EXHIBIT 99.3
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of August
26, 2005 by and between Salton, Inc. a Delaware corporation (the "Company"), and
Xxxxxx, Xxxxxx & Co., L.P. ("Xxxxxx Xxxxxx").
WHEREAS, the Company, on the one hand, and Xxxxxx Xxxxxx and certain other
parties (collectively, the "Investors") that have entered into the Support
Agreement dated as of July 5, 2005, as amended ("Support Agreement") providing
for the Investors to support the Exchange Offer (as defined in the Support
Agreement); and
WHEREAS, it is a condition of the exchange transaction contemplated by the
Support Agreement that the Company and the Investors execute and deliver this
Agreement providing certain registration rights to the Investors and each person
or entity that subsequently becomes a party to this Agreement pursuant to, and
in accordance with, the provisions of Section 9 hereof (each an "Investor
Permitted Transferee" and collectively, the "Investor Permitted Transferees").
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:
1. Definitions. The following terms shall have the meanings provided
therefor below or elsewhere in this Agreement as described below. Capitalized
terms used and not defined in this Agreement have the meanings ascribed to them
in the Support Agreement or the Term Sheet.
"Affiliate" of a party means any other Person controlling,
controlled by or under common control with the specified Person. For the
purposes of this definition, "control" means the power to direct the management
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise.
"Board" shall mean the board of directors of the Company.
"Demand Registration" shall have the meaning as set forth in Section
2(a) herein.
"Designated Counsel" shall have the meaning set forth in Section
4(a) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Filing Date Deadline" shall be forty-five (45) days following the
date of receipt by the Company of a request for Demand Registration.
"Initial Registrable Securities" are the Registrable Securities
outstanding upon consummation of the Exchange Offer.
"Investor Indemnified Person" has the meaning set forth in Section
7(a) hereof.
"Investors" shall mean, collectively, the Investors and the Investor
Permitted Transferees; provided, however, that the term "Investors" shall not
include any of the Investors or any of the Investor Permitted Transferees that
ceases to own or hold any Registrable Securities.
"NASD" shall mean the National Association of Securities Dealers.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Person" shall mean an individual, corporation, company,
partnership, firm, association, joint venture, trust, unincorporated
organization, government, governmental body, agency, political subdivision or
other entity.
"Prospectus" means the prospectus included in a Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
Registration Statement in reliance upon Rule 430A promulgated under the
Securities Act), 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 the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
"Registrable Securities" shall mean (i) the shares of Common Stock
issued to the Investors upon consummation of the Exchange Offer and held by the
Investors, (ii) any shares of Common Stock issued or issuable with respect to
such shares of Common Stock by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization, and (iii) any shares of Series C Preferred Stock held
by the Investors; provided, however, that shares of Common Stock and Series C
Preferred Stock that are considered to be Registrable Securities shall cease to
be Registrable Securities (A) upon the sale thereof pursuant to an effective
Registration Statement, (B) upon the sale thereof pursuant to Rule 144 or upon
the availability for such sale of Rule 144(k) (or successor or substitute rule,
law or provision), or (C) when such securities cease to be outstanding.
"Registration Expenses" has the meaning set forth in Section 6
hereof.
"Registration Statement" means the initial registration statement
required to be filed in accordance with Section 2(a), including (in each case)
the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act
and any successor or substitute rule, law or provision.
"SEC" shall mean the U.S. Securities and Exchange Commission.
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"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
2. Demand Registration.
(a) Requests for Registration. At any time on or after December 31, 2005,
subject to Section 2(d) below, the Investors shall have the right to make a
written request to the Company for registration with the SEC under the
Securities Act of all or part of their Registrable Securities (a "Demand
Registration"). All requests made pursuant to this Section 2(a) shall specify
the number of Registrable Securities to be registered and the intended methods
of disposition thereof. All such requests shall be delivered to the Company in
accordance with the provisions of Section 14(e)(i) of this Agreement.
