Exhibit 7
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of February 13, 2001 between The Xxxxxx Biomechanics Group , Inc., a
corporation organized under the laws of the State of New York (the "Company"),
and Kanders & Company, Inc., a corporation organized under the laws of the State
of New York and its assigns ("Holder").
RECITALS
This Agreement is made in connection with the Tender Offer Agreement,
dated as of the date hereof, among the Company, OrthoStrategies, Inc., and
OrthoStrategies Acquisitions Corp. (the "Tender Offer Agreement") pursuant to
which the Holder or its assignee will purchase 667,381 shares of Common Stock,
the Assignment and Assumption Agreement, dated as of January 29, 2001, between
Kanders & Company and Xxxxxx Partners, LLC, pursuant to which Kanders & Company
assigned to Xxxxxx Partners, LLC the right to purchase shares of Common Stock
under the Tender Offer Agreement, and the Option Agreement, dated as of the date
hereof between the Company and the Holder (the "Option Agreement"), pursuant to
which the Holder is acquiring options to purchase up to 100,000 shares of the
Common Stock of the Company.
Unless otherwise defined herein, capitalized terms so used herein and not
defined shall have the same meaning as provided in the Option Agreement.
The parties hereby agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the following
respective meanings:
"Business Day" means any day, other than a Saturday, Sunday or legal
holiday, on which banks in the State of New York are open for business.
"Common Stock" means the Common Stock, par value $.02 per share, of the
Company, as constituted on the date hereof, any shares into which such Common
Stock shall have been changed, or any shares resulting from any reclassification
of such Common Stock.
"Covenanted Registration" has the meaning specified in Section 2(a) of
this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute thereto, and the rules and regulations of the SEC
promulgated thereunder, all as the same shall be in effect at the time.
"Holder" means the Holder referred to in the Preamble, its successors and
any other person holding Registrable Securities to whom these registration
rights have been assigned pursuant to Section 9(f) of this Agreement, including
Xxxxxx Partners, LLC.
"Incidental Registration" has the meaning specified in Section 2(c) of
this Agreement.
"Person" shall mean an individual, partnership, corporation, association,
trust, joint venture, unincorporated organization and any government,
governmental department or agency or political subdivision thereof.
"Registrable Securities" means (i) the Common Stock acquired by the Holder
or its assignee pursuant to the Tender Offer Agreement, (ii) the Common Stock
acquired by the Holder pursuant to the exercise of the Option Agreement; (iii)
any Common Stock or other securities issued or issuable with respect to Common
Stock acquired by the Holder pursuant to the Tender Offer Agreement or pursuant
to the exercise of the Option Agreement, upon any stock split, stock dividend,
recapitalization, or similar event; and (iv) any securities issued in
replacement or exchange of any of the securities issued in clauses (i) through
(iii) above.
"Registration" means an Incidental Registration, a Requested Registration
and a Covenanted Registration.
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with this Agreement, including, without limitation,
all registration, filing, listing and National Association of Securities
Dealers, Inc. ("NASD") fees, all fees and expenses of complying with securities
or blue sky laws of the United States, including without limitation the
Securities Laws, all word processing, duplicating and printing expenses, all
messenger and delivery expenses, any stock exchange fees, any transfer taxes,
the fees and expenses of the Company's legal counsel and independent public
accountants, including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance, reasonable
fees and disbursements of one counsel for the Holder, and any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities; provided, however, that Registration Expenses shall not include
underwriting discounts and commissions.
"Registration Statement" has the meaning specified in Section 3(a) of this
Agreement.
"Requested Registration" has the meaning specified in Section 2(b) of this
Agreement.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor statute thereto, and the rules and regulations of the SEC promulgated
thereunder, all as the same shall be in effect at the time.
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"Securities Laws" means the Securities Act and the Exchange Act.
"Underwriter's Maximum Number" means in connection with an underwritten
registration or offering of Registrable Securities or any shares of the capital
stock or other securities of the Company, a specified maximum number of
securities that, in the written opinion of the managing underwriters, may
successfully be included in such registration or offering due to the dictates of
market conditions.
