1
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
December 1, 1999
To the several persons named
at the foot hereof
Dear Sirs:
This will confirm that in consideration of (a) the purchase by
the persons and entities listed in Schedule I of the Recapitalization Agreement,
dated as of September 29, 1999 (as amended, the "Recapitalization Agreement")
among Protocol Holdings, Inc., a Delaware corporation (the "Company"), and the
other parties listed in Schedules I and II thereto (such persons and entities
being hereinafter collectively called the "New Investors"), on the date hereof,
of an aggregate 10,693,634 shares of Series B Convertible Preferred Stock, $.001
par value ("Series B Preferred Stock"), of the Company, and as an inducement to
the New Investors to consummate the transactions contemplated by the
Recapitalization Agreement; (b) the purchase on Subsequent Closing Dates (as
defined in the Recapitalization Agreement) by the New Investors of up to an
aggregate 3,960,606 shares of Series B Preferred Stock and (c) the entry by the
Original Stockholders (as defined in the Recapitalization Agreement) into (x)
the Recapitalization Agreement and (y) the Stockholders Agreement, dated as of
the date hereof (the "Stockholders Agreement"), among the Company, the New
Investors and the Original Stockholders, and as an inducement to them to
consummate the transactions contemplated by the Recapitalization Agreement and
the Stockholders Agreement, the Company hereby covenants and agrees with each of
you, and with each subsequent holder of Restricted Stock (as such term is
defined herein), and with each holder of Original Stockholders Stock (as defined
herein), as follows:
1. Certain Definitions. As used herein, the following terms
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange
Commission, or any other federal agency at the time administering the
Securities Act.
"Common Stock" shall mean shares of the Common Stock of the
Company, as constituted as of the date of this Agreement, subject to
adjustment pursuant to the provisions of Section 10 hereof.
2
"Conversion Shares" shall mean the shares of Common Stock
issued upon conversion of the Series B Preferred Stock.
"Exchange Act" shall mean the Securities Exchange Act of 1934
or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Original Stockholders Stock" shall mean (i) the shares of
Common Stock and Series A Preferred Stock owned by the Original
Stockholders on the date of this Agreement after giving effect to the
Initial Closing under the Recapitalization Agreement, including the
shares of Common Stock issuable upon conversion of the Series A
Preferred Stock and (ii) up to 100,000 shares of Common Stock purchased
by the Original Stockholders pursuant to the terms of (x) the Asset
Purchase Agreement dated as of November 2, 1998 (the "Anserphone
Agreement") among the Company, Anserphone of New Orleans, Inc.,
Anserphone, Inc. and Xxxxxxx X. Read, Jr. and X. Xxxxxxx Read and (y)
the Assumption Agreement dated as of the date hereof among the Company
and the Original Stockholders.
"Registration Expenses" shall mean the expenses so described
in Section 8 hereof.
"Restricted Stock" shall mean any securities of the Company,
the certificates for which are required to bear the legend set forth in
Section 2 hereof, except such term shall not include Original
Stockholders Stock.
"Securities Act" shall mean the Securities Act of 1933 or any
similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean the expenses so described in
Section 8 hereof.
"Series A Preferred Stock" shall mean the shares of Series A
Preferred Stock, $.001 par value, as constituted as of the date of this
Agreement after giving effect to the Initial Closing under the
Recapitalization Agreement.
2. Restrictive Legend. Each certificate representing the
Series B Preferred Stock, the Original Stockholders Stock, and the Conversion
Shares upon conversion of the Series B Preferred Stock, and each certificate
issued upon exchange or transfer of the Common Stock, the Series B Preferred
Stock and the Conversion Shares,
2
3
as the case may be, other than in a public sale or as otherwise permitted by the
last paragraph of paragraph 3 hereof shall be stamped or otherwise imprinted
with a legend substantially in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. NEITHER THE SECURITIES EVIDENCED HEREBY, NOR ANY
INTEREST THEREIN, MAY BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS EITHER (i) THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SAID ACT AND LAWS RELATING THERETO OR (ii) THE
CORPORATION HAS RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY
IN FORM AND SUBSTANCE TO THE CORPORATION, STATING THAT SUCH
REGISTRATION IS NOT REQUIRED."
3. Notice of Proposed Transfer. Prior to any proposed transfer
of any Restricted Stock or Original Stockholders Stock, as the case may be,
(other than under the circumstances described in Section 4, 5, or 6 hereof), the
holder thereof shall give written notice to the Company of its intention to
effect such transfer. Each such notice shall describe the manner of the proposed
transfer and, if requested by the Company, shall be accompanied by an opinion of
counsel reasonably satisfactory to the Company to the effect that the proposed
transfer of the Restricted Stock or Original Stockholders Stock, as the case may
be, may be effected without registration under the Securities Act, whereupon the
holder of such Restricted Stock or Original Stockholders Stock, as the case may
be, shall be entitled to transfer such Restricted Stock or Original Stockholders
Stock, as the case may be, in accordance with the terms of its notice but
subject always to the terms of the Stockholders Agreement; provided, however,
that no such opinion or other documentation shall be required if such notice
shall cover a distribution by any New Investor that is a partnership or a
limited liability company to its partners or members. Each certificate for
Restricted Stock or Original Stockholders Stock, as the case may be, transferred
as above provided shall bear a legend substantially as set forth in Section 2,
unless (i) such transfer is in accordance with the provisions of Rule 144 (or
any other rule permitting public sale without registration under the Securities
Act) or (ii) the opinion of counsel referred to above is to the further effect
that the transferee and any subsequent transferee (other than an affiliate of
the Company) would be entitled to transfer such securities in a public sale
without registration under the Securities Act.
3
4
The foregoing restrictions on transferability of Restricted
Stock and Original Stockholders Stock shall terminate as to any particular
shares of Restricted Stock or Original Stockholders Stock when such shares shall
have been effectively registered under the Securities Act and sold or otherwise
disposed of in accordance with the intended method of disposition by the seller
or sellers thereof set forth in the registration statement concerning such
shares. Whenever a holder of Restricted Stock or Original Stockholders Stock is
able to demonstrate to the Company (and its counsel) that the provisions of Rule
144(k) of the Securities Act (or any successor rule) are available to such
holder, such holder of Restricted Stock or Original Stockholders Stock shall be
entitled to receive from the Company, without expense, a new certificate not
bearing the restrictive legend set forth in Section 2.
4. Restricted Stock Required Registration. (a) At any time
either (i) the holders of Restricted Stock constituting at least a majority of
the total Restricted Stock outstanding at such time (treating the holders of
Series B Preferred Stock as the holders of Conversion Shares for such purpose)
or (ii) either BCI Growth V, L.P. or Xxxxxx Xxxxx & Partners II, L.P. may
request the Company to register under the Securities Act all or any portion of
the Restricted Stock held by such requesting holder or holders for sale in the
manner specified in such notice; provided, however, that with respect to the
Series B Preferred Stock the only securities which the Company shall be required
to register pursuant hereto shall be Conversion Shares.
(b) Promptly following receipt of any notice under this
Section 4, the Company shall promptly notify any holders of Restricted Stock
from whom notice has not been received and Original Stockholders Stock, and
shall use its best efforts to register under the Securities Act, for public sale
in accordance with the method of disposition specified in such notice from
requesting holders, the number of shares of Restricted Stock specified in such
notice and, as applicable, in any notices received from other holders and
holders of Original Stockholders Stock within 20 days after their receipt of
such notice from the Company; provided, however, that if the proposed method of
disposition specified by the requesting holders shall be an underwritten public
offering, the number of shares of Restricted Stock or Original Stockholders
Stock or both, as the case may be, to be included in such an offering may be
reduced (first, pro rata among the requesting holders of Original Stockholders
Stock based on the number of shares of Original Stockholders Stock requested to
be registered and, second, pro rata among the requesting holders based on the
number of shares of Restricted Stock so requested to be registered) if and to
the extent that the managing underwriter shall be of the opinion that such
inclusion would adversely affect the marketing of the Restricted Stock and the
Original Stockholders Stock, as the case may be, to be sold. If such method of
disposition shall be an underwritten public offering, the Company may designate
the managing underwriter of
4
5
such offering, subject to the approval of the selling holders of a majority of
the Restricted Stock (treating the holders of Series B Preferred Stock as the
holders of Conversion Shares for such purpose) included in the offering, which
approval shall not be unreasonably withheld. The Company shall be obligated to
register Restricted Stock and Original Stockholders Stock pursuant to this
Section 4 on two occasions only. Notwithstanding anything to the contrary
contained herein, the obligation of the Company under this Section 4 shall be
deemed satisfied only when a registration statement covering all shares of
Restricted Stock specified in notices received as aforesaid (or such reduced
number of shares as contemplated above), for sale in accordance with the method
of disposition specified by the requesting holder, shall have become effective
and, if such method of disposition is a firm commitment underwritten public
offering, all such shares shall have been sold pursuant thereto.
(c) The Company shall be entitled to include in any
registration statement referred to in this Section 4, for sale in accordance
with the method of disposition specified by the requesting holders, shares of
Common Stock to be sold by the Company for its own account, except as and to the
extent that, in the opinion of the managing underwriter (if such method of
disposition shall be an underwritten public offering), such inclusion would
adversely affect the marketing of the Restricted Stock and Original Stockholders
Stock to be sold. Except as provided in this paragraph (c), the Company will not
effect any other registration of its Common Stock, whether for its own account
or that of other holders, from the date of receipt of a notice from requesting
holders pursuant to this Section 4 until the completion of the period of
distribution of the registration contemplated thereby, other than registrations
of Common Stock on Form S-4 or Form S-8 (or other applicable forms) issuable
pursuant to employee benefit plans of the Company, or registrations pursuant to
which notice was previously received pursuant to Section 5 hereof.
