Exhibit 99.4
WARRANTHOLDERS RIGHTS AGREEMENT
WARRANTHOLDERS RIGHTS AGREEMENT dated as of June 27, 1997 among Pumpkin
Ltd., a Delaware corporation (together with its successors, "the Company"),
Pumpkin Masters Holdings, Inc., a Delaware corporation (together with its
successors, "Holdings"), Security Capital Corporation (together with its
successors, "Security Capital"), Pumpkin Ltd. d/b/a Pumpkin Masters, Inc.
(the "Management Stockholder"), and NationsCredit Commercial Corporation
("NationsCredit") (Holdings together with any other holder of Conversion
Shares (as defined herein) and such other stockholders of the Company as may,
from time to time, become parties to this Agreement in accordance with the
provisions hereof, the "Company Stockholders"; NationsCredit and such other
warrantholders as may, from time to time, become parties to this Agreement in
accordance with the provisions hereof, the "Warrantholders"; and Security
Capital together with the Management Stockholder any such other stockholders
of Holdings as may, from time to time, become parties to this Agreement in
accordance with the provisions hereof, the "Holdings Stockholders").
WHEREAS on the date hereof, Holdings purchased from the Company and is
the beneficial owner of 855 shares of Company Common Stock (as defined
herein), and NationsCredit purchased and is the beneficial owner of the
Warrants (as defined herein) to purchase 100 shares of Company Non-Voting
Common Stock (as defined herein); and
WHEREAS the Company and each Company Stockholder (other than the holders
of the Conversion Shares) wish to provide to the Warrantholders and the
holders of the Conversion Shares the rights described herein;
NOW THEREFORE the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. Unless otherwise defined herein, the
following terms used in this Agreement shall have the meanings specified
below.
"Affiliate" means, with respect to any Person, any of (i) a director or
executive officer of such Person, (ii) a spouse, parent, sibling or descendant
of such Person (or a spouse, parent, sibling or descendant of any director or
executive officer
of such Person) and (iii) any other Person that, directly or indirectly,
controls, or is controlled by or is under common control with such Person.
For the purpose of this definition, "control" (including the terms
"controlling", "controlled by" and "under common control with"), as used with
respect to any Person, means 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
agency or otherwise.
"Asset Purchase Agreement" means the Asset Purchase Agreement, dated as
of June 27, 1997, among the Management Stockholder, the Company, Holdings and
Security Capital.
"BHC Act" means the Bank Holding Company Act of 1956, as amended.
"Commission" means the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
"Company Common Stock" means the Company Voting Common Stock or the
Company Non-Voting Common Stock, or both, as the context may require.
"Company Initial Public Offering" means the registration of an
underwritten offering of shares of Company Common Stock under the Securities
Act which becomes effective (other than by a registration on Form X-0, X-0,
X-00 or S-15 or any successor or similar forms).
"Company Non-Voting Common Stock" means the Class B common stock, par
value $0.01 per share, of the Company.
"Company Stockholders" has the meaning set forth in the introductory
paragraph.
"Company Voting Common Stock" means the Class A common stock, par value
$0.01 per share, of the Company.
"Conversion Shares" means (i) any shares of Company Non-Voting Common
Stock or other securities of the Company issued upon the exercise of any
Warrants and (ii) any securities issued with respect to any of such shares or
other securities referred to in clause (i) upon the conversion thereof into
other securities (including Company Voting Common Stock) or by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise;
provided that any of such
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securities shall cease to be Conversion Shares when
such securities shall have (x) been disposed of pursuant to a Public Sale or
(y) ceased to be outstanding.
"Credit Agreement" means the Credit Agreement dated as of June 27, 1997
among the Company, Holdings, the lenders named therein and NationsCredit, as
Agent, as amended from time to time.
"Exchange Act" means the Securities Exchange Act of 1934, or any
successor Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Exchange Act of 1934 shall include a
reference to the comparable section, if any, of any such successor Federal
statute.
"NationsCredit" has the meaning set forth in the introductory paragraph.
"Holdings Common Stock" means the common stock, par value $0.01 per
share, of Holdings.
"Holdings Initial Public Offering" means the registration of an
underwritten offering of shares of Holdings Common Stock under the Securities
Act which becomes effective (other than by a registration on Form X-0, X-0,
X-00 or S-15 or any successor or similar forms).
"Holdings Stockholder" has the meaning set forth in the introductory
paragraph.
"Initiating Holders" has the meaning set forth in Section 3.01 hereof.
"Management Stockholders" has the meaning set forth in the introductory
paragraph.
"Other Shares" has the meaning set forth in Section 3.01.
"Person" means a corporation, an association, a partnership, a limited
liability company, an organization, a business, an individual, a government
or a subdivision thereof or a governmental agency.
"Public Sale" means any sale of securities of the Company or Holdings (as
applicable) to the public pursuant to an offering registered under the
Securities Act or to the public through a broker, dealer or market maker
pursuant to the provisions of Rule 144 (or any successor provision then in
effect) adopted under the Securities Act.
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"Registrable Securities" means any Conversion Shares until the date (if
any) on which such Conversion Shares shall have been transferred or exchanged
and new certificates for them not bearing a legend restricting further
transfer shall have been delivered by the Company and subsequent disposition
of them shall not require registration or qualification of them under the
Securities Act or any similar state law then in force.
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with Sections 3.1 through 3.5 hereof, including
(i) all registration, filing and NASD fees, (ii) all fees and expenses of
complying with securities or blue sky laws, (iii) all word processing,
duplicating and printing expenses, (iv) all messenger and delivery expenses,
(v) the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of any special audits
or "cold comfort" letters required by or incident to such performance and
compliance, (vi) the fees and disbursements of any one counsel retained by
the holder or holders of more than 50% of the Registrable Securities being
registered (or, in the case of any registration effected pursuant to Section
3.01, as the Initiating Holders shall have selected to represent all holders
of the Registrable Securities being registered), (vii) premiums and other
costs of policies of insurance (if any) against liabilities arising out of
the public offering of the Registrable Securities being registered if the
Company desires such insurance and (viii) any fees and disbursements of
underwriters customarily paid by issuers of securities, but not including
underwriting discounts and commissions and transfer taxes, if any, provided
that, in any case where Registration Expenses are not to be borne by the
Company, such expenses shall not include (i) salaries of the Company's
personnel or general overhead expenses of the Company,(ii) auditing fees,
(iii) premiums or other expenses relating to liability insurance required by
underwriters of the Company or (iv) other expenses for the preparation of
financial statements or other data, to the extent that any of the foregoing
either is normally prepared by the Company in the ordinary course of its
business or would have been incurred by the Company had no public offering
taken place.
"Regulation Y Holder" means any Warrant Securityholder that has
identified itself to the Company as a bank holding company within the meaning
of the BHC Act, or a subsidiary thereof subject to Regulation Y under the BHC
Act. The Company acknowledges that NationsCredit has identified itself to the
Company as a "Regulation Y Holder".
"Regulatory Change" means, with respect to any Regulation Y Holder, (i) any
change on or after the date hereof in United States federal or state or foreign
laws or regulations (including the BHC Act and Regulation Y thereunder); (ii)
the adoption on or after the date hereof of any interpretation or ruling
applying to a class
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of Persons including such Regulation Y Holder under any United States federal
or state or foreign laws or regulations by any court or governmental or
regulatory authority charged with the interpretation or administration
thereof; or (iii) the modification on or after the date hereof of any
agreement or commitment known to the Company of any such governmental or
regulatory authority that is applicable to or binding upon such Regulation Y
Holder.
