Exhibit 10.41
WARRANT REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of December 7, 1999 between RECKSON SERVICE INDUSTRIES, INC., a Delaware
corporation (the "Company") and Xxxxxxx X. Xxxxxxxxxxx ("Xxxxxxxxxxx") and H.
Xxxxx Xxxx ("Xxxx"; together with Cooperstone, the "Sellers").
RECITALS
WHEREAS, the Company and each of the Sellers have executed and delivered
that certain Agreement, dated December 7, 1999 (the "Exchange Agreement"),
pursuant to which the Company has agreed to execute and deliver to each Seller a
Warrant (each a "Warrant"; together the "Warrants") to purchase a specified
number of shares of common stock, par value $0.01 per share, of the Company (the
"Warrant Shares"), in exchange for execution and delivery to the Company by each
Seller an Option to purchase from such Seller a specified number of shares of
the common stock, par value $0.01 per share, of eSourceOne, Inc., a Delaware
corporation ("eSourceOne");
WHEREAS, as an inducement to the Sellers to consummate such exchange, the
Company desires to grant to each Seller the registration rights set forth in
this Agreement, subject to the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements herein contained, the receipt and sufficiency of which is hereby
acknowledged, and subject to the terms and conditions set forth herein, the
parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following capitalized
defined terms shall have the following meanings:
"Advice" shall have the meaning set forth in the last paragraph of Section
3 hereof.
"Affiliate" has the same meaning as given to that term in Rule 405 under
the Securities Act or any successor rule thereunder.
"Business Day" means any day other than a Saturday, a Sunday, or a day on
which banking institutions in The City of New York are authorized or required by
law, executive order or regulation to remain closed.
"Change-in-Control Transaction" means any merger or consolidation of the
Company into or with another corporation, sale, transfer or other disposition of
all or substantially all of the assets or capital stock of the Company, or any
reorganization, recapitalization or like transaction or series of transactions
having substantially equivalent effect and purpose, at the conclusion of which
such merger, consolidation, sale, transfer, disposition, reorganization,
recapitalization or like transaction the holders of the voting capital stock of
the Company immediately prior to such transaction or series of transactions own
less than a majority of the voting capital stock of the acquiring entity or
entity surviving or resulting from such transaction or series of transactions
immediately thereafter.
"Company" shall have the meaning set forth in the preamble to this
Agreement and also includes the Company's successors and permitted assigns.
"Effectiveness Period" shall have the meaning set forth in Section 2(a)
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
"Exchange Agreement" shall have the meaning set forth in the preamble to
this Agreement.
"Holder" shall mean each of the Sellers, for so long as any of them own any
Registrable Securities, and each of their respective successors, assigns and
direct and indirect transferees who become holders of record of Registrable
Securities.
"Inspectors" shall have the meaning set forth in Section 3(m) hereof.
"Issue Date" shall mean the date of original issuance of the Warrant Shares
pursuant to the Exchange Agreement.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, limited liability corporation, or a government or
agency or political subdivision thereof.
"Prospectus" shall mean the prospectus included in a Shelf Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to a prospectus, including post-effective
amendments, and, in each case, including all documents incorporated by reference
therein.
"Records" shall have the meaning set forth in Section 3(k) hereof.
"Registrable Securities" shall mean the Warrant Shares; provided, however,
that Warrant Shares shall cease to be Registrable Securities when the earlier of
the following occurs (i) a Shelf Registration Statement with respect to such
Warrant Shares for the resale thereof shall have been declared effective under
the Securities Act and such Warrant Shares shall have been disposed of pursuant
to such Shelf Registration Statement, (ii) such Warrant Shares shall have been
sold to the public pursuant to Rule 144(k) (or any similar provision then in
force, but not Rule 144A) under the Securities Act or are eligible to be sold
without restriction as contemplated by Rule 144(k) or (iii) such Warrant Shares
shall have ceased to be outstanding.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC or National Association of Securities Dealers,
Inc. (the "NASD") registration and filing fees, (ii) all fees and expenses
incurred in connection with compliance with state securities or blue sky laws
(including reasonable fees and disbursements of one counsel for all underwriters
or Holders as a group in connection with blue sky qualification of any of the
Registrable Securities), (iii) all
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expenses of any Persons in preparing or assisting in preparing, word processing,
printing and distributing any Shelf Registration Statement, any Prospectus and
any amendments or supplements thereto, (iv) all fees and expenses incurred in
connection with the listing, if any, of the Registrable Securities on any
securities exchange or quoted on NASDAQ, (v) all fees and disbursements of
counsel for the Company and of its independent public accountants, including the
expenses of any "cold comfort" letters required by or incident to such
performance and compliance.