(d) Notwithstanding anything to the contrary contained in this
Agreement, the Board will be entitled to postpone the filing period (or suspend
the effectiveness) of any registration of the Restricted Stock or Original
Stockholders Stock, as the case may be, pursuant to this Section 4 for a
reasonable period of time not in excess of 90 calendar days and no more than one
such period in any period of 360 days, if the Board of Directors of the Company
(the "Board") determines, in its reasonable business judgment, that such
registration and offering could materially interfere with bona fide financing
plans of the Company or would require disclosure of information, the premature
disclosure of which could, in the Board's reasonable business judgment,
materially and adversely affect the Company. If the Board postpones the filing
of a registration statement pursuant to this Section 4, it will promptly notify,
in writing, the
5
6
holders of Restricted Stock and Original Stockholders Stock that requested such
registration when the events or circumstances permitting such postponement have
ended.
5. Form S-3 Registration. (a) If the Company shall receive
from any holder or holders of more than 500,000 shares of Restricted Stock
and/or Original Stockholders Stock a written request or requests that the
Company effect a registration on Form S-3 and any related qualification or
compliance with respect to Restricted Stock or Original Stockholders Stock, as
the case may be, owned by such holder or holders, the Company will:
(i) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other holders of
Restricted Stock and Original Stockholders Stock; and
(ii) as soon as practicable, effect such registration
(including, without limitation, the execution of an undertaking to file
post-effective amendments, appropriate qualifications under applicable
blue sky or other state securities laws and appropriate compliance with
applicable regulations issued under the Securities Act and any other
government requirements or regulations) as may be so requested and as
would permit or facilitate the sale and distribution of all or such
portion of such holder's or holders' Restricted Stock or Original
Stockholders Stock, as the case may be, as are specified in such
request, together with all or such portion of the Restricted Stock or
Original Stockholders Stock of any holder or holders joining in such
request as are specified in a written request given within thirty (30)
days after receipt of such written notice from the Company; provided
that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 5(a)
more than once in any 180-day period, or (B) if the Company is not
entitled to use Form S-3; and provided, further, that the only
securities which the Company shall be required to register pursuant
hereto shall be Common Stock. Subject to the foregoing, the Company
shall file a registration statement covering the Restricted Stock and
Original Stockholders Stock so requested to be registered as soon as
practicable after receipt of the request or requests of the holders of
the Restricted Stock and Original Stockholders Stock, as the case may
be.
(b) Registrations effected pursuant to this Section 5 shall
not be counted as requests for registration effected pursuant to either Section
4.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the Board will be entitled to postpone the filing period (or suspend
the effectiveness or use) of any registration statement relating to the
Restricted Stock or the
6
7
Original Stockholders Stock, as the case may be, pursuant to this Section 5 for
a reasonable period of time not in excess of 90 calendar days, if the Board
determines, in its reasonable business judgment, that such registration and
offering could materially interfere with bona fide financing plans of the
Company or would require disclosure of information, the premature disclosure of
which could, in the Board's reasonable business judgment, materially and
adversely affect the Company. If the Board postpones the filing (or suspends the
effectiveness or use) of a registration statement pursuant to this Section 5, it
will promptly notify, in writing, the holders of Restricted Stock or Original
Stockholders Stock, as the case may be, that requested such registration when
the events or circumstances permitting such postponement have ended.
6. Incidental Registration. If the Company at any time (other
than pursuant to Section 4 or 5 hereof) proposes to register any of its Common
Stock under the Securities Act for sale to the public, whether for its own
account or for the account of other securityholders or both (except with respect
to registration statements on Form S-4 or S-8 or another form not available for
registering the Restricted Stock or Original Stockholders Stock for sale to the
public), it will give written notice at such time to all holders of Restricted
Stock and Original Stockholders Stock of its intention to do so. Upon the
written request of any such holder, given within 30 days after receipt of any
such notice by the Company, to register any of its Restricted Stock or Original
Stockholders Stock, the Company will use its best efforts to cause the
Restricted Stock or Original Stockholders Stock as to which registration shall
have been so requested, to be included in the securities to be covered by the
registration statement proposed to be filed by the Company, all to the extent
requisite to permit the sale or other disposition by the holder of such
Restricted Stock or Original Stockholders Stock, as the case may be, so
registered; provided that nothing herein shall prevent the Company from
abandoning or delaying such registration at any time; provided, further, that
the only securities which the Company shall be required to register pursuant
hereto shall be Common Stock. The number of shares of Restricted Stock or
Original Stockholders Stock, as the case may be, to be included in such an
underwriting may be reduced, pro rata among the requesting holders of Restricted
Stock and Original Stockholders Stock, if and to the extent that the managing
underwriter shall be of the opinion that such inclusion would adversely affect
the marketing of the securities to be sold by the Company therein; provided,
however, that such number of shares of Restricted Stock or Original Stockholders
Stock, as the case may be, shall not be reduced if any shares are to be included
in such underwriting for the account of any person other than the Company.
