INVESTORS’ RIGHTS AGREEMENT
INVESTORS’
RIGHTS AGREEMENT
(this
“Agreement”),
dated
as of August 9, 2006, by and among Xxxx Xxxxxx and Company, Inc., a New Jersey
corporation, with headquarters located at 000 Xxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx
00000 (the “Company”),
and
the undersigned Buyers (as defined below).
WHEREAS:
A. In
connection with (i) the Amended and Restated Share Purchase Agreement (the
“Prentice
Securities Purchase Agreement”),
dated
as of August 9, 2006, by and among The Xxxxxxx Xxxxxx Foundation as the
seller
(the “Seller”)
and
the Prentice Buyers (defined as each entity on the signature pages hereto
identified as “Prentice Buyers”) and (ii) the Share Purchase Agreement (the
"Laminar
Securities Purchase Agreement"
and
together with the Prentice Securities Purchase Agreement, the "Securities
Purchase Agreements"),
dated
as of August 9, 2006, by and among the Seller and the Laminar Buyers (defined
as
each entity on the signature pages hereto identified as “Laminar Buyers”, and
collectively with the Prentice Buyers, the “Buyers”),
the
Seller has agreed, upon the terms and subject to the conditions set forth
in the
Securities Purchase Agreements, to sell to each Buyer shares of the Company’s
common stock, $0.10 stated value per share (the “Common
Stock”,
as
acquired by the Buyers from the Seller pursuant to the Securities Purchase
Agreements, the “Acquired
Shares”).
B. In
order
to induce the Buyers to enter into their respective Securities Purchase
Agreements, the Company has agreed to (i) nominate and facilitate the
election of up to two (2) designees of Prentice (defined below) and two
(2)
designees of Laminar (as defined below) to serve as directors of the Company
following the purchase of the Acquired Shares, and (ii) provide certain
registration rights to specified persons under the Securities Act of 1933,
as
amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, the “1933
Act”),
and
applicable state securities laws, subject in each case to the terms and
conditions set forth herein.
NOW,
THEREFORE,
in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the Company and each of the Buyers hereby agree as
follows:
I.
Board
Composition
1. Prentice
Directors.
a. Subject
to any limitations imposed by stock exchange rules in effect from time to
time
applicable to the Company, the Company agrees to cause two persons designated
by
Prentice Capital Management, L.P. (“Prentice”)
to be
nominated for election at every meeting of the stockholders of the Company
called with respect to the election of members of the board of directors
of the
Company, and at every adjournment or postponement thereof, and on every action
or approval by written consent of the stockholders or the board of directors
with respect to the election of members of the board of directors of the
Company
(a “Prentice
Director”);
provided
that at
any time that Prentice shall have the right under this Section I.1(a) to
designate more than one Prentice Director, at least one of such designees
shall
be an Independent Director (as defined in Exhibit A hereto). Should a person
designated pursuant to this Section I.1(a) be unwilling or unable to serve,
or
otherwise cease to serve, the Company shall cause persons designated by Prentice
(subject to the provisions of Section I.1 and I.3(a)) to replace such member
on
the board of directors. If Prentice desires to remove any Prentice Director,
the
Company shall cooperate with and shall support such removal and any vacancy
shall be filled in accordance with the preceding sentence; provided that
Prentice reimburses the Company for all costs (including, but not limited
to,
attorneys’ fees) incurred by it in connection with such removal, the special
meeting of stockholders called to consider such removal and the solicitation
of
proxies for such meeting, in each case in the event that such special meeting
or
solicitation of proxies was undertaken by the Company at the request of Prentice
and would not otherwise have been held.
b. Notwithstanding
anything herein to the contrary:
(i) If,
at
any time, the aggregate number of shares of the Common Stock held by the
Prentice Buyers and their affiliates falls below 2,600,000 shares (as adjusted
to reflect any stock split, stock dividend or other distributions or
recapitalizations made by the Company to holders of the Common Stock), then
the
number of directors that Prentice may designate in accordance with Section
I.1(a) above shall be permanently decreased to one.
(ii) If,
at
any time, the aggregate number of shares of the Common Stock held by the
Prentice Buyers and their affiliates falls below 1,500,000 shares (as adjusted
to reflect any stock split, stock dividend or other distributions or
recapitalizations made by the Company to holders of the Common Stock), then
Prentice shall cease to have any rights under this Section I.1 and the Company
shall not be obligated to nominate or facilitate the election of any designee
of
Prentice.
c. The
right
to designate Prentice Directors is personal to Prentice and may not be assigned
except in its entirety to an affiliate of Prentice or any Prentice
Buyer.
2. Laminar
Directors.
a. Subject
to any limitations imposed by stock exchange rules in effect from time to
time
applicable to the Company, the Company agrees to cause two persons designated
by
X. X. Xxxx Laminar Portfolios, L.L.C. (“Laminar”)
to be
nominated for election at every meeting of the stockholders of the Company
called with respect to the election of members of the board of directors
of the
Company, and at every adjournment or postponement thereof, and on every action
or approval by written consent of the stockholders or the board of directors
with respect to the election of members of the board of directors of the
Company
(a “Laminar
Director”);
provided
that at
any time that Laminar shall have the right under this Section I.2(a) to
designate more than one Laminar Director, at least one of such designees
shall
be an Independent Director (as defined in Exhibit A hereto). Should a person
designated pursuant to this Section I.2(a) be unwilling or unable to serve,
or
otherwise cease to serve, the Company shall cause persons designated by Laminar
(subject to the provisions of Section I.2 and I.3(a)) to replace such member
on
the board of directors. If Laminar desires to remove any Laminar Director,
the
Company shall cooperate with and shall support such removal and any vacancy
shall be filled in accordance with the preceding sentence; provided that
Laminar
reimburses the Company for all costs (including, but not limited to, attorneys’
fees) incurred by it in connection with such removal, the special meeting
of
stockholders called to consider such removal and the solicitation of proxies
for
such meeting, in each case in the event that such special meeting or
solicitation of proxies was undertaken by the Company at the request of Laminar
and would not otherwise have been held.
b. Notwithstanding
anything herein to the contrary:
(i) If,
at
any time, the aggregate number of shares of the Common Stock held by the
Laminar
Buyers and their affiliates falls below 2,600,000 shares (as adjusted to
reflect
any stock split, stock dividend or other distributions or recapitalizations
made
by the Company to holders of the Common Stock), then the number of directors
that Laminar may designate in accordance with Section I.2(a) above shall
be
permanently decreased to one.
(ii) If,
at
any time, the aggregate number of shares of the Common Stock held by the
Laminar
Buyers and their affiliates falls below 1,500,000 shares (as adjusted to
reflect
any stock split, stock dividend or other distributions or recapitalizations
made
by the Company to holders of the Common Stock), then Laminar shall cease
to have
any rights under this Section I.2 and the Company shall not be obligated
to
nominate or facilitate the election of any designee of Laminar.
c. The
right
to designate Laminar Directors is personal to Laminar and may not be assigned
except in its entirety to an affiliate of Laminar or any Laminar
Buyer.
3. Company
Obligations.
a. Notwithstanding
anything herein to the contrary, the Company shall not be obligated to cause
to
be nominated for election to the board of directors of the Company or to
recommend to the stockholders the election of any designee of Prentice or
Laminar (i) who fails to submit to the Company on a timely basis such
questionnaires as the Company may require of its directors generally and
such
other information as the Company may reasonably request or (ii) if the board
of
directors of the Company or the nominating committee thereof determines in
good
faith that such action would be inconsistent with its fiduciary duties or
applicable law; provided, that in the event that the board of directors of
the
Company or the nominating committee shall determine in good faith that such
action would be inconsistent with its fiduciary duties, the Company shall
promptly notify Prentice or Laminar, as applicable, of the basis for such
belief
and, to the extent that the Board of Directors of the Company or the
Nominating/Governance Committee of the Board of Directors of the Company
continues to believe that such action is inconsistent with its fiduciary
duties,
shall permit Prentice or Laminar, as applicable, to provide an alternate
nominee
or nominees sufficiently in advance of the meeting of the stockholders called
with respect to such nominees.
b. At
any
time that Prentice or Laminar shall have the right to nominate any director(s)
pursuant to this Section I, the Company shall not take any action to change
the
size of the entire board of directors of the Company from nine persons,
including, without limitation, by way of amendment of its bylaws or certificate
of incorporation.
c. No
later
than August 31, 2006, the Company shall take all reasonable action within
its
control to cause the Board of Directors of the Company to be comprised of
nine
(9) members, including two (2) Prentice Directors and two (2) Laminar Directors
in accordance with Sections I.1(a) and I.2(a) hereof.
II. Registration
Rights
1. Definitions
.
