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Exhibit 10.7
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REGISTRATION RIGHTS AGREEMENT
dated November 25, 1997,
among
YOUNG AMERICA CORPORATION
and the
OTHER PARTIES LISTED HEREIN
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REGISTRATION RIGHTS AGREEMENT
dated November 25, 1997, among YOUNG AMERICA
CORPORATION , a Minnesota corporation (the
"Company"), and the stockholders of the
Company listed on Schedule I (the
"Investors").
Each Investor currently owns (or has the right to acquire) the number of
shares of Common Stock of the Company set forth opposite the name of such
Investor on Schedule I. The parties hereto deem it to be in their best interests
to set forth their rights and obligations in connection with public offerings
and sales of shares of Common Stock. Accordingly, the parties agree as follows:
SECTION 1. Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
"Commission" means the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
"Common Stock" means collectively, the Class A Common Stock, par value
$1.00 per share, of the Company, the Class B Common Stock, par value $1.00 per
share, and the Class C Common Stock, par value $1.00 per share of the Company.
"Xxxxxxx" means Xxx X. Xxxxxxx and any person or entity that acquires
Restricted Shares directly or indirectly from Xxxxxxx in accordance with Section
17.
"Exchange Act" means the Securities Exchange Act of 1934, and the rules
and regulations of the Commission promulgated thereunder, all as the same shall
be in effect from time to time.
"Initial Public Offering" means the first underwritten public offering of
Common Stock for sale to the public for the account of the Company and offered
on a "firm commitment" or "best efforts" basis pursuant to an offering
registered under the Securities Act with the Commission on Form S-1 or its then
equivalent.
"Other Shares" means at any time those shares of Common Stock which do not
constitute Primary Shares or Registrable Shares.
"Primary Shares" means at any time the authorized but unissued shares of
Common Stock or shares of Common Stock held by the Company in its treasury.
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"Registrable Shares" means at any time, with respect to any Stockholder,
the Restricted Shares held by such Stockholder which constitute Common Stock.
"Requisite Percentage of Stockholders" means at any time prior to the
sixth anniversary of the date of this Agreement, the Stockholders holding not
less than 50% (by number of shares) of the then outstanding Registrable Shares,
and at any time thereafter, the Stockholders holding not less than 20% (by
number of shares) of the then outstanding Registrable Shares.
"Restricted Shares" means at any time, with respect to any Stockholder,
the shares of Common Stock, any other securities which by their terms are
exercisable or exchangeable for or convertible into Common Stock or other
securities which are so exercisable or convertible and any securities received
in respect thereof, which are held by such Stockholder and which have not
previously been sold to the public pursuant to a registration statement under
the Securities Act or pursuant to Rule 144 or which are not (or would not be,
upon any such exercise, exchange or conversion) eligible for sale by the holder
thereof under Rule 144(k) or any successor rule thereto or any complementary
rule thereto.
"Rule 144" means Rule 144 promulgated under the Securities Act or any
successor rule thereto or any complementary rule thereto.
"Securities Act" means the Securities Act of 1933, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect
from time to time.
"Stockholders" means the Investors and any person or entity that acquires
Restricted Shares directly or indirectly from an Investor in accordance with
Section 17.
"Transfer" means any disposition of any Restricted Shares or of any
interest therein which constitutes a sale within the meaning of the Securities
Act, other than any disposition pursuant to an effective registration statement
under the Securities Act and complying with all applicable state securities and
"blue sky" laws.
SECTION 2. Demand Registration.
