REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of March 9, 1998 among XXXX XXXXX,
INC., a Delaware corporation (the "Issuer"), and the Holders (as defined
herein).
WHEREAS, this Agreement is being entered into in connection with the
closing under the Merger Agreement referred to below;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises,
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 Definitions. Terms defined in the Agreement and Plan of
Merger dated as of November 6, 1997 among the Issuer, Quality Food Centers,
Inc., a Washington corporation ("QFC"), and Q-Acquisition Corp., a Washington
corporation, are used herein as defined therein. In addition, the following
terms, as used herein, shall have the following respective meanings:
"Commission" means the Securities and Exchange Commission or any successor
governmental body or agency.
"Common Stock" means the common stock, par value $.01 per share, of the
Issuer.
"Demand Registration" has the meaning ascribed thereto in Section 2.2(a).
"Demand Request" has the meaning ascribed thereto in Section 2.2(a).
"Disadvantageous Condition" has the meaning ascribed thereto in Section
2.4.
"Holder" means a person who owns Registrable Securities and is either (i)
an Investor or (ii) a Person that (A) has agreed to be bound by the terms of
this Agreement as if such Person were an Investor and (B) is (1) upon the death
of any Investor, the executor of the estate of such Investor or such Investor's
heirs, devisees, legatees or assigns, (2) upon the disability of any Investor,
any guardian or conservator of such Investor or (3) (x) a general or limited
partner of Xxxx/Chilmark that has received Registrable Securities pursuant to
the distribution to such partners of Registrable Securities in accordance with
the agreement of limited partnership governing
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the rights of such partners, (y) an individual that has a direct or indirect
equity interest in a general partner or limited partner of Xxxx/Chilmark and has
received Registrable Securities directly or indirectly from Xxxx/Chilmark or (z)
any financial institution that has received Registrable Securities pursuant to a
bona fide pledge thereof by any Holder referred to in the preceding clauses (x)
or (y).
"Holders' Agent" means the Xxxx Holders' Agent or Xxxxxx Xxxxx, as the case
may be.
"Investor" means Xxxx/Chilmark Fund, L.P. and Xxxxxx Xxxxx.
"Permitted Holder" means each of (i) the Xxxx Holders' Agent (or one
representative of the Xxxx Holders that (x) is designated by Xxxx Holders that
hold a majority of the Registrable Securities proposed to be sold by Xxxx
Holders in the applicable offering and (y) is reasonably acceptable to the
Issuer), and (ii) Xxxxxx Xxxxx, as the case may be.
"Registrable Securities" means Common Stock acquired by the Holders
pursuant to the merger (and any shares of stock or other securities into which
or for which such Common Stock may hereafter be changed, converted or exchanged
and any other shares or securities issued to Holders of such Common Stock (or
such shares of stock or other securities into which or for which such shares are
so changed, converted or exchanged) upon any reclassification, share
combination, share subdivision, share dividend, share exchange, merger,
consolidation or similar transaction or event) or otherwise. As to any
particular Registrable Securities, such Registrable Securities shall cease to be
Registrable Securities as soon as (i) such Registrable Securities have been sold
or otherwise disposed of pursuant to a registration statement that was filed
with the Commission in accordance with this Agreement and declared effective
under the Securities Act, (ii) based on an opinion of counsel or a no-action
letter of the Commission, in either case reasonably acceptable to the Issuer
(and, in the case of Registrable Securities held by a Xxxx Xxxxxx, reasonably
acceptable to the Xxxx Holders' Agent), such Registrable Securities are eligible
for immediate sale pursuant to Rule 144 or Rule 145 (whether or not subject to
applicable volume limitations thereunder), provided that, notwithstanding such
opinion or no-action letter, prior to the Shelf Termination Date (determined
disregarding clause (c) of the definition of Shelf Termination Date in Section
2.1) (x) no Registrable Securities held by a Xxxx Xxxxxx shall cease to be
Registrable Securities unless all Registrable Securities held by all Xxxx
Holders could then be sold in a single transaction (assuming for these purposes
the aggregation of all such Registrable Securities of all Xxxx Holders) without
violation of applicable Rule 144 volume limitations and (y) no Registrable
Securities held by Xxxxxx Xxxxx shall cease to be Registrable Securities unless
all Registrable Securities held by Xxxxxx Xxxxx could then be sold in a single
transaction without
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violation of applicable Rule 144 volume limitations, (iii) they shall have been
otherwise sold, transferred or disposed of by a Holder to any Person that is not
a Holder, or (iv) they shall have ceased to be outstanding.
