FORM OF REGISTRATION RIGHTS AGREEMENT BY AND BETWEEN SUTHERLAND ASSET MANAGEMENT CORPORATION AND CERTAIN PERSONS LISTED ON SCHEDULE 1 HERETO dated as of
Exhibit 10.6
FORM OF REGISTRATION RIGHTS AGREEMENT
BY AND BETWEEN
XXXXXXXXXX ASSET MANAGEMENT CORPORATION
AND
CERTAIN PERSONS LISTED ON SCHEDULE 1 HERETO
dated as of
, 2009
This REGISTRATION RIGHTS AGREEMENT, dated as of , 2009, is made and entered into by
and between Xxxxxxxxxx Asset Management Corporation, a Maryland corporation (the
“Company”), and certain persons listed on Schedule 1 hereto (such persons, in their
capacity as holders of Registrable Shares, the “Holders” and each a “Holder”).
RECITALS
WHEREAS, the Company has prepared a registration statement on Form S-11 (File No.
333-159388) with respect to the issuance and sale of its common stock, par value $0.01 per share
(the “Common Stock”), with the Securities and Exchange Commission (the
“Commission”) under the Securities Act of 1933, as amended (the “Securities Act”),
pursuant to which the Company intends to conduct an underwritten initial public offering of shares
of the Company’s Common Stock (the “IPO”);
WHEREAS, concurrent with the consummation of the IPO, the Company desires to issue and sell,
and the Holders desire to purchase, upon the terms and conditions set forth in the Private
Placement Purchase Agreement, dated as of , 2009 (the “Private Placement Purchase
Agreement”), shares of Common Stock (the “Private Placement Shares”);
WHEREAS, in order to induce the Holders to purchase the Private Placement Shares from the
Company, the Company has agreed to provide to the Holders the registration rights set forth in this
Agreement; and
WHEREAS, the execution of this Agreement is a condition to the closing under the Private
Placement Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants
contained in this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. Definitions. As used in this Agreement, the following terms shall have the
following meanings:
“Agreement” shall mean this Registration Rights Agreement as originally executed and
as amended, supplemented or restated from time to time.
“Board” shall mean the Board of Directors of the Company.
“Business Day” shall mean Monday, Tuesday, Wednesday, Thursday, and Friday that is
not a day on which banking institutions in New York or other applicable places where such act is to
occur are authorized or obligated by applicable law, regulation or executive order to close.
“Contingent Share Private Placement Agreement” shall mean the private placement
agreement, dated as of , 2009, by and among the Company and the Manager pursuant to
which the Company shall sell, and the Manager shall purchase, the Contingent Shares.
“Contingent Shares” shall mean the shares of Common Stock issued and sold pursuant to
the Contingent Share Private Placement Agreement.
“Common Stock” shall have the meaning set forth in the Recitals hereof.
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“Commission” shall have the meaning set forth in the Recitals hereof.
“Company” shall have the meaning set forth in the introductory paragraph hereof.
“Controlling Person” shall have the meaning set forth in Section 5(a) of this
Agreement.
“Depositary” shall mean The Depository Trust Company, or any other depositary
appointed by the Company, provided, however, that such depositary must have an address in the
Borough of Manhattan, in the City of New York.
“End of Suspension Notice” shall have the meaning set forth in Section 3(b) of
this Agreement.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended (or any
corresponding provision of succeeding law) and the rules and regulations thereunder.
“FINRA” shall mean the Financial Industry Regulatory Authority.
“Holder” shall mean each holder of the Common Stock, listed in Schedule 1
hereto, in his, her or its capacity as a holder of Registrable Shares and their direct and indirect
transferees. For purposes of this Agreement, the Company may deem and treat the registered holder
of a Registrable Share as the Holder and absolute owner thereof, unless notified to the contrary in
writing by the registered Holder thereof.
“IPO” shall have the meaning set forth in the Recitals hereof.
“Liabilities” shall have the meaning set forth in Section 5(a)(i) of this
Agreement.
“Management Agreement” shall mean the management agreement, dated as of ,
2009, by and among the Company, Xxxxxxxxxx Asset I, LLC, Xxxxxxxxxx Asset II, LLC and the Manager.
“Manager” shall mean Waterfall Asset Management, LLC, a Delaware limited liability
company.
“Manager Restricted Shares” shall mean the shares of restricted Common Stock granted
to the Manager in respect of its incentive fee pursuant to the Management Agreement.
“Person” shall mean any individual, partnership, corporation, limited liability
company, joint venture, association, trust, unincorporated organization or other governmental or
legal entity.
“Private Placement Purchase Agreement” shall have the meaning set forth in the
Recitals hereof.
“Private Placement Shares” shall have the meaning set forth in the Recitals hereof.
“Registrable Shares” shall mean at any time (i) the Private Placement Shares, (ii) the
Contingent Shares and (iii) the Manager Restricted Shares, together with, in each case, any class
of equity securities of the Company or of a successor to the entire business of the Company which
are issued in exchange for the Private Placement Shares, the Contingent Shares or the Manager
Restricted Shares; provided, however, that such Registrable Shares shall cease to be Registrable
Shares (A) when a Shelf Registration Statement with respect to such Registrable Shares shall have
been declared effective under the Securities Act and all such Registrable Shares shall have been
disposed of pursuant to such Shelf Registration Statement or (B) when such Registrable Shares shall
have ceased to be outstanding.
“Registration Expenses” shall mean (i) the fees and disbursements of counsel and
independent public accountants for the Company incurred in connection with the Company’s
performance of or
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compliance with this Agreement, including the expenses of any special audits or “comfort” letters
required by or incident to such performance and compliance, and any premiums and other costs of
policies of insurance obtained by the Company against liabilities arising out of the sale of any
securities and (ii) all registration, filing and stock exchange fees, all fees and expenses of
complying with securities or “blue sky” laws, all fees and expenses of custodians, transfer agents
and registrars, all printing expenses, messenger and delivery expenses and any fees and
disbursements of one common counsel retained by a majority of the Registrable Shares; provided,
however, that “Registration Expenses” shall not include any out-of-pocket expenses of the
Holders, transfer taxes, underwriting or brokerage commissions or discounts associated with
effecting any sales of Registrable Shares that may be offered, which expenses shall be borne by
each Holder of Registrable Shares on a pro rata basis with respect to the Registrable Shares so
sold.
“Securities Act” shall have the meaning set forth in the Recitals hereof.
“Selling Holders’ Counsel” shall mean counsel for the Holders that is selected by the
Holders holding a majority of the Registrable Shares included in a Shelf Registration Statement and
that is reasonably acceptable to the Company.
“Shelf Registration Statement” shall have the meaning set forth in Section
2(a) of this Agreement.
“Suspension Event” shall have the meaning set forth in Section 3(b) of this
Agreement.
“Suspension Notice” shall have the meaning set forth in Section 3(a) of this
Agreement.
“Underwritten Offering” shall mean a sale of securities of the Company to an
underwriter or underwriters for reoffering to the public.
Section 2. Shelf Registrations.
a. Shelf Registration. The Company agrees to use commercially reasonable efforts to
file with the Commission no later than 12 months following the
closing of the IPO, one or more registration
statements with respect to the Registrable Shares under the Securities Act for the offering to be
made on a continuous basis pursuant to Rule 415 under the Securities Act (the “Shelf
Registration Statement”); provided that any such Shelf
Registration Statement shall not include the Private Placement Shares
prior to 14-months following the closing of the IPO. The Company will use commercially reasonable efforts to cause such Shelf
Registration Statement to be declared effective by the Commission as soon as practicable
after the filing thereof. The Shelf Registration Statement shall be on an appropriate form and the registration
statement and any form of prospectus included therein (or prospectus supplement relating thereto)
shall reflect the plan of distribution or method of sale as the Holders may from time to time
notify the Company.
b. Effectiveness. The Company shall use commercially reasonable efforts to keep the
Shelf Registration Statement continuously effective for the period beginning on the date on which
the Shelf Registration Statement is declared effective and ending on the date that all of the
Registrable Shares registered under the Shelf Registration Statement cease to be Registrable
Shares. During the period that the Shelf Registration Statement is effective, the Company shall
supplement or make amendments to the Shelf Registration Statement, if required by the Securities
Act or if reasonably requested by the Holders (whether or not required by the form on which the
securities are being registered), including to reflect any specific plan of distribution or method
of sale, and shall use its commercially reasonable efforts to have such supplements and amendments
declared effective, if required, as soon as practicable after filing.
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c. Expenses. All Registration Expenses incurred in connection with any shelf
registration shall be borne by the Company, whether or not any Shelf Registration Statement related
thereto becomes effective.
Section 3. Black-Out Periods.
