REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "AGREEMENT" or sometimes the
"INVESTOR RIGHTS AGREEMENT") is made and entered into as of September 19, 1996,
by and among Total Control Products, Inc., an Illinois Corporation (the
"COMPANY"), and Xxxx X. Xxxxxx, Xxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx
(collectively, the "INVESTORS").
RECITALS:
A. Pursuant to the terms of the Stock Purchase Agreement dated as of the
date hereof (the "PURCHASE AGREEMENT") among 697621 Alberta Ltd., an Alberta
corporation and the wholly-owned subsidiary of the Company ("TCP SUB"), TCP Sub
purchased all First Preferred Shares and certain Class A Common Shares of Xxxxxx
Industrial Software Inc. ("XXXXXX") from the Investors.
B. Pursuant to the Articles of Amalgamation dated as of the date hereof
(the "AMALGAMATION AGREEMENT") TCP Sub and Xxxxxx amalgamated and continued as
one company, of which the Company owns all of the outstanding voting interests
(the "AMALGAMATED COMPANY").
C. Pursuant to Articles of Amendment dated as of the date hereof, the
Amalgamated Company created a class of exchangeable shares (the "EXCHANGEABLE
SHARES") which are exchangeable for shares of common stock of the Company.
D. Pursuant to a Share Exchange Agreement dated as of the date hereof
(the "EXCHANGE AGREEMENT") between the Company, the Investors and TCP Sub, the
shares of the Amalgamated Company held by the Investors were exchanged (the
"EXCHANGE") for Exchangeable Shares.
E. The Amalgamated Company and the Company have entered into a Support
Agreement (the "SUPPORT AGREEMENT") dated as of the date hereof which agreement
binds the Company to aid in the Exchange.
F. As a condition to the Investors entering into the Exchange Agreement,
the Investors have required the Company to enter into this Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
AGREEMENTS:
1. DEFINITIONS.
As used in this Agreement, the following capitalized terms shall have the
following meanings:
AFFILIATE: A Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with a
specified Person.
COMMON STOCK: The common stock, no par value per share, of the Company.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended from time to
time, and the rules and regulations promulgated thereunder.
PERSON: An individual, partnership, corporation, limited liability
company, trust or unincorporated organization, or a government or agency or
political subdivision thereof.
PROSPECTUS: The prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
REGISTRABLE SECURITIES: (a) The shares of Common Stock issued or issuable
to an Investor upon the exchange of the Exchangeable Shares in accordance with
the terms and conditions of the Articles of the Amalgamated Company or the
Exchange Agreement and any other shares of Common Stock acquired by an Investor
and (b) any securities issued or issuable with respect to the shares of Common
Stock referred to in the foregoing clause (a) by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise. For the purposes of this
Agreement, a Person holding Exchangeable Shares shall be deemed to hold the
Registrable Securities into which such Exchangeable Shares are exchangeable.
Any Registrable Security will cease to be a Registrable Security when (i) a
registration statement covering such Registrable Security has been declared
effective by the SEC and the Registrable Security has been disposed of pursuant
to such effective registration statement, (ii) the Registrable Security is sold
under circumstances in which all of the applicable conditions of Rule 144 (or
any similar provisions then in force) under the Securities Act are met, (iii)
the Registrable Security has been otherwise transferred, the Company has
delivered a new certificate or other evidence of ownership for it not bearing a
legend restricting further transfer, and it may be resold without subsequent
registration under the Securities Act, (iv) the Registrable Securities which are
owned by an Investor, or which the Investor has the right to acquire pursuant to
exchange of Exchangeable Shares, may be sold in the public market without
limitation as to manner of sale, or (v)(A) a favorable no-action letter is
obtained from the SEC confirming that the holding period of the Registerable
Securities for purposes of Rule 144 (or any similar provisions then in force) of
the
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Securities Act began at the time the Investors received the Exchangeable Shares;
(B) the holders of Registrable Securities re permitted to sell such securities
pursuant to Rule 144 of the Securities Act subject only to the volume
limitations set forth in such rule; and (C) based upon the sales volume of
Common Stock, the holders of all Registerable Securities would be entitled to
dispose of all of their remaining Registerable Securities under Rule 144 of the
Securities Act within in a period of six months. For the purposes of
determining a Person's right to any benefit afforded, or to exercise any rights
granted, to a holder of Registrable Securities hereunder, including any right to
receive notice, to give notice, to vote or to make certain elections, any
securities of the Company that are convertible into or exchangeable for
Registrable Securities shall be deemed to be that number of Registrable
Securities into which such securities may be converted or for which such
securities may be exchanged at any point in time.