"Restricted Period" shall mean the period of commencing on the date of the
Exchange Agreement and ending on the first to occur of (a) two (2) years from
the date of the Exchange Agreement and (b) a Change-in-Control Transaction.
"Rule 144(k) Period" shall mean the period of two years (or such shorter
period as may hereafter be referred to in Rule 144(k) under the Securities Act
(or similar successor rule)) commencing on the Issue Date.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Shelf Registration" shall mean a registration effected pursuant to Section
2(a) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration statement
of the Company pursuant to the provisions of Section 2(a) hereof which covers
all of the Registrable Securities on an appropriate form under Rule 415 under
the Securities Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all documents incorporated by reference
therein.
"Warrant Shares" shall have the meaning set forth in the recitals hereto.
2. Registration Under the Securities Act.
a. Shelf Registration. At any time following (i) the exercise of a Warrant
for a number of Warrant Shares having a value of at least $1 million (determined
on the price per share to be offered to the public) and (ii) the end of the
Restricted Period, upon the request of the Holders of such Warrant Shares, the
Company shall file or cause to be filed, within 90 days after such request, a
Shelf Registration Statement providing for the sale by the Holders of all of the
Registrable Securities and shall use its reasonable best efforts to have such
Shelf Registration Statement declared effective by the SEC. No Holder of
Registrable Securities shall be entitled to include any of its Registrable
Securities in any Shelf Registration pursuant to this Agreement unless and until
such Holder agrees in writing to be bound by all of the provisions of this
Agreement applicable to such Holder and furnishes to the Company in writing,
within 10 Business Days after receipt of a request therefor, such information as
the Company may, after conferring with counsel with regard to information
relating to Holders that would be required by the SEC to be included in such
Shelf Registration Statement or Prospectus included therein, reasonably request
for inclusion in any Shelf Registration Statement or Prospectus included
therein. Each Holder as to which any Shelf Registration is being effected agrees
to furnish to the
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Company all information with respect to such Holder necessary to make the
information previously furnished to the Company by such Holder not materially
misleading.
The Company agrees to use its reasonable best efforts to keep the Shelf
Registration Statement continuously effective and the Prospectus usable for
resales during the Rule 144(k) Period (subject to extension pursuant to the
provisions of this paragraph), or for such shorter period which will terminate
when all of the Warrant Shares covered by the Shelf Registration Statement have
been sold pursuant to the Shelf Registration Statement or cease to be
Registrable Securities (the "Effectiveness Period"); provided, however, that for
120 days or less (whether or not consecutive) in any twelve-month period, the
Company shall be permitted to suspend sales of Warrant Shares: (i) if the Shelf
Registration Statement is no longer effective or the Prospectus usable for
resales due to circumstances relating to pending developments, public filings
with the SEC and similar events, (ii) because the Prospectus includes an untrue
statement of a material fact or omits to state a material fact necessary in
order to make statements therein, in the light of the circumstances under which
they were made, not misleading or (iii) if the Company is engaged in or has
completed an underwritten public offering and the underwriters' lock-up period
with respect to sales of common stock (or securities convertible into common
stock) has not expired. Each Holder agrees that it shall give the Company notice
of not less than five (5) Business Days prior to disposing of any Registered
Securities under the Shelf Registration Statement so that the Company may make
any determination to suspend sales of Warrant Shares as contemplated in the
preceding sentence. Each Holder further agrees that it shall not dispose of
Registrable Securities under the Shelf Registration Statement in any single
transaction of less than $1 million determined on the price per share offered to
the public; provided however, a Holder may dispose of Registrable Securities in
a transaction of less than $1 million if such Holder is disposing of all of its
Registrable Securities in such transaction. In addition, each Holder agrees that
it shall not dispose of Registrable Securities under the Shelf Registration
Statement in any underwritten offering by one or more Holders of less than an
aggregate of $5 million of Registrable Securities determined on the price per
share offered to the public. The Company will, in the event a Shelf Registration
Statement is declared effective, provide to each Holder a reasonable number of
copies of the Prospectus which is a part of the Shelf Registration Statement,
and, at that time, notify each such Holder that the Shelf Registration Statement
has become effective and take such other actions as are required to permit
unrestricted resales of the Registrable Securities. The Company further agrees
to supplement or amend the Shelf Registration Statement if and as required by
the rules, regulations or instructions applicable to the registration form used
by the Company for such Shelf Registration Statement or by the Securities Act or
by any other rules and regulations thereunder for shelf registrations, and the
Company agrees to furnish to the Holders of Registrable Securities copies of any
supplement or amendment to the Prospectus promptly after its being used or filed
with the SEC.
