EXHIBIT 99.08
REGISTRATION AGREEMENT
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THIS REGISTRATION AGREEMENT (this "Agreement") is made as of May __, 2000,
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by and among Zecal Technology, LLC, a Delaware limited liability company
(together with its successors and permitted assigns, the "Company"), LZ
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Partners, LLC, a Delaware limited liability company ("LZ"), Zecal Corp., a
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Delaware corporation ("HTI") and each of the other Persons who becomes a party
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to this Agreement after the date hereof pursuant to paragraphs 10(e) or 10(f)
below. Certain capitalized terms used herein are defined in paragraph 9 below.
The Company and LZ are parties to a LLC Interest Purchase Agreement of even
date herewith (the "LLC Interest Purchase Agreement"). The Company, HTI and
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Heartland Technology, Inc. are parties to an Asset Purchase Agreement of even
date herewith (the "Purchase Agreement"). In connection with the LLC Interest
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Purchase Agreement and the Purchase Agreement, the Company has agreed to provide
the registration rights set forth in this Agreement.
The parties to this Agreement, intending to be legally bound, hereby agree
as follows:
1. Demand Registrations.
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(a) Requests for Registration. At any time after an IPO and subject to the
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other limitations set forth in this Section 1, either the holders of a majority
of the LZ Registrable Securities or the holders of a majority of the HTI
Registrable Securities may request registration under the Securities Act of
1933, as amended (the "Securities Act") of (x) all or any portion of their
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respective Registrable Securities on Form S-1 or any similar long-form
registration ("Long-Form Registrations") or (y) all or any portion of their
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respective Registrable Securities on Form S-2 or S-3 (including pursuant to Rule
415 under the Securities Act) or any similar short-form registration ("Short-
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Form Registrations"), if available. All registrations requested pursuant to
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this paragraph 1(a) are referred to herein as "Demand Registrations." Each
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request for a Demand Registration shall specify the approximate number of
Registrable Securities requested to be registered and the anticipated per share
price range for such offering. Within 10 days after receipt of any such
request, the Company shall give written notice of such requested registration to
all other holders of Registrable Securities and, subject to paragraph 1(d)
below, shall include in such registration all Registrable Securities with
respect to which the Company has received written requests for inclusion therein
within 15 days after the receipt of the Company's notice.
(b) Long-Form Registrations. At any time after an IPO, (i) the holders of
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a majority of the LZ Registrable Securities shall be entitled to request up to
two Long-Form Registrations in which the Company shall pay all Registration
Expenses and (ii) the holders of a majority of the HTI Registrable Securities
shall be entitled to request up to two Long-Form Registrations in which the
Company shall pay all Registration Expenses. A registration shall not count as
one of the permitted Long-Form Registrations until it has become effective. The
Company shall pay all Registration Expenses in connection with any registration
initiated as a Long-Form
Registration whether or not it has become effective. All Long-Form Registrations
shall be underwritten registrations.
(c) Short-Form Registrations. In addition to the Long-Form Registrations
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provided pursuant to paragraph 1(b), both (i) the holders of a majority of the
LZ Registrable Securities shall be entitled to request an unlimited number of
Short-Form Registrations in which the Company shall pay all Registration
Expenses and (ii) the holders of a majority of the HTI Registrable Securities
shall be entitled to request an unlimited number of Short-Form Registrations in
which the Company shall pay all Registration Expenses. Notwithstanding anything
contained herein to the contrary, Demand Registrations shall be Short-Form
Registrations whenever the Company is permitted to use any applicable short
form. After the Company has become subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Company
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shall use its best efforts to make Short-Form Registrations on Form S-3
available for the sale of Registrable Securities. If the Company is qualified
to and, pursuant to the request of the holders of a majority of the Registrable
Securities initiating such request for registration pursuant to Section 1(a),
has filed with the Securities and Exchange Commission a registration statement
under the Securities Act on Form S-3 pursuant to Rule 415 under the Securities
Act (the "Required Registration"), the Company shall use its best efforts to
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cause the Required Registration to be declared effective under the Securities
Act as soon as practical after filing, and once effective, the Company shall
cause such Required Registration to remain effective for a period ending on the
earlier of (i) the date on which all Registrable Securities have been sold
pursuant to the Required Registration or (ii) the date as of which the holders
of Registrable Securities initiating such request for registration pursuant to
Section 1(a) are able to sell all of their Registrable Securities then held by
them within the three month period immediately succeeding such date in
compliance with Rule 144 under the Securities Act (the "Effective Period").
