HIGHBURY FINANCIAL INC. INVESTOR RIGHTS AGREEMENT
Execution
Copy
This
Investor Rights Agreement (the “Agreement”) dated as
of August 10, 2009, is made by and among Highbury Financial Inc., a Delaware
corporation (the “Company”), the
parties named on Schedule A hereto as
Investors (individually, an “Investor” and
collectively, the “Investors”) and the
parties named on Schedule A hereto as
Management Stockholders.
ARTICLE
I
“Agreement” means this
Agreement, as amended, restated, supplemented, or otherwise modified from time
to time.
“Commission” means the
Securities and Exchange Commission, or any other federal agency then
administering the Securities Act or the Exchange Act.
“Common Stock” means
the common stock, par value $0.0001 per share, of the Company.
“Company” is defined
in the preamble to this Agreement.
“Demand
Registration” is defined in
Section
1.02(a).
“Demanding Holder” is
defined in Section 1.02(a).
“Exchange Act” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
of the Commission promulgated thereunder, all as the same shall be in effect at
the time.
“Exchange” is defined
in the recital to this Agreement.
“Exchange Agreement”
is defined in the recital to this Agreement.
“Form S-3” is defined
in Section
1.04.
“Founders Registration Rights
Agreement” means that certain Registration Rights Agreement dated January
25, 2006 among the Company and the Investors named on the signature pages
thereto, as amended from time to time.
“Indemnified Party” is
defined in Section
1.10(c).
“Indemnifying Party”
is defined in Section
1.10(c).
“Investor” is defined
in the preamble to this Agreement.
“Investor Indemnified
Party” is defined in Section
1.10(a).
“Maximum Number of
Shares” is defined in Section
1.02(d).
“Piggy-Back
Registration” is defined in Section
1.03(a).
“Register,” “registered” and
“registration”
mean a registration effected by preparing and filing a registration statement or
similar document in compliance with the requirements of the Securities Act, and
the applicable rules and regulations promulgated thereunder, and such
registration statement becoming effective.
“Registrable
Securities” mean all of the shares of Common Stock that is issued upon
conversion of the Series B Preferred Stock, owned or held by
Investors. Registrable Securities include any warrants, shares of
capital stock or other securities of the Company issued as a dividend or other
distribution with respect to or in exchange for or in replacement of shares of
Common Stock that are Registrable Securities. As to any particular
Registrable Securities, such securities shall cease to be Registrable Securities
when: (a) a Registration Statement, with respect to the sale of such securities
shall have become effective under the Securities Act and such securities shall
have been sold, transferred, disposed of or exchanged in accordance with such
Registration Statement; (b) such securities shall have been otherwise
transferred, new certificates for them not bearing a legend restricting further
transfer shall have been delivered by the Company and subsequent public
distribution of them shall not require registration under the Securities Act;
(c) such securities shall have ceased to be outstanding, or (d) such Registrable
Securities become eligible to be publicly sold without limitation as to amount
or manner of sale pursuant to Rule 144 (or any successor provision) under the
Securities Act.
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“Registration
Statement” means a registration statement filed by the Company with the
Commission in compliance with the Securities Act and the rules and regulations
promulgated thereunder for a public offering and sale of Common Stock (other
than a registration statement on Form S-4 or Form S-8, or their successors, or
any registration statement covering only securities proposed to be issued in
exchange for securities or assets of another entity).
“Securities Act” means
the Securities Act of 1933, as amended, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect at the
time.
“Series B Preferred
Stock” is defined in the recital to this Agreement.
“Underwriter” means a
securities dealer who purchases any Registrable Securities as principal in an
underwritten offering and not as part of such dealer’s market-making
activities.
Section
1.02. Demand
Registration.
(a) Request for
Registration. Subject to the restrictions on transfer set
forth in Article II hereof, at any time and from time to time that not less than
250 shares of Series B Preferred Stock (as ratably adjusted on account of any
stock splits, stock combinations, stock dividends or similar recapitalizations
with respect to the Series B Preferred Stock) have been converted into Common
Stock, the holders of a majority-in-interest of the then outstanding Registrable
Securities held by the Investors or the transferees of the Investors, may make a
written demand for registration under the Securities Act of all or part of their
Registrable Securities (a “Demand
Registration”); provided that the number of shares of Registrable
Securities requested to be included in any such Demand Registration shall in no
event be less than 500,000 shares of Common Stock (as ratably adjusted on
account of any stock splits, stock combinations, stock dividends or similar
recapitalizations with respect to the Series B Preferred Stock) have been
converted into Common Stock. Any demand for a Demand Registration
shall specify the number of shares of Registrable Securities proposed to be sold
and the intended method(s) of distribution thereof. The Company will
notify all holders of Registrable Securities of the demand within five (5)
business days, and each holder of Registrable Securities who wishes to include
all or a portion of such holder’s Registrable Securities in the Demand
Registration (each such holder including shares of Registrable Securities in
such registration, a “Demanding Holder”)
shall so notify the Company within fifteen (15) days after the receipt by the
holder of the notice from the Company. Upon any such request, the
Demanding Holders shall be entitled to have their Registrable Securities
included in the Demand Registration, subject to Section
1.02(d) and the provisos set forth in Section 1.05(a). The
Company shall not be obligated to effect more than an aggregate of three (3)
Demand Registrations under this Section
1.02(a) in respect of Registrable Securities.
