EXHIBIT 10.7
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of this 6th day of
June, 1997, among Commerce Security Bancorp, Inc., a Delaware corporation (the
"Company"), Madison Dearborn Capital Partners II, L.P., a Delaware limited
partnership ("MDP"), Olympus Growth Fund II, L.P., a Delaware limited
partnership ("Olympus I"), and Olympus Executive Fund, L.P., a Delaware limited
partnership ("Olympus II" and collectively with Olympus I, "Olympus"). MDP and
Olympus are collectively referred to herein as the "Purchasers."
WHEREAS, the Purchasers have agreed to purchase certain securities of the
Company and CSBI Capital Trust I, a trust organized under the Delaware Business
Trust Act ("CSBI Trust"), including Series A Capital Securities of CSBI Trust
and Series B Preferred Stock, Special Common Stock and certain warrants issued
in connection therewith to purchase shares of Class B Common Stock or Class C
Common Stock of the Company (collectively, the "Senior Securities") pursuant to
the Securities Purchase Agreement dated February 11, 1997 by and among the
Company, the Purchasers and certain others (the "Securities Purchase
Agreement");
WHEREAS, as a condition to such purchase, the Purchasers have requested
certain rights to require the Company to register, for public distribution, the
Registrable Shares (as defined herein) as hereafter described;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereto agree as
follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, in addition to the
terms defined in the preamble, the following terms shall have the following
respective meanings:
"CLASS B COMMON STOCK" means the Class B Common Stock of the Company,
par value $.01 per share.
"CLASS C COMMON STOCK" means the Class C Common Stock of the Company,
par value $.01 per share.
"COMMISSION" means the Securities and Exchange Commission, or any
other Federal agency at the time administering the Securities Act.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and any similar Federal statute successor thereto, and the rules and regulations
of the Commission issued under such Act, as they each may be in effect from time
to time.
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"HOLDERS" means the Purchasers and any subsequent transferee of the
Registrable Shares pursuant to Section 11 hereof effected on the books of the
Company.
"OTHER STOCKHOLDERS" means all holders of Class B Common Stock or
Class B Common Stock equivalents issued by the Company, other than the Holders,
who, by virtue of agreements entered into either prior to, contemporaneously
with or after the date of this Agreement, are entitled to registration rights,
including, without limitation, the right to include Secondary Shares in certain
registrations hereunder.
"PIE SHARES" means the Class B Common Stock and the Class Common Stock
issued or issuable in respect of the Series B Preferred Stock, the Series E
Preferred Stock and (in the case of certain holders of Series A Capital
Securities) the Series A Capital Securities.
"SERIES B WARRANTS" means the warrants to purchase Class B Common
Stock or Class C Common Stock.
"REGISTRATION STATEMENT" means a registration statement filed by the
Company with the Commission for a public offering and sale of securities of the
Company (other than a registration statement on Form S-8 or Form S-4, or any
successor form, or any other form for a limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).
"REGISTRABLE SHARES" means (i) any shares of Class B Common Stock
issued or issuable to a Holder upon conversion, directly or indirectly, of any
of the Series A Capital Securities, Series B Preferred Stock, Series E Preferred
Stock, Special Common Stock or Class C Common Stock, (ii) any shares of Class B
Common Stock issued to the Holder by the Company as PIE Shares, (iii) any shares
of Class B Common Stock issued or issuable to a Holder upon exercise of the
Series B Warrants issued to a Holder by the Company, and (iv) any other shares
of Class B Common Stock of the Company now owned or hereafter acquired,
including shares issued or issuable to a Holder in respect of the shares
described in the foregoing clauses (i), (ii) or (iii); PROVIDED, HOWEVER, that
shares of Class B Common Stock which are Registrable Shares shall cease to be
Registrable Shares upon any sale pursuant to a Registration Statement or Rule
144 or Rule 145(d), or any sale in any manner to a person or entity not
conducted in compliance with Section 11 hereof. Registrable Shares shall not
include shares of Class B Common Stock which may be sold by a Holder to the
public immediately without registration, including shares of Class B Common
Stock which may be sold within a period of 90 days under Rule 144, unless at the
time of the proposed sale such Holder, after the use of reasonable efforts, is
unable to arrange for an unregistered managed block distribution of such shares
by a recognized investment banking firm which specializes in such block
distributions at a reasonable discount to the then-current market price thereof.