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(d) Priority on Demand Registrations. The Company shall not include in any
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Demand Registration any securities which are not Registrable Securities without
the prior written consent of the holders of not less than a majority of the
Registrable Securities initiating such request for registration pursuant to
Section 1(a). If a Demand Registration is an underwritten offering and the
managing underwriters advise the Company in writing that in their opinion the
number of Registrable Securities and, if permitted hereunder, other securities
requested to be included in such offering exceeds the number of Registrable
Securities and other securities, if any, which can be sold without adversely
affecting the marketability of the offering, the Company shall include in such
registration prior to the inclusion of any securities which are not Registrable
Securities the number of Registrable Securities requested to be included which
in the opinion of such underwriters can be sold without adversely affecting the
marketability of the offering, pro rata among the respective holders of
Registrable Securities on the basis of the amount of Registrable Securities
owned by each such holder and then to the extent that any securities which are
not Registrable Securities can still be included, pro rata among the respective
holders thereof on the basis of the amount of such securities owned by each such
holder. Any Persons other than holders of Registrable Securities who participate
in Demand Registrations which are not at the Company's expense must pay their
share of the Registration Expenses as provided in paragraph 5 hereof.
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(e) Restrictions on Demand Registrations. The Company shall not be
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obligated to effect any Demand Registration within 180 days after the effective
date of a previous Demand Registration or an IPO. The Company shall be entitled
to postpone, for up to 180 days, the filing or the effectiveness of a
registration statement for a Demand Registration if the Company and the holders
of not less than a majority of the Registrable Securities agree that such Demand
Registration would be reasonably expected to have an adverse effect on any
proposal or plan by the Company or any of its Subsidiaries to engage in any
acquisition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or similar transaction; provided that in
such event, the Company will pay all Registration Expenses in connection with
such registration.
(f) Selection of Underwriters. The holders of a majority of the
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Registrable Securities included in any Demand Registration will have the right
to select the investment banker(s) and manager(s) to administer the offering,
subject to the Company's approval, which will not be unreasonably withheld.
(g) Other Registration Rights. Except as provided in this Agreement, the
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Company shall not grant to any Persons the right to request the Company to
register any equity securities of the Company, or any securities convertible or
exchangeable into or exercisable for such securities, without the prior written
consent of the holders of not less than a majority of the Registrable
Securities.
2. Piggyback Registrations.
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(a) Right to Piggyback. Whenever the Company proposes to register any of
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its equity securities (including any proposed registration of the Company's
securities by any third party) under the Securities Act (other than pursuant to
a Demand Registration or a registration on Form S-4 or S-8 or any successor or
similar forms) and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), whether or
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not for sale for its own account, the Company shall give prompt written notice
to all holders of Registrable Securities of its intention to effect such a
registration and shall include in such registration all Registrable Securities
with respect to which the Company has received written requests for inclusion
therein within 15 days after the receipt of the Company's notice.
(b) Piggyback Expenses. The Registration Expenses of the holders of
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Registrable Securities shall be paid by the Company in all Piggyback
Registrations.
(c) Priority on Primary Registrations. If a Piggyback Registration is an
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underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering without adversely affecting the marketability
of such offering, the Company shall include in such registration (i) first, the
securities the Company proposes to sell, (ii) second, the Registrable Securities
requested to be included in such registration, pro rata among the holders of
such Registrable Securities on the basis
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of the amount of such securities owned by each such holder and (iii) third, the
other securities requested to be included in such registration.
(d) Priority on Secondary Registrations. If a Piggyback Registration is an
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underwritten secondary registration on behalf of holders of the Company's
securities (and is not a Demand Registration), and the managing underwriters
advise the Company in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold without adversely affecting the marketability of the offering, the Company
shall include in such registration (i) first, the securities requested to be
included therein by the holders requesting such registration, (ii) second, the
Registrable Securities requested to be included in such registration, pro rata
among the holders of such Registrable Securities on the basis of the amount of
such securities owned by each such holder and (iii) third, other securities
requested to be included in such registration pro rata among the holders of such
securities on the basis of the amount of such securities owned by each such
holder.
(e) Selection of Underwriters. If any Piggyback Registration is an
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underwritten offering, the selection of investment banker(s) and manager(s) for
the offering must be approved by the holders of a majority of the Registrable
Securities included in such Piggyback Registration. Such approval shall not be
unreasonably withheld or delayed.
