Exhibit 99.3
REGISTRATION AND STANDSTILL AGREEMENT
THIS REGISTRATION AND STANDSTILL AGREEMENT (the "Agreement") is made
this _____ day of May, 2003, by and between Alonim Investments Inc., a Canadian
corporation and its Affiliates which are signatories hereto, namely: Future
Electronics Inc., a New Brunswick (Canada) corporation; and S & F Financial
Holdings Inc., a Canadian corporation (of the First Part), and Sipex
Corporation, a Massachusetts corporation (the "Company") (of the Second Part).
WHEREAS, contemporaneously with the execution of this Agreement,
pursuant to that certain Securities Purchase Agreement, by and between the
Company and Alonim (the "Securities Purchase Agreement"), Alonim has purchased
from the Company, and the Company has issued and sold to Alonim, a 1.5%
Convertible Secured Note of the Company due June 30, 2007, in the amount of U.S.
$10,560,000 (the "Note"), which may be convertible into shares of common stock,
$0.01 par value per share (the "Common Stock"), of the Company on the terms set
forth in the Note; and
NOW THEREFORE, for and in consideration of the promises and of the
mutual covenants, agreements, representations and warranties set forth herein
and in the Securities Purchase Agreement, the Voting Agreement and the Note, the
parties hereto, intending to be legally bound hereby, agree as follows:
1. Definitions. The following terms, as used in this Agreement,
shall have the respective meanings given to such terms as set forth below:
(a) "Affiliate" shall mean any Person that controls, is
controlled by, or is under common control with, Future Electronics Inc.
(b) "Beneficial Owner". A Person shall be deemed to be a
"Beneficial Owner" of, or to "Beneficially Own," shares of Company Voting Stock
in accordance with the meaning given to such term in Rule 13d-3 promulgated
under the Exchange Act as in effect on the date of this Agreement.
(c) A "Change of Control" shall be deemed to have
occurred if any of the following occurs after the date hereof:
(i) the consolidation, merger or other business
combination (including, without limitation, a reorganization or
recapitalization) of the Company with or into another Person, other than: (A) a
consolidation, merger or other business combination (including, without
limitation, reorganization or recapitalization) in which holders of the
Company's Voting Power immediately prior to the transaction continue after the
transaction to hold, directly or indirectly, the Voting Power of the surviving
entity or entities necessary to elect a majority of the members of the board of
directors (or their equivalent if other than a corporation) of such entity or
entities; or (B) pursuant to a migratory merger effected solely for the purpose
of changing the jurisdiction of incorporation of the Company;
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(ii) the sale or transfer of all or substantially
all of the Company's assets; or
(iii) the consummation of a purchase, tender or
exchange offer made to and accepted by the holders of more than 50% of the
outstanding shares of Common Stock (other than a purchase or tender or exchange
offer made by the Company or any of its subsidiaries that does not result in the
transaction constituting a "Rule 13e-3 transaction" for purposes of Rule 13e-3
under the Exchange Act).
(d) The "Conversion Shares" means the shares of Common
Stock issuable upon conversion of the Note as provided under the Securities
Purchase Agreement.
(e) "Company Voting Stock" means (i) Common Stock, or
(ii) any other securities of the Company entitled to vote generally for the
election of directors.
(f) "Derivative Securities" means (i) all shares of debt
or equity securities that are convertible into or exchangeable for shares of
Company Voting Stock, and (ii) all options, warrants and other rights to acquire
shares of Company Voting Stock, whether directly or indirectly, and all options,
warrants and rights to acquire other securities convertible into or exchangeable
for shares of Company Voting Stock, provided, that any unvested conversion
rights provided for in the Note shall not be considered to be Derivative
Securities until such time as they vest under the terms of the Note.
(g) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(h) "Fully Diluted Basis" means that the calculation of
the percentage of aggregate Beneficial Ownership of any Person in respect of
Company Voting Stock shall be on the basis of the following equation: (i) the
numerator of which shall be all vested Derivative Securities (plus, if such
Person is Alonim or any of its Affiliates, all Conversion Rights (as defined in
the Note) or other rights to acquire Company Voting Stock that can still
potentially vest pursuant to the Note or any other security), on a fully
converted, exchanged or exercised basis, as the case may be, into Company Voting
Stock, plus the shares of Company Voting Stock then Beneficially Owned by such
Person; and (ii) the denominator of which shall be the greater of (A) all shares
of Company Voting Stock outstanding, plus all vested Derivative Securities then
outstanding, plus all Conversion Rights that can still potentially vest pursuant
to the Note and (B) 40,000,000 (as adjusted for any stock dividends,
distributions, consolidations or splits with respect to such shares).
(i) "Limitation Period" means the time period beginning
on the date of this Agreement and ending on the third anniversary of such date.
(j) "Peak Beneficial Ownership" means the largest
aggregate number of shares of Company Voting Stock and Derivative Securities
held at any point in time, during the Limitation Period, by Alonim and its
Affiliates.
(k) "Person" means any individual, trust, corporation,
partnership, limited liability company, or other entity and all of its
Affiliates.
(l) "SEC" means the Securities and Exchange Commission.
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(m) "Securities Act" means the Securities Act of 1933, as
amended.
(n) "Voting Agreement" means the voting agreement entered
into by Alonim and the Company on the same date as this Agreement.
(o) "Voting Power" means, with respect to any Company
Voting Stock, the maximum number of votes which such Company Voting Stock is or
would be entitled to cast generally for the election of directors, and in the
case of a convertible, exercisable or exchangeable Company Voting Stock,
considering such security both on an unconverted, unexercised or unexchanged
basis and also on a converted, exercised or exchanged basis, as the case may be.
