REGISTRATION RIGHTS AGREEMENT
dated as of
March __, 1999
among
INTERIORS, INC.
and
XXXX XXXXXXX and XXXXXXXXXXX XXXXXXX
EXHIBIT A
TABLE OF CONTENTS
Page
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ARTICLE 1 - DEFINITIONS........................................................1
1.1 Definitions..........................................................1
ARTICLE 2 - REGISTRATION RIGHTS................................................3
2.1 Securities Subject to this Agreement.................................3
2.2 Shelf Registration...................................................3
2.3 Piggyback Registration...............................................3
2.4 Registration Procedures..............................................5
2.5 Preparation; Reasonable Investigation................................9
2.6 Certain Rights of Holders............................................9
2.7 Registration Expenses................................................9
2.8 Indemnification; Contribution.......................................10
2.9 Participation in Underwritten Registrations.........................12
2.10 Selection of Underwriters..........................................12
ARTICLE 3 - RULE 144..........................................................13
ARTICLE 4 - MISCELLANEOUS.....................................................13
4.1 Entire Agreement....................................................13
4.2 Successors and Assigns..............................................13
4.3 Notices.............................................................13
4.4 Headings............................................................14
4.5 Counterparts........................................................14
4.6 Applicable Law......................................................14
4.7 Specific Enforcement................................................14
4.8 Amendment and Waivers...............................................14
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is dated as of March
__, 1999 between INTERIORS, INC., a Delaware corporation (the "Company");
XXXXXXXXXXX XXXXXXX ("X. Xxxxxxx") and XXXX XXXXXXX ("X. Xxxxxxx").
WHEREAS, pursuant to the terms of a settlement agreement, dated March __,
1999 (the "Settlement Agreement"), among the Company, Petals, Inc., X. Xxxxxxx,
X. Xxxxxxx and certain other persons and entities designated as "Majority
Stockholders" in the Settlement Agreement: (a) the Company issued to each of X.
Xxxxxxx and X. Xxxxxxx (sometimes referred to herein individually as a "Holder"
and collectively as the "Holders") the Warrants, and (b) agreed to grant
registration rights to the Holders with respect to the Warrant Shares issuable
upon exercise of the Warrants, and
WHEREAS, in connection with resales by the Holders of the Warrant Shares
upon or after exercise of the Warrants, the Company and the Holders now desire
to enter into this Agreement in order to facilitate such resales.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. The following terms, as used herein, have the following
meanings.
"Board" means the Board of Directors of the Company.
"Business Day" means any day except a Saturday, Sunday or other day on
which banks in New York, New York are authorized by law to close.
"Closing" and "Closing Date" shall have the meanings set forth in the
Settlement Agreement.
"Commission" means the Securities and Exchange Commission.
"Class A Common Stock" means the Class A Common Stock, par value $.001 per
share, of the Company.
"Company" means Interiors, Inc., a Delaware corporation.
"Company Registration Statement" means the registration statement of the
Company on Form S-3 (or if the Company shall not be eligible to use Form S-3
than on Form S-1 or any other
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applicable form for registering securities under the Securities Act of 1933, as
amended) relating to the registration for resale of the Registrable Securities,
including the Prospectus included therein, all amendments and supplements
thereto (including post-effective amendments) and all exhibits and material
incorporated by reference therein.
"Effective Time" means the date of effectiveness of any Registration
Statement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"NASD" means the National Association of Securities Dealers, Inc.
"Person" means an individual, corporation, partnership, association, trust
or other entity or organization, including a government or political subdivision
or an agency or instrumentality thereof.
"Prospectus" means the prospectus included in any Registration Statement,
as amended or supplemented by any prospectus supplement and by all other
amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
"Registration Statement" means the Company Registration Statement.
"Registrable Securities" shall have the meaning set forth in the Section
2.2 of this Agreement.
"Restricted Securities" means any Securities until (i) a registration
statement covering such Securities has been declared effective by the Commission
and such Securities have been disposed of pursuant to such effective
registration statement, (ii) such Securities are sold under circumstances in
which all the applicable conditions of Rule 144 (or any similar provisions then
in force) under the Securities Act are met, or such Securities may be sold
pursuant to Rule 144(k) (or any similar provision then in force) under the
Securities Act, and are freely tradable after such sale by the transferee, (iii)
such Securities are otherwise transferred, the Company has delivered a new
certificate or other evidence of ownership for such Securities not bearing a
legend restricting further transfer and such Securities may be resold without
registration under the Securities Act, or (iv) such Securities shall have ceased
to be outstanding.
