Exhibit 10.2
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REGISTRATION RIGHTS AGREEMENT
BY AND BETWEEN
FRONTLINE CAPITAL GROUP
AND
DEUTSCHE BANK SHARPS XXXXXX INC.
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Dated as of December 13, 2000
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS..........................................................................................1
Section 1.01 Definitions................................................................................1
Section 1.02 Internal References........................................................................3
ARTICLE II REGISTRATION RIGHTS.................................................................................3
Section 2.01 Demand Registration........................................................................3
Section 2.02 Piggyback Registration.....................................................................5
ARTICLE III REGISTRATION PROCEDURES............................................................................7
Section 3.01 Filings; Information.......................................................................7
Section 3.02 Registration Expenses.....................................................................11
ARTICLE IV INDEMNIFICATION AND CONTRIBUTION...................................................................12
Section 4.01 Indemnification by the Company............................................................12
Section 4.02 Indemnification by Selling Holders........................................................12
Section 4.03 Conduct of Indemnification Proceedings....................................................13
Section 4.04 Contribution..............................................................................14
ARTICLE V MISCELLANEOUS.......................................................................................14
Section 5.01 Participation in Underwritten Registrations...............................................14
Section 5.02 Rule 144..................................................................................15
Section 5.03 Holdback Agreements.......................................................................15
Section 5.04 Termination...............................................................................15
Section 5.05 Amendments, Waivers, Etc..................................................................15
Section 5.06 Counterparts..............................................................................16
Section 5.07 Entire Agreement..........................................................................16
Section 5.08 Governing Law.............................................................................16
Section 5.09 Assignment of Registration Rights.........................................................16
Section 5.10 Specific Performance......................................................................16
Section 5.11 No Superior Registration Rights...........................................................16
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement"), is made as of
December 13, 2000, by and between FrontLine Capital Group, a Delaware
corporation (the "Company"), and Deutsche Bank Sharps Xxxxxx Inc., a Delaware
corporation (the "Initial Holder").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and the Initial Holder have entered into a
Securities Purchase Agreement dated December 13, 2000 (the "Securities
Purchase Agreement"); and
WHEREAS, pursuant to the terms of the Securities Purchase Agreement,
the Initial Holder shall purchase up to 25,000 shares (the "Shares") of the
9.25% Series B Convertible Cumulative Preferred Stock of the Company (the
"Convertible Preferred Stock"), which such Shares are convertible into shares
of the Common Stock, par value $.01 per share, of the Company ("Common
Stock"), in accordance with the terms of the Convertible Preferred Stock; and
WHEREAS, it is a condition precedent to the closing of the
transactions contemplated in the Securities Purchase Agreement that the
parties hereto execute and deliver this Agreement.
NOW THEREFORE, in consideration of the premises, mutual promises and
covenants contained in this Agreement and intending to be legally bound, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Terms defined in the Securities Purchase
Agreement are used herein as therein defined. In addition, the following
terms, as used herein, have the following meanings:
"Agreement" has the meaning set forth in the preamble.
"Board" shall mean the Board of Directors of the Company.
"Closing Date" shall mean the date hereof.
"Commission" means the United States Securities and Exchange
Commission.
"Common Stock" has the meaning set forth in the second recital.
"Company" has the meaning set forth in the preamble.
"Conversion Shares" means all shares of Common Stock or other
securities issued upon the conversion of the Convertible Preferred Stock in
accordance with its terms or issued in redemption of the Convertible Preferred
Stock.
"Convertible Preferred Stock" has the meaning set forth in the second
recital.
"Demand Registration" means a registration under the Securities Act
requested in accordance with Section 2.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Excluded Holders" has the meaning set forth in Section 2.01(f).
"Holders" means the Initial Holder, its direct and indirect
successors and assigns and any direct or indirect transferee of any
Registrable Securities initially held by the Initial Holder
"Indemnified Party" has the meaning set forth in Section 4.03.
"Indemnifying Party" has the meaning set forth in Section 4.03.
"Initial Holder" has the meaning set forth in the preamble.
"Losses" has the meaning set forth in Section 4.01.
"Material Adverse Effect" has the meaning set forth in Section
2.01(f).
"Piggyback Registration" has the meaning set forth in Section
2.02(a).
"Registrable Common Stock" means the Conversion Shares together with
any additional shares of Common Stock or other securities issued in respect
thereof in connection with any stock split, stock dividend, merger,
consolidation, reclassification, recapitalization or similar event with
respect to such shares of Common Stock.
"Registrable Securities" means (a) the Registrable Common Stock and
(b) any securities of the Company or any successor entity into which
Registrable Common Stock may hereafter be reclassified, converted or changed.
