EXHIBIT 10.4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of September 30, 1996 (the
"Agreement"), by and between E&S Holdings Corporation, a Delaware corporation
(the "Company") Strata Associates, L.P., a Delaware limited partnership ("Strata
Associates") and KKR Partners II, L.P., a Delaware limited partnership ("KKR
Partners II" and, together with Strata Associates, the "Common Stock
Partnerships").
RECITALS
WHEREAS, pursuant to a Recapitalization and Stock Purchase Agreement, dated
as of August 15, 1996 (the "Recapitalization Agreement"), among Abarco N.V
("Abarco"), the Company and Strata Associates, Strata Associates has agreed to
purchase $221 million of newly issued common stock of the Company subject to the
terms and conditions set forth in the Recapitalization Agreement; and
WHEREAS, pursuant to the Recapitalization Agreement, Strata Associates has
assigned a portion of its rights and obligations to KKR Partners II to purchase
newly issued common stock of the Company;
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties and agreements contained in this Agreement, the parties agree as
follows:
1. Definitions. As used in this Agreement, the following capitalized terms
shall have the following respective meanings:
"Common Stock": the common stock, par value $.01 per share, of the
Company and its successors, including, without limitation, the common stock
of any company into which the Common Stock may be converted by merger,
consolidation or other similar transaction.
"Common or Common Equivalent Registrable Securities": Registrable
Securities which are (i) Common Stock or (ii) securities that are
convertible into or exchangeable or exercisable for Common Stock.
"Demand Party": (a) Strata Associates, (b) KKR Partners II or (c) any
other Holder or Holders, including, without limitation, any present or
future general or limited partner of either Common Stock Partnership, or
(c) any general or limited partner of any general or limited partner
thereof, that may become an assignee of such Common Stock Partnership's
rights hereunder; provided that to be a Demand Party under this clause (c),
a Holder or Holders must either individually or in aggregate with all other
Holders with whom it is acting together to demand registration own at least
1% of the total number of Registrable Securities.
"Exchange Act": The Securities Exchange Act of 1934, as amended, or
any similar federal statute then in effect, and a reference to a particular
section thereof
shall be deemed to include a reference to the comparable section, if any,
of any such similar federal statute.
"Holder": Each Common Stock Partnership and any other holder of
Registrable Securities (including any direct or indirect transferees of the
Common Stock Partnership) who agrees in writing to be bound by the
provisions of this Agreement.
"Person": Any individual, partnership, joint venture, corporation,
trust, unincorporated organization or government or any department or
agency thereof.
"Registrable Securities": Any Common Stock acquired by a Common Stock
Partnership from the Company or any affiliate of the Company, whether as a
result of the purchase of Common Stock by a Common Stock Partnership or
upon the conversion of any convertible security or otherwise, and any
Common Stock or convertible security which may be issued or distributed in
respect thereof by way of stock dividend or stock split or other
distribution, recapitalization or reclassification. As to any particular
Registrable Securities, once issued, such Registrable Securities shall
cease to be Registrable Securities when (i) a registration statement with
respect to the sale by the Holder of such securities shall have become
effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (ii) such
securities shall have been distributed to the public pursuant to Rule 144
(or any successor provision) under the Securities Act, (iii) such
securities shall have been otherwise transferred, new certificates for such
securities not bearing a legend restricting further transfer shall have
been delivered by the Company and subsequent disposition of such securities
shall not require registration or qualification of such securities under
the Securities Act or any state securities or blue sky law then in force,
or (iv) such securities shall have ceased to be outstanding.