Notwithstanding anything to the contrary contained in this
Section 6, in the event that there is a firm commitment underwritten public
offering of securities of the Company pursuant to a registration covering
Restricted Stock or Original Stockholders
7
8
Stock or any of the above, as the case may be, and a holder of Restricted Stock
or Original Stockholders Stock, as the case may be, does not sell his Restricted
Stock or Original Stockholders Stock, as the case may be, to the underwriters of
the Company's securities in connection with such offering, such holder, at the
written request of such underwriter, shall refrain from selling such Restricted
Stock or Original Stockholders Stock, as the case may be, so registered pursuant
to this Section 6 during the period of distribution of the Company's securities
by such underwriters and the period in which the underwriting syndicate
participates in the after market; provided, however, that such holder shall, in
any event, be entitled to sell its Restricted Stock or Original Stockholders
Stock, as the case may be, commencing on the 90th day after the effective date
of such registration statement.
7. Registration Procedures and Expenses. If and whenever the
Company is required by the provisions of Section 4, 5 or 6 hereof to use its
best efforts to effect the registration of any of the Restricted Stock or
Original Stockholders Stock or both, as the case may be, under the Securities
Act, the Company will, as promptly as possible:
(a) prepare (and afford one counsel for the selling holders
(as designated by a majority in interest of the selling holders)
reasonable opportunity to review and comment thereon) and file with the
Commission a registration statement (which, in the case of an
underwritten public offering pursuant to Section 4 hereof, shall be on
Form S-1 or another form of general applicability satisfactory to the
managing underwriter selected as therein provided) with respect to such
securities and use its best efforts to cause such registration
statement to become and remain effective for the period of the
distribution contemplated thereby (determined as hereinafter provided);
(b) prepare (and afford the selected counsel for the selling
holders reasonable opportunity to review and comment thereon) 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 for
the period specified in paragraph (a) above and as comply with the
provisions of the Securities Act with respect to the disposition of all
Restricted Stock or Original Stockholders Stock or any of the above, as
the case may be, covered by such registration statement in accordance
with the sellers' intended method of disposition set forth in such
registration statement for such period;
8
9
(c) furnish to each seller and to each underwriter such number
of copies of the registration statement and the prospectus included
therein (including each preliminary prospectus) as such persons may
reasonably request in order to facilitate the public sale or other
disposition of the Restricted Stock or Original Stockholders Stock or
any of the above, as the case may be, covered by such registration
statement;
(d) register or qualify the Restricted Stock or Original
Stockholders Stock or any of the above, as the case may be, covered by
such registration statement under the securities or blue sky laws of
such jurisdictions as the sellers of Restricted Stock or Original
Stockholders Stock or any of the above, as the case may be, or, in the
case of an underwritten public offering, the managing underwriter,
shall reasonably request;
(e) promptly notify each seller under such registration
statement and each underwriter, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus contained in
such registration statement, as then in effect, includes 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 the light of the circumstances then existing;
(f) if the offering is underwritten, to furnish, at the
request of any seller, on the date that Restricted Stock or Original
Stockholders Stock or any of the above, as the case may be, is
delivered to the underwriters for sale pursuant to such registration:
(i) an opinion dated such date of counsel representing the Company for
the purposes of such registration, addressed to the underwriters and to
such seller, stating that such registration statement has become
effective under the Securities Act and that (A) to the best knowledge
of such counsel, no stop order suspending the effectiveness thereof has
been issued and no proceedings for that purpose have been instituted or
are pending or contemplated under the Securities Act, (B) the
registration statement, the related prospectus, and each amendment or
supplement thereof, comply as to form in all material respects with the
requirements of the Securities Act and the applicable rules and
regulations of the Commission thereunder (except that such counsel need
express no opinion as to financial statements, the notes thereto, and
the financial schedules and other financial and statistical data
contained therein) and (C) to such other effects as may reasonably be
requested by counsel for the underwriters or by such seller or its
counsel, and (ii) a letter dated such date from the independent public
accountants retained by the Company, addressed to the underwriters,
stating that they are independent public accountants within the meaning
of the Securities Act
9
10
and that, in the opinion of such accountants, the financial statements
of the Company included in the registration statement or the
prospectus, or any amendment or supplement thereof, comply as to form
in all material respects with the applicable accounting requirements of
the Securities Act, and such letter shall additionally cover such other
financial matters (including information as to the period ending no
more than five business days prior to the date of such letter) with
respect to the registration in respect of which such letter is being
given as such underwriters or seller may reasonably request; and
(g) make available for inspection by each seller, any
underwriter participating in any distribution pursuant to such
registration statement, and any attorney, accountant or other agent
retained by such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company,
and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration
statement and permit such seller, attorney, accountant or agent to
participate in the preparation of such registration statement.
