Exhibit 4.2
Draft Dated January 2, 1997
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of , 1997, by and between General Bearing
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Corporation, A Delaware corporation (the "Company"), and World Machinery
Company, a Delaware corporation (the "Stockholder").
The parties hereby agree as follows:
1. DEFINITIONS:
As used in this Agreement, the following capitalized terms shall
have the following meanings:
"Common Stock". Shares of the Company's Common Stock, par value
$1.0 per share, as the same may be constituted from time to time.
"Demand Registration". See Section 2(a) hereof.
"Exchange Act". The Securities Exchange Act of 1934, as amended
from time to time.
"Holder". Any person owning or having the right to acquire
Registrable Securities or any assignee thereof.
"Maximum Includable Shares". The maximum number of shares of
Common Stock, if any, to be offered in a firm commitment underwriting that
the managing underwriter or underwriters (collectively the "Managing
Underwriter") of the proposed offering, in their good faith judgment, deem
practicable to offer and sell on behalf of the Company and selling
stockholders of the Company, upon the effectiveness of the Registration
Statement. In making such judgment, the Managing Underwriters may take
into account any adverse effect on the price or terms upon which all
securities included in such Registration Statement for the account of the
Company and the Sellers may be sold.
"Person". An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
"Piggyback Registration". See Section 3(b) hereof.
"Prospectus". The prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement and all other amendments
and supplements to the Prospectus, including post-effective amendments and
all material incorporated by reference in such Prospectus.
"Registrable Securities". (i) The Shares and (ii) any
securities issued or issuable with respect to the Shares by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization, but such
term shall not mean or include any securities of any type or nature sold in
a public offering or sold or then currently saleable pursuant to Rule 144
under the Securities Act.
"Registration Expenses". See Section 7 hereof.
"Registration Statement". Any registration statement of the
Company which covers Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments (including
post-effective amendments) and supplements to such Registration Statement,
all exhibits and all material incorporated by reference in such
Registration Statement.
"Restricted Securities". A security is a Restricted Security
unless or until: (i) it has been effectively registered under the
Securities Act and disposed of in accordance with the Registration
Statement covering it; (ii) it is distributed to the public pursuant to
Rule 144 (or any similar provisions then in force) under the Securities
Act; or (iii) it has otherwise been transferred and a new certificate or
other evidence of ownership for it not bearing a restrictive legend and not
subject to any stop transfer order has been delivered by or on behalf of
the Company and no other restriction on transfer exists.
"SEC". The U.S. Securities and Exchange Commission.
"Securities Act". The Securities Act of 1933, as amended from
time to time.
"Seller". Each Holder, other than the Company, of shares of
Common Stock of the Company or other securities exchangeable, convertible
or exercisable for shares of Common Stock of the Company (collectively
"Equity Securities") for whom such shares or other securities are included
or proposed to be included in a Registration Statement filed by the
Company.
"Shares". The aggregate of 3,000,000 shares of Common Stock
owned by the Stockholder.
"Underwritten Registration Or Underwritten Offering". A
registration in which securities of the Company are sold pursuant to a firm
commitment underwriting to an underwriter at a fixed price for reoffering
or pursuant to agency or best efforts arrangements with an underwriter.
2. DEMAND REGISTRATION
(a) Notice and Demand. On and after the one year anniversary of this
Agreement, the Holders of Registrable Securities may notify the Company in
writing that they demand that the Company file a registration statement
under the Act covering the registration of no fewer than 50,000 shares of
Common Stock. Upon receipt of such notice, the Company shall, within ten
(10) days, given written notice of such request to all Holders and shall,
subject to the limitations of subsection 2(b), file as soon as practicable,
and in any event within thirty (30) days of the receipt of such request, a
Registration Statement under the Act covering all Registrable Securities
which the Holders request, by notice given to the Company within (10) days
of receipt of the Company's notice, to be registered (a "Demand
Registration").
(b) Underwritten Offerings. If the Holders initiating the
registration request hereunder ("Initiating Holders") intend to distribute
the Registrable Securities covered by their request by means of an
Underwritten Offering, they shall so advise the Company as a part of their
request made pursuant to this Section 2 and the Company shall include such
information in the written notice referred to in subsection 2(a). In such
event, the right of any Holder to include such Holder's 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 (together with the Company)
enter into an underwriting agreement in customary form with the Managing
Underwriter selected for such underwriting by a majority in interest of the
Initiating Holders, and reasonably acceptable to the Company; provided that
no Holder shall be required to make any representations other than with
respect to its ownership of Registered Securities and its intended method
of distribution.
(c) Reductions. The Company agrees to include all Registrable
Securities held by all Holders in such Registration Statement without
cutback or reduction unless cutbacks are required by the Managing
Underwriter. In the event the Managing Underwriter requires a cutback or
reduction, any Holders of the Registrable Securities which were not
included in such Registration Statement shall be entitled to additional
Demand Registrations for such excluded securities on the same terms as the
Demand Registration described in this Agreement.
(d) Rule 144. The Company is not obligated to effect a demand
registration under this Section 2 if in the written opinion of counsel to
the Company reasonably acceptable to the Holder or Holders from whom
written request for registration has been received (and satisfactory to the
Company's transfer agent to permit the transfer) that registration under
the Act is not required for the immediate transfer of the Registrable
Securities pursuant to Rule 144 or other applicable provision.
3. PIGGYBACK REGISTRATIONS
(a) Notice and Request to Piggyback. Whenever the Company proposes
to register any of its securities under the Securities Act (other than
pursuant to a registration on Forms S-4 or S-8 or comparable forms) (a
"Piggyback Registration"), the Company will give written notice to all
Holders of Registrable Securities of its intention to effect such a
registration. Such notice shall be given not later than 45 days prior to
the anticipated filing date. Subject to the provisions of Section 3(c),
the Company will include in such Piggyback Registration all Registrable
Securities with respect to which the Company has received written requests
for inclusion therein ("Piggyback Request") within fifteen (15) days after
the mailing to the applicable Holder of the Company's notice. The Holders
of Registrable Securities shall be permitted to withdraw all or any part of
the Registrable Securities from a Piggyback Registration at any time prior
to the effective date of such Piggyback Registration. If a Piggyback
Registration is an Underwritten Offering effected under Section 3(d)
hereof, all Persons whose securities are included in the Piggyback
Registration shall be obligated to sell their securities on the same terms
and conditions as apply to the securities being issued and sold by the
Company.
(b) Priority on Underwritten Registration. If a Piggyback
Registration is an underwritten registration on behalf of the Company and
the Managing Underwriters advise the Company with a written statement as to
the number of Maximum Includable Shares, the Company will include in such
registration:
(1) first, all securities the Company proposes to sell, and
(2) second, the Registrable Securities and such other securities
(provided such securities are of the same class as the
securities being sold by the Company) requested to be
included in such registration in excess of the number of
securities the Company proposes to sell which, in the
opinion of such Managing Underwriters, can be sold
(allocated pro rata among the Holders of such Registrable
Securities and other securities on the basis of the number
of securities requested to be included therein by each such
Holder).
(c) Selection of Underwriters. If any Piggyback Registration is an
Underwritten Offering, the Company will have the right to select the
investment banker or investment bankers and manager or managers to
administer the offering.
(d) Registration Rights Inapplicable to Certain Transactions.
Notwithstanding anything herein to the contrary, the right to require
Piggyback Registration of Registrable Securities hereunder shall not apply
to a Registration Statement relating to an offering solely for the account
of security holders of a single corporation or group of corporations, or
for the account of the Company, with respect to securities issued or to be
issued by the Company in connection with the acquisition of the stock or
assets, or the merger or consolidation of such corporation or corporations,
by or with the Company, which Registration Statement is filed by the
Company prior to the closing of such acquisition, merger or consolidation.
4. HOLDBACK AGREEMENT
Each Holder of Registrable Securities whose Registrable Securities are
covered by a Registration Statement filed pursuant to Sections 2 or 3
hereof agrees, if requested by the Managing Underwriters, not to effect any
public sale or distribution of securities of the Company of the same class
as the securities included in such Registration Statement, including a sale
pursuant to Rule 144 under the Securities Act (except as part of such
underwritten registration), during the 30-day period prior to, and during
the 90-day period beginning on, the closing date of each underwritten
offering (or best efforts underwritten offering) of Registrable Securities
made pursuant to such Registration Statement, to the extent timely notified
in writing by the Company or the Managing Underwriters.
The foregoing provisions shall not apply to any Holder of Registrable
Securities if such Holder is prevented by applicable statute or regulation
from entering any such agreement; provided that any such Holder shall
undertake, in its request to participate in any such underwritten offering,
not to effect any public sale or distribution of the applicable class of
Registrable Securities commencing on the date of sale of such applicable
class of Registrable Securities unless it has provided 45 days' prior
written notice of such sale or distribution to the underwriter or
underwriters.
5. MECHANICS OF FILING, BLUE SKY, ETC.
If and whenever the Company is required by the provisions of this
Agreement to include any Registrable Securities in any registration, the
Company shall, as expeditiously as reasonably possible:
(a) Filing of Registration Statement. Prepare and file with the SEC
a Registration Statement with respect to the Registrable Securities and use
its best efforts to cause such Registration Statement to become and remain
effective and prepare and file with the SEC such amendments and supplements
to such Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective
for the shorter of (i) 90 days, or (ii) the completion of the distribution,
and to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such Registration
Statement in accordance with the intended method of disposition of the
Registrable Securities as set forth in such Registration Statement for such
period.
(b) Copies of Prospectus. Furnish to each Holder such number of
copies of the Prospectus contained in such Registration Statement
(including each preliminary prospectus) in conformity with the requirements
of the Securities Act, and such other documents as the Holders may
reasonably request in order to facilitate the disposition of the securities
owned by the Holders;
(c) Blue Sky Registration (i) Register or qualify the Registrable
Securities covered by such Registration Statement under the securities or
blue sky laws of such jurisdictions not exceeding four in number as shall
be requested by the Holders, and do any and all other acts and things which
may be reasonably necessary or advisable to enable the Holders to
consummate the disposition of the Registrable Securities in such
jurisdictions during the period provided in subsection 5(a) above at the
Company's sole expense, and (ii) use its best efforts to register or
qualify such Registrable Securities under the securities or blue sky laws
of such other jurisdictions in addition to those in clause (i) above as the
Holders shall request and do any and all acts which may be reasonably
necessary or advisable to enable the Holders to consummate the disposition
of the Registrable Securities in such other additional jurisdictions during
the period provided in subsection 7(a) above at the Holders' sole expense,
provided that notwithstanding the provisions of subsection (c) clause (i),
the Company shall not be required to qualify to do business as a foreign
corporation or consent to or file a general consent to service of process
in any state;
(d) Information Provided to Holders. Notify the Holders of the
happening of any event as a result of which the Prospectus contained in
such Registration Statement, as then in effect, includes any untrue
statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, and prepare and
furnish to the Holders a reasonable number of copies of any supplement to
or amendment of such Prospectus that may be necessary so that as thereafter
delivered to the purchasers of the Registrable Securities, such Prospectus
shall not include any 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 not misleading in the light of the circumstances then
existing; and
(e) Agreements of Holders. If the method of disposition of the
Registrable Securities involves a continuous offering at the market, a best
efforts offering, or other method whereby all of the Registrable Securities
are not distributed and sold over a period of time not exceeding one (1)
business day, the Holders of Registrable Securities agree to execute such
other agreements that may be reasonably requested by the Company to insure
compliance with Exchange Act Rules 10b-2, 10b-6, 10b-7 and rules of similar
import.
6. FURNISHING OF INFORMATION AND SALES SUSPENSION.
The obligations of the Company and the rights of the Holders under
this Agreement shall be subject to the following additional terms,
conditions and limitations:
(a) Information Provided by Holders. Following any Registration
Request, the Holders shall be required to furnish to the Company and to its
counsel all relevant information concerning the proposed method of sale or
other distribution by the Holders of the Registrable Securities, and such
other information as the Company and its counsel reasonably may require to
prepare and file a Registration Statement in accordance with the applicable
provisions of the Securities Act and the rules and regulations promulgated
by the SEC thereunder. If requested by the Company, such information shall
be furnished in writing.
(b) Suspension of Sales by Holders. If, at any time when the Company
is required to maintain a Registration Statement effective and current with
respect to the Registrable Securities held by the Holders included within
the coverage thereof, any event or events shall occur which would cause the
Prospectus contained therein, as then amended or supplemented, to be other
than in compliance with the requirements of Section 10 of the Securities
Act, the Company will promptly give notice thereof to the Holders and, upon
receipt of such notice, the Holders shall immediately cease and desist from
effecting any sales of the Registrable Securities until the Holders shall
have received notice from the Company that such sales again may be effected
together with copies of a Prospectus which has been amended or supplemented
so as to conform to the requirements of said Section 10. Upon the
occurrence of any such event, the Company promptly shall use its best
efforts to prepare and file with the SEC a post-effective amendment to the
Registration Statement, or a post-effective amendment or supplement to the
Prospectus, so that the Prospectus, as so amended or supplemented, will
comply with the requirements of Section 10 of the Securities Act.
7. REGISTRATION EXPENSES
If and whenever the Company includes Registrable Securities in any
offering, the Company shall pay all expenses arising out of or related to
the preparation, filing, distribution, printing, amendment and
supplementing of a Registration Statement under Section 2 or 3 hereof (and
to the extent provided in Section 5(c) hereof, any Blue Sky registration
and qualification expenses) including, without limitation, all legal and
accounting fees, the fees of other experts, and any reasonable expenses or
other compensation paid to the underwriters (other than legal fees and
disbursements of Holders' counsel in connection with such registration and
the underwriting compensation required by the next succeeding sentence to
be paid by the Holders). Each Holder shall pay its pro rata share of
underwriting commissions and discounts and taxes.
8. INDEMNIFICATION
(a) Indemnification by Company. The Company agrees to indemnify, to
the fullest extent permitted by law, each Holder of Registrable Securities,
its officers, directors, employees and agents and each Person who controls
such Holder (within the meaning of the Securities Act) against all losses,
claims, damages, liabilities and expenses caused by any untrue or alleged
untrue statement of a material fact contained in any Registration
Statement, Prospectus or preliminary Prospectus or any omission or alleged
omissions to state therein a material fact required to be stated therein
not misleading, except insofar as the same are caused by or contained in
any information furnished in writing to the Company by such Holder
expressly for use therein or by such Holder's failure to deliver a copy of
the Registration Statement or Prospectus after the Company has furnished
such Holder with a sufficient number of copies of the same. The Company
will also indemnify underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the
distribution, their officers and directors and each Person who controls
such Persons (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the Holders of
Registrable Securities.
(b) Indemnification by Holder of Registrable Securities. In
connection with any Registration Statement in which a Holder of Registrable
Securities is participating, each such Holder will furnish to the Company
in writing such information and affidavits as the Company reasonably
requests for use in connection with any Registration Statement or
Prospectus and agrees to indemnify, to the full extent permitted by law,
the Company, its directors and officers and each Person who controls the
Company (within the meaning of the Securities Act) against expenses
resulting from any untrue or alleged untrue statement of a material fact or
any omission or alleged omission of a material fact required to be stated
in the Registration Statement or Prospectus or preliminary Prospectus or
necessary to make the statements therein not misleading, to the extent, but
only to the extent, that such untrue statement or omission is contained in
any information or affidavit so furnished in writing by such Holder to the
Company specifically for inclusion in such Registration Statement or
Prospectus. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in the distribution, to the same
extent as provided above with respect to information so furnished in
writing by such Persons specifically for inclusion in any Prospectus or
Registration Statement.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying
party of any claim with respect to which it seeks indemnification and (ii)
permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party, provided,
however, that any Person entitled to indemnification hereunder shall have
the right to employ separate counsel and to participate in the defense of
such claim, but the fees and expenses of such counsel shall be at the
expense of such Person unless (a) the indemnifying party has agreed to pay
such fees or expenses, or (b) the indemnifying party shall have failed to
assure the defense of such claim and employ counsel reasonably satisfactory
to such Person, or (c) in the reasonable judgment of any such Person and
the indemnifying party, based upon advice of their respective counsel, a
conflict of interest may exist between such Person and the indemnifying
party with respect to such claims (in which case, if the Person notifies
the indemnifying party in writing that such Person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claims on
behalf of such Person). If such defense is not assumed by the indemnifying
party, the indemnifying party will not be subject to any liability for any
settlement made without its consent (but such consent will not be
unreasonably withheld). No indemnifying party will be required to consent
to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in
respect to such claim or litigation. An indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.
9. RULE 144
The Company covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder, 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
Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the SEC. Upon the request
of any Holder of Registrable Securities, the Company will deliver to such
Holder a written statement as to whether it has complied with such
information and requirements.
10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Person may participate in any Underwritten Registration hereunder
unless such Person (i) agrees to sell such Person's securities on the basis
provided in any underwritten arrangements approved by the Persons entitled
hereunder to approve such arrangements and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents required under the terms of such underwriting
arrangements.
11. MISCELLANEOUS
(a) Remedies. Each Holder of Registrable Securities, in addition to
being entitled to exercise all rights provided herein or granted by law,
including recovery of damages, will be entitled to specific performance of
its rights under this Agreement. The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Agreement and hereby agrees to waive
the defense in any action for specific performance that a remedy at law
would be adequate.
(b) Term. The registration rights granted under Sections 2 and 3 shall
terminate on .
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(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier or air courier guaranteeing overnight
delivery:
(1) if to a Holder of Registrable Securities, at the most
current address given by such Holder to the Company;
and
(2) if to the Company, 00 Xxxx Xxxxxx, Xxxx Xxxxx, Xxx Xxxx
00000, Attention: President
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; or the
next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
(d) Successors and Assigns. The registration rights granted to the
Stockholders under Section 3 may only be transferred to a transferee who
acquires at least 10,000 Shares.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by he parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by the construed
in accordance with the laws of the State of New York.
(h) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity,
legality and enforceability of any such provision in every other respect
and of the remaining provisions contained herein shall not be affected or
impaired thereby.
(i) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties
thereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein with respect to the registration rights granted
by the Company with respect to the securities sold pursuant to the Purchase
Agreement.
This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
GENERAL BEARING CORPORATION
By:
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Name:
Title:
WORLD MACHINERY COMPANY
By:
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Name:
Title:
