EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of December 29, 2005, by and between Aveta Inc., a Delaware corporation
(together with any successor entity thereto, the "Company"), and Friedman,
Billings, Xxxxxx & Co., Inc., a Delaware corporation ("FBR"), for the benefit of
FBR, the purchasers of the Company's common stock, par value $0.01 per share, as
participants ("Participants") in the private placement by the Company of shares
of its common stock (the "Private Placement"), and the direct and indirect
transferees of FBR, and each of the Participants.
This Agreement is made pursuant to the Purchase/Placement Agreement (the
"Purchase/Placement Agreement"), dated as of December 21, 2005, by and among the
Company and FBR in connection with the purchase and sale or placement of an
aggregate of 25,000,000 shares of the Company's common stock (plus an additional
3,750,000 shares to cover additional allotments, if any). In order to induce FBR
to enter into the Purchase/Placement Agreement, the Company has agreed to
provide the registration rights provided for in this Agreement to FBR, the
Participants, and their respective direct and indirect transferees. The
execution of this Agreement is a condition to the closing of the transactions
contemplated by the Purchase/Placement Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
Accredited Investor Shares: Shares initially sold by the Company to
"accredited investors" (within the meaning of Rule 501(a) promulgated
under the Securities Act) as Participants.
Agreement: As defined in the preamble.
Affiliate: As to any specified Person, (i) any Person directly or
indirectly owning, controlling or holding, with power to vote, ten percent
or more of the outstanding voting securities of such other Person, (ii) any
Person ten percent or more of whose outstanding voting securities are
directly or indirectly owned, controlled or held, with power to vote, by
such other Person, (iii) any Person directly or indirectly controlling,
controlled by or under common control with such other Person, (iv) any
executive officer, director, trustee or general partner of such Person and
(v) any legal entity for which such Person acts as an executive officer,
director, trustee or general partner. An indirect relationship shall
include circumstances in which a Person's spouse, children, parents,
siblings or mother-, father-, sister- or brother-in-law is or has been
associated with a Person.
Business Day: With respect to any act to be performed hereunder, each
Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which
banking institutions in New York, New York or other applicable places where
such act is to occur are authorized or obligated by applicable law,
regulation or executive order to close.
Closing Date: December 29, 2005 or such other time or date as FBR and
the Company may agree.
Commission: The Securities and Exchange Commission.
Common Stock: The common stock, par value $0.01 per share, of the
Company.
Company: As defined in the preamble.
Controlling Person: As defined in Section 6(a) hereof.
End of Suspension Notice: As defined in Section 5(b) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the Commission pursuant thereto.
FBR: As defined in the preamble.
Holder: Each record owner of any Registrable Shares from time to time,
including FBR and its Affiliates.
Indemnified Party: As defined in Section 6(c) hereof.
Indemnifying Party: As defined in Section 6(c) hereof.
IPO Registration Statement: As defined in Section 2(b) hereof.
Liabilities: As defined in Section 6(a) hereof.
NASD: The National Association of Securities Dealers, Inc.
Offering Memorandum: The Offering Memorandum of the Company dated
December 21, 2005 pursuant to which the Rule 144 A Shares, the Regulation S
Shares and the Accredited Investor Shares are offered and sold.
Participant: As defined in the preamble.
Person: An individual, partnership, corporation, trust, unincorporated
organization, government or agency or political subdivision thereof, or any
other legal entity.
Private Placement: As defined in the preamble.
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Proceeding: An action, claim, suit or proceeding (including without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or, to the knowledge of the Person subject thereto,
threatened.
Prospectus: The prospectus included in any Registration Statement,
including any preliminary prospectus, and all other amendments and
supplements to any such prospectus, including post-effective amendments,
and all material incorporated by reference or deemed to be incorporated by
reference, if any, in such prospectus.
Purchase/Placement Agreement: As defined in the preamble.
Purchaser Indemnitee: As defined in Section 6(a) hereof.
Registrable Shares: The Rule 144A Shares, the Accredited Investor
Shares, and the Regulation S Shares, upon original issuance thereof, and at
all times subsequent thereto, including upon the transfer thereof by the
original holder or any subsequent holder and any shares or other securities
issued in respect of such Registrable Shares by reason of or in connection
with any stock dividend, stock distribution, stock split, purchase in any
rights offering or in connection with any exchange for or replacement of
such Registrable Shares or any combination of shares, recapitalization,
merger or consolidation, or any other equity securities issued pursuant to
any other pro rata distribution with respect to the Common Stock, until, in
the case of each such Share, the earliest to occur of (i) the date on which
it has been registered pursuant to the Securities Act and disposed of in
accordance with a Registration Statement relating to it; (ii) the date on
which either it is distributed to the public pursuant to Rule 144 (or any
similar provision then in effect) or is saleable pursuant to Rule 144(k)
promulgated by the Commission pursuant to the Securities Act; and (iii) the
date on which it is sold to the Company or any of its subsidiaries.
Registration Expenses: Any and all expenses incident to the
performance of or compliance with this Agreement, including, without
limitation: (i) all Commission, securities exchange, NASD or other
registration, listing, inclusion and filing fees, (ii) all fees and
expenses incurred in connection with compliance with international, federal
or state securities or blue sky laws (including, without limitation, any
registration, listing and filing fees and reasonable fees and disbursements
of counsel in connection with blue sky qualification of any of the
Registrable Shares and the preparation of a blue sky memorandum and
compliance with the rules of the NASD), (iii) all expenses of any Person in
preparing or assisting in preparing, word processing, duplicating,
printing, delivering and distributing any Registration Statement, any
Prospectus, any amendments or supplements thereto, any underwriting
agreements, securities sales agreements, certificates and any other
documents relating to the performance under and compliance with this
Agreement, (iv) all fees and expenses incurred in connection with the
listing or inclusion of any of the Registrable Shares on any securities
exchange or The Nasdaq Stock Market
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pursuant to Section 4(n) of this Agreement, (v) the fees and disbursements
of counsel for the Company and of the independent public accountants of the
Company (including, without limitation, the expenses of any special audit
and "cold comfort" letters required by or incident to such performance),
(vi) reasonable fees and disbursements of one counsel, reasonably
acceptable to the Company, for the Holders, selected by the Holders holding
a majority of the Registrable Shares (such counsel, "Selling Holders'
Counsel") and (vii) any fees and disbursements customarily paid in issues
and sales of securities (including the fees and expenses of any experts
retained by the Company in connection with any Registration Statement);
provided, however, that Registration Expenses shall exclude brokers' or
underwriters' discounts and commissions, if any, relating to the sale or
disposition of Registrable Shares by a Holder.