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(e) Withdrawal. If
a majority-in-interest of the Demanding Holders disapprove of the terms of any
underwriting or are not entitled to include all of their Registrable Securities
in any offering, such majority-in-interest of the Demanding Holders may elect to
withdraw from such offering by giving written notice to the Company and the
Underwriter or Underwriters of their request to withdraw prior to the
effectiveness of the Registration Statement filed with the Commission with
respect to such Demand Registration. If the majority-in-interest of
the Demanding Holders withdraws from a proposed offering relating to a Demand
Registration, then such registration shall not count as a Demand Registration
provided for in Section 1.02(c).
(a) Piggy-Back
Rights. Subject to the restrictions on transfer set forth in
Article II hereof, if at anytime that any Registrable Securities are
outstanding the Company proposes to file a Registration Statement under the
Securities Act with respect to an offering of equity securities, or securities
or other obligations exercisable or exchangeable for, or convertible into,
equity securities, by the Company for its own account or for shareholders of the
Company for their account (or by the Company and by shareholders of the Company
including, without limitation, pursuant to Section
1.02), other than a Registration Statement (i) filed in connection
with any employee stock option or other benefit plan, (ii) for an exchange offer
or offering of securities solely to the Company’s existing shareholders, (iii)
for an offering of debt that is convertible into equity securities of the
Company or (iv) for a dividend reinvestment plan, then the Company shall (x)
give written notice of such proposed filing to the holders of Registrable
Securities as soon as practicable but in no event less than ten (10) days before
the anticipated filing date, which notice shall describe the amount and type of
securities to be included in such offering, the intended method(s) of
distribution, and the name of the proposed managing Underwriter or Underwriters,
if any, of the offering, and (y) offer to the holders of Registrable Securities
in such notice the opportunity to register the sale of such number of shares of
Registrable Securities as such holders may request in writing within fifteen
(15) days following receipt of such notice (a “Piggy-Back
Registration”). The Company shall cause such Registrable
Securities to be included in such registration and shall use its best efforts to
cause the managing Underwriter or Underwriters of a proposed underwritten
offering to permit the Registrable Securities requested to be included in a
Piggy-Back Registration to be included on the same terms and conditions as any
similar securities of the Company and to permit the sale or other disposition of
such Registrable Securities in accordance with the intended method(s) of
distribution thereof. All holders of Registrable Securities proposing
to distribute their securities through a Piggy-Back Registration that involves
an Underwriter or Underwriters shall enter into an underwriting agreement in
customary form with the Underwriter or Underwriters selected for such Piggy-Back
Registration.