(a) If the Company shall be requested by the Requisite Percentage of
Stockholders to effect a registration under the Securities Act of Registrable
Shares in accordance with this Section, then the Company shall promptly give
written notice of such proposed registration to all holders of Restricted Shares
and shall offer to include in such proposed registration any Registrable Shares
requested to be included in such proposed registration by such holders who
respond in writing to the
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Company's notice within 30 days after delivery of such notice (which response
shall specify the number of Registrable Shares proposed to be included in such
registration). The Company shall promptly use its best efforts to effect such
registration on an appropriate form, including Form S-2 or S-3, if available,
under the Securities Act of the Registrable Shares which the Company has been so
requested to register; provided, however, that the Company shall not be
obligated to effect any registration under the Securities Act except in
accordance with the following provisions:
(i) the Company shall not be obligated to (A) file more than four
registration statements in total pursuant to this Section or (C) file more
than one registration statement pursuant to this Section within any
consecutive 180-day period, which registration statement(s) were initiated
pursuant to this Section and become effective or which are rescinded by
the Stockholders without reimbursement as specified in the last paragraph
of this Section;
(ii) the Company shall not be obligated to file any registration statement
during any period in which any other registration statement (other than on
Form S-4 or Form S-8 promulgated under the Securities Act or any successor
forms thereto) pursuant to which Primary Shares are to be or were sold has
been filed and not withdrawn or has been declared effective within the
prior 90 days;
(iii) with respect to any registration pursuant to this Section, the
Company may include in such registration any Primary Shares or Other
Shares; provided, however, that if the managing underwriter advises the
Company that the inclusion of all Registrable Shares, Primary Shares and
Other Shares proposed to be included in such registration would interfere
with the successful marketing (including pricing) of all such securities,
then the number of Registrable Shares, Primary Shares and Other Shares
proposed to be included in such registration shall be included in the
following order:
(A) first, the Primary Shares;
(B) second, the Registrable Shares held by the Stockholders,
pro rata based upon the number of Restricted Shares (based upon
Common Stock equivalents) owned by each such Stockholder at the time
of such registration; and
(C) third, the Other Shares,
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(b) A requested registration under this Section may be rescinded by
written notice to the Company by a majority of the Stockholders requesting such
registration; such rescinded registration shall not count as a registration
statement initiated pursuant to this Section for purposes of paragraph (a) above
if such registration statement is rescinded prior to the effective date thereof
and if the Stockholders initiating such request shall have reimbursed the
Company for all out-of-pocket expenses incurred by the Company in connection
with such rescinded registration. A registration shall not count as a
registration statement initiated pursuant to this Section for purposes of
paragraph (a) above unless it becomes effective and the Stockholders requesting
such registration are able to sell at least 80% of the Registrable Shares sought
to be included in such registration statement.
SECTION 3. Registrations on Form S-3.
Anything contained in Section 2 to the contrary notwithstanding, at such
time as the Company shall have qualified for the use of Form S-3 or any
successor form promulgated under the Securities Act, if the Company shall be
requested by the Stockholders (other than Xxxxxxx) to effect a registration
under the Securities Act of Registrable Shares in accordance with this Section,
then the Company shall promptly give written notice of such proposed
registration to all holders of Restricted Shares (including Xxxxxxx) and shall
offer to include in such proposed registration any Registrable Shares requested
to be included in such proposed registration by such holders who respond in
writing to the Company's notice within 30 days after delivery of such notice
(which response shall specify the number of Registrable Shares proposed to be
included in such registration). The Company shall promptly use its best efforts
to effect such registration on Form S-3 of the Registrable Shares which the
Company has been so requested to register; provided, however, that the Company
shall not be obligated to file any registration statement pursuant to this
Section if the Company shall reasonably conclude that the anticipated gross
offering price of all Registrable Shares to be included therein would be less
than $500,000.
SECTION 4. Piggyback Registration.
If the Company at any time proposes for any reason to register Primary
Shares or Other Shares under the Securities Act (other than on Form S-4 or Form
S-8 promulgated under the Securities Act or any successor forms thereto or other
than in connection with an exchange offer or offering solely to the Company's
stockholders), it shall promptly give written notice to each Stockholder of its
intention to so register the Primary Shares or Other Shares and, upon the
written request, given within 30 days after delivery of any such notice by the
Company, of any Stockholder to include in such registration Registrable
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Shares held by such Stockholder (which request shall specify the number of
Registrable Shares proposed to be included in such registration), the Company
shall use its best efforts to cause all such Registrable Shares to be included
in such registration on the same terms and conditions as the securities
otherwise being sold in such registration; provided, however, that if the
managing underwriter advises the Company that the inclusion of all Registrable
Shares or Other Shares proposed to be included in such registration would
interfere with the successful marketing (including pricing) of the Primary
Shares proposed to be registered by the Company, then the number of Primary
Shares, Registrable Shares and Other Shares proposed to be included in such
registration shall be included in the following order:
(a) first, the Primary Shares;
(b) second, the Registrable Shares held by the Stockholders, pro rata
based upon the number of Restricted Shares (based upon Common Stock equivalents)
owned by each such Stockholder at the time of such registration; and
(c) third, the Other Shares.
SECTION 5. Expenses.
The Company shall bear the expense of any registrations effected pursuant
to Sections 2, 3 and 4 , including, without limitation, all registration and
filing fees (including all expenses incident to filing with the NASD), fees and
expenses of complying with securities and blue sky laws, printing expenses, and
fees and expenses of the Company's counsel and accountants, and the fees and
expenses of the Selling Stockholders Counsel (as defined below), but excluding
any underwriters' or brokers' discounts or commissions and the fees of any
counsel to any Selling Stockholder, other than the Selling Stockholders'
Counsel. The expenses of any additional registrations pursuant to Sections 2 and
3 shall be borne by the Stockholders participating in such registration pro rata
based upon the number of shares registered pursuant thereto by each such
Stockholder.
