Exhibit 10.104
INVESTORS' RIGHTS AGREEMENT
INVESTORS' RIGHTS AGREEMENT (this "AGREEMENT"), dated as of August 10,
2006, by and among Xxxx Xxxxxx and Company, Inc., a New Jersey corporation, with
headquarters located at 000 Xxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000 (the
"COMPANY"), and the undersigned Buyers (as defined below).
WHEREAS:
A. In connection with (i) the Amended and Restated Share Purchase
Agreement (the "PRENTICE SECURITIES PURCHASE AGREEMENT"), dated as of August 9,
2006, by and among The Xxxxxxx Xxxxxx Foundation as the seller (the "SELLER")
and the Prentice Buyers (defined as each entity on the signature pages hereto
identified as "Prentice Buyers") and (ii) the Share Purchase Agreement (the
"LAMINAR SECURITIES PURCHASE AGREEMENT" and together with the Prentice
Securities Purchase Agreement, the "SECURITIES PURCHASE AGREEMENTS"), dated as
of August 9, 2006, by and among the Seller and the Laminar Buyers (defined as
each entity on the signature pages hereto identified as "Laminar Buyers", and
collectively with the Prentice Buyers, the "BUYERS"), the Seller has agreed,
upon the terms and subject to the conditions set forth in the Securities
Purchase Agreements, to sell to each Buyer shares of the Company's common stock,
$0.10 stated value per share (the "COMMON STOCK", as acquired by the Buyers from
the Seller pursuant to the Securities Purchase Agreements, the "ACQUIRED
SHARES").
B. In order to induce the Buyers to enter into their respective
Securities Purchase Agreements, the Company has agreed to (i) nominate and
facilitate the election of up to two (2) designees of Prentice (defined below)
and two (2) designees of Laminar (as defined below) to serve as directors of the
Company following the purchase of the Acquired Shares, and (ii) provide certain
registration rights to specified persons under the Securities Act of 1933, as
amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, the "1933 ACT"), and applicable state securities laws,
subject in each case to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and each
of the Buyers hereby agree as follows:
I. Board Composition
1. Prentice Directors.
a. Subject to any limitations imposed by stock exchange rules in
effect from time to time applicable to the Company, the Company agrees to cause
two persons designated by Prentice Capital Management, L.P. ("PRENTICE") to be
nominated for election at every meeting of the stockholders of the Company
called with respect to the election of members of the board of directors of the
Company, and at every adjournment or postponement thereof, and on every action
or approval by written consent of the stockholders or the board of directors
with respect to the election of members of the board of directors of the Company
(a "PRENTICE DIRECTOR"); provided that at any time that Prentice shall have the
right under this Section I.1(a) to designate
more than one Prentice Director, at least one of such designees shall be an
Independent Director (as defined in Exhibit A hereto). Should a person
designated pursuant to this Section I.1(a) be unwilling or unable to serve, or
otherwise cease to serve, the Company shall cause persons designated by Prentice
(subject to the provisions of Section I.1 and I.3(a)) to replace such member on
the board of directors. If Prentice desires to remove any Prentice Director, the
Company shall cooperate with and shall support such removal and any vacancy
shall be filled in accordance with the preceding sentence; provided that
Prentice reimburses the Company for all costs (including, but not limited to,
attorneys' fees) incurred by it in connection with such removal, the special
meeting of stockholders called to consider such removal and the solicitation of
proxies for such meeting, in each case in the event that such special meeting or
solicitation of proxies was undertaken by the Company at the request of Prentice
and would not otherwise have been held.
b. Notwithstanding anything herein to the contrary:
(i) If, at any time, the aggregate number of shares of the Common
Stock held by the Prentice Buyers and their affiliates falls below 2,600,000
shares (as adjusted to reflect any stock split, stock dividend or other
distributions or recapitalizations made by the Company to holders of the Common
Stock), then the number of directors that Prentice may designate in accordance
with Section I.1(a) above shall be permanently decreased to one.
(ii) If, at any time, the aggregate number of shares of the Common
Stock held by the Prentice Buyers and their affiliates falls below 1,500,000
shares (as adjusted to reflect any stock split, stock dividend or other
distributions or recapitalizations made by the Company to holders of the Common
Stock), then Prentice shall cease to have any rights under this Section I.1 and
the Company shall not be obligated to nominate or facilitate the election of any
designee of Prentice.
c. The right to designate Prentice Directors is personal to Prentice
and may not be assigned except in its entirety to an affiliate of Prentice or
any Prentice Buyer.
2. Laminar Directors.
a. Subject to any limitations imposed by stock exchange rules in
effect from time to time applicable to the Company, the Company agrees to cause
two persons designated by X. X. Xxxx Laminar Portfolios, L.L.C. ("LAMINAR") to
be nominated for election at every meeting of the stockholders of the Company
called with respect to the election of members of the board of directors of the
Company, and at every adjournment or postponement thereof, and on every action
or approval by written consent of the stockholders or the board of directors
with respect to the election of members of the board of directors of the Company
(a "LAMINAR DIRECTOR"); provided that at any time that Laminar shall have the
right under this Section I.2(a) to designate more than one Laminar Director, at
least one of such designees shall be an Independent Director (as defined in
Exhibit A hereto). Should a person designated pursuant to this Section I.2(a) be
unwilling or unable to serve, or otherwise cease to serve, the Company shall
cause persons designated by Laminar (subject to the provisions of Section I.2
and I.3(a)) to replace such member on the board of directors. If Laminar desires
to remove any Laminar Director, the Company shall cooperate with and shall
support such removal and any vacancy
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shall be filled in accordance with the preceding sentence; provided that Laminar
reimburses the Company for all costs (including, but not limited to, attorneys'
fees) incurred by it in connection with such removal, the special meeting of
stockholders called to consider such removal and the solicitation of proxies for
such meeting, in each case in the event that such special meeting or
solicitation of proxies was undertaken by the Company at the request of Laminar
and would not otherwise have been held.
b. Notwithstanding anything herein to the contrary:
(i) If, at any time, the aggregate number of shares of the Common
Stock held by the Laminar Buyers and their affiliates falls below 2,600,000
shares (as adjusted to reflect any stock split, stock dividend or other
distributions or recapitalizations made by the Company to holders of the Common
Stock), then the number of directors that Laminar may designate in accordance
with Section I.2(a) above shall be permanently decreased to one.
(ii) If, at any time, the aggregate number of shares of the Common
Stock held by the Laminar Buyers and their affiliates falls below 1,500,000
shares (as adjusted to reflect any stock split, stock dividend or other
distributions or recapitalizations made by the Company to holders of the Common
Stock), then Laminar shall cease to have any rights under this Section I.2 and
the Company shall not be obligated to nominate or facilitate the election of any
designee of Laminar.
c. The right to designate Laminar Directors is personal to Laminar and
may not be assigned except in its entirety to an affiliate of Laminar or any
Laminar Buyer.
3. Company Obligations.
a. Notwithstanding anything herein to the contrary, the Company shall
not be obligated to cause to be nominated for election to the board of directors
of the Company or to recommend to the stockholders the election of any designee
of Prentice or Laminar (i) who fails to submit to the Company on a timely basis
such questionnaires as the Company may require of its directors generally and
such other information as the Company may reasonably request or (ii) if the
board of directors of the Company or the nominating committee thereof determines
in good faith that such action would be inconsistent with its fiduciary duties
or applicable law; provided, that in the event that the board of directors of
the Company or the nominating committee shall determine in good faith that such
action would be inconsistent with its fiduciary duties, the Company shall
promptly notify Prentice or Laminar, as applicable, of the basis for such belief
and, to the extent that the Board of Directors of the Company or the
Nominating/Governance Committee of the Board of Directors of the Company
continues to believe that such action is inconsistent with its fiduciary duties,
shall permit Prentice or Laminar, as applicable, to provide an alternate nominee
or nominees sufficiently in advance of the meeting of the stockholders called
with respect to such nominees.
b. At any time that Prentice or Laminar shall have the right to
nominate any director(s) pursuant to this Section I, the Company shall not take
any action to change the size of the entire board of directors of the Company
from nine persons, including, without limitation, by way of amendment of its
bylaws or certificate of incorporation.
