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EXHIBIT L
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RIGHTS AGREEMENT
BETWEEN
XXXX INTERNATIONAL HOLDINGS, INC.
AND
THE PARTICIPATING STOCKHOLDERS PARTY HERETO
December 22, 1998
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TABLE OF CONTENTS
Page
ARTICLE I
DEMAND REGISTRATIONS.................................................2
1.1 REQUESTS FOR REGISTRATION........................2
1.2 LONG-FORM REGISTRATIONS..........................3
1.3 SHORT-FORM REGISTRATIONS.........................4
1.4 EFFECTIVE REGISTRATION STATEMENT.................4
1.5 PRIORITY ON DEMAND REGISTRATIONS.................5
1.6 SELECTION OF UNDERWRITERS........................6
1.7 OTHER REGISTRATION RIGHTS........................6
1.8 BLACK-OUT RIGHTS AND POSTPONEMENT................6
ARTICLE II
PIGGYBACK REGISTRATIONS..............................................7
2.1 RIGHT TO PIGGYBACK...............................7
2.2 PIGGYBACK EXPENSES...............................7
2.3 PRIORITY ON PRIMARY REGISTRATIONS................7
2.4 PRIORITY ON SECONDARY REGISTRATIONS..............8
ARTICLE III
HOLDBACK AGREEMENTS..................................................8
3.1 HOLDER'S HOLDBACK OBLIGATIONS....................8
3.2 COMPANY'S HOLDBACK OBLIGATIONS...................8
ARTICLE IV
REGISTRATION PROCEDURES..............................................9
ARTICLE V
REGISTRATION EXPENSES...............................................13
5.1 FEES AND EXPENSES GENERALLY.....................13
5.2 COUNSEL FEES....................................14
ARTICLE VI
UNDERWRITTEN OFFERINGS..............................................14
6.1 DEMAND UNDERWRITTEN OFFERINGS...................14
6.2 INCIDENTAL UNDERWRITTEN OFFERINGS...............14
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ARTICLE VII
INDEMNIFICATION.....................................................15
7.1 INDEMNIFICATION BY THE COMPANY..................15
7.2 INDEMNIFICATION BY A SELLING SHAREHOLDER........16
7.3 INDEMNIFICATION PROCEDURE. ....................17
7.4 UNDERWRITING AGREEMENT..........................18
7.5 CONTRIBUTION. .................................18
7.6 PERIODIC PAYMENTS...............................19
ARTICLE VIII
RULE 144............................................................20
ARTICLE IX
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.........................20
ARTICLE X
TRANSFER RESTRICTIONS; RIGHTS OF
INCLUSION; DUTY OF FIRST OFFER......................................21
10.1 TRANSFER RESTRICTIONS...........................21
10.2 RIGHTS OF INCLUSION.............................22
ARTICLE XI
DEFINITIONS.........................................................25
11.1 TERMS...........................................25
11.2 OTHER DEFINED TERMS.............................30
11.3 DEFINED TERMS IN CORRESPONDING SECTIONS.........30
ARTICLE XII
MISCELLANEOUS.......................................................31
12.1 NO INCONSISTENT AGREEMENTS......................31
12.2 SPECIFIC PERFORMANCE............................31
12.3 AMENDMENTS AND WAIVERS..........................31
12.4 SUCCESSORS AND ASSIGNS..........................32
12.5 NOTICES.........................................32
12.6 HEADINGS, CERTAIN CONVENTIONS...................33
12.7 GENDER..........................................33
12.8 INVALID PROVISIONS..............................34
12.9 GOVERNING LAW...................................34
12.10 CONSENT TO JURISDICTION AND SERVICE OF PROCESS..34
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12.11 WAIVER OF JURY TRIAL............................34
12.12 COUNTERPARTS....................................35
SCHEDULE I Addresses for Notices to Participating Stockholders
EXHIBIT A-1 Form of Joinder Agreement For Permitted Transferees
EXHIBIT A-2 Form of Joinder Agreement For Additional
Stockholders
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RIGHTS AGREEMENT dated as of December 22, 1998, by and among
Xxxx International Holdings, Inc., a Delaware corporation (the "Company"), LIH
Holdings, LLC, a Delaware limited liability company ("LIH Holdings I"), LIH
Holdings II, LLC, a Delaware limited liability company ("LIH Holdings II"), LIH
Holdings III, LLC, a Delaware limited liability company ("LIH Holdings III"; LIH
Holdings I, LIH Holdings II and LIH Holdings III being hereinafter collectively
referred to as the "LIH Entities"), BancBoston Capital Inc., a Massachusetts
corporation ("BancBoston"), Liberty Mutual Insurance Company, a Massachusetts
corporation ("Liberty Mutual"), Massachusetts Mutual Life Insurance Company, a
Massachusetts corporation ("MMLIC"), MassMutual Corporate Value Partners
Limited, a company organized under the laws of the Cayman Islands ("MMCVP"),
MassMutual Corporate Investors, a Massachusetts business trust ("MMCI"),
MassMutual Participation Investors, a Massachusetts business trust ("MMPI";
MMLIC, MMCVP, MMCI and MMPI being hereinafter collectively referred to as the
"MassMutual Entities"), and National City Venture Corporation, a Delaware
corporation ("NCVC"; NCVC and the MassMutual Entities being hereinafter
collectively referred to as the "Mezzanine Entities"). Capitalized terms are
used as defined in Article XI hereto.
RECITALS
WHEREAS, on the date hereof, LIH Holdings I is the owner of
1,686,893 shares of Common Stock, and LIH Holdings II is the owner of 874,400
shares of Common Stock and 1,493,398 shares of the Class B-1 Common Stock, par
value $0.01 per share (the "Class B-1 Common Stock"), of the Company;
WHEREAS, in connection with the Company's acquisition on the
date hereof of all the outstanding capital stock of Auto Ventshade Corporation,
the Company, LIH Holdings III, BancBoston, Liberty Mutual and the MassMutual
Entities have entered into that certain Investment Agreement (as the same may be
amended, supplemented or otherwise modified from time to time, the "AVS
Investment Agreement") dated as of December 22, 1998, whereby the Company
desires to sell and LIH Holdings III, BancBoston, Liberty Mutual and the
MassMutual Entities desire to purchase, in the aggregate, 1,047,412 shares of
Common Stock and 252,401.8 shares of the Series B Preferred Stock, par value
$.01 per share (the "Series B Preferred Stock"), of the Company, all for an
aggregate purchase price equal to $25,000,000;
WHEREAS, in connection with the proposed acquisition by the
Company of all the outstanding capital stock of Smitty Bilt, Inc., the Company,
LIH Holdings III, BancBoston, Liberty Mutual and the MassMutual Entities have
entered into that certain Investment Agreement (as the same may be amended,
supplemented or otherwise modified from time to time, the "SB Investment
Agreement"; the AVS Investment Agreement and the SB Investment Agreement being
hereinafter collectively referred to as the "Investment Agreements") dated as of
December 22, 1998, whereby the Company desires to sell and LIH Holdings III,
BancBoston, Liberty Mutual and the MassMutual
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Entities desire to purchase, in the aggregate, 316,056 shares of Common Stock
and 39,822.9 shares of Series B Preferred Stock, all for an aggregate purchase
price equal to $5,000,000;
WHEREAS, the Company, certain of its subsidiaries and each of
the Mezzanine Entities, in connection with the issuance to the Mezzanine
Entities of subordinated notes in an aggregate principal amount equal to
$25,000,000, are entering into those certain Securities Purchase Agreements (as
each may be amended, supplemented or otherwise modified from time to time,
collectively, the "Securities Purchase Agreements") dated December 23, 1998,
whereby, among other things, the Company desires to sell and the Mezzanine
Entities desire to purchase, in the aggregate, Warrants (including any
securities (other than any shares of Common Stock or Series B Preferred Stock)
issued in exchange therefor or replacement thereof, in each case as the same may
be amended, supplemented or otherwise modified from time to time, the
"Warrants") to purchase up to either 70,484 shares of Series B Preferred Stock
or 704,839 shares of Common Stock;
WHEREAS, each of the LIH Entities, BancBoston, Liberty Mutual,
the Mezzanine Entities and the Company desires to enter into this Agreement to
provide for, among other things, registration rights with respect to the Common
Stock and to impose restrictions on, and conditions to, certain transfers of
equity securities of the Company;
WHEREAS, each Investment Agreement, among other things,
provides that the execution and delivery of an agreement in substantially the
form hereof is a condition to the consummation of the other transactions
contemplated by such Investment Agreement; and
WHEREAS, each Securities Purchase Agreement, among other
things, provides that the execution and delivery of an agreement in
substantially the form hereof is a condition to the consummation of the other
transactions contemplated by such Securities Purchase Agreement.
NOW THEREFORE, in connection with the Investment Agreements
and the Securities Purchase Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
DEMAND REGISTRATIONS
1.1 REQUESTS FOR REGISTRATION. (a) Subject to Sections 1.2,
1.3 and 1.8, at any time after September 9, 2000, any or all of the Required LIH
Stockholders, the Required BancBoston Stockholders, the Required Liberty Mutual
Stockholders and the Required Mezzanine Stockholders may request in writing
registration under the Securities Act of all or part of their Registrable
Securities (i) on Form S-1 or Form S-2 or any similar or successor long-form
registration statement (any such registration, a "Long-Form Registration") or
(ii) on Form S-3 or any similar or successor short-form registration statement
(any such registration, a "Short-Form Registration") if the
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Company qualifies to use such short form. Within 10 days after its receipt of
any such request, the Company will give written notice of such request to all
other Participating Stockholders. Thereafter, the Company will use all
reasonable efforts to effect the registration under the Securities Act on the
form requested by the Requesting Investors, and to include in such registration,
(i) all Registrable Securities which the Requesting Investors have so requested
to be included therein, and (ii) all other Registrable Securities with respect
to which the Company has received written requests for inclusion therein by the
Participating Stockholders within 30 days after their receipt of the Company's
notice, subject in each case to the provisions of Section 1.5. Each Long-Form
Registration or Short-Form Registration requested in accordance with this
Section 1.1 is referred to herein as a "Demand Registration."
(b) The Requesting Investors which request a Demand
Registration pursuant to this Section 1.1 may, at any time prior to the
effective date of the registration statement relating to such Demand
Registration, revoke such request by providing written notice to the Company;
provided, however, that notwithstanding such revocation, such Demand
Registration shall be deemed a request for purposes of Section 1.2 unless, after
consultation with the Company and any proposed underwriter, the Requesting
Investors in good faith determine that more than 25% of the amount of
Registrable Securities which they have requested to be registered (before giving
effect to any cutback pursuant to Section 1.5) would not be sold pursuant to
such Demand Registration within a reasonable amount of time or at a price
reasonably acceptable to such Requesting Investors.
(c) Any request for a Demand Registration pursuant to Section
1.1 shall specify the number of Registrable Securities proposed to be sold by
the Requesting Investors and the intended method of disposition thereof.
1.2 LONG-FORM REGISTRATIONS. (a) The Required LIH Stockholders
will be entitled to request pursuant to Section 1.1 one Long-Form Registration,
(b) the Required BancBoston Stockholders will be entitled to request pursuant to
Section 1.1 one Long-Form Registration, (c) the Required Liberty Mutual
Stockholders will be entitled to request pursuant to Section 1.1 one Long- Form
Registration, and (d) the Required Mezzanine Stockholders will be entitled to
request pursuant to Section 1.1 up to two Long-Form Registrations; provided,
however, that no such request for a Long-Form Registration shall be made unless
such request is for the registration of at least 450,000 shares of Common Stock
(which number of shares shall be appropriately adjusted for any stock dividend,
stock split, combination of shares or other similar event that occurs after the
date hereof). The Company will pay all Registration Expenses in connection with
any such Long-Form Registration; provided, however, that in the case of any
Long-Form Registration as to which LIH Stockholders comprise the Requesting
Investors, such LIH Stockholders will pay for any special audits required to be
undertaken by the Company in connection therewith. All Long-Form Registrations
(unless otherwise requested by the Requisite Registration Participants) shall be
underwritten registrations.
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1.3 SHORT-FORM REGISTRATIONS. In addition to the Long-Form
Registrations contemplated by Section 1.2, the Required LIH Stockholders, the
Required BancBoston Stockholders, the Required Liberty Mutual Stockholders, and
the Required Mezzanine Stockholders will each be entitled to request an
unlimited number of Short-Form Registrations in which the Company will pay all
Registration Expenses; provided, however, that (a) in the case of any Short-
Form Registration as to which LIH Stockholders comprise the Requesting
Investors, such LIH Stockholders will pay for any special audits required to be
undertaken by the Company in connection therewith, (b) no such request for a
Short-Form Registration shall be made unless such request is for the
registration of at least 200,000 shares of Common Stock (which number of shares
shall be appropriately adjusted for any stock dividend, stock split, combination
of shares or other similar event that occurs after the date hereof) and (c) in
any 12-month period, the Company shall not be obligated to effect more than two
Short-Form Registrations pursuant to this Agreement.
1.4 EFFECTIVE REGISTRATION STATEMENT. No Demand Registration
shall be deemed to have been requested or effected for purposes of Section
1.1(a) or 1.2:
(i) unless a registration statement with respect
thereto has been declared effective by the Commission (other
than in connection with a revocation notice delivered pursuant
to Section 1.1(b)) and the Company has complied in all
material respects with all obligations required to be
performed by it on or prior to the date of such declaration in
connection with such Demand Registration;
(ii) if after such registration statement has become
effective, any stop order, injunction or other order or
requirement of the Commission or any other Governmental or
Regulatory Authority affecting any of the Registrable
Securities covered by such registration statement, is for any
reason threatened in writing or issued by the Commission or
such other Governmental or Regulatory Authority and, as a
result thereof, none of the Registrable Securities covered
thereby have been sold;
(iii) if the conditions to closing specified in the
purchase agreement or underwriting agreement entered into in
connection with such Demand Registration are not satisfied by
reason of a failure by or inability of the Company to satisfy
any of such conditions to closing;
(iv) if the Company declines to effect such Demand
Registration pursuant to Section 1.8(a) or delivers a
Black-Out Notice with respect to such Demand Registration;
(v) if the Requesting Investors have made the
determination contemplated by the proviso to Section 1.1(b)
with respect to such Demand Registration and have notified the
Company of such determination in accordance with Section
1.1(b);
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(vi) if the Requesting Investors are not able to
register and sell at least 75% of the amount of Registrable
Securities which they requested (before giving effect to any
cutback effected pursuant to Section 1.5) to be included in
such registration; or
(vii) if the registration statement with respect to
such Demand Registration does not remain effective for a
period of at least 180 days beyond the effective date thereof
or, in the case of any Demand Registration that constitutes an
underwritten offering of Registrable Securities, until 45 days
after the commencement of the distribution by the holders of
the Registrable Securities included in such Demand
Registration, in each case unless all of the Registrable
Securities included in such Demand Registration have been sold
to the public prior thereto in accordance with the plan of
distribution specified in such registration statement.
If a Demand Registration requested pursuant to this Article I
is deemed not to have been requested or effected as provided in this Section
1.4, then the Company shall continue to be obligated to effect the number of
Demand Registrations set forth in Section 1.2 without giving effect to such
requested Demand Registration and will pay all Registration Expenses in
connection with such Demand Registration.
1.5 PRIORITY ON DEMAND REGISTRATIONS. The Company will not
include in any Demand Registration any securities which are not Registrable
Securities of the Participating Stockholders without the written consent of the
Requisite Registration Participants. If the Requesting Investors and other
holders of Registrable Securities request Registrable Securities to be included
in a Demand Registration which is an underwritten offering and the managing
underwriter advises the Company in writing that in its opinion the number of
Registrable Securities requested to be included exceeds the number of
Registrable Securities which can be sold in such offering within a price range
acceptable to the Requisite Requesting Investors, the Company will include any
securities to be sold in such Demand Registration in the following order: (i)
(x) first, the Registrable Securities requested to be included in such
registration by the Requesting Investors or by other Participating Stockholders
in accordance with Section 1.1(a), provided that if the managing underwriter
determines in good faith that a lower number of Registrable Securities should be
included, then only that lower number of Registrable Securities requested to be
included by the Requesting Investors and such other Participating Stockholders
shall be included in such registration, and the Requesting Investors and such
other Participating Stockholders shall participate in such registration on a pro
rata basis in accordance with the number of Registrable Securities requested to
be included in such registration by each of them; (y) second, the securities
which the Company proposes to sell; and (z) third, any securities other than
Registrable Securities to be sold by persons other than the Company included in
such registration in compliance with Section 1.7.
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1.6 SELECTION OF UNDERWRITERS. The Requisite Registration
Participants with respect to any Demand Registration will have the right to
select the underwriters and the managing underwriter to administer such Demand
Registration (which underwriters and managing underwriters shall be reasonably
acceptable to the Company).
1.7 OTHER REGISTRATION RIGHTS. Except as provided in this
Agreement, without the written consent of the Participating Stockholders which
then hold Registrable Securities representing at least a majority (by number of
shares) of the Registrable Securities (on a Fully- Diluted Basis) then held by
all Participating Stockholders, the Company will not grant to any Person the
right to request the Company to register any equity securities of the Company,
or any securities convertible, exchangeable or exercisable for or into such
securities, other than piggyback registration rights entitling the holder
thereof to participate in Company-initiated registrations, subject to the prior
rights of Participating Stockholders to include their Registrable Securities in
Company-initiated registrations in accordance with Section 2.3.
1.8 BLACK-OUT RIGHTS AND POSTPONEMENT. (a) The Company shall
not be required to effect a Demand Registration if the Company, within the
120-day period preceding the date of a request for a Demand Registration, has
effected a registration of securities in which the Participating Stockholders
were able to register and sell at least 75% of the amount of Registrable
Securities which they requested (before giving effect to any cutback effected
pursuant to Section 1.5, 2.3 or 2.4) to be included in such registration
pursuant to Demand Registration rights under Article I or Piggyback Registration
rights under Article II.
(b) The Company may, upon written notice (a "Black-Out
Notice") to the Requesting Investors requesting a Demand Registration, require
such Requesting Investors to withdraw such Demand Registration upon the good
faith determination by the Company that such postponement is necessary (i) to
avoid disclosure of material non-public information or (ii) as a result of a
pending material financing or acquisition transaction, and in each case, each of
the LIH Stockholders, the BancBoston Stockholders, the Liberty Mutual
Stockholders and the Mezzanine Stockholders may not request another Demand
Registration for a period of up to 120 days, as specified by the Company in such
Black-Out Notice. The Company may only give a Black-Out Notice where the giving
of such notice has been specifically approved by the Board of Directors of the
Company. Upon receipt of a Black-Out Notice, the related Demand Registration
shall be deemed to be rescinded and retracted and shall not be counted as a
Demand Registration for any purpose hereunder. The Company may not deliver more
than three Black-Out Notices in any 12-month period; provided, however, that the
aggregate number of days covered by Black-Out Notices in any 12-month period
shall not under any circumstances exceed 180.
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ARTICLE II
PIGGYBACK REGISTRATIONS
2.1 RIGHT TO PIGGYBACK. Whenever the Company proposes to
register any of its equity securities under the Securities Act (other than
pursuant to a Demand Registration and other than on Forms S-4 or S-8 or any
successor forms), whether for the Company's own account or for the account of
any other Person, and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), the Company
will give prompt written notice (in any event within 10 days after its receipt
of notice of any exercise of other demand registration rights) to all
Participating Stockholders of its intention to effect such a registration. Such
notice shall offer each Participating Stockholder the opportunity to register,
on the same terms and conditions, such number of such Participating
Stockholder's Registrable Securities as such Participating Stockholder may
request. The Company will include in such registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein by Participating Stockholders within 30 days after their
receipt of the Company's notice, subject to the provisions of Sections 2.3 and
2.4. Such requests for inclusion shall specify the number of Registrable
Securities intended to be disposed of and the intended method of distribution
thereof.
2.2 PIGGYBACK EXPENSES. The Registration Expenses of the
Participating Stockholders will be paid by the Company in all Piggyback
Registrations.
2.3 PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback
Registration is an underwritten primary registration on behalf of the Company,
and the managing underwriter advises the Company in writing that in its opinion
the number of securities requested to be included in such registration is such
that the success of the Company's offering will be materially and adversely
affected, then the Company will include any securities to be sold in such
Piggyback Registration in the following order: (i) first, the securities the
Company proposes to sell; (ii) second, the Registrable Securities requested to
be included in such registration by the Participating Stockholders in accordance
with Section 2.1, provided that if the managing underwriter in good faith
determines that a lower number of Registrable Securities of the Participating
Stockholders should be included, then the Company shall be required to include
in such registration only that lower number of Registrable Securities, and the
Participating Stockholders shall participate in such registration on a pro rata
basis in accordance with the number of Registrable Securities requested to be
included in such registration by each Participating Stockholder; and (iii)
third, if all Registrable Securities requested to be included in such
registration by the Participating Stockholders in accordance with Section 2.1
are included in such registration, any other securities requested to be included
in such registration in compliance with Section 1.7.
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2.4 PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the Company's securities, and the managing underwriter advises the Company in
writing that in its opinion the number of securities requested to be included in
such registration is such that the success of such holders' offering would be
materially and adversely affected, then the Company will include any securities
to be sold in such Piggyback Registration in the following order: (i) first, the
securities which such holders propose to sell in compliance with Section 1.7;
(ii) second, the Registrable Securities requested to be included in such
registration by the Participating Stockholders in accordance with Section 2.1,
provided that if the managing underwriter determines in good faith that a lower
number of Registrable Securities of the Participating Stockholders should be
included, then the Company shall be required to include in such registration
only that lower number of Registrable Securities, and the Participating
Stockholders shall participate in such registration on a pro rata basis in
accordance with the number of Registrable Securities requested to be included in
such registration by each; and (iii) third, any other securities proposed to be
included in such registration in compliance with Section 1.7.