"Securities" means the Warrant Shares.
"Securities Act" means the Securities Act of 1933, as amended.
"Settlement Agreement" has the meaning given to it in the recitals to this
Agreement.
"Warrants" means the three (3) year Company warrants to purchase up to
100,000 Warrant Shares issued to the Holders in equal 50,000 amounts to each of
X. Xxxxxxx and X. Xxxxxxx, and in substantially the form of Exhibit E to the
Settlement Agreement.
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"Warrant Shares" shall mean all shares of Class A Common Stock issuable
upon exercise of the Warrants.
As used in this Agreement, words in the singular include the plural, and
in the plural include the singular.
ARTICLE 2
REGISTRATION RIGHTS
2.1 Securities Subject to this Agreement.
(a) The Securities entitled to the benefits of this Agreement are the
Restricted Securities, but only for so long as they remain Restricted
Securities.
(b) A Person is deemed to be a Holder of Restricted Securities whenever
such Person is the registered Holder of such Restricted Securities on the
Company's books and records.
2.2 Demand Registration. Not later than sixty (60) days following the date of
this Agreement, the Company shall file with the SEC (or include in the pending
Registration Statement on Form S-3 currently on file with the SEC, so long as
the same has not been declared effective by the SEC) the Company Registration
Statement, which shall include therein an aggregate of 100,000 shares of Company
Class A Common Stock, of which (a) 50,000 shares of Class A Common Stock
represent the Warrant Shares issuable upon exercise of the Warrants held by X.
Xxxxxxx and (b) 50,000 shares of Class A Common Stock represent the Warrant
Shares issuable upon exercise of the Warrants held by X. Xxxxxxx (collectively,
the "Registrable Securities"), and does further hereby agrees with the Holders
or their transferees to use its best efforts to cause such Registration
Statement to be declared effective by the SEC by June 30, 1999, or as soon as
practicable thereafter, so as to ensure that the Registrable Securities shall be
registered for resale under the Act.
2.3 Piggyback Registration. The provisions of this Section 2.3 shall be
applicable only in the event that the Registrable Securities of the Holders are
not registered under the Act pursuant to the provisions of Section 2.2 above.
(a) At any time that the Company proposes to file a Company Registration
Statement, either for its own account or for the account of a stockholder or
stockholders, the Company shall give the Holders written notice of its intention
to do so and of the intended method of sale (the "Registration Notice") within a
reasonable time prior to the anticipated filing date of the Company Registration
Statement effecting such Company Registration. Each Holder may request inclusion
of any Restricted Securities in such Company Registration by delivering to the
Company, within ten (10) Business Days after receipt of the Registration Notice,
a written notice (the "Piggyback Notice") stating the number of Restricted
Securities proposed to be included and that such shares are to be included in
any underwriting only on the same terms and conditions as the shares of Class A
Common Stock otherwise being sold through underwriters under such
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Company Registration Statement. The Company shall use its best efforts to cause
all Restricted Securities specified in the Piggyback Notice to be included in
the Company Registration Statement and any related offering, all to the extent
requisite to permit the sale by the Holders of such Restricted Securities in
accordance with the method of sale applicable to the other shares of Class A
Common Stock included in such Company Registration Statement; provided, however,
that if, at any time after giving written notice of its intention to register
any securities and prior to the effective date of the Company Registration
Statement filed in connection with such registration, the Company shall
determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each Holder of Restricted Securities and, thereupon:
(i) in the case of a determination not to register, shall be
relieved of its obligation to register any Restricted Securities in
connection with such registration, and
(ii) in the case of a delay in registering, shall be permitted to
delay registering any Restricted Securities for the same period as the
delay in registering such other securities.
(b) The Company's obligation to include Restricted Securities in a Company
Registration Statement pursuant to Section 2.3(a) shall be subject to the
following limitations:
(i) The Company shall not be obligated to include any Restricted
Securities in a registration statement filed on Form X-0, Xxxx X-0 or such
other similar successor forms then in effect under the Securities Act.