"Registration Expenses" means any and all expenses incident to performance
of or compliance with any registration of securities pursuant to Article II,
including, without limitation, (i) the fees, disbursements and expenses of the
Issuer's counsel and accountants (including in connection with the delivery of
opinions and/or comfort letters) in connection with this Agreement and the
performance of the Issuer's obligations hereunder; (ii) all expenses, including
filing fees, in connection with the preparation, printing and filing of one or
more registration statements hereunder; (iii) the cost of printing or producing
any agreements among underwriters, underwriting agreements, and blue sky or
legal investment memoranda; (iv) the filing fees incident to securing any
required review by the National Association of Securities Dealers, Inc. of the
terms of the sale of the securities to be disposed of; (v) transfer agents' and
registrars' fees and expenses in connection with such offering; (vi) all
security engraving and security printing expenses; (vii) all fees and expenses
payable in connection with the listing of the Registrable Securities on any
securities exchange or automated interdealer quotation system on which the
Common Stock is then listed; and (viii) all reasonable fees and expenses of one
legal counsel for the Holders in connection with each of the Required Shelf
Registration and the Demand Registration, which legal counsel shall be selected
by Holders owning a majority of the Registrable Securities then being
registered; provided that Registration Expenses shall exclude (x) all
underwriting discounts and commissions, selling or placement agent or broker
fees and commissions, and transfer taxes, if any, in connection with the sale of
any securities, (y) the fees and expenses of counsel for any Holder (other than
pursuant to clause (viii)) and (z) all costs and expenses of the Issuer incurred
as contemplated in Section 2.6(g).
"Required Shelf Registration" has the meaning ascribed thereto in Section
2.1.
"Rule 144" means Rule 144 (or any successor rule to similar effect)
promulgated under the Securities Act.
"Rule 145" means Rule 145 (or any successor rule to similar effect)
promulgated under the Securities Act.
"Rule 415 Offering" means an offering on a delayed or continuous basis
pursuant to Rule 415 (or any successor rule to similar effect) promulgated under
the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
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"Selling Holder" means any Holder who sells Registrable Securities pursuant
to a public offering registered hereunder.
"Shelf Registration" means the registration under the Securities Act of a
Rule 415 Offering.
"Shelf Registration Statement" means a registration statement intended to
effect a Shelf Registration.
"Xxxx Xxxxxx" means Xxxx/Chilmark, any Affiliate of Xxxx/Chilmark that is a
Holder, and each partner of Xxxx/Chilmark referred to in clause (3) of the
definition of "Holder."
"Xxxx Holders' Agent" has the meaning ascribed thereto in Section 3.11.
SECTION 1.2. Internal References. Unless the context indicates otherwise,
references to Articles, Sections and paragraphs shall refer to the corresponding
articles, sections and paragraphs in this Agreement, and references to the
parties shall mean the parties to this Agreement.
ARTICLE 2
REGISTRATION RIGHTS
SECTION 2.1 Shelf Registration. If requested by a Holder or Holders holding
a majority in interest of the Registrable Securities, as soon as practicable
(but in any event not more than 10 days) after such request, the Issuer shall
prepare and file with the Commission a Shelf Registration Statement on an
appropriate form that shall include all Registrable Securities, and may include
securities of the Company for sale for the Company's own account (the "Required
Shelf Registration"). The Issuer shall use its reasonable best efforts to cause
such Shelf Registration Statement to be declared effective as soon as
practicable after such request, and within 5 days after the first public release
by the Issuer of 30 days of combined financial results of the Issuer and QFC, in
the event of a request made prior to such public release. Notwithstanding
anything else contained in this Agreement, the Issuer shall only be obligated to
keep such Shelf Registration Statement effective until the earliest of (a) 12
months after the date such Shelf Registration Statement has been declared
effective, provided that such 12-month period shall be extended by (i) the
length of any period during which the Issuer delays in maintaining the Shelf
Registration Statement current pursuant to Section 2.4, (ii) the length of any
period (in which such Shelf Registration Statement is required to be effective
hereunder) during which such Shelf Registration Statement is not maintained
effective, and (iii) such number of days that equals the number of days elapsing
from (x) the date the written notice contemplated by Section 2.6(e) below is
given by the Issuer to (y) the date on which the Issuer
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delivers to the Holders of Registrable Securities the supplement or amendment
contemplated by Section 2.6(e) below, (b) such time as all Registrable
Securities have been sold or disposed of thereunder or sold, transferred or
otherwise disposed of to a Person that is not a Holder and (c) such time as all
securities that were Registrable Securities on the date hereof have ceased to be
Registrable Securities (the earliest of (a), (b) and (c) being the "Shelf
Termination Date"). The Required Shelf Registration shall not be counted as a
Demand Registration for purposes of Section 2.2 of this Agreement.