b. Expenses. The Company, as issuer of the Warrant Shares, shall pay all
Registration Expenses in connection with any Shelf Registration Statement filed
pursuant to Section 2(a) hereof and will reimburse any single counsel designated
in writing by the Holders of a majority of the Registrable Securities to act as
counsel for the Holders of the Registrable Securities in connection with a Shelf
Registration Statement, which other counsel shall be reasonably satisfactory to
the Company; provided however, that such reimbursement shall in no event exceed
an aggregate of $10,000. Except as provided herein, each Holder shall pay all
expenses of its counsel, underwriting discounts and commissions and transfer
taxes, if any,
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relating to the sale or disposition of such Holder's Registrable Securities
pursuant to the Shelf Registration Statement.
(c) Effective Shelf Registration Statement. A Shelf Registration Statement
will not be deemed to have become effective unless it has been declared
effective by the SEC; provided, however, that if, after it has been declared
effective, the offering of Registrable Securities pursuant to such Shelf
Registration Statement is interfered with by any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or court, such
Shelf Registration Statement will be deemed not to have been effective during
the period of such interference, until the offering of Registrable Securities
pursuant to such Shelf Registration Statement may legally resume. The Company
will be deemed not to have used its reasonable best efforts to cause a Shelf
Registration Statement to become, or to remain, effective during the requisite
period if it voluntarily takes any action that would result in any such Shelf
Registration Statement not being declared effective or that would result in the
Holders of Registrable Securities covered thereby not being able to offer and
sell such Registrable Securities during that period, unless such action is
required by applicable law.
(d) Specific Enforcement. Without limiting the remedies available to the
Holders, the Company acknowledges that any failure by it to comply with its
obligations under Section 2(a) hereof may result in material irreparable injury
to the Holders for which there is no adequate remedy at law, that it would not
be possible to measure damages for such injuries precisely and that, in the
event of any such failure, any Holder may obtain such relief as may be required
to specifically enforce the Company's obligations under Section 2(a) hereof.
3. Registration Procedures. In connection with the obligations of the
Company with respect to the Shelf Registration Statement pursuant to Section
2(a) hereof, the Company shall use its reasonable best efforts to:
(a) prepare and file with the SEC a Shelf Registration Statement as
prescribed by Section 2(a) hereof within the relevant time period specified
in Section 2(a) hereof on the appropriate form under the Securities Act,
which form shall (i) be selected by the Company, (ii) be available for the
sale of the Registrable Securities by the selling Holders thereof, and
(iii) comply as to form in all material respects with the requirements of
the applicable form and include all financial statements required by the
SEC to be filed therewith; the Company shall use its efforts to cause such
Shelf Registration Statement to become effective and remain effective and
the Prospectus usable for resales in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Shelf Registration Statement as may be necessary to keep
such Shelf Registration Statement effective for the Effectiveness Period,
subject to the proviso contained in the second paragraph in Section 2(a),
and cause each Prospectus to be supplemented, if so determined by the
Company or requested by the SEC, by any required prospectus supplement and
as so supplemented to be filed pursuant to Rule 424 (or any similar
provision then in force) under the Securities Act, and comply with the
provisions of the Securities Act, the Exchange Act and the rules and
regulations promulgated thereunder applicable to it with respect to the
disposition of all securities
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covered by a Shelf Registration Statement during the Effectiveness Period
in accordance with the intended method or methods of distribution by the
selling Holders thereof described in this Agreement;
(c) register or qualify the Registrable Securities under all
applicable state securities or "blue sky" laws of such jurisdictions by the
time the applicable Shelf Registration Statement is declared effective by
the SEC as any Holder of Registrable Securities covered by a Shelf
Registration Statement and each underwriter of an underwritten offering of
Registrable Securities shall reasonably request in writing in advance of
such date of effectiveness, and do any and all other acts and things which
may be reasonably necessary or advisable to enable such Holder and
underwriter to consummate the disposition in each such jurisdiction of such
Registrable Securities owned by such Holder; provided, however, that the
Company shall not be required to (i) qualify as a foreign corporation or as
a dealer in securities in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(c), (ii) file any general
consent to service of process in any jurisdiction where it would not
otherwise be subject to such service of process or (iii) subject itself to
taxation in any such jurisdiction if it is not then so subject;
(d) promptly notify each Holder of Registrable Securities, their
counsel and the managing underwriters, if any, and promptly confirm such
notice in writing (i) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a Shelf
Registration Statement or the qualification of the Registrable Securities
in any jurisdiction described in Section 3(c) hereof or the initiation of
any proceedings for that purpose, (ii) if, between the effective date of a
Shelf Registration Statement and the closing of any sale of Registrable
Securities covered thereby, the representations and warranties of the
Company contained in any purchase agreement, securities sales agreement or
other similar agreement cease to be true and correct in all material
respects, and (iii) of the happening of any event or the failure of any
event to occur or the discovery of any facts, during the Effectiveness
Period, which makes any statement made in a Shelf Registration Statement or
the related Prospectus untrue in any material respect or which causes such
Shelf Registration Statement or Prospectus to omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(e) obtain the withdrawal of any order suspending the effectiveness of
the Shelf Registration Statement at the earliest possible moment;
(f) cooperate with the selling Holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends
and registered in such names as the selling Holders or the underwriters may
reasonably request at least two Business Days prior to the closing of any
sale of Registrable Securities pursuant to the Shelf Registration
Statement;
(g) promptly after the occurrence of any event specified in Section
3(d)(i) or 3(d)(iii) (subject to a 120 day grace period within any
twelve-month period) hereof,
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prepare a supplement or post-effective amendment to the Shelf
Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not include any untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; and the Company shall notify
each Holder to suspend use of the Prospectus as promptly as
practicable after the occurrence of such an event, and each Holder
hereby agrees to suspend use of the Prospectus until the Company has
amended or supplemented the Prospectus to correct such misstatement or
omission;
(h) if requested by the Holders of Registrable Securities in
connection with a firm commitment underwritten offering of at least
$10 million in initial public offering price of Registrable
Securities: (i) enter into such agreements (including underwriting
agreements) as are customary in underwritten offerings and make such
representations and warranties to the underwriters (if any), with
respect to the business of the Company and its subsidiaries as then
conducted and with respect to the Shelf Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily
made by issuers to underwriters in underwritten offerings, and confirm
the same if and when requested; (ii) obtain opinions of counsel to the
Company and updates thereof (which may be in the form of a reliance
letter) in form and substance reasonably satisfactory to the managing
underwriters covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be
reasonably requested by such underwriters (it being agreed that the
matters to be covered by such opinion may be subject to customary
qualifications and exceptions); (iii) obtain "cold comfort"
accountants' letters and updates thereof in form and substance
reasonably satisfactory to the managing underwriters from the
independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any
business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the
Registration Statement), addressed to each of the underwriters, such
letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
underwritten offerings and such other matters as reasonably requested
by such underwriters in accordance with Statement on Auditing
Standards No. 72; and (iv) if an underwriting agreement is entered
into, the same shall contain indemnification provisions and
procedures;
(i) if requested by Holders of Registrable Securities in
connection with a firm commitment underwritten offering of at least
$15 million in public offering price of Registrable Securities make
reasonably available for inspection by any selling Holder of
Registrable Securities who certifies to the Company that it has a
current intention to sell Registrable Securities pursuant to the Shelf
Registration, any underwriter participating in any such disposition of
Registrable Securities, if any, and any attorney, accountant or other
agent retained by any such selling Holder or underwriter
(collectively, the "Inspectors"), at the offices where normally kept,
during the Company's normal business hours, all financial and other
records, pertinent organizational and operational documents and
properties of the Company and its subsidiaries (collectively, the
"Records") as shall
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be reasonably necessary to enable them to exercise any applicable due
diligence responsibilities, and cause the officers, trustees and
employees of the Company and its subsidiaries to supply all relevant
information in each case reasonably requested by any such Inspector in
connection with such Shelf Registration Statement; records and
information which the Company, in good faith, to be confidential and
any Records and information which it notifies the Inspectors are
confidential shall not be disclosed to any Inspector except where (i)
the disclosure of such Records or information is necessary to avoid or
correct a material misstatement or omission in such Shelf Registration
Statement, (ii) the release of such Records or information is ordered
pursuant to a subpoena or other order from a court of competent
jurisdiction or is necessary in connection with any action, suit or
proceeding or (iii) such Records or information previously has been
made generally available to the public; each selling Holder of such
Registrable Securities will be required to agree in writing that
Records and information obtained by it as a result of such inspections
shall be deemed confidential and shall not be used by it as the basis
for any market transactions in the securities of the Company unless
and until such is made generally available to the public through no
fault of an Inspector or a selling Holder; and each selling Holder of
such Registrable Securities will be required to further agree in
writing that it will, upon learning that disclosure of such Records or
information is sought in a court of competent jurisdiction, or in
connection with any action, suit or proceeding, give notice to the
Company and allow the Company at its expense to undertake appropriate
action to prevent disclosure of the Records and information deemed
confidential;
(j) comply with all applicable rules and regulations of the SEC
so long as any provision of this Agreement shall be applicable and
make generally available to its securityholders earning statements
satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) no later than 45 days after the end of any
twelve-month period (or 90 days after the end of any twelve-month
period if such period is a fiscal year) (i) commencing at the end of
any fiscal quarter in which Registrable Securities are sold to
underwriters in a firm commitment or best efforts underwritten
offering and (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of the Company
after the effective date of a Shelf Registration Statement, which
statements shall cover said twelve-month periods, provided that the
obligations under this Section 3(j) shall be satisfied by the timely
filing of quarterly and annual reports on Forms 10-Q and 10-K under
the Exchange Act;
(k) cooperate with each seller of Registrable Securities covered
by a Shelf Registration Statement and each underwriter, if any,
participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be
made with the NASD; and
(l) take all other steps necessary to effect the registration of
the Registrable Securities covered by a Shelf Registration Statement
contemplated hereby.
Each Holder agrees that, upon receipt of any notice from the
Company of the occurrence of any event specified in Section 3(d)(i) or 3(d)(iii)
hereof, such Holder will
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forthwith discontinue disposition of Registrable Securities pursuant to a Shelf
Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(g) hereof or until
it is advised in writing (the "Advice") by the Company that the use of the
applicable Prospectus may be resumed, and, if so directed by the Company, such
Holder will deliver to the Company (at the Company's expense) all copies in such
Holder's possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Securities current at
the time of receipt of such notice. If the Company shall give any such notice to
suspend the disposition of Registrable Securities pursuant to a Shelf
Registration Statement, the Company shall use its best efforts to file and have
declared effective (if an amendment) as soon as practicable after the resolution
of the related matters an amendment or supplement to the Shelf Registration
Statement and related Prospectus.
4. Indemnification and Contribution. (a) The Company hereby agrees to
indemnify and hold harmless each Holder, each underwriter who participates in an
offering of the Registrable Securities, each Person, if any, who controls any of
such parties within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act and each of their respective directors, officers,
employees and agents, as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in a Shelf Registration
Statement (or any amendment thereto) or the Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission therefrom of a
material fact required to be stated therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, provided that (subject to Section
4(d) hereof) such settlement is effected with the prior written consent of
the Company; and
(iii) against any and all expenses whatsoever, as incurred (including
the reasonable fees and disbursements of counsel chosen by such Holder),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under
subparagraph (i) or (ii) of this Section 4(a);
provided, however, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished in writing to the Company by such
Holder or underwriter for use in the Shelf Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto).