(ii) If a Company Registration Statement involves an underwritten
offering and the managing underwriter advises the Company in writing that,
in its opinion, the number of securities requested to be included in such
Company Registration Statement exceeds the number which can be sold in
such offering without adversely affecting the offering, the Company will
include in such Company Registration Statement the number of such
Securities which the Company is so advised can be sold in such offering
without adversely affecting the offering, determined as follows:
(A) first, the securities proposed by the Company to be
sold for it own account, and
(B) second, any Restricted Securities requested to be
included in such registration and any other securities of the
Company in accordance with the priorities, if any, then existing
among the Holders of such securities pro rata among the Holders
thereof requesting such registration on the basis of the number of
shares of such securities requested to be included by such Holders.
(iii) The Company shall not be obligated to include Restricted
Securities in more than two (2) Company Registration Statement(s).
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(c) No Holder of Restricted Securities may include any of its Restricted
Securities in the Company Registration Statement pursuant to this Agreement
unless and until such Holder furnishes to the Company in writing, within 10
business days after receipt of a written request therefor, such information
specified in Item 507 of Regulation S-K under the Securities Act or such other
information as the Company may reasonably request for use in connection with the
Company Registration Statement or Prospectus or preliminary Prospectus included
therein and in any application to the NASD. Each Holder as to which the Company
Registration Statement is being effected agrees to furnish promptly to the
Company all information required to be disclosed in order to make all
information previously furnished to the Company by such Holder not materially
misleading.
2.4 Registration Procedures. In connection with any Registration Statement and
any Prospectus required by this Agreement to permit the sale or resale of
Restricted Securities, the Company shall:
(a) prepare and file with the Commission such amendments and
post-effective amendments to such Registration Statement as may be necessary to
keep such Registration Statement effective if such Registration Statement is a
Company Registration Statement, until the earlier of such time as all of such
securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such Company
Registration Statement; and comply with the provisions of the Securities Act
with respect to the disposition 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 or the Prospectus;
(b) promptly (and in respect of events covered by clause (i) hereof, on
the same day as the Company shall receive notice of effectiveness) advise the
Holders covered by such Registration Statement and, if requested by such
Persons, to confirm such advice in writing, (i) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and when the
same has become effective, (ii) of any request by the Commission for
post-effective amendments to such Registration Statement or post-effective
amendments or supplements to the Prospectus or for additional information
relating thereto, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of any such Registration Statement under the
Securities Act or of the suspension by any state securities commission of the
qualification of the Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the preceding
purposes, and (iv) of the existence of any fact or the happening of any event
that makes any statement of a material fact made in any such Registration
Statement, the related Prospectus, any amendment or supplement thereto, or any
document incorporated by reference therein untrue, or that requires the making
of any additions to or changes in any such Registration Statement or the related
Prospectus in order to make the statements therein not misleading. If at any
time the Commission shall issue any stop order suspending the effectiveness of
such Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of the Restricted Securities under state securities
or Blue Sky laws, the Company
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shall use its reasonable efforts to obtain the withdrawal or lifting of such
order at the earliest possible time;
(c) promptly furnish to each Holder of Restricted Securities covered by
any Registration Statement, and each underwriter, if any, without charge, at
least one conformed copy of any Registration Statement, as first filed with the
Commission, and of each amendment thereto, including all documents incorporated
by reference therein and all exhibits (including exhibits incorporated therein
by reference) and such other documents as such Holder may reasonably request;
(d) deliver to each Holder covered by any Registration Statement, and each
underwriter, if any, without charge, as many copies of the Prospectus (including
each preliminary prospectus) and any amendment or supplement thereto as such
person reasonably may request.
