EXHIBIT 4.4
ADDENDUM TO REGISTRATION RIGHTS AGREEMENT
THIS ADDENDUM TO REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made
as of July 28, 1997 by and among Innovative Valve Technologies, Inc., a Delaware
corporation ("INVATEC"), and the Holders listed on the signature pages hereof
(the "Puget Holders") and any Holder hereafter becoming a party hereto in
accordance with the provisions hereof.
WHEREAS, a Registration Rights Agreement was entered into as of June ____,
1997 (the "Initial Agreement") by and among INVATEC and the Holders listed on
the signature pages thereof (the "Initial Holders"), and any Holder thereafter
becoming a party to such agreement by entering into one or more addenda thereto;
WHEREAS, each Puget Holder has received convertible subordinated notes
convertible into shares of common stock, par value $.001 per share, of INVATEC
pursuant to an agreement with INVATEC, and INVATEC, in order to induce that
Puget Holder to enter into that agreement, has agreed to designate those shares
as Registrable Common (as hereinafter defined) and to provide Registration
rights on the terms set forth in this Agreement for the benefit of that Puget
Holder and to enter into this Addendum to the Initial Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, and intending to be legally bound hereby, the
parties to this Agreement agree as follows:
1. DEFINED TERMS. As used in this Agreement, the following terms have the
meanings assigned to them below:
"AFFILIATE" means, as to any specified Person, any other Person
that, directly or indirectly through one or more intermediaries or
otherwise, controls, is controlled by or is under common control with the
specified Person. As used in this definition, "Acontrol"@ means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person (whether through
ownership of capital stock of that Person, by contract or otherwise).
"BLUE SKY LAWS" has the meaning specified in Section 4(a).
"CLAIMS" has the meaning specified in Section 10(a).
"COMMON STOCK" means the common stock, par value $.001 per share, of
INVATEC.
"ELIGIBLE OFFERING" has the meaning specified in Section 3(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and any successor thereto and the rules and regulations
thereunder.
"EXEMPT OFFERING" means any offering by INVATEC of shares of Common
Stock (i) in connection with or pursuant to any benefit, compensation,
incentive or savings plan or program in which any of the officers,
directors, employees or independent contractors of INVATEC or any of its
subsidiaries participate, (ii) as consideration in any business
combination or other acquisition transaction, (iii) as the securities into
or for which other equity or debt securities are convertible or
exchangeable, or as the securities that may be acquired by the exercise of
options, warrants or other rights, in each case at a conversion, exchange
or exercise price representing a premium over the trading price of the
Common Stock at the time of the offering, (iv) made pursuant to Regulation
S under the Securities Act (or any similar provision then in force) or (v)
made only to existing holders of securities issued by INVATEC.
"HOLDER" means at any time any Person then owning Registrable Common
and having the rights and obligations of a Holder and which (i) is in an
Puget Holder, (ii) has been assigned those rights and obligations pursuant
to Section 9(a) or (iii) has become a Holder pursuant to Section 9(b),
including the Puget Holders.
"INDEMNIFIED PARTY" has the meaning specified in Section 10(b).
"INITIAL AGREEMENT" has the meaning specified in the first recital
hereto.
"INITIAL HOLDER" has the meaning specified in the first recital
hereto.
"IPO" means the first time a Registration statement filed by INVATEC
under the Securities Act and respecting an underwritten primary offering
by INVATEC of shares of Common Stock is declared effective under the
Securities Act, and any of those registered shares are issued and sold by
INVATEC (otherwise than pursuant to the exercise of any over-allotment
option).
"IPO CLOSING DATE" means the date on which INVATEC first receives
payment for shares of Common Stock it sells in the IPO.
"INSPECTOR" has the meaning specified in Section 4(a).
"LOCKUP PERIOD" has the meaning specified in Section 7.
"PERSON" means any natural person, sole proprietorship, corporation,
partnership, limited liability company, business trust, unincorporated
organization or association, estate or trust.
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"PROCEEDING has the meaning specified in Section 10(b).
"RECORDS has the meaning specified in Section 4(a).
"RED XXXXXXX PROSPECTUS" means, as applied to any Registration
statement INVATEC files under the Securities Act to register unissued
shares of Common Stock for a public offering by it of those shares (other
than an Exempt Offering), the prospectus included in that Registration
statement which is labeled "subject to completion" and is first used in
"roadshow" presentations by INVATEC to potential investors in connection
with that offering.
