1
EXHIBIT 10.25
SHAREHOLDER'S AGREEMENT
This Agreement is made and entered into this 9th day of
August, 1998, by and between THE MAXIM GROUP, INC., a Delaware corporation
(hereinafter called the "Company"), and XXXX INDUSTRIES, INC., a Georgia
corporation (hereinafter called the "Shareholder").
WHEREAS, concurrently with the execution of this Agreement,
the Company has issued to Shareholder an aggregate of 3,150,000 shares of the
Common Stock of the Company (hereinafter "Issued Shares") in connection with
that certain Agreement and Plan of Merger ("Purchase Agreement") dated June 23,
1998 by and among the Company, CMAX Acquisition, Inc., the Shareholder and Xxxx
Carpet Showplace, Inc.; and
WHEREAS, it is a condition to the consummation of the
transactions contemplated by the Purchase Agreement that the parties hereto
execute and deliver this Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties agree as follows:
1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Affiliate" means, with respect to any Person, any Person
that, directly or indirectly, controls, is controlled by or is under common
control with the Person in question. In addition to the foregoing, with respect
to the Shareholder, "Affiliate" shall mean Xxxxxx X. Xxxx, his lineal
descendants, and their immediate family members, trusts primarily for the
benefit of such individuals and Persons controlled, directly or indirectly, by
such individuals and/or trust.
"Commission" shall mean the United States Securities and
Exchange Commission and any successor federal agency having similar powers and
responsibility for administering the Securities Act.
"Common Stock" shall mean the $.001 par value Common Stock
of the Company.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended (or any similar successor statute) and the rules and
regulations thereunder, all as the same shall be in effect at the time.
"Holder" shall mean the Shareholder and/or any Affiliate
thereof to whom any of the Issued Shares shall have been transferred during the
term of this Agreement.
2
"Person" means an individual or a corporation, partnership, limited
liability company or partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.
"Registrable Securities" shall mean the Issued Shares. Registrable
Securities will cease to be Registrable Securities when (i) a Registration
Statement covering such Registrable Securities has been declared effective under
the Securities Act by the Commission and such Registrable Securities have been
disposed of pursuant to such effective Registration Statement, (ii) such
securities shall have been sold pursuant to Rule 144 (or any successor
provision) under the Securities Act and in compliance with the requirements of
paragraphs (c) (e), (f) and (g) of Rule 144 (notwithstanding the provisions of
paragraph (k) of such Rule), or (iii) the Registrable Securities are sold or
distributed by a Person not entitled to the registration rights granted by this
Agreement.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and this Agreement, and the declaration or
ordering of the effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses incurred by the
Company in complying with Section 4 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company (including any fees incurred by Company counsel for
advice rendered to any seller of Registrable Securities), blue sky fees and
expenses, fees of the National Association of Securities Dealers, Inc. and
accountants' expenses, including without limitation, any special audits or
"comfort" letters incident to or required by any such registration, and any fees
and disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting discounts and commissions.
"Registration Statement" means a registration statement filed pursuant
to the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Voting Securities" shall mean the shares of Common Stock and any
other securities of the Company entitled to vote generally in the election of
directors.
2. Transfer of Shares.
(a) Restrictions on Transfer. Shareholder agrees that it will not,
without the prior written consent of the Company, directly or indirectly,
offer, sell, exchange, pledge, hypothecate, encumber, transfer, assign or
otherwise dispose of (collectively, a "transfer") any Issued Shares for a
period of ninety (90) days after the date hereof.
-2-
3
(b) Endorsement on Certificates, etc.
(i) Upon the execution of this Agreement, in addition to any other
legend which the Company may deem advisable under the Securities Act and
certain state securities laws, all certificates representing the Issued
Shares shall be endorsed as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF A SHAREHOLDER'S AGREEMENT DATED AS OF __________
1998, BETWEEN THE COMPANY AND THE REGISTERED HOLDER OF THIS
CERTIFICATE AND, IN ACCORDANCE WITH SUCH AGREEMENT, MAY NOT BE
TRANSFERRED OR SOLD FOR A PERIOD OF 90 DAYS FROM THE DATE OF SUCH
AGREEMENT. A COPY OF THE ABOVE REFERENCED AGREEMENT IS ON FILE AT
THE PRINCIPAL OFFICE OF THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR AN
EXEMPTION FROM REGISTRATION UNDER SAID ACT AS EVIDENCED BY AN
OPINION OF COUNSEL THAT REGISTRATION IS NOT REQUIRED.