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(b) Each Holder or underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its trustees and officers (including
each officer of the Company who signed the Shelf Registration Statement), and
each Person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act against any and all
loss, liability, claim, damage and expense whatsoever described in the indemnity
contained in Section 4(a) hereof, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Shelf Registration Statement (or any amendment thereto) or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such Holder expressly for use in
such Shelf Registration Statement (or any amendment thereto) or such Prospectus
(or any amendment or supplement thereto); provided, however, that no Holder
shall be liable for any claims hereunder in excess of the amount of net proceeds
received by such Holder from the sale of Registrable Securities.
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have under this Section 4 to the extent that it is not materially
prejudiced by such failure as a result thereof, and in any event shall not
relieve it from liability which it may have otherwise on account of this
indemnity agreement. In the case of parties indemnified pursuant to Section 4(a)
or (b) above, counsel to the indemnified parties shall be selected by such
parties. An indemnifying party may participate at its own expense in the defense
of such action; provided, however, that counsel to the indemnifying party shall
not (except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for the
fees and expenses of more than one counsel (in addition to local counsel),
separate from their own counsel, for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 4 (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional written release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have validly requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 4(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
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(e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement set forth in this Section 4 is
for any reason held to be unenforceable by an indemnified party although
applicable in accordance with its terms, the Company, on the one hand, and the
Holders, on the other hand, shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement incurred by the Company and the Holders, as incurred;
provided, however, that no Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution
from any Person that was not guilty of such fraudulent misrepresentation. As
between the Company, on the one hand, and the Holders, on the other hand, such
parties shall contribute to such aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated by such indemnity agreement in such
proportion as shall be appropriate to reflect the relative fault of the Company,
on the one hand, and the Holders, on the other hand, with respect to the
statements or omissions which resulted in such loss, liability, claim, damage or
expense, or action in respect thereof, as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand, and of the
Holders, on the other hand, shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company, on the one hand, or by or on behalf of the Holders, on
the other, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Holders of the Registrable Securities agree that it would not be just
and equitable if contribution pursuant to this Section 4 were to be determined
by pro rata allocation or by any other method of allocation that does not take
into account the relevant equitable considerations. For purposes of this Section
4, each Affiliate of a Holder, and each director, officer and employee and
Person, if any, who controls a Holder or such Affiliate within the meaning of
Section 15 of the Securities Act shall have the same rights to contribution as
such Holder, and each trustee and officer of the Company and each Person, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same rights to contribution
as the Company.
5. Participation in an Underwritten Registration. No Holder may participate
in an underwritten registration hereunder unless such Holder (a) agrees to sell
such Holder's Registrable Securities on the basis provided in the underwriting
arrangement approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all reasonable questionnaires,
powers of attorney, indemnities, underwriting agreements, lock-up letters and
other documents reasonably required under the terms of such underwriting
arrangements.
6. Selection of Underwriters. The Holders of Registrable Securities covered
by the Shelf Registration Statement who desire to do so may sell the Securities
covered by such Shelf Registration in an underwritten offering, subject to the
provisions of Section 3(h) hereof. In any such underwritten offering, the
underwriter or underwriters and manager or managers that will administer the
offering will be selected by the Holders; provided, however, that such
underwriters and managers must be reasonably satisfactory to the Company.
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7. Miscellaneous.
(a) Rule 144. For so long as the Company is subject to the reporting
requirements of Section 13 or 15 of the Exchange Act and any Registrable
Securities or Warrant Shares which are no longer Registrable Securities solely
as a result of their issuance pursuant to a Net Issue Exercise as provided by
Section 1.2 of the Warrant (collectively, "Eligible Securities") remain
outstanding, the Company will file the reports required to be filed by it under
the Securities Act and Section 13(a) or 15(d) of the Exchange Act and the rules
and regulations adopted by the SEC thereunder; provided, however, that if the
Company ceases to be so required to file such reports, it will, upon the request
of any Holder of Eligible Securities (a) make publicly available such
information as is necessary to permit sales of its securities pursuant to Rule
144 under the Securities Act and (b) take such further action that is reasonable
in the circumstances, in each case, to the extent required from time to time to
enable such Holder to sell its Eligible Securities without registration under
the Securities Act within the limitation of the exemptions provided by Rule 144
under the Securities Act, as such rule may be amended from time to time, or any
similar rules or regulations hereafter adopted by the SEC. Upon the request of
any Holder of Eligible Securities, the Company will deliver to such Holder a
written statement as to whether it has complied with such requirements.
