EXHIBIT 10.31
REGISTRATION AND STANDSTILL AGREEMENT
THIS REGISTRATION AND STANDSTILL AGREEMENT (the "Agreement")
is made this 20th day of June, 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: /s/ Walid Maghribi
---------------------------------------
Walid Maghribi
President and Chief Executive Officer
FUTURE ELECTRONICS INC.
By: /s/ Xxx Xxxxxxxx
---------------------------------------
Xxx Xxxxxxxx
Attorney
S&F FINANCIAL HOLDINGS INC.
By: /s/ Xxx Xxxxxxxx
---------------------------------------
Xxx Xxxxxxxx
Attorney
ALONIM INVESTMENTS INC.
By: /s/ Xxx Xxxxxxxx
---------------------------------------
Xxx Xxxxxxxx
Attorney
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.
