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Exhibit 10.16
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of December ___, 1997 by and among Xxxxxx Industries, Inc., a
Delaware corporation (the "Company"), Xxxxxx Xxxxxxxxxx Xxxxx Inc. ("Xxxxxx
Xxxxxxxxxx"), and Southwest Securities, Inc. ("Southwest"). Xxxxxx Xxxxxxxxxx
and Southwest are hereafter referred to collectively as the "Managing
Underwriters."
W I T N E S S E T H
In connection with the public offering by the Company and certain
selling stockholders (the "Selling Stockholders") of the Company's common stock,
par value $.10 per share (the "Common Stock"), and Common Stock Purchase
Warrants (the "Warrants") under that certain Warrant Agreement (the "Warrant
Agreement"), dated as of the date hereof, between the Company and the Warrant
Agent (as defined in Section 1), the Managing Underwriters purchased a warrant
(the "Managing Underwriters' Warrant") entitling the holder thereof to purchase
up to (i) 140,000 shares of Common Stock (the "Underlying Shares") and (ii)
140,000 Warrants (the "Underlying Warrants"), which shall entitle the holder(s)
thereof to purchase up to 140,000 shares of Common Stock (the "Underlying
Warrant Shares"), each subject to adjustment as specified in the Managing
Underwriters' Warrant Agreement (as defined in Section 1) or the Warrant
Agreement, respectively.
In order to induce the Managing Underwriters to purchase the Managing
Underwriters' Warrant, the Company has agreed to provide the registration rights
set forth in this Agreement for the benefit of (i) the Managing Underwriters,
and (ii) the Persons owning the record or beneficial interest in any Registrable
Securities from time to time (the "Holders").
The parties hereby agree as follows:
SECTION 1. Definitions. As used in this Agreement, the following
capitalized terms shall have the following meanings:
(a) "Affiliate" of any specified Person means any other Person that,
directly or indirectly, is in control of, is controlled by, or is under common
control with such specified Person. For purposes of this definition, control of
a Person means the power, direct or indirect, to direct or cause the direction
of the management and policies of such Person whether by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
(b) "Agreement" shall have the meaning set forth in the introductory
paragraph hereto.
(c) "Business Day" shall mean any day except a Saturday, Sunday or
other day in the City of New York on which banks are authorized to close.
(d) "Commission" shall mean the Securities and Exchange Commission.
(e) "Common Stock" shall have the meaning set forth in the recitals
hereto.
(f) "Company" shall have the meaning set forth in the introductory
paragraph hereto.
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(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "Holders" shall have the meaning set forth in the recitals hereto.
(i) "Xxxxxx Xxxxxxxxxx" shall have the meaning set forth in the
introductory paragraph hereto.
(j) "Managing Underwriters" shall have the meaning set forth in the
introductory paragraph hereto.
(k) "Managing Underwriters' Warrant" shall have the meaning set forth
in the recitals hereto.
(l) "Managing Underwriters' Warrant Agreement" shall mean the Managing
Underwriters' Warrant Agreement, dated as of the date hereof, between the
Company and the Managing Underwriters.
(m) "Material Event" shall have the meaning set forth in Section 4(c)
hereof.
(n) "NASD" shall mean the National Association of Securities Dealers,
Inc.
(o) "Person" shall mean an individual, partnership, corporation,
limited liability company, joint venture, association, trust or other
organization whether or not a legal entity, or a government or agency or
political subdivision thereof.
(p) "Prospectus" shall mean the prospectus included in a Registration
Statement, as amended or supplemented by any prospectus supplement and by all
other amendments thereto, including post-effective amendments, and all material
incorporated by reference into such prospectus.
(q) "Registrable Securities" shall mean the Managing Underwriters'
Warrant, the Underlying Shares, the Underlying Warrants, and the Underlying
Warrant Shares. All of the Registrable Securities are divisible. A Registrable
Security ceases to be a Registrable Security after it has been sold pursuant to
an effective registration statement under the Securities Act, provided that any
underlying security shall remain a Registrable Security until such underlying
security has also been sold pursuant to an effective registration statement
under the Securities Act.
(r) "Registration Statement" shall mean any Shelf Registration
Statement pursuant to Section 2 hereof and any piggyback registration statement
pursuant to Section 3 hereof (including any amendments and supplements to such
registration statement, including any post-effective amendments).