For purposes of paragraphs (a) and (b) above and of Section 4(c) hereof, the
period of distribution of Restricted Stock or Original Stockholders Stock or any
of the above, as the case may be, in a firm commitment underwritten public
offering shall be deemed to extend until each underwriter has completed the
distribution of all securities purchased by it, and the period of distribution
of Restricted Stock or Original Stockholders Stock or any of the above, as the
case may be, in any other registration shall be deemed to extend until the
earlier of the sale of all Restricted Stock or Original Stockholders Stock or
any of the above, as the case may be, covered thereby or six months after the
effective date thereof.
In connection with each registration hereunder, the selling
holders of Restricted Stock and Original Stockholders Stock, if applicable, will
furnish to the Company in writing such information with respect to themselves
and the proposed distribution by them as shall be reasonably necessary in order
to assure compliance with federal and applicable state securities laws.
In connection with each registration pursuant to Sections 4, 5
and 6 hereof covering an underwritten public offering, the Company and any
selling holder of Restricted Stock or Original Stockholders stock or any of the
above, as the case may be, agree to enter into a written agreement with the
managing underwriter selected in the manner herein provided in such form and
containing such provisions as are customary in the securities business for such
an arrangement between major underwriters and
10
11
companies of the Company's size and investment stature; provided, however, that
such agreement shall not contain any such provision applicable to the Company or
such selling holders which is inconsistent with the provisions hereof and
provided, further, however, that the time and place of the closing under said
agreement shall be as mutually agreed upon among the Company, such managing
underwriter and the selling holders of Restricted Stock and Original
Stockholders Stock, if applicable.
8. Expenses. All expenses incurred by the Company in complying
with Sections 4, 5 and 6 hereof, including, without limitation, all registration
and filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees of the National Association
of Securities Dealers, Inc., transfer taxes, fees of transfer agents and
registrars and fees and expenses of one counsel for the sellers of Restricted
Stock or Original Stockholders Stock, as the case may be, but excluding any
Selling Expenses, are herein called "Registration Expenses". All underwriting
discounts and selling commissions applicable to the sale of Restricted Stock or
Original Stockholders Stock or any of the above, as the case may be, are herein
called "Selling Expenses".
The Company will pay all Registration Expenses in connection
with each registration statement filed pursuant to Section 4, 5 or 6 hereof. All
Selling Expenses in connection with any registration statement filed pursuant to
Section 4, 5 or 6 hereof shall be borne by the participating sellers in
proportion to the number of shares sold by each, or by such persons other than
the Company (except to the extent the Company shall be a seller) as they may
agree.
9. Indemnification. In the event of a registration of any of
the Restricted Stock or Original Stockholders Stock or any of the above, as the
case may be, under the Securities Act pursuant to Section 4, 5 or 6 hereof, the
Company will indemnify and hold harmless each seller of such Restricted Stock or
Original Stockholders Stock, as the case may be, thereunder and each underwriter
of Restricted Stock or Original Stockholders Stock or any of the above, as the
case may be, thereunder and each other person, if any, who controls such seller
or underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such seller or
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Restricted Stock or Original Stockholders Stock or any of the
above, as the case may be, was registered under the Securities Act pursuant to
Section 4, 5 or 6, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein
11
12
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each such seller, each
such underwriter and each such controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case if and to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by such seller, such underwriter
or such controlling person in writing specifically for use in such registration
statement or prospectus.
In the event of a registration of any of the Restricted Stock
or Original Stockholders Stock or any of the above, as the case may be, under
the Securities Act pursuant to Section 4, 5 or 6 hereof, each seller of such
Restricted Stock or Original Stockholders Stock, as the case may be, thereunder,
severally and not jointly, will indemnify and hold harmless the Company and each
person, if any, who controls the Company within the meaning of the Securities
Act, each officer of the Company who signs the registration statement, each
director of the Company, each underwriter and each person who controls any
underwriter within the meaning of the Securities Act, against all losses,
claims, damages or liabilities, joint or several, to which the Company or such
officer or director or underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in the registration statement under which such Restricted Stock or Original
Stockholder Stock or any of the above, as the case may be, was registered under
the Securities Act pursuant to Section 4, 5 or 6, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereof, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company and each such
officer, director, underwriter and controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that such seller will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information pertaining to
such seller, as such, furnished in writing to the Company by such seller
specifically for use in such registration statement or prospectus; provided,
further, however, that the liability of each seller hereunder shall be limited
to the proportion of any such loss, claim, damage, liability or expense which is
equal to the proportion that the public offering price of
12
13
shares sold by such seller under such registration statement bears to the total
public offering price of all securities sold thereunder, but not to exceed the
proceeds (net of underwriting discounts and commissions) received by such seller
from the sale of Restricted Stock or Original Stockholders Stock, as the case
may be, covered by such registration statement.
Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to any indemnified party other than under this Section 9. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel satisfactory to such indemnified
party, and, after notice from the indemnifying party to such indemnified party
of its election so to assume and undertake the defense thereof, the indemnifying
party shall not be liable to such indemnified party under this Section 9 for any
legal expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation and of
liaison with counsel so selected; provided, however, that, if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be
reasonable defenses available to it which are different from or additional to
those available to the indemnifying party, or if the interests of the
indemnified party reasonably may be deemed to conflict with the interests of the
indemnifying party, the indemnified party shall have the right to select a
separate counsel and to assume such legal defenses and otherwise to participate
in the defense of such action, with the expenses and fees of such separate
counsel and other expenses related to such participation to be reimbursed by the
indemnifying party as incurred.
Notwithstanding the foregoing, any indemnified party shall
have the right to retain its own counsel in any such action, but the fees and
disbursements of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party shall have failed to retain counsel for the
indemnified person as aforesaid or (ii) the indemnifying party and such
indemnified party shall have mutually agreed to the retention of such counsel.
It is understood that the indemnifying party shall not, in connection with any
action or related actions in the same jurisdiction, be liable for the fees and
disbursements of more than one separate firm qualified in such jurisdiction to
act as counsel for the indemnified party. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such
13
14
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment.
If the indemnification provided for in the first two
paragraphs of this Section 9 is unavailable or insufficient to hold harmless an
indemnified party under such paragraphs in respect of any losses, claims,
damages or liabilities or actions in respect thereof referred to therein, then
each indemnifying party shall in lieu of indemnifying such indemnified party
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or actions in such proportion as
appropriate to reflect the relative fault of the Company, on the one hand, and
the underwriters and the sellers of such Restricted Stock or Original
Stockholders Stock, as the case may be, on the other, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or actions as well as any other relevant equitable considerations,
including the failure to give any notice under the third paragraph of this
Section 9. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
relates to information supplied by the Company, on the one hand, or the
underwriters and the sellers of such Restricted Stock or Original Stockholders
Stock, as the case may be, on the other, and to the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and each selling holder of Restricted Stock
or Original Stockholders Stock, as the case may be, agree that it would not be
just and equitable if contributions pursuant to this paragraph were determined
by pro rata allocation (even if all of the sellers of such Restricted Stock or
Original Stockholders Stock, as the case may be, were treated as one entity for
such purpose) or by any other method of allocation which did not take account of
the equitable considerations referred to above in this paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities or action in respect thereof, referred to above in this
paragraph, shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this paragraph, the
sellers of such Restricted Stock or Original Stockholders Stock, as the case may
be, shall not be required to contribute any amount in excess of the amount, if
any, by which the total price at which the Common Stock sold by each of them was
offered to the public exceeds the amount of any damages which they would have
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission. No person guilty of fraudulent misrepresentations (within
the meaning of Section 10(f) of the Securities Act), shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.
14
15
The indemnification of underwriters provided for in this
Section 9 shall be on such other terms and conditions as are at the time
customary and reasonably required by such underwriters. In that event the
indemnification of the sellers of Restricted Stock or Original Stockholders
Stock or any of the above, as the case may be, in such underwriting shall at the
sellers' request be modified to conform to such terms and conditions.
10. Changes in Common Stock. If, and as often as, there are
any changes in the Common Stock by way of stock split, stock dividend,
combination or reclassification, or through merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof, as may be required, so that
the rights and privileges granted hereby shall continue with respect to the
Common Stock as so changed.
11. Representations and Warranties of the Company. The Company
represents and warrants to you as follows:
(a) The execution, delivery and performance of this Agreement
by the Company have been duly authorized by all requisite corporate
action and will not violate any provision of law, any order of any
court or other agency of government, the Amended and Restated Articles
of Incorporation or Bylaws of the Company, or any provision of any
indenture, agreement or other instrument to which it or any of its
properties or assets is bound, or conflict with, result in a breach of
or constitute (with due notice or lapse of time or both) a default
under any such indenture, agreement or other instrument, or result in
the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the properties or assets of the Company.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, subject to
considerations of public policy in the case of the indemnification
provisions hereof.