(ii) Upon the expiration of the ninety (90) day period referred to
above, the holder of any certificate shall be entitled to receive from the
Company, without expense, upon delivery to the Company of the existing
certificate representing such shares of Common Stock, a new certificate not
bearing the first restrictive legend set forth in clause (i) of this Section
2(b). The second legend set forth in clause (i) of this Section 2(b) shall
be removed from a particular certificate representing shares of Common Stock
when such security (A) shall have been sold to the public pursuant to an
effective registration statement, (B) shall have been sold in compliance
with the provisions of Rule 144 under the Securities Act or (C) becomes
eligible for sale to the public pursuant to Rule 144(k) under the Securities
Act.
(c) Improper Transfer. Any attempt to transfer or encumber any shares
of Common Stock other than in accordance with the terms of this Agreement
shall be null and void and neither the Company nor any transfer agent of
such securities shall give any effect to such attempted transfer or
encumbrance in its stock records.
3. Standstill. The Shareholder hereby agrees that, for a period of one
year from the date hereof, without the prior written consent of the Company, the
Shareholder will not, and the Shareholder will use its reasonable best efforts
to cause each of its Affiliates not to, directly or indirectly:
-3-
4
(i) acquire, publicly announce an intention to acquire, offer
or propose to acquire, or agree to acquire (except, in any case, by way of
stock dividends or other distributions or offerings made available to
holders of any Common Stock generally), directly or indirectly, whether by
purchase, tender or exchange offer, through the acquisition of control of
another Person, by joining a partnership, limited partnership, syndicate or
other "group" (within the meaning of Section 13(d)(3) of the Exchange Act)
or otherwise, any equity securities of the Company; provided, however, that
the Shareholder and/or any of its Affiliates may acquire additional shares
of Common Stock in open market or privately-negotiated transactions as long
as the Shareholder and its Affiliates, collectively, shall not, as a result
of such purchase or purchases, beneficially own in excess of 25% of the
outstanding shares of Common Stock;
(ii) make, or in any way participate, directly or indirectly, in
any "solicitation" (as such term is used in the proxy rules of the
Commission as in effect on the date hereof) of proxies or consents
(whether or not relating to the election or removal of directors), seek to
advise, encourage or influence any Person with respect to the voting of
any Voting Securities, initiate, propose or otherwise "solicit" (as such
term is used in the proxy rules of the Commission as in effect on the date
hereof) stockholders of the Company for the approval of stockholder
proposals made pursuant to Rule 14a-8 of the Exchange Act, or induce or
attempt to induce any other Person to initiate any such stockholder
proposal;
(iii) seek, propose, or make any public statement (whether
written or oral) with respect to, any merger, consolidation, business
combination, tender or exchange offer, sale or purchase of assets, sale or
purchase of securities (except as and to the extent specifically permitted
hereby), dissolution, liquidation, restructuring, recapitalization or
similar transactions of or involving the Company or any of its Affiliates
or solicit or encourage any other Person to make any such public statement
or proposal;
(iv) form, join or in any way participate in a "group" (within
the meaning of Section 13(d)(3) of the Exchange Act) with respect to any
Voting Securities, other than groups consisting solely of directors of the
Company, other parties hereto and their respective Affiliates;
(v) deposit any Voting Securities in any voting trust or
subject any Voting Securities to any arrangement or agreement with respect
to the voting of any Voting Securities;
(vi) execute any written consent with respect to the Company or
its Voting Securities;
-4-
5
(vii) otherwise act, alone or in concert with others, to control
or seek to control or influence or seek to influence the management, Board
of Directors or policies of the Company;
(viii) seek, alone or in concert with others, representation on
the Board of Directors of the Company or seek the removal of any member of
the Board of Directors;
(ix) make any publicly disclosed proposal or enter into any
discussion regarding any of the foregoing;
(x) publicly make any proposal, statement or inquiry, or
publicly disclose any intention, plan or arrangement (whether written or
oral) inconsistent with the foregoing, or publicly make or disclose any
request to amend, waive or terminate any provision of this Agreement or
the Certificate of Incorporation or By-laws of the Company; or
(xi) enter into any arrangements, understandings or agreements
(whether written or oral) with, or advise, finance or assist, any other
Person in connection with any of the foregoing, or make any investment in
or enter into any arrangement with, any other Person that engages, or
offers or proposes to engage, in any of the foregoing.
4. Registration under Securities Act.
4.1 Shelf Registration.
(a) Effective Registration. The Company shall file, as soon
as practicable following the date of this Agreement (but not later than 30
days thereafter), a "shelf" registration statement (the "Shelf
Registration") covering the securities then constituting Registrable
Securities on any appropriate form pursuant to Rule 415 under the
Securities Act so as to permit the continuous or delayed offering of the
Registrable Securities by the Holders. The Company shall cause the Shelf
Registration to be declared effective on or prior to the 90th day after
the date of this Agreement and to keep such registration statement
continuously effective until the earlier to occur of (i) all Registrable
Securities included therein have been sold or (ii) the later to occur of
(x) two (2) years after the date of this Agreement or (y) such time as the
Shareholder is not an "affiliate" of the Company within the meaning of
Rule 144 under the Securities Act.
(b) Shelf "Draw-Downs." If any holder of Registrable
Securities effects, pursuant to the Shelf Registration, an underwritten
public offering of all or a part of its Registrable Securities (a shelf
"draw-down") and wishes the Company to perform, in connection with such
shelf "draw-down," any procedures specified in Section 4.3 hereof, such
holder shall deliver to the Company, at least ten (10) business days
before such "draw-down" is to be made, a written notice describing in
reasonable detail its proposed offering and requesting the performance of
such procedures pursuant to this Section 4.1 and Section 4.3. The Company
shall be required to perform such procedures in advance of a particular
shelf
-5-
6
"draw-down" only if such holder shall have requested such performance as
provided above. In addition, the Company shall be required to perform such
additional procedures (other than those required under the securities
laws) in connection with a particular shelf "draw-down" only if one or
more holders shall have notified the Company pursuant to this Section
4.1(b) of their intention to offer to the public Registrable Securities
with an aggregate market value (on the date the written notice referred to
above is delivered) of at least $10,000,000 pursuant to such "draw-down."
The Company shall have the right to sell shares of Common Stock
in an underwritten registered offering conducted simultaneously with any
such shelf "draw-down" on a primary basis; provided that in the event the
managing underwriter of such underwritten offering shall have advised the
Company and the Holders that, in its judgment, the distribution of all or
a specified portion of the shares requested to be so included concurrently
with the securities being distributed by such underwriters will adversely
affect the distribution of such securities by such underwriters, then the
Holders may require, by written notice to the Company, that the
distribution of all or a specified portion of such shares proposed to be
sold by the Company be excluded from such distribution.
The Company shall not be obligated to effect more than two (2)
such shelf "draw-downs." In addition, the Company shall not be obligated
to effect any shelf "draw-down" within (i) 60 days after the effective
date of a previous offering of Common Stock registered under the
Securities Act or (ii) 270 days after the completion of a previously
requested shelf "draw-down." The Company may postpone for up to 75 days
the filing or the effectiveness of any such requested shelf "draw-down" if
the Company's Board of Directors determines in its reasonable good faith
judgment that such shelf "draw-down" would reasonably be expected to have
a material adverse effect on any proposal or plan by the Company or any of
its subsidiaries to engage in any acquisition (other than in the ordinary
course of business) or any merger, consolidation, tender offer,
reorganization or similar transaction.
(c) Registration Statement Form. The registration made pursuant
to this Section 4.1 shall be effected by the filing of a registration
statement on any form which the Company is eligible to use, such form to
be selected by the Company, after consultation with counsel and after
notice of such selection of such form is delivered to the holders of all
Registrable Securities electing to participate in such registration; but
in no event shall the Company be required to maintain the effectiveness of
such registration beyond the period specified in Section 4.1(a).
(d) Expenses. Except as otherwise prohibited by applicable law,
the Company will pay all Registration Expenses in connection with (i) the
registration of Registrable Securities pursuant to Section 4.1(a) and (ii)
one (1) shelf "draw-down" pursuant to Section 4.1(b).
-6-
7
4.2 Incidental Registration.
(a) Right to Include Registrable Securities. If, at any time
after the date of this Agreement, the Company proposes to register any of its
equity securities under the Securities Act, whether for sale for its own account
or for the account of any other person, on a form and in a manner which would
permit registration of Registrable Securities for sale to the public under the
Securities Act, so long as any holder of Registrable Securities cannot sell all
of such Registrable Securities pursuant to Rule 144 under the Securities Act,
the Company will each such time give prompt written notice to such holder(s) of
Registrable Securities of its intention to do so, describing such securities and
specifying the form and manner and the other relevant facts involved in such
proposed registration, and upon the written request of any such holder delivered
to the Company within ten (10) business days after the giving of any such notice
(which request shall specify the Registrable Securities intended to be disposed
of by such holder and the intended method or methods of disposition thereof),
the Company will use its reasonable best efforts to effect the registration
under the Securities Act of all Registrable Securities which the Company has
been so requested to register by the holders of Registrable Securities
(hereinafter "Requesting Holder"), to the extent requisite to permit the
disposition of the Registrable Securities in accordance with the intended
methods thereof as specified by the holders of a majority of the Registrable
Securities so to be registered, provided that:
(i) if, at any time after giving such written notice of its
intention to register any of its 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 register such securities, the Company may, at its
election, give written notice of such determination to each
Requesting Holder and thereupon shall be relieved of its
obligation to register any Registrable Securities in connection
with such registration (but not from its obligation to pay the
Registration Expenses in connection therewith as provided in
subdivision (b) of this Section 4.2);
(ii) if (A) the registration so proposed by the Company
involves an underwritten offering of the securities so being
registered, whether or not for sale for the account of the
Company, to be distributed by or through one (1) or more
underwriters of recognized standing under underwriting terms
appropriate for such a transaction, (B) the Company proposes that
the securities to be registered in such underwritten offering
will not include all of the Registrable Securities requested to
be so included, and (C) the managing underwriter of such
underwritten offering shall advise the Company and the Requesting
Holders in writing that, in its judgment, the distribution of all
or a specified portion of the Registrable Securities requested to
be so included concurrently with the securities being distributed
by such underwriters will adversely affect the distribution of
such securities by such underwriters, then the Company may
require, by written notice to each such holder, that the
distribution of all or a specified portion of such Registrable
Securities be excluded from such distribution (in case of an
exclusion of a portion of such Registrable Securities, such
-7-
8
portion to be allocated among such holders in proportion to the
respective numbers of shares of Registrable Securities owned by
such holders) provided that, the number of shares of Registrable
Securities included shall be reduced pro rata with any securities
being offered for the account of any Person other than the
Company (other than pursuant to the "demand" registration rights
of such Person);
(iii) the Company shall not be obligated to effect any
registration of Registrable Securities under this Section 4.2
incidental to the registration of any of its securities in
connection with mergers, acquisitions, exchange offers, dividend
reinvestment plans or stock option or other employee benefit
plans or incidental to the registration of any non-equity
securities not convertible into equity securities;
(iv) the Company shall not be required to include any
Registrable Securities in any registration statement pursuant to
this Section 4.2 if the Requesting Holders can at the time of the
request sell the securities requested to be so included in the
registration statement pursuant to Rule 144 under the Securities
Act; and
(v) the Company may, but shall not be obligated to, effect
any registrations pursuant to this Section 4.2.
No registrations of Registrable Securities effected under this Section 4.2 shall
relieve the Company of its obligation to effect registration of Registrable
Securities pursuant to Section 4.1.
(b) Expenses. Except as otherwise prohibited by applicable law, the
Company will pay all Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to this Section
4.2.