"Restricted Securities" means the Warrants, the Conversion Shares and any
securities obtained upon exchange for or upon conversion or transfer of or as
a distribution on Warrants, the Conversion Shares or any such securities;
provided that particular securities shall cease to be Restricted Securities
when such securities shall have (x) been disposed of pursuant to a Public
Sale, (y) been otherwise transferred or exchanged and new certificates for
them not bearing a legend restricting further transfer shall have been
delivered by the Company, and subsequent disposition of them shall not
require registration or qualification of them under the Securities Act or any
similar state law then in force or (z) ceased to be outstanding. Whenever
any particular securities cease to be Restricted Securities, the holder
thereof shall be entitled to receive from the issuer thereof or its transfer
agent, without expense (other than transfer taxes, if any), new securities of
like tenor not bearing a legend of the character set forth in Section 2.02.
"Securities Act" means the Securities Act of 1933, or any similar Federal
statute, and the rules and regulations of the Commission thereunder, all as
the same shall be in effect at the time. Reference to a particular section
of the Securities Act of 1933 shall include a reference to the comparable
section, if any, of any such similar Federal statute.
"Security Capital" has the meaning set forth in the introductory
paragraph.
"Warrant Securityholder" means at any time any Warrantholder or any
holder of Conversion Shares.
"Warrantholders" has the meaning set forth in the introductory paragraph
(and for purposes of Section 2.08 shall include any Person that held Warrants
that were redeemed pursuant to Section 5.03 of the Warrants).
"Warrants" means the Warrant or Warrants originally issued to
NationsCredit, as such Warrants may be transferred or otherwise assigned, but
only to the extent not theretofore exercised, redeemed or expired in
accordance with their respective terms.
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All references herein to "days" shall mean calendar days unless otherwise
specified.
ARTICLE II
TRANSFER OF SHARES;
PAYMENTS TO WARRANT SECURITYHOLDERS
SECTION 2.01 General. (a) Except as otherwise provided in this
Agreement, any other applicable agreement or by law, each Company Stockholder
may transfer its shares of Company Common Stock at any time to any Person.
(b) Except as otherwise provided in this Agreement, any other applicable
agreement or by law, each Holdings Stockholder may transfer its shares of
Holdings Common Stock at any time to any Person.
SECTION 2.02 Restrictions on Transfer; Legend on Certificates. (a)
Except as otherwise provided in this Agreement, Restricted Securities shall
not be transferable except (i) pursuant to an effective registration
statement under the Securities Act, (ii) pursuant to Rule 144 or 144A (or any
successor provisions) under the Securities Act or (iii) pursuant to a
transaction that is otherwise exempt from the registration requirements of
the Securities Act.
(b) Unless otherwise expressly provided herein, each certificate for
Restricted Securities and each certificate issued in exchange for or upon
transfer of any thereof shall be stamped or otherwise imprinted with a legend
in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR OFFERED FOR SALE
UNLESS REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS
OR UNLESS IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER
THEREOF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO AND HAVE THE BENEFIT OF
A WARRANTHOLDERS RIGHTS AGREEMENT DATED AS OF JUNE 27, 1997 AMONG PUMPKIN
LTD., PUMPKIN MASTERS HOLDINGS, INC. AND THE STOCKHOLDERS AND
WARRANTHOLDERS PARTIES THERETO, COPIES OF WHICH ARE ON FILE WITH PUMPKIN
LTD."
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(c) Any other provision of this Agreement to the contrary
notwithstanding, no transfer of any Restricted Securities other than pursuant
to a Public Sale may be made to any Person unless such Person shall have
agreed in writing that such Person, as a holder of Restricted Securities, and
the Restricted Securities it acquires shall be bound by and be entitled to
the benefits of all the provisions of this Agreement applicable to such
Restricted Securities (and upon such agreement such Person shall be bound by
this Agreement and shall be entitled to such benefits). Any purported
transfer of Restricted Securities without compliance with the applicable
provisions of this Agreement shall be void and of no effect, and the
purported transferee shall have no rights as a Warrantholder or Company
Stockholder or under this Agreement. In the event of such non-complying
transfer, the Company shall not transfer any such Restricted Securities on
its books or recognize the purported transferee as a shareholder or
warrantholder, as the case may be, for any purpose, unless and until all
applicable provisions of this Agreement have been complied with.
SECTION 2.03 Permitted Transfers. The restrictions on transfer provided
in Section 2.02(a) shall not be applicable to (i) any transfer in compliance
with federal and all applicable state securities laws to an Affiliate of the
holder of Restricted Securities, from an Affiliate of such holder to such
holder or between Affiliates of such holder (provided that if any such
Affiliate to whom shares of Restricted Securities have been transferred by a
holder thereof ceases to be an Affiliate of such holder of Restricted
Securities, such Restricted Securities shall immediately be transferred back
to the transferor thereof) or, (ii) any transfer upon the death of any holder
of Restricted Securities to such holder's executors, administrators or
testamentary trustees, (iii) any transfer to a trust the beneficiaries of
which include only the holder of such Restricted Securities or such holder's
spouse, parents, siblings or descendants ( any transferee referred to in (i),
(ii) or (iii) above being referred to herein as a "Permitted Transferee");
provided that no such transfer shall be made to any Permitted Transferee
unless such Permitted Transferee shall have agreed in writing that such
Permitted Transferee, as a Company Stockholder or Warrantholder (as the case
may be), and the shares of Company Common Stock or Warrants it acquires shall
be bound by and be entitled to the benefits of all the provisions of this
Agreement applicable to Company Common Stock or Warrants (as the case may
be), and upon such agreement such Permitted Transferee shall be entitled to
such benefits.
SECTION 2.04 Tag-Along Rights. (a) If Holdings or any Company
Stockholder (any such Person for purposes of this Section 2.04(a), the
"Transferor") wishes to transfer its shares of Company Common Stock or any
portion thereof to any Person (the "Transferee"), the Transferor shall first
give to the Company and each Warrant Securityholder (pursuant to a list
provided by the Company) a written notice (a "Transfer Notice"), executed by
it and the Transferee and containing (i)
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the number of shares of Company Common Stock that the Transferee proposes to
acquire from the Transferor, (ii) the name and address of the Transferee,
(iii) the proposed purchase price, terms of payment and other material terms
and conditions of such proposed transfer, (iv) an estimate, in the
Transferor's reasonable judgment, of the fair market value of any non-cash
consideration offered by the Transferee and (v) an offer by the Transferee or
Transferor to purchase, upon the purchase by the Transferee of any shares of
Company Common Stock owned by the Transferor and for the same per share
consideration, that number of Conversion Shares (or if such number is not an
integral number, the next integral number which is greater than such number)
of each Warrant Securityholder which shall be the product of (x) the
aggregate number of Conversion Shares either then owned, or issuable upon
exercise of Warrants then owned, by such Warrant Securityholder and (y) a
fraction, the numerator of which shall be the number of shares of Company
Common Stock indicated in the Transfer Notice as subject to purchase by the
Transferee from the Transferor and the denominator of which shall be the sum
of (A) the total number of shares of Company Common Stock then owned by the
Transferor plus (B) the total number of Conversion Shares either then owned,
or issuable upon exercise of Warrants then owned, by each Warrant
Securityholder. Each Warrant Securityholder shall have the right, for a
period of 20 days after the Transfer Notice is given, to accept such offer in
whole or in part, exercisable by delivering a written notice to the
Transferor and the Company within such 20-day period, stating therein the
number of shares of Company Common Stock (which may be the number of shares
set forth in the offer by the Transferor or Transferee, as the case may be,
or a portion thereof) to be sold by such Warrant Securityholder to the
Transferor or Transferee, as the case may be. Prior to the earlier of (x) the
end of such 20-day period or (y) the acceptance or rejection by each Warrant
Securityholder of the Transferee's or Transferor's offer, as the case may be,
the Transferor will not complete any sale of shares of Company Common Stock
to the Transferee. Thereafter, for a period of 60 days after the prohibition
under the preceding sentence shall have terminated, the Transferor may sell
to the Transferee for the consideration stated and on the terms set forth in
the Transfer Notice up to the number of shares of Company Common Stock stated
in the Transfer Notice as subject to purchase by the Transferee, provided
that the Transferor or Transferee, as the case may be, shall simultaneously
purchase the number of shares of Company Common Stock as calculated above
from those Warrant Securityholders who have accepted the Transferor's or
Transferee's offer, as the case may be. The provisions of this Section
2.04(a) shall not apply to transfers between the Transferor and any of its
Affiliates or between Affiliates of the Transferor.
