SHAREHOLDERS REGISTRATION RIGHTS AGREEMENT
SHAREHOLDERS REGISTRATION RIGHTS AGREEMENT, dated as of August 20,
1997 (this "Agreement"), by and among XXXXX INDUSTRIES, INC., a California
corporation ("Company"), and the Persons listed on the signature pages hereto
(the "Shareholders").
WHEREAS, the Board of Directors of Xxxxx has effected a
recapitalization of Xxxxx pursuant to which, among other things, JFL Merger Co.,
a wholly owned subsidiary of X.X. Xxxxxx Equity Investors I, L.P. ("MergerCo")
has merged with and into Xxxxx, with Xxxxx surviving such merger (the "Merger"),
pursuant to which Xxxxx assumed the liabilities and obligations of MergerCo;
WHEREAS, the Board of Directors has determined that it is in the best
interests of the Company and the Shareholders that, in connection with the
Merger, the Company provide the registration rights set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
1. DEFINITIONS. Unless otherwise defined herein, the following
terms shall have the following meanings below:
"COMMON STOCK" shall mean the common stock of the Company, no par
value, upon consummation of the Merger.
"OTHER HOLDERS" shall mean Persons who are holders of record of equity
securities of the Company who have valid contractual registration rights
under the Warrantholders Registration Rights Agreement entered into among
certain holders of warrants to purchase Common Stock of the Company and the
Company.
"PERSON" shall mean an individual, corporation, unincorporated
association, partnership, group (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934), trust, joint stock company, joint
venture, business trust or unincorporated organization, any governmental
entity or any other entity of whatever nature.
"REGISTRABLE SHARES" shall mean any shares of Common Stock which may
be (i) held from time to time by the Shareholders or (ii) issued or
distributed in respect of the Common Stock referred to in clause (i) above
by way of stock dividend or stock split or other distribution,
recapitalization or reclassification. As to any particular Registrable
Share, such Registrable Share shall cease to be a Registrable Share when
(i) it shall have been sold, transferred or otherwise disposed of or
exchanged pursuant to a registration statement under the Securities Act or
(ii) it shall have been distributed to the public pursuant to Rule 144 (or
any successor provision) under the Securities Act.
2. INCIDENTAL REGISTRATIONS.
(a) RIGHT TO INCLUDE REGISTRABLE SHARES. After the completion
of the initial public offering by the Company of its Common Stock, each time the
Company shall determine to file a registration statement under the Securities
Act in connection with the proposed offer and sale for cash of Common Stock
(other than debt securities which are convertible into Common Stock and other
than registration statements on Form S-4 or S-8) either by it or by any holders
of its outstanding equity securities, the Company shall give prompt written
notice of its determination to each Holder and of such Holder's rights under
this Section 2, at least 20 days prior to the anticipated filing date of such
registration statement. Upon the written request of each Holder made within 15
days after the receipt of any such notice from the Company, (which request shall
specify the Registrable Shares intended to be disposed of by such Holder), the
Company shall use its best efforts to effect the registration under the
Securities Act of all Registrable Shares which the Company has been so requested
to register by the Holders thereof, to the extent required to permit the
disposition of the Registrable Shares so to be registered; PROVIDED, HOWEVER,
that (i) if, at any time after giving written notice of its intention to
register any securities and prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to proceed with the proposed registration of the
securities to be sold by it, the Company may, at its election, give written
notice of such determination to each Holder of Registrable Shares and thereupon
shall be relieved of its obligation to register any Registrable Shares in
connection with such registration (but not from its obligation to pay the
Registration Expenses in connection therewith) and (ii) if such registration
involves an underwritten offering, all Holders of Registrable Shares requesting
to be included in the Company's registration must sell their Registrable Shares
to the underwriters on the same terms and conditions as apply to the Company,
with such differences, including any with respect to indemnification, as may be
customary or appropriate in combined primary and secondary offerings (provided
that no Holder shall be required to provide indemnification which is more
expansive than the indemnification provided in Section 9(b) hereof and provided,
further, that the representations and warranties provided by any Holder shall be
limited to such matters as the authority of such Holder to sell its Registrable
Shares, its title thereto and the absence of liens thereon). If a registration
requested pursuant to this Section 2(a) involves an underwritten public
offering, any Holder of Registrable Shares requesting to be included in such
registration may elect in writing prior to the effective date of the
registration statement filed in connection with such registration, not to
register such securities in connection with such registration. No registration
effected under this Section 2 shall relieve the Company of its obligations to
effect one registration upon request under Section 4 hereof.
