Exhibit 10.3
STOCKHOLDERS AGREEMENT
DATED AS OF MARCH 31, 1998
among
GREEN EQUITY INVESTORS II, L.P.
XXXXXXX XXXXXX,
XXXXXXX XXXXX
and
DIAMOND TRIUMPH AUTO GLASS, INC.
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (the "Agreement") is entered into as of
March 31, 1998, by and among Green Equity Investors II, L.P., a Delaware limited
partnership (the "Purchaser"), Xxxxxxx Xxxxxx ("Xxxxxx"), Xxxxxxx Xxxxx
("Xxxxx")(the foregoing individuals being sometimes hereinafter referred to,
individually, as an Executive and, collectively, as the "Executives") and
Diamond Triumph Auto Glass, Inc., a Delaware corporation (the "Company"). Each
of the parties to this Agreement (other than the Company) and any other Person
(as defined in Section 4.1) who shall become a party to or agree to be bound by
the terms of this Agreement after the date hereof is sometimes hereinafter
referred to as a "Stockholder".
RECITALS
Concurrently with the execution of this Agreement, the
Company, the Purchaser and the Executives will consummate the transactions
contemplated by that certain Second Amended and Restated Stock Purchase and Sale
Agreement dated as of January 15, 1998, (the "Purchase Agreement"). The
execution and delivery of this Agreement is a condition to the parties'
obligations under the Purchase Agreement.
Following the consummation of the transactions contemplated by
the Purchase Agreement, Purchaser will own 770,000 shares of Common Stock, par
value $.01 per share, of the Company (the "Common Stock") and 28,000 shares of
12% Senior Cumulative Preferred Stock, with a liquidation preference of $1,000
per share, of the Company (the "Preferred Stock"), Xxxxxx will own 100,000
shares of Common Stock and 3,500 Shares of Preferred Stock and Xxxxx will own
100,000 shares of Common Stock and 3,500 shares of Preferred Stock. Shares of
Common Stock are collectively referred to as the "Common Shares", shares of
Preferred Stock are collectively referred to as the "Preferred Shares and Common
Shares and Preferred Shares are collectively referred to as the "Shares".
The Company and each of the Stockholders desire, for their
mutual benefit and protection, to enter into this Agreement to set forth their
respective rights and obligations with respect to their Shares (whether issued
or acquired hereafter, including all shares of Common Stock issuable upon the
exercise of warrants, options or other rights to acquire shares of Common Stock,
or upon the conversion or exchange of any security ("Rights")).
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1. Election of Directors.
So long as an Executive is an executive officer of the
Company, each Stockholder shall vote his or its Common Shares in favor of the
election of such Executive as a director of the Company.
-2-
ARTICLE 2. Restrictions on Transfer
2.1 General Restrictions on Transfer. Each Stockholder agrees that such
Stockholder will not, directly or indirectly, sell, hypothecate, give, bequeath,
transfer, assign, pledge or in any other way whatsoever encumber or dispose of
(any such event, a "Transfer") any Shares now or hereafter at any time owned by
such Stockholder (or any interest therein) to another Person ("Transferee"), to
the extent such Transfer is prohibited by this Agreement. The Company shall not
transfer upon its books any Shares to any Person to the extent prohibited by
this Agreement and any purported transfer in violation hereof shall be null and
void and of no effect. Each Executive represents and warrants to the Purchaser
and the Company that, except as permitted by Section 2.4 and Article 3, there is
not any plan or intention on the part of such Executive to sell, exchange or
otherwise dispose of the Shares owned by such Executive on the date hereof
following the consummation of the transactions contemplated by the Purchase
Agreement.
2.2 Compliance with Securities Laws. No Stockholder shall Transfer any
Shares, and the Company shall not transfer on its books any Shares, unless (a)
the Transfer is pursuant to an effective registration statement under the
Securities Act of 1933, as amended, or any similar federal statute, and the
rules and regulations of the Commission (as defined in Section 4.1) thereunder,
all as the same shall be in effect at the time (the "Securities Act") and is in
compliance with any applicable state securities or blue sky laws or (b) such
Stockholder shall have furnished the Company with an opinion of counsel, to the
extent reasonably required by the Company, which opinion and counsel shall be
reasonably satisfactory to the Company, to the effect that no such registration
is required because of the availability of an exemption from registration under
the Securities Act; provided that any Transfer by a Stockholder which is a
state-sponsored employee benefit plan to a successor trust or fiduciary or
pursuant to a statutory reconstitution shall be expressly permitted and no
opinions of counsel shall be required in connection therewith. As used in this
Agreement, the term "affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under common
control with such Person. For purposes of this Agreement, the term "control",
(including, with correlative meanings, the terms "controlling", "controlled by",
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
2.3 Agreement to be Bound. No Transfer of Shares by a Stockholder shall
be effective (and the Company shall not transfer on its books any Shares) unless
(i) the certificates representing such Shares issued to the Transferee shall
bear the legend provided in Section 7.4, if required by such Section 7.4, and
(ii) the Transferee shall have executed and delivered to the Company, as a
condition precedent to such Transfer, an instrument or instruments in form and
substance satisfactory to the Company confirming that the Transferee agrees to
be bound by the terms of this Agreement and accepts the rights and obligations
set forth hereunder, provided, however, that the conditions set forth in this
Section 2.3 shall not apply to any sale of Shares pursuant to an effective
registration statement under the Securities Act or, provided such sale is (x)
not to an affiliate of the Company and (y) not made prior to a Public Offering
Event (as defined in Section 2.4.5), pursuant to Rule 144 under the Securities
Act, as such Rule may be
-3-
amended from time to time, or any other similar regulation hereafter adopted by
the SEC ("Rule 144").
2.4 Tag-Along Rights for the Executive Parties.
2.4.1 Right to Participate in Sale. (a) Purchaser and its
affiliates are sometimes referred to in this Agreement, collectively, as the
"Purchaser Parties" and, individually, as a "Purchaser Party." The Executives
and their respective spouses, descendants and ancestors and any trusts solely
for the benefit of any or all of the foregoing are sometimes referred to in this
Agreement, collectively, as the "Executive Parties" and, individually, as an
"Executive Party." If at any time any Purchaser Parties propose to enter into an
agreement (or substantially contemporaneous agreements, whether or not with the
same or affiliated parties) to sell or otherwise dispose of for value any Common
Shares in one or more related transactions which will result in the transfer of
at least ten percent (10%) of the outstanding Common Shares (such sale or other
disposition for value being referred to as a "Tag-Along Sale"), then such
Purchaser Parties shall afford the Executive Parties (each individually a
"Tag-Along Stockholder" and, collectively, the "Tag-Along Stockholders") the
opportunity to participate proportionately in such Tag-Along Sale in accordance
with this Section 2.4. The number of Common Shares that each Tag-Along
Stockholder will be entitled to include in such Tag-Along Sale (the "Tag-Along
Allotment") shall be determined by multiplying (i) the number of Common Shares
held by such Tag-Along Stockholder as of the close of business on the day
immediately prior to the Tag-Along Notice Date (as hereinafter defined) by (ii)
a fraction, the numerator of which shall equal the number Common Shares proposed
by the Purchaser Parties to be sold or otherwise disposed of pursuant to the
Tag-Along Sale and the denominator of which shall equal the total number of
Common Shares that are beneficially owned by the Purchaser Parties as of the
close of business on the day immediately prior to the Tag-Along Notice Date (the
"Purchaser Fraction"); provided, however, that if any of the Executive Parties
fails to elect to participate in a Tag-Along Sale, Purchaser shall give notice
of such failure to the other Tag-Along Stockholders. Such notice shall be made
by telephone and confirmed in writing within two (2) days. The other Tag-Along
Stockholders shall have three (3) days from the date such notice was given to
agree to sell their pro rata share of any unsold portion. For purposes of this
Section 2.4.1, a Tag-Along Stockholder's pro rata share of any unsold portion
shall be equal to the number of shares obtained by dividing (A) the Purchaser
Fraction times the total number of Common Shares that are held by the Executive
Parties that are not participating in the Tag-Along Sale by (B) the number of
Tag-Along Stockholders that are participating in the Tag-Along Sale.
2.4.2 Sale Notice. The relevant Purchaser Parties shall
provide each Tag-Along Stockholder and the Company with written notice (the
"Tag-Along Sale Notice") not more than sixty (60) days nor less than thirty (30)
days prior to the proposed date of the Tag-Along Sale (the "Tag-Along Sale
Date"). Each Tag-Along Sale Notice shall be accompanied by a copy of any written
agreement relating to the Tag-Along Sale and shall set forth: (i) the name and
address of each proposed Transferee of Common Shares in the Tag-Along Sale; (ii)
the number of Common Shares proposed to be Transferred by such Purchaser
Parties; (iii) the proposed amount and form of consideration to be paid for such
Common Shares and the terms and conditions of payment offered by each proposed
Transferee; (iv) the aggregate number of Common Shares held of record by the
Purchaser Parties as of the close of business on the day
-4-
immediately prior to the date of the Tag-Along Notice (the "Tag-Along Notice
Date"); (v) the Tag-Along Stockholder's Tag-Along Allotment assuming the
Tag-Along Stockholder elected to sell the maximum number of Common Shares
possible; (vi) confirmation that the proposed Transferee has been informed of
the "Tag-Along Rights" provided for herein and has agreed to purchase Common
Shares from any Tag-Along Stockholder in accordance with the terms hereof; and
(vii) the Tag-Along Sale Date.
2.4.3 Tag-Along Notice. Any Tag-Along Stockholder wishing to
participate in the Tag-Along Sale shall provide written notice (the "Tag-Along
Notice") to the relevant Purchaser Parties no less than fifteen (15) days prior
to the Tag-Along Sale Date. The Tag-Along Notice shall set forth the number of
Common Shares that such Tag-Along Stockholder elects to include in the Tag-Along
Sale, which shall not exceed such Tag-Along Stockholder's Tag-Along Allotment.