REGISTRATION EXPENSES: See Section 5 hereof.
REGISTRATION STATEMENT: The Registration Statement of the Company that
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus included therein, all amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended from time to time,
and the rules and regulations promulgated thereunder.
XXXXXX AGREEMENT: The Registration Rights Agreement dated as of December
16, 1993 between the Company and X.X. Xxxxxx.
UNDERWRITTEN OFFERING: An offering in which securities of the Company are
sold to an underwriter for reoffering to the public.
2. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION. Except as otherwise provided herein and
subject to the terms of the Xxxxxx Agreement, at any time after the
expiration of seven months following the effective date of an initial public
offering (an "INITIAL PUBLIC OFFERING") of any class of the Company's
securities under the Securities Act (the "EFFECTIVE TIME"), and during the
five year period commencing at the Effective Time, each of (x) Xxxxxx Xxxxxx;
and (v) Xxxxx and Xxxx Xxxxxx may make two written requests (each, a "DEMAND
NOTICE") for registration under the Securities Act (each, a "DEMAND
REGISTRATION") of the Registrable Securities held by the Investors; PROVIDED,
HOWEVER, that the number of shares of Registrable Securities requested to be
registered (i) shall be greater than 2% of the shares of the class of the
Company's outstanding capital stock requested to be registered and (ii) shall
have a "fair market value" ( determined pursuant to the next sentence) in
excess of $1,000,000. For purposes of this Agreement, fair market value of
the Registrable
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Securities shall be determined as follows: (i) if the security is listed on any
established stock exchange or a national market system, including, without
limitation, the National Market System of the National Association of Securities
Dealers Automated Quotation System, its fair market value shall be the closing
sales price or the closing bid if no sales were reported, as quoted on such
system or exchange (or the largest such exchange) on the date of the Demand
Notice (or if there are no sales bids for such date, then for the last preceding
business day of such sales or bids), as reported in The Wall Street Journal or
similar publication; (ii) if the security is regularly quoted by a recognized
securities dealer but selling prices are not reported, its fair market value
shall be the mean between the high bid and low asked prices for the security on
the date of the Demand Notice (or if there are no quoted prices for such date,
then for the last preceding business day on which there were quoted prices); or
(iii) in the absence of an established market for the security, the fair market
value shall be determined in good faith by the Company's Board of Directors,
with reference to the Company's net worth, prospective earning power,
dividend-paying capacity and other relevant factors, including the goodwill of
the Company, the economic outlook in the Company's industry, the Company's
position in the industry and its management and the values of stock of other
corporations in the same or a similar line of business (all of such factors
determined as of the date of the Demand Notice).
Within ten days after receipt of each Demand Notice, the Company shall give
written notice of such registration request to all non-requesting holders of
Registrable Securities and all other holders of registerable securities of the
Company and shall, subject to the provisions of the following paragraph, include
in such registration all Registrable Securities with respect to which the
Company received written requests for inclusion therein within 15 days after the
receipt of the notice of such demand registration request by the applicable
holder. Both the Demand Notice and any request to have Registrable Securities
included in a Demand Registration will specify the number of shares of
Registrable Securities proposed to be sold and will also specify the intended
method of disposition thereof. A registration requested pursuant to this
Section 2(a) will not be deemed to have been effected unless the Registration
Statement relating thereto has become effective under the Securities Act;
PROVIDED, HOWEVER, that if, after such Registration Statement has become
effective, the offering of the Registrable Securities pursuant to such
registration is interfered with by any stop order, injunction or other order or
requirement of the SEC or other governmental agency or court, or by the
Company's failure to keep the Registration Statement effective or the prospectus
included therein current for the periods specified herein, such registration
will be deemed not to have been effected and the demanding Investors' right to
request a Demand Registration hereunder shall be reinstated. The Investors
requesting a registration pursuant to this Section 2(a) may, at any time prior
to the effective date of the Registration Statement relating to such
registration, revoke such request with respect to their Registrable Securities
by providing a written notice to the Company revoking such request.
If the Investor(s) making such demand so elect, the offering of
Registrable Securities pursuant to a Demand Registration shall be in the form
of an Underwritten Offering. If the managing underwriter or underwriters of
such offering advise the Company and the holders of Registrable Securities in
writing that in their opinion the number of shares of Registrable Securities
requested to be included in such offering is sufficiently large to materially
and adversely affect the success of such offering, the Company will include
in such offering the aggregate number of
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Registrable Securities which in the opinion of such managing underwriter or
underwriters can be sold without any such material adverse effect and the
Registrable Securities to be included in such registration shall be allocated,
(i) FIRST to X.X. Xxxxxx to the extent Xxxxxx is entitled to include securities
in the Demand Registration; (ii) SECOND to the Investors making such demand pro
rata in accordance with the number of Registerable Securities of each Investor
proposed to include in the Demand Registration, (iii) THIRD among the other
holders of Registrable Securities pro rata (according to the Registrable
Securities beneficially owned by such holders) to the extent necessary to reduce
the total amount of securities to be included in such offering to the amount
recommended by such managing underwriter or underwriters, and (iv) FOURTH among
the Company and any other holders of registration rights in respect of
securities of the Company in accordance with the terms of the agreements
granting such rights. If fewer than one-half of the Registrable Securities
proposed to be included by the Investors are included in a Demand Registration,
then the Investor's right to request such Demand Registration shall be
reinstated. No Investor shall be entitled to effect a Demand Notice under this
Section 2(a) within 180 days after the closing date of an Underwritten Offering.
In the event that at any time the Company takes a position that the holding
period of the Exchangeable Shares may not be identified with the holding period
of the Registerable Securities under Rule 144(d), each of (a) Xxxx and Xxxxx
Xxxxxx; and (b) Xxxxxx Xxxxxx shall be entitled to request at any time after the
completion of the Demand Registrations requested under this subsection 2(a), and
the Company shall be obligated to effect as soon as practicable after such
request, in accordance with the terms of this Agreement, one additional Demand
Registration pursuant to the terms hereof.
(b) INCIDENTAL REGISTRATION. If the Company proposes to file a
registration statement under the Securities Act (other than in connection with
the Initial Public Offering, a Registration Statement on Form S-4 or S-8 or any
form substituting therefor) with respect to an offering of any class of security
by the Company for its own account or for the account of any of its security
holders, then the Company shall give written notice of such proposed filing to
the holders of the Registrable Securities as soon as practicable (but in no
event less than thirty days before the anticipated filing date), and such notice
shall offer such holders the opportunity to register such number of Registrable
Securities as each such holder may request. Each holder of Registrable
Securities desiring to have its Registrable Securities registered under this
subsection 2(b) shall so advise the Company in writing within 15 days after the
date of receipt of such notice from the Company (which request shall set forth
the number of Registrable Securities for which registration is requested). The
Company shall include in such Registration Statement all such Registrable
Securities so requested to be included therein, and, if such registration is an
Underwritten Registration, the Company, shall use it best efforts to cause the
managing underwriter or underwriters to permit the Registrable Securities
requested to be included in the registration statement for such offering to be
included (on the same terms and conditions as similar securities of the Company
included therein to the extent appropriate); PROVIDED, HOWEVER, that if the
managing underwriter or underwriters of such offering deliver a written opinion
to the holders of such Registrable Securities that the total number of
securities that the Company, the holders of Registrable Securities, or such
other persons propose to include in such offering is such that the
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success of the offering would be materially and adversely affected by inclusion
of the securities requested to be included, then the amount of securities to be
offered for the accounts of the Company, the holders of Registrable Securities
and other holders registering securities pursuant to registration rights shall
be allocated as follows:
(i) if such registration has been initiated by the Company as a primary
offering, first to the securities sought to be included by the
Company, SECOND to the securities sought to be included by Xxxxxx to
the extent permitted by the Xxxxxx Agreement and THIRD to the
Registrable Securities sought to be included by the holders thereof
and the securities sought to be included by other holders of
registration rights, pro rata, on the basis of the number of
securities owned by each such holder; and
(ii) if such registration has been initiated by another holder of
registration rights (other than pursuant to Section 2(a) hereof),
FIRST to the securities sought to be included by Xxxxxx to the
extent permitted by the Xxxxxx Agreement, SECOND to the securities
sought to be included by such demanding holder, THIRD to the
Registrable Securities sought to be included by the holders thereof
and to all other securities sought to be included by other holders
of registration rights, pro rata, on the basis of the number of
securities owned by each such holder, and FOURTH to the securities
sought to be included by the Company.
If the number of Registrable Securities sought to be registered pursuant to
this Section 2(b) by a holder of Registrable Securities is reduced as provided
above, such holder shall have the right to withdraw such holder's request for
registration with respect to all of the Registrable Securities initially sought
to be registered.
3. HOLD-BACK AGREEMENT. Each holder of Registrable Securities agrees, if
requested by the managing underwriters in an Underwritten Offering, not to
effect any public sale or distribution of securities of the Company of the same
class as the securities included in the applicable registration statement,
including a sale pursuant to Rule 144 under the Securities Act (except as part
of such Underwritten Registration), during the 10-day period prior to the filing
of the registration statement with respect to such Underwritten Offering, and
during the 180-day period beginning on the effective date of the registration
statement with respect to such Underwritten Offering, to the extent timely
notified in writing by the Company or the managing underwriters.
Notwithstanding the foregoing, each holder of "Registerable Securities agrees to
enter into a lock-up agreement with the underwriters of any public registration
of the Company's securities in substantially the form entered into by the
directors, executive officers and holders of five percent of the Common Stock of
the Company.
4. REGISTRATION PROCEDURES. In connection with the Company registration
obligations pursuant to Section 2 hereof, the Company will use its best efforts
to effect such registration to permit the sale of such Registrable Securities in
accordance with the intended method or methods of distribution thereof, and
pursuant thereto the Company will as expeditiously as possible:
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(a) prepare and file with the SEC, as soon as practicable, a Registration
Statement relating to the applicable registration on any appropriate form under
the Securities Act, which form shall be available for the sale of the
Registrable Securities in accordance with the intended method or methods of
distribution thereof and shall include all financial statements of the Company,
and use its best efforts to cause such Registration Statement to become
effective; PROVIDED that the Company shall have the right to delay filing or
effectiveness of a Registration Statement filed pursuant to Section 2(a) hereto
or the commencement of a public distribution of Registrable Securities, as
applicable, for up to 90 days if the Company's Board of Directors determines, in
good faith, that the filing or effectiveness thereof or the commencement of such
public distribution could materially interfere with a pending extraordinary
transaction involving the Company or bona fide financing plans of the Company or
would require disclosure of information, the premature disclosure of which would
be materially detrimental to the best interests of the Company; and PROVIDED
FURTHER that such right may not be exercised more than once in any twelve month
period;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep the
Registration Statement effective for nine months with respect to a Demand
Registration on a form other than Form S-3 and two years with respect to a
Demand Registration on Form S-3, or such shorter period which will terminate
when all Registrable Securities covered by such Registration Statement have been
sold; cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under the
Securities Act; and comply with the provisions of all securities covered by such
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the sellers thereof set forth in
such Registration Statement or supplement to the Prospectus; the Company shall
not be deemed to have used its best efforts to keep a Registration Statement
effective during the applicable period if it voluntarily takes any action that
would result in selling holders of the Registrable Securities covered thereby
not being able to sell such Registrable Securities during that period unless
such action is required under applicable law; PROVIDED that the Company shall be
entitled to defer filing any of the foregoing for a period of sixty (60) days if
the Company shall in good faith and for valid business reasons defer such
filings, which valid business reasons shall include, without limitation, the
acquisition or divestiture of assets, so long as the Company promptly thereafter
complies with the requirements of Section 4(j) hereof, if applicable;
(c) notify the selling holders of Registrable Securities and the managing
underwriters, if any, promptly, and (if requested by any such Person) confirm
such advice in writing, (1) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to the Registration
Statement or any post-effective amendment, when the same has become effective,
(2) of any request by the SEC for amendments or supplements to the Registration
Statement or the Prospectus or for additional information, (3) of the issuance
by the SEC of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose, (4) if at any
time the representations and warranties of the Company contemplated by paragraph
(1) below cease to be true and correct, (5) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose and (6) of the
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happening of any event which makes any statement made in the Registration
Statement, the Prospectus or any document incorporated therein by reference
untrue or which requires the making of any changes in the Registration
Statement, the Prospectus or any document incorporated therein by reference in
order to make the statements therein not misleading;
(d) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(e) furnish to each selling holder of Registrable Securities and each
managing underwriter, without charge, at least one signed copy of the
Registration Statement and any post effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(f) deliver to each selling holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such Persons may reasonably request; the Company consents to the use of the
Prospectus or any amendment or supplement thereto by each of the selling holders
of Registrable Securities and the underwriters, if any, in connection with the
offering and sale of the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto;
(g) prior to any public offering of Registrable Securities, register or
qualify or cooperate with the selling holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as any seller or
underwriter reasonably requests in writing and do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of
the Registrable Securities covered by the Registration Statement;
(h) cooperate with the selling holders of Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold and not beating
any restrictive legends; and enable such Registrable Securities to be in such
denominations and registered in such names as the managing underwriters may
request at least two business days prior to any sale of Registrable Securities
to the underwriters;
(i) cause the Registrable Securities covered by the applicable
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the seller
or sellers thereof or the underwriters, if any, to consummate the disposition of
such Registrable Securities;
0) promptly upon the occurrence of any event contemplated by Section
4(c)(6) above, prepare a supplement or post-effective amendment to the
Registration Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, the Prospectus will
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not contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading;
(k) cause all Registrable Securities covered by the Registration Statement
to be listed or approved for listing on each securities exchange on which
similar securities issued by the Company are then listed and approved for
quotation on NASDAQ if the Company's securities are then quoted on NASDAQ;
(l) enter into such agreements (including an underwriting agreement) and
take all such other actions in connection therewith in order to expedite or
facilitate the disposition of such Registrable Securities and in connection
therewith, whether or not an underwriting agreement is entered into and whether
or not the registration is an Underwritten Registration, (1) make such
representations, warranties, covenants and indemnities to the holders of such
Registrable Securities and the underwriters, if any, in form, substance and
scope as are customarily made by issuers to underwriters in primary underwritten
offerings; (2) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters, if any, and the holders of a majority
of the Registrable Securities included in such registration, covering the
matters customarily covered in opinions requested in Underwritten Offerings and
such other matters as may be reasonably requested by such holders and
underwriters); and (3) obtain "cold comfort" letters and updates thereof from
the Company's independent certified public accountants addressed to the selling
holders of Registrable Securities and the underwriters, if any, such letters to
be in customary form and covering matters of the type customarily covered in
"cold comfort" letters by underwriters in connection with primary
Underwritten Offerings;
(m) comply with all applicable rules and regulations of the SEC and make
available to its security holders, as soon as reasonably practicable, earning
statements satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder (or any similar rule promulgated under the Securities Act),
covering any 12-month period (or 90 days after the end of any 12-month period if
such period is a fiscal year) (i) commencing at the end of any fiscal quarter in
which Registrable Securities are sold to underwriters in a firm commitment or
reasonable efforts underwritten offering and (ii) if not sold to underwriters in
such an offering, commencing on the day of the first fiscal quarter of the
Company after the effective date of a Registration Statement; and
(n) cooperate with each seller of Registrable Securities and each
underwriter participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc. (the "NASD");
(o) notify the Investors if the SEC advises the Company that the exchange
of the Exchangeable Shares for Registrable Securities is required as a condition
to the filing of any registration statement under Section 2. If such exchange is
required, the Company's obligation to register the Registrable Securities under
Section 2, shall be conditioned upon the exchange occurring prior to the filing
of the Registration Statement. If a registration statement must be withdrawn
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because the SEC takes the position that the exchange must be made before filing,
the expenses of such filing shall be borne by the Company pursuant to Section 5
and such prior filing shall not be deemed to satisfy the Company's obligation to
effect a registration under Section 2.
(p) keep the Investors advised of the status of any registration statement
filed under Section 2 and coordinate the effective date of such registration
statement with the Investors; and
(q) take such other lawful actions as shall be reasonable to facilitate
the registration of the Registrable Securities.
The Company may require each seller of Registrable Securities as to which
any registration is being effected to furnish to the Company such information
regarding the distribution of such securities as the Company may from time to
time reasonably request in writing and to enter into agreements related to the
distribution of the Registrable Securities that are designed to insure
compliance with the Exchange Act.
Each Investor hereby agrees by acquisition of such Registrable Securities
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 4(j) hereof, such holder will forthwith
discontinue disposition of Registrable Securities until such holder's receipt
of the copies of the supplemented or amended Prospectus contemplated by Section
4(j) hereof, or until it is advised in writing (the "ADVICE") by the Company
that the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in the
Prospectus, and, if so directed by the Company such holder will deliver to the
Company (fit the Company's expense), all copies, other than permanent file
copies then in such holder's possession, of the Prospectus coveting such
Registrable Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the time periods regarding the
effectiveness of Registration Statements set forth in Section 2 hereof and
Section 4(b) hereof shall be extended by the number of days during the period
from and including the date of the giving of such notice pursuant to
Section 4(c) (6) hereof to the date when the selling holders of Registrable
Securities covered by such registration statement shall receive copies of the
supplemented or amended prospectus contemplated by Section 4(j) hereof or
the Advice.
5. REGISTRATION FEES. All expenses incident to the Company's performance
of or compliance with this Agreement, including without limitation: all
registration and filing fees; all fees associated with a required listing of the
Registrable Securities on any securities exchange; fees and expenses with
respect to filings required to be made with the NASD; fees and expenses of
compliance with securities or blue sky laws (including fees and disbursements of
counsel for the underwriters or holders of Registrable Securities in connection
with blue sky qualifications of the Registrable Securities and determination of
their eligibility for investment under the laws of such jurisdictions as the
managing underwriters or holders of a majority of the Registrable Securities
being sold may designate); printing expenses, messenger, telephone and delivery
expenses;, fees and disbursements of counsel for the Company and customary fees
and expenses for independent certified public accountants retained by the
Company (including the expenses of any comfort letters
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or costs associated with the delivery by independent certified public
accountants of a comfort letter or comfort letters requested pursuant to Section
4(l) hereof); fees and disbursements of counsel for the Investors in an
aggregate amount for all purposes under this Agreement and for all Demand and/or
Incidental Registration Rights not to exceed $20,000; securities acts liability
insurance, if the Company so desires; all internal expenses of the Company
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties); the expense of any annual
audit; and the fees and expenses of any Person, including special experts,
retained by the Company (all such expenses being herein called "REGISTRATION
EXPENSES") will be borne by the Company regardless of whether the Registration
Statement becomes effective. The Company shall not have any obligation to pay
any underwriting fees, discounts, or commissions attributable to the sale of
Registrable Securities.
6. INDEMNIFICATION: CONTRIBUTION.
(a) INDEMNIFICATION BY COMPANY. The Company agrees to indemnify and hold
harmless each holder of Registrable Securities against all losses, claims,
damages, liabilities and expenses arising out of or based upon any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, Prospectus or preliminary prospectus or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are caused by or contained in any information furnished in writing to the
Company by the holders of Registrable Securities expressly for use therein.
(b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. Each holder of
Registrable Securities agrees to indemnify and hold harmless the Company, its
directors, officers, employees, agents, and Affiliates, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and each other holder against any losses, claims,
damages, liabilities and expenses resulting from any untrue statement of a
material fact or any omission of a material fact required to be stated in the
Registration Statement or Prospectus or preliminary prospectus or necessary to
make the statements therein not misleading, to the extent, but only to the
extent, that such untrue statement or omission is contained in any information
or affidavit so furnished in writing by such holder to the Company specifically
for inclusion in such Registration Statement or Prospectus.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; PROVIDED, HOWEVER that any Person
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such Person unless (a) the
indemnifying party has agreed to pay such fees or expenses, (b) the indemnifying
party shall have failed to assume the defense of such claim and employ counsel
reasonably satisfactory to such Person or (c) based upon advice of counsel of
such Person, a conflict of interest may exist between such Person and the
indemnifying party with respect to such claims
11
(in which case, if the Person notifies the indemnifying party in writing that
such Person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such Person), in each of which events the fees and
expenses of such counsel shall be at the expense of the indemnifying party. The
indemnifying party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably withheld), but if
settled with its written consent, or if there be a final judgment for the
plaintiff in any such action or proceeding, the indemnifying party shall
indemnify and hold harmless the indemnified parties from and against any loss or
liability (to the extent stated above) by reason of such settlement or judgment.
No indemnified party will be required to consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff/ to such indemnified party of a
release from all liability in respect to such claim or litigation.
