EXHIBIT 10.11
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into
as of the ___ day of _________, 2005, by and among: International Metal
Enterprises, Inc., a Delaware corporation (the "Company"); and the undersigned
parties listed under Investors on the signature page hereto (each, an "Investor"
and collectively, the "Investors").
WHEREAS, the Investors currently hold all of the issued and outstanding
securities of the Company;
WHEREAS, the Investors and the Company desire to enter into this
Agreement to provide the Investors with certain rights relating to the
registration of shares of Common Stock held by them;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS. The following capitalized terms used herein have the
following meanings:
"Agreement" means this Agreement, as amended, restated,
supplemented, or otherwise modified from time to time.
"Commission" means the Securities and Exchange Commission, or
any other federal agency then administering the Securities Act or the Exchange
Act.
"Common Stock" means the common stock, par value $0.0001 per
share, of the Company.
"Company" is defined in the preamble to this Agreement.
"Demand Registration" is defined in Section 2.1.1.
"Demanding Holder" is defined in Section 2.1.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder,
all as the same shall be in effect at the time.
"Form S-3" is defined in Section 2.3.
"Indemnified Party" is defined in Section 4.3.
"Indemnifying Party" is defined in Section 4.3.
"Investor" is defined in the preamble to this Agreement.
"Investor Indemnified Party" is defined in Section 4.1.
"Maximum Number of Shares" is defined in Section 2.1.4.
"Notices" is defined in Section 6.3.
"Piggy-Back Registration" is defined in Section 2.2.1.
"Register," "registered" and "registration" mean a
registration effected by preparing and filing a registration statement or
similar document in compliance with the requirements of the Securities Act, and
the applicable rules and regulations promulgated thereunder, and such
registration statement becoming effective.
"Registrable Securities" mean all of the shares of Common
Stock owned or held by Investors. Registrable Securities include any warrants,
shares of capital stock or other securities of the Company issued as a dividend
or other distribution with respect to or in exchange for or in replacement of
such shares of Common Stock. As to any particular Registrable Securities, such
securities shall cease to be Registrable Securities when: (a) a Registration
Statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been sold,
transferred, disposed of or exchanged in accordance with such Registration
Statement; (b) such securities shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent public distribution of them
shall not require registration under the Securities Act; (c) such securities
shall have ceased to be outstanding, or (d) the Securities and Exchange
Commission makes a definitive determination to the Company that the Registrable
Securities are salable under Rule 144(k).
"Registration Statement" means a registration statement filed
by the Company with the Commission in compliance with the Securities Act and the
rules and regulations promulgated thereunder for a public offering and sale of
Common Stock (other than a registration statement on Form S-4 or Form S-8, or
their successors, or any registration statement covering only securities
proposed to be issued in exchange for securities or assets of another entity).
"Release Date" means the date on which shares of Common Stock
are disbursed from escrow pursuant to Section 3 of that certain Stock Escrow
Agreement dated as of _______________, 2005 by and among the parties hereto and
Continental Stock Transfer & Trust Company.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder, all as
the same shall be in effect at the time.
"Underwriter" means a securities dealer who purchases any
Registrable Securities as principal in an underwritten offering and not as part
of such dealer's market-making activities.
2. REGISTRATION RIGHTS.
2.1 Demand Registration.
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2.1.1. Request for Registration. At any time and from time
to time on or after the Release Date, the holders of a majority-in-interest of
the Registrable Securities held by the Investors or the transferees of the
Investors, may make a written demand for registration under the Securities Act
of all or part of their Registrable Securities (a "Demand Registration"). Any
demand for a Demand Registration shall specify the number of shares of
Registrable Securities proposed to be sold and the intended method(s) of
distribution thereof. The Company will notify all holders of Registrable
Securities of the demand, and each holder of Registrable Securities who wishes
to include all or a portion of such holder's Registrable Securities in the
Demand Registration (each such holder including shares of Registrable Securities
in such registration, a "Demanding Holder") shall so notify the Company within
fifteen (15) days after the receipt by the holder of the notice from the
Company. Upon any such request, the Demanding Holders shall be entitled to have
their Registrable Securities included in the Demand Registration, subject to
Section 2.1.4 and the provisos set forth in Section 3.1.1. The Company shall not
be obligated to effect more than an aggregate of two (2) Demand Registrations
under this Section 2.1.1 in respect of Registrable Securities.
2.1.2. Effective Registration. A registration will not
count as a Demand Registration until the Registration Statement filed with the
Commission with respect to such Demand Registration has been declared effective
and the Company has complied with all of its obligations under this Agreement
with respect thereto; provided, however, that if, after such Registration
Statement has been declared effective, the offering of Registrable Securities
pursuant to a Demand Registration is interfered with by any stop order or
injunction of the Commission or any other governmental agency or court, the
Registration Statement with respect to such Demand Registration will be deemed
not to have been declared effective, unless and until, (i) such stop order or
injunction is removed, rescinded or otherwise terminated, and (ii) a
majority-in-interest of the Demanding Holders thereafter elect to continue the
offering; provided, further, that the Company shall not be obligated to file a
second Registration Statement until a Registration Statement that has been filed
is counted as a Demand Registration or is terminated.
2.1.3. Underwritten Offering. If a majority-in-interest of
the Demanding Holders so elect and such holders so advise the Company as part of
their written demand for a Demand Registration, the offering of such Registrable
Securities pursuant to such Demand Registration shall be in the form of an
underwritten offering. In such event, the right of any holder to include its
Registrable Securities in such registration shall be conditioned upon such
holder's participation in such underwriting and the inclusion of such holder's
Registrable Securities in the underwriting to the extent provided herein. All
Demanding Holders proposing to distribute their securities through such
underwriting shall enter into an underwriting agreement in customary form with
the Underwriter or Underwriters selected for such underwriting by a
majority-in-interest of the holders initiating the Demand Registration.
2.1.4. Reduction of Offering. If the managing Underwriter
or Underwriters for a Demand Registration that is to be an underwritten offering
advises the Company and the Demanding Holders in writing that the dollar amount
or number of shares of Registrable Securities which the Demanding Holders desire
to sell, taken together with all other
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shares of Common Stock or other securities which the Company desires to sell and
the shares of Common Stock, if any, as to which registration has been requested
pursuant to written contractual piggy-back registration rights held by other
shareholders of the Company who desire to sell, exceeds the maximum dollar
amount or maximum number of shares that can be sold in such offering without
adversely affecting the proposed offering price, the timing, the distribution
method, or the probability of success of such offering (such maximum dollar
amount or maximum number of shares, as applicable, the "Maximum Number of
Shares"), then the Company shall include in such registration: (i) first, the
Registrable Securities as to which Demand Registration has been requested by the
Demanding Holders (pro rata in accordance with the number of shares of
Registrable Securities which such Demanding Holder has requested be included in
such registration, regardless of the number of shares of Registrable Securities
held by each Demanding Holder) that can be sold without exceeding the Maximum
Number of Shares; (ii) second, to the extent that the Maximum Number of Shares
has not been reached under the foregoing clause (i), the shares of Common Stock
or other securities that the Company desires to sell that can be sold without
exceeding the Maximum Number of Shares; (iii) third, to the extent that the
Maximum Number of Shares has not been reached under the foregoing clauses (i)
and (ii), the shares of Common Stock for the account of other persons that the
Company is obligated to register pursuant to written contractual arrangements
with such persons and that can be sold without exceeding the Maximum Number of
Shares; and (v) fourth, to the extent that the Maximum Number of Shares have not
been reached under the foregoing clauses (i), (ii), and (iii), the shares of
Common Stock that other shareholders desire to sell that can be sold without
exceeding the Maximum Number of Shares.
2.1.5. Withdrawal. If a majority-in-interest of the
Demanding Holders disapprove of the terms of any underwriting or are not
entitled to include all of their Registrable Securities in any offering, such
majority-in-interest of the Demanding Holders may elect to withdraw from such
offering by giving written notice to the Company and the Underwriter or
Underwriters of their request to withdraw prior to the effectiveness of the
Registration Statement filed with the Commission with respect to such Demand
Registration. If the majority-in-interest of the Demanding Holders withdraws
from a proposed offering relating to a Demand Registration, then such
registration shall not count as a Demand Registration provided for in Section
2.1.1.
2.2 Piggy-Back Registration.
2.2.1. Piggy-Back Rights. If at any time on or after the
Release Date the Company proposes to file a Registration Statement under the
Securities Act with respect to an offering of equity securities, or securities
or other obligations exercisable or exchangeable for, or convertible into,
equity securities, by the Company for its own account or for shareholders of the
Company for their account (or by the Company and by shareholders of the Company
including, without limitation, pursuant to Section 2.1), other than a
Registration Statement (i) filed in connection with any employee stock option or
other benefit plan, (ii) for an exchange offer or offering of securities solely
to the Company's existing shareholders, (iii) for an offering of debt that is
convertible into equity securities of the Company or (iv) for a dividend
reinvestment plan, then the Company shall (x) give written notice of such
proposed filing to the holders of Registrable Securities as soon as practicable
but in no event less than ten (10) days before the anticipated filing date,
which notice shall describe the amount and type of securities to be
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included in such offering, the intended method(s) of distribution, and the name
of the proposed managing Underwriter or Underwriters, if any, of the offering,
and (y) offer to the holders of Registrable Securities in such notice the
opportunity to register the sale of such number of shares of Registrable
Securities as such holders may request in writing within fifteen (15) days
following receipt of such notice (a "Piggy-Back Registration"). The Company
shall cause such Registrable Securities to be included in such registration and
shall use its best efforts to cause the managing Underwriter or Underwriters of
a proposed underwritten offering to permit the Registrable Securities requested
to be included in a Piggy-Back Registration to be included on the same terms and
conditions as any similar securities of the Company and to permit the sale or
other disposition of such Registrable Securities in accordance with the intended
method(s) of distribution thereof. All holders of Registrable Securities
proposing to distribute their securities through a Piggy-Back Registration that
involves an Underwriter or Underwriters shall enter into an underwriting
agreement in customary form with the Underwriter or Underwriters selected for
such Piggy-Back Registration.
2.2.2. Reduction of Offering. If the managing Underwriter
or Underwriters for a Piggy-Back Registration that is to be an underwritten
offering advises the Company and the holders of Registrable Securities in
writing that the dollar amount or number of shares of Common Stock which the
Company desires to sell, taken together with shares of Common Stock, if any, as
to which registration has been demanded pursuant to written contractual
arrangements with persons other than the holders of Registrable Securities
hereunder, the Registrable Securities as to which registration has been
requested under this Section 2.2, and the shares of Common Stock, if any, as to
which registration has been requested pursuant to the written contractual
piggy-back registration rights of other shareholders of the Company, exceeds the
Maximum Number of Shares, then the Company shall include in any such
registration:
(i) If the registration is undertaken for the
Company's account: (A) first, the shares of Common Stock or other securities
that the Company desires to sell that can be sold without exceeding the Maximum
Number of Shares; (B) second, to the extent that the Maximum Number of Shares
has not been reached under the foregoing clause (A), the shares of Common Stock,
if any, including the Registrable Securities, as to which registration has been
requested pursuant to written contractual piggy-back registration rights of
security holders (pro rata in accordance with the number of shares of Common
Stock which each such person has actually requested to be included in such
registration, regardless of the number of shares of Common Stock with respect to
which such persons have the right to request such inclusion) that can be sold
without exceeding the Maximum Number of Shares; and
(ii) If the registration is a "demand" registration
undertaken at the demand of persons other than the holders of Registrable
Securities pursuant to written contractual arrangements with such persons, (A)
first, the shares of Common Stock for the account of the demanding persons that
can be sold without exceeding the Maximum Number of Shares; (B) second, to the
extent that the Maximum Number of Shares has not been reached under the
foregoing clause (A), the shares of Common Stock or other securities that the
Company desires to sell that can be sold without exceeding the Maximum Number of
Shares; and (C) third, to the extent that the Maximum Number of Shares has not
been reached under the foregoing clauses (A) and (B), the Registrable Securities
as to which registration has been
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requested under this Section 2.2 (pro rata in accordance with the number of
shares of Registrable Securities held by each such holder); and (D) fourth, to
the extent that the Maximum Number of Shares has not been reached under the
foregoing clauses (A), (B) and (C), the shares of Common Stock, if any, as to
which registration has been requested pursuant to written contractual piggy-back
registration rights which other shareholders desire to sell that can be sold
without exceeding the Maximum Number of Shares.
2.2.3. Withdrawal. Any holder of Registrable Securities
may elect to withdraw such holder's request for inclusion of Registrable
Securities in any Piggy-Back Registration by giving written notice to the
Company of such request to withdraw prior to the effectiveness of the
Registration Statement. The Company may also elect to withdraw a registration
statement at any time prior to the effectiveness of the Registration Statement.
Notwithstanding any such withdrawal, the Company shall pay all expenses incurred
by the holders of Registrable Securities in connection with such Piggy-Back
Registration as provided in Section 3.3.
2.3 Registrations on Form S-3. The holders of Registrable
Securities may at any time and from time to time, request in writing that the
Company register the resale of any or all of such Registrable Securities on Form
S-3 or any similar short-form registration which may be available at such time
("Form S-3"); provided, however, that the Company shall not be obligated to
effect such request through an underwritten offering. Upon receipt of such
written request, the Company will promptly give written notice of the proposed
registration to all other holders of Registrable Securities, and, as soon as
practicable thereafter, effect the registration of all or such portion of such
holder's or holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
holder or holders joining in such request as are specified in a written request
given within fifteen (15) days after receipt of such written notice from the
Company; provided, however, that the Company shall not be obligated to effect
any such registration pursuant to this Section 2.3: (i) if Form S-3 is not
available for such offering; or (ii) if the holders of the Registrable
Securities, together with the holders of any other securities of the Company
entitled to inclusion in such registration, propose to sell Registrable
Securities and such other securities (if any) at any aggregate price to the
public of less than $500,000. Registrations effected pursuant to this Section
2.3 shall not be counted as Demand Registrations effected pursuant to Section
2.1.