The Tag-Along Notice given by any Tag-Along Stockholder shall constitute such
Tag-Along Stockholder's binding agreement to sell the Common Shares specified in
the Tag-Along Notice on the terms and conditions applicable to the Tag-Along
Sale; provided, however, that in the event that there is any material change in
the terms and conditions of such Tag-Along Sale applicable to the Tag-Along
Stockholder (including, but not limited to, any decrease in the purchase price
that occurs other than pursuant to an adjustment mechanism set forth in the
agreement relating to the Tag-Along Sale) after such Tag-Along Stockholder gives
its Tag-Along Notice, then, notwithstanding anything herein to the contrary, the
Tag-Along Stockholder shall have the right to withdraw from participation in the
Tag-Along Sale with respect to all of its Common Shares affected thereby. If the
proposed Transferee does not consummate the purchase of all of the Common Shares
requested to be included in the Tag-Along Sale by any Tag-Along Stockholder on
the same terms and conditions applicable to the Purchaser Parties, then such
Purchaser Parties shall not consummate the Tag-Along Sale of any of its Common
Shares to such Transferee, unless the Common Shares of such Purchaser Parties
and the Tag-Along Stockholders to be sold are reduced or limited pro rata in
proportion to the respective number of Common Shares actually sold in any such
Tag-Along Sale and all other terms and conditions of the Tag-Along Sale are the
same for such Purchaser Parties and the Tag-Along Stockholders.
If a Tag-Along Notice from any Tag-Along Stockholder is not received by
such Purchaser Parties prior to the ten (10) day period specified above, such
Purchaser Parties shall have the right to consummate the Tag-Along Sale without
the participation of such Tag-Along Stockholder, but only on terms and
conditions which are no more favorable in any material respect to such Purchaser
Parties (and, in any event, at no greater a purchase price, except as the
purchase price may be adjusted pursuant to the agreement relating to the
relevant Tag-Along Sale) than as stated in the Tag-Along Sale Notice and only if
such Tag-Along Sale occurs on a date within sixty (60) days of the Tag-Along
Sale Date. If such Tag-Along Sale does not occur within such sixty (60) day
period, the Common Shares that were to be subject to such Tag-Along Sale
thereafter shall continue to be subject to all of the restrictions contained in
this Section 2.4.
2.4.4 Delivery of Certificates. On the Tag-Along Sale Date,
each Tag-Along Stockholder shall deliver a certificate or certificates for the
Common Shares to be sold by such Tag-Along Stockholder in connection with the
Tag-Along Sale, duly endorsed for transfer with
-5-
signatures guaranteed, to the Transferee in the manner and at the address
indicated in the Tag-Along Notice against delivery of the purchase price for
such Common Shares.
2.4.5 Exempt Transfers. The provisions of this Section 2.4
shall not apply:
(i) to any sale or other disposition of Common Shares by and
among Purchaser Parties;
(ii) to any sale of Common Shares to the public pursuant to
an effective registration statement under the Securities Act or
pursuant to Rule 144;
(iii) from and after a Public Offering Event. For the purposes
of this Agreement, a "Public Offering Event" shall mean the first date
after which at least twenty percent (20%) of the Company's outstanding
shares of Common Stock is publicly held and such Common Stock is listed
or admitted to trading on a national securities exchange or quoted on
the National Association of Securities Dealers, Inc.'s National Market
System or Small Capitalization System.
(iv) any bona fide pledge of Common Shares to a commercial
bank, savings and loan institution or any other similar lending
institution as security for any indebtedness to such lender, provided
that, prior to any such pledge, the Executives are informed in writing
of such pledge and the pledgee shall deliver to the Company its written
agreement, in form and substance satisfactory to the Company, that upon
any foreclosure such pledgee shall comply with the terms of Section 2.3
of this Agreement; or
(v) to any sale or other disposition of Preferred Shares.
2.5 Cooperation by the Company. The Company will provide reasonable
assistance to any Executive Party or any Purchaser Party seeking to sell its
Shares, provided that the Company shall not be required to provide any
confidential information to any prospective purchaser who has not executed a
confidentiality agreement in form reasonably satisfactory to the Company. Any
reasonable out-of-pocket costs to the Company of providing such assistance shall
be paid pro rata by each Stockholder seeking to sell its Shares. The Company
will also cooperate with any Executive Party or any Purchaser Party in having
all stop transfer instructions or notations and restrictive legends lifted in
connection with the sale (other than to an affiliate of the Company) of Shares
pursuant to Rule 144 promulgated under the Securities Act; provided that in such
a case the selling Stockholder shall be required to provide the Company with the
opinion provided for in Section 2.2(b).
2.6 Improper Transfer. Any attempt to Transfer or otherwise encumber
any Shares in violation of this Agreement shall be null and void and neither the
Company nor any transfer agent of such Shares shall give any effect to such
attempted Transfer or encumbrance in its stock records.
2.7 Involuntary Transfer. In the case of any Transfer of title or
beneficial ownership of Shares upon default, foreclosure, forfeit, court order,
or otherwise than by a voluntary decision on the part of a Stockholder (an
"Involuntary Transfer"), such Stockholder (or his legal
-6-
representatives) shall promptly (but in no event later than two (2) Business
Days after such Involuntary Transfer) furnish written notice to the Company
indicating that the Involuntary Transfer has occurred, specifying the name of
the Person to whom such Shares have been transferred, giving a detailed
description of the circumstances giving rise to, and stating the legal basis
for, the Involuntary Transfer.
2.8 First Option Rights.
2.8.1 First Option. (a) No Executive Party shall Transfer any
Shares except as specifically permitted by this Section 2.8. If at any time any
Executive Party (a "Selling Executive Party") desires to sell or otherwise
dispose of for value all or any part of the Shares held by such Selling
Executive Party, and such Selling Executive Party shall have received an
irrevocable and unconditional bona fide arm's length written offer (the "Bona
Fide Offer") for the purchase of such Shares for consideration consisting solely
of cash from any third party unaffiliated with such Selling Executive Party (an
"Outside Party"), the Selling Executive Party shall provide written notice (the
"Sale Notice") to each of (i) Purchaser (together with its assigns, the
"Purchaser Buyer") and (ii) the Company (each of Purchaser Buyer and the Company
a "Potential Buyer") setting forth such desire to sell or otherwise dispose of
for value such Shares, which Sale Notice shall be accompanied by a photocopy of
the original Bona Fide Offer and shall set forth at least the name and address
of the Outside Party and the price and terms of such Bona Fide Offer. Upon the
giving of such Sale Notice, each Potential Buyer shall, subject to the
priorities set forth below, have the option (which option (the "Purchase
Option"), in the case of Purchaser only, shall be assignable at Purchaser's sole
discretion) to purchase all, but not less than all, of such Shares specified in
the Sale Notice, on the same terms and conditions, including but not limited to
the offer price for the Shares, of the Bona Fide Offer. Each Potential Buyer
shall have thirty (30) days from receipt of the Sale Notice to provide written
notice (the "Acceptance Notice") to such Selling Executive Party of its desire
to exercise such Purchase Option. If more than one Potential Buyer shall deliver
an Acceptance Notice within such thirty (30) day period, the priority as among
the Potential Buyers to match the Bona Fide Offer and purchase such Shares shall
be, to the extent such Potential Buyers have delivered Acceptance Notices,
first, the Purchaser Buyer and, second, the Company.
If a Potential Buyer or Potential Buyers, as applicable,
elects to purchase, in the aggregate, all of the Shares covered by the Bona Fide
Offer on the terms and conditions set forth in the Sale Notice, the Potential
Buyer(s) entitled to purchase such Shares (the "Chosen Buyer(s)") shall be
determined in accordance with the priorities set forth above and such Chosen
Buyer(s) shall be obligated to purchase, and such Selling Executive Party shall
be obligated to sell, such Shares at the price and terms specified in the Sale
Notice. The closing of the purchase by the Chosen Buyer(s) shall be held on a
Business Day within sixty days (60) days after the giving of the relevant
Acceptance Notice, at the principal offices of the Chosen Buyer(s), or at such
other time and place as may be mutually agreed to by the Chosen Buyer(s) and the
Selling Executive Party.
If no Acceptance Notice(s) is (are) delivered within the
periods specified above by one or more Potential Buyers, as applicable, with
respect to all (but not less than all) of the Shares included in the Sale
Notice, the Selling Executive Party shall, upon compliance with the
-7-
provisions of Section 2.3, have the right to consummate the sale of all (but not
less than all) of the Shares covered by the Sale Notice to the Outside Party but
only at the price and upon terms and conditions no less favorable to the Selling
Executive Party than those contained in the Sale Notice (provided that the
purchase price must be payable solely in cash) and only if such sale occurs on a
date within sixty (60) days of the date of the Sale Notice; provided, however,
that in the event the Selling Executive Party has not so transferred all (but
not less than all) of such Shares to the Outside Party within such ninety-day
period, then such Shares thereafter shall continue to be subject to all of the
restrictions contained in this Agreement.
2.8.2 No Waiver. Any election in any instance by any Potential
Buyer not to exercise its option rights under this Section 2.8 shall not
constitute a waiver of such rights with respect to any other proposed Transfer
of Shares.
2.8.3 Exempt Transfers. The provisions of this Section 2.8
shall not apply:
(i) to any Transfer of Shares to Levine, Rutta, the spouse of
either of them, any direct lineal descendant or ancestor of either of
them or any trust solely for the benefit of any or all of the
foregoing, provided that each of the following conditions shall be
satisfied:
(A) after giving effect to such Transfer,
each of Xxxxxx and Xxxxx shall be the sole beneficial
and record owner of a number of Common Shares
representing not less than five percent (5%) of the
then issued and outstanding Common Shares;
(B) after giving effect to such Transfer,
sole voting power with respect to such Transferred
Shares shall be held by Xxxxxx and/or Xxxxx; and
(C) the Transferee of such Transferred
Shares shall have executed and delivered to the
Company, as a condition precedent to such Transfer,
an instrument or instruments in form and substance
satisfactory to the Company confirming that the
Transferee agrees to be bound by the terms of this
Agreement and accepts the rights and obligations set
forth in this Agreement; or
(ii) to any sale of Shares by an Executive Party to
the public pursuant to an effective registration statement under the
Securities Act.
ARTICLE 3. Drag-Along Sales.