(b) Reduction of
Offering. If the managing Underwriter or Underwriters for a
Piggy-Back Registration that is to be an underwritten offering advises the
Company and the holders of Registrable Securities in writing that the dollar
amount or number of shares of Common Stock which the Company desires to sell,
taken together with shares of Common Stock, if any, as to which registration has
been demanded pursuant to written contractual arrangements with persons other
than the holders of Registrable Securities hereunder, the Registrable Securities
as to which registration has been requested under this Section
1.03, and the shares of Common Stock, if any, as to which
registration has been requested pursuant to the written contractual piggy-back
registration rights of other shareholders of the Company, exceeds the Maximum
Number of Shares, then the Company shall include in any such
registration:
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(i) If
the registration is undertaken for the Company’s account: (A) first, the shares
of Common Stock or other securities that the Company desires to sell that can be
sold without exceeding the Maximum Number of Shares; (B) second, to the extent
that the Maximum Number of Shares has not been reached under the foregoing
clause (A), the shares of Common Stock, if any, including the Registrable
Securities, as to which registration has been requested pursuant to written
contractual piggy-back registration rights of security holders (pro rata in
accordance with the number of shares of Common Stock which each such person has
actually requested to be included in such registration, regardless of the number
of shares of Common Stock with respect to which such persons have the right to
request such inclusion) that can be sold without exceeding the Maximum Number of
Shares; and
(ii) If
the registration is a “demand” registration
undertaken at the demand of persons other than the holders of Registrable
Securities pursuant to written contractual arrangements with such persons, (A)
first, the shares of Common Stock for the account of the demanding persons that
can be sold without exceeding the Maximum Number of Shares; (B) second, to the
extent that the Maximum Number of Shares has not been reached under the
foregoing clause (A), the shares of Common Stock or other securities that the
Company desires to sell that can be sold without exceeding the Maximum Number of
Shares; and (C) third, to the extent that the Maximum Number of Shares has not
been reached under the foregoing clauses (A) and (B), the shares of Common Stock
as to which registration has been requested pursuant to the terms of the
Founders Registration Rights Agreement; (C) fourth, to the extent that the
Maximum Number of Shares has not been reached under the foregoing clauses (A),
(B) and (C), the Registrable Securities as to which registration has been
requested under this Section 1.03 (pro rata in accordance with the number of
shares of Registrable Securities held by each such holder) and (E) fifth, to the
extent that the Maximum Number of Shares has not been reached under the
foregoing clauses (A), (B), (C) and (D), the shares of Common Stock, if any, as
to which registration has been requested pursuant to written contractual
piggy-back registration rights which other shareholders desire to sell that can
be sold without exceeding the Maximum Number of Shares.
(c) Withdrawal. Any
holder of Registrable Securities may elect to withdraw such holder’s request for
inclusion of Registrable Securities in any Piggy-Back Registration by giving
written notice to the Company of such request to withdraw prior to the
effectiveness of the Registration Statement. The Company may also
elect to withdraw a registration statement at any time prior to the
effectiveness of the Registration Statement. Notwithstanding any such
withdrawal, the Company shall pay all expenses incurred by the holders of
Registrable Securities in connection with such Piggy-Back Registration as
provided in this Section
1.03.
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Section
1.04. Registrations on Form
S-3. The holders of Registrable Securities may at any time and
from time to time that any Registrable Securities are outstanding, request in
writing that the Company register the resale of any or all of such Registrable
Securities on Form S-3 or any similar short-form registration which may be
available at such time (“Form S-3”); provided,
however, that the Company shall not be obligated to effect such request through
an underwritten offering. Upon receipt of such written request, the
Company will promptly give written notice of the proposed registration to all
other holders of Registrable Securities, and, as soon as practicable thereafter,
effect the registration of all or such portion of such holder’s or holders’
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any other holder or holders
joining in such request as are specified in a written request given within
fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration pursuant to this Section
1.04: (i) if Form S-3 is not available for such offering;
or (ii) if the holders of the Registrable Securities, together with the holders
of any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other securities
(if any) at any aggregate price to the public of less than
$500,000. Registrations effected pursuant to this Section
1.04 shall not be counted as Demand Registrations effected pursuant
to Section
1.02.
Section
1.05. Filings;
Information. Whenever the Company is required to effect the
registration of any Registrable Securities pursuant to this Article
I, the Company shall use its best efforts to effect the registration
and sale of such Registrable Securities in accordance with the intended
method(s) of distribution thereof as expeditiously as practicable, and in
connection with any such request:
(a) Filing Registration
Statement. The Company shall, as expeditiously as possible and
in any event within sixty (60) days after receipt of a request for a Demand
Registration pursuant to Section
1.02, prepare and file with the Commission a Registration Statement
on any form for which the Company then qualifies or which counsel for the
Company shall deem appropriate and which form shall be available for the sale of
all Registrable Securities to be registered thereunder in accordance with the
intended method(s) of distribution thereof, and shall use its best efforts to
cause such Registration Statement to become and remain effective for the period
required by Section 1.05(c);
provided, however, that the Company shall have the right to defer any
Demand Registration for up to ninety (90) days, and any Piggy-Back Registration
for such period as may be applicable to deferment of any demand registration to
which such Piggy-Back Registration relates, in each case if the Company shall
furnish to the holders a certificate signed by the Chief Executive Officer of
the Company stating that, in the good faith judgment of the Board of Directors
of the Company, it would be materially detrimental to the Company and its
shareholders for such Registration Statement to be effected at such time;
provided further, however, that the Company shall not have the right to exercise
the right set forth in the immediately preceding proviso more than once in any
365-day period in respect of a Demand Registration hereunder.
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(f) Agreements for
Disposition. The Company shall enter into customary agreements
(including, if applicable, an underwriting agreement in customary form) and take
such other actions as are reasonably required in order to expedite or facilitate
the disposition of such Registrable Securities. The representations,
warranties and covenants of the Company in any underwriting agreement which are
made to or for the benefit of any Underwriters, to the extent applicable, shall
also be made to and for the benefit of the holders of Registrable Securities
included in such registration statement. No holder of Registrable
Securities included in such registration statement shall be required to make any
representations or warranties in the underwriting agreement except, if
applicable, with respect to such holder’s organization, good standing,
authority, title to Registrable Securities, lack of conflict of such sale with
such holder’s material agreements and organizational documents, and with respect
to written information relating to such holder that such holder has furnished in
writing expressly for inclusion in such Registration
Statement. Holders of Registrable Securities shall agree to such
covenants and indemnification and contribution obligations for selling
stockholders as are customarily contained in agreements of that
type. Further, such holders shall cooperate fully in the preparation
of the registration statement and other documents relating to any offering in
which they include securities pursuant to Article
I hereof. Each holder shall also furnish to the Company
such information regarding itself, the Registrable Securities held by such
holder, and the intended method of disposition of such securities shall be
reasonably required to effect the registration of the Registrable
Securities.
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Section
1.06. Obligation to Suspend
Distribution. Upon receipt of any notice from the Company of
the happening of any event of the kind described in Section
1.05(d)(iv), or, in the case of a resale registration on Form S-3
pursuant to Section
1.04 hereof, upon any suspension by the Company, pursuant to a
written xxxxxxx xxxxxxx compliance program adopted by the Company’s Board of
Directors, of the ability of all “insiders” covered by such program to transact
in the Company’s securities because of the existence of material non-public
information and holder would be deemed an “insider” under such program, each
holder of Registrable Securities included in any registration shall immediately
discontinue disposition of such Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until such holder
receives the supplemented or amended prospectus contemplated by Section
1.05(d)(iv) or the restriction on the ability of “insiders” to
transact in the Company’s securities is removed or is inapplicable to such
holder, as applicable, and, if so directed by the Company, each such holder will
deliver to the Company all copies, other than permanent file copies then in such
holder’s possession, of the most recent prospectus covering such Registrable
Securities at the time of receipt of such notice.
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Section
1.07. Registration
Expenses. The Company shall bear all costs and expenses
incurred in connection with any Demand Registration pursuant to Section
1.02, any Piggy-Back Registration pursuant to Section
1.03, and any registration on Form S-3 effected pursuant to Section
1.04, and all expenses incurred in performing or complying with its
other obligations under this Agreement, whether or not the Registration
Statement becomes effective, including, without limitation; (i) all registration
and filing fees; (ii) fees and expenses of compliance with securities or “blue
sky” laws (including fees and disbursements of counsel in connection with blue
sky qualifications of the Registrable Securities); (iii) printing expenses; (iv)
the Company’s internal expenses (including, without limitation, all salaries and
expenses of its officers and employees); (v) the fees and expenses incurred in
connection with the listing of the Registrable Securities as required by Section
1.05(k); (vi) Financial Industry Regulatory Authority fees; (vii)
fees and disbursements of counsel for the Company and fees and expenses for
independent certified public accountants retained by the Company (including the
expenses or costs associated with the delivery of any opinions or comfort
letters requested pursuant to Section 1.05(i)); (viii) the fees and
expenses of any special experts retained by the Company in connection with such
registration; and (ix) the reasonable fees and expenses of one legal counsel
selected by the holders of a majority-in-interest of the Registrable Securities
included in such registration. The Company shall have no obligation
to pay any underwriting discounts or selling commissions or transfer taxes, if
any, attributable to the Registrable Securities being sold by the holders
thereof, which underwriting discounts or selling commissions or transfer taxes,
if any, shall be borne by such holders. Additionally, in an
underwritten offering, all selling shareholders and the Company shall bear the
expenses of the underwriter pro rata in proportion to the respective amount of
shares each is selling in such offering.
Section
1.08. Information. The
holders of Registrable Securities shall provide such information relating to
such holder and its intended method of distribution of such Registrable
Securities as may reasonably be requested by the Company, or the managing
Underwriter, if any, in connection with the preparation of any Registration
Statement, including amendments and supplements thereto, in order to effect the
registration of any Registrable Securities under the Securities Act pursuant to
this Article
I and in connection with the Company’s obligation to comply with
federal and applicable state securities laws.