"REGISTRABLE COMMON" means (i) the Common Stock issued to the
Initial Holders on or before the IPO Closing Date and (ii) the Common
Stock designated by INVATEC in writing as Registrable Common and issued to
Persons who become Holders pursuant to Section 9(b), including the Puget
Holders. For purposes of this Agreement, a share of Registrable Common
will cease to be Registrable Common when (i) a Registration statement
covering that share has been filed and become effective under the
Securities Act and its Holder distributes it by means of that effective
Registration statement, (ii) its Holder distributes it to the public
pursuant to Rule 144 or (iii) it may be distributed to the public in the
United States without being registered for resale under the Securities Act
or subject to the volume limitations of Rule 144.
"REGISTRATION NOTICE" has the meaning specified in Section 3(b).
"RELATED PARTY" means, as to any specified Person, any other Person
who is an officer, director or agent of the specified Person or who
controls the specified Person within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act.
"REQUESTING HOLDER" has the meaning specified in Section 3(d).
"REQUEST NOTICE" has the meaning specified in Section 3(c).
'RESTRICTED PERIOD" means (i) the period from and including the IPO
Closing Date through and including the second anniversary of the IPO
Closing Date and, as applied to Persons who become Holders pursuant to
Section 9(b), (ii) the period designated by Invatec in writing as their
"Restricted Period."
"RULE 144" means Rule 144 (or any similar or successor provision)
under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
any successor thereto and the rules and regulations thereunder.
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"SEC" means the Securities and Exchange Commission and any successor
thereto as the agency administering the Securities Act.
"SELLING HOLDER" has the meaning specified in Section 4(a).
"SELLERS' REGISTRATION STATEMENT" means a Registration statement
filed by INVATEC under the Securities Act to register shares of
Registrable Common for resale by Holders.
2. OTHER DEFINITIONAL PROVISIONS. (a) when used in this Agreement, the
words "herein," "hereof," "hereto" and "hereunder" and words of similar import
refer to this Agreement as a whole and not to any provision of this Agreement.
(b) Whenever the context so requires, the singular number includes the
plural and vice versa, and a reference to one gender includes the other genders.
(c) The word "including" (and, with correlative meaning, the word
"include") means including without limiting the generality of any description
preceding that word, and the verbs "shall" and "will" are used interchangeably
and have the same meaning.
(d) The term "underwriter," as used herein, does not include any Holder.
3. REGISTRATION RIGHTS. (a) If INVATEC proposes to register any shares of
Common Stock for its own account under the Securities Act at any time or times
after the Restricted Period and before December 31, 2002 for a public offering,
other than an Exempt Offering, in the United States, of those shares for cash
(each such public offering, other than an Exempt Offering, being an "Eligible
Offering"), then, at each of those times, each then Holder will, subject to the
terms and conditions hereof, be entitled to have such number of shares of that
Holder's Registrable Common as that Holder may request in accordance with
Section 3(c) registered under the Securities Act for disposition by means of the
Registration statement relating to that Eligible Offering.
(b) In the case of each Eligible Offering, INVATEC will deliver to each
then Holder a written notice of that offering (a "Registration Notice") at least
15 days prior to its filing with the SEC of the Registration statement, or the
amendment thereto, which includes the Red Xxxxxxx Prospectus for that offering.
INVATEC will briefly describe in each Registration Notice the Eligible Offering
to which that notice relates and inform the addressee that it has 10 days within
which to request to include shares of its Registrable Common in the Registration
statement for that offering.
(c) Any Holder desiring to participate in any Eligible Offering must
deliver to INVATEC within 10 days after the Holder receives the Registration
Notice for that offering a written notice to that effect (a "Request Notice"),
specifying the number of shares of the Holder's Registrable Common the Holder
desires to have registered under the Securities Act for inclusion in that
offering. Any Holder that does not deliver a Request Notice for an Eligible
Offering within that 10-day period
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will be deemed to have waived its right to participate in that offering unless
INVATEC agrees otherwise in writing.