SECTION 6. Holdback Agreement.
(a) If the Company at any time shall register shares of Common Stock under
the Securities Act pursuant to an Initial Public Offering and the managing
underwriter for such registration shall request, the Stockholders shall not
sell, make any short sale of, grant any option for the purchase of, or otherwise
dispose of any Restricted Shares (other than those shares of Common Stock
included in such registration) without the prior written consent of the Company
for a period designated by the Company in writing to the Stockholders, which
period shall not begin more than 10 days prior to the effectiveness of the
registration statement pursuant to which such public offering
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shall be made and shall not last more than 180 days after the effective date of
such registration statement; provided that the Stockholders shall be bound by
this provision only if, and to the extent, the executive officers of the Company
owning Common Stock shall be bound by such a provision.
(b) If the Company at any time shall register shares of Common Stock under
the Securities Act (including any registration pursuant to Sections 2, 3 or 4)
for sale to the public after the Initial Public Offering and the managing
underwriter for such registration shall request, the Stockholders shall not
sell, make any short sale of, grant any option for the purchase of, or otherwise
dispose of any Restricted Shares (other than those shares of Common Stock
included in such registration) without the prior written consent of the Company
for a period designated by the Company in writing to the Stockholders, which
period shall not begin more than 10 days prior to the effectiveness of the
registration statement pursuant to which such public offering shall be made and
shall not last more than 90 days after the effective date of such registration
statement; provided that the Stockholders shall be bound by this provision only
if, and to the extent, the executive officers of the Company owning Common Stock
shall be bound by such a provision.
SECTION 7. Preparation and Filing.
If and whenever the Company is under an obligation pursuant to the
provisions of this Agreement to use its best efforts to effect the registration
of any Registrable Shares, the Company shall, as expeditiously as practicable:
(a) use its best efforts to cause a registration statement that registers
such Registrable Shares to become and remain effective for a period of 180 days
or until all of such Registrable Shares have been disposed of (if earlier);
(b) furnish, at least five business days before filing a registration
statement that registers such Registrable Shares, a prospectus relating thereto
or any amendments or supplements relating to such a registration statement or
prospectus, to each holder of Registrable Shares, to any counsel to any Selling
Stockholder and to one counsel selected by the holders of a majority of such
Registrable Shares (the "Selling Stockholders' Counsel"), copies of all such
documents proposed to be filed (it being understood that such five-business-day
period need not apply to successive drafts of the same document proposed to be
filed so long as such successive drafts are supplied to such counsel in advance
of the proposed filing by a period of time that is customary and reasonable
under the circumstances);
(c) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such
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registration statement effective for at least a period of 180 days or until all
of such Registrable Shares have been disposed of (if earlier) and to comply with
the provisions of the Securities Act with respect to the sale or other
disposition of such Registrable Shares;
(d) notify in writing any counsel to any Selling Stockholder and the
Selling Stockholders' Counsel promptly (i) of the receipt by the Company of any
notification with respect to any comments by the Commission with respect to such
registration statement or prospectus or any amendment or supplement thereto or
any request by the Commission for the amending or supplementing thereof or for
additional information with respect thereto, (ii) of the receipt by the Company
of any notification with respect to the issuance by the Commission of any stop
order suspending the effectiveness of such registration statement or prospectus
or any amendment or supplement thereto or the initiation or threatening of any
proceeding for that purpose and (iii) of the receipt by the Company of any
notification with respect to the suspension of the qualification of such
Registrable Shares for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purposes;
(e) use its best efforts to register or qualify such Registrable Shares
under such other securities or blue sky laws of such jurisdictions as any seller
of Registrable Shares reasonably requests and do any and all other acts and
things which may be reasonably necessary or advisable to enable such seller of
Registrable Shares to consummate the disposition in such jurisdictions of the
Registrable Shares owned by such seller; provided, however, that the Company
will not be required to qualify generally to do business, subject itself to
general taxation or consent to general service of process in any jurisdiction
where it would not otherwise be required so to do but for this paragraph (e);
(f) furnish to each seller of such Registrable Shares such number of
copies of a summary prospectus or other prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as such seller of Registrable Shares may reasonably request in
order to facilitate the public sale or other disposition of such Registrable
Shares;
(g) use its best efforts to cause such Registrable Shares to be registered
with or approved by such other governmental agencies or authorities as may be
necessary by virtue of the business and operations of the Company to enable the
seller or sellers thereof to consummate the disposition of such Registrable
Shares;
(h) notify on a timely basis each seller of such Registrable Shares at any
time when a prospectus relating to such
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Registrable Shares is required to be delivered under the Securities Act within
the appropriate period mentioned in paragraph (a) of this Section, of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing and, at the request of such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the offerees of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;
(i) make available for inspection by any counsel to any Selling
Stockholder and the Selling Stockholders' Counsel or any underwriter
participating in any disposition pursuant to such registration statement and any
attorney, accountant or other agent retained by any such underwriter
(collectively, the "Inspectors"), all pertinent financial and other records,
pertinent corporate documents and properties of the Company (collectively, the
"Records"), as shall be reasonably necessary to enable them to exercise their
due diligence responsibility, and cause the Company's officers, directors and
employees to supply all information (together with the Records, the
"Information") reasonably requested by any such Inspector in connection with
such registration statement. Any of the Information which the Company determines
in good faith to be confidential, and of which determination the Inspectors are
so notified, shall not be disclosed by the Inspectors unless (i) the disclosure
of such Information is necessary to avoid or correct a misstatement or omission
in the registration statement, (ii) the release of such Information is ordered
pursuant to a subpoena or other order from a court of competent jurisdiction or
(iii) such Information has been made generally available to the public. The
seller of Registrable Shares agrees that it will, upon learning that disclosure
of such Information is sought in a court of competent jurisdiction, give notice
to the Company and allow the Company, at the Company's expense, to undertake
appropriate action to prevent disclosure of the Information deemed confidential;
(j) use its best efforts to obtain from its independent certified public
accountants "comfort" letters in customary form and at customary times and
covering matters of the type customarily covered by comfort letters;
(k) use its best efforts to obtain from its counsel an opinion or opinions
in customary form;
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(l) provide a transfer agent and registrar (which may be the same entity
and which may not be the Company) for such Registrable Shares;
(m) issue to any underwriter to which any seller of Registrable Shares may
sell shares in such offering certificates evidencing such Registrable Shares;
provided, however, that the Company shall have the right to approve any such
underwriter with such approval not to be unreasonably withheld;
(n) list such Registrable Shares on any national securities exchange on
which any shares of the Common Stock are listed or, if the Common Stock is not
listed on a national securities exchange, use its best efforts to qualify such
Registrable Shares for inclusion on the automated quotation system of the
National Association of Securities Dealers, Inc. (the "NASD") or such national
securities exchange as the holders of a majority of such Registrable Shares
shall request;
(o) otherwise use its best efforts to comply with all applicable rules and
regulations of the Commission and make available to its securityholders, as soon
as reasonably practicable, earnings statements (which need not be audited)
covering a period of 12 months beginning within three months after the effective
date of the registration statement, which earnings statements shall satisfy the
provisions of Section 11(a) of the Securities Act; and
(p) use its best efforts to take all other steps necessary to effect the
registration of such Registrable Shares contemplated hereby.
SECTION 8. Indemnification.
In connection with any registration of any Registrable Shares under the
Securities Act pursuant to this Agreement, the Company shall indemnify and hold
harmless the seller of such Registrable Shares, its officers and directors, each
underwriter, broker or any other person acting on behalf of such seller and each
other person, if any, who controls any of the foregoing persons within the
meaning of the Securities Act against any losses, claims, damages or
liabilities, joint or several, (or actions in respect thereof) to which any of
the foregoing persons 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 an untrue statement or alleged untrue
statement of a material fact contained in the registration statement under which
such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained therein or otherwise filed
with the Commission, any amendment or supplement thereto or any document
incident to registration or qualification of any Registrable Shares, or arise
out of or are based upon the
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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
shall reimburse such seller, such officer or director, such underwriter, such
broker or such other person acting on behalf of such seller and each such
controlling person for any legal or other expenses reasonably incurred by any of
them in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage, liability or
action arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in said registration statement,
preliminary prospectus, final prospectus, amendment, supplement or document
incident to registration or qualification of any Registrable Shares in reliance
upon and in conformity with written information furnished to the Company through
an instrument duly executed by such seller or underwriter specifically for use
in the preparation thereof; provided, further, that the foregoing indemnity
shall not inure to the benefit of any underwriter, with respect to any
preliminary prospectus, from who the person asserting any losses, claims,
damages and liabilities and judgments purchased Registrable Shares or any person
controlling such underwriter, if a copy of the prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such underwriter to such
person, if required by law so to have been delivered, or prior to a written
confirmation of the sale of the Registrable Shares to such person, and if the
prospectus (as so amended and supplemented) would have cured the defect giving
rise to such loss, claim, damage, liability or judgment, unless such failure to
deliver the prospectus (as so amended and supplemented was a result of
noncompliance by the Company with Section 7(f) hereof.