3.1 Right of Purchaser to Require Sale. Notwithstanding any other
provision of this Agreement, if some or all Purchaser Parties (the "Drag-Along
Sellers") agree to sell or otherwise dispose of (or cause to be sold or
otherwise disposed of) for value all or substantially all of the Common Shares
and/or Preferred Shares then owned by the Purchaser Parties, in one in one or
more related transactions (a "Drag-Along Sale"), to a third Person or third
Persons who are not affiliates of any of the Drag-Along Sellers (a "Third
Party"), then, upon the demand of
-8-
a majority of the Drag-Along Sellers, the Executive Parties (the "Required
Sellers") shall be required to sell to such Third Party all, but not less than
all of the shares of Common Stock and/or Preferred Stock, as applicable, if any,
then held by them, at the same price and on the same terms and conditions as the
Drag-Along Sellers have agreed to with such Third Party.
3.2 Drag-Along Notice. Prior to making any Drag-Along Sale, the
Drag-Along Sellers shall promptly provide each Required Seller with written
notice (the "Drag-Along Notice") not more than thirty (30) or less than fifteen
(15) days prior to the proposed date of the Drag-Along Sale (the "Drag-Along
Sale Date"). The Drag-Along Notice shall set forth: (i) the name and address of
the Third Party; (ii) the name and address of each member of the Drag-Along
Sellers; (iii) the proposed amount and form of consideration to be paid per
Common Share and/or Preferred Share and the terms and conditions of payment
offered by the Third Party; (iv) the number of Common Shares and Preferred
Shares held of record as of the close of business on the date of the Drag-Along
Sale Notice (the "Drag-Along Notice Date") by the Required Seller to whom the
notice is sent; (v) the aggregate number of Common Shares and Preferred Shares
held of record as of the Drag-Along Notice Date by the Drag-Along Sellers; (vi)
confirmation that the Drag-Along Sellers are selling all or substantially all of
the aggregate number of Common Shares and/or Preferred Shares then held by them
to the Third Party; (vii) the Drag-Along Sale Date; and (viii) confirmation that
the proposed Third Party has agreed to purchase the Required Sellers' shares of
Common Stock and/or Preferred Stock, as applicable, in accordance with the terms
hereof.
3.3 Delivery of Certificates. On the Drag-Along Sale Date, each
Required Seller shall deliver a certificate or certificates for all of its
shares of Common Stock, and/or Preferred Stock, as applicable, duly endorsed for
transfer with signatures guaranteed, to such Third Party in the manner and at
the address indicated in the Drag-Along Notice against delivery of the purchase
price for such Required Seller's shares of Common Stock.
3.4 Consideration. The provisions of this Section 3 shall apply
regardless of the form of consideration received in the Drag-Along Sale.
3.5 Cooperation. The Executive Parties shall cooperate in good faith
with the Drag-Along Sellers in connection with the consummation of the
Drag-Along Sale.
ARTICLE 4. Registration Rights.
4.1 Definitions.
"Commission" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission (as defined in Section 4.1) thereunder.
"Executive Holder" means a Holder of Registrable Executive
Shares, including a Transferee of Registrable Executive Shares if (i) the
Transfer to such Transferee is not prohibited
-9-
by this Agreement, and (ii) the Shares Transferred to such Transferee continue
to be Registrable Shares.
"Holder" means a Holder of Registrable Shares. A Person is
deemed to be a Holder of Registrable Shares whenever such Person owns
Registrable Shares; provided, however, that unless the Company is otherwise
notified by the Holder of Registrable Shares, the Holder of Registrable Shares
shall be deemed to be that Person set forth on the books and records of the
Company or the registrar for such Registrable Shares.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or other agency or political subdivision thereof.
"Purchaser Holder" means a Holder of Registrable Purchaser
Shares, including a Transferee of Registrable Purchaser Shares if (i) the
Transfer to such Transferee is not prohibited by this Agreement, and (ii) the
Shares Transferred to such Transferee continue to be Registrable Shares.
"Registrable Purchaser Shares" means the shares of Common
Stock issued pursuant to the Purchase Agreement to Purchaser or subsequently
acquired by any Purchaser Party (and any securities issued or issuable with
respect to such Common Stock by way of stock dividends or stock splits or in
connection with a combination of shares, recapitalization, merger,
consolidation, or other reorganization or otherwise); and "Registrable Executive
Shares" means the shares of Common Stock owned by either Executive on the date
hereof immediately following the Closing under the Purchase Agreement or
subsequently acquired by any Executive Party (and any securities issued or
issuable with respect to such Common Stock by way of stock dividends or stock
splits or in connection with a combination of shares, recapitalization, merger,
consolidation, or other reorganization or otherwise) (collectively, together
with the Registrable Purchaser Shares, the "Registrable Shares"); provided,
however, that any such shares will cease to be Registrable Shares when (i) a
registration statement covering such Registrable Shares has been declared
effective and such Registrable Shares have been disposed of pursuant to such
effective registration statement, or (ii) such Registrable Shares are
distributed to the public pursuant to Rule 144.
"Selling Holder" means, with respect to any registration
statement, any Holder whose Registrable Shares are included therein.
4.2 Demand Registrations.
4.2.1 Number of Registrations.
(a) Purchaser Holders' Demand Rights. Commencing on the
earlier of (i) the date that is three (3) months after a Public Offering Event,
and (ii) the second anniversary of the date of this Agreement, Purchaser Holders
holding an aggregate number of Registrable Purchaser Shares at least equal to
twenty percent (20%) of the number of Registrable Purchaser Shares on the date
hereof shall be entitled to make written request (a "Demand") of the Company to
register all or part of their Registrable Purchaser Shares under the Securities
Act
-10-
(including, but not limited to, a shelf registration under Rule 415 promulgated
under the Securities Act) (a "Demand Registration"); provided, however, that not
more than an aggregate of two (2) Demand Registrations with respect to the
Registrable Purchaser Shares may be made pursuant to the rights granted by this
Section 4.2.1(a); and provided, further that if one or more of the Purchaser
Parties have not registered all or part of their Registrable Shares through the
first Demand Registration, then one or more Purchaser Holders holding an
aggregate number of Registrable Purchaser Shares at least equal to fifteen
percent (15%) of the Registrable Purchaser Shares on the date hereof shall be
entitled to make the second Demand; and provided, further that the first Demand
Registration must cover an aggregate number of Registrable Purchaser Shares at
least equal to twenty-five percent (25%) of the number of Registrable Purchaser
Shares on the date hereof and the second Demand Registration must cover an
aggregate number of Registrable Purchaser Shares at least equal to twenty
percent (20%) of the number of Registrable Purchaser Shares on the date hereof.
(b) Selection of Underwriter. Any Demand Registration
hereunder shall be on any appropriate form under the Securities Act permitting
registration of such Registrable Shares for resale by the Purchaser Holders in
the manner or manners designated by them (including, without limitation,
pursuant to one or more underwritten offerings). The determination of whether
the offering will involve an underwritten offering, and the selection of
investment bankers and managers, if any, and counsel, shall be made by Holders
of a majority of the Registrable Purchaser Shares to be included in such
registration, provided, however, that the selection of investment bankers and
managers, if any, and counsel so selected shall be reasonably satisfactory to
the Company. If requested, the Company shall enter into an underwriting or
purchase agreement with an investment banking firm in connection with a Demand
Registration, containing representations, warranties, indemnities and agreements
then customarily included in underwriting or purchase agreements by such
underwriter with respect to secondary distributions of securities.
4.2.2 Registration. The Company shall file a registration
statement with respect to each Demand Registration and use its best efforts to
cause the same to be declared effective as promptly as practicable following
such Demand, but not later than one hundred twenty (120) days thereafter. Unless
all of the Purchaser Registrable Shares covered by the registration statement
have earlier been sold or withdrawn from sale, the Company shall keep any such
Registration Statement effective for a period of at least one hundred eighty
(180) days after such registration statement is first declared effective plus a
period equal to (x) any period during which the Selling Holders are prohibited
from making sales because of any stop order, injunction or other order or
requirement of the Commission or any other governmental agency or court plus (y)
any Demand Suspension Period (as defined below) plus (z) any holdback period
pursuant to Section 4.6 that occurs while the registration statement is
effective (the "Demand Period") and a registration will not count as a Demand
Registration unless it is declared effective by the Commission and remains
effective until the earlier of such time as all of the Purchaser Registrable
Shares included in such registration have been sold or disposed of or withdrawn
from sale by the Selling Holders or the expiration of the Demand Period or, if
the registration remains effective for a shorter period, the Selling Holders
have sold at least eighty percent (80%) of their Purchaser Registrable Shares
included in such Demand Registration. In addition, a request for registration
shall not be deemed to constitute a Demand Registration if: (i) the conditions
to
-11-
closing specified in the purchase agreement or underwriting agreement entered
into in connection with such Demand Registration are not satisfied other than by
reason of some act or omission by the Purchaser Holders that are Selling
Holders; (ii) the Company voluntarily takes any action that would result in the
Selling Holders not being able to sell such Registrable Shares covered thereby
during the Demand Period; (iii) after it has become effective, such Demand
Registration becomes subject to any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court and such
order, injunction or requirement is not promptly withdrawn or lifted, and such
Demand Registration has not otherwise remained effective for the Demand Period
(including effective periods both before and after the order, injunction or
requirement is made or imposed); or (iv) such Demand Registration does not
involve an underwritten offering and the Purchaser Holders that are Selling
Holders determine not to proceed following any delay imposed hereunder by the
Company; provided, however, that prior to such a delay under this clause (iv),
the Purchaser Holders that are Selling Holders have not sold more than eighty
percent (80%) of the Purchaser Registrable Shares included in such Demand
Registration. Notwithstanding the foregoing, the Company may, at any time, delay
the filing or delay or suspend the effectiveness of the Demand Registration or,
without suspending such effectiveness, instruct the Selling Holders not to sell
any securities included in the Demand Registration, if the Company shall have
determined in good faith (as evidenced by a Board resolution delivered to the
Selling Holders) that proceeding with the Demand Registration at such time may
have a material adverse effect on the Company or the Company shall have
determined upon the advice of counsel that it would be required to disclose any
actions taken by the Company in good faith and for valid business reasons,
including without limitation, the acquisition or divestiture of assets, which
disclosure may have a material adverse effect on the Company or on such actions
(a "Demand Suspension Period"), by providing the Selling Holders with written
notice of such Demand Suspension Period and the reasons therefor. The Company
shall use its best efforts to provide such notice at least ten (10) days prior
to the commencement of such a Demand Suspension Period; provided, however, that
in any event the Company shall provide such notice no later than the
commencement of such Demand Suspension Period; and provided, further, that in no
event shall the Demand Suspension Periods exceed one hundred twenty (120) days
in any three hundred sixty (360) day period.