SECTION 2.2 Demand Registration. (a) Upon written notice to the Issuer from
a Holder or Holders holding a majority in interest of the Registrable Securities
(but not later than the date that is 180 days after the Shelf Termination Date)
(the "Demand Request") requesting that the Issuer effect the registration under
the Securities Act of any or all of the Registrable Securities held by such
requesting Holders, which notice shall specify the intended method or methods of
disposition of such Registrable Securities, the Issuer shall prepare as soon as
practicable and, within 15 days after such request, file with the Commission a
registration statement with respect to such Registrable Securities and
thereafter use its reasonable best efforts to cause such registration statement
to be declared effective under the Securities Act for purposes of dispositions
in accordance with the intended method or methods of disposition stated in such
request within the later to occur of the first public release by the Issuer of
30 days of combined financial results of the Issuer and QFC and 30 days after
the filing of such registration statement. Notwithstanding any other provision
of this Agreement to the contrary:
(i) the Holders may collectively exercise their rights to request
registration under this Section 2.2(a) on not more than one occasion
(such registration being referred to herein as the "Demand
Registration");
(ii) the method of disposition requested by Holders in connection
with any Demand Registration may not, without the Issuer's written
consent, be a Rule 415 Offering; and
(iii) the Issuer shall not be required to effect the Demand
Registration hereunder if all securities that were Registrable
Securities on the date hereof have ceased to be Registrable
Securities.
(b) Notwithstanding any other provision of this Agreement to the
contrary, a Demand Registration requested by Holders pursuant to this Section
2.2 shall not be deemed to have been effected, and, therefore, not requested and
the rights of each Holder shall be deemed not to have been exercised for
purposes of paragraph (a) above, (i) if such Demand Registration has not become
effective under the Securities Act or (ii) if such Demand Registration, after it
became effective under the Securities Act, was not maintained effective under
the Securities
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Act (other than as a result of any stop order, injunction or other order or
requirement of the Commission or other government agency or court solely on the
account of a material misrepresentation or omission of a Holder) for at least 30
days (or such shorter period ending when all the Registrable Securities covered
thereby have been disposed of pursuant thereto) and, as a result thereof, the
Registrable Securities requested to be registered cannot be distributed in
accordance with the plan of distribution set forth in the related registration
statement. So long as a Demand Request is made by the Holders within the 180-day
period referred to in Section 2.2(a), the Holders shall not lose their right to
their Demand Registration under Section 2.2 if the Demand Registration related
to such Demand Request is delayed or not effected in the circumstances set forth
in this clause (b).
(c) The Issuer shall have the right to cause the registration of
additional equity securities for sale for the account of the Issuer in the
registration of Registrable Securities requested by the Holders pursuant to
Section 2.2(a) above, provided that if such Holders are advised in writing
(with a copy to the Issuer) by the lead or managing underwriter referred to in
Section 2.3(b) that, in such underwriters good faith view, all or a part of such
Registrable Securities and additional equity securities cannot be sold and the
inclusion of such Registrable Securities and additional equity securities in
such registration would be likely to have an adverse effect on the price, timing
or distribution of the offering and sale of the Registrable Securities and
additional equity securities then contemplated, then the number of securities
that can, in the good faith view of such underwriter, be sold in such offering
without so adversely affecting such offering shall be allocated pro rata among
the requesting Holders and the Issuer on the basis of the relative number
requested to be included therein by the Issuer and each such Holder; provided
that in the event such a pro rata allocation shall be made in connection with
the Demand Request, the remaining Holders shall be entitled to request one
additional Demand Registration (without needing to make a Demand Request
therefor within the 180-day period referred to in Section 2.2(a); provided
further that in connection with such additional Demand Registration, if any, the
Issuer may not include additional securities therein for its own account if such
inclusion would result in any reduction in the Registrable Securities proposed
to be sold therein by the Holders. The Holders of the Registrable Securities to
be offered pursuant to paragraph (a) above may require that any such additional
equity securities be included by the Issuer in the offering proposed by such
Holders on the same conditions as the Registrable Securities that are included
therein.
(d) Within 7 days after delivery of a Demand Request by a Holder, the
Issuer shall provide a written notice to each Holder (or, if so requested by the
Issuer after appropriate notice to the Xxxx Holders' Agent by the Issuer, the
Xxxx Holders' Agent shall provide written notice to each Xxxx Xxxxxx),
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advising such Holder of its right to include any or all of the Registrable
Securities held by such Holder for sale pursuant to the Demand Registration and
advising such Holder of procedures to enable such Holder to elect to so include
Registrable Securities for sale in the Demand Registration. Any Holder may,
within 7 days of delivery to such Holder of a notice pursuant to this Section
2.2(d), elect to so include Registrable Securities in the Demand Registration by
written notice to such effect to the Issuer specifying the number of Registrable
Securities desired to be so included by such Holder.
SECTION 2.3 Other Matters In Connection With Registrations. (a) Each Xxxx
Xxxxxx shall keep the Xxxx Holders' Agent informed promptly (x) of the name,
address and other contact information of such Xxxx Xxxxxx, (y) of the number of
Registrable Securities held from time-to-time by such Xxxx Xxxxxx, and (z) of
each sale, transfer or other disposition of Registrable Securities (including
the number of shares sold) by each such Xxxx Xxxxxx. Each Holders' Agent shall
keep the Issuer informed promptly (x) of the name, address and other contact
information of each Holder for whom such Holders' Agent is acting as agent
hereunder, (y) of the number of Registrable Securities held from time-to-time by
each such Holder and (z) of each sale, transfer or other disposition of
Registrable Securities (including the number of shares sold) by each such
Holder.
(b) In the event that any public offering pursuant to this Agreement
shall involve, in whole or in part, an underwritten offering, the Issuer shall
have the right to designate an underwriter or underwriters as the lead or
managing underwriters of such underwritten offering who shall be reasonably
acceptable to Holders owning a majority of the Registrable Securities proposed
to be sold therein.
SECTION 2.4 Certain Delay Rights. Notwithstanding any other provision of
this Agreement to the contrary, if at any time while the Required Shelf
Registration is effective the Issuer provides written notice to each Holder
(whether by notice directly to such Holder or through the Holders' Agent acting
as agent for such Holder hereunder) that in the Issuer's good faith and
reasonable judgment it would be materially disadvantageous to the Issuer
(because the sale of Registrable Securities covered by such registration
statement or the disclosure of information therein or in any related prospectus
or prospectus supplement would materially interfere with any acquisition,
financing or other material event or transaction in connection with which a
registration of securities under the Securities Act for the account of the
Issuer is then intended or the public disclosure of which at the time would be
materially prejudicial to the Issuer) (a "Disadvantageous Condition") for sales
of Registrable Securities thereunder to then be permitted, and setting forth the
general reasons for such judgment, the Issuer may refrain from maintaining
current the prospectus contained in the Shelf Registration Statement until such
Disadvantageous Condition no longer exists (notice of which the Issuer shall
promptly deliver
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to each Holder (directly or through the applicable Holders' Agent)).