As to any particular Registrable Securities, such securities shall cease to be
Registrable Securities upon the earliest to occur of (i) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been
disposed of under such registration statement in accordance with the plan of
distribution set forth therein; (ii) such securities shall have become
transferable in a single transaction pursuant to Rule 144(k); (iii) such
securities shall have been otherwise transferred or disposed of, and new
certificates therefor not bearing a legend restricting further transfer shall
have been delivered by the Company, and subsequent transfer of such securities
shall not require registration or qualification under the Securities Act or
any similar state law then in force; or (iv) such securities shall have ceased
to be outstanding.
"Requesting Holders" means the Holders requesting a Demand
Registration, and shall include parties deemed "Requesting Holders" pursuant
to Sections 2.01(a)(iii).
"Rule 144" means Rule 144 (or any successor rule of similar effect)
promulgated under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Securities Purchase Agreement" has the meaning set forth in the
first recital.
"Selling Holder" means any Holder who is selling Registrable
Securities pursuant to a public offering registered hereunder.
"Shares" has the meaning set forth in the second recital.
"Shelf Registration" means a Demand Registration which is effected
pursuant to Rule 415 under the Securities Act.
"Underwriter" means a securities dealer who purchases any Registrable
Securities as principal in connection with a Demand Registration or a
Piggyback Registration and not as part of such dealer's market-making
activities.
Section 1.02 Internal References. Unless the context indicates
otherwise, references to Articles, Sections and paragraphs shall refer to the
corresponding articles, sections and paragraphs in this Agreement, and
references to the parties shall mean the parties to the Securities Purchase
Agreement.
ARTICLE II
REGISTRATION RIGHTS
Section 2.01 Demand Registration. (a) (i) Holders of not less than a
majority of the Registrable Securities may make up to two written requests for
a Demand Registration (of which such Demand Registrations, one may be a Shelf
Registration) of all or any part of the Registrable Securities held by the
Initial Holder; provided that the Holders shall not be entitled to a Demand
Registration if, during the 6 months preceding such request, the Initial
Holder has requested a Demand Registration (unless such Demand Registration
was preempted pursuant to Section 2.01(e)).
(ii) Any request for a Demand Registration will specify the aggregate
number of shares of Registrable Securities proposed to be sold by the
Requesting Holders and will also specify the intended method of disposition
thereof. Any such request for a Demand Registration shall specify whether such
registration will be a Shelf Registration. A registration will not count as a
Demand Registration until it has become effective. If the Requesting Holders
withdraw or do not pursue the request for the Demand Registration (provided
that at such time the Company is in compliance in all material respects with
its obligations under this Agreement), then such Demand Registration shall be
deemed to have been effected, provided that (i) if, the Demand Registration
does not become effective because a material adverse change has occurred, or
is reasonably likely to occur, in the condition (financial or otherwise),
business, properties, assets, liabilities, operations or prospects of the
Company and its subsidiaries taken as a whole subsequent to the date of the
written request made by the Initial Holder or (ii) if, after the Demand
Registration has become effective, an offering of Registrable Securities
pursuant to a registration is interfered with by any stop order, injunction,
or other order or requirement of the Commission or other governmental agency
or court then the Demand Registration shall not be deemed to have been
effected and will not count as a Demand Registration.
(iii) Upon receipt of any request for a Demand Registration by
Holders of not less than a majority of the Registrable Securities held by the
Holders, the Company shall promptly (but in any event within ten (10) days)
give written notice of such proposed Demand Registration to all other Holders,
and subject to Section 2.01(f), all such Holders shall have the right,
exercisable by written notice to the Company within twenty (20) days of their
receipt of the Company's notice, to elect to include in such Demand
Registration such portion of their Registrable Securities as they may request.
All such Holders requesting to have their Registrable Securities included in a
Demand Registration in accordance with the preceding sentence shall be deemed
to be "Requesting Holders" for purposes of this Section 2.01.
(b) In the event that the Requesting Holders withdraw or do not
pursue a request for a Demand Registration and, pursuant to Section 2.01(a)
hereof, such Demand Registration is deemed to have been effected, the Holders
may reacquire such Demand Registration (such that the withdrawal or failure to
pursue a request will not count as a Demand Registration hereunder) if the
Selling Holders reimburse the Company for any and all registration expenses
actually incurred by the Company in connection with such request for a Demand
Registration; provided, however that the Requesting Holders may not reacquire
a Demand Registration pursuant to this subparagraph more than twice during the
term of this Agreement.
(c) If the Requesting Holders so elect, the offering of such
Registrable Securities pursuant to such Demand Registration shall be in the
form of a "firm commitment" underwritten offering. A majority in interest of
the Requesting Holders, or, to the extent the Initial Holder is a Selling
Holder, the Initial Holder, shall have the right to select the managing
Underwriters and any additional investment bankers and managers to be used in
connection with any offering under this Section 2.01 as long as such managing
underwriters and additional investment bankers and managers are nationally
recognized first-tier underwriters, in all cases, subject to the Company's
approval, which approval shall not be unreasonably withheld.