4.3 Registration Procedures. If and whenever the Company is required
to effect the registration of any Registrable Securities under the Securities
Act as provided in Sections 4.1 and 4.2 or any "draw-down" pursuant to Section
4.1, the Company will promptly:
(a) cooperate with any underwriters for, and the holders of such
Registrable Securities, and will enter into a usual and customary
underwriting agreement with respect thereto and take all such other
reasonable actions as are necessary or advisable to permit, expedite and
facilitate the disposition of such Registrable Securities in the manner
contemplated by the related registration statement, and the Company will
provide to the holders of such Registrable Securities, any underwriter
participating in any distribution thereof pursuant to a registration
statement, and any attorney, accountant or other agent retained by any holder
of Registrable Securities or underwriter, reasonable access to appropriate
Company officers and employees to answer questions and to supply financial
and other information reasonably requested by any such holders of Registrable
Securities, underwriter, attorney, accountant or agent in connection with
such registration statement;
-8-
9
(b) prepare and file with the Commission a registration statement
with respect to such Registrable Securities and cause such registration
statement to become effective;
(c) prepare and file with the Commission 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 and, with respect to any "draw-down," to reflect the method of
disposition of the Registrable Securities pursuant to such "draw-down," and
to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities and other securities covered by
such registration statement until the earlier of such time as all of such
Registrable Securities and such other securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof set forth in such registration statement or, in the case of a
registration pursuant to Section 4.2 hereof, the expiration of sixty (60)
days after such registration statement becomes effective; and will furnish,
upon request, to each such seller prior to the filing thereof a copy of any
amendment or supplement to such registration statement or prospectus and
shall not file any such amendment or supplement to which any such seller
shall have reasonably objected on the grounds that such amendment or
supplement does not comply in all material respects with the requirements of
the Securities Act or of the rules or regulations thereunder;
(d) furnish to each seller of such Registrable Securities and the
underwriters (if any) such number of conformed copies of such registration
statement and of each such 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 any
summary prospectus), in conformity with the requirements of the Securities
Act, such documents, if any, incorporated by reference in such registration
statement or prospectus, and such other documents, as such seller may
reasonably request;
(e) promptly, upon written request, deliver to each seller of
Registrable Securities and the underwriters (if any), copies of all
correspondence between the Commission and (i) the Company, (ii) its counsel,
or (iii) its auditors, with respect to the registration statement;
(f) use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement under
such other securities or blue sky laws of the states of the United States as
each seller shall reasonably request, to keep such registration or
qualification in effect for so long as such registration statement remains in
effect, and do any and all other acts and things which may be necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the Registrable Securities covered by such registration
statement, except that the Company shall not for any such purpose be required
to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this Subsection
(f) be obligated to be so qualified, or to subject itself to taxation in any
such jurisdiction, or to consent to general service of process in any such
jurisdiction;
-9-
10
(g) immediately notify each seller of Registrable Securities
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, upon
discovery that, or upon the happening of any event as a result of which, the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, which untrue statement or omission requires amendment of the
registration statement or supplementation of the prospectus, and at the
request of any such seller, prepare and furnish to such seller a reasonable
number of copies of a supplement to or an amendment of such prospectus as may
be necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing; provided, however, that each holder
of Registrable Securities registered pursuant to such registration statement
agrees that he will not sell any Registrable Securities pursuant to such
registration statement during the time that the Company is preparing and
filing with the Commission a supplement to or an amendment of such prospectus
or registration statement;
(h) in the event of the issuance of any stop order suspending the
effectiveness of any registration statement or of any order suspending or
preventing the use of any prospectus or suspending the qualification of any
Registrable Securities for sale in any jurisdiction, use its best efforts to
obtain its withdrawal;
(i) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its securities
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve (12) months, but not more than eighteen (18)
months, beginning with the first month of the first fiscal quarter after the
effective date of such registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act;
(j) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such
registration statement; and
(k) use its best efforts to list all Common Stock covered by such
registration statement on each securities exchange or securities quotation
system on which any of the Common Stock is then listed.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such seller and the distribution of such securities as the Company may from time
to time reasonably request and as shall be required by law or by the Commission
in connection therewith.
-10-
11
4.4 Underwritten Offerings.
(a) Underwriting Agreement. If requested by the underwriters for
any "draw-down" of Registrable Securities on behalf of a holder or holders
of Registrable Securities pursuant to a registration under Section 4.1, the
Company will enter into an underwriting agreement reasonably acceptable to
the Company with such underwriters for such offering, such agreement to
contain such representations and warranties by the Company and such other
terms and provisions as are customarily contained in underwriting agreements
with respect to secondary distributions, including, without limitation,
provisions with respect to opinions of Company's counsel, customary "comfort"
letters from the Company's independent auditors and indemnities to the effect
and to the extent provided in Section 4.6. The holders of Registrable
Securities on whose behalf Registrable Securities are to be distributed by
such underwriters shall be parties to the underwriting agreement between the
Company and such underwriters. Such holders of Registrable Securities shall
not be required by the Company to make any representations or warranties to
or agreements with the Company or the underwriters other than reasonable
representations, warranties or agreements (including indemnity agreements
customary in secondary offerings) regarding such holder, such holder's
Registrable Securities and such holder's intended method or methods of
disposition and any other representation required by law.