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c. No later than August 31, 2006, the Company shall take all
reasonable action within its control to cause the Board of Directors of the
Company to be comprised of nine (9) members, including two (2) Prentice
Directors and two (2) Laminar Directors in accordance with Sections I.1(a) and
I.2(a) hereof.
II. Registration Rights
1. Definitions.
As used in this Agreement, the following terms shall have the
following meanings:
a. "1934 ACT" means the Securities Exchange Act of 1934, as
amended.
b. "BUSINESS DAY" means any day other than Saturday, Sunday or
any other day on which commercial banks in the City of New York are authorized
or required by law to remain closed.
c. "CLOSING DATE" shall have the meaning set forth in the
Securities Purchase Agreements.
d. "EFFECTIVE DATE" means the date the Registration Statement is
declared effective by the SEC.
e. "INCIDENTAL REGISTRATION" shall mean a registration required
to be effected by the Company pursuant to Section II.2(b).
f. "INVESTOR" means a Buyer, for so long as it shall hold
Registrable Securities or any transferee or assignee thereof to whom a Buyer
assigns its rights under this Agreement and who agrees to become bound by the
provisions of this Agreement in accordance with Section II.9 and any transferee
or assignee thereof to whom a transferee or assignee assigns its rights under
this Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section II.9.
g. "LAMINAR INVESTOR" means an Investor that is a Laminar Buyer
or a permitted transferee or assignee thereof.
h. "PARTICIPATING STOCKHOLDERS" has the meaning ascribed to it in
Section II.2(a)(v).
i. "PERSON" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.
j. "PRENTICE INVESTOR" means an Investor that is a Prentice Buyer
or a permitted transferee or assignee thereof.
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k. "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415 and the
declaration or ordering of effectiveness of such Registration Statement(s) by
the SEC.
l. "REGISTRABLE SECURITIES" means (i) the Acquired Shares and
(ii) any capital stock of the Company issued or issuable with respect to the
Acquired Shares as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, excluding (i) any such
securities sold under any effective registration statement, (ii) any such
securities sold pursuant to Rule 144 under the 1933 Act or (iii) any such
securities held by any Investor if all of such shares held by such Person may be
sold without restriction by reason of Rule 144(k) under the 1933 Act or any
other rule or statute of similar effect allowing for the unrestricted resale of
such shares without registration under the 1933 Act.
m. "REGISTRATION EXPENSES" shall mean all expenses incident to
the Company's performance of or compliance with this Agreement, including
without limitation, all registration and filing fees, fees and expenses incident
to the Company's or any Investor's performance of or compliance with any
registration or proposed registration under this Agreement (whether or not any
of the registration statements in connection therewith become effective), fees
and expenses of compliance with securities or blue sky laws, printing expenses,
messenger and delivery expenses, fees and expenses for listing or quoting the
Registrable Securities on each securities exchange or automated quotation on
which similar securities issued by the Company are then listed or quoted, and
fees and disbursements of (i) counsel for the Company, the underwriters, or any
Investor, (ii) any transfer agent, (iii) all independent certified public
accountants incidental to or required by any registration under this Agreement
(including "cold comfort" letter and audit fees that would not have been
incurred but for a registration pursuant to this Agreement), (iv) underwriters
and (v) other persons retained by the Company, the underwriters or any Investor
in connection with any registration under this Agreement. Registration Expenses
shall include any underwriters' discounts or commissions or brokers' fees or
fees of similar securities industry professionals and any transfer taxes
relating to the disposition of the Registrable Securities by any Investors.
Notwithstanding the foregoing, Registration Expenses shall not include an
allocation of internal expenses of the Company (including salaries and expenses
of the Company's officers and employees).
n. "REGISTRATION REQUEST" has the meaning ascribed to it in
Section II.2(a) hereof.
o. "REGISTRATION STATEMENT" means a registration statement or
registration statements of the Company filed under the 1933 Act covering the
Registrable Securities.
p. "REQUESTING STOCKHOLDERS" has the meaning ascribed to it in
Section II.2(a) hereof.
q. "RULE 415" means Rule 415 under the 1933 Act or any successor
rule providing for offering securities on a continuous or delayed basis.
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r. "SEC" means the United States Securities and Exchange
Commission.
s. "UNDERWRITERS" shall mean the underwriters, if any, of the
offering being registered under the 1933 Act.
t. "UNDERWRITTEN OFFERING" shall mean a sale of securities of the
Company to an Underwriter or Underwriters for reoffering to the public.
2. Registration.
a. Demand Registration. (i) Subject in all cases to Section
II.2(a)(iii) below, at any time beginning on June 1, 2007, if the Company shall
have been requested in writing (a "REGISTRATION REQUEST") by a Prentice Investor
or a Laminar Investor to effect the registration under the 1933 Act of shares of
Registrable Securities (the "REQUESTING STOCKHOLDERS"), then the Company shall:
(1) within ten (10) days of the receipt of such Registration Request (but
in no event prior to June 1, 2007), give written notice of such request to all
Investors other than the Requesting Stockholders describing the terms of such
request; and
(2) use its reasonable efforts to file, as soon as practicable on or after
June 1, 2007, a Registration Statement under the 1933 Act for the sale of (x)
all Registrable Securities for which the Requesting Stockholders shall have
requested registration under this Section II.2(a) and (y) all other Registrable
Securities that any Investors with rights to request registration under Section
II.2(b) have requested the Company include in such registration by request
received by the Company within 15 days after such Persons receive the Company's
notice, subject to the limitation of paragraph (v) below.
(ii) Any Registration Request will specify (i) the number of Registrable
Securities proposed to be sold and (ii) the intended method of distribution
thereof.
(iii) Notwithstanding the provisions of Section II.2(a)(i), the Company
shall not be obligated to file or cause to become effective any Registration
Statement relating to a Registration Request unless Investors holding at least
two-thirds of the outstanding Registrable Securities shall have elected to
participate in such offering pursuant to such Registration Statement, and such
registration shall include at least 1,000,000 shares of Registrable Securities.
In addition, notwithstanding the provisions of Section II.2(a)(i), the Company
shall not be obligated to file and cause to become effective more than three
Registration Statements pursuant to Section II.2(a)(i). In addition,
notwithstanding the provisions of Section II.2(a)(i), the Company shall not be
obligated to file a Registration Statement relating to any Registration Request:
(A) within a period of 60 days after the effective date of any other
registration statement of the Company (other than a registration statement on
Form S-4 or S-8 or any successor or other form hereafter promulgated for similar
purposes) or (B) while a registration statement contemplated by Section 2(d) is
effective under the 1933 Act. A Registration Statement shall not be counted for
purposes of the foregoing until such time as such Registration Statement has
been declared effective by the Commission.
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(iv) The Company shall select the registration statement form for any
registration pursuant to Section II.2(a)(i); provided that the prospectus
included in a Registration Statement for an Underwritten Offering shall include
such information required by Form S-1 (or any successor form) as the managing
Underwriters may reasonably request.
(v) In the event of an Underwritten Offering, the Company, together with
all Investors proposing to distribute their securities through such underwriting
in accordance with this Agreement (the "Participating Stockholders"), shall
enter into an underwriting agreement in customary form and reasonably
satisfactory to the Company with the managing Underwriter(s) selected for such
underwriting by the Requesting Stockholders, which Underwriter(s) shall be
reasonably acceptable to the Company. Notwithstanding any other provision
hereof, if the managing Underwriter(s) advises the Company and the Participating
Stockholders in writing that because the number of shares requested by the
Participating Stockholders to be included in the registration exceeds the number
which can be sold in an orderly manner in such offering within a price range
acceptable to the Requesting Stockholders or that marketing factors require a
limitation of the number of shares to be underwritten on behalf of the
Participating Stockholders (the "Underwritten Registration Cutback"), and such
Underwritten Registration Cutback results in less than all of the Registrable
Securities of the Participating Stockholders that are requested to be included
in such registration to actually be included in such registration, then the
Company will include in such registration, a number of shares which the Company
is so advised can be sold in (or during the time of) such offering without such
interference or affect on the price or sale, such number of Registrable
Securities shared pro rata among all of the Participating Stockholders based on
the total number of Registrable Securities held by each such Participating
Stockholder and shall not include any securities of any other Person, including
without limitation the Company.
b. Incidental Registration. (1) If the Company at any time
proposes to register securities under the Securities Act (other than a
registration on Form S-4 or S-8 or any similar or successor form to such forms)
whether or not pursuant to registration rights granted to other holders of its
securities and whether or not for sale for its account, the Company shall
deliver prompt written notice to the Investors of its intention to undertake
such registration, describing in reasonable detail the proposed registration and
distribution and of such Investor's right to participate in such registration
under this Section II.2(b) as hereinafter provided. Subject to the other
provisions of this Section II.2(b), upon the written request of each Investor
made within 7 days after the receipt of such written notice (which request shall
specify the amount of Registrable Securities to be registered on behalf of such
Investor and the intended method of disposition thereof), the Company shall use
its reasonable efforts to effect the registration under the 1933 Act of all
Registrable Securities requested by Investors to be so registered (an
"INCIDENTAL REGISTRATION"), to the extent requisite to permit the disposition
(in accordance with the intended methods thereof as aforesaid) of the
Registrable Securities so to be registered, by inclusion of such Registrable
Securities in the Registration Statement which covers the securities which the
Company proposes to register. Each Investor may, at any time at least two
Business Day's prior to the effective date of the Registration Statement (and
for any reason), revoke such request by delivering written notice to the Company
revoking such requested inclusion.
(2) 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
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connection with such Incidental Registration, the Company shall determine
for any reason not to register or to delay registration of such securities,
the Company may, at its election, give written notice of such determination
to each participating Investor and, thereupon, (A) in the case of a
determination not to register, the Company shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration and (B) in the case of a determination to delay such
registration, the Company shall be permitted to delay the registration of
such Registrable Securities for the same period as the delay in registering
such other securities.
(3) If an Incidental Registration involves an Underwritten
Offering, and the sole or the lead managing Underwriter, as the case may
be, of such Underwritten Offering shall advise the Company in writing (with
a copy to each Investor requesting registration) that, in its opinion, the
amount of securities (including Registrable Securities) requested to be
included in such registration exceeds the amount which can be sold in such
offering without interfering with the successful marketing of the
securities being offered (such writing to state the approximate number of
such securities which may be included in such offering without such
effect), or, in the case of an Incidental Registration not involving an
Underwritten Offering, the Company shall reasonably determine (and notify
the Investors), after consultation with an investment banking firm, that
the amount of securities (including Registrable Securities) proposed to be
sold in such offering exceeds the number which can be sold in such offering
within a price range acceptable to the Company, the Company shall include
in such registration, to the extent of the number which the Company is so
advised may be included in such offering without such effect, (i) in the
case of a registration initiated by the Company, (A) first, the securities
that the Company proposes to register for its own account, (B) second, the
Registrable Securities requested to be included in such registration by the
Investors, allocated pro rata in proportion to the number of Registrable
Securities requested to be included in such registration by each of them,
and (C) third, other securities of the Company to be registered on behalf
of any other Person, allocated pro rata in proportion to the number of
securities requested to be included in such registration by each of them;
and (ii) in the case of a registration initiated by a Person(s) other than
the Company or the Investors, (A) first, the securities of the Company to
be registered on behalf of such initiating Person(s), (B) second, the
securities that the Company proposes to register for its own account, and
(C) third, Registrable Securities requested to be included in such
registration by the Investors and other securities requested to be included
by any other Person, allocated pro rata in proportion to the number of
securities requested to be included in such registration by each of them.
(4) If the Incidental Registration is, in whole or in part,
an Underwritten Offering, any request by Investors under this Section
II.2(b) must specify that the Registrable Securities be included in the
underwriting on the same terms and conditions as the securities of the
Company otherwise being sold through Underwriters under such registration.
c. Legal Counsel. The Prentice Investors and the Laminar
Investors shall each have the right, as applicable, to select one legal counsel
to review and oversee any registration pursuant to this Section II.2 (the
"PRENTICE LEGAL COUNSEL" and the "LAMINAR
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LEGAL COUNSEL", respectively, and collectively, "LEGAL COUNSEL"). The Company
and Legal Counsel shall reasonably cooperate with each other in performing the
Company's obligations under this Agreement.
d. FORM S-3 REGISTRATION.
(i) In case the Company shall receive from any Investor(s)
holding 25 percent (25%) of the Registrable Securities then outstanding a
written request or requests that the Company effect a registration on Form S-3
(or any successor to Form S-3) or any similar short-form registration statement
and any related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Investor(s), the Company will:
(1) within ten (10) days of the receipt thereof, give written notice
of such request to all Investors; and
(2) as soon as practicable, use its reasonable efforts to effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Investors' Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of any
other Investor joining in such request as are specified in a written request
given within fifteen (15) days after receipt of such written notice from the
Company; provided, however, that the Company shall not be obligated to effect
any such registration, qualification or compliance pursuant to this paragraph
(d):
(A) if Form S-3 is not available to the Company or for such offering
by the Investors,
(B) if the Investors, together with the holders of any other
securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any)
at an aggregate price to the public of less than five hundred thousand
dollars ($500,000), or
(C) if the Company has, within the twelve (12) month period preceding
the effective date of such registration, already effected a registration on
Form S-3 for the Investors pursuant to this paragraph (d) (such twelve
month period commencing on the date such prior registration statement
ceased to be effective or all Registrable Securities covered thereby were
sold).
3. Related Obligations.
At such time as the Company is obligated to file a Registration
Statement with the SEC pursuant to Section II.2(a), II.2(b) or II.2(d), the
Company will use its reasonable efforts to effect the registration of the
Registrable Securities in accordance with the intended method of disposition
thereof and, pursuant thereto, the Company shall have the following obligations:
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a. The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities and use its
reasonable efforts to cause such Registration Statement relating to the
Registrable Securities to become effective as soon as practicable after such
filing. The Company shall keep each Registration Statement effective pursuant to
Rule 415 at all times until the earlier of, as applicable, (i) 120 days (or, in
the case of a shelf registration, until the date as of which the Investors may
sell all of the Registrable Securities covered by such Registration Statement
without restriction pursuant to Rule 144(k) (or any successor thereto)
promulgated under the 0000 Xxx) after the Effective Date or (ii) the date on
which the Investors shall have sold all of the Registrable Securities covered by
such Registration Statement (the "REGISTRATION PERIOD"). The term "reasonable
efforts" shall include, that the Company shall submit to the SEC, as soon as is
practicable after the later of the date that (i) the Company learns that no
review of a particular Registration Statement will be made by the staff of the
SEC or that the staff has no further comments on a particular Registration
Statement, as the case may be, and (ii) the approval of applicable Legal Counsel
pursuant to Section II.3(c) (which approval is promptly sought), a request for
acceleration of effectiveness of such Registration Statement.
b. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to a
Registration Statement and the prospectus used in connection with such
Registration Statement, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period.
c. The Company shall permit applicable Legal Counsel to review
and comment upon (i) a Registration Statement at least three Business Days prior
to its filing with the SEC and (ii) all amendments and supplements to all
Registration Statements (except for Annual Reports on Form 10-K and Reports on
Form 10-Q and any similar or successor reports) within a reasonable number of
days prior to their filing with the SEC. The Company shall not submit a request
for acceleration of the effectiveness of a Registration Statement or any
amendment or supplement thereto without the prior approval of applicable Legal
Counsel, which consent shall not be unreasonably withheld. The Company shall
furnish to applicable Legal Counsel, without charge, (i) copies of any
correspondence from the SEC or the staff of the SEC to the Company or its
representatives relating to any Registration Statement, (ii) promptly after the
same is prepared and filed with the SEC, one copy of any Registration Statement
and any amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, if requested by a participating
Investor, and all exhibits (excluding unredacted copies of exhibits for which
confidential treatment is sought) and (iii) upon the effectiveness of any
Registration Statement, one copy of the prospectus included in such Registration
Statement and all amendments and supplements thereto. The Company shall
reasonably cooperate with applicable Legal Counsel in performing the Company's
obligations pursuant to Section II.3.