(b) If Security Capital or any Management Stockholder (any such Person
for purposes of this Section 2.04(b), the "Transferor") wishes to transfer
its shares of Holdings Common Stock or any portion thereof to any Person (the
"Transferee"), the Transferor shall first give to Holdings and each Warrant
Securityholder (pursuant
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to a list provided by the Company) a written notice (a "Transfer Notice"),
executed by it and containing (i) the number of shares of Holdings Common
Stock that the Transferee proposes to acquire from the Transferor, (ii) the
name and address of the Transferee, (iii) the proposed purchase price, terms
of payment and other material terms and conditions of such proposed transfer
and (iv) an estimate, in the Transferor's reasonable judgment, of the fair
market value of any non-cash consideration offered by the Transferee. Each
Warrant Securityholder shall have the right, in accordance with the terms of
the Warrants, to require the Company to redeem the Warrants held by such
Warrant Securityholder and the Transferor shall not consummate the transfer
set forth in the Transfer Notice unless, contemporaneously with the
consummation of such transfer, the Company shall effect such redemption. The
provisions of this Section 2.04(b) shall not apply to transfers between the
Transferor and any of its Affiliates or between Affiliates of the Transferor.
SECTION 2.05 Drag-Along Rights. (a) If at any time prior to a Company
Initial Public Offering, Holdings or any Company Stockholder (any such Person
for purposes of this Section 2.05(a), the "Transferor") wishes to transfer
all of the shares of Company Common Stock owned by it (provided that such
shares of Company Common Stock constitute more than 50% of all shares of
Company Common Stock on a Fully Diluted Basis (as defined in the Warrants) at
such time) in a bona fide sale to any Person (the "Proposed Transferee")
pursuant to which the consideration to be paid by the Proposed Transferee
consists solely of cash and freely tradeable securities with an active public
market and the Transferor will not receive, in connection with the
transactions contemplated at the time of such transfer, any other securities
or options to acquire securities of the Company, then the Transferor shall
have the right (the "Drag-Along Right") to require each Warrant
Securityholder to sell to the Proposed Transferee for the same per share
consideration received by the Transferor all of the Conversion Shares and
Warrants (calculated, in the case of any Warrants, on the number of
Conversion Shares for which such Warrant is exercisable at such time) held by
such Warrant Securityholder. To exercise the Drag-Along Right, the Transferor
shall first give to the Company and each Warrant Securityholder (pursuant to
a list provided by the Company) a written notice (a "Drag-Along Notice")
executed by the Transferor and the Proposed Transferee and containing (a) the
number of shares of Company Common Stock that the Proposed Transferee
proposes to acquire from the Transferor and its Permitted Transferee, and
certifying that such shares constitute all of the shares of Company Common
Stock owned by the Transferor and its Permitted Transferees and more than 50%
of the shares of Company Common Stock on a Fully Diluted Basis at such time,
(b) the name and address of the Proposed Transferee and (c) the proposed
purchase price, terms of payment and other material terms and conditions of
the Proposed Transferee's offer, (d) a statement by the Proposed Transferee
that the Proposed
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Transferee (i) has been informed of the Drag-Along Right provided for in this
Section 2.05(a) and (ii) has agreed to purchase the Conversion Shares and
Warrants in accordance with the terms of this Section 2.05(a) and (e) the
aggregate number of Conversion Shares or Warrants owned by each Warrant
Securityholder with respect to which the Transferor wishes to exercise its
Drag-Along Right pursuant to this Section 2.05(a). Each Warrant
Securityholder shall thereafter be obligated to sell to the Proposed
Transferee the Warrants and Conversion Shares subject to such Drag-Along
Notice, provided that the sale to the Proposed Transferee is consummated
within 60 days of delivery of the Drag-Along Notice. If the sale is not
consummated within such 60-day period, then each affected Warrant
Securityholder may sell, but shall no longer be obligated to sell, such
Warrant Securityholder's Warrants or Conversion Shares pursuant to such
Drag-Along Notice. The provisions of this Section 2.05(a) shall not apply to
transfers between the Transferor and any of its Affiliates or between any of
its Affiliates.
(b) (i) If at any time prior to a Holdings Initial Public Offering,
Security Capital or any other Holdings Stockholder (any such Person for
purposes of this Section 2.05(b), the "Transferor") wishes to transfer all of
the shares of Holdings Common Stock owned by it (provided that such shares of
Holdings Common Stock constitute more than 50% of all shares of Holdings
Common Stock on a Fully Diluted Basis (as defined in the Warrants) at such
time in a bona fide sale to any Person (the "Proposed Transferee") pursuant
to which the consideration to be paid by the Proposed Transferee consists
solely of cash and freely tradeable securities with an active public market
and the Transferor will not receive, in connection with the transactions
contemplated at the time of such transfer, any other securities or options to
acquire securities of Holdings (any such proposed transfer, a "Redemption
Transfer"), then the Transferor shall have the right to require the Company
to redeem all, but not less than all, of the Warrants outstanding at such
time in accordance with the terms thereof and all Conversion Shares
outstanding on such date. The provisions of this Section 2.05(b) shall not
apply to transfers between the Transferor and any of its Affiliates or
between any of its Affiliates.
(ii) In addition, on or within 30 days after the date on which the
Company shall have delivered a Trigger Notice (as defined in the Warrants)
with respect to a Redemption Transfer, the Company shall have the right to
redeem all, but not less than all, of the outstanding Conversion Shares at
the Trigger Redemption Price (as defined in the Warrants; provided that,
for purposes of this clause (ii), the numerator in the number set forth in
clause (A) of such definition shall be the number of Conversion Shares)
with respect to such Redemption Transfer. Irrevocable notice of such right
of redemption shall be given by the Company to all Warrant Securityholders
not more than 30 days nor less than 15 days prior to the date scheduled for
redemption,
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stating the date of such redemption, which shall be the date of
consummation of the Redemption Transfer with respect to which a Trigger
Notice has been delivered; provided that such notice of redemption may
provide that the obligations of the Company to redeem all outstanding
Conversion Shares shall be conditioned upon the consummation of the
Redemption Transfer. On the date scheduled for redemption, the Company
shall pay to each Warrant Securityholder the Trigger Redemption Price in
immediately available funds upon surrender of the certificates representing
all outstanding Conversion Shares held by such Warrant Securityholder on
such date.
SECTION 2.06. Asset Purchase Agreement. In addition to any other
restrictions on transfer provided for herein, the transfer of shares of
Holdings Common Stock owned by the Management Stockholders and Security
Capital shall be subject to the terms and provisions of the Asset Purchase
Agreement.
SECTION 2.07. Restrictions on Transfer by Regulation Y Holders. (a) No
Regulation Y Holder may transfer any Warrant or any Conversion Shares;
provided that such Regulation Y Holder may transfer such Warrant or
Conversion Shares: (i) to the public in an offering registered under the
Securities Act or (ii) in a transaction pursuant to Rule 144 or Rule 144A (or
any successor provisions) under the Securities Act or similarly exempt from
the registration requirements of the Securities Act in which no single
purchaser receives an interest (treating any such Warrant as exercised and
any Company Non-Voting Common Stock as converted to Company Voting Common
Stock) equivalent to more than two percent of the outstanding Company Voting
Common Stock or (iii) in a single transaction to a third party who acquires
at least a majority of the Company Voting Common Stock without regard to the
transfer of such Warrant or Conversion Shares. In the event of a Regulatory
Change, the effect of which is to permit such Regulation Y Holder to transfer
such Warrant or Conversion Shares in any other manner, the foregoing proviso
shall be deemed modified to permit a transfer of such Warrant or Conversion
Shares in such other manner.
(b) Nothing in Sections 2.04, 2.05 or 2.06 of this Agreement shall
require any Regulation Y Holder to make a transfer of Warrants or Conversion
Shares in a manner not permitted by Section 2.07(a) (an "Impermissible
Transfer"). If Sections 2.04, 2.05 or 2.06 of this Agreement would otherwise
require any Regulation Y Holder to make an Impermissible Transfer as a
condition precedent to making a transfer of Warrants or Conversion Shares in
a manner permitted by Section 2.07(a) (a "Permissible Transfer"), then such
Regulation Y Holder shall not be required to make such Impermissible Transfer
as a condition precedent to making such Permissible Transfer.
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SECTION 2.08 Adjustment Event Fee. If (a) any Adjustment Event shall
occur within 365 days after the Optional Redemption Date and (b) the
Consideration Per Share for such Adjustment Event is greater than the
Redemption Price Per Share then, immediately upon the occurrence of such
Adjustment Event, the Company shall pay to each Warrant Securityholder an
amount equal to (1) if the Consideration Per Share with respect to such
Adjustment Event has been determined with reference to Company Common Stock,
the product of (x) the number of shares of Company Common Stock represented
by the Warrants of such Warrant Securityholder that were redeemed and (y) the
difference between the Consideration Per Share for such Adjustment Event and
the Redemption Price Per Share paid to such Warrant Securityholder and (2) if
the Consideration Per Share with respect to such Adjustment Event has been
determined with reference to Holdings Common Stock, (x) the product of (A) a
fraction, the numerator of which shall be the number of shares of Company
Common Stock represented by the Warrants of such Warrant Securityholder that
were redeemed and the denominator of which shall be the number of shares of
Company Common Stock outstanding at such time (calculated on a Fully Diluted
Basis) times (B) the number of shares of Holdings Common Stock outstanding at
such date (calculated on a Fully Diluted Basis) times (y) the difference
between the Consideration Per Share for such Adjustment Event and the
Redemption Price Per Share paid to such Warrant Securityholder.
"Adjustment Event" means: (a) the completion of a Company Initial
Public Offering or a Holdings Initial Public Offering; or
(b) 25% or more of the:
(i) (x) Holdings Common Stock on a Fully Diluted Basis (as defined in
the Warrants) on an aggregate basis is sold, exchanged, transferred or
otherwise disposed of by Holdings or any stockholder of Holdings (as part
of a single sale or a series of related sales) or (y) Company Common Stock
on a Fully Diluted Basis (as defined in the Warrants) on an aggregate basis
is sold, exchanged, transferred or otherwise disposed of by the Company or
any stockholder of the Company (as part of a single sale or a series of
related sales); or
(ii) (x) Company Common Stock issued and outstanding on the Optional
Redemption Date is sold, exchanged, transferred or otherwise disposed of by
Holdings (as part of a single sale or a series of sales) or (y) Holdings
Common Stock issued and outstanding on the Optional Redemption Date is
sold, exchanged, transferred or otherwise disposed of by stockholders of
Holdings (as part of a single sale or a series of sales; or
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(c) all or substantially all of the assets of the Company and its
Subsidiaries or Holdings and its Subsidiaries are, directly or indirectly,
sold, exchanged, leased, transferred or otherwise disposed of as an entirety
or substantially as an entirety (in one transaction or a series of
transactions) to any Person or related group of Persons; or
(d) the stockholders or directors of Holdings or the Company consummate
a definitive agreement or plan for any merger, consolidation,
recapitalization, reorganization, restructuring or other business combination
of Holdings or the Company and, after giving effect to such transaction, the
stockholders of Holdings on the Optional Redemption Date (after giving effect
to the redemption of the Warrants which has occurred on such Date) will no
longer hold, directly or indirectly, securities representing in the aggregate:
(i) a percentage of the total voting power entitled to vote in the
election of directors, managers or trustees of the corporation surviving or
resulting from such transaction greater than 75% of the percentage of such
total voting power with respect to Holdings represented by the Holdings
Common Stock held by such stockholders on the Optional Redemption Date
(after giving effect to the redemption of the Warrants which has occurred
on such Date); and
(ii) the securities entitled to receive a percentage of the dividends
paid by such surviving or resulting corporation greater than 75% of the
percentage of the dividends paid by Holdings that the Holdings Common Stock
held by such stockholders on the Optional Redemption Date was entitled to
receive (after giving effect to the redemption of the Warrants which has
occurred on such Date); and
(iii) a percentage of the stockholders' equity of such surviving or
resulting corporation greater than 75% of the percentage of the
stockholder's equity of Holdings represented by the Holdings Common Stock
held by such stockholders on the Optional Redemption Date (after giving
effect to the redemption of the Warrants which has occurred on such Date);
or
(e) the stockholders or directors of Holdings or the Company
consummate a definitive agreement or plan for the liquidation or
dissolution of Holdings or the Company.
"Consideration Per Share" means: (i) in the case of any Adjustment Event
described in clause (a) or (b)(i) of the definition of Adjustment Event, the
highest consideration per share (if any) received by Holdings or any
stockholder of Holdings
13
or the Company or any stockholder of the Company, as the case may be, from
the sale, exchange, transfer or other disposition by it of Holdings Common
Stock or Company Common Stock, as the case may be, in connection with such
Adjustment Event; and
(ii) in the case of any other Adjustment Event, the highest
consideration per share of Company Common Stock or Holdings Common Stock,
as the case may be, that would be received by any stockholder of Holdings
upon the disposition of all or substantially all of the Company Common
Stock or Holdings Common Stock, as the case may be, or of the assets of
Holdings or the Company (determined by reference to all of the
consideration received by the stockholders of Holdings or the Company, as
the case may be, (as stockholders) for that portion actually disposed of in
connection with such Adjustment Event, or which would be received if all of
the consideration received by Holdings and the Company in connection with
such Adjustment Event were distributed to the stockholders of Holdings or
the Company, as the case may be), in each case net of underwriting
commissions and other costs and expenses incurred in connection with any
such Adjustment Event.
"Optional Redemption Date" means the date of any redemption of the
Warrants pursuant to Section 5.03 of the Warrants.
"Redemption Price Per Share" means the Optional Redemption Price (as
defined in the Warrants) which was paid to the Warrant Securityholders
pursuant to Section 5.03 of the Warrants (determined on a per share basis by
reference to the number of shares of Company Common Stock represented by the
Warrants that were redeemed) plus interest thereon from the Optional
Redemption Date to the date of the relevant Adjustment Event referred to in
clause (a) of Section 2.08 at a rate per annum announced by NationsBank of
North Carolina, N.A. from time to time as its prime rate (calculated on the
basis of a 360-day year for the actual number of days elapsed).