(e) enter into such customary agreements and take all such other
reasonable action in connection therewith (including those reasonably requested
by the selling Holders or the underwriter(s), if any) required in order to
expedite or facilitate the disposition of such Restricted Securities pursuant to
such Registration Statement, including, but not limited to, dispositions
pursuant to an underwritten registration, and in such connection:
(i) make such representations and warranties to the selling Holders
and underwriter(s), if any, in form, substance and scope as are
customarily made by issuers to underwriters in underwritten offerings
(whether or not sales of securities pursuant to such Registration
Statement are to be to an underwriter(s)) and confirm the same if and when
requested;
(ii) obtain opinions of counsel to the Company (which counsel and
opinions, in form and substance, shall be reasonably satisfactory to the
selling Holders and the underwriter(s), if any, and their respective
counsel) addressed to each selling Holder and underwriter, if any,
covering the matters customarily covered in opinions requested in
underwritten offerings (whether or not sales of securities pursuant to
such Registration Statement are to be made to an underwriter(s)) and dated
the date of effectiveness of any Registration Statement (and, in the case
of any underwritten sale of securities pursuant to such Registration
Statement, each closing date of sales to the underwriter(s) pursuant
thereto);
(iii) use reasonable efforts to obtain comfort letters dated the
date of effectiveness of any Registration Statement (and, in the case of
any underwritten sale of securities pursuant to such Registration
Statement, each closing date of sales to the underwriter(s) pursuant
thereto) from the independent certified public accountants of the Company
addressed to each selling Holder and underwriter, if any, such letters to
be in customary form and covering matters of the type customarily covered
in comfort letters in connection with underwritten offerings (whether or
not sales of securities pursuant to such Registration Statement are to be
made to an underwriter(s));
6
(iv) provide for the indemnification provisions and procedures of
Section 2.8 hereof with respect to selling Holders and the underwriter(s),
if any, and;
(v) deliver such documents and certificates as may be reasonably
requested by the selling Holders or the underwriter(s), if any, and which
are customarily delivered in underwritten offerings (whether of not sales
of securities pursuant to such Registration Statement are to be made to an
underwriter(s), with such documents and certificates to be dated the date
of effectiveness of any Registration Statement.
The actions required by clauses (i) through (v) above shall be done at
each closing under such underwriting or similar agreement, as and to the extent
required thereunder, and if at any time the representations and warranties of
the Company contemplated in clause (i) above cease to be true and correct, the
Company shall so advise the underwriter(s), if any, and each selling Holder
promptly, and, if requested by such Person, shall confirm such advice in
writing;
(f) prior to any public offering of Restricted Securities, cooperate with
the selling Holders, the underwriter(s), if any, and their respective counsel in
connection with the registration and qualification of the Restricted Securities
under the securities or Blue Sky laws of such U.S. jurisdictions as the selling
Holders or underwriter(s), if any, may reasonably request in writing by the time
any Registration Statement is declared effective by the Commission, and do any
and all other acts or filings necessary or advisable to enable disposition in
such U.S. jurisdictions of the Restricted Securities covered by any Registration
Statement and to file such consents to service of process or other documents as
may be necessary in order to effect such registration or qualification;
provided, however, that the Company shall not be required to register or qualify
as a foreign corporation in any jurisdiction where it is not then so qualified
or as a dealer in securities in any jurisdiction where it would not otherwise be
required to register or qualify but for this Section 2.4, or to take any action
that would subject it to the service of process in suits or to taxation, in any
jurisdiction where it is not then so subject;
(g) in connection with any sale of Restricted Securities that will result
in such securities no longer being Restricted Securities, cooperate with the
selling Holders and the underwriter(s), if any, to facilitate the timely
preparation and delivery of certificates representing Restricted Securities to
be sold and not bearing any restrictive legends; and enable such Restricted
Securities to be in such denominations and registered in such names as the
Holders or the underwriter(s), if any, may request at least two (2) Business
Days prior to any sale of Restricted Securities made by such underwriters;
(h) use its reasonable efforts to cause the disposition of the Restricted
Securities covered by any Registration Statement to be registered with or
approved by such other U.S. governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the underwriter(s), if any,
to consummate the disposition of such Restricted Securities;
(i) if any fact or event contemplated by Section 2.4(b) shall exist or
have occurred, prepare a supplement or post-effective amendment to any
Registration Statement or related Prospectus or any document incorporated
therein by reference or file any other required
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document so that, as thereafter delivered to the Holders of Restricted
Securities, the Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the statement therein
not misleading;
(j) cooperate and assist in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the rules and
regulations of the NASD, and use its reasonable efforts to cause any
Registration Statement to become effective and approved by such U.S.
governmental agencies or authorities as may be necessary to enable the Holders
selling Restricted Securities to consummate the disposition of such Restricted
Securities;
(k) otherwise use its reasonable efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to its
security Holders with regard to such Registration Statement, as soon as
practicable, a consolidated earnings statement meeting the requirements of Rule
158 (which need not be audited) for the twelve-month period (i) commencing at
the end of any fiscal quarter in which Restricted Securities are sold to the
underwriter in a firm or best efforts underwritten offering or (ii) if not sold
to an underwriter in such an offering, beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of any
Registration Statement;
(l) provide a CUSIP number for all Restricted Securities not later than
the effective date of any Registration Statement;
(m) use its best efforts to list, not later than the effective date of
such Registration Statement, all Restricted Securities covered by such
Registration Statement on the American Stock Exchange or any other trading
market on which any Class A Common Stock of the Company are then admitted for
trading, and
(n) provide promptly to each Holder covered by any Registration Statement
upon request each document filed with the Commission pursuant to the
requirements of Section 12 and Section 14 of the Exchange Act.