(b) Procedures. Following the receipt of a request for Demand
Registration, the Company will promptly give written notice of such request to
all Investors other than those that were parties to such request, and,
thereupon, will use its commercially reasonable best efforts to cause to be
filed and declared effective, as soon as practicable, a Registration Statement
on such appropriate form as the Company in its reasonable discretion shall
determine providing for the sale of all of such Registrable Securities requested
to included by the Investors that were parties to such request and all other
Registrable Securities that the Company has been requested to register by other
Investors by written request (which shall specify the number of Registrable
Securities to be registered and the intended method of disposition thereof)
received by the Company within 30 days after the giving of such written notice
by the Company; provided, however, that, subject to Section 2(d), below, such
Registration Statement shall be filed with the SEC not later than the Filing
Date Deadline. Promptly after expiration of the 20 day period referred to in
this Section 2(b), the Company will notify all the Investors entitled to be
included in the Registration Statement of the other Investors that have
requested inclusion and the number of Registrable Securities requested to be
included therein.
(c) Number of, and Limitations on, Registrations. The Investors will be
entitled to request three (3) Demand Registrations. The Company will not be
obligated to register any Registrable Securities pursuant to such a Demand
Registration unless there is requested to be included in such registration at
least five percent (5%) of the then outstanding shares of Common Stock.
(d) Suspension Periods. Notwithstanding Section 2(b), the Company may
postpone the filing or effectiveness of any Registration Statement for any
Demand Registration or the filing or effectiveness of any amendment or
supplement to any such Registration Statement (whether required by Section 4(c)
or otherwise), if the Company in good faith determines and notifies the
Investors that (i) such registration (or such amendment or supplement) would
have an adverse effect on any plan or proposal by the Company with respect to
any financing, acquisition, recapitalization, reorganization or other material
transaction, or (ii) the Company is in possession of material non-public
information which would be required to be disclosed in such Registration
Statement (or such amendment or supplement) and the Company has a bona fide
business purpose for preserving such information as confidential; provided,
however, that the Company shall not exercise its rights under this Section 2(d)
(A) to the extent that the postponement or postponements relating to any Demand
Registration(s) and amendments and
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supplements thereto would exceed an aggregate of 90 days in any calendar year or
(B) to the extent that the postponement or postponements relating to any Demand
Registration(s) and amendments and supplements thereto would exceed an aggregate
of 30 days in the first six months of 2006.
(e) Expenses. In any registration initiated as a Demand Registration, the
Company will pay all Registration Expenses, whether or not the Registration
Statement has become effective.
(f) Effectiveness of Registration Statement. Subject to Section 2(g), a
Registration Statement will not count as a registration pursuant to a Demand
Registration until it has been declared effective by the SEC.
(g) Selection of Underwriters. If any of the Registrable Securities
covered by a Demand Registration are to be sold in an underwritten offering, or
in a best efforts underwritten offering, the investment banker or investment
bankers and manager or managers that will administer the offering will be
selected by the Investors, subject to the approval of the Company, which will
not be unreasonably withheld or delayed. If the Investors disapprove of the
terms and conditions of the underwriting, the Investors may elect to withdraw
all their respective Registrable Securities by written notice to the Company and
the managing underwriter and, at the election of the Investors, either (i) pay
the costs and expenses associated therewith (in which case such withdrawn
registration shall not constitute a Demand Registration) or (ii) permit the
Company to pay the same (in which case such withdrawn registration shall
constitute one of the Investors' two Demand Registrations); provided, however,
that, if the Company has already filed a Registration Statement pursuant to such
demand by the Investor, the Investor's withdrawn registration will nevertheless
constitute a Demand Registration pursuant to this Agreement. For purposes of
this Section 2(g), the Investors holding a majority of the Registrable
Securities (treating shares of Common Stock and shares of Series C Preferred
Stock as fungible) to be registered on the Registration Statement filed for the
Demand Registration shall have the right to act for the Investors.
