Exhibit 10.21
REGISTRATION RIGHTS AGREEMENT
Dated as of June 27, 2002
by and among
PCA INTERNATIONAL, INC.
and
THE PURCHASERS WHO ARE SIGNATORIES HERETO
TABLE OF CONTENTS
Page
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Section 1. DEFINITIONS..................................................1
Section 2. REGISTRATION RIGHTS..........................................3
2.1 Incidental Registration......................................3
2.2 Supplements and Amendments...................................4
2.3 Underwritten Registrations...................................5
2.4 Registration Procedures......................................5
2.5 Registration Expenses.......................................10
2.6 Rule 144....................................................11
2.7 Limitation on sale by Holders...............................11
Section 3. INDEMNIFICATION.............................................11
3.1 Indemnification by the Company..............................11
3.2 Indemnification by Holder of Registrable Securities.........12
3.3 Conduct of Indemnification Proceeding.......................12
3.4 Contribution................................................13
3.5 Other Indemnities...........................................14
Section 4. MISCELLANEOUS...............................................14
4.1 Remedies....................................................14
4.2 No Inconsistent Agreements..................................14
4.3 Amendments and Waivers......................................14
4.4 Notices.....................................................15
4.5 Successors and Assigns......................................15
4.6 Counterparts................................................15
4.7 Headings....................................................15
4.8 Governing Law...............................................15
4.9 Severability................................................16
4.10 Entire Agreement............................................16
4.11 Attorneys' Fees.............................................16
4.12 Securities Held by the Company or Its Subsidiaries..........16
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement"), dated as
of June 27, 2002, by and among PCA INTERNATIONAL, INC., a North Carolina
corporation (or any successor, the "Company"), and the purchasers whose
signatures appear on the execution pages of this Agreement (each a "Purchaser"
and collectively, the "Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of June 27, 2002 (the "Purchase Agreement"), by and among
the Company and the Purchasers. The execution of this Agreement is required by
the terms of the Purchase Agreement.
The parties hereby agree as follows:
Section 1. DEFINITIONS.
Capitalized terms used herein without definition shall have
their respective meanings set forth in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
"Advice" has the meaning set forth in the last paragraph of
Section 2.4.
"Affiliate" means, with respect to any Person, any other
Person (i) directly or indirectly controlling or controlled by or under direct
or indirect common control with such Person or (ii) directly or indirectly
owning or holding five percent (5%) or more of the equity interest in such
Person. For purposes of this definition, "control" when used with respect to any
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Agreement" has the meaning set forth in the first paragraph
of this Agreement.
"Common Stock" means the Common Stock, par value $.20 per
share, of the Company.
"Company" has the meaning set forth in the first paragraph of
this Agreement.
"DTC" has the meaning set forth in Section 2.4(h) of this
Agreement.
"Exchange Act" has the meaning set forth in Section 2.4(a) of
this Agreement.
"Exchange Shares" means the shares of (i) Common Stock
issuable or issued in exchange for the warrants to purchase Common Stock
pursuant to the terms of
the Warrant Agreement and (ii) Common Stock issuable or issued in exchange for
the Preferred Stock issuable or issued in exchange for the warrants to purchase
Preferred Stock that were issued on the Purchasers pursuant to the terms of the
Warrant Agreement.
"Holder" means any holder of a Registrable Security.
"Incidental Registration" has the meaning set forth in Section
2.1(a) of this Agreement.
"indemnified party" has the meaning set forth in Section 3.3
of this Agreement.
"indemnifying party" has the meaning set forth in Section 3.3
of this Agreement.
"Inspectors" has the meaning set forth in Section 2.4(m) of
this Agreement.
"NASD" has the meaning set forth in Section 2.5 of this
Agreement.
"Person" means any individual, trustee, corporation,
partnership, joint stock company, trust, unincorporated association, union,
business association, firm or other legal entity.
"Preferred Stock" means the shares of Series A Convertible
Preferred Stock, par value $10 per share, of the Company.
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such prospectus.
"Purchase Agreement" has the meaning set forth in the second
paragraph of this Agreement.