a. Subject to the provisions of this Section 3, the Company shall be permitted, in
limited circumstances, to suspend the use, from time to time, of the prospectus that is part of a
Shelf Registration Statement (and therefore suspend sales of the Registrable Shares under such
Shelf Registration Statement), by providing written notice (a “Suspension Notice”) to the
Selling Holders’ Counsel, if any, and the Holders and by issuing a press release, making a filing
with the Commission or such other means that the Company reasonably believes to be a reliable means
of communication, for such times as the Company reasonably may determine is necessary and advisable
(but in no event for more than an aggregate of 90 days in any rolling 12-month period commencing on
the date of this Agreement or more than 45 consecutive days, except as a result of a refusal by the
Commission to declare any post-effective amendment to the Shelf Registration Statement effective
after the Company has used all commercially reasonable efforts to cause the post-effective
amendment to be declared effective by the Commission, in which case, the Company must terminate the
black-out period immediately following the effective date of the post-effective amendment) if any
of the following events shall occur: (i) a majority of the Board determines in good faith that (A)
the offer or sale of any Registrable Shares would materially impede, delay or interfere with any
proposed financing, offer or sale of securities, acquisition, corporate reorganization or other
material transaction involving the Company, (B) after the advice of counsel, the sale of
Registrable Shares pursuant to the Shelf Registration Statement would require disclosure of
non-public material information not otherwise required to be disclosed under applicable law, and
(C) (x) the Company has a bona fide business purpose for preserving the confidentiality of such
transaction, (y) disclosure would have a material adverse effect on the Company or the Company’s
ability to consummate such transaction, or (z) such transaction renders the Company unable to
comply with Commission requirements, in each case under circumstances that would make it
impractical or inadvisable to cause the Shelf Registration Statement (or such filings) to become
effective or to promptly amend or supplement the Shelf Registration Statement on a post effective
basis, as applicable; or (ii) a majority of the Board determines in good faith, upon the advice of
counsel, that it is in the Company’s best interest or it is required by law, rule or regulation to
supplement the Shelf Registration Statement or file a post-effective amendment to the Shelf
Registration Statement in order to ensure that the prospectus included in the Shelf Registration
Statement (1) contains the information required under Section 10(a)(3) of the Securities Act; (2)
discloses any facts or events arising after the effective date of the Shelf Registration Statement
(or of the most recent post-effective amendment) that, individually or in the aggregate, represents
a fundamental change in the information set forth therein; or (3) discloses any material
information with respect to the plan of distribution that was not disclosed in the Shelf
Registration Statement or any material change to such information. Upon the occurrence of any such
suspension, the Company shall use its commercially reasonable efforts to cause the Shelf
Registration Statement to become effective or to promptly amend or supplement the Shelf
Registration Statement on a post effective basis or to take such action as is necessary to make
resumed use of the Shelf Registration Statement as soon as possible.
b. In the case of an event that causes the Company to suspend the use of a Shelf Registration
Statement as set forth in paragraph (a) above (a “Suspension Event”), the Company shall
give a Suspension Notice to the Selling Holders’ Counsel, if any, and the Holders to suspend sales
of the Registrable Shares and such notice shall state generally the basis for the notice and that
such suspension shall continue only for so long as the Suspension Event or its effect is continuing
and the Company is using its commercially reasonable efforts and taking all reasonable steps to
terminate suspension of the use of the Shelf Registration Statement as promptly as possible. A
Holder shall not effect any sales of the Registrable Shares pursuant to such Shelf Registration
Statement (or such filings) at any time after it has
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received a Suspension Notice from the Company and prior to receipt of an End of Suspension
Notice (as defined below). If so directed by the Company, each Holder will deliver to the Company
(at the expense of the Company) all copies other than permanent file copies then in such Holder’s
possession of the prospectus covering the Registrable Shares at the time of receipt of the
Suspension Notice. The Holders may recommence effecting sales of the Registrable Shares pursuant
to the Shelf Registration Statement (or such filings) following further written notice to such
effect (an “End of Suspension Notice”) from the Company, which End of Suspension Notice
shall be given by the Company to the Holders and to the Selling Holders’ Counsel, if any, promptly
following the conclusion of any Suspension Event and its effect.
c. Notwithstanding any provision herein to the contrary, if the Company shall give a
Suspension Notice with respect to any Shelf Registration Statement pursuant to this Section
3, the Company agrees that it shall extend the period of time during which such Shelf
Registration Statement shall be maintained effective pursuant to this Agreement by the number of
days during the period from the date of receipt by the Holders of the Suspension Notice to and
including the date of receipt by the Holders of the End of Suspension Notice and provide copies of
the supplemented or amended prospectus necessary to resume sales, with respect to each Suspension
Event; provided that such period of time shall not be extended beyond the date that Common Stock
covered by such Shelf Registration Statement are no longer Registrable Shares.
Section 4. Registration Procedures.
a. In connection with the filing of any Shelf Registration Statement as provided in this
Agreement, the Company shall use commercially reasonable efforts to, as expeditiously as reasonably
practicable:
(i) prepare and file with the Commission the Shelf Registration Statement, within the
relevant time period specified in Section 2(a), on the appropriate form under the
Securities Act, which form (1) shall be selected by the Company, (2) shall be available for
the registration and sale of the Registrable Shares by the selling Holders thereof, (3)
shall comply as to form in all material respects with the requirements of the applicable
form and include or incorporate by reference all financial statements required by the
Commission to be filed therewith or incorporated by reference therein, and (4) shall comply
in all respects with the requirements of Regulation S-T under the Securities Act, and
otherwise comply with its obligations under Section 2 hereof;
(ii) prepare and file with the Commission such amendments and post-effective amendments
to each Shelf Registration Statement as may be necessary under applicable law to keep such
Shelf Registration Statement effective for the applicable period; and cause each prospectus
to be supplemented by any required prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provision then in force) under the Securities Act and
comply with the provisions of the Securities Act, the Exchange Act and the rules and
regulations thereunder applicable to them with respect to the disposition of all securities
covered by each Shelf Registration Statement during the applicable period in accordance with
the intended method or methods of distribution by the selling Holders thereof;
(iii) (1) notify each Holder of Registrable Shares, at least five Business Days after
filing, that a Shelf Registration Statement with respect to the Registrable Shares has been
filed and advising such Holders that the distribution of Registrable Shares will be made in
accordance with any method or combination of methods legally available by the Holders of any
and all Registrable Shares; (2) furnish to each Holder of Registrable Shares and to each
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underwriter of an Underwritten Offering of Registrable Shares, if any, without charge,
as many copies of each prospectus, including each preliminary prospectus, and any amendment
or supplement thereto and such other documents as such Holder or underwriter may reasonably
request, including financial statements and schedules in order to facilitate the public sale
or other disposition of the Registrable Shares; and (3) hereby consent to the use of the
prospectus or any amendment or supplement thereto by each of the selling Holders of
Registrable Shares in connection with the offering and sale of the Registrable Shares
covered by the prospectus or any amendment or supplement thereto;
(iv) use its commercially reasonable efforts to register or qualify the Registrable
Shares under all applicable state securities or “blue sky” laws of such jurisdictions as any
Holder of Registrable Shares covered by a Shelf Registration Statement and each underwriter
of an Underwritten Offering of Registrable Shares shall reasonably request by the time the
applicable Shelf Registration Statement is declared effective by the Commission, and do any
and all other acts and things which may be reasonably necessary or advisable to enable each
such Holder and underwriter to consummate the disposition in each such jurisdiction of such
Registrable Shares owned by such Holder; provided, however, that the Company shall not be
required to (1) qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to qualify but for this Section
4(a)(iv), or (2) take any action which would subject it to general service of process or
taxation in any such jurisdiction where it is not then so subject;
(v) notify promptly each Holder of Registrable Shares under a Shelf Registration
Statement and, if requested by such Holder, confirm such advice in writing promptly at the
address determined in accordance with Section 8(d) of this Agreement (1) when a
Shelf Registration Statement has become effective and when any post-effective amendments and
supplements thereto become effective, (2) of any request by the Commission or any state
securities authority for post-effective amendments and supplements to a Shelf Registration
Statement and prospectus or for additional information after the Shelf Registration
Statement has become effective, (3) of the issuance by the Commission or any state
securities authority of any stop order suspending the effectiveness of a Shelf Registration
Statement or the initiation of any proceedings for that purpose, (4) if, between the
effective date of a Shelf Registration Statement and the closing of any sale of Registrable
Shares covered thereby, the representations and warranties of the Company contained in any
underwriting agreement, securities sales agreement or other similar agreement, if any,
relating to the offering cease to be true and correct in all material respects, (5) of the
happening of any event or the discovery of any facts during the period a Shelf Registration
Statement is effective as a result of which such Shelf Registration Statement or the related
prospectus or any document incorporated by reference therein contains any untrue statement
of a material fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or, in the case of the prospectus,
contains any untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (which information shall be
accompanied by an instruction to suspend the use of the Shelf Registration Statement and the
prospectus (such instruction to be provided in the same manner as a Suspension Notice) until
the requisite changes have been made, at which time notice of the end of suspension shall be
delivered in the same manner as an End of Suspension Notice), (6) of the receipt by the
Company of any notification with respect to the suspension of the qualification of the
Registrable Shares, for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose and (7) of the filing of a post-effective amendment to such
Shelf Registration Statement;
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(vi) furnish Selling Holders’ Counsel, if any, copies of any comment letters relating
to the selling Holders received from the Commission or any other request by the Commission
or any state securities authority for amendments or supplements to a Shelf Registration
Statement and prospectus or for additional information relating to the selling Holders;
(vii) make every reasonable effort to obtain the withdrawal of any order suspending the
effectiveness of a Shelf Registration Statement at the earliest possible moment;
(viii) furnish to each Holder of Registrable Shares, and each underwriter, if any,