(d) Any holder that delivers a Request Notice relating to an Eligible
Offering on a timely basis, or as otherwise agreed by INVATEC, pursuant to
Section 3(c) (each such Holder being a "Requesting Holder") will be entitled to
offer and sell shares of its Registrable Common in that offering on the terms
and conditions on which INVATEC offers and sells shares of Common Stock in that
offering if the Requesting Holder complies with the applicable provisions of
Sections 4, 5 and 10; provided, however, that: (i) INVATEC may reserve to itself
the right to be the exclusive grantor of any underwriter's overallotment option;
and (ii) the shares of Registrable Common any Requesting Holder will be entitled
to offer and sell will be subject to reduction as provided in Section 3(e).
(e) INVATEC will have the right to determine the aggregate size of each
Eligible Offering and to limit the number of shares of Registrable Common to be
included in that offering without reducing the number of shares of Common Stock
to be offered by INVATEC in that offering, as follows: (i) if the lead managing
underwriter selected by INVATEC for an Eligible Offering (or, if that offering
will not be underwritten, a financial advisor to INVATEC) determines that
marketing factors render necessary or advisable a limitation on the number of
shares of Registrable Common to be included in that offering, INVATEC will be
required to include in that offering only such number of shares of Registrable
Common, if any, as that lead managing underwriter (or financial advisor, as the
case may be) believes (as evidenced by its written advice to INVATEC) will not
jeopardize the success of the primary offering by INVATEC; and (ii) if INVATEC
limits the number of shares of Registrable Common that Requesting Holders may
have included in any Eligible Offering pursuant to clause (i), but does not
exclude all shares of Registrable Common from that offering, the maximum number
of shares of Registrable Common to be included in that offering on behalf of
each of those Requesting Holders will be the product of (A) the number of shares
of Registrable Common that Requesting Holder has specified in its Request Notice
relating to that offering multiplied by (B) the fraction the numerator of which
is the number of shares of Registrable Common that Requesting Holder has
specified in its Request Notice relating to that offering and the denominator of
which is the aggregate number of shares of Registrable Common all those
Requesting Holders have specified in their Request Notices relating to that
offering. If INVATEC determines, on the basis of advice of its tax counsel or
independent accountants, that the inclusion of a Requesting Holder's shares of
Registrable Common in any Eligible Offering likely would jeopardize the
nonrecognition status under the Internal Revenue Code of 1986, as amended, of
any acquisition transaction effected by INVATEC, INVATEC will be entitled to
limit the number of shares that Requesting Holder may have included in that
offering to such number, if any, as INVATEC determines will not jeopardize that
status.
4. REGISTRATION PROCEDURES. (a) Whenever INVATEC is required by Section 3
to include shares of Registrable Common in a Registration statement relating to
an Eligible Offering, it will, subject to the applicable terms and conditions
hereof:
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(i) cause those shares to be registered under the Securities Act by
means of a Seller's Registration Statement, in either the original filing
thereof or in a pre-effective amendment to a previously filed Registration
statement;
(ii) prior to the first to occur of (A) the sale by the Holders
thereof, by means of the Sellers' Registration Statement after it becomes
effective under the Securities Act, of all the shares of Registrable
Common covered by the Sellers' Registration Statement when it becomes
effective under the Securities Act and the elapse of the period in which a
dealer is required by the Securities Act to deliver a prospectus in
connection with its offer and sale of any of those shares and (B) the
withdrawal by INVATEC of the Sellers' Registration Statement pursuant to
Securities Act Rule 477, prepare and file with the SEC under the
Securities Act such amendments (including post-effective amendments) to
the Sellers' Registration Statement and supplements to the related
prospectus as are necessary (A) to reflect the plan of distribution
contemplated by the Sellers' Registration Statement and (B) so that (1)
neither the Sellers' Registration Statement nor that prospectus contains
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading and (2) both the Sellers' Registration Statement and that
prospectus comply in all material respects with all other applicable legal
requirements;
(iii) provide to each Requesting Holder named as a selling
stockholder in the Sellers' Registration Statement (each a "Selling
Holder") such number of prospectuses (including preliminary prospectuses)
and other documents incident to the offering and sale of that Selling
Holder's Registrable Common by means of the Sellers' Registration
Statement as that Selling Holder from time to time reasonably may request;
(iv) prior to the time the Seller's Registration Statement or any
post-effective amendment thereto becomes effective under the Securities