As
used
in this Agreement, the following terms shall have the following
meanings:
a. "1934
Act"
means
the Securities Exchange Act of 1934, as amended.
b. “Business
Day”
means
any day other than Saturday, Sunday or any other day on which commercial
banks
in the City of New York are authorized or required by law to remain
closed.
c. “Closing
Date”
shall
have the meaning set forth in the Securities Purchase Agreements.
d. “Effective
Date”
means
the date the Registration Statement is declared effective by the
SEC.
e. “Incidental
Registration”
shall
mean a registration required to be effected by the Company pursuant to Section
II.2(b).
f. “Investor”
means
a
Buyer, for so long as it shall hold Registrable Securities or any transferee
or
assignee thereof to whom a Buyer assigns its rights under this Agreement
and who
agrees to become bound by the provisions of this Agreement in accordance
with
Section II.9 and any transferee or assignee thereof to whom a transferee
or
assignee assigns its rights under this Agreement and who agrees to become
bound
by the provisions of this Agreement in accordance with Section
II.9.
g. "Laminar
Investor"
means
an Investor that is a Laminar Buyer or a permitted transferee or assignee
thereof.
h. “Participating
Stockholders”
has
the
meaning ascribed to it in Section II.2(a)(v).
i. “Person”
means
an individual, a limited liability company, a partnership, a joint venture,
a
corporation, a trust, an unincorporated organization and a government or
any
department or agency thereof.
j. "Prentice
Investor"
means
an Investor that is a Prentice Buyer or a permitted transferee or assignee
thereof.
k. “register,”
“registered,”
and
“registration”
refer
to a registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415 and the
declaration or ordering of effectiveness of such Registration Statement(s)
by
the SEC.
l. “Registrable
Securities”
means
(i) the Acquired Shares and (ii) any capital stock of the Company
issued or issuable with respect to the Acquired Shares as a result of any
stock
split, stock dividend, recapitalization, exchange or similar event or otherwise,
excluding (i) any such securities sold under any effective registration
statement, (ii) any such securities sold pursuant to Rule 144 under the
1933 Act or (iii) any such securities held by any Investor if all of such
shares held by such Person may be sold without restriction by reason of Rule
144(k) under the 1933 Act or any other rule or statute of similar effect
allowing for the unrestricted resale of such shares without registration
under
the 1933 Act.
m. “Registration
Expenses”
shall
mean all expenses incident to the Company’s performance of or compliance with
this Agreement, including without limitation, all registration and filing
fees,
fees and expenses incident to the Company’s or any Investor’s performance of or
compliance with any registration or proposed registration under this Agreement
(whether or not any of the registration statements in connection therewith
become effective), fees and expenses of compliance with securities or blue
sky
laws, printing expenses, messenger and delivery expenses, fees and expenses
for
listing or quoting the Registrable Securities on each securities exchange
or
automated quotation on which similar securities issued by the Company are
then
listed or quoted, and fees and disbursements of (i) counsel for the Company,
the
underwriters, or any Investor, (ii) any transfer agent, (iii) all independent
certified public accountants incidental to or required by any registration
under
this Agreement (including “cold comfort” letter and audit fees that would not
have been incurred but for a registration pursuant to this Agreement), (iv)
underwriters and (v) other persons retained by the Company, the underwriters
or
any Investor in connection with any registration under this Agreement.
Registration Expenses shall include any underwriters’ discounts or commissions
or brokers’ fees or fees of similar securities industry professionals and any
transfer taxes relating to the disposition of the Registrable Securities
by any
Investors. Notwithstanding the foregoing, Registration Expenses shall not
include an allocation of internal expenses of the Company (including salaries
and expenses of the Company’s officers and employees).
n. “Registration
Request”
has
the
meaning ascribed to it in Section II.2(a) hereof.
o. “Registration
Statement”
means
a
registration statement or registration statements of the Company filed under
the
1933 Act covering the Registrable Securities.
p. “Requesting
Stockholders”
has
the
meaning ascribed to it in Section II.2(a) hereof.
q. “Rule
415”
means
Rule 415 under the 1933 Act or any successor rule providing for offering
securities on a continuous or delayed basis.
r. “SEC”
means
the United States Securities and Exchange Commission.
s. “Underwriters”
shall
mean the underwriters, if any, of the offering being registered under the
1933
Act.
t. “Underwritten
Offering”
shall
mean a sale of securities of the Company to an Underwriter or Underwriters
for
reoffering to the public.
2. Registration.
a. Demand
Registration.
(i)
Subject in all cases to Section II.2(a)(iii) below, at any time beginning
on
June 1, 2007, if the Company shall have been requested in writing (a
“Registration
Request”)
by a
Prentice Investor or a Laminar Investor to effect the registration under
the
1933 Act of shares of Registrable Securities (the “Requesting
Stockholders”),
then
the Company shall:
(1) within
ten (10) days of the receipt of such Registration Request (but in no event
prior
to June 1, 2007), give written notice of such request to all Investors other
than the Requesting Stockholders describing the terms of such request;
and
(2) use
its
reasonable efforts to file, as soon as practicable on or after June 1, 2007,
a
Registration Statement under the 1933 Act for the sale of (x) all Registrable
Securities for which the Requesting Stockholders shall have requested
registration under this Section II.2(a) and (y) all other Registrable Securities
that any Investors with rights to request registration under Section II.2(b)
have requested the Company include in such registration by request received
by
the Company within 15 days after such Persons receive the Company’s notice,
subject to the limitation of paragraph (v) below.
(ii) Any
Registration Request will specify (i) the number of Registrable Securities
proposed to be sold and (ii) the intended method of distribution
thereof.
(iii) Notwithstanding
the provisions of Section II.2(a)(i), the Company shall not be obligated
to file
or cause to become effective any Registration Statement relating to a
Registration Request unless Investors holding at least two-thirds of the
outstanding Registrable Securities shall have elected to participate in such
offering pursuant to such Registration Statement, and such registration shall
include at least 1,000,000 shares of Registrable Securities. In addition,
notwithstanding the provisions of Section II.2(a)(i), the Company shall not
be
obligated to file and cause to become effective more than three Registration
Statements pursuant to Section II.2(a)(i). In addition, notwithstanding the
provisions of Section II.2(a)(i), the Company shall not be obligated to file
a
Registration Statement relating to any Registration Request: (A) within a
period
of 60 days after the effective date of any other registration statement of
the
Company (other than a registration statement on Form S-4 or S-8 or any successor
or other form hereafter promulgated for similar purposes) or (B) while a
registration statement contemplated by Section 2(d) is effective under the
1933
Act. A Registration Statement shall not be counted for purposes of the foregoing
until such time as such Registration Statement has been declared effective
by
the Commission.
(iv) The
Company
shall select the registration statement form for any registration pursuant
to
Section II.2(a)(i); provided that the prospectus included in a Registration
Statement for an Underwritten Offering shall include such information required
by Form S-1 (or any successor form) as the managing Underwriters may reasonably
request.
(v) In
the event
of an Underwritten Offering, the Company, together with all Investors proposing
to distribute their securities through such underwriting in accordance with
this
Agreement (the “Participating
Stockholders”),
shall
enter into an underwriting agreement in customary form and reasonably
satisfactory to the Company with the managing Underwriter(s) selected for
such
underwriting by the Requesting Stockholders, which Underwriter(s) shall be
reasonably acceptable to the Company. Notwithstanding any other provision
hereof, if the managing Underwriter(s) advises the Company and the Participating
Stockholders in writing that because the number of shares requested by the
Participating Stockholders to be included in the registration exceeds the
number
which can be sold in an orderly manner in such offering within a price range
acceptable to the Requesting Stockholders or that marketing factors require
a
limitation of the number of shares to be underwritten on behalf of the
Participating Stockholders (the “Underwritten
Registration Cutback”),
and
such Underwritten Registration Cutback results in less than all of the
Registrable Securities of the Participating Stockholders that are requested
to
be included in such registration to actually be included in such registration,
then the Company will include in such registration, a number of shares which
the
Company is so advised can be sold in (or during the time of) such offering
without such interference or affect on the price or sale, such number of
Registrable Securities shared pro rata among all of the Participating
Stockholders based on the total number of Registrable Securities held by
each
such Participating Stockholder and shall not include any securities of any
other
Person, including without limitation the Company.
b. Incidental
Registration.
(1)
If the
Company at any time proposes to register securities under the Securities
Act
(other than a registration on Form S-4 or S-8 or any similar or successor
form
to such forms) whether or not pursuant to registration rights granted to
other
holders of its securities and whether or not for sale for its account, the
Company shall deliver prompt written notice to the Investors of its intention
to
undertake such registration, describing in reasonable detail the proposed
registration and distribution and of such Investor’s right to participate in
such registration under this Section II.2(b) as hereinafter provided. Subject
to
the other provisions of this Section II.2(b), upon the written request of
each
Investor made within 7 days after the receipt of such written notice (which
request shall specify the amount of Registrable Securities to be registered
on
behalf of such Investor and the intended method of disposition thereof),
the
Company shall use its reasonable efforts to effect the registration under
the
1933 Act of all Registrable Securities requested by Investors to be so
registered (an “Incidental
Registration”),
to
the extent requisite to permit the disposition (in accordance with the intended
methods thereof as aforesaid) of the Registrable Securities so to be registered,
by inclusion of such Registrable Securities in the Registration Statement
which
covers the securities which the Company proposes to register. Each Investor
may,
at any time at least two Business Day’s prior to the effective date of the
Registration Statement (and for any reason), revoke such request by delivering
written notice to the Company revoking such requested inclusion.