The Company further agrees to supplement or amend such
registration statement with respect to such Demand Registration, as required by
the registration form utilized by the Company or by the instructions applicable
to such registration form or by the Securities Act for the registration of
securities or as reasonably requested (which request shall result in the filing
of a supplement or amendment subject to approval thereof by the Company, which
approval shall not be unreasonably withheld) by any Selling Holder or any
managing underwriter of Registrable Shares to which such Demand Registration
relates, and the Company agrees to furnish to the Selling Holders (and any
managing underwriter) copies, in substantially the form proposed to be used
and/or filed, of any such supplement or amendment prior to its being used and/or
filed with the Commission. The Company shall amend or supplement the
registration statement with respect to such Demand Registration no less
frequently than every forty five (45) days to update the list of Selling Holders
pursuant to written requests by such Holders.
4.2.3 Inclusion of Registrable Shares. Any written request for
a Demand shall specify the number of Purchaser Registrable Shares to be
registered and the intended methods of
-12-
disposition thereof. Within ten (10) days after receipt of such Demand, the
Company shall give written notice of such registration request to all Holders of
Purchaser Registrable Shares which have not made the Demand, and the Company
shall include in such registration all Purchaser Registrable Shares with respect
to which the Company has received written requests for inclusion therein within
fifteen (15) days after the date on which such notice is given. Each such
request shall also specify the aggregate number of Purchaser Registrable Shares
to be registered. The Company may also include in such Demand Registration
shares of Common Stock for the account of the Company and any other Persons who
hold shares of Common Stock.
4.2.4 Priority on Demand Registrations. If a Demand
Registration is an underwritten registration and the managing underwriters of
such offering determine that the aggregate number of (i) Purchaser Registrable
Shares of the Selling Holders exercising their rights to participate in the
Demand Registration on a demand basis, pursuant to this Section 4.2; (ii) Shares
of the Company; and (iii) Common Shares of any other Persons entitled to
participate in such Demand Registration, in each case proposed to be included in
such registration statement, exceeds the maximum number of Common Shares that
can reasonably be expected to be sold within a price range acceptable to the
Company and the Purchaser Holders that are the Selling Holders, then the number
of shares to be offered for the account of the Company and for the account of
all such other Persons, other than holders of Purchaser Registrable Shares
participating on a demand basis, participating in such registration shall be
reduced or limited pro rata (and to zero, if necessary) in proportion to the
respective number of Common Shares requested to be registered to the extent
necessary to reduce the total number of Common Shares requested to be included
in such registration statement to the maximum number of Common Shares that can
reasonably be expected to be included therein and still satisfy such price
requirement. If the foregoing market "cutback" does not reduce the aggregate
number of Common Shares proposed to be included in the registration statement to
the maximum number of Common Shares that can reasonably be expected to be sold
within the price range acceptable to the Company and the Purchaser Holders that
are Selling Holders, the Company shall include in such registration, Purchaser
Registrable Shares of such Selling Holders pro rata among all such Selling
Holders on the basis of the number of Purchaser Registrable Shares of the
Company requested to be included by all such Selling Holders. Any request for
registration with respect to which such a market "cutback" with respect to such
Selling Holders occurs shall be deemed to constitute a Demand Registration for
all purposes of this Article 4; provided, however, that if any such market
"cutback" occurs with respect to a Demand Registration and all such Selling
Holders are not able to sell at least eighty percent (80%) of the Registrable
Shares which such Holders proposed to sell pursuant to such Demand Registration,
then such request for registration will not count against the number of Demands
to which the Purchaser Holders are entitled pursuant to Section 4.2 hereof.
4.2.5 Compliance. Notwithstanding any other provisions hereof,
the Company shall use its best efforts to ensure that (i) any registration
statement filed in connection with a Demand Registration, and any amendment
thereto, and any prospectus forming a part thereof, and any supplement thereto,
complies in all material respects with the Securities Act and the rules and
regulations thereunder, (ii) any registration statement filed in connection with
a Demand Registration, and any amendment thereto, does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein
-13-
or necessary to make the statements therein not misleading and (iii) any
prospectus forming part of any registration statement filed in connection with a
Demand Registration, and any supplement to such prospectus, does not include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements, in the light of the circumstances under which
they are made, not misleading.
4.3 Piggyback Registration.
4.3.1 Right to Include Registrable Shares. If the Company at
any time proposes to register any of its equity securities under the Securities
Act, whether or not for sale for its own account, on a form and in a manner
which would permit registration of Registrable Shares for a public offering
under the Act (other than on a registration statement (i) on Form S-4 or Form
S-8 or any successor form thereto or (ii) filed in connection with an exchange
offer), the Company shall give written notice of the proposed registration to
each Holder at least fifteen (15) days prior to the filing thereof, and each
Holder shall have the right to request that all or any part of its Registrable
Shares be included in such registration by giving written notice to the Company
within fifteen (15) days after the giving of such notice by the Company. If the
registration statement is to cover an underwritten offering, such Registrable
Shares shall be included in the underwriting on the same terms and conditions as
the securities otherwise being sold through the underwriters. Notwithstanding
the foregoing, an Executive Holder may not request the registration of its
Registrable Executive Shares if such Registrable Executive Shares may, at the
time (or within thirty days thereafter), be distributed to the public pursuant
to paragraph (k), as such paragraph may be amended from time to time, or any
other similar provision hereafter adopted by the SEC, of Rule 144.
4.3.2 Priority on Piggyback Registrations.
(a) Company Registrations. If the registration is an
underwritten primary registration on behalf of the Company and the managing
underwriter(s) of such offering determine in their good faith judgment that the
aggregate number of securities, including Registrable Shares, of the Company
which all Holders and all other security holders of the Company, pursuant to
contractual rights to participate in such registration (the "Other Holders"),
propose to include in such registration statement exceeds the maximum number of
securities, including Registrable Shares, that can reasonably be expected to be
sold in such offering without materially and adversely affecting the
marketability of the offering or the selling price to be obtained, the Company
will include in such registration, first, the shares of Common Stock or other
securities which the Company proposes to sell and, second, the Registrable
Shares of such Selling Holders and other securities to be sold for the account
of Other Holders, pro rata among all such Selling Holders and Other Holders,
taken together, on the basis of the number of Registrable Shares or other
securities of the Company requested to be included by all Selling Holders and
Other Holders who have requested that securities owned by them be so included
(it being agreed and understood, however, that such managing underwriter(s)
shall have the right to eliminate entirely the participation in such
registration of all Selling Holders and Other Holders).
(b) Selling Holders' Registration. If the registration is an
underwritten secondary registration on behalf of Selling Holders that are
Purchaser Holders pursuant to
-14-
Section 4.2 hereof, and the managing underwriter(s) determine that the aggregate
number of securities which all Selling Holders, the Company and all Other
Holders propose to include in such registration exceeds the maximum number of
securities that can reasonably be expected to be sold within the price range
acceptable to the Company and the Purchaser Holders that are Selling Holders,
the Company will include in such registration, first, the Purchaser Registrable
Shares of the Selling Holders participating in such registration on a demand
basis in accordance with Section 4.2.4 hereof, and, second, any securities to be
sold for the account of the Company, securities to be sold for the account of
the Selling Holders participating in such offering on a piggyback basis and any
securities to be sold for the account of the Other Holders electing to include
securities in such registration, pro rata among the Company, all such Selling
Holders and all such Other Holders, taken together, on the basis of the number
of Shares or other securities to be sold by the Company in the absence of such
pro ration, the number of Registrable Shares or other securities requested to be
included by all such Selling Holders and the number of Shares or other
securities requested to be included by all such Other Holders (it being agreed
and understood, however, that such managing underwriter(s) shall have the right
to eliminate entirely the participation therein of the Company and of all such
Selling Holders and Other Holders).
(c) Other Holders' Registration. If the registration is an
underwritten secondary registration on behalf of any of the Other Holders
pursuant to demand registration rights and the managing underwriters determine
that the aggregate number of securities which all Selling Holders, the Company
and all Other Holders propose to include in such registration exceeds the
maximum number of securities that should be included therein, the Company will
include in such registration, first, the securities to be sold for the account
of the Other Holders demanding registration (but only to the extent such Other
Holders are entitled to demand inclusion thereof pursuant to demand registration
rights), second, any securities to be sold for the account of the Company, and,
third, the Registrable Shares of such Selling Holders and other securities to be
sold for the account of the Other Holders electing to include (but not being
entitled pursuant to demand registration rights to demand inclusion of)
securities in such registration, pro rata among all such Selling Holders and
Other Holders, taken together, on the basis of the number of Registrable Shares
or other securities of the Company requested to be included by all Selling
Holders and such Other Holders who have requested that securities owned by them
be included (it being agreed and understood, however, that such managing
underwriter(s) shall have the right to eliminate entirely the participation
therein of all such Selling Holders and Other Holders with respect to such
securities since they are not entitled to demand inclusion of such securities
pursuant to demand registration rights).
(d) Underwriters. Registrable Shares proposed to be registered
and sold for the account of any Selling Holder pursuant to a piggyback
registration shall be sold to prospective underwriters selected or approved by
the Company, and on the terms and subject to the conditions of one or more
underwriting agreements negotiated between the Company, the Purchaser Holders,
if any, and/or Other Holders demanding registration and such prospective
underwriters. The Selling Holders shall be permitted to withdraw all or a part
of the Registrable Shares held by such Selling Holders which were to be included
in such piggyback registration at any time prior to the effective date of such
registration. The Company may withdraw any registration statement for such
registration at any time before it becomes effective, or postpone the offering
of securities, without obligation or liability to any Selling Holder
participating on a piggy-back basis.