SECTION 2.09 No Inconsistent Agreements. Neither the Company nor
Holdings has entered into or will enter into any registration rights
agreement or similar arrangements the performance by the Company or Holdings,
as the case may be, of the terms of which would in any manner conflict with,
restrict or be inconsistent with the performance by the Company or Holdings,
as the case may be, of its obligations under this Agreement.
SECTION 2.10 Holdings Guaranty. (a) Holdings hereby unconditionally
guarantees the full and punctual payments of all amounts payable by the Company
14
to any Warrant Securityholder pursuant to Section 5.02(b) of the Warrants. Upon
failure by the Company to pay punctually any such amount, Holdings shall
forthwith on demand pay the amount not so paid at the place and in the manner
specified in the Warrants.
(b) The obligations of Holdings hereunder are unconditional and absolute
and, without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or release
in respect of any obligation of the Company or Holdings under any Operative
Document, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to any Operative
Document;
(iii) any release, non-perfection or invalidity of any direct or
indirect security for any obligation of the Company or Holdings under any
Operative Document;
(iv) any change in the corporate existence, structure or ownership of
the Company or Holdings or any insolvency, bankruptcy, reorganization or
other similar proceeding affecting the Company or Holdings or any of their
respective assets or any resulting release or discharge of any obligation
of the Company or Holdings contained in any Operative Document;
(v) the existence of any claim, set-off or other rights which
holdings may have at any time against the Company, the Agent, any Lender or
any other Person, whether in connection herewith or any unrelated
transactions, provided that nothing herein shall prevent the assertion of
any such claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against the
Company or Holdings for any reason of any Operative Document, or any
provision of applicable law or regulation purporting to prohibit the
payment by the Company or Holdings of the principal of or interest on any
Note or any reimbursement obligation or any other amount payable by the
Company under any Operative Document; or
(vii) any other act or omission to act or delay of any kind by the
Company, Holdings, the Agent, any Lender or any other Person or any other
circumstance whatsoever which might, but for the provisions of this
15
paragraph, constitute a legal or equitable discharge of Holdings'
obligations hereunder.
(c) Holdings irrevocably waives acceptance hereof, presentment, demand,
protest and any notice not provided for herein or in the Warrants, as well as
any requirement that at any time any action be taken by any Person against
the Company or any other Person.
(d) Holdings's obligations under this Section 2.10 shall remain in full
force and effect until all Warrants have expired, been exercised in full or
redeemed in accordance with their terms. If at any time any payment of any
amount payable by the Company under Section 5.02 of any Warrant is rescinded
or must be otherwise restored or returned upon the insolvency or receivership
of the Company or otherwise, Holding's obligations hereunder with respect to
such payment shall be reinstated as though such payment had been due but not
made at such time.
(e) Upon making any payment with respect to the Company hereunder,
Holdings shall be subrogated to the rights of the payee against the Company
with respect to such payment; provided that Holdings shall not enforce any
payment by way of subrogation until all amounts of principal of and interest
on the Loans and all other amounts payable by the Company under the Credit
Agreement and any other Financing Documents have been paid in full and the
Commitments of each Lender have been terminated and all Letters of Credit
shall have expired or shall have been canceled.
ARTICLE III
REGISTRATION RIGHTS
SECTION 3.01 Registration on Request. (a) At any time or from time to
time beginning 180 days after the date of consummation of a Company Initial
Public Offering (or after such shorter period as the underwriter or
underwriters, if any, distributing Common Stock in such Initial Public Offering
may permit), upon the written request of the holder or holders of a majority of
all outstanding Conversion Shares and Warrants (such majority determined, for
purposes of this Section 3.01, by calculating the number of Conversion Shares
for which such Warrants are then exercisable) (the "Initiating Holders"),
requesting that the Company effect the registration under the Securities Act of
all or part of such Initiating Holders' Registrable Securities and specifying
the intended method of disposition thereof, the ompany will promptly give
written notice of such requested registration to all holders
16
of Warrants and Registrable Securities, and thereupon the Company will use
its best efforts to effect the registration under the Securities Act of:
(i) the Registrable Securities which the Company has been so
requested to register by such Initiating Holders for disposition in
accordance with the intended method of disposition stated in such request;
(ii) all other Registrable Securities the holders of which shall have
made a written request to the Company for registration thereof within 30
days after the giving of such written notice by the Company (which request
shall specify the intended method of disposition of such Registrable
Securities); and
(iii) all shares of Company Common Stock which the Company may elect
to register in connection with the offering of Registrable Securities
pursuant to this Section 3.01, whether for its own account or for the
account of a holder of Company Common Stock,
all to the extent requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities and the
additional shares of Company Common Stock, if any, to be so registered,
provided that the Warrant Securityholders as a class shall be entitled to not
more than two registrations upon request pursuant to this Section 3.01.
(b) Registrations under this Section 3.01 shall be on such appropriate
registration form of the Commission (i) as shall be selected by the Company
and (ii) as shall permit the disposition of such Registrable Securities in
accordance with the intended method or methods of disposition specified in
their request for such registration. The Company agrees to include in any
such registration statement all information which is required under the
Securities Act to effect any such registration.
(c) The Company will pay all Registration Expenses in connection with
the one registration which may be requested pursuant to this Section 3.01,
provided that, in addition, the Company shall pay all Registration Expenses
in connection with any registration upon request pursuant to which less than
50% of the Registrable Shares requested to be registered by such Initiating
Holders are registered, but no such registration shall be counted as a
requested registration for purposes of this Section 3.01. The underwriting
discounts and commissions and transfer taxes, if any, allocable to the
Registrable Securities requested to be registered by the Initiating Holders
in connection with each registration requested under this Section 3.01 shall
be paid for by the Initiating Holders requesting such registration.
17
(d) A registration requested pursuant to this Section 3.01 shall not be
deemed to have been effected (i) unless a registration statement with respect
thereto has become effective; provided that a registration which does not
become effective after the Company has filed a registration statement with
respect thereto solely by reason of the refusal to proceed by the Initiating
Holders (other than a refusal to proceed based upon the advice of counsel
relating to a matter with respect to the Company) shall be deemed to have
been effected by the Company at the request of the Initiating Holders and
shall be counted as a requested registration for purposes of this Section
3.01 unless the Initiating Holders shall have elected to pay all Registration
Expenses in connection with such registration, (ii) if, after it has become
effective, such registration is interfered with by any stop order, injunction
or other order or requirement of the Commission or other governmental agency
or court for any reason, other than by reason of some act or omission by any
Warrantholder or Warrant Securityholder, or (iii) the conditions to closing
specified in the purchase agreement or underwriting agreement entered into in
connection with such registration are not satisfied, other than by reason of
some act or omission by any Warrantholder or Warrant Securityholder.
(e) If a requested registration pursuant to this Section 3.01 involves
an underwritten offering, the underwriter or underwriters thereof shall be
selected by the Company subject to the reasonable consent of the holders of
at least a majority (by a number of shares) of the Registrable Securities as
to which registration has been requested.
(f) If a requested registration pursuant to this Section 3.01 involves
an underwritten offering, and the managing underwriter shall advise the
Company (with a copy of any such notice to each holder of Registrable
Securities requesting registration) that, in its opinion, the number of
securities requested to be included in such registration (including
securities proposed to be sold for the account of the Company) exceeds the
number which can be sold in such offering within a price range acceptable to
the Initiating Holders, the Company will include in such registration, to the
extent of the number which the Company is so advised can be sold in such
offering, (i) first, Registrable Securities requested to be included in such
registration by the holder or holders of Registrable Securities, pro rata
among such holders requesting such registration on the basis of the number of
such securities requested to be included by such holders, (ii) second, all
shares proposed to be included by the Company in such registration and (iii)
third, all shares other than Registrable Shares (any such shares with respect
to any registration, "Other Shares") requested to be included in such
registration by the holder or holders thereof.
18
(g) The Company may, upon written notice (a "Black-Out Notice") to each
Initiating Holder requesting a demand registration pursuant to Section 3.01
hereof, require such Initiating Holder to withdraw such demand registration
for a period of not more than 180 days upon the good faith determination by
the Company that such postponement is necessary (i) to avoid disclosure of
material non-public information or (ii) as a result of a pending material
financing or acquisition transaction. Upon receipt of a Black-Out Notice,
the registration requested pursuant to Section 3.01 hereof shall be deemed to
be rescinded and retracted and shall not be counted as a demand registration
for any purpose. The Company may not deliver more than one Black-Out Notice
in any twelve-month period.
SECTION 3.02 Incidental Registration. (a) If the Company at any time
proposes to register any of its securities under the Securities Act (other
than (x) by a registration on Form S-4 or S-8 or S-14 or S-15 or any
successor or similar forms or (y) pursuant to Section 3.01) whether for its
own account or for the account of the holder or holders of any Other Shares,
it will each such time give prompt written notice to all Warrant
Securityholders of its intention to do so and of such holders' rights under
this Section 3.02. Upon the written request of any such holder made within
10 days after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such holder and the
intended method of disposition thereof), the Company will use its best
efforts to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register by
the holders thereof, to the extent requisite to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the Registrable
Securities so to be registered, by inclusion of such Registrable Securities
in the registration statement which covers the securities which the Company
proposes to register; provided that if, at any time after giving written
notice of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such
registration, the Company shall determine for any reason either not to
register or to delay registration of such securities, the Company may, at its
election, give written notice of such determination to each holder of
Registrable Securities and, thereupon, (i) in the case of a determination not
to register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its obligation
to pay the Registration Expenses in connection therewith), without prejudice,
however, to the then existing rights (if any) of any Warrant Securityholder
or Warrant Securityholders entitled to do so to request that such
registration be effected as a registration under Section 3.01, and (ii) in
the case of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities, for the same period as the delay in
registering such other securities. No registration effected under this
Section 3.02 shall relieve the Company of its obligation to effect any
registration upon request under Section 3.01, nor shall any such registration
19
hereunder be deemed to have been effected pursuant to Section 3.01. The
Company will pay all Registration Expenses in connection with each
registration of Registrable Securities pursuant to this Section 3.02.
(b) If the Company at any time proposes to register any of its
securities under the Securities Act as contemplated by Section 3.02 and such
securities are to be distributed by or through one or more underwriters, the
Company will, if requested by any holder of Registrable Securities as
provided in this Section 3.02, use its best efforts to arrange for such
underwriters to include all the Registrable Securities to be offered and sold
by such holder among the securities to be distributed by such underwriters,
provided that if the managing underwriter of such underwritten offering shall
inform the Company and holders of the Registrable Securities requesting such
registration and all other holders of any other shares of Company Common
Stock which shall have exercised, in respect of such underwritten offering,
registration rights comparable to the rights under this Section 3.02 by
letter of its belief that inclusion in such distribution of all or a
specified number of such securities proposed to be distributed by such
underwriters would interfere with the successful marketing of the securities
being distributed by such underwriters (such letter to state the approximate
number of such Registrable Securities and such Other Shares proposed so to be
registered which may be distributed without such effect), then the Company
may, upon written notice to all holders of such Registrable Securities and
holders of such Other Shares, reduce pro rata (if and to be extent stated by
such managing underwriter to be necessary to eliminate such effect) the
number of such Registrable Securities and Other Shares the registration of
which shall have been requested by each holder thereof so that the resultant
aggregate number of such Registrable Securities and Other Shares (if any) so
included in such registration, together with the number of securities to be
included in such registration for the account of the Company, shall be equal
to the number of shares stated in such managing underwriter's letter.
SECTION 3.03 Registration Procedures. (a) If and whenever the Company
is required to effect the registration of any Registrable Securities under
the Securities Act as provided in Sections 3.01 and 3.02, the Company shall,
as expeditiously as possible under the then existing facts and circumstances:
(i) prepare and file with the Commission the requisite registration
statement to effect such registration (including such audited financial
statements as may be required by the Securities Act) and thereafter use
its best efforts to cause such registration statement to become and
remain effective for the periods contemplated in Section 3.03(ii);
provided further that the Company may discontinue any registration of its
securities which are not Registrable Securities being registered pursuant
to Section 3.01 at any
20
time prior to the effective date of the registration statement relating
thereto; provided further that before filing such registration statement
or any amendments thereto, the Company will furnish to the counsel
selected by the holders of Registrable Securities which are to be
included in such registration copies of all such documents proposed to be
filed;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement until the earlier of (x) in the case of a
registration pursuant to Section 3.01, the expiration of 120 days after
such registration statement becomes effective, or (y) in the case of a
registration pursuant to Section 3.02, the expiration of 90 days after
such registration statement becomes effective.
(iii) furnish to each seller of Registrable Securities covered by
such registration statement and each underwriter, if any, of the
securities being sold by such seller such number of conformed copies of
such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of
the prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in conformity
with the requirements of the Securities Act, and such other documents, as
such seller and underwriter, if any, may reasonably request in order to
facilitate the public sale or other disposition of the Registrable
Securities owned by such seller;
(iv) use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement
under blue sky or similar laws of such jurisdictions as any seller
thereof and any underwriter of the securities being sold by such seller
shall reasonably request, to keep such registrations or qualifications in
effect for so long as such registration statement remains in effect, and
take any other action which may be reasonably necessary or advisable to
enable such seller and underwriter to consummate the disposition in such
jurisdictions of the securities owned by such seller, except that the
Company shall not for any such purpose be required to qualify generally
to do business as a foreign corporation in any jurisdiction wherein it
would not but for the requirements of this subdivision (iv) be obligated
to be so qualified, to subject itself to taxation in any such
jurisdiction or to consent to general service of process in any such
jurisdiction;
21
(v) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof to consummate the disposition of
such Registrable Securities;
(vi) furnish to each seller of Registrable Securities a signed
counterpart, addressed to such seller and the underwriters, if any, of
(x) an opinion of counsel for the Company, dated the effective
date of such registration statement (and, if such registration
includes an underwritten public offering, an opinion dated the date
of the closing under the underwriting agreement), reasonably
satisfactory in form and substance to such seller, and
(y) a "comfort" letter, dated the effective date of such
registration statement (and, if such registration includes an
underwritten public offering, a letter dated the date of the closing
under the underwriting agreement), signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' letter, with respect to events subsequent to the date of
such financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities;
(vii) notify the holders of Registrable Securities and the managing
underwriter or underwriters, if any, promptly and confirm such advice in
writing promptly thereafter:
(A) when the registration statement, the prospectus or any
prospectus supplement related thereto or post-effective amendment to
the registration statement has been filed, and, with respect to the
registration statement or any post-effective amendment thereto, when
the same has become effective;
(B) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus or for
additional information;
22
(C) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration or the initiation
of any proceedings by any Person for that purpose; and
(D) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable
Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation or threat of any proceeding for such
purpose;
(viii) notify each seller of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, upon the Company's
discovery that, or upon the happening of any event as a result of which,
the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and at the request of any such seller promptly prepare and
furnish to such seller and each underwriter, if any, a reasonable number
of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing;
(ix) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the registration statement at the
earliest possible moment;
(x) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first full calendar month after
the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities
Act;
(xi) make available for inspection by a representative of the
holders of Registrable Securities participating in the offering, any
underwriter participating in any disposition pursuant to the registration
and any attorney or accountant retained by such selling holders or
underwriter (each, an
23
"Inspector"), all financial and other records, pertinent corporate
documents and properties of the Company (the "Records"), and cause the
Company's officers, directors and employees to supply all information
reasonably requested by any such Inspector in connection with such
registration; provided that the Company shall not be required to comply
with this subdivision (xi) if there is a reasonable likelihood, in the
judgment of the Company, that such delivery could result in the loss of
any attorney-client privilege related thereto; and provided further that
Records which the Company determines, in good faith, to be confidential
and which it notifies the Inspectors are confidential shall not be
disclosed by the Inspectors (other than to any holder of Registrable
Securities participating in the offering) unless (x) such Records have
become generally available to the public or (y) the disclosure of such
Records may be necessary or appropriate (A) to comply with any law, rule,
regulation or order applicable to any such Inspectors or holder of
Registrable Securities, (B) in response to any subpoena or other legal
process or (C) in connection with any litigation to which such Inspectors
or any holder of Registrable Securities is a party (provided that the
Company is provided with reasonable notice of such proposed disclosure
and a reasonable opportunity to seek a protective order or other
appropriate remedy with respect to such Records);
(xii) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such
Registration Statement;
(xiii) use its best efforts to list all Registrable Securities
covered by such registration statement on any securities exchange on
which any of the Company Common Stock is then listed; and
(xiv) use its best efforts to provide a CUSIP number for the
Registrable Securities, not later than the effective date of the
registration.
The Company may require that each seller of Registrable Securities as to
which any registration is being effected to furnish the Company such
information regarding such seller and the distribution of such securities as
the Company may from time to time reasonably request in writing for purposes
of preparing the relevant registration statement and amendments and
supplements thereto.
(b) Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of
the occurrence of any event of the kind described in subdivision (viii) of
Section 3.03(a), such holder will forthwith discontinue such holder's
disposition of Registrable
24
Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (viii) of
Section 3.03(a). In the event the Company shall give any such notice, the
periods specified in subdivision (ii) of Section 3.03(a) shall be extended by
the length of the period from and including the date when each seller of any
Registrable Securities covered by such registration statement shall have
received such notice to the date on which each such seller has received the
copies of the supplemented or amended prospectus contemplated by subdivision
(viii) of Section 3.03(a).
(c) If any such registration or comparable statement refers to any
holder of Registrable Securities by name or otherwise as the holder of any
securities of the Company, then such holder shall have the right to require,
in the event that such reference to such holder by name or otherwise is not
required by the Securities Act or any similar federal statute then in force,
the deletion of the reference to such holder.
SECTION 3.04 Underwritten Offerings. (a) If requested by the
underwriters for any underwritten offering by holders of Registrable
Securities pursuant to a registration requested under Section 3.01, the
Company and each such holder of Registrable Securities will enter into an
underwriting agreement with such underwriters for such offering, such
agreement to be customary and otherwise satisfactory in substance and form to
the Company, each such holder and the underwriters, and to contain such
representations and warranties by the Company and such holder and such other
terms as are generally prevailing in agreements of such type, including,
without limitation, indemnities to the effect and to the extent provided in
Section 3.05. The holders of the Registrable Securities will cooperate with
the Company in the negotiation of the underwriting agreement.
(b) Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities not to sell, make any short sale of, loan, grant any
option for the purchase of, effect any public sale or distribution of or
otherwise dispose of any equity securities of the Company, during the ten
days prior to and the 120 days after any underwritten registration pursuant
to Section 3.01 or 3.02 has become effective, except as part of such
underwritten registration, whether or not such holder participates in such
registration, and except as otherwise permitted by the managing underwriter
of such underwriting (if any). Each holder of Registrable Securities agrees
that the Company may instruct its transfer agent to place stop transfer
notations in its records to enforce this Section 3.04(b).
(c) The Company agrees (x) not to sell, make any short sale of, loan,
grant any option for the purchase of, effect any public sale or distribution of
or otherwise
25
dispose of its equity securities or securities convertible into or
exchangeable or exercisable for any of such securities during the ten days
prior to and the 120 days after any registration pursuant to Section 3.01 or
3.02 has become effective, except (i) as part of such registration, (ii)
pursuant to registrations on Form X-0, X-0, X-00 or S-15 or any successor or
similar forms thereto or (iii) as otherwise permitted by the managing
underwriter of such offering (if any), and (y) to use all commercially
reasonable efforts to cause each holder of its equity securities or any
securities convertible into or exchangeable or exercisable for any of such
securities, in each case purchased from the Company at any time after the
date of this Agreement (other than in a public offering) to agree not to
sell, make any short sale of, loan, grant any option for the purchase of,
effect any public sale or distribution of or otherwise dispose of such
securities during such period except as part of such underwritten
registration.
(d) No Person may participate in any underwritten offering hereunder
unless such Person (i) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved, subject to the terms and
conditions hereof, by the Person or a majority of the Persons entitled to
approve such arrangements and (ii) completes and executes all agreements,
questionnaires, indemnities and other documents (other than powers of
attorney) required under the terms of such underwriting arrangements.
SECTION 3.05 Indemnification. (a) The Company agrees to indemnify and
hold harmless each holder of Registrable Securities whose Registrable
Securities are covered by any registration statement, its directors and
officers and each other Person, if any, who controls such holder within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which any such indemnified party may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
and the Company will reimburse each such indemnified party for any legal or
any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided that the Company shall not be liable in any such case to
the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made
26
in such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and
in conformity with written information furnished to the Company by or on
behalf of (x) such holder or (y) any underwriter specifically for use in the
preparation thereof. In addition, the Company shall indemnify any
underwriter of such offering and each other Person, if any, who controls any
such underwriter within the meaning of the Securities Act in substantially
the same manner and to substantially the same extent as the indemnity herein
provided to each Indemnified Party. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
holder or any such director, officer, underwriter or controlling person and
shall survive the transfer of such securities by such holder.
(b) Each prospective seller of Registrable Securities hereunder shall
indemnify and hold harmless (in the same manner and to the same extent as set
forth in subdivision (a) of this Section 3.05) the Company, each director of
the Company, each officer of the Company and each other person, if any, who
controls the Company within the meaning of the Securities Act, with respect
to any statement or alleged statement in or omission or alleged omission from
such registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement thereof,
if such statement or alleged statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company by or on behalf of such seller specifically for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. Any such indemnity
shall remain in full force and effect, regardless of any investigation made
by or on behalf of the Company or any such director, officer or controlling
person and shall survive the transfer of such securities by such seller. The
amount payable by any prospective seller of Registrable Securities with
respect to the indemnification set forth in this subsection (b) in connection
with any offering of securities shall not exceed the amount of net proceeds
received by such prospective seller pursuant to such offering.
(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in the
preceding subdivisions of this Section 3.05, such indemnified party will, if
a claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action; provided
that the failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations under the
preceding subdivisions of this Section 3.05, except to the extent that the
indemnifying party is actually prejudiced by such failure to give notice. In
case any such action is brought against an indemnified party, unless counsel
to such indemnified party has advised it that in such counsel's reasonable
27
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, the indemnifying party shall be
entitled to participate in and to assume the defense thereof, jointly with
any other indemnifying party similarly notified, to the extent that the
indemnifying party may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any
legal or other expenses subsequently incurred by the latter in connection
with the defense thereof. No indemnifying party shall, without the consent
of the indemnified party, consent to entry of any judgment or enter into any
settlement of any such action which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of
a release from all liability in respect to such claim or litigation. No
indemnified party shall consent to entry of any judgment or enter into any
settlement of any such action the defense of which has been assumed by an
indemnifying party without the consent of such indemnifying party.
(d) If the indemnification provided for in the preceding subdivisions of
this Section 3.05 is unavailable to an indemnified party in respect of any
expense, loss, claim, damage or liability referred to therein, then each
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 expense, loss, claim, damage or liability (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the holder or underwriter, as the case may be, on
the other from the distribution of the Registrable Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company on the one hand and of the holder or underwriter, as the case may be,
on the other in connection with the statements or omissions which resulted in
such expense, loss, damage or liability, as well as any other relevant
equitable considerations. The relative benefits received by the Company on
the one hand and the holder or underwriter, as the case may be, on the other
in connection with the distribution of the Registrable Securities shall be
deemed to be in the same proportion as the total net proceeds received by the
Company from the initial sale of the Registrable Securities by the Company to
the purchaser bear to the gain realized by the selling holder or the
underwriting discounts and commissions received by the underwriter, as the
case may be. The relative fault of the Company on the one hand and of the
holder or underwriter, as the case may be, on the other shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission to state a material fact relates to
information supplied by the Company, by the holder or by the underwriter and
parties' relative intent, knowledge, access to information and
28
opportunity to correct or prevent such statement or omission; provided that
the foregoing contribution agreement shall not inure to the benefit of any
indemnified party if indemnification would be unavailable to such indemnified
party by reason of the proviso contained in the first sentence of subdivision
(a) of this Section 3.05, and in no event shall the obligation of any
indemnifying party to contribute under this subdivision (d) exceed the amount
that such indemnifying party would have been obligated to pay by way of
indemnification if the indemnification provided for under subdivisions (a) or
(b) of this Section 3.05 had been available under the circumstances.
The Company and the holders of Registrable Securities agree that it would
not be just and equitable if contribution pursuant to this subdivision (d)
were determined by pro rata allocation (even if the holders and any
underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph and
subdivision (c) of this Section 3.05. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages and liabilities
referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
Notwithstanding the provisions of this subdivision (d), no holder of
Registrable Securities or underwriter shall be required to contribute any
amount in excess of the amount by which (i) in the case of any such holder,
the net proceeds received by such holder from the sale of Registrable
Securities or (ii) in the case of an underwriter, the total price at which
the Registrable Securities purchased by it and distributed to the public were
offered to the public exceeds, in any such case, the amount of any damages
that such holder or underwriter 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.
SECTION 3.06 Rule 144; Rule 144A. (a) If the Company shall have filed
a registration statement pursuant to Section 12 of the Exchange Act or a
registration statement pursuant to the Securities Act, the Company will 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
Securities may reasonably request, all to the extent required from time to
time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
29
provided by (a) Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any holder of Registrable
Securities the Company will deliver to such holder a written statement as to
whether it has complied with such requirements.
(b) The Company represents and warrants that as of the date hereof, the
Company Common Stock is not, and is not part of a class of securities that
is, listed on a national securities exchange registered under Section 6 of
the Exchange Act or quoted in an automated inter-dealer quotation system.
For so long as any shares of Registrable Securities are restricted securities
within the meaning of Rule 144(a)(3) under the Securities Act, the Company
covenants and agrees that it shall, during any period in which it is not
subject to Section 13 or 15(d) of the Exchange Act, make available to any
holder of Registrable Securities in connection with the sale of such holder's
Registrable Securities and any prospective purchaser of Registrable
Securities from such, in each case upon request, the information specified
in, and meeting the requirements of, Rule 144A(d)(4) under the Securities Act
relating to the Company, respectively.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01 Notices. All notices and other communications provided for
hereunder shall be dated and in writing and shall be deemed to have been
given (i) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section and telephonic confirmation of
receipt thereof is obtained or (ii) if given by mail, prepaid overnight
courier or any other means, when received at the address specified in this
Section or when delivery at such address is refused. Such notices shall be
addressed to the appropriate party to the attention of the person who
executed this Agreement at the address or telecopy number set forth under
such party's signature below (or to the attention of such other person or to
such other address or telecopy number as such party shall have furnished to
each other party in accordance with this Section 4.01).
SECTION 4.02 Binding Nature of Agreement. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto or their successors in interest, except as expressly otherwise
provided herein.
30
SECTION 4.03 Descriptive Headings. The descriptive headings of the
several sections and paragraphs of this Agreement are inserted for reference
only and shall not limit or otherwise affect the meaning hereof.
SECTION 4.04 Specific Performance. Without limiting the rights of each
party hereto to pursue all other legal and equitable rights available to such
party for the other parties' failure to perform their obligations under this
Agreement, the parties hereto acknowledge and agree that the remedy at law
for any failure to perform their obligations hereunder would be inadequate
and that each of them, respectively, shall be entitled to specific
performance, injunctive relief or other equitable remedies in the event of
any such failure.
SECTION 4.05 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED
BY, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH SUCH PARTY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS
IN THE MANNER PROVIDED FOR NOTICES IN SECTION 4.1. NOTHING IN THIS AGREEMENT
WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW.
SECTION 4.06 Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed
an original, but all such counterparts shall together constitute one and the
same instrument.
SECTION 4.07 Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances,
is held
31
invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any
way impaired thereby, it being intended that all of the rights and privileges
of the parties hereto shall be enforceable to the fullest extent permitted by
law.
SECTION 4.08 Entire Agreement. This Agreement is intended by the
parties hereto as a final and complete expression of their agreement and
understanding in respect to the subject matter contained herein. This
Agreement supersedes all prior agreement and understandings, written or oral,
between the parties with respect to such subject matter.
SECTION 4.09 Amendment and Waiver. Any provision of this Agreement may
be amended if, but only if, such amendment is in writing and is signed by
Holdings, the Holdings Stockholders, the Company, the Company Stockholders
and Warrantholders owning, or having Warrants exercisable for, at least a
majority of shares of Common Stock either then outstanding or issuable upon
the exercise of all outstanding Warrants, provided that no such amendment may
adversely affect the rights of any Warrant Securityholder unless signed by
such Warrant Securityholder. Any provision may be waived if, but only if,
such waiver is in writing and is signed by the party or parties waiving such
provision and for whose benefit such provision is intended.
SECTION 4.10 No Third Party Beneficiaries. Nothing in this Agreement
shall convey any rights upon any person or entity which is not a party or an
assignee of a party to this Agreement.
32
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first above written.
PUMPKIN LTD.
By /s/ Xxxxxx Xxxxxx
--------------------------------
Title: Vice President
Address: Xxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Telefax: 203-625-0770
PUMPKIN MASTERS HOLDINGS, INC.
By /s/ Xxxxxx Xxxxxx
--------------------------------
Title: Vice President
Address: Xxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Telefax: 203-625-0770
SECURITY CAPITAL CORPORATION
By /s/ A. Xxxxxx Xxxxxxx
--------------------------------
Title: President
Address: c/o Capital Partners
Xxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Telefax: 000-000-0000
33
NATIONSCREDIT COMMERCIAL
CORPORATION, as Agent
By /s/ Xxxxxx X. Alt
--------------------------------
Title: Authorized Signatory
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000-0000
Telefax: 000-000-0000
34
PUMPKIN LTD. D/B/A
PUMPKIN MASTERS, INC.
By /s/ Gay Xxxxx
--------------------------------
Title: Vice President
Address: Xxx 00000, Xxxxxx XX 00000
Telefax: (000) 000-0000
35