Act, provide an opportunity to review and comment with respect to that
document to one counsel selected by Selling Holders holding a majority of
the shares of Registrable Common covered by that document and reasonably
satisfactory to INVATEC;
(v) provide to each Selling Holder, any managing underwriter
participating in the distribution of the shares of Registrable Common
covered by the Sellers' Registration Statement and any accountant, lawyer
or other professional retained by that Selling Holder or managing
underwriter (each an "Inspector") reasonable access to appropriate
officers and employees of INVATEC to ask questions and obtain information
reasonably requested by that Inspector in connection with that Sellers'
Registration Statement; provided, however, that in connection with any
such access or request, each Selling Holder will and will cause each of
its representative Inspectors to, and INVATEC may require each other
Inspector to, (A) cooperate to the extent reasonably practicable to
minimize any disruption in the operation by INVATEC of its business, (B)
keep confidential all records, documents and information INVATEC advises
are confidential or of a proprietary nature (collectively, the
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"Records") and (C) not use the information it obtains from the records as
a basis for any market transactions in the securities of INVATEC unless
and until that information is in the public domain or otherwise becomes
publicly available;
(vi) use its good-faith efforts to register and qualify the
Registrable Common covered by the Sellers' Registration Statement under
the applicable securities or "blue sky" laws (collectively, "Blue Sky
Laws") of such jurisdictions as any Selling Holder reasonably may request;
provided that it will not be required to (A) qualify generally to do
business in any jurisdiction where it otherwise would not be required to
qualify but for this paragraph (vi), (B) subject itself to taxation in any
such jurisdiction or (C) consent to general service of process in any such
jurisdiction;
(vii) notify each Selling Holder promptly (A) when it is informed
that the Sellers' Registration Statement or any post-effective amendment
thereto becomes effective under the Securities Act, (B) of any request by
the SEC for an amendment to the Sellers' Registration Statement or a
supplement to any related prospectus, (C) of the issuance by the SEC of
any stop order suspending the effectiveness of the Sellers' Registration
Statement or any order preventing or suspending the use of any related
prospectus or the initiation or threat by the SEC of any proceeding for
any of those purposes, (D) of the suspension of the qualification of any
shares of Registrable Common covered by the Sellers' Registration
Statement for sale in any jurisdiction or the initiation or threat of any
proceeding for that purpose and (E) of any determination by it that any
event has occurred or fact exists which makes untrue any statement of a
material fact included in the Seller's Registration Statement or any
related then current prospectus or which requires the making of a change
in the Sellers' Registration Statement or that prospectus in order that
the same will not contain any untrue statement of a material fact or omit
to state a material fact required to be contained therein or necessary to
make the statements therein not misleading;
(viii)if any order is issued which (A) suspends the effectiveness of
the Sellers' Registration Statement, (B) suspends or prevents the use of
any related then-current prospectus or (C) suspends the qualification of
any shares of Registrable Common covered by the Sellers' Registration
Statement for sale in any jurisdiction, use its reasonable best efforts to
obtain the withdrawal of that order;
(ix) if the Eligible Offering to which the Sellers' Registration
Statement relates is being underwritten by underwriters, (A) enter into
agreements customary at the time (including an underwriting or purchase
agreement in then-customary form) as those underwriters reasonably may
request in order to facilitate the disposition of the shares of
Registrable Common in that offering, (B) use reasonable diligence to
obtain an opinion of legal counsel (who may be its general counsel)
covering such matters as are then customarily covered by opinions
addressed to those underwriters by an issuer's counsel and (C) use
reasonable diligence to obtain a "comfort" letter or letters from its
independent public
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accountants in their customary form and covering such matters of the type
then customarily covered by "comfort" letters as those underwriters
reasonably may request; and
(x) otherwise use its good-faith efforts to comply with all
applicable rules and regulations of the SEC and make available to its
security holders, as soon as reasonably practicable, an earnings statement
that (A) covers a period of at least 12 months beginning within three
months after the effective date of the Sellers' Registration Statement and
(B) satisfies the provisions of Section 11(a) of the Securities Act;
(b) In connection with each Eligible Offering, INVATEC, in its sole
discretion, will determine whether to proceed with or terminate that offering
and to select any underwriter or underwriters to administer that offering.