-15-
4.4 Registration Statement. In connection with any registration of
Registrable Shares under the Securities Act pursuant to this Agreement, the
Company will furnish each Selling Holder and each underwriter, if any, with a
copy of the registration statement and all amendments thereto and will supply
each such Selling Holder with copies of any prospectus included therein
(including a preliminary prospectus and all amendments and supplements thereto),
in each case including all exhibits, and such other documents as may be
reasonably requested, in such quantities as may be reasonably necessary for the
purposes of the proposed sale or distribution covered by such registration (the
Company hereby consenting to the use in accordance with all applicable law of
each such registration statement (or amendment or post-effective amendment
thereto) and each such prospectus (or preliminary prospectus or supplement
thereto) by each such Selling Holder and the underwriters, if any, in connection
with the offering and sale of the Registrable Shares covered by such
registration statement or prospectus). The Company shall not, however, be
required to maintain the registration statement relating to a Demand
Registration and to supply copies of a prospectus for a period beyond the Demand
Period, and, at the end of such period, the Company may deregister any
Registrable Shares covered by such registration statement and not then sold or
distributed. In connection with any such registration of Registrable Shares, the
Company will, at the request of the managing underwriter with respect thereto
(or, if not an underwritten offering, at the request of Selling Holders holding
a majority of the Registrable Shares to be included in the registration) use its
best efforts to register or qualify such Registrable Shares for sale under the
securities laws of such states as is reasonably requested to permit the
distribution of such Registrable Shares and to use its reasonable efforts to
keep each such registration or qualification effective during the period such
registration statement is required to be kept effective and to do such other
acts or things reasonably necessary to enable the disposition in such
jurisdictions of the securities covered by the applicable registration statement
in accordance with applicable "blue sky" securities laws of such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereof to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction or become
subject to taxation in any jurisdiction.
In connection with any offering of Registrable Shares registered
pursuant to this Agreement, the Company shall (i) furnish each Selling Holder,
at the Company's expense and at least three (3) business days prior to the sale
of any Registrable Shares to the underwriters, with unlegended certificates in a
form eligible for deposit with The Depository Trust Company representing
ownership of the Registrable Shares which are sold pursuant to the registration
statement, in such denominations and registered in such names as the managing
underwriter, if any, or such Selling Holder shall reasonably request, and (ii)
instruct the transfer agent and registrar of the Common Stock to release any
stop transfer orders with respect to the Registrable Shares so sold.
4.5 Registration Procedures. In connection with the Company's
obligations to effect a registration pursuant to Sections 4.2 and 4.3 (but
subject to the last sentence of Section 4.3.2(d) and provided that any time
periods set forth in this Section 4.5 regarding effective periods and the like
shall apply only in the event of a Demand Registration), the Company will as
expeditiously as is reasonably practicable:
-16-
(i) prepare and file with the Commission as soon as
practicable (in the case of a Demand Registration) a registration statement with
respect to such Registrable Shares, on a form available for the sale of the
Registrable Shares by the Holders thereof in accordance with the intended method
or methods of distribution thereof and use its commercially reasonable efforts
to cause each such registration statement to become and remain effective;
provided, however, that before filing a registration statement or prospectus or
any amendments or supplements thereto (including documents that would be
incorporated or deemed to be incorporated therein by reference) and, whether or
not filed pursuant to Section 4.2 or 4.3, the Company will furnish to the
Holders of the Registrable Shares covered by such registration statement and the
underwriters, if any, and any attorney, accountant or other agent retained by
the Holders of Registrable Shares covered by such registration statement, copies
of all such documents proposed to be filed, which documents will be subject to
the review and comment of such Holders, such counsel and underwriters, if any.
The Company will not file any registration statement or any amendment thereto or
any prospectus or any supplement thereto in connection with a Demand
Registration pursuant to Section 4.2 (including such documents incorporated by
reference and proposed to be filed after the initial filing of the registration
statement) to which the Holders of a majority of the Registrable Shares covered
by such registration statement or the underwriters, if any, shall reasonably and
timely object;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to such registration statement and such supplements to
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective (to the extent otherwise required by this
Agreement) and to comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such registration statement
until such time as all of such 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 the expiration of the Demand Period (in
the case of a Demand Registration), whichever occurs earlier; provided, however,
that the only remedy for any failure to keep the registration statement so
effective shall be as set forth in Section 4.2.2 and provided, further, that the
Company will have no obligation to a Selling Holder participating on a
"piggyback" basis in a registration statement that has become effective to keep
such registration statement effective for a period beyond 120 days from the
effective date of such registration statement;
(iii) cooperate and assist in any filings required to be made
with the National Association of Securities Dealers, Inc. (the "NASD");
(iv) notify each Selling Holder and the managing underwriter,
if any, promptly (and in any event within three (3) business days): (A) when the
prospectus or any prospectus supplement or post-effective amendment has been
filed, and with respect to the registration statement or any post-effective
amendment, when the same has become effective; (B) of any request by the
Commission or any other federal or state governmental authority for any
amendments or supplements to the registration statement or the prospectus or for
additional information; (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the initiation of
any proceedings for that purpose; (D) if, at any time prior to the closing
contemplated by an underwriting agreement entered into in connection with such
registration statement, that the representations and warranties of the
-17-
Company contained in such agreement cease to be true and correct; (E) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Registrable Shares for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose; (F) of the
happening of any event which makes any statement made in the registration
statement, the prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue or which requires the making of any
changes in the registration statement, the prospectus or any document
incorporated therein by reference in order to make the statements therein not
misleading; and (G) of the Company's reasonable determination that a
post-effective amendment to a registration statement would be required;
(v) make commercially reasonable efforts to prevent the
issuance of any order suspending the effectiveness of the registration statement
or of any order preventing or suspending the use of a prospectus or suspending
the qualification of any of the Registrable Shares included therein for sale in
any jurisdiction (subject to the proviso at the end of the penultimate paragraph
of Section 4.4), and, in the event of the issuance of any stop order suspending
the effectiveness of the registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Common Shares included in such registration statement for sale in any
jurisdiction (subject to the proviso at the end of the penultimate paragraph of
Section 4.4), the Company will use its best efforts to promptly obtain the
withdrawal of any such order;
(vi) furnish to each Selling Holder and the managing
underwriters, if any, without any additional charge, one signed copy of the
registration statement and any post-effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(vii) as promptly as reasonably practicable, if required,
based on the advice of the Company's counsel, or upon the occurrence of any
event contemplated by Section 4.5(iv)(F), prepare and file a supplement or
post-effective amendment to the registration statement, the related prospectus
or any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the Registrable
Shares, the prospectus will not contain an untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein not
misleading;
(viii) cause all Registrable Shares covered by the
registration statement to be listed on each securities exchange on which
identical securities issued by the Company are then listed if requested by the
Selling Holders holding a majority in number of the Registrable Shares covered
by the Registration Statement or the managing underwriters, if any;
(ix) provide and cause to be maintained a transfer agent and
registrar for all Registrable Shares covered by such registration statement from
and after a date not later than the effective date of such registration
statement;
(x) use its best efforts to provide a CUSIP number for the
Registrable Shares, not later than the effective date of the registration
statement;
-18-
(xi) use its best efforts to (A) obtain opinions of counsel to
the Company (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters, if any, and not objected
to by the Holders of a majority of the Registrable Shares being sold), and
updates thereof addressed to the Selling Holders, covering the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by the underwriters, if any; and
(B) obtain "cold comfort" letters and updates thereof (which letters and updates
(in form, scope and substance) shall be reasonably satisfactory to the managing
underwriters, if any, and counsel to the Holders of a majority of the
Registrable Shares being sold) from the Company's independent certified public
accountants addressed to such Selling Holders (and, if necessary, any other
independent certified public accountants of any subsidiary of the Company or of
any business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the registration
statement), such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters by accountants in connection
with underwritten offerings and such other matters as the underwriters, if any,
or the Holders of a majority of the Registrable Shares being sold, reasonably
request. The above shall be done at each closing under such underwriting or
similar agreement or as and to the extent required thereunder or, if not an
underwritten offering, as otherwise reasonably requested by the Holders of a
majority of the Registrable Shares being sold;
(xii) make available for inspection by a representative of the
Selling Holders and any attorneys or accountants retained by such Holders (and,
to the extent reasonably requested, furnish copies), in connection with the
preparation of a registration statement pursuant to this Agreement, all
financial and other records and pertinent corporate documents and properties of
the Company, and cause the Company's officers, directors and employees to supply
all information reasonably requested by any such representative(s), attorney(s)
or accountant(s) in connection with such registration; provided, however, that
any records, information or documents that are designated by the Company in
writing as confidential shall be kept confidential by such persons unless
disclosure of such records, information or documents is required by court or
administrative order or under applicable law; and provided, further, that
appropriate arrangements are made, to the extent required by applicable
antitrust law, to limit access to such information of the Company to
representatives of the Holders who are not officers or employees of the Selling
Holders; and provided, further that, without limiting the foregoing, no such
information shall be used by any such Person in connection with any market
transactions in securities of the Company or its subsidiaries in violation of
law;
(xiii) enter into such agreements reasonably requested
(including, as applicable, an underwriting agreement in form, scope and
substance as is customary in underwritten secondary offerings and is reasonably
satisfactory to the Company) and take all such other customary and reasonable
actions in connection therewith (including those requested by the managing
underwriters) in order to expedite or facilitate the disposition of the
Registrable Shares, and in such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an underwritten
registration:
(a) make such representations and warranties to the Holders of
such Registrable Shares included in the registration statement and the
underwriters, if any,
-19-
with respect to the business of the Company and the registration
statement, prospectus and documents, if any, incorporated or deemed to
be incorporated by reference therein, in each case, in form, substance
and scope as are customarily made by issuers to underwriters in
underwritten offerings and confirm the same, if and when reasonably
requested; and
(b) deliver such documents and certificates as may be
reasonably requested by the Holders of a majority of the Registrable
Shares being included in the registration statement and managing
underwriters, if any, to evidence compliance with clause (a) above and
with any provisions contained in the underwriting agreement or other
similar agreement entered into by the Company;
The above shall be done at each closing under such underwriting or similar
agreement or as and, if not an underwritten offering, to the extent otherwise
reasonably requested by the Holders of a majority of the Registrable Shares
being sold pursuant to the registration statement;
(xiv) (a) if so required by the managing underwriter in an
underwritten offering of Registrable Shares covered by a registration statement
filed pursuant to Section 4.2 or 4.3 hereof, not publicly or privately sell,
make any short sale of, loan, grant any option, effect any public sale or
distribution of or otherwise dispose of its equity securities or securities
convertible into or exchangeable or exercisable for any of such securities
during the ten (10) days prior to and the ninety (90) days after any
underwritten registration pursuant hereto has become effective, except as part
of such underwritten registration and except pursuant to any exchange offer or
