REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of October 28, 1998 (this
"Agreement") between Inco Limited, a corporation continued under the laws of
Canada (the "Investor"), and Special Metals Corporation, a Delaware corporation
(the "Company").
W I T N E S S E T H:
WHEREAS, in connection with the closing of the transactions
contemplated by the Investment Agreement, dated as of the date hereof (the
"Investment Agreement"), between the Company and the Investor, the parties have
agreed to enter into this Agreement, which sets forth certain registration
rights applicable to the Registrable Securities (as defined below) held from
time to time by the Investor and/or certain permitted transferees;
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and subject to the conditions and
upon the terms hereof, the parties hereto hereby agree as follows:
1. Definitions. Capitalized terms used herein without definition shall
have their respective meanings set forth in the Investment Agreement. As used
herein, unless the context otherwise requires, the following terms have the
following respective meanings:
"Certificate of Designation" shall mean the Certificate of Designation
of Rights and Preferences establishing the terms and relative rights and
preferences of the Convertible Preferred Securities.
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Common Stock" shall mean and include (i) Common Stock, par value $0.01
per share, of the Company, (ii) each other class of capital stock of the Company
that does not have a preference over any other class of capital stock of the
Company as to dividends or upon liquidation, dissolution or winding up of the
Company, and (iii) any class of capital stock or securities into which or for
which shares of Common Stock or any other class of capital stock or securities
described in clauses (ii) or (iii) may hereafter be changed, converted or
exchanged or which are issued to holders of shares of Common Stock or any other
class of capital stock or securities described in clauses (ii) or (iii) upon any
reorganization, recapitalization, reclassification, share combination, share
subdivision, share dividend, merger, consolidation or similar transactions or
events.
"Conversion Shares" shall mean and include the shares of Common Stock
issuable upon conversion of the Convertible Preferred Securities in accordance
with the terms of the Certificate of Designation.
"Convertible Preferred Securities" shall mean and include (i) the
6.625% Series A Senior Convertible Preferred Stock (Liquidation Amount $50.00
per Convertible Preferred Security) of the Company and (ii) any class of capital
stock or securities into which or for which Convertible Preferred Securities or
any other class of capital stock or securities described in this clause (ii) may
hereafter be changed, converted or exchanged (in each case, other than pursuant
to its terms) or which are issued to holders of Convertible Preferred Securities
or any other class of capital stock or securities described in this clause (ii)
upon any reorganization, recapitalization, reclassification, share combination,
share subdivision, share dividend, merger, consolidation or similar transactions
or events.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any superseding Federal statute, and the rules and regulations promulgated
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Exchange Act of 1934, as amended, shall
include a reference to the comparable section, if any, of any such superseding
Federal statute.
"First Offer Price" is defined in Section 2.1(a).
"a majority of the Registrable Securities" shall mean (i) more than 50%
of the shares of the issued and outstanding Registrable Securities if the
Registrable Securities are shares of capital stock or rights or warrants to
acquire capital stock, (ii) more than 50% of the aggregate principal amount of
the issued and outstanding Registrable Securities if the Registrable Securities
are debt securities or (iii) more than 50% of the aggregate liquidation amount
of the issued and outstanding Registrable Securities if the Registrable
Securities are Convertible Preferred Securities. If there is more than one class
of Registrable Securities, the term "a majority of the Registrable Securities"
shall mean a majority of the Registrable Securities, assuming for purposes of
this definition, that all such securities have been converted into securities of
the same class.
"Offered Securities" is defined in Section 2.6(a).
"Person" means any individual, firm, corporation, partnership, limited
liability company or partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind and shall include any
successor (by merger or otherwise) of such entity.
"Principal Stockholders" is defined in Section 2.1(a).
"Principal Stockholders' Registration Agreement" is defined in Section
2.1(a).
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"Principal Stockholders' Securities" is defined in Section 2.1(b).
"Registrable Securities" means the Convertible Preferred Securities,
the Conversion Shares and any other securities of the Company, in each case,
acquired pursuant to the terms of the Investment Agreement. As to any particular
Registrable Securities, once issued, such securities shall cease to be
Registrable Securities when (a) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (b) they shall have been sold as permitted by Rule 144 (or any
successor provision) under the Securities Act, (c) they shall have been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent public distribution of them shall not require registration of such
distribution under the Securities Act or (d) they shall have ceased to be
outstanding. All references to percentages of Registrable Securities shall be
calculated pursuant to Section 12.