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"RULE 144" means Rule 144 as promulgated by the Commission under the
Securities Act, as such Rule may be amended from time to time, or any similar
successor rule that may be promulgated by the Commission.
"RULE 145(d)" means Rule 145(d) as promulgated by the Commission under
the Securities Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the Commission.
"SECONDARY SHARES" means such shares of Class B Common Stock held by
Other Stockholders; PROVIDED, HOWEVER, that shares of Class B Common Stock which
are Secondary Shares shall cease to be Secondary Shares upon any sale pursuant
to a Registration Statement or Rule 144 or Rule 145(d) under the Securities Act,
or any sale in any manner to a person or entity not conducted in compliance with
Section 11 hereof. Secondary Shares shall not include shares of Class B Common
Stock which may be sold by Other Stockholders to the public immediately without
registration, including shares of Class B Common Stock which may be sold within
a period of 90 days under Rule 144 promulgated under the Securities Act, unless
at the time of the proposed sale such Other Stockholder, after the use of his
best efforts, is unable to arrange for an unregistered managed block
distribution of such shares by a recognized investment banking firm which
specializes in such block distributions at a reasonable discount to the
then-current market price thereof.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and any
similar Federal statute successor thereto, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
"SERIES A CAPITAL SECURITIES" means the Subordinated Capital Income
Securities, Series A, issued by CSBI Trust, certain holders of which may become
entitled to receive PIE Shares as provided in the Securities Purchase Agreement.
"SERIES B PREFERRED STOCK" means the Series B Preferred Stock of the
Company, par value $.01.
"SERIES E PREFERRED STOCK" means the Series B Preferred Stock of the
Company, par value $.01.
"SHAREHOLDER AGREEMENT" means the Shareholder Agreement dated as of
the date hereof by and among the Company, the Purchasers, Dartmouth Capital
Group, L.P., Dartmouth Capital Group, Inc., Xxxxxx X. Xxxxxx and the other
parties named therein and their respective transferees.
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"SPECIAL COMMON STOCK" means, together, the Voting Special Common
Stock of the Company, par Value $.01, and the Non-Voting Special Common
Stock of the Company, par value $.01 per share.
Other capitalized terms not defined herein shall have the meanings assigned
those terms in the Securities Purchase Agreement.
2. DEMAND REGISTRATIONS.
(a) Commencing upon the earlier of (x) one year after the completion
of an underwritten public offering of Class B Common Stock or (y) the second
anniversary of the date hereof, and until such time as the Company becomes
eligible to file a Registration Statement on Form S-3 (or any successor form
relating to secondary offerings), the Holders of 40% of the Registrable Shares
then outstanding may request, in writing, that the Company effect the
registration on Form S-1 or Form S-2 (or any successor form) of Registrable
Shares owned by the Holders; PROVIDED, HOWEVER, that the minimum aggregate
offering price of the Class B Common Stock to be registered by such Holders
equals $10,000,000 (prior to deductions for underwriting discounts and
commissions). Any such request pursuant to Section 2(a) shall be in writing and
shall state the number of shares of Registrable Shares to be disposed of and the
intended method of disposition of such shares by such Holder. If a Holder
elects to distribute its Registrable Shares by means of an underwriting, it
shall so advise the Company in its request. Thereupon, the Company shall, as
expeditiously as possible, use its best efforts to effect the registration, on
Form S-1 or Form S-2 (or any successor form), of all Registrable Shares which
the Company has been requested so to register. The Company shall not be
required to effect more than two (2) registrations pursuant to this Section 2(a)
(each, a "Permitted Registration"). A registration shall not count as one of
the Permitted Registrations under this Section 2(a) until it has become
effective, and any registration pursuant to Section 2(a) shall not count as one
of the Permitted Registrations unless the Holders of Registrable Shares are able
to register and sell 75% or more of the Registrable Shares requested to be
included in such registration. The Company shall not be required to effect any
registration pursuant to this Section 2(a) within six months after the effective
date of any other Registration Statement of the Company for an underwritten
offering of Class B Common Stock.