In connection with any registration of Registrable Shares under the
Securities Act pursuant to this Agreement, each seller of Registrable Shares
shall indemnify and hold harmless (in the same manner and to the same extent as
set forth in the preceding paragraph of this Section) the Company, each director
of the Company, each officer of the Company who shall sign such registration
statement, each underwriter, broker or other person acting on behalf of such
seller, each person who controls any of the foregoing persons within the meaning
of the Securities Act and each other seller of Registrable Shares under such
registration statement with respect to any statement or omission from such
registration statement, any preliminary prospectus or final prospectus contained
therein or otherwise filed with the Commission, any amendment or supplement
thereto or any document incident to registration or qualification of any
Registrable Shares, if such statement or omission was made in reliance upon and
in conformity with written information furnished to the Company or such
underwriter through an instrument duly executed by such seller specifically for
use in connection with the
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preparation of such registration statement, preliminary prospectus, final
prospectus, amendment, supplement or document; provided, however, that the
obligation to indemnify will be several, not joint and several, among such
sellers of Registrable Shares, and the maximum amount of liability in respect of
such indemnification shall be in proportion to and limited to, in the case of
each seller of Registrable Shares, an amount equal to the net proceeds actually
received by such seller from the sale of Registrable Shares effected pursuant to
such registration.
The indemnification required by this Section 9 will be made by periodic
payments during the course of the investigation or defense, as and when bills
are received or expenses incurred, subject to prompt refund in the event any
such payments are determined not to have been due and owing hereunder.
Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in the preceding
paragraphs of this Section, such indemnified party will, if a claim in respect
thereof is made against an indemnifying party, give written notice to the latter
of the commencement of such action. In case any such action is brought against
an indemnified party, the indemnifying party will be entitled to participate in
and to assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be responsible for any legal or other
expenses subsequently incurred by the latter in connection with the defense
thereof; provided, however, that if any indemnified party shall have reasonably
concluded that there may be one or more legal or equitable defenses available to
such indemnified party which are additional to or conflict with those available
to the indemnifying party, or that such claim or litigation involves or could
have an effect upon matters beyond the scope of the indemnity agreement provided
in this Section, the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party and such indemnifying
party shall reimburse such indemnified party and any person controlling such
indemnified party for that portion of the fees and expenses of any counsel
retained by the indemnified party which is reasonably related to the matters
covered by the indemnity agreement provided in this Section.
The indemnification provided for under this Agreement will remain in full
force and effect regardless of any investigation made by or on behalf of the
indemnified party or any officer, director or controlling person of such
indemnified party and will survive the transfer of securities.
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If the indemnification provided for in this Section is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect to
any loss, claim, damage, liability or action referred to herein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amounts 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 indemnifying party on the one
hand and of the indemnified party on the other in connection with the statements
or omissions which resulted in such loss, claim, damage or liability as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified 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 the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the sellers of Registrable Shares agree that it would not be just and equitable
if contributions pursuant to this paragraph were determined by pro rata
allocation or by any other method of allocation which did not take into account
the equitable considerations referred to herein. The amount paid or payable to
an indemnified party as a result of the losses, claims, damages, liabilities or
expenses referred to above shall be deemed to include, subject to the limitation
set forth in the fourth paragraph of this Section 8, any legal or other expenses
reasonably incurred in connection with investigating or defending the same.
Notwithstanding the foregoing, in no event shall the amount contributed by a
seller of Registrable Shares exceed the aggregate net offering proceeds received
by such seller from the sale of its Registrable Shares.
SECTION 9. Underwriting Agreement.
Notwithstanding the provisions of Sections 6, 7 and 8, to the extent that
the Company and the Stockholders selling Registrable Shares in a proposed
registration shall enter into an underwriting or similar agreement, which
agreement contains provisions covering one or more issues addressed in such
Sections, the provisions contained in such Sections addressing such issue or
issues shall be superseded with respect to such registration by such other
agreement.
SECTION 10. Information by Holder.
Each Stockholder selling Registrable Shares in a proposed registration
shall furnish to the Company such written information regarding such holder and
the distribution proposed by such Stockholder as the Company may reasonably
request in writing and as shall be reasonably required in connection with
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any registration, qualification or compliance referred to in this Agreement.