3. REGISTRATION PROCEDURES.
3.1 Filings; Information. Whenever the Company is required
to effect the registration of any Registrable Securities pursuant to Section 2,
the Company shall use its best efforts to effect the registration and sale of
such Registrable Securities in accordance with the intended method(s) of
distribution thereof as expeditiously as practicable, and in connection with any
such request:
3.1.1. Filing Registration Statement. The Company shall,
as expeditiously as possible and in any event within sixty (60) days after
receipt of a request for a Demand Registration pursuant to Section 2.1, prepare
and file with the Commission a Registration Statement on any form for which the
Company then qualifies or which counsel for the Company shall deem appropriate
and which form shall be available for the sale of all
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Registrable Securities to be registered thereunder in accordance with the
intended method(s) of distribution thereof, and shall use its best efforts to
cause such Registration Statement to become and remain effective for the period
required by Section 3.1.3; provided, however, that the Company shall have the
right to defer any Demand Registration for up to thirty (30) days, and any
Piggy-Back Registration for such period as may be applicable to deferment of any
demand registration to which such Piggy-Back Registration relates, in each case
if the Company shall furnish to the holders a certificate signed by the Chief
Executive Officer of the Company stating that, in the good faith judgment of the
Board of Directors of the Company, it would be materially detrimental to the
Company and its shareholders for such Registration Statement to be effected at
such time; provided further, however, that the Company shall not have the right
to exercise the right set forth in the immediately preceding proviso more than
once in any 365-day period in respect of a Demand Registration hereunder.
3.1.2. Copies. The Company shall, prior to filing a
Registration Statement or prospectus, or any amendment or supplement thereto,
furnish without charge to the holders of Registrable Securities included in such
registration, and such holders' legal counsel, copies of such Registration
Statement as proposed to be filed, each amendment and supplement to such
Registration Statement (in each case including all exhibits thereto and
documents incorporated by reference therein), the prospectus included in such
Registration Statement (including each preliminary prospectus), and such other
documents as the holders of Registrable Securities included in such registration
or legal counsel for any such holders may request in order to facilitate the
disposition of the Registrable Securities owned by such holders.
3.1.3. Amendments and Supplements. The Company shall
prepare and file with the Commission such amendments, including post-effective
amendments, and supplements to such Registration Statement and the prospectus
used in connection therewith as may be necessary to keep such Registration
Statement effective and in compliance with the provisions of the Securities Act
until all Registrable Securities and other securities covered by such
Registration Statement have been disposed of in accordance with the intended
method(s) of distribution set forth in such Registration Statement (which period
shall not exceed the sum of one hundred eighty (180) days plus any period during
which any such disposition is interfered with by any stop order or injunction of
the Commission or any governmental agency or court) or such securities have been
withdrawn.
3.1.4. Notification. After the filing of a Registration
Statement, the Company shall promptly, and in no event more than ten (10)
business days after such filing, notify the holders of Registrable Securities
included in such Registration Statement of such filing, and shall further notify
such holders promptly and confirm such advice in writing in all events within
ten (10) business days of the occurrence of any of the following: (i) when such
Registration Statement becomes effective; (ii) when any post-effective amendment
to such Registration Statement becomes effective; (iii) the issuance or
threatened issuance by the Commission of any stop order (and the Company shall
take all actions required to prevent the entry of such stop order or to remove
it if entered); and (iv) any request by the Commission for any amendment or
supplement to such Registration Statement or any prospectus relating thereto or
for additional information or of the occurrence of an event requiring the
preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of the securities covered by such
Registration Statement, such prospectus will not contain an untrue
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statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
promptly make available to the holders of Registrable Securities included in
such Registration Statement any such supplement or amendment; except that before
filing with the Commission a Registration Statement or prospectus or any
amendment or supplement thereto, including documents incorporated by reference,
the Company shall furnish to the holders of Registrable Securities included in
such Registration Statement and to the legal counsel for any such holders,
copies of all such documents proposed to be filed sufficiently in advance of
filing to provide such holders and legal counsel with a reasonable opportunity
to review such documents and comment thereon, and the Company shall not file any
Registration Statement or prospectus or amendment or supplement thereto,
including documents incorporated by reference, to which such holders or their
legal counsel shall object.