Furthermore, notwithstanding anything else contained in this Agreement, with
respect to any registration statement filed, or to be filed, pursuant to Section
2.2, if the Issuer provides written notice to each Holder (whether by notice
directly to such Holder or through the Holders' Agent acting as agent for such
Holder hereunder) that in the Issuer's good faith and reasonable judgment it
would be materially disadvantageous to the Issuer (because of a Disadvantageous
Condition) for such a registration statement to be maintained effective, or to
be filed and become effective, and setting forth the general reasons for such
judgment, the Issuer shall be entitled to cause such registration statement to
be withdrawn or the effectiveness of such registration statement terminated, or,
in the event no registration statement has yet been filed, shall be entitled not
to file any such registration statement, until such Disadvantageous Condition no
longer exists (notice of which the Issuer shall promptly deliver to each Holder
(directly or through the applicable Holders' Agent)). With respect to each
Holder, upon the receipt by such Holder of any such notice of a Disadvantageous
Condition (directly from the Issuer or through the applicable Holders' Agent)
(i) in connection with the Required Shelf Registration, such Holder shall
forthwith discontinue use of the prospectus and any prospectus supplement under
such registration statement and shall suspend sales of Registrable Securities
until such Disadvantageous Condition no longer exists and (ii) in connection
with the Required Shelf Registration or the Demand Registration, as applicable,
if so directed by the Issuer by notice as aforesaid, such Holder will deliver to
the Issuer all copies, other than permanent filed copies then in such Holder's
possession, of the prospectus and prospectus supplements then covering such
Registrable Securities at the time of receipt of such notice as aforesaid.
Notwithstanding anything else contained in this Agreement, (x) neither the
filing nor the effectiveness of any registration statement under Section 2.2 may
be delayed for more than a total of 60 days pursuant to this Section 2.4 and (y)
the maintaining current of a prospectus (and the suspension of sales of
Registrable Securities) in connection with the Required Shelf Registration may
not be delayed under this Section 2.4 for more than a total of 60 days in any
six-month period.
SECTION 2.5 Expenses. Except as provided herein, the Issuer shall pay all
Registration Expenses with respect to each registration hereunder.
Notwithstanding the foregoing, (i) each Holder and the Issuer shall be
responsible for its own internal administrative and similar costs, which shall
not constitute Registration Expenses, (ii) each Holder shall be responsible for
the legal fees and expenses of its own counsel (except as provided in clause
(viii) of the definition of Registration Expenses), (iii) each Holder shall be
responsible for all underwriting discounts and commissions, selling or placement
agent or broker fees and commissions, and transfer taxes, if any, in connection
with the sale of securities by such Holder, and (iv) the Holders shall be
jointly and severally responsible for
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all out-of-pocket costs and expenses of the Issuer and its officers and
employees incurred in connection with providing the assistance and/or attending
analyst or investor presentations or any "road show" undertaken in connection
with the registration and/or marketing of any Registrable Securities as
contemplated in Section 2.6(g).
SECTION 2.6 Registration and Qualification. If and whenever the Issuer is
required to effect the registration of any Registrable Securities under the
Securities Act as provided in Sections 2.1 or 2.2, the Issuer shall as promptly
as practicable (but subject to the provisions of Sections 2.1 and 2.2):
(a) prepare, file and cause to become effective a registration
statement under the Securities Act relating to the Registrable Securities to be
offered in accordance with the intended method of disposition thereof;
(b) prepare and file with the Commission 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 and
to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities (i) in the case of the Required Shelf
Registration, until the Shelf Termination Date and (ii) in the case of the
Demand Registration, until the earlier of (A) such time as all Registrable
Securities proposed to be sold therein have been disposed of in accordance with
the intended methods of disposition set forth in such registration statement and
(B) the expiration of 30 days after such registration statement becomes
effective, provided, that such 30-day period shall be extended for such number
of days that equals the number of days elapsing from (x) the date the written
notice contemplated by paragraph (e) below is given by the Issuer to (y) the
date on which the Issuer delivers to the Holders of Registrable Securities the
supplement or amendment contemplated by paragraph (e) below;
(c) furnish to the Holders of Registrable Securities and to any
underwriter of such Registrable Securities such number of conformed copies of
such registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the prospectus
included in such registration statement (including each preliminary prospectus,
in conformity with the requirements of the Securities Act, and such documents
incorporated by reference in such registration statement or prospectus, as the
Holders of Registrable Securities or such underwriter may reasonably request;
(d) furnish to any underwriter of such Registrable Securities an
opinion of counsel for the Issuer and a "cold comfort" letter signed by the
independent public accountants who have audited the financial statements of the
Issuer included in the applicable registration statement, in each such case
covering
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substantially such matters with respect to such registration statement (and the
prospectus included therein) and the related offering as are customarily covered
in opinions of issuer's counsel with respect thereto and in accountants' letters
delivered to underwriters in underwritten public offerings of securities and
such other matters as such underwriters may reasonably request;
(e) promptly notifying the Selling Holders in writing (i) at any time
when a prospectus relating to a registration pursuant to Section 2.1 or 2.2 is
required to be delivered under the Securities Act 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 a material fact or omits 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, and (ii) of any request by the Commission or any other
regulatory body or other body having jurisdiction for any amendment or
supplement to any registration statement or other document relating to such
offering, and in either such case, at the request of the Selling Holders prepare
and furnish to the Selling Holders a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading;
(f) use its reasonable best efforts to list all such Registrable
Securities covered by such registration on each securities exchange and
automated interdealer quotation system on which the Common Stock is then listed;
(g) use reasonable efforts to assist the Holders in the marketing of
Common Stock in connection with up to two underwritten offerings hereunder
(including, to the extent reasonably consistent with work commitments, using
reasonable efforts to have officers of the Issuer attend "road shows" and
analyst or investor presentations scheduled in connection with such
registration), with all out-of-pocket costs and expenses incurred by the Issuer
or such officers in connection with such attendance or assistance to be paid by
the Holders as provided in Section 2.5; and
(h) furnish for delivery in connection with the closing of any
offering of Registrable Securities pursuant to a registration effected pursuant
to Sections 2.1 or 2.2 unlegended certificates representing ownership of the
Registrable Securities being sold in such denominations as shall be requested by
the Selling Holders or the underwriters.
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SECTION 2.7 Underwriting; Due Diligence. (a) If requested by the
underwriters for any underwritten offering of Registrable Securities pursuant to
a registration requested under this Article II, the Issuer shall enter into an
underwriting agreement with such underwriters for such offering, which agreement
will contain such representations and warranties by the Issuer and such other
terms and provisions as are customarily contained in underwriting agreements
with respect to secondary distributions, including, without limitation,
indemnification and contribution provisions substantially to the effect and to
the extent provided in Section 2.8, and agreements as to the provision of
opinions of counsel and accountants' letters to the effect and to the extent
provided in Section 2.6(d). Such underwriting agreement shall also contain such
representations and warranties by such Selling Holders and such other terms and
provisions as are customarily contained in underwriting agreements with respect
to secondary distributions, including, without limitation, indemnification and
contribution provisions substantially to the effect and to the extent provided
in Section 2.8.
(b) In connection with the preparation and filing of each registration
statement registering Registrable Securities under the Securities Act pursuant
to this Article II, the Issuer shall give the Permitted Holders of such
Registrable Securities and the underwriters, if any, and their respective
counsel and accountants (the identity and number of whom shall be reasonably
acceptable to the Issuer), such reasonable and customary access to its books,
records and properties and such opportunities to discuss the business and
affairs of the Issuer with its officers and the independent public accountants
who have certified the financial statements of the Issuer as shall be necessary,
in the opinion of such Holders and such underwriters or their respective
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act; provided that the foregoing shall not require the Issuer to
provide access to (or copies of) any competitively sensitive information
relating to the Issuer or its Subsidiaries or their respective businesses;
provided further that (i) each Holder and the underwriters and their respective
counsel and accountants shall have entered into a confidentiality agreement
reasonably acceptable to the Issuer and (ii) the Permitted Holders and the
underwriters and their respective counsel and accountants shall use their
reasonable best efforts to minimize the disruption to the Issuer's business and
coordinate any such investigation of the books, records and properties of the
Issuer and any such discussions with the Issuer's officers and accountants so
that all such investigations occur at the same time and all such discussions
occur at the same time.