registrations on Form S-4 or S-8 or any successor or similar forms thereto,
except that the Company may make grants of options under its stock option plans
and may issue securities issuable upon the exercise or conversion of outstanding
convertible securities, stock options and other options, warrants and rights of
the Company and (b) if requested, use reasonable efforts to cause each holder of
ten percent (10%) or more of the securities of the same class as the securities
included in any underwritten registration pursuant to Section 4.2 hereof, or any
securities convertible into or exchangeable or exercisable for such securities,
in each case purchased from the Company at any time after the date of this
Agreement (other than in a registered public offering) to agree not to effect
any public or private sale or distribution or otherwise dispose (including sales
pursuant to Rule 144 promulgated under the Act) of any such securities during
the ten (10) days prior to and the ninety (90) days after any underwritten
registration pursuant hereto has become effective (except as part of such
underwritten registration, if otherwise permitted), unless the underwriters
managing the registered public offering otherwise agree;
(xv) if requested, furnish each Selling Holder with a copy (or
a reasonable number of copies, as requested) of the registration statement
(together with the Exhibits thereto) and each amendment thereto prior to the
filing thereof with the Commission;
(xvi) if requested by the managing underwriters, if any, or a
Holder of Registrable Shares being sold, promptly incorporate in a prospectus,
supplement or post-effective amendment such information as the managing
underwriters, if any, and the Holders of the Registrable Shares being sold
reasonably request to be included therein relating to the sale of
-20-
the Registrable Shares, including, without limitation, information with respect
to the number of Registrable Shares being sold to underwriters, the purchase
price being paid therefor by such underwriters and with respect to any other
terms of the underwritten offering of the Registrable Shares to be sold in such
offering; and make all required filings of such prospectus, supplement or
post-effective amendment promptly following notification of the matters to be
incorporated in such supplement or post-effective amendment;
(xvii) upon the occurrence of any event that would cause a
shelf registration statement (A) to contain a material misstatement or omission
or (B) to be not effective and usable for resale of Registrable Shares during
the Demand Period, the Company shall promptly file an amendment to such shelf
registration statement, in the case of clause (A), correcting any such
misstatement or omission and, in the case of either clause (A) or (B), use its
commercially reasonable efforts to cause such amendment to be declared effective
and such shelf registration statement to become usable as soon as reasonably
practicable thereafter;
(xviii) otherwise use its best efforts to (x) comply with all
applicable rules and regulations of the Commission and to take all other steps
reasonably necessary to effect the registration of the Registrable Shares
covered by the registration statement contemplated hereby, and (y) make
available to its securityholders an earnings statement which satisfies the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or
any similar rule promulgated under the Act) no later than forty-five (45) days
after the end of any twelve-month (12) period (or ninety (90) days after the end
of any twelve-month (12) period if such period is a fiscal year) (or in each
case within such extended period of time as may be permitted by the Commission
for filing the applicable report with the Commission) (i) commencing at the end
of any fiscal quarter in which Registrable Shares are sold to underwriters in a
firm commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said twelve-month (12) periods; and
(xix) in connection with any underwritten offering, cooperate
with all marketing efforts reasonably requested by the managing underwriter or
managing underwriters in connection with the sale of the Registrable Shares,
including, without limitation, participation in a reasonable number of road-show
presentations (in major U.S. financial cities) and other marketing activity by
executives and other employees of the Company requested by such underwriter or
underwriters provided that the scheduling of the road-show presentations shall
be set in consultation with the Company and will not require the Company's
involvement at any time or place to which the Company has a reasonable
objection.
4.6 Holdback Agreements.
Restrictions on Public Sale by Holders of Registrable Shares.
Each Holder of Registrable Shares (whether or not such Registrable Shares are
covered by a Registration Statement filed pursuant to Section 4.2 or 4.3 hereof)
agrees, if requested (pursuant to a timely written notice) by the managing
underwriter or underwriters in an underwritten offering, not to effect any
public sale or distribution of any of the Company's securities, including a sale
pursuant to Rule 144 (except as part of such underwritten offering), during the
period beginning
-21-
ten (10) days prior to, and ending ninety (90) days after, the closing date of
the underwritten offering made pursuant to such Registration Statement.
The foregoing provisions shall not apply to any holder of
Registrable Shares if such Holder is prevented by applicable statute or
regulation from entering into any such agreement; provided, however, that any
such Holder shall undertake not to effect any public sale or distribution of the
class of securities covered by such Registration Statement (except as part of
such underwritten offering) during such period unless it has provided sixty (60)
days' prior written notice of such sale or distribution to the managing
underwriter.
4.7 Registration Expenses. Except as otherwise required by state
securities laws or the rules and regulations promulgated thereunder, all
expenses, disbursements and fees incurred by the Company in connection with
carrying out its obligations under this Article 4, including but not limited to,
(i) the reasonable and documented fees and expenses of one counsel for the
Selling Holders (which counsel shall be selected by Holders of a majority of the
Registrable Shares included in the applicable registration), (ii) all
registration, filing fees and expenses (including fees with respect to filings
made with the NASD (including, if applicable, the fees and expenses of any
"qualified independent underwriter" and its counsel, as may be required by the
rules and regulations of the NASD, (iii) fees and expenses of compliance with
securities or blue sky laws (including fees and disbursements of counsel for the
underwriters or Selling Holders in connection with blue sky qualifications of
the Registrable Shares and determinations of their eligibility for investment
under the laws of such jurisdiction as the managing underwriters or Holders of a
majority of the Registrable Shares being sold may designate, subject to the
proviso to the last sentence of the penultimate paragraph of Section 4.4), (iv)
printing expenses (including printing certificates for the Registrable Shares to
be sold and the registration statements and prospectuses), messenger and
delivery expenses, duplication, word processing, and telephone, (v) fees and
disbursements of counsel for the Company, and (vi) fees and disbursements of all
independent certified public accountants of the Company incurred in connection
with such registration (including the expenses of any special audit and "cold
comfort" letters incident to such registration) and fees and disbursements of
underwriters (excluding discounts, commissions or fees of underwriters, selling
brokers, dealer managers or similar securities industry professionals relating
to the distribution of the Registrable Shares) and other Persons retained by the
Company (all such expenses being herein called "Registration Expenses"), will be
borne by the Company regardless of whether a registration statement becomes
effective; provided, however, that the Company will, in any event, pay its
internal expenses (including, without limitation), all salaries and expenses of
its officers and employees performing legal or accounting duties), the expenses
of any annual audit or quarterly review, the fees and expenses of any Person,
including special experts, retained by the Company, the expense of any liability
insurance and the expenses and fees for listing the securities to be registered
on each securities exchange on which similar securities issued by the Company
are then listed or on the NASD automated quotation system; and provided further,
that each Selling Holder shall pay (x) all costs and expenses of counsel (other
than the counsel costs referred to in (i) above), accounting or financing
professionals retained by such Selling Holder, (y) all underwriting discounts,
commissions, fees and expenses and all transfer taxes with respect to the
-22-
Shares sold by such Selling Holder, and (z) all other expenses incurred by such
Selling Holder and incidental to the sale and delivery of the Shares to be sold
by such Holder.
4.8 Conditions to Holder's Rights. It shall be a condition of each
Selling Holder's rights hereunder that:
4.8.1 Cooperation. Such Selling Holder shall cooperate with
the Company by supplying information and executing documents relating to such
Selling Holder or the securities of the Company owned by such Selling Holder in
connection with such registration which are customary for offerings of this type
(including agreeing to sell such Selling Holder's Registrable Shares on the
basis provided in any underwriting arrangements containing customary terms
reasonably satisfactory to such Selling Holder);
4.8.2 Undertakings. Such Selling Holder shall enter into any
undertakings and take such other action relating to the conduct of the proposed
offering which the Company or the underwriters may reasonably request as being
necessary to insure compliance with federal and state securities laws and the
rules or other requirements of the NASD or which the Company or the underwriters
may reasonably request to otherwise effectuate the offering; and
4.8.3 Indemnification. Such Selling Holder shall execute and
deliver an agreement to indemnify to the fullest extent permitted by law and
hold harmless the Company, each of its directors, each of its officers who has
signed the registration statement, any underwriter (as defined in the Securities
Act), and each person, if any, who controls the Company or such underwriter
within the meaning of the Securities Act, against such losses, claims, damages
or liabilities (including reimbursement for legal and other expenses) to which
the Company or any such director, officer, underwriter or controlling person may
become subject under the Securities Act or otherwise, in such manner as is
customary for registrations of the type then proposed, but only with respect to
written information about or pertaining to such Selling Holder furnished by such
Selling Holder for inclusion in the Registration Statement.
4.9 Indemnification.
4.9.1 Indemnification by the Company. In the case of any
offering registered pursuant to this Agreement, the Company agrees to indemnify
to the fullest extent permitted by law and hold each Selling Holder, each
affiliate of such Selling Holder and each director, officer, agent,
representative and employee of such Selling Holder and its affiliates, each
Person who controls each Selling Holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act and the directors, officers,
agents or employees of each such controlling person harmless against any and all
losses, claims, damages, liabilities, actions (including reasonable and
documented costs (including, without limitation, costs of preparation and
reasonable attorneys' fees and disbursements) and expenses, including reasonable
expenses of investigation) (collectively "Losses") to which they or any of them
may become subject under the Securities Act or any other statute or common law
or otherwise, insofar as any such Losses shall arise out of, be caused by or
shall be based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the registration statement relating to the sale of
the Registrable Shares covered thereby, or the omission or alleged omission to
state therein a
-23-
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (ii) any untrue statement or alleged untrue statement
of a material fact contained in any preliminary prospectus (as amended or
supplemented if the Company shall have filed with the Commission any amendment
thereof or supplement thereof), if used prior to the effective date of such
registration statement, or contained in the prospectus (as amended or
supplemented if the Company shall have filed with the Commission any
amendment,thereof or supplement thereof, including the information deemed part
of such registration statement pursuant to Rule 430A promulgated under the
Securities Act), if used within the period during which the Company shall be
required to keep the registration statement to which such prospectus relates
current pursuant to the terms of this Agreement, or the omission or alleged
omission to state therein (if so used) a material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the indemnification agreement
contained in this Section 4.9.1 shall not apply to such Losses which shall arise
from the sale of Registrable Shares to any Person if such Losses shall arise out
of, shall be caused by or shall be based upon any such untrue statement or
alleged untrue statement, or any such omission or alleged omission, (i) if such
statement or omission shall have been made in reliance upon and in conformity
with information furnished in writing to the Company by such Selling Holder
specifically for use in connection with the preparation of the registration
statement or any preliminary prospectus or prospectus contained in the
registration statement or any such amendment thereof or supplement thereto; (ii)
if such untrue statement or omission was made in any preliminary prospectus to
the extent that (a) the prospectus corrected such untrue statement or such
omission and (b) the Selling Holder was legally required to and failed to send
or deliver a copy of the prospectus with or prior to the delivery of written
confirmation of the sale by such Selling Holder of Registrable Shares to the
Person asserting the claim from which such Losses arise; or (iii) if any such
Losses arise out of, are caused by or are based upon an untrue statement or
omission in the prospectus, to the extent that (a) such untrue statement or
omission is corrected in an amendment or supplement to the prospectus and (b)
having previously been furnished by or on behalf of the Company with copies of
the prospectus as so amended or supplemented, such Selling Holder was legally
required to and thereafter fails to deliver such prospectus as so amended or
supplemented, prior to or concurrently with the sale of Registrable Shares to
the Person asserting the claim from which such Losses arise. This indemnity
shall be in addition to any other indemnification arrangements to which the
Company may otherwise be a party.
4.9.2 Indemnification by Holders of Registrable Shares. Each
Selling Holder agrees to indemnify to the fullest extent permitted by law and
hold the Company, its directors, officers, agents and employees, each Person who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act and the directors, officers, agents or employees
of such controlling persons harmless against any and all Losses arising out of,
caused by or based upon any untrue statement of a material fact contained in any
registration statement, prospectus or form of prospectus, or arising out of,
caused by or based upon any omission of a material fact required to be stated
therein or necessary to make the statements therein (in the case of the
preliminary prospectus and the prospectus, in each case, including amendments or
supplements, in light of the circumstances in which they were made) not
misleading, to the extent, but only to the extent, that such untrue statement or
omission is contained in any information furnished in writing by such Selling
Holder to the Company,
-24-
expressly for use in such registration statement or prospectus; provided,
however, that the obligation to indemnify will be several and not joint and in
no event shall the liability of any Selling Holder hereunder be greater in
amount than the dollar amount of the proceeds (net of the payment of
underwriting discounts and commissions payable by such Selling Holder) received
by any such Selling Holder upon the sale of the Registrable Shares giving rise
to such indemnification obligation. The Company and the Selling Holders shall be
entitled to receive indemnities from underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution to the same extent as provided above with respect to information so
furnished in writing by such Persons expressly for use in any prospectus or
registration statement.
4.9.3 Conduct of Indemnification Proceedings. Any Person
entitled to indemnity under this Agreement (an "Indemnified Party") shall give
prompt written notice to the party from which such indemnity is sought (the
"Indemnifying Party") of any claim or of the commencement of any proceeding with
respect to which such Indemnified Party seeks indemnification or contribution
pursuant hereto; provided, however, that the failure so to notify the
Indemnifying Party shall not relieve the indemnifying party from any obligation
or liability except to the extent that the Indemnifying Party has been
prejudiced materially by such failure. The Indemnifying Party shall have the
right, exercisable by giving written notice to an Indemnified Party promptly
after the receipt of written notice from such Indemnified Party of such claim or
proceeding to assume, at the Indemnifying Party's expense, the defense of any
such claim or proceeding, with counsel reasonably satisfactory to such
Indemnified Party; provided, however, that under such circumstances an
Indemnified Party shall have the right to employ separate counsel in any such
claim or proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party
unless: (1) the Indemnifying Party agrees to pay such fees and expenses; or (2)
the Indemnifying Party fails promptly to assume the defense of such claim or
proceeding or fails to employ counsel reasonably satisfactory to such
Indemnified Party; or (3) the Indemnified Party shall have been advised by
counsel that (i) there may be one or more material defenses available to such
Indemnified Party that are different from or additional to those available to
the Indemnifying Party or its affiliates, or (ii) a conflict of interest likely
exists if such counsel represents such Indemnified Party and such Indemnifying
Party or its affiliate, in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof, it being understood, however, that the
Indemnifying Party shall not, in connection with any one such claim or
proceeding, or separate but substantially similar or related claims or
proceedings arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel which such counsel shall be designated
by the Indemnified Party and be reasonably acceptable to the Indemnifying Party)
at any time for such Indemnified Party, or for fees and expenses that are not
reasonable. Whether or not such defense is assumed by the Indemnifying Party,
such Indemnifying Party will not be subject to any liability for any settlement
made without its consent (which consent shall not be unreasonably withheld). The
Indemnifying Party shall not consent to entry of any judgment or settle or
compromise any pending or threatened claim, action or proceeding, unless it
contains as an unconditional term thereof the giving by the claimant or
plaintiff to the Indemnified Party of a
-25-
release, in form and substance satisfactory to such Indemnified Party, from all
liability in respect of such claim or litigation for which such Indemnified
Party would be entitled to indemnification hereunder.
The Indemnifying Party's liability to any such Indemnified
Party hereunder shall not be extinguished solely because any other Indemnified
Party is not entitled to indemnity hereunder.
4.9.4 Contribution. If the indemnification provided for in
this Section 4.9 is unavailable to an Indemnified Party in respect of any Losses
or is insufficient to hold such Indemnified Party harmless, then, except to the
extent that contribution is not permitted under Section 11(f) of the Securities
Act, each applicable Indemnifying Party shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party, on
the one hand, and such Indemnified Party, on the other hand, in connection with
the actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations appropriate under the circumstances. The
relative fault of such Indemnifying Party, on the one hand, and such Indemnified
Party, on the other hand, shall be determined by reference to, among other
things, whether any action in question, including any untrue statement of a
material fact or omission to state a material fact, has been taken or made by,
or relates to information supplied by, such Indemnifying Party or Indemnified
Party, and the parties' relative intent, knowledge, access to information
concerning the matter with respect to which the claim was asserted and
opportunity to correct or prevent such action, statement or omission. The amount
paid or payable by a party as a result of any Losses shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 4.9.4 were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 4.9.4, no Indemnifying
Party that is a Selling Holder shall be required to contribute any amount in
excess of the amount by which the net proceeds received by such Selling Holder
from the sale of Registrable Shares exceeds the amount of any damages that such
Selling Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission. 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.
The indemnity and contribution agreements contained in this
Section 4.9 are in addition to any liability that the Indemnifying Parties may
have to the Indemnified Parties.
4.9.5 Underwriting Agreement to Govern. At such time as an
underwriting agreement with respect to a particular underwriting is entered
into, the terms of any such underwriting agreement shall govern with respect to
the matters set forth therein to the extent inconsistent with this Section 4.9;
provided, however, that the indemnification provisions of such underwriting
agreement as they relate to Selling Holders are customary for registrations of
the
-26-
type then proposed and provide for indemnification by such Selling Holders only
with respect to written information furnished by such Selling Holders.
4.10 Rule 144. Following a Public Offering Event, the Company shall
file the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the Commission thereunder
and will take such further action as any Holder of Registrable Shares may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Registrable Shares without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144. Upon the request
of any Holder of Registrable Shares, the Company will deliver to such Holder a
written statement as to whether it has complied with such requirements.
ARTICLE 5. Representations and Warranties
5.1 Representations and Warranties of the Company.
The Company represents and warrants to the Stockholders as
follows:
5.1.1 Organization. It is a corporation duly organized and
validly listing under the laws of the State of Delaware;
5.1.2 Authority. It has full corporate power and authority to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby;
5.1.3 Binding Obligation. The execution, delivery and
performance of this Agreement by it and the consummation by it of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on its part, and this Agreement constitutes its
binding obligation, enforceable against it in accordance with its terms, except
insofar as enforceability may be limited by bankruptcy, insolvency, moratorium
or other laws which may affect creditors' rights and remedies generally and by
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law); and
5.1.4 No Conflict. The execution, delivery and performance of
this Agreement by it and the consummation by it of the transactions contemplated
hereby will not, with or without the giving of notice or the lapse of time, or
both, (i) violate any provision of law, statute, rule or regulation to which it
is subject, (ii) violate any order, judgment or decree applicable to it, or
(iii) conflict with, or result in a breach or default under, any term or
condition of its certificate or articles of incorporation or its by-laws or any
material agreement or other material instrument to which it is a party or by
which it or its property is bound.
5.2 Representations and Warranties of the Stockholders. Each of the
Stockholders represents and warrants to each other and to the Company as
follows:
5.2.1 Organization. If it is an entity, it is a corporation,
limited partnership or other entity duly organized and validly existing under
the laws of its respective state of organization;
-27-
5.2.2 Authority. It has full power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby;
5.2.3 Binding Obligation. The execution, delivery and
performance of this Agreement by it and the consummation by it of the
transactions contemplated hereby have been duly and validly authorized by all
necessary action on its part, and this Agreement constitutes its binding
obligation, enforceable against it in accordance with its terms, except insofar
as enforceability may be limited by bankruptcy, insolvency, moratorium or other
laws which may affect creditors' rights and remedies generally and by principles
of equity (regardless of whether enforceability is considered in a proceeding in
equity or at law); and
5.2.4 No Conflict. The execution, delivery and performance of
this Agreement by it and the consummation by it of the transactions contemplated
hereby will not, with or without the giving of notice or the lapse of time, or
both, (i) violate any provision of law, statute, rule or regulation to which it
is subject, (ii) violate any order, judgment or decree applicable to it, or
(iii) conflict with, or result in a breach or default under, any term or
condition of its certificate of incorporation, bylaws or equivalent governing
document or any material agreement or other material instrument to which it is a
party or by which it or its property is bound.
ARTICLE 6. Termination of Agreement
Subject to the next succeeding sentence, this Agreement shall terminate
ten (10) years from the date of this Agreement (the "Termination Date"). The
provisions of Article 1 and Article 3 of this Agreement and the provisions of
Sections 2.4 and 2.8 of this Agreement shall terminate on the date of a Public
Offering Event which occurs prior to the Termination Date.