(h) Underwriter Cutback. If the managing underwriter of any offering of
Registrable Securities pursuant to a Demand Registration that is an underwritten
offering advises the Company in writing that, in its reasonable opinion, the
aggregate amount of Registrable Securities requested to be included in such
offering exceeds the number which can be sold in such offering without adversely
affecting the success of the offering, the Company will include in such
Registration Statement the aggregate amount of Registrable Securities which in
the opinion of such managing underwriter can be sold without any such material
adverse effect, and such amount of Registrable Securities shall be allocated in
the following order: (i) first, to the Investors, pro rata in accordance with
the number of Registrable Securities sought to be registered by them on the
Registration Statement; and (ii) second, to the Company and to any holder of
Common Stock exercising piggyback or incidental registration rights with respect
to such Demand Registration.
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3. Piggyback Registration Rights.
(a) If the Company at any time following the date hereof proposes to
register any of its shares of Common Stock on its own behalf or any of its
shares of Common Stock on behalf of other stockholders on a form and in a manner
that would permit registration of Registrable Securities under the Securities
Act, it will each such time give prompt notice in accordance with the provisions
of Section 14(e)(ii) of this Agreement to the Investors of its intention to do
so, specifying the form and manner and the other relevant facts involved in such
proposed registration (including, without limitation, the identity of the
managing underwriter, if any). Upon the written request of the Investors
delivered to the Company within thirty (30) days after such notice shall have
been delivered to the Investors (which request shall specify the Registrable
Securities intended to be disposed of by such holder and the intended method of
disposition thereof), the Company will use its commercially reasonable best
efforts to effect the registration under the Securities Act, as expeditiously as
is reasonable, of all Registrable Securities that the Company has been so
requested to register by the Investors, to the extent requisite to permit the
sale of the Registrable Securities to be so registered; provided, however, that:
(i) if, at any time after giving such written notice of its
intention to register any Common Stock proposed to be registered by the
Company and prior to the effective date of the Registration Statement
filed in connection with such registration, the Company shall determine
for any reason not to register such Common Stock, the Company shall, at
its election, give written notice of such determination to the Investors,
and thereupon the Company shall be relieved of its obligation to register
any Registrable Securities in connection with such registration (but not
from its obligation to pay the Registration Expenses in connection
therewith to the extent provided in Section 6); and
(ii) if the managing underwriter of such offering shall advise the
Company that, in its judgment, the number of shares of Common Stock
proposed to be included in such offering should be limited because the
inclusion of Registrable Securities is likely to adversely impact the
purchase price obtained for the Common Stock proposed to be included in
such offering, then the Company will promptly advise the Investors thereof
and may require, by written notice to the Investors accompanying such
advice, that, to the extent necessary to meet such limitation, all holders
of Registrable Securities and of other shares of Common Stock proposing
pursuant to piggyback or incidental registration rights to sell Common
Stock in such offering shall share pro rata in the number of shares of
Common Stock to be excluded from such offering, such sharing to be based
on the respective numbers of Registrable Securities and other shares of
Common Stock as to which registration has been requested by such holders,
and that the distribution of such Registrable Securities and other shares
of Common Stock as are so excluded be deferred (in case of a deferral as
to a portion of such Registrable Securities and other shares of Common
Stock, such portion to be allocated among such holders in proportion to
the respective numbers of Common Stock so requested to be registered by
such holders) until the completion of the distribution of such Common
Stock and any other securities by such underwriters.
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(b) The holders of Registrable Securities to be distributed by
underwriters in an underwritten offering shall be parties to the underwriting
agreement between the Company and the underwriters. Any such holder of
Registrable Securities shall not be required to make any representations or
warranties to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such holder, such holder's
Registrable Securities and such holder's intended method of distribution and any
other representation required by law.
(c) In any registration initiated pursuant to this Section 3, the Company
will pay all Registration Expenses, whether or not the Registration Statement
has become effective, except as otherwise provided on Section 6.
(d) Notwithstanding anything in this Section 3 to the contrary, in the
event that the Company is registering shares of Common Stock and no other class
of security pursuant to a demand registration under the Registration Rights
Agreement dated as of July 15, 1998 by and among the Company and the Purchasers
(as listed on the signature page thereto), then the rights of the Investors
under this Section 3 shall apply only with respect to shares of Common Stock
that are Registrable Securities and not any shares of Series C Preferred Stock.