(d) The Initial Holder will inform the Company of the time and manner
of any disposition of Registrable Securities (which may be pursuant to a Shelf
Registration), and agree to take reasonable action to cooperate with the
Company in effecting the disposition of the Registrable Securities in a manner
that does not unreasonably disrupt the public trading market for the Common
Stock.
(e) The Company shall have the right for up to 180 days in any
consecutive 365-day period to delay or suspend any Demand Registration in the
event that the Board determines, in good faith, that it is in the best
interest of the Company for the Company to proceed with its own offering of
equity securities. The Company may so proceed by delivering written notice
(within five business days after the Company has received a request for such
Demand Registration) of such intention to the Selling Holders indicating that
the Company has identified a bona fide business purpose and use for the
proceeds of the sale of such securities and the Company shall use its best
efforts to effect a primary registration within 60 days of such notice. In the
ensuing primary registration, the Holders will have such piggyback
registration rights as are set forth in Section 2.02 hereof. Upon the
Company's preemption of a requested Demand Registration, such requested
registration will not count as a Demand Registration. The Company may exercise
the right to preempt only once in any 365-day period. Notwithstanding anything
to the contrary contained herein, during any 365-day period the Company shall
not exercise its right to preempt, delay or postpone the filing or
effectiveness of any registration statement, pre- or post-effective amendment
or supplement or prospectus supplement pursuant to this Section 2.01(e), the
first proviso to Section 3.01(a), or Section 3.01(b) for more than 180 days in
the aggregate for all such provisions during any period of 365 consecutive
days.
(f) Priority on Demand Registrations. No securities to be sold for
the account of any Person (including the Company) other than a Requesting
Holder shall be included in a Demand Registration (other than a Shelf
Registration) unless the managing Underwriter or Underwriters shall advise the
Company and the Requesting Holders in writing that the inclusion of such
securities will not materially and adversely affect the price, distribution or
timing of the offering (a "Material Adverse Effect"). Any additional
securities to be included in a Demand Registration pursuant to this Section
2.01(f) shall be included in such Demand Registration in accordance with their
relative rights. Furthermore, in the event the managing Underwriter or
Underwriters shall advise the Company or the Requesting Holders that even
after exclusion of all securities of other Persons (including the Company)
pursuant to the immediately preceding sentence, the amount of Registrable
Securities proposed to be included in such Demand Registration by the
Requesting Holders is sufficiently large to cause a Material Adverse Effect,
the Registrable Securities of the Requesting Holders to be included in such
Demand Registration shall equal the number of shares which the Company and the
Requesting Holders are so advised can be sold in such offering without a
Material Adverse Effect and such shares shall be allocated pro rata among the
Requesting Holders on the basis of the number of Registrable Securities
requested to be included in such registration by each such Requesting Holder;
provided, however, that if any Registrable Securities requested to be
registered pursuant to a Demand Registration under Section 2.01 are excluded
from registration hereunder, then the Holder(s) having shares excluded
("Excluded Holders") shall have the right to withdraw all, or any part, of
their shares from such registration; provided, further, that if less than 80%
of the Registrable Securities requested to be included in such Demand
Registration are actually included therein, such registration will not count
as a Demand Registration for purposes of this Section 2.01.
Section 2.02 Piggyback Registration. (a) If the Company at any time
proposes to file a registration statement under the Securities Act with
respect to an offering of securities for its own account or for the account of
another Person (other than a registration statement on Form S-4 or S-8 (or any
substitute form that may be adopted by the Commission) and other than a Demand
Registration hereunder), the Company shall give written notice of such
proposed filing to the Holders at the address set forth in the share register
of the Company as soon as reasonably practicable (but in no event less than 15
days before the anticipated date on which such registration will be first
filed with the Commission), undertaking to provide each Holder the opportunity
to register on the same terms and conditions such number and type of
Registrable Securities as the Initial Holder may request (a "Piggyback
Registration"). A Holder will have 10 business days after receipt of any such
notice to notify the Company as to whether it wishes to participate in a
Piggyback Registration (which notice shall not be deemed to be a request for a
Demand Registration); provided that should a Holder fail to provide timely
notice to the Company, such Holder will forfeit any rights to participate in
the Piggyback Registration with respect to such proposed offering. In the
event that the registration statement is filed on behalf of a Person other
than the Company, the Company will use its best efforts to have the shares of
Registrable Securities that the Holders wish to sell included in the
registration statement. If the Company shall determine in its sole discretion
not to register or to delay the proposed offering, the Company shall provide
written notice of such determination to the Holders and (i) in the case of a
determination not to effect the proposed offering, shall thereupon be relieved
of the obligation to register such Registrable Securities in connection
therewith, and (ii) in the case of a determination to delay a proposed
offering, shall thereupon be permitted to delay registering such Registrable
Securities for the same period as the delay in respect of the proposed
offering. As between the Company and the Selling Holders, the Company shall be
entitled to select the Underwriters in connection with any Piggyback
Registration.