2. Restriction on Acquisition of Common Stock.
(a) During the Limitation Period, and without the prior
affirmative vote of the Board of Directors of the Company, neither Alonim nor
any of its Affiliates shall, directly or indirectly or collectively:
(i) acquire (by purchase or otherwise), offer to
acquire, or agree to acquire, directly or indirectly, any shares of Company
Voting Stock or Derivative Securities if the effect of such acquisition would be
to cause Alonim and its Affiliates to become, in the aggregate, the Beneficial
Owner, on a Fully Diluted Basis, of more than thirty-five percent (35.0%) of the
Company Voting Stock (the "Standstill Percentage"); or
(ii) request that the Company or any of its
representatives, directly or indirectly, to amend or waive any provision of this
Section 2.
Notwithstanding the foregoing, Alonim and its Affiliates shall not be in breach
hereof, nor shall they be obligated to dispose of Company Voting Stock or
Derivative Securities if the aggregate percentage of Company Voting Stock which
Alonim and its Affiliates are the Beneficial Owner of, on a Fully Diluted Basis,
exceeds the Standstill Percentage, solely as a result of (1) the Company
engaging in a stock repurchase of shares of its Company Voting Stock or (2) the
lapsing of subscription rights pursuant to Derivative Securities not
Beneficially Owned by Alonim and its Affiliates.
(b) In the event of a violation by Alonim or its
Affiliates of Section 2(a), then the Company, as its sole and exclusive remedy
under Section 2(a), shall have the right to terminate: (A) the Distribution
Agreement, dated July 1, 1993, between the Company and Future Electronics Inc.,
as the same may be amended from time to time (the "Distribution Agreement"); or
(B) the exclusivity provisions contained in the amendment to the Distribution
Agreement dated October 1, 2002 (the "Amendment"), either of such termination to
be effective ninety (90) days after such notice is provided to Future
Electronics Inc.
3A. Disposition of Common Stock - Limited Period.
(a) In the event that Alonim and its Affiliates shall,
without the prior affirmative vote of the Board of Directors of the Company,
directly or indirectly, by sale or otherwise, dispose of:
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(i) More than 25% of their aggregate Peak
Beneficial Ownership of the Company Voting Stock or Derivative Securities on or
before June 30, 2005; or
(ii) More than 50% of their aggregate Peak
Beneficial Ownership of the Company Voting Stock or Derivative Securities on or
before June 30, 2006; or
(iii) More than 75% of their aggregate Peak
Beneficial Ownership of the Company Voting Stock or Derivative Securities on or
before June 30, 2007,
then the Company shall have the right to require Alonim and its Affiliates to,
and Alonim and its Affiliates shall immediately, disgorge to the Company fifty
percent (50%) of any profits made by Alonim and/or its Affiliates on any
disposition of the shares of Company Voting Stock or Derivative Securities, in
excess of the applicable percentage set forth in this subsection, and to
terminate (in its sole discretion): (A) the Distribution Agreement; or (B) the
exclusivity provisions contained in the Amendment, either of such termination to
be effective ninety (90) days after such notice is provided to Future
Electronics Inc. The foregoing remedies shall be the Company's sole and
exclusive remedies under this Section 3A in the event of such a disposition by
Alonim and its Affiliates of the Company Voting Stock or Derivative Securities.
(b) For purposes of clarification, this Section 3A shall
include any shares sold by Alonim and its Affiliates under any Registration
Statement pursuant to the registration rights set forth in Section 4(a) of this
Agreement.
(c) In order to exercise the rights set forth in Section
2(b) or Section 3A(a) above, the Company shall notify Alonim in writing that the
Company is availing itself of the foregoing remedies, and the Company shall
accompany such notice with all available documentation evidencing that the
Company is entitled to exercise such remedies.
3B. Disposition of Common Stock - Unlimited Period. In the event
that either Alonim and/or any of its Affiliates shall, without the prior written
consent of the Company, directly or indirectly, dispose, by sale or otherwise,
of shares of Company Voting Stock or Derivative Securities, and the effect of
such disposition would be to decrease by more than 50% Alonim and its
Affiliates' Peak Beneficial Ownership of Company Voting Stock or Derivative
Securities, then Future Electronics Inc. shall not be entitled to terminate the
Distribution Agreement with the Company "without cause" pursuant to Section
11(b) of the Distribution Agreement, unless Future Electronics Inc. gives the
Company at least 12 months prior written notice of such termination, in which
event, the exclusivity provisions contained in the Amendment shall immediately
terminate upon the giving of such notice.
4. Registration Rights for Company Voting Shares.
(a) Resale S-3 Registration Procedures and Other Matters.