(f) Other Registrations. If the Company has previously filed a
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registration statement with respect to Registrable Securities pursuant to
paragraph 1 or pursuant to this paragraph 2, and if such previous registration
has not been withdrawn or abandoned, the Company shall not file or cause to be
effected any other registration of any of its equity securities or securities
convertible or exchangeable into or exercisable for its equity securities under
the Securities Act (except on Form S-4 or S-8 or any successor form), whether on
its own behalf or at the request of any holder or holders of such securities,
until a period of at least 180 days has elapsed from the effective date of such
previous registration.
3. Holdback Agreements.
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(a) To the extent not inconsistent with applicable law, each holder of
Registrable Securities shall not effect any public sale or distribution of its
equity securities, or any securities, options or rights convertible into or
exchangeable or exercisable for such securities (except as part of an
underwritten registration or pursuant to registrations on Form S-4 or Form S-8
or any successor form), during the ten days prior to and during the 90-day
period beginning on the effective date of any (x) underwritten Demand
Registration, (y) underwritten Piggyback Registration or (z) post-effective
amendment of a Required Registration pursuant to which an underwritten offering
is to be effected, unless (in any such case) the underwriter managing the
registered public offering otherwise agrees.
(b) The Company agrees (except as part of an underwritten registration or
pursuant to registrations on Form S-4 or Form S-8 or any successor form) (i) not
to effect any public sale or distribution of its equity securities, or any
securities, options or rights convertible into or
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exchangeable or exercisable for such securities, during the ten days prior to
and during the 90-day period beginning on the effective date of any (x)
underwritten Demand Registration, (y) underwritten Piggyback Registration or (z)
post-effective amendment of a Required Registration pursuant to which an
underwritten offering is to be effected, unless (in any such case) the
underwriter managing the registered public offering otherwise agrees, and (ii)
to use its best efforts to cause, to the extent not inconsistent with applicable
law, each holder of its equity securities, or any securities, options or rights
convertible into or exchangeable or exercisable for equity securities purchased
from the Company at any time after the date of this Agreement (other than in a
registered public offering) to agree not to effect any public sale or
distribution (including sales pursuant to Rule 144) of any such securities
during such period (except as part of such underwritten registration, if
otherwise permitted), unless the underwriters managing the registered public
offering otherwise agree.
4. Registration Procedures. Whenever the holders of Registrable
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Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, the Company shall use its best efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof, and pursuant thereto the Company shall
as expeditiously as possible:
(a) prepare and (within 60 days after the end of the period within which
requests for registration may be given to the Company) file with the Securities
and Exchange Commission a registration statement with respect to such
Registrable Securities and use its best efforts to cause such registration
statement to become effective (provided that before filing a registration
statement or prospectus or any amendments or supplements thereto, the Company
shall furnish to the counsel selected by the holders of not less than a majority
of the Registrable Securities covered by such registration statement copies of
all such documents proposed to be filed, which documents shall be subject to the
review and comment of such counsel);
(b) notify in writing each holder of Registrable Securities of the
effectiveness of each registration statement filed hereunder and prepare and
file with the Securities and Exchange Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for a period
of either (i) not less than 180 days (subject to extension pursuant to paragraph
7(b)) or, if such registration statement relates to an underwritten offering,
such longer period as in the opinion of counsel for the underwriters a
prospectus is required by law to be delivered in connection with sales of
Registrable Securities by an underwriter or dealer or (ii) such shorter period
as will terminate when all of the securities covered by such registration
statement have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement (but in any event not before the expiration of any longer period
required under the Securities Act), and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement until 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 registration statement;
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(c) furnish to each seller of Registrable Securities such number of copies
of such registration statement, each amendment and supplement thereto, the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as such seller may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by such
seller;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller (provided that the Company shall not be required to (i) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph (d), (ii) subject itself to taxation in any
such jurisdiction where it would not otherwise be required to subject itself but
for this subparagraph (d) or (iii) consent to general service of process in any
such jurisdiction where it would not otherwise be required to consent but for
this subparagraph (d));
(e) notify each seller of such Registrable Securities, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, upon discovery that, or upon the discovery of the happening of any event as
a result of which, the prospectus included in such registration statement
contains an untrue statement of a material fact or omits any fact necessary to
make the statements therein not misleading in the light of the circumstances
under which they were made, and, at the request of any such seller, the Company
shall prepare and furnish to such seller a reasonable number of copies of a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus shall not contain
an untrue statement of a material fact or omit to state any fact necessary to
make the statements therein not misleading in the light of the circumstances
under which they were made;
(f) cause all such Registrable Securities to be listed on each securities
exchange on which similar securities issued by the Company are then listed or on
the NASD automated quotation system;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
not less than a majority of the Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (including, without limitation,
effecting a stock split or a combination of shares);
(i) make available for inspection by any seller of Registrable Securities,
any underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
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directors, employees and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement;
(j) otherwise use its best efforts to comply with all applicable rules and
regulations of the Securities and Exchange Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day of
the Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) permit any holder of Registrable Securities which holder, in its sole
and exclusive judgment, might be deemed to be an underwriter or a controlling
person of the Company, to participate in the preparation of such registration or
comparable statement and to require the insertion therein of material, furnished
to the Company in writing, which in the reasonable judgment of such holder and
its counsel should be included;
(l) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any securities included in such registration statement for sale in any
jurisdiction, use its best efforts promptly to obtain the withdrawal of such
order;
(m) use its best efforts to cause such Registrable Securities covered by
such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the sellers
thereof to consummate the disposition of such Registrable Securities;
(n) obtain one or more comfort letters, dated the effective date of such
registration statement (and, if such registration includes an underwritten
public offering, dated the date of the closing under the underwriting
agreement), from the Company's independent public accountants in customary form
and covering such matters of the type customarily covered by comfort letters as
the holders of not less than a majority of the Registrable Securities being sold
reasonably request (provided that such Registrable Securities constitute at
least 10% of the securities covered by such registration statement);
(o) provide a legal opinion of the Company's outside counsel, dated the
effective date of such registration statement (and, if such registration
includes an underwritten public offering, dated the date of the closing under
the underwriting agreement), with respect to the registration statement, each
amendment and supplement thereto, the prospectus included therein (including the
preliminary prospectus) and such other documents relating thereto in customary
form and covering such matters of the type customarily covered by legal opinions
of such nature; and
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(p) use reasonable efforts to cause certificates for the Registrable
Securities covered by such registration statement to be delivered by the holders
thereof to the underwriters in such denominations and registered in such names
as the underwriters may request.
5. Registration Expenses.
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(a) All expenses incident to the Company's performance of or compliance
with this Agreement, including, without limitation, all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws, printing
expenses, travel expenses, filing expenses, messenger and delivery expenses,
fees and disbursements of custodians, fees and disbursements of counsel for the
Company and fees and disbursements of all independent certified public
accountants, underwriters (excluding discounts and commissions) and other
Persons retained by the Company or the holders of not less than a majority of
the Registrable Securities participating in any registration (all such expenses
being herein called "Registration Expenses"), shall be borne by the Company,
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except as otherwise expressly provided in this Agreement, except that the
Company shall, in any event, pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit or quarterly
review, the expense of any liability insurance and the expenses and fees for
listing the securities to be registered on each securities exchange on which
similar securities issued by the Company are then listed or on the NASD
automated quotation system (or any successor or similar system).
(b) In connection with each Demand Registration and each Piggyback
Registration, the Company shall reimburse the holders of Registrable Securities
included in such registration for the reasonable fees and disbursements of one
counsel (in addition to local counsel) chosen by the holders of a majority of
the Registrable Securities included in such registration and for the reasonable
fees and disbursements of each additional counsel retained by any holder of
Registrable Securities for the purpose of rendering a legal opinion on behalf of
such holder in connection with any underwritten Demand Registration or Piggyback
Registration.
(c) To the extent Registration Expenses are not required to be paid by the
Company, each holder of securities included in any registration hereunder shall
pay those Registration Expenses allocable to the registration of such holder's
securities so included, and any Registration Expenses not so allocable shall be
borne by all sellers of securities included in such registration in proportion
to the aggregate selling price of the securities to be so registered.
6. Indemnification.
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(a) The Company agrees to indemnify and hold harmless, to the fullest
extent permitted by law, each holder of Registrable Securities, its officers,
directors, managers, agents, and employees and each Person who controls such
holder (within the meaning of the Securities Act) against any losses, claims,
damages, liabilities, joint or several, together with reasonable costs and
expenses (including reasonable attorneys' fees), to which such indemnified party
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are
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based upon (i) any breach of this Agreement, (ii) any untrue or alleged untrue
statement of material fact contained (A) in any registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or (B) in any application or other document or communication (in this
paragraph 6 collectively called an "application") executed by or on behalf of
the Company or based upon written information furnished by or on behalf of the
Company filed in any jurisdiction in order to qualify any securities covered by
such registration statement under the "blue sky" or securities laws thereof or
(iii) any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Company will reimburse such holder and each such director, officer and
controlling Person for any legal or any other expenses incurred by them in
connection with investigating or defending any such loss, claim, liability,
action or proceeding; provided that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement, or omission or alleged omission,
made in such registration statement, any such prospectus or preliminary
prospectus or any amendment or supplement thereto, or in any application, in
reliance upon, and in conformity with, written information prepared and
furnished to the Company by such holder expressly for use therein or by such
holder's failure to deliver a copy of the registration statement or prospectus
or any amendments or supplements thereto after the Company has furnished such
holder with a sufficient number of copies of the same. In connection with an
underwritten offering, the Company will indemnify such underwriters, their
officers and directors and each Person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the holders of Registrable Securities.
(b) In connection with any registration statement in which a holder of
Registrable Securities is participating, each such holder will furnish to the
Company in writing such information and affidavits as the Company reasonably
requests (and which are customarily provided by selling stockholders) for use in
connection with any such registration statement or prospectus and, to the
fullest extent permitted by law, will indemnify and hold harmless the Company,
and its respective directors, officers, agents and employees and each other
Person who controls the Company (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities, joint or several, together
with reasonable costs and expenses (including reasonable attorneys' fees), to
which such indemnified party may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon (i) any breach of this Agreement, (ii) any untrue or alleged
untrue statement of material fact contained in the registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or in any application or (iii) any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement or
omission is made in such registration statement, any such prospectus or
preliminary prospectus or any amendment or supplement thereto, or in any
application, in reliance upon and in conformity with written information
prepared and furnished to the Company by such holder expressly for use therein,
and such holder will reimburse the Company and each such other indemnified party
for any legal or any other expenses incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided that the obligation to indemnify will be individual
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to each holder and will be limited to the net amount of proceeds received by
such holder from the sale of Registrable Securities pursuant to such
registration statement.
(c) Any person entitled to indemnification under this Agreement shall
notify promptly the indemnifying party in writing of the commencement of any
action or proceeding with respect to which a claim for indemnification may be
made pursuant to this paragraph 6, but the failure of any indemnified party to
provide such notice shall not relieve the indemnifying party of its obligations
under the preceding subparagraphs of this paragraph 6, except to the extent the
indemnifying party is materially prejudiced thereby and shall not relieve the
indemnifying party from any liability which it may have to any indemnified party
otherwise than under this paragraph 6. In case any action or proceeding is
brought against an indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, unless in the reasonable opinion of outside counsel to
the indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, to assume the defense
thereof jointly with any other indemnifying party similarly notified, to the
extent that it chooses, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified party
that it so chooses, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided that (i) if the indemnifying party fails to
take reasonable steps necessary to defend diligently the action or proceeding
within 20 days after receiving notice from such indemnified party that the
indemnified party believes it has failed to do so; or (ii) if such indemnified
party who is a defendant in any action or proceeding which is also brought
against the indemnifying party reasonably shall have concluded that there may be
one or more legal defenses available to such indemnified party which are not
available to the indemnifying party; or (iii) if representation of both parties
by the same counsel is otherwise inappropriate under applicable standards of
professional conduct, then, in any such case, the indemnified party shall have
the right to assume or continue its own defense as set forth above (but with no
more than one firm of counsel for all indemnified parties in each jurisdiction,
except to the extent any indemnified party or parties reasonably shall have
concluded that there may be legal defenses available to such party or parties
which are not available to the other indemnified parties or to the extent
representation of all indemnified parties by the same counsel is otherwise
inappropriate under applicable standards of professional conduct) and the
indemnifying party shall be liable for any expenses therefor.
(d) No indemnifying party shall, without the written consent of each
indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (A) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim without any payment or consideration provided or obligation
incurred by any indemnified party and (B) 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.
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(e) If the indemnification provided for in this paragraph 6 is unavailable
to or is insufficient to hold harmless an indemnified party under the provisions
above in respect to any losses, claims, damages or liabilities referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
fault of the Company on the one hand and the sellers of Registrable Securities
and any other sellers participating in the registration statement on the other
hand or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative fault referred to in clause (i) above but also the relative benefit of
the Company on the one hand and of the sellers of Registrable Securities and any
other sellers participating in the registration statement on the other in
connection with the statement or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the sellers of Registrable Securities and any other sellers participating in
the registration statement on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) to the Company bear to the total net proceeds from the offering
(before deducting expenses) to the sellers of Registrable Securities and any
other sellers participating in the registration statement. The relative fault of
the Company on the one hand and of the sellers of Registrable Securities and any
other sellers participating in the registration statement on the other shall be
determined by reference to, among other things, whether the untrue or alleged
omission to state a material fact relates to information supplied by the Company
or by the sellers of Registrable Securities or other sellers participating in
the registration statement and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company and the sellers of Registrable Securities agree that it would
not be just and equitable if contribution pursuant to this paragraph 6 were
determined by pro rata allocation (even if the sellers of Registrable Securities
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages and liabilities
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
paragraph 6, no seller of Registrable Securities shall be required to contribute
pursuant to this paragraph 6 any amount in excess of the net proceeds received
by such Seller from the sale of Registrable Securities covered by the
registration statement filed pursuant hereto. 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.
(f) The indemnification and contribution by any such party provided for
under this Agreement shall be in addition to any other rights to indemnification
or contribution which any indemnified party may have pursuant to law or contract
and will remain in full force and effect regardless of any investigation made or
omitted by or on behalf of the indemnified party or any
11
officer, director or controlling Person of such indemnified party and will
survive the transfer of securities.
(g) The indemnification and contribution required by this paragraph 6
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
7. Participation in Underwritten Registrations.
-------------------------------------------
(a) No Person may participate in any registration hereunder which is
underwritten unless such Person (i) agrees to sell such Person's securities on
the basis provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements (including, without
limitation, pursuant to the terms of any over-allotment or "green shoe" option
requested by the managing underwriters), provided that no holder of Registrable
Securities will be required to sell more than the number of Registrable
Securities that such holder has requested the Company to include in any
registration and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements; provided that no holder of
Registrable Securities included in any underwritten registration shall be
required to make any representations or warranties to the Company or the
underwriters (other than representations and warranties regarding such holder
and such holder's intended method of distribution) or to undertake any
indemnification obligations to the Company or the underwriters with respect
thereto, except as otherwise provided in paragraph 6 hereof.
(b) Each Person that is participating in any registration hereunder agrees
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in paragraph 4(e) above, such Person will forthwith
discontinue the disposition of its Registrable Securities pursuant to the
registration statement until such Person's receipt of the copies of a
supplemented or amended prospectus as contemplated by such paragraph 4(e). In
the event the Company shall give any such notice, the applicable time period
mentioned in paragraph 4(b) during which a Registration Statement is to remain
effective shall be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to this paragraph to
and including the date when each seller of a Registrable Security covered by
such registration statement shall have received the copies of the supplemented
or amended prospectus contemplated by paragraph 4(e).
8. Rule 144 Reporting. With a view to making available the benefits of
------------------
certain rules and regulations of the Securities and Exchange Commission that may
permit the sale of Registrable Securities to the public without registration,
the Company agrees at all times after the Company has filed a registration
statement with the Securities and Exchange Commission pursuant to the
requirements of either the Securities Act or the Exchange Act to use its best
efforts to:
(a) make and keep public information regarding the Company available as
those terms are understood and defined in Rule 144 under the Securities Act;
12
(b) file with the Securities and Exchange Commission in a timely manner
all reports and other documents required of the Company under the Securities Act
and the Exchange Act at any time after it has become subject to such reporting
requirements; and
(c) so long as a holder owns any Registrable Securities, furnish to the
holder forthwith upon written request a written statement by the Company as to
its compliance with the reporting requirements of Rule 144, and of the
Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so filed
as a holder may reasonably request in availing itself of any rule or regulation
of the Securities and Exchange Commission allowing a holder to sell any such
securities without registration.
9. Definitions.
-----------
"HTI Registrable Securities" means (i) any Company Interest (as such term
--------------------------
is defined in the LLC Agreement) issued to HTI pursuant to the Purchase
Agreement or otherwise acquired by HTI, (ii) any securities issued or issuable
directly or indirectly with respect to the securities referred to in clause (i)
above by way of distribution or split or in connection with a combination of
securities, recapitalization, merger, consolidation or other reorganization,
including a recapitalization or exchange; provided that in the event that
pursuant to such recapitalization or exchange, equity securities are issued
which do not participate in the residual equity of the Company ("Non-
---
Participating Securities"), such Non-Participating Securities will not be HTI
------------------------
Registrable Securities. As to any particular securities constituting HTI
Registrable Securities, such securities will cease to be HTI Registrable
Securities when they have been (x) effectively registered under the Securities
Act and disposed of in accordance with the registration statement covering them,
(y) sold to the public through a broker, dealer or market maker pursuant to Rule
144 (or by similar provision then in force) under the Securities Act or (z)
distributed to any shareholder of Heartland Technologies, Inc., the parent
company of Zecal Corp.
"IPO" means the initial sale pursuant to a registration statement filed
---
under the Securities Act of any equity securities of the Company, whether by the
Company or any holder of equity securities of the Company.
"LLC Agreement" means that certain Limited Liability Company Agreement of
-------------
even date herewith by and among the Company and the members party thereto.
"LZ Registrable Securities" means (i) any Company Interest (as such term is
-------------------------
defined in the LLC Agreement) issued to LZ pursuant to the LLC Interest Purchase
Agreement or otherwise acquired by LZ, (ii) any securities issued or issuable
directly or indirectly with respect to the securities referred to in clause (i)
above by way of distribution or split or in connection with a combination of
securities, recapitalization, merger, consolidation or other reorganization,
including a recapitalization or exchange; provided that in the event that
pursuant to such recapitalization or exchange, Non-Participating Securities are
issued, such Non-Participating Securities will not be LZ Registrable Securities.
As to any particular securities constituting LZ Registrable Securities, such
securities will cease to be LZ Registrable Securities when they have been (x)
effectively registered
13
under the Securities Act and disposed of in accordance with the registration
statement covering them, (y) sold to the public through a broker, dealer or
market maker pursuant to Rule 144 (or by similar provision then in force) under
the Securities Act or (z) distributed to any partner, shareholder or member of
any holder of LZ Registrable Securities.
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Registrable Securities" means collectively the HTI Registrable Securities
----------------------
and the LZ Registrable Securities. For purposes of this Agreement, a Person
shall be deemed to be a holder of Registrable Securities whenever such Person
has the right to acquire such Registrable Securities (upon conversion or
exercise in connection with a transfer of securities or otherwise, but
disregarding any restrictions or limitations upon the exercise of such right),
whether or not such acquisition has actually been effected, and such Person
shall be entitled to exercise the rights of a holder of Registrable Securities
hereunder.
"Subsidiary" is defined in the LLC Agreement.
----------
10. Miscellaneous.
-------------
(a) No Inconsistent Agreements. The Company shall not hereafter enter into
--------------------------
any agreement with respect to its securities which is inconsistent with or
violates the rights granted to the holders of Registrable Securities in this
Agreement.
(b) Adjustments Affecting Registrable Securities. Except as otherwise
--------------------------------------------
permitted herein or by the Other Agreements (as defined in that certain Members
Agreement dated as of the date hereof between the Company and its members), the
Company shall not take any action, or permit any change to occur, with respect
to its securities which would adversely affect the ability of the holders of
Registrable Securities to include such Registrable Securities in a registration
undertaken pursuant to this Agreement or which would adversely affect the
marketability of such Registrable Securities in any such registration
(including, without limitation, effecting a stock split or a combination of
shares).
(c) Remedies. Any Person having rights under any provision of this
--------
Agreement shall be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement. Nothing contained in this Agreement will be construed to confer upon
any Person who is not a signatory hereto any rights or benefits, as a third
party beneficiary or otherwise.
14
(d) Amendments and Waivers. Except as otherwise provided herein, no
----------------------
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the holders of Registrable Securities unless
such modification, amendment or waiver is approved in writing by the holders of
not less than a majority of the Registrable Securities then in existence. No
failure by any party to insist upon the strict performance of any covenant,
duty, agreement or condition of this Agreement or to exercise any right or
remedy consequent upon a breach thereof shall constitute a waiver of any such
breach or any other covenant, duty, agreement or condition.
(e) Additional Parties. The governing body of the Company shall be
------------------
entitled, but not obligated, with the consent of Persons holding not less than a
majority of the Registrable Securities, to allow any purchaser of equity
securities (or securities or rights convertible or exercisable into equity
securities), of the same type and class of the Registrable Securities, to
execute a counterpart to this Agreement and become a party hereto (each, an
"Additional Party"). Except as set forth in this paragraph 10(e) and in
----------------
paragraph 1(g), the Company will not grant to any other Persons any registration
rights.
(f) Successors and Assigns. All covenants and agreements in this Agreement
----------------------
by or on behalf of any of the parties hereto shall bind and inure to the benefit
of the respective successors and assigns of the parties hereto whether so
expressed or not. In addition, whether or not any express assignment has been
made, the provisions of this Agreement which are for the benefit of the
purchasers or holders of any type of Registrable Securities are, except as
otherwise described herein, also for the benefit of, and enforceable by, any
subsequent holder of Registrable Securities. Notwithstanding the foregoing, in
order to obtain the benefit of this Agreement, any subsequent holder of
Registrable Securities must execute a counterpart to this Agreement, thereby
agreeing to be bound the terms hereof and, in connection with any such
assignment described in this paragraph 10(f) (whether by operation of law or
otherwise), such subsequent holder of Registrable Securities must also first
comply with the terms and conditions (if any) contained in the LLC Agreement and
the Members Agreement (as defined in the LLC Agreement) in effect at the time of
such assignment.
(g) Determinations. At all such times that the interest of holders of
--------------
Registrable Securities in the Company are represented by a percentage interest
in the Company, each holder of Registrable Securities shall be deemed to hold
one share of Registrable Securities for each dollar of Invested Capital (as such
term is defined in the LLC Agreement) held by such holder or its predecessor in
interest.
(h) Severability. Whenever possible, each provision of this Agreement will
------------
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
15
(i) Counterparts. This Agreement may be executed in separate counterparts
------------
each of which will be an original and all of which taken together will
constitute one and the same agreement.
(j) Descriptive Headings; Interpretation. The descriptive headings of this
------------------------------------
Agreement are inserted for convenience only and do not constitute a substantive
part of this Agreement. Whenever required by the context, any pronoun used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns, pronouns and verbs shall include the
plural and vice versa. The use of the word "including" in this Agreement shall
be by way of example rather than by limitation. Reference to any agreement,
document or instrument means such agreement, document or instrument as amended
or otherwise modified from time to time in accordance with the terms thereof,
and if applicable, hereof. Without limiting the generality of the immediately
preceding sentence, no amendment or other modification to any agreement,
document or instrument that requires the consent of any Person pursuant to the
terms of this Agreement or any other agreement (including the LLC Agreement)
will be given effect hereunder unless such Person has consented in writing to
such amendment or modification. The use of the words "or," "either" and "any"
shall not be exclusive.
(k) Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of Delaware, without giving effect to any
choice of law or conflict of law rules or provisions (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware. Any dispute relating
hereto shall be heard in the state or federal courts of Delaware, and the
parties agree to jurisdiction and venue therein.
(l) Notices. Any notice provided for in this Agreement will be in writing
-------
and will be either personally delivered, or received by certified mail, return
receipt requested, or sent by reputable overnight courier service (charges
prepaid) to the Company at the address set forth below and to any other
recipient and to any subsequent holder of Registrable Securities subject to this
Agreement at such address as indicated by the Company's records, or at such
address or to the attention of such other person as the recipient party has
specified by prior written notice to the sending party. Notices will be deemed
to have been given hereunder when delivered personally, three days after deposit
in the U.S. mail and one day after deposit with a reputable overnight courier
service. The Company's address is:
To the Company:
--------------
Zecal Technology, LLC
c/o Lamb Partners
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telecopy Number: (000) 000-0000
Attention: Xxxx X. Xxxxx
16
With a copy to:
--------------
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy Number: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
and to:
------
Heartland Technology, Inc.
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Telecopy Number: (000) 000-0000
Attention: Xxxxxxxx Xxxxxxx, Esq.
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
(m) Delivery by Facsimile. This Agreement and any signed agreement or
---------------------
instrument entered into in connection with this Agreement or contemplated
hereby, and any amendments hereto or thereto, to the extent signed and delivered
by means of a facsimile machine, shall be treated in all manner and respects as
an original agreement or instrument and shall be considered to have the same
binding legal effect as if it were the original signed version thereof delivered
in person. At the request of any party hereto or to any such agreement or
instrument, each other party hereto or thereto shall re-execute original forms
thereof and deliver them to all other parties. No party hereto or to any such
agreement or instrument shall raise the use of a facsimile machine to deliver a
signature or the fact that any signature or agreement or instrument was
transmitted or communicated through the use of a facsimile machine as a defense
to the formation of a contract and each such party forever waives any such
defense.
(n) No Strict Construction. The parties hereto have participated jointly
----------------------
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement.
* * * * *
17
IN WITNESS WHEREOF, the parties have executed this Registration Agreement
as of the day and year first above written.
ZECAL TECHNOLOGY, LLC
By:________________________________
Its:_______________________________
LZ PARTNERS, LLC
By:________________________________
Its:_______________________________
ZECAL CORP.
By:________________________________
Its:_______________________________