without charge, at least one conformed copy of each Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and schedules (without
documents incorporated therein by reference and all exhibits thereto, unless requested);
(ix) cooperate with the selling Holders to facilitate the timely preparation and
delivery of certificates representing Registrable Shares to be sold and not bearing any
restrictive legends; and enable such Registrable Shares to be in such denominations and
registered in such names as the selling Holders or the underwriters, if any, may reasonably
request at least three Business Days prior to the closing of any sale of Registrable Shares;
(x) upon the occurrence of any event or the discovery of any facts, as contemplated by
Sections 4(a)(v)(5) and 4(a)(v)(6) hereof, as promptly as practicable after
the occurrence of such an event, use its best efforts to prepare a supplement or
post-effective amendment to the Shelf Registration Statement or the related prospectus or
any document incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Shares, such prospectus will
not contain at the time of such delivery any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or will remain so qualified, as
applicable. At such time as such public disclosure is otherwise made or the Company
determines that such disclosure is not necessary, in each case to correct any misstatement
of a material fact or to include any omitted material fact, the Company agrees promptly to
notify each Holder of such determination and to furnish each Holder such number of copies of
the prospectus as amended or supplemented, as such Holder may reasonably request;
(xi) within a reasonable time prior to the filing of any Shelf Registration Statement,
any prospectus, any amendment to a Shelf Registration Statement or amendment or supplement
to a prospectus, provide copies of such document to the Selling Holders’ Counsel, if any, on
behalf of such Holders, and make representatives of the Company as shall be reasonably
requested by the Holders of Registrable Shares available for discussion of such document;
(xii) obtain a CUSIP number for the Registrable Shares not later than the effective
date of a Shelf Registration Statement, and provide the Company’s transfer agent with
printed certificates for the Registrable Shares, in a form eligible for deposit with the
Depositary, in each case, to the extent necessary or applicable;
(xiii) enter into agreements (including underwriting agreements) and take all other
customary appropriate actions in order to expedite or facilitate the disposition of such
Registrable Shares whether or not an underwriting agreement is entered into and whether or
not the registration is an underwritten registration:
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(A) make such representations and warranties to the Holders of such Registrable
Shares and the underwriters, if any, in form, substance and scope as are customarily
made by issuers to underwriters in similar Underwritten Offerings as may be
reasonably requested by them;
(B) obtain opinions of counsel to the Company and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably satisfactory
to any managing underwriter(s) and their counsel) addressed to the underwriters, if
any (and in the case of an underwritten registration, each selling Holder), covering
the matters customarily covered in opinions requested in Underwritten Offerings and
such other matters as may be reasonably requested by the underwriter(s);
(C) obtain “comfort” letters and updates thereof from the Company’s independent
registered public accounting firm (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company or of any business
acquired by the Company for which financial statements are, or are required to be,
included in the Shelf Registration Statement) addressed to the underwriter(s), if
any, and use reasonable efforts to have such letter addressed to the selling Holders
in the case of an underwritten registration (to the extent consistent with Statement
on Auditing Standards No. 72 of the American Institute of Certified Public
Accounts), such letters to be in customary form and covering matters of the type
customarily covered in “comfort” letters to underwriters in connection with similar
Underwritten Offerings;
(D) enter into a securities sales agreement with the Holders and an agent of
the Holders providing for, among other things, the appointment of such agent for the
selling Holders for the purpose of soliciting purchases of Registrable Shares, which
agreement shall be in form, substance and scope customary for similar offerings;
(E) if an underwriting agreement is entered into, cause the same to set forth
indemnification provisions and procedures substantially equivalent to the
indemnification provisions and procedures set forth in Section 5 hereof with
respect to the underwriters and all other parties to be indemnified pursuant to said
Section or, at the request of any underwriters, in the form customarily provided to
such underwriters in similar types of transactions; and
(F) deliver such documents and certificates as may be reasonably requested and
as are customarily delivered in similar offerings to the Holders of a majority in
principal amount of the Registrable Shares being sold and the managing underwriters,
if any;
(xiv) make available for inspection by any underwriter participating in any disposition
pursuant to a Shelf Registration Statement, Selling Holders’ Counsel and any accountant
retained by a majority in principal amount of the Registrable Shares being sold, all
financial and other records, pertinent corporate documents and properties or assets of the
Company reasonably requested by any such persons, and cause the respective officers,
directors, employees, and any other agents of the Company to supply all information
reasonably requested by any such representative, underwriter, counsel or accountant in
connection with a Shelf Registration Statement, and make such representatives of the Company
available for discussion of such documents as shall be reasonably requested by the Company;
provided, however, that the Selling Holders’ Counsel, if any, and the representatives of any
underwriters will use commercially reasonable efforts, to the extent reasonably practicable,
to coordinate the foregoing
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inspection and information gathering and to not materially disrupt the Company’s
business operations;
(xv) a reasonable time prior to filing any Shelf Registration Statement, any prospectus
forming a part thereof, any amendment to such Shelf Registration Statement, or amendment or
supplement to such prospectus, provide copies of such document to the underwriter(s) of an
Underwritten Offering of Registrable Shares; within five Business Days after the filing of
any Shelf Registration Statement, provide copies of such Shelf Registration Statement to
Selling Holders’ Counsel; make such changes in any of the foregoing documents prior to the
filing thereof, or in the case of changes received from Selling Holders’ Counsel by filing
an amendment or supplement thereto, as the underwriter or underwriters, or in the case of
changes received from Selling Holders’ Counsel relating to the selling Holders or the plan
of distribution of Registrable Shares, as Selling Holders’ Counsel, reasonably requests; not
file any such document in a form to which any underwriter shall not have previously been
advised and furnished a copy of or to which the Selling Holders’ Counsel, if any, on behalf
of the Holders of Registrable Shares, or any underwriter shall reasonably object; not
include in any amendment or supplement to such documents any information about the selling
Holders or any change to the plan of distribution of Registrable Shares that would limit the
method of distribution of the Registrable Shares unless Selling Holders’ Counsel has been
advised in advance and has approved such information or change; and make the representatives
of the Company available for discussion of such document as shall be reasonably requested by
the Selling Holders’ Counsel, if any, on behalf of such Holders, Selling Holders’ Counsel or
any underwriter;
(xvi) furnish to each Holder, if it has a due diligence defense under the Securities
Act, and to each underwriter, if any, a signed counterpart, addressed to such Holder or
underwriter, of (i) an opinion or opinions of counsel to the Company and (ii) if eligible
under SAS 72, a comfort letter or comfort letters from the Company’s independent public
accountants, each in customary form and covering such matters of the type customarily
covered by opinions or comfort letters, as the case may be, as the Holders of a majority of
the Registrable Shares included in such offering or the managing underwriter or underwriters
therefor reasonably requests;
(xvii) use its best efforts to cause all Registrable Shares to be listed on any
national securities exchange;
(xviii) otherwise comply with all applicable rules and regulations of the Commission
and make available to its security holders, as soon as reasonably practicable, an earnings
statement covering at least 12 months which shall satisfy the provisions of Section 11(a) of
the Securities Act and Rule 158 thereunder;
(xix) cooperate and assist in any filings required to be made with the FINRA and in the
performance of any due diligence investigation by any underwriter and its counsel (including
any “qualified independent underwriter” that is required to be retained in accordance with
the rules and regulations of the FINRA); and
(xx) the Company may (as a condition to a Holder’s participation in a Shelf
Registration) require each Holder of Registrable Shares to furnish to the Company such
information regarding the Holder and the proposed distribution by such Holder of such
Registrable Shares as the Company may from time to time reasonably request in writing.
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Each Holder agrees that, upon receipt of any notice from the Company of the happening of any
event or the discovery of any facts of the type described in Section 4(a)(v) hereof, such
Holder will forthwith discontinue disposition of Registrable Shares pursuant to a Shelf
Registration Statement relating to such Registrable Shares until such Holder’s receipt of the
copies of the supplemented or amended prospectus contemplated by Section 4(a)(v) hereof,
and, if so directed by the Company, such Holder will deliver to the Company (at the Company’s
expense) all copies in such Holder’s possession, other than permanent file copies then in such
Holder’s possession, of the prospectus covering such Registrable Shares current at the time of
receipt of such notice.
Section 5. Indemnification.
a. Indemnification by the Company. The Company agrees to indemnify and hold harmless
each Holder, and the respective officers, directors, partners, employees, representatives and
agents of any such Person, and each Person (a “Controlling Person”), if any, who controls
(within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) any of
the foregoing Persons, as follows:
(i) against any and all loss, liability, claim, damage, judgment, actions, other
liabilities and expense whatsoever (the “Liabilities”), as incurred, arising out of
any untrue statement or alleged untrue statement of a material fact contained in any Shelf
Registration Statement (or any amendment or supplement thereto) pursuant to which
Registrable Shares were registered under the Securities Act, including all documents
incorporated therein by reference, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements therein not
misleading, or arising out of any untrue statement or alleged untrue statement of a material
fact contained in any prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom at such date of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not
misleading;
(ii) against any and all Liabilities, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue statement or omission;
provided that (subject to Section 5(d) below) any such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including the fees and
disbursements of counsel chosen by any indemnified party), reasonably incurred in
investigating, preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid under subparagraph
(i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any Liabilities to the extent
arising out of any untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the Company by the Holder
expressly for use in a Shelf Registration Statement (or any amendment thereto) or any prospectus
(or any amendment or supplement thereto).
b. Indemnification by the Holders. Each Holder severally, but not jointly, agrees to
indemnify and hold harmless the Company and the other selling Holders, and each of their respective
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officers, directors, partners, employees, representatives and agents, and each of their
respective Controlling Persons, against any and all Liabilities described in the indemnity
contained in Section 5(a) hereof, as incurred, but only with respect to untrue statements
or omissions, or alleged untrue statements or omissions, made in the Shelf Registration Statement
(or any amendment thereto) or any prospectus included therein (or any amendment or supplement
thereto) in reliance upon and in conformity with written information with respect to such Holder
furnished to the Company by such Holder expressly for use in the Shelf Registration Statement (or
any amendment thereto) or such prospectus (or any amendment or supplement thereto); provided,
however, that no such Holder shall be liable for any claims hereunder in excess of the amount of
net proceeds received by such Holder from the sale of Registrable Shares pursuant to such Shelf
Registration Statement.
c. Notices of Claims, etc. Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action or proceeding commenced against it
in respect of which indemnity may be sought hereunder, but failure so to notify an indemnifying
party shall not relieve such indemnifying party from any liability hereunder to the extent it is
not materially prejudiced as a result thereof and in any event shall not relieve it from any
liability which it may have otherwise than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of such action; provided, however, that
counsel to the indemnifying party shall not (except with the consent of the indemnified party) also
be counsel to the indemnified party. In no event shall the indemnifying party or parties be liable
for the fees and expenses of more than one counsel (in addition to any local counsel) separate from
their own counsel for all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whosoever in respect of which indemnification or contribution could be
sought under this Section 5 (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an unconditional
release of each indemnified party from all liability arising out of such litigation, investigation,
proceeding or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
d. Indemnification Payments. If at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by
Section 5(a)(ii) effected without its written consent if (i) such settlement is entered
into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at least 30 days
prior to such settlement being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior to the date of such
settlement.
e. Contribution. If the indemnification provided for in this Section 5 is for
any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any
Liabilities referred to therein, then each indemnifying party shall contribute to the aggregate
amount of such Liabilities incurred by such indemnified party, as incurred, in such proportion as
is appropriate to reflect the relative fault of the Company on the one hand and the Holders on the
other hand in connection with the statements or omissions which resulted in such Liabilities, as
well as any other relevant equitable considerations.
The relative fault of the Company on the one hand and the Holders on the other hand shall be
determined by reference to, among other things, whether any such untrue or alleged untrue statement
of a
12
material fact or omission or alleged omission to state a material fact relates to information
supplied by the Company or the Holders and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Holders agree that it would not be just and equitable if contribution
pursuant to this Section 5 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred to above in this
Section 5. The aggregate amount of Liabilities incurred by an indemnified party and
referred to above in this Section 5 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission.
No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
For purposes of this Section 5, each Person, if any, who controls the a Holder within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the
same rights to contribution as a Holder, and each director of the Company, and each Person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act shall have the same rights to contribution as the Company.
Section 6. Market Stand-Off Agreement. Each Holder hereby agrees that it shall not,
directly or indirectly sell, offer to sell (including without limitation any short sale), pledge,
contract to sell, sell any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant for the sale of or otherwise dispose of or transfer any
Registrable Shares or other Common Stock or any securities convertible into or exchangeable or
exercisable for Common Stock then owned by such Holder (other than to permitted transferees of the
Holder who agree to be similarly bound) for up to 60 days following the date of an underwriting
agreement with respect to an underwritten public offering of the Company’s securities; provided,
however, that:
a. the restrictions above shall not apply to Registrable Shares sold on the Holder’s behalf to
the public in an Underwritten Offering pursuant to such Shelf Registration Statement;
b. all officers and directors of the Company then holding Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock enter into similar agreements for
not less than the entire time period required of the Holders hereunder; and
c. the Holders shall be allowed any concession or proportionate release allowed to any (i)
officer, (ii) director, (iii) other holder of the Company’s Common Stock that entered into similar
agreements (with such proportion being determined by dividing the number of shares being released
with respect to such officer, director or other holder of the Company’s Common Stock by the total
number of issued and outstanding shares held by such officer, director or holder).
In order to enforce the foregoing covenant, the Company shall have the right to place
restrictive legends on the certificates representing the securities subject to this Section
6 and to impose stop transfer instructions with respect to the Registrable Shares and such
other securities of each Holder (and the securities of every other Person subject to the foregoing
restriction) until the end of such period.
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Section 7. Termination; Survival. The rights of each Holder under this Agreement
shall terminate upon the date that all of the Registrable Shares cease to be Registrable Shares.
Notwithstanding the foregoing, the obligations of the parties under Sections 5 and
8 of this Agreement shall remain in full force and effect following such time.
Section 8. Miscellaneous.
a. Covenants Relating To Rule 144. For so long as the Company is subject to the
reporting requirements of Section 13 or 15 of the Securities Act, the Company covenants that it
will file the reports required to be filed by it under the Securities Act and Section 13(a) or
15(d) of the Exchange Act and the rules and regulations adopted by the Commission thereunder. If
the Company ceases to be so required to file such reports, the Company covenants that it will upon
the request of any Holder of Registrable Shares (a) make publicly available such information as is
necessary to permit sales pursuant to Rule 144 under the Securities Act, (b) deliver such
information to a prospective purchaser as is necessary to permit sales pursuant to Rule 144A under
the Securities Act and it will take such further action as any Holder of Registrable Shares may
reasonably request, and (c) take such further action that is reasonable in the circumstances, in
each case to the extent required from time to time to enable such Holder to sell its Registrable
Shares without registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such Rule may be amended from time to time,
(ii) Rule 144A under the Securities Act, as such rule may be amended from time to time, or (iii)
any similar rules or regulations hereafter adopted by the Commission. Upon the request of any
Holder of Registrable Shares, the Company will deliver to such Holder a written statement as to
whether it has complied with such requirements (at any time after 90 days after the effective date
of the first Shelf Registration Statement filed by the Company for an offering of its Common Stock
to the general public) and of the Securities Act and the Exchange Act (at any time after it has
become subject to the reporting requirements of the Exchange Act), a copy of the most recent annual
and quarterly report(s) of the Company, and such other reports, documents or stockholder
communications of the Company, and take such further actions consistent with this Section
8(a), as a Holder may reasonably request in availing itself of any rule or regulation of the
Commission allowing a Holder to sell any such Registrable Shares without registration.
b. No Inconsistent Agreements. The Company has not entered into and the Company will
not after the date of this Agreement enter into any agreement which is inconsistent with the rights
granted to the Holders of Registrable Shares pursuant to this Agreement or otherwise conflicts with
the provisions of this Agreement. The rights granted to the Holders hereunder do not and will not
for the term of this Agreement in any way conflict with the rights granted to the holders of the
Company’s other issued and outstanding securities under any such agreements.
c. Amendments and Waivers. The provisions of this Agreement may be amended or waived
at any time only by the written agreement of the Company and the Holders of a majority of the
Registrable Shares; provided, however, that the provisions of this Agreement may not be amended or
waived without the consent of the Holders of all the Registrable Shares adversely affected by such
amendment or waiver if such amendment or waiver adversely affects a portion of the Registrable
Shares but does not so adversely affect all of the Registrable Shares; provided, further, that the
provisions of the preceding provision may not be amended or waived except in accordance with this
sentence. Any waiver, permit, consent or approval of any kind or character on the part of any such
Holders of any provision or condition of this Agreement must be made in writing and shall be
effective only to the extent specifically set forth in writing. Any amendment or waiver effected
in accordance with this paragraph shall be binding upon each Holder of Registrable Shares and the
Company.
14
d. Notices. All notices and other communications provided for or permitted hereunder
shall be made in writing by hand delivery, registered first-class mail, facsimile or any courier
guaranteeing overnight delivery (a) if to a Holder, at the most current address given by such
Holder to the Company by means of a notice given in accordance with the provisions of this
Section 8(d) and (b) if to the Company, to Xxxxxxxxxx Asset Management Corporation, 0000
Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, Attention:
(facsimile: ).
All such notices and communications shall be deemed to have been duly given: at the time
delivered by hand, if personally delivered; two Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt is acknowledged, if sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and kept on file by the
sending party) and on the next Business Day if timely delivered to an air courier guaranteeing
overnight delivery.
e. Successor and Assigns. This Agreement shall inure to the benefit of and be binding
upon the successors, assigns and transferees of each of the parties, including, without limitation
and without the need for an express assignment, subsequent Holders; provided, however, that nothing
herein shall be deemed to permit any assignment, transfer or other disposition of Registrable
Shares in violation of the terms of the Private Placement Purchase Agreement. If any transferee of
any Holder shall acquire Registrable Shares, in any manner, whether by operation of law or
otherwise, such Registrable Shares shall be held subject to all of the terms of this Agreement, and
by taking and holding such Registrable Shares such person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this Agreement, including
the restrictions on resale set forth in this Agreement and, if applicable, the Private Placement
Purchase Agreement, and such person shall be entitled to receive the benefits hereof.
f. Specific Enforcement. Without limiting the remedies available to the Holders, the
Company acknowledges that any failure by the Company to comply with its obligations under
Section 2 hereof may result in material irreparable injury to the Holders for which there
is no adequate remedy at law, that it would not be possible to measure damages for such injuries
precisely and that, in the event of any such failure, a Holder may obtain such relief as may be
required to specifically enforce the Company’s obligations under Section 2 hereof.
g. Counterparts. This Agreement may be executed in any number of counterparts and by
the parties hereto in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same agreement.
h. Headings. The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.
i. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
j. Severability. In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable,
the validity, legality and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired thereby.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date
first written above.
| XXXXXXXXXX ASSET MANAGEMENT CORPORATION, a Maryland corporation |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| HOLDERS |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
SCHEDULE 1
HOLDERS
| Number of Shares of | ||||
| Name of the Holder | Common Stock Held | Address of the Holder | ||
Sch.1