3.1.5. State Securities Laws Compliance. The Company shall
use its best efforts to (i) register or qualify the Registrable Securities
covered by the Registration Statement under such securities or "blue sky" laws
of such jurisdictions in the United States as the holders of Registrable
Securities included in such Registration Statement (in light of their intended
plan of distribution) may request and (ii) take such action necessary to cause
such Registrable Securities covered by the Registration Statement to be
registered with or approved by such other Governmental Authorities as may be
necessary by virtue of the business and operations of the Company and do any and
all other acts and things that may be necessary or advisable to enable the
holders of Registrable Securities included in such Registration Statement to
consummate the disposition of such Registrable Securities in such jurisdictions;
provided, however, that the Company shall not be required to qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this paragraph (e) or subject itself to taxation in any such
jurisdiction.
3.1.6. Agreements for Disposition. The Company shall enter
into customary agreements (including, if applicable, an underwriting agreement
in customary form) and take such other actions as are reasonably required in
order to expedite or facilitate the disposition of such Registrable Securities.
The representations, warranties and covenants of the Company in any underwriting
agreement which are made to or for the benefit of any Underwriters, to the
extent applicable, shall also be made to and for the benefit of the holders of
Registrable Securities included in such registration statement. No holder of
Registrable Securities included in such registration statement shall be required
to make any representations or warranties in the underwriting agreement except,
if applicable, with respect to such holder's organization, good standing,
authority, title to Registrable Securities, lack of conflict of such sale with
such holder's material agreements and organizational documents, and with respect
to written information relating to such holder that such holder has furnished in
writing expressly for inclusion in such Registration Statement.
3.1.7. Cooperation. The principal executive officer of the
Company, the principal financial officer of the Company, the principal
accounting officer of the Company and all other officers and members of the
management of the Company shall cooperate fully in any offering of Registrable
Securities hereunder, which cooperation shall include, without limitation, the
preparation of the Registration Statement with respect to such offering and all
other offering materials and related documents, and participation in meetings
with Underwriters, attorneys, accountants and potential investors.
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3.1.8. Records. The Company shall make available for
inspection by the holders of Registrable Securities included in such
Registration Statement, any Underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant or other
professional retained by any holder of Registrable Securities included in such
Registration Statement or any Underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, as shall be
necessary to enable them to exercise their due diligence responsibility, and
cause the Company's officers, directors and employees to supply all information
requested by any of them in connection with such Registration Statement.
3.1.9. Opinions and Comfort Letters. The Company shall
furnish to each holder of Registrable Securities included in any Registration
Statement a signed counterpart, addressed to such holder, of (i) any opinion of
counsel to the Company delivered to any Underwriter and (ii) any comfort letter
from the Company's independent public accountants delivered to any Underwriter.
In the event no legal opinion is delivered to any Underwriter, the Company shall
furnish to each holder of Registrable Securities included in such Registration
Statement, at any time that such holder elects to use a prospectus, an opinion
of counsel to the Company to the effect that the Registration Statement
containing such prospectus has been declared effective and that no stop order is
in effect.
3.1.10. Earnings Statement. The Company shall comply with
all applicable rules and regulations of the Commission and the Securities Act,
and make available to its shareholders, as soon as practicable, an earnings
statement covering a period of twelve (12) months, beginning within three (3)
months after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder.
3.1.11. Listing. The Company shall use its best efforts to
cause all Registrable Securities included in any registration to be listed on
such exchanges or otherwise designated for trading in the same manner as similar
securities issued by the Company are then listed or designated or, if no such
similar securities are then listed or designated, in a manner satisfactory to
the holders of a majority of the Registrable Securities included in such
registration.
3.2 Obligation to Suspend Distribution. Upon receipt of
any notice from the Company of the happening of any event of the kind described
in Section 3.1.4(iv), or, in the case of a resale registration on Form S-3
pursuant to Section 2.3 hereof, upon any suspension by the Company, pursuant to
a written xxxxxxx xxxxxxx compliance program adopted by the Company's Board of
Directors, of the ability of all "insiders" covered by such program to transact
in the Company's securities because of the existence of material non-public
information, each holder of Registrable Securities included in any registration
shall immediately discontinue disposition of such Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such holder receives the supplemented or amended prospectus contemplated
by Section 3.1.4(iv) or the restriction on the ability of "insiders" to transact
in the Company's securities is removed, as applicable, and, if so directed by
the Company, each such holder will deliver to the Company all copies, other than
permanent file copies then in such holder's
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possession, of the most recent prospectus covering such Registrable Securities
at the time of receipt of such notice.
3.3 Registration Expenses. The Company shall bear all costs
and expenses incurred in connection with any Demand Registration pursuant to
Section 2.1, any Piggy-Back Registration pursuant to Section 2.2, and any
registration on Form S-3 effected pursuant to Section 2.3, and all expenses
incurred in performing or complying with its other obligations under this
Agreement, whether or not the Registration Statement becomes effective,
including, without limitation: (i) all registration and filing fees; (ii) fees
and expenses of compliance with securities or "blue sky" laws (including fees
and disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities); (iii) printing expenses; (iv) the Company's internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees); (v) the fees and expenses incurred in connection with
the listing of the Registrable Securities as required by Section 3.1.11; (vi)
National Association of Securities Dealers, Inc. fees; (vii) fees and
disbursements of counsel for the Company and fees and expenses for independent
certified public accountants retained by the Company (including the expenses or
costs associated with the delivery of any opinions or comfort letters requested
pursuant to Section 3.1.9); (viii) the fees and expenses of any special experts
retained by the Company in connection with such registration and (ix) the fees
and expenses of one legal counsel selected by the holders of a
majority-in-interest of the Registrable Securities included in such
registration. The Company shall have no obligation to pay any underwriting
discounts or selling commissions attributable to the Registrable Securities
being sold by the holders thereof, which underwriting discounts or selling
commissions shall be borne by such holders. Additionally, in an underwritten
offering, all selling shareholders and the Company shall bear the expenses of
the underwriter pro rata in proportion to the respective amount of shares each
is selling in such offering.
3.4 Information. The holders of Registrable Securities shall
provide such information as may reasonably be requested by the Company, or the
managing Underwriter, if any, in connection with the preparation of any
Registration Statement, including amendments and supplements thereto, in order
to effect the registration of any Registrable Securities under the Securities
Act pursuant to Section 2 and in connection with the Company's obligation to
comply with federal and applicable state securities laws.
4. INDEMNIFICATION AND CONTRIBUTION.
4.1 Indemnification by the Company. The Company agrees to
indemnify and hold harmless each Investor and each other holder of Registrable
Securities, and each of their respective officers, employees, affiliates,
directors, partners, members, attorneys and agents, and each person, if any, who
controls an Investor and each other holder of Registrable Securities (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
(each, an "Investor Indemnified Party"), from and against any expenses, losses,
judgments, claims, damages or liabilities, whether joint or several, arising out
of or based upon any untrue statement (or allegedly untrue statement) of a
material fact contained in any Registration Statement under which the sale of
such Registrable Securities was registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained in the
Registration Statement, or any amendment or supplement to such Registration
Statement, or
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arising out of or based upon any omission (or alleged omission) to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of the Securities Act or
any rule or regulation promulgated thereunder applicable to the Company and
relating to action or inaction required of the Company in connection with any
such registration; and the Company shall promptly reimburse the Investor
Indemnified Party for any legal and any other expenses reasonably incurred by
such Investor Indemnified Party in connection with investigating and defending
any such expense, loss, judgment, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the extent that
any such expense, loss, claim, damage or liability arises out of or is based
upon any untrue statement or allegedly untrue statement or omission or alleged
omission made in such Registration Statement, preliminary prospectus, final
prospectus, or summary prospectus, or any such amendment or supplement, in
reliance upon and in conformity with information furnished to the Company, in
writing, by such selling holder expressly for use therein. The Company also
shall indemnify any Underwriter of the Registrable Securities, their officers,
affiliates, directors, partners, members and agents and each person who controls
such Underwriter on substantially the same basis as that of the indemnification
provided above in this Section 4.1.
4.2 Indemnification by Holders of Registrable Securities. Each
selling holder of Registrable Securities will, in the event that any
registration is being effected under the Securities Act pursuant to this
Agreement of any Registrable Securities held by such selling holder, indemnify
and hold harmless the Company, each of its directors and officers and each
underwriter (if any), and each other person, if any, who controls such selling
holder or such underwriter within the meaning of the Securities Act, against any
losses, claims, judgments, damages or liabilities, whether joint or several,
insofar as such losses, claims, judgments, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or
allegedly untrue statement of a material fact contained in any Registration
Statement under which the sale of such Registrable Securities was registered
under the Securities Act, any preliminary prospectus, final prospectus or
summary prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement, or arise out of or are based upon any
omission or the alleged omission to state a material fact required to be stated
therein or necessary to make the statement therein not misleading, if the
statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company by such selling holder expressly
for use therein, and shall reimburse the Company, its directors and officers,
and each such controlling person for any legal or other expenses reasonably
incurred by any of them in connection with investigation or defending any such
loss, claim, damage, liability or action. Each selling holder's indemnification
obligations hereunder shall be several and not joint and shall be limited to the
amount of any net proceeds actually received by such selling holder.
4.3 Conduct of Indemnification Proceedings. Promptly after
receipt by any person of any notice of any loss, claim, damage or liability or
any action in respect of which indemnity may be sought pursuant to Section 4.1
or 4.2, such person (the "Indemnified Party") shall, if a claim in respect
thereof is to be made against any other person for indemnification hereunder,
notify such other person (the "Indemnifying Party") in writing of the loss,
claim, judgment, damage, liability or action; provided, however, that the
failure by the Indemnified Party to notify the Indemnifying Party shall not
relieve the Indemnifying Party from any liability
11
which the Indemnifying Party may have to such Indemnified Party hereunder,
except and solely to the extent the Indemnifying Party is actually prejudiced by
such failure. If the Indemnified Party is seeking indemnification with respect
to any claim or action brought against the Indemnified Party, then the
Indemnifying Party shall be entitled to participate in such claim or action,
and, to the extent that it wishes, jointly with all other Indemnifying Parties,
to assume control of the defense thereof with counsel satisfactory to the
Indemnified Party. After notice from the Indemnifying Party to the Indemnified
Party of its election to assume control of the defense of such claim or action,
the Indemnifying Party shall not be liable to the Indemnified Party for any
legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that in any action in which both the
Indemnified Party and the Indemnifying Party are named as defendants, the
Indemnified Party shall have the right to employ separate counsel (but no more
than one such separate counsel) to represent the Indemnified Party and its
controlling persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Indemnified Party against the
Indemnifying Party, with the fees and expenses of such counsel to be paid by
such Indemnifying Party if, based upon the written opinion of counsel of such
Indemnified Party, representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, consent to entry of judgment or effect any settlement of any claim or
pending or threatened proceeding in respect of which the Indemnified Party is or
could have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such judgment or settlement includes an unconditional
release of such Indemnified Party from all liability arising out of such claim
or proceeding.
4.4 Contribution.
4.4.1. If the indemnification provided for in the
foregoing Sections 4.1, 4.2 and 4.3 is unavailable to any Indemnified Party in
respect of any loss, claim, damage, liability or action referred to herein, then
each such Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such loss, claim, damage, liability or action in such proportion as is
appropriate to reflect the relative fault of the Indemnified Parties and the
Indemnifying Parties in connection with the actions or omissions which resulted
in such loss, claim, damage, liability or action, as well as any other relevant
equitable considerations. The relative fault of any Indemnified Party and any
Indemnifying Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such Indemnified Party or such Indemnifying Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
4.4.2. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 4.4 were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
Section 4.4.1. The amount paid or payable by an Indemnified Party as a result of
any loss, claim, damage, liability or action referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other
12
expenses incurred by such Indemnified Party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 4.4, no holder of Registrable Securities shall be required to contribute
any amount in excess of the dollar amount of the net proceeds (after payment of
any underwriting fees, discounts, commissions or taxes) actually received by
such holder from the sale of Registrable Securities which gave rise to such
contribution obligation. 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.
5. UNDERWRITING AND DISTRIBUTION.
5.1 Rule 144. The Company covenants that it shall file any
reports required to be filed by it under the Securities Act and the Exchange Act
and shall take such further action as the holders of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
holders to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144 under the
Securities Act, as such Rules may be amended from time to time, or any similar
Rule or regulation hereafter adopted by the Commission.
6. MISCELLANEOUS.
6.1 Other Registration Rights. The Company represents and
warrants that no person, other than a holder of the Registrable Securities or
the Purchase Option Holders, has any right to require the Company to register
any shares of the Company's capital stock for sale or to include shares of the
Company's capital stock in any registration filed by the Company for the sale of
shares of capital stock for its own account or for the account of any other
person.
6.2 Assignment; No Third Party Beneficiaries. This Agreement
and the rights, duties and obligations of the Company hereunder may not be
assigned or delegated by the Company in whole or in part. This Agreement and the
rights, duties and obligations of the holders of Registrable Securities
hereunder may be freely assigned or delegated by such holder of Registrable
Securities in conjunction with and to the extent of any transfer of Registrable
Securities by any such holder. This Agreement and the provisions hereof shall be
binding upon and shall inure to the benefit of each of the parties and their
respective successors and the permitted assigns of the Investor or holder of
Registrable Securities or of any assignee of the Investor or holder of
Registrable Securities. This Agreement is not intended to confer any rights or
benefits on any persons that are not party hereto other than as expressly set
forth in Article 4 and this Section 6.2.
6.3 Notices. All notices, demands, requests, consents,
approvals or other communications (collectively, "Notices") required or
permitted to be given hereunder or which are given with respect to this
Agreement shall be in writing and shall be personally served, delivered by
reputable air courier service with charges prepaid, or transmitted by hand
delivery, telegram, telex or facsimile, addressed as set forth below, or to such
other address as such party shall have specified most recently by written
notice. Notice shall be deemed given on the date of service or transmission if
personally served or transmitted by telegram, telex or facsimile; provided, that
if such service or transmission is not on a business day or is after normal
business
13
hours, then such notice shall be deemed given on the next business day. Notice
otherwise sent as provided herein shall be deemed given on the next business day
following timely delivery of such notice to a reputable air courier service with
an order for next-day delivery.
To the Company:
International Metal Enterprises, Inc.
0 Xxxx Xxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
with a copy to:
Xxxxxxx Xxxxxx & Xxxx LLP
2 Grand Central Tower
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxx, Esq.; and
Xxxxxxxx Xxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxx
To an Investor, to:
Xxxx Xxxxxxxxxx ; or
Xxxxxxx Xxxxxxxxxx ; or
Xxxxxx Xxxxxxxxxx ; or
Xxxxxxx Xxxxxxxxxx ; or
Xxxxx Xxxxxxxxxx ; or
Xxx Xxxxxxx ; or
14
with a copy to:
Xxxxxxx Xxxxxx & Xxxx LLP
2 Grand Central Tower
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxx, Esq.;
6.4 Severability. This Agreement shall be deemed severable,
and the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term or
provision hereof. Furthermore, in lieu of any such invalid or unenforceable term
or provision, the parties hereto intend that there shall be added as a part of
this Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be possible and be valid and enforceable.
6.5 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument.
6.6 Entire Agreement. This Agreement (including all agreements
entered into pursuant hereto and all certificates and instruments delivered
pursuant hereto and thereto) constitute the entire agreement of the parties with
respect to the subject matter hereof and supersede all prior and contemporaneous
agreements, representations, understandings, negotiations and discussions
between the parties, whether oral or written.
6.7 Modifications and Amendments. No amendment, modification
or termination of this Agreement shall be binding upon any party unless executed
in writing by such party.
6.8 Titles and Headings. Titles and headings of sections of
this Agreement are for convenience only and shall not affect the construction of
any provision of this Agreement.
6.9 Waivers and Extensions. Any party to this Agreement may
waive any right, breach or default which such party has the right to waive,
provided that such waiver will not be effective against the waiving party unless
it is in writing, is signed by such party, and specifically refers to this
Agreement. Waivers may be made in advance or after the right waived has arisen
or the breach or default waived has occurred. Any waiver may be conditional. No
waiver of any breach of any agreement or provision herein contained shall be
deemed a waiver of any preceding or succeeding breach thereof nor of any other
agreement or provision herein contained. No waiver or extension of time for
performance of any obligations or acts shall be deemed a waiver or extension of
the time for performance of any other obligations or acts.
6.10 Remedies Cumulative. In the event that the Company fails
to observe or perform any covenant or agreement to be observed or performed
under this Agreement, the Investor or any other holder of Registrable Securities
may proceed to protect and enforce its rights by suit in equity or action at
law, whether for specific performance of any term contained in this Agreement or
for an injunction against the breach of any such term or in aid of the
15
exercise of any power granted in this Agreement or to enforce any other legal or
equitable right, or to take any one or more of such actions, without being
required to post a bond. None of the rights, powers or remedies conferred under
this Agreement shall be mutually exclusive, and each such right, power or remedy
shall be cumulative and in addition to any other right, power or remedy, whether
conferred by this Agreement or now or hereafter available at law, in equity, by
statute or otherwise.
6.11 Governing Law. This Agreement shall be governed by,
interpreted under, and construed in accordance with the internal laws of the
State of New York applicable to agreements made and to be performed within the
State of New York, without giving effect to any choice-of-law provisions thereof
that would compel the application of the substantive laws of any other
jurisdiction.
6.12 Waiver of Trial by Jury. Each party hereby irrevocably
and unconditionally waives the right to a trial by jury in any action, suit,
counterclaim or other proceeding (whether based on contract, tort or otherwise)
arising out of, connected with or relating to this Agreement, the transactions
contemplated hereby, or the actions of the Investor in the negotiation,
administration, performance or enforcement hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
16
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be executed and delivered by their duly authorized representatives
as of the date first written above.
INTERNATIONAL METAL
ENTERPRISES, INC.
A Delaware corporation
By:
---------------------------
Xxxx Xxxxxxxxxx, CEO
INVESTORS:
---------------------------
Xxxx Xxxxxxxxxx
---------------------------
Xxxxxxx Xxxxxxxxxx
---------------------------
Xxxxxx Xxxxxxxxxx
---------------------------
Xxxxxxx Xxxxxxxxxx
---------------------------
Xxxxx Xxxxxxxxxx
---------------------------
Xxx Xxxxxxx
17
