REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made as of this
14th day of November, 2001 by and among Xxxxx Inc., an Ohio corporation (the
"Company"), and the "Investors" named in that certain Securities Purchase
Agreement by and among the Company and the Investors, dated the date hereof (the
"Purchase Agreement").
This Agreement is made pursuant to the Purchase Agreement.
The parties hereby agree as follows:
Section 1. Certain Definitions. Capitalized terms used and not otherwise
defined herein shall have the meanings given such terms in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or is under common control
with such Person. For the purposes of this definition, "Control" when used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms "Affiliated" "Controlling" and "Controlled" have
meanings correlative to the foregoing.
"Business Day" means a day, other than a Saturday or Sunday, or other day
on which banks in the State of New York are closed or authorized by law to
close.
"Common Stock" shall mean the Company's common stock, par value $.01 per
share.
"Investors" shall mean the Investors identified in the Purchase Agreement
and any Affiliate or permitted transferee of any Investor who is a subsequent
holder of any Registrable Securities.
"Notes" shall mean the 6% Senior Secured Subordinated Convertible Notes
due 2006 issued pursuant to the Purchase Agreement.
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement, with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
"Register," "registered" and "registration" refer to a registration made
by preparing and filing a Registration Statement or similar document in
compliance with the 1933 Act (as defined below), and the declaration or ordering
of effectiveness of such Registration Statement or document.
"Registrable Securities" shall mean: (a) the Notes; (b) the shares of
Common Stock issuable upon conversion of the Notes; and (iii) any other
securities issued or issuable with respect to or in exchange for Registrable
Securities.
"Registration Statement" shall mean any registration statement of the
Company filed under the 1933 Act that covers the resale of any of the
Registrable Securities pursuant to the provisions of this Agreement, amendments
and supplements to such Registration Statement, including post-effective
amendments, all exhibits and all material incorporated by reference in such
Registration Statement.
"Shares" shall mean the shares of Common Stock issuable upon conversion of
the Notes.
"SEC" means the U.S. Securities and Exchange Commission.
"1933 Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
2. Registration.
(a) Registration Statements.
(i) Promptly following the Closing (but not later than
forty-five (45) days thereafter), the Company shall prepare and file with the
SEC a Registration Statement on Form S-1 (or, if Form S-1 is not then available
to the Company, on such form of registration statement as is then available to
effect a registration for resale of the Registrable Securities, subject to the
Investors' prior written consent), covering the resale of the Registrable
Securities and with regard to the Shares shall register an amount at least equal
to the number of shares of Common Stock issuable to the Investors on the Closing
Date pursuant to the Notes based upon the initial Conversion Price (as defined
in the Notes). Such Registration Statement also shall cover, to the extent
allowable under the 1933 Act and the rules promulgated thereunder (including
Rule 416), such indeterminate number of additional shares of Common Stock
resulting from stock splits, stock dividends or similar transactions with
respect to the Registrable Securities. The Company shall not permit any
securities other than the Registrable Securities to be included in such
Registration Statement. The Registration Statement (and each amendment or
supplement thereto, and each request for acceleration of effectiveness thereof)
shall be provided in accordance with Section 3(c) hereof to the Investors and
their counsel prior to its filing or other submission. The Company shall use its
reasonable commercial efforts to cause the Registration Statement to be filed
pursuant to this Section 2(a)(i) to be declared effective by the SEC not later
than the earlier of: (A) the date that is 135 days after the Closing Date; and
(B) ninety (90) days after the Registration Statement is filed with the SEC. The
Company shall keep the Registration Statement filed pursuant to this Section
2(a)(i) effective and current under the 1933 Act until the date that is two (2)
years after the Closing Date, unless a replacement Registration Statement filed
pursuant to Section 2(a)(iii) hereof shall have been declared effective by the
SEC prior to the expiration of such two (2) year period, in which case the time
provisions set forth in Section 2(a)(iii) hereof shall control, provided
however, that such two (2)
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year period shall be extended until the date on which all of the Registrable
Securities are eligible for resale pursuant to Rule 144(k) under the 1933 Act.
(ii) Additional Registrable Securities. Upon the written
demand of any Investor and upon the issuance or deemed issuance by the Company
of shares of Common Stock such as to trigger the anti-dilution provisions
contained in the Notes regarding issuances or deemed issuances by the Company of
shares of Common Stock at a price per share less than the then effective
Conversion Price, or any other change in the Conversion Price such that
additional shares of Common Stock become issuable pursuant to the Notes (the
"Additional Note Shares"), the Company shall prepare and file with the SEC one
or more Registration Statements on Form S-1 or Form S-3 if the Company is then
eligible to use Form S-3 (or, if Form S-1 or Form S-3, as the case may be, is
not then available to the Company, on such form of registration statement as is
then available to effect a registration for resale of such additional shares of
Common Stock, subject to the Investors' prior written consent) covering the
resale of the Additional Note Shares, but only to the extent the Additional Note
Shares are not at the time covered by an effective Registration Statement. Such
Registration Statement also shall cover, to the extent allowable under the 1933
Act and the rules promulgated thereunder (including Rule 416), such
indeterminate number of additional shares of Common Stock resulting from stock
splits, stock dividends or similar transactions with respect to the Additional
Note Shares. The Company may permit securities other than the Registrable
Securities to be included in such Registration Statement; provided, that the
inclusion of such securities in such Registration Statement shall not affect or
limit the number of Registrable Securities included in such Registration
Statement. The Registration Statement (and each amendment or supplement thereto,
and each request for acceleration of effectiveness thereof) shall be provided in
accordance with Section 3(c) hereof to the Investors and their counsel prior to
its filing or other submission. A Registration Statement covering the Additional
Note Shares shall be filed by the Company with the SEC within thirty (30) days
of the request of any Investor. The Company shall use its reasonable commercial
efforts to cause the Registration Statement to be filed pursuant to this Section
2(a)(ii) to be declared effective by the SEC not later than the earlier of: (A)
the date that is one hundred and twenty (120) days after the date on which an
Investor shall have requested such registration of Additional Note Shares; and
(B) ninety (90) days after the Registration Statement is filed with the SEC. The
Company shall keep the Registration Statement filed pursuant to this Section
2(a)(ii) effective and current under the 1933 Act until the date on which all of
the Registrable Securities are eligible for resale pursuant to Rule 144(k) under
the 1933 Act, unless a replacement Registration Statement filed pursuant to
Section 2(a)(iii) hereof shall have been declared effective by the SEC prior to
the expiration of such period, in which case the time provisions set forth in
Section 2(a)(iii) hereof shall control.
(iii) Registration on Form S-3. Promptly after such time as
the Company is eligible to use Form S-3 (but not later than fifteen (15) days
after becoming eligible), irrespective of any prior filing of any Registration
Statement in respect of any Registrable Securities, the Company shall prepare
and file with the SEC a replacement Registration Statement on Form S-3 (or, if
Form S-3 is not then available to the Company, on such form of registration
statement as is then available to effect a registration for resale of the
Registrable Securities, subject to the Investors' prior written consent),
covering the resale of the Registrable Securities and with regard to the Shares
shall register an amount at least equal to the number of shares of Common Stock
issuable to the Investors on the date of filing such
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Registration Statement on Form S-3 pursuant to the Notes based upon the then
effective Conversion Price. Such Registration Statement also shall cover, to the
extent allowable under the 1933 Act and the rules promulgated thereunder
(including Rule 416), such indeterminate number of additional shares of Common
Stock resulting from stock splits, stock dividends or similar transactions with
respect to the Registrable Securities. The Company may permit securities other
than the Registrable Securities to be included in such Registration Statement;
provided, that the inclusion of such securities in such Registration Statement
shall not affect or limit the number of Registrable Securities included in such
Registration Statement. The Registration Statement (and each amendment or
supplement thereto, and each request for acceleration of effectiveness thereof)
shall be provided in accordance with Section 3(c) hereof to the Investors and
their counsel prior to its filing or other submission. The Company shall use its
reasonable commercial efforts to cause the Registration Statement to be filed
pursuant to this Section 2(a)(iii) to be declared effective by the SEC not later
than the earlier of: (A) the date that is seventy five (75) days after the date
on which the Company became eligible to use Form S-3; and (B) sixty (60) days
after the Registration Statement is filed with the SEC. The Company shall keep
the Registration Statement filed pursuant to this Section 2(a)(iii) effective
and current under the 1933 Act until the date on which all of the Registrable
Securities are eligible for resale pursuant to Rule 144(k) of the 1933 Act.
(iv) (A) If the Company at any time proposes to register any
of its securities under the 1933 Act for sale to the public pursuant to an
underwritten offering, whether for its own account or for the account of other
stockholders of the Company or both, each such time it will promptly give
written notice to all holders of the Registrable Securities (whether or not such
Registrable Securities are currently registered under the 0000 Xxx) of its
intention so to do. Upon the written request of any such holder, which is
received by the Company within fifteen (15) days after the giving of any such
notice by the Company, to register and include any or all of its Registrable
Securities (whether or not currently registered under the 0000 Xxx) in such
underwritten offering, the Company will use its reasonable commercial efforts to
cause such Registrable Securities as to which registration and inclusion shall
have been so requested to be included in such registration statement. The right
of any holder of such Registrable Securities to include Registrable Securities
in such registration shall be conditioned upon such holder's participation in
such underwriting to the extent provided herein. The Company may abandon or
withdraw any such registration at any time without any liability or obligation
to any holder of Registrable Securities.
(B) Notwithstanding any other provision of this Section
2(a)(iv), if the managing underwriter or underwriters determine that the number
of shares to be included in such registration (including any securities that the
Company, the holders of Registrable Securities and any other stockholders with
registration rights (other than Registrable Securities) exceeds the largest
number of shares that can be sold without having an adverse effect on such
offering (the "Maximum Offering Size"), the Company will include in such
registration, in the following priority, up to the Maximum Offering Size:
(w) first, that number of the securities held
by any stockholders exercising a demand registration pursuant
to a written agreement between such stockholders and the
Company, if any, as would not cause the offering to exceed
the Maximum Offering Size (allocated, if
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necessary for the offering not to exceed the Maximum Offering
Size, pro rata among such holders on the basis of the number
of shares of registrable securities so requested to be
included in such registration); and
(x) second, if the Maximum Offering Size has
not been exceeded, that number of securities proposed to be
registered for the account of the Company; and
(y) third, if the Maximum Offering Size has
not been exceeded, all Registrable Securities requested to be
included in such registration by the holders of Registrable
Securities and any other securities proposed to be registered
for the account of any person with piggyback registration
rights pursuant to a written agreement executed prior to the
delivery of the notice set forth in Section 4(a) hereof
(allocated, if necessary for the offering not to exceed the
Maximum Offering Size, pro rata among such holders on the
basis of the number of shares of Registrable Securities and
other securities so requested to be included in such
registration); and
(z) fourth, if the Maximum Offering Size has
not been exceeded, any securities proposed to be registered
for the account of any other persons with such priorities
among them as the Company shall determine.
(b) Expenses. The Company will pay all expenses associated with each
registration under this Agreement, including, without limitation, filing and
printing fees, counsel and accounting fees and expenses, costs associated with
clearing the Registrable Securities for sale under applicable state securities
laws, listing fees and the Investors' reasonable expenses in connection with the
registration including, without limitation, the reasonable attorney fees of one
counsel to the Investors, but excluding discounts, commissions, fees of
underwriters, selling brokers, dealer managers or similar securities industry
professionals with respect to the Registrable Securities being sold.
