hold harmless the indemnified party from and against any and all
losses, claims, damages, liabilities and judgments by reason of any settlement
of any action (i) effected with the indemnifying party's written consent or (ii)
effected without the indemnifying party's written consent if the indemnifying
party is adjudicated by a court of competent jurisdiction to have breached its
obligations under this Section 7 and the indemnified party enters into a
settlement more than twenty Business Days after the indemnifying party shall
have received a request from the indemnified party for reimbursement for the
reasonable fees and expenses of counsel (in any case where such reasonable fees
and expenses are at the expense of the indemnifying party) and, prior to the
date of such settlement, the indemnifying party shall have failed to comply with
such reimbursement request. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement or compromise
of, or consent to the entry of judgment with respect to, any pending or
threatened action in respect of which the indemnified party is or could have
been a party and indemnity or contribution may be or could have been sought
hereunder by the indemnified party, unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability on claims that are or could have been the subject matter of such
action and (ii) does not
14
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this Section 7
is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the one
hand, and the FFH Eligible Sellers and Eligible Founders, on the other hand,
from their sale of Restricted Stock or (ii) if the allocation provided by clause
(i) of this Section 7(d) is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in such
clause (i) but also the relative fault of the Company, on the one hand, and of
the FFH Eligible Seller and Eligible Founder, on the other hand, in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand, and of the
FFH Eligible Seller and Eligible Founder, on the other hand, 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 by the FFH Eligible Seller and Eligible Founder, on the other hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities or
judgments referred to above shall be deemed to include, subject to the
limitations set forth in Section 9(c), any legal or other fees or expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any matter, including any action that could have given rise to such
losses, claims, damages, liabilities or judgments.
The Company and each FFH Eligible Seller and Eligible Founder agree that it
would not be just and equitable if contribution pursuant to this Section 9(d)
were determined by pro rata allocation (even if the FFH Eligible Sellers and
Eligible Founders were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. Notwithstanding the
provisions of this Section 6, no FFH Eligible Seller, Eligible Founder, its or
their directors or officers or any Person, if any, who controls such FFH
Eligible Seller or Eligible Founder shall be required to contribute, in the
15
aggregate, any amount in excess of the gross proceeds (after deducting
underwriting discounts and selling commissions) received by such FFH Eligible
Seller or Eligible Founder with respect to its sale of Restricted Stock pursuant
to a Registration Statement. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. The FFH Eligible Sellers' and Eligible Founders' obligations
to contribute pursuant to this Section 7(d) are several in proportion to the
respective shares of Restricted Stock held by each FFH Eligible Seller and
Eligible Founder hereunder and not joint.
8. Changes in Common Stock or Preferred Stock. If, and as often as, there is any
change in the Common Stock or the Preferred Stock by way of a stock split, stock
dividend, combination or reclassification, or through a merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof so that the rights and
privileges granted hereby shall continue with respect to the Common Stock or the
Preferred Stock as so changed.
9. Rule 144 Reporting and Rule 144A Information. With a view to making available
the benefits of certain rules and regulations of the Commission that may at any
time permit the resale of the Restricted Stock without registration, the Company
will:
(a) at all times after 90 days after any Registration Statement covering a
public offering of securities of the Company under the Securities Act shall have
become effective:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(ii) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(iii) furnish to each FFH Eligible Seller and Eligible Founder
forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of such Rule 144 and of the
Securities Act and the Exchange Act; and
(b) at any time, at the request of any FFH Eligible Seller or Eligible
Founder, make available to such FFH Eligible Seller or Eligible Founder, as the
case may be, and to any prospective transferee of Preferred Stock or shares of
Restricted Stock the information concerning the Company described in Rule
144A(d)(4) under the Securities Act.
16
10. Representations and Warranties of the Company. The Company represents and
warrants to the FFH Investors and Founders, as of the date hereof, as follows:
(a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action and will not
cause a material violation of any provision of any law applicable to the
Company, any order of any court or other agency of government applicable to the
Company, the Certificate of Incorporation or By-laws of the Company or any
provision of any indenture, agreement or other instrument to which it or any or
its properties or assets is bound, conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument or result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company.
(b) This Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company, enforceable
in accordance with its terms, subject to laws of general application from time
to time in effect affecting creditors' rights and the exercise of judicial
discretion in accordance with general equitable principles.
11. Lock-Up Period Agreements. In connection with any underwritten public
offering of the Company's securities, FFH hereby agrees, and FFH shall secure
the agreement of any Investor Transferee, upon request of the Company or the
lead underwriter, not to sell or otherwise transfer or dispose of any securities
of the Company held by such person for a period (the "Lock-Up Period") following
the effective date of a registration statement of the Company filed under the
Securities Act with respect to such offering. The Lock-Up Period shall not
exceed 180 days after such effective date for any secondary Offering. No Lock-Up
Period agreement shall apply under this Section 12 to any public offering unless
each executive officer, director, and holder of at least 1.5% of the outstanding
shares of Common Stock of the Company shall enter into the same Lock-Up Period
agreement or a Lock-Up Period agreement more favorable to the Company in respect
of such public offering. In the event that the provisions set forth in Section
4(b) of this Agreement prevent FFH Investor from registering its Restricted
Stock pursuant to Section 3(a) of this Agreement in a public offering by the
Company, FFH shall not be subject to the Lock-Up Period agreement set forth in
this Section 12 during such offering.