(b) No Inconsistent Agreements. The Company has not entered into, and will
not enter into, any agreement which is inconsistent with the rights granted to
the Holders of Registrable Securities in this Agreement or otherwise conflicts
with the provisions hereof. The rights granted to the Holders hereunder do not
in any way conflict with and are not inconsistent with the rights granted to the
holders of the Company's other issued and outstanding securities under any such
agreements.
(c) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of Holders of a majority of
the outstanding Registrable Securities affected by such amendment, modification,
supplement, waiver or departure; provided that no amendment, modification or
supplement or waiver or consent to the departure with respect to the provisions
of Section 4 hereof shall be effective as against any Holder of Registrable
Securities unless consented to in writing by such Holder of Registrable
Securities. Notwithstanding the foregoing sentence, (i) this Agreement may be
amended, without the consent of any Holder of Registrable Securities, by written
agreement signed by the Company and the Sellers or their successors and assigns
to cure any ambiguity, correct or supplement any provision of this Agreement
that may be inconsistent with any other provision of this Agreement or to make
any other provisions with respect to matters or questions arising under this
Agreement which shall not be inconsistent with other provisions of this
Agreement, (ii) this Agreement may be amended, modified or supplemented, and
waivers and consents to departures from the provisions hereof may be given, by
written agreement signed by the Company and the Sellers or their successors and
assigns to the extent that any such amendment, modification, supplement, waiver
or consent is, in their reasonable judgment, necessary or appropriate to comply
with applicable law (including any interpretation of the Staff of the SEC) or
any change therein and (iii) to the extent any provision of this Agreement
relates to the Sellers, such provision may be amended,
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modified or supplemented, and waivers or consents to departures from such
provisions may be given, by written agreement signed by the Sellers and the
Company.
(d) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, telex, telecopier, or any courier guaranteeing overnight delivery (i) if
to a Holder, at the most current address given by such Holder to the Company by
means of a notice given in accordance with the provisions of this Section 7(d),
which address initially is, with respect to the Sellers, the address set forth
in the Exchange Agreement; and (ii) if to the Company, initially at the
Company's address set forth in the Exchange Agreement and thereafter at such
other address, notice of which is given in accordance with the provisions of
this Section 7(d).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next Business Day, if timely delivered to an overnight courier, including
Federal Express or similar courier utilizing overnight delivery.
(e) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns and transferees of the Sellers,
including, without limitation and without the need for an express assignment,
subsequent Holders; provided, however, that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Securities
in violation of the terms of the Exchange Agreement provided, further, that the
rights of the Sellers hereunder shall not be assignable to any competitor of the
Company unless such assignment is in connection with the sale by the Sellers of
a majority of the Restricted Stock held by the Sellers and notice of such
assignment and the identity of such transferee is provided to the Company. If
any transferee of any Holder shall acquire Registrable Securities, in any
manner, whether by operation of law or otherwise, such Registrable Securities
shall be held subject to all of the terms of this Agreement, and by taking and
holding such Registrable Securities, such Person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement and such Person shall be entitled to receive the benefits hereof.
(f) Third Party Beneficiaries. Each Holder shall be a third party
beneficiary of the agreements made hereunder among the Company and the Sellers,
and the Sellers shall have the right to enforce such agreements directly to the
extent it deems such enforcement necessary or advisable to protect its rights or
the rights of Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
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(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to any
provisions relating to conflicts of laws.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) 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.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
RECKSON SERVICE INDUSTRIES, INC.
By: ___________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President
THE SELLERS
___________________________________
Xxxxxx X. Xxxxxxxxxxx
___________________________________
H. Xxxxx Xxxx
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