Registration Statement: Any registration statement of the Company that
covers the resale of Registrable Shares pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto and all material incorporated by reference
or deemed to be incorporated by reference, if any, in such registration
statement.
Regulation S: Regulation S (Rules 901-904) promulgated by the
Commission under the Securities Act, as such rules may be amended from time
to time, or any similar rule or regulation hereafter adopted by the
Commission as a replacement thereto having substantially the same effect as
such regulation.
Regulation S Shares: Shares initially resold by FBR pursuant to the
Purchase/Placement Agreement to "non-U.S. persons" (in accordance with
Regulation S) in an "offshore transaction" (in accordance with Regulation
S).
Rule 144: Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission as a
replacement thereto having substantially the same effect as such rule.
Rule 144A: Rule 144A promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission as a
replacement thereto having substantially the same effect as such rule.
Rule 144A Shares: Shares initially resold by FBR pursuant to the
Purchase/Placement Agreement to "qualified institutional buyers" (as such
term is defined in Rule 144A).
Rule 158: Rule 158 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission as a
replacement thereto having substantially the same effect as such rule.
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Rule 174: Rule 174 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission as a
replacement thereto having substantially the same effect as such rule.
Rule 415: Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission as a
replacement thereto having substantially the same effect as such rule.
Rule 424: Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission as a
replacement thereto having substantially the same effect as such rule.
Rule 429: Rule 429 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission as a
replacement thereto having substantially the same effect as such rule.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the Commission thereunder.
Shares: The shares of Common Stock being offered and sold pursuant to
the terms and conditions of the Purchase/Placement Agreement
Shelf Registration Statement: As defined in Section 2(a) hereof.
Suspension Event: As defined in Section 5(b) hereof.
Suspension Notice: As defined in Section 5(b) hereof.
Underwritten Offering: A sale of securities of the Company to an
underwriter or underwriters for reoffering to the public.
2. REGISTRATION RIGHTS
(a) Mandatory Shelf Registration. As set forth in Section 4 hereof, the
Company agrees to file with the Commission as soon as reasonably practicable
following the date of this Agreement (but in no event later than the date that
is 90 days after the date of this Agreement) a shelf Registration Statement on
Form S-1 or such other form under the Securities Act then available to the
Company providing for the resale of any Registrable Shares pursuant to Rule 415
from time to time by the Holders (a "Shelf Registration Statement"). The Company
shall use its commercially reasonable efforts to cause such Shelf Registration
Statement to be declared effective by the Commission as soon as practicable (but
in no event later than 180 days after the date of this Agreement). Any Shelf
Registration Statement shall provide for the resale from time to time, and
pursuant to any method or combination of methods legally available (including,
without limitation, an Underwritten Offering, a direct sale to purchasers or a
sale through brokers
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or agents, which may include sales over the Internet) by the Holders of any and
all Registrable Shares.
(b) IPO Registration. If the Company proposes to file a registration
statement on Form S-1 or such other form under the Securities Act providing for
the initial public offering of shares of Common Stock (the "IPO Registration
Statement"), the Company will notify each Holder of the proposed filing and
afford each Holder an opportunity to include in the IPO Registration Statement
all or any part of the Registrable Shares then held by such Holder. Each Holder
desiring to include in the IPO Registration Statement all or part of the
Registrable Shares held by such Holder shall, within twenty (20) days after
receipt of the above-described notice from the Company, so notify the Company in
writing, and in such notice shall inform the Company of the number of
Registrable Shares such Holder wishes to include in the IPO Registration
Statement. Any election by any Holder to include any Registrable Shares in the
IPO Registration Statement will not affect the inclusion of such Registrable
Shares in the Shelf Registration Statement until such Registrable Shares have
been sold under the IPO Registration Statement.
(i) Right to Terminate IPO Registration. The Company, in its sole
discretion, shall have the right to terminate or withdraw the IPO
Registration Statement initiated by it referred to in this Section 2(b)
prior to the effectiveness of such registration whether or not any Holder
has elected to include Registrable Shares in such registration.
(ii) Selection of Underwriter. The Company shall have the sole right
to select the managing underwriter(s) for its initial public offering,
regardless of whether any Registrable Shares are included in the IPO
Registration Statement or otherwise.
(iii) Shelf Registration not Impacted by IPO Registration Statement.
The Company's obligation to file the Shelf Registration Statement pursuant
to Section 2(a) hereof shall not be affected by the filing or effectiveness
of the IPO Registration Statement.
(c) Underwriting. The Company shall advise all Holders of the underwriter
for the Underwritten Offering proposed under the IPO Registration Statement. The
right of any such Holder's Registrable Shares to be included in the IPO
Registration Statement pursuant to Section 2(b) shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Shares in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Shares through such
underwriting shall enter into an underwriting agreement in customary form with
the managing underwriter(s) selected for such underwriting and complete and
execute any questionnaires, powers of attorney, indemnities, securities escrow
agreements and other documents reasonably required under the terms of such
underwriting, and furnish to the Company such information as the Company may
reasonably request in writing for inclusion in the Registration Statement;
provided, however, that no Holder shall be required to make any representations
or warranties to or agreements with the Company or the underwriters other than
representations, warranties
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or agreements regarding such Holder and such Holder's intended method of
distribution and any other representation required by law or reasonably
requested by the underwriters. Notwithstanding any other provision of this
Agreement, if the managing underwriter(s) determine(s) in good faith that
marketing factors require a limitation on the number of shares to be included,
then the managing underwriter(s) may exclude shares (including Registrable
Shares) from the IPO Registration Statement and Underwritten Offering, and any
shares included in such IPO Registration Statement and Underwritten Offering
shall be allocated first, to the Company, and second, to each of the Holders
requesting inclusion of their Registrable Shares in such IPO Registration
Statement (on a pro rata basis based on the total number of Registrable Shares
then held by each such Holder who is requesting inclusion); provided, however,
that the number of Registrable Shares to be included in the IPO Registration
Statement shall not be reduced unless all other securities of the Company held
by (i) officers, directors, other employees of the Company and consultants; and
(ii) other holders of the Company's capital stock with registration rights that
are inferior (with respect to such reduction) to the registration rights of the
Holders set forth herein, are first entirely excluded from the underwriting and
registration.