12. Rule 144 Reporting. The Company agrees with you as
follows:
(a) The Company shall use its best efforts to make and keep
public information available, as those terms are understood and defined
in Rule 144 under the Securities Act, at all times from and after the
date it is first required to do so.
15
16
(b) The Company shall use its best efforts to file with the
Commission in a timely manner all reports and other documents as the
Commission may prescribe under Section 13(a) or 15(d) of the Exchange
Act at any time after the Company has become subject to such reporting
requirements of the Exchange Act.
(c) The Company shall furnish to such holder of Restricted
Stock forthwith upon request (i) a written statement by the Company as
to whether it is in compliance with the reporting requirements of Rule
144 (at any time from and after the date it first becomes subject to
such reporting requirements, and of the Securities Act and the Exchange
Act (at any time after it has become subject to such reporting
requirements), (ii) a copy of the most recent annual or quarterly
report of the Company filed with the Commission, and (iii) such other
reports and documents so filed as a holder may reasonably request to
avail itself of any rule or regulation of the Commission allowing a
holder of Restricted Stock to sell any such securities without
registration.
13. Miscellaneous. (a) All covenants and agreements contained
in this Agreement by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto whether so expressed or not. Without limiting the generality of the
foregoing, the registration rights conferred herein on the holders of Restricted
Stock and Original Stockholders Stock shall inure to the benefit of any and all
subsequent holders from time to time of the Restricted Stock and the Original
Stockholders Stock for so long as the certificates representing the Restricted
Stock or the Original Stockholders Stock, as the case may be, shall be required
to bear the legend specified in Section 2 hereof.
(b) All notices, requests, consents and other communications
hereunder shall be in writing and shall be mailed by first class registered
mail, postage prepaid, addressed as follows:
if to the Company, to it at:
Protocol Holdings, Inc.
0000 Xxxxxxxx Xxxx.
Xxxxxxxx, Xxxxxxx 00000
Attention: President
Telecopy: 000-000-0000
16
17
if to any holder of Restricted Stock, to it at its address as
set forth in Annex I hereto;
if to any holder of Original Stockholders Stock, to it at its
address as set forth in Annex I hereto;
if to any subsequent holder of Restricted Stock or Original
Stockholders Stock to it at such address as may have been
furnished to the Company in writing by such holder;
or, in any case, at such other address or addresses as shall have been furnished
in writing to the Company (in the case of a holder of Restricted Stock or
Original Stockholders Stock) or to the holders of Restricted Stock or Original
Stockholders Stock (in the case of the Company).
(c) This Agreement and all matters relating to this Agreement,
unless otherwise specified, shall be governed by and construed in accordance
with the internal laws of the State of New York without regard to its conflict
of law rules.
(d) This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and may not be modified or
amended except in writing with the consent of at least a majority of the holders
of (i) Restricted Stock (treating the holders of Series B Preferred Stock as the
holder of Conversion Shares for such purpose and (ii) the Original Stockholders
Stock; provided that this Agreement may be amended to grant registration rights
with respect to new securities to be issued by the Company after the date hereof
with the consent of holders of at least a majority of Restricted Stock (treating
the holders of Series B Preferred Stock as the holders of Conversion Shares for
such purpose) and the Original Stockholders Stock; provided, further, however,
that such grants of registration rights shall not affect the relative rights of
the Restricted Stock and the Original Stockholders Stock hereunder with respect
to each other.
(e) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17
18
Please indicate your acceptance of the foregoing by signing
and returning the enclosed counterpart of this letter, whereupon this letter
(herein sometimes called "this Agreement") shall be a binding agreement between
the Company and each of you.
Very truly yours,
PROTOCOL HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Financial Officer
AGREED TO AND ACCEPTED
as of the date first
above written.
XXXXXX XXXXX & PARTNERS II, L.P.
By: /s/ Xxxxxx X. Xxxxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Managing Director
XXXXXX XXXXX & PARTNERS DUTCH, L.P.
By: /s/ Xxxxxx X. Xxxxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Managing Director
19
BCI GROWTH IV, L.P.
By Glenpointe Associates, LLP,
General Partner
By Glenpointe Associates, LLC
General Partner
By: /s/ Xxxxx X. Xxxxx
-----------------------------------
Name: Xxxxx X. Xxxxx
Title: Managing Member
BCI GROWTH V, L.P.
By Glenpointe Associates V, LLC
General Partner
By: /s/ Xxxxx X. Xxxxx
-----------------------------------
Name: Xxxxx X. Xxxxx
Title: Managing Member
BCI INVESTORS, L.L.C.