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with Section 2, including, without limitation, all
registration and filing fees, all fees of the NASDAQ National Market, any
national securities exchange or the National Association of Securities Dealers,
Inc., all fees and expenses of the Company of complying with securities or blue
sky laws (if any), all word processing, duplicating and printing expenses,
messenger and delivery expenses of the Company, the fees and disbursements of
counsel for the Company and of the Company's independent public accountants,
including the expenses of "comfort" letters required by or incident to such
performance and compliance, any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities (excluding any underwriting
discounts or commissions or transfer taxes with respect to the Registrable
Securities) and the reasonable fees and expenses of one counsel to the Selling
Holders (selected by the Selling Holders representing a majority of the
Registrable Securities covered by such registration statement); provided,
however, that in the event the Company shall determine, in accordance with
Section 2.1(a), not to register any securities with respect to which it had
given written notice of its intention to so register to holders of Registrable
Securities, all of the costs of the type (and subject to any limitation to the
extent) set forth in this definition and incurred by Selling Holders in
connection with such registration on or prior to the date the Company notifies
the Selling Holders of such determination shall be deemed Registration Expenses.
"Second Offer Price" is defined in Section 2.6(b).
"Selling Holders" is defined in Section 2.1(a).
"Securities Act" means the Securities Act of 1933, as amended, or any
superseding Federal statute, and the rules and regulations promulgated
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act of 1933, as amended, shall include a
reference to the comparable section, if any, of any such superseding Federal
statute.
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"Timet" means Timet Finance Management Company, a Delaware corporation.
"Timet Registration Rights Agreement" means the Registration Rights
Agreement, dated the date hereof, between Timet Finance Management Company and
the Company, as amended from time to time.
2. Registration Under Securities Act, etc.
2.1 Piggy-back Registration.
(a) Right to Include Registrable Securities. Except in
connection with an exclusive demand registration pursuant to Section 2.1 of the
Timet Registration Rights Agreement or Section 2.1 of the Registration Rights
Agreement (the "Principal Stockholders' Registration Agreement"), dated as of
February 25, 1997, among Societe Industrielle de Materiaux Avances, LWH Holding
S.A. and Advanced Materials Investments Holding S.A. (collectively, the
"Principal Stockholders"), as in effect on the date hereof, if the Company at
any time after the second anniversary of the date of this Agreement, proposes to
register any of its Common Stock under the Securities Act by registration on any
form other than Forms S-4 or S-8, or a Form S-1 relating to securities to be
issued in connection with a merger or similar transaction, whether or not for
sale for its own account, it will each such time give prompt written notice to
all registered holders of Registrable Securities of its intention to do so and
of such holders' rights under this Section 2.1(a). Upon the written request of
any such holder made as promptly as practicable and in any event within 10 days
after the receipt of any such notice from the Company (which request shall
specify the Registrable Securities intended to be disposed of by such holder and
the selling price (the "First Offer Price") which is acceptable to such holder,
as determined in good faith by such holder), the Company will use its best
efforts to effect the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the holders
thereof (all such holders are referred to herein as the "Selling Holders");
provided, that prior to the effective date of the registration statement filed
in connection with such registration, immediately upon notification to the
Company from the managing underwriter of the price at which such securities are
to be sold, if such price is below the First Offer Price which any Selling
Holder shall have indicated to be acceptable to such Selling Holder, the Company
shall so advise such Selling Holder of such price, and such Selling Holder shall
then have the right to withdraw its request to have its Registrable Securities
included in such registration statement; and provided, further, however, that
any sale of Offered Securities pursuant to the registration provisions of this
Section 2.1(a) shall, pursuant to Section 2.6(a), be subject to the Company's
prior right of first refusal set forth in Section 6 of the Investment Agreement
and shall be subject to the additional purchase rights of the Company set forth
in Section 2.6(b). If, at any time after giving written notice of its intention
to register any securities and prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to register or to delay registration of such
securities, the Company shall give written notice of such
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determination to each Selling Holder of Registrable Securities and (x) in the
case of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from any obligation of the Company to pay the Registration Expenses in
connection therewith), and (y) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable Securities,
for the same period as the delay in registering such other securities.