d. The Company shall furnish to each Investor whose Registrable
Securities are included in any Registration Statement, without charge, (i)
promptly after the same is prepared and filed with the SEC, at least one copy of
such Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference, if
requested by an Investor, all exhibits (excluding unredacted copies of exhibits
for which confidential treatment is sought) and each preliminary prospectus,
(ii) upon the effectiveness of any Registration Statement, such number of copies
of the
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prospectus included in such Registration Statement and all amendments and
supplements thereto as such Investor may reasonably request and (iii) such other
documents, including copies of any preliminary or final prospectus, as such
Investor may reasonably request from time to time in order to facilitate the
disposition of the Registrable Securities owned by such Investor.
e. The Company shall use its reasonable efforts to (i) register
and qualify, unless an exemption from registration and qualification applies,
the resale by Investors of the Registrable Securities covered by a Registration
Statement under such other securities or "blue sky" laws of such jurisdictions
in the United States specified in writing by any Investor, (ii) prepare and file
in those jurisdictions, such amendments (including post-effective amendments)
and supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, and (iii)
take such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to (x) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section II.3(e), (y)
subject itself to general taxation in any such jurisdiction, or (z) file a
general consent to service of process in any such jurisdiction. The Company
shall promptly notify applicable Legal Counsel and each participating Investor
of the receipt by the Company of any notification with respect to the suspension
of the registration or qualification of any of the Registrable Securities for
sale under the securities or "blue sky" laws of any such jurisdiction or its
receipt of notice of the initiation or threatening of any proceeding for such
purpose.
f. The Company shall notify applicable Legal Counsel and each
Investor in writing of the happening of any event, as promptly as practicable
after becoming aware of such event, as a result of which the prospectus included
in a Registration Statement, as then in effect, includes an untrue statement of
a material fact or omission to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (provided that in no
event shall such notice contain any material, nonpublic information), and,
subject to Section 4(c), promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and deliver
ten (10) copies of such supplement or amendment to applicable Legal Counsel and
each Investor (or such other number of copies as applicable Legal Counsel or
such Investor may reasonably request). Each Investor shall immediately
discontinue any offer or sale of Registrable Securities upon receipt of such a
notice. The Company shall also promptly notify applicable Legal Counsel and each
participating Investor in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and when a Registration
Statement or any post-effective amendment has become effective (by facsimile or
e-mail), (ii) of any request by the SEC for amendments or supplements to a
Registration Statement or related prospectus or related information, and (iii)
of the Company's reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.
g. The Company shall use its reasonable efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction for which such qualification
has been requested and, if such an order or suspension is issued, to use its
reasonable efforts to obtain the withdrawal of such order or suspension and to
notify applicable
11
Legal Counsel and each Investor who holds Registrable Securities being sold of
the issuance of such order and the resolution thereof or its receipt of notice
of the initiation or threat of any proceeding for such purpose. Each Investor
shall immediately discontinue any offer or sale of Registrable Securities upon
receipt of such a notice.
h. If any Investor is deemed to be, alleged to be or reasonably
believes may be deemed or alleged to be, an underwriter or is required under
applicable securities laws to be described in the Registration Statement as an
underwriter, at the reasonable request of any Investor, the Company shall use
commercially reasonable efforts (which shall include requesting that the
Company's independent certified accountant and counsel representing the Company
furnish to such Investor) to furnish to such Investor, on the date of the
effectiveness of the Registration Statement and thereafter from time to time on
such dates as an Investor may reasonably request (i) 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, addressed to the Investors, and
(ii) an opinion, dated as of such date, of counsel representing the Company for
purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
Investors.
i. Upon the written request of any participating Investor in
connection with such Investor's due diligence requirements, if any, the Company
shall make available for inspection by (i) such Investor, (ii) applicable Legal
Counsel and (iii) one firm of accountants or other agents retained by the
Investors (collectively, the "INSPECTORS"), all pertinent financial and other
records, and pertinent corporate documents and properties of the Company
(collectively, the "RECORDS"), as shall be reasonably deemed necessary by each
Inspector, and cause the Company's officers, directors and employees to supply
all information which any Inspector may reasonably request; provided, however,
that (i) such request shall not unreasonably interfere with the business of the
Company and (ii) each Inspector shall agree to hold in strict confidence and
shall not make any disclosure (except to an Investor) or use of any Record or
other information which the Company determines in good faith to be confidential,
and of which determination the Inspectors are so notified, unless (a) the
disclosure of such Records is necessary to avoid or correct a misstatement or
omission in any Registration Statement or is otherwise required under the 1933
Act, (b) the release of such Records is ordered pursuant to a final,
non-appealable subpoena or order from a court or government body of competent
jurisdiction, or (c) the information in such Records has been made generally
available to the public other than by disclosure in violation of this Agreement
or any applicable confidentiality agreement. Each Investor agrees that it shall,
upon learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential. Nothing herein (or in any other
confidentiality agreement between the Company and any Investor) shall be deemed
to limit the Investors' ability to sell Registrable Securities in a manner which
is otherwise consistent with applicable laws and regulations.
j. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of
12
such information is necessary to avoid or correct a misstatement or omission in
any Registration Statement, (iii) the release of such information is ordered
pursuant to a subpoena or other final, non-appealable order from a court or
governmental body of competent jurisdiction, or (iv) such information has been
made generally available to the public other than by disclosure in violation of
this Agreement or any other agreement. The Company agrees that it shall, upon
learning that disclosure of such information concerning an Investor is sought in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt written notice to such Investor and allow such Investor, at
the Investor's expense, to undertake appropriate action to prevent disclosure
of, or to obtain a protective order for, such information.
k. The Company shall use its reasonable efforts to cause all of
the Registrable Securities covered by a Registration Statement to be listed on
each securities exchange on which securities of the same class or series issued
by the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange.
l. The Company shall cooperate with participating Investors and,
to the extent applicable, facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legend) representing the Registrable
Securities to be offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
Investors may reasonably request and registered in such names as the managing
Underwriter, if any, or such Investors may request.
m. If reasonably requested by an Investor, the Company shall (i)
as soon as practicable incorporate in a prospectus supplement or post-effective
amendment such information as an Investor reasonably requests to be included
therein relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the number of
Registrable Securities being offered or sold, the purchase price being paid
therefor and any other terms of the offering of the Registrable Securities to be
sold in such offering; and (ii) as soon as practicable make all required filings
of such prospectus supplement or post-effective amendment after being notified
of the matters to be incorporated in such prospectus supplement or
post-effective amendment.
n. The Company shall otherwise use its reasonable efforts to
comply with all applicable rules and regulations of the SEC in connection with
any registration hereunder.
o. Within two (2) Business Days after a Registration Statement
which covers Registrable Securities is ordered effective by the SEC, the Company
shall deliver, to the transfer agent for such Registrable Securities (with
copies to the Investors whose Registrable Securities are included in such
Registration Statement) confirmation that such Registration Statement has been
declared effective by the SEC.
p. Notwithstanding anything to the contrary herein, (i) if the
Company has commenced preparation of a registration statement with respect to a
public offering of securities by the Company (other than in connection with
employee benefit and similar plans) (a "Company Offering") prior to the receipt
of a Registration Request or a request pursuant to Section II.2(d) and the
Company furnishes the Requesting Stockholders with written notice to
13
such effect (the "Transaction Delay Notice") promptly after such request, the
Company shall not be required to effect any registration pursuant to Section
II.2(a)(i) or Section II.2(d) hereof until the earliest of (A) 60 days after the
completion of such Company Offering, (B) promptly after the abandonment of such
Company Offering or (C) 120 days after the date of the Transaction Delay Notice,
and (ii) if upon receipt of a Registration Request or a request under Section
II.2(d) or while a Registration Request or a request under Section II.2(d) is
pending, the Company determines in its reasonable judgment after consultation
with its securities counsel that the filing of a registration statement would
require disclosure of material information which would not otherwise be required
to be disclosed and that such disclosure would not be in the best interest of
the Company and the Company provides the Requesting Stockholders written notice
thereof promptly after the Company makes such determination, which shall be made
promptly after the receipt of any request, the Company shall not be required to
comply with its obligations under Section II.2(a)(i) or Section II.2(d) hereof
until the earlier of (A) the date upon which such material information is
disclosed to the public or ceases to be material or (B) 90 days after the
Requesting Stockholders' receipt of such notice.
4. Obligations of the Investors.
a. At least five (5) Business Days prior to the first anticipated
filing date of a Registration Statement, the Company shall notify each Investor
in writing of the information the Company requires from each such Investor if
such Investor elects to have any of such Investor's Registrable Securities
included in such Registration Statement. It shall be a condition precedent to
the obligations of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Securities of a particular Investor
that such Investor shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it as shall be reasonably
required to effect the effectiveness of the registration of such Registrable
Securities and shall execute such documents in connection with such registration
as the Company may reasonably request.
b. Each Investor, by such Investor's acceptance of the
Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of any
Registration Statement hereunder, unless such Investor has notified the Company
in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from such Registration Statement.
c. Each Investor agrees that, upon receipt of any notice (which
shall be in writing) from the Company (a "BLACKOUT NOTICE") that the Company is
in possession of material non-public information that it deems advisable not to
disclose or is engaged in negotiations or planning for a merger or acquisition
or disposition transaction by the Company that, in any case, the Company would
then be required to disclose in connection with a registration statement for a
primary offering of the Company's Common Stock, such Investor will immediately
discontinue offers or sales of Registrable Securities pursuant to any
Registration Statement(s) covering such Registrable Securities for the period
set forth in such Blackout Notice; provided, that in no event shall such period
set forth in any Blackout Notice exceed 90 consecutive days and or shall all
such periods pursuant to this Section II.4(c) and Section II.3(p) above exceed
120 days in any 365-day period.
14
d. Each Investor covenants and agrees that it will comply with
the prospectus delivery requirements of the 1933 Act as applicable to it or an
exemption therefrom in connection with sales of Registrable Securities pursuant
to the Registration Statement.
e. Each Investor agrees that it will not effect any disposition
of the Registrable Securities that would constitute a sale within the meaning of
the 1933 Act or pursuant to any applicable state securities laws, except as
contemplated hereunder or as otherwise permitted by law, and that it will
promptly notify the Company of any changes in the information set forth in any
Registration Statement regarding such Investor or its plan of distribution
provided, however, that by making the agreements herein, such Investor does not
agree to hold any of the Registrable Securities for any minimum or other
specific term and reserves the right to dispose of the Registrable Securities at
any time in accordance with or pursuant to a registration statement or an
exemption under the 1933 Act.
f. No Investor may participate in any Underwritten Offering
unless such Investor completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreement and other documents required under
the terms of the underwriting arrangements pertaining to such registration and
consistent with the provisions of this Agreement.
5. Expenses of Registration.
Notwithstanding anything in this Agreement to the contrary, no Investor
shall be entitled to have any of its Registrable Securities included in any
registration statement contemplated by this Agreement unless it executes and
delivers to the Company at the time of its request to include such Registrable
Securities an agreement reasonably satisfactory to the Company that such
Investor will bear its pro-rata share (based upon the number of Registrable
Securities to be sold by each participating Investor) of all Registration
Expenses incident to such registration statement; provided, that no such
agreement shall be required with respect to an Incidental Registration initiated
by a Person other than the Company for which such other Person is not required
to bear its pro rata share of all Registration Expenses incident to such
registration statement.
6. Indemnification.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each Investor, the directors,
officers, members, partners, employees, agents, representatives of, and each
Person, if any, who controls any Investor within the meaning of the 1933 Act or
the 1934 Act (each, an "INDEMNIFIED PERSON"), against any losses, claims,
damages, liabilities, judgments, fines, penalties, charges, costs, reasonable
attorneys' fees, amounts paid in settlement or expenses, joint or several,
(collectively, "CLAIMS") incurred in investigating, preparing or defending any
action, claim, suit, inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or
15
governmental, administrative or other regulatory agency, body or the SEC
("INDEMNIFIED DAMAGES"), to which any of them may become subject insofar as such
Claims arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact in a Registration Statement or any
post-effective amendment thereto, or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) any untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in the light of the circumstances under which the statements therein
were made, not misleading, or (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act, any other law, including without
limitation any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities pursuant to a
Registration Statement (collectively, "VIOLATIONS"). Subject to Section II.6(c),
the Company shall reimburse the Indemnified Persons, promptly as such expenses
are incurred and are due and payable, for any legal fees or other reasonable
expenses incurred by them in connection with investigating or defending any such
Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section II.6(a): (i) shall not apply
to a Claim by an Indemnified Person arising out of or based upon a Violation
which occurs in reliance upon and in conformity with information furnished in
writing to the Company by an Indemnified Person expressly for use in connection
with the preparation of the Registration Statement, prospectus, or any such
amendment thereof or supplement thereto, (ii) shall not apply with respect to
Claims arising from the sale of Registrable Securities to a Person to whom there
was not sent or given, at or prior to the written confirmation of such sale, a
copy of the Registration Statement or the prospectus contained therein, as
amended or supplemented, to the extent such delivery was required under the 1933
Act or the rules or regulations thereunder and (iii) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be unreasonably withheld
or delayed.
b. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to severally and not
jointly indemnify, hold harmless and defend, to the same extent and in the same
manner as is set forth in Section II.6(a), the Company, each of its directors,
officers, employees, agents, representatives of, and each Person, if any, who
controls the Company within the meaning of the 1933 Act or the 1934 Act (each,
an "INDEMNIFIED PARTY"), against any Claim or Indemnified Damages to which any
of them may become subject, under the 1933 Act, the 1934 Act or otherwise,
insofar as such Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case to the extent, and only to the extent, that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in connection with
such Registration Statement; or for any violation or alleged violation or
failure by an Investor to comply with the 1933 Act, the 1934 Act, any other law,
including without limitation any state securities law, or any rule or regulation
thereunder relating to the offer or sale of the Registrable Securities pursuant
to a Registration Statement, and, subject to Section II.6(c), such Investor will
reimburse any legal or other expenses reasonably incurred by an Indemnified
Party in connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section II.6(b) and the
agreement with respect to contribution
16
contained in Section 7 shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of such
Investor, which consent shall not be unreasonably withheld or delayed; provided,
further, however, that the Investor shall be liable under this Section 6(b) for
only that amount of a Claim or Indemnified Damages as does not exceed the net
proceeds to such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement.
c. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section II.6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a Claim,
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section II.6,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses of not more than one counsel for such
Indemnified Person or Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate under applicable professional
standards due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. In the case of an indemnified Person, legal counsel
referred to in the immediately preceding sentence shall be selected by the
Investors holding at least a majority in interest of the Registrable Securities
included in the Registration Statement to which the Claim relates. Upon receipt
of notice from the indemnifying party to such indemnified Person of its election
to assume the defense of such action and approval by the indemnified Person of
counsel, the indemnifying party will not be liable to such indemnified Person
under this section for any legal or other expenses subsequently incurred by such
indemnified Person in connection with the defense thereof unless the indemnified
Person shall have employed such counsel in connection with the assumption of
legal defenses in accordance with the preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel representing all of the indemnified Persons who
are parties to such action), in which case the reasonable fees and expenses of
counsel shall be at the expense of the indemnifying party. The Indemnified Party
or Indemnified Person shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or Claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or Claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person reasonably apprised at all times as to
the status of the defense or any settlement negotiations with respect thereto.
No indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its prior written consent, provided, however, that
the indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
17
Indemnified Party or Indemnified Person of a release from all liability in
respect to such Claim or litigation, and does not involve the imposition of
equitable remedies or the imposition of any obligations on such Indemnified
Party or Indemnified Person and does not otherwise adversely affect such
indemnified Person, other than as a result of the imposition of financial
obligations for which such indemnified Person will be indemnified hereunder, and
provided further that such settlement shall not include any admission as to
fault on the part of the Indemnified Person or Indemnified Party. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action.
d. The indemnification required by this Section II.6 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 Indemnified Damages
are incurred.
e. The indemnity agreements contained herein shall be in addition
to (i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to applicable law.
7. Contribution.
If the indemnification provided for in Section II.6 is required by its
terms but is for any reason held to be unavailable to or otherwise insufficient
to hold harmless an indemnified Person thereunder in respect to any Claims
referred to therein as subject to indemnification, then each applicable
indemnifying Person shall contribute to the amount paid or payable by such
indemnified Person as a result of any Claims referred to therein as subject to
indemnification in such proportion as is appropriate to reflect the relative
fault of the Company on the one hand and the Investors, on the other, in
connection with the actions, statements or omissions that resulted in such
Claims, as well as any other relevant equitable considerations. The relative
fault of the Company, on the one hand, and each Investor, on the other, shall be
determined by reference to, among other things, whether the untrue or alleged
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or by such Investor
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 a party as a result of the Claims referred to above shall be deemed
to include, subject to the limitations set forth in Section II.6(c), any legal
or other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
Section II.6(c) with respect to the notice of the threat or commencement of any
threat or action shall apply if a claim for contribution is to be made under
this Section II.7; provided, however, that no additional notice shall be
required with respect to any threat or action for which notice has been given
under Section II.6(c) for purposes of indemnification. The Company and each
Investor agree that it would not be just and equitable if contribution pursuant
to this Section II.7 were determined solely by pro rata allocation (even if the
Investors 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 this paragraph. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from
18
any person who was not guilty of such fraudulent misrepresentation. The
Investors' obligations to contribute pursuant to this Section II.7 are several
and not joint and contribution by any seller of Registrable Securities shall be
limited in amount to the net amount of proceeds received by such seller from the
sale of such Registrable Securities pursuant to such Registration Statement.
8. Reports Under the 1934 Act.
With a view to making available to the Investors the benefits of Rule
144 promulgated under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees to:
a. use its reasonable efforts to make and keep public information
available, as those terms are understood and defined in Rule 144, and as may be
required in order to be eligible to use Form S-3; provided, however, that so
long as the Company has acted in good faith in its attempts to make and keep
such public information available, the failure to do so shall not be a breach of
this Agreement.
b. use its reasonable efforts to file with the SEC all reports
and other documents required of the Company under the 1933 Act and the 1934 Act
so long as the Company remains subject to such requirements and the filing of
such reports and other documents is required for the applicable provisions of
Rule 144; and
c. furnish to each Investor, promptly upon request, (i) a written
statement by the Company, if true, that it has complied with the reporting
requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested to permit the Investors to sell such securities pursuant to
Rule 144 without registration.
9. Assignment of Registration Rights.
The rights under Section II of this Agreement shall be automatically
assignable by the Investors to any transferee of all or any portion of such
Investor's Registrable Securities if: (i) the Investor agrees in writing with
the transferee or assignee to assign such rights, and a copy of such agreement
is furnished to the Company within a reasonable time after such assignment; (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned; (iii) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the 1933 Act or applicable state securities laws;
and (iv) at or before the time the Company receives the written notice
contemplated by clause (ii) of this sentence the transferee or assignee agrees
in writing with the Company to be bound by all of the provisions contained
herein.
10. Amendment of Registration Rights.
19
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the holders of at least two-thirds of the Registrable Securities then
outstanding. Any amendment or waiver effected in accordance with this Section
II.10 shall be binding upon each Investor and the Company. No such amendment
shall be effective to the extent that it applies to less than all of the holders
of the Registrable Securities. No consideration shall be offered or paid to any
Person to amend or consent to a waiver or modification of any provision of any
of this Agreement unless the same consideration also is offered to all of the
parties to this Agreement.
11. Miscellaneous.
a. A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the such record owner of such Registrable Securities.
b. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after deposit with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
If to the Company:
Xxxx Xxxxxx and Company, Inc.
000 Xxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
With a copy to:
Xxxx Xxxxxx and Company, Inc.
000 Xxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
and
20
Xxxx Xxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers attached hereto, with copies to such Buyer's representatives as set forth
on the Schedule of Buyers, or to such other address and/or facsimile number
and/or to the attention of such other Person as the recipient party has
specified by written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
c. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
d. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
The City of New York, Borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION
21
HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
e. Subject to the remainder of this paragraph, this Agreement and
the instruments referenced herein constitute the entire agreement among the
parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein. This Agreement and the instruments referenced herein
supersede all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof, provided that this agreement does not
supersede, or modify the obligations of (i) the Prentice Buyers under the letter
agreement dated June, 2006 between the Company and Prentice, which shall remain
in full force and effect in accordance with its terms (each Prentice Investor
shall comply with such letter agreement as if it were Prentice, and the
limitations expressed in that letter agreement shall be applied to all Prentice
Investors collectively as if they were one entity), other than the provisions of
Section 7 thereof, which provisions shall be superseded in their entirety by the
provisions attached hereto as Exhibit A, which are incorporated herein by
reference thereto and made a part hereof, and (ii) (i) the Laminar Buyers under
the letter agreement dated February 15, 2006 between the Company and Laminar
which shall remain in full force and effect in accordance with its terms (each
Laminar Investor shall comply with such letter agreement as if it were the
original signatory thereof, and the limitations expressed in that letter
agreement shall be applied to all Laminar Investors collectively as if they were
one entity), other than the provisions of Section 7 thereof, which provisions
shall be superseded in their entirety by the provisions attached hereto as
Exhibit A, which are incorporated herein by reference thereto and made a part
hereof.
f. Subject to the requirements of Section II.9, this Agreement
shall inure to the benefit of and be binding upon the permitted successors and
assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in identical counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission (including in Adobe Acrobat
format) of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.
i. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as any other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
j. All consents and other determinations required to be made by
the Investors pursuant to this Agreement shall be made, unless otherwise
specified in this Agreement, by holders of a majority of Registrable Securities.
22
k. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party.
l. This Agreement is intended for the benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.
m. The obligations of each Investor hereunder are several and not
joint with the obligations of any other Investor, and no provision of this
Agreement is intended to confer any obligations on any Investor vis-a-vis any
other Investor. Nothing contained herein, and no action taken by any Investor
pursuant hereto, shall be deemed to constitute the Investors as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated herein.
n. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
o. Enforcement. Each party hereto acknowledges that money damages
would not be an adequate remedy in the event that any of the covenants or
agreements in this Agreement are not performed in accordance with its terms, and
it is therefore agreed that in addition to and without limiting any other remedy
or right it may have, the non-breaching party will have the right to an
injunction, temporary restraining order or other equitable relief in any court
of competent jurisdiction enjoining any such breach and enforcing specifically
the terms and provisions hereof.
[SIGNATURE PAGE FOLLOWS]
23
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Investors' Rights Agreement to be duly
executed as of the date first written above.
COMPANY:
XXXX XXXXXX AND COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and Chief Executive
Officer
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Investors' Rights Agreement to be duly
executed as of the date first written above.
PRENTICE BUYERS:
PRENTICE CAPITAL PARTNERS, LP
By: Prentice Capital GP, LLC
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxx
Title: General Counsel
PRENTICE CAPITAL PARTNERS QP, LP
By: Prentice Capital GP, LLC
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxx
Title: General Counsel
PRENTICE CAPITAL OFFSHORE, LTD.