(b) PRIORITY IN INCIDENTAL REGISTRATIONS. If a registration
pursuant to this Section 2 involves an underwritten offering and the managing
underwriter in good faith advises the Company in writing that, in its opinion,
the number of securities which the Company, the Holders and any other Persons
intend to include in such registration exceeds the largest number of securities
which can be sold in such offering without having an adverse effect on such
offering (including the price at which such securities can be sold), then the
Company shall include in such registration: (i) FIRST, 100% of the securities
the Company proposes to sell for its own account; and (ii) SECOND, such number
of Registrable Shares which the Holders have requested
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to be included in such registration and such number of securities which Other
Holders have requested to be included in such registration which, in the opinion
of such managing underwriter, can be sold without having the adverse effect
referred to above, such number of Registrable Shares and securities of Other
Holders to be included on a pro rata basis among all requesting Holders and
Other Holders on the basis of the relative number of shares of Common Stock
beneficially owned (as such term is used in Rule 13d-3 of the Exchange Act) by
such Holders and Other Holders, PROVIDED that if the number of Registrable
Shares requested to be included in such registration by the Other Holders
pursuant to Section 2(a) of the Warrantholders Registration Rights Agreement and
permitted to be included in such registration by the Other Holders pursuant to
Section 2(b) of the Warrantholders Registration Rights Agreement exceeds the
number which the Company has been advised can be sold in such offering without
having the adverse effect referred to above, the number of such Registrable
Shares to be included in such registration by the Other Holders shall be
allocated pro rata among such Other Holders on the basis set forth in Section
2(b) of the Warrantholders Registration Rights Agreement and, in such event, the
Holders shall have no right to register shares pursuant to this Agreement;
and (iii) THIRD, to the extent that the number of securities which are to be
included in such registration pursuant to clauses (i) and (ii), in the
aggregate, is less than the number of securities which the Company has been
advised can be sold in such offering without having the adverse effect referred
to above, such number of other securities requested to be included in the
offering for the account of any other Persons which, in the opinion of such
managing underwriter, can be sold without having the adverse effect referred to
above, such number to be allocated pro rata among all holders of such other
securities on the basis of the relative number of such other securities each
other person has requested to be included in such registration.
3. HOLDBACK AGREEMENTS. If any registration of Registrable Shares
shall be effected in connection with an underwritten public offering, the
Holders agree not to effect any public sale or distribution without the consent
of the managing underwriter (except in connection with such public offering), of
any equity securities of the Company, or of any security convertible into or
exchangeable or exercisable for any equity security of the Company (in each
case, other than as part of such underwritten public offering), during the 180-
day period (or such lesser period as the managing underwriter may permit)
beginning on the effective date of such registration, if, and to the extent, the
managing underwriter of any such offering determines such action is necessary or
desirable to effect such offering and if and to the extent that each director
and executive officer of the Company so agrees; PROVIDED, HOWEVER, that each
Holder has received the written notice required by Section 2(a) hereof.