ARTICLE III
HOLDBACK AGREEMENTS
3.1 HOLDER'S HOLDBACK OBLIGATIONS. Each Participating
Stockholder agrees not to effect any public sale or distribution of Registrable
Securities, or any securities convertible, exchangeable or exercisable for or
into Registrable Securities during the seven days prior to, and the 180-day
period beginning on, the effective date of any underwritten Demand Registration
or any underwritten Piggyback Registration in which such Participating
Stockholder had an opportunity to participate without cutback under Article II
hereof (in each case except as part of such underwritten registration), unless
the managing underwriter of such underwritten registration otherwise agrees.
3.2 COMPANY'S HOLDBACK OBLIGATIONS. Unless the managing
underwriter of the relevant underwritten Demand Registration or an underwritten
Piggyback Registration otherwise agrees, the Company agrees (i) not to effect
any public sale or distribution of its equity securities, or any securities
convertible, exchangeable or exercisable for or into such securities, during the
14 days prior to, and during the 90-day period beginning on, the effective date
of any underwritten Demand Registration or any underwritten Piggyback
Registration in which holders of Registrable Securities are selling stockholders
(except as part of such underwritten registration or pursuant to registrations
on Form S-4 or S-8 or any successor forms), and (ii) to use all reasonable
efforts to cause each holder of at least 5% (on a Fully-Diluted Basis) of its
equity securities to agree not to effect any public sale or distribution of any
such equity securities or any securities convertible, exchangeable or
exercisable for into such equity securities during the 180-day period beginning
on the effective date of any underwritten Demand Registration or any
underwritten Piggyback
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Registration in which holders of Registrable Securities are selling stockholders
(except as part of such underwritten registration, if otherwise permitted).
ARTICLE IV
REGISTRATION PROCEDURES
Whenever Participating Stockholders have requested that any
Registrable Securities be registered in accordance with Article I or II, the
Company will use all reasonable efforts to effect the registration and the sale
of such Registrable Securities in accordance with the intended method of
disposition thereof, and pursuant thereto the Company will as reasonably
expeditiously as possible (or, in the case of clause (p) below, will not):
(a) promptly prepare and file with the Commission a
registration statement with respect to such Registrable Securities (such
registration statement to include all information which the Participating
Stockholders holding the Registrable Securities to be registered thereby shall
reasonably request) and use all reasonable efforts to cause such registration
statement to become effective, provided, that as promptly as practicable before
filing a registration statement or prospectus or any amendments or supplements
thereto, the Company will (i) furnish to one counsel selected by the Requisite
Registration Participants copies of all such documents proposed to be filed, and
the Company shall not file any such document to which such counsel shall have
reasonably objected on the grounds that such document does not comply in all
material respects with the requirements of the Securities Act, and (ii) notify
each Participating Stockholder holding Registrable Securities covered by such
registration statement of (x) any request by the Commission to amend such
registration statement or amend or supplement any prospectus, or (y) any stop
order issued or threatened by the Commission, and take all reasonable actions
required to prevent the entry of such stop order or to promptly remove it if
entered;
(b) (i) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective at all times during the period commencing on the effective date of
such registration statement and ending on the first date as of which all
Registrable Securities of the Participating Stockholders covered by such
registration statement are sold in accordance with the intended plan of
distribution set forth in such registration statement and (ii) comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement;
(c) furnish to each Participating Stockholder holding
Registrable Securities covered by such registration statement, without charge,
such number of conformed copies of such registration statement, each amendment
and supplement thereto, the prospectus included in such registration statement
(including each preliminary prospectus and, in each case, including all exhibits
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thereto and documents incorporated by reference therein) and such other
documents as such Participating Stockholder may reasonably request in order to
facilitate the disposition of the Registrable Securities covered thereby that
are held by such Participating Stockholder;
(d) use its best efforts to register or qualify the
Registrable Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions in the United States as any
Participating Stockholder holding any such Registrable Securities shall
reasonably request, to keep such registration or qualification in effect for so
long as such registration statement remains in effect and to do any and all
other acts and things which may be reasonably necessary or advisable to enable
such Participating Stockholder to consummate the disposition in such
jurisdictions of any such Registrable Securities held by such Participating
Stockholder; provided, however, that the Company will not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this clause (d), (ii) subject itself to
taxation in any such jurisdiction or (iii) consent to general service of process
in any such jurisdiction;
(e) furnish to each Participating Stockholder holding
Registrable Securities covered by such registration statement a signed copy,
addressed to such Participating Stockholder (and the underwriters, if any) of an
opinion of counsel for the Company or special counsel to such Participating
Stockholder dated the effective date of such registration statement (and, if
such registration statement includes an underwritten public offering, dated the
date of the closing under the underwriting agreement), reasonably satisfactory
in form and substance to the Requisite Registration Participants, covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) as are customarily covered in opinions of
issuer's counsel delivered to the underwriters in underwritten public offerings,
and such other legal matters as the Requisite Registration Participants (or the
underwriters, if any) may reasonably request;
(f) notify each Participating Stockholder holding Registrable
Securities covered by such registration statement, at a time when a prospectus
relating to such Registrable Securities is required to be delivered under the
Securities Act, of the occurrence of any event known to the Company as a result
of which the prospectus included in such registration statement, as then in
effect, contains an 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 in light of the circumstances under which they were made,
and, at the request of any such Participating Stockholder, (i) the Company will
prepare and furnish such Participating Stockholder 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 purchasers of such Registrable 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 in the light of the circumstances under which
they were made and (ii) the Company shall extend the period during which such
registration statement shall be maintained effective by the number of days
during the period from and including the date of the giving of such notice to
such Participating Stockholder to the date when
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the Company made available to such Participating Stockholder an appropriately
amended or supplemented prospectus;
(g) cause all Registrable Securities of the Participating
Stockholders covered by such registration statement to be listed on each
securities exchange and quotation system on which similar securities issued by
the Company are then listed and to enter into such customary agreements as may
be required in furtherance thereof, including listing applications and
indemnification agreements in customary form;
(h) provide a transfer agent and registrar for the Registrable
Securities of the Participating Stockholders covered by such registration
statement not later than the effective date of such registration statement;
(i) enter into such customary arrangements and take all such
other actions as the Requisite Registration Participants or the underwriters, if
any, for the offering of the Registered Securities covered by such registration
statement reasonably request in order to expedite or facilitate the disposition
of such Registrable Securities (including using its best efforts to effect a
stock split or combination of shares) and, in connection with an underwritten
offering, participate, to the extent reasonably requested by the managing
underwriter for the offering, in customary efforts to sell the securities in the
offering, including participating in "road shows";
(j) make available for inspection by any Participating
Stockholder holding Registrable Securities covered by such registration
statement, any underwriter participating in any disposition of securities
pursuant to such registration statement and any attorney, accountant or other
agent retained by any such Participating Stockholder or underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company and all correspondence between the Commission and the Company or its
counsel or auditors and all memoranda relating to discussions with the
Commission or its staff in connection with such registration statement, and
cause the Company's officers, directors, employees and independent accountants
to supply all information reasonably requested by any such Participating
Stockholder, underwriter, attorney, accountant or agent in connection with such
registration statement;
(k) subject to other provisions hereof, use all reasonable
efforts to cause the Registrable Securities of the Participating Stockholders
covered by such registration statement to be registered with or approved by such
Governmental or Regulatory Authorities or self-regulatory organizations as may
be necessary to enable such Participating Stockholders thereof to consummate the
disposition of such Registrable Securities;
(l) use all reasonable efforts to obtain a "cold comfort"
letter, dated the effective date of such registration statement (and, if such
registration includes an underwritten offering, dated the date of the closing
under the underwriting agreement), signed by the independent public accountants
who have certified the Company's financial statements included in such
registration statement, addressed to the Company, to each Participating
Stockholder holding Registrable
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Securities covered by such registration statement, and to the underwriters, if
any, 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 the underwriters in underwritten public
offerings of securities and such other financial matters as the Requisite
Registration Participants (or the underwriters, if any) may reasonably request;
(m) otherwise use all reasonable efforts to comply with all
applicable rules and regulations of the Commission and make available to its
security holders, in each case as soon as practicable, an earnings statement
covering a period of at least 12 months, beginning with the first month after
the effective date of such registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act;
(n) permit any Participating Stockholder holding Registrable
Securities covered by such registration statement, which Participating
Stockholder, in its sole judgment exercised in good faith, might be deemed to be
a controlling person of the Company (within the meaning of the Securities Act or
the Exchange Act) to participate in the preparation of such registration
statement and to include therein material, furnished to the Company in writing,
which in the reasonable judgment of such Participating Stockholder should be
included and which is reasonably acceptable to the Company;
(o) promptly notify the Participating Stockholders holding the
Registrable Securities covered by such registration statement of the issuance by
any state securities commission or other Governmental or Regulatory Authority of
any order suspending the qualification or exemption from qualification of any
such Registrable Securities under any state securities or "blue sky" law, and
use every reasonable effort to obtain the lifting at the earliest possible time
of any stop order (whether issued by the Commission or otherwise) suspending the
effectiveness of such registration statement or of any order preventing or
suspending the use of any preliminary prospectus included therein;
(p) at any time file or make any amendment to such
registration statement, or any amendment of or supplement to the prospectus
included therein (including amendments of the documents incorporated by
reference into the prospectus), (i) of which each Participating Stockholder
holding Registrable Securities covered by such registration statement or the
managing underwriter, if any, shall not have previously been advised and
furnished a copy or (ii) to which the Requisite Registration Participants, the
managing underwriter (if any) or counsel for the Requisite Registration
Participants or any such managing underwriter shall reasonably object;
(q) make such representations and warranties (subject to
appropriate disclosure schedule exceptions) to the Participating Stockholders
holding Registrable Securities covered by such registration statement and the
underwriters, if any, in form, substance and scope as are customarily made by
issuers to underwriters and selling holders, as the case may be, in underwritten
public offerings of substantially the same type;
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(r) during the period when the prospectus included in such
registration statement is required to be delivered under the Securities Act,
promptly file all documents required to be filed with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act; and
(s) if such registration statement refers to any Participating
Stockholder holding Registrable Securities covered thereby by name or otherwise
as the holder of any securities of the Company, then (whether or not, in the
sole judgment, exercised in good faith, of such Participating Stockholder, such
Participating Stockholder is or might be deemed to be a controlling person of
the Company), (i) at the request of such Participating Stockholder, insert
therein language, in form and substance reasonably satisfactory to such
Participating Stockholder, the Company and the managing underwriter (if any), to
the effect that the holding by such Participating Stockholder of such securities
is not to be construed as a recommendation by such Participating Stockholder of
the investment quality of the Company's Registrable Securities or the Company's
other securities covered thereby and that such holding does not imply that such
Participating Stockholder will assist in meeting any future financial
requirements of the Company, or (ii) in the event that such reference to such
Participating Stockholder by name or otherwise is not required by the Securities
Act, any similar Federal or state statute, or any rule or regulation of any
Governmental or Regulatory Authority having jurisdiction over the offering, then
in force, the Company shall be required at the request of such Participating
Stockholder to delete the reference to such Participating Stockholder.