12. Miscellaneous.
(a) Successors and Assigns. This Agreement shall inure to the
17
benefit of and be binding upon the successors and assigns of each of the
parties, including, without limitation, Investor Transferees; provided that
nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Restricted Stock in violation of the terms hereof or of the Stock
Purchase Agreement or the Stockholders' Agreement; provided, further, that the
rights of the FFH hereunder shall not be assignable to any competitor of the
Company unless such assignment is in connection with the sale by FFH of a
majority of the Restricted Stock held by FFH and notice of such assignment and
the identity of such transferee is provided to the Company. If any transferee of
FFH shall acquire Restricted Stock in any manner, whether by operation of law or
otherwise, such Restricted Stock shall be held subject to all of the terms of
this Agreement, and by taking and holding such Restricted Stock such Person
shall be conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement, including the restrictions on resale
set forth in this Agreement and, if applicable, the Stock Purchase Agreement and
Stockholders' Agreement, and such Person shall be entitled to receive the
benefits hereof.
(b) Remedies. Each party to this Agreement acknowledges and agrees that any
failure by such party to comply with such party's obligations hereunder may
result in material irreparable injury to the other parties hereto for which
there is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of any such failure,
the other parties may seek such relief as may be required to specifically
enforce the breaching party's obligations hereunder. Each party further agrees
to waive the defense in any action for specific performance that a remedy at law
would be adequate.
(c) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier with
confirmation and followed promptly by hard copy in accordance with this
provision, or courier guaranteeing reasonably prompt delivery and recognized for
high quality service:
(i) if to FFH, at
c/o First Frontier Holdings, Inc.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
18
(ii) if to the Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇, CEO
or, in any case, at such other address or addresses as shall have been furnished
in writing by one party to the other parties in accordance with the provisions
of this Section 14(c).
All such notices and communications shall be deemed to have been duly
given: at the time delivered, if delivered by hand, telex or by courier; five
(5) business days after being deposited in the mail, if mailed; and when receipt
acknowledged, if telecopied.
(d) Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflict of law rules thereof, applicable to contracts made and to be performed
within such State.
(e) Submission to Jurisdiction. Each of the parties hereto hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts of the State of New York and of the United States of America, in
each case located in the County of New York, for any action, proceeding or
investigation in any court or before any governmental authority ("Litigation")
arising out of or relating to this Agreement and the transactions contemplated
hereby (and agrees not to commence any Litigation relating thereto except in
such courts). Each of the parties hereto hereby irrevocably and unconditionally
waives any objection to the laying of venue of any Litigation arising out of
this Agreement or the transactions contemplated hereby in the courts of the
State of New York or the United States of America, in each case located in the
County of New York, and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such Litigation
brought in any such court has been brought in an inconvenient forum.
(f) No Inconsistent Agreements. The Company will not, on or after the date
of this Agreement, enter into any agreement with respect to its securities that
is inconsistent with the rights granted to FFH Investors in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to FFH
hereunder do not in conflict in any material respect with and are not
inconsistent with the rights granted to the holders of the
19
Company's securities under any agreement in effect on the date hereof. The
Company shall not grant to any third party any registration rights that are more
favorable than, inconsistent with, or equivalent to any of those contained
herein, so long as any of the registration rights under this Agreement remains
in effect.
(g) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given, unless (i) in the case of this Section
13(g), the Company has obtained the written consent of each FFH Eligible Seller
and (ii) in the case of all other provisions hereof, the Company has obtained
the written consent of the FFH Eligible Sellers holding a majority of the
outstanding shares of Restricted Stock (excluding Restricted Stock held by the
Company or any of its affiliates (as defined in Rule 144 under the Securities
Act)).
(h) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. In proving this Agreement
it shall not be necessary to produce or account for more than one such
counterpart executed by the party against whom enforcement is sought.
(i) Termination. This Agreement and the rights granted herein with respect
to any FFH Eligible Seller or Eligible Founder shall terminate on the earlier of
(i) the seventh (7th) anniversary of a Qualified Initial Public Offering and
(ii) such time that all of the Restricted Stock held by such FFH Eligible Seller
or Eligible Founder can be sold under Rule 144(k) promulgated under the
Securities Act.
(j) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(k) Severability. If any provision of this Agreement shall be held to be
illegal, invalid or unenforceable such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement unless the effect thereof would be to alter materially the effect of
this Agreement, and this Agreement (if not so altered) shall be carried out as
if any such illegal, invalid or unenforceable provision were not contained
herein.
(l) Delays or Omissions. It is agreed that no delay or omission to exercise
any right, power or remedy on the part of any party upon any breach or default
of any party to this Agreement shall
20
impair any such right, power or remedy, nor shall it be construed to be a waiver
of any such breach or default, or any acquiescence therein, or of any similar
breach or default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. It is further agreed that any waiver, permit, consent
or approval of any kind or character on any party of any breach or default under
this Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing and that all remedies either under this
Agreement, or by law otherwise afforded to any party, shall be cumulative and
not alternative.
(m) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Restricted
Stock. This Agreement supersedes all prior agreements and understandings between
the parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
▇▇▇▇▇▇▇.▇▇▇, Inc.
By: _________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
By: _________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
First Frontier Holdings, Inc.
By: __________________________
▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer and
President
21
