INVESTORS’ RIGHTS AGREEMENT
INVESTORS’ RIGHTS AGREEMENT
THIS
INVESTORS’
RIGHTS AGREEMENT,
dated
as of April 17, 2007 (as amended, modified or waived from time to time in
accordance herewith, this “Agreement”),
is
among (a) AEROCENTURY CORP., a Delaware corporation (the “Company”),
(b)
each of the Investors named on the signature pages hereto (the “Initial Investors”),
and
(c) each other Person who becomes an Investor hereunder.
WHEREAS,
the
Company has entered into a Securities Purchase Agreement, dated as of
April 17, 2007 (as amended, modified or waived from time to time in
accordance therewith, the “Securities Purchase Agreement”),
with
each of its Initial Investors, pursuant to which the Company has issued to
each
of the Initial Investors certain Senior Subordinated Notes and certain Common
Stock Purchase Warrants (the “Original Warrants”);
and
WHEREAS,
in
connection with, and as a condition precedent to the effectiveness of, the
transactions contemplated by the Securities Purchase Agreement, the parties
hereto wish to set forth their relative rights with regard to pre-emptive rights
upon certain issuances of the Company’s securities, and registration rights with
respect to the Company’s warrants and the shares of capital stock issuable upon
exercise of such warrants;
NOW,
THEREFORE,
the
parties to this Agreement hereby agree as follows:
1. DEFINITIONS.
Unless
otherwise defined herein, all capitalized terms defined in the Securities
Purchase Agreement shall have the same meanings herein as thereon. For all
purposes of this Agreement, the following terms shall have the meanings set
forth below:
Agreement.
See
preamble.
Board
means
the Board of Directors of the Company.
Charter
means
the Company's Certificate of Incorporation, as amended and in effect.
Common Stock
means
(a) the Company’s Common Stock, $0.01 par value per share, and (b) any shares of
any other class of capital stock of the Company hereafter issued which are
(i)
not preferred as to dividends or assets over any class of stock of the Company,
(ii) not subject to redemption pursuant to the terms thereof, or (iii) issued
to
the holders of shares of Common Stock upon any reclassification
thereof.
Company.
See
preamble.
Demand
Registration.
See
Section 4.1(a)(i).
Excluded
Registrations.
See
Section 4.2(a)(i).
Form
S-1.
See
Section 4.1(b)(i).
Holder
means
any registered holder of Investor Securities.
Indemnified
Party.
See
Section 4.7(c)
Indemnifying
Party.
See
Section 4.7(c).
Initial
Investor.
See
preamble.
Investor
means
any Initial Investor for so long as such Person holds Investor Securities and
any other Person to whom Investor Securities are transferred for so long as
such
Person holds any Investor Securities.
Investor Securities
means
(a) the Original Warrants to purchase shares of Common Stock issued to the
Investors pursuant to the Securities Purchase Agreement, and all Warrants
subsequently issued upon transfer of such Warrants in accordance with their
terms, (b) all shares of Common Stock issued or issuable upon exercise of
such Warrants, and (c) all shares of the Company's capital stock issued with
respect to such securities by way of stock dividend or stock split or in
connection with any merger, consolidation, recapitalization or other
reorganization affecting the Company's capital stock. Investor Securities will
continue to be Investor Securities in the hands of any holder and each
transferee thereof will succeed to the rights and obligations of a holder of
Investor Securities hereunder, provided that
shares
of Investor Securities will cease to be Investor Securities when transferred
(i)
to the Company, or (ii) pursuant to a Public Sale.
Lock-up
Period.
See
Section 4.3(a).
Manager
means
any officer, employee or director of the Company or any of its
Subsidiaries.
Material
Transaction
means
any material transaction in which the Company or any of its Subsidiaries
proposes to engage or is engaged, including a purchase or sale of assets or
securities, financing, merger, consolidation or any other transactions that
would require disclosure pursuant to the Exchange Act, and with respect to
which
the Company's board of directors has reasonably determined that compliance
with
this Agreement may be expected to either materially interfere with the Company's
ability to consummate such transaction or require the Company to disclose
material, non-public information prior to such time as it would otherwise be
required to be disclosed.
Original
Warrants.
See
recitals.
Piggyback
Registration.
See
Section 4.2(a)(i).
Prospectus
means
the prospectus included in any Registration Statement, as amended or
supplemented by any Prospectus supplement with respect to the terms of the
offering of any portion of the Investor Securities covered by such Registration
Statement and all other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference in such
Prospectus.
Public
Sale
means
any sale of Common Stock or Warrants to the public pursuant to a public offering
registered under the Securities Act or to the public through a broker or
market-maker pursuant to the provisions of Rule 144 (or any successor rule)
adopted under the Securities Act.
registered
and
registration
means a
registration effected by preparing and filing a Registration Statement in
compliance with the Securities Act and the declaration or ordering by the
Commission of effectiveness of such Registration Statement.
Registration
Expenses.
See
Section 4.6(a).
Registration
Statement
means
any registration statement of the Company which covers any of the Investor
Securities pursuant to the provisions of this Agreement including the
Prospectus, amendments and supplements to such Registration Statement, including
post-effective amendments, all exhibits and all material incorporated by
reference in such Registration Statement.
Rights
Agreement
means
the Rights Agreement between the Company and Continental Stock Transfer &
Trust Company, dated as of April 8, 1998, and amended and restated as of
January 22, 1999, as amended and in effect from time to time, and any
successor agreement providing similar rights to the holders of Common
Stock.
Rule
144.
See
Section 4.9.
Securities
Purchase Agreement.
See
recitals.
Stockholders
means,
collectively, the Investor and the Other Stockholders.
Stock Options
means
any option to purchase Common Stock of the Company outstanding on the date
hereof or issuable under any stock option plan of the Company in effect as
of
the date hereof, as more fully set forth on Schedule
5.19
to the
Securities Purchase Agreement.
Underwriters’
Maximum Number
means,
for any Piggyback Registration, Demand Registration or other registration which
is an underwritten registration, that number of securities to which such
registration should, in the opinion of the managing underwriters of such
registration in the light of marketing factors, be limited.
Warrants
means
the warrants for the purchase of shares of Common Stock issued pursuant to
the
Securities Purchase Agreement, including the Original Warrants and any warrants
issued upon transfer of such warrants in accordance with their terms.
Warrant Shares
means
shares of the Company’s Common Stock issued upon exercise of the Warrants.
2. LEGEND.
So long
as any Securities are subject to the provisions hereof, all certificates or
instruments representing Securities will have imprinted on them the following
legend:
THESE
SECURITIES HAVE THE BENEFITS OF AN INVESTORS’ RIGHTS AGREEMENT DATED AS OF
APRIL 17, 2007, A COPY OF WHICH IS ON FILE IN THE ISSUER’S OFFICES. THE
INVESTORS’ RIGHTS AGREEMENT CONTAINS, AMONG OTHER THINGS, REGISTRATION RIGHTS IN
FAVOR OF THE HOLDER OF THESE SECURITIES.
3. PRE-EMPTIVE
RIGHTS.
3.1. Pre-Emptive
Rights.
If the
Company authorizes the issuance and sale of any class or series of capital
stock
or any securities convertible into or containing options or rights to acquire
any shares of any class or series of capital stock (other than (i) as a dividend
payable in shares of Common Stock on outstanding shares of Common Stock, (ii)
the Warrants and the Stock Options and the issuance of Common Stock pursuant
thereto, and (iii) so long as the Company has complied with and is in compliance
with Section 5(f) of the Warrants, the Rights (as defined in the Rights
Agreement) and shares of the Company’s Series A Preferred Stock issuable upon
exercise of the Rights, pursuant to and in accordance with the terms and
provisions of the Rights Agreement), the Company will first offer to sell to
each Investor a pro
rata
portion
of such securities equal to the percentage determined by dividing (a) the number
of shares of Common Stock held by such Investor, assuming exercise in full
of
all other Warrants, Stock Options or other securities exercisable for or
convertible to shares of Common Stock then held by such Investor, by (b) the
number of shares of Common Stock then outstanding, assuming exercise in full
of
all other Warrants, Stock Options or other securities exercisable for or
convertible to shares of Common Stock then outstanding. Each Investor will
be
entitled to purchase all or part of such stock or securities at the same price
and on the same terms as such stock or securities are to be offered to any
other
Person.
3.2. Stockholders’
Exercise of Right.
Each
Investor entitled to purchase securities under this Section 3 must exercise
such
Investor’s purchase rights hereunder within fifteen (15) days after receipt
of written notice from the Company describing in reasonable detail the stock
or
securities being offered, the purchase price thereof, the payment terms, and
such Investor’s percentage allotment.
3.3. Company’s
Exercise of Right.
Upon
the expiration of the offering period described above, the Company will be
free
to sell such stock or securities which the Investors entitled to purchase such
stock or securities have not elected to purchase during the 180 days following
such expiration on terms and conditions no more favorable to the purchasers
thereof, in the aggregate, than those offered to such Investors. Any such stock
or securities offered or sold by the Company after such 180-day period must
be
re-offered to the Investors entitled to purchase such stock or securities
pursuant to the terms of this Section 3.
4. REGISTRATION
RIGHTS.
4.1. Demand
Registration.
(a) Request
for Demand Registration.
(i) Subject
to the limitations contained in this Section 4, any Holder who holds, or
any group of Holders who collectively hold, a majority of all Investor
Securities may, pursuant to this subparagraph (i), at any time and from time
to
time, make a written request to the Company for the registration by the Company
under the Securities Act of all or any part of the Investor Securities of such
Holders (such registration being herein called a "Demand Registration");
provided,
however, that the aggregate offering price of the Investor Securities to be
registered exceeds $500,000. Within ten (10) days after the receipt by the
Company of any such written request, the Company will give written notice of
such registration request to all non-requesting Holders of Investor
Securities.
(ii) Subject
to the limitations contained in this Section 4, after the receipt of such
written request for a Demand Registration, (A) the Company will be obligated
and
required to include in such Demand Registration all Investor Securities with
respect to which the Company shall receive from the Holders thereof, within
thirty (30) days after the date on which the Company shall have given to all
such Holders a written notice of registration request pursuant to
Section 4.1(a)(i) hereof, the written requests of such Holders for
inclusion in such Demand Registration, and (B) the Company will use its best
efforts in good faith to effect promptly the registration of all such Investor
Securities. All written requests made by Holders of Investor Securities pursuant
to this subparagraph (ii) will specify the number of shares of Investor
Securities to be registered.
(b) Limitations
on Demand Registration.
(i) The
Holders of Investor Securities will not be entitled to require the Company
to
effect (A) more than one (1) Demand Registration of the Warrants, (B) more
than
one (1) Demand Registration on Form S-1 (or any other comparable form adopted
by
the Commission) (“Form
S-1”)
during
any twelve-month period, and more than two (2) Demand Registrations on Form
S-1
at any time, (C) more than three (3) “short form” Demand Registrations on Form
S-2 or Form S-3 (or other comparable “short form” adopted by the Commission); or
(D) more than (1) Demand Registration during any thirteen-month period.
(ii) Any
registration initiated by Holders of Investor Securities as a Demand
Registration pursuant to Section 4.1(a) hereof shall not count as a Demand
Registration for purposes of Section 4.1(b)(i) hereof (A) unless and until
such registration shall have become effective and shall have been kept effective
for the period required pursuant to Section 4.4(b) or (B) if Holders of a
majority of the Investor Securities initially requested to be registered
pursuant to such Demand Registration withdraw their request for a Demand
Registration at any time because (1) such Holders reasonably believed that
the
Registration Statement or Prospectus contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements made therein (in the case of the Prospectus,
in
the light of the circumstances under which they were made) not misleading,
(2)
such Holders notified the Company of such fact and requested the Company correct
such alleged misstatement or omission and (3) the Company has refused to correct
such alleged misstatement or omission.
(iii) The
Company shall not be obligated or required to effect the Demand Registration
of
any Investor Securities pursuant to Section 4.1(a) hereof during the period
commencing on the date falling thirty (30) days prior to the Company's estimated
date of filing of, and ending on the date one hundred eighty (180) days
following the effective date of, any Registration Statement pertaining to any
underwritten registration initiated by the Company, for the account of the
Company, if the written request of Holders of Investor Securities for such
Demand Registration pursuant to Section 4.1(a)(i) hereof shall have been
received by the Company after the Company shall have given to all Holders of
Investor Securities a written notice stating that the Company is commencing
an
underwritten registration initiated by the Company; provided,
however,
that
the Company will use its best efforts in good faith to cause any such
Registration Statement to be filed and to become effective as expeditiously
as
shall be reasonably possible. All Holders agree to maintain the confidentiality
of any notice stating that the Company is commencing an underwritten
registration except that Holders may disclose such information on a confidential
basis to their legal counsel and other advisors to the extent necessary to
exercise their rights under this Agreement.
(iv) Anything
contained herein to the contrary notwithstanding, the Company may delay the
filing or effectiveness of any Registration Statement under this Section 4
for a
period of up to one hundred twenty (120) days after the date of a request
for registration pursuant to this Section 4 if a Material Transaction
exists at the time of such request.
(c) Priority on Demand Registrations.
If the
managing underwriters in any underwritten Demand Registration shall give written
advice to the Company and the Holders of Investor Securities to be included
in
such registration of an Underwriters' Maximum Number, then: (i) the Company
will
be obligated and required to include in such registration that number of
Investor Securities requested by the Holders thereof to be included in such
registration which does not exceed the Underwriters' Maximum Number, and such
number of Investor Securities shall be allocated pro
rata
based on
the number of Investor Securities requested by such Holders to be included
in
such registration; (ii) if the Underwriters' Maximum Number exceeds the number
of Investor Securities requested by the Holders thereof to be included in such
registration, then the Company will be entitled to include in such registration
that number of securities which shall have been requested by the Company be
included in such registration for the account of the Company and which shall
not
be greater than such excess; and (iii) if the Underwriters' Maximum Number
exceeds the sum of the number of Investor Securities which the Company shall
be
required to include in such Demand Registration and the number of securities
which the Company proposes to offer and sell for its own account in such
registration, then the Company may include in such registration that number
of
other securities which Persons (other than the Holders of Investor Securities
as
such) shall have requested be included in such registration and which shall
not
be greater than such excess. The Company shall not be entitled to include any
securities in any underwritten Demand Registration unless the Company shall
have
agreed in writing to sell such securities on the same terms and conditions
as
shall apply to the Investor Securities to be included in such Demand
Registration.
(d) Selection of Underwriters.
The
Holders of a majority of Investor Securities to be included in any Demand
Registration shall determine whether or not such Demand Registration shall
be
underwritten and shall select the investment banker(s) and managing
underwriter(s) to administer such offering, subject to the approval of the
Company, not to be unreasonably withheld.
4.2. Piggyback
Registrations.
(a) Rights
to Piggyback.
(i) If
(and
on each occasion that) the Company proposes to register any of its equity
securities under the Securities Act (other than (A) a Demand Registration
pursuant to Section 4.1(a)(i) hereof, which shall be governed by
Section 4.1(a)(i) hereof and not this Section 4.2, (B) the
registration of an offer, sale or other disposition of securities to employees
of, or other persons providing services to, the Company, or any subsidiary
pursuant to an employee or similar benefit plan, (C) pursuant to a registration
statement on Form S-4 or any similar form, (D) in connection with a registration
the primary purpose of which is to register debt securities, including
convertible debt securities, or (E) relating to a merger, acquisition or other
transaction of the type described in Rule 145 under the Securities Act or a
comparable or successor rule (collectively, “Excluded Registrations”)),
either for the Company's own account or for the account of any of its
stockholders and the registration form to be used may also be used for the
registration of Investor Securities (each such registration not withdrawn or
abandoned prior to the effective date thereof being herein called a
"Piggyback Registration"),
the
Company will give written notice to all Holders of Investor Securities of such
proposal not later than the earlier to occur of (A) the tenth day following
the
receipt by the Company of notice of exercise of any registration rights by
any
Persons, and (B) the thirtieth day prior to the anticipated filing date of
such
Piggyback Registration. The Company shall have the right to terminate or
withdraw any registrations initiated by it under this Section 4.2(a)(i),
whether or not any Holder has elected to include any Investor Securities in
such
registration.
(ii) Subject
to the provisions contained in paragraph (b) of this Section 4.2 and in the
last sentence of this subparagraph (ii), (A) the Company will be obligated
and
required to include in each Piggyback Registration all Warrant Shares with
respect to which the Company shall receive from Holders of Warrant Shares,
within fifteen (15) days after the date on which the Company shall have given
written notice of such Piggyback Registration to all Holders of Investor
Securities pursuant to Section 4.2(a)(i) hereof, the written requests of
such Holders for inclusion in such Piggyback Registration, and (B) subject
to
the Company’s unconditional right described in the last sentence of Section
4.2(a)(i) to terminate any registration initiated by it, the Company will use
its best efforts in good faith to effect promptly the registration of all such
Warrant Shares. The Holders of Warrant Shares shall be permitted to withdraw
all
or any part of their Warrant Shares from any Piggyback Registration at any
time
prior to the effective date of such Piggyback Registration unless such Holders
of Investor Securities shall have entered into a written agreement with the
Company's underwriters establishing the terms and conditions under which such
Holders would be obligated to sell such securities in such Piggyback
Registration.
(b) Priority on Piggyback Registrations.
If a
Piggyback Registration is an underwritten registration, and the managing
underwriters shall give written advice to the Company of an Underwriters'
Maximum Number, then: (i) the Company shall be entitled to include in such
registration that number of securities which the Company proposes to offer
and
sell for its own account in such registration and which does not exceed the
Underwriters' Maximum Number; (ii) if the Underwriters' Maximum Number exceeds
the number of securities which the Company proposes to offer and sell for its
own account in such registration, then the Company will be obligated and
required to include in such registration that number of Investor Securities
requested by the Holders thereof to be included in such registration and which
does not exceed such excess and such Investor Securities shall be allocated
pro
rata
among
the Holders thereof on the basis of the number of Investor Securities requested
to be included therein by each such Holder; and (iii) if the Underwriters'
Maximum Number exceeds the sum of the number of Investor Securities which the
Company shall be required to include in such registration pursuant to clause
(ii) and the number of securities which the Company proposes to offer and sell
for its own account in such registration, then the Company may include in such
registration that number of other securities which other Persons shall have
requested be included in such registration and which shall not be greater than
such excess.
(c) Selection of Underwriters.
In any
Piggyback Registration, the Company shall (unless the Company shall otherwise
agree) have the right to select the investment bankers and managing underwriters
in such registration.
4.3. Lock-up
Agreements.
(a) Restrictions on Public Sale by Holders of Investor
Securities.
Each
Holder of Investor Securities, if the Company or the managing underwriters
so
request in connection with any underwritten registration of the Company's
securities, will not, except in connection with such underwritten registration,
without the prior written consent of the Company or such underwriters, effect
any Public Sale or other distribution of any equity securities of the Company,
including any sale pursuant to Rule 144, during the period beginning on the
date
of such request from the Company or the managing underwriters, and ending on
the
180th day after the effective date of the applicable registration statement
(the
“Lock-Up
Period”),
or,
if required by the managing underwriters, such longer period of time as is
necessary to enable such underwriters to issue a research report or make a
public appearance that relates to an earnings release or announcement by the
Company within eighteen (18) days before or after the last day of the Lock-Up
Period, but in any event not to exceed two hundred ten (210) days following
the
effective date of the registration statement relating to such offering, and
upon
request by the managing underwriters will execute a lock-up agreement to that
effect.
(b) Restrictions on Public Sale by the Company.
If the
managing underwriters so request in connection with any underwritten
registration of the Company’s securities, the Company will not effect any Public
Sale or other distribution of its equity securities, or any securities
convertible into or exchangeable or exercisable for such equity securities,
during the period commencing on the seventh day prior to, and ending on the
ninetieth day following, the effective date of any underwritten Demand
Registration or Piggyback Registration, except (i) in connection with any
such underwritten registration and (ii) for Excluded
Registrations.
4.4. Registration
Procedures.
Whenever the Holders of Investor Securities have requested that any Investor
Securities be registered pursuant to this Agreement, the Company will use its
best efforts to effect the registration and the sale of such Investor Securities
in accordance with the intended method of disposition thereof, and pursuant
thereto the Company will as expeditiously as possible:
(a) prepare
and file with the Commission a Registration Statement with respect to such
Investor Securities and use its best efforts to cause such Registration
Statement to become effective (provided,
that at
least five (5) days before filing a Registration Statement or Prospectus or
any
amendments or supplements thereto, the Company will furnish to counsel selected
by the Holders of Investor Securities covered by such Registration Statement,
copies of all such documents proposed to be filed, which documents will be
subject to the timely review of such counsel and the Company will not file
any
Registration Statement or amendment thereto or any Prospectus or any supplement
thereto, including documents incorporated by reference, to which the Holders
of
a majority of the Investor Securities covered by such Registration Statement
shall reasonably object), provided,
however, that nothing herein shall prevent or limit the Company’s ability to
timely file any required reports with the Commission;
(b) prepare
and file with the Commission such amendments and supplements to such
Registration Statement and the Prospectus used in connection therewith as may
be
necessary to keep such Registration Statement effective until the earlier of
(i)
the date on which all securities covered by such Registration Statement have
been disposed of and (ii) the six (6) month anniversary of the effective date
of
such Registration Statement, and comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
Registration Statement during such effective period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
Registration Statement and cause the Prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed pursuant
to
Rule 424 under the Securities Act;
(c) upon
request, furnish to each seller of Investor Securities such number of copies
of
such Registration Statement, each amendment and supplement thereto, the
Prospectus included in such Registration Statement (including each preliminary
Prospectus and each Prospectus filed under Rule 424 of the Securities Act)
and
such other documents as each such seller may reasonably request in order to
facilitate the disposition of the Investor Securities owned by each such seller
(it being understood that the Company consents to the use of the Prospectus
and
any amendment or supplement thereto by such seller in connection with the
offering and sale of the Investor Securities covered by the Prospectus or any
amendment or supplement thereto);
(d) use
its
best efforts to register or qualify such Investor Securities under such other
securities or blue sky laws of such jurisdictions as any seller reasonably
requests, use its best efforts to keep each such registration or qualification
effective, including through new filings, amendments or renewals, during the
period such Registration Statement is required to be kept effective, 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
Investor Securities owned by such seller; provided
that the
Company will not be required (i) to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (d), (ii) to subject itself to taxation in any such jurisdiction
or
(iii) to consent to general service of process in any such
jurisdiction;
(e) notify
each seller of such Investor Securities, at any time when a Prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event as a result of which the Prospectus included in such Registration
Statement contains an untrue statement of a material fact or omits any material
fact necessary to make the statements therein not misleading, and, at the
request of any such seller, the Company will promptly prepare (and, when
completed, give notice to each seller of Investor Securities) a supplement
or
amendment to such Prospectus so that, as thereafter delivered to the purchasers
of such Investor 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; provided
that
upon such notification by the Company, each seller of such Investor Securities
will not offer or sell such Investor Securities pursuant to the Prospectus
until
the Company has notified such seller that it has prepared a supplement or
amendment to such Prospectus and delivered copies of such supplement or
amendment to such seller;
(f) cause
all
such Investor Securities to be listed, prior to the date of the first sale
of
such Investor Securities pursuant to such registration, on each securities
exchange, if any, on which the same class of securities issued by the Company
are then listed and, if not so listed, to be listed on an inter-dealer quotation
system;
(g) provide
a
transfer agent and registrar for all such Investor Securities not later than
the
effective date of such Registration Statement;
(h) enter
into all such customary agreements (including underwriting agreements in
customary form) and take all such other actions as the Holders of a majority
of
the Investor Securities being sold or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Investor
Securities (including, without limitation, effecting a stock split or a
combination of shares);
(i) make
available for inspection on a confidential basis by any seller, any underwriter
participating in any disposition pursuant to such Registration Statement, and
any attorney, accountant or other agent retained by any such seller or
underwriter (in each case after reasonable prior notice), all financial and
other records, pertinent corporate documents and properties of the Company,
and
cause the Company's officers, directors, employees and independent accountants
to supply on a confidential basis all information reasonably requested by any
such seller, underwriter, attorney, accountant or agent in connection with
such
Registration Statement;
(j) permit
any Holder of Investor Securities which Holder, in the reasonable judgment
of
the Company, might be deemed to be an underwriter or a controlling person of
the
Company within the meaning of Section 15 of the Securities Act, to participate
in the preparation of such registration or comparable statement and to permit
the insertion therein of material, furnished to the Company in writing, which
in
the reasonable judgment of such Holder and its counsel should be included,
provided that such material shall be furnished under such circumstances as
shall
cause it to be subject to the indemnification provisions provided pursuant
to
Section 4.7(b) hereof;
(k) in
the
event of the issuance of any stop order suspending the effectiveness of a
Registration Statement, or of any order suspending or preventing the use of
any
related Prospectus or suspending the qualification of any Investor Securities
included in such Registration Statement for sale in any jurisdiction, the
Company will use all commercially reasonable efforts promptly to obtain the
withdrawal of such order;
(l) if
requested by the managing underwriter or underwriters or any Holder of Investor
Securities in connection with any sale pursuant to a Registration Statement,
promptly incorporate in a Prospectus supplement or post-effective amendment
such
information relating to such underwriting as the managing underwriter or
underwriters or such Holder reasonably requests to be included therein, 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;
(m) cooperate
with the Holders of Investor Securities and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Investor
Securities to be sold under such registration, and enable such Investor
Securities to be in such denominations and registered in such names as the
managing underwriter or underwriters, if any, or such Holders may
request;
(n) use
its
best efforts to cause the Investor Securities to be registered with or approved
by such other governmental agencies or authorities within the United States
and
having jurisdiction over the Company as may reasonably be necessary to enable
the seller or sellers thereof or the underwriter or underwriters, if any, to
consummate the disposition of such Investor Securities;
(o) use
all
commercially reasonable efforts to obtain:
(i) at
the
time of effectiveness of each registration, a "comfort letter" from the
Company's independent certified public accountants covering such matters of
the
type customarily covered by "cold comfort letters" as the Holders of a majority
of the Investor Securities covered by such registration and the underwriters
reasonably request; and
(ii) at
the
time of any underwritten sale pursuant to a Registration Statement, a
"bring-down comfort letter", dated as of the date of such sale, from the
Company's independent certified public accountants covering such matters of
the
type customarily covered by comfort letters as the Holders of a majority of
the
Investor Securities covered by such Registration Statement and the underwriters
reasonably request;
(p) use
all
commercially reasonable efforts to obtain, at the time of effectiveness of
each
Demand Registration or Piggyback Registration and at the time of any sale
pursuant to each registration, an opinion of counsel representing the Company
for the purposes of such registration, in form and substance as is customarily
given to underwriters in an underwritten public offering, addressed to the
underwriters; and
(q) otherwise
comply with all applicable rules and regulations of the Commission, and make
generally available to its security holders (as contemplated by Section 11(a)
under the Securities Act) an earnings statement satisfying the provisions of
Rule 158 under the Securities Act no later than ninety (90) days after the
end
of the twelve month period beginning with the first month of the Company's
first
fiscal quarter commencing after the effective date of the Registration
Statement, which statement shall cover said twelve month period.
4.5. Cooperation
by Prospective Sellers, Etc.
(a) Each
prospective seller of Investor Securities will furnish to the Company in writing
such information as the Company may reasonably require from such seller, and
otherwise reasonably cooperate with the Company in connection with any
Registration Statement with respect to such Investor Securities. In addition,
each such prospective seller will immediately notify the Company, at any time
when a Prospectus relating to the registration of such Investor Securities
is
required to be delivered under the Securities Act, upon such prospective
seller’s knowledge of the happening of any event as a result of which
information previously furnished in writing by such prospective seller
specifically for inclusion in such Prospectus contains an untrue statement
of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of
the
circumstances under which they were made.
(b) The
failure of any prospective seller of Investor Securities to furnish any
information or documents in accordance with any provision contained in this
Agreement shall not affect the obligations of the Company under this Agreement
to any remaining sellers who furnish such information and documents unless
in
the reasonable opinion of counsel to the Company or the underwriters, such
failure impairs or may impair the viability of the offering or the legality
of
the Registration Statement or the underlying offering.
(c) The
Holders of Investor Securities included in any Registration Statement will
not
(until further notice) effect sales thereof after receipt of telegraphic or
written notice from the Company to suspend sales to permit the Company to
correct or update such Registration Statement or Prospectus; but the obligations
of the Company with respect to maintaining any Registration Statement current
and effective shall be extended by a period of days equal to the period such
suspension is in effect.
(d) At
the
end of any period during which the Company is obligated to keep any Registration
Statement current and effective as provided by Section 4.4 hereof (and any
extensions thereof required by the preceding paragraph (c) of this
Section 4.5), the Holders of Investor Securities included in such
Registration Statement shall discontinue sales of shares pursuant to such
Registration Statement upon receipt of notice from the Company of its intention
to remove from registration the shares covered by such Registration Statement
which remain unsold, and such Holders shall notify the Company of the number
of
shares registered which remain unsold promptly after receipt of such notice
from
the Company.
4.6. Registration
Expenses.
(a) All
costs
and expenses incurred or sustained in connection with or arising out of each
registration pursuant to Sections 4.1 and 4.2 hereof, including, without
limitation, all registration and filing fees, fees and expenses of compliance
with securities or blue sky laws (including reasonable fees and disbursements
of
counsel for the underwriters in connection with the blue sky qualification
of
Investor Securities), printing expenses, messenger, telephone and delivery
expenses, fees and disbursements of counsel for the Company, reasonable fees
and
disbursements of one counsel representing the Holders of Investor Securities,
such counsel to be selected by the Holders of a majority of the Investor
Securities to be included in such registration, fees and disbursements of all
independent certified public accountants (including the expenses relating to
the
preparation and delivery of any special audit or "cold comfort" letters required
by or incident to such registration), fees and disbursements of underwriters
customarily paid by issuers and sellers of securities (but excluding discounts
and commissions), the reasonable fees and expenses of any special experts
retained by the Company of its own initiative or at the request of the managing
underwriters in connection with such registration, and fees and expenses of
all
(if any) other Persons retained by the Company (all such costs and expenses
being herein called, collectively, the "Registration Expenses"),
will
be borne and paid by the Company. The Company will, in any case, pay its
internal expenses (including, without limitation, all salaries and expenses
of
its officers and employees performing legal or accounting duties), the expense
of any annual audit, and the fees and expenses incurred in connection with
the
listing of the securities to be registered on each securities exchange on which
similar securities of the Company are then listed.
(b) The
Company will not bear the cost of nor pay for any stock transfer taxes imposed
in respect of the transfer of any Investor Securities to any purchaser thereof
by any Holder of Investor Securities in connection with any registration of
Investor Securities pursuant to this Agreement.
(c) To
the
extent that Registration Expenses incident to any registration are, under the
terms of this Agreement, not required to be paid by the Company, each Holder
of
Investor Securities included in such registration will pay all Registration
Expenses that are clearly solely attributable to the registration of such
Holder's Investor Securities so included in such registration, and all other
Registration Expenses not so attributable to one Holder will be borne and paid
by all sellers of securities included in such registration in proportion to
the
number of securities so included by each such seller.
4.7. Indemnification.
(a) Indemnification by the Company.
The
Company will indemnify each Holder requesting or joining in a registration
and
each underwriter of the securities so registered, the officers, directors and
partners of each such Person and each Person who controls any thereof (within
the meaning of the Securities Act) against any and all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on
any
untrue statement (or alleged untrue statement) of any material fact contained
in
any Prospectus, offering circular or other document incident to any
registration, qualification or compliance (or in any related Registration
Statement, notification or the like) or any omission (or alleged omission)
to
state therein any material fact required to be stated therein or necessary
to
make the statements therein not misleading, or any violation by the Company
of
any rule or regulation promulgated under the Securities Act applicable to the
Company and relating to any action or inaction required of the Company in
connection with any such registration, qualification or compliance, and the
Company will reimburse each such Holder, underwriter, officer, director, partner
and controlling person for any legal and any other expenses reasonably incurred
in connection with investigating or defending any such claim, loss, damage,
liability or action; provided,
however,
that
the Company will not be liable in any such case to the extent that any such
claim, loss, damage or liability arises out of or is based on any untrue
statement or omission based upon written information furnished to the Company
in
an instrument duly executed by such Holder, underwriter, officer, director,
partner or controlling person and stated to be specifically for use in such
Prospectus, offering circular or other document.
(b) Indemnification by Each Holder.
Each
Holder requesting or joining in a registration will indemnify each underwriter
of the securities so registered, the Company and its officers and directors
and
each Person, if any, who controls any thereof (within the meaning of the
Securities Act) and their respective successors in title and assigns, and any
other Holder selling securities under such registration statement or any of
such
other Holder’s partners, directors or officers or any person who controls such
Holder, against any and all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of any material fact contained in any Prospectus, offering
circular or other document incident to any registration, qualification or
compliance (or in any related Registration Statement, notification or the like)
or any omission (or alleged omission) to state therein any material fact
required to be stated therein or necessary to make the statement therein not
misleading, and such Holder will reimburse each underwriter, the Company and
each other Person indemnified pursuant to this paragraph (b) for any legal
and
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action; provided,
however,
that
this paragraph (b) shall apply only if (and only to the extent that) such
statement or omission was made in reliance upon written information furnished
to
such underwriter or the Company in an instrument duly executed by such Holder
and stated to be specifically for use in such Prospectus, offering circular
or
other document (or related Registration Statement, notification or the like)
or
any amendment or supplement thereto; and, provided further,
that
each Holder's liability hereunder with respect to any particular registration
shall be limited to an amount equal to the net proceeds received by such Holder
from the Investor Securities sold by such Holder in such
registration.
(c) Limitation on Indemnification.
The
foregoing indemnity agreements of the Company and the selling Holders are
subject to the condition that, insofar as they relate to any claims or damages
arising from any untrue statement or alleged untrue statement of a material
fact
contained in, or omission or alleged omission of a material fact from, a
Prospectus (or necessary to make the statements therein not misleading) that
has
been corrected in the form of Prospectus included in the registration statement
at the time it becomes effective, or any amendment or supplement thereto filed
with the Commission pursuant to Rule 424(b) under the Securities Act, such
indemnity agreement shall not inure to the benefit of any person if a copy
of
such correcting Prospectus was furnished to the indemnified party and such
indemnified party failed to deliver, at or before the confirmation of the sale
of the shares registered in such offering, a copy of such correcting Prospectus
to the person asserting the loss, liability, claim, or damage in any case in
which such delivery was required by the Securities Act.
(d) Indemnification Proceedings.
Each
party entitled to indemnification pursuant to this Section 4.7 (the
"Indemnified Party")
shall
give notice to the party required to provide indemnification pursuant to this
Section 4.7 (the "Indemnifying Party")
promptly after such Indemnified Party acquires actual knowledge of any claim
as
to which indemnity may be sought, and shall permit the Indemnifying Party (at
its expense) to assume the defense of any claim or any litigation resulting
therefrom; provided
that
counsel for the Indemnifying Party, who shall conduct the defense of such claim
or litigation, shall be reasonably acceptable to the Indemnified Party, and
the
Indemnified Party may participate in such defense at such party's expense;
and
provided,
further,
that
the failure by any Indemnified Party to give notice as provided in this
paragraph (d) shall not relieve the Indemnifying Party of its obligations
under this Section 4.7 except to the extent that the failure results in a
failure of actual notice to the Indemnifying Party and such Indemnifying Party
is damaged solely as a result of the failure to give notice. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, 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. The reimbursement required
by this Section 4.7 shall be made by periodic payments during the course of
the investigation or defense, as and when bills are received or expenses
incurred.
4.8. Contribution
in Lieu of Indemnification.
If the
indemnification provided for in Section 4.7 hereof is unavailable to a
party that would have been an Indemnified Party under such Section in respect
of
any losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each party that would have been an Indemnifying Party
thereunder shall, in lieu of indemnifying such Indemnified Party, contribute
to
the amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and such Indemnified Party on the other in connection
with
the statements or omissions which resulted in such losses, claims, damages
or
liabilities (or actions in respect thereof). The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state
a material fact relates to information supplied by the Indemnifying Party or
such Indemnified Party and the parties' relative intent, knowledge, access
to
information and opportunity to correct or prevent such statement or omission.
The Company and each Holder of Investor Securities agree that it would not
be
just and equitable if contribution pursuant to this Section 4.8 were
determined by pro-rata
allocation or by any other method of allocation which does not take account
of
the equitable considerations referred to above in this Section 4.8. The
amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above
in this Section 4.8 shall include any legal or other expenses reasonably
incurred by such Indemnified Party in connection with investigating or defending
any such action or claim. Notwithstanding any provision of this Section 4.8
to the contrary, (a) 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 and (b) each Holder's liability hereunder with respect to
any
particular registration shall be limited to an amount equal to the net proceeds
received by such Holder from the Investor Securities sold by such Holder in
such
registration.
4.9. Rule
144 Requirements; Form S-3.
The
Company will make its best efforts in good faith (a) to take all steps necessary
to ensure that the Company will be eligible to register securities on Form
X-0,
X-0 (or any comparable form adopted by the Commission) as soon thereafter as
possible, and (b) to make publicly available and available to the Holders of
Investor Securities, pursuant to Rule 144 of the Commission under the Securities
Act, or a comparable or successor rule (“Rule 144”),
such
information as shall be necessary to enable the Holders of Investor Securities
to make sales of Investor Securities pursuant to Rule 144. The Company will
furnish to any Holder of Investor Securities, upon request made by such Holder
at any time after the undertaking of the Company in the preceding sentence
shall
have first become effective, a written statement signed by the Company,
addressed to such Holder, describing briefly the action the Company has taken
or
proposes to take to comply with the current public information requirements
of
Rule 144. The Company will, at the request of any Holder of Investor Securities,
upon receipt from such Holder of a certificate certifying (i) that such Holder
has held such Investor Securities for the applicable holding period under Rule
144 with respect to such Holder’s possession of such Investor Securities, as in
effect on the date of such certificate, (ii) that such Holder has not been
an
affiliate (as defined in Rule 144) of the Company for more than the ninety
(90)
preceding days, and (iii) as to such other matters as may be appropriate in
accordance with such Rule, remove from the stock certificates representing
such
Investor Securities that portion of any restrictive legend which relates to
the
registration provisions of the Securities Act.
4.10. Participation
in Underwritten Registrations.
No
Person may participate in any underwritten registration pursuant to this
Agreement unless such Person (a) agrees to sell such Person's securities on
the
basis provided in any underwriting arrangements approved by the Persons
entitled, under the provisions hereof, to approve such arrangements, and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
lock-up agreements (to the extent the terms and provisions thereof are
consistent with Section 4.3 hereof), underwriting agreements and other
documents reasonably required by the terms of such underwriting arrangements.
Any Holder of Investor Securities to be included in any underwritten
registration shall be entitled at any time to withdraw such Investor Securities
from such registration prior to its effective date in the event that such Holder
shall disapprove of any of the terms of the related underwriting
agreement.
4.11. Termination
of Registration Rights.
The
right of any Holder to request registration or inclusion of Investor Securities
in any registration pursuant to Section 4.1 or Section 4.2 shall terminate
when all of such Holder’s Investor Securities could be sold without restriction
under Rule 144(k) under the Securities Act, or any comparable or successor
rule.
4.12. Delay
of Registration; Furnishing Information.
No
Holder shall have any right to obtain or seek an injunction restraining or
otherwise delaying any registration as the result of any controversy that might
arise with respect to the interpretation or implementation of this Section
4.
5. SEVERABILITY.
Whenever
possible, each provision of this Agreement will be interpreted in such manner
as
to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality
or
unenforceability will not affect any other provision or any other jurisdiction,
but this Agreement will be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provision had never been contained
herein.
6. ENTIRE
AGREEMENT. Except
as
otherwise expressly set forth herein, in the Securities Purchase Agreement,
the
Warrants and the Charter, this document embodies the complete agreement and
understanding among the parties hereto with respect to the subject matter hereof
and thereof and supersedes and preempts any prior understandings, agreements
or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
7. SUCCESSORS
AND ASSIGNS. This
Agreement will bind and inure to the benefit of and be enforceable by the
Company and the Investors and their respective successors and permitted assigns.
8. COUNTERPARTS.
This
Agreement may be executed in separate counterparts each of which will be an
original and all of which taken together will constitute one and the same
agreement. Any such counterpart may be executed by facsimile signature or by
email with scan or attachment signature with only verbal confirmation, and
when
so executed and delivered shall be deemed an original and such counterpart(s)
together shall constitute only one original.
9. REMEDIES.
The
Investors will be entitled to enforce their rights under this Agreement
specifically (without posting a bond or other security), to recover damages
by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in their favor. The parties hereto agree and acknowledge
that money damages is not an adequate remedy for any breach of the provisions
of
this Agreement and that any Investor shall have the remedy of specific
performance and/or injunctive relief in order to enforce or prevent any
violation of the provisions of this Agreement. In the event of any dispute
involving the terms of this Agreement, the prevailing party shall be entitled
to
collect reasonable fees and expenses incurred by the prevailing party in
connection with such dispute from the other parties to such
dispute.
10. NOTICES.
Any
notice provided for in this Agreement will be in writing and will be deemed
properly delivered if either personally delivered or sent by facsimile,
electronic mail, overnight courier or mailed certified or registered mail,
return receipt requested, postage prepaid to the recipient (a) if to any
Investor (other than an Initial Investor), at the address listed for such
Investor in the stock records of the Company, (b) if to any Initial Investor,
at
the address listed for such Initial Investor in the Securities Purchase
Agreement, with a copy to F. Xxxx Xxxxx, Esq., Xxxxxxx XxXxxxxxx LLP, Xxx
Xxxxx Xxxxxx, Xxxxxxxx, XX 00000-0000, fax: (000) 000-0000, email
address: xxxx.xxxxx@xxxxxxx.xxx, and (c) if to the Company, at the address
listed for the Company in the Securities Purchase Agreement, with a copy to
Xxxxxx Xxxxxxx, Esq., Xxxxxxxx & Xxxxxxxx, LLP, 000 Xxxx Xxxx Xxxx, Xxxx
Xxxx, XX 00000; fax (000) 000-0000; email address: xxxxxxxx@xxxx.xxx, as
each such address may be changed by at least ten (10) days’ prior written
notice of such changed address to the other parties hereto. Any such notice
shall be effective (i) if delivered personally, by facsimile transmission
or by electronic mail, when received, (ii) if sent by overnight courier,
when receipted for, and (iii) if mailed, five (5) days after being mailed
as described above. The Company agrees to make available to each Investor upon
request a list of the most recent addresses available to the Company of all
Investors to ensure correct delivery of all notices hereunder.
11. AMENDMENT
AND WAIVER. No
modification, amendment or waiver of any provision of this Agreement will be
effective against the Company or the Investors unless such modification,
amendment or waiver is approved in writing by the holders of more than 50%
of
the total number of the then outstanding Investor Securities. The failure of
any
party to enforce any of the provisions of this Agreement will in no way be
construed as a waiver of such provisions and will not affect the right of such
party thereafter to enforce each and every provision of this Agreement in
accordance with its terms.
12. EMPLOYMENT.
Nothing
contained in this Agreement is intended to create for any Investor who is a
Manager a right to continued employment with the Company or any of its
Subsidiaries or employment in the same position or on the same terms as those
currently in effect.
13. TERMINATION.
This
Agreement will terminate upon the earlier of (i) the completion of any voluntary
or involuntary liquidation or dissolution of the Company, or (ii) the Initial
Investors or their Affiliates ceasing to hold at least twenty-five percent
(25%)
of the Investor Securities originally issued to the Initial Investors under
the
Securities Purchase Agreement (calculated assuming the exercise in full of
all
of the Warrants).
14. GOVERNING
LAW. This
Agreement and the obligations of the parties hereunder shall be deemed to be
a
contract under seal and shall for all purposes be governed by and construed
in
accordance with the internal laws (and not the choice-of-law rules) of the
State
of New York, without reference to principles of conflicts of law.
15. DESCRIPTIVE
HEADINGS; TERMS.
The
descriptive headings of this Agreement are inserted for convenience only and
do
not constitute a part of this Agreement. Defined terms will have the meanings
specified, applicable to both singular and plural forms, for all purposes of
this Agreement.
16. CONSTRUCTION.
The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent, and no rule of strict construction
will
be applied against any party.
[Balance
of Page Intentionally Left Blank]
Investor
Rights Agreement/pa-1147621 v1
IN
WITNESS WHEREOF, the
parties hereto have executed this Investors’ Rights Agreement on the day and
year first above written.
THE
COMPANY:
By:
__________________________
Name:
Title:
[signature
page to Investors’ Rights Agreement]
THE
INITIAL INVESTORS:
SATELLITE
FUND II, L.P.
By: Satellite
Advisors, L.L.C.
Its
General Partner
By:_________________________________
Name: Xxxxx
Xxxxxxx
Title: General
Counsel
SATELLITE
FUND IV, L.P.
By: Satellite
Advisors, L.L.C.
Its
General Partner
By:_________________________________
Name: Xxxxx
Xxxxxxx
Title: General
Counsel
THE
APOGEE GROUP, LLC
By: Satellite
Asset Management, L.P.
Its
Manager
By:_________________________________
Name: Xxxxx
Xxxxxxx
Title: General
Counsel
SATELLITE
FUND V, LLC
By: Satellite
Asset Management, L.P.
Its
Manager
By:_________________________________
Name: Xxxxx
Xxxxxxx
Title: General
Counsel
[signature
page to Investors’ Rights Agreement]
