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EXHIBIT 10(d)(2)
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement"), dated as of September
6, 1996, is executed by and between ErgoBilt, Inc., a Texas corporation (the
"Company"), and Summit Partners Management Co. ("Summit").
WHEREAS, as of the date of this Agreement, Summit owns of record and
beneficially Thirty-Four Thousand (34,000) shares (the "Shares") of the
Company's Common Stock, par value $0.10 (the "Common Stock"); and
WHEREAS, Summit shall also acquire warrants (the "Warrants') to purchase
additional Shares; and
WHEREAS, Summit shall also receive additional Shares upon conversion of
that certain Convertible Promissory Note dated September 6, 1996, executed by
the Company in favor of Summit (the "Note"); and
WHEREAS, the parties have agreed that the Shares and all shares acquired
by Summit under the Warrants and upon conversion of the Note shall have certain
registration rights as set forth more fully below.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth herein, the parties agree as follows:
1.0 REGISTRATION RIGHTS.
Summit shall have the following registration rights with respect
to the Shares, the shares of Common Stock issued upon conversion of the Note
and any securities issued or issuable in respect of the Shares by way of stock
dividends or stock splits or in connection with a combination of shares,
recapitalization, reclassification, merger, share exchange or consolidation,
and any other securities issued pursuant to any other pro rata distribution
with respect to the Shares (the "Registrable Shares").
1.1 PIGGY-BACK RIGHTS. Subsequent to its initial public
offering of Common Stock, and subject to any restrictions imposed by "lock-up
agreements" and other arrangements, whenever the Company proposes to file a
registration statement ("Registration Statement") other than on Form S-4 or
S-8, the Company shall, prior to such filing, give written notice to Summit of
its intention to do so. Upon the written request of Summit given within twenty
(20) days after the Company provides such notice (which request shall state the
intended method of disposition of such shares), the Company shall use its best
efforts to cause all shares which the Company has been requested by Summit to
register to be registered under the Securities Act of 1933, as amended (the
"1933 Act"), to the extent necessary to permit their sale or other disposition
in accordance with the intended methods of distribution specified in the
request of Summit; provided that the Company shall have the right to postpone
or withdraw any registration effected pursuant to this Section
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without obligation to Summit. If, in the opinion of the managing underwriter,
it is appropriate because of marketing factors to limit or exclude the number
of Registrable Shares to be included in the offering, then the Company shall be
required to include in the registration only that number of Registrable Shares
which the managing underwriter believes should be included therein; provided
that any such exclusion shall be effected pro rata based upon the number of
shares requested to be included in such registration by all shareholders having
"piggy-back" rights similar to those granted to Summit hereunder. In
connection with any registration under this Section 1.1, the Company shall not
be required to include the Registrable Shares in such registration, unless
Summit accepts the terms of the underwriting as agreed upon between the Company
and the underwriters selected by the Company. The Company shall not grant any
"piggy-back" registration rights superior to those of Summit hereunder.
1.2 SHELF REGISTRATION. In the event the Company files a
"shelf" registration (the "Shelf Registration") statement on an appropriate
form under the 1933 Act covering any shares of Common Stock owned by other
shareholders of the Company, such Shelf Registration shall cover the
Registrable Shares. Summit agrees to execute such lock-up agreements
containing substantially the same terms and conditions applicable to the
executive officers and principal shareholders of the Company as the managing
underwriters may require in connection with any underwritten public offering
during the time in which the Shelf Registration is effective.
1.3 TERMINATION OF STATUS AS REGISTRABLE SECURITIES. Summit's
Registrable Shares shall cease to be Registrable Shares when (a) a Shelf
Registration becomes effective under the 1933 Act and such securities shall
have been disposed of pursuant to the Shelf Registration; or (b) the Shares
shall have been sold.
1.4 REGISTRATION PROCEDURES. In connection with the Company's
obligation to effect the registration of Registrable Shares, the Company will
(i) furnish to Summit copies of any prospectus to facilitate the public sale or
other disposition of Summit's Shares, (ii) use its best efforts to cause all
such Registrable Shares to be listed on each securities exchange on which
similar securities issued by the Company are then listed or quoted and on any
inter-dealer quotation system on which similar securities issued by the Company
are then quoted, and (iii) cooperate in any filings to be made with the
National Association of Securities Dealers, Inc. ("NASD").
1.5 EXPENSES OF REGISTRATION. All expenses incurred in
effecting any registration pursuant to this Agreement, including, without
limitation, registration and filing fees, printing expenses, expenses of
compliance with blue sky laws, fees and disbursements of counsel for the
Company and expenses of any audits incidental to or required by any such
registration, shall be borne by the Company, except that all Securities and
Exchange Commission ("SEC"), NASD and state securities registration or filing
fees applicable to the Shares shall be paid equally by the Company and by
Summit, and the underwriting discounts and commissions attributable to
Registrable Shares being sold by Summit shall be borne by Summit.
1.6 SUMMIT'S COVENANTS. Summit shall provide (in writing and
signed by Summit and stated to be specifically for use in the related
Registration Statement, preliminary prospectus, prospectus or other document
incident thereto) all such information and materials,
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including, without limitation, the intended plan of distribution, and shall
take all such action as may be required in order to permit the Company to
comply with all applicable requirements of the SEC and any applicable state
securities laws and to obtain any desired acceleration of the effective date of
any Registration Statement prepared and filed by the Company pursuant to this
Agreement.
Summit shall, if requested by the Company or the managing
underwriters in connection with any proposed registration and distribution
pursuant to this Agreement, (i) agree to sell the Registrable Shares on the
basis provided in any underwriting arrangements entered into in connection
therewith, and (ii) complete and execute all questionnaires, powers of
attorney, indemnities, underwriting agreement and other documents customary in
similar offerings.
1.7 WARRANT REGISTRATION RIGHTS. The registration rights for
the shares of Common Stock issuable upon exercise of the Warrants shall contain
identical terms and conditions as those contained in the warrant issued to the
managing underwriter of the Company's initial public offering of Common Stock.
2.0 INDEMNIFICATION.
2.1 INDEMNIFICATION BY THE COMPANY. To the extent permitted
by law, the Company will indemnify Summit and each underwriter and selling
broker of the Registrable Shares so registered (collectively, "Indemnitees")
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering circular or
other document incident to any registration, qualification or compliance (or in
any related registration statement, notification or the like) 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 in light of
the circumstances in which they were made, or any violation by the Company of
any rule or regulation promulgated under the 1933 Act and/or the Securities
Exchange Act of 1934, as amended (the "1934 Act"), applicable to the Company
and relating to action or inaction required of the Company in connection with
any such registration, qualification or compliance. The Company will reimburse
each such Indemnitee for any legal and any other expenses reasonably incurred
in connection with investigating or defending any such claim, loss, damage,
liability or action; provided, however, that the Company will not be liable in
any such case to the extent that any such claim, loss, damage or liability is
caused by any untrue statement (or alleged untrue statement) or omission (or
alleged omission) so made in conformity with written information furnished to
the Company by an instrument duly executed by such Indemnitees and stated to be
specifically for use in such prospectus, offering circular or other document,
and except that the foregoing indemnity agreement is subject to the condition
that, insofar as it relates to any such untrue statement (or alleged untrue
statement) or omission (or alleged omission) made in the preliminary prospectus
but eliminated or remedied in the amended prospectus on file with the SEC at
the time the registration statement becomes effective or in the amended
prospectus filed with the SEC at the time the registration statement becomes
effective or in the amended prospectus filed with the SEC pursuant to Rule
424(b) (the "Final Prospectus"), then the Company shall have no liability.
Such indemnity agreement shall not inure to the benefit of any underwriter, or
any Indemnitee if there is no underwriter, if a copy of the Final Prospectus
was not furnished to the person or entity asserting the
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loss, liability, claim or damage at or prior to the time such furnishing is
required by the 0000 Xxx. The obligation of the Company under this subsection
shall survive the completion of any offering of Registrable Shares in a
registration statement under this Agreement, or otherwise.
2.2 INDEMNIFICATION BY SUMMIT. To the extent permitted by
law, Summit shall indemnify and hold the Company, and its respective directors
and officers who participated in preparation of the Final Prospectus, and each
Underwriter and selling broker so registered (collectively, "Company
Indemnitees"), against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular or other document incident to any registration, qualification or
compliance (or in any related registration statement, notification or the like)
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
in light of the circumstances in which they were made, or any violation by the
Company of any rule or regulation promulgated under the 1933 Act and/or the
1934 Act, applicable to the Company resulting from any written information
provided to the Company by Summit. Summit will reimburse each such Company
Indemnitee in the same manner that the Company is required to indemnify Summit
under subsection 2.1 above.
2.3 INDEMNIFICATION PROCEEDINGS. In any proceedings
(including any governmental investigation) instituted against any person in
respect of which indemnity may be brought pursuant to subsections 2.1 and 2.2
above, such person (the "Indemnified Party") shall promptly notify the person
or entity against whom such indemnity may be sought (the "Indemnifying Party")
in writing. No indemnification provided for in subsections 2.1 or 2.2 shall be
available to any Indemnified Party who fails to give notice if the Indemnifying
Party was not aware of the proceedings to which such notice would have related
and was materially prejudiced by the failure to receive notice. Such failure
to give notice shall not relieve the Indemnifying Party from any liability
which such party may have for contribution or otherwise than on account of the
provisions of subsections 2.1 or 2.2. If such proceedings are brought against
any Indemnified Party who has notified the Indemnifying Party of the
commencement hereof, the Indemnifying Party shall be entitled to participate in
such proceedings and, in its discretion, jointly with any other Indemnifying
Party similarly notified, to assume the defense thereof, with legal counsel
satisfactory to the Indemnified Party. The Indemnifying Party shall pay as
incurred the fees and disbursements of such counsel. In any such proceedings,
an Indemnified Party shall have the right to retain its own counsel at its own
expense. Notwithstanding the foregoing, the Indemnifying Party shall pay as
incurred, or within thirty (30) days of presentation, the fees and expenses of
legal counsel retained by Indemnifying Party in the event (i) the Indemnified
Parties have mutually agreed to the retention of such counsel or (ii) the named
parties to any such proceedings (including any impleaded parties) include both
the Indemnifying and Indemnified Parties and representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests among them. It is agreed that the Indemnifying Party shall not, in
connection with any proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm for all Indemnified
Parties. Such firm shall be designated in writing by the Indemnified Parties.
The Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there is a final judgment for the plaintiff, the Indemnifying Party agrees to
indemnify the Indemnified Party from and against any loss or liability
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by reason of such settlement or judgment. In addition, the Indemnifying Party
will not, without the prior written consent of the Indemnified Party, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding for which indemnification may be sought hereunder
(whether or not any Indemnified Party is an actual or potential party to such
claim, action or proceeding) unless such settlement, compromise or consent
includes an unconditional release of each Indemnified Party from all liability
arising out of such claim, action or proceeding.
3.0 MISCELLANEOUS.
3.1 NOTICES. Any notices or other communication required or
permitted to be given hereunder shall be in writing and shall be effective (a)
immediately upon hand delivery or delivery by telex (with correct answer back
received), telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice is
to be received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours where such
notice is to be received) or (b) after twenty-four (24) hours if sent by
express courier service, fully prepaid, addressed to such address, or upon
actual service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:
To Company: ErgoBilt, Inc.
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxxx, President
With a copy to: Wolin, Fuller, Xxxxxx & Xxxxxx LLP
3100 Bank One Center
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
To Summit: Summit Partners Management Co.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxx X. Xxxxxx
With a copy to: Xxxxxx and Xxxxx, L.L.P.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
3.2 HEADINGS. The headings in this Agreement are for
convenience only, do not constitute a part of this Agreement and shall not be
deemed to limit or affect any of the provisions hereof.
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3.3 BINDING EFFECT, AMENDMENTS, ASSIGNMENT. This Agreement
shall be binding upon and inure to the benefit of the Company and Summit. This
Agreement may be amended, modified or supplemented only upon the written
agreement of the parties. This Agreement is intended for the benefit of the
Company and Summit and its affiliates and may not be transferred or assigned to
any other person or entity without the written consent of the Company; provided
that Summit may assign its rights hereunder to any affiliate of Summit or of
Xxx X. Xxxxxx without prior written consent.
3.4 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of Texas.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first set forth above.
ErgoBilt, Inc.
By: /s/ XXXXXX XXXXX
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Xxxxxx Xxxxx
Its: President
Summit Partners Management Co.
By: /s/ XXX X. XXXXXX
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Xxx X. Xxxxxx
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