(b) If the Company is eligible to use Form S-3, or any similar
short-form registration statement, the Holders of Registrable Shares shall have
the right to request an unlimited number of registrations on Form S-3, or any
similar short-form registration statement, (such requests shall be in writing
and shall state the number of shares of Registrable Shares to be disposed of and
the intended methods of disposition of such shares by such Holder), PROVIDED,
HOWEVER, that the Company shall not be obligated to effect any such registration
if (i) the Holders, together with the holders of any other securities of the
Company entitled to inclusion in such registration, propose to sell Registrable
Shares and such other securities (if any) on Form S-3 at
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an aggregate price to the public of less than $2,500,000 (prior to deductions
for underwriting discounts and commissions), or (ii) in a given twelve-month
period, after the Company has effected three (3) registrations pursuant to
Sections 2(a) and/or 2(b) in any such period. If a Holder elects to distribute
its Registrable Shares by means of an underwriting, it shall so advise the
Company in its request. Thereupon, the Company shall, as expeditiously as
possible, use its best efforts to effect the registration, on Form S-3 (or any
successor form), of all Registrable Shares which the Company has been requested
so to register.
(c) In connection with any registration pursuant to Section 2, the
Company shall keep such registration effective for a period of ninety (90) days
or until the Holder has completed its distribution described in the Registration
Statement relating thereto, whichever first occurs; PROVIDED, HOWEVER, that (i)
such 90-day period shall be extended for a period of time equal to the period
the Holder refrains from selling any securities included in such registration at
the request of the Company or of an underwriter of common stock (or other
securities) of the Company, provided, however, that in no event shall such
extension be more than 180 days, and (ii) in the case of any registration of
Registrable Shares on Form S-3 (or any other applicable form) which are intended
to be offered on a continuous or delayed basis, such 90-day period shall be
extended, if necessary, to keep the Registration Statement effective until all
such Registrable Shares are sold, provided that Rule 415, or any successor rule
under the Securities Act, permits an offering on a continuous or delayed basis,
and provided further that applicable rules under the Securities Act governing
the obligation to file a post-effective amendment permit, in lieu of filing a
post-effective amendment that (I) includes any prospectus required by Section
10(a)(3) of the Securities Act or (II) reflects facts or events representing a
material or fundamental change in the information set forth in the Registration
Statement, the incorporation by reference of information required to be included
in (I) and (II) above to be contained in periodic reports filed pursuant to
Section 13 or 15(d) of the Exchange Act in the Registration Statement.
(d) Upon receipt of any such request, the Company shall promptly give
written notice of such proposed registration to all Holders. Each Holder shall
have the right, by giving written notice to the Company within 30 days after the
Company provides its notice, to elect to have included in such registration such
of the Holder's Registrable Shares as such Holder may request in such notice of
election. Thereupon, the Company shall, as expeditiously as possible, use its
best efforts to effect the registration of all Registrable Shares which the
Company has been requested to register.
(e) If at the time of any request to register Registrable Shares
pursuant to this Section 2, the Company is engaged or has fixed plans to engage
within 60 days of the time of the request in a registered public offering as to
which the Holders may include Registrable Shares pursuant to Section 4 or is
engaged in any other activity which, in the good faith determination of the
Company's Board of Directors, would be adversely affected by the requested
registration to the material detriment of the Company, then the Company may at
its option direct that such request be delayed for a period not in excess of six
months from the date the Company received
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the request to register such Registrable Shares, such right to delay a request
to be exercised by the Company not more than once in any 18-month period.
(f) If, after a Registration Statement becomes effective pursuant to
Section 2, the Company advises the Holders of any Registrable Shares registered
pursuant to such Registration Statement that the Company, on the basis of a
written opinion of outside counsel, considers it appropriate for the
Registration Statement to be amended, the Holders of such shares shall suspend
any further sales of their registered shares until the Company advises them that
the applicable amendment to the Registration Statement has been filed and is
then effective; provided that the Company shall use its best efforts to promptly
file any such amendment. The 90-day time period referred to herein during which
the Registration Statement must be kept current after its effective date shall
be extended for an additional number of business days equal to the number of
business days during which the rights to sell shares was suspended pursuant to
the preceding sentence.
(g) In the event that Registrable Shares are sold pursuant to a
Registration Statement in an underwritten offering pursuant to this Section 2,
the Company agrees to enter into an underwriting agreement containing customary
representations and warranties with respect to the business and operations of an
issuer of the securities being registered and customary covenants and agreements
to be performed by such issuer, including without limitation customary
provisions with respect to indemnification by the Company of the underwriters of
such offering.