(c) Failure to Comply. If a Registration Statement: (i) is not filed
within the time periods set forth in any of Section 2(a)(i) through Section
2(a)(iii) hereof, as the case may be; (ii) is not effective by the time set
forth in any of Section 2(a)(i) through Section 2(a)(iii) hereof, as the case
may be; or (iii) is suspended or otherwise is not effective or current for any
reason for at least thirty (30) days during any period that it is to be
effective or current as provided in any of Section 2(a)(i) through Section
2(a)(iii) and Section 3(j) hereof, as the case may be, the per annum interest
rate pursuant to the Notes shall increase by one-half of one percent (0.50%) for
each thirty (30) day period (or pro rata for any portion thereof): (x) during
which the obligation to file a Registration Statement is not met; (y) during a
period when a Registration Statement was to be declared effective and has not
been declared effective; or (z) during a period when a Registration Statement
was suspended, otherwise not effective or current; provided that the interest
rate pursuant to the Notes shall return to the interest rate in effect on the
Closing Date upon the satisfaction by the Company of its applicable obligation
under Section 2(a) or Section 3(j) hereof. Such adjustment in the interest rate
under the Notes, if any, is
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liquidated damages and not a penalty and shall be the sole monetary remedy
available to the holder for the failure of the Company to comply with Sections
2(a) and 3(j) hereof, provided, however that if an Acceleration Notice (as
defined in the Notes) has been delivered the interest rate under the Notes shall
be as provided in Section 1(b) of the Notes.
(d) Underwritten Offering. If any of the Registrable Securities are
to be sold in an underwritten offering at the request of the Investors, the
investment banker that will administer the offering will be selected by the
Company with the consent of the holders of a majority of the Registrable
Securities included in such offering, which consent shall not be unreasonably
withheld. No holder of Registrable Securities may participate in any
underwritten offering hereunder unless such holder: (i) agrees to sell its
Registrable Securities on the basis provided in any underwriting agreements
approved by the Persons entitled hereunder to approve such arrangements; and
(ii) completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
arrangements.
3. Company Obligations. The Company will use commercially reasonable
efforts to effect the registration of the Registrable Securities in accordance
with the terms hereof, and pursuant thereto the Company will, as expeditiously
as possible:
(a) use commercially reasonable efforts to cause such Registration
Statement to become effective and to remain continuously effective for the
periods provided in Section 2(a) hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement and the Prospectus as may be necessary
to keep the Registration Statement effective for the period specified in Section
2(a) hereof and to comply with the provisions of the 1933 Act and the 1934 Act
with respect to the distribution of all of the Registrable Securities covered
thereby;
(c) provide copies to and permit counsel designated by the Investors
to review each Registration Statement and all amendments and supplements thereto
no fewer than seven (7) days prior to their filing with the SEC and not file any
document to which such counsel reasonably objects;
(d) furnish to the Investors and their legal counsel: (i) promptly
after the same is prepared and publicly distributed, filed with the SEC, or
received by the Company (but not later than two (2) Business Days after the
filing date, receipt date or sending date, as the case may be) one (1) copy of
any Registration Statement and any amendment thereto, each preliminary
prospectus and Prospectus and each amendment or supplement thereto, and each
letter written by or on behalf of the Company to the SEC or the staff of the
SEC, and each item of correspondence from the SEC or the staff of the SEC, in
each case relating to such Registration Statement (other than any portion of any
thereof which contains information for which the Company has sought confidential
treatment); and (ii) such number of copies of a Prospectus, including a
preliminary prospectus, and all amendments and supplements thereto and such
other documents as each Investor may reasonably request in order to facilitate
the
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disposition of the Registrable Securities owned by such Investor that are
covered by the related Registration Statement;
(e) in the event of an underwritten offering, the Company shall
enter into and perform its reasonable obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the underwriter of such
offering;
(f) if required by the underwriter, or if any Investor is described
in the Registration Statement as an underwriter, the Company shall furnish, on
the effective date of the Registration Statement (except with respect to clause
3(f)(i) below) and on the date that Registrable Securities are delivered to an
underwriter, if any, for sale in connection with the Registration Statement
(including any Investor deemed to be an underwriter): (i) in the case of an
underwritten offering, an opinion, dated as of the closing date of the sale of
Registrable Securities to the underwriters, from independent legal 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 underwriters and the Investors participating in such
underwritten offering and (ii) a letter, dated as of the effective date of such
Registration Statement and confirmed as of the applicable dates described above,
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 underwriters
(including any Investor deemed to be an underwriter);
(g) use commercially reasonable efforts to: (i) prevent the issuance
of any stop order or other suspension of effectiveness and; (ii) if such order
is issued, obtain the withdrawal of any such order at the earliest possible
moment;
(h) prior to any public offering of Registrable Securities, use
commercially reasonable efforts to register or qualify or cooperate with the
Investors and their counsel in connection with the registration or qualification
of such Registrable Securities for offer and sale under the securities or blue
sky laws of such jurisdictions requested by the Investors and do any and all
other commercially reasonable acts or things necessary or advisable to enable
the distribution in such jurisdictions of the Registrable Securities covered by
the Registration Statement; and provide evidence of any such action so taken to
such Investor promptly upon such filing; and continue such qualification at all
times through the resale of all Registrable Securities; provided, however, that
the Company will not be required to (x) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (h), (y) subject itself to general taxation in any such jurisdiction
or (z) file a general consent to service of process in any such jurisdiction.
(i) use commercially reasonable efforts to cause all Registrable
Securities covered by a Registration Statement to be listed on each securities
exchange, interdealer quotation system or other market on which similar
securities issued by the Company are then listed;
(j) immediately notify the Investors, at any time when a Prospectus
relating to Registrable Securities is required to be delivered under the 1933
Act, upon discovery
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that, or upon the happening of any 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 omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing or is no longer current, and at the
request of any such holder, as promptly as reasonably practicable prepare and
furnish to such holder a reasonable number of copies of a supplement to or an
amendment of such Prospectus as may be necessary such that, as thereafter
delivered to the purchasers of such Registrable Securities, such Prospectus
shall (i) not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing and (ii) be
current; and
(k) otherwise use commercially reasonable efforts to comply in all
material respects with all applicable rules and regulations of the SEC under the
1933 Act and the 1934 Act, take such other actions as may be reasonably
necessary to facilitate the registration of the Registrable Securities
hereunder; and make available to its security holders, as soon as reasonably
practicable, but not later than the date on which such filings are made with the
SEC, copies of the Company's filings under the 1933 Act and 1934 Act made with
the SEC.
(l) with respect to any Registration Statement filed or to be filed
pursuant to Section 2(a) above, if the Board of Directors of the Company
determines that, in its reasonable good faith judgment, it would (because of the
existence of, or in reasonable anticipation of, any acquisition or corporate
reorganization or other transaction, financing activity, or other development
involving the Company or any Subsidiary (as defined in the Purchase Agreement),
or the unavailability for reasons beyond the Company's control of any required
financial statements related to such acquisition or corporate reorganization or
any other event or condition of similar significance to the Company or any
Subsidiary) be materially disadvantageous (a "Material Development Condition")
to the Company or any Subsidiary to file such Registration Statement with the
SEC, or to amend or supplement a Registration Statement that has been filed with
the SEC, then the Company shall, notwithstanding any other provisions of this
Agreement, be entitled, upon the giving to the Investors of a certificate signed
by an executive officer of the Company stating that in the reasonable good faith
judgment of the Board of Directors that a Material Development Condition has
occurred (a "Delay Notice"), (i) to cause sales of Registrable Securities by the
Investors pursuant to such Registration Statement to cease or (ii) in the event
no such Registration Statement has yet been filed or declared effective, to
delay the filing of any such Registration Statement until, in the reasonable
good faith judgment of the Board of Directors, such Material Development
Condition no longer exists (notice of which the Company shall promptly deliver
to the holder of the Registrable Securities). Notwithstanding the foregoing
provisions of this Section 3(l): (1) in no event may such cessation or delay be,
for each such Registration Statement, for a period of more than ninety (90)
consecutive days in any twelve-month period from the giving of its Delay Notice
to the Investors with respect to such Material Development Condition, as above
provided; and (2) in the event a Registration Statement is filed and
subsequently withdrawn or if the Investors are required to cease using an
effective Registration Statement, by reason of any existing or anticipated
Material Development Condition as provided above, the Company shall cause a new
Registration Statement or an amendment or supplement to an effective
Registration Statement covering the Registrable Securities to be filed with the
SEC as soon as practicable, but in no event more than thirty (30) days, after
such Material Development Condition ceases to exist or, if sooner, as soon
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as practicable after the expiration of such ninety (90) day period.