(2) If
at any
time after giving written notice of its intention to register any securities
and
prior to the effective date of the Registration Statement filed in connection
with such Incidental Registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company
may, at
its election, give written notice of such determination to each participating
Investor and, thereupon, (A) in the case of a determination not to register,
the
Company shall be relieved of its obligation to register any Registrable
Securities in connection with such registration and (B) in the case of a
determination to delay such registration, the Company shall be permitted
to
delay the registration of such Registrable Securities for the same period
as the
delay in registering such other securities.
(3) If
an
Incidental Registration involves an Underwritten Offering, and the sole or
the
lead managing Underwriter, as the case may be, of such Underwritten Offering
shall advise the Company in writing (with a copy to each Investor requesting
registration) that, in its opinion, the amount of securities (including
Registrable Securities) requested to be included in such registration exceeds
the amount which can be sold in such offering without interfering with the
successful marketing of the securities being offered (such writing to state
the
approximate number of such securities which may be included in such offering
without such effect), or, in the case of an Incidental Registration not
involving an Underwritten Offering, the Company shall reasonably determine
(and
notify the Investors), after consultation with an investment banking firm,
that
the amount of securities (including Registrable Securities) proposed to be
sold
in such offering exceeds the number which can be sold in such offering within
a
price range acceptable to the Company, the Company shall include in such
registration, to the extent of the number which the Company is so advised
may be
included in such offering without such effect, (i) in the case of a registration
initiated by the Company, (A) first, the securities that the Company proposes
to
register for its own account, (B) second, the Registrable Securities requested
to be included in such registration by the Investors, allocated pro rata
in
proportion to the number of Registrable Securities requested to be included
in
such registration by each of them, and (C) third, other securities of the
Company to be registered on behalf of any other Person, allocated pro rata
in
proportion to the number of securities requested to be included in such
registration by each of them; and (ii) in the case of a registration initiated
by a Person(s) other than the Company or the Investors, (A) first, the
securities of the Company to be registered on behalf of such initiating
Person(s), (B) second, the securities that the Company proposes to register
for
its own account, and (C) third, Registrable Securities requested to be included
in such registration by the Investors and other securities requested to be
included by any other Person, allocated pro rata
in
proportion to the number of securities requested to be included in such
registration by each of them.
(4) If
the
Incidental Registration is, in whole or in part, an Underwritten Offering,
any
request by Investors under this Section II.2(b) must specify that the
Registrable Securities be included in the underwriting on the same terms
and
conditions as the securities of the Company otherwise being sold through
Underwriters under such registration.
c. Legal
Counsel.
The Prentice Investors and the Laminar Investors shall each have the right,
as
applicable, to select one legal counsel to review and oversee any registration
pursuant to this Section II.2 (the "Prentice
Legal Counsel"
and the
"Laminar
Legal Counsel",
respectively, and collectively, “Legal
Counsel”).
The
Company and Legal Counsel shall reasonably cooperate with each other in
performing the Company’s obligations under this Agreement.
d. Form
S-3 Registration.
(i) In
case
the Company shall receive from any Investor(s) holding 25 percent (25%) of
the
Registrable Securities then outstanding a written request or requests that
the
Company effect a registration on Form S-3 (or any successor to Form S-3)
or any
similar short-form registration statement and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned
by
such Investor(s), the Company will:
(1)
within ten (10)
days of the receipt thereof, give written notice of such request to all
Investors; and
(2)
as soon as
practicable, use its reasonable efforts to effect such registration and all
such
qualifications and compliances as may be so requested and as would permit
or
facilitate the sale and distribution of all or such portion of such Investors’
Registrable Securities as are specified in such request, together with all
or
such portion of the Registrable Securities of any other Investor joining
in such
request as are specified in a written request given within fifteen (15) days
after receipt of such written notice from the Company; provided,
however,
that
the Company shall not be obligated to effect any such registration,
qualification or compliance pursuant to this paragraph (d):
(A)
if
Form S-3 is not available to the Company or for such offering by the
Investors,
(B)
if the
Investors, together with the holders of any other securities of the Company
entitled to inclusion in such registration, propose to sell Registrable
Securities and such other securities (if any) at an aggregate price to the
public of less than five hundred thousand dollars ($500,000), or
(C)
if the
Company has, within the twelve (12) month period preceding the effective
date of
such registration, already effected a registration on Form S-3 for the Investors
pursuant to this paragraph (d) (such twelve month period commencing on the
date
such prior registration statement ceased to be effective or all Registrable
Securities covered thereby were sold).
3. Related
Obligations.
At
such
time as the Company is obligated to file a Registration Statement with the
SEC
pursuant to Section II.2(a), II.2(b) or II.2(d), the Company will use its
reasonable efforts to effect the registration of the Registrable Securities
in
accordance with the intended method of disposition thereof and, pursuant
thereto, the Company shall have the following obligations:
a. The
Company shall promptly prepare and file with the SEC a Registration Statement
with respect to the Registrable Securities and use its reasonable efforts
to
cause such Registration Statement relating to the Registrable Securities
to
become effective as soon as practicable after such filing. The Company shall
keep each Registration Statement effective pursuant to Rule 415 at all times
until the earlier of, as applicable, (i) 120 days (or, in the case of a shelf
registration, until the date as of which the Investors may sell all of the
Registrable Securities covered by such Registration Statement without
restriction pursuant to Rule 144(k) (or any successor thereto) promulgated
under
the 0000 Xxx) after the Effective Date or (ii) the date on which the Investors
shall have sold all of the Registrable Securities covered by such Registration
Statement (the “Registration
Period”).
The
term “reasonable efforts” shall include, that the Company shall submit to the
SEC, as soon as is practicable after the later of the date that (i) the Company
learns that no review of a particular Registration Statement will be made
by the
staff of the SEC or that the staff has no further comments on a particular
Registration Statement, as the case may be, and (ii) the approval of applicable
Legal Counsel pursuant to Section II.3(c) (which approval is promptly sought),
a
request for acceleration of effectiveness of such Registration
Statement.
b. The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and
the
prospectus used in connection with such Registration Statement, as may be
necessary to keep such Registration Statement effective at all times during
the
Registration Period.
c. The
Company shall permit applicable Legal Counsel to review and comment upon
(i) a
Registration Statement at least three Business Days prior to its filing with
the
SEC and (ii) all amendments and supplements to all Registration Statements
(except for Annual Reports on Form 10-K and Reports on Form 10-Q and any
similar
or successor reports) within a reasonable number of days prior to their filing
with the SEC. The Company shall not submit a request for acceleration of
the
effectiveness of a Registration Statement or any amendment or supplement
thereto
without the prior approval of applicable Legal Counsel, which consent shall
not
be unreasonably withheld. The Company shall furnish to applicable Legal Counsel,
without charge, (i) copies of any correspondence from the SEC or the staff
of
the SEC to the Company or its representatives relating to any Registration
Statement, (ii) promptly after the same is prepared and filed with the SEC,
one
copy of any Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by
reference, if requested by a participating Investor, and all exhibits (excluding
unredacted copies of exhibits for which confidential treatment is sought)
and
(iii) upon the effectiveness of any Registration Statement, one copy of the
prospectus included in such Registration Statement and all amendments and
supplements thereto. The Company shall reasonably cooperate with applicable
Legal Counsel in performing the Company’s obligations pursuant to Section
II.3.
d. The
Company shall furnish to each Investor whose Registrable Securities are included
in any Registration Statement, without charge, (i) promptly after the same
is
prepared and filed with the SEC, at least one copy of such Registration
Statement and any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference, if requested
by an
Investor, all exhibits (excluding unredacted copies of exhibits for which
confidential treatment is sought) and each preliminary prospectus, (ii) upon
the
effectiveness of any Registration Statement, such number of copies of the
prospectus included in such Registration Statement and all amendments and
supplements thereto as such Investor may reasonably request and (iii) such
other
documents, including copies of any preliminary or final prospectus, as such
Investor may reasonably request from time to time in order to facilitate
the
disposition of the Registrable Securities owned by such Investor.