Regardless of whether a Holder elects to include Registrable Shares in the
IPO Registration Statement, each Holder of such Registrable Shares shall be
deemed to have agreed not to effect any public sale or distribution of
securities of the Company of the same or similar class or classes of the
securities included in the IPO Registration Statement or any securities
convertible into or exchangeable or exercisable for such securities, including a
sale pursuant to Rule 144 or Rule 144A under the Securities Act, during such
periods as reasonably requested (but in no event for a period longer than sixty
(60) days following the effective date of the IPO Registration Statement) by the
representatives of the underwriters, if an Underwritten Offering, or by the
Company in any other registration.
If any Holder disapproves of the terms of any such underwriting, such
Holder may elect to withdraw therefrom by written notice to the Company and the
underwriter, delivered at least ten (10) Business Days prior to the effective
date of the IPO Registration Statement. Any Registrable Shares excluded or
withdrawn from such underwriting shall be excluded and withdrawn from the
registration.
(d) Expenses. The Company shall pay all Registration Expenses in connection
with the registration of the Registrable Shares pursuant to this Agreement. Each
Holder participating in a registration pursuant to this Section 2 shall bear
such Holder's proportionate share (based on the total number of Registrable
Shares sold in such registration) of all discounts and commissions payable to
underwriters or brokers in connection with a registration of Registrable Shares
pursuant to this Agreement.
(e) Executive Bonuses. If (1) the Company does not file a Registration
Statement registering the resale of the Accredited Investor Shares, the Rule
144A Shares, and the Regulation S Shares within 90 days after the Closing Date
or (2) such Registration Statement is not declared effective within 180 days of
the Closing Date, other than as a result of the Commission being unable to
accept such filings (each a "Registration Default"), then Xxxxxx X. Xxxxxx,
Chairman of the Company's Board of Directors, Xxxxxxx X. X'Xxxxxxx, the
Company's
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Chief Executive Officer, and Xxxxxx X. Xxxx, Chairman of the Company's Executive
Committee of the Board of Directors, shall each forfeit 1% of any cash bonus to
which he became entitled or earned as a result of performance during the 2006
fiscal year (whether or not payable in 2006)), whether under an employment
agreement with the Company, a bonus plan or any other bonus arrangement,
including any bonus compensation for which payment would otherwise be deferred
until after 2006, for each Business Day such Registration Default continues, up
to the maximum amount of each such bonus; provided, however, that such
forfeiture shall not apply at any time when the Company has endeavored in good
faith to file such Registration Statement within the time period specified but
is unable to make the filing as of the specified date as a result of
circumstances beyond the Company's reasonable control.
3. RULES 144 AND 144A REPORTING
With a view to making available the benefits of certain rules and
regulations of the Commission that may at any time permit the sale of the
Registrable Shares to the public without registration, the Company agrees to:
(a) use commercially reasonable efforts to make and keep public information
available, as those terms are understood and defined in Rule 144 under the
Securities Act, at all times after the effective date of the first registration
under the Securities Act filed by the Company for an offering of its securities
to the general public;
(b) use commercially reasonable efforts to file with the Commission in a
timely manner all reports and other documents required to be filed by the
Company under the Securities Act and the Exchange Act (at any time after it has
become subject to such reporting requirements);
(c) if the Company is not required to file reports and other documents
under the Securities Act and the Exchange Act, it will make available other
information as required by, and so long as necessary to permit sales of
Registrable Shares pursuant to, Rule 144 or Rule 144A;
(d) to furnish to any Holder promptly upon request (i) a written statement
by the Company as to its compliance with the reporting requirements of Rule 144
(at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public), and of the Securities Act and the Exchange Act (at any time
after it has become subject to the reporting requirements of the Exchange Act),
(ii) a copy of the most recent annual or quarterly report of the Company, and
(iii) such other reports and documents of the Company, and take such further
actions, as a Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Holder to sell any such Registrable
Shares without registration; and
(e) If the Company is not otherwise required to file reports and other
documents with the Commission, it will use commercially reasonable efforts to
make available such other information as required by, and so long as necessary
to permit sales of shares of its common stock pursuant to, Rule 144 or Rule
144A, and in any event will make available to holders of its common stock
(either by mailing a copy thereof, by posting on our website or by press
release):
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- its annual consolidated financial statements prepared in accordance
with U.S. generally accepted accounting principles, no later than
ninety (90) days after the end of each of its fiscal years; and
- its unaudited quarterly financial statements, prepared in a manner
consistent with the preparation of its annual financial statements, no
later than forty-five (45) days after the end of each of its fiscal
quarters.
In addition, the Company shall hold, within a reasonable period of time
following availability of its annual and quarterly financial statements and upon
reasonable notice to FBR and its stockholders (either by mailing a copy thereof,
by posting on its website or by press release) an investor conference call to
discuss such financial statements, with an opportunity for investors to ask
questions of the Company's management with respect to such financial statements.
4. REGISTRATION PROCEDURES
In connection with the obligations of the Company with respect to any
registration pursuant to this Agreement, the Company shall use its commercially
reasonable efforts to effect or cause to be effected the registration of the
Registrable Shares under the Securities Act to permit the sale of such
Registrable Shares by the Holder or Holders in accordance with the Holder's or
Holders' intended method or methods of distribution, and the Company shall:
(a) notify FBR and Selling Holders' Counsel, in writing, at least ten (10)
Business Days prior to filing a Registration Statement, of its intention to file
a Registration Statement with the Commission and, at least five (5) Business
Days prior to filing, provide a copy of the Registration Statement to FBR, its
counsel, and Selling Holders' Counsel for review and comment; prepare and file
with the Commission, as specified in this Agreement, a Registration
Statement(s), which Registration Statement(s) (x) shall comply as to form in all
material respects with the requirements of the applicable form and include all
financial statements required by the Commission to be filed therewith and (y)
shall be reasonably acceptable to FBR, its counsel and Selling Holders' Counsel;
notify FBR and Selling Holders' Counsel in writing, at least five (5) Business
Days prior to filing of any amendment or supplement to such Registration
Statement and, at least three (3) Business Days prior to filing, provide a copy
of such amendment or supplement to FBR, its counsel and Selling Holders' Counsel
for review and comment; promptly following receipt from the Commission, provide
to FBR, its counsel and Selling Holders' Counsel copies of any comments made by
the staff of the Commission relating to such Registration Statement and of the
Company's responses thereto for review and comment; and use its commercially
reasonable efforts to cause such Registration Statement to become effective as
soon as practicable after filing and to remain effective, subject to Section 5
hereof, until the earlier of (i) the sale, transfer or other disposition of all
of the shares covered by such Registration Statement pursuant to such
Registration Statement have been sold, transferred or disposed of pursuant to
such Registration statement or Rule 144, (ii) all of the shares covered by such
Registration Statement are eligible for sale pursuant to Rule 144(k), and (iii)
the second anniversary of the initial effective date of such Registration
Statement (subject to extension as provided in Section 5(c)); provided, however,
that if the Company has an effective Shelf Registration Statement on Form S-1
under the Securities Act and becomes eligible to use Form
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S-3 or such other short-form registration statement form under the Securities
Act, the Company may, upon thirty (30) Business Days prior written notice to all
Holders, register any Registrable Shares registered but not yet distributed
under the effective Shelf Registration Statement on such a short-form Shelf
Registration Statement and, once the short-form Shelf Registration Statement is
declared effective, de-register such shares under the previous Registration
Statement or transfer the filing fees from the previous Registration Statement
(such transfer pursuant to Rule 429, if applicable) unless any Holder registered
under the initial Shelf Registration Statement notifies the Company within
twenty (20) Business Days of receipt of the Company notice that such a
registration under a new Registration Statement and de-registration of the
initial Shelf Registration Statement would interfere with its distribution of
Registrable Shares already in progress;
(b) subject to Section 4(i) hereof, (i) prepare and file with the
Commission such amendments and post-effective amendments to each such
Registration Statement as may be necessary to keep such Registration Statement
effective for the period described in Section 4(a) hereof; (ii) cause each
Prospectus contained therein to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 or any
similar rule that may be adopted under the Securities Act; and (iii) comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by each Registration Statement during the applicable period
in accordance with the intended method or methods of distribution by the selling
Holders thereof;
(c) furnish to the Holders, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder may reasonably
request, in order to facilitate the public sale or other disposition of the
Registrable Shares; the Company consents to the use of such Prospectus,
including each preliminary Prospectus, by the Holders, if any, in connection
with the offering and sale of the Registrable Shares covered by any such
Prospectus;
(d) use its commercially reasonable efforts to register or qualify, or
obtain exemption from registration or qualification for, all Registrable Shares
by the time the applicable Registration Statement is declared effective by the
Commission under all applicable state securities or "blue sky" laws of such
jurisdictions as FBR or any Holder of Registrable Shares covered by a
Registration Statement shall reasonably request in writing, keep each such
registration or qualification or exemption effective during the period such
Registration Statement is required to be kept effective pursuant to Section 4(a)
and do any and all other acts and things that may be reasonably necessary or
advisable to enable such Holder to consummate the disposition in each such
jurisdiction of such Registrable Shares owned by such Holder; provided, however,
that the Company shall not be required to (i) qualify generally to do business
in any jurisdiction or to register as a broker or dealer in such jurisdiction
where it would not otherwise be required to qualify but for this Section 4(d)
and except as may be required by the Securities Act, (ii) subject itself to
taxation in any such jurisdiction, or (iii) submit to the general service of
process in any such jurisdiction;
(e) use its commercially reasonable efforts to cause all Registrable Shares
covered by such Registration Statement to be registered and approved by such
other governmental agencies
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or authorities as may be necessary to enable the Holders thereof to consummate
the disposition of such Registrable Shares;
(f) notify FBR and each Holder promptly and, if requested by FBR or any
Holder, confirm such advice in writing (i) when a Registration Statement has
become effective and when any post-effective amendments and supplements thereto
become effective, (ii) of the issuance by the Commission or any state securities
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any proceedings for that purpose, (iii) of any
request by the Commission or any other federal, state or foreign governmental
authority for amendments or supplements to a Registration Statement or related
Prospectus or for additional information, (iv) of the happening of any event
during the period a Registration Statement is effective as a result of which
such Registration Statement or the related Prospectus or any document
incorporated by reference therein contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading (which information shall
be accompanied by an instruction to suspend the use of the Prospectus until the
requisite changes have been made) and (v) at the request of any such Holder,
promptly to furnish to such Holder a reasonable number of copies of a supplement
to or an amendment of such Prospectus as may be necessary so that, as thereafter
delivered to the purchaser of such securities, such Prospectus shall not include
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 not misleading;
(g) use its commercially reasonable efforts to avoid the issuance of, or if
issued, to obtain, as promptly as practicable, the withdrawal of, any order
enjoining or suspending the use or effectiveness of a Registration Statement or
suspending of the qualification (or exemption from qualification) of any of the
Registrable Shares for sale in any jurisdiction;
(h) upon the written request, furnish to each requesting Holder of
Registrable Shares, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment or supplement thereto
(without documents incorporated therein by reference or exhibits thereto, unless
requested);
(i) except as provided in Section 5, upon the occurrence of any event
contemplated by Section 4(f)(iv) hereof, use its commercially reasonable efforts
to promptly prepare a supplement or post-effective amendment to a Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Shares, such Prospectus will not contain
any 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
the light of the circumstances under which they were made, not misleading;
(j) if requested by the representative of the underwriters, if any, or any
Holders of Registrable Shares being sold in connection with such offering,
(i) promptly incorporate in a Prospectus supplement or post-effective amendment
such information as the representative of the underwriters, if any, or such
Holders indicate relates to them or that they reasonably request be included
therein and (ii) make all required filings of such Prospectus supplement or such
post-
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effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus supplement or
post-effective amendment;
(k) in the case of an Underwritten Offering, use its commercially
reasonable efforts to furnish to the underwriters a signed counterpart,
addressed to the underwriters, of: (i) an opinion of counsel for the Company,
dated the date of each closing under the underwriting agreement, reasonably
satisfactory to the underwriters; and (ii) a "comfort" letter, dated the
effective date of such Registration Statement and the date of each closing under
the underwriting agreement, signed by the independent public accountants who
have certified the Company's financial statements included in such Registration
Statement, covering substantially the same matters with respect to such
Registration Statement (and the Prospectus included therein) and with respect to
events subsequent to the date of such financial statements, as are customarily
covered in accountants' letters delivered to underwriters in underwritten public
offerings of securities;
(l) enter into customary agreements (including in the case of an
Underwritten Offering, an underwriting agreement in customary form) and take all
other action in connection therewith in order to expedite or facilitate the
distribution of the Registrable Shares included in such Registration Statement,
and, in the case of an Underwritten Offering, make representations and
warranties to the underwriters in such form and scope as are customarily made by
issuers to underwriters in underwritten offerings and confirm the same to the
extent customary if and when requested;
(m) make available for inspection by representatives of the Holders and the
representative of any underwriters participating in any disposition pursuant to
a Registration Statement and any special counsel or accountants retained by such
Holders or underwriters, all financial and other records, pertinent corporate
documents and properties of the Company and cause the respective officers,
directors and employees of the Company to supply all information reasonably
requested by any such representatives, the representative of the underwriters,
counsel thereto or accountants in connection with a Registration Statement;
provided, however, that such records, documents or information that the Company
determines, in good faith, to be confidential and notifies such representatives,
representative of the underwriters, counsel thereto or accountants are
confidential shall not be disclosed by the representatives, representative of
the underwriters, counsel thereto or accountants unless (i) the disclosure of
such records, documents or information is necessary to avoid or correct a
misstatement or omission in a Registration Statement or Prospectus, (ii) the
release of such records, documents or information is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction, or (iii) such
records, documents or information have been generally made available to the
public;
(n) use its commercially reasonable efforts (including, without limitation,
seeking to cure any deficiencies cited by the exchange or market in the
Company's listing or inclusion application) to list or include all Registrable
Shares on the New York Stock Exchange, the American Stock Exchange or The Nasdaq
Stock Market;
(o) prepare and file in a timely manner all documents and reports required
by the Exchange Act and, to the extent the Company's obligation to file such
reports pursuant to Section 15(d) of the Exchange Act expires prior to the
expiration of the effectiveness period of the Registration Statement as required
by Section 4(a) hereof, the Company shall register the
12
Registrable Shares under the Exchange Act and shall maintain such registration
through the effectiveness period required by Section 4(a) hereof;
(p) provide a CUSIP number for all Registrable Shares, not later than the
effective date of the Registration Statement;
(q) (i) otherwise use its commercially reasonable efforts to comply with
all applicable rules and regulations of the Commission, (ii) make generally
available to its stockholders, as soon as reasonably practicable, earnings
statements covering at least 12 months that satisfy the provisions of Section
1l(a) of the Securities Act and Rule 158 (or any similar rule promulgated under
the Securities Act) thereunder, but in no event later than forty-five (45) days
after the end of each fiscal year of the Company and (iii) not file any
Registration Statement or Prospectus or amendment or supplement to such
Registration Statement or Prospectus to which any Holder of Registrable Shares
covered by any Registration Statement shall have reasonably objected on the
grounds that such Registration Statement or Prospectus or amendment or
supplement does not comply in all material respects with the requirements of the
Securities Act, such Holder having been furnished with a copy thereof at least
two (2) Business Days prior to the filing thereof;
(r) provide and cause to be maintained a registrar and transfer agent for
all Registrable Shares covered by any Registration Statement from and after a
date not later than the effective date of such Registration Statement;
(s) in connection with any sale or transfer of the Registrable Shares
(whether or not pursuant to a Registration Statement) that will result in the
security being delivered no longer being Registrable Shares, cooperate with the
Holders and the representative of the underwriters, if any, to facilitate the
timely preparation and delivery of certificates representing the Registrable
Shares to be sold, which certificates shall not bear any transfer restrictive
legends (other than as required by The Depository Trust Company) and to enable
such Registrable Shares to be in such denominations and registered in such names
as the representative of the underwriters, if any, or the Holders may request at
least two (2) Business Days prior to any sale of the Registrable Shares;
provided, however, that such Holder has provided the Company with any documents
that are reasonably requested by the Company;
(t) if required by the rules of the NASD, in connection with the initial
filing of a Shelf Registration Statement and each amendment thereto with the
Commission pursuant to Section 2(a) hereof, prepare and, within one Business Day
of such filing with the Commission, file with the NASD all forms and information
required or requested by the NASD in order to obtain written confirmation from
the NASD that the NASD does not object to the fairness and reasonableness of the
underwriting terms and arrangements (or any deemed underwriting terms and
arrangements) relating to the resale of Registrable Shares pursuant to the Shelf
Registration Statement, including, without limitation, information provided to
the NASD through its COBRADesk system, and pay all costs, fees and expenses
incident to the NASD's review of the Shelf Registration Statement and the
related underwriting terms and arrangements, including, without limitation, all
filing fees associated with any filings or submissions to the NASD and the legal
expenses, filing fees and other disbursements of FBR and any other NASD member
that is the holder of, or is affiliated or associated with an owner of,
Registrable Shares included in the
13
Shelf Registration Statement (including in connection with any initial or
subsequent member filing);
(u) in connection with the initial filing of a Shelf Registration Statement
and each amendment thereto with the Commission pursuant to Section 2(a) hereof,
provide to FBR and its representatives, the opportunity to conduct reasonable
due diligence, including, without limitation, an inquiry of the Company's
financial and other records, and make available members of its management for
questions regarding information which FBR may request in order to fulfill any
due diligence obligation on its part; and
(w) upon effectiveness of the first Registration Statement filed under this
Agreement, the Company will take such actions and make such filings as are
necessary to effect the registration of the Common Stock under the Exchange Act
simultaneously with or immediately following the effectiveness of the
Registration Statement.
The Company may require the Holders to furnish to the Company such
information regarding the proposed distribution by such Holder of such
Registrable Shares as the Company may from time to time reasonably request in
writing or as shall be required to effect the registration of the Registrable
Shares, and no Holder shall be entitled to be named as a selling stockholder in
any Registration Statement and no Holder shall be entitled to use the Prospectus
forming a part thereof if such Holder does not provide such information to the
Company. Each Holder further agrees to furnish promptly to the Company in
writing all information required from time to time to make the information
previously furnished by such Holder not misleading.
Each Holder agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4(f)(iii) or 4(f)(iv)
hereof, such Holder will immediately discontinue disposition of Registrable
Shares pursuant to a Registration Statement until such Holder's receipt of the
copies of the supplemented or amended Prospectus. If so directed by the Company,
such Holder will deliver to the Company (at the expense of the Company) all
copies in its possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Shares current at the
time of receipt of such notice.
5. BLACK-OUT PERIOD
(a) Subject to the provisions of this Section 5, following the
effectiveness of a Registration Statement (and the filings with any
international, federal or state securities commissions), the Company may direct
the Holders, in accordance with Section 5(b), to suspend sales of the
Registrable Shares pursuant to a Registration Statement for such times as the
Company reasonably may determine is necessary and advisable (but in no event for
more than an aggregate of ninety (90) days in any consecutive twelve (l2)-month
period commencing on the Closing Date or more than sixty (60) days in any
consecutive 90-day period except as a result of a review of any post-effective
amendment by the Commission prior to declaring any post-effective amendment to
the Registration Statement effective, provided the Company has used all
commercially reasonable efforts to cause such post effective amendment to be
declared effective), if any of the following events shall occur: (i) the
representative of the underwriters of an Underwritten Offering of primary shares
by the Company has advised the Company that the
14
sale of Registrable Shares pursuant to the Registration Statement would have a
material adverse effect on the Company's initial public offering; (ii) the
majority of the members of the Board of Directors of the Company shall have
determined in good faith that the offer or sale of any Registrable Shares would
materially impede, delay or interfere with any proposed financing, offer or sale
of securities, acquisition, merger, tender-offer, business combination,
corporate reorganization or other significant transaction involving the Company;
(iii) after the advice of counsel, the majority of the members of the Board of
Directors of the Company shall determine, in good faith, that the offer or sale
of Registrable Shares pursuant to the Registration Statement would require
disclosure of non-public material information not otherwise required to be
disclosed under applicable law and (x) the Company has a bona fide business
purposes for preserving the confidentiality of such information and (y) the
nondisclosure of such information would cause the Registration Statement to fail
to comply with Commission requirements; or (iv) after the advice of counsel, the
majority of the members of the Board of Directors of the Company shall have
determined in good faith, that the Company is required by law, rule or
regulation or Commission published release or interpretation to supplement the
Registration Statement or file a post-effective amendment to the Registration
Statement in order to incorporate information into the Registration Statement
for the purpose of (1) including in the Registration Statement any prospectus
required under Section 10(a)(3) of the Securities Act; (2) reflecting in the
prospectus included in the Registration Statement any facts or events arising
after the effective date of the Registration Statement (or of the most-recent
post-effective amendment) that, individually or in the aggregate, represents a
fundamental change in the information set forth therein; or (3) including in the
prospectus included in the Registration Statement any material information with
respect to the plan of distribution not disclosed in the Registration Statement
or any material change to such information. Upon the occurrence of any such
suspension, the Company shall use all commercially reasonable efforts to cause
the Registration Statement to become effective or to promptly amend or
supplement the Registration Statement on a post-effective basis or to take such
action as is necessary to make resumed use of the Registration Statement
compatible with the Company's best interests, as applicable, so as to permit the
Holders to resume sales of the Registrable Shares as soon as possible.
(b) In the case of an event that causes the Company to suspend the use of a
Registration Statement (a "Suspension Event"), the Company shall give written
notice (a "Suspension Notice") to FBR and the Holders to suspend sales of the
Registrable Shares and such notice shall state generally the basis for the
notice and that such suspension shall continue only for so long as the
Suspension Event or its effect is continuing and the Company is using its best
efforts and taking all reasonable steps to terminate suspension of the use of
the Registration Statement as promptly as possible. No Holder shall effect any
sales of the Registrable Shares pursuant to such Registration Statement (or such
filings) at any time after it has received a Suspension Notice from the Company
and prior to receipt of an End of Suspension Notice (as defined below). If so
directed by the Company, each Holder will deliver to the Company (at the expense
of the Company) all copies other than permanent file copies then in such
Holder's possession of the Prospectus covering the Registrable Shares at the
time of receipt of the Suspension Notice. The Holders may recommence effecting
sales of the Registrable Shares pursuant to the Registration Statement (or such
filings) following further notice to such effect (an "End of Suspension Notice")
from the Company, which End of Suspension Notice shall be given by the Company
to the Holders and FBR in the manner described above promptly following the
conclusion of any Suspension Event and its effect.
15
(c) Notwithstanding any provision herein to the contrary, if the Company
shall give a Suspension Notice pursuant to this Section 5, the Company agrees
that it shall extend the period of time during which the applicable Registration
Statement shall be maintained effective pursuant to this Agreement by the number
of days during the period from the date of receipt by the Holders of the
Suspension Notice to and including the date of receipt by the Holders of the End
of Suspension Notice and copies of the supplemented or amended Prospectus
necessary to resume sales.
6. INDEMNIFICATION AND CONTRIBUTION
(a) The Company agrees to indemnify and hold harmless (i) each Holder of
Registrable Shares and any underwriter (as determined in the Securities Act) for
such Holder (including FBR, if applicable), (ii) each Person, if any, who
controls (within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act), any such Person described in clause (i) (any of the
Persons referred to in this clause (ii) being hereinafter referred to as a
"Controlling Person"), and (iii) the respective officers, directors, partners,
employees, representatives and agents of any such Person or any Controlling
Person (any Person referred to in clause (i), (ii) or (iii) may hereinafter be
referred to as a "Purchaser Indemnitee"), to the fullest extent lawful, from and
against any and all losses, claims, damages, judgments, actions, out-of-pocket
expenses, and other liabilities (the "Liabilities"), including without
limitation and as incurred, reimbursement of all reasonable costs of
investigating, preparing, pursuing or defending any claim or action, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel to any
Purchaser Indemnitee, joint or several, directly or indirectly related to, based
upon, arising out of or in connection with any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement or
Prospectus (as amended or supplemented if the Company shall have furnished to
such Purchaser Indemnitee any amendments or supplements thereto), or any
preliminary Prospectus or any other document used to sell the Shares, or any
omission or alleged omission to state therein 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, except insofar as such
Liabilities arise out of or are based upon (i) any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity
with information relating to any Purchaser Indemnitee furnished to the Company
or any underwriter in writing by such Purchaser Indemnitee expressly for use
therein, or (ii) any untrue statement contained in or omission from a
preliminary Prospectus if a copy of the Prospectus (as then amended or
supplemented, if the Company shall have furnished to or on behalf of the Holder
participating in the distribution relating to the relevant Registration
Statement any amendments or supplements thereto) was not sent or given by or on
behalf of such Holder to the Person asserting any such Liabilities who purchased
Shares, if such Prospectus (or Prospectus as amended or supplemented) is
required by law to be sent or given at or prior to the written confirmation of
the sale of such Shares to such Person and the untrue statement contained in or
omission from such preliminary Prospectus was corrected in the Prospectus (or
the Prospectus as amended or supplemented). The Company shall notify the Holders
promptly of the institution, threat or assertion of any claim, proceeding
(including any governmental investigation), or litigation of which it shall have
become aware in connection with the matters addressed by this Agreement which
involves the Company or a Purchaser Indemnitee. The
16
indemnity provided for herein shall remain in full force and effect regardless
of any investigation made by or on behalf of any Purchaser Indemnitee.