The Company shall:
(i) prepare and file with the SEC a registration
statement on Form S-3 (or such other form as is then available for registration
of such resale) promulgated under the Securities Act (the "Initial Registration
Statement") within ninety (90) days after the date of this Agreement, subject to
receipt of the information called for by the questionnaire attached to this
Agreement as Exhibit A from Future Electronics Inc. after prompt written request
from the Company to Future Electronics Inc. to provide such information. Such
Registration Statement
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shall be prepared and filed to enable the resale by Alonim or its Affiliates,
from time to time, on the automated quotation system of the Nasdaq National
Market (or any other exchange or market on which the Common Stock is then listed
or traded) or in privately negotiated transactions, without restriction other
than those expressly set forth herein, of:
(A) the Conversion Shares (without
regard to whether any such Conversion Shares have yet vested pursuant to the
Note); and
(B) the Underlying Shares (as such term
is defined in the Securities Purchase Agreement dated September 27, 2002,
between the Company and S&F Financial Holdings, Inc., an Affiliate of Alonim);
(ii) from time to time, upon demand from Alonim,
prepare and file with the SEC a registration statement (each such registration
statement, an "Additional Registration Statement," and "Registration Statement"
shall refer to the Initial Registration Statement, any Additional Registration
Statement or any registration statement filed pursuant to Section 4(b) hereof),
subject to receipt of the information called for by the questionnaire attached
to this Agreement as Exhibit A from Alonim, after prompt written request from
the Company to Alonim to provide such information. Such Additional Registration
Statement(s) shall be prepared to enable the resale by Alonim or its Affiliates,
from time to time, on the automated quotation system of the Nasdaq National
Market (or any other exchange or market on which the Common Stock is then listed
or traded), or in privately negotiated transactions, without restriction other
than those expressly set forth herein, of the other shares of Common Stock now
or in the future held by Alonim or any of its Affiliates within the Standstill
Percentage, (the "Affiliate Shares"); provided, that any such demand for
registration pursuant to this subsection 4(a)(ii) by Alonim shall be for a
minimum of 2,000,000 shares;
(iii) to cause the Registration Statement to
become effective with the SEC as expeditiously as possible;
(iv) prepare and file with the SEC such
amendments and supplements to the Registration Statement and the Prospectus used
in connection therewith as may be necessary to keep the Registration Statement
current and effective for a period not to exceed the earlier of (A) the first
date on which Alonim or its Affiliates may, pursuant to Rule 144(k) under the
Securities Act or any other rule of similar effect, sell all Conversion Shares
then held or issuable upon conversion of the Note, and all other Registrable
Shares, within a ninety (90) day period, or (B) such time as all Registrable
Shares have been sold;
(v) furnish to Alonim with respect to the
Registrable Shares registered under the Registration Statement such number of
copies of the Registration Statement, prospectuses and preliminary prospectuses
in conformity with the requirements of the Securities Act and such other
documents as Alonim may reasonably request, in order to facilitate the public
sale or other disposition of all or any of the Registrable Shares by Alonim;
provided, however, that the obligation of the Company to deliver copies of
prospectuses or preliminary prospectuses to Alonim shall be subject to the
receipt by the Company of reasonable assurances from Alonim that Alonim will
comply with the applicable provisions of the Securities Act and of such other
securities or blue sky laws as may be applicable in connection with any use of
such prospectuses or preliminary prospectuses;
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(vi) file documents required of the Company for
blue sky clearance (A) in all U.S. jurisdictions in which any of the Registrable
Shares are originally issued and (B) in states where specified in writing by
Alonim; provided, however, that, as to clause (B), the Company shall not be
required to qualify to do business or consent to service of process in any
jurisdiction in which it is not now so qualified or has not so consented;
(vii) bear all expenses in connection with the
procedures in this Section 4(a) and Section 4(b) and the registration of the
Conversion Shares and the Underlying Shares pursuant to the Registration
Statement; including the reasonable fees and expenses, if any, of one counsel to
Alonim and its Affiliates, but excluding underwriting discounts, brokerage fees
and commissions incurred by Alonim and/or its Affiliates, provided, that such
fees and expenses shall not exceed $20,000 in the aggregate; and provided,
further, that any incremental expenses relating to the registration of Affiliate
Shares in any registration shall be borne by Alonim;
(viii) advise Alonim promptly after it shall
receive notice or obtain knowledge of the issuance of any stop order by the SEC
delaying or suspending the effectiveness of the Registration Statement or of the
initiation or threat of any proceeding for that purpose; and it will promptly
use its reasonable best efforts to prevent the issuance of any stop order or to
obtain its withdrawal at the earliest possible moment if such stop order should
be issued;
(ix) if an offering of Registrable Shares is to
be underwritten in whole or in part, enter into a written underwriting agreement
in form and substance reasonably satisfactory to the managing underwriter of the
public offering, the Company and Alonim;
(x) notify Alonim, promptly after it shall
receive notice thereof, of the date and time when the Registration Statement and
each post-effective amendment thereto has become effective or a supplement to
any prospectus forming a part of the Registration Statement has been filed;
(xi) cause all Registrable Shares to be listed on
each securities exchange or market on which the Common Stock is listed;
(xii) make available for inspection upon request
by Alonim, by any managing underwriter of any distribution to be effected
pursuant to the Registration Statement and by any attorney, accountant or other
agent retained by Alonim or any such underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, and cause
all of the Company's officers, directors and employees to supply all information
reasonably requested by Alonim or any such underwriter, attorney, accountant or
agent in connection with the Registration Statement;
(xiii) if such registration includes an
underwritten public offering, at the closing provided for in the underwriting
agreement, provide, at Alonim's expense, (A) an opinion dated such date of the
counsel representing the Company for the purposes of such registration,
addressed to the underwriters, covering such matters with respect to the
Registration Statement, the prospectus and each amendment or supplement thereto,
proceedings under state and federal securities laws, other matters relating to
the Company, the securities being registered and the offer and sale of such
securities as are customarily the subject of opinions of issuer's counsel
provided to underwriters in underwritten public offerings, and such opinion of
counsel
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shall additionally cover such legal matters with respect to the registration as
Alonim may reasonably request, and (B) letters dated each of such effective date
and such closing date, from the independent certified public accountants of the
Company, addressed to the underwriters, stating that they are independent
certified public accountants within the meaning of the Securities Act and
dealing with such matters as the underwriters may request, or if the offering is
not underwritten that in the opinion of such accountants the financial
statements and other financial data of the Company included in the registration
statement or the prospectus or any amendment or supplement thereto comply in all
material respects with the applicable accounting requirements of the Securities
Act, and additionally covering such other accounting and financial matters,
including information as to the period ending not more than five (5) business
days prior to the date of such letter with respect to the Registration Statement
and Prospectus, as Alonim may reasonably request; and
(xiv) subject to all the other provisions of this
Agreement, take all other commercially reasonable steps necessary to effect any
registration of Registrable Shares contemplated hereby.