2. Registration
(a) Covenant to Register. The Company shall file a registration statement
with the SEC to register all the Registrable Securities held by the Holder for
an offering to be made on a continuous or delayed basis pursuant to Rule 415
under the Securities Act. Such registration statement shall be on Form S-3 under
the Securities Act, if such Form is then available for use by the Company, or
another appropriate form that is available to the Company permitting
registration of the Registrable Securities for resale by the Holder in the
manner or manners reasonably designated by them (including, without limitation,
one or more underwritten offerings). The Company shall use its best efforts to
prosecute the registration required by this Section 2(a) (the "Covenanted
Registration") of the Registrable Securities pursuant to the Securities Act. The
Company shall use its best efforts to cause the Registrable Securities to be
registered as soon as practicable after the filing of the registration statement
relating to such Registrable Securities, but in no event later than 180 days
after the filing of such registration statement. The Holder shall cooperate with
the Company to provide all such necessary information as shall be required by
the Company to file the registration statement relating to the Covenanted
Registration. The Company shall maintain the prospectus relating to the
Registrable Securities effective for so long as the Holder desires to dispose of
the Registrable Securities, not to exceed a period of five years from the date
that the registration statement was declared effective by the Commission. The
Company shall not have the right to include any securities for sale on behalf of
the Company in any such Covenanted Registration.
(b) Requested Registration. At any time after the date hereof, upon
written request by the Holder to the Company that the Company effect the
registration under the Securities Act of all or part of the Registrable
Securities owned by the Holder (a "Requested Registration"), the Company will
use its best efforts to effect the registration under the Securities Act of the
Registrable Securities
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which the Company has been so requested to register by the Holder within one
hundred twenty (120) days after receipt of such request or within sixty (60)
days after receipt of such request with respect to a Requested Registration, if
the Company is qualified to file a registration statement on SEC Form S-3 or any
successor or similar short-form registration statement (collectively, "SEC Form
S-3"); provided, however, that the Company shall not be obligated to effect a
Requested Registration pursuant to this subdivision (b), (A) unless with respect
to a Requested Registration, the shares to be registered represent at least two
percent (2%) of the Common Stock then outstanding and the anticipated aggregate
offering price of the Registrable Securities to be sold is at least $1,000,000,
in the case of registration on XXX Xxxx X-0, or at least $2,000,000 in the case
of other registrations, or (B) during the 180 day period immediately following
the consummation of any previous Requested Registration pursuant to this
Section. Subject to all limitations in the preceding sentence, the Company must
effect an unlimited number of Requested Registrations pursuant to this
subdivision (b) to the extent such Requested Registrations may be effected on
SEC Form S-3, but the Company shall not be obligated to effect more than three
Requested Registrations hereunder other than on SEC Form S-3. Subject to
subdivision (g), the Company may include in such Requested Registration other
securities of the Company for sale, for the Company's account or for the account
of any other person, if there is no underwriter and, if there is an underwriter,
if and to the extent that the managing underwriter determines that the inclusion
of such additional shares will not interfere with the orderly sale of the
underwritten securities at a price range acceptable to the requesting Holder.
Upon receipt of a written request pursuant to this subdivision (b), the Company
shall promptly give written notice of such request to all holders of its Common
Stock, and all such holders shall be afforded the opportunity to join in such
request. The Company will include in the Requested Registration such number of
securities of the holders joining in such request as are specified in a written
request by the holders received by the Company within 20 days after receipt of
such written notice from the Company.
(c) Incidental Registration. If the Company for itself or any of its
security holders shall at any time or times after the date hereof determine to
register under the Securities Act any shares of its capital stock or other
securities (an "Incidental Registration"), other than: (i) the registration of
an offer, sale or other disposition of securities solely to employees of, or
other persons providing services to, the Company, or any subsidiary pursuant to
an employee or similar benefit plan; or (ii) relating to a merger, acquisition
or other transaction of the type described in Rule 145 under the Securities Act
or a comparable or successor rule, registered on XXX Xxxx X-0 or similar or
successor forms, the Company will notify the Holder of such determination at
least thirty (30) days prior to the filing of such registration statement or
prospectus, and upon the written request of the Holder given in writing to the
Company within twenty (20) days after the receipt of such notice, the Company
will use its best efforts as soon as practicable thereafter to cause all of the
Holder's Registrable Securities specified in the Holder's request to be included
in such registration statement or prospectus to the extent such registration is
permissible under the applicable Securities Laws and subject to the conditions
of such applicable Securities Laws.
(d) Registration Statement Form. The Company shall, if permitted by law,
effect any Registration requested under this Section 2 by the filing of a
registration statement on SEC Form S-3 to permit resales as requested by Holder.
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(e) Expenses. The Company shall pay all Registration Expenses incurred in
connection with any Covenanted Registration, any Incidental Registration and any
Requested Registration.
(f) Effective Registration Statement. A Covenanted Registration, a
Requested Registration or an Incidental Registration requested pursuant to
Section 2 (a), Section (b) or Section 2(c), respectively, shall not be deemed to
have been effected unless the Registration Statement relating thereto has become
effective with the SEC. Notwithstanding the foregoing, a Covenanted
Registration, a Requested Registration or an Incidental Registration will not be
deemed to have been effected if (i) within sixty (60) days after it has become
effective with the SEC, such Covenanted Registration, Requested Registration or
Incidental Registration is interfered with by any stop order, cease trade order,
injunction, or other order or requirement of the SEC or any other governmental
agency or any court proceeding for any reason other than a misrepresentation or
omission by the Holder; or (ii) the conditions to closing specified in the
purchase agreement or underwriting agreement entered into in connection with
such registration are not satisfied, other than solely by reason of some act or
omission by the Holder.
(g) Priority in Registration.
(i) If (A) a Requested Registration or a Covenanted
Registration is an underwritten registration, (B) the Company
proposes to include other securities of the Company for sale, for
the Company's account or the account of others ("Additional
Registrable Securities"), and (C) the managing underwriters shall
give written advice to the Company of an Underwriter's Maximum
Number with respect to such Requested Registration or Covenanted
Registration, which is less than the aggregate number (the "Proposed
Included Securities") of the Registrable Securities requested for
inclusion by the Holder and such Additional Registrable Securities,
then no shares of Additional Registrable Securities shall be
included in such Requested Registration or Covenanted Registration
unless 100% of the Registrable Securities requested for inclusion by
the Holder have been included in such Requested Registration or
Covenanted Registration.
(ii) If an Incidental Registration is an underwritten
registration initiated by the Company, and the managing underwriters
shall give written advice to the Company of an Underwriter's Maximum
Number with respect to such Incidental Registration, then: (A) the
Company shall be entitled to include in such registration that
number of securities which the Company proposes to offer and sell
for its own account in such registration which does not exceed the
Underwriter's Maximum Number; and (B) the Company will be obligated
and required to include in such registration that number of shares
of Registrable Securities which shall have been requested by
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the Holder and for the account of others ("Additional Registrants")
having registration rights parri passu with those of the Holder
("Additional Registrable Securities") and which does not exceed the
difference between the Underwriter's Maximum Number and that number
of securities which the Company is entitled to include therein
pursuant to clause (A) above and such number of shares shall be
allocated pro rata between the Holder and the Additional Registrants
on the basis of the number of shares requested to be included
therein by the Holder and the Additional Registrants to the full
extent of the remaining portion of the Underwriter's Maximum Number.
(h) Notwithstanding anything in paragraph (b) of this Section 2, the
Company shall have the right to delay any registration of Registrable Securities
requested pursuant to paragraph (b) of this Section 2 for up to ninety (90) days
if such registration would, in the reasonable judgment of the Company's Board of
Directors, substantially interfere with any material transaction being
considered at the time of receipt of the request from the Holder. If the
material transaction being considered by the Company is a public offering of its
securities, the Company shall be permitted to delay the requested registration
only if it is actively engaged in seeking to complete such offering.
3. Registration and Qualification Procedures.
(a) If and whenever the Company is required to effect the registration of
any Registrable Securities under the Securities Laws as provided in Section 2,
the Company, as expeditiously as possible and subject to the terms and
conditions of Section 2, will:
(i) prepare and file in any event within forty-five (45) days
after a request for registration has been delivered to the Company
or, if the Company is then eligible to use XXX Xxxx X-0, within
thirty (30) days after such request has been so delivered, with the
SEC the requisite registration statement and prospectus related
thereto to effect such Registration (a "Registration Statement") and
use its best efforts to cause such Registration Statement to become
and remain effective;
(ii) permit the Holder, if in the reasonable judgment of the
Holder, the Holder might be deemed to be an underwriter, promoter or
a controlling person of the Company, to participate in the
preparation of a Registration Statement and to require the insertion
therein of material, furnished to the Company in writing, which in
the reasonable judgment of the Holder and its counsel should be
included;
(iii) prepare and file with the SEC such amendments and
supplements to such Registration Statement pursuant to the
Securities Laws as may be necessary to keep such Registration
Statement effective and to comply with the provisions of the
Securities Laws with respect to the disposition of all securities
covered by such
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Registration Statement until the earlier of such time as all of such
securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof set forth in
such Registration Statement or the expiration of one year after such
Registration Statement becomes effective;
(iv) furnish to the Holder (A) such number of conformed copies
of such Registration Statement, each preliminary prospectus and
summary prospectus and each amendment and supplement thereto (in
each case including all exhibits) and any prospectus filed under
Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and (B) such other documents, as
the Holder of Registrable Securities to be sold under such
Registration Statement may reasonably request;
(v) use its best efforts to register or qualify all
Registrable Securities under such other United States state
securities or blue sky laws of such jurisdictions as the Holder
shall reasonably request, to keep such registration or qualification
in effect, and take any other action which may be reasonably
necessary or advisable to enable the Holder to consummate the
disposition of such Registrable Securities in such jurisdictions,
except that the Company shall not for any such purpose be required
to (A) qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not but for the requirements of
this subdivision (v) be obligated to be so qualified, or (B) subject
itself to taxation in any such jurisdiction;
(vi) use its best efforts to cause all Registrable Securities
covered by a Registration Statement to be registered with or
approved by such other United States and/or state agencies or
authorities as may be necessary to enable the Holder to consummate
the intended disposition of such Registrable Securities;
(vii) in the event of the issuance of any stop, cease trade or
other order suspending the effectiveness of the Registration
Statement, or of any order suspending or preventing the use of any
related prospectus or suspending the registration of any Registrable
Securities included in such Registration Statement for sale in any
jurisdiction, the Company shall use its best efforts promptly to
obtain the withdrawal of such order;
(viii) use its best efforts to furnish to the Holder (A) an
opinion, reasonably acceptable in form and substance to the Holder,
dated the effective date of the Registration Statement, of the
independent counsel representing the Company for the purposes of
such registration, addressed to the underwriters, if any, and to the
Holder stating that such Registration Statement has become effective
under applicable Securities Laws and that (1) to the best knowledge
of such counsel, no stop, cease trade or other order suspending the
effectiveness thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under
applicable Securities Laws; (2) the Registration Statement, each
preliminary
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or supplementary prospectus with respect thereto, and each amendment
or supplement thereto, comply as to form in all material respects
with the requirements of applicable Securities Laws (except that
such counsel need express no opinion as to financial statements
contained therein); (3) such counsel has no reason to believe that
either the Registration Statement, each preliminary or supplementary
prospectus with respect thereto, or any amendment or supplement
thereto, contains any untrue statement of a material fact or omits a
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; (4)
the descriptions in the effective Registration Statement, each
supplementary prospectus with respect thereto, or any amendment or
supplement thereto, of all legal and governmental matters and
contracts and other legal documents or instruments are accurate and
fairly present the information required to be shown; and (5) such
counsel does not know of any legal or governmental proceedings,
pending or contemplated, required to be described in the effective
Registration Statement, each supplementary prospectus with respect
thereto, or any amendment or supplement thereto, which are not
described as required nor of any contracts or documents or
instruments of a character required to be described in the effective
Registration Statement, each supplementary prospectus with respect