4. Obligations of the Company. In connection with the Company's obligation
under Sections 2 and 3, the Company shall, as expeditiously as reasonably
possible:
(a) Prepare and file with the SEC such amendments and supplements to the
Registration Statement and the Prospectus as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement; provided, however,
that before filing a Registration Statement or Prospectus or any amendments or
supplements thereto, or comparable statements under securities or blue sky laws
of the States of New York and up to two other States designated in writing by
Xxxxxx Xxxxxx, the Company will furnish to counsel to the Investors
participating in the planned offering ("Designated Counsel"), upon delivery by
Designated Counsel of its agreement, on terms reasonably satisfactory to the
Company, to maintain the confidentiality of material and information furnished
pursuant to this Section 4(a), copies of the "Selling Securityholder" and "Plan
of Distribution" sections of such filings, or, at the request of an Investor, of
all such documents proposed to be filed (including all exhibits thereto), which
documents will be subject to the reasonable review and reasonable comment of
such counsel.
(b) Furnish to the Investors such number of copies of the Prospectus,
including a preliminary Prospectus, in conformity with the requirements of the
Securities Act, and such other documents (including, without limitation,
Prospectus amendments and supplements as are prepared by the Company in
accordance with Section 4(a) above) as the Investors may reasonably request in
order to facilitate the disposition of such Investors' Registrable Securities.
(c) Promptly notify the Investors, at any time when the Prospectus
relating to the Registration Statement is required to be delivered under the
Securities Act, of the happening of any event (without disclosing the nature or
substance of such event) as a result of which the Prospectus included in or
relating to the Registration Statement contains an untrue statement of a
material fact or omits any fact necessary to make the statements therein, in
light of the
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circumstances under which they were made, not misleading; and, thereafter, and
subject to Section 2(d), the Company will use commercially reasonable efforts to
promptly prepare (and, when completed, give notice to each Investor) a
supplement or amendment to such Prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities pursuant to the Registration
Statement, such Prospectus will not contain an untrue statement of a material
fact or omit to state any fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided
that upon such notification by the Company of the foregoing and instructing each
Investor to cease to offer and sell Registrable Securities, each Investor will
use commercially reasonable efforts to cease its offer and sale of Registrable
Securities until the Company has notified the Investors that it has prepared a
supplement or amendment to such Prospectus and delivered copies of such
supplement or amendment to the Investors (it being understood and agreed by the
Company that the foregoing proviso shall in no way diminish or otherwise impair
the Company's obligation to promptly prepare a Prospectus amendment or
supplement as above provided in this Section 4(c) and deliver copies of same as
above provided in Section 4(b) hereof).
(d) If, at the time, the Common Stock is not a covered security described
by Section 18(b)(1) of the Securities Act, use commercially reasonable efforts
to register and qualify the Registrable Securities covered by the Registration
Statement under the securities or "blue sky" laws of New York and up to two
other States designated in writing by Xxxxxx Xxxxxx.
(e) Promptly notify (i) each Investor (A) any time when the Registration
Statement, the Prospectus or any Prospectus supplement related thereto or post
effective amendment has been filed, and with respect to the Registration
Statement or any post-effective amendment, when the same has become effective,
and with respect to the Registration Statement, provide each Investor who has
provided its current e-mail address to Counsel to the Company, a copy of the
Prospectus by e-mail prior to the opening of trading of the Company's Common
Stock on the first business day following the date on which the Registration
Statement has become effective, (B) of the issuance of any stop order by the SEC
suspending the effectiveness of such Registration Statement or the initiation,
known to the Company, of any proceedings by the SEC to such effect, and promptly
use all commercially reasonable efforts to obtain the release of such
suspension, (C) of the receipt by the Company of any notification with respect
to the suspension of the qualification of any Registrable Securities for sale
under the securities or blue sky laws of any jurisdiction or the initiation of
any proceeding for such purpose, (D) when a Prospectus relating to the
registration of the Registrable Securities is required to be delivered under the
Securities Act, or (E) of the happening of any event as a result of which the
Prospectus included, as then in effect, includes any untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing; and (ii) Designated Counsel of any request by the
SEC for amendments or supplements to the Registration Statement or Prospectus or
for additional information.
(f) Cause all Common Stock included in such Registrable Securities
registered pursuant to this Agreement to be quoted or listed on each securities
exchange or market on which similar securities issued by the Company are then
quoted or listed.
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(g) Provide a transfer agent and registrar for all Registrable Securities
registered pursuant to this Agreement and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of
registration and, at the time of the sale of the Registrable Securities pursuant
to an effective Registration Statement, use commercially reasonable efforts to
cause the transfer agent to remove restrictive legends on such Registrable
Securities.
(h) Upon delivery by Designated Counsel of its agreement, on terms
reasonably satisfactory to the Company, to maintain the confidentiality of
material and information furnished pursuant to this Section 4(h), promptly
deliver to Designated Counsel copies of all correspondence between the SEC and
the Company, its counsel or auditors and all memoranda relating to discussions
with the SEC or its staff with respect to the Registration Statement, and make
reasonably available for inspection by Designated Counsel participating in any
disposition to be effected pursuant to the Registration Statement, all pertinent
financial and other records, pertinent corporate documents and properties of the
Company, and cause all of the Company's officers, directors and employees to
supply all information reasonably requested by Designated Counsel in connection
with such Registration Statement.
(i) Use commercially reasonable best efforts to obtain the withdrawal of
any order suspending the effectiveness of the Registration Statement in New York
or any other of the other two States designated in writing by Xxxxxx Xxxxxx.
(j) Upon written request, furnish to each Investor participating in the
offering, without charge, at least one (1) conformed copy of the Registration
Statement and any post-effective amendments thereto, including financial
statements, all documents incorporated therein by reference and all exhibits
(including those incorporated by reference).
(k) Comply with applicable law and regulation, including without
limitation, the rules and regulations of the SEC, the NASD, and the NYSE.
5. Furnish Information; Other Sales. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Agreement
(including, without limitation, to maintain the accuracy of any information
previously furnished by Investors for use in the Registration Statement) that
the Investors shall furnish to the Company such information regarding them and
the securities held by them as the Company shall reasonably request and as shall
be required by applicable securities laws and regulations in order to effect any
registration by the Company pursuant to this Agreement. The Investors agree,
during the 10-day period prior to, and during the 90-day period commencing on,
the effective date of the registration statement filed with the Commission
(other than on Form S-8) in connection with an underwritten offering of
securities of the same class as the then outstanding (or any securities issuable
upon conversion or exchange thereof), not to make any sales of Registrable
Securities (or such other securities) pursuant to Rule 144, provided that they
were given the opportunity, if required by (and subject to) Section 3 hereof, to
include in such registration statement all such Registrable Securities as they
may have requested.
6. Expenses of Registration. Except as otherwise provided herein, all
expenses incident to the Company's performance of or compliance with this
Agreement including without limitation all registration and filing fees,
including with respect to filings required to be made
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with the NASD, fees and expenses of compliance with securities or blue sky laws
of the States of New York and up to two other States designated in writing by
Xxxxxx Xxxxxx (including reasonable fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of the Registrable
Securities and determination of their eligibility for investment under the laws
of the States of New York and up to two other States designated in writing by
Xxxxxx Xxxxxx printing expenses, messenger, telephone and delivery expenses, and
fees and disbursements of counsel for the Company and counsel (but only a single
law firm) representing the Investors in connection with each Demand Registration
(selected in the manner set forth in the last sentence of Section 2(g)), the
fees and disbursements of the Company's independent certified public accountants
(including the expenses of any special audit and "comfort" letters required by
or incident to such performance), the fees and expenses incurred in connection
with the listing of the Common Stock to be registered on each securities
exchange on which similar securities issued by the Company are then listed, the
reasonable fees and expenses of any special experts retained by the Company in
connection with such registration and fees and expenses of other Persons
retained by the Company (all such expenses being herein called the "Registration
Expenses") will be borne by the Company. The Company shall, in any event, pay
its internal expenses (including, without limitation, all salaries and expenses
of its officers and employees performing legal or accounting duties) and the
expense of any annual audit which are not "Registration Expenses" for purposes
of this Agreement. In no event shall the Company be liable for the payment
(which shall be made by the Investors registering Registrable Securities) of any
discounts, commissions or fees of underwriters, selling brokers, dealer managers
or similar industry professionals relating to the distribution of the
Registrable Securities or any fees of counsel (except as specifically provided
in this Section 6) or other advisers to the Investors.
7. Indemnification.
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Investor, its directors, officers, employees, fiduciaries,
members, managers, or general or limited partners (and the directors, officers,
employees and stockholders thereof), any underwriter (as defined in the
Securities Act) for each Investor, and each Person, if any, who controls such
Investor or underwriter within the meaning of the Securities Act (each, an
"Investor Indemnified Person"), against any losses, claims, damages or
liabilities, joint or several, and expenses (including reasonable counsel fees
and disbursements, any amounts paid in any settlement effected with the
Company's prior written consent) to which they may become subject under the
Securities Act, the Exchange Act, state securities laws or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (i) any untrue or alleged untrue
statement of any material fact contained in any Registration Statement pursuant
to which Registrable Securities are registered pursuant to Section 2 or Section
3 hereof (including any preliminary prospectus or final prospectus relating
thereto, any amendments or supplements thereto and any exhibits thereto) or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein, or necessary to make the
statements therein in light of the circumstance under which they were made not
misleading or any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, state securities laws or any rule or
regulation promulgated under the Securities Act, the Exchange Act, the NASD,
state securities laws or the NYSE or (ii) any failure of the Company to fulfill
any undertaking included in any Registration Statement
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pursuant to which Registrable Securities are registered pursuant to Section 2 or
Section 3 hereof (including any preliminary prospectus or final prospectus
relating thereto, any amendments or supplements thereto and any exhibits
thereto); and will reimburse such Investor Indemnified Person for any fees and
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action (including
reasonable fees and expenses of legal counsel); provided, however, that the
Company shall not be liable in any such case for any such losses, claims,
damages, liabilities or expenses to the extent that they arise out of or are
based upon an untrue statement or alleged untrue statement or omission made in
connection with the Registration Statement in reliance upon and in conformity
with written information furnished by the Investors expressly for use in
connection with such Registration Statement. Such indemnity and reimbursement of
expenses shall remain in full force and effect regardless of any investigation
made by or on behalf of such Investor Indemnified Person and shall survive the
sale of such Registrable Securities by such Investor.
(b) To the extent permitted by law, each Investor will severally, and not
jointly, indemnify and hold harmless the Company, each of its directors, each of
its officers who have signed a Registration Statement pursuant to which
Registrable Securities are registered pursuant to Section 2 or Section 3 hereof,
any underwriter (as defined in the Securities Act) for each Investor or acting
on behalf of the Company, and each person, if any, who controls, within the
meaning of the Securities Act, the Company or any such underwriter (as defined
in the Securities Act) (a "Company Indemnified Person") against any losses,
claims, damages or liabilities to which the Company or any such director,
officer, controlling person, or underwriter may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
untrue or alleged untrue statement of any material fact contained in a
Registration Statement pursuant to which Registrable Securities are registered
pursuant to Section 2 or Section 3 hereof or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, in each case to the
extent and only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in such Registration
Statement, in reliance upon and in conformity with written information furnished
by such Investor expressly for use in connection with such Registration
Statement; and such Investor will reimburse any expenses reasonably incurred by
a Company Indemnified Person in connection with investigating or defending any
such loss, claim, damage, liability or action (including reasonable counsel fees
and disbursements); provided, however, that the liability of each Investor
hereunder shall be limited to the proceeds (net of underwriting discounts and
commissions, if any) received by such Investor from the sale of Registrable
Securities covered by such Registration Statement; as the case may be. Such
indemnity and reimbursement of expenses shall remain in full force and effect
regardless of any investigation made by or on behalf of such Company Indemnified
Person and, as relevant, shall survive the sale of such Registrable Securities
by any Investor.