"Purchaser" has the meaning set forth in the first paragraph
of this Agreement.
"Purchasers" has the meaning set forth in the first paragraph
of this Agreement.
"Registrable Securities" means (i) the Exchange Shares, (ii)
any other securities issued or issuable with respect to the Exchange Shares by
way of a stock dividend or stock split or in connection with a combination of
shares, recapitalization,
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merger, consolidation or other reorganization and (iii) any other shares of
Common Stock acquired by the Purchasers pursuant to the Stockholders Agreement
by and among Jupiter Partners II, L.P., the Company and the Purchasers;
provided, however, that a security ceases to be a Registrable Security when it
is no longer a Transfer Restricted Security.
"Registration Statement" means any registration statement of
the Company that covers any of the Registrable Securities pursuant to the
provisions of Section 2.1 of this Agreement, including the Prospectus,
amendments and supplements to such registration statement, including
post-effective amendments, all exhibits, and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
"Rule 144" means Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than Rule
144A) or regulation hereafter adopted by the SEC providing for offers and sales
of securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not Affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Transfer Restricted Security" means an Exchange Share until
such Exchange Share (i) has been effectively registered under the Securities Act
and disposed of in accordance with a registration statement filed under the
Securities Act covering it or (ii) is distributed to the public pursuant to Rule
144.
"underwritten registration" or "underwritten offering" means a
registration in which securities of the Company (including Registrable
Securities) are sold to an underwriter for reoffering to the public.
"Warrant Agreement" means that certain Warrant Agreement,
dated as of June 27, 2002, by and between the Company and the Purchasers.
Section 2. REGISTRATION RIGHTS.
2.1 Incidental Registration.
(a) If, at any time when Registrable Securities are
outstanding, the Company proposes to register any of its securities under the
Securities Act (other than a registration on Form S-4 or S-8 or any successor
form thereto or pursuant to "demand" registration rights that are exercised
under the terms of any contract or agreement entered into by the Company prior
to the date hereof), whether or not for sale for its own account, and the
registration form to be used therefor may be used for the registration of
Registrable Securities, it will at each such time give prompt written notice to
all Holders
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of Registrable Securities of the Company's intention to do so and, upon the
written request of any such Holder to the Company made within 10 days after the
receipt of any such notice (which request shall specify the Registrable
Securities intended to be disposed of by such Holder and the intended method of
disposition thereof), the Company will use its best efforts to effect the
registration (an "Incidental Registration") under the Securities Act of all
Registrable Securities which the Company has been so requested to register by
the Holders thereof.
(b) Subject to Section 2.1(c), if an Incidental Registration
is an underwritten registration, and the managing underwriters thereof 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 the offering, the
Company will include in such registration (i) first, the securities the Company
proposes to sell for its own account in such registration, (ii) second, any
securities that the Company is required to include pursuant to the terms of any
agreement or contract entered into by the Company prior to the date hereof that
grants "piggy back" registration rights, (iii) third, the Registrable Securities
requested to be included in such registration, pro rata among the Holders of
such Registrable Securities on the basis of the number of shares owned by each
such Holder and such Holder's beneficiaries and (iv) fourth, other securities
requested to be included in such registration.
(c) Notwithstanding Section 2.1(b), if an Incidental
Registration is an underwritten secondary registration solely on behalf of
holders of the Company's securities, 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 the offering, the
Company will include in such registration (i) first, the securities requested to
be included therein by the holders requesting such registration, (ii) second,
any securities that the Company is required to include pursuant to the terms of
any agreement or contracted entered into by the Company prior to the date hereof
that grants "piggy back" registration rights, (iii) third, the Registrable
Securities requested to be included in such registration, pro rata among the
Holders of such Registrable Securities on the basis of the number of shares
owned by each such Holder and such Holder's beneficiaries, and (iv) fourth,
other securities requested to be included in such registration.