Each Holder agrees by acquisition of a Restricted Security that, upon
receipt of any notice from the Company of the existence of any fact of the kind
described in Section 2.4(b)(iv) or the commencement of a Black-Out Period, such
Holder will forthwith discontinue disposition of Restricted Securities pursuant
to any Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 2.4(i), or until it
is advised in writing, in accordance with the notice provisions of Section 4.3
herein (the "Advice"), by the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental fillings that
are incorporated by reference in the Prospectus. If so directed by the Company,
each Holder will deliver to the Company all copies, other than permanent file
copies, then in such Holder's possession, of the Prospectus covering such
Restricted Securities that was current at the time of receipt of such notice.
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2.5 Preparation; Reasonable Investigation. In connection with preparation and
filing of each Registration Statement under the Securities Act, the Company will
give the Holders of Restricted Securities registered under such Registration
Statement, their underwriter, if any, and their respective counsel and
accountants, the opportunity to participate in the preparation of such
Registration Statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
to them access to its books and records and such opportunities to discuss the
business, finances and accounts of the Company and its subsidiaries with its
officers, directors and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of such Holders
and such underwriters' respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
2.6 Certain Rights of Holders. The Company will not file any registration
statement under the Securities Act which refers to any Holder of Restricted
Securities by name or otherwise without the prior approval of such Holder, which
consent shall not be unreasonably withheld or delayed.
2.7 Registration Expenses.
(a) All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses (including filings made with the
NASD); (ii) all reasonable fees and expenses of compliance with federal
securities and state Blue Sky or securities laws in connection with compliance
with state Blue Sky or securities laws for up to 40 states; (iii) all expenses
of printing, messenger and delivery services and telephone calls; (iv) all fees
and disbursements of counsel for the Company; and (v) all fees and disbursements
of independent certified public accountants of the Company (including the
expenses of any special audit and comfort letters required by or incident to
such performance), but excluding from this paragraph, fees and expenses of
counsel to the underwriter(s), if any, unless otherwise set forth herein.
(b) Notwithstanding the foregoing, the Company will not be responsible for
any underwriting discounts, commissions or fees attributable to the sale of
Restricted Securities or any legal fees or disbursements (other than any such
fees or disbursements relating to Blue Sky compliance or otherwise as set for
the under Section 2.7(a)) incurred by any underwriter(s) in any underwritten
offering if the underwriter(s) participates in such underwritten offering at the
request of the Holders of Restricted Securities, or any transfer taxes that may
be imposed in connection with a sale or transfer of Restricted Securities.
(c) The Company shall, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Company.
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2.8 Indemnification; Contribution.
(a) The Company agrees to indemnify and hold harmless (i) each Holder
covered by any Registration Statement, (ii) each other Person who participates
as an underwriter in the offering or sale of such securities, (iii) each person,
if any, who controls (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) any such Holder or underwriter (any of the
persons referred to in this clause (iii) being hereinafter referred to as a
"controlling person") and (iv) the respective officers, directors, partners,
employees, representatives and agents of any such Holder or underwriter or any
controlling person (any person referred to in clause (i), (ii), (iii) or (iv)
may hereinafter be referred to as an "indemnified Person"), to the fullest
extent lawful, from and against any and all losses, claims, damages,
liabilities, judgments or expenses, joint or several (or actions or proceedings,
whether commenced or threatened, in respect thereof) (collectively, "Claims"),
to which such indemnified Person may become subject under either Section 15 of
the Securities Act or Section 20 of the Exchange Act or otherwise, insofar as
such Claims arise out of or are based upon, or are caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus (or any amendment or supplement thereto),
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, or
a violation by the Company of the Securities Act or any state securities law, or
any rule or regulation promulgated under the Securities Act or any state
securities law, or any other law applicable to the Company relating to any such
registration or qualification, except insofar as such losses, claims, damages,
liabilities, judgments or expenses of any such indemnified Person; (x) are
caused by any such untrue statement or omission or alleged untrue statement or
omission that is based upon information relating to such indemnified Person
furnished in writing to the Company by or on behalf of any of such indemnified
Person expressly for use therein; (y) with respect to the preliminary
Prospectus, result from the fact that such Holder sold Securities to a person to
whom there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the Prospectus, as amended or supplemented, if the Company
shall have previously furnished copies thereof to such Holder in accordance with
this Agreement and said Prospectus, as amended or supplemented, would have
corrected such untrue statement or omission; or (z) as a result of the use by an
indemnified Person of any Prospectus when, upon receipt of a Black-Out Notice or
a notice from the Company of the existence of any fact of the kind described in
Section 2.4(b)(iv), the indemnified Person or the related Holder was not
permitted to do so. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of any indemnified Person
and shall survive the transfer of such securities by such Holder.
In case any action shall be brought or asserted against any of the
indemnified Persons with respect to which indemnity may be sought against the
Company, such indemnified Person shall promptly notify the Company and the
Company shall assume the defence thereof. Such indemnified Person shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of the indemnified Person unless (i) the employment of such counsel
shall have been specifically authorized in writing by the Company, (ii) the
Company shall have failed to assume the defense and employ counsel or (iii) the
named parties to any such action (including any
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implied parties) include both the indemnified Person and the Company and the
indemnified Person shall have been advised in writing by its counsel that there
may be one or more legal defenses available to it which are different from or
additional to those available to the Company (in which case the Company shall
not have the right to assume the defense of such action on behalf of the
indemnified Person), it being understood, however, that the Company shall not,
in connection with such action or similar or related actions or proceedings
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for all the indemnified Persons,
which firm shall be (x) designated by such indemnified Persons and (y)
reasonably satisfactory to the Company. The Company shall not be liable for any
settlement of any such action or proceeding effected without the Company's prior
written consent, which consent shall not be withheld unreasonably, and the
Company agrees to indemnify and hold harmless any indemnified Person from and
against any loss, claim, damage, liability, judgment or expense by reason of any
settlement of any action effected with the written consent of the Company. The
Company shall not, without the prior written consent of each indemnified Person,
settle or compromise or consent to the entry of judgment on or otherwise seek to
terminate any pending or threatened action, claim, litigation or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not any indemnified Person is a party thereto), unless such
settlement, compromise, consent or termination includes an unconditional release
of each indemnified Person from all liability arising out of such action, claim
litigation or proceeding.
(b) Each Holder of Restricted Securities covered by any Registration
Statement agrees, severally and not jointly, to indemnify and hold harmless the
Company and its directors, officers and any person controlling (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
the Company, and the respective officers, directors, partners, employees,
representatives and agents of each person, to the same extent as the foregoing
indemnity from the Company to each of the indemnified Persons, but only (i) with
respect to actions based on information relating to such Holder furnished in
writing by or on behalf of such Holder expressly for use in any Registration
Statement or Prospectus, and (ii) to the extent of the gross proceeds, if any,
received by such Holder from the sale or other disposition of his or its
Restricted Securities covered by such Registration Statement. In case any action
or proceeding shall be brought against the Company or its directors or officers
or any such controlling person in respect of which indemnity may be sought
against a Holder of Restricted Securities covered by any Registration Statement,
such Holder shall have the rights and duties given the Company in Section 2.8(a)
(except that the Holder may but shall not be required to assume the defense
thereof), and the Company or its directors or officers or such controlling
person shall have the rights and duties given to each Holder by Section 2.8(a).
(c) If the indemnification provided for in this Section 2.8 is unavailable
to an indemnified party under Section 2.7(a) (other than by reason of exceptions
provided in those Sections) in respect of any losses, claims, damages,
liabilities, judgments or expenses referred to therein, then each applicable
indemnifying party (in the case of the Holders severally and not jointly), in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims damages,
liabilities,
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judgments or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Holder on the
other hand from sale of Restricted Securities or (ii) if such allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and such
Holder in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities, judgments or expenses, as well as any
other relevant equitable considerations. The relative fault of the Company on
the one hand and of such Holder 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 the Company or by such Holder and the parties
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid to a party as a result of
the losses, claims, damages, liabilities judgments and expenses referred to
above shall be deemed to include, subject to the limitations set forth in the
second paragraph of Section 2.8(a), any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim.
The Company and each Holder of Restricted Securities covered by any
Registration Statement agree that it would not be just and equitable if
contribution pursuant to this Section 2.8(c) were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation which does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 2.8(c) no Holder (and none of its
related indemnified Persons) shall be required to contribute, in the aggregate,
any amount in excess of the amount by which the dollar amount of proceeds
received by such Holder upon the sale of the Restricted Securities exceeds the
amount of any damages which such Holder has otherwise been required to pay by
reason of such untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentations (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
The indemnity, and contribution provisions contained in this Section 2.8
are in addition to any liability which the indemnifying person may otherwise
have to the indemnified persons referred to above.
2.9 Participation in Underwritten Registrations. No Holder may participate in
any underwritten registration hereunder unless such Holder (a) agrees to sell
such Holder's Restricted Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all reasonable questionnaires,
powers of attorney, indemnities, underwriting agreements, lock-up letters and
other documents required under the terms of such underwriting arrangements.
2.10 Selection of Underwriters. The Holders of Restricted Securities covered by
any Registration Statement who desire to do so may sell such Restricted
Securities in an underwritten offering. In any such underwritten offering, the
investment banker or investment bankers and
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manager or managers that will administer the offering will be selected by the
Company. Such investment bankers and managers are referred to herein as the
"underwriters".
ARTICLE 3
RULE 144
The Company hereby agrees with each Holder of Restricted Securities, for
so long as any of the Restricted Securities remain outstanding and continue to
be "restricted securities" within the meaning of Rule 144 under the Act, and
during any period in which the Company is not subject to Section 13 or 15(d) of
the Exchange Act, to make available to the Holders of Restricted Securities in
connection with any sale thereof, and to any prospective Holder of Class A
Common Stock from such Holders of Restricted Securities or beneficial owner, the
information required by Rule 144 (d)(4) under the Act in order to permit resales
of such Restricted Securities pursuant to Rule 144.
ARTICLE 4
MISCELLANEOUS
4.1 Entire Agreement. This Agreement, together with the Settlement Agreement,
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreement and understandings, both oral
and written, between the parties with respect to the subject matter hereof.
4.2 Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Restricted Securities; provided, however, that this Agreement shall
not inure to the benefit of or be binding upon a successor or assign of a Holder
unless and to the extent such successor or assign acquired Restricted Securities
from such Holder at a time when such Holder could not transfer such Restricted
Securities pursuant to any Registration Statement or pursuant to Rule 144 under
the Securities Act as contemplated by clause (ii) of the definition of
Restricted Securities.
4.3 Notices. All notices and other communications given or made pursuant hereto
or pursuant to any other agreement among the parties, unless otherwise
specified, shall be in writing and shall be deemed to have been duly given or
made if sent by telecopy (with confirmation in writing), delivered personally or
by overnight courier or sent by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the telecopy number, if any, or
address set forth below or at such other addresses as shall be furnished by the
parties by like notice. Notices sent by telecopier shall be effective when
receipt is acknowledged, notices delivered personally or by overnight courier
shall be effective upon receipt and notices sent by registered or certified mail
shall be effective three days after mailing:
if to a Holder: : Xxxx Xxxxxxx
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________________________________________
________________________________
and/or
Xxxxxxxxxxx Xxxxxxx
________________________________________
________________________________
if to the Company: Interiors, Inc
________________________________
Mount Vernon, New York _________________
4.4 Headings. The headings contained in this Agreement are for convenience only
and shall not affect the meaning or interpretation of this Agreement
4.5 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which together shall
be deemed to be one and the same instrument.
--------------------------------------------------------------------------------
4.6 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
choice law provisions.
4.7 7 Specific Enforcement. Each party hereto acknowledges that the remedies at
law of the other parties for a breach or threatened breach of this Agreement
would be inadequate, and, in recognition of this fact, any party to this
Agreement, without posting any bond, and in addition to all other remedies which
may be available, shall be entitled to obtain equitable relief in the form of
specific performance, a temporary restraining order, a temporary to permanent
injunction or any other equitable remedy which may then be available.
4.8 Amendment and Waivers. The provisions of this Agreement may not be amended,
modified or supplemented, and waivers or consents to or departures from the
provisions hereof may not be given unless the Company has obtained the written
consent of Holders of a majority of the Restricted Securities.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
INTERIORS, INC.
By:
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Xxx Xxxx, President
THE HOLDERS
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Name: XXXX XXXXXXX
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Name: XXXXXXXXXXX XXXXXXX
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