By: Prentice Capital Management, LP, its
investment manager
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxx
Title: General Counsel
GPC XLIII, LLC
By: Prentice Capital Management, LP, its
advisor
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxx
Title: General Counsel
1
PEC I, LLC
By: Prentice Capital Management, LP, its
manager
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxx
Title: General Counsel
S.A.C. CAPITAL ASSOCIATES, LLC
By: S.A.C. Capital Advisors, LLC
By: /s/ Xxxxx Xxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxx
Title: General Counsel
PRENTICE SPECIAL OPPORTUNITIES MASTER,
L.P.
By: Prentice Capital XX XX, LP, its
General Partner
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxx
Title: General Counsel
PRENTICE SPECIAL OPPORTUNITIES, LP
By: Prentice Capital XX XX, LP,
its General Partner
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxx
Title: General Counsel
2
XXXX BUYER:
D. E. SHAW LAMINAR PORTFOLIOS, L.L.C.
By: /s/ Xxxxxx Xxxxxx
------------------------------------
Name: Xxxxxx Xxxxxx
Title: Authorized Signatory
3
SCHEDULE OF BUYERS
(2) (3) (5)
(1) ADDRESS AND NUMBER OF (4) LEGAL REPRESENTATIVE'S
BUYER FACSIMILE NUMBER ACQUIRED SHARES PURCHASE PRICE ADDRESS AND FACSIMILE NUMBER
----- ------------------------------------- --------------- -------------- ------------------------------
PRENTICE CAPITAL c/o Prentice Capital Management, L.P. 100,340 $ 1,133,842 Xxxxxxx Xxxx & Xxxxx LLP
PARTNERS, LP 000 Xxxxx Xxxxxx, 00xx Xxxxx 000 Xxxxx Xxxxxx
Attn: Xxxxxxx Xxxxxxx Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000 Attention: Xxxxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000
PRENTICE CAPITAL c/o Prentice Capital Management, L.P. 484,357 $ 5,473,234.10 Xxxxxxx Xxxx & Xxxxx LLP
PARTNERS QP. LP 000 Xxxxx Xxxxxx, 00xx Xxxxx 000 Xxxxx Xxxxxx
Attn: Xxxxxxx Xxxxxxx Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000 Attention: Xxxxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000
PRENTICE CAPITAL c/o Prentice Capital Management, L.P. 1,063,272 $12,014,973.60 Xxxxxxx Xxxx & Xxxxx LLP
OFFSHORE, LTD. 000 Xxxxx Xxxxxx, 00xx Xxxxx 000 Xxxxx Xxxxxx
Attn: Xxxxxxx Xxxxxxx Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000 Attention: Xxxxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000
GPC XLIII, LLC c/o Prentice Capital Management, L.P. 230,335 $ 2,602,785.50 Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx 000 Xxxxx Xxxxxx
Attn: Xxxxxxx Xxxxxxx Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000 Attention: Xxxxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000
PEC I, LLC c/o Prentice Capital Management, L.P. 351,979 $ 3,977,362.70 Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx 000 Xxxxx Xxxxxx
Attn: Xxxxxxx Xxxxxxx Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000 Attention: Xxxxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000
PRENTICE SPECIAL c/o Prentice Capital Management, L.P. 646,252 $ 7,302,647.60 Xxxxxxx Xxxx & Xxxxx LLP
OPPORTUNITIES 000 Xxxxx Xxxxxx, 00xx Xxxxx 000 Xxxxx Xxxxxx
MASTER, L.P. Attn: Xxxxxxx Xxxxxxx Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000 Attention: Xxxxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000
PRENTICE SPECIAL c/o Prentice Capital Management, L.P. 233,694 $ 2,640,742.60 Xxxxxxx Xxxx & Xxxxx LLP
OPPORTUNITIES, LP 000 Xxxxx Xxxxxx, 00xx Xxxxx 000 Xxxxx Xxxxxx
Attn: Xxxxxxx Xxxxxxx Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000 Attention: Xxxxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000
S.A.C. CAPITAL c/o S.A.C. Capital Advisors, LLC
00 Xxxxxxxx Xxxxx Xxxx
4
ASSOCIATES, LLC Xxxxxxxx, Xxxxxxxxxxx 00000 1,289,504 $14,571,395.20
Attn: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
c/o Prentice Capital Management, L.P.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx: Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
D. E. SHAW LAMINAR c/o X. X. Xxxx & Co., L.P. 4,399,733 $49,716,982.90 McCarter& English, LLP
PORTFOLIOS, L.L.C. 000 Xxxx 00xx Xxxxxx, 39th Floor Xxxx Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 000 Xxxxxxxx Xxxxxx
Telephone: (000) 000-0000 Xxxxxx, Xxx Xxxxxx 00000-0000
Facsimile: (000) 000-0000 Attn: Xxxxx X. Xxxxxxxxx, Esq.
000-000-0000 (direct tel.)
000-000-0000 (direct fax)
xxxxxxxxxx@xxxxxxxx.xxx
5
EXHIBIT A
X. Xxxxxxxx Covenants. For a period of two and one half years after the Closing
Date, Prentice, and, to the extent acting on its behalf, its Representatives
(defined below), shall not directly or indirectly, and Prentice shall cause any
person or entity controlled by Prentice not to,
(x) without the consent of a majority of Independent Directors (defined below),
in any manner acquire, agree to acquire or make any proposal to acquire,
directly or indirectly, any shares of any class of securities of the Company,
except that this clause shall not prohibit:
(A) the acquisition by the Prentice Buyers of up to 2,083,000 shares of Common
Stock if, after giving effect thereto, Prentice, the Prentice Buyers and their
respective affiliates would not have Beneficial ownership (defined below) in
excess of an aggregate of 31% of the outstanding shares of Common Stock
(provided, however, that this limitation shall not apply to, and the Prentice
Buyers will be permitted hereunder to consummate without the consent of a
majority of Independent Directors, the acquisition of Common Stock Beneficially
owned by (i) the Laminar Buyers, (ii) Third Avenue Management LLC and/or (iii)
Franklin Advisory Services, LLC (each of the Persons in clauses (ii) or (iii)
above, an "EXISTING INSTITUTION"), in each case to the extent that Prentice, the
Prentice Buyers or their respective affiliates would not thereafter have
Beneficial ownership in excess of an aggregate of 60% of the outstanding shares
of Common Stock, and provided, in the case of clauses (ii) and (iii) above: on
the date of the consummation of the acquisition by the Prentice Buyers from the
applicable Existing Institution (the "PRENTICE CONSUMMATION DATE"), (x) such
Existing Institution does not have Beneficial ownership of more than 105% of the
number of shares of common stock of the Company it Beneficially owned on the
Closing Date and (y) the applicable Existing Institution enters into an
agreement with the Company to refrain from acquiring any additional Common Stock
for a period of one year commencing on the Prentice Consummation Date, in form
reasonable satisfactory to the Company. If the Prentice Buyers propose to make
an acquisition from any Existing Institution pursuant to the preceding sentence,
at the request of Prentice, the Company will give reasonable access to the
relevant Existing Institution to non-public information regarding the Company
and its business, subject to the execution by such Existing Institution of a
confidentiality agreement with the Company, in form reasonably satisfactory to
the Company.
(B) the acquisition by the Prentice Buyers of securities of the Company as a
result of any stock split, stock dividend, or other distributions or
recapitalizations made by the Company to holders of a class or series of such
securities generally;
(C) the acquisition by the Prentice Buyers of shares of Common Stock pursuant to
a Qualifying Tender Offer;
(D) the acquisition by the Prentice Buyers of shares of Common Stock in
connection with any primary offering of such Common Stock by the Company, at a
cash price per share equal to the price at which such shares were offered for
sale to the public; provided, that the maximum number of shares of Common Stock
that may be acquired by the Prentice Buyers pursuant to this clause (D) shall
equal (1) the number of shares of Common Stock offered in such primary offering
multiplied by (2) the percentage of the outstanding Common Stock Beneficially
owned
6
by Prentice, the Prentice Buyers and their respective affiliates immediately
prior to such primary offering;
(y) nominate, or otherwise propose candidates for election to the Board of
Directors of the Company, or vote or consent as a holder of voting securities of
the Company with respect to the election or removal of directors, if the purpose
or effect of such action would be to cause Independent Directors not to
constitute a majority of the members of the Board of Directors of the Company or
otherwise to cause the Company not to be in compliance with the corporate
governance rules of the New York Stock Exchange (without regard to any
"controlled company" or similar exemption); or
(z) without the prior written consent of Laminar, permit Prentice or any
Prentice Buyer or any of their respective affiliates to, in any manner, acquire,
agree to acquire or make any proposal to acquire, directly or indirectly, shares
of Common Stock if, after giving effect thereto, Prentice, the Prentice Buyers
and their respective affiliates would have Beneficial ownership in excess of an
aggregate of 40% of the outstanding shares of Common Stock, provided, that no
consent from Laminar shall be required (i) if Laminar, the Laminar Buyers and
their respective affiliates do not Beneficially own at least 10% of the
outstanding shares of Common Stock, or (ii) in respect of any acquisition
pursuant to clauses (B), (C), or (D) of paragraph I(x) hereof made by Prentice,
any Prentice Buyer or any of their respective affiliates.
II. Laminar Covenants. For a period of two and one half years after the Closing
Date, Laminar, and, to the extent acting on its behalf, its Representatives,
shall not directly or indirectly, and Laminar shall cause any person or entity
controlled by Laminar not to,
(x) without the consent of a majority of Independent Directors, in any manner
acquire, agree to acquire or make any proposal to acquire, directly or
indirectly, shares of any class of securities of the Company, except that this
clause shall not prohibit:
(A) the acquisition by the Laminar Buyers of up to 2,083,000 shares of Common
Stock if, after giving effect thereto, Laminar, the Laminar Buyers and their
respective affiliates would not have Beneficial ownership (defined below) in
excess of an aggregate of 31% of the outstanding shares of Common Stock
(provided, however, that this limitation shall not apply to, and the Laminar
Buyers will be permitted hereunder to consummate without the consent of a
majority of Independent Directors, the acquisition of Common Stock Beneficially
owned by (i) the Prentice Buyers or (ii) any Existing Institution, in each case
to the extent that Laminar, the Laminar Buyers or their respective affiliates
would not thereafter have Beneficial ownership in excess of an aggregate of 60%
of the outstanding shares of Common Stock, and provided, in the case of clause
(ii) above: on the date of the consummation of the acquisition by the Laminar
Buyers from the applicable Existing Institution (the "LAMINAR CONSUMMATION
DATE"), (x) such Existing Institution does not have Beneficial ownership of more
than 105% of the number of shares of Common Stock it Beneficially owned on the
Closing Date and (y) the applicable Existing Institution enters into an
agreement with the Company to refrain from acquiring any additional Common Stock
for a period of one year commencing on the Laminar Consummation Date, in form
reasonable satisfactory to the Company. If the Laminar Buyers propose to make an
acquisition from any Existing Institution or any other person or entity pursuant
to the
7
preceding sentence, at the request of Laminar, the Company will give reasonable
access to the relevant Existing Institution or any other person or entity to
non-public information regarding the Company and its business, subject to the
execution by such Existing Institution, person or entity of a confidentiality
agreement with the Company, in form reasonably satisfactory to the Company.
(B) the acquisition by the Laminar Buyers of securities of the Company as a
result of any stock split, stock dividend, or other distributions or
recapitalizations made by the Company to holders of a class or series of such
securities generally;
(C) the acquisition by the Laminar Buyers of shares of Common Stock pursuant to
a Qualifying Tender Offer;
(D) the acquisition by the Laminar Buyers of shares of Common Stock from the
Company in connection with any primary offering of such Common Stock by the
Company, at a cash price per share equal to the price at which such shares were
offered for sale to the public; provided, that the maximum number of shares of
Common Stock that may be acquired by the Laminar Buyers pursuant to this clause
(D) shall equal (1) the number of shares of Common Stock offered in such primary
offering multiplied by (2) the percentage of the outstanding Common Stock
Beneficially owned by Laminar, the Laminar Buyers and their respective
affiliates immediately prior to such primary offering;
(y) nominate, or otherwise propose candidates for election to the Board of
Directors of the Company, or vote or consent as a holder of voting securities of
the Company with respect to the election or removal of directors, if the purpose
or effect of such action would be to cause Independent Directors not to
constitute a majority of the members of the Board of Directors of the Company or
otherwise to cause the Company not to be in compliance with the corporate
governance rules of the New York Stock Exchange (without regard to any
"controlled company" or similar exemption); or
(z) without the prior written consent of Prentice, permit Laminar or any Laminar
Buyer or any of their respective affiliates to, in any manner, acquire, agree to
acquire or make any proposal to acquire, directly or indirectly, shares of
Common Stock if, after giving effect thereto, Laminar, the Laminar Buyers and
their respective affiliates would have Beneficial ownership in excess of an
aggregate of 40% of the outstanding shares of Common Stock, provided, that no
consent from Prentice shall be required (i) if Prentice, the Prentice Buyers and
their respective affiliates do not Beneficially own at least 10% of the
outstanding shares of Common Stock, or (ii) in respect of any acquisition
pursuant to clause (B), (C) or (D) of paragraph II(x) hereof made by Laminar,
any Laminar Buyer or any of their respective affiliates.
As used in Sections I. and II. above, the term (i) "REPRESENTATIVES", in the
case of Prentice, means any of Prentice's affiliates, or any of Prentice's or
its affiliates' directors, officers, employees, members, partners, advisors,
agents and other representatives, including, without limitation, attorneys,
accountants, consultants, potential institutional sources of debt financing or
financial advisors, and in the case of Laminar, means any of Laminar's
affiliates, or any of
8
Laminar's or its affiliates' directors, officers, employees, members, partners,
advisors, agents and other representatives, including, without limitation,
attorneys, accountants, consultants, potential institutional sources of debt
financing or financial advisors, (ii) "BENEFICIAL OWNER" (including, with
correlative meaning, the term "Beneficial ownership") has the meaning given to
that term in Rule 13d-3 under the Securities Exchange act of 1934, as amended
(except that, for purposes of clauses I.(x) and (y), and II.(x) and (y), such
definition shall be applied as if the phrase "within 60 days" in paragraph
(d)(1)(i) of such Rule were "whether currently or at any time in the future"),
(iii) "INDEPENDENT DIRECTOR" shall mean a member of the board of directors of
the Company who qualifies as an "Independent Director" for purposes of the
governance rules of the New York Stock Exchange and who would be an "Independent
Director" under such rules if each of Prentice and the Prentice Buyers and
Laminar and the Laminar Buyers were the listed company with respect to which
independence is being determined, and (iv) "QUALIFYING TENDER OFFER" shall mean
a cash tender offer for all of the outstanding shares of common stock of the
Company that is (x) made to all holders of such common stock, (y) is approved
and determined to be fair to the holders of common stock (other than the Buyers
or their affiliates) by a majority of the Independent Directors (after receiving
and taking into account an opinion as to the fairness of the offer to such
holders from an investment bank) and (z) is accepted by the holders of a
majority of the outstanding shares of common stock (excluding, for purposes of
such calculation, any shares of common stock Beneficially owned by Laminar, the
Laminar Buyers and their respective affiliates if the Qualifying Tender Offer is
being initiated by a Laminar Buyer, or owned by Prentice, the Prentice Buyers
and their respective affiliates if the Qualifying Tender Offer is being
initiated by a Prentice Buyer). Nothing in this section shall constitute
approval of any such transaction by the Board of Directors of the Company to the
extent such approval is required by applicable law and/or the terms of those
certain resolutions being delivered to the Buyers pursuant to Section 5.1.9 of
the Securities Purchase Agreements. Other capitalized terms used but undefined
in this Exhibit A shall have the meanings ascribed to them in the Investors'
Rights Agreement to which this document is attached as an exhibit.
9