(b) Piggyback Rights on Company Registration.
(i) If the Company shall determine to register
any of its securities either for its own account or the account of a security
holder or holders exercising their respective demand registration rights (other
than pursuant to Section 4 hereof), other than a registration relating solely to
employee benefit plans, a registration relating solely to the offer and sale of
debt securities, a registration relating solely to a corporate reorganization or
other transaction subject to Rule 145 on Form S-4, a registration on any
registration form that does not permit secondary sales (any such registration, a
"Company Registration"), the Company shall:
(A) promptly give to Alonim written
notice thereof;
(B) use its commercially reasonable
efforts to include in such registration (and any related qualification under
blue sky laws or other compliance), except as set forth in Section 4(b)(ii)
below, and in any underwriting involved therein, the Additional Registrable
Securities specified in a written request or requests made by Alonim and
received by the Company within fifteen (15) days after the written notice from
the Company described in clause (i) above is received by Alonim, which written
request may specify all or a part of the Registrable Securities held by Alonim;
and
(C) comply with all the provisions of
Section 4(a)(iii) through (a)(xiv) in connection with any such registration.
(ii) If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise Alonim as a part of the written notice given pursuant to
Section 4(b)(i). In such event, the right of Alonim to registration pursuant to
this Section 4(b) shall be conditioned upon Alonim's participation in such
underwriting and the inclusion of Additional Registrable Securities held by
Alonim in the underwriting to the extent provided herein. If Alonim proposes to
distribute any securities through such underwriting, then it shall (together
with the Company and the other stockholders that are participating in such
registration) enter into an underwriting agreement in customary form with the
representative of the underwriter or underwriters selected by the Company. If
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Alonim does not agree to the terms of any such underwriting, then Alonim shall
be excluded therefrom by notice from the Company or the underwriters. Any
Additional Registrable Securities or other securities excluded or withdrawn from
such underwriting shall be withdrawn from such registration.
(iii) Notwithstanding any other provision of this
Section 4(b), in the event that a Company Registration is underwritten, if a
representative of the underwriters advises the Company in writing that marketing
factors require a limitation of the number of securities to be underwritten
(including Additional Registrable Securities) in an offering subject to this
Section 4(b) because the number of securities to be underwritten is likely to
have an adverse effect on the price, timing or the distribution of securities to
be offered, then the Company shall so advise Alonim which would otherwise be
underwritten pursuant hereto, and subject to the terms of the registration
rights contained in the Stock Purchase Agreements dated as of April 15, 2002
(the "Prior Registration Agreements") between other stockholders and the
Company, the number of shares that may be included in the underwriting shall be
allocated, first, to the Company, second, to Alonim and, third, to the other
stockholders in accordance with the Prior Registration Agreements. Any
Registrable Securities or other securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration. If the underwriting
agreement executed in connection with such offering provides for an
overallotment option to be granted to the underwriters, and if such option is
exercised by the underwriters, the allocation priority established above shall
govern the allocation with respect to the sale of any shares of securities
(including Registrable Securities) pursuant to such exercise by the
underwriters. No such reduction pursuant to this Section 4(b)(iii) shall reduce
the amount of Additional Registrable Securities of Alonim included in the
registration below twenty-five percent (25%) of the total amount of securities
included in such registration.
(iv) The Company shall have the right to
terminate or withdraw any registration described under this Section 4(b) prior
to the effectiveness of such registration whether or not Alonim has elected to
include Additional Registrable Securities in such registration. The registration
expenses of such withdrawn registration shall be borne by the Company in
accordance with Section 4(a) hereof.
(c) Transfer of Registrable Shares After Registration;
Suspension.
(i) Each of Alonim and each of its Affiliates
agrees that it will not effect any disposition of the Registrable Shares under
the Registration Statement referred to in Section 4(a) above except as
contemplated in such Registration Statement and as described herein or as
otherwise permitted by law, and that it will promptly notify the Company of any
changes in the information set forth in the Registration Statement regarding
Alonim and its Affiliates or its plan of distribution; provided, however, that
nothing in this section shall in any way limit Alonim's and its Affiliates'
ability to transfer or otherwise dispose of any of the Securities as permitted
by any other section of this Agreement and applicable law.
(ii) Except in the event that paragraph (iii)
below applies, the Company shall (A) prepare and file from time to time with the
SEC a post-effective amendment to the Registration Statement or a supplement to
the related Prospectus or a supplement or amendment to any document incorporated
therein by reference or file any other required document so that such
Registration Statement will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the
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statements therein not misleading, and so that, as thereafter delivered to
purchasers of the Registrable Shares being sold thereunder, such Prospectus will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading; (B)
provide Alonim copies of any documents filed pursuant to Section 4(c)(ii); and
(C) inform Alonim that the Company has complied with its obligations in Section
4(c)(ii) (or that, if the Company has filed a post-effective amendment to the
Registration Statement which has not yet been declared effective, the Company
will notify Alonim to that effect, will use its best efforts to secure the
effectiveness of such post-effective amendment as promptly as possible and will
promptly notify Alonim pursuant to Section 4(c)(ii) hereof when the amendment
has become effective).
(iii) In the event (A) of any request by the SEC
or any other federal or state governmental authority during the period of
effectiveness of the Registration Statement for amendments or supplements to a
Registration Statement or related Prospectus or for additional information; (B)
of the issuance by the SEC or any other federal or state governmental authority
of any stop order suspending the effectiveness of a Registration Statement or
the initiation of any proceedings for that purpose; (C) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; or (D) of any event or circumstance which in the good faith judgment of
the Company's Board of Directors, upon advice of counsel, would necessitate the
making of any changes in the Registration Statement or Prospectus, or any
document incorporated or deemed to be incorporated therein by reference, so
that, in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or any omission to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and that in the case of the Prospectus, it will not contain any untrue statement
of a material fact or any 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; then the Company
shall, deliver a certificate in writing to Alonim (the "Suspension Notice") to
the effect of the foregoing and, upon receipt of such Suspension Notice, Alonim
and its Affiliates will refrain from selling any Registrable Shares pursuant to
the Registration Statement (a "Suspension") until Alonim's and its Affiliates
receipt of copies of a supplemented or amended Prospectus prepared and filed by
the Company, or until it is or they are advised in writing by the Company that
the current Prospectus may be used, and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in any such Prospectus. In the event of any Suspension, the Company will use its
commercially reasonable efforts to cause the use of the Prospectus so suspended
to be resumed as expeditiously as practicable after the delivery of a Suspension
Notice to Alonim.
(iv) Provided that a Suspension is not then in
effect, Alonim and its Affiliates may sell Registrable Shares under the
Registration Statement, provided that it arranges or they arrange for delivery
of a current Prospectus to the transferee of such Registrable Shares.
(d) Indemnification.
(i) For the purpose of this Section 4(d):
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(x) the term "Selling Stockholder"
shall include Alonim and any officer, director or trustee of Alonim, any
underwriter (as defined in the Securities Act) for Alonim and/or any Affiliate
of Alonim and each person, if any, that controls Alonim, any Affiliate of Alonim
and/or any such underwriter within the meaning of the Securities Exchange Act of
1934, as amended; and
(y) the term "Registration Statement"
shall include any final Prospectus, exhibit, supplement or amendment included in
or relating to the Registration Statement referred to in Section 4(a).
(ii) The Company agrees to indemnify and hold
harmless each Selling Stockholder from and against any losses, claims, damages
or liabilities to which such Selling Stockholder may become subject (under the
Securities Act or otherwise) insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon any untrue statement, or alleged untrue statement of any material
fact contained in a Registration Statement, or any omission or alleged omission
to state a material fact required to be stated in a Registration Statement, or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, and the Company will reimburse such Selling
Stockholder for any reasonable legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim, provided, however, that the Company shall not be liable in any such case
to the extent that such loss, claim, damage or liability arises out of, or is
based upon, (x) an untrue statement made or alleged untrue statement or omission
or alleged omission in such Registration Statement in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Selling Stockholder specifically for use in preparation of the Registration
Statement, (y) the failure of such Selling Stockholder to comply with its
covenants and agreements contained in Section 4(c) hereof respecting sale of the
Registrable Shares, or (z) any statement or omission in any Prospectus that is
corrected in any subsequent Prospectus that was delivered to Alonim prior to the
pertinent sale or sales by Alonim.
(iii) Each of Alonim, S & F Financial Holding
Inc., and Future Electronics Inc. (together the "Signatory Affiliates")agree to
indemnify and hold harmless the Company (and each person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act, each officer
of the Company who signs the Registration Statement and each director of the
Company) from and against any losses, claims, damages or liabilities to which
the Company (or any such officer, director or controlling person) may become
subject (under the Securities Act or otherwise), insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of, or are based upon, (i) any failure by such Alonim to comply with the
covenants and agreements contained in Section 4(c) hereof respecting sale of the
Registrable Shares, or (ii) any untrue statement, or alleged untrue statement of
any material fact contained in a Registration Statement, or any omission or
alleged omission to state a material fact required to be stated in a
Registration Statement, or necessary to make the statements therein not
misleading, if such untrue statement or omission or alleged untrue statement or
omission was made in reliance upon and in conformity with written information
furnished by or on behalf of Alonim or the Signatory Affiliates specifically for
use in preparation of the Registration Statement, and Alonim or the Signatory
Affiliates will reimburse the Company (or such officer, director or controlling
person), as the case may be, for any reasonable legal or other expenses
reasonably incurred in investigating, defending or preparing to defend any such
action, proceeding or claim; provided that Alonim's or the Signatory Affiliates
10
obligation to indemnify the Company shall be limited to the amount received by
Alonim or the Signatory Affiliates from the sale of the Registrable Shares.
(iv) Promptly after receipt by any indemnified
person of a notice of a claim or the beginning of any action in respect of which
indemnity is to be sought against an indemnifying person pursuant to this
Section 4(d), such indemnified person shall notify the indemnifying person in
writing of such claim or of the commencement of such action, but the omission to
so notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party under this Section 4(d) (except to the extent
that such omission materially and adversely affects the indemnifying party's
ability to defend such action) or from any liability otherwise than under this
Section 4(d). Subject to the provisions hereinafter stated, in case any such
action shall be brought against an indemnified person, the indemnifying person
shall be entitled to participate therein, and, to the extent that it shall elect
by written notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, shall be entitled to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
person. After notice from the indemnifying person to such indemnified person of
its election to assume the defense thereof, such indemnifying person shall not
be liable to such indemnified person for any legal expenses subsequently
incurred by such indemnified person in connection with the defense thereof,
provided, however, that if there exists or shall exist a conflict of interest
that would make it inappropriate, in the opinion of counsel to the indemnified
person, for the same counsel to represent both the indemnified person and such
indemnifying person or any affiliate or associate thereof, the indemnified
person shall be entitled to retain its own counsel at the expense of such
indemnifying person; provided, however, that no indemnifying person shall be
responsible for the fees and expenses of more than one separate counsel
(together with appropriate local counsel) for all indemnified parties. In no
event shall any indemnifying person be liable in respect of any amounts paid in
settlement of any action unless the indemnifying person shall have approved the
terms of such settlement; provided that such consent shall not be unreasonably
withheld. No indemnifying person shall, without the prior written consent of the
indemnified person, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified person is or could have been a
party and indemnification could have been sought hereunder by such indemnified
person, unless such settlement includes an unconditional release of such
indemnified person from all liability on claims that are the subject matter of
such proceeding.
(v) If the indemnification provided for in this
Section 4(d) is unavailable to or insufficient to hold harmless an indemnified
party under Section 4(d)(1) or 4(d)(2) above in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Company on the one hand and Alonim as well
as any other Selling Stockholders under such Registration Statement on the other
in connection with the statements or omissions or other matters which resulted
in such losses, claims, damages or liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations. The relative fault shall
be determined by reference to, among other things, in the case of an untrue
statement or omission, whether the untrue statement or omission relates to
information supplied by the Company on the one hand or Alonim or other Selling
Stockholder on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company and Alonim agree that it would not be just and equitable
if contribution
11
pursuant to this Section 4(d)(4) were determined by pro rata allocation (even if
Alonim and other Selling Stockholders were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to above in this Section 4(d)(4). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this Section 4(d)(4) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 4(d)(4), Alonim and the other Selling Stockholders shall not be required
to contribute any amount in excess of the amount by which the amount received by
Alonim and other Selling Stockholders from the sale of the Registrable Shares to
which such loss relates exceeds the amount of any damages which Alonim or such
other Selling Stockholder has otherwise been required to pay by reason of such
untrue statement or omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(vi) Each of Alonim and each of the Signatory
Affiliates hereby acknowledges that it is a sophisticated business person who
was represented by counsel during the negotiations regarding the provisions
hereof including, without limitation, the provisions of this Section 4(d), and
is fully informed regarding said provisions. Each of Alonim and each of its
Affiliates further acknowledges that the provisions of this Section 4(d) fairly
allocate the risks in light of the ability of Alonim and its Affiliates to
investigate the Company and its business in order to assure that adequate
disclosure is made in the Registration Statement as required by the Securities
Act and the Exchange Act.
(e) Termination of Conditions and Obligations. The
conditions precedent imposed by this Section 4 upon the transferability of the
Registrable Shares shall cease and terminate as to any particular number of the
Registrable Shares when such Registrable Shares shall have been effectively
registered under the Securities Act and sold or otherwise disposed of in
accordance with the intended method of disposition set forth in the Registration
Statement covering such Registrable Shares or at such time as an opinion of
counsel satisfactory to the Company shall have been rendered to the effect that
such conditions are not necessary in order to comply with the Securities Act.
(f) Information Available. So long as the Registration
Statement is effective covering the resale of Registrable Shares owned by
Alonim, the Company will furnish to or otherwise make available to Alonim upon
Alonim's request and at Alonim's expense:
(i) a full copy of the Registration Statement;
and
(ii) an adequate number of copies of the
prospectuses to supply to any other party requiring such prospectuses; and upon
the reasonable request of Alonim, the Company will meet with Alonim or a
representative thereof at the Company's headquarters to discuss all information
relevant for disclosure in the Registration Statement covering the Registrable
Shares and will otherwise cooperate with Alonim and its Affiliates for the
purpose of reducing or eliminating such Alonim's exposure to liability under the
Securities Act, including the reasonable production of information at the
Company's headquarters; provided, that the Company shall not be required to
disclose any confidential information to or meet at its headquarters with Alonim
until and unless Alonim shall have entered into a confidentiality
12
agreement in form and substance reasonably satisfactory to the Company with the
Company with respect thereto.
(g) Effect on Prior Registration Rights. The registration
rights granted by the Company in Section 5 of that certain Securities Purchase
Agreement dated as of September 27, 2002 by and between the Company and S&F
Financial is hereby superseded in its entirety and shall be of no further
effect.
(h) "Market Stand-Off" Agreement. In connection with any
underwritten offering of securities by the Company in which Alonim or its
Affiliates participates, if requested by the managing underwriter of such
offering, Alonim and its Affiliates shall agree to enter into a market stand-off
agreement in customary form with such underwriter pursuant to which such holder
will agree not to transfer or offer to transfer any Company securities (other
than those included in the registration) during a period not to exceed ninety
(90) days following the effective date of the Registration Statement with
respect to such underwritten offering.
5. Additional Agreements of the Parties.
(a) Alonim and the Company shall, as soon as practicable
after the date hereof, amend the Amendment to provide that its current term be
automatically extended by one year for each Reference Year (as such term is
defined in the Note) which Alonim attains the applicable Target (as such term is
defined in the Note), provided that neither Alonim nor any of its Affiliates
shall, during the term of this Agreement and without the prior affirmative vote
of a majority of the members of the Board of Directors of the Company, directly
or indirectly, dispose, by sale or otherwise, of shares of Company Voting Stock
or Derivative Securities such that the effect of such disposition would be to
decrease by more than 50%, Alonim and its Affiliates' Peak Beneficial Ownership
of such Company Voting Stock on a Fully Diluted Basis.
(b) During the term of this Agreement, the Company shall
not take any action in such a manner that would cause Alonim and its Affiliates'
aggregate Beneficial Ownership of Company Voting Stock on a Fully Diluted Basis
to exceed the Standstill Percentage.
6. Miscellaneous.
(a) Enforcement. The parties acknowledge and agree that
irreparable damage would occur if any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. Accordingly, the parties will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
its provisions in any court having jurisdiction, this being in addition to any
other remedy to which they may be entitled at law or in equity.
(b) Aggregation. Any shares of Company Voting Stock
transferred to or held by any Affiliates of Alonim will be aggregated together
with shares held by Alonim for all purposes of this Agreement. All references
made to Alonim in this Agreement shall be deemed to also constitute the
agreement of the Affiliates of Alonim.
(c) Entire Agreement; Waivers. This Agreement, the
Securities Purchase Agreement and the other agreements specifically contemplated
by the Securities Purchase Agreement constitute the entire agreement among the
parties hereto pertaining to the subject matter hereof and thereof and supersede
all prior and contemporaneous agreements,
13
understandings, negotiations and discussions, whether oral or written, of the
parties with respect to such subject matter. No waiver of any provision of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof or shall constitute a further or continuing waiver of that provision.
(d) Amendment or Modification. The parties hereto may not
amend or modify this Agreement except in such manner as may be agreed upon by a
written instrument executed by such parties.
(e) Successors and Assigns. All the terms and provisions
of this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors, and each successor shall be
deemed to be a party hereto for all purposes hereof. The terms and provisions of
this Agreement shall not be binding upon any transferee (other than an Affiliate
of Alonim) that purchases any securities subject to this Agreement without
violation of any provision of this Agreement. Neither Alonim nor any of its
Affiliates may assign or transfer any of its rights or obligations hereunder
without the prior written consent of the Company, and no transfer or assignment
by any party shall relieve such party of any of its obligations hereunder.
(f) Severability. If any provision of this Agreement is
held by a court of competent jurisdiction to be unenforceable, the remaining
provisions shall remain in full force and effect. It is declared to be the
intention of the parties that they would have executed the remaining provisions
without including any that may be declared unenforceable.
(g) Headings. Descriptive headings are for convenience
only and will not control or affect the meaning or construction of any provision
of this Agreement.
(h) Counterparts. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by the parties, and
each such executed counterpart will be an original instrument.
(i) Notices. All notices, requests, claims, demands or
other communications hereunder shall be in writing and shall be deemed given
when delivered personally, upon receipt of a transmission confirmation if sent
by fax or like transmission and on the next business day when sent by Federal
Express, Express Mail or other reputable overnight courier service to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
If to the Company:
Sipex Corporation
000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxx, CFO
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
14
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Day
If to Alonim and its Affiliates:
c/o Future Electronics Inc.
000 Xxxxx Xxxxxxxxx
Xxxxxxxx (Xxxxxx Xxxxxx)
Xxxxxx, Xxxxxx
X0X 0X0
Telephone: (000) 000-0000 Ext. 2266
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxxxx
Executive Vice-President and Chief Financial
Officer
with a copy to:
Xxx Xxxxxxxx, Esq.
Associate General Counsel
Tel.: (000) 000-0000, Ext. 2986
Facsimile: (000) 000-0000
(j) Governing Law. This Agreement shall be governed by
and construed in accordance with the law of the State of California, without
giving effect to any choice or conflict of law provision or rule that would
cause the application of the law of any other jurisdiction.
(k) Termination. This Agreement will commence on the date
first referred to above and shall terminate at the earliest to occur of (i) the
Note being paid in full or otherwise cancelled or extinguished, (ii) a Change of
Control of the Company or (iii) the written approval of the parties hereto,
provided, that (x) the registration rights granted in Section 4 shall terminate
upon the date on which Registrable Securities held by Alonim (together with its
Affiliates) may be sold pursuant to Rule 144(k), and (y) the indemnification
provisions in Section 4 shall survive the completion of any offering of
Registrable Securities and any termination of this Agreement.
[Signatures on Following Page]
15
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their proper and duly authorized officers, as of the
date first above written.
SIPEX CORPORATION
By: _________________________________
Walid Maghribi
President and Chief Executive
Officer
FUTURE ELECTRONICS INC.
By: _________________________________
Xxx Xxxxxxxx
Attorney in Fact
S&F FINANCIAL HOLDINGS INC.
By: _________________________________
Xxx Xxxxxxxx
Attorney in Fact
ALONIM INVESTMENTS INC.
By: _________________________________
Xxx Xxxxxxxx
Attorney in Fact
16
Exhibit A
FORM OF SELLING STOCKHOLDER QUESTIONNAIRE
Sipex Corporation
000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Ladies and Gentlemen:
We understand that _____________ is named as a selling shareholder in
the prospectus that forms a part of the registration statement on Form S-3
(Registration No. 333-___) that Sipex Corporation has filed with the Securities
and Exchange Commission to register under the Securities Act of 1933 the offer
and sale of the shares of Sipex Corporation common stock issued pursuant to the
conversion of the Note (as defined in that certain Securities Purchase Agreement
dated as of May ___, 2003, by and between Sipex Corporation and Alonim
Investments Inc.). We understand further that Sipex Corporation will use the
information that we provide in this Questionnaire to ensure the accuracy of the
registration statement and the prospectus.