Section
1.09. Holder
Obligations. No holder of Registrable Securities may
participate in any underwritten offering pursuant to this Article
I unless such holder (i) agrees to sell only such holder’s
Registrable Securities on the basis reasonably provided in any underwriting
agreement, and (ii) completes, executes and delivers any and all questionnaires,
powers of attorney, custody agreements, indemnities, underwriting, agreements
and other documents reasonably required by or under the terms of any
underwriting agreement or as reasonably requested by the
Company.
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(a) Indemnification by the
Company. The Company agrees to indemnify and hold harmless
each Investor and each other holder of Registrable Securities, and each of their
respective officers, employees, affiliates, directors, partners, members and
agents, and each person, if any, who controls an Investor and each other holder
of Registrable Securities (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) (each, an “Investor Indemnified
Party”), from and against any expenses, losses, judgments, claims,
damages or liabilities, whether joint or several, arising out of or based upon
any untrue statement (or allegedly untrue statement) of a material fact
contained in any Registration Statement under which the sale of such Registrable
Securities was registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained in the Registration Statement,
or any amendment or supplement to such Registration Statement, or arising out of
or based upon any omission (or alleged omission) to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act or any rule or
regulation promulgated thereunder applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration; and the Company shall promptly reimburse the Investor Indemnified
Party for any legal and any other expenses reasonably incurred by such Investor
Indemnified Party in connection with investigating and defending any such
expense, loss, judgment, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any such
expense, loss, claim, damage or liability arises out of or is based upon any
untrue statement or allegedly untrue statement or omission or alleged omission
made in such Registration Statement, preliminary prospectus, final prospectus,
or summary prospectus, or any such amendment or supplement, in reliance upon and
in conformity with information furnished to the Company, in writing, by such
selling holder expressly for use therein. The Company also shall
indemnify any Underwriter of the Registrable Securities, their officers,
affiliates, directors, partners, members and agents and each person who controls
such Underwriter on substantially the same basis as that of the indemnification
provided above in this Section
1.10(a).
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(c) Conduct of Indemnification
Proceedings. Promptly after receipt by any person of any
notice of any loss, claim, damage or liability or any action in respect of which
indemnity may be sought pursuant to Section
1.10(a) or (b), such person (the “Indemnified Party”)
shall, if a claim in respect thereof is to be made against any other person for
indemnification hereunder, notify such other person (the “Indemnifying Party”)
in writing of the loss, claim, judgment, damage, liability or action; provided,
however, that the failure by the Indemnified Party to notify the Indemnifying
Party shall not relieve the Indemnifying Party from any liability which the
Indemnifying Party may have to such Indemnified Party hereunder, except and
solely to the extent the Indemnifying Party is actually prejudiced by such
failure. If the Indemnified Party is seeking indemnification with
respect to any claim or action brought against the Indemnified Party, then the
Indemnifying Party shall be entitled to participate in such claim or action,
and, to the extent that it wishes, jointly with all other Indemnifying Parties,
to assume control of the defense thereof with counsel reasonably satisfactory to
the Indemnified Party. After notice from the Indemnifying Party to
the Indemnified Party of its election to assume control of the defense of such
claim or action, the Indemnifying Party shall not be liable to the Indemnified
Party for any legal or other expenses subsequently incurred by the Indemnified
Party in connection with the defense thereof other than reasonable costs of
investigation; provided, however, that in any action in which both the
Indemnified Party and the Indemnifying Party are named as defendants, the
Indemnified Party shall have the right to employ separate counsel (but no more
than one such separate counsel) to represent the Indemnified Party and its
controlling persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Indemnified Party against the
Indemnifying Party, with the fees and expenses of such counsel to be paid by
such Indemnifying Party if, based upon the written opinion of counsel of such
Indemnified Party, representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. No Indemnifying Party shall, without the prior written consent
of the Indemnified Party, consent to entry of judgment or effect any settlement
of any claim or pending or threatened proceeding in respect of which the
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such judgment or settlement
includes an unconditional release of such Indemnified Party from all liability
arising out of such claim or proceeding.
(i) If
the indemnification provided for in the foregoing Section 1.10(a), (b) and (c)
is unavailable to any Indemnified Party in respect of any loss, claim, damage,
liability or action referred to herein, then each such Indemnifying Party, in
lieu of indemnifying such Indemnified Party, shall contribute to the amount paid
or payable by such Indemnified Party as a result of such loss, claim, damage,
liability or action in such proportion as is appropriate to reflect the relative
fault of the Indemnified Parties and the Indemnifying Parties in connection with
the actions or omissions which resulted in such loss, claim, damage, liability
or action, as well as any other relevant equitable
considerations. The relative fault of any Indemnified Party and any
Indemnifying Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such Indemnified Party or such Indemnifying Party and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
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(ii) The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section
1.10(d) were determined by pro rata allocation or by any other method
of allocation which does not take account of the equitable considerations
referred to in the immediately preceding Section
1.10(d)(i). The amount paid or payable by an Indemnified
Party as a result of any loss, claim, damage, liability or action referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
Indemnified Party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section
1.10(d), no holder of Registrable Securities shall be required to
contribute any amount in excess of the dollar amount of the net proceeds (after
payment of all underwriting fees, discounts, commissions and taxes) actually
received by such holder from the sale of Registrable Securities which gave rise
to such contribution obligation. 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.
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“(b) If
the registration is a “demand” registration
undertaken at the demand of persons other than the holders of Registrable
Securities pursuant to written contractual arrangements with such persons, (A)
first, the shares of Common Stock for the account of the demanding persons that
can be sold without exceeding the Maximum Number of Shares; (B) second, to the
extent that the Maximum Number of Shares has not been reached under the
foregoing clause (A), the shares of Common Stock or other securities that the
Company desires to sell that can be sold without exceeding the Maximum Number of
Shares; and (C) third, to the extent that the Maximum Number of Shares has not
been reached under the foregoing clauses (A) and (B), the shares of Common Stock
as to which registration has been requested pursuant to the terms of the
Founders Registration Rights Agreement and the Registrable Securities to which
registration has been requested under this Section 1.03 (pro rata in accordance
with the number of shares of Registrable Securities and Common Stock held by
each such holder) and (D) fourth, to the extent that the Maximum Number of
Shares has not been reached under the foregoing clauses (A), (B) and (C), the
shares of Common Stock, if any, as to which registration has been requested
pursuant to written contractual piggy-back registration rights which other
shareholders desire to sell that can be sold without exceeding the Maximum
Number of Shares.”
ARTICLE
II
Section
2.01. Transferability of
Shares. Subject to the provisions of Section
2.02 below, no shares of Series B Preferred Stock may, directly or
indirectly, be sold, assigned, transferred, gifted or exchanged, nor may any
Investor (or transferee thereof) offer to do any of the foregoing (each, a
“Transfer”),
nor may any direct or indirect interest in any Investor be, directly or
indirectly, Transferred by any holder thereof, nor may any stockholder or other
holder of an ownership interest in Investor which is not a natural person offer
to do any of the foregoing, and no Transfer by an Investor (or transferee
thereof) or holder of an ownership interest in an Investor shall be binding upon
the Company or any Investor, in each case unless (i) such Transfer is expressly
permitted by this Article
II and (ii) the Company receives an executed copy of the documents
effecting such Transfer and such documents are in compliance with the
requirements of this Article
II and otherwise in form and substance
reasonably satisfactory to the Company. No Company Shares may be
pledged, hypothecated, optioned or encumbered, nor may any direct or indirect
ownership interests in an Investor may be pledged, hypothecated, optioned or
encumbered, nor may any offer to do any of the foregoing be made, without the
prior written consent of the Company in its sole discretion. Each
Investor agrees to comply, and to cause its owners and transferees to comply (as
applicable), with the provisions of this Article
II. An Investor’s Company Shares (or, in the case of an
Investor which is not a natural person, direct (but in no event indirect)
ownership interests in such Investor) may be Transferred solely:
(a) with
the prior written consent of the Company, which consent may be granted or
withheld by the Company in its reasonable discretion;
(b) (i)
upon the death of such Investor (in the case of an Investor who is a natural
person), with respect to Company Shares held by such Investor, or upon the death
of a direct holder of ownership interests in such Investor (in the case of an
Investor which is not a natural person), with respect to the direct ownership
interests in such Investor held by such deceased holder, in either such case
such specified ownership interests may be Transferred by will or the laws of
descent and distribution (without the consent of the Company, but subject in all
cases to the provisions regarding redemption of such Company Shares by the
Company pursuant to Section 10 of the Certificate of Designation for the Series
B Preferred Stock, which shall continue to be binding upon the Company Shares of
such Investor (and the holders thereof) notwithstanding such death) or (ii) in
connection with the appointment of a legal guardian or conservator for such
Investor or a direct holder of equity interests therein (as applicable) in the
event of incapacity, to the extent such legal guardian or conservator succeeds
as a matter of law to record ownership of such Company Shares or direct
ownership interests (as applicable) and provided that such Investor or holder of
direct ownership interests (as applicable) remains the beneficial owner of such
interests; or
15
(c) (i)
a Management Stockholder may Transfer his or her Company Shares, or (ii) direct
ownership interests in an Investor which is not a natural person may be
Transferred by its related Management Stockholder, in either such case to
members of such Management Stockholder’s Immediate Family (or trusts for the
benefit of such Management Stockholder or the members of such Management
Stockholder’s Immediate Family, provided that any such trust does not require or
permit distribution of such interests other than to such Management Stockholder,
members of such Management Stockholder’s Immediate Family, or such Management
Stockholder’s related original Investor that is a party hereto).
provided
that in the case of (b) or (c) above, (i) the transferee first enters into an
agreement with the Company in form and substance reasonably satisfactory to the
Company agreeing to be bound by the provisions of this Agreement, and (ii)
whether or not the transferee enters into such an agreement, such Company Shares
and ownership interests in such Investor (as applicable) shall thereafter remain
subject to this Agreement. The transferees pursuant to the provisions
of Section 2.01(b) and (c) hereof, and, to the extent set forth in any consent
of the Company pursuant to Section 2.01(a), the transferees pursuant to Section
2.01(a) are referred to as “Permitted
Transferees”.
(d) For
purposes of this Section 2.01, the following terms shall have the meanings set
forth below:
(i) “Affiliate” shall
mean, with respect to any Person (herein the “first party”), any
other Person that directly or indirectly controls, or is controlled by, or is
under common control with, such first party. The term “control” as used
herein (including the terms “controlled by” and
“under common control
with”) means the possession, directly or indirectly, of the power to (a)
vote twenty-five percent (25%) or more of the outstanding voting securities of
such Person, or (b) otherwise direct the management or policies of such Person
by contract or otherwise (other than solely as a director of a corporation (or
similar entity) that has five (5) or more directors).
(ii) “Controlled Affiliate”
shall mean, with respect to a Person, any Affiliate of such Person under its
“control,” as
the term “control” is defined
in the definition of Affiliate.
(iii) “Immediate Family”
shall mean, with respect to any natural person, (a) such person’s spouse,
parents, grandparents, children, grandchildren and siblings, (b) such person’s
former spouse(s) and current spouses of such person’s children, grandchildren
and siblings and (c) estates, trusts, partnerships and other entities of which
substantially all of the interests are held directly or indirectly by the
foregoing.
16
(iv) “Management
Stockholder(s)” shall mean (a) in the case of any Investor which is a
natural person, such Investor, and (b) in the case of any Investor which is not
a natural person, that certain employee of Aston (or one of its Controlled
Affiliates) who is the owner of the issued and outstanding capital stock of, or
other equity interests in, such Investor and is listed as such on Schedule A hereto
(including any such employee after such employee has transferred any of his or
her interest in such Investor to a Permitted Transferee).
(v) “Person” means any
individual, partnership (limited or general), corporation, limited liability
company, limited liability partnership, association, trust, joint venture,
unincorporated organization or other entity.
17
Section
2.03. Restrictive
Legends. It is understood and agreed that the certificates
evidencing the shares of Series B Preferred Stock and the certificates
evidencing the shares of Common Stock issued upon conversion of Series B
Preferred Stock until such time as such shares of Common Stock represented by
such certificate are Transferred in compliance with the provisions of this
Article II, shall bear the following legends, in addition to any other legends
required by Delaware law:
“THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED AND SOLD ONLY IF SO
REGISTERED OR IN A MANNER EXEMPT FROM REGISTRATION UNDER SUCH ACT.
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS
OF AN INVESTOR RIGHTS AGREEMENT WHICH PLACES RESTRICTIONS ON THE TRANSFERABILITY
OF THE SHARES REPRESENTED HEREBY. A COPY OF THE INVESTOR RIGHTS
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.”
ARTICLE
III
18
if to the
Company:
000
Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx,
Xxxxxxxx 00000
Attention: Xxxxxxx
X. Xxxxx
Facsimile: 303-893-2902
with a
copy to:
Xxxxxxx
XxXxxxxxx LLP
000 Xxxx
Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attention: Xxxxx
X. Xxxxxxx
Facsimile: 000-000-0000
if to the
Investors or Management Stockholders:
000 Xxxxx
XxXxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx,
Xxxxxxxx 00000
Facsimile: 000-000-0000
with a
copy to:
Xxxxxxxxxxxx
Xxxx & Xxxxxxxxx LLP
000 X.
Xxxxxx Xxxxx
Xxxxx
0000
Xxxxxxx,
Xxxxxxxx 00000-0000
Attention: Xxxxxxx
X. Xxxxxxxxx
Facsimile:
312-876-7934
or at
such other address as a party may furnish in writing to each other
party.