4. REGISTRATION ON DEMAND.
(a) DEMAND BY HOLDERS. At any time on or after the later of
(i) August 20, 2000 and (ii) the one hundred and eighty-first (181st) day after
completion of the initial public offering by the Company of its Common Stock,
upon the written request by Holders of at least 66-2/3% of all Registrable
Shares, that the Company effect the registration under the Securities Act of all
or part of the Registrable Shares of such requesting party, and specifying the
amount and intended method of disposition thereof, the Company shall promptly
give notice of such requested registration to all other Holders and, as
expeditiously as possible, use its best efforts to effect the registration under
the Securities Act of: (i) the Registrable Shares which the
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Company has been so requested to register; and (ii) all other Registrable Shares
which the Company has been requested to register by any other Holder by written
request received by the Company within 15 days after the giving of such written
notice by the Company (which request shall specify the intended method of
disposition of such Registrable Shares); PROVIDED, HOWEVER, that the Company
shall not be required to effect such registration unless the Registrable Shares
requested to be so registered have an aggregate proposed offering price of not
less than $5,000,000; and PROVIDED, FURTHER, HOWEVER, that the Company shall not
be required to effect more than one registration pursuant to this Section 4(a)
unless (X) all of the Registrable Shares that the Holders initially requesting
registration pursuant to this Section 4(a) requested to be registered are not
included in such registration statement or (Y) the Company is eligible to file
on Form S-3, in which case the Holders shall be entitled to request an unlimited
number of registrations pursuant to this Section 4(a) except that the Company
shall not be required to effect such registration pursuant to this clause
(Y) unless the Registrable Shares requested to be so registered have an
aggregate proposed offering price of not less than $5,000,000 and no other
registration statement on Form S-3 has been filed by the Company and been
declared effective within the previous twelve months. Promptly after the
expiration of the 15-day period referred to in clause (ii) above, the Company
shall notify all Holders to be included in the registration of the other Holders
participating in such registration and the number of Registrable Shares
requested to be included therein. The Holders initially requesting a
registration pursuant to this Section 4(a) may, at any time prior to the
effective date of the registration statement relating to such registration,
revoke such request by providing a written notice to the Company revoking such
request; PROVIDED, HOWEVER, that if such revocation occurs after the date of the
filing of such registration statement, then the Registration Expenses incurred
by the Company in connection with the revoked request shall be payable by the
Holders participating in such demand registration.
(b) EFFECTIVE REGISTRATION STATEMENT. A registration requested
pursuant to this Section 4 shall not be deemed to have been effected unless it
has become effective under the Securities Act and has remained effective for 180
days or such shorter period as all the Registrable Shares included in such
registration have actually been sold thereunder.
(c) PRIORITY IN DEMAND REGISTRATIONS. If a demand registration
pursuant to this Section 4 involves an underwritten offering and the managing
underwriter in good faith advises the Company in writing that, in its opinion,
the number of securities requested to be included in such registration
(including securities of the Company which are not Registrable Shares) exceeds
the largest number of securities which can be sold in such offering without
having an adverse effect on such offering (including the price, acceptable to
the Holders requesting such registration, at which such securities can be sold),
then the Company will include in such registration (i) FIRST, 100% of the
Registrable Shares requested to be registered pursuant to Section 4(a) (provided
that if the number of Registrable Shares requested to be registered pursuant to
Section 4(a) exceeds the number which the Company has been advised can be sold
in such offering without having the adverse effect referred to above, the number
of such Registrable Shares to be included in such registration by the Holders
shall be allocated pro rata among such Holders on the basis of the relative
number of Registrable Shares each Holder has requested to be included in such
registration); and (ii) SECOND, to the extent that the number of Registrable
Shares requested to be registered pursuant to Section 4(a) is less than the
number of securities which the Company has been advised can be sold in such
offering without having the adverse effect referred
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to above, such number of shares of equity securities that, FIRST, the Company
and, SECOND, Other Holders may request to be included in such registration.
5. REGISTRATION PROCEDURES.
(a) If and whenever the Company is required by the provisions of
Sections 2 or 4 hereof to use its best efforts to effect or cause the
registration of Registrable Shares, the Company shall as expeditiously as
possible:
(i) prepare and, in any event within 60 days after the
end of the period within which a request for registration may be given to the
Company, file with the Securities and Exchange Commission (the "SEC") a
registration statement with respect to such Registrable Shares and use its best
efforts to cause such registration statement to become effective;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
a period not in excess of 90 days and to comply with the provisions of the
Securities Act, the Exchange Act, and the rules and regulations promulgated
thereunder with respect to the disposition of all the securities covered by such
registration statement during such period in accordance with the intended
methods of disposition by the Holders thereof set forth in such registration
statement; PROVIDED, that the Company shall notify each Holder of Registrable
Shares covered by such registration statement of any stop order issued or
threatened by the SEC, any other order suspending the use of any preliminary
prospectus or of the suspension of the qualification of the registration
statement for offering or sale in any jurisdiction, and take all reasonable
actions required to prevent the entry of such stop order, other order or
suspension or to remove it if entered;
(iii) furnish to each Holder and each underwriter, if
applicable, of Registrable Shares covered by such registration statement such
number of copies of the registration statement and of each amendment and
supplement thereto (in each case including all exhibits), such number of copies
of the prospectus included in such registration statement (including each
preliminary prospectus and summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents as each Holder of
Registrable Shares covered by such registration statement may reasonably request
in order to facilitate the disposition of the Registrable Shares owned by such
Holder;
(iv) use its best efforts to register or qualify such
Registrable Shares covered by such registration statement under the state
securities or blue sky laws of such jurisdictions as each Holder of Registrable
Shares covered by such registration statement and, if applicable, each
underwriter, may reasonably request, and do any and all other acts and things
which may be reasonably necessary to consummate the disposition in such
jurisdictions of the Registrable Shares owned by such Holder; PROVIDED, HOWEVER,
that in connection therewith, the Company shall not be required to (A) qualify
as a foreign corporation to do business or to register as a broker or dealer in
any such jurisdiction where it would not otherwise be required to qualify
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or register but for this clause (iv), (B) subject itself to taxation in any
jurisdiction or (C) file a general consent to service of process in any such
jurisdiction.
(v) use its best efforts to cause such Registrable Shares
covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
Holders thereof to consummate the disposition of such Registrable Shares;
(vi) if at any time when a prospectus relating to the
Registrable Shares is required to be delivered under the Securities Act any
event shall have occurred as the result of which any such prospectus as then in
effect would include an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, immediately give written notice thereof to each Holder
and the managing underwriter, if any, of such Registrable Shares and prepare and
furnish to each such Holder a reasonable number of copies of an amended or
supplemental prospectus as may be necessary so that, as thereafter delivered to
the purchasers of such Registrable Shares, such prospectus shall not include an
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
(vii) use its best efforts to cause such Registrable Shares
to be accepted for listing or quotation on any securities exchange or automated
quotation system on which similar securities of the Company are then listed, and
enter into customary agreements including a listing application and
indemnification agreement in customary form, provided that the applicable
listing requirements are satisfied, and provide a transfer agent and registrar
for such Registrable Shares covered by such registration statement not later
than the effective date of such registration statement;
(viii) enter into such customary agreements (including an
underwriting agreement in customary form) and take such other actions as each
Holder of Registrable Shares being sold or the underwriter, if any, reasonably
requests in order to expedite or facilitate the disposition of such Registrable
Shares, including customary indemnification and opinions;
(ix) to the extent reasonably requested by the Holders of
at least 51% of the Registrable Shares being sold, or the underwriters, if any,
use its best efforts to obtain a "cold comfort" letter or letters from the
Company's independent public accountants in customary form and covering matters
of the type customarily covered by "cold comfort" letters;
(x) make available, at the Company's expense, for
inspection by representatives of any Holder of Registrable Shares covered by
such registration statement, by any underwriter participating in any disposition
to be effected pursuant to such registration statement and by any attorney,
accountant or other agent retained by such Holders or any such underwriter
(collectively, the "HOLDER REPRESENTATIVES"), all financial and other records,
pertinent corporate documents and properties of the Company and its subsidiaries
(excluding any such records and documents as are protected by attorney-client
privilege or which the Company is prohibited from disclosing pursuant to the
terms of any nondisclosure agreements to which the
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Company or any of its subsidiaries is a party; PROVIDED that, to the extent
permitted under any such nondisclosure agreement, the Company shall disclose any
information subject to such nondisclosure agreement upon execution and delivery
by such Holder or Holder Representative of a confidentiality agreement for the
benefit of the parties to such nondisclosure agreement);
(xi) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable after the effective date of the
registration statement, an earnings statement which shall satisfy the provisions
of Section 11(a) of the Securities Act and the rules and regulations promulgated
thereunder; and
(xii) notify counsel for the Holders of Registrable Shares
included in such registration statement and the managing underwriter, if any,
immediately, and confirm the notice in writing, (A) when the registration
statement, or any post-effective amendment to the registration statement, shall
have become effective, or any supplement to the prospectus or any amendment
prospectus shall have been filed and (B) of any request of the SEC to amend the
registration statement or amend or supplement the prospectus or for additional
information.