PLEASE ANSWER EVERY QUESTION.
IF THE ANSWER TO ANY QUESTION IS "NONE" OR "NOT APPLICABLE," PLEASE SO STATE.
1. NAME. Type or print your name exactly as it should appear in the
Registration Statement.
_________________________________________________________________
2. CONTACT INFORMATION. Provide the address, telephone number and fax
number where you can be reached during business hours.
Address: ______________________________________________________________
______________________________________________________________
Phone: ______________________________________________________________
Fax: ______________________________________________________________
3. RELATIONSHIP WITH SIPEX CORPORATION. Describe the nature of any
position, office or other material relationship you have had with Sipex
Corporation during the past three years.
_______________________________________________________________________
_______________________________________________________________________
4. OWNERSHIP OF SIPEX CORPORATION SECURITIES. This question covers your
beneficial ownership of Sipex Corporation securities. Please consult
the Appendix to this Questionnaire for information as to the meaning of
"beneficial ownership."
17
(a) State the number of shares of Sipex Corporation common stock
that you beneficially owned as of ___________, 2003:
No. of Shares of Stock _______________________________________
(b) State the total number of shares of Sipex Corporation common
stock that you have the right to acquire upon the exercise of
options (including employee stock options) or warrants that
are currently exercisable or will become exercisable before
[DATE IN SUBSECTION (a) + 60 DAYS].
No. of Shares of Stock _______________________________________
Type of Right ________________________________________________
(c) If you have the right to purchase any additional shares of
stock, whether under an option, warrant, debenture, or
otherwise, please indicate the number of shares you have a
right to purchase and any contingencies relating to such
shares.
No. of Shares of Stock _______________________________________
Title of Security ____________________________________________
Contingencies ________________________________________________
(d) If, as a result of applying the rules regarding beneficial
ownership summarized in the Appendix to this Questionnaire,
you have included in the amount stated in answer to Item 4(a)
above shares (and/or shares represented by options or
warrants) which are not owned of record by you, please give
details as to the nature of your "beneficial ownership" of
such shares and state the amount of shares so owned.
No. of Shares of Stock _______________________________________
Title of Security ____________________________________________
Nature of Beneficial Ownership _______________________________
(e) If, as a result of applying the rules regarding beneficial
ownership summarized in the Appendix to this Questionnaire,
you have excluded from the amount stated in the answer to Item
4(a) above shares (and/or shares represented by options or
warrants) which are owned of record by you, please state the
amount so excluded and explain why you are not the "beneficial
owner" of such shares.
No. of Shares of Stock _______________________________________
Title of Security ____________________________________________
Explanation of Nonbeneficial Ownership _______________________
______________________________________________________________
18
5. RELIANCE ON RESPONSES. I acknowledge and agree that Sipex Corporation
and its counsel, Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, shall be entitled to
rely on my responses in this Questionnaire in all matters pertaining to
the registration statement and the sale of any shares of common stock
of Sipex Corporation pursuant to the registration statement.
Please acknowledge that your answers to the foregoing questions are true and
correct to the best of your information and belief by signing and dating this
Questionnaire where indicated below.
If at any time you discover that your answer to any question was inaccurate, or
if any event occurring after your completion hereof would require a change in
your answer to any questions, please immediately contact ____________________ of
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, counsel to Sipex Corporation, at (650)
____________ or [Company Contact], [Title] for Sipex Corporation, at
(___)__________.
Date: ______________________________ _____________________________________
(Print name of selling stockholder)
By: _________________________________
(Signature)
Name: _______________________________
(Print name)
Title: ______________________________
19
APPENDIX
DETERMINING "BENEFICIAL OWNERSHIP"
(a) A "Beneficial Owner" of a security includes any person who,
directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise has or shares:
(1) Voting power which includes the power to vote, or to
direct the voting of, such security; and/or
(2) Investment power which includes the power to dispose,
or direct the disposition of, such security.
Please note that either voting power or investment power, or
both, is sufficient for you to be considered the beneficial
owner of shares.
(b) Any person who, directly or indirectly, creates or uses a
trust, proxy, power of attorney, pooling arrangement or any
other contract, arrangement or device with the purpose or
effect of divesting such person of beneficial ownership of a
security or preventing the vesting of such beneficial
ownership as part of a plan or scheme to evade the reporting
requirements of the federal securities acts shall be deemed to
be the beneficial owner of such security.
(c) Notwithstanding the provisions of paragraph (a), a person is
deemed to be the "beneficial owner" of a security, if that
person has the right to acquire beneficial ownership of such
security within 60 days, including but not limited to any
right to acquire: (A) through the exercise of any option,
warrant or right; (B) through the conversion of a security;
(C) pursuant to the power to revoke a trust, discretionary
account or similar arrangement; or (D) pursuant to the
automatic termination of a trust, discretionary account or
similar arrangement; provided, however, any person who
acquires a security or power specified in paragraphs (A), (B)
or (C) above, with the purpose or effect of changing or
influencing the control of the issuer, or in connection with
or as a participant in any transaction having such purpose or
effect, immediately upon such acquisition shall be deemed to
be the beneficial owner of the securities which may be
acquired through the exercise or conversion of such security
or power.