(d) CONTRIBUTION. If for any reason the indemnification provided for in
the preceding clauses (a) and (b) is unavailable to an indemnified party or
insufficient to hold it harmless as contemplated by, the preceding clauses (a)
and (b), then each indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnified party and each such indemnifying party, but
also the relative fault of the indemnified party and each such indemnifying
party, as well as any other relevant equitable considerations. The relative
fault of the Company on the one hand and of the selling holders on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such party, and the
party's relative intent, knowledge, access to information, and opportunity to
correct or prevent such statement or omission. 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 misrepresentations.
7. PARTICIPATION IN UNDERWRITTEN OFFERINGS. No Person may participate in
any Underwritten Offerings hereunder unless such Person (i) agrees to sell such
Person's securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnifies,
underwriting agreements, lock-up agreements and other documents required under
the terms of this Agreement and such underwriting arrangements. Nothing in this
Section 7 shall be construed to create any additional rights regarding the
registration of Registrable Securities in any Person otherwise than as set forth
herein.
From and after the Effective Time, until no Registerable Securities remain
outstanding, in order to facilitate the availability to the Investors and the
other holders of Registerable Securities of Form S-2 and Form S-3, if available,
and the exemption from registration provided by Rule 144 of the Securities Act,
if available, the Company hereby agrees to file in the manner and at the times
required all reports and other information required to be filed by the Company
pursuant to the Securities Exchange Act of 1934, as amended.
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8. MISCELLANEOUS.
(a) REMEDIES. Each party hereto, in addition to being entitled to
exercise all rights provided herein or granted by law, including recovery of
damages, will be entitled to specific performance of its right under this
Agreement to the extent available under applicable law. Each party hereto
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Agreement and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given without the written consent of the Company and each of the Investors.
(c) NOTICES. All Notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telecopier, or air courier guaranteeing overnight delivery:
(i) if to the Company: Total Control Products, Inc., 0000 Xxxxx
Xxxxxx Xxxxxx, Xxxxxxx Xxxx, Xxxxxxxx, Attention: Xxxxxxxx
Xxxx, President, Fax: (000) 000-0000; with a copy to: X'Xxxxxx
& Xxxxxx, 00 Xxxxx XxXxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx
00000, Attention: Xxxxxxx X. Xxxxxxx, Fax: (000) 000-0000.
(ii) if to Xxxx X. Xxxxxx and/or Xxxxx X Xxxxxx: 0000 - 000 Xxxxxx,
Xxxxxxxx, Xxxxxxx X0X 0X0, Fax: (000) 000-0000, with a copy to
Xxxxxxx Xxxxx, 3700 - 000 Xxxxx Xxxxxx XX, Xxxxxxx, Xxxxxxx,
X0X 0X0, Attention: Xxxx Xxxxxx, Fax: (000) 000-0000.
(iii) if to Xxxxxx X. Xxxxxx: 00 Xxxxxxx Xxxxxxxx Xxxxxxxx, Xxxxxxx,
X0x 0X0, Fax: (000) 000-0000.
(iv) if to any transferee, at the address given by such transferee
to the Company.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent holders of Registrable Securities who agree in writing to
be bound by the obligations of holders of Registrable Securities set forth
herein; PROVIDED that holders of Registrable Securities may not assign their
rights under this Agreement except in connection with the permitted transfer of
Registrable Securities and then only insofar as relates to such Registrable
Securities. The rights to request a Demand Registration under Section 2(a)
hereof reserved to the Investors under this Agreement shall not be transferable,
but may be exercised by an Investor on behalf of a transferee of Registerable
Securities, and in such event
13
the Registerable Securities held by such transferee shall be deemed to be held
by the Investor to which they were issued for the purpose of Section 2 hereof.
(e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) HEADING. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
(h) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(i) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in (sic]
Alberta Agreement. respect of the subject matter contained herein. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter hereof.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
14
IN WITNESS WHEREOF, the parties hereto have executed this Investor Rights
Agreement as of the date first written above.
TOTAL CONTROL PRODUCTS, INC.
By: /s/ Xxxxxxxx Xxxx
---------------------------
Title:
------------------------
/s/ X.X. Xxxxxx
------------------------------
Xxxx X. Xxxxxx
/s/ X. Xxxxxx
------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxx Xxxxxx
------------------------------
Xxxxx X. Xxxxxx
15