(b) Incidental Underwritten Offerings. If the Company at any time
proposes to register any of its securities under the Securities Act as
contemplated by Section 4.2 and such securities are to be distributed by or
through one (1) or more underwriters, the Company will use its best efforts,
if requested by any holder or holders of Registrable Securities who requests
incidental registration of Registrable Securities in connection therewith
pursuant to Section 4.2, to arrange for such underwriters to include the
Registrable Securities to be offered and sold by such holder among the
securities to be distributed by or through such underwriters, provided that,
for purposes of this sentence, best efforts shall not require the Company to
reduce the amount or sale price of such securities proposed by the Company to
be distributed by or through such underwriters. The holders of Registrable
Securities to be distributed by such underwriters shall be parties to the
underwriting agreement between the Company and such underwriters. Such
holders of Registrable Securities shall not be required by the Company to
make any representations or warranties to or agreements with the Company or
the underwriters other than reasonable representations, warranties or
agreements (including indemnity agreements customary in secondary offerings)
regarding such holder, such holder's Registrable Securities and such holder's
intended method or methods of distribution and any other representation
required by law.
(c) Allocation of Over-Allotment Option. Whenever the Company
shall effect an underwritten offering of Registrable Securities pursuant to a
registration subject to Section 4.2 hereof, the securities to be sold
pursuant to the underwriter's exercise of an over-allotment option (the
"Over-Allotment Shares"), if any, shall be allocated as follows: (i) in any
such registration in which the number of Registrable Securities requested to
be registered has not been reduced based on the advice of the managing
underwriter of such offering, then the sellers of Registrable Securities
shall not be entitled to sell any Registrable Securities as part of the
Over-Allotment
-11-
12
Shares, and (ii) in any such registration in which the number of
Registrable Securities requested to be registered has been reduced
pursuant to the provisions hereof based on the advice of the managing
underwriter of such offering, then the sellers of Registrable Securities
participating in such offering may sell that number of Over-Allotment
Shares equal to the total number of Over-Allotment Shares multiplied by a
fraction the numerator of which is the number of total principal offering
shares that constitute Registrable Securities and the denominator of which
is the total number of principal offering shares, which shares shall be
allocated on a pro rata basis among the sellers of Registrable Securities
participating in such registration based upon the number of Registrable
Securities originally requested to be registered; provided, however, that
the number of Registrable Securities that constitute Over-Allotment Shares
shall not exceed the number of Registrable Securities requested to be
registered but which were not registered based on the advice of the
managing underwriter.
(d) Selection of Underwriters. Whenever an offering pursuant to
Section 4.1 is an underwritten offering, the holders of a majority of the
Registrable Securities included in such registration shall have the right
to select the managing underwriter(s) to administer the offering, after
consulting with the Company as to such selection and subject to the
approval of the Company, which approval will not be unreasonably withheld.
If the Company at any time proposes to register any of its securities
under the Securities Act for sale for its own account and such securities
are to be distributed by or through one (1) or more underwriters, the
selection of the managing underwriter(s) shall be made by the Company and
notice of the selection thereof delivered to the holders of all
Registrable Securities eligible to participate in such registration.
(e) Holdback Agreements.
(i) If any registration pursuant to Section 4.2 shall be in
connection with an underwritten public offering, each holder of
Registrable Securities agrees by acquisition of such Registrable
Securities that, so long as such holder shall have the right to
request that Registrable Securities be included in such registration
statement, if so required by the managing underwriter, such holder
shall not effect any public sale or distribution of Registrable
Securities (other than as part of such underwritten public offering)
for such period as the officers and directors of the Company are
required by the underwriter to cease sales or distributions.
(ii) The Company agrees not to effect any public sale or
distribution of any of its equity securities or securities
convertible into or exchangeable or exercisable for any of such
securities during the seven (7) days prior to and during the ninety
(90) day period beginning on the date on which any underwritten
offering pursuant to Section 4.1 or 4.2 has commenced, except as
part of such underwritten offering and except pursuant to
registrations on Form S-8 or Form S-4 or any successor thereto.
-12-
13
4.5 Preparation; Reasonable Investigation.
(a) Seller Information. The Company may require each seller of
Registrable Securities as to which any registration is being effected to furnish
to the Company such information regarding the distribution of such securities as
the Company may from time to time reasonably request in writing and as shall be
required by law in connection therewith.