thereto, or any amendment or supplement thereto or to be filed as
exhibits to the effective Registration Statement which are not
described and filed as required; and (B) a letter, dated the
effective date of the Registration Statement, from the independent
certified public accountants of the Company, addressed to the
underwriters, if any, and to the Holder making such request, stating
that they are independent certified public accountants within the
meaning of the Securities Act and that in the opinion of such
accountants, the financial statements and other financial data of
the Company included in the effective Registration Statement, each
supplementary prospectus with respect thereto, or any amendment or
supplement thereto, comply as to form in all material respects with
the applicable accounting requirements of applicable Securities Laws
. Such opinion of counsel shall additionally cover such legal
matters with respect to the registration or qualification in respect
of which such opinion is being given as the Holders may reasonably
request. Such letter from the independent certified public
accountants shall additionally cover such other financial matters
(including information as to the period ending not more than five
business days prior to the date of such letter ) with respect to the
registration or qualification in respect of which such letter is
being given as the Holders may reasonably request;
(ix) immediately notify the Holder of Registrable Securities
included in such Registration Statement at any time when a
prospectus relating thereto is required to be delivered under
applicable Securities Laws, of the happening of any event as a
result of which the prospectus included in such Registration
Statement, as then in effect, includes an untrue statement of
material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were
made, and at the request of the Holder promptly prepare and furnish
to the Holder a reasonable
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number of copies of a supplement to or an amendment thereof as may
be necessary so that, as thereafter delivered to the purchasers of
such 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 under which
they were made;
(x) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to
its security holders, as soon as reasonably practicable, an earnings
statement covering a period of at least twelve months, but not more
than eighteen months, beginning with the first full calendar month
after the effective date of the Registration Statement, which
earnings statement shall satisfy the provisions of Section 11(a) of
the Securities Act and Rule 158 thereunder, and not file any
amendment or supplement to such Registration Statement or prospectus
related thereto to which the Holder shall have reasonably objected
in writing on the grounds that such amendment or supplement does not
comply in all material respects with the requirements of the
Securities Act or of the rules or regulations thereunder, having
been furnished with a copy thereof at least five business days prior
to the filing thereof;
(xi) provide a transfer agent for all Registrable Securities
covered by such Registration Statement not later than the effective
date of such Registration Statement; and
(xii) use its best efforts to list all Registrable Securities
covered by such Registration Statement on any securities exchange on
which any of the shares of the capital stock of the Company are then
listed.
(b) If Registrable Securities of the Holder are to be sold under a
Registration Statement, the Company may require the Holder, at the Company's
expense, to furnish the Company with such information and undertakings as it may
reasonably request regarding the Holder and the distribution of such securities
as the Company may from time to time reasonably request in writing.
(c) The Holder, by execution of this Agreement, agrees (A) that upon
receipt of any notice of the Company of the happening of any event of the kind
described in subdivision (a)(ix) of this Section 3, the Holder will forthwith
discontinue its disposition of Registrable Securities pursuant to the
Registration Statement relating thereto until the expiration of any time limits
imposed by applicable Securities Laws and until the receipt by the Holder of
copies of the supplemented or amended prospectus contemplated by subdivision
(a)(ix) of this Section 3 and, if so directed by the Company, will deliver to
the Company all copies other than permanent file copies, then in possession of
the Holder of the prospectus relating to such Registrable Securities current at
the time of receipt of such notice and (B) that Holder will immediately notify
the Company, at any time when a prospectus relating to the registration or
qualification of such Registrable Securities is required to be delivered under
applicable Securities Laws, of the happening of any event as a result of which
information previously furnished by Holder to the Company for inclusion in such
prospectus contains an untrue statement of a material fact or omits to state any
material fact required to be stated
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therein or necessary to make the statements therein not misleading in the light
of the circumstances under which they were made. In the event the Company or the
Holder shall give any such notice, the period referred to in subdivision
(a)(iii) of this Section 3 shall be extended by a number of days equal to the
number of days during the period from and including the giving of notice
pursuant to subdivision (a)(ix) of this Section 3 to and including the date when
the Holder shall have received the copies of the supplemented or amended
prospectus contemplated by subdivision (a)(ix) of this Section 3.
4. Underwritten Offerings.
(a) Underwritten Offerings. In connection with any underwritten offering
pursuant to a Registration under Section 2(a) or 2(b), the Company and the
Holder will enter into an underwriting agreement with the underwriters for such
offering, such agreement to be in form and substance reasonably satisfactory to
the Holder and the Holder's underwriter in their reasonable judgment and to
contain representations and warranties by the Company and such other terms as
are customarily contained in agreements of that type, including, without
limitation, indemnities to the effect and to the extent provided in Section 6.
The Holder shall be a party to such underwriting agreement and may, at his
option, require that any or all of the representations and warranties by, and
the other agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of the Holder and that
any or all of the conditions precedent to the obligations of such underwriters
under such underwriting agreement be conditions precedent to the obligations of
the Holder. The Holder shall not be required to make any representations or
warranties to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding the Holder and its intended
method of distribution.
(b) Selection of Underwriters. If a Covenanted Registration pursuant to
2(a) or a Requested Registration pursuant to Section 2(b) involves an
underwritten offering, then the Company shall select the underwriter from
underwriting firms of national reputation, subject to the approval of the
Holder.
(c) Holdback Agreements. The Holder agrees, if so reasonably required by
the managing underwriter of any firm commitment registered offering pursuant to
Section 2 or by the managing underwriter of any firm commitment registered
offering by the Company of its securities, not to effect any public sale or
distribution of Registrable Securities or sales of Registrable Securities
pursuant to Rule 144 or Rule 144A under the Securities Act during the seven (7)
days prior to and the 180 days after the effective date of the related
Registration Statement if necessary in order to complete the orderly sale and
distribution of the securities distributed in such offering, except as part of
such underwritten registration or offering, whether or not the Holder
participates in such registration or offering.
5. Preparation, Reasonable Investigation.
In connection with the preparation and filing of each Registration
Statement under applicable Securities Laws, the Company will give the Holder, if
the Holder has requested that any of its
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Registrable Securities be included in such registration, the underwriters, if
any, and their respective counsel and accountants, drafts and final copies of
such Registration Statement, each preliminary or summary prospectus with respect
thereto and each amendment thereof or supplement thereto, at least 1 business
day prior to the filing thereof with the SEC, and will give each of them such
access to its books and records and such opportunities to discuss the business
of the Company with its officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of the
Holder and such underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.
6. Indemnification and Contribution.
(a) Indemnification by the Company. In the event of any registration under
applicable Securities Laws pursuant to Section 2 of any of Holder's Registrable
Securities, the Company will, and hereby does, indemnify and hold harmless the
Holder (including its officers, directors, employees, agents, partners, and any
other person acting on its behalf) and Holder's legal counsel, each other person
who participates as an underwriter in the offering or sale of such securities
(if so required by such underwriter as a condition to including the Registrable
Securities of the Holder in such registration or qualification), such
underwriters' counsel, and each other person, if any, who controls the Holder or
any such underwriter within the meaning of the Securities Act (collectively, the
"Indemnified Parties"), against any losses, claims, damages or liabilities,
joint or several, to which such Indemnified Party may become subject under
applicable Securities Laws or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement
under which Holder's Registrable Securities were registered or qualified under
applicable Securities Laws, any preliminary prospectus, final prospectus or
summary prospectus contained therein or any document incorporated therein by
reference, or any amendment or supplement thereto, or 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, or arise out of any
violation by the Company of any Securities Law, any state, securities or "blue
sky" laws or any rule or regulation promulgated thereunder and relating to
action or inaction required of the Company in connection with any such loss,
claim, liability, action required of the Company in connection with any such
registration or qualification, and the Company will reimburse the Indemnified
Parties for any legal or any other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, liability,
action or proceeding; provided, however, that the Company shall not be liable to
any Indemnified Party in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in such Registration Statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by such Indemnified Party, except the Company shall be liable if
such untrue statement or omission was corrected in such Registration Statement,
preliminary prospectus, final prospectus, amendment or supplement and the
Company failed to deliver such corrected document under circumstances in which
the obligation to deliver such corrected document was the responsibility of the
Company.
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(b) Indemnification by the Holder. The Company may require, as a condition
to including any securities of the Company held by any person or entity in any
Registration Statement filed pursuant to Section 2, that the Company shall have
received an undertaking reasonably satisfactory to it from such person or entity
to indemnify and hold harmless (in the same manner and to the same extent as set
forth in subdivision (a) of this Section 6) the Company, each director of the
Company, each officer of the Company, counsel to the Company, each other person,
if any, who controls the Company within the meaning of applicable Securities
Laws, and each underwriter or agent thereof, with respect to any statement or
alleged statement in or omission or alleged omission from such Registration
Statement, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, if, and only if, such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with information furnished in writing to the
Company directly by such person or entity specifically for use therein;
provided, however, that the obligation of the Holder hereunder shall be limited
to an amount equal to the net proceeds received by the Holder upon the sale of
Registrable Securities sold in the offering covered by such registration.
(c) Notices of Claims, etc. Promptly after receipt by an Indemnified Party
of notice of the commencement of any action or proceeding involving a claim
referred to in the preceding subdivisions of this Section 6, such Indemnified
Party will, if a claim in respect thereof is to be made against a party required
to provide indemnification (an "Indemnifying Party"), give written notice to the
latter of the commencement of such action, provided, however, that the failure
of any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligation under the preceding subdivisions of this
Section 6, except to the extent that the Indemnifying Party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an Indemnified Party, unless in such Indemnified Party's reasonable
judgment a conflict of interest between such Indemnified and Indemnifying
Parties may exist in respect of such claim, the Indemnifying Party shall be
entitled to participate in and to assume the defense thereof, jointly with any
other Indemnifying Party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such Indemnified Party, and after notice from
the Indemnifying Party to such Indemnified Party of its election so to assume
the defense thereof, the Indemnifying Party shall not be liable to such
Indemnified Party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation. No Indemnifying Party shall consent to entry of any judgment or
enter into any settlement without the consent of the Indemnified Party 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.
(d) Other Indemnification. Indemnification similar to that specified in
the preceding subdivisions of this Section 6 (with appropriate modifications)
shall be given by the Company and the Holder, if any of Holder's Registrable
Securities are included in any Registration Statement with respect to any
required registration or other qualification of securities under any Federal or
state law or regulation of any governmental authority, other than the Securities
Act.
12
(e) Indemnification Payment. The indemnification required by this Section
6 shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
(f) Survival of Obligations. The obligations of the Company and the Holder
under this Section 6 shall survive the completion of any offering of Registrable
Securities under this Agreement.
(g) Contribution. If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an Indemnified Party, then each
Indemnifying Party shall contribute to the amount paid or payable to such
Indemnified Party as a result of the losses, claims, damages or liabilities
referred to in this Section 6 an amount or additional amount, as the case may
be, in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party or parties on the one hand and the Indemnified Party on the
other in connection with the statements or omissions which resulted in such
losses, claims, demands or liabilities as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Indemnifying Party or parties on the one hand or the
Indemnified Party on the other and the parties' relative, intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid to an Indemnified Party as a result of
the losses, claims, damages or liabilities referred to in the first sentence of
this Section 6(g) shall be deemed to include any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any action or claim which is the subject of this Section 6. 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.
7. Covenants Relating to Rule 144 and Multi-Jurisdictional Registrations.
With a view to making available the benefits of certain rules and
regulations of the SEC which permit the sale of securities of the Company to the
public at any time without registration, the Company agrees:
(a) to make and at all times keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act;
(b) to use its best efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act.;
(c) so long as a Holder owns any Registrable Securities, to furnish to the
Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144, and of the
Securities Act and the Exchange Act a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the
Company as a Holder may reasonably request in availing itself of any rule or
regulation of the SEC
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allowing a Holder to sell any such securities without resignation.
8. Other Registration Rights.
The Company represents and warrants that it has not granted any
registration rights to any Person other than as required by the Tender Offer
Agreement or to officers or directors of the Company. The Company shall not
grant to any Person any registration rights entitling such Person to a priority
in registration superior to that of the Holder.
9. Miscellaneous.
(a) Specified Performance. The parties hereto acknowledge that there may
be no adequate remedy at law if any party fails to perform any of its
obligations hereunder and that each party may be irreparably harmed by any such
failure, and accordingly agree that each party, in addition to any other remedy
to which it may be entitled at law or in equity, shall be entitled to compel
specific performance of the obligations of any other party under this Agreement
in accordance with the terms and conditions of this Agreement.
(b) Notices. All demands, notices, requests, consents and other
communications required or permitted under this Agreement shall be in writing
and shall be personally delivered or sent by facsimile machine (with a
confirmation copy sent by one of the other methods authorized in this Section),
commercial (including UPS), U.S. Postal Service overnight delivery service, or,
deposited with the U.S. Postal Service mailed first class, registered or
certified mail, postage prepaid, as set forth below:
If to the Company, addressed to:
The Xxxxxx Biomechanics Group, Inc.
000 Xxxxxxx Xxxx
Xxxx Xxxx, Xxx Xxxx 00000
Attn: President
with a copy to:
Xxxx Xxxxxxx, P.C.
1350 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
If to a Holder, addressed as follows:
Kanders & Company, Inc.
0 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
with a copy to:
Xxxx Xxxxxxx, P.C.
1350 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
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Notices shall be deemed given upon the earlier to occur of (i) receipt by the
party to whom such notice is directed; (ii) if sent by facsimile machine, on the
day (other than a Saturday, Sunday or legal holiday in the jurisdiction to which
such notice is directed) such notice is sent if sent (as evidenced by the
facsimile confirmed receipt) prior to 5:00 p.m. Eastern Time and, if sent after
5:00 p.m. Eastern Time, on the day (other than a Saturday, Sunday or legal
holiday in the jurisdiction to which such notice is directed) after which such
notice is sent; (iii) on the first business day (other than a Saturday, Sunday
or legal holiday in the jurisdiction to which such notice is directed) following
the day the same is deposited with the commercial carrier if sent by commercial
overnight delivery service; or (iv) the fifth day (other than a Saturday, Sunday
or legal holiday in the jurisdiction to which such notice is directed) following
deposit thereof with the U.S. Postal Service as aforesaid. Each party, by notice
duly given in accordance therewith may specify a different address for the
giving of any notice hereunder.
(c) Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without regard to
conflicts of law principles thereof. Each party submits to the Federal and New
York State courts located in the County of New York, State of New York for the
purpose of resolving any disputes under this Agreement.
(d) Headings. The descriptive headings of the several sections and
paragraphs of this Agreement are inserted for convenience only, and do not
constitute a part of this Agreement and shall not affect in any way the meaning
or interpretation of this Agreement.
(e) Entire Agreement; Amendments. This Agreement and the other writings
referred to herein or delivered pursuant hereto which form a part hereof contain
the entire understanding of the parties with respect to its subject matter. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to its subject matter. This Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only by a written
instrument duly executed by the Company and the Holder.
(f) Assignability. This Agreement and all of the provisions hereof will be
assigned, without the consent of the Company, by the Holder to, and shall inure
to the benefit of, any purchaser, transferee or assignee of any Registrable
Security or any right to purchase a Registrable Security, unless the Holder
specifies otherwise in connection with particular transfers of Registrable
15
Securities. However, the Company shall not be required to recognize any such
purchaser, transferee or assignee as a Holder under this Agreement unless and
until either (i) such person becomes the holder of record of Registrable
Securities or (ii) the Company receives written notice of such purchase,
transfer or assignment.
(g) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
THE XXXXXX BIOMECHANICS GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
Title: Xxxxxx X. Xxxxxx
KANDERS & COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
17