ARTICLE V
REGISTRATION EXPENSES
5.1 FEES AND EXPENSES GENERALLY. Subject to the next
succeeding sentence, all expenses incident to the Company's performance of or
compliance with this Agreement, including internal expenses (including all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual or special audit or quarterly
review, the expense of any liability insurance, the expenses and fees for
listing securities on one or more securities exchanges or quotation systems
pursuant to clause (g) of Article IV, all registration and filing fees, fees and
expenses of compliance with securities or blue sky laws (including reasonable
fees and disbursements of counsel in connection with blue sky qualifications of
the Registrable Securities), printing expenses, messenger and delivery expenses,
and fees and disbursements of counsel for the Company and all independent
certified public accountants, underwriters (excluding underwriting fees,
discounts and commissions) and other Persons retained by the Company (all such
expenses being herein called "Registration Expenses"), will be borne by the
Company. Notwithstanding anything in this Agreement to the contrary, (a) each
Participating Stockholder shall pay any underwriting fees, discounts or
commissions attributable to the sale of its Registrable Securities and (b) in
the case of any Demand Registration as to which LIH Stockholders comprise the
Requesting Investors, such LIH Stockholders shall pay for any special audits
required to be undertaken by the Company in connection therewith.
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5.2 COUNSEL FEES. In connection with each Demand Registration,
the Company will reimburse the Participating Stockholders for the reasonable
fees and disbursements of one counsel selected by the Requisite Registration
Participants.
ARTICLE VI
UNDERWRITTEN OFFERINGS
6.1 DEMAND UNDERWRITTEN OFFERINGS. If requested by the
underwriters for any underwritten offering of Registrable Securities pursuant to
a Demand Registration, the Company will enter into an underwriting agreement
with such underwriters for such offering, such agreement to be consistent with
the terms hereof, to contain such representations and warranties by the Company
and such other terms as are generally included in agreements of this type,
including indemnities customarily included in such agreements, and to be
otherwise reasonably satisfactory in form and substance to the Requisite
Registration Participants, the Company and the underwriters. The Participating
Stockholders holding the Registrable Securities to be distributed by such
underwriters will cooperate in good faith with the Company in the negotiation of
the underwriting agreement. The Participating Stockholders holding the
Registrable Securities to be distributed by such underwriters shall be parties
to such underwriting agreement and may, at the option of the Requisite
Registration Participants, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of
such Participating Stockholders and that any or all of the conditions precedent
to the obligations of such underwriters under such underwriting agreement also
be conditions precedent to the obligations of such Participating Stockholders.
The Company shall cooperate as reasonably requested by any such Participating
Stockholder in order to limit (a) any representations or warranties to, or
agreements with, the Company or the underwriters to be made by such
Participating Stockholder only to representations, warranties or agreements
regarding such Participating Stockholder, such Participating Stockholder's
Registrable Securities and such Participating Stockholder's intended method of
distribution and any other representation required by applicable law and (b)
such Participating Stockholder's maximum liability in respect of its
indemnification and contribution obligations under such underwriting agreement
to an amount equal to the net proceeds actually received by such Participating
Stockholder (after deducting any underwriting fees, discounts and expenses) from
the sale of Registrable Securities pursuant to such Demand Registration.
6.2 INCIDENTAL UNDERWRITTEN OFFERINGS. If the Company at any
time proposes to register any of its equity securities under the Securities Act
as contemplated by Article II and such equity securities are to be distributed
by or through one or more underwriters, the Company will, if requested by any
Participating Stockholder as provided in Article II, arrange for such
underwriters to include all the Registrable Securities to be offered and sold by
such Participating Stockholder,
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subject to the limitations set forth in Article II, among the securities to be
distributed by such underwriters. The Participating Stockholders holding
Registrable Securities to be distributed by such underwriters shall be parties
to the underwriting agreement between the Company and such underwriters
(provided that such underwriting agreement is consistent with the terms hereof),
and may, at their option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of
such Participating Stockholders and that any or all of the conditions precedent
to the obligations of such underwriters under such underwriting agreement also
be conditions precedent to the obligations of such Participating Stockholders.
The Company shall cooperate as reasonably requested by any such Participating
Stockholder in order to limit (a) any representations or warranties to, or
agreements with, the Company or the underwriters to be made by such
Participating Stockholder only to representations, warranties or agreements
regarding such Participating Stockholder, such Participating Stockholder's
Registrable Securities and such Participating Stockholder's intended method of
distribution and any other representation required by applicable law and (b)
such Participating Stockholder's maximum liability in respect of its
indemnification and contribution obligations under such underwriting agreement
to an amount equal to the net proceeds actually received by such Participating
Stockholder (after deducting any underwriting fees, discounts and expenses) from
the sale of Registrable Securities pursuant to the applicable Piggyback
Registration.
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless, to the fullest extent permitted by law, each of the
Participating Stockholders holding any Registrable Securities covered by a
registration statement that has been filed with the Commission pursuant to this
Agreement, each underwriter for such Participating Stockholder in connection
therewith, each other Person, if any, who controls such Participating
Stockholder or any such underwriter within the meaning of the Securities Act or
the Exchange Act, and each of their respective managers, partners, officers,
directors, employees and general partners, as follows:
(i) against any and all loss, liability, claim,
damage or expense (other than amounts paid in settlement)
incurred by such Person arising out of or based upon an untrue
statement or alleged untrue statement of a material fact
contained in such registration statement (or any amendment or
supplement thereto), including all documents incorporated
therein by reference, or in any preliminary prospectus or
prospectus included therein (or any amendment or supplement
thereto) or the omission or alleged omission therefrom of 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;
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(ii) against any and all loss, liability, claim,
damage and expense incurred by such Person to the extent of
the aggregate amount paid in settlement of any litigation,
investigation or proceeding by any Governmental or Regulatory
Authority, in each case whether commenced or threatened, or of
any claim whatsoever, that is based upon any such untrue
statement or omission or any such alleged untrue statement or
omission, if such settlement is effected with the written
consent of the Company (which consent shall not be
unreasonably withheld or delayed); and
(iii) against any and all expense incurred by such
Person in connection with investigating, preparing or
defending against any litigation or any investigation or
proceeding by any Governmental or Regulatory Authority, in
each case whether commenced or threatened in writing, or
against any claim whatsoever, that is based upon any such
untrue statement or omission or any such alleged untrue
statement or omission, to the extent that any such expense is
not paid under clause (i) or (ii) above;
provided, however, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of or based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Participating Stockholder expressly for use in
the preparation of such registration statement (or any amendment or supplement
thereto), including all documents incorporated therein by reference, or in any
preliminary prospectus or prospectus included therein (or any amendment or
supplement thereto); and provided further, however, that the Company will not be
liable to any Participating Stockholder (or any other indemnified Person) under
the indemnity agreement in this Section 7.1, with respect to any preliminary
prospectus or the final prospectus or the final prospectus as amended or
supplemented, as the case may be, to the extent that any such loss, liability,
claim, damage or expense of such Participating Stockholder (or other indemnified
Person) results from the fact that such Participating Stockholder sold
Registrable Securities to a Person to whom there was not sent or given, at or
prior to the written confirmation of such sale, a copy of the final prospectus
or of the final prospectus as then amended or supplemented, whichever is most
recent, if the Company has previously and timely furnished copies thereof to
such Participating Stockholder. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such any
Participating Stockholder or any other Person eligible for indemnification under
this Section 7.1, and shall survive the transfer of the relevant Registrable
Securities by the Participating Stockholder who theretofore held them.
7.2 INDEMNIFICATION BY A SELLING SHAREHOLDER. In connection
with any registration statement which covers Registrable Securities of a
Participating Stockholder pursuant to this Agreement, each such Participating
Stockholder agrees to indemnify and hold harmless (in the same manner and to the
same extent as set forth in Section 7.1 of this Agreement), to the extent
permitted by law, the Company and each underwriter for the Company or any such
Participating Stockholder in connection therewith, each other Person who
controls the Company or any such
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underwriter within the meaning of the Securities Act or the Exchange Act, and
each of their respective managers, officers, directors and general partners,
with respect to any statement or alleged statement in or omission or alleged
omission from such registration statement, any preliminary, final or summary
prospectus contained therein, or any amendment or supplement thereto or to any
such prospectus, if such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written information
that relates only to such Participating Stockholder and its affiliates or the
plan of distribution and that is furnished to the Company by or on behalf of
such Participating Stockholder expressly for use in the preparation of such
registration statement, preliminary, final or summary prospectus or amendment or
supplement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of the Company or any other Person
eligible under this Section 7.2, and shall survive the transfer of Registrable
Securities by such Participating Stockholder. The obligations of each
Participating Stockholder pursuant to this Section 7.2 are to be several and not
joint. Additionally, with respect to each claim pursuant to this Section 7.2 and
each corresponding claim for contribution under Section 7.5, each such
Participating Stockholder's maximum aggregate liability under this Section 7.2
and Section 7.5 shall be limited to an amount equal to the net proceeds actually
received by such Participating Stockholder (after deducting any underwriting
fees, discounts and expenses) from the sale of Registrable Securities being sold
pursuant to such registration statement or prospectus by such Participating
Stockholder.
7.3 INDEMNIFICATION PROCEDURE. Within 10 days after receipt by
an indemnified party hereunder of written notice of the commencement of any
action or proceeding involving a claim referred to in Section 7.1 or 7.2, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under Section 7.1 or 7.2, except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice. In case any such
action or proceeding is brought against an indemnified party, the indemnifying
party will be entitled to participate in and to assume the defense thereof,
jointly with any other indemnifying party similarly notified, it may, with
counsel reasonably satisfactory to such indemnified party; and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal fees and expenses subsequently incurred by the
latter in connection with the defense thereof, unless in such indemnified
party's reasonable judgment an actual or potential conflict of interest between
such indemnified and indemnifying parties may exist in respect of such claim, in
which case the indemnifying party shall not assume the defense of such claim but
also shall not be liable for the fees and expenses of (i) in the case of a claim
referred to in Section 7.1, more than one counsel (in addition to any local
counsel) for all indemnified parties selected by the holders of a majority (by
number of shares) of the Registrable Securities held by such indemnified
parties, or (ii) in the case of a claim referred to in Section 7.2, more than
one counsel (in addition to any local counsel) for the Company, in each case in
connection with any one action or separate but similar or related actions or
proceedings. An indemnifying party who is not entitled to (pursuant to the
immediately preceding
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sentence), or elects not to, assume the defense of a claim will not be obligated
to pay the fees and expenses of more than one counsel (in addition to any local
counsel) for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party an actual
or potential conflict of interest may exist between such indemnified party and
any other of such indemnified parties with respect to such claim, in which event
the indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels as may be reasonable in light of such conflict.