(b) Priority in Piggy-back Registrations. If the managing
underwriter of any underwritten offering or, in the case of any offering that is
not underwritten, a nationally recognized investment banking firm shall advise
the Company (and the Company shall in each case so advise each Selling Holder of
Registrable Securities requesting registration of such advice in writing) that,
in its opinion, the number or type of Registrable Securities requested to be
included in such registration would materially adversely affect such offering or
the market for the Company's securities, then the Company will include in such
registration, to the extent of the number and type of securities which the
Company is so advised can be sold in (or during the time of) such offering,
first, all securities of the Company proposed by the Company to be sold for its
own account, or, in the case of a secondary offering made pursuant to demand
registration rights granted to any Person other than a holder of Registrable
Securities, all securities of the Company that such Person proposes to sell;
second, all securities, if any (the "Principal Stockholders' Securities"),
proposed by the Company to be sold for the account of the Principal Stockholders
pursuant to the exercise of their piggy-back registration rights under the
Principal Stockholders' Registration Rights agreement; third, all Registrable
Securities, if any, requested to be included in such registration pursuant to
the Timet Registration Rights Agreement (pro rata, based on the number of
Registrable Securities requested to be included by each holder thereunder);
fourth, such Registrable Securities requested to be included in such
registration pursuant to this Agreement (pro rata, based on the number of
Registrable Securities requested to be included by each Selling Holder
hereunder) among such Selling Holders; and fifth, all securities of the Company
to be sold for the account of a Person other than a holder of Registrable
Securities or Principal Stockholder Securities, as the case may be.
(c) Expenses. The Company will pay all Registration Expenses
in connection with any registration contemplated pursuant to this Section 2.1.
2.2 Registration Procedures. If and whenever the Company is required to
use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Section 2.1, the Company will, as
expeditiously as possible:
(i) prepare and (within 90 days after the end of the period
within which requests for registration may be given to the Company)
file with the Commission the requisite registration statement to effect
such registration and thereafter use its commercially reasonable best
efforts to cause such
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registration statement to become effective; provided, however, that the
Company may discontinue any registration of securities that are not
Registrable Securities (and, under the circumstances specified in
Section 2.1(a) and (b), Registrable Securities) at any time prior to
the effective date of the registration statement relating thereto;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Securities
covered by such registration statement until such time as all of such
Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set
forth in such registration statement; provided, that except with
respect to any such registration statement filed pursuant to Rule 415
under the Securities Act, such period need not exceed 180 days;
(iii) furnish to each seller of Registrable Securities, such
number of conformed copies of such registration statement and of each
such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the
Securities Act, and such other documents, as such seller may reasonably
request;
(iv) make any filings (if any) required under the blue sky or
securities laws of such States of the United States of America as the
sellers of Registrable Securities covered by such registration
statement shall reasonably request;
(v) furnish at the effective date of such registration
statement and/or on the date of closing under the underwriting
agreement, as the case may be, to each seller of Registrable
Securities, and to the underwriters, if any, a signed counterpart of:
(x) an opinion of counsel for the Company dated the
effective date of such registration statement and, if
applicable, the date of the closing under the underwriting
agreement, and
(y) a "comfort" letter signed by the independent
public accountants who have certified the Company's financial
statements included or incorporated by reference in such
registration statement, covering substantially the same
matters with respect to such registration statement (and the
prospectus included
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therein) and, in the case of the accountants' comfort letter,
with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions
of issuer's counsel and in accountants' comfort letters
delivered to the underwriters in underwritten public offerings
of securities and, in the case of the accountants' comfort
letter, such other financial matters, and, in the case of the
legal opinion, such other legal matters, as counsel for the
seller or sellers of Registrable Securities may reasonably
request;
(vi) notify each seller of Registrable Securities at any time
when a prospectus relating thereto is required to be delivered under
the Securities Act, upon discovery that, or upon the happening of any
event as a result of which, the prospectus included in such
registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, in the light of the circumstances under which they were
made, and at the request of any such seller promptly prepare and
furnish to it a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, 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
under which they were made;
(vii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to security holders, as soon as reasonably practicable (but not more
than sixteen months after the effective date of such registration
statement), an earnings statement covering the period of at least
twelve months beginning with the first full calendar month after the
effective date of such registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 promulgated thereunder;
(viii) provide and cause to be maintained a transfer agent and
registrar (which, in each case, may be the Company) for all Registrable
Securities covered by such registration statement from and after a date
not later than the effective date of such registration;
(ix) use its best efforts to list all Registrable Securities
covered by such registration statement on any national market or
national securities exchange on which Registrable Securities of the
same class covered by such registration statement are then listed and,
if no such Registrable Securities are so listed, on any national market
or national securities exchange on which the Common Stock is then
listed;
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(x) to the extent reasonably requested by the managing
underwriter of any underwritten offering, send appropriate officers of
the Company to attend "road shows" scheduled in connection with any
such registration; and
(xi) furnish unlegended certificates representing ownership of
the Registrable Securities being sold in such denominations as shall be
requested by the sellers of Registrable Securities or the underwriters.