e. The
Company shall use its reasonable efforts to (i) register and qualify, unless
an
exemption from registration and qualification applies, the resale by Investors
of the Registrable Securities covered by a Registration Statement under such
other securities or “blue sky” laws of such jurisdictions in the United States
specified in writing by any Investor, (ii) prepare and file in those
jurisdictions, such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary
to
maintain the effectiveness thereof during the Registration Period, and (iii)
take such other actions as may be necessary to maintain such registrations
and
qualifications in effect at all times during the Registration Period;
provided,
however, that the Company shall not be required in connection therewith or
as a
condition thereto to (x) qualify to do business in any jurisdiction where
it
would not otherwise be required to qualify but for this Section II.3(e),
(y)
subject itself to general taxation in any such jurisdiction, or (z) file
a
general consent to service of process in any such jurisdiction. The Company
shall promptly notify applicable Legal Counsel and each participating Investor
of the receipt by the Company of any notification with respect to the suspension
of the registration or qualification of any of the Registrable Securities
for
sale under the securities or “blue sky” laws of any such jurisdiction or its
receipt of notice of the initiation or threatening of any proceeding for
such
purpose.
f. The
Company shall notify applicable Legal Counsel and each Investor in writing
of
the happening of any event, as promptly as practicable after becoming aware
of
such event, as a result of which the prospectus included in a Registration
Statement, as then in effect, includes an untrue statement of a material
fact or
omission to state a material fact required to be stated therein or necessary
to
make the statements therein, in the light of the circumstances under which
they
were made, not misleading (provided that in no event shall such notice contain
any material, nonpublic information), and, subject to Section 4(c), promptly
prepare a supplement or amendment to such Registration Statement to correct
such
untrue statement or omission, and deliver ten (10) copies of such supplement
or
amendment to applicable Legal Counsel and each Investor (or such other number
of
copies as applicable Legal Counsel or such Investor may reasonably request).
Each Investor shall immediately discontinue any offer or sale of Registrable
Securities upon receipt of such a notice. The Company shall also promptly
notify
applicable Legal Counsel and each participating Investor in writing (i) when
a
prospectus or any prospectus supplement or post-effective amendment has been
filed, and when a Registration Statement or any post-effective amendment
has
become effective (by facsimile or e-mail), (ii) of any request by the SEC
for
amendments or supplements to a Registration Statement or related prospectus
or
related information, and (iii) of the Company’s reasonable determination that a
post-effective amendment to a Registration Statement would be
appropriate.
g. The
Company shall use its reasonable efforts to prevent the issuance of any stop
order or other suspension of effectiveness of a Registration Statement, or
the
suspension of the qualification of any of the Registrable Securities for
sale in
any jurisdiction for which such qualification has been requested and, if
such an
order or suspension is issued, to use its reasonable efforts to obtain the
withdrawal of such order or suspension and to notify applicable Legal Counsel
and each Investor who holds Registrable Securities being sold of the issuance
of
such order and the resolution thereof or its receipt of notice of the initiation
or threat of any proceeding for such purpose. Each Investor shall immediately
discontinue any offer or sale of Registrable Securities upon receipt of such
a
notice.
h. If
any
Investor is deemed to be, alleged to be or reasonably believes may be deemed
or
alleged to be, an underwriter or is required under applicable securities
laws to
be described in the Registration Statement as an underwriter, at the reasonable
request of any Investor, the Company shall use commercially reasonable efforts
(which shall include requesting that the Company's independent certified
accountant and counsel representing the Company furnish to such Investor)
to
furnish to such Investor, on the date of the effectiveness of the Registration
Statement and thereafter from time to time on such dates as an Investor may
reasonably request (i) a letter, dated such date, from the Company's independent
certified public accountants in form and substance as is customarily given
by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the Investors, and (ii) an opinion, dated as
of
such date, of counsel representing the Company for purposes of such Registration
Statement, in form, scope and substance as is customarily given in an
underwritten public offering, addressed to the Investors.
i. Upon
the
written request of any participating Investor in connection with such Investor’s
due diligence requirements, if any, the Company shall make available for
inspection by (i) such Investor, (ii) applicable Legal Counsel and (iii)
one
firm of accountants or other agents retained by the Investors (collectively,
the
“Inspectors”),
all
pertinent financial and other records, and pertinent corporate documents
and
properties of the Company (collectively, the “Records”),
as
shall be reasonably deemed necessary by each Inspector, and cause the Company’s
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that (i) such request shall not
unreasonably interfere with the business of the Company and (ii) each Inspector
shall agree to hold in strict confidence and shall not make any disclosure
(except to an Investor) or use of any Record or other information which the
Company determines in good faith to be confidential, and of which determination
the Inspectors are so notified, unless (a) the disclosure of such Records
is
necessary to avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the 1933 Act, (b) the release of
such
Records is ordered pursuant to a final, non-appealable subpoena or order
from a
court or government body of competent jurisdiction, or (c) the information
in
such Records has been made generally available to the public other than by
disclosure in violation of this Agreement or any applicable confidentiality
agreement. Each Investor agrees that it shall, upon learning that disclosure
of
such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and
allow
the Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein (or in any other confidentiality agreement between
the Company and any Investor) shall be deemed to limit the Investors’ ability to
sell Registrable Securities in a manner which is otherwise consistent with
applicable laws and regulations.
j. The
Company shall hold in confidence and not make any disclosure of information
concerning an Investor provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws,
(ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release
of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available
to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure
of
such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give
prompt
written notice to such Investor and allow such Investor, at the Investor’s
expense, to undertake appropriate action to prevent disclosure of, or to
obtain
a protective order for, such information.
k. The
Company shall use its reasonable efforts to cause all of the Registrable
Securities covered by a Registration Statement to be listed on each securities
exchange on which securities of the same class or series issued by the Company
are then listed, if any, if the listing of such Registrable Securities is
then
permitted under the rules of such exchange.
l. The
Company shall cooperate with participating Investors and, to the extent
applicable, facilitate the timely preparation and delivery of certificates
(not
bearing any restrictive legend) representing the Registrable Securities to
be
offered pursuant to a Registration Statement and enable such certificates
to be
in such denominations or amounts, as the case may be, as the Investors may
reasonably request and registered in such names as the managing Underwriter,
if
any, or such Investors may request.
m. If
reasonably requested by an Investor, the Company shall (i) as soon as
practicable incorporate in a prospectus supplement or post-effective amendment
such information as an Investor reasonably requests to be included therein
relating to the sale and distribution of Registrable Securities, including,
without limitation, information with respect to the number of Registrable
Securities being offered or sold, the purchase price being paid therefor
and any
other terms of the offering of the Registrable Securities to be sold in such
offering; and (ii) as soon as practicable make all required filings of such
prospectus supplement or post-effective amendment after being notified of
the
matters to be incorporated in such prospectus supplement or post-effective
amendment.
n. The
Company shall otherwise use its reasonable efforts to comply with all applicable
rules and regulations of the SEC in connection with any registration
hereunder.
o. Within
two (2) Business Days after a Registration Statement which covers Registrable
Securities is ordered effective by the SEC, the Company shall deliver, to
the
transfer agent for such Registrable Securities (with copies to the Investors
whose Registrable Securities are included in such Registration Statement)
confirmation that such Registration Statement has been declared effective
by the
SEC.
p. Notwithstanding
anything to the contrary herein, (i) if the Company has commenced preparation
of
a registration statement with respect to a public offering of securities
by the
Company (other than in connection with employee benefit and similar plans)
(a
“Company Offering”) prior to the receipt of a Registration Request or a request
pursuant to Section II.2(d) and the Company furnishes the Requesting
Stockholders with written notice to such effect (the “Transaction Delay Notice”)
promptly after such request, the Company shall not be required to effect
any
registration pursuant to Section II.2(a)(i) or Section II.2(d) hereof until
the
earliest of (A) 60 days after the completion of such Company Offering, (B)
promptly after the abandonment of such Company Offering or (C) 120 days after
the date of the Transaction Delay Notice, and (ii) if upon receipt of a
Registration Request or a request under Section II.2(d) or while a Registration
Request or a request under Section II.2(d) is pending, the Company determines
in
its reasonable judgment after consultation with its securities counsel that
the
filing of a registration statement would require disclosure of material
information which would not otherwise be required to be disclosed and that
such
disclosure would not be in the best interest of the Company and the Company
provides the Requesting Stockholders written notice thereof promptly after
the
Company makes such determination, which shall be made promptly after the
receipt
of any request, the Company shall not be required to comply with its obligations
under Section II.2(a)(i) or Section II.2(d) hereof until the earlier of (A)
the
date upon which such material information is disclosed to the public or ceases
to be material or (B) 90 days after the Requesting Stockholders’ receipt of such
notice.
4. Obligations
of the Investors.
a. At
least
five (5) Business Days prior to the first anticipated filing date of a
Registration Statement, the Company shall notify each Investor in writing
of the
information the Company requires from each such Investor if such Investor
elects
to have any of such Investor’s Registrable Securities included in such
Registration Statement. It shall be a condition precedent to the obligations
of
the Company to complete the registration pursuant to this Agreement with
respect
to the Registrable Securities of a particular Investor that such Investor
shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the
effectiveness of the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company
may
reasonably request.
b. Each
Investor, by such Investor’s acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement hereunder,
unless
such Investor has notified the Company in writing of such Investor’s election to
exclude all of such Investor’s Registrable Securities from such Registration
Statement.
c. Each
Investor agrees that, upon receipt of any notice (which shall be in writing)
from the Company (a “Blackout
Notice”)
that
the Company is in possession of material non-public information that it deems
advisable not to disclose or is engaged in negotiations or planning for a
merger
or acquisition or disposition transaction by the Company that, in any case,
the
Company would then be required to disclose in connection with a registration
statement for a primary offering of the Company’s Common Stock, such Investor
will immediately discontinue offers or sales of Registrable Securities pursuant
to any Registration Statement(s) covering such Registrable Securities for
the
period set forth in such Blackout Notice; provided,
that in
no event shall such period set forth in any Blackout Notice exceed 90
consecutive days and or shall all such periods pursuant to this Section 4(c)
and
Section 3(p) above exceed 120 days in any 365-day period.
d. Each
Investor covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 Act as applicable to it or an exemption therefrom
in
connection with sales of Registrable
Securities pursuant to the Registration Statement.
e. Each
Investor agrees that it will not effect any disposition of the Registrable
Securities that would constitute a sale within the meaning of the 1933 Act
or
pursuant to any applicable state securities laws, except as contemplated
hereunder or as otherwise permitted by law, and that it will promptly notify
the
Company of any changes in the information set forth in any Registration
Statement regarding such Investor or its plan of distribution
provided,
however,
that by
making the agreements herein, such Investor does not agree to hold any of
the
Registrable Securities for any minimum or other specific term and reserves
the
right to dispose of the Registrable Securities at any time in accordance
with or
pursuant to a registration statement or an exemption under the 1933
Act.
f. No
Investor may participate in any Underwritten Offering unless such Investor
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreement and other documents required under the terms of the
underwriting arrangements pertaining to such registration and consistent
with
the provisions of this Agreement.
5. Expenses
of Registration.
Notwithstanding
anything in this Agreement to the contrary, no Investor shall be entitled
to
have any of its Registrable Securities included in any registration statement
contemplated by this Agreement unless it executes and delivers to the Company
at
the time of its request to include such Registrable Securities an agreement
reasonably satisfactory to the Company that such Investor will bear its pro-rata
share (based upon the number of Registrable Securities to be sold by each
participating Investor) of all Registration Expenses incident to such
registration statement; provided,
that no
such agreement shall be required with respect to an Incidental Registration
initiated by a Person other than the Company for which such other Person
is not
required to bear its pro rata
share of
all Registration Expenses incident to such registration statement.
6. Indemnification.
In
the
event any Registrable Securities are included in a Registration Statement
under
this Agreement:
a. To
the
fullest extent permitted by law, the Company will, and hereby does, indemnify,
hold harmless and defend each Investor, the directors, officers, members,
partners, employees, agents, representatives of, and each Person, if any,
who
controls any Investor within the meaning of the 1933 Act or the 1934 Act
(each,
an “Indemnified
Person”),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
expenses, joint or several, (collectively, “Claims”)
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by
or
before any court or governmental, administrative or other regulatory agency,
body or the SEC (“Indemnified
Damages”),
to
which any of them may become subject insofar as such Claims arise out of
or are
based upon: (i) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement or any post-effective amendment thereto,
or the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii)
any
untrue statement or alleged untrue statement of a material fact contained
in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented,
if
the Company files any amendment thereof or supplement thereto with the SEC)
or
the omission or alleged omission to state therein any material fact necessary
to
make the statements made therein, in the light of the circumstances under
which
the statements therein were made, not misleading, or (iii) any violation
or
alleged violation by the Company of the 1933 Act, the 1934 Act, any other
law,
including without limitation any state securities law, or any rule or regulation
thereunder relating to the offer or sale of the Registrable Securities pursuant
to a Registration Statement (collectively, “Violations”).
Subject to Section II.6(c), the Company shall reimburse the Indemnified Persons,
promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section II.6(a): (i) shall not apply to a Claim by an Indemnified Person
arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by an Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement, prospectus, or any such amendment thereof or supplement thereto,
(ii)
shall not apply with respect to Claims arising from the sale of Registrable
Securities to a Person to whom there was not sent or given, at or prior to
the
written confirmation of such sale, a copy of the Registration Statement or
the
prospectus contained therein, as amended or supplemented, to the extent such
delivery was required under the 1933 Act or the rules or regulations thereunder
and (iii) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company,
which
consent shall not be unreasonably withheld or delayed.
b. In
connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is
set
forth in Section II.6(a), the Company, each of its directors, officers,
employees, agents, representatives of, and each Person, if any, who controls
the
Company within the meaning of the 1933 Act or the 1934 Act (each, an
“Indemnified
Party”),
against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim
or
Indemnified Damages arise out of or are based upon any Violation, in each
case
to the extent, and only to the extent, that such Violation occurs in reliance
upon and in conformity with written information furnished to the Company
by such
Investor expressly for use in connection with such Registration Statement;
or
for any violation or alleged violation or failure by an Investor to comply
with
the 1933 Act, the 1934 Act, any other law, including without limitation any
state securities law, or any rule or regulation thereunder relating to the
offer
or sale of the Registrable Securities pursuant to a Registration Statement,
and,
subject to Section II.6(c), such Investor will reimburse any legal or other
expenses reasonably incurred by an Indemnified Party in connection with
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section II.6(b) and the agreement with respect
to
contribution contained in Section 7 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior
written
consent of such Investor, which consent shall not be unreasonably withheld
or
delayed; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim or Indemnified Damages
as does
not exceed the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement.
c. Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section
II.6 of notice of the commencement of any action or proceeding (including
any
governmental action or proceeding) involving a Claim, such Indemnified Person
or
Indemnified Party shall, if a Claim in respect thereof is to be made against
any
indemnifying party under this Section II.6, deliver to the indemnifying party
a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party
so
desires, jointly with any other indemnifying party similarly noticed, to
assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as
the
case may be; provided, however, that an Indemnified Person or Indemnified
Party
shall have the right to retain its own counsel with the fees and expenses
of not
more than one counsel for such Indemnified Person or Indemnified Party to
be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of
the
Indemnified Person or Indemnified Party and the indemnifying party would
be
inappropriate under applicable professional standards due to actual or potential
differing interests between such Indemnified Person or Indemnified Party
and any
other party represented by such counsel in such proceeding. In the case of
an
indemnified Person, legal counsel referred to in the immediately preceding
sentence shall be selected by the Investors holding at least a
majority in
interest of the Registrable Securities included in the Registration Statement
to
which the Claim relates. Upon receipt of notice from the indemnifying party
to
such indemnified Person of its election to assume the defense of such action
and
approval by the indemnified Person of counsel, the indemnifying party will
not
be liable to such indemnified Person under this section for any legal or
other
expenses subsequently incurred by such indemnified Person in connection with
the
defense thereof unless the indemnified Person shall have employed such counsel
in connection with the assumption of legal defenses in accordance with the
preceding sentence (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate counsel
representing all of the indemnified Persons who are parties to such action),
in
which case the reasonable fees and expenses of counsel shall be at the expense
of the indemnifying party. The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or Claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to
the
Indemnified Party or Indemnified Person which relates to such action or Claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person
reasonably apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall
be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent, provided, however, that the indemnifying party shall
not unreasonably withhold, delay or condition its consent. No indemnifying
party
shall, without the prior written consent of the Indemnified Party or Indemnified
Person, consent to entry of any judgment or enter into any settlement or
other
compromise which does not include as an unconditional term thereof the giving
by
the claimant or plaintiff to such Indemnified Party or Indemnified Person
of a
release from all liability in respect to such Claim or litigation, and does
not
involve the imposition of equitable remedies or the imposition of any
obligations on such Indemnified Party or Indemnified Person and does not
otherwise adversely affect such indemnified Person, other than as a result
of
the imposition of financial obligations for which such indemnified Person
will
be indemnified hereunder, and provided further that such settlement shall
not
include any admission as to fault on the part of the Indemnified Person or
Indemnified Party. The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action shall
not
relieve such indemnifying party of any liability to the Indemnified Person
or
Indemnified Party under this Section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such
action.
d. The
indemnification required by this Section II.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 Indemnified Damages are incurred.
e. The
indemnity agreements contained herein shall be in addition to (i) any cause
of
action or similar right of the Indemnified Party or Indemnified Person against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to applicable law.
7. Contribution.
If
the
indemnification provided for in Section II.6 is required by its terms but
is for
any reason held to be unavailable to or otherwise insufficient to hold harmless
an indemnified Person thereunder in respect to any Claims referred to therein
as
subject to indemnification, then each applicable indemnifying Person shall
contribute to the amount paid or payable by such indemnified Person as a
result
of any Claims referred to therein as subject to indemnification in such
proportion as is appropriate to reflect the relative fault of the Company
on the
one hand and the Investors, on the other, in connection with the actions,
statements or omissions that resulted in such Claims, as well as any other
relevant equitable considerations. The relative fault of the Company, on
the one
hand, and each Investor, on the other, shall be determined by reference to,
among other things, whether the untrue or alleged statement of a material
fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by such Investor 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 a party
as a
result of the Claims referred to above shall be deemed to include, subject
to
the limitations set forth in Section II.6(c), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating
or
defending any action or claim. The provisions set forth in Section II.6(c)
with
respect to the notice of the threat or commencement of any threat or action
shall apply if a claim for contribution is to be made under this Section
II.7;
provided, however, that no additional notice shall be required with respect
to
any threat or action for which notice has been given under Section II.6(c)
for
purposes of indemnification. The Company and each Investor agree that it
would
not be just and equitable if contribution pursuant to this Section II.7 were
determined solely by pro rata allocation (even if the Investors were treated
as
one entity for such purpose) or by any other method of allocation which does
not
take account of the equitable considerations referred to in this paragraph.
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. The Investors’
obligations to contribute pursuant to this Section II.7 are several and not
joint and contribution by any seller of Registrable Securities shall be limited
in amount to the net amount of proceeds received by such seller from the
sale of
such Registrable Securities pursuant to such Registration
Statement.
8. Reports
Under the 1934 Act.
With
a
view to making available to the Investors the benefits of Rule 144 promulgated
under the 1933 Act or any other similar rule or regulation of the SEC that
may
at any time permit the Investors to sell securities of the Company to the
public
without registration (“Rule
144”),
the
Company agrees to:
a. use
its
reasonable efforts to make and keep public information available, as those
terms
are understood and defined in Rule 144, and as may be required in order to
be
eligible to use Form S-3; provided, however, that so long as the Company
has
acted in good faith in its attempts to make and keep such public information
available, the failure to do so shall not be a breach of this
Agreement.
b. use
its
reasonable efforts to file with the SEC all reports and other documents required
of the Company under the 1933 Act and the 1934 Act so long as the Company
remains subject to such requirements and the filing of such reports and other
documents is required for the applicable provisions of Rule 144;
and
c. furnish
to each Investor, promptly upon request, (i) a written statement by the Company,
if true, that it has complied with the reporting requirements of Rule 144,
the
1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested
to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.
9. Assignment
of Registration Rights.
The
rights under Section II of this Agreement shall be automatically assignable
by
the Investors to any transferee of all or any portion of such Investor’s
Registrable Securities if: (i) the Investor agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement
is
furnished to the Company within a reasonable time after such assignment;
(ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee
or
assignee, and (b) the securities with respect to which such registration
rights
are being transferred or assigned; (iii) immediately following such transfer
or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the 1933 Act or applicable state securities
laws;
and (iv) at or before the time the Company receives the written notice
contemplated by clause (ii) of this sentence the transferee or assignee agrees
in writing with the Company to be bound by all of the provisions contained
herein.
10. Amendment
of Registration Rights.
Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders
of
at least two-thirds of the Registrable Securities then outstanding. Any
amendment or waiver effected in accordance with this Section II.10 shall
be
binding upon each Investor and the Company. No such amendment shall be effective
to the extent that it applies to less than all of the holders of the Registrable
Securities. No consideration shall be offered or paid to any Person to amend
or
consent to a waiver or modification of any provision of any of this Agreement
unless the same consideration also is offered to all of the parties to this
Agreement.
11. Miscellaneous.
a. A
Person
is deemed to be a holder of Registrable Securities whenever such Person owns
or
is deemed to own of record such Registrable Securities. If the Company receives
conflicting instructions, notices or elections from two or more Persons with
respect to the same Registrable Securities, the Company shall act upon the
basis
of instructions, notice or election received from the such record owner of
such
Registrable Securities.
b. Any
notices, consents, waivers or other communications required or permitted
to be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending
party);
or (iii) one Business Day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive
the
same. The addresses and facsimile numbers for such communications shall
be:
If
to the
Company:
|
Xxxx
Xxxxxx and Company, Inc.
|
|
|
000
Xxxxx Xxxxx
|
|
|
Xxxxxxx,
Xxx Xxxxxx 00000
|
|
|
Telephone:
|
(000)
000-0000
|
|
Facsimile:
|
(000)
000-0000
|
|
Attention:
|
Chief
Executive Officer
|
|
With
a copy to:
|
|
|
Xxxx
Xxxxxx and Company, Inc.
|
|
|
000
Xxxxx Xxxxx
|
|
|
Xxxxxxx,
Xxx Xxxxxx 00000
|
|
|
Telephone:
|
(000)
000-0000
|
|
Facsimile:
|
(000)
000-0000
|
|
Attention:
|
General
Counsel
|
|
and
|
|
|
Xxxx
Xxxxxxx
|
|
|
000
Xxxx Xxxxxx
|
|
|
Xxx
Xxxx, XX 00000
|
|
|
Telephone:
|
(000)
000-0000
|
|
Facsimile:
|
(000
) 000-0000
|
|
Attention:
|
Xxxx
X. Xxxxxxxxx, Esq.
|
If
to a
Buyer, to its address and facsimile number set forth on the Schedule of Buyers
attached hereto, with copies to such Buyer’s representatives as set forth on the
Schedule of Buyers, or to such other address and/or facsimile number and/or
to
the attention of such other Person as the recipient party has specified by
written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by
the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender’s facsimile machine
containing the time, date, recipient facsimile number and an image of the
first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
c. Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate
as a
waiver thereof.
d. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of
New
York, without giving effect to any choice of law or conflict of law provision
or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State
of
New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of
the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein,
and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction
of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be
deemed
to limit in any way any right to serve process in any manner permitted by
law.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction
or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction. EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
e. Subject
to the remainder of this paragraph, this Agreement and the instruments
referenced herein constitute the entire agreement among the parties hereto
with
respect to the subject matter hereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein.
This Agreement and the instruments referenced herein supersede all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof, provided that this agreement does not supersede, or
modify the obligations of (i) the Prentice Buyers under the letter agreement
dated June, 2006 between the Company and Prentice, which shall remain in
full
force and effect in accordance with its terms (each Prentice Investor shall
comply with such letter agreement as if it were Prentice, and the limitations
expressed in that letter agreement shall be applied to all Prentice Investors
collectively as if they were one entity), other than the provisions of Section
7
thereof, which provisions shall be superseded in their entirety by the
provisions attached hereto as Exhibit A, which are incorporated herein by
reference thereto and made a part hereof, and (ii) (i) the Laminar Buyers
under
the letter agreement dated February 15, 2006 between the Company and Laminar
which shall remain in full force and effect in accordance with its terms
(each
Laminar Investor shall comply with such letter agreement as if it were the
original signatory thereof, and the limitations expressed in that letter
agreement shall be applied to all Laminar Investors collectively as if they
were
one entity), other than the provisions of Section 7 thereof, which provisions
shall be superseded in their entirety by the provisions attached hereto as
Exhibit A, which are incorporated herein by reference thereto and made a
part
hereof.
f. Subject
to the requirements of Section II.9, this Agreement shall inure to the benefit
of and be binding upon the permitted successors and assigns of each of the
parties hereto.
g. The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
h. This
Agreement may be executed in identical counterparts, each of which shall
be
deemed an original but all of which shall constitute one and the same agreement.
This Agreement, once executed by a party, may be delivered to the other party
hereto by facsimile transmission (including in Adobe Acrobat format) of a
copy
of this Agreement bearing the signature of the party so delivering this
Agreement.
i. Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
j. All
consents and other determinations required to be made by the Investors pursuant
to this Agreement shall be made, unless otherwise specified in this Agreement,
by holders of a majority of Registrable Securities.
k. The
language used in this Agreement will be deemed to be the language chosen
by the
parties to express their mutual intent and no rules of strict construction
will
be applied against any party.
l. This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may
any
provision hereof be enforced by, any other Person.
m. The
obligations of each Investor hereunder are several and not joint with the
obligations of any other Investor, and no provision of this Agreement is
intended to confer any obligations on any Investor vis-à-vis any other Investor.
Nothing contained herein, and no action taken by any Investor pursuant hereto,
shall be deemed to constitute the Investors as a partnership, an association,
a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to
such
obligations or the transactions contemplated herein.
n. Severability.
Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision
in any
other jurisdiction.
o. Enforcement.
Each party hereto acknowledges that money damages would not be an adequate
remedy in the event that any of the covenants or agreements in this Agreement
are not performed in accordance with its terms, and it is therefore agreed
that
in addition to and without limiting any other remedy or right it may have,
the
non-breaching party will have the right to an injunction, temporary restraining
order or other equitable relief in any court of competent jurisdiction enjoining
any such breach and enforcing specifically the terms and provisions
hereof.
[Signature
Page Follows]
|
10206365.5
|
ws2A19.tmp
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Investors’ Rights Agreement to be duly executed as of the date first written
above.
COMPANY:
XXXX
XXXXXX AND COMPANY, INC.
By:/s/
Xxxxxx X. Xxxxx
Name:
Xxxxxx X. Xxxxx
Title:
Chief Executive Officer
|
10206365.5
|
Revised
Investors Rights Agreement (DES).DOC
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Investors’ Rights Agreement to be duly executed as of the date first written
above.
PRENTICE
BUYERS:
PRENTICE
CAPITAL PARTNERS, LP
By:
Prentice Capital GP, LLC
By:
/s/ Xxxxxx Xxxxxxx
Name: Xxxxxx
Xxxxxxx
Title:
General Counsel
PRENTICE
CAPITAL PARTNERS QP, LP
By:
Prentice Capital GP, LLC
By:
/s/ Xxxxxx Xxxxxxx
Name: Xxxxxx
Xxxxxxx
Title:
General Counsel
PRENTICE
CAPITAL OFFSHORE, LTD.
By:
Prentice Capital Management, LP, its investment manager
By:
/s/ Xxxxxx Xxxxxxx
Name: Xxxxxx
Xxxxxxx
Title:
General Counsel
GPC
XLIII, LLC
By:
Prentice Capital Management, LP, its advisor
By:
/s/ Xxxxxx Xxxxxxx
Name: Xxxxxx
Xxxxxxx
Title:
General Counsel
PEC
I, LLC
By:
Prentice Capital Management, LP, its manager
By:
/s/ Xxxxxx Xxxxxxx
Name: Xxxxxx
Xxxxxxx
Title:
General Counsel
S.A.C.
CAPITAL ASSOCIATES, LLC
By:
S.A.C. Capital Advisors, LLC
By:
/s/ Xxxxx Xxxxxxxx
Name: Xxxxx
Xxxxxxxx
Title:
General Counsel
PRENTICE
SPECIAL OPPORTUNITIES MASTER, L.P.
By:
Prentice Capital XX XX, LP, its General Partner
By:
/s/ Xxxxxx Xxxxxxx
Name: Xxxxxx
Xxxxxxx
Title:
General Counsel
PRENTICE
SPECIAL OPPORTUNITIES, LP
By:
Prentice Capital XX XX, LP, its General Partner
By:
/s/ Xxxxxx Xxxxxxx
Name: Xxxxxx
Xxxxxxx
Title:
General Counsel
|
10206365.5
|
Revised
Investors Rights Agreement (DES).XXX
XXXX
BUYER:
D.
E. SHAW LAMINAR PORTFOLIOS, L.L.C.
By:
/s/ Xxxxxx Xxxxxx
Name: Xxxxxx
Xxxxxx
Title:
Authorized Signatory
|
10206365.5
|
Revised
Investors Rights Agreement (DES).DOC
SCHEDULE
OF BUYERS
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
|
Buyer
|
Address
and
Facsimile
Number
|
Number
of Acquired Shares
|
Purchase
Price
|
Legal
Representative's
Address
and Facsimile Number
|
|
Prentice
Capital Partners, LP
|
c/o
Prentice Capital Management, L.P.
000
Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx:
Xxxxxxx Xxxxxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
|
100,340
|
$1,133,842
|
Xxxxxxx
Xxxx & Xxxxx LLP
000
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxx Xxxxx, Esq.
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
|
Prentice
Capital Partners QP. LP
|
c/o
Prentice Capital Management, L.P.
000
Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx:
Xxxxxxx Xxxxxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
|
484,357
|
$5,473,234.10
|
Xxxxxxx
Xxxx & Xxxxx LLP
000
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxx Xxxxx, Esq.
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
|
Prentice
Capital Offshore, Ltd.
|
c/o
Prentice Capital Management, L.P.
000
Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx:
Xxxxxxx Xxxxxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
|
1,063,272
|
$12,014,973.60
|
Xxxxxxx
Xxxx & Xxxxx LLP
000
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxx Xxxxx, Esq.
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
|
GPC
XLIII, LLC
|
c/o
Prentice Capital Management, L.P.
000
Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx:
Xxxxxxx Xxxxxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
|
230,335
|
$2,602,785.50
|
Xxxxxxx
Xxxx & Xxxxx LLP
000
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxx Xxxxx, Esq.
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
|
PEC
I, LLC
|
c/o
Prentice Capital Management, L.P.
000
Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx:
Xxxxxxx Xxxxxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
|
351,979
|
$3,977,362.70
|
Xxxxxxx
Xxxx & Xxxxx LLP
000
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxx Xxxxx, Esq.
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
|
Prentice
Special Opportunities Master, L.P.
|
c/o
Prentice Capital Management, L.P.
000
Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx:
Xxxxxxx Xxxxxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
|
646,252
|
$7,302,647.60
|
Xxxxxxx
Xxxx & Xxxxx LLP
000
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxx Xxxxx, Esq.
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
|
Prentice
Special Opportunities, LP
|
c/o
Prentice Capital Management, L.P.
000
Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx:
Xxxxxxx Xxxxxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
|
233,694
|
$2,640,742.60
|
Xxxxxxx
Xxxx & Xxxxx LLP
000
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxx Xxxxx, Esq.
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
|
S.A.C.
Capital Associates, LLC
|
c/o
S.A.C. Capital Advisors, LLC
00
Xxxxxxxx Xxxxx Xxxx
Xxxxxxxx,
Xxxxxxxxxxx 00000
Attn:
Xxxxx Xxxxxxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
With
a copy to:
c/o
Prentice Capital Management, L.P.
000
Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx:
Xxxxxxx Xxxxxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
|
1,289,504
|
$14,571,395.20
|
|
|
D.
E. Shaw Laminar Portfolios, L.L.C.
|
c/o
X. X. Xxxx & Co., L.P.
000
Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
|
4,399,733
|
$49,716,982.90
|
McCarter&
English, LLP
Four
Gateway Center
000
Xxxxxxxx Xxxxxx
Xxxxxx,
Xxx Xxxxxx 00000-0000
Attn:
Xxxxx X. Xxxxxxxxx, Esq.
000-000-0000
(direct tel.)
000-000-0000
(direct fax)
xxxxxxxxxx@xxxxxxxx.xxx
|
|
10206365.5
|
Revised
Investors Rights Agreement (DES).DOC
EXHIBIT
A
X.
Xxxxxxxx
Covenants. For
a period of two and one half years after the Closing Date, Prentice, and,
to the
extent acting on its behalf, its Representatives (defined below), shall not
directly or indirectly, and Prentice shall cause any person or entity controlled
by Prentice not to,
(x)
without the consent of a majority of Independent Directors (defined below),
in
any manner acquire, agree to acquire or make any proposal to acquire, directly
or indirectly, any shares of any class of securities of the Company, except
that
this clause shall not prohibit:
(A)
the
acquisition by the Prentice Buyers of up to 2,083,000 shares of Common Stock
if,
after giving effect thereto, Prentice, the Prentice Buyers and their respective
affiliates would not have Beneficial ownership (defined below) in excess
of an
aggregate of 31% of the outstanding shares of Common Stock (provided,
however, that this limitation shall not apply to, and the Prentice Buyers
will
be permitted hereunder to consummate without the consent of a majority of
Independent Directors, the acquisition of Common Stock Beneficially owned
by (i)
the Laminar Buyers, (ii) Third Avenue Management LLC and/or (iii) Franklin
Advisory Services, LLC (each of the Persons in clauses (ii) or (iii) above,
an
“Existing
Institution”),
in
each case to the extent that Prentice, the Prentice Buyers or their respective
affiliates would not thereafter have Beneficial ownership in excess of an
aggregate of 60% of the outstanding shares of Common Stock, and provided,
in the
case of clauses (ii) and (iii) above: on the date of the consummation of
the
acquisition by the Prentice Buyers from the applicable Existing Institution
(the
“Prentice
Consummation Date”),
(x)
such Existing Institution does not have Beneficial ownership of more than
105%
of the number of shares of common stock of the Company it Beneficially owned
on
the Closing Date and (y) the applicable Existing Institution enters into
an
agreement with the Company to refrain from acquiring any additional Common
Stock
for a period of one year commencing on the Prentice Consummation Date, in
form
reasonable satisfactory to the Company. If the Prentice Buyers propose to
make
an acquisition from any Existing Institution pursuant to the preceding sentence,
at the request of Prentice, the Company will give reasonable access to the
relevant Existing Institution to non-public information regarding the Company
and its business, subject to the execution by such Existing Institution of
a
confidentiality agreement with the Company, in form reasonably satisfactory
to
the Company.