SECTION 2.8 Indemnification and Contribution. (a) The Issuer agrees to
indemnify and hold harmless each Selling Holder and each person, if any, who
controls each Selling Holder within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses,
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claims, damages and liabilities (including, without limitation, any legal or
other expenses reasonably incurred in connection with defending or investigating
any such action or claim) insofar as such losses, claims, damages or liabilities
are caused by any untrue statement or alleged untrue statement of a material
fact contained in any registration statement or any amendment thereof, any
preliminary prospectus or prospectus (as amended or supplemented if the Issuer
shall have furnished any amendments or supplements thereto) relating to the
Registrable Securities, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information furnished to the
Issuer in writing by a Selling Holder expressly for use therein. The Issuer also
agrees to indemnify any underwriter of the Registrable Securities so offered and
each person, if any, who controls such underwriter on substantially the same
basis as that of the indemnification by the Issuer of the Selling Holder
provided in this Section 2.8(a).
(b) Each Selling Holder agrees to indemnify and hold harmless the
Issuer, its directors, the officers who sign the registration statement and each
person, if any who controls the Issuer within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages, liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) insofar as such losses, claims, damages
or liabilities are caused by any untrue statement or alleged untrue statement of
a material fact contained in any registration statement or any amendment
thereof, any preliminary prospectus or prospectus (as amended or supplemented if
the Issuer shall have furnished any amendments or supplements thereto) relating
to the Registrable Securities, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, but only with reference to information
furnished in writing by a Selling Holder (or any representative thereof)
expressly for use in a registration statement, any preliminary prospectus,
prospectus or any amendments or supplements thereto. Each Selling Holder also
agrees to indemnify any underwriter of the Registrable Securities so offered and
each person, if any, who controls such underwriter on substantially the same
basis as that of the indemnification by such Selling Holder of the Issuer
provided in this Section 2.8(b).
(c) Each party indemnified under paragraph (a) or (b) above shall,
promptly after receipt of notice of a claim or action against such indemnified
party in respect of which indemnity may be sought hereunder, notify the
indemnifying party in writing of the claim or action; provided that the failure
to notify the indemnifying party shall not relieve it from any
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liability that it may have to an indemnified party on account of the indemnity
agreement contained in paragraph (a) or (b) above except to the extent that the
indemnifying party was actually prejudiced by such failure, and in no event
shall such failure relieve the indemnifying party from any other liability that
it may have to such indemnified party. If any such claim or action shall be
brought against an indemnified party, and it shall have notified the
indemnifying party thereof, unless based on the written advice of counsel to
such indemnified party a conflict of interest between such indemnified party and
indemnifying parties may exist in respect of such claim, the indemnifying party
shall be entitled to participate therein, and, to the extent that it wishes,
jointly with any other similarly notified indemnifying party, to assume the
defense thereof. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 2.8 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof. Any indemnifying party
against whom indemnity may be sought under this Section 2.8 shall not be liable
to indemnify an indemnified party if such indemnified party settles such claim
or action without the consent of the indemnifying party. The indemnifying party
may not agree to any settlement of any such claim or action, other than solely
for monetary damages for which the indemnifying party shall be responsible
hereunder, the result of which any remedy or relief shall be applied to or
against the indemnified party, without the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld. In any
action hereunder as to which the indemnifying party has assumed the defense
thereof, the indemnified party shall continue to be entitled to participate in
the defense thereof, with counsel of its own choice, but the indemnifying party
shall not be obligated hereunder to reimburse the indemnified party for the
costs thereof.
(d) If the indemnification provided for in this Section 2.8 shall for
any reason be unavailable (other than in accordance with its terms) to an
indemnified party in respect of any loss, liability, cost, claim or damage
referred to therein, then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, cost, claim or damage (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Issuer on the one hand and the Selling Holders on the other hand from the
offering of the Registrable Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the indemnifying party or parties on the
one hand and of the indemnified party or parties on the other hand in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the
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Issuer on the one hand and the Selling Holders on the other hand in connection
with the offering of the Registrable Securities shall be deemed to be in the
same respective proportions as the net proceeds from the offering of the
Registrable Securities (before deducting expenses) received by the Issuer and
the Selling Holders, respectively, bear to the aggregate public offering price
of the Registrable Securities. The relative fault of the Issuer on the one hand
and the Selling Holders on the other hand 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 Issuer or a Selling Holder and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by an indemnified party
as a result of the loss, cost, claim, damage or liability, or action in respect
thereof, referred to above in this paragraph (d) shall be deemed to include, for
purposes of this paragraph (d), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. The Issuer and the Selling Holders agree that it would not be
just and equitable if contribution pursuant to this Section 2.8 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 this paragraph.