(b) Priority on Piggyback Registrations. If the Registrable
Securities requested to be included in the Piggyback Registration by any
Holder differ from the type of securities proposed to be registered by the
Company and the managing Underwriter advises the Company that due solely to
such differences the inclusion of such Registrable Securities would cause a
Material Adverse Effect, then (i) the number of such Holders' Registrable
Securities to be included in the Piggyback Registration shall be reduced to an
amount which, in the opinion of the managing Underwriter, would eliminate such
Material Adverse Effect or (ii) if no such reduction would, in the opinion of
the managing Underwriter, eliminate such Material Adverse Effect, then the
Company shall have the right to exclude all such Registrable Securities from
such Piggyback Registration, provided that no other securities of such type
are included and offered for the account of any other Person in such Piggyback
Registration. Any partial reduction in number of Registrable Securities of any
Holder to be included in the Piggyback Registration pursuant to clause (i) of
the immediately preceding sentence shall be effected pro rata based on the
ratio which such Holder's requested shares bears to the total number of shares
requested to be included in such Piggyback Registration by all Persons other
than the Company who have the contractual right to request that their shares
be included in such registration statement and who have requested that their
shares be included. If the Registrable Securities requested to be included in
the registration statement are of the same type as the securities being
registered by the Company and the managing Underwriter advises the Company
that the inclusion of such Registrable Securities would cause a Material
Adverse Effect, the Company will be obligated to include in such registration
statement, as to each Holder only a portion of the shares such Holder has
requested be registered equal to the ratio which such Holder's requested
shares bears to the total number of shares requested to be included in such
registration statement by all Persons who have the contractual right to
request that their shares be included in such registration statement and who
have requested their shares be included; provided, however, that the
provisions of this sentence shall not be applicable to the Person or Persons
initiating such registration statement. If the Company initiated the
registration, then the Company may include all of its securities in such
registration statement before any such Holder's requested shares are included.
If another security holder initiated the registration, then the Company may
not include any of its securities in such registration statement unless all
Registrable Securities requested to be included in the registration statement
by all Holders are included in such registration statement. If as a result of
the provisions of this Section 2.02(b) any Holder shall not be entitled to
include all Registrable Securities in a registration that such Holder has
requested to be so included, such Holder may withdraw such Holder's request to
include Registrable Securities in such registration statement prior to its
effectiveness.
ARTICLE III
REGISTRATION PROCEDURES
Section 3.01 Filings; Information. In connection with the
registration of Registrable Securities pursuant to Section 2.01 and Section
2.02 hereof, the Company will use its best efforts to effect the registration
of such Registrable Securities as promptly as is reasonably practicable, and
in connection with any such request:
(a) The Company will expeditiously prepare and file as soon as
practicable (but in any event within 60 days) with the Commission a
registration statement on any form for which the Company then qualifies
and which counsel for the Company shall deem appropriate and available
for the sale of the Registrable Securities to be registered thereunder in
accordance with the intended method of distribution thereof, and use its
reasonable best efforts to cause such filed registration statement to
become and remain effective for such period as may be reasonably
necessary to effect the sale of such securities; provided that if the
Company shall furnish to the Selling Holder a certificate signed by the
Company's Chairman or President stating that the Company's Board has
determined in good faith that it would be detrimental or otherwise
disadvantageous to the Company or its shareholders for such a
registration statement to be filed as expeditiously as possible because
the sale of Registrable Securities covered by such registration statement
or the disclosure of information in any related prospectus or prospectus
supplement would materially interfere with any acquisition, financing or
other material event or transaction which is then intended or the public
disclosure of which at the time would be materially prejudicial to the
Company, the Company may postpone the filing or effectiveness of a
registration statement for a period of not more than 180 days; provided,
further, that the Company shall not exercise its right to preempt, delay
or postpone any registration pursuant to Section 2.01(e), the first
proviso to this Section 3.01(a), or Section 3.01(b) for more than 180
days in the aggregate for all such provisions during any period of 365
consecutive days; provided, further, that the Company may exercise its
rights under Section 3.01(a) only once with respect to any particular
registration statement; and provided, further, that if (i) the effective
date of any registration statement filed pursuant to a Demand
Registration would otherwise be at least 45 calendar days, but fewer than
90 calendar days, after the end of the Company's fiscal year, and (ii)
the Securities Act requires the Company to include audited financial
statements of the Company as of the end of such fiscal year, the Company
may delay the effectiveness of such registration statement for such
period as is reasonably necessary to include therein its audited
financial statements for such fiscal year;
(b) Anything in this Agreement to the contrary notwithstanding, it
is understood and agreed that the Company shall not be required to keep
any Shelf Registration effective or useable for others or sales of the
Registerable Securities, file a post effective amendment to a Shelf
Registration Statement or prospectus supplement or supplement or amend
any registration statement, if the Company is then involved in
discussions concerning, or otherwise engaged in, any material financing
or investment, acquisition or divestiture transaction or other material
business purpose, if the Company determines in good faith that the making
of such a filing, supplement or amendment at such time would interfere
with such transaction or purpose. The Company shall promptly give the
Holders of Registrable Securities written notice of such postponement
containing a general statement of the reasons for such postponement and
an approximation of the anticipated delay. Upon receipt by a Holder of
Registrable Securities of notice of an event of the kind described in
this Section 3.01(b), such Holder shall forthwith discontinue such
Holder's disposition of Registrable Securities until such Holder's
receipt of notice from the Company that such disposition may continue and
of any supplemented or amended prospectus indicated in such notice.
Notwithstanding anything to the contrary contained herein, the Company
shall not be entitled to preempt, delay or postpone the filing or
effectiveness of any registration statement, pre- or post-effective
amendment or supplement to any registration statement or prospectus
supplement pursuant to Section 2.01(e), the first proviso of Section
3.01(a), or this Section 3.01(b) for more than 180 days in the aggregate
for all such provisions during any period of 365 consecutive days;
(c) Before filing a registration statement or prospectus or any
amendments or supplements thereto, the Company will furnish to any
Selling Holder and to the applicable managing Underwriters, if any, draft
copies of all such documents proposed to be filed at least 5 business
days prior thereto, which documents will be subject to the reasonable
review of such Selling Holders, the applicable managing Underwriters, if
any, and their respective counsel, agents and representatives, and the
Company will not file any registration statement or amendment thereto or
any prospectus or any supplement thereto (including such documents
incorporated by reference) to which any Selling Holder or Underwriter
shall reasonably object;
(d) Notify the Selling Holders requesting such registration and (if
requested) confirm such advice in writing, as soon as practicable after
notice thereof is received by the Company (i) when the registration
statement or any amendment thereto has been filed or becomes effective,
the prospectus or any amendment or supplement to the prospectus has been
filed, (ii) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus or for
additional information, (iii) if at any time the representations and
warranties of the Company contemplated by Section 5.01 cease to be true
and correct and (iv) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Registrable
Securities for offering or sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose;
(e) After the filing of the registration statement, the Company will
promptly notify the Selling Holders of any stop order issued, or, to the
Company's knowledge, threatened to be issued, by the Commission and use
its best efforts to prevent the entry of such stop order or to remove it
if entered;
(f) Prepare and file with the Commission such amendments,
post-effective amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be necessary to
keep such registration statement effective for a period of not less than
120 days (or such shorter period which will terminate when all
Registrable Securities covered by such registration statement have been
sold or withdrawn, but not prior to the expiration of the applicable
period referred to in Section 4(3) of the Securities Act and Rule 174
thereunder, if applicable), 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, and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the Selling
Holders set forth in such registration statement;
(g) Furnish to each Selling Holder requesting such registration and
the managing Underwriter, if any, without charge, one signed copy and
such number of conformed copies of such registration statement, each
amendment and supplement thereto, the prospectus included in such
registration statement (including each preliminary prospectus) and any
amendments or supplements thereto, any documents incorporated by
reference therein and such other documents as any such Selling Holder or
such managing Underwriter may reasonably request in order to facilitate
the disposition of the Registrable Securities (it being understood that
the Company consents to the use of the prospectus (including the
preliminary prospectus) and any amendment or supplement thereto by the
Selling Holder requesting such registration and the managing Underwriter,
if any, in connection with the offering and sale of the Registrable
Securities covered by the prospectus or any amendment or supplement
thereto);
(h) The Company will use its best efforts to qualify the Registrable
Securities for offer and sale under such other securities or blue sky
laws of such jurisdictions in the United States as the Selling Holders
reasonably request; keep each such registration or qualification (or
exemption therefrom) effective during the period in which 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 each Selling Holder to consummate the disposition of the
Registrable Securities owned by such Selling Holder in such
jurisdictions; provided that the Company will not be required to qualify
generally to do business in any jurisdiction where it would not otherwise
be required to qualify but for this paragraph 3.01(h), (ii) subject
itself to taxation in any such jurisdiction or (iii) consent to general
service of process in any such jurisdiction;
(i) The Company will as promptly as is practicable notify the
Selling Holders, at any time when a prospectus relating to the sale of
the Registrable Securities is required by law to be delivered under the
Securities Act, of the occurrence of any event requiring the preparation
of a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading and promptly
make available to the Selling Holders and to the Underwriters any such
supplement or amendment. Upon receipt of any notice of the occurrence of
any event of the kind described in the preceding sentence, Selling
Holders will forthwith discontinue the offer and sale of Registrable
Securities pursuant to the registration statement covering such
Registrable Securities until receipt by the Selling Holders and the
Underwriters of the copies of such supplemented or amended prospectus
and, if so directed by the Company, the Selling Holders will deliver to
the Company all copies, other than permanent file copies then in the
possession of Selling Holders, of the most recent prospectus covering
such Registrable Securities at the time of receipt of such notice. In the
event the Company shall give such notice, the Company shall extend the
period during which such registration statement shall be maintained
effective as provided in Section 3.01(a) hereof by the number of days
during the period from and including the date of the giving of such
notice to the date when the Company shall make available to the Selling
Holders such supplemented or amended prospectus;
(j) The Company will enter into customary agreements (including an
underwriting agreement in customary form, including customary
representations, warranties, covenants, conditions and indemnities) and
take such other actions as are required or reasonably requested by the
Selling Holders or the managing Underwriter in order to expedite or
facilitate the sale of such Registrable Securities;
(k) At the request of any Underwriter in connection with an
underwritten offering the Company will furnish an opinion of counsel,
addressed to the Underwriters, covering such customary matters as the
managing Underwriter may reasonably request and (ii) a comfort letter or
comfort letters (and updates thereof) from the Company's independent
public accountants covering such customary matters as the managing
Underwriter may reasonably request;
(l) If requested by the managing Underwriter or any Selling Holder,
the Company shall promptly incorporate in a prospectus supplement or post
effective amendment such information as the managing Underwriter or any
Selling Holder reasonably requests to be included therein, including,
without limitation, with respect to the Registrable Securities being sold
by such Selling Holder, the purchase price being paid therefor by the
Underwriters and with respect to any other terms of the underwritten
offering of the Registrable Securities to be sold in such offering, and
promptly make all required filings of such prospectus supplement or post
effective amendment;
(m) The Company shall promptly make available for inspection by any
Selling Holder or Underwriter participating in any disposition pursuant
to any registration statement, and any attorney, accountant or other
agent or representative retained by any such Selling Holder or
Underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, as shall be reasonably necessary
to enable them to exercise their due diligence responsibility, and cause
the Company's officers, directors and employees to supply all information
requested by any such Selling Holder or Underwriter in connection with
such registration statement;
(n) The Company shall cause the Registrable Securities included in
any registration statement to be (A) listed on each securities exchange,
if any, on which similar securities issued by the Company are then
listed, or (B) authorized to be quoted and/or listed (to the extent
applicable) on the Nasdaq National Market if the Registrable Securities
so qualify;
(o) The Company shall provide a CUSIP number, registrar and transfer
agent for the Registrable Securities included in any registration
statement not later than the effective date of such registration
statement;
(p) The Company shall cooperate with each Selling Holder and each
Underwriter participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings
required to be made with the National Association of Securities Dealers,
Inc.;
(q) The Company shall during the period when the prospectus is
required to be delivered under the Securities Act, promptly file all
documents required to be filed with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act;
(r) The Company will make generally available to its security
holders, as soon as reasonably practicable, an earnings statement
covering a period of 12 months, beginning within three months after the
effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and
the rules and regulations of the Commission thereunder; and
(s) The Company will use its best efforts to cause all such
Registrable Securities to be listed on each securities exchange or quoted
on each inter-dealer quotation system on which the Common Stock is then
listed or quoted.
The Company may require Selling Holders promptly to furnish in
writing to the Company such information regarding such Selling Holders, the
plan of distribution of the Registrable Securities and other information as
may be legally required in connection with such registration.
Section 3.02 Registration Expenses. The Company will pay all
registration expenses of the Selling Holders in connection with any Demand
and/or Piggyback Registrations including but not limited to (i) registration
and filing fees with the Commission and the National Association of Securities
Dealers, Inc., (ii) fees and expenses of compliance with securities or blue
sky laws (including reasonable fees and disbursements of counsel in connection
with blue sky qualifications of the Registrable Securities), (iii) printing
expenses, (iv) fees and expenses incurred in connection with the listing or
quotation of the Registrable Securities, (v) fees and expenses of counsel to
the Company and the reasonable fees and expenses of independent certified
public accountants for the Company (including fees and expenses associated
with the special audits or the delivery of comfort letters), (vi) the
reasonable fees and expenses of any additional experts retained by the Company
in connection with such registration, (vii) all roadshow costs and expenses
not paid by the Underwriters, (viii) rating agency fees and (ix) reasonable
and documented fees and expenses of counsel to the holders of Registrable
Securities.
The Company will not be required to pay for any underwriting
discounts and commissions attributable to the sale of Registrable Securities.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
Section 4.01 Indemnification by the Company. The Company agrees to
indemnify and hold harmless, to the fullest extent permitted by applicable
law, each Selling Holder and its Affiliates and their respective officers,
directors, partners, stockholders, members, employees, agents and
representatives and each Person (if any) which controls a Selling Holder
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages,
liabilities, costs and expenses (including attorneys, fees) (collectively,
"Losses") caused by, arising out of, resulting from or related to any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement, preliminary prospectus or prospectus relating to the
Registrable Securities (as amended or supplemented from time to time), or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such Losses are caused by or contained in or
based upon any information furnished in writing to the Company by or on behalf
of such Selling Holder or any Underwriter expressly for use therein (which was
not subsequently corrected in writing prior to or concurrently with the sale
of Registrable Securities to the Person asserting the Loss) or by the Selling
Holder's failure to deliver a copy of the registration statement or prospectus
or any amendments or supplements thereto after the Company has furnished the
Selling Holder with copies of the same. The Company also agrees to indemnify
any Underwriters of the Registrable Securities, their officers and directors
and each person who controls such Underwriters on substantially the same basis
as that of the indemnification of the Selling Holders provided in this Section
4.01. Notwithstanding the foregoing, the Company shall have no obligation to
indemnify under this Section 4.01 to the extent any such Losses have been
finally and non-appealably determined by a court of competent jurisdiction to
have resulted from a Selling Holder's or Underwriter's willful misconduct or
gross negligence.
Section 4.02 Indemnification by Selling Holders. The Selling Holders
agree to indemnify and hold harmless, to the fullest extent permitted by
applicable law, the Company and its Affiliates and their respective officers,
directors, partners, stockholders, members, employees, agents and
representatives and each Person (if any) which controls the Company within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all Losses caused by, arising out of,
resulting from or related to any untrue statement or alleged untrue statement
of a material fact contained in any registration statement, preliminary
prospectus or prospectus relating to the Registrable Securities (supplemented
from time to time) or any preliminary prospectus, or caused by any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, but only
insofar as such Losses are caused by or contained in or based upon any
information furnished in writing to the Company by or on behalf of such
Selling Holder or any Underwriter expressly for use therein (which was not
subsequently corrected in writing prior to or concurrently with the sale of
Registrable Securities to the Person asserting the Loss). Notwithstanding the
foregoing, the Selling Holder shall have no obligation to indemnify under this
Section 4.02 to the extent that any such Losses have been finally and
non-appealably determined by a court of competent jurisdiction to have
resulted from the Company's willful misconduct or gross negligence.
Section 4.03 Conduct of Indemnification Proceedings. In case any
proceeding (including any governmental investigation) shall be instituted or
threatened involving any Person in respect of which indemnity may be sought
pursuant to Section 4.01 or Section 4.02, such Person (the "Indemnified
Party") shall promptly notify the Person against whom such indemnity may be
sought (the "Indemnifying Party") in writing (it being understood that the
failure to give such notice shall not relieve any Indemnifying Party from any
liability which it may have hereunder except to the extent the Indemnifying
Party is actually and materially prejudiced by such failure) and the
Indemnifying Party, upon the request of the Indemnified Party, shall retain
counsel reasonably satisfactory to such Indemnified Party to represent such
Indemnified Party and any other Persons the Indemnifying Party may designate
in such proceeding and shall pay the fees and disbursements of such counsel
related to such proceeding. If the Indemnifying Party does not elect within 15
days after receipt of the notice required hereby to assume the defense of any
proceeding, the Indemnified Party may assume such defense with counsel of its
choice at the cost and expense of the Indemnifying Party. In any such
proceeding where the Indemnifying Party has assumed the defense, any
Indemnified Party shall have the right to retain its own counsel and
participate in the defense, but the fees and expenses of such counsel shall be
at the expense of such Indemnified Party unless (i) the Indemnifying Party and
the Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the Indemnified Party and the Indemnifying
Party and, in the opinion of counsel for the Indemnified Party, representation
of both parties by the same counsel would be inappropriate due to actual or
potential conflicting interests between them or there exist defenses available
to the Indemnified Party which are not available to the Indemnifying Party. It
is understood that the Indemnifying Party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel for each such jurisdiction) at any time for all such
Indemnified Parties, and that all such fees and expenses shall be reimbursed
as they are incurred. In the case of any such separate firm for the
Indemnified Parties, such firm shall be designated in writing by the
Indemnified Parties. The Indemnifying Party shall not settle any claim or
proceeding without the written consent of the Indemnified Party, unless such
settlement (x) requires no relief or penalty other than the payment of money
damages, (y) does not require any Indemnified Party to admit culpability or
fault in any respect and (z) contains a full and complete release of the
Indemnified Party with respect to all matters arising from the facts giving
rise to the underlying claim or proceeding. The Indemnifying Party shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent (not to be unreasonably withheld),
or if there be a final judgment for the plaintiff, the Indemnifying Party
shall indemnify and hold harmless such Indemnified Parties from and against
any loss or liability (to the extent stated above) by reason of such
settlement or judgment.
Section 4.04 Contribution. If the indemnification provided for in
this Article IV is unavailable to an Indemnified Party in respect of any
Losses in respect of which indemnity is to be provided hereunder, then each
such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
to the fullest extent permitted by law contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses in such
proportion as is appropriate to reflect the relative fault of such party in
connection with the statements or omissions that resulted in such Losses, as
well as any other relevant equitable considerations. The relative fault of the
Company, each Selling Holder and the Underwriters 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 such party and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission.
The Company and each Selling Holder agrees that it would not be just
and equitable if contribution pursuant to this Section 4.04 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of
the Losses referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Article IV, no Selling Holder shall be required to
indemnify for or contribute any amount in excess of the amount by which the
net proceeds of the offering received by such Selling Holder exceeds the
amount of any damages which such Selling Holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
ARTICLE V
MISCELLANEOUS
Section 5.01 Participation in Underwritten Registrations. No Person
may participate in any underwritten registered offering contemplated hereunder
unless such Person (a) agrees to sell its securities on the basis provided in
any underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements, (b) completes and executes all questionnaires,
powers of attorney, custody arrangements, indemnities, underwriting agreements
and other documents reasonably required under the terms of such underwriting
arrangements and this Agreement and (c) furnishes in writing to the Company
such information regarding such Person, the plan of distribution of the
Registrable Securities and other information as the Company may from time to
time request or as may be legally required in connection with such
registration; provided, however, that no such Person shall be required to make
any representations or warranties in connection with any such registration
other than representations and warranties as to (i) such Person's ownership of
his or its Registrable Securities to be sold or transferred free and clear of
all liens, claims and encumbrances, (ii) such Person's power and authority to
effect such transfer and (iii) such matters pertaining to compliance with
securities laws as may be reasonably requested; provided, further, however,
that the obligation of such Person to indemnify pursuant to any such
underwriting agreements shall be several, not joint and several, among such
Persons selling Registrable Securities, and the liability of each such Person
will be in proportion to, and limited to, the net amount received by such
Person from the sale of such Person's Registrable Securities pursuant to such
registration.
Section 5.02 Rule 144. The Company covenants that it will file any
reports required to be filed by it under the Securities Act and the Exchange
Act and that it will take such further action as the Holders may reasonably
request to the extent required from time to time to enable the Holders to sell
Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by Rule 144 under the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any
Holder, the Company will deliver to such Holder a written statement as to
whether it has complied with such reporting requirements.
Section 5.03 Holdback Agreements. Each Holder agrees, in the event of
an underwritten offering for the account of the Company, not to offer, sell,
contract to sell or otherwise dispose of any Registrable Securities, or any
securities convertible into or exchangeable or exercisable for such
securities, including any sale pursuant to Rule 144 under the Securities Act
(except as part of such underwritten offering), during the 14 days prior to,
and during the 120-day period (or such lesser period as the lead or managing
underwriters may require) beginning on, the effective date of the registration
statement for such underwritten offering (or, in the case of an offering
pursuant to an effective shelf registration statement pursuant to Rule 415,
the pricing date for such underwritten offering).
Section 5.04 Termination. The registration rights granted under this
Agreement will terminate at such time as there shall no longer be any
Registrable Securities.
Section 5.05 Amendments, Waivers, Etc. This Agreement may not be
amended, waived or otherwise modified or terminated except by an instrument in
writing signed by the Company and Holders of at least 66-2/3% of the
Registrable Securities then held by all Holders, if the amendment is to be
effective against the Holders.
Section 5.06 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same
agreement. Each party need not sign the same counterpart.
Section 5.07 Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof.
Section 5.08 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York regardless of
the laws that might otherwise govern under applicable principles of conflicts
of law thereof.
Section 5.09 Assignment of Registration Rights. Each Holder of the
Registrable Securities may assign all or any part of its rights under this
Agreement to any person to whom such Holder sells, transfers or assigns such
Registrable Securities. In the event that the Holder shall assign its rights
pursuant to this Agreement in connection with the transfer of less than all
its Registrable Securities, the Holder shall also retain his rights with
respect to its remaining Registrable Securities.
Section 5.10 Specific Performance. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by the
Holders by reason of any breach by it of the provisions of this Agreement and
hereby agrees that the Holders, in addition to any remedies which they may
have at law, including monetary damages, will be entitled to the remedy of
specific performance.
Section 5.11 No Superior Registration Rights. The Company will not
grant registration rights with respect to priorities superior to those of the
Holders pursuant to this Agreement.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the Company and the Initial Holder has caused
this Agreement to be signed on its behalf by its officer thereunto duly
authorized as of the date first written above.
FRONTLINE CAPITAL GROUP
By /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
DEUTSCHE BANK SHARPS XXXXXX INC.
By /s/ Xxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President
By /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