(b) Each Holder of Registrable Shares hereby agrees that, upon
receipt of any notice from the Company of the happening of any event of the type
described in Section 5(a)(vi) hereof, such Holder shall forthwith discontinue
disposition of such Registrable Shares covered by such registration statement or
related prospectus until such Holder's receipt of the copies of the supplemental
or amended prospectus contemplated by Section 5(a)(vi) hereof. In the event the
Company shall give any such notice, the period mentioned in Section 5(a)(ii)
hereof shall be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to Section 5(a)(vi)
hereof and including the date when such Holder shall have received the copies of
the supplemental or amended prospectus contemplated by Section 5(a)(vi) hereof.
If for any other reason the effectiveness of any registration statement filed
pursuant to Section 4 hereof is suspended or interrupted prior to the expiration
of the time period regarding the maintenance of the effectiveness of such
Registration Statement required by Section 5(a)(ii) hereof so that Registrable
Shares may not be sold pursuant thereto, the applicable time period shall be
extended by the number of days equal to the number of days during the period
beginning with the date of such suspension or interruption to and ending with
the date when the sale of Registrable Shares pursuant to such registration
statement may be recommenced.
(c) Each Holder hereby agrees to provide the Company, upon
receipt of its request, with such information about such Holder to enable the
Company to comply with the requirements of the Securities Act and to execute
such certificates as the Company may reasonably request in connection with such
information and otherwise to satisfy any requirements of law. Each Holder
further agrees to furnish to the Company in writing such information regarding
the Holder and his, her or its proposed distribution of Registrable Shares as
the Company may from time to time reasonably request.
6. UNDERWRITTEN REGISTRATIONS. Subject to the provisions of
Sections 2, 3 and 4 hereof, any of the Registrable Shares covered by a
registration statement may be sold in an
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underwritten offering at the discretion of the Holder thereof. In the case of
an underwritten offering pursuant to Section 2 hereof, the managing underwriter
or underwriters that will administer the offering shall be selected by the
Company, PROVIDED that such managing underwriter or underwriters is reasonably
satisfactory to the Holders of a majority of the Registrable Shares to be
registered. In the case of any underwritten offering pursuant to Section 4
hereof, the managing underwriter or underwriters that will administer the
offering shall be selected by the Holders of a majority of the Registrable
Shares to be registered, PROVIDED that such underwriters are reasonably
satisfactory to the Company.
7. SUSPENSION OF REGISTRATION REQUIREMENT.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, the Company's obligation to use its best efforts to cause a
registration statement and any filings with any state securities authorities to
become effective or to amend or supplement any such registration statement or
filings shall be suspended during such period as circumstances exist (including,
without limitation, pending negotiations relating to, or the consummation of,
any transaction) which (i) would require additional disclosure of material
information by the Company in such registration statement or filing which the
Company has a bona fide business purpose for not disclosing in such registration
statement or (ii) render the Company unable to comply with SEC requirements (any
such circumstances hereinafter referred to as a "Suspension Event"); PROVIDED
that any suspension as a result of a Suspension Event shall occur on not more
than one occasion during any 365-day period and shall continue only for so long
as such event or its effect is continuing and in no event shall any such
suspension continue for more than 120 days. To the extent that any such
suspension occurs during a period in which a registration statement has been
filed pursuant hereto and remains effective, the time during which the Company
shall be required to maintain the effectiveness of such registration statement
shall be extended for the number of days during which such suspension continued.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, the Company shall not be required to cause a registration statement
requested pursuant to Section 4(a) to become effective during the period
beginning 30 days prior to the Company's good faith estimate of the date of
filing of, and ending 180 days after the effective date of, a Company-initiated
registration, provided that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective.
(c) The Company shall give the holders written notice
immediately upon the occurrence of any Suspension Event instructing such holders
to suspend sales of Registrable Shares as a result of such Suspension Event.
The Holders agree that after receipt of such notice they will not effect any
sales of Registrable Shares pursuant to any registration statement filed
pursuant to this Agreement until such time as such Holders shall have received
further notice from the Company that such sales may be recommenced, which notice
shall be given by the Company not later than five days after the conclusion of
any such Suspension Event.
8. EXPENSES.
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(a) The fees, costs and expenses of all registrations in
accordance with Sections 2 and 4 hereof shall be borne by the Company, subject
to the provisions of Section 8(b) hereof.
(b) The fees, costs and expenses of registration to be borne as
provided in Section 8(a) hereof shall include, without limitation, all expenses
incident to the Company's performance of or compliance with this Agreement,
including without limitation all SEC and stock exchange or NASD registration and
filing fees and expenses, fees and expenses of compliance with securities or
blue sky laws (including without limitation reasonable fees and disbursements of
counsel for the underwriters, if any, or for the selling Holders in connection
with blue sky qualifications of the Registrable Shares), rating agency fees,
printing expenses (including expenses of printing certificates for Registrable
Shares and prospectuses), the fees and expenses incurred in connection with the
listing of the securities to be registered on each securities exchange or
automated quotation system on which similar securities issued by the Company are
then listed, and fees and disbursements of counsel for the Company and all
independent certified public accountants (including the expenses of any annual
audit, special audit and "cold comfort" letters required by or incident to such
performance and compliance) (but in any event not including any underwriting
discounts or commissions or transfer taxes, if any, attributable to the sale of
Registrable Shares by such Holders) (collectively, "Registration Expenses").
9. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. In the event of any
registration of any securities of the Company under the Securities Act pursuant
to Sections 2 or 4 hereof, the Company shall, and it hereby does, indemnify and
hold harmless, to the extent permitted by law, each of the Holders of any
Registrable Shares covered by such registration statement, each affiliate of
such Holder and their respective directors and officers (and the directors,
officers, affiliates and controlling Persons thereof), each other Person who
participates as an underwriter in the offering or sale of such securities and
each other Person, if any, who controls such Holder or any such underwriter
within the meaning of the Securities Act (collectively, the "Indemnified
Parties"), against any and all losses, claims, damages or liabilities, joint or
several, and expenses (including any amounts paid in any settlement effected
with the Company's consent, which consent shall not be unreasonably withheld and
including any expenses paid in connection with the enforcement of the
indemnification rights contained herein) to which any Indemnified Party may
become subject under the Securities Act, state securities or blue sky laws,
common law, any other applicable law, foreign or domestic, or otherwise, insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof, whether or not such Indemnified Party is a party thereto) or
expenses arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary, final or summary prospectus contained therein, or any amendment or
supplement thereto, (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (iii) any violation by the Company of any federal,
state or common law rule or regulation applicable to the Company and relating to
action required of or inaction by the Company in connection with any such
registration, and the Company shall reimburse such Indemnified Party for any
legal or any other expenses reasonably incurred by it in connection with
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investigating or defending any such loss, claim, liability, action or
proceeding; PROVIDED that the Company shall not be liable to any Indemnified
Party in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement or amendment or supplement
thereto or in any such preliminary, final or summary prospectus in reliance upon
and in conformity with written information with respect to such Holder furnished
to the Company by such Holder specifically for use therein. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Holder or any Indemnified Party and shall survive the transfer
of such securities by such Holder.
(b) INDEMNIFICATION BY THE HOLDERS AND UNDERWRITERS. The
Company may require, as a condition to including any Registrable Shares in any
registration statement filed in accordance with Sections 2 or 4 hereof, that the
Company shall have received an undertaking reasonably satisfactory to it from
the Holders of such Registrable Shares or any underwriter to, severally and not
jointly, indemnify and hold harmless (in the same manner and to the same extent
as set forth in Section 9(a) hereof) the Company with respect to any statement
or alleged statement in or omission or alleged omission from such registration
statement, any preliminary, final or summary prospectus contained therein, or
any amendment or supplement, if such statement or alleged statement or omission
or alleged omission was made in reliance upon and in conformity with written
information with respect to such Holder or such underwriter furnished to the
Company by such Holder or such underwriter specifically for use in such
registration statement, preliminary, final or summary prospectus or amendment or
supplement, or a document incorporated by reference into any of the foregoing;
PROVIDED that no such Holder shall be liable for any indemnity claims in excess
of the amount of net proceeds received by such Holder from the sale of
Registrable Shares. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company or any of
the Holders, or any of their respective affiliates, directors, officers or
controlling Persons, and shall survive the transfer of such securities by such
Holder.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an
indemnified party hereunder of written notice of the commencement of any action
or proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 9, such indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; PROVIDED that the failure of the
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under this Section 9, except to the extent
that the indemnifying party is actually materially prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