ARTICLE 7. General
7.1 Recapitalization, Exchanges, etc. Affecting the Shares. The
provisions of this Agreement shall apply to the full extent set forth herein
with respect to (a) the Shares and any option, right or warrant to acquire
Shares, and (b) any and all shares of capital stock of the Company or any
successor or assign of the Company (whether by merger, consolidation, sale of
assets or otherwise) which may be issued in respect of, in exchange for, or in
substitution for any Shares, by combination, recapitalization, reclassification,
merger, consolidation or otherwise. In the event of any change in the
capitalization of the Company, as a result of any stock split, stock dividend or
stock combination, the provisions of this Agreement shall be appropriately
adjusted.
7.2 Injunctive Relief. It is hereby agreed and acknowledged that it
will be impossible to measure in money the damages that would be suffered if the
parties fail to comply with any of the obligations herein imposed on them and
that, in the event of any such failure, an aggrieved person will be irreparably
damaged and will not have an adequate remedy of law. Any such person shall,
therefore, be entitled to injunctive relief, including specific performance, to
enforce such obligations, without the posting of any bond and if any action
should be brought in equity to enforce any of the provisions of this Agreement,
none of the parties hereto shall raise the defense that there is an adequate
remedy at law.
-28-
7.3 Notices. Any and all notices, demands or other communications
required or permitted hereunder shall be in writing and shall be made by hand
delivery (deemed given upon receipt), or by certified mail return receipt
requested (deemed given upon execution of such return receipt), addressed to a
Stockholder and the Company at the address set forth below such person's or
entity's signature. Any party may change its address for notice by notice given
to each Stockholder and the Company in accordance with the foregoing. No
objection may be made to the method of delivery of any notice actually and
timely received.
7.4 Legend. In addition to any other legend which may be required by
applicable law, each share certificate representing Shares which are subject to
this Agreement shall have endorsed, to the extent appropriate, upon its face the
following words:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR THE SECURITIES LAWS OF ANY JURISDICTION. SUCH
SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
ASSIGNED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO (I) A REGISTRATION STATEMENT WITH RESPECT
TO SUCH SECURITIES THAT IS EFFECTIVE UNDER SUCH ACT OR
APPLICABLE STATE SECURITIES LAW, OR (II) ANY EXEMPTION FROM
REGISTRATION UNDER SUCH ACT, OR APPLICABLE STATE SECURITIES
LAW, RELATING TO THE DISPOSITION OF SECURITIES, INCLUDING RULE
144, PROVIDED AN OPINION OF COUNSEL IS FURNISHED TO THE
COMPANY, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE
COMPANY, TO THE EFFECT THAT AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND/OR APPLICABLE STATE SECURITIES LAW
IS AVAILABLE.
IN ADDITION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER COMPLIES WITH
THE PROVISIONS OF A STOCKHOLDERS AGREEMENT DATED AS OF MARCH
31, 1998 (THE "STOCKHOLDERS AGREEMENT"), A COPY OF WHICH IS ON
FILE AND MAY BE INSPECTED AT THE PRINCIPAL OFFICE OF THE
COMPANY. NO TRANSFER OF THE SECURITIES WILL BE MADE ON THE
BOOKS OF THE COMPANY UNLESS ACCOMPANIED BY EVIDENCE OF
COMPLIANCE WITH THE TERMS OF SUCH PRINCIPAL STOCKHOLDERS
AGREEMENT. THE SECURITIES REPRESENTED BY THIS
-29-
CERTIFICATE ARE ALSO SUBJECT TO OTHER RIGHTS AND OBLIGATIONS
AS SET FORTH IN THE PRINCIPAL STOCKHOLDERS AGREEMENT.
7.5 Transferees Bound. All Shares owned by a Transferee shall, subject
to the terms of Section 2.3 of this Agreement, for all purposes be subject to
the terms of this Agreement, whether or not such Transferee has executed a
consent to be bound by this Agreement. The foregoing shall not apply in the case
of any Shares acquired by a Transferee pursuant to a sale of Shares pursuant to
an effective registration statement under the Securities Act or, except for
sales to an affiliate of the Company or sales made prior to a Public Offering
Event, pursuant to Rule 144.
7.6 Amendment; Waiver. This Agreement may be amended, modified,
supplemented or terminated only by a written instrument signed by each of (i)
the Company, (ii) Stockholders holding a majority of the Registrable Purchaser
Shares, and (iii) Stockholders holding a majority of the Registrable Executive
Shares. No provision of this Agreement may be waived orally, but only by a
written instrument signed by the party against whom enforcement of such waiver
is sought. Stockholders shall be bound from and after the date of the receipt of
a written notice from the Company setting forth such amendment or waiver by any
consent authorized by this Section, whether or not the Shares shall have been
marked to indicate such consent; no alteration, modification or impairment shall
be implied by reason of any previous waiver, extension of time, delay or
omission in exercise, or other indulgence.
7.7 Additional Documents. Each party hereto agrees to execute any and
all further documents and writings within its powers and to perform such other
actions which may be or become necessary or expedient to effectuate and carry
out this Agreement.
7.8 No Third-Party Benefits. None of the provisions of this Agreement
shall be for the benefit of, or enforceable by, any third-party beneficiary.
7.9 Successors and Assigns. Subject to the terms hereof, this Agreement
shall be binding upon and shall inure to the benefit of the Stockholders, and
their respective successors and permitted assigns; provided, however, (i)
neither this Agreement nor any rights or obligations hereunder may be
transferred by the Company and (ii) no rights or obligations of any Stockholder
under this Agreement may be assigned except that any Stockholder may transfer
its rights and obligations hereunder, in whole or in part, in connection with a
Transfer of Shares made in compliance with all of the provisions of this
Agreement.
7.10 Severability. In case any one or more of the provisions contained
in this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein; provided, however, that the parties hereto shall
use their best efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such invalid,
illegal or unenforceable term, provision, covenant or restriction.
-30-
7.11 Integration. This Agreement contains the entire understanding of
the parties with respect to the subject matter hereof. There are no
restrictions, agreements, promises, representations, warranties, covenants or
undertakings with respect to the subject matter hereof other than those
expressly set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to its subject
matter.
7.12 Governing Law. THE RIGHTS AND LIABILITIES OF THE PARTIES SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, REGARDLESS OF THE CHOICE
OF LAWS PROVISIONS OF SUCH STATE OR ANY OTHER JURISDICTION.
7.13 Attorneys' Fees. Should any litigation or arbitration be commenced
(including any proceedings in a bankruptcy court) between the parties hereto or
their representatives concerning any provision of this Agreement or the rights
and duties of any person or entity hereunder, the party or parties prevailing in
such proceeding shall be entitled, in addition to such other relief as may be
granted, to the reasonable attorneys' fees and court costs incurred by reason of
such litigation or arbitration.
7.14 Headings. The headings in this Agreement are inserted only as a
matter of convenience, and in no way define, limit, or extend or interpret the
scope of this Agreement or of any particular Section.
7.15 Information for Notices. No Stockholder (other than a Stockholder
as of the date of this Agreement with respect to the Shares held as of such
date) shall hold any of its Shares in nominee name unless it otherwise provides
the Company and the other Stockholders with its name and address and other
information reasonably requested by the Company in order to establish such
Stockholder's particular status under this Agreement (e.g., Purchaser Holder,
Executive Party, etc.).
7.16 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.17 Consent to Jurisdiction. Each Stockholder agrees that any
proceeding arising out of or relating to this Agreement or the breach or
threatened breach of this Agreement may be commenced and prosecuted in a court
in the State of New York. Each Stockholder hereby irrevocably and
unconditionally consents and submits to the non-exclusive personal jurisdiction
of any court in the State of New York in respect of any such proceeding. Each
Stockholder consents to service of process upon it with respect to any such
proceeding by registered mail, return receipt requested, and by any other means
permitted by applicable laws and rules. Each Stockholder waives any objection
that it may now or hereafter have to the laying of venue of any such proceeding
in any court in the State of New York and any claim that it may now or hereafter
have that any such proceeding in any court in the State of New York has been
brought in an inconvenient forum.
-31-
7.18 No Inconsistent Agreements. The Company will not hereafter enter
into any agreements with respect to its securities which are inconsistent with
or violate in any material respects the rights granted to the Holders of
Registrable Shares in this Agreement.
7.19 Certain Distributions Exempt. Notwithstanding anything to the
contrary contained in this Agreement, any distribution of Shares by the
Purchaser or any other Purchaser Party to its equity participants in accordance
with the terms of its limited partnership agreement, operating agreement or
other governing agreement or instrument shall be exempt from the terms and
conditions of this Agreement, other than that the Persons receiving the Shares
in connection with any such distribution shall be bound on a going-forward basis
by the terms and conditions of this Agreement. For example, and not by way of
limitation, any such distribution shall not trigger any of the "tag-along"
rights set forth in Section 2.4.
7.20 Certain Limitations. Notwithstanding anything to the contrary
contained in this Agreement, prior to the issuance or sale of any shares of the
Company's capital stock pursuant to an effective registration statement under
the Securities Act, the Company shall not be required to register any transfer
of Shares on the Company's books if in the reasonable, good faith judgment of
the Company, registering such transfer would cause the Company to become subject
to registration pursuant to the Exchange Act.
7.21 Information Regarding Beneficial Ownership. Each Stockholder
agrees to promptly provide to the Company any information or representations
that the Company may request regarding such holder's beneficial ownership of
shares of any class of the Company's capital stock.
-32-
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first set forth above.
Diamond Triumph Auto Glass, Inc.
By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxx
Title: Co-Chairman & Co-Chief
Executive Officer
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Fax: 000-000-0000
Attention: Co-Chairmen of the Board
Green Equity Investors II, L.P.
By: Grand Avenue Capital Partners, L.P.
By: Grand Avenue Capital Corporation,its
general partner
By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxx
Title:
Xxxxxxx Xxxxx & Partners, L.P.
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Fax: 000-000-0000
Attention: Xxxxxxx X. Annick
/s/ Xxxxxxx Xxxxxx
------------------------------------
Xxxxxxx Xxxxxx
XX0 Xxx 000X
Xxxxxx, XX 00000
Fax: 000-000-0000
-33-
/s/ Xxxxxxx Xxxxx
------------------------------------
Xxxxxxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax: 000-000-0000
-34-