As a condition precedent of the Company's obligations under this
Section 2.2, the Company may require each seller of Registrable Securities as to
which any registration is being effected to agree to comply with the Securities
Act and the Exchange Act in connection with the registration of such seller's
Registrable Securities and to provide the Company with such information required
under such Acts as the Company may reasonably request in connection therewith.
Each holder of Registrable Securities agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
subdivision (vi) of this Section 2.2, such holder will forthwith discontinue
such disposition of Registrable Securities pursuant to the registration
statement relating to such Registrable Securities until the receipt of the
copies of the supplemented or amended prospectus contemplated by subdivision
(vi) of this Section 2.2 and, if so directed by the Company, will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies,
then in its possession of the prospectus relating to such Registrable Securities
current at the time of receipt of such notice.
2.3 Underwritten Offerings.
(a) Incidental Underwritten Offerings. If the Company proposes
to register any of its securities under the Securities Act as contemplated by
Section 2.1 and such securities are to be distributed by or through one or more
underwriters, the Company will, if requested by any Selling Holder of
Registrable Securities, use its best efforts to arrange for such underwriters to
include all the Registrable Securities to be offered and sold by such Selling
Holder among the securities of the Company to be distributed by such
underwriters, subject to the provisions of Section 2.1(b). The holders of
Registrable Securities to be distributed by such underwriters shall be parties
to the underwriting agreement between the Company and such underwriters and such
holders of Registrable Securities may, at the option of the holders of a
majority of the Registrable Securities to be distributed by such underwriters,
require that any or all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders of Registrable Securities. Any such
Selling Holder of Registrable Securities shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations,
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warranties or agreements regarding such Selling Holder, such Selling Holder's
Registrable Securities and such Selling Holder's intended method of distribution
or any other representations required by applicable law.
(b) Holdback Agreements.
(i) To the extent not inconsistent with applicable
law, each holder of Registrable Securities agrees not to effect any
public sale or distribution of any Registrable Securities of the
Company or any securities convertible into or exchangeable or
exercisable for such Registrable Securities, during the seven days
prior to and the 90 days after any registration relating to such
Registrable Securities pursuant to Section 2.1 has become effective,
except as part of such registration, if and to the extent requested by
the Company in the case of a non-underwritten public offering or if and
to the extent requested by the managing underwriter or underwriters in
the case of an underwritten public offering.
(ii) The Company agrees not to effect any public sale
or distribution of its Registrable Securities or securities convertible
into or exchangeable or exercisable for any of such Registrable
Securities during the seven days prior to and the 90 days after any
registration relating to such Registrable Securities pursuant to
Section 2.1 has become effective, except as part of such registration
and except pursuant to registrations on Form S-4 or S-8 or any
successor or similar forms thereto; provided, however, that the
provisions of this Section 2.3(b)(ii) shall not prevent the conversion
or exchange of any securities pursuant to their terms into or for other
securities.