The indemnifying party will not, without the prior written consent of each
indemnified party, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action, suit, investigation or proceeding in
respect of which indemnification may be sought hereunder (whether or not such
indemnified party or any Person who controls such indemnified party is a party
to such claim, action, suit, investigation or proceeding), unless such
settlement, compromise or consent includes an unconditional release of such
indemnified party from all liability arising out of such claim, action, suit,
investigation or proceeding. An indemnified party will not settle or compromise
or consent to the entry of any judgment in any pending or threatened claim,
action, suit, investigation or proceeding in respect of which it is then seeking
(or thereafter seeks) indemnification hereunder, in each case without the prior
written consent of the indemnifying party (which consent shall not be
unreasonably withheld or delayed). Notwithstanding anything to the contrary set
forth herein, and without limiting any of the rights set forth above, an
indemnified party hereunder will have the right to retain, at its own expense,
counsel with respect to the defense of a claim.
7.4 UNDERWRITING AGREEMENT. The Company and each Participating
Stockholder requesting registration of all or any part of its Registrable
Securities pursuant to Article I or II, shall provide for the foregoing
indemnity (with appropriate modifications) in any underwriting agreement entered
into in connection with a Demand Registration or a Piggyback Registration with
respect to any required registration or other qualification of Registrable
Securities under any Federal or state law or regulation of any Governmental or
Regulatory Authority.
7.5 CONTRIBUTION. If the indemnification provided for in
Sections 7.1 and 7.2 of this Agreement is unavailable to hold harmless an
indemnified party under such Section, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of the losses, claims, damages, liabilities and expenses referred to in Section
7.1 or 7.2, as the case may be, in such proportion as is appropriate to reflect
the relative fault of such indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations, including the relative benefits
received by each party from the offering of the securities covered by the
relevant registration statement, the parties' relative knowledge and access to
information concerning the matter with respect to which the relevant claim was
asserted and the parties' relative opportunities to correct and prevent any
relevant statement or omission. Without limiting the generality of the
foregoing, the parties' relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of
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a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or the indemnified
party and the parties' relative intent, knowledge, access to relevant
information and opportunity to correct or prevent such alleged untrue or untrue
statement or omission. The parties hereto agree that it would not be just and
equitable if contributions pursuant to this Section 7.5 were to be determined by
pro rata or per capita allocation (even if the underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the first and second
sentences of this Section 7.5. The amount paid by an indemnified party as a
result of the losses, claims, damages, liabilities or expenses referred to in
the first sentence of this Section 7.5 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending the relevant action or proceeding and shall be
limited as provided in Section 7.3 if the indemnifying party has assumed the
defense of the relevant action or proceeding in accordance with the provisions
of Section 7.3. Promptly after receipt by an indemnified party under this
Section 7.5 of notice of the commencement of any action or proceeding against
such party in respect of which a claim for contribution may be made against an
indemnifying party under this Section 7.5, such indemnified party shall notify
the indemnifying party in writing of the commencement thereof if the notice
specified in Section 7.3 has not been given with respect to such action or
proceeding; provided, however, that the omission to so notify the indemnifying
party shall not relieve the indemnifying party from any liability which it may
otherwise have to any indemnified party under this Section 7.5, except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. The Company and the Participating Stockholders agree with each
other, and will agree with and the underwriters of Registrable Securities
registered pursuant to Article I or II, if requested by such underwriters, that
(i) the underwriters' portion of the contribution paid to the Participating
Stockholders pursuant to this Section 7.5 shall not exceed the total
underwriting fees, discounts and commissions in connection with the relevant
offering of Registrable Securities and (ii) the total amount of such
Participating Stockholder's contributions under this Section 7.5 and any amounts
paid by such Participating Stockholder in respect of corresponding claims for
indemnification under Section 7.2 shall not exceed an amount equal to the net
proceeds actually received by such Participating Stockholder from the sale of
Registrable Securities in the offering to which the losses, liabilities, claims,
damages or expenses of the indemnified parties relate. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
7.6 PERIODIC PAYMENTS. The indemnification required by this
Article VII shall be made by periodic payments of the amount thereof during the
course of the relevant investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred; provided, however, that if it
is finally determined by a court of competent jurisdiction that the relevant
indemnified party was not entitled to indemnification hereunder in respect of
such investigation or defense, such indemnified party shall repay to the
indemnifying party, on demand, all amounts received by it in respect of such
investigation or defense pursuant to this Section 7.6, together with interest
thereon at a rate per annum equal to the "prime rate" (as published from time to
time in the
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Xxxx Xxxxxx Journal) for the period from and including the date on which the
indemnified party received the relevant amount to but excluding the date on
which it repaid such amount to the indemnifying party.
ARTICLE VIII
RULE 144
If the Company shall have filed a registration statement
pursuant to the requirements of Section 12 of the Exchange Act or pursuant to
the requirements of the Securities Act, the Company covenants that it will file
the reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the Commission thereunder (or, if
the Company is not required to file such reports, it will, upon the request of
any Participating Stockholder, make publicly available other information), and
it will take such further action as any Participating Stockholder may reasonably
request, all to the extent required from time to time to enable such
Participating Stockholder to sell shares of Registrable Securities without
registration under the Securities Act in compliance with (i) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the Commission. Upon the request
of any Participating Stockholder, the Company will deliver to such Participating
Stockholder a written statement as to whether it has complied with such
requirements.
ARTICLE IX
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Participating Stockholder may participate in any
underwritten registration hereunder unless such Participating Stockholder (i)
agrees to sell its Registrable Securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements, escrow agreements and
other documents reasonably required under the terms of such underwriting
arrangements and consistent with the provisions of this Agreement. If the
Requesting Investors with respect to any Long-Form Demand Registration are
subsequently not entitled to participate in such Demand Registration solely by
reason of their failure to comply with any material requirement of this Article
IX then, notwithstanding anything in Section 1.1(b) or 1.4 to the contrary, the
request by such Requesting Investors for such Long-Form Registration shall
continue to be counted for purposes of Section 1.2.
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ARTICLE X
TRANSFER RESTRICTIONS; RIGHTS OF
INCLUSION; DUTY OF FIRST OFFER
10.1 TRANSFER RESTRICTIONS. (a) Each of the LIH Stockholders,
the BancBoston Stockholders, the Liberty Mutual Stockholders and the Mezzanine
Stockholders, severally and not jointly, agrees that it will not, for a period
of 180 days after the Closing Date (as defined in the SB Investment Agreement
or, if the closing under the SB Investment Agreement does not occur, as defined
in the AVS Investment Agreement), Transfer any Restricted Securities other than
(i) to a Permitted Transferee, who shall have executed a Joinder Agreement in
substantially the form of Exhibit A-1, and thereby become a party to this
Agreement, (ii) in the case of the BancBoston Stockholders, the Liberty Mutual
Stockholders and the Mezzanine Stockholders, to any LIH Stockholder (unless such
Transfer would result in a breach of the Amended and Restated Governance
Agreement), (iii) pursuant to Section 10.2 or (iv) pursuant to a transaction
that constitutes a Sale of the Company.
(b) Until the first date as of which (i) the market value of
publicly held shares of Common Stock calculated in accordance with Rules 4310
and 4450 under the Manual of the National Association of Securities Dealers,
Inc. (the "Manual"), as in effect from time to time (or any successor listing
requirements for NASDAQ)) has exceeded the minimum market value then required
therefor by Rule 4450(b)(3) under the Manual (or any successor listing
requirement for NASDAQ) by at least $15 million for a period of 90 consecutive
trading days, (ii) the number of shares of Common Stock that are publicly held
(as so calculated) exceeds the minimum number of shares required to be publicly
held by Rule 4450(b)(2) under the Manual (or any successor listing requirement
for NASDAQ) and (iii) the Company has issued the officer's certificate described
in the next succeeding sentence, each of the BancBoston Stockholders, the
Liberty Mutual Stockholders and the Mezzanine Stockholders agrees, severally and
not jointly, that it shall not, without the prior written consent of the
independent directors of the Company, (x) Transfer any Common Stock or Equity
Equivalents to any person or "group" (as defined for purposes of Rule 13d under
the Exchange Act) if, after giving effect to such Transfer, any of the shares of
Common Stock directly or indirectly beneficially owned by such person or any
member of such group would not be deemed to be publicly held for purposes of
Rule 4450(b)(2) or 4450(b)(3) under the Manual (or any successor listing
requirement for NASDAQ) or (y) be a Transferee (or permit any person included in
any group in which such BancBoston Stockholder, Liberty Mutual Stockholder or
Mezzanine Stockholder is included to be a Transferee) of any Common Stock or
Equity Equivalents if, after giving effect to such Transfer, any of the shares
of Common Stock directly or indirectly beneficially owned by such Transferee (or
by any member of any such group) would not be deemed to be publicly held for
purposes of Rule 4450(b)(2) or 4450(b)(3) under the Manual (or any successor
listing requirement for NASDAQ); provided, however, that this Section 10.1(b)
shall not apply to any Transfer of Common Stock or Equity Equivalents (A)
pursuant to Section 10.2, (B) to any LIH Stockholder (unless such Transfer would
result in a breach of the Amended and Restated Governance Agreement), or (C)
pursuant to a transaction that constitutes a Sale of the Company.
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Within 10 Business Days following the first date as of which the requirements
set forth in clauses (i) and (ii) above have been satisfied, the Company shall
provide each of the BancBoston Stockholders, the Liberty Mutual Stockholders and
the Mezzanine Stockholders with an officer's certificate certifying as to, and
setting forth calculations demonstrating in reasonable detail, the satisfaction
of such requirements.
(c) Each of the Participating Stockholders that is then a Bank
Entity agrees, severally and not jointly, that it will not effect any Transfer
of Restricted Securities to any other Person, unless such Participating
Stockholder determines in good faith that such Transfer would not cause such
Participating Stockholder or any of its Affiliates to be in violation of the
Bank Holding Company Act.