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 7, notify the indemnifying party in writing of the commencement thereof
and the indemnifying party shall have the right to
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participate in and, to the extent the indemnifying party desires, jointly with
any other indemnifying party similarly noticed, to assume at its expense the
defense thereof with counsel mutually satisfactory to the indemnifying parties
with the consent of the indemnified party (which consent will not be
unreasonably withheld, conditioned or delayed). If the indemnifying party
assumes any such defense, the indemnified party may participate in such defense
with its own counsel and at its own expense.
(d) If the indemnification provided for in this Section 7 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, claim, damage, liability or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the statements
or omissions that resulted in such loss, claim, damage, liability or expense as
well as any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement or omission. If, however, the indemnification provided
for in this Section 7 and allocation provided in the first sentence of this
paragraph are both not permitted by applicable law, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative faults but also
the relative benefits of the indemnifying party and the indemnified party as
well as any other relevant equitable considerations. The parties hereto agree
that it would not be just and equitable if contributions pursuant to this
Section 7(d) were to be determined by pro rata allocation or by any other method
of allocation which does not take account of the equitable considerations
referred to in the preceding sentences of this Section 7(d). The amount paid or
payable in respect of any claim shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending such loss, claim, damage or liability. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Notwithstanding anything in
this Section 7(d) to the contrary, no Investor shall be required pursuant to
this Section 7(d) to contribute any amount in excess of the net proceeds
received by such Investor from the sale of Registrable Securities in the
offering to which the loss, claims, damage or liability relates, less the amount
of any indemnification payment previously made by such indemnifying party
pursuant to Section 7(b).
(e) The obligations of the Company and the Investors under this Section 7
shall survive the completion of any offering of Registrable Securities pursuant
to a Registration Statement.
(f) Notwithstanding anything to the contrary herein, the indemnifying
party shall not be entitled to settle any claim, suit or proceeding unless in
connection with such settlement the indemnified party receives an unconditional
release with respect to the subject matter of such
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claim, suit or proceeding and such settlement does not contain any admission of
fault by the indemnified party.
8. Reports under the Exchange Act. With a view to making available to the
Investors the benefits of Rule 144 and any other rule or regulation of the SEC
that may at any time permit the Investors to sell the Registrable Securities to
the public without registration, the Company agrees to use commercially
reasonable efforts: (i) to make and keep public information available, as that
term is understood and defined in Rule 144; (ii) to file with the SEC in a
timely manner all reports and other documents required to be filed by an issuer
of securities registered under the Securities Act or the Exchange Act; (iii) as
long as any Investor owns any Registrable Securities, to furnish in writing upon
such Investor's request a written statement by the Company that it has complied
with the reporting requirements of Rule 144 and of the Exchange Act; and (iv)
subject to Section 2(d) and Section 4(c), undertake any additional actions
reasonably necessary to maintain the availability of the Registration Statement
(but not for more than nine months after it first became effective) or the use
of Rule 144.
9. Transfer of Registration Rights. None of the rights of any Investor
under this Agreement shall be transferred or assigned to any person unless (i)
such person is (A) an Affiliate of an Investor; or (B) after such transfer or
assignment, holds at least 10% of the aggregate number of Initial Registrable
Securities; and (ii) such transferee or assignee agrees in writing to become
subject to the terms and conditions of this Agreement.
10. No Required Sale. Nothing in this Agreement shall be deemed to create
an independent obligation on the part of any Investor to sell any Registrable
Securities pursuant to any effective registration statement.
11. Nominees for Beneficial Owners. If Registrable Securities are held by
a nominee for the beneficial owner thereof, the beneficial owner thereof may, at
its option, be treated as the holder of such Registrable Securities for purposes
of any request or other action by any Investor pursuant to this Agreement (or
any determination of any number or percentage of shares constituting Registrable
Securities held by any Investor contemplated by this Agreement); provided that
the Company shall have received assurances reasonably satisfactory to it of such
beneficial ownership.
12. Limitations on Subsequent Registration Rights. The Company represents
and warrants that from and after the date of this Agreement, it shall not,
without the prior written consent of the holders of at least 50% of the
Registrable Securities then outstanding, enter into any agreement (or amendment
or waiver of the provisions of any agreement) with any holder or prospective
holder of any securities of the Company that would grant such holder
registration rights that are pari passu (except with respect to piggyback or
incidental registration rights) or senior to those granted to the Investors
hereunder.