(B)
the
acquisition by the Prentice Buyers of securities of the Company as a result
of
any stock split, stock dividend, or other distributions or recapitalizations
made by the Company to holders of a class or series of such securities
generally;
(C)
the
acquisition by the Prentice Buyers of shares of Common Stock pursuant to
a
Qualifying Tender Offer;
(D)
the
acquisition by the Prentice Buyers of shares of Common Stock in connection
with
any primary offering of such Common Stock by the Company, at a cash price
per
share equal to the price at which such shares were offered for sale to the
public; provided,
that
the maximum number of shares of Common Stock that may be acquired by the
Prentice Buyers pursuant to this clause (D) shall equal (1) the number of
shares
of Common Stock offered in such primary offering multiplied by (2) the
percentage of the outstanding Common Stock Beneficially owned by Prentice,
the
Prentice Buyers and their respective affiliates immediately prior to such
primary offering;
(y)
nominate, or otherwise propose candidates for election to the Board of Directors
of the Company, or vote or consent as a holder of voting securities of the
Company with respect to the election or removal of directors, if the purpose
or
effect of such action would be to cause Independent Directors not to constitute
a majority of the members of the Board of Directors of the Company or otherwise
to cause the Company not to be in compliance with the corporate governance
rules
of the New York Stock Exchange (without regard to any “controlled company” or
similar exemption); or
(z)
without the prior written consent of Laminar, permit Prentice or any Prentice
Buyer or any of their respective affiliates to, in any manner, acquire, agree
to
acquire or make any proposal to acquire, directly or indirectly, shares of
Common Stock if, after giving effect thereto, Prentice, the Prentice Buyers
and
their respective affiliates would have Beneficial ownership in excess of
an
aggregate of 40% of the outstanding shares of Common Stock, provided,
that no
consent from Laminar shall be required (i) if Laminar, the Laminar Buyers
and
their respective affiliates do not Beneficially own at least 10% of the
outstanding shares of Common Stock, or (ii) in respect of any acquisition
pursuant to clauses (B), (C), or (D) of paragraph I(x) hereof made by Prentice,
any Prentice Buyer or any of their respective affiliates.
II.
Laminar
Covenants.
For a period of two and one half years after the Closing Date, Laminar, and,
to
the extent acting on its behalf, its Representatives, shall not directly
or
indirectly, and Laminar shall cause any person or entity controlled by Laminar
not to,
(x)
without the consent of a majority of Independent Directors, in any manner
acquire, agree to acquire or make any proposal to acquire, directly or
indirectly, shares of any class of securities of the Company, except that
this
clause shall not prohibit:
(A)
the
acquisition by the Laminar Buyers of up to 2,083,000 shares of Common Stock
if,
after giving effect thereto, Laminar, the Laminar Buyers and their respective
affiliates would not have Beneficial ownership (defined below) in excess
of an
aggregate of 31% of the outstanding shares of Common Stock (provided,
however, that this limitation shall not apply to, and the Laminar Buyers
will be
permitted hereunder to consummate without the consent of a majority of
Independent Directors, the acquisition of Common Stock Beneficially owned
by (i)
the Prentice Buyers or (ii) any Existing Institution, in each case to the
extent
that Laminar, the Laminar Buyers or their respective affiliates would not
thereafter have Beneficial ownership in excess of an aggregate of 60% of
the
outstanding shares of Common Stock, and provided,
in the
case of clause (ii) above: on the date of the consummation of the acquisition
by
the Laminar Buyers from the applicable Existing Institution (the “Laminar
Consummation Date”),
(x)
such Existing Institution does not have Beneficial ownership of more than
105%
of the number of shares of Common Stock it Beneficially owned on the Closing
Date and (y) the applicable Existing Institution enters into an agreement
with
the Company to refrain from acquiring any additional Common Stock for a period
of one year commencing on the Laminar Consummation Date, in form reasonable
satisfactory to the Company. If the Laminar Buyers propose to make an
acquisition from any Existing Institution or any other person or entity pursuant
to the preceding sentence, at the request of Laminar, the Company will give
reasonable access to the relevant Existing Institution or any other person
or
entity to non-public information regarding the Company and its business,
subject
to the execution by such Existing Institution, person or entity of a
confidentiality agreement with the Company, in form reasonably satisfactory
to
the Company.
(B)
the
acquisition by the Laminar Buyers of securities of the Company as a result
of
any stock split, stock dividend, or other distributions or recapitalizations
made by the Company to holders of a class or series of such securities
generally;
(C)
the
acquisition by the Laminar Buyers of shares of Common Stock pursuant to a
Qualifying Tender Offer;
(D)
the
acquisition by the Laminar Buyers of shares of Common Stock from the Company
in
connection with any primary offering of such Common Stock by the Company,
at a
cash price per share equal to the price at which such shares were offered
for
sale to the public; provided,
that
the maximum number of shares of Common Stock that may be acquired by the
Laminar
Buyers pursuant to this clause (D) shall equal (1) the number of shares of
Common Stock offered in such primary offering multiplied by (2) the percentage
of the outstanding Common Stock Beneficially owned by Laminar, the Laminar
Buyers and their respective affiliates immediately prior to such primary
offering;
(y)
nominate, or otherwise propose candidates for election to the Board of Directors
of the Company, or vote or consent as a holder of voting securities of the
Company with respect to the election or removal of directors, if the purpose
or
effect of such action would be to cause Independent Directors not to constitute
a majority of the members of the Board of Directors of the Company or otherwise
to cause the Company not to be in compliance with the corporate governance
rules
of the New York Stock Exchange (without regard to any “controlled company” or
similar exemption); or
(z)
without the prior written consent of Prentice, permit Laminar or any Laminar
Buyer or any of their respective affiliates to, in any manner, acquire, agree
to
acquire or make any proposal to acquire, directly or indirectly, shares of
Common Stock if, after giving effect thereto, Laminar, the Laminar Buyers
and
their respective affiliates would have Beneficial ownership in excess of
an
aggregate of 40% of the outstanding shares of Common Stock, provided,
that no
consent from Prentice shall be required (i) if Prentice, the Prentice Buyers
and
their respective affiliates do not Beneficially own at least 10% of the
outstanding shares of Common Stock, or (ii) in respect of any acquisition
pursuant to clause (B), (C) or (D) of paragraph II(x) hereof made by Laminar,
any Laminar Buyer or any of their respective affiliates.
As
used
in Sections I. and II. above, the term (i) “Representatives”,
in the
case of Prentice, means any of Prentice’s affiliates, or any of Prentice’s or
its affiliates’ directors, officers, employees, investors, advisors, agents and
other representatives, including, without limitation, attorneys, accountants,
consultants, potential institutional sources of debt financing or financial
advisors, and in the case of Laminar, means any of Laminar’s affiliates, or any
of Laminar’s or its affiliates’ directors, officers, employees, members,
partners, advisors, agents and other representatives, including, without
limitation, attorneys, accountants, consultants, potential institutional
sources
of debt financing or financial advisors, (ii) “Beneficial
owner”
(including, with correlative meaning, the term “Beneficial ownership”) has the
meaning given to that term in Rule 13d-3 under the Securities Exchange act
of
1934, as amended (except that, for purposes of clauses I.(x) and (y), and
II.(x)
and (y), such definition shall be applied as if the phrase “within 60 days” in
paragraph (d)(1)(i) of such Rule were “whether currently or at any time in the
future”), (iii) “Independent
Director”
shall
mean a member of the board of directors of the Company who qualifies as an
“Independent Director” for purposes of the governance rules of the New York
Stock Exchange and who would be an “Independent Director” under such rules if
each of Prentice and the Prentice Buyers and Laminar and the Laminar Buyers
were
the listed company with respect to which independence is being determined,
and
(iv) “Qualifying
Tender Offer”
shall
mean a cash tender offer for all of the outstanding shares of common stock
of
the Company that is (x) made to all holders of such common stock, (y) is
approved and determined to be fair to the holders of common stock (other
than
the Buyers or their affiliates) by a majority of the Independent Directors
(after receiving and taking into account an opinion as to the fairness of
the
offer to such holders from an investment bank) and (z) is accepted by the
holders of a majority of the outstanding shares of common stock (excluding,
for
purposes of such calculation, any shares of common stock Beneficially owned
by
Laminar, the Laminar Buyers and their respective affiliates if the Qualifying
Tender Offer is being initiated by a Laminar Buyer, or owned by Prentice,
the
Prentice Buyers and their respective affiliates if the Qualifying Tender
Offer
is being initiated by a Prentice Buyer). Nothing in this section shall
constitute approval of any such transaction by the Board of Directors to
the
extent such approval is required by applicable law and/or the terms of those
certain resolutions being delivered to the Buyers pursuant to Section 5.1.9
of
the Securities Purchase Agreements. Other capitalized terms used but undefined
in this Exhibit A shall have the meanings ascribed to them in the Investors'
Rights Agreement to which this document is attached as an exhibit.