10.2 RIGHTS OF INCLUSION. (a) Except for (i) any Transfer of
Restricted Securities to a Permitted Transferee, (ii) any Transfer of Restricted
Securities pursuant to a Demand Registration, a Piggyback Registration or a Rule
144 Transaction, and (iii) other Transfers of Restricted Securities (other than
Transfers in respect of which an Inclusion Notice is delivered pursuant to this
Section 10.2(a)) which, in the aggregate, comprise less than 20% of the LIH
Stockholders' Original Ownership Level, and subject to paragraph (f) below, if
any or all of the LIH Stockholders (the "Transferors") propose to Transfer any
Restricted Securities (the "Transferor Shares") to one or more persons (the
"Buyer"), then as a condition of such Transfer, the Transferors shall cause the
Buyer to include a written offer (the "Section 10.2 Offer") to each of the
BancBoston Stockholders, Liberty Mutual Stockholders and Mezzanine Stockholders
(collectively, the "Offerees"), to sell to the Buyer, at the option of each
Offeree, that number of shares of Restricted Securities determined in accordance
with Section 10.2(b), on the same terms and conditions as are applicable to the
Transferor Shares, all of which terms shall be specified in the Section 10.2
Offer. The terms of the Section 10.2 Offer shall not require any Offeree (i) to
provide any representation, warranty or covenant other than representations,
warranties and covenants which relate specifically to such Offeree or its
Restricted Securities, such as representations regarding such Offeree's power
and authority to effect a sale of its Restricted Securities pursuant to the
Section 10.2 Offer and such Offeree's title to and ownership of its Restricted
Securities, (ii) other than in connection with the representations, warranties
and covenants which such Offeree may be required to provide under clause (i)
above, to join in any indemnification obligations that are not allocated
severally (as opposed to jointly and severally) among the Transferors and the
Offerees on a pro rata basis (based on the Transferors' and each Offeree's
respective amounts of the aggregate consideration paid to them in connection
with the Transfer contemplated by the Section 10.2 Offer) or (iii) to indemnify
the Buyer with respect to an amount in excess of the net cash proceeds paid to
such Offeree in connection with such Transfer. The Transferors shall provide a
written notice (the "Inclusion Notice") of the Section 10.2 Offer to each
Offeree, which may accept the Section 10.2 Offer by providing a written notice
of acceptance of the Section 10.2 Offer to the Transferors within 10 Business
Days of delivery of the Inclusion Notice.
(b) Each Offeree shall have the right (an "Inclusion Right")
to sell pursuant to the
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Section 10.2 Offer the same percentage of its Restricted Securities (calculated
on a Fully-Diluted Basis) as the percentage of the Transferors' Restricted
Securities to be sold by the Transferors to the Buyer. Any Offeree which owns
Equity Equivalents may sell pursuant to the Section 10.2 Offer, in lieu of
shares of Restricted Securities, Equity Equivalents representing that number of
shares of Restricted Securities which it could sell pursuant to its Inclusion
Right, and the purchase price therefor shall equal the aggregate price that
would be paid for the shares of Restricted Securities issuable upon the
exercise, exchange or conversion thereof minus the aggregate exercise, exchange
or conversion price under such Equity Equivalents for such shares of Restricted
Securities. If any Offeree exercises its Inclusion Right on a timely basis
pursuant to Section 10.2(a) with respect to any Inclusion Notice, then prior to
the expiration of the applicable 120-day period referred to in Section 10.2(c),
none of the Transferors shall consummate any sale to the Buyer of any of the
Transferor Shares covered by such Inclusion Notice unless such Offeree is
permitted to participate in such Transfer as provided in this Section 10.2 (it
being understood that any Transfer of any such Transferor Shares after the
expiration of such 120-day period must comply with this Section 10.2).
(c) With reasonable promptness following its exercise of an
Inclusion Right, each Offeree shall deliver to the Transferors a certificate or
certificates representing the Restricted Securities to be Transferred pursuant
to the Section 10.2 Offer by such Offeree, free and clear of all Liens (other
than Liens which the Buyer permits to exist with respect to the Transferor
Shares at the time of its acquisition thereof), and a limited power-of-attorney
authorizing the Transferors to sell or otherwise dispose of such Restricted
Securities pursuant to the terms of the Section 10.2 Offer. The Transferors
shall have 120 days, commencing on the expiration of the 10-Business Day period
referred to in Section 10.2(a), in which to Transfer to the Buyer, on behalf of
itself and the Offerees, up to the number of Restricted Securities equal to the
sum of (i) the number of Restricted Securities covered by the Section 10.2 Offer
as to which Offerees shall have exercised their Inclusion Rights on a timely
basis pursuant to Section 10.2(a) plus (ii) the number of Transferor Shares. If
all such Restricted Securities and Transferor Shares are not sold to the Buyer,
the Transferors, at their option, may elect to sell, on behalf of themselves and
the Offerees that have exercised their Inclusion Rights on a timely basis
pursuant to Section 10.2(a), such number thereof as the Buyer will purchase,
allocated Pro Rata (as nearly as practicable) among the Transferors and such
Offerees. The material terms of any Transfer referred to in the two immediately
preceding sentences, including price and form of consideration, shall be as set
forth in the Inclusion Notice. If at the end of such 120-day period the
Transferors have not completed the Transfer of all the Transferor Shares and all
such Offerees' Restricted Securities (if any) proposed to be sold, the
Transferors shall return to each of the Offerees its respective certificates, if
any, representing Restricted Securities which the Offerees delivered for
Transfer pursuant to this Section 10.2 and which were not sold pursuant to the
Section 10.2 Offer, and the provisions of this Section 10.2 shall continue to be
in effect.
(d) Promptly after the Transfer of the Transferor Shares and
Restricted Securities (if any) of the Offerees to the Buyer pursuant to the
Section 10.2 Offer, the Transferors shall notify the Offerees thereof. To the
extent within their control and at the expense of the requesting Offeree, the
Transferors shall furnish such evidence of the completion of such Transfer and
the terms thereof as may be reasonably requested by any Offerees that
participated in such Transfer.
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(e) Notwithstanding anything to the contrary contained in this
Section 10.2, (i) except for the Transferors' obligation to return to each
Offeree any certificates representing the Offerees' Restricted Securities there
shall be no liability on the part of any Transferor to any Participating
Stockholder in the event that any proposed Transfer pursuant to this Section
10.2 is not consummated for any reason, and (ii) whether or not any sale of
Restricted Securities is effected pursuant to this Section 10.2 shall be in the
sole and absolute discretion of the Transferors.
(f) The provisions of paragraphs (a) through (e) above shall
not apply to any Transfer of Restricted Securities by any LIH Stockholder which
occurs following the first date as of which the LIH Stockholders, taken
together, cease to beneficially own Restricted Securities which comprise at
least 20% of the LIH Stockholders' Original Ownership Xxxxx.
00
00
ARTICLE XI
DEFINITIONS
11.1 TERMS. As used in this Agreement, the following defined
terms shall have the meanings set forth below:
"ADDITIONAL STOCKHOLDER" means any person to whom the Company
has granted registration rights in compliance with Section 1.7 and who has
executed a Joinder Agreement in substantially the form of Exhibit A-2, and its
direct and indirect Permitted Transferees, so long as any such Person shall hold
Registrable Securities.
"BANCBOSTON STOCKHOLDERS" means BancBoston, and its direct and
indirect Permitted Transferees, in each case so long as any such Person shall
hold Registrable Securities or Restricted Securities.
"BANK ENTITY" means, at any time of determination, any Person
that is then subject to regulation under Section 4 of the Bank Holding Company
Act.
"BANK HOLDING COMPANY ACT" means the Bank Holding Company Act
of 1956, as amended, and the rules and regulations thereunder.
"BUSINESS DAY" means a day other than Saturday, Sunday or any
day on which banks located in the State of New York or the State of Minnesota
are authorized or obligated to close.
"COMMISSION" means the U.S. Securities and Exchange
Commission.
"COMMON STOCK" means the Common Stock, par value $.10 per
share, of the Company, any securities into which such Common Stock shall have
been changed and any securities resulting from any reclassification or
recapitalization of such Common Stock, and all other securities of any class or
classes (however designated) of the Company the holders of which have the right,
without limitation as to amount, after payment on any securities entitled to a
preference on dividends or other distributions upon any dissolution, liquidation
or winding up, either to all or to a share of the balance of payments upon such
dissolution, liquidation or winding up.
"EQUITY EQUIVALENTS" means (a) the Warrants, (b) any other
securities (other than employee options) which, by their terms, are or may be
exercisable, convertible or exchangeable for or into Common Stock at the
election of the holder thereof, (c) the shares of Class B-1 Common Stock and (d)
the shares of Series B Preferred Stock.
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"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar Federal statute then in effect, and any reference to a
particular section thereof shall include a reference to a comparable section, if
any, of any such similar Federal statute, and the rules and regulations
thereunder.
"FULLY-DILUTED BASIS" means with respect to the calculation of
the number of shares of Common Stock, (i) all shares of Common Stock outstanding
at the time of determination, (ii) all shares of Common Stock issuable upon the
exercise, conversion or exchange of any Equity Equivalents outstanding at the
time of determination and (iii) all shares of Common Stock issuable upon the
exercise, conversion or exchange of any securities that are issuable upon the
exercise, conversion or exchange of any Equity Equivalents outstanding at the
time of determination.
"JOINDER AGREEMENT" means a Joinder Agreement substantially in
the form attached hereto as Exhibit A-1 or A-2.
"LIBERTY MUTUAL STOCKHOLDERS" means Liberty Mutual, and its
direct and indirect Permitted Transferees, in each case so long as any such
Person shall hold Registrable Securities or Restricted Securities.
"LIH STOCKHOLDERS" means the LIH Entities, and their
respective direct and indirect Permitted Transferees, in each case so long as
any such Person shall hold Registrable Securities or Restricted Securities.
"MEZZANINE STOCKHOLDERS" means the Mezzanine Entities, and
their respective direct and indirect Permitted Transferees, in each case so long
as any such Person shall hold Registrable Securities or Restricted Securities.
"ORIGINAL OWNERSHIP LEVEL" means, with respect to the
BancBoston Stockholders, the LIH Stockholders, the Liberty Mutual Stockholders
or the Mezzanine Stockholders (as applicable), the number of shares of Common
Stock, on a Fully Diluted Basis, as adjusted for any stock splits, stock
dividends or reclassifications or other similar events, held by them in the
aggregate on the Closing Date immediately after the Closing (as such terms are
defined in the SB Investment Agreement or, if the Closing thereunder does not
occur, as such terms are defined in the AVS Investment Agreement).
"PARTICIPATING STOCKHOLDERS" means the LIH Stockholders, the
BancBoston Stockholders, the Liberty Mutual Stockholders, the Mezzanine
Stockholders and any Additional Stockholders or transferee of any of the
foregoing persons who has acquired Registrable Securities and who has executed a
Joinder Agreement.