13. Entire Agreement. This Agreement and exhibits attached hereto and
incorporated herewith constitute and contain the entire agreement and
understanding of the parties with respect to the subject matter hereof, and
supersedes any and all prior negotiations, correspondence, agreements or
understandings with respect to the subject matter hereof and
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supercedes all prior agreements, negotiations, understandings, representations
and statements respecting the subject matter hereof, whether oral or written.
14. Miscellaneous.
(a) Amendment. No amendment, modification, alteration, waiver or change in
any of the terms of this Agreement shall be valid or binding upon the parties
hereto unless made in writing and duly executed by the Company and the holders
of at least 50% of the Registrable Securities held by all of the Investors;
provided, however, that in each case, no such amendment shall increase the
obligations of, or have any adverse effect upon, any Investor without such
Investor's written consent.
(b) Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York, without
regard to any conflicts of laws concepts that would apply the laws of another
jurisdiction.
(c) Third Party Beneficiaries; Assignment; Termination. The rights and
obligations of the parties hereto shall inure to the benefit of, and shall be
binding upon the Company, Xxxxxx Xxxxxx, the other Investors and the authorized
successors and permitted assigns of each such party; provided, that the terms
and conditions of Section 9 hereof are satisfied. Notwithstanding anything in
this Agreement to the contrary, this Agreement shall terminate for all purposes
on January 1, 2008. In addition, if at any time any Investor shall have
materially breached its obligations under the Support Agreement or shall cease
to own any Registrable Securities, all of such Investor's rights under this
Agreement shall immediately terminate; provided, however, that if such Investor
ceases to own Registrable Securities because all or a portion of such shares
were sold pursuant to a Registration Statement, then such Investor shall
continue to have the rights and obligations set forth in Section 7 hereof, as
provided in Section 7(e) hereof.
(d) Specific Performance. Each party acknowledges and agrees that the
other parties would be damaged irreparably if any provision of this Agreement
were not performed in accordance with its specific terms or were otherwise
breached. Accordingly, the parties will be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and its provisions in any action or
proceeding instituted in any state or federal court sitting in New York, New
York having jurisdiction over the parties and the matter, in addition to any
other remedy to which they may be entitled, at law or in equity. Except as
expressly provided herein, the rights, obligations and remedies created by this
Agreement are cumulative and in addition to any other rights, obligations or
remedies otherwise available at law or in equity. Except as expressly provided
herein, nothing herein will be considered an election of remedies.
(e) Notice. Any notices, reports or other correspondence required or
permitted to be given hereunder shall be sent by courier (overnight or same day)
or facsimile or delivered by hand to the party to whom such correspondence is
required or permitted to be given hereunder. The date of giving any notice shall
be the date of its actual receipt.
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(i) All notice to the Company shall be addressed as follows:
Salton, Inc.
0000 X. Xxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
Facsimile: 000-000-0000
Attn: President and Chief Operating Officer
with a copy to (which shall not constitute notice):
Xxxx Xxxxxxxxxx, Esq.
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
(ii) All notices to the Investors shall be shall be addressed as
follows:
If to Xxxxxx Xxxxxx:
Xxxxxx, Xxxxxx & Co., L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile:_______________
Attn:____________________
with a copy to (which shall not constitute notice):
Akin Gump Xxxxxxx Xxxxx & Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxx, Esq.
If to any other Investor, to the address of such
Investor specified in the Joinder Agreement with the
Company executed by such Investor in connection with
the Exchange Offer.
(iii) Any Person may change the address to which correspondence to
it is to be addressed by notification as provided for herein.
(f) Waiver. No waiver of any term, provision or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or be construed as, a further or continuing waiver of any such
term, provision or condition or as a waiver of any other term, provision or
condition of this Agreement.
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(g) Counterparts. 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date and year first above written.
SALTON, INC.
By:___________________________________
Name: ____________________________
Title: ___________________________
XXXXXX, XXXXXX & CO., L.P.
By: __________________________________
Name: ____________________________
Title: ___________________________
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