the indemnifying party shall be entitled to participate in and to assume the
defense thereof, with counsel satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable costs of
investigation; PROVIDED that the indemnified party shall have the right to
employ counsel to represent the indemnified party and its respective controlling
persons, directors, officers, general or limited partners, employees or agents
who may be subject to liability arising out of any
10
claim in respect of which indemnity may be sought by the indemnified party
against such indemnifying party under this Section 9 PROVIDED that the
employment of such counsel shall be at the expense of the indemnified party,
unless (i) the indemnifying party shall have agreed in writing to pay the
expenses of such counsel, (ii) the indemnifying party shall not have promptly
employed counsel reasonably satisfactory to the indemnified party to assume the
defense of such action or counsel or (iii) any indemnified party shall have
reasonably concluded that there may be defenses available to such indemnified
party or its respective controlling persons, directors, officers, employees or
agents which are in conflict with or in addition to those available to the
indemnifying party, and in that event the reasonable fees and expenses of one
firm of separate counsel for the indemnified party (in addition to the
reasonable fees and expenses of one firm serving as local counsel) shall be paid
by the indemnifying party. No indemnifying party shall consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 9 shall for any reason be unavailable to any indemnified party under
Section 9(a) or 9(b) hereof or is insufficient to hold it harmless in respect of
any loss, claim, damage or liability, or any action in respect thereof referred
to therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or
liability, or action in respect thereof, (i) in such proportion as shall be
appropriate to reflect the relative benefits received by the indemnified party
and indemnifying party or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) but also the relative
fault of the indemnified party and indemnifying party with respect to the
statements or omissions which resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. Notwithstanding any other provision of this Section 9(d), no
Holder of Registrable Shares shall be required to contribute an amount greater
than the dollar amount of the proceeds received by such Holder with respect to
the sale of any such Registrable Shares. 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.
(e) OTHER INDEMNIFICATION. Indemnification and contribution
similar to that specified in the preceding subdivisions of this Section 9 (with
appropriate modifications) shall be given by the Company and each Holder of
Registrable Shares with respect to any required registration or other
qualification of securities under any federal or state law or regulation or
governmental authority other than the Securities Act.
(f) NON-EXCLUSIVITY. The obligations of the parties under this
Section 9 shall be in addition to any liability which any party may otherwise
have to any other party.
10. ASSIGNABILITY. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. In addition, and whether or not any express assignment shall
have been made, the provisions of this Agreement which are for the benefit of
the parties hereto other than the Company shall also be for
11
the benefit of and enforceable by any subsequent Holder of any Registrable
Shares, subject to the provisions contained herein. The Company may not assign
any of its rights or delegate any of its duties under this Agreement without the
written consent of the Holders of 66K% of the Registrable Shares.
11. NOTICES. Any and all notices, designations, consents, offers,
acceptances or any other communications shall be given in writing by either
(a) personal delivery to and receipted for by the addressee or by (b) telecopy
or registered or certified mail which shall be addressed, in the case of the
Company, to 0000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxxxxxxxxx 00000, facsimile
(000) 000-0000, attention of Chief Executive Officer, with a copy to X.X. Xxxxxx
Equity Investors I, L.P., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, facsimile
(000) 000-0000, attention of Xx. Xxxxxx Xxxxxxxx, and in the case of Holders, to
the address or addresses thereof appearing on the books of the Company or of the
transfer agent and registrar for the Registrable Shares.
All such notices and communications shall be deemed to have been duly
given and effective: when delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed; and
when receipt acknowledged, if telecopied.
12. ARBITRATION. Any controversy, dispute or claim arising out of, in
connection with or in relation to the interpretation, performance or breach of
this Agreement shall be determined, at the request of any party, by arbitration
in a city mutually agreeable to the parties to such controversy, dispute or
claim, or, failing such agreement, in New York, New York, before and in
accordance with the then-existing Rules for Commercial Arbitration of the
American Arbitration Association, and any judgment or award rendered by the
arbitrator will be final, binding and unappealable and judgment may be entered
by any state or Federal court having jurisdiction thereof. The pre-trial
discovery procedures of the Federal Rules of Civil Procedure shall apply to any
arbitration under this Section 12. Any controversy concerning whether a dispute
is an arbitrable dispute or as to the interpretation or enforceability of this
Section 12 shall be determined by the arbitrator. The arbitrator shall be a
retired or former United States District Judge or other person acceptable to
each of the parties, provided such individual has substantial professional
experience with regard to corporate or partnership legal matters. The parties
intend that this agreement to arbitrate be valid, enforceable and irrevocable.