By: /s/ Xxxxx X. Xxxxx
-----------------------------------
Name: Xxxxx X. Xxxxx
Title: Managing Member
ING (U.S.) CAPITAL LLC
By: /s/ Xxxxxxxx Xxxxxxx
-----------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Vice President
20
XXXXXXXXX XXXXXXXX & COMPANY, INC.
By /s/ Xxxxxxx Xxxxx *
---------------------------------------
Name:
Title:
/s/ Xxxxx X. Xxxxxx *
-----------------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxxx Xxxxx *
-----------------------------------------
Xxxxxx Xxxxx
/s/ Xxxxxx X. Xxxxxxx *
-----------------------------------------
Xxxxxx X. Xxxxxxx
XXXXXXX XXXXX CANADA CORPORATION
By *
---------------------------------------
Name:
Title:
/s/ Xxxxxx X. Xxxx *
-----------------------------------------
Xxxxxx X. Xxxx
/s/ Xxxxx Xxxxx *
-----------------------------------------
Xxxxx Xxxxx
* Executed pursuant to the Election to Redemption Form
21
/s/ Xxxxxx X. Knee *
-----------------------------------------
Xxxxxx X. Knee
/s/ Xxxxxxx Kommitt *
-----------------------------------------
Xxxxxxx Xxxxxx
LA FIDUCIE FAMILLIALE XXXXX
By *
---------------------------------------
Name:
Title:
LA FIDUCIE FAMILLIALE XXXXX
By *
---------------------------------------
Name:
Title:
/s/ Xxxxx X. Xxxxx *
-----------------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxxxx X. XxXxxx *
-----------------------------------------
Xxxxxxx X. XxXxxx
/s/ Xxxxx Xxx Xxxxxxx *
-----------------------------------------
Xxxxx Xxx Xxxxxxx
/s/ Xxxxxxx X. Xxxxxx *
-----------------------------------------
Xxxxxxx X. Xxxxxx
* Executed pursuant to the Election to Redemption Form
22
/s/ Xxxxx Xxxxxxxx *
-----------------------------------------
Xxxxx Xxxxxxxx
/s/ Xxxxxxx El-Xxxxxx *
-----------------------------------------
Xxxxxxx El-Xxxxxx
/s/ Xxxxxxx Xxxxx *
-----------------------------------------
Xxxxxxx Xxxxx
/s/ Xxxxx X. Xxxxx *
-----------------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxxxx Xxxxxxxxx *
-----------------------------------------
Xxxxxxx Xxxxxxxxx
/s/ Xxxxxxx Xxxxx *
-----------------------------------------
Xxxxxxx Xxxxx
/s/ Xxxx Xxxxxxxx *
-----------------------------------------
Xxxx Xxxxxxxx
/s/ Xxxxxx X. Xxxxxx *
-----------------------------------------
Xxxxxx X. Xxxxxx
* Executed pursuant to the Election to Redemption Form
23
/s/ Xxxx X. Xxxxxxx *
-----------------------------------------
Xxxx X. Xxxxxxx
/s/ Xxxxx Xxxxxxxx *
-----------------------------------------
Xxxxx Xxxxxxxx
/s/ Xxxxxx X. Xxxxxxxx *
-----------------------------------------
Xxxxxx X. Xxxxxxxx
/s/ Fidele Toghoua *
-----------------------------------------
Fidele Toghoua
/s/ Xxxxxxx Xxxxxxxxx *
-----------------------------------------
Xxxxxxx Xxxxxxxxx
XXXXXX X. XXXXXXX, AS TRUSTEE OF
THE AMENDED AND RESTATED XXXXXX
X. XXXXXXX FAMILY TRUST U/A/D 10/15/87
By *
---------------------------------------
Name:
Title:
* Executed pursuant to the Election to Redemption Form
24
XXXXXX X. XXXXXXX, AS TRUSTEE OF
THE AMENDED AND RESTATED XXXXXX
X. XXXXXXX FAMILY TRUST U/A/D 10/15/87
By *
---------------------------------------
Name:
Title:
/s/ D. Xxxxx Xxxxxxx *
-----------------------------------------
D. Xxxxx Xxxxxxx
/s/ Xxxxxx Xxxx *
-----------------------------------------
Xxxxxx Xxxx
/s/ X. Xxxxxxx Read *
-----------------------------------------
X. Xxxxxxx Read
/s/ Xxxxxxx X. Read *
-----------------------------------------
Xxxxxxx X. Read
/s/ Xxxxxx Xxxxx *
-----------------------------------------
Xxxxxx Xxxxx
/s/ Xxxxxxxxx Xxxxx *
-----------------------------------------
Xxxxxxxxx Xxxxx
/s/ Xxxx X. and Xxxxx X. Xxxxxx *
-----------------------------------------
Xxxx X. and Xxxxx X. Xxxxxx
* Executed pursuant to the Election to Redemption Form