(h) In the case of any registration effected pursuant to this Section
2, the Holders of a majority of the Registrable Shares being offered in the
registration shall have the right to designate the managing underwriter in any
underwritten offering, subject to the approval of the Company, which approval
may not be unreasonably withheld or delayed.
3. "PIGGYBACK" REGISTRATION -- ON REGISTRATION DEMANDED BY HOLDERS. Upon
receipt of any request by the Holders for registration of its Registrable Shares
pursuant to Section 2, the Company shall promptly give written notice of such
proposed registration to all Other Stockholders, including those that are, at
such time, permitted to transfer all or any portion of their common stock
pursuant to the Shareholder Agreement. In the event registration of the
Holder's Registrable Shares is proposed to be underwritten, the right of Other
Stockholders to participate shall be conditioned on such Other Stockholders'
acceptance of the terms of the underwriting as agreed upon between the Company,
the Holders of the Registrable Shares included in the Registration Statement,
and the underwriters selected by the Holders. Such Other Stockholders shall
have the right, by giving written notice to the Company within 30 days after the
Company provides its notice, to elect to have included in such registration such
of their Secondary Shares as such Other Stockholders may request in such notice
of election, subject (in the case of an underwritten offering) to the approval
of the underwriter managing the offering. If in the opinion of the managing
underwriter, the registration of all, or part of, the Secondary Shares that the
Other Stockholders have requested to be included pursuant to this Section 3
would
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materially and adversely affect such public offering, then notwithstanding the
foregoing, the Holders shall be required to include in the underwriting only
that number of Secondary Shares, if any, which the managing underwriter believes
may be sold without causing such adverse effect. If the number of Secondary
Shares to be included in the underwriting in accordance with the foregoing is
less than the total number of shares that Other Stockholders of Secondary Shares
have requested to be included, then the Other Stockholders who have requested
registration shall participate in the underwriting PRO RATA based upon their
total ownership of the aggregate number of all Secondary Shares requested to be
included in such registration by the Other Stockholders (or in any other
proportion as agreed upon by such Other Stockholders).
4. "PIGGYBACK" REGISTRATION.
(a) If at any time the Company proposes to file a Registration
Statement, whether at its own election or pursuant to a request made by one or
more Other Stockholders, it will, prior to such filing, give written notice to
all Holders of its intention to do so and, upon the written request of a Holder
given within 30 days after the Company provides such notice (which request shall
state the intended method of disposition of such Registrable Shares), the
Company shall use its best efforts to cause all (or the requested portion) of
such Holder's Registrable Shares to be registered under the Securities Act to
the extent necessary to permit their sale or other disposition in accordance
with the intended methods of distribution specified in the request of such
Holder; PROVIDED, HOWEVER, that the Company shall have the right to postpone or
withdraw any registration effected pursuant to this Section 4 without obligation
to any Holder.
(b) In connection with any offering under this Section 4 involving an
underwriting, the Company shall not be required to include any Registrable
Shares in such underwriting unless the requesting Holder accepts the terms of
the underwriting as agreed upon between the Company and the underwriters
selected by it.
(c) If in the opinion of the managing underwriter the registration of
all, or part of, the Registrable Shares which the Holders have requested to be
included pursuant to this Section 4 would materially and adversely affect such
public offering, then notwithstanding subsection 4(a) hereof the Company shall
be required to include in the underwriting only that number of the Holders'
Registrable Shares, if any, which the managing underwriter believes may be sold
without causing such adverse effect. If the number of Registrable Shares to be
included in the underwriting in accordance with the foregoing is less than the
total number of shares that Holders of Registrable Shares have requested to be
included, then the Holders of Registrable Shares who have requested
registration, and all Other Stockholders who have made a similar request, shall
participate in the underwriting PRO RATA based upon their total ownership of the
aggregate number of all Registrable Shares and Secondary Shares requested to be
included in such registration by the Holders and such Other Stockholders (or in
any other proportion as agreed upon by all Holders and Other Stockholders
entitled to such rights).