(b) In connection with any Registration Statement in which a Holder of
Registrable Shares is participating, such Holder agrees, severally and not
jointly, to indemnify and hold harmless the Company, each Person who controls
the Company within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act and the respective partners, directors, officers,
members, representatives, employees and agents of such Person or Controlling
Person to the same extent as the foregoing indemnity from the Company to each
Purchaser Indemnitee, but only with reference to untrue statements or omissions
or alleged untrue statements or omissions made in reliance upon and in strict
conformity with information relating to such Purchaser Indemnitee furnished to
the Company in writing by such Purchaser Indemnitee expressly for use in any
Registration Statement or Prospectus, any amendment or supplement thereto or any
preliminary Prospectus. The liability of any Purchaser Indemnitee pursuant to
this paragraph shall in no event exceed the net proceeds received by such
Purchaser Indemnitee from sales of Registrable Shares giving rise to such
obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to paragraph (a)
or (b) above, such Person (the "Indemnified Party"), shall promptly notify the
Person against whom such indemnity may be sought (the "Indemnifying Party"), in
writing of the commencement thereof (but the failure to so notify an
Indemnifying Party shall not relieve it from any liability which it may have
under this Section 6, except to the extent the Indemnifying Party is materially
prejudiced by the failure to give notice), and the Indemnifying Party, upon
request of the Indemnified Party, shall retain counsel reasonably satisfactory
to the Indemnified Party to represent the Indemnified Party and any others the
Indemnifying Party may reasonably designate in such proceeding and shall pay the
reasonable fees and expenses actually incurred by such counsel related to such
proceeding. Notwithstanding the foregoing, in any such proceeding, any
Indemnified Party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party,
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed in writing to the contrary, (ii) the Indemnifying Party failed within a
reasonable time after notice of commencement of the action to assume the defense
and employ counsel reasonably satisfactory to the Indemnified Party, (iii) the
Indemnifying Party and its counsel do not actively and vigorously pursue the
defense of such action or (iv) the named parties to any such action (including
any impleaded parties), include both such Indemnified Party and the Indemnifying
Party, or any Affiliate of the Indemnifying Party, and such Indemnified Party
shall have been reasonably advised by counsel that, either (x) there may be one
or more legal defenses available to it which are different from or additional to
those available to the Indemnifying Party or such Affiliate of the Indemnifying
Party or (y) a conflict may exist between such Indemnified Party and the
Indemnifying Party or such Affiliate of the Indemnifying Party (in which case
the Indemnifying Party shall not have the right to assume nor direct the defense
of such action on behalf of such Indemnified Party, it being understood,
however, that the Indemnifying Party shall not, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel), for all such Indemnified Parties,
17
which firm shall be designated in writing by those Indemnified Parties who sold
a majority of the Registrable Shares sold by all such Indemnified Parties and
any such separate firm for the Company, the directors, the officers and such
control Persons of the Company as shall be designated in writing by the
Company). The Indemnifying Party shall not be liable for any settlement of any
proceeding effected without its written consent, which consent shall not be
unreasonably withheld, but if settled with such consent or if there is a final
nonappealable judgment for the plaintiff, the Indemnifying Party agrees to
indemnify any Indemnified Party from and against any loss or liability by reason
of such settlement or judgment. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Party is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability on claims that are the subject matter
of such proceeding.
(d) If the indemnification provided for in paragraphs (a) and (b) of this
Section 6 is for any reason held to be unavailable to an Indemnified Party in
respect of any Liabilities referred to therein (other than by reason of the
exceptions provided therein) or is insufficient to hold harmless a party
indemnified thereunder, then each Indemnifying Party under such paragraphs, in
lieu of indemnifying such Indemnified Party thereunder, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such Liabilities
(i) in such proportion as is appropriate to reflect the relative benefits of the
Indemnified Party on the one hand and the Indemnifying Party(ies) on the other
in connection with the statements or omissions that resulted in such
Liabilities, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Indemnifying Party(ies) and the Indemnified Party, as well as any
other relevant equitable considerations. The relative fault of the Company on
the one hand and any Purchaser Indemnitees on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by such Purchaser Indemnitees
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 6 were determined by pro rata allocation
(even if such Indemnified Parties were treated as one entity for such purpose),
or by any other method of allocation that does not take account of the equitable
considerations referred to in paragraph 6(d) above. The amount paid or payable
by an Indemnified Party as a result of any Liabilities referred to paragraph
6(d) shall be deemed to include, subject to the limitations set forth above, any
reasonable legal or other expenses actually incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6, in no event shall a Purchaser
Indemnitee be required to contribute any amount in excess of the amount by which
proceeds received by such Purchaser Indemnitee from sales of Registrable Shares
exceeds the amount of any damages that such Purchaser Indemnitee has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. For purposes of this Section 6, each Person, if
any, who controls (within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act) FBR or a Holder of Registrable Shares shall
18
have the same rights to contribution as FBR or such Holder, as the case may be,
and each Person, if any, who controls (within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act) the Company, and each officer,
director, partner, employee, representative, agent or manager of the Company
shall have the same rights to contribution as the Company. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties, notify each party or
parties from whom contribution may be sought, but the omission to so notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any obligation it or they may have under this Section 6 or
otherwise, except to the extent that any party is materially prejudiced by the
failure to give notice. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 1l(f) of the Securities Act), shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
(f) The indemnity and contribution agreements contained in this Section 6
will be in addition to any liability which the Indemnifying Parties may
otherwise have to the Indemnified Parties referred to above. The Purchaser
Indemnitee's obligations to contribute pursuant to this Section 6 are several in
proportion to the respective number of Shares sold by each of the Purchaser
Indemnitees hereunder and not joint.
