Exhibit 5
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
May 3, 2000, between the undersigned former stockholder ("Stockholder") of
Xxxxxxxxx.xxx, Inc., a Delaware corporation f/k/a XxxXxxxx.xxx, Inc. (the
"Company"), and HA-LO Industries, Inc., an Illinois corporation ("Acquiror").
WHEREAS, the Company, Acquiror and HA-LO Industries, Inc., a Delaware
corporation and wholly owned subsidiary of Acquiror ("Acquiror Sub"), have
entered into an Agreement and Plan of Merger and Plan of Reorganization (the
"Merger Agreement"), providing for the merger (the "Merger") of the Company with
and into Acquiror Sub pursuant to the terms and conditions of the Merger
Agreement;
WHEREAS, upon consummation of the Merger, the stockholders of the Company
(the "Stockholders") will receive shares of Common Stock, no par value, of
Acquiror ("Common Stock") and shares of Series A Convertible Preferred Stock, no
par value, of Acquiror ("Preferred Stock");
WHEREAS, Acquiror has agreed to register the shares of Common Stock issued
to the Stockholder in the Merger, together with the shares of Common Stock
issuable upon conversion of Preferred Stock issued to the Stockholder in the
Merger (together, "Acquiror Stock"), and any shares of capital stock issued or
issuable, from time to time (with any adjustments), on or in exchange for or
otherwise with respect to the Acquiror Stock and such shares of capital stock
(collectively, the "Registrable Securities").
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. Defined Terms. The following terms shall have the meanings set
forth below. All of the capitalized terms used herein but not otherwise defined
shall have the meanings specified in the Merger Agreement.
(a) "Damages" means, with respect to any Registration Statement, any
losses, claims, damages, or liabilities (or actions in respect thereof)
that arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in such Registration Statement,
including any preliminary prospectus or final prospectus contained therein
or any amendments or supplements thereto, the omission or alleged omission
to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or any violation
or alleged violation of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law.
(b) "register," "registered" and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the U.S. Securities Act of 1933 ("Securities
Act") and pursuant to Rule 415 under the Securities Act or any successor
rule providing for offering securities on a continuous basis ("Rule 415"),
and the declaration or ordering of effectiveness of such Registration
Statement by the United States Securities and Exchange Commission (the
"Commission"); and
(c) "Registration Statement" means a registration statement of the
Company registered under the Securities Act pursuant to the provisions of
this Agreement.
(d) "Representatives" means, with respect to any person or entity,
the officers, directors, partners, members, trustees, agents, employees
and successors of such person or entity.
SECTION 2. Step Registration of Acquiror Stock. Within ten (10) days
following the Effective Time, Acquiror shall, for the benefit of the
Stockholder, effect the registration for resale of twenty-five percent (25%) of
the Registrable Securities. Acquiror further agrees that (i) it shall effect the
registration for resale of an additional fifteen percent (15%) of the original
total of Registrable Securities (including any Registrable Securities issued
with respect thereto after the Merger) on or prior to the last day of the three
(3) month period beginning at the Effective Time, (ii) it shall effect the
registration for resale of an additional thirty-three and one-third percent (33
1/3%) of the original total of Registrable Securities (including any Registrable
Securities issued with respect thereto after the Merger) on or prior to the last
day of the nine (9) month period beginning at the Effective Time, and (iii) it
shall effect the registration for resale of the balance of such Registrable
Securities on or prior to the second anniversary of the Effective Time, to the
extent such Registrable Securities are then owned by the Stockholder. The
percentage of Registrable Securities registered from time to time shall consist
of outstanding Common Stock and Common Stock issuable upon conversion of
outstanding Preferred Stock, in such proportions as shall be identified by the
Stockholder pursuant to Section 2(i). Acquiror shall use all reasonable efforts
to effect the registration of the Registrable Securities of Acquiror Stock for
resale under the Securities Act, by performing the following:
(a) The registration for resale shall be effected through a shelf
registration statement and related prospectus (collectively, "Resale
Prospectus") covering the applicable Registrable Securities, prepared and
filed by Acquiror with the Commission. Acquiror shall cause each Resale
Prospectus to become effective and remain effective until all Registrable
Securities have either been sold or may be resold under Rule 144(k) of the
Securities Act without limitation as to volume or manner of sale.
(b) Acquiror shall, if reasonably requested by the Stockholder, use
its best efforts to register, or obtain and maintain exemption from
registration or qualification for, such Registrable Securities under the
Blue Sky Laws of each state as the Stockholder shall reasonably request,
and update and amend such
2
registration, qualification or exemption and take any other action which
may be reasonably necessary or advisable to enable the Stockholder to
consummate the sale or disposition of Acquiror Stock in such states;
provided, however, that Acquiror shall not be required to (i) qualify to
do business as a foreign corporation in any such state, or (ii) consent to
general service of process in any such state.
(c) Acquiror shall identify and cause there to be provided at all
times to the Stockholder a transfer agent for all the Acquiror Stock
required to be registered under this Agreement.
(d) Acquiror shall provide, or cause there to be provided, such
certificates, instruments and any other documents required under the
Securities Act, requested by the Commission in connection with the sale by
the Stockholder of Registrable Securities covered by a Resale Prospectus,
or otherwise necessary or reasonably required in connection with, or to
facilitate, the sale of Registrable Securities in accordance with this
Agreement.
(e) Acquiror shall file with the appropriate stock exchange or
trading system upon which Acquiror Shares are then listed or qualified a
notification form for the listing of additional shares with respect to the
Registrable Securities at the time(s) and in the manner required by each
such exchange or trading system.
(f) Acquiror shall promptly prepare and file with the Commission
such required amendments and supplements to each Resale Prospectus as may
be necessary to update and keep such Resale Prospectus effective and
available for use during the Registration Period and to comply with the
provisions of the Securities Act with respect to the sale of securities
covered by such Resale Prospectus; provided, however, that Acquiror shall
be entitled to postpone or suspend, for a reasonable period of time (the
"Blackout Period"), the filing, effectiveness or use of any Registration
Statement in the event that (i) there shall be a proposed, material
merger, acquisition, financing or other major event (any such event, a
"Corporate Opportunity") as to which Acquiror has entered into a
definitive heads of agreement, letter of intent, term sheet or other
similar arrangement required to be disclosed under applicable securities
laws and (ii) the Board of Directors of Acquiror shall reasonably believe
that public disclosure with respect to such Corporate Opportunity at that
time would materially jeopardize Acquiror's ability to effect the
Corporate Opportunity or the benefit to Acquiror presented by such
Corporate Opportunity and that the failure to pursue such Corporate
Opportunity at such time would materially and adversely affect Acquiror's
business; provided, however, that Acquiror shall only be entitled to
exercise its rights with respect to all Blackout Periods for a total of 90
days during any rolling 12-month period during the term of this Agreement.
Acquiror shall use all reasonable efforts to minimize the duration of any
Blackout Period and make appropriate public disclosure as soon as
practicable and to terminate the Blackout Period, consistent with the
foregoing. At the expiration of any Blackout Period and without any
further request from the Stockholder, Acquiror shall effect
3
its obligations pursuant to Section 2 of this Agreement.
(g) Acquiror shall furnish the Stockholder, promptly after the same
is prepared and publicly distributed or filed with the Commission, one
copy of the Registration Statement and any amendment thereto, each
preliminary prospectus and prospectus and each amendment or supplement
thereto. Acquiror shall furnish the Stockholder with such number of copies
of the preliminary and final Resale Prospectus as the Stockholder may
reasonably request in order to facilitate the sale of registered shares of
Acquiror Stock ("Registered Shares") owned by him or it.
(h) All expenses incurred by Acquiror in effecting the registration
for resale of Registable Securities including, without limitation, all
registration and filing fees with any governmental entity, printing
expenses, and fees and disbursements of counsel for Acquiror, shall be
paid by and be the sole obligation of Acquiror. All selling commissions
applicable to sales of Registrable Securities and all fees and
disbursements of counsel for the Stockholder in connection therewith shall
be paid by and be the sole obligation of the Stockholder.
(i) The Stockholder shall timely furnish such information as may
reasonably be requested by Acquiror (including without limitation a plan
of distribution) for inclusion in, or necessary to the preparation of, a
Resale Prospectus, or other filings ancillary thereto. The information
supplied by the Stockholder for inclusion in a Resale Prospectus shall
not, at the time such Resale Prospectus is declared effective, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
(j) As soon as practicable after becoming aware of such event,
Acquiror shall notify (by telephone and also by facsimile and reputable
overnight courier) the Stockholder of the happening of any event, of which
Acquiror has knowledge, as a result of which the Resale Prospectus
included in the 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
not misleading, and use all reasonable efforts as soon as possible (but in
any event within five (5) business days) to prepare a supplement or
amendment to the Registration Statement (and make all required filings
with the Commission) to correct such untrue statement or omission, and
Acquiror shall simultaneously (and thereafter as requested) deliver such
number of copies of such supplement or amendment (or other applicable
document) to the Stockholder as the Stockholder may request in writing.
Unless such an event is publicly announced, Acquiror shall not, without
the consent of the Stockholder, give the Stockholder any material
non-public information, but shall inform the Stockholders that such Resale
Prospectus 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 not misleading
4
(k) Acquiror shall use all reasonable efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, and, if an order is issued, to obtain the
withdrawal of such order and the termination of such suspension at the
earliest practicable time and Acquiror shall immediately notify via
facsimile the Stockholder (at the facsimile number for the Stockholder set
forth on the signature page hereto) of the issuance of such order and the
resolution thereof.
(l) Each Resale Prospectus shall not, at the time such Resale
Prospectus is declared effective, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading; provided,
however, that the foregoing shall not apply to the extent of statements or
omissions based upon information furnished in writing by the Stockholder
for inclusion in such Resale Prospectus.
SECTION 3. Piggyback Registration. If (but without any obligation to do
so) Acquiror proposes to register any of its other securities in a firm
commitment underwritten public offering in which officers and directors of
Acquiror are participating, Acquiror shall give the Stockholder at least 20 days
advance written notice of such registration. Upon the written request of the
Stockholder given within 10 days after receipt of Acquiror's written notice,
Acquiror shall, subject to the terms of this Section 3, cause to be registered
in such underwritten offering all of the Registrable Securities that the
Stockholder has requested to be registered; provided, however, if the managing
underwriter of such offering advises Acquiror that marketing factors require a
limitation of the number of shares to be underwritten, then the number of shares
that may be included in the underwriting shall be allocated pro rata among all
stockholders who are entitled to require Acquiror to register their shares in
such offering. The rights of the Stockholder to include Registrable Securities
in such offering shall be conditioned upon the Stockholder's entering into an
underwriting agreement, lock-up agreement, custody agreement and other
agreements, in customary form, with the underwriters selected by Acquiror and
furnishing such information regarding the Stockholder as may reasonably be
requested. Notwithstanding any other provision of this Section 3, (i) the
Stockholder shall not be entitled to register any Registrable Securities earlier
than the Stockholder is entitled to register such Registrable Securities under
Section 2, (ii) the Stockholder's rights under this Section 3 are subject (and
may be subordinate) to existing registration rights granted by Acquiror to third
parties prior to the date hereof, and (iii) this Section 3 shall not limit
Acquiror's rights or remedies under the Escrow Agreement with Stockholder, if
any, or under the Merger Agreement
SECTION 4. Indemnification for Securities Matters.
(a) In connection with the registration of the Registrable
Securities pursuant to a Resale Prospectus, Acquiror will indemnify and
hold harmless the Stockholder, the Stockholder's Representatives, if any,
and each other person, if any, who controls such Stockholder within the
meaning of Section 15 of the Securities Act, against any Damage, joint or
several, to which the Stockholder,
5
such Representative or such controlling person may become subject under
the Securities Act or otherwise, insofar as such Damages (or actions or
proceedings in respect thereof) arise out of or are based upon any untrue
statement of a material fact contained in any Resale Prospectus (or any
amendment or supplement thereto), or any omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and Acquiror will reimburse the
Stockholder, such Representative and such controlling person for any legal
or other expenses reasonably incurred by the Stockholder, such
Representative or such controlling person in connection with investigating
or defending against any such Damage; provided, however, that Acquiror
shall not be liable in any such case to the Stockholder to the extent that
any such Damage (or action or proceeding in respect thereof) arises out of
or is based upon an untrue statement or omission of a material fact made
in such Resale Prospectus (or amendment or supplement thereto) in reliance
upon and in conformity with information furnished in writing by the
Stockholder for inclusion in such Resale Prospectus.
(b) In connection with the registration of the Registrable
Securities pursuant to a Resale Prospectus, the Stockholder, severally and
not jointly with any other selling stockholders whose shares are included
in such Resale Prospectus, will indemnify and hold harmless Acquiror,
Acquiror's Representatives, each person, if any, who controls the Acquiror
within the meaning of Section 15 of the Securities Act, each officer of
Acquiror who signs the Resale Prospectus and each director of Acquiror,
against any Damage, joint or several, to which Acquiror, such
Representative or such officer, director, or controlling person may become
subject under the Securities Act or otherwise, and will reimburse
Acquiror, such Representative or such officer, director, or controlling
person for any legal or other expenses reasonably incurred by Acquiror,
such Representative or such officer, director, or controlling person in
connection with investigating or defending against any such Damage, but
only insofar as such Damage (or actions in respect thereof) arises out of
or is based upon an untrue statement or omission of a material fact
referred to in subsection (a) above made by the Stockholder.
(c) It shall be a condition of Acquiror's obligations to effect the
registration of Registrable Securities that the Stockholder provide
Acquiror with all material facts, including, without limitation,
furnishing such certificates, questionnaires and legal opinions as may be
required by Acquiror concerning the Stockholder and the Registrable
Securities which are reasonably required to be stated in the Resale
Prospectus or are otherwise required in connection with the offering.
(d) If the indemnification provided in this Section 4 is for any
reason unavailable or insufficient to hold an indemnified party harmless
hereunder, then the indemnifying party shall contribute the amount paid or
payable by such indemnified party as a result of the Damage referred to
herein in such proportion as is appropriate to reflect the relative fault
of Acquiror, on the one hand, and the
6
indemnifying Stockholder, on the other hand, in connection with the
statements or omissions that resulted in such Damage, as well as any other
relevant equitable considerations. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from a person who was not guilty of
fraudulent misrepresentation. Each party entitled to contribution agrees
that upon the service of a summons or other initial legal process upon it
in any action in respect of which contribution may be sought, it shall
promptly give written notice of such service to the party or parties from
whom contribution may be sought, but the omission to so notify such party
or parties shall not relieve the party from whom contribution may be
sought from any obligation it may have hereunder.
SECTION 5. Term of Agreement; Termination. This Agreement and the
obligations of Acquiror hereunder shall terminate on the date on which all of
the Registrable Securities have either been sold or may be resold under Rule
144(k) of the Securities Act, without limitation as to volume or manner of sale.
SECTION 6. Assignment of Rights Hereunder. The Stockholder may assign its
rights to cause Acquiror to register Registrable Securities pursuant to this
Agreement to any of the following persons or entities to whom or which the
Stockholder transfers or assigns Registrable Securities: (i) any member of the
Stockholder's immediate family; (ii) any stockholder, partner or member of the
Stockholder; any corporation, partnership, limited liability company, joint
venture, trust or individual who or which, directly or indirectly through one or
more intermediaries, is controlled by or under common control with the
Stockholder or which controls, directly or indirectly through one or more
intermediaries, the Stockholder; (iii) any trust for the benefit of, or
partnership, corporation, limited liability company or other entity owned or
controlled by, any of the foregoing, (iv) any person who acquires at least
100,000 shares of Registrable Securities from the Stockholder in assignment, or
(v) any pledgee who or which forecloses on Registrable Securities pursuant to a
bona fide pledge made by the Stockholder; provided, however, that no such
assignee from the Stockholder shall be entitled to further assign its
registration rights under this Agreement to any other person; provided, further,
that the Stockholder shall retain its rights under this Agreement as to all
Registrable Securities not transferred or assigned by the Stockholder. For
purposes of this Section 6, the terms "control", "controlled" and "common
control with" mean the ability, whether by the direct or indirect ownership of
voting securities or other equity interest, by contract or otherwise, to elect a
majority of the directors of a corporation, to select the managing partner of a
partnership, or otherwise to select a majority of those persons exercising
governing authority over an entity.
SECTION 7. Entire Agreement. This Agreement supersedes all prior
agreements, written or oral, among the parties hereto with respect to the
subject matter hereof and contains the entire agreement among the parties with
respect to the subject matter hereof. This Agreement may not be amended,
supplemented or modified, and no provisions hereof may be modified or waived,
except by an instrument in writing signed by all parties hereto. No waiver of
any provisions hereof by any party shall be deemed a
7
waiver of any other provisions hereof by any such party, nor shall any such
waiver be deemed a continuing waiver of any provision hereof by such party.
SECTION 7. Notices. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission (with confirmation) and on the next business day
when sent by a reputable, overnight courier service to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
If to Acquiror: HA-LO Industries, Inc.
0000 Xxxx Xxxxx Xxxxxx
Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, CFO
With a copy to: Xxxx, Gerber & Xxxxxxxxx
Xxx Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
If to Stockholder:
At the Stockholder's address as set forth on
the books and records of the Company.
With a copy to:
Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxx, Esq.
SECTION 8. Miscellaneous.
(a) This Agreement shall be deemed a contract made under, and for all
purposes shall be construed in accordance with, the laws of the State of
Illinois, without reference to its conflicts of law principles.
(b) If any provision of this Agreement or the application of such
provision to any person or circumstances shall be held invalid or unenforceable
by a court of competent jurisdiction, such provision or application shall be
unenforceable only to the extent of such invalidity or unenforceability, and the
remainder of the provision held invalid or unenforceable and the application of
such provision to persons or circumstances, other than the party as to which it
is held invalid, and the remainder of this Agreement shall not be affected.
(c) This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
8
(d) All Section headings herein are for convenience of reference only and
are not part of this Agreement, and no construction or reference shall be
derived therefrom.
(e) The obligations of the Stockholder set forth in this Agreement shall
not be effective or binding upon the Stockholder until the Effective Time, and
the parties agree that there is not and has not been any other agreement,
arrangement or understanding between the parties hereto with respect to the
matters set forth herein.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
9
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
ACQUIROR:
HA-LO INDUSTRIES, INC.
By: /s/ Xxxx Xxxxxx
---------------------
Name: Xxxx Xxxxxx
Title: Chief Executive Officer
STOCKHOLDER:
By: Coventry Partners Family L.P.,
a Delaware limited partnership
By: Coventry Associates, Inc.,
a Delaware corporation,
its general partner
By: /s/ Xxxx Xxxxxxxxx
-------------------
Xxxx Xxxxxxxx
President
10