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5. REGISTRATION PROCEDURES. If and whenever the Company is required by
the provisions of this Agreement to use its best efforts to effect the
registration of any of the Registrable Shares under the Securities Act,
including, without limitation under Sections 2 and 4 hereof, the Company shall
as expeditiously as possible:
(a) prepare and file with the Commission a Registration Statement
with respect to such Registrable Shares and use its best efforts to cause that
Registration Statement to become and remain effective (provided that before
filing a registration statement or prospectus or any amendments or supplements
thereto, the Company shall furnish to the counsel selected by the Holders of a
majority of the Registrable Shares covered by such Registration Statement copies
of all such documents proposed to be filed, which documents shall be subject to
the reasonable review and comment of such counsel) and, in connection therewith,
use its best efforts to comply with all applicable rules and regulations of the
Commission;
(b) furnish to each selling Holder such reasonable number of copies
of the registration statement, each amendment and supplement thereto,
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as the selling
Holder may reasonably request in order to facilitate the public sale or other
disposition of the Registrable Shares owned by the selling Holder;
(c) use its best efforts to register or qualify the Registrable
Shares covered by the Registration Statement under the securities or Blue Sky
laws of such states as the selling Holders shall reasonably request, and do any
and all other acts and things that may be necessary or desirable to enable the
selling Holders to consummate the public sale or other disposition in such
jurisdictions of the Registrable Shares owned by the selling Holders; PROVIDED,
HOWEVER, that the Company shall not be required in connection with this
paragraph (d) to qualify as a foreign corporation, execute a general consent to
service of process or subject itself to taxation in any jurisdiction;
(d) notify each Holder of Registrable Shares of the effectiveness of
each Registration Statement filed hereunder;
(e) cause all Registrable Shares covered by the Registration
Statement to be listed on each securities exchange on which the Class B Common
Stock is then listed and, if not so listed, to be listed on the NASD automated
quotation system and, if listed on the NASD automated quotation system, use all
commercially reasonable efforts to secure designation of all such Registrable
Shares covered by such Registration Statement as a NASDAQ "national market
system security" within the meaning of Rule 11Aa2-1 of the Commission or,
failing that, to secure NASDAQ authorization for such Registrable Shares and,
without limiting the generality of the foregoing, to arrange for at least two
market makers to register as such with respect to such Registrable Shares with
the NASD;
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(f) provide a transfer agent and registrar for all such Registrable
Shares not later than the effective date of such Registration Statement;
(g) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other customary actions as the
Holders of a majority of the Registrable Shares being sold or the underwriters,
if any, reasonably request in order to expedite or facilitate the disposition of
such Registrable Shares, which actions are not inconsistent with the fiduciary
duties of the Company's directors or which reasonably could be expected to be
materially detrimental to some or all of the holders of Class B Common Stock;
(h) make available for inspection by any underwriter participating in
any disposition pursuant to a Registration Statement under Section 2 and any
attorney, accountant or other agent retained by any such underwriter, or the
attorney representing the Holders of Registrable Shares covered by such
Registration Statement, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such party in connection with such Registration
Statement, subject to the terms of such customary confidentiality agreement as
the Company may reasonably request considering the circumstances under which,
and the purposes for which, such information is requested;
(i) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission and to make available to the holders of
Class B Common Stock and any of its other security holders, as soon as
reasonably practicable, an earnings statement covering the period of at least
twelve months beginning with the first day of the Company's first full calendar
quarter after the effective date of the Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder;
(j) permit any Holder of Registrable Shares which Holder, in its sole
and exclusive judgment, might be deemed to be an underwriter or a controlling
person of the Company, to participate in the preparation of such registration or
comparable statement and to require the insertion therein of material, furnished
to the Company in writing, which in the reasonable judgment of such Holder and
its counsel should be included and as to which the Company has no reasonable
objection;
(k) in the event of the issuance of any stop order suspending the
effectiveness of a Registration Statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such Registration Statement for sale in any
jurisdiction, the Company shall use its best efforts promptly to obtain the
withdrawal of such order; and
(l) with respect to any underwritten sale of Registrable Shares, or
any sale of Registrable Shares as to which the Holder reasonably determines,
after consultation with its
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counsel, that such Holder may have liability under Section 11 of the Securities
Act as an underwriter or a control person, at the request of such underwriter or
Holder (or the Holders of the majority of the Registrable Shares covered by such
Registration Statement), the Company shall use all commercially reasonable
efforts to obtain a so-called cold comfort letter from the Company's independent
public accountants to such underwriter or Holder in customary form and covering
such matters of the type customarily covered by cold comfort letters as the
Holders of a majority of the Registrable Shares being sold reasonably request.
If the Company has delivered preliminary or final prospectuses to the
selling Holders and after having done so the prospectus is amended to comply
with the requirements of the Securities Act, the Company shall promptly notify
the selling Holders and, if requested, the selling Holders shall immediately
cease making offers of Registrable Shares and return all prospectuses then in
their possession to the Company. The Company shall promptly provide the selling
Holders with revised prospectuses and, following receipt of the revised
prospectuses, the selling Holders shall be free to resume making offers of the
Registrable Shares.
6. ALLOCATION OF EXPENSES.
(a) The Company will pay all Registration Expenses of all
registrations under this Agreement whether or not the registrations have become
effective and whether or not such registrations have counted as one of the
Permitted Registrations. For purposes of this Section, the term "Registration
Expenses" shall mean all expenses incurred by the Company or the Holders in
complying with the terms hereof, including, without limitation, all registration
and filing fees, exchange listing fees, printing expenses, accounting fees, fees
and expenses for listing the securities to be registered on each securities
exchange on which similar securities issued by the Company are then-listed or on
the NASD automated quotation system, fees and disbursements of counsel for the
Company and the reasonable fees and disbursements of one counsel for the selling
Holders, but excluding underwriting discounts and selling commissions relating
to the Registrable Shares, which expenses will be borne by the selling Holders.
(b) Notwithstanding the foregoing, the Company shall, in any event,
pay its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any annual audit or quarterly review and the expense of any
liability insurance.
(c) In connection with each registration for which the Company is
required to pay all of the Holder's Registration Expenses pursuant to Section
6(a), the Company shall reimburse the Holders of Registrable Shares included in
such registration for the reasonable fees and disbursements of one counsel
chosen by the Holders of a majority of the Registrable Shares included in such
registration and for the reasonable fees and disbursements of each additional
counsel retained by any Holder of Registrable Shares for the purpose of
rendering a legal opinion on behalf of such Holder in connection with any
underwritten registration pursuant to Section 2,
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3 or 4. Notwithstanding any other provision of this Agreement, in no event
shall the Company's liability for any fees or expenses incurred by legal counsel
retained by the Holders in connection with the preparation of a Registration
Statement and matters customarily incident thereto under this Agreement exceed
the sum of (i) $75,000, plus (ii) 30% of the amount by which such fees exceed
$75,000, plus (iii) expenses incurred by such counsel; provided, however, that
such limit shall be reasonably adjusted from time to time to reflect any
increase in the cost of such legal services, generally, or any material change
in the scope of legal work customarily performed by such counsel.
7. INDEMNIFICATION.
(a) In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, the Company will indemnify
and hold harmless the seller of such Registrable Shares, each underwriter of
such Registrable Shares, and each other person, if any, who controls such seller
or underwriter within the meaning of the Securities Act or the Exchange Act
against any losses, claims, damages or liabilities, joint or several, to which
such seller, underwriter or controlling person may become subject under the
Securities Act, the Exchange Act, state securities laws or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any Registration Statement under which such
Registrable Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained in the Registration Statement, or any
amendment or supplement to such Registration Statement, or arise out of or are
based upon the omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
and the Company will reimburse such seller, underwriter and each such
controlling person for any legal or any other expenses reasonably incurred by
such seller, underwriter or controlling person in connection with investigating
or defending any such loss, claim, damage, liability or action; PROVIDED,
HOWEVER, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon any
untrue statement or omission made in such Registration Statement, preliminary
prospectus or prospectus, or any such amendment or supplement, made in reliance
upon and in conformity with information furnished to the Company, in writing, by
or on behalf of such seller, underwriter or controlling person specifically for
use in the preparation thereof.
(b) In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, each seller of Registrable
Shares, severally and not jointly, will indemnify and hold harmless the Company,
each of its directors and officers and each underwriter, if any, and each
person, if any, who controls the Company or any such underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages or liabilities, joint or several, to which the Company, such directors
and officers, underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities laws or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
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thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement under which
such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information furnished in writing to the Company by or on
behalf of such seller, specifically for use in connection with the preparation
of such Registration Statement, prospectus, amendment or supplement; PROVIDED,
HOWEVER, that the obligation to indemnify shall be individual, not joint and
several, for each Holder and the obligations of such Holders hereunder shall be
limited to an amount equal to the proceeds to each Holder of the Registrable
Shares of such Holder sold as contemplated herein.