2.4 Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give a representative holder (the
"Representative") designated in writing to the Company by a majority of the
holders of Registrable Securities to be registered under such registration
statement and counsel designated by the Representative the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such reasonable access to its
books and records and such opportunities to discuss the business of the Company
and its subsidiaries with officers of the Company and the independent public
accountants of the Company who have certified its financial statements as shall
be necessary, in the opinion of such Representative and such counsel, to conduct
a reasonable investigation within the meaning of the Securities Act.
2.5 Indemnification.
(a) Indemnification by the Company. The Company shall, and
hereby does, indemnify and hold harmless, in the case of any registration
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statement filed pursuant to Section 2.1, each seller of any Registrable
Securities covered by such registration statement and each other Person who
participates as an underwriter in the offering or sale of any securities covered
by such registration statement and each other Person, if any, who controls such
seller or any such underwriter within the meaning of the Securities Act or the
Exchange Act, and their respective directors, officers, partners, agents and
affiliates, against any losses, claims, damages or liabilities, joint or
several, to which such seller or underwriter or any such director, officer,
partner, agent, affiliate or controlling person may become subject under the
Securities Act or otherwise, including, without limitation, the reasonable fees
and expenses of legal counsel, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Registrable Securities were registered under the Securities
Act, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein (in light of the circumstances under
which they were made) not misleading, and the Company will reimburse such seller
or underwriter and each such director, officer, partner, agent, affiliate and
controlling person for any reasonable legal or any other expenses incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided, however, that the Company shall not
be liable in any case to the extent that any such loss, claim, damage, liability
(or action or proceeding in respect thereof) or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
thereto in reliance upon and in conformity with written information furnished to
the Company by or on behalf of such seller or underwriter, as the case may be,
specifically stating that it is for use in the preparation thereof; and
provided, further, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in such
registration statement, any such preliminary prospectus, final prospectus or
summary prospectus, amendment or supplement thereto if (i) such untrue statement
or omission or alleged untrue statement or omission is completely corrected in a
prospectus or prospectus supplement or in an amendment or supplement to such
prospectus or prospectus supplement, (ii) the seller of Registrable Securities
or the underwriter of Registrable Securities, as the case may be, has an
obligation under the Securities Act to deliver a prospectus or prospectus
supplement in connection with such sale of Registrable Securities and (iii) the
seller of Registrable Securities or the underwriter of Registrable Securities,
as the case may be, thereafter fails to deliver such prospectus or prospectus
supplement or such amendment or supplement to such prospectus or prospectus
supplement prior to or concurrently with the sale of Registrable Securities to
the person asserting such loss, claim, damage, liability or expense after the
Company has furnished the seller of Registrable Securities or the underwriter of
Registrable Securities, as the case may be, with a
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sufficient number of copies of the same. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
seller or underwriter or any such director, officer, partner, agent, affiliate
or controlling person and shall survive the transfer of such securities by such
seller or underwriter.
(b) Indemnification by the Sellers. As a condition to
including any Registrable Securities in any registration statement, the Company
shall have received an undertaking reasonably satisfactory to it from the
prospective seller of such Registrable Securities to indemnify and hold harmless
(in the same manner and to the same extent as set forth in Section 2.5(a)) the
Company and each director of the Company, each officer of the Company who signs
the registration statement and each other Person, if any, who participates as an
underwriter in the offering or sale of such securities and each other Person who
controls the Company or any such underwriter within the meaning of the
Securities Act or the Exchange Act, with respect to any statement or alleged
untrue statement of a material fact in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company by such seller specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement; provided, however, that
the liability of such indemnifying party under this Section 2.5(b) shall be
limited to the amount of proceeds received by such indemnifying party in the
offering giving rise to such liability. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Company or any such director, officer, employee, shareholder, controlling person
or other Person. Such indemnity shall survive the transfer of such securities by
such seller.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in Section 2.5(a) or (b), such indemnified party
shall, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action;
provided, however, that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under the preceding subdivisions of this Section 2.5, except to the extent that
the indemnifying party is actually and materially prejudiced by such failure to
give notice. In case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate therein and, to the
extent that it may wish, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for legal or other expenses subsequently incurred by the latter in connection
with the defense thereof; provided, however, that any indemnified party may, at
its own expense, retain separate counsel to participate in such defense.