5. UNDERWRITING ARRANGEMENTS. No Holder will be permitted to participate
in any Registration hereunder of securities being underwritten and offered for
resale by underwriters unless the Holder (i) agrees to sell the Holder's
Registrable Common on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve those arrangements, (ii)
enters into a written agreement with the managing underwriter or the
representative of the underwriters in such form and containing such provisions
as are then customary in the securities business for such an arrangement between
those underwriters and issuers of INVATEC's size and investment stature and
(iii) completes and executes all questionnaires, powers of attorney, indemnities
and other documents, and obtains such spousal or other consents, as are
reasonably required under the terms of those arrangements and this Agreement.
6. RULE 144 REPORTING. INVATEC will:
(i) make and keep public information available (as those terms are
understood and defined in Rule 144) at all times from and after 90 days
following the IPO Closing Date;
(ii) use its good-faith efforts to file with the SEC in a timely
manner all reports and other documents Section 13 or 15(d) of the Exchange
Act, as applicable, requires it to file with the SEC; and
(iii) so long as a Holder owns shares of Registrable Common, deliver
to the Holder, on Holder's request, a written statement as to whether it
is in compliance with the requirements referred to in clause (ii) above
(if it is then subject to those requirements).
7. MARKET STANDOFF. Each Holder agrees, to the extent permitted by
applicable law, that, for so long as the Holder holds shares of Registrable
Common, the Holder will not, except as permitted by Section 2, sell, transfer or
otherwise dispose of in a public transaction (including through put or
short-sale arrangements) shares of Common Stock in the period (i) beginning 10
days prior to the effectiveness under the Securities Act of any Registration
statement covering shares of Common Stock being publicly offered in an Eligible
Offering or in an Exempt Offering of the type
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specified in clause (iii) of the definition of Exempt Offering and (ii) ending
90 days following the date of that effectiveness (each such period being a
"Lockup Period"). INVATEC will provide each Holder written notice of any Lockup
Period.
8. REGISTRATION EXPENSES. (a) Except as provided in Section 8(b), INVATEC
will pay or otherwise bear all the expense attributable to the Registration of
Registrable Common under the Securities Act for sale pursuant to Section 2,
including all the following: (i) Registration and filing fees payable under the
Securities Act or Blue Sky Laws; (ii) fees and expenses incurred in complying
with Blue Sky Laws, including the reasonable fees and disbursements of counsel
incurred in that connection; (iii) printing expenses; (iv) messenger and
delivery expenses; (v) the Company's internal expenses, including the salaries
and expenses of its employees; (vi) fees and expenses attributable to the
listing of the Registrable Common on each securities exchange (including, for
this purpose, the NASDAQ national market) on which the Common Stock is then
listed at INVATEC's initiation; (vii) registrar and transfer agents' fees;
(viii) fees and disbursements of INVATEC's counsel and independent certified
public accountants; (ix) securities act liability insurance premiums (if INVATEC
elects to obtain that insurance); and (x) fees and expenses of any special
experts or other Persons retained by INVATEC in connection with its compliance
with this Agreement.
(b) Each Selling Holder will pay or otherwise bear all underwriting
commissions and discounts and transfer taxes attributable to that Selling
Holder's sale or other disposition of shares of Registrable Common, and each
Holder will pay or otherwise bear (i) the fees and expenses of that Holder's
counsel and any other special experts or Persons retained by that Holder in
connection with any Seller's Registration statement or the sale or other
disposition of that Holder's Registrable Common and (ii) that Holder's internal
expenses, including the salaries and expenses of that Holder's employees.
9. TRANSFERS AND ADDITIONAL GRANTS OF REGISTRATION RIGHTS. (a) A Holder
may not transfer the Registration rights this Agreement affords the Holder to
any other Person except as provided in this Section 9: (i) a Holder who is a
natural person may transfer those rights to a member of his immediate family or
a trust for the benefit of one or more members of his immediate family; (ii) a
Holder that is a corporation or other entity may transfer those rights to an
Affiliate of the Holder which also is a corporation or other entity; and (iii) a
Holder may transfer those rights to any other Holder; provided, that any such
transfer will be permitted only if the transferee executes an addendum to this
Agreement, in a form satisfactory to INVATEC, in which that transferee agrees to
comply with and otherwise be bound by all the terms and conditions hereof.