(c) Each party entitled to indemnification under this Section 7 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld); and, provided, further, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 7. The Indemnified Party may participate in such
defense at such party's expense; PROVIDED, HOWEVER, that the Indemnifying Party
shall pay such expense if representation of such Indemnified Party by the
counsel retained by the Indemnifying Party would be inappropriate due to actual
or potential differing interests between the Indemnified Party and any other
party represented by such counsel in such proceeding; PROVIDED, HOWEVER, that
under no circumstances will the Indemnifying Party be required under this
Section 7 to pay the expenses of more than one counsel for the Indemnified
Parties unless counsel has advised that there exists an actual or potential
conflict of interest among two or more Indemnified Parties with respect to the
matter as to which indemnification is sought, and then only the minimum number
of counsel as are necessary to avoid such conflict. No Indemnifying Party, in
the defense of any such claim or litigation shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect of such claim or litigation, and no Indemnified Party shall
consent to entry of any judgment or settle such claim or litigation without the
prior written consent of the Indemnifying Party.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an Indemnified Party under this
Section 7 in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to herein, then each Indemnifying Party shall
contribute to the amount paid or payable by such Indemnified Party as
12
a result of such losses, claims, damages or liabilities (or actions in respect
thereof) in the same proportion that the net proceeds from the offering (before
deducting expenses) received by such Indemnifying Party bear to the total net
proceeds from the offering (before deducting expenses), less the amount of any
damages which such Indemnifying Party has otherwise been required to pay by
reason of its indemnification obligations under this Section 7. No person
guilty of fraudulent misrepresentation within the meaning of Section 11 of the
Securities Act shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. The contribution obligations of
each Indemnifying Party under this Section 7 are several and not joint.
(e) The indemnification provided for under this Agreement shall
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling person
of such indemnified party and shall survive the transfer of securities.
8. INFORMATION BY HOLDERS. Each Holder of Registrable Shares included in
any registration shall furnish to the Company such information regarding such
Holder and the distribution proposed by such Holder as the Company may
reasonably request in writing.
9. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. After the date of this
Agreement, the Company shall not, without the prior written consent of the
Holders of two-thirds of the Registrable Shares (which consent shall not
withheld unreasonably), enter into any agreement (other than this Agreement)
with any holder or prospective holder of any securities of the Company which
would allow such holder or prospective holder to include securities of the
Company in any registration filed under Section 2 hereof. The Company hereby
represents that, as of the date hereof, the only agreements pursuant to which
the Company has granted registration rights with respect to any of its capital
stock are (i) the Registration Agreement, dated September 30, 1995, as amended,
by and between the Company and Dartmouth Capital Group, L.P. and (ii) the
Employment Agreement, dated October 1, 1995, by and between the Company and
Xxxxxx X. Xxxxxx. After the date of this Agreement, without the consent of the
Holders of two-thirds of the Registrable Shares then outstanding, which consent
shall not be unreasonably withheld, the Company shall not enter into any
agreement granting registration rights to any Other Stockholders that does not
permit the Holders of Registrable Shares to exercise the rights granted to them
pursuant to Section 4 hereof.
10. RULE 144 REQUIREMENTS. The Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Exchange Act; and
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(c) furnish to any holder of Registrable Shares upon request a
written statement by the Company as to its compliance with the information
requirements of Rule 144, and of the reporting requirements of the Exchange Act,
a copy of the most recent annual or quarterly report of the Company, and such
other reports and documents of the Company as such holder may reasonably request
to avail itself of any similar rule or regulation of the Commission allowing it
to sell any such securities without registration.
11. TRANSFERS OF CERTAIN RIGHTS. The rights granted to the Holders
hereunder may be transferred by such Holder to any transferee who acquires not
less than 50,000 Registrable Shares (which threshold shall be appropriately
adjusted in the event of any future stock split, reverse split or similar
reclassification of the Class B Common Stock); PROVIDED, HOWEVER, that (a) the
Company is given written notice by the transferee at the time of such transfer
stating the name and address of the transferee and identifying the securities
with respect to which such rights are being assigned, and (b) as a condition to
the transfer of the rights hereunder, the transferee shall deliver to the
Company a written instrument by which such transferee agrees to be bound by the
obligations imposed upon the Holders under this Agreement to the same extent as
if such transferee were a Purchaser.
12. NOTICES. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be delivered by hand or
mailed by first class certified or registered mail, return receipt requested,
postage prepaid, to the Company at its executive offices, to the attention of
the Chief Executive Officer, and to each Holder at its address shown in the
Company's stock register.