"PERMITTED TRANSFEREE" means:
(i) with respect to any Participating Stockholder who is a
natural person, the
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spouse or any lineal descendant (including by adoption and
stepchildren) of such Participating Stockholder or any trust
of which such Participating Stockholder is the trustee and
which is established solely for the benefit of any of the
foregoing individuals and whose terms are not inconsistent
with the terms of Article X; and
(ii) with respect to any Participating Stockholder who is not
a natural person, (A) any Affiliate of such Participating
Stockholder and any officer or director of such Participating
Stockholder or any such Affiliate, (B) any spouse or lineal
descendant (including by adoption and stepchildren) of the
officers and directors referred to in clause (A) above, and
any trust in which all the beneficiaries thereof are one or
more of the persons described in this clause (B) and the
officers and directors described in clause (A) above and whose
terms are not inconsistent with the terms of Article X; and
(iii) as to any LIH Stockholder, (w) any other LIH
Stockholder, (x) any member or manager of such LIH
Stockholder, (y) any partner, officer or employee of any such
manager or member, (z) any Affiliate of such LIH Stockholder
or of any such member, manager, partner, officer or employee,
and (xx) any liquidating trust or similar entity established
by such LIH Stockholder or any of the foregoing entities for
the benefit of its members, partners or other interest holders
and their Permitted Transferees for the purpose of holding
Registrable Securities;
(iv) as to any Mezzanine Stockholder, (w) any other Mezzanine
Stockholder, (x) any liquidating trust or similar entity
established by any Mezzanine Stockholder for the benefit of
its Permitted Transferees for the purpose of holding
Registrable Securities, (y) with respect to the MassMutual
Entities only, any person (excluding individuals) that is an
investment fund for whom a MassMutual Entity (or any Affiliate
thereof) is the sole investment manager or investment advisor,
and (z) with respect to NCVC only, Great Lakes Capital
Investments I, LLC, or any other entity that is formed and
controlled by and for the benefit of the executive officers of
NCVC; and
(v) as to any Liberty Mutual Stockholder, Liberty Mutual Fire
Insurance Company, Liberty Life Assurance Company of Boston
and Liberty Insurance Corporation, in each case so long as
such Person is an Affiliate of such Liberty Mutual Stockholder
at the time of the relevant Transfer;
provided, however, that notwithstanding anything in paragraphs
(i) through (v) above to the contrary, for the purposes of
Article X only, (w) the "Permitted Transferees" of the LIH
Stockholders at any time of determination shall not include
any Person who is then a BancBoston Stockholder, a Liberty
Mutual Stockholder, a Mezzanine Stockholder or a Permitted
Transferee of a BancBoston Stockholder, Liberty Mutual
Stockholder or Mezzanine Stockholder, (x) the "Permitted
Transferees" of the
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BancBoston Stockholders at any time of determination shall not
include any Person who is then an LIH Stockholder, a Liberty
Mutual Stockholder, a Mezzanine Stockholder or a Permitted
Transferee of an LIH Stockholder, Liberty Mutual Stockholder
or Mezzanine Stockholder, (y) the "Permitted Transferees" of
the Liberty Mutual Stockholders at any time of determination
shall not include any Person who is then a BancBoston
Stockholder, an LIH Stockholder, a Mezzanine Stockholder or a
Permitted Transferee of a BancBoston Stockholder, LIH
Stockholder or Mezzanine Stockholder and (z) the "Permitted
Transferees" of the Mezzanine Stockholders at any time of
determination shall not include any Person who is then a
Liberty Mutual Stockholder, a BancBoston Stockholder, an LIH
Stockholder or a Permitted Transferee of a Liberty Mutual
Stockholder, BancBoston Stockholder or LIH Stockholder.
"PRO RATA" means, with respect to one or more Stockholders, in
proportion to the number of shares of Common Stock on a Fully-Diluted Basis
owned by such Stockholder or Stockholders or which may be acquired by any such
Stockholder or Stockholders upon exercising any rights under any Equity
Equivalent owned by such Stockholder or Stockholders.
"REGISTRABLE SECURITIES" means, at any time of determination,
(i) the shares of Common Stock then issued and outstanding or which are issuable
upon the conversion, exercise or exchange of Equity Equivalents, (ii) any then
outstanding securities into which shares of Common Stock shall have been changed
and (iii) any then outstanding securities resulting from any reclassification or
recapitalization of Common Stock; provided, however, that "Registrable
Securities" shall not include any shares of Common Stock or other securities
obtained or transferred pursuant to an effective registration statement under
the Securities Act or in a Rule 144 Transaction; and provided further, however,
that "Registrable Securities" shall not include any shares of Common Stock or
other securities which are held by a Person who is not a Participating
Stockholder.
"REQUESTING INVESTORS" means, with respect to any Demand
Registration, the Required LIH Stockholders, the Required BancBoston
Stockholders, the Required Liberty Mutual Stockholders or the Required Mezzanine
Stockholders (as the case may be) that have requested such Demand Registration
in accordance with Section 1.1.
"REQUIRED BANCBOSTON STOCKHOLDERS" means, as of the date of
any determination thereof, BancBoston Stockholders which then hold Registrable
Securities representing at least a majority (by number of shares) of the
Registrable Securities (or, for purposes of any amendment, modification or
waiver of any provision of Article X, the Restricted Securities), on a
Fully-Diluted Basis, then held by all BancBoston Stockholders.
"REQUIRED LIBERTY MUTUAL STOCKHOLDERS" means, as of the date
of any determination thereof, Liberty Mutual Stockholders which then hold
Registrable Securities representing at least a majority (by number of shares) of
the Registrable Securities (or, for purposes of any amendment, modification or
waiver of any provision of Article X, the Restricted Securities),
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on a Fully-Diluted Basis, then held by all Liberty Mutual Stockholders.
"REQUIRED LIH STOCKHOLDERS" means, as of the date of any
determination thereof, LIH Stockholders which then hold Registrable Securities
representing at least a majority (by number of shares) of the Registrable
Securities (or, for purposes of any amendment, modification or waiver of any
provision of Article X, the Restricted Securities), on a Fully-Diluted Basis,
then held by all LIH Stockholders.
"REQUIRED MEZZANINE STOCKHOLDERS" means, as of the date of any
determination thereof, Mezzanine Stockholders which then hold Registrable
Securities representing at least a majority (by number of shares) of the
Registrable Securities (or, for purposes of any amendment, modification or
waiver of any provision of Article X, the Restricted Securities), on a
Fully-Diluted Basis, then held by all Mezzanine Stockholders.
"REQUISITE REGISTRATION PARTICIPANTS" means, with respect to
any Demand Registration or Piggyback Registration, Participating Stockholders
which then hold Registrable Securities representing at least a majority (by
number of shares) of the Registrable Securities requested to be included in such
Demand Registration (whether as Requesting Investors or otherwise) or Piggyback
Registration pursuant to Section 1.1 or 2.1, as applicable.
"REQUISITE REQUESTING INVESTORS" means, as of the date of any
determination thereof with respect to any Demand Registration, Requesting
Investors which then hold a majority (by number of shares) of the Registrable
Securities, on a Fully-Diluted Basis, then held by all Requesting Investors of
such Demand Registration.
"RESTRICTED SECURITIES" means the Series B Preferred Stock,
the Common Stock, any Equity Equivalents and any securities issued with respect
to any of the foregoing as a result of any stock dividend, stock split,
reclassification, recapitalization, reorganization, merger, consolidation or
similar event or upon the conversion, exchange or exercise thereof.
"RULE 144 TRANSACTION" means a transfer of Common Stock (a)
complying with Rule 144 under the Securities Act (or any successor statute or
rule) as such Rule (or such successor statute or rule, as the case may be) is in
effect on the date of such transfer (but not including a sale other than
pursuant to a "brokers transaction" as defined in clauses (1) and (2) of
paragraph (g) of such Rule as in effect on the date hereof) and (b) occurring at
a time when shares of Common Stock are registered pursuant to Section 12 of the
Exchange Act (or any successor to such Section).
"SALE OF THE COMPANY" means the sale of the Company (whether
by merger, consolidation, recapitalization, reorganization, sale of securities
of the Company or sale of all or substantially all the assets of the Company) to
one or more Persons (other than the LIH Stockholders and their respective
Affiliates) who acquire securities representing 50% or more of the total voting
power of and equity interest in the Company, in each case on a Fully-Diluted
Basis.
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"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar Federal statute then in effect, and any reference to a particular
section thereof shall include a reference to a comparable section, if any, of
any such similar Federal statute, and the rules and regulations thereunder.
"TRANSFER" means any direct or indirect sale, transfer,
assignment, grant of a participation in, gift, hypothecation, pledge or other
disposition of any Restricted Security or any interest therein or, as the
context may require, to sell, transfer, assign, grant a participation in, give
as a gift, hypothecate, pledge or otherwise dispose of, directly or indirectly,
any Restricted Security or any interest therein; provided, however, that the
exercise of any purchase, conversion or exchangeability right provided for in
the terms of the Series B Preferred Stock or any Equity Equivalent shall not be
deemed a "Transfer."
11.2 OTHER DEFINED TERMS. Unless otherwise defined herein,
capitalized terms used in this Agreement shall have the respective meanings
assigned to them in the AVS Investment Agreement.
11.3 DEFINED TERMS IN CORRESPONDING SECTIONS. The following
defined terms, when used in this Agreement, shall have the meaning ascribed to
them in the corresponding Sections of this Agreement listed below:
"AVS Investment Agreement" -- Recitals
"BancBoston" -- Preamble
"Black-Out Notice" -- Section 1.8(b)
"Buyer" -- Section 10.2(a)
"Class B-1 Common Stock" -- Recitals
"Company" -- Preamble
"Demand Registration" -- Section 1.1
"Inclusion Notice" -- Section 10.2(a)
"Inclusion Right" -- Section 10.2(b)
"Investment Agreements" -- Recitals
"Liberty Mutual" -- Preamble
"LIH Holdings I" -- Preamble
"LIH Holdings II" -- Preamble
"LIH Holdings III" -- Preamble
"LIH Entities" -- Preamble
"Long-Form Registration" -- Section 1.1(a)
"MassMutual Entities" -- Preamble
"Mezzanine Entities" -- Preamble
"MMCI" -- Preamble
"MMCVP" -- Preamble
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"MMLIC" -- Preamble
"MMPI" -- Preamble
"NCVC" -- Preamble
"Offerees" -- Section 10.2(a)
"Piggyback Registration" -- Section 2.1
"Registration Expenses" -- Section 5.1
"SB Investment Agreement" -- Recitals
"Section 10.2 Offer" -- Section 10.2(a)
"Securities Purchase Agreements" -- Recitals
"Series B Preferred Stock" -- Recitals
"Short-Form Registration" -- Section 1.1(a)
"Transferors" -- Section 10.2(a)
"Transferor Shares" -- Section 10.2(a)
"Warrants" -- Recitals
ARTICLE XII
MISCELLANEOUS
12.1 NO INCONSISTENT AGREEMENTS. The Company represents and
warrants that it does not currently have, and covenants that it will not
hereafter enter into any Contract which is inconsistent with, or would otherwise
restrict the performance by the Company of, its obligations hereunder.
12.2 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties hereto
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy that may be available to any of them at law or equity;
provided, however, that each of the parties hereto agrees to provide the other
parties hereto with written notice at least two Business Days prior to filing
any motion or other pleading seeking a temporary restraining order, a temporary
or permanent injunction, specific performance, or any other equitable remedy and
to give the other parties hereto and their counsel a reasonable opportunity to
attend and participate in any judicial or administrative hearing or other
proceeding held to adjudicate or rule upon any such motion or pleading.
12.3 AMENDMENTS AND WAIVERS. Except as otherwise provided
herein, no modification, amendment or waiver of any provision of this Agreement
will be effective against the Company or any holder of Registrable Securities or
Restricted Securities, unless such modification, amendment or waiver is approved
in writing by the Company, the Required LIH Stockholders, the Required
BancBoston Stockholders, the Required Liberty Mutual Stockholders and the
Required
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Mezzanine Stockholders. Each of the Participating Stockholders and the Company
shall be bound by each modification, amendment or waiver authorized in
accordance with this Section 12.3, regardless of whether the certificates
evidencing the Registrable Securities or the Restricted Securities shall have
been marked to indicate such modification, amendment or waiver. The failure of
any party hereto to enforce any of the provisions of this Agreement will in no
way be construed as a waiver of such provisions and will not affect the right of
such party thereafter to enforce each and every provision of this Agreement in
accordance with its terms.
12.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns. Each of the Participating
Stockholders hereby agrees that it shall not Transfer any Restricted Securities
to any of its Permitted Transferees, unless such Permitted Transferee shall have
executed a Joinder Agreement, substantially in the form of Exhibit A-1, and
thereby become a party to this Agreement. In addition, whether or not any
express assignment has been made, the provisions of this Agreement which are for
the benefit of purchasers or holders of Registrable Securities are also for the
benefit of, and enforceable by, any subsequent holder of Registrable Securities,
except to the extent reserved to or by the Transferor in connection with any
such Transfer; provided, however, that the benefits of this Agreement shall
inure to and be enforceable by any Transferee of Registrable Securities only if
such Transferee acquired such Registrable Securities in accordance with the
terms of Article X and shall have executed a Joinder Agreement. Notwithstanding
the immediately preceding sentence, (a) nothing contained herein shall be
construed as granting any Participating Stockholder the right to Transfer any of
its Restricted Securities except in accordance with this Agreement and (b)
unless otherwise expressly contemplated by this Agreement, none of the
provisions of Article X shall apply to any Transfer of Restricted Securities (or
to the Transferee thereof) subsequent to a Transfer of those securities pursuant
to Section 10.2.
12.5 NOTICES. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally against written receipt or by facsimile transmission or
mailed by prepaid first class certified mail, return receipt requested or mailed
by reputable overnight courier, fee prepaid, to the parties at the following
addresses or facsimile numbers:
(a) if to the Company, to:
Xxxx International Holdings, Inc.
000 Xxxx Xxxxxxxxx
Xxxxx, Xxxxxxxxx 00000
Facsimile No: (000) 000-0000
Attn: Chief Executive Officer
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with copies (which shall not constitute notice) to
the other holders of Registrable Securities or
Restricted Securities and to:
Xxxxxxx, Street and Deinard
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile No: (000) 000-0000
Attn: Xxxx Xxxxx, Esq.; and
(b) if to any Participating Stockholder, to the address for
notices set forth opposite its name in Schedule I.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section 12.5, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section 12.5, be deemed given upon receipt, (iii) if delivered
by mail in the manner described above to the address as provided in this Section
12.5, be deemed given on the earlier of the third full Business Day following
the day of mailing or upon receipt, and (iv) if delivered by overnight courier
to the address provided in this Section 12.5, be deemed given on the earlier of
the first Business Day following the date sent by such overnight courier or upon
receipt (in each case regardless of whether such notice, request or other
communication is received by any other Person to whom a copy of such notice is
to be delivered pursuant to this Section 12.5). Any party from time to time may
change its address, facsimile number or other information for the purpose of
notices to that party by giving notice specifying such change to the other
parties hereto.
12.6 HEADINGS, CERTAIN CONVENTIONS. The headings used in this
Agreement have been inserted for convenience of reference only and do not define
or limit any terms or provisions hereof. Unless the context otherwise expressly
requires, all references herein to Articles, Sections and Exhibits are to
Articles and Sections of, and Exhibits to, this Agreement. The words "herein,"
"hereunder" and "hereof" and words of similar import refer to this Agreement as
a whole and not to any particular Section or provision. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation."
12.7 GENDER. Whenever the pronouns "he" or "his" are used
herein they shall also be deemed to mean "she" or "hers" or "it" or "its"
whenever applicable. Words in the singular shall be read and construed as though
in the plural and words in the plural shall be construed as though in the
singular in all cases where they would so apply.
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12.8 INVALID PROVISIONS. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (i) such provision will be
fully severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (iv) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
12.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York.
12.10 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. EACH OF
THE PARTIES HERETO CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW YORK AND IRREVOCABLY AGREES
THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT MAY BE LITIGATED IN
SUCH COURTS. EACH OF THE PARTIES HERETO ACCEPTS FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES HERETO FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE PARTY AT THE ADDRESS
SPECIFIED IN THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE 15 DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF ANY
PARTY HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER OR
TO BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST ANY OF THE OTHER PARTIES HERETO
IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS MAY BE PERMITTED BY ANY
APPLICABLE LAW.
12.11 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
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ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. EACH OF THE PARTIES HERETO
ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR
THIS WAIVER, BE REQUIRED OF SUCH PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO
BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND
THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT
LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS. EACH OF THE PARTIES HERETO FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO
A TRIAL BY THE COURT.
12.12 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
XXXX INTERNATIONAL HOLDINGS, INC.
By: /s/ Xxxxxx Vollmershausen
-----------------------------------
Name: Xxxxxx Vollmershausen
Title: President
LIH HOLDINGS, LLC
By: /s/ Xxx X. Xxxxxxxx
-----------------------------------
Name: Xxx X. Xxxxxxxx
Title: Authorized Person
LIH HOLDINGS II, LLC
By: /s/ Xxx X. Xxxxxxxx
-----------------------------------
Name: Xxx X. Xxxxxxxx
Title: Authorized Person
LIH HOLDINGS III, LLC
By: /s/ Xxx X. Xxxxxxxx
-----------------------------------
Name: Xxx X. Xxxxxxxx
Title: Authorized Person
LIBERTY MUTUAL INSURANCE COMPANY
By: /s/ A. Xxxxxxxxx Xxxxxxxx
-----------------------------------
Name: A. Xxxxxxxxx Xxxxxxxx
Title: Senior Vice President &
Chief Investment Officer
[Signature Page to Rights Agreement]
41
BANCBOSTON CAPITAL INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
MASSMUTUAL CORPORATE VALUE PARTNERS
LIMITED
By: Massachusetts Mutual Life Insurance
Company, as Investment Advisor
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
MASSMUTUAL CORPORATE INVESTORS
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
The foregoing is executed on behalf
of MassMutual Corporate Investors,
organized under a Declaration of
Trust, dated September 13, 1985, as
amended from time to time. The
obligations of such Trust are not
personally binding upon, nor shall
resort be had to the property of,
any of the Trustees, shareholders,
officers, employees or agents of
such Trust, but the Trust's property
only shall be bound.
[Signature Page to Rights Agreement]
42
MASSMUTUAL PARTICIPATION INVESTORS
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
The foregoing is executed on behalf
of MassMutual Participation
Investors, organized under a
Declaration of Trust, dated April 7,
1988, as amended from time to time.
The obligations of such Trust are
not personally binding upon, nor
shall resort be had to the property
of, any of the Trustees,
shareholders, officers, employees or
agents of such Trust, but the
Trust's property only shall be
bound.
NATIONAL CITY VENTURE CORPORATION
By: /s/ Xxxxxxxxxxx X. Xxxx
---------------------------------
Name: Xxxxxxxxxxx X. Xxxx
Title: Vice President
[Signature Page to Rights Agreement]
43
Exhibit A-1
Form of Joinder Agreement
For Permitted Transferees
XXXX INTERNATIONAL HOLDINGS, INC.
000 Xxxx Xxxxxxxxx
Xxxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
Ladies & Gentlemen:
In consideration of the transfer to the undersigned of
[DESCRIBE SECURITY BEING TRANSFERRED] of XXXX INTERNATIONAL HOLDINGS, INC., a
Delaware corporation (the "Company"), the undersigned represents that it is a
Permitted Transferee of [INSERT NAME OF TRANSFEROR] and agrees that, as of the
date written below, [HE][SHE][IT] shall become a party to, and a Permitted
Transferee as defined in, that certain Rights Agreement dated as of December 22,
1998, as such agreement may have been amended from time to time (the
"Agreement"), among the Company and the persons named therein, and as a
Permitted Transferee shall be fully bound by, and subject to, all of the
covenants, terms and conditions of the Agreement that were applicable to the
undersigned's transferor, as though an original party thereto, and shall be
deemed a [LIH STOCKHOLDER] [BANCBOSTON STOCKHOLDER] [LIBERTY MUTUAL STOCKHOLDER]
[MEZZANINE STOCKHOLDER] [ADDITIONAL STOCKHOLDER] for all purposes thereof.
Executed as of the day of , .
SIGNATORY: _____________________________
Address: _____________________________
ACKNOWLEDGED AND ACCEPTED:
XXXX INTERNATIONAL HOLDINGS, INC.
By ___________________________
Name:
Title:
44
Exhibit A-2
Form of Joinder Agreement
For Additional Stockholders
XXXX INTERNATIONAL HOLDINGS, INC.
000 Xxxx Xxxxxxxxx
Xxxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
Ladies & Gentlemen:
In consideration of the issuance to the undersigned of
[DESCRIBE SECURITY BEING ISSUED] of XXXX INTERNATIONAL HOLDINGS, INC., a
Delaware corporation (the "Company"), the undersigned agrees that, as of the
date written below, [HE][SHE][IT] shall become a party to and an Additional
Stockholder under that certain Rights Agreement dated as of December 22, 1998,
as such agreement may have been amended from time to time (the "Agreement"),
among the Company and the persons named therein, and shall be fully bound by,
and subject to, the covenants, terms and conditions of the Agreement as provided
under Section 12.4 of the Agreement as though an original party thereto.
Executed as of the day of , .
SIGNATORY: _____________________________
Address: _____________________________
ACKNOWLEDGED AND ACCEPTED:
XXXX INTERNATIONAL HOLDINGS, INC.
By ___________________________
Name:
Title:
45
Schedule I
Names and Addresses
LIH Holdings III, LLC
c/o Harvest Partners, Inc.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
Liberty Mutual Insurance Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx Xxx
Facsimile No.: (000) 000-0000
BancBoston Capital Inc.
00 Xxxxxxx Xxxxxx
Mail Stop 75-10-01
Xxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
Massachusetts Mutual Life Insurance Company
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
MassMutual Corporate Value Partners Limited
c/o Massachusetts Mutual Life Insurance Company
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
MassMutual Corporate Investors
c/o Massachusetts Mutual Life Insurance Company
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
46
Schedule I cont'd
Names and Addresses
MassMutual Participation Investors
c/o Massachusetts Mutual Life Insurance Company
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
National City Venture Corporation
0000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxxxxxx X. Xxxx
Facsimile No.: (000) 000-0000