SECTION 11. Exchange Act Compliance.
From and after the Demand Registration Date or such earlier date as a
registration statement filed by the Company pursuant to the Exchange Act
relating to any class of the Company's securities shall have become effective,
the Company shall comply with all of the reporting requirements of the Exchange
Act and with all other public information reporting requirements of the
Commission which are conditions to the availability of Rule 144 for the sale of
the Common Stock. The Company shall cooperate with each Stockholder in supplying
such information as may be necessary for such Stockholder to complete and file
any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of Rule 144.
SECTION 12. No Conflict of Rights.
The Company represents and warrants to the Stockholders that the
registration rights granted to the Stockholders hereby do not conflict with any
other registration rights granted by the Company. The Company shall not, after
the date hereof, grant any registration rights which conflict with the
registration rights granted hereby.
SECTION 13. Restriction on Transfer.
(a) The Restricted Shares shall not be transferable except upon the
conditions specified in this Section, which conditions are intended to insure
compliance with the provisions of the Securities Act.
(b) Each certificate representing Restricted Shares shall (unless
otherwise permitted by the provisions of paragraph (c) and (d) below) be stamped
or otherwise imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM. ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS SUBJECT
TO THE SATISFACTION OF CERTAIN CONDITIONS SET FORTH WITHIN A
STOCKHOLDERS AGREEMENT DATED AS OF NOVEMBER 25, 1997 AMONG YOUNG
AMERICA
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CORPORATION, AND THE OTHER PARTIES NAMED THEREIN AND A REGISTRATION
RIGHTS AGREEMENT DATED NOVEMBER 25, 1997, AMONG YOUNG AMERICA
CORPORATION, AND THE OTHER PARTIES NAMED THEREIN, AND NO TRANSFER OF
THESE SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS
HAVE BEEN FULFILLED. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO
COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF YOUNG AMERICA CORPORATION."
(c) The holder of any Restricted Shares by acceptance thereof agrees,
prior to any Transfer of any Restricted Shares, to give written notice to the
Company of such holder's intention to effect such Transfer and to comply in all
other respects with the provisions of this Section. Each such notice shall
describe the manner and circumstances of the proposed Transfer. Upon request by
the Company, the holder delivering such notice shall deliver a written opinion,
addressed to the Company, of counsel for the holder of Restricted Shares,
stating that in the opinion of such counsel (which opinion and counsel shall be
reasonably satisfactory to the Company) such proposed Transfer does not involve
a transaction requiring registration or qualification of such Restricted Shares
under the Securities Act. Such holder of Restricted Shares shall be entitled to
Transfer such Restricted Shares in accordance with the terms of the notice
delivered to the Company, if the Company does not reasonably object to such
Transfer and request such opinion within fifteen days after delivery of such
notice, or, if it requests such opinion, does not reasonably object to such
Transfer within fifteen days after delivery of such opinion. Each certificate or
other instrument evidencing the securities issued upon the Transfer of any
Restricted Shares (and each certificate or other instrument evidencing any
untransferred balance of such Registered Shares) shall bear the legend set forth
in paragraph (b) above unless (i) in such opinion of counsel to the holder of
Restricted Shares (which opinion and counsel shall be reasonably acceptable to
the Company) registration of any future Transfer is not required by the
applicable provisions of the Securities Act or (ii) the Company shall have
waived the requirement of such legends.
(d) Notwithstanding the foregoing provisions of this Section, the
restrictions imposed by this Section upon the transferability of any Restricted
Shares shall cease and terminate when (i) any such Restricted Shares are sold or
otherwise disposed of (A) pursuant to an effective registration statement under
the Securities Act or (B) in a transaction contemplated by paragraph (c) above
which does not require that the Restricted Shares so transferred bear the legend
set forth in paragraph (b) hereof, or (ii) the holder of such Restricted Shares
has met the requirements for Transfer of such Restricted Shares under Rule
144(k) under the Securities Act (subject to the deliver of opinions as set forth
above). Whenever the restrictions imposed by this Section shall terminate, the
holder of any Restricted Shares as to which such restrictions have
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terminated shall be entitled to receive from the Company, without expense, a new
certificate not bearing the restrictive legend set forth in paragraph (b) above
and not containing any other reference to the restrictions imposed by this
Section.
SECTION 14. Termination.
This Agreement shall terminate and be of no further force or effect on the
date on which there remains no Restricted Shares outstanding.
SECTION 15. Severability.
Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or any other jurisdiction, and such invalid, void or otherwise unenforceable
provisions shall be null and void. It is the intent of the parties, however,
that any invalid, void or otherwise unenforceable provisions be automatically
replaced by other provisions which are as similar as possible in terms to such
invalid, void or otherwise unenforceable provisions but are valid and
enforceable to the fullest extent permitted by law.
SECTION 16. Entire Agreement.
This Agreement, together with the Stockholders' Agreement dated the date
hereof among the Company and the other parties named therein (the "Stockholders'
Agreement"), contains the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior arrangements or understandings
with respect hereto. In the event of any inconsistency between this Agreement
and the Stockholders' Agreement, the Stockholders' Agreement shall control.
SECTION 17. Successors and Assigns.
This Agreement shall bind and inure to the benefit of the Company and the
Stockholders and their respective successors and permitted assigns; provided,
however, that each such person or entity shall, as a condition to the
effectiveness of such assignment, be required to execute a counterpart to this
Agreement whereupon such person or entity shall have the benefits of, and shall
be subject to the restrictions contained in, this Agreement with respect to such
Restricted Shares.
SECTION 18. Counterparts.
This Agreement may be executed simultaneously in two or more counterparts,
any one of which need not contain the
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signatures of more than one party, but all such counterparts taken together will
constitute one and the same agreement. It shall not be necessary in making proof
of this Agreement to produce or account for more than one such counterpart. The
failure of any Stockholder to execute this Agreement does not make it invalid as
against any other Stockholder.
SECTION 19. Remedies.
(a) Each Stockholder shall have all rights and remedies reserved for such
Stockholder pursuant to this Agreement and the Articles of Incorporation and the
By-laws of the Company and all rights and remedies which such Stockholder has
been granted at any time under any other agreement or contract and all of the
rights which such holder has under any law or equity. Any person having any
rights under any provision of this Agreement will be entitled to enforce such
rights specifically, to recover damages by reason of any breach of any provision
of this Agreement and to exercise all other rights granted by law or equity.
(b) The parties hereto agree that if any parties seek to resolve any
dispute arising under this Agreement pursuant to a legal proceeding, the
prevailing parties to such proceeding shall be entitled to receive reasonable
fees and expenses (including reasonable attorneys' fees and expenses) incurred
in connection with such proceedings.
(c) It is acknowledged that it will be impossible to measure in money the
damages that would be suffered if the parties fail to comply with any of the
obligations herein imposed on them and that in the event of any such failure, an
aggrieved person will be irreparably damaged and will not have an adequate
remedy at law. Any such person shall, therefore, be entitled to injunctive
relief, including specific performance, to enforce such obligations, and if any
action should be brought in equity to enforce any of the provisions of this
Agreement, none of the parties hereto shall raise the defense that there is an
adequate remedy at law.
SECTION 20. Notices.
All notices, requests, consents and other communications hereunder to any
party shall be deemed to be sufficient if contained in a written instrument and
shall be deemed to have been duly given when delivered in person, by telecopy,
by nationally-recognized overnight courier, or by first class registered or
certified mail, postage prepaid, addressed to such party at the address set
forth below or such other address as may hereafter be designated in writing by
the addressee to the addressor:
(i) if to the Company, to:
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Young America Corporation
c/o BT Capital Partners, Inc.
000 Xxxxxxx Xxxxxx
Mail Stop 0000
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Tel.: (000) 000-0000
Attention: Xxxxxxx Xxxxxxx
(ii) if to the Investors:
to the address set forth for such Investor on
Schedule I, with copies to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Tel.: (000) 000-0000
Attention: Xxxx X. Xxxxx; and
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Tel.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx; and
Xxxxxx & Xxxxxxx
Xxxxxxxxx Center South
000 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Fax: (000) 000-0000
Tel.: (000) 000-0000
Attention: Xxxxxxx X. XxXxxxxxx.
All such notices, requests, consents and other communications shall be deemed to
have been delivered (a) in the case of personal delivery or delivery by
telecopy, on the date of such delivery, (b) in the case of nationally-recognized
overnight courier, on the next business day and (c) in the case of mailing, on
the third business day following such mailing if sent by certified mail, return
receipt requested.
SECTION 21. Governing Law; Jurisdiction; Venue; Process.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in the State of New York and shall be construed without regard to (i) any choice
of law or conflict of law provision or rule (whether of the State of New York or
any other jurisdiction) that would cause the application
-17-
19
of the laws of any jurisdiction other than the State of New York and (ii) any
presumption or other rule requiring the construction of an agreement against the
party causing it to be drafted. Any legal action in a proceeding brought in
accordance with this Section shall be brought in either Hennepin County,
Minnesota, in the courts of the State of Minnesota or of the United States
District Court for the District of Minnesota, or in New York, New York, in the
courts of the State of New York or of the United States District Court for the
Southern District of New York, and by execution and delivery of this Agreement,
the parties hereby accept for themselves and in respect of their property,
generally and unconditionally, the exclusive jurisdiction of the aforesaid
courts. The parties hereby irrevocably waive any objection which they may now or
hereafter have to laying of venue of any actions or proceedings arising out of
or in connection with this Agreement brought in the courts referred to above and
hereby further irrevocably waive and agree, not to plead or claim in any such
court that any such action or proceeding has been brought in an inconvenient
forum. The parties further agree that the mailing by certified or registered
mail, return receipt requested, of any process required by any such court shall
constitute valid and lawful service of process against them, without necessity
for service by any other means provided by statute or rule of court.
SECTION 22. Further Assurances.
Each party hereto shall do and perform or cause to be done and performed
all such further acts and things and shall execute and deliver all such other
agreements, certificates, instruments, and documents as any other party hereto
reasonably may request in order to carry out the provisions of this Agreement
and the consummation of the transactions contemplated hereby.
SECTION 23. Modifications; Amendments; Waivers.
The terms and provisions of this Agreement may not be modified, amended or
waived, except pursuant to a writing signed by the Majority in Interest of BT
Stockholders and the Majority in Interest of OTPB Stockholders (as such terms
are defined within the Stockholders Agreement); provided, however, that any such
amendment, modification, or waiver that would adversely affect the rights
hereunder of any Stockholder, in its capacity as a Stockholder, without
similarly affecting the rights hereunder of all Stockholders, in their
capacities as Stockholders, shall not be effective as to such Stockholder
without its prior written consent.
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SECTION 24. Headings.
The headings of the various sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed to be a part of this
Agreement.
SECTION 25. Waiver.
No course of dealing between the Company and the Stockholders (or any of
them) or any delay in exercising any rights hereunder will operate as a waiver
of any rights of any party to this Agreement. The failure of any party to
enforce any of the provisions of this Agreement will in no way be construed as a
waiver of such provisions and will not affect the right of such party thereafter
to enforce each and every provision of this Agreement in accordance with its
terms.
SECTION 26. Mutual Waiver of Jury Trial.
BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS
ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON
AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN
ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A
JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION
OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO
ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR ANY DOCUMENTS
RELATED HERETO.
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IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement on the date first written above.
YOUNG AMERICA CORPORATION
By: /s/ Xxxxxxx X. Xxxx
--------------------------------
Name: Xxxxxxx X. Xxxx
Title: President
BT CAPITAL PARTNERS, INC.
By:
--------------------------------
Name:
Title:
ONTARIO TEACHERS' PENSION
PLAN BOARD
By:
--------------------------------
Name:
Title:
/s/ Xxx X. Xxxxxxx
--------------------------------
Xxx X. Xxxxxxx
22
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement on the date first written above.
YOUNG AMERICA CORPORATION
By:
--------------------------------
Name: Xxxxxxx X. Xxxx
Title: President
BT CAPITAL PARTNERS, INC.
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
ONTARIO TEACHERS' PENSION
PLAN BOARD
By:
--------------------------------
Name:
Title:
--------------------------------
Xxx X. Xxxxxxx
23
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement on the date first written above.
YOUNG AMERICA CORPORATION
By:
--------------------------------
Name: Xxxxxxx X. Xxxx
Title: President
BT CAPITAL PARTNERS, INC.
By:
--------------------------------
Name:
Title:
ONTARIO TEACHERS' PENSION
PLAN BOARD
By: /s/ [ILLEGIBLE]
--------------------------------
Name: [ILLEGIBLE]
Title: Portfolio Manager
--------------------------------
Xxx X. Xxxxxxx
24
Schedule I
Shares of
Investors Common Stock
--------- ------------
BT CAPITAL PARTNERS, INC. 1,029,859
000 Xxxxxxx Xxxxxx
Mail Stop 0000
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Tel.: (000) 000-0000
Attention: Xxxxxxx Xxxxxxx
ONTARIO TEACHERS' PENSION PLAN BOARD 551,000
0000 Xxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxx
X0X 0X0
Fax: (000) 000-0000
Tel.: (000) 000-0000
Attention: Portfolio Manager, Merchant
Banking and Counsel,
Investments
XXX X. XXXXXXX 134,400
Pier 66 Resort & Marina
0000 Xxxxxxxxx 00xx Xxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Tel.: (000) 000-0000