Nothing contained in this Section 3(l) shall modify the Company's obligations
under Section 1(c) of the Notes.
4. Due Diligence Review; Information. The Company shall make available,
during normal business hours and on reasonable notice, for inspection and review
by the Investors, advisors to and representatives of the Investors (who may or
may not be affiliated with the Investors and who are reasonably acceptable to
the Company), any underwriter participating in any disposition of Registrable
Securities on behalf of the Investors pursuant to a Registration Statement or
amendments or supplements thereto or any blue sky, NASD or other filing, all
financial and other records, all SEC Filings (as defined in the Purchase
Agreement) and other filings with the SEC, and all other corporate documents and
properties of the Company as may be reasonably necessary for the purpose of such
review, and cause the Company's officers, directors and employees, within a
reasonable time period, to supply all such information reasonably requested by
the Investors or any such representative, advisor or underwriter in connection
with such Registration Statement (including, without limitation, in response to
all questions and other inquiries reasonably made or submitted by any of them),
prior to and from time to time after the filing and effectiveness of the
Registration Statement for the sole purpose of enabling the Investors and such
representatives, advisors and underwriters and their respective accountants and
attorneys to conduct initial and ongoing due diligence with respect to the
Company and the accuracy of such Registration Statement.
The Company shall not disclose material nonpublic information to the Investors,
or to advisors to or representatives of the Investors, unless prior to
disclosure of such information the Company identifies such information as being
material nonpublic information and provides the Investors, such advisors and
representatives with the opportunity to accept or refuse to accept such material
nonpublic information for review. If the Investors decide to accept such
material nonpublic information, they shall not receive such information until
they shall have entered into a confidentiality agreement with the Company, in
form and substance satisfactory to the Company.
5. Obligations of the Investors.
(a) Each Investor shall furnish in writing to the Company such
information regarding itself, the Registrable Securities held by it, the
intended method of disposition of the Registrable Securities held by it and such
other information as may be required to be disclosed by it under the 1933 Act,
as shall be reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such registration
as the Company may reasonably request. At least ten (10) Business Days prior to
the first anticipated filing date of any Registration Statement, the Company
shall notify each Investor of the information the Company requires from such
Investor if such Investor elects to have any of the Registrable Securities
included in the Registration Statement. An Investor shall provide such
information to the Company at least five (5) Business Days prior to the first
anticipated filing date of such Registration Statement if such Investor elects
to have any of the Registrable Securities included in such Registration
Statement.
(b) Each Investor, by its 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 a Registration Statement
hereunder, unless such Investor has notified
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the Company in writing of its election to exclude all of its Registrable
Securities from such Registration Statement.
(c) In the event of an underwritten offering which includes
Registrable Securities of the Investors, each such Investor agrees to enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary indemnification and
contribution obligations, with the managing underwriter of such offering and
take such other actions as are reasonably required in order to expedite or
facilitate the disposition of the Registrable Securities.
(d) Each Investor agrees that, upon receipt of any Delay Notice or
any notice from the Company of the happening of an event pursuant to Section
3(j) hereof, such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities, until the Investor's receipt of the copies of the
supplemented or amended Prospectus filed with the SEC and declared effective
and, if so directed by the Company, the Investor shall deliver to the Company
(at the expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in the Investor's possession of the
Prospectus covering the Registrable Securities current at the time of receipt of
such notice.
(e) No Investor may participate in any third party underwritten
registration hereunder unless it: (i) agrees to sell the Registrable Securities
on the basis provided in any underwriting arrangements in usual and customary
form entered into by the Company; (ii) completes and executes all
questionnaires, powers of attorney, custody agreements, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements; and (iii) agrees to pay its pro rata share of
all underwriting discounts and commissions. Notwithstanding the foregoing, no
Investor shall be required to make any representations to such underwriter,
other than those with respect to itself and the Registrable Securities owned by
it, including its right to sell the Registrable Securities, and any
indemnification in favor of the underwriter by the Investors shall be several
and not joint and limited in the case of any Investor, to the proceeds received
by such Investor from the sale of its Registrable Securities. The scope of any
such indemnification in favor of an underwriter shall be limited to the same
extent as the indemnity provided in Section 6(b) hereof.
6. Indemnification.
(a) Indemnification by the Company. The Company will, to the fullest
extent permitted by law, indemnify and hold harmless each Investor and its
officers, directors, members, employees and agents, successors and assigns, and
each other person, if any, who controls such Investor (within the meaning of the
1933 Act), against any losses, claims, damages, liabilities and expenses
(including reasonable attorney fees), joint or several, to which such Investor,
officer, director, member, or controlling person may become subject under the
1933 Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of any material fact contained in any
Registration Statement, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof; (ii) any blue sky
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application or other document executed by the Company specifically for that
purpose or based upon written information furnished by the Company filed in any
state or other jurisdiction in order to qualify any or all of the Registrable
Securities under the securities laws thereof (any such application, document or
information herein called a "Blue Sky Application"); (iii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not misleading; (iv) any
violation by the Company or its agents of any rule or regulation promulgated
under the 1933 Act applicable to the Company or its agents and relating to
action or inaction required of the Company in connection with such registration;
or (v) any failure to register or qualify the Registrable Securities included in
any such Registration in any state where the Company or its agents has
affirmatively undertaken or agreed in writing that the Company will undertake
such registration or qualification on an Investor's behalf (the undertaking of
any underwriter chosen by the Company being attributed to the Company) and will
reimburse such Investor, and each such officer, director or member and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case if and to the extent that any such loss, claim, damage or
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information furnished by such Investor or any such controlling person in
writing specifically for use in such Registration Statement or Prospectus. This
Section 6(a) shall not inure to the benefit of any Investor from whom the person
asserting any such losses, claims, damages or liabilities purchased Registrable
Securities if a copy of the Prospectus (as then amended or supplemented and
furnished by the Company to the Investor) was not sent or given by or on behalf
of such Investor to such person, if such is required by law, within the time
required by the 1933 Act and if such Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such loss, claim, damage or
liability.
(b) Indemnification by the Investors. In connection with any
registration pursuant to the terms of this Agreement, each Investor will furnish
to the Company in writing such information as the Company reasonably requests
concerning the holders of Registrable Securities or the proposed manner of
distribution for use in connection with any Registration Statement or Prospectus
and agrees, severally but not jointly, to indemnify and hold harmless, to the
fullest extent permitted by law, the Company, its directors, officers,
employees, stockholders and each person who controls the Company (within the
meaning of the 0000 Xxx) against any losses, claims, damages, liabilities and
expenses (including reasonable attorney fees) resulting from any untrue
statement or alleged untrue statement of a material fact or any omission or
alleged omission of a material fact required to be stated in the Registration
Statement or Prospectus or preliminary prospectus or amendment or supplement
thereto or necessary to make the statements therein not misleading, to the
extent, but only to the extent that such untrue statement or omission is
contained in any information furnished in writing by such Investor to the
Company specifically for inclusion in such Registration Statement or Prospectus
or amendment or supplement thereto. In no event shall the liability of an
Investor be greater in amount than the dollar amount of the proceeds (net of all
expenses paid by such Investor and the amount of any damages such holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission) received by such Investor upon the
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sale of the Registrable Securities included in the Registration Statement giving
rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder shall: (i) give prompt notice to the indemnifying
party of any claim with respect to which it seeks indemnification; and (ii)
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party; provided that any person
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in (but not control) the defense of such claim, but
the fees and expenses of such counsel shall be at the expense of such person
unless: (A) the indemnifying party has agreed to pay such fees or expenses; or
(B) the indemnifying party shall have failed to assume the defense of such claim
and employ counsel reasonably satisfactory to such person; or (C) in the
reasonable judgment of any such person, based upon written advice of its
counsel, a conflict of interest exists between such person and the indemnifying
party with respect to such claims (in which case, if the person notifies the
indemnifying party in writing that such person elects to employ separate counsel
at the expense of the indemnifying party, the indemnifying party shall not have
the right to assume the defense of such claim on behalf of such person);
provided, further, that the indemnifying party shall not be obligated to pay the
fees and expenses of more than one counsel for all parties indemnified by such
indemnifying party; and provided, further, that the failure of any indemnified
party to give notice as provided herein shall not relieve the indemnifying party
of its obligations hereunder, except to the extent that such failure to give
notice shall materially adversely affect the indemnifying party in the defense
of any such claim or litigation. No indemnifying party will, except with the
consent of the indemnified party, consent to entry of any judgment or enter into
any settlement that does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. The indemnifying party will
not be subject to any liability for any settlement made without its consent.
(d) Contribution. If for any reason the indemnification provided for
in the preceding subparagraphs (a) and (b) is unavailable to an indemnified
party or insufficient to hold it harmless, other than as expressly specified
therein, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative fault of
the indemnified party and the indemnifying party, as well as any other relevant
equitable considerations. No person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the 1933 Act shall be entitled to
contribution from any person not guilty of such fraudulent misrepresentation. In
no event shall the contribution obligation of a holder of Registrable Securities
be greater in amount than the dollar amount of the proceeds (net of all expenses
paid by such holder and the amount of any damages such holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission) received by it upon the sale of the Registrable Securities
giving rise to such contribution obligation.
7. Miscellaneous.
(a) Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of
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the Company and the Required Investors. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
Registrable Securities, each future holder of all such securities, and the
Company.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made as set forth in Section 8.4 of the Purchase
Agreement.
(c) Assignments and Transfers by Investors. The provisions of this
Agreement shall be binding upon and inure to the benefit of the Investors and
their respective successors and assigns. An Investor may transfer or assign, in
whole or, from time to time in part, to one or more Persons its rights hereunder
in connection with the transfer of Registrable Securities aggregating at least
ten percent (10%) in principal amount of the outstanding Notes of such Investor,
or ten percent (10%) of all of the Shares of such Investor, as the case may be,
by such Investor to such Person, provided that such Investor complies with all
laws applicable thereto and the Purchase Agreement, provides written notice of
assignment to the Company promptly after such assignment is effected, and any
such transferee agrees to be bound by the provisions of this Agreement.
(d) Assignments and Transfers by the Company. This Agreement may not
be assigned by the Company (whether by operation of law or otherwise) without
the prior written consent of the Required Investors.
(e) Benefits of the Agreement. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
(f) Counterparts; Faxes. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also
be executed via facsimile, which shall be deemed an original.
(g) Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(h) 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 but shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereby
waive any provision of law which renders any provisions hereof prohibited or
unenforceable in any respect.
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(i) Further Assurances. The parties shall execute and deliver all
such further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.
(j) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
(k) Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of
New York without regard to the choice of law principles thereof. Each of the
parties hereto irrevocably submits to the exclusive jurisdiction of the courts
of the State of New York located in New York County and the United States
District Court for the Southern District of New York for the purpose of any
suit, action, proceeding or judgment relating to or arising out of the
Agreements and the transactions contemplated thereby. Service of process in
connection with any such suit, action or proceeding may be served on each party
hereto anywhere in the world by the same methods as are specified for the giving
of notices under this Agreement. Each of the parties hereto irrevocably consents
to the jurisdiction of any such court in any such suit, action or proceeding and
to the laying of venue in such court. Each party hereto irrevocably waives any
objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
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IN WITNESS WHEREOF, the parties have executed this Agreement or caused
their duly authorized officers to execute this Agreement as of the date first
above written.
The Company: XXXXX INC.
By: /s/
--------------------------------------
Name:
Title:
The Investors: PALISADE CONCENTRATED EQUITY PARTNERSHIP, L.P.
By: Palisade Concentrated Holdings, L.L.C.
as General Partner
By: /s/
--------------------------------------
Name: Xxxx Xxxxxxx
Title: Member
PEGASUS PARTNERS II, L.P.
By: Pegasus Investors II GP, LLC,
as General Partner
By: /s/
--------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Vice President
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