(b) Seller Diligence. In connection with the preparation and filing
of each registration statement registering Registrable Securities under the
Securities Act and any amendment or supplement to the prospectus included
therein, the Company will give the holders of Registrable Securities on whose
behalf such Registrable Securities are to be so registered, the opportunity to
review such registration statement, each prospectus included therein or filed
with the Commission and each amendment thereof or supplement thereto, and, in
the event such offering of Registrable Securities is underwritten, will give
each of them and the underwriters and their counsel such access to its books and
records and such opportunities to discuss the business of the Company with its
officers and the independent public accountants who have certified its financial
statements as shall be reasonably necessary in the opinion of such holders and
such underwriters or their respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act. To minimize disruption
and expense to the Company during the course of the registration process,
sellers of Registrable Securities to be covered by any such registration
statement shall coordinate their investigation and due diligence efforts
hereunder and, to the extent practicable, will act through a single set of
counsel and a single set of accountants.
4.6 Indemnification.
(a) Indemnification by the Company. In the event of any registration
of any securities of the Company under the Securities Act, the Company will, and
hereby does, indemnify and hold harmless in the case of any registration
statement filed pursuant to Section 4.1 or 4.2, the seller of any Registrable
Securities covered by such registration statement, and if such seller is a
corporation, its directors, trustees and officers, employees and agents, 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 seller or any such
underwriter within the meaning of the Securities Act against any losses, claims,
damages, liabilities or expenses, joint or several, to which such seller or any
such director, trustee, officer, employee or agent, participating or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions or proceedings in
respect thereof) arise out of or are based upon (x) 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 prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any document incorporated by
reference therein, (y) 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 (z) any violation by the Company of any rule or
regulation promulgated under the Securities Act or the Exchange Act,
-13-
14
or other federal or state securities law applicable to the Company and relating
to any action or inaction required of the Company in connection with such
registration, and the Company will reimburse such seller, and each such
director, trustee, officer, employee or agent, participating person and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding, provided that the Company shall not be liable
in any such case if and to the extent that any such loss, claim, damage,
liability or expense (or action or proceeding in respect thereof) arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by the underwriters or by such seller or any such director, trustee,
officer, employee or agent, participating person or controlling person
specifically for use in the preparation thereof. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
such seller or any such director, trustee, officer, employee or agent,
participating person or controlling person and shall survive the transfer of
such securities by such seller.
(b) Indemnification by the Sellers. As a condition to including any
Registrable Securities in any registration statement filed pursuant to Section
4.1 or 4.2, each seller of Registrable Securities shall, severally and not
jointly, indemnify and hold harmless the Company, its directors and officers,
employees and agents, and each other person, if any, who controls the Company,
against any losses, claims, damages or liabilities, joint or several, to which
the Company or any such director or officer or any such person may become
subject under the Securities Act or any other statute or at common law, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any alleged untrue statement of any material
fact contained, on the effective date thereof, in any registration statement
under which Registrable Securities were registered under the Securities Act, or
in any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto, or (ii) any alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent that
such alleged untrue statement or alleged omission was contained in written
information furnished to the Company by such holder specifically for use
therein, and shall reimburse the Company or such director, officer or other
person for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such loss, claim, damage, liability or
action. Notwithstanding the foregoing, the obligations of any seller of
Registrable Securities shall be limited to an amount equal to the proceeds
received by such seller from the sale of Registrable Securities pursuant to the
registration statement to which the losses, claims, liabilities or damages
relate.
(c) Notice of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subsections of this Section 4.6, such
indemnified party will, 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 any indemnified party to give notice
as provided herein
-14-
15
shall not relieve the indemnifying party of its obligations under the
preceding subsections of this Section 4.6, except and to the extent that the
indemnifying party is prejudiced by such failure to give notice. In case any
such action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified, to the extent that it may wish, with counsel reasonably
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 and of liaison with counsel so selected, provided, however,
that if the defendants in any such action include both the indemnified party
and the indemnifying party, and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party, or
if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, the indemnified party
shall have the right to select one (1) separate law firm as counsel and to
assume such legal defenses and otherwise to participate in the defense of
such action, with the expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the indemnifying
party as the same shall be incurred. No indemnifying party shall, without the
consent of the indemnified party, 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. In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
either (i) any seller of Registrable Securities exercising rights under this
Agreement, or any controlling person of any such holder, makes a claim for
indemnification pursuant to this Section 4.6, but it is judicially determined
(by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 4.6 provides for indemnification
in such case, or (ii) contribution under the Securities Act may be required
on the part of any such seller or any such controlling person in
circumstances for which indemnification is provided under this Section 4.6,
then, and in each such case, the Company and such seller will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) (A) in such proportion so that such
seller is responsible for the portion represented by the percentage that the
public offering price of its Registrable Securities offered by the
registration statement bears to the public offering price of all securities
offered by such registration statement, or (B) if the allocation provided by
clause (A) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative proceeds but also the relative
fault of each of the contributing parties, on the one hand, and the party
receiving contribution, on the other hand, in connection with statements or
omissions that resulted in such losses, claims, damages, expenses or
liabilities, as well as any other relevant equitable
-15-
16
consideration; provided, however, that in any such case, (1) no such seller
will be required to contribute any amount in excess of the aggregate public
offering price of all such Registrable Securities offered by such seller
pursuant to such registration statement; and (2) no person or entity guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or entity
who was not guilty of such fraudulent misrepresentation. Relative fault 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, or by such seller, and the relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, expenses or liabilities (or actions in respect
thereof) referred to above in this Subsection (d) shall be deemed to include
any legal or other expenses reasonably incurred by a party entitled to
contribution in connection with investigating or defending such action or
claim. Any party entitled to contribution will promptly after receipt of
notice of commencement of any action or proceeding against such party in
respect of which a claim for contribution may be made against another party
or parties under this Subsection (d), notify such party or parties from whom
contribution may be sought, but the omission so to notify such party or
parties shall not relieve the party or parties from whom contribution may be
sought from any obligation it or they may have hereunder or otherwise than
under this Subsection (d), to the extent that such party or parties were not
adversely affected by such omission. The contribution agreement set forth
above shall be in addition to any liabilities which any party may have at
common law or otherwise.
(e) Other Indemnification. Indemnification similar to that
specified in the preceding subsections of this Section 4.6 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification
of such Registrable Securities under any federal or state law or regulation
of governmental authority other than the Securities Act.
(f) Indemnification Payments. The indemnification required by this
Section 4.6 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
5. Rule 144. For so long as the Company shall have any class of its equity
securities registered under Section 12(b) or Section 12(g) of the Exchange Act,
the Company shall take such action as any holder of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
holder to sell shares of Registrable 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 rule or regulation hereafter adopted by the Commission including,
without limitation,
(a) filing with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
-16-
17
(b) furnishing to any holder of Registrable Securities, upon
request, (i) a written statement by the Company that it has complied with
the reporting requirements of Rule 144 and the Exchange Act; (ii) a copy
of the most recent annual or quarterly report of the Company; and (iii)
such other information as may be reasonably required to permit sales of
Registrable Securities under Rule 144.
6. Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the holder or
holders of a majority of the Issued Shares. Each holder of any Issued Shares at
the time shall be bound by any consent authorized by this Section 6.
7. Termination. This Agreement shall terminate on the earlier to occur
of:
(a) the date that the Company and the Shareholder mutually agree to
terminate this Agreement; or
(b) the twentieth anniversary of the date of this Agreement unless
earlier renewed by unanimous written agreement of the Company and the
Shareholder.
8. Notices. Notices and other communications under this Agreement
shall be in writing and shall be deemed given when personally delivered, or, if
by U.S. mail, three (3) days after mailing, by Certified First Class Mail,
postage prepaid, return receipt requested, addressed
(a) to any holder of Issued Shares at the address shown on the
stock transfer books of the Company unless such holder has advised the
Company in writing of a different address as to which notices shall be
sent under this Agreement, and
(b) if to the Company at 000 XxxxXxxx Xxxxx, Xxxxxxxx, Xxxxxxx
00000, to the attention of the President, or to such other address or to
the attention of such other officer, as the Company shall have furnished
to each holder of Issued Shares at the time outstanding.
9. Miscellaneous. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective successors and assigns of
the parties hereto. This Agreement may not be assigned without the approval of a
majority of the holders of the Issued Shares. This Agreement embodies the entire
agreement and understanding between the Company and the other parties hereto and
supersedes all prior agreements and understandings relating to the subject
matter hereof. This Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of Georgia. The headings in this Agreement
are for purposes of reference only and shall not limit or otherwise affect the
meaning hereof. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall constitute
one (1) instrument.
-17-
18
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
THE MAXIM GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx, Executive Vice
President-Finance and Treasurer
Attest:
/s/ Xxxx Xxxxxxxxx
-----------------------------------------
Xxxx Xxxxxxxxx, Senior Executive
Vice President, Chief Financial Officer
and Secretary
SHAREHOLDER
XXXX INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxxx, Vice
President and Secretary
Attest:
/s/ Xxxx X. Xxxxxx
-----------------------------------------
Xxxx X. Xxxxxx, Assistant Secretary
-18-