"Registration Expenses": Any and all expenses incident to performance
of or compliance with this Agreement, including, without limitation, (i)
all SEC and stock exchange or National Association of Securities Dealers,
Inc. (the "NASD") registration and filing fees (including, if applicable,
the fees and expenses of any "qualified independent underwriter," as such
term is defined in Schedule E to the By-laws of the NASD, and of its
counsel), (ii) all fees and expenses of complying with securities or blue
sky laws (including fees and disbursements of counsel for the underwriters
in connection with blue sky qualifications of the Registrable Securities),
(iii) all printing, messenger and delivery expenses, (iv) all fees and
expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange pursuant to clause (viii) of Section
4 and all rating agency fees, (v) the fees and disbursements of counsel for
the Company and of its independent public accountants, including the
expenses of any special audits and/or "cold comfort" letters required by or
incident to such performance and compliance, (vi) the reasonable fees and
disbursements of counsel selected pursuant to Section 7 hereof by the
Holders of the Registrable Securities being registered to represent such
Holders in connection with each such registration, (vii) any fees and
disbursements of underwriters customarily paid by the
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issuers or sellers of securities, including liability insurance if the
Company so desires or if the underwriters so require, and the reasonable
fees and expenses of any special experts retained in connection with the
requested registration, but excluding underwriting discounts and
commissions and transfer taxes, if any, and (viii) other reasonable
out-of-pocket expenses of Holders (provided that such expenses shall not
include expenses of counsel other than those provided for in clause (vi)
above).
"Securities Act": The Securities Act of 1933, as amended, or any
similar federal statute then in effect, and a reference to a particular
section thereof shall be deemed to include a reference to the comparable
section, if any, of any such similar federal statute.
"SEC": The Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act or the Exchange Act.
2. Incidental Registrations. (a) Right to Include Common or Common
Equivalent Registrable Securities. If the Company at any time after the date
hereof proposes to register its Common Stock (or any security which is
convertible into or exchangeable or exercisable for Common Stock) under the
Securities Act (other than a registration on Form S-4 or S-8, or any successor
or other forms promulgated for similar purposes), whether or not for sale for
its own account, in a manner which would permit registration of Common or Common
Equivalent Registrable Securities for sale to the public under the Securities
Act, it will, at each such time, give prompt written notice to all Holders of
Common or Common Equivalent Registrable Securities of its intention to do so and
of such Holders' rights under this Section 2. Upon the written request of any
such Holder made within 15 days after the receipt of any such notice (which
request shall specify the Common or Common Equivalent Registrable Securities
intended to be disposed of by such Holder), the Company will use its best
efforts to effect the registration under the Securities Act of all Common or
Common Equivalent Registrable Securities which the Company has been so requested
to register by the Holders thereof, to the extent requisite to permit the
disposition of the Common or Common Equivalent Registrable Securities so to be
registered; provided that (i) if, at any time after giving written notice of its
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to proceed with the proposed registration of
the securities to be sold by it, the Company may, at its election, give written
notice of such determination to each Holder of Common or Common Equivalent
Registrable Securities and, thereupon, shall be relieved of its obligation to
register any Common or Common Equivalent Registrable Securities in connection
with such registration (but not from its obligation to pay the Registration
Expenses in connection therewith), and (ii) if such registration involves an
underwritten offering, all Holders of Common or Common Equivalent Registrable
Securities requesting to be included in the Company's registration must sell
their Common or Common Equivalent Registrable Securities to the underwriters
selected by the Company on the same terms and conditions as apply to the
Company, with such differences, including any with respect to indemnification
and liability insurance, as may be customary or appropriate in combined primary
and secondary offerings. If a registration requested pursuant to this Section
2(a) involves an underwritten public offering, any Holder of Common or Common
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Equivalent Registrable Securities requesting to be included in such registration
may elect, in writing prior to the effective date of the registration statement
filed in connection with such registration, not to register such securities in
connection with such registration. Nothing in this Section 2(a) shall operate to
limit the right of Holder to (i) request the registration of Common Stock
issuable upon conversion or exercise of convertible securities held by such
Holder notwithstanding the fact that at the time of request such Holder holds
only convertible securities or (ii) request the registration at one time of both
Common Stock and securities convertible into Common Stock.
(b) Expenses. The Company will pay all Registration Expenses in connection
with each registration of Common or Common Equivalent Registrable Securities
requested pursuant to this Section 2.
(c) Priority in Incidental Registrations. If a registration pursuant to
this Section 2 involves an underwritten offering and the managing underwriter
advises the Company in writing that, in its opinion, the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering, so as to be likely to have an adverse effect on the
price, timing or distribution of the Securities offered in such offering as
contemplated by the Company (other than the Common or Common Equivalent
Registrable Securities), then the Company will include in such registration (i)
first, 100% of the securities the Company proposes to sell and (ii) second, to
the extent of the number of Common or Common Equivalent Registrable Securities
requested to be included in such registration which, in the opinion of such
managing underwriter, can be sold without having the adverse effect referred to
above, the number of Common or Common Equivalent Registrable Securities which
the Holders have requested to be included in such registration, such amount to
be allocated pro rata among all requesting Holders on the basis of the relative
number of shares of Common or Common Equivalent Registrable Securities then held
by each such Holder (provided that any shares thereby allocated to any such
Holder that exceed such Holder's request will be reallocated among the remaining
requesting Holders in like manner).
3. Registration on Request. (a) Request by the Demand Party. At any time,
upon the written request of the Demand Party requesting that the Company effect
the registration under the Securities Act of all or part of such Demand Party's
Registrable Securities and specifying the amount and intended method of
disposition thereof, the Company will promptly give written notice of such
requested registration to all other Holders of such Registrable Securities, and
thereupon will, as expeditiously as possible, use its best efforts to effect the
registration under the Securities Act of:
(i) such Registrable Securities (including, if such request relates to
a security which is convertible into shares of Common Stock, the shares of
Common Stock issuable upon such conversion) which the Company has been so
requested to register by the Demand Party; and
(ii) all other Registrable Securities of the same class or series as
are to be registered at the request of a Demand Party and which the Company
has been
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requested to register by any other Holder thereof by written request given
to the Company within 15 days after the giving of such written notice by
the Company (which request shall specify the amount and intended method of
disposition of such Registrable Securities),
all to the extent necessary to permit the disposition (in accordance with the
intended method thereof as aforesaid) of the Registrable Securities so to be
registered; provided, that with respect to any Demand Party other than the
Common Stock Partnership, the Company shall not be obligated to effect any
registration of Registrable Securities under this Section 3(a) unless such
Demand Party requests that the Company register at least 1% of the total number
of Registrable Securities; and provided, further, that, unless Holders of a
majority of the shares of Registrable Securities held by Holders consent thereto
in writing, the Company shall not be obligated to file a registration statement
relating to any registration request under this Section 3(a) (x) within a period
of nine months after the effective date of any other registration statement
relating to any registration request under this Section 3(a) which was not
effected on Form S-3 (or any successor or similar short-form registration
statement) or relating to any registration effected under Section 2, or (y) if
with respect thereto the managing underwriter, the SEC, the Securities Act or
the rules and regulations thereunder, or the form on which the registration
statement is to be filed, would require the conduct of an audit other than the
regular audit conducted by the Company at the end of its fiscal year, in which
case the filing may be delayed until the completion of such regular audit
(unless the Holders of the Registrable Securities to be registered agree to pay
the expenses of the Company in connection with such an audit other than the
regular audit). Nothing in this Section 3 shall operate to limit the right of
Holder to (i) request the registration of Common Stock issuable upon conversion
or exercise of convertible securities held by such Holder notwithstanding the
fact that at the time of request such Holder holds only convertible securities
or (ii) request the registration at one time of both Common Stock and securities
convertible into Common Stock.
(b) Registration Statement Form. If any registration requested pursuant to
this Section 3 which is proposed by the Company to be effected by the filing of
a registration statement on Form S-3 (or any successor or similar short-form
registration statement) shall be in connection with an underwritten public
offering, and if the managing underwriter shall advise the Company in writing
that, in its opinion, the use of another form of registration statement is of
material importance to the success of such proposed offering, then such
registration shall be effected on such other form.
(c) Expenses. The Company will pay all Registration Expenses in connection
with the first six (6) registrations of each class or series of Registrable
Securities pursuant to this Section 3 upon the written request of any of the
Holders, provided that, for purposes hereof, a request to register Common Stock
into which a convertible security is convertible in conjunction with a
registration of such convertible security shall be deemed to be one request for
registration of a class or series of Registrable Securities. All expenses for
any subsequent registrations of Registrable Securities pursuant to this Section
3 shall be paid pro rata by the Company and all other Persons (including the
Holders) participating in such registration on
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the basis of the relative number of shares of Common Stock of each such person
whose Registrable Securities are included in such registration.
(d) Effective Registration Statement. A registration requested pursuant to
this Section 3 will not be deemed to have been effected unless it has become
effective and all of the Registrable Securities registered thereunder have been
sold; provided that if, within 180 days after it has become effective, the
offering of Registrable Securities pursuant to such registration is interfered
with by any stop order, injunction or other order or requirement of the SEC or
other governmental agency or court, such registration will be deemed not to have
been effected.
(e) Selection of Underwriters. If a requested registration pursuant to this
Section 3 involves an underwritten offering, the Holders of a majority of the
shares of Registrable Securities which are held by Holders and which the Company
has been requested to register shall have the right to select the investment
banker or bankers and managers to administer the offering; provided, however,
that such investment banker or bankers and managers shall be reasonably
satisfactory to the Company.
(f) Priority in Requested Registrations. If a requested registration
pursuant to this Section 3 involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its opinion, the number of
securities requested to be included in such registration (including securities
of the Company which are not Registrable Securities) exceeds the number which
can be sold in such offering, the Company will include in such registration only
the Registrable Securities requested to be included in such registration. In the
event that the number of Registrable Securities requested to be included in such
registration exceeds the number which, in the opinion of such managing
underwriter, can be sold, the number of such Registrable Securities to be
included in such registration shall be allocated pro rata among all requesting
Holders on the basis of the relative number of shares of Registrable Securities
then held by each such Holder (provided that any shares thereby allocated to any
such Holder that exceed such Holder's request shall be reallocated among the
remaining requesting Holders in like manner). In the event that the number of
Registrable Securities requested to be included in such registration is less
than the number which, in the opinion of the managing underwriter, can be sold,
the Company and the other holders who may have piggyback registration rights,
may include in such registration the securities they propose to sell up to the
number of securities that, in the opinion of the underwriter, can be sold.
(g) Additional Rights. If the Company at any time grants to any other
holders of Common Stock any rights to request the Company to effect the
registration under the Securities Act of any such shares of Common Stock on
terms more favorable to such holders than the terms set forth in this Section 3,
the terms of this Section 3 shall be deemed amended or supplemented to the
extent necessary to provide the Holders such more favorable rights and benefits.
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4. Registration Procedures. If and whenever the Company is required to use
its best efforts to effect or cause the registration of any Registrable
Securities under the Securities Act as provided in this Agreement, the Company
will, as expeditiously as possible:
(i) prepare and, in any event within 120 days after the end of the
period within which a request for registration may be given to the Company,
file with the SEC a registration statement with respect to such Registrable
Securities and use its best efforts to cause such registration statement to
become effective, provided, however, that the Company may discontinue any
registration of its securities which is being effected pursuant to Section
2 at any time prior to the effective date of the registration statement
relating thereto;
(ii) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for a
period not in excess of 270 days and to comply with the provisions of the
Securities Act, the Exchange Act and the rules and regulations of the SEC
thereunder with respect to the disposition of all securities covered by
such registration statement during such period in accordance with the
intended methods of disposition by the seller or sellers thereof set forth
in such registration statement; provided that before filing a registration
statement or prospectus, or any amendments or supplements thereto, the
Company will furnish to counsel selected pursuant to Section 7 hereof by
the Holders of the Registrable Securities covered by such registration
statement to represent such Holders, copies of all documents proposed to be
filed, which documents will be subject to the review of such counsel;
(iii) furnish to each seller of such Registrable Securities such
number of copies of such registration statement and of each amendment and
supplement thereto (in each case including all exhibits filed therewith,
including any documents incorporated by reference), such number of copies
of the prospectus included in such registration statement (including each
preliminary prospectus and summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents as such seller
may reasonably request in order to facilitate the disposition of the
Registrable Securities by such seller;
(iv) use its best efforts to register or qualify such Registrable
Securities covered by such registration in such jurisdictions as each
seller shall reasonably request, and do any and all other acts and things
which may be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the Registrable
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 where, but for the requirements of this
clause (iv), it would not 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;
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(v) use its best efforts to cause such 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) notify each seller of any such Registrable Securities covered by
such registration statement, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act within the appropriate
period mentioned in clause (ii) of this Section 4, of the Company's
becoming aware that the prospectus included in such registration statement,
as then in effect, includes an untrue statement of a material fact or omits
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, and at the request of any such seller, prepare and furnish
to such seller a reasonable number of copies of an amended or supplemental
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable 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;
(vii) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable (but not more than eighteen
months) after the effective date of the registration statement, an earnings
statement which shall satisfy the provisions of Section 11(a) of the
Securities Act and the rules and regulations promulgated thereunder;
(viii) (A) if such Registrable Securities are Common Stock (including
Common Stock issuable upon conversion of a convertible security), use its
best efforts to list such Registrable Securities on any securities exchange
on which the Common Stock is then listed if such Registrable Securities are
not already so listed and if such listing is then permitted under the rules
of such exchange; (B) if such Registrable Securities are convertible
securities, upon the reasonable request of sellers of a majority of shares
of such Registrable Securities, use its best efforts to list the
convertible securities and, if requested, the Common Stock underlying the
convertible securities, notwithstanding that at the time of request such
sellers hold only convertible securities, on any securities exchange so
requested, if such Registrable Securities are not already so listed, and if
such listing is then permitted under the rules of such exchange; (C) and
use its best efforts to provide a transfer agent and registrar for such
Registrable Securities covered by such registration statement not later
than the effective date of such registration statement;
(ix) enter into such customary agreements (including an underwriting
agreement in customary form), which may include indemnification provisions
in favor of underwriters and other persons in addition to, or in
substitution for the provisions of Section 5 hereof, and take such other
actions as sellers of a majority of shares of such
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Registrable Securities or the underwriters, if any, reasonably requested in
order to expedite or facilitate the disposition of such Registrable
Securities;
(x) obtain a "cold comfort" letter or letters from the Company's
independent public accounts in customary form and covering matters of the
type customarily covered by "cold comfort" letters as the seller or sellers
of a majority of shares of such Registrable Securities shall reasonably
request (provided that Registrable Securities constitute at least 25% of
the securities covered by such registration statement);
(xi) make available for inspection by any seller of such Registrable
Securities covered by such registration statement, by any underwriter
participating in any disposition to be effected pursuant to such
registration statement and by any attorney, accountant or other agent
retained by any such seller or any such underwriter, all pertinent
financial and other records, pertinent corporate documents and properties
of the Company, and cause all of the Company's officers, directors and
employees to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with such
registration statement;
(xii) notify counsel (selected pursuant to Section 7 hereof) for the
Holders of Registrable Securities included in such registration statement
and the managing underwriter or agent, immediately, and confirm the notice
in writing (i) when the registration statement, or any post-effective
amendment to the registration statement, shall have become effective, or
any supplement to the prospectus or any amendment prospectus shall have
been filed, (ii) of the receipt of any comments from the SEC, (iii) of any
request of the SEC to amend the registration statement or amend or
supplement the prospectus or for additional information, and (iv) of the
issuance by the SEC of any stop order suspending the effectiveness of the
registration statement or of any order preventing or suspending the use of
any preliminary prospectus, or of the suspension of the qualification of
the registration statement for offering or sale in any jurisdiction, or of
the institution or threatening of any proceedings for any of such purposes;
(xiii) make every reasonable effort to prevent the issuance of any
stop order suspending the effectiveness of the registration statement or of
any order preventing or suspending the use of any preliminary prospectus
and, if any such order is issued, to obtain the withdrawal of any such
order at the earliest possible moment;
(xiv) if requested by the managing underwriter or agent or any Holder
of Registrable Securities covered by the registration statement, promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter or agent or such Holder reasonably
requests to be included therein, including, without limitation, with
respect to the number of Registrable Securities being sold by such Holder
to such underwriter or agent, the purchase price being paid therefor by
such underwriter or agent and with respect to any other terms of the
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underwritten offering of the Registrable Securities to be sold in such
offering; and make all required filings of such prospectus supplement or
post-effective amendment as soon as practicable after being notified of the
matters incorporated in such prospectus supplement or post-effective
amendment;
(xv) cooperate with the Holders of Registrable Securities covered by
the registration statement and the managing underwriter or agent, if any,
to facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legends) representing securities to be sold under
the registration statement, and enable such securities to be in such
denominations and registered in such names as the managing underwriter or
agent, if any, or such Holders may request;
(xvi) obtain for delivery to the Holders of Registrable Securities
being registered and to the underwriter or agent an opinion or opinions
from counsel for the Company in customary form and in form, substance and
scope reasonably satisfactory to such Holders, underwriters or agents and
their counsel; and
(xvii) cooperate with each seller of Registrable Securities and each
underwriter or agent participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings
required to be made with the NASD.
The Company may require each seller of Registrable Securities as to which
any registration is being effected to furnish the Company with such information
regarding such seller and pertinent to the disclosure requirements relating to
the registration and the distribution of such securities as the Company may from
time to time reasonably request in writing.
Each Holder of Registrable Securities agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
clause (vi) of this Section 4, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by clause (vi) of this
Section 4, and, if so directed by the Company, such Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the period mentioned in clause (ii) of this
Section 4 shall be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to clause (vi) of this
Section 4 and including the date when each seller of Registrable Securities
covered by such registration statement shall have received the copies of the
supplemented or amended prospectus contemplated by clause (vi) of this Section
4.
5. Indemnification. (a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities Act pursuant
to Section 2 or 3, the Company will, and it hereby does, indemnify and hold
harmless, to the extent
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permitted by law, the seller of any Registrable Securities covered by such
registration statement, each affiliate of such seller and their respective
directors and officers or general and limited partners (including any director,
officer, affiliate, employee, agent and controlling Person of any of the
foregoing), each other Person who participates as an underwriter in the offering
or sale of such securities and each other Person, if any, who controls such
seller or any such underwriter within the meaning of the Securities Act
(collectively, the "Indemnified Parties"), against any and all losses, claims,
damages or liabilities, joint or several, and expenses (including reasonable
attorney's fees and reasonable expenses of investigation) to which such
Indemnified Party may become subject under the Securities Act, common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof, whether or not such Indemnified Party is a party
thereto) arise out of or are based upon (a) any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary, final or summary prospectus contained therein, or any amendment or
supplement thereto, or (b) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in the case of a prospectus, in light of the circumstances under which
they were made) not misleading, and the Company will reimburse such Indemnified
Party for any legal or any other expenses reasonably incurred by it in
connection with investigating or defending against any such loss, claim,
liability, action or proceeding; provided that the Company shall not be liable
to any Indemnified Party in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or expense
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement or amendment
or supplement thereto or in any such preliminary, final or summary prospectus in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such seller specifically stating
that it is for use in the preparation thereof. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
such seller or any Indemnified Party and shall survive the transfer of such
securities by such seller.
(b) Indemnification by the Seller. The Company may require, as a condition
to including any Registrable Securities in any registration statement filed in
accordance with Section 4 herein, that the Company shall have received an
undertaking reasonably satisfactory to it from the prospective seller of such
Registrable Securities or any underwriter to indemnify and hold harmless (in the
same manner and to the same extent as set forth in this Section 5) the Company
and all other prospective sellers with respect to any untrue statement or
alleged untrue statement in or omission or alleged omission from such
registration statement, any preliminary, final or summary prospectus contained
therein, or any amendment or supplement, if such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company through an
instrument duly executed by such seller or underwriter specifically stating that
it is for use in the preparation of such registration statement, preliminary,
final or summary prospectus or amendment or supplement, or a document
incorporated by reference into any of the foregoing. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
the Company or any of the prospective sellers, or any of their respective
affiliates, directors, officers or controlling Persons and shall survive the
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transfer of such securities by such seller. In no event shall the liability of
any selling Holder of Registrable Securities hereunder be greater in amount than
the dollar amount of the proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified party
hereunder of written notice of the commencement of any action or proceeding with
respect to which a claim for indemnification may be made pursuant to this
Section 5, 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 the Indemnified Party
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under the preceding subdivisions of this Section 5, 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 in such Indemnified Party's reasonable judgment a conflict of interest
between such Indemnified Party and indemnifying parties may exist in respect of
such claim, the indemnifying party will be entitled to participate in and to
assume the defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory to
such Indemnified Party, and after notice from the indemnifying party to such
Indemnified Party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such Indemnified Party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party will consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof, the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation.
(d) Contribution. If the indemnification provided for in this Section 5
from the indemnifying party is unavailable to an Indemnified Party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
herein, then the 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 losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and Indemnified Parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and Indemnified Parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
Indemnified Parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party under this Section 5(d) as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method
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of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(e) Other Indemnification. Indemnification similar to that specified in
this Section 5 (with appropriate modifications) shall be given by the Company
and each seller of Registrable Securities with respect to any required
registration or other qualification of securities under any federal or state law
or regulation or governmental authority other than the Securities Act.
(f) Non-Exclusivity. The obligations of the parties under this Section 5
shall be in addition to any liability which any party may otherwise have to any
other party.
6. Rule 144. The Company covenants that it 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 SEC thereunder (or, if the Company is not
required to file such reports, it will, upon the request of any Holder of
Registrable Securities, make publicly available such information), and it 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 shares of Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the SEC. 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.
Notwithstanding anything contained in this Section 6, the Company may deregister
under Section 12 of the Exchange Act if it then is permitted to do so pursuant
to the Exchange Act and the rules and regulations thereunder.
7. Selection of Counsel. In connection with any registration of Registrable
securities pursuant to Sections 2 and 3 hereof, the Holders of a majority of the
Registrable Securities covered by any such registration may select one counsel
to represent all Holders of Registrable Securities covered by such registration;
provided, however, that in the event that the counsel selected as provided above
is also acting as counsel to the Company in connection with such registration,
the remaining Holders shall be entitled to select one additional counsel to
represent all such remaining Holders.
8. Miscellaneous. (a) Other Investors. The Company may enter into
agreements with other purchasers of Common Stock who are then employees of the
Company (or its successor) or any of its subsidiaries, making them parties
hereto (and thereby giving them all, or a portion, of the rights, preferences
and privileges of an original party hereto) with respect to additional shares of
Common Stock (the "Supplemental Agreements"); provided, however, that pursuant
to any such Supplemental Agreement, such purchaser expressly agrees to be bound
by all of the terms, conditions and obligations of this Agreement as if such
purchaser were an original party hereto. All shares of Common Stock issued or
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issuable pursuant to such Supplemental Agreements shall be deemed to be
Registrable Securities.
(b) Holdback Agreement. If any such registration shall be in connection
with an underwritten public offering, each Holder of Registrable Securities
agrees not to effect any public sale or distribution, including any sale
pursuant to Rule 144 under the Securities Act, of any equity securities of the
Company, or of any security convertible into or exchangeable or exercisable for
any equity security of the Company (in each case, other than as part of such
underwritten public offering), within 7 days before or such period not to exceed
180 days as the underwriting agreement may require (or such lesser period as the
managing underwriters may permit) after the effective date of such registration
(except as part of such registration), and the Company hereby also so agrees and
agrees to cause each other holder of any equity security, or of any security
convertible into or exchangeable or exercisable for any equity security, of the
Company purchased from the Company (at any time other than in a public offering)
to so agree.
(c) Amendments and Waivers. This Agreement may be amended and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the Holders of
a majority of the Registrable Securities then outstanding; provided, however,
that no amendment, waiver or consent to the departure from the terms and
provisions of this Agreement that is adverse to the Common Stock Partnership or
any of its successors and assigns shall be effective as against any such Person
for so long as such Person holds any Registrable Securities unless consented to
in writing by such Person. Each Holder of any Registrable Securities at the time
or thereafter outstanding shall be bound by any consent authorized by this
Section 8(c), whether or not such Registrable Securities shall have been marked
to indicate such consent.
(d) Successors, Assigns and Transferees. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns. In addition, and whether or not any express assignment
shall have been made, the provisions of this Agreement which are for the benefit
of the parties hereto other than the Company shall also be for the benefit of
and enforceable by any subsequent Holder of any Registrable Securities, subject
to the provisions contained herein. Without limitation to the foregoing, in the
event that either Common Stock Partnership distributes or otherwise transfers
any shares of the Registrable Securities to any of its present or future general
or limited partners, the Company hereby acknowledges that the registration
rights granted pursuant to this Agreement shall be transferred to such partner
or partners on a pro rata basis, and that at or after the time of any such
distribution or transfer, any such partner or group of partners may designate a
Person to act on its behalf in delivering any notices or making any requests
hereunder.
(e) Business Combinations. Without the prior written consent of the Common
Stock Partnership or its successor or assignee, the Company shall not
consolidate with or enter into any merger, consolidation or other business
combination transaction (for the purposes of this Section 8(e), a "business
combination") with another Person (whether or not
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the Company is the surviving entity) or transfer (by lease, assignment, sale or
otherwise) (for the purposes of this Section 8(e), a "transfer") all or
substantially all of its assets or earning power, in a single transaction or
through a series of related transactions, to another Person or group of
affiliated Persons or permit any of its subsidiaries to enter into any such
transaction or transactions, where the business combination or transfer involves
the payment by any Person of any securities to, or the exchange by any Person of
any securities with, the Company or any of the holders of Common Stock of the
Company, unless (x) such securities, if any, to be received by the Common Stock
Partnership have been registered under the Securities Act in a manner which
would permit the sale to the public of such securities under the Securities Act
or (y) the issuer of such securities agrees to be bound by the terms of this
registration rights agreement with the Common Stock Partnerships relating to
such securities or otherwise agrees to enter into a new registration rights
agreement which shall contain terms substantially similar to this Agreement
(with appropriate modifications) and shall otherwise be in a form satisfactory
to Strata Associates. Notwithstanding the foregoing, the provisions of this
Section 8(e) shall not apply if at the time of any business combination or
transfer the Common Stock Partnerships own in the aggregate less than 5% of the
outstanding Common Stock, calculated on a fully diluted basis.
(f) Notices. All notices and other communications provided for hereunder
shall be in writing and shall be sent by first class mail, telex, telecopier or
hand delivery:
(i) if to the Company, to:
E&S Holdings Corporation
000 Xxxxx Xxxxxxx Xxxxxx Xxxx.
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxx
(ii) if to either Common Stock Partnership, to it in care of:
Kohlberg Kravis Xxxxxxx & Co.
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq
(iii) if to any other holder of Registrable Securities, to the address
of such other holder as shown in the stock record book of the Company, or
to such other address as any of the above shall have designated in writing
to all of the other above.
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All such notices and communications shall be deemed to have been given or
made (1) when delivered by hand, (2) five business days after being deposited in
the mail, postage prepaid, (3) when telexed answer-back received or (4) when
telecopied, receipt acknowledged.
(g) Descriptive Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein.
(h) Severability. In the event that any one or more of the provisions,
paragraphs, words, clauses, phrases or sentences contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the remaining provisions, paragraphs,
words, clauses, phrases or sentences hereof shall not be in any way impaired, it
being intended that all rights, powers and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by law.
(i) Counterparts. This Agreement may be executed in counterparts, and by
different parties on separate counterparts, each of which shall be deemed an
original, but all such counterparts shall together constitute one and the same
instrument.
(j) Governing Law; Submission to Jurisdiction. This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of New York applicable to contracts made and to be performed therein. The
parties to this Agreement hereby agree to submit to the jurisdiction of the
courts of the State of New York, the courts of the United States of America for
the Southern District of New York, and appellate courts from any thereof in any
action or proceeding arising out of or relating to this Agreement.
(k) Specific Performance. The parties hereto acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, it is agreed that they shall be entitled to an
injunction or injunctions to prevent breaches of the provision of this Agreement
and to enforce specifically the terms and provisions hereof in any court of
competent jurisdiction in the United States or any state thereof, in addition to
any other remedy to which they may be entitled at law or in equity.
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IN WITNESS WHEREOF, each of the undersigned has executed this Agreement or
caused this Agreement to be duly executed on its behalf as of the date first
written above.
E&S HOLDINGS CORPORATION
By:______________________________________
Title:
STRATA ASSOCIATES, L.P.
By:______________________________________
Title:
KKR PARTNERS II, L.P.
By:______________________________________
Title:
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