7. MARKET STAND-OFF AGREEMENT
Each Holder hereby agrees that it shall not, to the extent requested by the
Company or an underwriter of securities of the Company, directly or indirectly
sell, offer to sell (including without limitation any short sale), grant any
option or otherwise transfer or dispose of any Registrable Shares or other
shares of Common Stock of the Company or any securities convertible into or
exchangeable or exercisable for shares of Common Stock of the Company then owned
by such Holder (other than to donees or partners of the Holder who agree to be
similarly bound) for a period of sixty (60) days following the effective date of
an IPO Registration Statement of the Company filed under the Securities Act;
provided, however, that:
(a) the restrictions above shall not apply to Registrable Shares sold
pursuant to the IPO Registration Statement;
(b) all executive officers and directors of the Company then holding shares
of Common Stock of the Company or securities convertible into or exchangeable or
exercisable for shares of Common Stock of the Company enter into similar
agreements;
(c) the Holders shall be allowed any concession or proportionate release
allowed to any executive officer or director that entered into similar
agreements (with such proportion being determined by dividing the number of
shares being released with respect to such officer or director by the total
number of issued and outstanding shares held by such officer or director);
provided, that nothing in this Section 7(c) shall be construed as a right to
proportionate release for the executive officers and directors of the Company
upon the expiration of the 60-day period applicable to all Holders other than
the executive officers and directors of the Company;
19
(d) this Section 7 shall not be applicable if a Shelf Registration
Statement of the Company filed under the Securities Act has been declared
effective prior to the filing of an IPO Registration Statement.
In order to enforce the foregoing covenant, the Company shall have the
right to place restrictive legends on the certificates representing the
securities subject to this Section 7 and to impose stop transfer instructions
with respect to the Registrable Shares and such other securities of each Holder
(and the securities of every other Person subject to the foregoing restriction)
until the end of such period.
8. TERMINATION OF THE COMPANY'S OBLIGATION
The Company shall have no obligation pursuant to this Agreement at such
time as no Registrable Securities are outstanding; provided that the Company's
obligations under Sections 3, 6 and 10 of the Agreement shall remain in full
force and effect.
9. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS
From and after the date of this Agreement, the Company shall not, without
the prior written consent of Holders beneficially owning not less than a
majority of the then outstanding Registrable Shares (provided, however, that for
purposes of this Section 9, Registrable Shares that are owned, directly or
indirectly, by an Affiliate of the Company shall not be deemed to be
outstanding), enter into any agreement with any holder or prospective holder of
any securities of the Company that would allow such holder or prospective holder
(a) to include such securities in any Registration Statement (other than an IPO
Registration Statement) filed pursuant to the terms hereof, unless under the
terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of his
securities will not reduce the amount of Registrable Shares of the Holders that
is included, or (b) to have his securities registered on a registration
statement that could be declared effective prior to the earlier of (x) the date
that is one hundred eighty (180) days after the effective date of any
Registration Statement filed pursuant to this Agreement and (y) the one year
anniversary of the date of this Agreement.
10. MISCELLANEOUS
(a) Remedies. In the event of a breach by the Company of any of its
obligations under this Agreement, each Holder, in addition to being entitled to
exercise all rights provided herein or, in the case of FBR, in the
Purchase/Placement Agreement, or granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.
Subject to Section 6, the Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agree that, in the event
of any action for specific performance in respect of such breach, it shall waive
the defense that a remedy at law would be adequate.
(b) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to or departures from the provisions hereof may not be
given, without the written
20
consent of the Company and Holders beneficially owning not less than a majority
of the then outstanding Registrable Shares; provided, however, that for purposes
of this Section 10(b), Registrable Shares that are owned, directly or
indirectly, by an Affiliate of the Company shall not be deemed to be
outstanding. No amendment shall be deemed effective unless it applies uniformly
to all Holders. Notwithstanding the foregoing, a waiver or consent to or
departure from the provisions hereof with respect to a matter that relates
exclusively to the rights of a Holder whose shares of common stock are being
sold pursuant to a Registration Statement and that does not directly or
indirectly affect, impair, limit or compromise the rights of other Holders may
be given by such Holder; provided that the provisions of this sentence may not
be amended, modified or supplemented except in accordance with the provisions of
the immediately preceding sentence.
(c) Notices. All notices and other communications, provided for or
permitted hereunder shall be made in writing by delivered by facsimile (with
receipt confirmed), overnight courier or registered or certified mail, return
receipt requested, or by telegram
(i) if to a Holder, at the most current address given by the transfer
agent and registrar of the Shares to the Company; and
(ii) if to the Company at the offices of the Company at
Aveta Inc.
000 Xxxxx Xxxxxxxx Xxxx
Xxxx Xxx, Xxx Xxxxxx 00000
Attention: _______________
Facsimile: _______________
(d) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties hereto,
including, without limitation and without the need for an express assignment or
assumption, subsequent Holders. The Company agrees that the Holders shall be
third party beneficiaries to the agreements made hereunder by FBR and the
Company, and each Holder shall have the right to enforce such agreements
directly to the extent it deems such enforcement necessary or advisable to
protect its rights hereunder; provided, however that such Holder fulfills all
of its obligations hereunder.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF
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LAW. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF ANY STATE COURT IN THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING IN NEW
YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT
MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(h) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties hereto that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(i) Entire Agreement. This Agreement, together with the Purchase/Placement
Agreement, is intended by the parties hereto as a final expression of their
agreement, and is intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein.
(j) Registrable Shares Held by the Company or its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable Shares
is required hereunder, Registrable Shares held by the Company or its Affiliates
shall not be counted in determining whether such consent or approval was given
by the Holders of such required percentage.
(k) Adjustment for Stock Splits, etc. Wherever in this Agreement there is a
reference to a specific number of shares with respect to any Registrable Shares,
then upon the occurrence of any subdivision, combination, or stock dividend of
such shares, the specific number of shares with respect to any Registrable
Shares so referenced in this Agreement shall automatically be proportionally
adjusted to reflect the effect on the outstanding shares of such class or series
of stock by such subdivision, combination, or stock dividend.
(l) Survival. This Agreement is intended to survive the consummation of the
transactions contemplated by the Purchase/Placement Agreement. The
indemnification and contribution obligations under Section 6 of this Agreement
shall survive the termination of the Company's obligations under Section 2 of
this Agreement.
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(m) Attorneys' Fees. In any action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the prevailing party, as determined by the court, shall be
entitled to recover its reasonable attorneys' fees in addition to any other
available remedy.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
AVETA INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Senior Managing Director
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