(b) INVATEC may, without the consent of any Holder, extend the
Registration rights this Agreement provides to additional persons who become
holders of Common Stock after the date hereof by entering into one or more
addenda to this Agreement with those Persons pursuant to which, for all purposes
hereof, those Persons will become Holders and any shares of Common Stock
referred to in those addenda will become Registrable Common. Nothing herein will
limit or otherwise restrict the ability or right of INVATEC to grant to any
Person any Registration or similar
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rights in the future respecting shares of Common Stock or any other securities
INVATEC may issue, whether pursuant to the provisions of this Section 9 or
otherwise.
10. INDEMNIFICATION; CONTRIBUTION. (a) INDEMNIFICATION BY INVATEC. INVATEC
will, to the extent permitted by applicable law, indemnify each Selling Holder
who sells shares of REGISTRABLE Common by means of a Sellers' Registration
Statement and each of that Selling Holder's Related Parties against, and hold
each of those Persons harmless from and in respect of, any and all claims,
damages, losses, liabilities and expenses (including reasonable legal expenses)
whatsoever (collectively, "Claims") that arise from or are based on any untrue
statement or alleged untrue statement of a material fact contained in that
Sellers' Registration Statement or any prospectus (including any preliminary
prospectus) forming a part thereof, or any amendment thereof or supplement
thereto, or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made, except
insofar as those Claims arise out of or are based on any such untrue statement
or omission or allegation thereof based on information furnished in writing to
INVATEC by or on behalf of that Selling Holder expressly for use therein. In
connection with any underwritten offering of shares of Registrable Common,
INVATEC will indemnify and hold harmless each participating underwriter and each
of that underwriter's Related Parties on either (i) substantially the same basis
on which it will indemnify each Selling Holder and that Selling Holder's Related
Parties pursuant to this Section 10(a) or (ii) such other basis as is
customarily obtained by underwriters from issuers at the time of that offering.
Notwithstanding the foregoing, INVATEC's obligations to indemnify and hold
harmless pursuant to this Section 10(a) with respect to any Claim (or action or
proceeding in respect thereof) that arises from or is based on any untrue or
alleged untrue statement contained in, or any omission or alleged omission from,
any preliminary prospectus will not inure to the benefit of any Selling Holder
or underwriter or its Related parties if it is determined that (i) a copy of the
prospectus used to confirm the sale of shares of Registrable Common to the
Person asserting that claim was not sent or given to that Person at or prior to
the written confirmation of that sale, (ii) the untrue statement or alleged
untrue statement or the omission or alleged omission was corrected by that
prospectus and (iii) it was the responsibility of that Selling Holder or that
underwriter (or any dealer acquiring those shares directly or indirectly from
that underwriter) to send or give that prospectus to that Person.
(b) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Each Person claiming
indemnification from INVATEC pursuant to this Section 10 (an "Indemnified
Party") will, promptly after that Indemnified Party becomes aware of any
assertion or commencement of any action or proceeding against that Indemnified
Party in respect of which indemnity may be sought from INVATEC (a "Proceeding"),
promptly notify INVATEC in writing of the Proceeding; provided, that an
Indemnified Party's failure to so notify INVATEC will not relieve INVATEC from
any liability it may have to that Indemnified Party otherwise than pursuant to
the provisions of this Section 10. If any Proceeding is brought against any
Indemnified Party and that Indemnified Party duly notifies INVATEC thereof: (i)
INVATEC will have the right, at its expense, to assume the defense thereof,
including the employment of counsel; and (ii) the Indemnified Party will have
the right to employ separate counsel in the Proceeding and participate in the
defense thereof, but the Indemnified Party
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will pay the fees and expenses of that separate counsel unless (A) INVATEC has
agreed in writing to pay those fees and expenses or (B) the named parties to the
Proceeding (including any impleaded parties) include both the Indemnified Party
and INVATEC, and counsel advises the Indemnified Party in writing that one or
more legal defenses may be available to the Indemnified Party which is or are
different from or additional to those available to INVATEC (in which case, if
the Indemnified Party notifies INVATEC in writing that the Indemnified Party
elects to employ separate counsel at the expense of INVATEC, INVATEC will not
have the right to assume the defense of the Proceeding on behalf of the
Indemnified Party; it being understood, however, that INVATEC will not, in
connection with any one Proceeding or separate but substantially similar or
related Proceedings in the same jurisdiction and arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate law firm (together with appropriate local counsel) at any time for
all Indemnified Parties). INVATEC will not be liable for any settlement of any
Proceeds which any Indemnified Party effects without INVATEC's written consent.