Notwithstanding any other provision of this Section 2.8, no Selling Holder shall
be required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities of such Selling Holder were offered to
the public exceeds the amount of any damages which such Selling Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The obligations of the parties under this Section 2.8 shall be in
addition to any liability which any party may otherwise have to any other party.
SECTION 2.9 Holdback Agreement. If the Demand Registration pursuant to this
Article II shall be in connection with an underwritten public offering of
Registrable Securities, each Selling Holder agrees not to effect any sale or
distribution, including any sale under Rule 144, of any equity security of the
Issuer (otherwise than through the registered public offering then being made),
within 7 days prior to or 90 days (or such lesser period as the lead or managing
underwriters may permit) after the effective date of the applicable registration
statement.
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ARTICLE 3
MISCELLANEOUS
SECTION 3.1 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
SECTION 3.2 Assignment. No party may assign any of its rights or
obligations hereunder by operation of law or otherwise without the prior written
consent of the other parties.
SECTION 3.3 Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the Issuer and
Holders representing a majority of the Registrable Securities then held by all
Holders.
SECTION 3.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if given) by hand delivery or telecopy, or by
any courier service, such as Federal Express, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
address or telecopy number set forth on the signature pages hereto (unless such
contact information in the case of the Holders is updated pursuant to Section
2.3(a)).
SECTION 3.5 Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
SECTION 3.6 No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
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SECTION 3.7 No Third Party Beneficiaries. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any Person who or which
is not a party hereto.
SECTION 3.8 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of New York, without giving effect to
the principles of conflicts of law thereof.
SECTION 3.9 Jurisdiction. Each party hereby irrevocably submits to the
exclusive jurisdiction of the United States District Court for the Southern
District of New York or any state court sitting in the City of New York, Borough
of Manhattan in any action, suit or proceeding arising in connection with this
Agreement, and agrees that any such action, suit or proceeding shall be brought
only in such courts (and waives any objection based on forum non conveniens or
any other objection to venue therein); provided, however, that such consent to
jurisdiction is solely for the purpose referred to in this Section 3.9 and shall
not be deemed to be a general submission to the jurisdiction of said Courts or
in the State of New York other than for such purposes. Each party hereto hereby
waives any right to a trial by jury in connection with any such action, suit or
proceeding.
SECTION 3.10 Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 3.11 Xxxx Holders' Agent. Each Xxxx Xxxxxx hereby appoints
Xxxx/Chilmark Fund, L.P. as its agent and attorney-in-fact (the "Xxxx Holders'
Agent") for purposes of the delivery and receipt of all notices and requests
pursuant to this Agreement. The Issuer may give notice to any Xxxx Xxxxxx
hereunder by giving such notice directly to such Xxxx Xxxxxx. Alteratively, the
Issuer may request that the Xxxx Holders' Agent deliver to each Xxxx Xxxxxx any
notice given by the Issuer hereunder, in which event the Xxxx Holders' Agent
will promptly so give such notice to each Xxxx Xxxxxx. Prompt delivery by the
Xxxx Holders' Agent to the Xxxx Holders will be deemed satisfied if delivery is
made to the Xxxx Holders, in accordance with Section 3.4, not later than the
third business day after actual receipt of the applicable notice or document by
the Xxxx Holders' Agent from the Issuer. Notwithstanding anything else contained
herein, the Xxxx Holders' Agent will not be liable or responsible to any Person
should any Xxxx Xxxxxx fail to act in accordance with any notice so given to
such Xxxx Xxxxxx hereunder.
SECTION 3.12 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
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IN WITNESS WHEREOF, the Issuer and the Holders have caused this Agreement
to be duly executed as of the day and year first above written.
XXXX XXXXX, INC.
By: XXXXX X. XXXXX
-----------------------------------
Name: Xxxxx X. Xxxxx
Title: Senior Vice President
Holders
-------
XXXX/CHILMARK FUND, L.P.
By: ZC Limited Partnership, general
partner
By: ZC Partnerships, general partner
By: ZC Inc., a partner
By: XXXXXX X. XXXXXXXXXXX
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: Vice President
Address:
XXXXXX XXXXX
------------------------------------------
Name: Xxxxxx Xxxxx
Address:
