Exhibit 2.3
STOCKHOLDERS' AGREEMENT
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This STOCKHOLDERS' AGREEMENT, dated as of __________, 1997 is among
ELCOTEL, INC., a Delaware corporation (the "Company"); WEXFORD PARTNERS FUND,
L.P., a Delaware limited partnership ("Wexford"); and FUNDAMENTAL MANAGEMENT
CORPORATION, a Florida corporation ("Fundamental", together with Wexford, the
"Stockholders").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Agreement and Plan of Merger dated
as of August __, 1997 (the "Merger Agreement") among the Company, Technology
Services Group, Inc. ("TSG") and Elcotel Hospitality Service, Inc. ("Merger
Subsidiary") pursuant to which Merger Subsidiary is merging (the "Merger") with
and into TSG, and as a result the stockholders of TSG will receive shares (the
"Merger Shares") of the Company's common stock, par value $.01 per share (the
"Common Stock");
WHEREAS, Fundamental is the owner of approximately ______ percent of
the outstanding Common Stock of the Company immediately prior to the Merger;
WHEREAS, as a result of the consummation of the
Merger, Wexford is receiving ___ shares of Common Stock;
WHEREAS, the execution and delivery of this Agreement by the parties
hereto is a condition to the transactions contemplated by the Merger Agreement
and is an inducement therefor;
WHEREAS, the Stockholders desire to enter into certain arrangements
with respect to the disposition of their shares of Common Stock and to define
certain rights, duties and obligations of such parties.
NOW THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. Transfers Restricted. (a) Neither Stockholder shall sell,
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assign, transfer, mortgage, pledge, hypothecate or in any way dispose of or
encumber any legal or beneficial interest (collectively, "Transfer" or a
"Transfer") in any or all of the Capital Stock now or hereafter owned by such
Stockholder, whether for consideration or otherwise, except in accordance with
the provisions of this Agreement. For purposes of this Agreement, "Capital
Stock" shall mean any and all Common Stock of the Company, any and all
securities of the Company issued as a dividend on or in exchange for such Common
Stock and any and all
warrants, options, convertible securities or other rights to purchase or
acquire any of the foregoing.
(b) Any purported Transfer of Capital Stock by a Stockholder which is
not permitted by the provisions of this Agreement, or which is in violation of
such provisions, shall be void and of no force or effect whatsoever. The
Company or its transfer agent shall not recognize or give effect to any such
proposed Transfer and shall be entitled to issue, or to cause to be issued, stop
transfer instructions with respect to any proposed Transfer that violates the
provisions of this Agreement.
2. Prohibitions on Transfers. (a) Each of the Stockholders agrees
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that it will not Transfer any of the Capital Stock owned by it during the six
month period beginning on the effective date of the Merger; except that
Fundamental may sell Capital Stock not to exceed 75,000 shares and Wexford may
sell Capital Stock not to exceed 125,000 shares (i) during the three month
period beginning on the day after the effective date of the Merger and (ii)
during the three month period beginning on the three month anniversary of the
effective date of the Merger.
(b) After such six month anniversary of the effective date of the
Merger, the Stockholders may Transfer shares of Capital Stock owned by them in
accordance with applicable law; provided that the Stockholder Transferring such
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shares complies with the provisions of Section 3 or Section 4.
3. Tag Along Rights. If any Stockholder proposes to sell any shares
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of Capital Stock otherwise permitted to be sold pursuant to the terms of this
Agreement, but excluding (i) sales to a Related Transferee of such Stockholder
or to A.T.T. IV, N.V. in accordance with Section 4 or (ii) any sale in which all
of the Stockholders agree and are permitted to participate, then such
Stockholder shall offer (the "Participation Offer") to include in the proposed
sale a number of shares of Capital Stock designated by any of the other
Stockholders, not to exceed, in respect of any such other Stockholder, the
number of shares equal to the product of (A) the aggregate number of shares of
Capital Stock to be sold by such Stockholder to the proposed transferee(s) and
(B) a fraction the numerator of which is equal to the number of shares of
Capital Stock owned by such other Stockholder and the denominator of which is
equal to the number of shares of Capital Stock held by all Stockholders;
provided that if the consideration to be received by such Stockholder includes
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any securities subject to Section 5 of the Securities Act of 1933 (or any
successor statute) (the "Securities Act"), only Stockholders who are permitted
by the Securities Act to purchase such securities shall be entitled to include
their shares of Capital Stock in such sale. The Stockholder making the
Participation Offer (the "Offering Stockholder") shall give written notice to
each other Stockholder of the Participation Offer (the "Tag-Along Notice") at
least 15 days prior to the proposed sale. The Tag-Along Notice shall specify the
proposed transferee(s), the number of shares of Capital Stock to be sold to such
transferee(s), the amount and type of consideration to be received therefor, and
the place and date on which the sale is to be consummated. Each other
Stockholder who wishes to include shares of Capital Stock in the proposed sale
in accordance with the terms of this Section 3 shall so notify the Offering
Stockholder not more than 10 days after the date of the Tag-Along Notice. The
Participation
Offer shall be conditioned upon consummation of the sale of shares of Capital
Stock pursuant to the transactions contemplated in the Tag-Along Notice. If any
Stockholder shall have accepted the Participation Offer, the Offering
Stockholder shall reduce to the extent necessary the amount of Capital Stock it
otherwise would have sold in the proposed sale so as to permit the other
Stockholders who have accepted the Participation Offer to sell the number of
shares that they are entitled to sell under this Section 3, and the Offering
Stockholder and such other Stockholders shall sell the number of shares
specified in the Participation Offer in accordance with the terms of such sale
set forth in the Tag-Along Notice.
4. Exempt Transfers. Notwithstanding anything in this Agreement to
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the contrary, (a) Wexford may sell to A.T.T. IV, N.V. up to 150,000 shares
(subject to adjustment) of Capital Stock pursuant to the Amended and Restated
Option Agreement of even date herewith, and (b) each Stockholder that is not a
natural person may sell any or all of its Capital Stock to any entity or person
affiliated with, controlled by, or under common control with such Stockholder,
in each case without the consent of the other Stockholder or the Company and
without being required to first offer such Capital Stock to any Stockholder or
the Company. Any such transferee of a Stockholder (other than A.T.T. IV, N.V.
under clause (a) hereof) is referred to herein as a "Related Transferee." If any
Stockholder transfers any of the Capital Stock held by it to a Related
Transferee (or if any Related Transferee subsequently transfers or re-transfers
any of such Capital Stock to another Related Transferee of such Stockholder),
such Related Transferee shall receive and hold the Capital Stock so transferred
subject to the provisions of this Agreement, including, without limitation, the
obligations hereunder of the Stockholder who originally transferred such Capital
Stock, as though such Capital Stock were still owned by such holder and the
Related Transferee shall be deemed a Stockholder for purposes of this Agreement.
It shall be a condition precedent to any Transfer permitted by this Section 4
that the Related Transferee shall execute and deliver to each party hereto an
agreement acknowledging that all Capital Stock transferred or to be transferred
to such Related Transferee is and shall be subject to this Agreement and no
Transfer by any Stockholder (or by any of such holder's Related Transferees)
under Section 4 shall release such Stockholder from any of such holder's
obligations or liabilities hereunder that occurred prior to the date of such
transfer.
5. Stockholder Breaches of Sections 2 or 3. If either Stockholder
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breaches its obligations with respect to the Transfer of shares of Capital Stock
or giving notice with respect thereto under the provisions of Section 2 or
Section 3 of this Agreement, the non-breaching Stockholder shall have the right
for a period of 1 year after such Stockholder becomes aware of any such breach
to require the breaching Stockholder to purchase for cash from the nonbreaching
Stockholder all or a portion of that number of its shares of Capital Stock equal
to the number of shares of Capital Stock which were Transferred by the breaching
Stockholder in violation of such Section 2 or 3 at a price per share of Capital
Stock equal to (i) the price per share the breaching Stockholder received as
consideration for the shares of Capital Stock Transferred by the breaching
Stockholder in violation of such Section 2 or 3 plus (ii) interest at an annual
rate of 15% compounded quarterly on the amount payable pursuant to the foregoing
clause (i) from the date of the breach until final payment is received by the
non-breaching Stockholder.