19
Section
3.08. Governing
Law. This Agreement and the rights of the parties hereunder
shall be interpreted in accordance with the laws of the State of Delaware, and
all rights and remedies shall be governed by such laws without regard to
principles of conflicts of laws. . Each of the parties
hereby consents to personal jurisdiction, service of process and venue in the
federal or state courts sitting in the City of Chicago for any claim, suit or
proceeding arising under this Agreement to enforce any arbitration award or
obtain equitable relief and hereby irrevocably agrees that all claims in respect
of such action or proceeding may be heard and determined in such state court or,
to the extent permitted by law, in such federal court (subject to the provisions
of Section 3.09 hereof). To the extent permitted by law, each of the
parties hereby irrevocably consents to the service of process in any such action
or proceeding by the mailing by certified mail of copies of any service or
copies of the summons and complaint and any other process to such party at the
address specified in Section 3.02 hereof. The parties agree that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions.
20
[Signature
Pages Follow]
21
The
parties hereto have executed this Investor Rights Agreement as of the date first
written above.
|
By:
|
/s/
Xxxxxxx X. Xxxxx
|
|
Name:
Xxxxxxx X. Xxxxx
|
|
|
Title:
President and Chief Executive Officer
|
|
|
INVESTORS:
|
|
|
SDB
ASTON, INC.
|
|
|
By:
|
/s/
Xxxxxx X. Xxxxxx
|
|
Name:
Xxxxxx X. Xxxxxx
|
|
|
Title:President
|
|
|
KCA
ASTON, INC.
|
|
|
By:
|
/s/
Xxxxxxx X. Xxxxxxxx
|
|
Name:
Xxxxxxx X. Xxxxxxxx
|
|
|
Title:
President
|
|
|
GFD
ASTON, INC.
|
|
|
By:
|
/s/
Xxxxxx X. Xxxxxxxxxx
|
|
Name:
Xxxxxx X. Xxxxxxxxxx
|
|
|
Title:
President
|
|
|
CRD
ASTON, INC.
|
|
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By:
|
/s/
Xxxxxxxxx X. Dragon
|
|
Name:
Xxxxxxxxx X. Dragon
|
|
|
Title:
President
|
|
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XX
XXXXX, INC.
|
|
|
By:
|
/s/
Xxxxxx Xxxx
|
|
Name:
Xxxxxx Xxxx
|
|
|
Title:
President
|
|
22
|
BCH
ASTON, INC.
|
|
|
By:
|
/s/
Xxxxx X. Xxxxxxx
|
|
Name:
Xxxxx X. Xxxxxxx
|
|
|
Title:
President
|
|
|
DAR
ASTON, INC.
|
|
|
By:
|
/s/
Xxxxx X. Xxxxxxx
|
|
Name:
Xxxxx X. Xxxxxxx
|
|
|
Title:
President
|
|
|
JPR
ASTON, INC.
|
|
|
By:
|
/s/
Xxxx X. Xxxxx
|
|
Name:
Xxxx X. Xxxxx
|
|
|
Title:
President
|
|
| /s/ Xxxxxx X. Xxxxxx | |
| Xxxxxx X. Xxxxxx | |
| /s/ Xxxxxxx X. Xxxxxxxx | |
| Xxxxxxx X. Xxxxxxxx | |
| /s/ Xxxxxx Xxxxxxxxxx | |
| Xxxxxx Xxxxxxxxxx | |
| /s/ Xxxxxxxxx X. Dragon | |
| Xxxxxxxxx X. Dragon | |
| /s/ Xxxxxx Xxxx | |
| Xxxxxx Xxxx | |
23
|
/s/
Xxxxx Xxxxxxx
|
|
Xxxxx
Xxxxxxx
|
|
/s/
Xxxxx Xxxxxxx
|
|
Xxxxx
Xxxxxxx
|
|
/s/
Xxxx Xxxxx
|
|
Xxxx
Xxxxx
|
24
SCHEDULE
A
|
Investors
|
|
SDB
Aston, Inc.
|
|
KCA
Aston, Inc.
|
|
GFD
Aston, Inc.
|
|
CRD
Aston, Inc.
|
|
XX
Xxxxx, Inc.
|
|
BCH
Aston, Inc.
|
|
DAR
Aston, Inc.
|
|
JPR
Aston, Inc.
|
|
Management Stockholders
|
|
Xxxxxx
Xxxxxx
Xxxxxxx
X. Xxxxxxxx
Xxxxxx
Xxxxxxxxxx
Xxxxxxxxx
X. Dragon
Xxxxxx
Xxxx
Xxxxx
Xxxxxxx
Xxxxx
Xxxxxxx
Xxxx
Xxxxx
|
25