(c) INDEMNIFICATION BY SELLING HOLDERS. Each Selling Holder will, to
the extent permitted by applicable law, indemnify INVATEC and each of its
Related Parties against, and hold each of those Persons harmless from and in
respect of, Claims to the same extent as the indemnity from INVATEC to that
Selling Holder in Section 10(a), but only with respect to information that is
furnished by or on behalf of that Selling Holder expressly for use in a Sellers'
Registration Statement or any prospectus (including any preliminary prospectus)
forming a part thereof, or any amendment thereof or supplement thereto. If any
action or proceeding is brought against INVATEC or any of its Related Parties in
respect of which any of those Persons may seek indemnity from a Selling Holder
pursuant to this Section 10(c), that Selling Holder will have the rights and
duties given to INVATEC and each of those Persons will have the rights and
duties given to that Selling Holder and that Selling Holder's Related Parties,
by Section 10(b). Each Selling Holder also will, to the extent permitted by
applicable law, indemnify and hold harmless the underwriters of the shares of
Registrable Common offered by that Selling Holder on substantially the same
basis on which INVATEC will indemnify and hold harmless those Persons pursuant
to Section 10(a).
(d) CONTRIBUTION. If the indemnification this Section 10 provides
for is unavailable to any partner intended to be indemnified pursuant to this
Section 10 in respect of any Claims referred to herein, the parties who would
have indemnified that party in the contemplation of this Section 10 will, in
lieu of providing that indemnification, contribute to the amount paid or payable
by that party as a result of those Claims, as follows:
(i) as between INVATEC and the Selling Holders, on the one hand, and
the underwriters of shares of Registrable Common on the other hand, (A) in
such proportion as is appropriate to reflect the relative benefits
received by INVATEC and the Selling Holders and by those underwriters from
the offering of those shares or, if that allocation is not permitted by
applicable law, (B) in such proportion as is appropriate to reflect not
only those relative benefits, but also the relative faults of INVATEC and
the Selling Holders and of
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those underwriters in connection with the statements or omissions that
resulted in those Claims, as well as any other relevant equitable
considerations; and
(ii) as between INVATEC, on the one hand, and each Selling Holders
on the other hand, in such proportion as is appropriate to reflect the
relative faults of INVATEC and of that Selling Holder in connection with
those statements or omissions, as well as any other relevant equitable
considerations.
The relative benefits received by INVATEC and the Selling Holders, on the one
hand, and the underwriters participating in the underwritten offering of shares
of Registrable Common, on the other hand, will be deemed to be in the same
proportion as the total proceeds from that offering (including shares of Common
Stock being offered by INVATEC), net of underwriting discounts and commissions,
but before deducing expenses, bear to the total amount of underwriting discounts
and commissions received by those underwriters in that offering, while (i)
relative faults of INVATEC and the Selling Holders and of those underwriters
will be determined by reference to, among other facts, whether the statements or
omissions that resulted in the Claims in respect of which contribution is being
made are or relate to information supplied by INVATEC and the Selling Holders or
by those underwriters and (ii) the relative fault of INVATEC and of the Selling
Holders will be determined by reference to, among other facts, (A) whether those
statements or omissions are or relate to information supplied by INVATEC or by
the Selling Holders and (B) those Persons' relative intent, knowledge, access to
information and opportunity to correct those statements or omissions or prevent
them from being made. INVATEC and the Selling Holders agree it would not be just
or equitable if contribution pursuant to this Section 10(d) were to be
determined by pro rata allocation (even if the underwriters, if any, were to be
treated as one entity for this purpose) or by any other allocation method that
does not take into account the equitable considerations referred to in this
Section 10(d).
(e) LIMITATIONS ON CONTRIBUTION. No underwriter will be required to
contribute to INVATEC or the Selling Holders, pursuant to Section 10(d) or
otherwise, any amount in excess of the amount by which (i) the total price at
which the shares of Registrable Common underwritten by it and distributed to the
public were offered to the public exceeds (ii) the amount of any damages it
otherwise has been required to pay by reason of the statements or omissions that
resulted in the Claims in respect of which contribution is being made, and no
Selling Holder will be required to contribute to INVATEC or any underwriter,
pursuant to Section 10(d) or otherwise, any amount in excess of the amount by
which (i) the total price at which that Selling Holder's shares of Registrable
Common were offered to the public exceeds (ii) the amount of any damages that
Selling Holder otherwise has been required to pay by reason of those statements
or omissions. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any Person who was not guilty of such fraudulent misrepresentation. If
indemnification is available under this Section 10, the indemnifying parties
will indemnify each indemnified party to the extent provided in Sections 10(a)
and (c) without regard to the relative fault of any Person or any other
equitable consideration referred to in Section 10(d).
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11. MISCELLANEOUS. (a) AMENDMENTS AND WAIVERS. Except as otherwise
provided herein, the provisions of this Agreement may not be amended, modified
or supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless INVATEC has obtained the written consent of
Holders of at least 51% of the shares of Registrable Common then outstanding.
(b) NOTICES. All notices and other communications provided for or
permitted hereunder must be in writing and will be deemed delivered and received
(i) if personally delivered or if delivered by telex, telegram, facsimile or
courier service, when actually received by the party to whom the notice or
communication is sent, or (ii) if delivered by mail (whether actually received
or not), at the close of business on the third Houston, Texas business day next
following the day when placed in the mail, postage prepaid, certified or
registered, addressed to the appropriate party or parties at the address of that
party set forth or referred to below (or at such other address as that party may
designate by written notice to each other party in accordance herewith):
(A) if to a Holder, at the most current address given by that Holder
to INVATEC in a writing making specific reference to this Agreement, with
a copy (which will not constitute notice for purposes of this Agreement)
to such legal counsel, if any, as that Holder may designate in that
writing; and
(B) if to INVATEC, at the following address:
Innovative Valve Technologies, Inc.
00000 Xxxxxxx Xxxxx, Xxxxx X-000
Xxxxxxx, Xxxxx 00000
Attn: Corporate Secretary
Telecopy: (000)000-0000
with copies to:
Xxxxx, Xxxxx & Xxxxxx Incorporated
Nine Xxxxxxxx Xxxxx
#0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxx, Xx.
Telecopy: (000) 000-0000
(c) SUCCESSORS AND ASSIGNS. This Agreement will inure to the benefit
of and be binding on the heirs, executors, administrators, successors and
assigns of each of the parties hereto.
(d) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed will
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be deemed to be an original and all of which taken together will constitute one
and the same agreement.
(e) HEADINGS AND REFERENCES. The headings in this Agreement are for
convenience of reference only and will not limit or otherwise affect the meaning
hereof. References herein to "Sections" are to Sections of this Agreement unless
otherwise indicated.
(f) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED WHOLLY WITHIN THAT STATE.
(g) SEVERABILITY. If any one or more of the provisions contained
herein or the application thereof in any circumstances, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of that provision in every other respect and of the remaining
provisions contained herein will not be in anyway impaired thereby, it being
intended by each partner hereto that all the rights and privileges of all
parties hereto will be enforceable to the fullest extent permitted by law.
(h) ENTIRE AGREEMENT; TERMINATION. The parties hereto intend that
this agreement will be considered for all purposes as the final expression, and
a complete and exclusive statement, of their mutual agreement and understanding
in respect of the subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the parties to this Agreement with
respect to that subject matter. This Agreement, except for the provisions of
Sections 1 and 10 (which will survive until the expiration of the applicable
statutes of limitations) and this Section 11, will terminate and be of no
further force or effect on December 31, 2002; provided, that if INVATEC delivers
a Registration Notice relating to an Eligible Offering that is pending on
December 31, 2002, all the provisions of this Agreement will survive until that
Eligible Offering is closed or abandoned by INVATEC.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
INNOVATIVE VALVE TECHNOLOGIES, INC.
By: /s/ XXXXXXX X. XXXXXXXX
Xxxxxxx X. Xxxxxxxx, Senior Vice President
PUGET HOLDERS:
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/s/ X. XXXXX KING
X. Xxxxx Xxxx
/s/ X. X. XXXX
X.X. Xxxx
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