6. Representations and Warranties.
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(a) Each of the Stockholders (as to such Stockholder only)
represents and warrants to the Company and the other Stockholders that:
(i) such Stockholder has full power and authority to
execute, deliver, and perform this Agreement and to consummate the
transactions contemplated hereby, and the execution, delivery, and
performance by it of this Agreement and the consummation by it of the
transactions contemplated hereby have been duly authorized by all
necessary action;
(ii) this Agreement has been duly and validly executed and
delivered by such Stockholder and constitutes the binding obligation
of such Stockholder enforceable against such Stockholder in accordance
with its terms; and
(iii) the execution, delivery, and performance by such
Stockholder of this Agreement and the consummation by such Stockholder
of the transactions contemplated hereby will not, with or without the
giving of notice or the lapse of time, or both, (A) violate any
provision of law, statute, rule, or regulation to which it is subject,
(B) violate any order, judgment, or decree applicable to it, or (C)
conflict with, or result in a breach or default under, any term or
condition of its certificate of incorporation or by-laws, certificate
of limited partnership or partnership agreement, as applicable, or any
agreement or other instrument to which such Stockholder is a party or
by which such Stockholder is bound, other than any such violation,
conflict or breach the occurrence of which would not have a material
adverse effect on the ability of such Stockholder to perform this
Agreement.
(b) The Company hereby represents and warrants to each
Stockholder that:
(i) it is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware, it has
full corporate power and authority under its certificate of
incorporation to execute, deliver, and perform this Agreement and to
consummate the transactions contemplated hereby, and the execution,
delivery, and performance by it of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by
all necessary corporate action;
(ii) this Agreement has been duly and validly executed and
delivered by the Company and constitutes the binding obligation
thereof enforceable against the Company in accordance with its terms;
and
(iii) the execution, delivery, and performance by the
Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby will not, with or without the giving
of notice or the lapse of time, or both, (A) violate any provision of
law, statute, rule, or regulation to which the Company is subject, (B)
violate any order, judgment, or decree applicable to the Company, or
(C) conflict with, or result in a breach or default under, any term or
condition of its certificate of incorporation or by-laws or any
agreement or other instrument to which the Company is a party or by
which it is bound, other than any such violation, conflict or breach
the occurrence of which would not have a material adverse effect on
the ability of the Company to perform this Agreement.
7. Term. This Agreement shall terminate as follows:
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(a) Upon the unanimous agreement of all Stockholders and the
Company.
(b) Upon the happening of any of the following events:
(i) A trustee or receiver is appointed for the Company or
for the major part of its property and is not discharged within 30 days
after such appointment;
(ii) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or
similar law or laws for the relief of debtors, are instituted against the
Company, are consented to by the Company or are not dismissed within 60
days after such institution;
(iii) The Company shall be merged with or into another
company and the stockholders of the Company immediately prior to such
merger do not own after such merger substantially all of the capital stock
of the Company or the surviving entity of such merger in substantially the
same proportions or whose shares of capital stock shall not be listed on a
national securities exchange or quoted on the National Association of
Securities Dealers, Inc. Automated Quotation System (the "NASDAQ System");
or
(iv) At such time as a Stockholder and its Related
Transferees collectively own less than 5% of the outstanding Common Stock of the
Company (in which event this Agreement shall continue to be binding upon the
Company and the other Stockholders until such time as termination hereof
otherwise occurs), provided that such Stockholder and Related Transferees'
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registration rights pursuant to Section 9 hereof shall only terminate upon the
Stockholder and Related Transferees owning no outstanding Common Stock of the
Company.
(c) In any event, not later than five (5) years from the date of
this Agreement.
8. Voting of Capital Stock. During the period ending immediately
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after the second annual meeting of stockholders of the Company which occurs
after the meeting at which the Merger was approved, each of the Stockholders
agrees that it will vote (or cause to be voted) its shares of Capital Stock in
favor of any nominees for director nominated by the incumbent Board of Directors
of the Company.
9. Registration Rights. Stockholders and their Related Transferees
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and ▇▇▇▇ ▇.▇. shall have the registration rights set forth in Exhibit A hereto.
The parties hereto acknowledge and agree that ▇▇▇▇ ▇.▇. is a third party
beneficiary of such registration rights and shall have full power and authority
to enforce such rights as if it had been a party executing this Agreement.
10. Specific Performance. The Stockholders and the Company recognize
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that the obligations imposed on them in this Agreement are special, unique, and
of extraordinary character, and that in the event of breach by any party,
damages may be an insufficient remedy. Consequently, it is agreed that the
Stockholders and the Company may have specific performance and injunctive relief
(in addition to damages) as a remedy for the enforcement hereof, without proving
damages.
11. Notices. Any and all notices, designations, consents, offers,
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acceptances, or other communications provided for herein (each a "Notice") shall
be given in writing by overnight courier, telegram, or telecopy (with receipt
confirmed) which shall be addressed, or sent, to the respective addresses as
follows (or such other address or telecopier number as the Company or any
Stockholder may specify to the Company and all other Stockholders by notice):
To the Company, at
Elcotel, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
Schnader, Harrison, ▇▇▇▇▇ & ▇▇▇▇▇ llp
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to Wexford, at
Wexford Partners Fund, L.P.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to Fundamental, at
Fundamental Management Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
All notices shall be deemed effective and received (a) if given by telecopy,
when such telecopy is transmitted to the telecopy number specified above and
receipt thereof is confirmed; (b) if given by overnight courier, on the business
day immediately following the day on which such notice is delivered to a
reputable overnight courier service; or (c) if given by telegram, when such
notice is delivered at the address specified above. No Stockholder shall be
entitled to receive a notice hereunder (or a copy of a notice delivered to the
Company) if, at the time such notice is to be sent, such Stockholder (including
its Affiliates and the employees of such Stockholder and its Affiliates) no
longer owns any shares of Common Stock.
12. Modification, Amendment and Waiver. No modification, amendment or
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waiver of any provision of this Agreement shall be effective unless approved in
writing by each of the parties hereto. The failure of any party at any time to
enforce any of the provisions of this Agreement shall in no way be construed as
a waiver of such provisions and shall not affect the rights of the party
thereafter to enforce the provisions of this Agreement in accordance with its
terms.
13. Arbitration. Any and all disputes arising out of, under, in
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connection with, or relating to this Agreement (including, without limitation,
valuation disputes) shall be finally settled by arbitration in the City of New
York, or in such other place as the parties hereto agree, in accordance with the
rules then in effect of the American Arbitration Association. The board of
arbitrators shall be composed of three arbitrators, each being qualified to make
evaluations of the kind under dispute. Each of the parties to such arbitration
shall appoint one arbitrator and the two arbitrators so appointed shall appoint
the third arbitrator within thirty days after their appointment. If either party
fails to appoint its arbitrator within fifteen days after written request by the
other party, the other party may request the President of the American
Arbitration Association to make such appointment within fifteen days after such
request to the President. The arbitration award shall be final and binding on
the parties and may include costs, including
attorneys' fees. Any arbitration award may be enforced in any court having
jurisdiction over the party against which enforcement is sought.
14. Entire Agreement. This document embodies the entire agreement and
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understanding between and among the parties hereto with respect to the subject
matter hereof, and supersedes and preempts any prior understandings, agreements,
or representations by or among the parties, written or oral, that may have
related to the subject matter hereof.
15. Successors and Assigns. This Agreement will bind and inure to the
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benefit of and be enforceable by the parties and their respective permitted
successors and assigns. This Agreement may not be assigned by any party hereto
without the prior written consent of all parties hereto.
16. Counterparts. This Agreement may be executed in separate
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counterparts, each of which will be an original and all of which taken together
will constitute one and the same agreement.
17. Applicable Law. All questions concerning this Agreement will be
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governed by and interpreted in accordance with the laws of the State of
Delaware, without regard to the conflict of laws principles thereof.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date first written above.
ELCOTEL, INC. WEXFORD PARTNERS FUND L.P.
By: By:
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Name: Name:
Title: Title:
FUNDAMENTAL MANAGEMENT CORPORATION
By:
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Name:
Title:
EXHIBIT A
REGISTRATION RIGHTS
1. Definitions. Except as otherwise set forth below, terms defined
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in the Stockholders Agreement of which this Exhibit is a part are used herein as
therein defined.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Holder" means any Stockholder, Related Transferee or Acor, S.A. who
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holds Registrable Securities.
"Indemnified Party" has the meaning set forth in Section 5(c) below.
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"Indemnifying Party" has the meaning set forth in Section 5(c) below.
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"Person" (or "Persons" as the context may require) means an
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individual, a corporation, a partnership, a limited liability partnership, a
limited liability company, a firm, a joint venture, an association, a trust, or
an unincorporated organization.
"Registrable Securities" means the Common Stock issued to Wexford
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pursuant to the Merger, any other Common Stock beneficially owned by Wexford,
any Common Stock beneficially owned by Fundamental, any Common Stock
beneficially owned by Acor, S.A. and any other securities issuable with respect
to such Common Stock by way of a stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or
reorganization; provided that
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(1) any Registrable Security will cease to be a Registrable Security
when (a) a registration statement covering such Registrable Security
has been declared effective by the SEC and it has been disposed of
pursuant to such effective registration statement or (b) it is sold
under circumstances in which all of the applicable conditions of Rule
144 (or any similar provisions then in force) under the Securities Act
are met; and
(2) Registrable Securities shall only include such Registrable
Securities which any Holder could not otherwise sell pursuant to Rule
144 under the Securities Act without restriction as a result of volume
limitations, whether under subsection (k) of Rule 144 or otherwise.
"Registration Expenses" has the meaning set forth in Section 4 below.
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"SEC" means the United States Securities and Exchange Commission.
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2. Registration. The Company shall file with the SEC within forty-
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five (45) days after the effective date of the Merger, a "shelf" registration
statement on Form S-3 or other appropriate available Form, covering the
Registrable Securities owned by the Holders and shall use its reasonable best
efforts to cause the same to be declared effective by the SEC as promptly as
practicable after such filing.
3. Registration Procedures. The Company will:
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(a) before filing the registration statement or prospectus or any
amendments or supplements thereto, furnish to all Holders and to one counsel
selected by the Holders, copies of all such documents proposed to be filed,
which document will be subject to the review of and comment by such counsel;
(b) prepare and promptly 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
a period (except as provided in the last paragraph of this Section 3) of not
less than 360 consecutive days or, if shorter, the period terminating when all
Registrable Securities covered by such registration statement have been sold
(but not before the expiration of the applicable period referred to in Section
4(3) of the Securities Act and Rule 174 thereunder, if applicable);
(c) furnish to each Holder such number of copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto) and the prospectus included in such registration
statement as such Holder may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Holder;
(d) notify the Holders promptly, (i) when the registration
statement or any post-effective amendment has become effective under the
Securities Act and applicable state law, (ii) of any request by the SEC or any
other Federal or state governmental authority for amendments or supplements to
the registration statement or related prospectus or for additional information,
(iii) of the issuance by the SEC of any stop order suspending the effectiveness
of the registration statement or the initiation of any proceedings for that
purpose, (iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, and (v) of the happening of any
event which makes any statement made in such registration statement or related
prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in such registration statement, prospectus or documents so that, in the
case of the registration statement, it will not contain any untrue statements 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, and that in the case
of the prospectus, it will not contain 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, in light of the circumstances under
which they were made, not misleading;
(e) use its reasonable best efforts to obtain the withdrawal of
any order suspending the effectiveness of a registration statement, or the
lifting of any suspension of the qualification (or exemption from qualification)
of any of the Registrable Securities for sale in any jurisdiction;
(f) use its reasonable best efforts to register or qualify such
Registrable Securities as promptly as practicable under such other securities or
blue sky laws of such jurisdictions as any Holder reasonably (in light of the
intended plan of distribution) requests and do any and all other acts and things
which may be reasonably necessary or advisable to enable such Holder to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by such Holder; provided, that the Company will not be required to (i)
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qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph (f), (ii) subject itself
to taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction;
(g) use its reasonable best efforts to cause all such Registrable
Securities to be listed on each securities exchange on which similar securities
issued by the Company are then listed or quoted on any inter-dealer quotation
system on which similar securities issued by the Company are then quoted;
(l) if any event contemplated by Section 3(d)(v) above shall
occur, as promptly as practicable prepare a supplement or amendment or post-
effective amendment to such registration statement or the related prospectus or
any document incorporated therein by reference or promptly file any other
required document so that, as thereafter delivered to the purchasers of the
Registrable Securities, the 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 not misleading.
The Company may require each Holder to promptly furnish in writing to
the Company such information regarding the distribution of the Registrable
Securities as it may from time to time reasonably request and such other
information as may be legally required in connection with such registration.
Notwithstanding anything herein to the contrary, the Company shall have the
right to exclude from any offering the Registrable Securities of any Holder who
does not comply with the provisions of the immediately preceding sentence.
Each Holder agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(d)(v) hereof,
such Holder shall forthwith discontinue disposition of Registrable Securities
pursuant to the registration statement covering such Registrable Securities
until such Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(d)(v) hereof, and, if so directed by the
Company, such Holder shall deliver to the Company all copies, other than
permanent file copies,
then in such Holder's possession, 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 (including the period
referred to in Section 3(b) hereof) by the number of days during the period from
and including the date of the giving of notice pursuant to Section 3(d)(v)
hereof to the date when the Company shall make available to the Holders of
Registrable Securities covered by such registration statement a prospectus
supplemented or amended to conform with the requirements of Section 3(d)(v)
hereof.
4. Registration Expenses. In connection with any registration
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statement required to be filed hereunder, the Company shall pay the following
registration expenses (the "Registration Expenses"): (i) all registration and
filing fees, (ii) fees and expenses of compliance with securities or blue sky
laws, (iii) word processing, duplicating and printing expenses, (iv) internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), (v) transfer
agents', trustees', depositories', registrars' and fiscal agents' fees, (vi) the
fees and expenses incurred in connection with the listing of the Registrable
Securities on the Nasdaq National Market or any other trading medium or exchange
on which the Common Stock is then listed or traded, (vii) all fees and
disbursements of counsel for the Company and fees and expenses for independent
certified public accountants retained by the Company, and (viii) the fees and
expenses of any special experts retained by the Company in connection with such
registration.
5. Indemnification; Contribution. (a) Indemnification by the
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Company. The Company agrees to indemnify and hold harmless each Holder, each
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Person, if any, who controls such Holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and the officers, directors,
agents, general and limited partners, and employees of each Holder and each such
controlling person from and against any and all losses, claims, damages,
liabilities, and reasonable expenses (including reasonable costs of
investigation) directly or indirectly arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus relating to the Registrable Securities or
in any amendment or supplement thereto or in any preliminary prospectus, or
arising out of or based upon 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, claims, damages,
liabilities or reasonable expenses arise out of, or are based upon, any such
untrue statement or omission or allegation thereof based upon information
furnished to the Company by such Holder or on such Holder's behalf expressly for
use therein; and the Company will reimburse such Indemnified Party for any legal
or other expenses reasonably incurred by them in connection with enforcing their
rights hereunder, provided, however, that with respect to any untrue statement
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or omission or alleged untrue statement or omission made in any preliminary
prospectus, the indemnity agreement contained in this paragraph shall not apply
to the extent that any such loss, claim, damage, liability or expense results
from the fact that a current copy of the prospectus was not sent or given to the
Persons asserting any such loss, claim, damage, liability or expense at or prior
to the written confirmation of the sale of the Registrable Securities concerned
to such Person if it is determined that (i)(A) it was the responsibility of such
Holder
to provide such person with a current copy of the prospectus, (B) such Holder
was provided with a current copy of the prospectus prior to the written
confirmation of sale and (C) such current copy of the prospectus would have
cured the defect giving rise to such loss, claim, damage, liability or expense
or (ii) the Holder provided a prospectus to any Person in violation of the last
paragraph of Section 3 hereof.
(b) Indemnification by Holder of Registrable Securities. Each Holder
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agrees to indemnify and hold harmless the Company, and each Person, if any, who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act and the officers, directors, agents and
employees of the Company and each such controlling Person to the same extent as
the foregoing indemnity from the Company to such Holder, but only with respect
to written information furnished by such Holder or on such Holder's behalf for
use in any registration statement or prospectus relating to the Registrable
Securities. The liability of any Holder under this Section 5(b) shall be limited
to the net amount of proceeds received by such Holder pursuant to the sale of
Registrable Securities covered by such registration statement or prospectus.
(c) Conduct of Indemnification Proceedings. If any action or
--------------------------------------
proceeding (including any governmental investigation) shall be brought or
asserted against any Person entitled to indemnification under Section 5(a) or
5(b) above (an "Indemnified Party") in respect of which indemnity may be sought
from any party who has agreed to provide such indemnification under Section 5(a)
or 5(b) above (an "Indemnifying Party"), the Indemnified Party shall give prompt
notice to the Indemnifying Party, provided that the failure of any Indemnified
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Party to give notice as provided herein shall not relieve the Indemnifying Party
of its obligations under this Section 5, except to the extent that such
Indemnifying Party is materially prejudiced by such failure to give notice. The
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Party, and shall assume the
payment of all reasonable expenses of such defense. Such Indemnified Party
shall have the right to employ separate counsel in any such action or proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party unless (i) the
Indemnifying Party has agreed to pay such fees and expenses or (ii) the
Indemnifying Party fails promptly to assume the defense of such action or
proceeding or fails to employ counsel reasonably satisfactory to such
Indemnified Party or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both such Indemnified Party and
Indemnifying Party (or an affiliate of the Indemnifying Party), and such
Indemnified Party shall have been advised by counsel that there is a conflict of
interest on the part of counsel employed by the Indemnifying Party to represent
such Indemnified Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it 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 action or proceeding on behalf of such
Indemnified Party). Notwithstanding the foregoing, the Indemnifying Party shall
not, in connection with any one such action or proceeding or separate but
substantially similar related actions or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable at any
time for the fees and expenses of more than one separate firm of attorneys
(together in each case with appropriate local counsel). The
Indemnifying Party shall not be liable for any settlement of any such action or
proceeding effected without its written consent (which consent will not be
unreasonably withheld), but if settled with its written consent, or if there be
a final judgment for the plaintiff in any such action or proceeding, the
Indemnifying Party shall indemnify and hold harmless such Indemnified Party from
and against any loss or liability (to the extent stated above) by reason of such
settlement or judgment. The Indemnifying Party shall not consent to entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release, in form and substance satisfactory to the
Indemnified Party, from all liability in respect of such action or proceeding
for which such Indemnified Party would be entitled to indemnification hereunder.
(d) Contribution. If the indemnification provided for in this Section
------------
5 is unavailable to the Indemnified Parties in respect of any losses, claims,
damages, liabilities or judgment referred to herein, then each such Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages, liabilities and judgments as between the Company on the one
hand and each Holder on the other, in such proportion as is appropriate to
reflect the relative fault of the Company and of each Holder in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of each
Holder on the other 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 the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 5(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by the Indemnified Party as a result of
the losses, claims, damages, liabilities or judgments 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 the investigating or defending any
such action or claim. Notwithstanding the provisions of this Section 5(d), no
Holder shall be required to contribute any amount in excess of the amount by
which the total price of which the Registrable Securities of such Holder were
offered to the public exceeds the amount of any damages which Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statements 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.