2.2 Supplements and Amendments. If a Registration Statement ceases to be
effective for any reason at any time during the period for which it is required
to be effective under this Agreement, the Company shall use its best efforts to
obtain the prompt withdrawal of any order suspending the effectiveness thereof
and shall in connection therewith promptly supplement and amend any such
Registration Statement in a manner reasonably and in good faith expected to
obtain the withdrawal of the order suspending the effectiveness thereof, and the
Company shall use its best efforts to cause any such Registration Statement to
be declared effective as soon as practicable after such amendment or supplement.
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The Company shall supplement and amend a Registration Statement if required
by the rules, regulations or instructions applicable to the applicable
registration form for such Registration Statement, if required by the Securities
Act or the SEC, or if reasonably requested by the Holders of a majority of the
Registrable Securities covered by such Registration Statement or by any
underwriter of the Registrable Securities.
2.3 Underwritten Registrations. The Holders of Registrable Securities sold
in any underwriter offering shall pay all underwriting discounts and commissions
of the underwriter or underwriters relating to the share of Registrable
Securities pro rata; provided, however, that this Section 2.3 shall not relieve
the Company of its obligations under Section 2.5 hereof.
No Holder of Registrable Securities may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Securities on the basis provided in any underwriting arrangements
and (b) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements.
2.4 Registration Procedures. In connection with any Registration Statement,
the Company shall effect such registrations to permit the offering and sale of
the Registrable Securities in accordance with the provided for method or methods
of disposition thereof, and pursuant thereto the Company shall as expeditiously
as possible:
(a) Before filing any such Registration Statement or any Prospectus or
any amendments or supplements thereto (including documents that would be
incorporated or deemed to be incorporated therein by reference, including such
documents filed under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), that would be incorporated therein by reference), the Company
shall afford promptly to the Holders of the Registrable Securities covered by
such Registration Statement and their counsel, an opportunity to review copies
of all such documents proposed to be filed a reasonable time prior to the
proposed filing thereof and the Company shall give reasonable consideration in
good faith to any comments of such Holders, counsel and underwriters; provided
that the Company may discontinue any registration of its securities giving rise
to registration rights pursuant to Section 2.1 hereof at any time prior to the
effective date of the registration statement relating thereto.
(b) Cause the related Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in force) under the Securities Act; and comply
in all material respects with the provisions of the Securities Act, the Exchange
Act and the rules and regulations of the SEC promulgated thereunder applicable
to it with respect to the disposition of all securities covered by such
Registration Statement as so amended or in such prospectus as so supplemented.
(c) Notify the Holders of Registrable Securities and their counsel
promptly, and confirm such notice in writing, (i) when a Prospectus or any
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prospectus supplement or post-effective amendment has been filed, and, with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective (including in such notice a written statement that any
Holder may, upon request, obtain, without charge, one conformed copy of such
Registration Statement or post-effective amendment including financial
statements and schedules and exhibits), (ii) of the issuance by the SEC of any
stop order suspending the effectiveness of such Registration Statement or of any
order preventing or suspending the use of any preliminary prospectus or the
initiation or threatening of any proceedings for that purpose, (iii) if at any
time when a prospectus is required by the Securities Act to be delivered in
connection with sales of the Registrable Securities the representations and
warranties of the Company contained in any agreement (including any underwriting
agreement) contemplated by Section 2.4(l) below, to the knowledge of the
Company, cease to be true and correct in any material respect, (iv) of the
receipt by the Company of any notification with respect to (A) the suspension of
the qualification or exemption from qualification of the Registration Statement
or any of the Registrable Securities covered thereby for offer or sale in any
jurisdiction, or (B) the initiation or threatening of any proceeding for such
purpose, (v) of the happening of any event, the existence of any condition or
information becoming known to the Company that requires the making of any
changes in such Registration Statement Prospectus or documents so that, in the
case of such Registration Statement, it will conform in all material respects
with the requirements of the Securities Act and it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, not misleading, and
that in the case of the Prospectus, it will conform in all material respects
with the requirements of the Securities Act and it will not contain any untrue
statement of a material fact or omit 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, and (vi) of the
Company's reasonable determination that a post-effective amendment to such
Registration Statement would be appropriate.
(d) Use every reasonable effort to prevent the issuance of any order
suspending tile effectiveness of the Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Securities covered
thereby for sale in any jurisdiction, and, if any such order is issued, to
obtain the withdrawal of any such order at the earliest practicable moment.
(e) Furnish to each Holder of Registrable Securities who so requests
and to counsel for the Holders of Registrable Securities, without charge, upon
request, one conformed copy of the Registration Statement and each
post-effective amendment thereto, including financial statements and schedules,
and of all documents incorporated or deemed to be incorporated therein by
reference and all exhibits (including exhibits incorporated by reference).
(f) Deliver to each Holder of Registrable Securities and their counsel,
without charge, as many copies of each Prospectus (including each form of
prospectus) and each amendment or supplement thereto as such Holders may
reasonably
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request but only for so long as the Company is required to keep such
registration statement effective; and, subject to the last paragraph of this
Section 2.4, the Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the Holders of Registrable Securities
in connection with the offering and sale of the Registrable Securities covered
by such Prospectus and any amendment or supplement thereto.
(g) Prior to any offering of Registrable Securities, cooperate with the
Holders of Registrable Securities if any, and their counsel in connection with
the registration or qualification (or exemption from such registration or
qualification) of, such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
may be required to permit the resale thereof by the Holders of Registrable
Securities, or as the managing underwriter or underwriters reasonably request in
writing; provided, however, that where Registrable Securities are offered other
than through an underwritten offering, the Company agrees to cause its counsel
to perform Blue Sky investigations and file registrations and qualifications
required to be filed pursuant to this Section 2.4(g); keep each such
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be effective hereunder and do
any and all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the securities covered thereby, provided,
further, that the Company will not be required to (A) qualify generally to do
business in any jurisdiction where it is not then so qualified, (B) take any
action that would subject it to general service of process in any such
jurisdiction where it is not then so subject or (C) become subject to taxation
in any jurisdiction where it is not then so subject.
(h) Cooperate with the Holders of Registrable Securities and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold, which certificates shall not bear any restrictive legends whatsoever
and shall be in a form eligible for deposit with The Depository Trust Company
("DTC"); and enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriter or underwriters, if any, or
Holders may reasonably request at least two Business Days prior to any sale of
Registrable Securities in a firm commitment underwritten public offering.
(i) Use its reasonable best efforts to cause the Registrable Securities
covered by a Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be reasonably necessary to
enable the seller or sellers thereof or the underwriter or underwriters, if any,
to consummate the disposition of such Registrable Securities, except as may be
required solely as a consequence of the nature of such selling Holder's
business, in which case the Company will cooperate in all reasonable respects
with the filing of the Registration Statement and the granting of such
approvals.
(j) Upon the occurrence of any event contemplated by Section 2.4(c)(v)
or 2.4(c)(vi) above, as promptly as practicable prepare a supplement or
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post-effective amendment to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and, subject to Section 2.4(a) hereof, file such with the
SEC so that, as thereafter delivered to the purchasers of Registrable Securities
being sold thereunder, such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading and will otherwise comply with law.
(k) Prior to the effective date of a Registration Statement (i) provide
the registrar for Exchange Shares or such other Registrable Securities with
printed certificates for such securities in a form eligible for deposit with DTC
and (ii) provide a CUSIP number for such securities.
(l) In the case of an underwritten offering, enter into an underwriting
agreement in form, scope and substance as is customary in underwritten offerings
and take all such other actions as are reasonably requested by the managing
underwriter or underwriters in order to expedite or facilitate the registration
or disposition of such Registrable Securities in any underwritten offering to be
made of the Registrable Securities in accordance with this Agreement, and in
such connection, (i) make such representations and warranties to the underwriter
or underwriters, with respect to the business of the Company and its
Subsidiaries, and the Registration Statement, Prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein, in each case, in
form, substance and scope as are customarily made by issuers to underwriters in
underwritten offerings, and confirm the same if and when requested; (ii) obtain
an opinion of counsel to the Company (which counsel and opinion (in form, scope
and substance) shall be reasonably satisfactory to the managing underwriter or
underwriters), addressed to the underwriter or underwriters covering the matters
customarily covered in opinions requested in underwritten offerings with respect
to secondary distributions and such other matters as may be reasonably requested
by underwriters; (iii) use its reasonable best efforts to obtain "cold comfort"
letters and updates thereof (which letters and updates shall be reasonably
satisfactory in form, scope and substance to the managing underwriter or
underwriters) from the independent certified public accountants of the Company
(and, if applicable, the Subsidiaries of the Company) and, to the extent
reasonably practicable, any other independent certified public accountants of
any Subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data are, or are required to be,
included in the Registration Statement, addressed to each of the underwriters,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings; and (iv) if an underwriting agreement is entered into, the same shall
contain indemnification provisions and procedures no less favorable than those
set forth in Section 3 hereof (or such other provisions and procedures
acceptable to Holders of a majority of Registrable Securities covered by such
Registration Statement and the managing underwriter or underwriters or agents)
with respect to all parties to be indemnified pursuant to said Section. The
above shall be done at each closing under such underwriting agreement, or as and
to the extent required thereunder.
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(m) Make available for inspection by a representative of the Holders of
Registrable Securities being sold and any attorney or accountant retained by
such representative of the Holders (collectively, the "Inspectors"), at the
offices where normally kept, during reasonable business hours, all pertinent
financial and other records, pertinent corporate documents and properties of the
Company and its Subsidiaries, and cause the officers, directors and employees of
the Company and its Subsidiaries to supply all information in each case
reasonably requested by any such Inspector in connection with such Registration
Statement; provided, however, that any information that is designated in writing
by the Company, in good faith, as confidential at the time of delivery of such
information, shall be kept confidential by each Inspector and not used by such
Inspector for any purpose other than in connection with such Inspector's review
of the Registration Statement for such registration except to the extent (i)
disclosure of such information is required by court or administrative order,
(ii) disclosure of such information, in the written opinion of counsel to such
Inspector (a copy of which is furnished to the Company), is necessary to avoid
or correct a misstatement or omission of a material fact in the Registration
Statement, Prospectus or any supplement or post-effective amendment thereto or
disclosure is otherwise required by law, (iii) disclosure of such information is
in the written opinion of counsel for any such Inspector (a copy of which is
furnished to the Company), necessary or advisable in connection with any action,
claim, suit or proceeding, directly or indirectly, involving or potentially
involving such Inspector and arising out of, based upon, relating to or
involving this Agreement or any of the transactions contemplated hereby or
arising hereunder, or (iv) such information becomes generally available to the
public other than as a result of a disclosure or failure to safeguard by such
Inspector; without limiting the foregoing, no such information shall be used by
such Inspector as the basis for any market transactions in securities of the
Company or any of its Subsidiaries in violation of applicable law. Each selling
Holder of such Registrable Securities agrees that information obtained by it as
a result of such inspections shall be deemed confidential and shall not be used
by it as the basis for any market transactions in the securities of the Company
or of any of its Affiliates unless and until such information is made generally
available to the public. Each selling Holder of such Registrable Securities
further agrees that it will, upon learning that disclosure of such information
is sought in a court of competent jurisdiction, give prompt notice to the
Company and allow the Company, at the Company's expense, to undertake
appropriate action to prevent disclosure of the information deemed confidential.
(n) Use its reasonable best efforts to cause all Registrable Securities
relating to such Registration Statement to be listed on each securities
exchange, if any, on which similar securities issued by the Company are then
listed.
Each seller of Registrable Securities as to which any registration is being
effected agrees, as a condition to the registration obligations with respect to
such Holder provided herein, to furnish promptly to the Company such information
regarding such seller and the distribution of such Registrable Securities as the
Company may, from time to time, reasonably request in writing to comply with the
Securities Act and other applicable law. The Company may exclude from such
registration the Registrable Securities of any seller who unreasonably fails to
furnish such information within a
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reasonable time after receiving such request. If the identity of a seller of
Registrable Securities is to be disclosed in the Registration Statement, such
seller shall be permitted to include all information regarding such seller as it
shall reasonably request.
Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 2.4(c)(ii), 2.4(c)(iv),
2.4(c)(v), or 2.4(c)(vi), such Holder will forthwith discontinue disposition of
such Registrable Securities covered by the Registration Statement or Prospectus
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 2.4(k), or until it is advised in writing
(the "Advice") by the Company that the use of the applicable prospectus may be
resumed, and has received copies of any amendments or supplements thereto, and,
if so directed by the Company, such Holder will either (i) deliver to the
Company, or (ii) destroy, all copies, other than permanent file copies, then in
such Holder's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the period of time for which a Registration Statement is
required hereunder to be effective shall be extended by the number of days
during such periods from and including the date of the giving of such notice to
and including the date when each seller of Registrable Securities covered by
such Registration Statement shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 2.4(j) or (y) the
Advice.
2.5 Registration Expenses. All fees and expenses incident to the
performance of or compliance with the provisions of this Section 2 by the
Company shall be borne by the Company whether or not any Registration Statement
is filed or becomes effective, including, without limitation, (i) all
registration and filing fees (including, without limitation, (A) fees with
respect to filings required to be made with the National Association of
Securities Dealers Inc. (the "NASD") in connection with an underwritten offering
and (B) fees and expenses of compliance with state securities or Blue Sky laws
(including, without limitation, fees and disbursements of counsel for the
underwriter or underwriters in connection with Blue Sky qualifications of the
Registrable Securities and determination of the eligibility of the Registrable
Securities for investment under the laws of such jurisdictions as provided in
Section 2.4(g)), (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities in a form eligible for
deposit with DTC and of printing prospectuses if the printing of prospectuses is
requested by the managing underwriter or underwriters, if any, or, in respect of
Registrable Securities, by the Holders of a majority of Registrable Securities
included in any Registration Statement), (iii) reasonable fees and disbursements
of all independent certified public accountants referred to in Section
2.4(l)(iii) (including, without limitation, the reasonable expenses of any
special audit and "cold comfort" letters required by or incident to such
performance), (iv) the fees and expenses of any "qualified independent
underwriter" or other independent appraiser participating in an offering
pursuant to Schedule E to the By-laws of the NASD, (v) liability insurance under
the Securities Act, if the Company so desires such insurance, (vi) fees and
expenses of all attorneys, advisors, appraisers and other Persons retained by
the Company or any of its
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Subsidiaries, (vii) internal expenses of the Company and its Subsidiaries
(including, without limitation, all salaries and expenses of officers and
employees of the Company and its Subsidiaries performing legal or accounting
duties), (viii) the expense of any annual audit and (ix) the expenses relating
to printing, word processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements, indentures and any other
documents necessary in order to comply with this Agreement. Anything herein to
the contrary notwithstanding, all underwriting and brokerage discounts and
commissions and all fees and expenses of counsel to the Holders shall be paid by
the Holders of Registrable Securities.
2.6 Rule 144. The Company covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder in a timely manner and, if
at any time the Company is not required to file such reports, it will, upon the
reasonable request of any Holder of Registrable Securities, make publicly
available other information so long as necessary to permit sales pursuant to
Rule 144 and Rule 144A under the Securities Act. The Company further covenants
that it will take such further action as any Holder of Registrable Securities
may reasonably request, all to the extent required from time to time to enable
such Holder to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule 144
and Rule 144A under the Securities Act, as such Rules may be amended from time
to time, or (b) any similar rule or regulation hereafter adopted by the SEC.
Upon the request of any Holder of Registrable Securities, the Company will
deliver to such Holder a written statement as to whether it has complied with
such information requirements.
2.7 Limitation on sale by Holders. In the event of an underwritten
offering of securities of the Company in which a Holder does not participate,
such Holder agrees not to effect any public sale or distribution of any
securities of the same class of the securities being offered (or any securities
convertible into or exchangeable or exercisable for any such securities) or any
option or other right for such securities during the 15-day period prior to and
during the 180-day period beginning on, the commencement of such underwritten
offering.
Section 3. INDEMNIFICATION.
3.1 Indemnification by the Company. The Company agrees to indemnify and
hold harmless each Holder and each Person, if any, who controls any Holder
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act from and against any and all losses, claims, damages and
liabilities, joint or several, to which such Holder or controlling Person may
become subject, under the Securities Act or otherwise, caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or any Prospectus or any amendment or supplement thereto
or any preliminary prospectus, or caused by 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, and will reimburse each Holder for any
legal or other expenses reasonably incurred by such Holder in connection with
investigating or defending any such loss, claim, damage, liability or action as
such
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expenses are incurred; provided, however, that the Company will not be liable
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information furnished in writing to the Company by any Holder expressly for use
therein; and provided further, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission in the Prospectus, if such untrue statement or
alleged untrue statement or omission or alleged omission is completely corrected
in an amendment or supplement to the Prospectus and the seller of Registrable
Securities thereafter fails to deliver such Prospectus as so amended or
supplemented prior to or concurrently with the sale of Registrable Securities to
the person asserting such loss, claim, damage, or liability after the Company
had furnished such seller with a sufficient number of copies of the same or if
the seller received written notice from the Company of the existence of such
untrue statement or alleged untrue statement or omission or alleged omission and
the seller continued to dispose of Registrable Securities prior to the time of
the receipt of either (A) an amended or supplemented Prospectus which completely
corrected such untrue statement or omission or (B) a notice from the Company
that the use of the existing Prospectus may be resumed. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of any Holder or any Person controlling such Holder within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act.
3.2 Indemnification by Holder of Registrable Securities. Each Holder
agrees, severally and not jointly, to indemnify and hold harmless the Company,
the Company's directors, the Company's officers who sign the Registration
Statement and any Person controlling the Company to the same extent as the
foregoing indemnity from the Company to each Holder set forth in Section 3.1,
but only with reference to, and in conformity with, information relating to such
Holder furnished in writing by such Holder expressly for use in a Registration
Statement, the Prospectus or any preliminary prospectus, or any amendment or
supplement thereto and will reimburse any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending any such
loss, claim, damage, liability or action as such expenses are incurred. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any such director, officer or Person
controlling the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act and shall survive the transfer
of such securities by such Holder.
3.3 Conduct of Indemnification Proceeding. In case any proceeding
(including any governmental investigation) shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to either Section
3.1 or Section 3.2, such Person (the "indemnified party") shall promptly notify
the Person against whom such indemnity may be sought (the "indemnifying party")
in writing; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party
otherwise than as provided above. In case any such proceeding is instituted
against any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall have the right to retain
counsel satisfactory to such indemnified party to defend against such proceeding
and shall pay the
12
reasonable fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them or (iii) the indemnifying party has not
retained counsel to defend such proceeding, notwithstanding anything to the
contrary in this Section 3. It is understood that the indemnifying party shall
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm for all such indemnified parties. Such firm shall be designated in
writing by the Holders of a majority of the Registrable Securities included in
such Registration Statement in the case of parties indemnified pursuant to
Section 3.1 and by the Company in the case of parties indemnified pursuant to
Section 3.2. All fees and expenses, which an indemnified party is entitled to
receive from an indemnifying party under this Section 3, shall be reimbursed as
they are incurred. No indemnifying party shall, without prior written consent of
the indemnified party (which shall not be unreasonably withheld or delayed),
effect any settlement of any pending or threatened action in respect of which
any indemnified party is or could have been a party and indemnity could have
been sought hereunder by such indemnified party unless such settlement includes
an unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action.
3.4 Contribution. If the indemnification provided for in Section 3.1 or
Section 3.2 is unavailable as a matter of law to an indemnified party in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under either such Section, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages, judgments or
liabilities in such proportion as is appropriate to reflect the relative fault
of the Company on the one hand and of the Holders of Registrable Securities
covered by the Registration Statement in question on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission to
state a material fact relates to information supplied by the Company, or by the
Holders of Registrable Securities covered by the Registration Statement in
question 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 3 were determined by pro rata
allocation 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 of this Section 3.4 shall be deemed to
13
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
Section 3, no Holder shall be required to contribute any amount in excess of the
amount by which the total price at which the Registrable Securities sold by such
Holder and distributed to the public were offered to the public exceeds the
amount of any damages which such Holder has otherwise been required to pay by
reason of such untrue statement or omission or alleged omission. No Person
guilty of fraudulent 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.
3.5 Other Indemnities. The obligations of the Company and of each of
the Holders under this Section 3 shall be in addition to any liability which the
Company or which any of the Holders may otherwise have.
Section 4. MISCELLANEOUS.
4.1 Remedies. In the event of a breach by the Company of any of its
obligations under this Agreement, each Holder of Registrable Securities, in
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, will be entitled to specific performance of
its rights under this Agreement. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of any of the provisions of this Agreement.
4.2 No Inconsistent Agreements. The Company shall not, after the date of
this Agreement, enter into any agreement with respect to any of its securities
that is inconsistent with the rights granted to the Holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions hereof.
4.3 Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the Company has obtained the
prior written consent of Holders of at least a majority of the then outstanding
Registrable Securities. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders of Registrable Securities whose securities
are being sold pursuant to a Registration Statement and that does not directly
or indirectly affect, impair, limit or compromise the rights of other Holders of
Registrable Securities may be given by Holders of at least a majority of the
Registrable Securities being sold by such Holders pursuant to such Registration
Statement; provided, however, that the provisions of this sentence may not be
amended, modified or supplemented except in accordance with the provisions of
the immediately preceding sentence. The last sentence of the definition of
Registrable Securities and this Section 4.3 may not be amended, modified or
supplemented, and waivers or consents to departures therefrom may not be given
at any time.
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4.4 Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, next-day air courier or telecopier:
(i) if to a Holder of Registrable Securities, at the most current
address given by such Holder to the Company in accordance with the provisions of
this Section 4.4, which address initially is, with respect to each Holder, the
address set forth on the signature page attached hereto; and
(ii) if to the Company, 000 Xxxxxxxx-Xxxx Xxxx Xxxx, Xxxxxxxx, Xxxxx
Xxxxxxxx 00000, Attention: Corporate Secretary, Telecopier No. (000) 000-0000
with a copy to Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X. Xxxxxxxx, Esq.,
Telecopier No. (000) 000-0000.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; three Business Days
after being deposited in the mail, postage prepaid, if mailed; one Business Day
after being timely delivered to a next-day courier; and when receipt is
acknowledged by the addressee, if telecopied.
4.5 Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Registrable Securities.
4.6 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.
4.7 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
4.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
4.9 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or
15
invalidated, and the parties hereto shall use their best efforts to find and
employ an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.
4.10 Entire Agreement. This Agreement, together with the Purchase
Agreement, is intended by the parties as a final expression of their agreement,
and is intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein. This Agreement and the Purchase Agreement supersede all
prior agreements and understandings between the parties with respect to such
subject matter.
4.11 Attorneys' Fees. As between the parties to this Agreement, in any
action or proceeding brought to enforce any provision of this Agreement, or
where any provision hereof is validly asserted as a defense, the successful
party shall be entitled to recover reasonable attorneys' fees in addition to its
costs and expenses and any other available remedy.
4.12 Securities Held by the Company or Its Subsidiaries. Whenever the
consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
by any of its Subsidiaries shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
PCA International, Inc.
By: /s/ Xxxxx X. Xxxx
--------------------------------------
Name: Xxxxx X. Xxxx
Title: President and CEO
Address:
000 Xxxxxxxx-Xxxx Xxxx Xxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopy No. (000) 000-0000
Attention: Chief Financial Officer
GS MEZZANINE PARTNERS II, L.P.
By: GS Mezzanine Advisors II, L.L.C.,
its general partner
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Vice President
Address:
c/o Goldman, Sachs & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy No. (000) 000-0000
Attention:
GS MEZZANINE PARTNERS II OFFSHORE, L.P.
By: GS Mezzanine Advisors II, L.L.C.,
its general partner
By: /s/ Xxxxxxx Xxxxxxx
----------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Vice President
Address:
c/o Goldman, Xxxxx & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy No. 000-000-0000
Attention:
