Execution Copy
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INVESTOR'S RIGHTS AGREEMENT
This Investor's Rights Agreement (this "Agreement") is made and entered
into as of December 10, 1998 by and among Accom, Inc., a Delaware corporation
(the "Company"), and Xxxxxxx Xxxxxxxx (the "Investor").
RECITALS
A. The Investor has agreed to acquire from the Company, and the Company
has agreed to issue to the Investor, 2,500,000 shares of the Company's Common
Stock (the "New Shares") on the terms and conditions set forth in the Stock
Purchase Agreement dated as the date hereof by and between the Company and the
Investor (the "Stock Purchase Agreement").
B. As a condition to the issuance of the New Shares the Investor, the
Company has agreed to certain restrictions related to the ownership of stock of
the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:
1. Acquisition of Additional Shares, Voting, Transfer and Other Restrictions.
1.1 Certain Definitions. All capitalized terms used but not defined in
this Agreement shall have the meaning as defined for such term in the Stock
Purchase Agreement. In addition, as used in this Agreement, the following terms
shall have the following respective meanings:
"Affiliate" of any Person, means (i) any other Person
controlling, controlled by or under common control with such Person, (ii) any
director or executive officer of such Person or of any Affiliate of such Person
and (iii) any immediate family member of any director or executive officer of
such Person or any director or executive officer of any Affiliate of such
Person.
"Stock Purchase Closing" means the Closing as defined in the
Stock Purchase Agreement.
"Beneficially Own" or "Beneficial Ownership" with respect to
any securities shall have the meaning set forth in Rule 13d-3 under the Exchange
Act.
"Common Stock" means the Company's common stock, $0.001 par
value.
"Company Securities" mean any option, warrant, other right to
acquire Voting Securities or other capital stock of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder, all as the same
shall be in effect at the time.
"Investor Shares" means the New Shares plus all shares of
Common Stock of the Company owned by the Investor on the date hereof.
"Person" means any natural person, corporation, partnership,
limited liability company, firm, association, trust, "group" within the meaning
of Section 13(d)(3) of the Exchange Act, government, governmental agency, or
other legal entity, whether acting in an individual, fiduciary or other
capacity.
"Permitted Transferee" means, with respect to each Person
bound by the terms of this Agreement, (i) in respect of the Investor, any
descendant, Affiliate or associate (as such term is defined in Rule 405 of the
Securities Act) of the Investor or any other Permitted Transferee of such
Affiliate; (ii) the Company; (iii) in the event of the dissolution, liquidation
or winding up of any such Person that is a corporation or a partnership, the
partners of a partnership that is such Person, the stockholder of a corporation
that is such Person or a successor partnership all of the partners of which or a
successor corporation all of the stockholder of which are the Persons who were
the partners of such partnership or the stockholder of such corporation
immediately prior to the dissolution, liquidation or winding up of such Person;
(iv) a transferee by testamentary or intestate disposition; (v) a transferee by
inter vivos transfer to the transferring Person's spouse, children and/or other
lineal descendants; (vi) a trust transferee by inter vivos transfer, the
beneficiaries of which are the transferring Person, spouse, children and/or
other lineal descendants; (vii) a successor nominee or trustee for the
beneficial owner of the shares for which such Person acts as nominee or trustee,
as the case may be, or (viii) a Person who acquires all or substantially all of
the stock or assets of such Person; provided, however, that any such Permitted
Transferee shall have agreed in writing in form and substance satisfactory to
the Company to be bound by, and hold the Registrable Securities acquired by it
subject to, the terms of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC thereunder, as the same shall be in
effect at the time.
"Total Voting Power" at any time means the total combined
voting power in the general election of directors of all the Voting Securities
then outstanding.
"Transfer" means any sale, transfer, pledge, encumbrance or
other disposition.
"Voting Securities" means any shares of any class of capital
stock of the Company which are then entitled to vote generally in the election
of directors.
1.2 Acquisition of Additional Shares.
(a) The Investor covenants and agrees with the Company that,
for so long as Xxxxxx Xxxxxx is the Chief Executive Officer of the Company, the
Investor will not, and will not permit any of its Affiliates, in either case
without the prior written consent of the Company, to acquire Beneficial
Ownership of any Company Securities other than the Investor Shares.
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(b) If at any time, as the result of any transaction or
circumstances, the Investor and its Affiliates shall acquire Beneficial
Ownership of any Company Securities other than the Investor Shares,
inadvertently or otherwise, in violation of this Agreement, then the Investor
shall promptly take such action as may be necessary or appropriate to divest
such Beneficial Ownership of Company Securities.
1.3. Further Restrictions on Conduct. The Investor covenants and agrees
with the Company that, for so long as Xxxxxx Xxxxxx is the Chief Executive
Officer of the Company, neither it nor any of its Affiliates shall:
(a) initiate, commence or propose, directly or indirectly, any
"solicitation" of "proxies" to vote, or seek to influence any Person with
respect to the voting of, any Company Securities, in connection with a
"solicitation" or "election contest" (as such terms are defined or used in
Regulation 14A under the Exchange Act) with respect to the election or removal
of the members of the Board. Notwithstanding the foregoing, or any other
provision of this Agreement, nothing in this Agreement shall prevent the
Investor from voting the Investor Shares in connection with any matter
(including the election or removal of members of the Board) however the Investor
decides to vote such Investor Shares;
(b) other than a transaction permitted by Section 1.4(b)(iii)
hereof, solicit, offer, seek or propose to acquire shares of Company Securities
in excess of the number of shares permitted by this Agreement, whether directly
or indirectly through a tender offer, proxy or consent solicitation, exchange
offer, merger proposal or otherwise; or
(c) become a member of a "group" within the meaning of Section
13(d)(3) of the Exchange Act with any person other than the Investor and its
Affiliates.
1.4 Restrictions on Transfer. The Investor covenants and agrees with
the Company that:
(a) until the first anniversary of the date of this Agreement,
the Investor will not Transfer any of the Investor Shares to any Person other
than a Permitted Transferee except through:
(i) a Transfer through a bona fide underwritten
public offering registered under the Securities Act effected in accordance with
the provisions of Section 2.5 hereof, with an underwriter or underwriters and
pursuant to procedures reasonably acceptable to the Company, intended to achieve
a broad public distribution of the Investor Shares covered thereby; or
(ii) Transfers in normal and customary open-market
transactions on a national securities exchange, the Nasdaq National Market or an
over-the counter market, provided that the total number of Investor Shares so
transferred by the Investor in any one-week period shall not exceed the greater
of (a) one percent (1%) of the outstanding shares of the Common Stock or (b) the
average weekly trading volume for Common Stock for the four weeks immediately
preceding the week in which the relevant Transfer occurs.
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(b) after the first anniversary of the date of this Agreement,
the Investor will not Transfer any Investor Shares except through:
(i) a Transfer through a bona fide underwritten
public offering registered under the Securities Act effected in accordance with
the provisions of Section 2 hereof, with an underwriter or underwriters and
pursuant to procedures reasonably acceptable to the Company, intended to achieve
a broad public distribution of the Investor Shares covered thereby;
(ii) Transfers in normal and customary open-market
transactions on a national securities exchange, the Nasdaq National Market or an
over-the counter market, provided that the total number of Investor Shares so
transferred by the Investor in any one-week period shall not exceed the greater
of (a) one percent (1%) of the outstanding shares of the Common Stock or (b) the
average weekly trading volume for Common Stock for the four weeks immediately
preceding the week in which the relevant Transfer occurs;
(iii) a Transfer of all or substantially all of the
Investor Shares in a transaction involving the opportunity for all holders of
Company Securities (including the Investor) to dispose of all or a proportionate
part of such Company Securities for the same consideration as, and on terms and
conditions not materially less favorable than those available to the Investor;
or
(iv) a Transfer by the Investor to a Permitted
Transferee.
2. Registration Rights.
2.1 Definitions. For purposes of this Section 2:
(a) Registration. The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act and the declaration
or ordering of effectiveness of such registration statement
(b) Registrable Securities. The term "Registrable Securities"
means (i) the Investor Shares and (ii) any Common Stock or other shares of
capital stock of the Company issued by way of stock dividend or stock split or
other distribution, recapitalization or reclassification with respect to, or in
exchange for, or in replacement of, any other Registrable Securities.
Notwithstanding the foregoing, "Registrable Securities" shall exclude any
Registrable Securities sold by a person in a transaction in which rights under
this Section 2 are not assigned in accordance with this Agreement or any
Registrable Securities sold in a public offering, whether sold pursuant to Rule
144 promulgated under the Securities Act, or in a registered offering, or
otherwise.
(c) Registrable Securities Then Outstanding. The number of
shares of "Registrable Securities then outstanding" shall mean the number of
shares of Common Stock of the Company that are Registrable Securities and are
then issued and outstanding.
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(d) Holder. For purposes of this Section 2, the term "Holder"
means any person owning of record Registrable Securities that have not been sold
to the public or pursuant to Rule 144 promulgated under the Securities Act or
any permitted assignee of record of such Registrable Securities to whom rights
under this Section 2 have been duly assigned in accordance with this Agreement.
(e) SEC. The term "SEC" or "Commission" means the U.S.
Securities and Exchange Commission.
2.2 Demand Registration.
(a) Request by Holders. If the Company shall at any time after
the first anniversary of the date hereof receive a written request from any of
the Holders of the Registrable Securities then outstanding that the Company file
a registration statement under the Securities Act covering the registration of
Registrable Securities pursuant to this Section 2.2, then the Company shall,
within fifteen (15) business days of the receipt of such written request, give
written notice of such request ("Request Notice") to all Holders, and effect, as
soon as practicable, the registration under the Securities Act of all
Registrable Securities that Holders request to be registered and included in
such registration by written notice given such Holders to the Company within
fifteen (15) days after receipt of the Request Notice, subject only to the
limitations of this Section 2.2; provided that the Registrable Securities
requested by all Holders to be registered pursuant to such request must be at
least fifty percent (50%) of all Registrable Securities then outstanding; and
provided further that the Company shall not be obligated to effect any such
registration if the Company has, within the six (6) month period preceding the
date of such request, already effected a registration under the Securities Act
pursuant to this Section 2.2, or in which the Holders had an opportunity to
participate pursuant to the provisions of Section 2.3 if at least 50% of the
number of Registrable Securities as to which registration was requested by the
Holders were registered therein.
(b) Underwriting. If the Holders initiating the registration
request under this Section 2.2 ("Initiating Holders") intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
then they shall so advise the Company as a part of their request made pursuant
to this Section 2.2 and the Company shall include such information in the
written notice referred to in subsection 2.2(a). In addition, the right of any
Holder to include his Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the managing underwriter or
underwriters selected for such underwriting by the Company and reasonably
acceptable to a majority of the Holders participating in such offering. Such
underwriting agreement shall include a market stand-off agreement of up to 180
days if required by such underwriter. Notwithstanding any other provision of
this Section 2.2, if the underwriter advises the Company in writing that
marketing factors require a limitation of the number of securities to be
underwritten then the Company shall so advise all Holders of Registrable
Securities which would otherwise be registered and underwritten pursuant hereto,
and the
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number of Registrable Securities that may be included in the underwriting shall
be reduced as required by the underwriter and allocated among the Holders of
Registrable Securities on a pro rata basis according to the number of
Registrable Securities then outstanding held by each Holder requesting
registration (including the initiating Holders). If any such exclusion causes
less than 50% of the number of shares of Registrable Securities as to which
registration was requested by the Holders to be registered, such registration
may be withdrawn at the request of a majority of the Holders of Registrable
Securities to be included in such offering and, if so withdrawn within ten (10)
days after such Holders are notified of such exclusion, such registration shall
not constitute a request for registration under Section 2.2(e). Any Registrable
Securities excluded and withdrawn from such underwriting shall be withdrawn from
the registration.
(c) Maximum Number of Demand Registrations. The Company shall
be obligated to effect only two (2) such registrations pursuant to this Section
2.2.
(d) Deferral. Notwithstanding the foregoing, if the Company
shall furnish to Holders requesting the filing of a registration statement
pursuant to this Section 2.2, a certificate signed by the President or Chief
Executive Officer of the Company stating that in the good faith judgment of the
Board, it would be materially detrimental to the Company for such registration
statement to be filed, then the Company shall have the right to defer such
filing for a period of not more than ninety (90) days after receipt of the
request of the Initiating Holders; provided, however, that the Company may not
utilize this right more than once in any twelve (12) month period.
(e) Expenses. All expenses incurred in connection with any
registration pursuant to this Section 2.2, including without limitation all
federal and state securities and "blue sky" registration fees, filing and
qualification fees, printer's and accounting fees, and fees and disbursements of
counsel for the Company (but excluding underwriters' discounts and commissions
relating to shares sold by the Holders and legal fees of counsel for any of the
Holders), shall be borne by the Company. Each Holder participating in a
registration pursuant to this Section 2.2 shall bear such Holder's proportionate
share (based on the total number of shares sold in such registration other than
for the account of the Company) of all discounts, commissions or other amounts
payable to underwriters or brokers. In addition, each Holder shall bear such
Holders' legal fees, in connection with such offering by the Holders.
Notwithstanding the foregoing, the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to this Section 2.2 if
the registration request is subsequently withdrawn at the request of the Holders
of a majority of the Registrable Securities to be registered, unless the Holders
of a majority of the Registrable Securities to be registered pursuant to such
request agree that such registration constitutes the use by the Holders of one
(1) demand registration pursuant to this Section 2.2 (in which case such
registration shall also constitute the use by all Holders of Registrable
Securities of one (l) such demand registration); provided, further, however,
that if at the time of such withdrawal, such Holders have learned of a material
adverse change in the condition, business, or prospects of the Company not known
to the Holders at the time of their request for such registration and have
withdrawn their request for registration with reasonable promptness after
learning of such material adverse change, then the Holders shall not be required
to pay any of such expenses and such registration shall not constitute the use
of a demand registration pursuant to this Section 2.2.
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2.3 Piggyback Registrations.
(a) The Company shall notify all Holders of Registrable
Securities in writing at least thirty (30) days prior to filing any registration
statement under the Securities Act for purposes of effecting a public offering
of securities of the Company (including, but not limited to, registration
statements relating to secondary offerings of securities of the Company, but
excluding registration statements relating to any registration under Section 2.2
of this Agreement, to any employee benefit plan, to any corporate reorganization
or to a sale solely in connection with a Rule 145 transaction or a registration
statement which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities) and will afford each such Holder an opportunity to
include in such registration statement all or any part of the Registrable
Securities then held by such Holder. Each Holder desiring to include in any such
registration statement all or any part of the Registrable Securities held by
such Holder shall within fifteen (15) days after receipt of the above-described
notice from the Company, so notify the Company in writing, and in such notice
shall inform the Company of the number of Registrable Securities such Holder
wishes to include in such registration statement. If a Holder decides not to
include all of its Registrable Securities in any registration statement
thereafter filed by the Company, such Holder shall nevertheless continue to have
the right to include any Registrable Securities in any subsequent registration
statement or registration statements as may be filed by the Company with respect
to offerings of its securities, all upon the terms and conditions set forth
herein.
(b) Underwriting. If a registration statement under which the
Company gives notice under this Section 2.3 is for an underwritten offering,
then the Company shall so advise the Holders of Registrable Securities. In such
event, the right of any such Holder's Registrable Securities to be included in a
registration pursuant to this Section 2.3 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Securities through such
underwriting shall enter into an underwriting agreement in customary form with
the managing underwriter or underwriters selected by the Company for such
underwriting (including a market stand-off agreement of up to 180 days if
required by such underwriters) on terms no less favorable to such Holders than
available to the Company if the Company is participating in such underwriting.
Notwithstanding any other provision of this Agreement, if the managing
underwriter determines in good faith that marketing factors require a limitation
of the number of shares to be underwritten, then the managing underwriters may
exclude shares from the registration and the underwriting, and the number of
shares that may be included in the registration and the underwriting shall be
allocated, first to the Company, and second, to each of the Holders requesting
inclusion of their Registrable Securities in such registration statement and
each of the other holders of Common Stock with similar registration rights, if
any, on a pro rata basis based on the total number of Registrable Securities
then held by each such Holder and Common Stock of any other holder participating
in such registration. If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by written notice to
the Company and the underwriter, delivered at least ten (10) business days prior
to the effective date of the registration statement. Any Registrable Securities
excluded or withdrawn from such underwriting shall be excluded and withdrawn
from the registration. For any Holder that is a partnership, the Holder and the
partners and retired
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partners of such Holder, or the estates and family members of any such partners
and retired partners and any trusts for the benefit of any of the foregoing
persons, and for any Holder that is a corporation, the Holder and all
corporations that are affiliates of such Holder shall be deemed to be a single
"Holder," and any pro rata reduction with respect to such "Holder" shall be
based upon the aggregate amount of shares carrying registration rights owned by
all entities and individuals included in such "Holder," as defined in this
sentence.
(c) Expenses. All expenses incurred in connection with any
registration pursuant to this Section 2.3, including without limitation all
federal and state securities and "blue sky" registration fees, filing and
qualification fees, printer's and accounting fees, and fees and disbursements of
counsel for the Company (but excluding underwriters' discounts and commissions
relating to shares sold by the Holders and legal fees of counsel for any of the
Holders), shall be borne by the Company. Each Holder participating in a
registration pursuant to this Section 2.3 shall bear such Holder's proportionate
share (based on the total number of shares sold in such registration other than
for the account of the Company) of all discounts, commissions or other amounts
payable to underwriters or brokers. In addition, each Holder shall bear such
Holders' legal fees, in connection with such offering by the Holders.
(d) Not Demand Registration. Registration pursuant to this
Section 2.3 shall not be deemed to be a demand registration as described in
Section 2.2 above. Except as otherwise provided herein, there shall be no limit
on the number of times the Holders may request registration of Registrable
Securities under this Section 2.3.
2.4 Form S-3 Registration. In case the Company shall receive from the
Investor a written request that the Company effect a registration on Form S-3
(or any comparable successor form or forms) and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned by
the Investor, the Company shall effect, as soon as practicable, such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of the Investor's Registrable Securities as are specified in such
request, provided, however, that the Company shall not be obligated to effect
any such registration, qualification or compliance, pursuant to this section
2.4:
(a) if Form S-3 is not available for such offering by the
Holders;
(b) if the Company has already effected two registrations
pursuant to this Section 2.4;
(c) if the Investor proposes to sell Registrable Securities
and such other securities (if any) at an aggregate price to the public (net of
any underwriters' discounts or commissions) of less than $1,000,000;
(d) if the Company shall furnish to the Investor a certificate
signed by the President or Chief Executive Officer of the Company stating that
in the good faith judgment of the Board, it would be materially detrimental to
the Company for such registration statement to be filed, then the Company shall
have the right to defer such filing for a period of not more than
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ninety (90) days after receipt of the request of the Investor; provided,
however, that the Company may not utilize this right more than once in any
twelve (12) month period; or
(e) in any particular jurisdiction in which the Company would
be required to qualify to do business or to execute a general consent to service
of process in effecting such registration, qualification or compliance (except
for California and New York).
Registrations effected pursuant to this Section 2.4 shall not be counted as
requests for registration effected pursuant to Section 2.2.
2.5 Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities under this Agreement the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, provided, however, that the
Company shall not be required to keep any such registration statement effective
for more than one hundred twenty (120) days. Prior to filing a registration
statement or prospectus relating to the sale of Registrable Securities, or any
amendments or supplements thereto, the Company will furnish to counsel
representing the Holders of the Registrable Securities covered by such
registration statement copies of all documents proposed to be filed, which
documents will be subject to the review of such counsel within five (5) business
days after receipt thereof.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to keep such registration
statement effective during the distribution period and comply with the
provisions of the Securities Act, the Exchange Act and the rules and regulations
of the SEC thereunder with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders such number of copies of such
registration statement, and of each amendment and supplement thereto, such
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by them that are included in such registration.
(d) Use its best efforts to register or qualify such
Registrable Securities covered by such registration statement under such other
securities or blue sky laws of each of the 50 states of the United States (or
such jurisdictions as each seller shall reasonably request), or obtain
appropriate exemptions therefrom, and keep such state securities/"blue sky"
registrations effective, or keep the appropriate exemption therefrom effective,
during the effective period of such registration statement, and do any and all
other acts and things which may be reasonably necessary or advisable to enable
such seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such seller in accordance with their intended
method of distribution thereof, except that the Company shall not for any such
purpose be required to
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qualify generally to do business as a foreign corporation in any jurisdiction
where, but for the requirements of this case (d), it would not be obligated to
be so qualified, to subject itself to taxation in any such jurisdiction or to
consent to general service of process in any such jurisdiction (except for
California and New York). Notwithstanding the foregoing, if the Registrable
Securities are not listed for trading on the New York Stock Exchange, Nasdaq
National Market or any other equivalent United States stock market or exchange
at the time the Company is required to effect the registration of any
Registrable Securities pursuant hereto, then the Company's obligations under
this Section 2.5(d) shall be limited to the states of California and New York.
(e) Notify promptly each seller of any such Registrable
Securities covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act within the
appropriate period mentioned in clause (b) of this Section 2.5, of the Company's
becoming aware that the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact in light of the circumstances then existing, and at the
request of any such seller, prepare and furnish to such seller a reasonable
number of copies of an amended or supplemental prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(f) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable (but not more than eighteen months)
after the effective date of the registration statement, if required, an earnings
statement which shall satisfy the provisions of Section 11(a) of the Securities
Act and the rules and regulations promulgated thereunder;
(g) (i) Use reasonable efforts to list such Registrable
Securities on any securities exchange on which the Common Stock is then listed,
if any, if such Registrable Securities are not already so listed and if such
listing is then permitted under the rules of such exchange and desired by the
Company; and (ii) use reasonable efforts to provide a transfer agent and
registrar for such Registrable Securities covered by such registration statement
not later than when such distribution so requires an agent or registrar, if any;
(h) to the extent permitted by the rules of the AICPA, if
requested by the underwriters in any underwritten offering, use reasonable
efforts to obtain for such underwriters a "cold comfort" letter or letters from
the Company's independent public accountants in customary form;
(i) make available for inspection by any seller of such
Registrable Securities covered by such registration statement, by any
underwriter participating in any disposition to be effected pursuant to such
registration statement and by any attorney, accountant or other agent retained
by any such seller or any such underwriter, all pertinent financial and other
records, pertinent corporate documents and properties of the Company, and cause
all of the Company's
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officers, directors and employees to supply all information reasonably requested
by any such seller, underwriter, attorney, accountant or agent in connection
with such registration statement;
(j) notify the Holders of Registrable Securities included in
such registration statement promptly (i) when the registration statement, or any
post-effective amendment to the amendment prospectus shall have been filed, (ii)
of the receipt of any comments from the SEC and (iii) of the issuance by the SEC
of any stop order suspending the effectiveness of the registration statement or
of any order preventing or suspending the use of any preliminary prospectus, or
of the suspension of the qualification of the registration statement for
offering or sale in any jurisdiction, or of the institution or threatening of
any proceedings for any of such purposes;
(k) if requested by the managing underwriter or agent or any
Holder of Registrable Securities covered by the registration statement, promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter or agent or such Holder reasonably
requests to be included therein, including, without limitation, the number of
Registrable Securities being sold by such Holder to such underwriter or agent,
the purchase price being paid therefor by such underwriter or agent and any
other terms of the underwritten offering of the Registrable Securities to be
sold in such offering; and make all required filings of such prospectus
supplement or post-effective amendment as soon practicable after being notified
of the matters incorporated in such prospectus supplement or post-effective
amendment;
(l) cooperate with the Holders of Registrable Securities
covered by the registration statement and the managing underwriter or agent, if
any, to facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legends) representing securities sold under the
registration statement, and enable such securities to be in such denominations
and registered in such names as the managing underwriter or agent, if any, or
such Holders may request;
(m) obtain for delivery to the Holders of Registrable
Securities being registered and to the underwriter or agent an opinion or
opinions of counsel for the Company in customary form and in form, substance and
scope reasonably satisfactory to such Holders, underwriters or agents and their
counsel; and
(n) cooperate with each seller of Registrable Securities and
each underwriter or agent participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings required
to be made with the NASD.
2.6 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Sections 2.2 or 2.3
that the selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition of such securities as shall be required to timely effect the
Registration of their Registrable Securities.
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2.7 Indemnification. In the event any Registrable Securities are
included in a registration statement under Sections 2.2 or 2.3:
(a) By the Company. To the extent permitted by law, the
Company will indemnify and hold harmless each Holder, the partners, officers,
directors and Affiliates of each Holder, any underwriter (as determined in the
Securities Act) for such Holder and each person, if any, who controls, is under
common control or is controlled by such Holder or underwriter within the meaning
of the Securities Act or the Securities Exchange Act of 1934, as amended, (the
"1934 Act"), against any and all losses, claims, damages, or liabilities (joint
or several) to which they may become subject under the Securities Act, the 1934
Act or other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof whether or not such identified party
is a party thereto) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"):
(i) any untrue statement or alleged untrue statement
of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto;
(ii) the omission or alleged omission to state
therein a material fact required to be stated therein, or
necessary to make the statements therein (in the case of a
prospectus, in light of the circumstances under which they
were made) not misleading, or
(iii) any violation or alleged violation by the
Company of the Securities Act, the 1934 Act, any federal or
state securities law or any rule or regulation promulgated
under the Securities Act, the 1934 Act or any federal or state
securities law in connection with the offering covered by such
registration statement;
and the Company will reimburse each such Holder, partner, officer, director or
Affiliate thereof, underwriter or controlling person for any legal or other
expenses reasonably incurred by them, as incurred, in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this subsection
2.7(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration through an instrument or
document provided by such Holder, partner, officer, director, underwriter or
controlling person of such Holder specifically stating that it is for use in
preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such seller or any
indemnified party and shall survive the transfer of such securities by such
seller.
(b) By Selling Holders. To the extent permitted by law, each
selling Holder will indemnify and hold harmless the Company, each of its
directors, each
12
of its Affiliates, each of its officers who have signed the registration
statement, each person, if any, who controls or is under common control or
controlled by the Company within the meaning of the Securities Act, any
underwriter 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 within the meaning of the Securities Act or the
1934 Act, against any and all losses, claims, damages or liabilities (joint or
several) to which the Company or any such director, officer, controlling person,
underwriter or other such Holder, partner or director, officer or controlling
person of such other Holder may become subject under the Securities Act, the
1934 Act or other federal or state law, insofar as such losses, claims, damages
or liabilities (or actions in respect thereto whether or not such identified
party is a party thereto) arise out of or are based upon any Violation, in each
case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder specifically stating that it is for use in connection with such
registration; and each such Holder will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, Affiliate,
controlling person, underwriter or other Holder, partner, officer, director or
controlling person of such other Holder in connection with investigating or
defending any such loss, claim, damage, liability or action: provided, however,
that the indemnity agreement contained in this subsection 2.7(b) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Holder, which
consent shall not be unreasonably withheld; and provided, further, that the
total amounts payable in indemnity by a Holder under this Section 2.7(b) in
respect of any Violation shall not exceed the net proceeds received by such
Holder in the registered offering out of which such Violation arises; provided
further, however, that such Holder shall not be obligated to provide such
indemnity to the extent that such losses, claims or liabilities result from the
failure of the Company to promptly amend or take action to correct or supplement
any such registration statement or prospectus on the basis of corrected or
supplemental information furnished in writing to the Company by such Holder
expressly for such purpose. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company or any
indemnified party.
(c) Notice. Promptly after receipt by an indemnified party
under this Section 2.7 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 2.7,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential conflict of interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall relieve such indemnifying party of
liability to the indemnified party under this Section 2.7 to the extent the
indemnifying party is prejudiced as a result thereof, but the omission so to
deliver written notice to the indemnified
13
party will not relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 2.7.
(d) Defect Eliminated in Final Prospectus. The foregoing
indemnity agreements of the Company and Holders are subject to the condition
that, insofar as they relate to any Violation made in a preliminary prospectus
but eliminated or remedied in the amended prospectus on file with the SEC at the
time the registration statement in question becomes effective or the amended
prospectus filed with the SEC pursuant to SEC Rule 424(b) (the "Final
Prospectus"), such indemnity agreement shall not inure to the benefit of any
person if a copy of the Final Prospectus was timely furnished to the indemnified
party and was not furnished to the person asserting the loss, liability, claim
or damage at or prior to the time such action is required by the Securities Act.
(e) Contribution. In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
either (i) any Holder exercising rights under this Agreement, or any controlling
person of any such Holder, makes a claim for indemnification pursuant to this
Section 2.7 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 2.7 provides
for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any such selling Holder or any such controlling
person in circumstances for which indemnification is provided under this Section
2.7; then, and in each such case, the Company and such Holder will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion so that such Holder
is responsible for the portion represented by the percentage that the public
offering price of its Registrable Securities offered by and sold under the
registration statement bears to the public offering price of all securities
offered by and sold under such registration statement, and the Company and other
selling Holders are responsible for the remaining portion; provided, however,
that, in any such case: (A) no such Holder will be required to contribute any
amount in excess of the public offering price of all such Registrable Securities
offered and sold by such Holder pursuant to such registration statement; and (B)
no person or entity guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) will be entitled to contribution from
any person or entity who was not guilty of such fraudulent misrepresentation.
(f) Survival. The obligations of the Company and Holders under
this Section 2.7 shall survive until the first anniversary of the completion of
any offering of Registrable Securities in a registration statement, regardless
of the expiration of any statutes of limitation or extensions of such statutes.
2.8 Termination of the Company's Obligations. The Company shall have no
obligations pursuant to Sections 2.2 or 2.3 with respect to any Registrable
Securities proposed to be sold by a Holder in a registration pursuant to Section
2.2 or 2.3 if, in the opinion of counsel to the Company, all such Registrable
Securities proposed to be sold by a Holder may then be sold under Rule 144 in
any three month period without exceeding the volume limitations thereunder.
14
2.9 Transfer of Registration Rights. The registration rights may only
be transferred to a Holder reasonably acceptable to the Company that acquires
all of the Investor's Registrable Securities or to any party acquiring all or
substantially all of the stock or assets of a Holder.
2.10 Rule 144 and Rule 144A. The Company covenants that it will file
the reports required to be filed by it under the Securities Act and the 1934 Act
and the rules and regulations adopted by the SEC thereunder (or, if the Company
is not required to file such reports, it will, upon the request of any Holder of
Registrable Securities, make publicly available such information), and it will
take such further action as any Holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell shares of Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (i) Rule 144 and Rule
144A under the Securities Act, as such rules may be amended from time to time or
(ii) any similar rule or regulation hereafter adopted by the SEC.
3. Miscellaneous Provisions
3.1 Construction. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Delaware.
3.2 Notices.
All notices, requests, demands and other communications called for or
contemplated hereunder shall be in writing and shall be deemed to have been duly
given when delivered to the party to whom addressed or when sent by telecopy (as
indicated by a telecopy confirmation and if promptly confirmed by registered or
certified mail, return receipt requested, prepaid and addressed) to the parties,
their successors in interest, or their assignees at the following addresses, or
at such other addresses as the parties may designate by written notice in the
manner aforesaid::
If to Buyer: Accom, Inc.
0000 X'Xxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Attn: President
Fax: 000-000-0000
With copies to: Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
Fax: 000-000-0000
If to Investor: Xxxxxxx Xxxxxxxx
00 Xxxxxxxxx Xxxxx
Xxxxxx XX0X 0XX
Fax: 000-00-000-000-0000
15
With copies to: Pillsbury Madison & Sutro LLP
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxxxxx X. Xxxxxx
Fax: 000-000-0000
3.3 Assignment. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof nor any of the
documents executed in connection herewith may be assigned by any party without
the consent of the other parties provided, however, that any party may freely
assign this Agreement to any party acquiring all or substantially all of the
stock or assets of such assigning party. Nothing contained herein, express or
implied, is intended to confer upon any person or entity other than the parties
hereto and their successors in interest and permitted assignees any rights or
remedies under or by reason of this Agreement unless so stated herein to the
contrary.
3.4 Amendments and Waivers. This Agreement and all exhibits may be
modified only by a written instrument duly executed by each party. No condition
to any party's obligations and no breach of any covenant, agreement, warranty or
representation shall be deemed waived unless expressly waived in writing by the
party whose obligations are subject to such condition or who might assert such
breach. No waiver of any right hereunder shall operate as a waiver of any other
right or of the same or a similar right on another occasion.
3.5 Survival. The covenants, agreements, warranties and representations
entered into or made pursuant to this Agreement, irrespective of any
investigation made by or on behalf of any party, shall be continuing.
3.6 Remedies. No remedy conferred by any of the specific provisions of
this Agreement is intended to be exclusive of any other remedy. Each and every
remedy shall be cumulative and shall be in addition to every other remedy given
hereunder now or hereafter existing at law or in equity or by statute or
otherwise, and the election by a party of one or more remedies shall not
constitute a waiver of the party's right to pursue any other available remedies.
3.7 Attorneys' Fees. In the event that any action or proceeding,
including arbitration, is commenced by any party hereto for the purpose of
enforcing any provision of this Agreement, the parties to such action,
proceeding or arbitration may receive as part of any award, judgment, decision
or other resolution of such action, proceeding or arbitration their costs and
reasonable attorneys' fees as determined by the person or body making such
award, judgment, decision or resolution. Should any claim hereunder be settled
short of the commencement of any such action or proceeding, including
arbitration, the parties in such settlement shall be entitled to include as part
of the damages alleged to have been incurred reasonable costs of attorneys or
other professionals in investigation or counseling on such claim.
3.8 Binding Nature of Agreement. The Agreement includes each of the
exhibits which are referred to herein or attached hereto, all of which are
incorporated by reference herein. All the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective executors, heirs, legal representatives, successors and assigns.
16
3.9 Entire Agreement. This Agreement contains the entire understanding
of the parties, supersedes all prior agreements and understandings relating to
the subject matter hereof.
3.10 Severability. Any provision of this Agreement which is invalid,
illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability,
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of this Agreement invalid,
illegal or unenforceable in any other jurisdiction.
3.11 Counterparts. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
3.12 Section Headings. The headings of each Section, subsection or
other subdivision of this Agreement are for reference only and shall not limit
or control the meaning thereof.
[The remainder of this page is intentionally left blank.]
17
IN WITNESS WHEREOF, the parties hereto have executed this Investor
Right Agreement on the date first above written.
ACCOM, INC.
By: /S/ XXXXXX XXXXXX
----------------------------------
Name: Xxxxxx Xxxxxx
--------------------------------
Title: Chief Executive Officer
-------------------------------
XXXXXXX XXXXXXXX
By: /s/ XXXXXXX XXXXXXXX
---------------------------------
Name: Xxxxxxx Xxxxxxxx
--------------------------------
Title:
-------------------------------
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