13. SEVERABILITY. If any provision of this Agreement or any portion
thereof is finally determined to be unlawful or unenforceable, such provision or
portion thereof shall be deemed to be severed from this Agreement. Every other
provision, and any portion of such an invalidated provision that is not
invalidated by such a determination, shall remain in full force and effect.
14. AMENDMENTS, WAIVERS. This Agreement may not be amended, modified
or supplemented and no waivers of or consents to departures from the provisions
hereof may be given unless consented to in writing by the Company and the
Holders of at least 66 2/3% of the Registrable Shares.
12
15. ATTORNEYS' FEES. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.
16. ENTIRE AGREEMENT. This Agreement contains the entire agreement
among the parties hereto with respect to the transactions contemplated herein
and understandings among the parties relating to the subject matter hereof. Any
and all previous agreements and understandings between or among the parties
hereto regarding the subject matter hereof are, whether written or oral,
superseded by this Agreement.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which,
together, shall constitute one and the same instrument.
18. CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
19. LIMITATION OF LIABILITY OF SHAREHOLDERS AND OFFICERS OF COMPANY.
ANY OBLIGATION OR LIABILITY WHATSOEVER OF THE COMPANY WHICH MAY ARISE AT ANY
TIME UNDER THIS AGREEMENT OR ANY OBLIGATION OR LIABILITY WHICH MAY BE INCURRED
BY IT PURSUANT TO ANY INSTRUMENT, TRANSACTION OR UNDERTAKING CONTEMPLATED HEREBY
SHALL BE SATISFIED OUT OF THE COMPANY'S ASSETS ONLY. NO SUCH OBLIGATION OR
LIABILITY SHALL BE PERSONALLY BINDING UPON, NOR SHALL RESORT FOR THE ENFORCEMENT
THEREOF BE HAD TO, THE PROPERTY OF ANY OF THE COMPANY'S SHAREHOLDERS (SOLELY AS
A RESULT OF THEIR STATUS AS SHAREHOLDERS), DIRECTORS, OFFICERS, EMPLOYEES OR
AGENTS, REGARDLESS OF WHETHER SUCH OBLIGATION OR LIABILITY IS IN THE NATURE OF
CONTRACT, TORT OR OTHERWISE. NOTWITHSTANDING THE FOREGOING, THIS SECTION 19
13
SHALL NOT IN ANY WAY AFFECT OR LIMIT ANY RIGHTS OR OBLIGATIONS OF THE COMPANY OR
ANY HOLDER UNDER THIS AGREEMENT.
20. GOVERNING LAW. This Agreement is made pursuant to and shall be
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective authorized officers as of the date aforesaid.
XXXXX INDUSTRIES, INC.
By: /s/ XXXXXX XXXXXXXX
------------------------
Name: Xxxxxx Xxxxxxxx
Title: Assistant Vice
President
THE SHAREHOLDERS:
/s/ XXXXXXX X. XXXXXX
--------------------------
Xxxxxxx X. Xxxxxx
/s/ XXXXXX X. XXXXXX
--------------------------
Xxxxxx X. Xxxxxx
/s/ XXXXX X. XXXXXXXX
--------------------------
Xxxxx X. Xxxxxxxx
/s/ XXXX X. XXXXXXXXXX
--------------------------
Xxxx X. Xxxxxxxxxx
/s/ XXXXXX X. XXXXXX
--------------------------
Xxxxxx X. Xxxxxx
/s/ XXXXX X. XXXXXXXXXXX
--------------------------
Xxxxx X. Xxxxxxxxxxx
/s/ XXXX X. XXXX
--------------------------
Xxxx X. Xxxx
14
/s/ XXXXXX X. XXXXX
--------------------------
Xxxxxx X. Xxxxx
/s/ XXXXX X. XXXXXX
--------------------------
Xxxxx X. Xxxxxx
/s/ XXXXXX X. XXXXXXXX
--------------------------
Xxxxxx X. Xxxxxxxx
/s/ XXXXXX XXXXXXXXXX
--------------------------
Xxxxxx Xxxxxxxxxx
/s/ XXXXXX X. XXXXXXX
--------------------------
Xxxxxx X. Xxxxxxx
15