13. CONSTRUCTION OF AGREEMENT. This Agreement embodies the entire
agreement and understanding between the Parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision. The headings of the sections, subsections, and paragraphs
of this Agreement have been added for convenience only and shall not be deemed
to be a part of this Agreement. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which to
ether shall constitute one and the same instrument.
14. AMENDMENTS AND WAIVERS. Except as otherwise expressly set forth in
this Agreement, any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), with the written consent of
the Company and the Holders of two-thirds of the Registrable Shares then
outstanding. Any amendment or waiver effected in accordance with this Section
14 shall be binding upon each holder of any Registrable Shares, each future
holder of all such securities and the Company. No waivers of or exceptions to
any term, condition or provision of this Agreement, in any one or more
instances, shall be seemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
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15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
16. MISCELLANEOUS.
(a) Market Stand-off.
(i) The Company shall not effect any public sale or
distribution of its Class B Common Stock, or any securities convertible into or
exchangeable or exercisable for Class B Common Stock, during the seven days
prior to and during the 120-day period beginning on the effective date of any
underwritten registration pursuant to Section 2(a) (except as part of such
underwritten registration or pursuant to registrations on Form S-4 or Form S-8
or any successor form or as part of any other issuance of Class B Common Stock
in exchange for securities or assets of another corporation), unless the
underwriters managing the registered public offering otherwise agree; PROVIDED,
HOWEVER, that the restrictions pursuant to this Section 16(a) shall expire
120-days from the effective date of the second Permitted Registration demanded
by the Holder pursuant to Section 2(a).
(ii) The Holder shall not effect any public sale or
distribution of its Registrable Shares, or any securities convertible into or
exchangeable or exercisable for Registrable Shares, during the seven days prior
to and during the 90-day period beginning on the effective date of any
underwritten registration by the Company of Class B Common Stock, other than
pursuant to Section 2 of this Agreement, unless the underwriters managing the
registered public offering otherwise agree.
(b) SELECTION OF INVESTMENT BANKERS. The Company will consult with the
Holder in advance of any underwritten registration effected pursuant to this
Agreement regarding the selection of investment banker(s) and manager(s) for any
public offering or private sale by the Company of Class B Common Stock.
(c) NO INCONSISTENT AGREEMENTS. The Company shall not enter into any
agreement with respect to its securities which is inconsistent with or violates
the rights granted to the Holders of Registrable Shares in this Agreement.
(d) ADJUSTMENTS AFFECTING REGISTRABLE SHARES. The Company shall not take
any action and shall use all commercially reasonably efforts not to permit any
change to occur, with respect to the terms of the Class B Common Stock set forth
in the Company's Amended and Restated Certificate of Incorporation, as the same
may be amended from time to time in a manner consistent herewith, which
reasonably could be expected to adversely affect in any material respect (i) the
ability of the Holders of Registrable Shares to include such Registrable Shares
in a registration undertaken pursuant to this Agreement, or (ii) the
marketability of such Registrable Shares in any such registration.
15
(e) REMEDIES. Any person having rights under any provision of this
Agreement shall be entitled to enforce such rights specifically, to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law or equity. The parties hereto agree
and acknowledge that money damages would not be an adequate remedy for any
breach of the provisions of this Agreement and that any party may in its sole
discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or other security) for specific performance and for
other injunctive relief in order to enforce or prevent violation of the
provisions of this Agreement.
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IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the
day and year first above written.
COMMERCE SECURITY BANCORP, INC.
By: /s/
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
MADISON DEARBORN CAPITAL PARTNERS II, L.P.
By: MADISON DEARBORN PARTNERS, II, L.P.,
its general partner
By: MADISON DEARBORN PARTNERS, INC.,
its general partner
By: /s/
------------------------------------------------
Name: Xxxx X. Xxxx
Title: Vice President
OLYMPUS GROWTH FUND II, L.P.
By: OGP II, L.P., its general partner
By: Xxxxxx, L.L.C., its general partner
By: /s/
------------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Member
OLYMPUS EXECUTIVE FUND, L.P.
By: OEF, L.P., its general partner
By: Xxxxxx, L.L.C., its general partner
By: /s/
------------------------------------------------
Name: Xxxxx X. Xxxxxx
17
Title: Member
18