(s) "Securities Act" shall mean the Securities Act of 1933, as amended.
(t) "Shelf Registration Statement" shall mean a shelf registration
statement of the Company pursuant to Section 2 hereof filed with the Commission
on an appropriate form under Rule 415 under the Securities Act, or any similar
rule that may be adopted by the Commission, any amendments and supplements to
such registration statement, including any post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
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(u) "Southwest" shall have the meaning as set forth in the introductory
paragraph hereto.
(v) "Underlying Shares" shall have the meaning set forth in the
recitals hereto.
(w) "Underlying Warrants" shall have the meaning set forth in the
recitals hereto.
(x) "Underlying Warrant Shares" shall have the meaning set forth in the
recitals hereto.
(y) "Warrant Agent" shall mean American Stock Transfer & Trust Company,
as warrant agent.
(z) "Warrant Agreement" shall mean that certain Warrant Agreement,
dated as of the date hereof, between the Company and the Warrant Agent.
SECTION 2. Shelf Registration Statement.
(a) Demand Registration Right. The Managing Underwriters have one
demand registration right with respect to the Registrable Securities under this
Section 2. Either Managing Underwriter may exercise this demand right during the
period beginning on the first anniversary of the date hereof and ending on the
fifth anniversary of the date hereof or the expiration of the Managing
Underwriters' Warrant, if later. Such demand right must be exercised in writing
and must satisfy the notice requirements to the Company as set forth in Section
10(d) herein. A Managing Underwriter need not be a Holder to exercise this
demand right. This demand right shall continue to exist until it expires
pursuant to this Section 2(a), or a Shelf Registration Statement demanded under
this Section 2(a) becomes effective.
(b) Filing of a Shelf Registration Statement. Upon such written demand
pursuant to Section 2(a), the Company shall within 30 days following receipt of
such written demand, file with the Commission a Shelf Registration Statement
relating to the issuance and/or resale of the Registrable Securities from time
to time in accordance with the methods of distribution set forth in such Shelf
Registration Statement (including securities deemed registered pursuant to Rule
416 under the Securities Act), and thereafter use its reasonably best efforts to
cause such Shelf Registration Statement to be declared effective under the
Securities Act within 75 days following receipt of such written demand; provided
that no Holder shall be entitled to have its Registrable Securities covered by
such Shelf Registration Statement unless such Holder is in compliance with
Section 5 hereof.
(c) Effective Period. The Company shall use its reasonably best efforts
to keep such Shelf Registration Statement continuously effective in order to
permit the Prospectus forming a part thereof to be usable until the fourth
anniversary of the date that such Shelf Registration Statement was declared
effective (or if later, until the Warrants expire).
(d) Identification of Holders. After the effectiveness of the Shelf
Registration Statement, the Company shall promptly upon the request of any
Holder, use its reasonably best efforts to take any action necessary to identify
such Holder as a selling security holder to the extent such Holder is required
but not already identified as such in the Prospectus.
(e) Additional Demand Registration Rights. After the expiration of the
effective
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period in Section 2(c) hereof, each Managing Underwriter may make one additional
demand registration for the Registrable Securities upon the terms set forth in
this Section 2, provided that the demanding Managing Underwriter pay all of the
Company's out-of-pocket fees and expenses, including reasonable legal fees, in
connection with such filing.
SECTION 3. Piggyback Registration Rights.
(a) Notice to Holders. If at any time on or after the first anniversary
of the date hereof and on or before the fifth anniversary of the date hereof or
such later time as the Managing Underwriters Warrant expires, the Company
proposes to file a registration statement with the Commission (other than on a
Form S-4 or a Form S-8), it will give written notice by registered mail, at
least 30 days prior to the filing of each such registration statement, to the
Holders of its intention to do so. If any Holders shall notify the Company
within 20 days after receipt of such notice of their desire to include any of
their Registrable Securities (including any security underlying their
Registrable Securities) in such proposed registration statement, the Company
shall include such Registrable Securities in such registration statement,
provided that if the managing underwriter, if any, of such offering delivers an
opinion to the Holders that the total amount of securities that they and the
holders of other piggyback rights intend to include in such registration
statement could adversely affect the success of such offering, then the amount,
the number or kind of securities to be offered for the account of such Holders
and the holders of such other piggyback rights will be reduced pro rata among
such Holders and the holders of such other piggyback rights to the extent
necessary to reduce the total amount of securities to be included in such
offering to the amount, number or kind recommended by the managing underwriter.
(b) Effectiveness of Registration Statement. The Company shall use its
reasonably best efforts to cause any registration statement filed pursuant to
Section 3(a) hereof to be declared effective and shall maintain the
effectiveness thereof for a period of not less than one year after such
effective date.
SECTION 4. Registration Procedures. In connection with each
Registration Statement and any related Prospectus, the Company shall:
(a) Provided Required Information. Use its reasonably best efforts to
keep such Registration Statement continuously effective and provide all
requisite financial statements for the periods required hereunder; upon the
occurrence of any event that would cause such Registration Statement or the
Prospectus contained therein (i) to contain a material misstatement or omission
or (ii) not to be effective and usable during the period required by this
Agreement, the Company shall file promptly an appropriate amendment to such
Registration Statement, in the case of clause (i), correcting any such
misstatement or omission, and in the case of either clause (i) or (ii), use its
best efforts to cause such amendment to be declared effective and such
Registration Statement and the related Prospectus to become usable for their
intended purposes as soon as reasonably practicable thereafter;
(b) Amendments. Prepare and file with the Commission such amendments
and post-effective amendments to such Registration Statement as may be necessary
to keep such Registration Statement effective for the periods required
hereunder, the related Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under the
Securities Act, and to comply fully with the applicable provisions of Rules 424
and 430A under the Securities Act in a timely manner; and comply with the
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provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such Registration Statement in accordance with
the intended method or methods of distribution set forth in such Registration
Statement or supplement to such Prospectus;
(c) Material Events. Advise promptly the Managing Underwriters, the
Holders and any underwriters involved in the offering, and if requested by such
Persons, confirm such advice in writing, (i) when such Registration Statement or
Prospectus supplement or post-effective amendment has been filed, and with
respect to any post-effective amendment, when the same has become effective,
(ii) of any request by the Commission for amendments to such Registration
Statement or amendments or supplements to such Prospectus or for additional
information relating thereto, (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of such Registration Statement under the
Securities Act or of the suspension by any state securities commission of the
qualification of the Registrable Securities for offering or sale
in any jurisdiction, or the initiation of any proceeding for any of the
preceding purposes or (iv) of the existence of any fact or the happening of any
event that makes any statement of a material fact made in such Registration
Statement, the related Prospectus, any amendment or supplement thereto, or any
document incorporated by reference therein untrue, or that requires the making
of any additions to or changes in such Registration Statement or the related
Prospectus in order to make the statements of material fact therein not
misleading (a "Material Event"); if at any time the Commission shall issue any
stop order suspending the effectiveness of such Registration Statement, or any
state securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the Registrable
Securities under state securities or Blue Sky laws, the Company shall use its
best efforts to obtain the withdrawal or lifting of such order at the earliest
practicable time;
(d) Opportunity to Comment. Furnish to the Managing Underwriters, the
Holders and any underwriters involved in the offering, before filing with the
Commission, copies of such Registration Statement and the Prospectus included
therein and any amendments or supplements to such Registration Statement or
Prospectus (including all documents incorporated by reference), which documents
will be subject to the review of such Managing Underwriters, Holders and
underwriters for a period of at least three Business Days, and the Company will
not file such Registration Statement or Prospectus or any amendment or
supplement to such Registration Statement or Prospectus (including all documents
incorporated by reference) to which any of such Managing Underwriters, Holders
or underwriters reasonably object within five Business Days after the receipt
thereof; such Managing Underwriters, Holders and underwriters shall be deemed to
have reasonably objected to such filing if such Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be filed,
contains a material misstatement or omission or fails to comply with the
applicable requirements of the Securities Act;
(e) Opportunity to Ask Questions. Prior to the filing of such
Registration Statement, any amendment thereto, or any document that is to be
incorporated by reference therein, if requested by the Managing Underwriters,
the Holders and any underwriters involved in the offering within three Business
Days after receipt of notification thereof from the Company, make the Company's
representatives available for discussion of such document and other customary
due diligence matters, and include such information in such document prior to
the filing thereof as such Managing Underwriters, Holders and underwriters
reasonably may request;
(f) Opportunity to Review Documents. Make available at reasonable times
for
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inspection by the Managing Underwriters, the Holders and any underwriters
involved in the offering, and any attorney or accountant retained by any of
them, all financial and other records, pertinent corporate documents and
properties of the Company and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such Managing
Underwriters, Holders and underwriters, attorney or accountant in connection
with such Registration Statement, any amendment thereto, or any document that is
to be incorporated therein prior to the filing thereof;
(g) Post-Effective Amendments. If requested by the Managing
Underwriters, the Holders or any underwriters involved in the offering, promptly
include in such Registration Statement or Prospectus, pursuant to a supplement
or post-effective amendment if necessary, such information as such Managing
Underwriters, Holders or underwriters may reasonably request to have included
therein, including, without limitation, information relating to the "Plan of
Distribution" of the Registrable Securities; and make all required filings of
such Prospectus supplement or post-effective amendment as soon as practicable
after the Company is notified of the matters to be included in such Prospectus
supplement or post-effective amendment;
(h) Copies of Registration Statement. Furnish to each Managing
Underwriter, Holder and any underwriter involved in the offering, without
charge, at least one copy of such Registration Statement, as first filed with
the Commission, and of each amendment thereto, including all documents
incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference);
(i) Copies of Prospectus. Deliver to each Managing Underwriter, Holder
and any underwriter involved in the offering, without charge, as many copies of
the Prospectus related to such Registration Statement (including each
preliminary Prospectus) and any amendment or supplement thereto as such Persons
may request; the Company hereby consents to the use of such Prospectus and any
amendment or supplement thereto by each of the Managing Underwriters, Holders
and underwriters, if any, in connection with the offering and the sale of the
Registrable Securities covered by such Prospectus or any amendment or supplement
thereto;
(j) Legal Opinion. Obtain an opinion of outside counsel to the Company
and updates thereof in form and substance reasonably satisfactory to the
Managing Underwriters, the Holders and any underwriters involved in the
offering, addressed to such Managing Underwriters, Holders and underwriters
covering the matters customarily covered in opinions requested in offerings and
such other matters as may be reasonably requested by such Managing Underwriters,
Holders and underwriters, including a statement to the effect that such counsel
has participated in conferences with officers and other representatives of the
Company, representatives of the independent public accountants for the Company,
and such other Persons as may participate in such conferences at which the
contents of such Registration Statement and related Prospectus were discussed,
and although such counsel has not undertaken to investigate or independently
verify and does not assume any responsibility for the accuracy, completeness, or
fairness of the statements therein, such counsel advises that no facts came to
such counsel's attention that caused such counsel to believe that such
Registration Statement and related Prospectus, at the time that such
Registration Statement became effective or the date of such counsel's opinion,
contained an untrue statement of material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading;
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(k) Underwriting Agreement. In connection with any underwritten
offering of Registrable Securities pursuant to such Registration Statement,
enter into an underwriting agreement as is customary in underwritten offerings
and take all such other actions as are reasonably requested by the underwriters
in such offering to expedite or facilitate the registration and disposition of
such Registrable Securities, and in connection therewith make such
representations and warranties to the underwriters, and provide such indemnities
as are customarily made and provided by issuers to underwriters in underwritten
offerings;
(l) Blue Sky Filings. Prior to any public offering of Registrable
Securities, cooperate with the Managing Underwriters, the Holders and any
underwriters involved in the offering, and their respective counsel in
connection with the registration and qualification of the Registrable Securities
under the securities or Blue Sky laws of such jurisdictions as such Managing
Underwriters, Holders and underwriters may reasonably request and do any and all
other acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by such Registration
Statement; provided, however, that the Company shall not be required to register
or qualify as a foreign corporation where it is not required to be qualified or
to take any action that would subject it to service of process in suits or to
taxation in any jurisdiction where it is not now so subject;
(m) Certificates. Cooperate with the Managing Underwriters, the Holders
and any underwriters involved in the offering to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold and not bearing any restrictive legends; and to register such
Registrable Securities in such denominations and such names as the Managing
Underwriters, the Holders and any underwriters involved in the offering may
request at least two Business Days prior to such sale of Registrable Securities
made by such Managing Underwriters, Holders and underwriters;
(n) Approvals. Use its reasonably best efforts to cause the 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 Managing Underwriters, the Holders and any underwriters involved
in the offering to consummate the disposition of such Registrable Securities;
(o) Post-Effective Amendments. If any Material Event shall exist or
have occurred, promptly prepare a supplement or post-effective amendment to
such Registration Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of Registrable Securities, such Prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading;
(p) CUSIP Numbers. Provide a CUSIP number or numbers for all
Registrable Securities not later than the effective date of such Registration
Statement to the extent that any Registrable Security does not already have a
CUSIP number;
(q) NASD Filings. Cooperate and assist in any filings required to be
made with the NASD and in the performance of any due diligence investigation by
the Managing Underwriters, the Holders and any underwriters involved in the
offering (including any "qualified independent underwriter") that is required to
be retained in accordance with the rules and regulations of the NASD;
(r) Earnings Statement. Otherwise use its best efforts to comply with
all applicable
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rules and regulations of the Commission, and make generally available to its
security holders as soon as practicable, but not later than 45 days after the
end of the 12 month period beginning at the end of the fiscal quarter of the
Company during which the date on which the Commission declares such Registration
Statement effective, or 90 days if such 12 month period coincides with the
Company's fiscal year, a consolidated earnings statement (in form complying with
the provisions of Section 11(a) of the Securities Act and Rule 158 under the
Securities Act), which need not be audited, covering such 12 month period;
(s) Exchange Act Filings. Provide promptly to each Managing Underwriter
and each Holder upon request each document filed with the Commission pursuant to
the requirements of Section 13 or Section 15 of the Exchange Act;
(t) Conduct Rules. In the event that any broker-dealer registered under
the Exchange Act shall underwrite any Registrable Securities or participate as a
member of an underwriting syndicate or selling group or "assist in the
distribution" (within the meaning of the Conduct Rules and the By-Laws of the
NASD) thereof, whether as a Holder of such Registrable Securities or as an
underwriter, a placement or sales agent or a broker or dealer in respect
thereof, or otherwise, assist such broker-dealer in complying with the
requirements of such Conduct Rules and By-Laws, including, without limitation,
by (i) engaging a "qualified independent underwriter" (as defined in such
Conduct Rules) to participate in the preparation of such Registration Statement
relating to such Registrable Securities and to exercise usual standards of due
diligence in respect thereto, (ii) indemnifying any such qualified independent
underwriter to the same extent as the Company indemnifies the Holders under
Section 8 hereof, and (iii) providing such information to such broker-dealer as
may be required in order for such broker-dealer to comply with the requirements
of the Conduct Rules of the NASD; and
(u) Exchange Listing. Use its reasonably best efforts to cause all
Registrable Securities covered by such Registration Statement to be listed on
each securities exchange or automated quotation system on which similar
securities issued by the Company are then listed.
SECTION 5. Holder Information. No Holder may include any of its
Registrable Securities in a Registration Statement pursuant to this Agreement
unless and until such Holder furnishes to the Company in writing such
information as the Company may reasonably request specified in Items 507 and 508
of Regulation S-K under the Securities Act for use in connection with such
Registration Statement or Prospectus or preliminary Prospectus included therein.
Each Holder agrees to furnish promptly to the Company all information required
to be disclosed to make the information previously furnished to the Company by
such Holder not materially misleading.
SECTION 6. Restrictions On Holders. Each Holder agrees by acquisition
of a Registrable Security that, upon receipt of any notice from the Company of
the existence of any Material Event not adequately described in a Registration
Statement, such Holder will forthwith discontinue disposition of Registrable
Securities pursuant to such Registration Statement until such Holder's receipt
of the copies of the related supplemented or amended Prospectus contemplated by
Section 4(o) hereof, or until such Holder is advised in writing by the Company
that the use of such Prospectus may be resumed, and has received copies of any
additional or supplemental filings that are incorporated by reference in such
Prospectus.
SECTION 7. Registration Expenses
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(a) Company Expenses. Except as provided in Section 9 hereof, all expenses
incident to the Company's performance of or compliance with this Agreement will
be borne by the Company, regardless of whether a Registration Statement becomes
effective, including without limitation: (i) all fees, disbursements and
expenses of the Company's counsel and accountants and all other expenses in
connection with the registration, printing and filing of a Registration
Statement and the related Prospectus and any amendments and supplements thereto
and the mailing and delivery of copies thereof and of any final Prospectus to
the Managing Underwriters, Holders, and any underwriters involved in the
offering, (ii) all registration and filing fees of the Commission, (iii) all
printing and delivery (including, without limitation, postage, air freight
charges and charges for counting and packaging) of copies of such Registration
Statement, Prospectus, and each final Prospectus, Blue Sky memoranda, any
agreements among underwriters, any selected dealer agreements, any ancillary
agreements and documents, and all amendments or supplements to any of them as
may be reasonably requested for use in connection with the offering related to
such Registration Statement, (iv) all expenses incurred in connection with the
qualification under state securities laws or Blue Sky laws, including the
reasonable fees of the counsel for the Managing Underwriters not to exceed
$5,000, Holders, and any underwriters involved in the offering in connection
therewith not to exceed $5,000, (v) all listing, designation and other filing
fees in connection with listing the Registrable Securities on a national
securities exchange or automated quotation system pursuant to the requirements
hereof, (vi) all filing fees incident to securing a review of the terms of the
sale of the Registrable Securities by the association or organization that
supervises, oversees or regulates such exchange or system, (vii) all costs of
preparing certificates for the securities, including the Registrable Securities,
offered in such offering, (viii) all costs and charges of any transfer agent,
warrant agent or registrar, (ix) all costs of the tax stamps, if any, in
connection with the issuance and delivery of the Registrable Securities, (x) if
the Company elects to make the offering related to such Registration Statement
an underwritten offering, all out-of-pocket expenses in connection with "road
shows" in connection with any underwritten offering, and (xi) if the Company
elects to make the offering related to such Registration Statement an
underwritten offering, all out-of-pocket other out-of-pocket costs and expenses
incurred in the performance of the obligations of the Company hereunder that are
not otherwise specifically provided for in this paragraph; provided, however,
that if any Managing Underwriter makes an additional demand registration
pursuant to Section 2(e), such Managing Underwriter shall bear the out-of-pocket
expenses noted in this paragraph incurred in connection with such registration.
The Company will bear internal expenses (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expenses of any annual audit and the fees and expenses
of any Person, including special experts, retained by the Company.
(b) Counsel for the Managing Underwriters and the Holders. In addition
to the expenses described in Section 7(a) above, in connection with a Shelf
Registration Statement filed pursuant to Section 2 at the Company's expense, the
Company will reimburse the demanding Managing Underwriter for the reasonable
fees and disbursements of not more than one counsel; provided, however, that the
Company shall not be liable for such attorneys' fees in excess of $10,000.
SECTION 8. Indemnification
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless each Managing Underwriter, Holder, the respective directors,
officers, partners, employees, and agents of each Managing Underwriter or
Holder, and each Person, if any, who controls any Managing Underwriter or Holder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages,
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liabilities and expenses (including reasonable attorneys' fees and costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement or
related Prospectus, or in any amendment or supplement thereto, or in any
application or other document executed by the Company, or arising out of or
based upon any omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or arising
out of or based upon any inaccuracy in the representations and warranties of the
Company contained in an underwriting agreement related to such Registration
Statement or any failure of the Company to perform its obligations under such
underwriting agreement, except insofar as such losses, claims, damages,
liabilities or expenses arise out of or are based upon an untrue statement or
omission or alleged untrue statement or omission that has been made in any
Registration Statement or related Prospectus or omitted therefrom in reliance
upon and in conformity with the information furnished in writing to the Company
by or on behalf of any Managing Underwriters or Holders expressly for use in
connection therewith; provided, however, that with respect to any untrue
statement or omission made in any preliminary Prospectus, this indemnity shall
not inure to the benefit of a Managing Underwriter or Holder (or to the benefit
of any other person entitled to such indemnification) from whom the person
asserting such losses, claims, damages or liabilities purchased the Registrable
Securities concerned if both: (i) a copy of the final Prospectus was not sent or
given to such person as required by the Securities Act, and (ii) the untrue
statement or omission in such preliminary Prospectus was corrected in such final
Prospectus. This indemnity will be in addition to any liability that the Company
may otherwise have, including under this Agreement.
(b) Indemnification by the Holders. Each Holder agrees, severally and
not jointly, to indemnify and hold harmless the Company, its directors, its
officers who sign the Registration Statement, and any Person who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, to the same extent as the foregoing indemnity from the Company
in Section 8(a) hereof, but only with respect to information furnished in
writing to the Company by or on behalf of such Holder expressly for use in such
Registration Statement or related Prospectus. This indemnity will be in addition
to any liability which any Holder may otherwise have, including under this
Agreement.
(c) Indemnification Procedure. If any claim or action shall be brought
under this Section 8(a) or Section 8(b), the indemnified party shall promptly
notify in writing the indemnifying parties, and such indemnifying parties shall
assume the defense thereof, including the employment of counsel reasonably
acceptable to the indemnified party and payment of all fees and expenses. The
indemnified party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
indemnifying parties have agreed to pay such fees and expenses, (ii) the
indemnifying parties have failed to assume the defense and employ counsel
reasonably acceptable to the indemnified party, or (iii) the named parties to
any such action (including any impleaded parties) include the indemnified party
and the indemnifying parties, and the indemnified party shall have been advised
by its counsel that one or more legal defenses may be available to the
indemnified party that may be unavailable to the indemnifying parties, or that
representation of such indemnified party and any indemnifying parties by the
same counsel would be inappropriate under applicable standards of professional
conduct due to actual or potential differing interests between them (in which
case the indemnifying parties shall not have the right to assume the defense of
such action on behalf of the indemnified party (notwithstanding their obligation
to bear the fees and expenses of such counsel)). The indemnifying parties shall
not be liable for any settlement of any such action effected without their
written consent, which may not be unreasonably withheld, but if settled with
such written consent, or if there be a final judgment for the plaintiff in any
such action, the indemnifying parties agree to indemnify and hold harmless any
indemnified party from and
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against any loss, claim, damage, liability or expense by reason of such
settlement or judgment, but in the case of a judgment only to the extent
provided in this Section 8.
(d) Contribution. In order to provide for contribution in circumstances
in which the indemnification provided for in this Section 8 is for any reason
held to be unavailable or is insufficient (other than by reason of the terms
thereof) to hold harmless a party indemnified hereunder, the Company, on the one
hand, and the Holders for whose benefit the Company filed the subject
Registration Statement, on the other hand, shall contribute to the aggregate
losses, claims, damages, liabilities and expenses of the nature contemplated by
such indemnification provision (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claims asserted, but after deducting in the
case of losses, claims, damages, liabilities and expenses suffered by the
Company any contribution received by the Company from Persons, other than such
Holders, who may also be liable for contribution, including Persons who control
the Company within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) to which the Company and such Holders may be subject, in
such proportion as is appropriate to reflect the relative benefits received by
the Company, on the one hand, and such Holders, on the other hand, or if such
allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company, on the one hand, and such Holders, on the
other hand, in connection with the statements or omissions that resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company, on the
one hand, and such Holders, on the other hand, shall be deemed to be in the same
proportion as (x) the total proceeds from the offering of the shares of Common
Stock and the Warrants, which have been registered pursuant to a Registration
Statement on Form S-1 (Registration Statement No. 333-39767) (net of discounts
but before deducting expenses) received by the Company plus proceeds received by
the Company in connection with the securities covered by the Registration
Statement and (y) the total proceeds received by such Holders upon their sale of
Registrable Securities covered by the Registration Statement plus the
underwriting discounts and commissions received by the Managing Underwriters
pursuant to the offering registered pursuant to the Registration Statement on
Form S-1 (Registration Statement No. 333-39767). The relative fault of the
Company and such Holders shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied or which should have been supplied by the Company, on the one hand, or
to information supplied by such Holders, on the other hand, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by a pro
rata allocation (even if the Holders 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 above. The amount paid or payable as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in this
Section 8, any legal or other expenses reasonably incurred in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8 (i) no Holder shall be required to contribute any
amount in excess of the dollar amount by which the proceeds received by such
Holder with respect to the sale of its Registrable Securities covered by the
subject Registration Statement exceeds the amount of any damages which such
Holder has otherwise been required to pay by
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reason of such untrue statement or alleged untrue statement or omission or
alleged omission and (ii) 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.
For purposes of this Section 8, each Person, if any, who controls a
Managing Underwriter or Holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act and the respective officers,
directors, partners, employees, representatives and agents of a Managing
Underwriter or Holder or any controlling Person shall have the same rights to
contribution as such Managing Underwriter or Holder, and each Person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act and the respective officers, directors,
partners, employees, representatives and agents of the Company, or any such
controlling Person shall have the same rights to contribution as the Company,
subject in each case to the limitations on contribution described in this
Section 8(d). Any Person entitled to contribution will, promptly after receipt
of notice of commencement of any action, suit or proceeding against such Person
in respect of which a claim for contribution may be made against another Person
under this Section 8, notify such Person from whom contribution may be sought,
but the failure to so notify such Person shall not relieve the Person from whom
contribution may be sought from any obligation such Person may have under this
Section 8.
SECTION 9. Underwritten Offering. A Managing Underwriter may require
that any Shelf Registration Statement filed pursuant to Section 2 hereof be an
underwritten offering; provided, however, that such Managing Underwriter shall
bear those out-of-pocket expenses set forth in Section 7(a) that arise solely
because such Managing Underwriter required such Shelf Registration Statement to
be an underwritten offering, including underwriting discounts and commissions
with respect to the Registrable Securities and fees of any "qualified
independent underwriter" engaged pursuant to Section 4(t) hereof with respect to
the Registrable Securities. In any such underwritten offering, the investment
banker or investment bankers and manager or managers that will administer the
offering will be selected by the demanding Managing Underwriter; provided that
such investment bankers and managers must be reasonably satisfactory to the
Company (it being understood that Xxxxxx Xxxxxxxxxx and Southwest are reasonably
satisfactory). No Holder may participate in any underwritten offering hereunder
unless such Holder agrees to sell such Holder's Registrable Securities on the
basis provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements. The Company shall not bear any
underwriting discounts and commissions with respect to the Registrable
Securities in connection with an underwritten offering relating to a
Registration Statement filed pursuant to Section 2 or 3 hereof.
SECTION 10. Miscellaneous.
(a) Remedies. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not on or after the
date of this Agreement enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Managing Underwriters and
Holders in this Agreement or otherwise conflicts with the provisions hereof. The
Company represents and warrants that the rights
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granted to the Managing Underwriters and Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders of
the Company's securities under any agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless the Company has obtained the
written consent of the Managing Underwriters.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), facsimile transmission,
telex, telecopier, or air courier guaranteeing overnight delivery:
(i) if to Xxxxxx Xxxxxxxxxx:
Xxxxxx Xxxxxxxxxx Xxxxx Inc.
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Phone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(ii) if to Southwest:
Southwest Securities, Inc.
0000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: C. Xxxxxxx Xxxxxx, Xx.
Phone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(iii) if to a Holder, at the address set forth on the
records of (A) the Company with respect to a Holder of the Managing
Underwriters' Warrant, (B) the Warrant Agent with respect to the Holder
of any Underlying Warrants, with a copy to the Warrant Agent, or (C)
the Company's stock transfer agent with respect to the Holder of any
Underlying Shares or Underlying Warrant Shares, with a copy to the
stock transfer agent; and
(iv) if to the Company:
Xxxxxx Industries, Inc.
00 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: President
Phone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with copy to:
Blau, Kramer, Wactlar & Xxxxxxxxx, P.C.
000 Xxxxxxx Xxxxxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
with a copy to:
Blau, Kramer, Wactlar & Xxxxxxxxx, P.C.
000 Xxxxxxx Xxxxxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
All such notices and communications shall be deemed to have been duly
delivered: at the time delivered by hand, if personally delivered; three
Business Days after being deposited in the mail, postage prepaid, if mailed;
upon receipt of a confirmation notice, if sent by facsimile transmission; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on
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the next Business Day, if timely delivered to an air courier guaranteeing
overnight delivery.
(e) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment, all
subsequent Holders of any Registrable Securities, provided that only a Managing
Underwriter may demand the filing of a Shelf Registration Statement under
Section 2 hereof.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflicts of laws rules thereof.
(i) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality or enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(j) Entire Agreement. This Agreement is intended by the parties as the
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter hereof.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
XXXXXX INDUSTRIES, INC.
By:
Xxxxx Xxxx
President
XXXXXX XXXXXXXXXX XXXXX INC.
By:
Xxxxxxx X. Xxxxxxx
Senior Vice President
SOUTHWEST SECURITIES, INC.
By:
C. Xxxxxxx Xxxxxx, Xx.
Senior Vice President and
Managing Director
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