Notwithstanding the foregoing,
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in any action or proceeding in which the Company as well as an indemnified party
is, or is reasonably likely to become, a party, such indemnified party shall
have the right to employ separate counsel at the expense of the Company, and to
control its own defense of such action or proceeding if, in the reasonable
opinion of counsel to such indemnified party, (a) there are or may be any legal
defenses available to such indemnified party or to other indemnified parties
that are different from or additional to those available to the Company, or (b)
any conflict or potential conflict exist between the Company and such
indemnified party that would make such separate representation advisable in the
opinion of the indemnified party. No indemnifying party shall be liable for any
settlement of any action or proceeding effected without its written consent,
which consent shall not be unreasonably withheld. No indemnifying party shall,
without the consent of the indemnified party, which consent shall not be
unreasonably withheld, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation or which requires action other
than the payment of money by the indemnifying party or which otherwise adversely
affects the indemnified party. No indemnifying party shall be liable for any
settlement of any action or proceeding effected without its written consent,
which consent shall not be unreasonably withheld.
(d) Contribution. If the indemnification provided for in this
Section 2.5 shall for any reason be held by a court to be unavailable to an
indemnified party under Section 2.5(a) or (b) hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under Section 2.5(a) or (b), the indemnified party
and the indemnifying party under Section 2.5(a) or (b) shall contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the same), in such
proportion as is appropriate to reflect the relative fault of the Company on one
hand, and the prospective sellers on the other hand, which resulted in such
loss, claim, damage or liability, or action or proceeding in respect thereof,
with respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action or proceeding in respect thereof, as well as any
other relevant equitable considerations; provided, that for purposes of this
Section 2.5(d), no seller shall be obligated to contribute to another party any
amount in excess of the amount that such seller would have been obligated to pay
to such other party if the indemnity under Section 2.5(a) or (b) were available.
The relative fault shall be determined by reference to whether an untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party on one hand and the indemnified party on the other hand, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission, but not by a
party's security ownership in the Company. 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. Such prospective seller's obligations to
contribute as provided in this Section 2.5(d) are several in proportion to the
relative value of such seller's
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respective Registrable Securities covered by such registration statement and not
joint. In addition, no Person shall be obligated to contribute hereunder any
amounts in payment for any settlement of any action or claim effected without
such Person's consent, which consent shall not be unreasonably withheld.
(e) Indemnification Payments. The indemnification and
contribution required by this Section 2.5 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred.
2.6 Company's Right of First Refusal
(a) Section 6 of Investment Agreement. Prior to any sale of
Registrable Securities by any Selling Holders pursuant to the registration
provisions of Section 2.1, the Company shall have the right, exercisable in
accordance with Section 6 of the Investment Agreement, to purchase all, but not
less than all, of the Registrable Securities to be subject to such sale by all
such Selling Holders (the "Offered Securities") at a purchase price in cash
equal to the First Offer Price per share of Common Stock of the Offered
Securities (assuming for this purpose that such Convertible Preferred Securities
have been converted into Common Stock). For purposes of this Section 2.6, (i)
references in Section 6 of the Investment Agreement to the term "Investor" shall
include, as the context requires, the Selling Holders, (ii) the demand for
registration or request for registration provided for in this Agreement shall be
deemed to be the Transfer Notice required by Section 6(a) of the Investment
Agreement, (iii) the date for the closing of a purchase by the Company of
specified Registrable Securities from a Selling Holder shall not be more than 10
business days after the delivery by the Company of an Acceptance Notice (as such
term is defined in the Investment Agreement) to such Selling Holder, subject to
extension as provided in Section 6(f) of the Investment Agreement, and (iv) in
the event the Company does not exercise its right to purchase Registrable
Securities, and such Registrable Securities are to be sold pursuant to an
underwritten offering, then the Selling Holders or the Requesting Holders, as
the case may be, shall cause the managing underwriter to use its commercially
reasonable efforts not to sell any such shares to any of the persons described
in clauses (x), (y) or (z) of Section 5(b) of the Investment Agreement, subject
to the exceptions and qualifications set forth therein.
(b) Additional Purchase Rights. In the event the Company
elects not to exercise its right to purchase the Offered Securities from the
Selling Holders as provided in Section 2.6(a) and the offering price at which
such Offered Securities to be registered with the Commission pursuant to Section
2.1 and purchased from the Selling Holders (the "Second Offer Price") is less
than 95% of the First Offer Price, then the Company shall have the additional
right to cancel the proposed public offering and purchase all such Offered
Securities from such Selling Holders, at the Second Offer Price (less any
underwriting discounts and commissions). The Company and the Selling Holders
shall cause any underwriting agreement entered into in connection with the offer
and sale of the Offered Securities to reflect such purchase right of the
Company. Immediately, and in no event less than three business days,
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prior to the time the registration statement filed by the Company for the
registration of the Offered Securities becomes effective under the Securities
Act, the Company shall, or shall cause the managing underwriter to, notify the
Selling Holders, in the case of a registration requested pursuant to Section
2.1, of the Second Offer Price. If the Company elects to exercise its right to
purchase the Offered Securities at the Second Offer Price (less any underwriting
discounts and commissions), the Company shall promptly (and prior to the
effectiveness of the registration statement for such Offered Securities) deliver
an Acceptance Notice (as defined in the Investment Agreement) to each Selling
Holder of its intention to purchase the Offered Securities owned by such Selling
Holder at the Second Offer Price (less any underwriting discounts and
commissions), on a date not more than five business days after delivery of such
Acceptance Notice (subject to extension as provided in Section 6(f) of the
Investment Agreement). If the Company elects to exercise its purchase rights
hereunder and purchases the Offered Securities, the Company shall pay all fees
(including all underwriting discounts and commissions which would have been
given or retained by such underwriters had the proposed public offering been
consummated) of the underwriters in connection with the preparation and filing
of the registration statement and the Company shall pay all Registration
Expenses of the Selling Holders which would have been payable by it pursuant to
Section 2.1 had the Company not exercised its purchase rights hereunder.
3. Rule 144. The Company shall take all actions reasonably necessary to
enable holders of Registrable Securities to sell such securities without
registration under the Securities Act within the limitation of the exceptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rules or regulations hereafter adopted by
the Commission, and subject to the limitations on transfer set forth in Section
5 of the Investment Agreement. Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written statement as to
whether such requirements have been complied with.
4. Amendments and Waivers. This Agreement may be amended with the
written consent of the Company and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company shall have obtained the written consent to such amendment,
action or omission to act, of the holder or holders of at least a majority in
aggregate principal amount or liquidation amount, as the case may be, of the
Registrable Securities affected by such amendment, action or omission to act;
provided, however, that the provisions set forth in the third sentence of
Section 5 may not, directly or indirectly, be amended or modified without the
prior written consent of each Lender (as defined in Section 6(c) of the
Investment Agreement) affected thereby. Each holder of any Registrable
Securities at the time or thereafter outstanding shall be bound by any consent
authorized by this Section 4, whether or not such Registrable Securities shall
have been marked to indicate such consent. No course of dealing between any
parties or any delay on the part of any party in exercising any rights hereunder
or under any agreement contemplated hereby shall operate as a waiver of any
rights of any such party. No delay on the part of any party in exercising any
right, power or privilege
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hereunder shall operate as a waiver thereof, or shall any waiver on the part of
any party of any such right, power or privilege, nor any single or partial
exercise of any such right, power or privilege, preclude any further exercise
thereof or the exercise of any other such right, power or privilege. The rights
and remedies herein provided are cumulative and are not exclusive of any rights
or remedies that any party may otherwise have at law or in equity.
5. Transfer of Registration Rights; Termination. Any holder of
Registrable Securities may transfer all or any portion of its rights under this
Agreement to any transferee (each, a "Transferee") of Registrable Securities
owned by such holder, subject to the limitations on transfers of Convertible
Preferred Securities and Conversion Shares set forth in Section 5 of the
Investment Agreement and the Company's rights of purchase set forth in Section 6
of the Investment Agreement and Section 2.6 of this Agreement; provided,
however, that the rights of the Investor under this Agreement may be assigned to
a wholly-owned subsidiary of the Investor, without the consent of the Company,
provided that the Investor shall remain liable for the obligations of the
Investor hereunder. Any transfer of rights pursuant to this Section 5 shall be
effective upon receipt by the Company of (i) a written notice from such holder
stating the name and address of any Transferee and identifying the amount of
Registrable Securities with respect to which the rights under this Agreement are
being transferred and the nature of the rights so transferred and (ii) a written
agreement from such Transferee to be bound by the terms of this Agreement and
the Investment Agreement. In addition to the foregoing, and notwithstanding any
other provision of this Agreement or the Investment Agreement, the Investor may
transfer all or any portion of its rights under this Agreement to any Lender (as
defined in Section 5(c) of the Investment Agreement), subject to the Company's
rights of purchase set forth in Section 6 of the Investment Agreement and
Section 2.6 of this Agreement (other than Section 2.6(a)(iv). The holders of
Registrable Securities may exercise the rights hereunder in such priority as
they shall agree upon among themselves.
6. Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election in writing delivered to the
Company, be treated as the holder of such Registrable Securities for purposes of
any request or other action by any holder or holders of Registrable Securities
pursuant to this Agreement or any determination of any number or percentage of
Registrable Securities held by any holder or holders of Registrable Securities
contemplated by this Agreement. If the beneficial owner of any Registrable
Securities so elects, the Company may require assurances reasonably satisfactory
to it of such owner's beneficial ownership of such Registrable Securities.
7. Notices. All notices, demands and other communications provided for
or permitted hereunder shall be made in writing and shall be sent by registered
or certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:
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(a) If to the Investor, at 000 Xxxx Xxxxxx Xxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxx X0X 0X0, Canada, attention: Xxxxxx X. Xxxxxx, General Counsel
or at such other address as the Investor shall have furnished to the Company in
the manner set forth herein;
(b) If to the Company, at 0000 Xxxxxx Xxxxxxxxxx Xxxx, Xxx
Xxxxxxxx, Xxx Xxxx 00000, attention: Xxxxxx X. Xxxxxxx, Vice President,
Secretary and Chief Legal Counsel or at such other address as the Company shall
have furnished to each holder of Registrable Securities at that time outstanding
in the manner set forth herein; or
(c) If to any other holder of Registrable Securities, at the
address that such holder shall have furnished to the Company in writing in the
manner set forth herein, or, until such holder so furnishes to the Company an
address, then to and at the address of the last holder of such Registrable
Securities who has furnished an address to the Company.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when delivered by a
courier, if delivered by overnight courier service; three business days after
being deposited in the mail, postage prepaid, if mailed; and when receipt is
acknowledged, if telecopied.
8. Successors and Assigns; Third Parties.
(a) Subject to Section 5, this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Except by operation of law, this agreement shall not be
assigned by the Company without the prior written consent of the holders of a
majority of the Registrable Securities outstanding at the time such consent is
required.
(b) Nothing in this Agreement, expressed or implied, is
intended or shall be construed to confer upon any Person (other than the parties
and their successors and permitted assigns and any Person entitled to the
benefit of Section 2.5) any right, remedy or claim under or by reason of this
Agreement.
9. No Inconsistent Agreements; Acknowledgment. The Company will not
hereafter enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the holders of Registrable Securities in
this Agreement. Without limiting the generality of the foregoing, the Company
will not hereafter enter into any agreement with respect to its securities which
grants to any holder of its securities in connection with a piggy-back
registration of such securities equal or higher priority to the rights granted
to the holders of Registrable Securities under Section 2. The parties hereby
acknowledge that, on the date hereof, the Company and Timet will enter into the
Timet Registration Rights Agreement pursuant to which the Company will grant to
Timet certain demand and priority piggy-back registration rights for the
Registrable Securities held by it.
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10. Remedies. Each holder of Registrable Securities, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
11. Severability. If any term or provision of this Agreement is held by
a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms and provisions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term or provision.
12. Calculation of Percentage Interests in Registrable Securities. For
purposes of this Agreement, all references to a percentage of the Registrable
Securities shall be calculated based upon the number of shares, warrants or
rights or the aggregate principal amount or liquidation amount, as applicable,
of Registrable Securities outstanding at the time such calculation is made.
13. 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.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
14. Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed in that State, without regard to principles of conflicts of
law.
16. Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed an original and all of which taken together
shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
INCO LIMITED
By: ______________________________________
Name:
Title:
SPECIAL METALS CORPORATION
By: _______________________________________
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
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