REGISTRATION RIGHTS AGREEMENT
EXHIBIT
4.5
This
Registration Rights Agreement (this “Agreement”)
is
made and entered into as of July 3, 2007, by and between Maiden Holdings, Ltd.,
a Bermuda company limited by shares (together with any successor entity thereto,
the “Company”),
and
Friedman, Billings, Xxxxxx & Co., Inc., a Delaware corporation
(“FBR”),
for
the benefit of FBR, the purchasers of the Company’s common stock, par value
$0.01 per share, as participants (“Participants”)
in the
private placement by the Company of shares of its common stock (the
“Private
Placement”),
and
the direct and indirect transferees of FBR, and each of the
Participants.
This
Agreement is made pursuant to the Purchase/Placement Agreement (the
“Purchase/Placement
Agreement”),
dated
as of June 26, 2007, by and among the Company and FBR in connection with the
purchase and sale or placement of an aggregate of 45,000,000 shares of the
Company’s common stock (plus an additional 6,750,000 shares to cover additional
allotments, if any). In order to induce FBR to enter into the Purchase/Placement
Agreement, the Company has agreed to provide the registration rights provided
for in this Agreement to FBR, the Participants, and their respective direct
and
indirect transferees. The execution of this Agreement is a condition to the
closing of the transactions contemplated by the Purchase/Placement
Agreement.
The
parties hereby agree as follows:
1. Definitions
As
used
in this Agreement, the following terms shall have the following
meanings:
Accredited
Investor Shares:
Shares
initially sold by the Company to “accredited investors” (within the meaning of
Rule 501(a) promulgated under the Securities Act) as Participants.
Agreement:
As
defined in the preamble.
Affiliate:
As to
any specified Person, (i) any Person directly or indirectly owning,
controlling or holding, with power to vote, ten percent or more of the
outstanding voting securities of such other Person, (ii) any Person ten
percent or more of whose outstanding voting securities are directly or
indirectly owned, controlled or held, with power to vote, by such other Person,
(iii) any Person directly or indirectly controlling, controlled by or under
common control with such other Person, (iv) any executive officer,
director, trustee or general partner of such Person and (v) any legal
entity for which such Person acts as an executive officer, director, trustee
or
general partner. An indirect relationship shall include circumstances in which
a
Person's spouse, children, parents, siblings or mother-, father-, sister- or
brother-in-law is or has been associated with a Person.
Business
Day:
With
respect to any act to be performed hereunder, each Monday, Tuesday, Wednesday,
Thursday and Friday that is not a day on which banking institutions in New
York,
New York or other applicable places where such act is to occur are authorized
or
obligated by applicable law, regulation or executive order to
close.
1
Closing
Date:
July 3,
2007 or such other time or such other date as FBR and the Company may
agree.
Commission:
The
Securities and Exchange Commission.
Common
Stock:
The
common stock, par value $0.01 per share, of the Company.
Company:
As
defined in the preamble.
Controlling
Person:
As
defined in Section 6(a) hereof.
End
of
Suspension Notice:
As
defined in Section 5(b) hereof.
Exchange
Act:
The
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated by the Commission pursuant thereto.
FBR:
As
defined in the preamble.
Holder:
Each
record owner of any Registrable Shares from time to time, including FBR and
its
Affiliates.
Indemnified
Party:
As
defined in Section 6(c) hereof.
Indemnifying
Party:
As
defined in Section 6(c) hereof.
Inside
Holders:
Xxxxxxx
Xxxxxxxxx, Xxxxxx Xxxxxxxxx and Xxxxx X. Xxxxxxx and any transferees of shares
of Common Stock therefrom.
IPO
Registration Statement:
As
defined in Section 2(b) hereof.
Liabilities:
As
defined in Section 6(a) hereof.
Market
Value:
With
respect to the Common Stock for any 180-day period contemplated by Section
2(e)(ii) shall mean (i) if the Common Stock is then listed on a national
securities exchange, the average of the closing sale prices on the principal
exchange on which the Common Stock is then listed for the days in which sales
occurred in the last thirty (30) days of such 180-day period or (ii) if the
Common Stock is not then listed on a stock exchange but is eligible for resale
on The Portal Market, the average of the closing sale prices for days on which
trading is reporting on The Portal Market in the last thirty (30) days of such
180-day period.
NASD:
The
National Association of Securities Dealers, Inc.
No
Objections Letter:
As
defined in Section 4(t) hereof.
2
Offering
Memorandum:
The
Offering Memorandum of the Company dated June 26, 2007 pursuant to which the
Rule 144A Shares, the Regulation S Shares and the Accredited Investor Shares
are
offered and sold.
Participant:
As
defined in the preamble.
Person:
Any
individual, partnership, corporation, limited liability company, joint stock
company, association, trust, unincorporated organization, or a government agency
or political subdivision thereof.
Private
Placement:
As
defined in the preamble.
Proceeding:
An
action, claim, suit or proceeding (including without limitation, an
investigation or partial proceeding, such as a deposition), whether commenced
or, to the knowledge of the Person subject thereto, threatened.
Prospectus:
The
prospectus included in any Registration Statement, including any preliminary
prospectus, and all other amendments and supplements to any such prospectus,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference, if any, in such
prospectus.
Purchase/Placement
Agreement:
As
defined in the preamble.
Purchaser
Indemnitee:
As
defined in Section 6(a) hereof.
Registrable
Shares:
The
Rule 144A Shares, the Accredited Investor Shares and the Regulation S Shares,
upon original issuance thereof, and at all times subsequent thereto, including
upon the transfer thereof by the original holder or any subsequent holder and
any shares or other securities issued in respect of such Registrable Shares
by
reason of or in connection with any stock dividend, stock distribution, stock
split, purchase in any rights offering or in connection with any exchange for
or
replacement of such Registrable Shares or any combination of shares,
recapitalization, merger or consolidation, any other equity securities issued
in
respect of Registrable Shares pursuant to any other pro rata distribution with
respect to the Common Stock or any issuance of shares pursuant to Section
2(e)(ii), until, in the case of any such Rule 144A Share, Accredited Investor
Share or Regulation S Share, the earliest to occur of (i) the date on which
it has been registered effectively pursuant to the Securities Act and disposed
of in accordance with the Registration Statement relating to it, (ii) the
date on which either it is distributed to the public pursuant to Rule 144 (or
any similar provision then in effect) or is saleable pursuant to Rule 144(k)
promulgated by the Commission pursuant to the Securities Act or (iii) the
date on which it is sold to the Company.
3
Registration
Expenses:
Any and
all expenses incident to the performance of or compliance with this Agreement,
including, without limitation: (i) all Commission, securities exchange,
NASD registration, listing, inclusion and filing fees, (ii) all fees and
expenses incurred in connection with compliance with international, federal
or
state securities or blue sky laws (including, without limitation, any
registration, listing and filing fees and reasonable fees and disbursements
of
counsel in connection with blue sky qualification of any of the Registrable
Shares and the preparation of a blue sky memorandum and compliance with the
rules of the NASD), (iii) all expenses in preparing or assisting in
preparing, word processing, duplicating, printing, delivering and distributing
any Registration Statement, any Prospectus, any amendments or supplements
thereto, any underwriting agreements, securities sales agreements, certificates
and any other documents relating to the performance under and compliance with
this Agreement, (iv) all fees and expenses incurred in connection with the
listing or inclusion of any of the Registrable Shares on any securities exchange
or The Nasdaq Stock Market pursuant to Section 4(n) of this Agreement,
(v) the fees and disbursements of counsel for the Company and of the
independent public accountants of the Company (including, without limitation,
the expenses of any special audit and “cold comfort” letters required by or
incident to such performance), (vi) reasonable fees and disbursements (not
exceeding $35,000) of one counsel (which counsel shall be Sidley Austin LLP,
unless another such counsel shall have been selected by the Holders holding
a
majority of the Registrable Shares) (such counsel, “Selling
Holders’ Counsel”)
and
(vii) any fees and disbursements customarily paid in issues and sales of
securities (including the fees and expenses of any experts retained by the
Company in connection with any Registration Statement); provided, however,
that
Registration Expenses shall exclude (i) brokers' or underwriters' discounts
and
commissions, if any, relating to the sale or disposition of Registrable Shares
by a Holder and (ii) any fees and expenses incurred by any underwriter, other
than such fees and expenses (x) agreed to be paid under this Agreement or (y)
that the Company shall have agreed in writing with such underwriter to pay.
Registration
Statement:
Any
registration statement of the Company that covers the resale of Registrable
Shares pursuant to the provisions of this Agreement, including the Prospectus,
amendments and supplements to such registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto and all
material incorporated by reference or deemed to be incorporated by reference,
if
any, in such registration statement.
Regulation
S:
Regulation S (Rules 901-905) promulgated by the Commission under the Securities
Act, as such rules may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission as a replacement thereto having
substantially the same effect as such regulation.
Regulation
S Shares:
Shares
initially resold by FBR pursuant to the Purchase/Placement Agreement to
“non-U.S. persons” (in accordance with Regulation S) in an “offshore
transaction” (in accordance with Regulation S).
4
Rule
144:
Rule
144 promulgated by the Commission pursuant to the Securities Act, as such rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission as a replacement thereto having substantially the
same
effect as such rule.
Rule
144A:
Rule
144A promulgated by the Commission pursuant to the Securities Act, as such
rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission as a replacement thereto having substantially the
same
effect as such rule.
Rule
144A Shares:
Shares
initially resold by FBR pursuant to the Purchase/Placement Agreement to
“qualified institutional buyers” (as such term is defined in Rule
144A).
Rule
158:
Rule
158 promulgated by the Commission pursuant to the Securities Act, as such rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission as a replacement thereto having substantially the
same
effect as such rule.
Rule
174:
Rule
174 promulgated by the Commission pursuant to the Securities Act, as such rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission as a replacement thereto having substantially the
same
effect as such rule.
Rule
415:
Rule
415 promulgated by the Commission pursuant to the Securities Act, as such rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission as a replacement thereto having substantially the
same
effect as such rule.
Rule
424:
Rule
424 promulgated by the Commission pursuant to the Securities Act, as such rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission as a replacement thereto having substantially the
same
effect as such rule.
Rule
429:
Rule
429 promulgated by the Commission pursuant to the Securities Act, as such rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission as a replacement thereto having substantially the
same
effect as such rule.
Securities
Act:
The
Securities Act of 1933, as amended, and the rules and regulations promulgated
by
the Commission thereunder.
Shares:
The
shares of Common Stock being offered and sold pursuant to the terms and
conditions of the Purchase/Placement Agreement
Shelf
Registration Statement:
As
defined in Section 2(a) hereof.
Suspension
Event:
As
defined in Section 5(b) hereof.
Suspension
Notice:
As
defined in Section 5(b) hereof.
5
Underwritten
Offering:
A sale
of securities of the Company to an underwriter or underwriters for reoffering
to
the public.
2. Registration
Rights
(a) Mandatory
Shelf Registration. As
set
forth in Section 4 hereof, the Company agrees to file with the Commission
as soon as reasonably practicable following the date of this Agreement (but
in
no event later than the date that is 90 days after the date of this Agreement)
a
shelf Registration Statement on Form S-1 or such other form under the Securities
Act then available to the Company providing for the resale of any Registrable
Shares pursuant to Rule 415 from time to time by the Holders (a “Shelf
Registration Statement”).
The
Company shall use its commercially reasonable efforts to cause such Shelf
Registration Statement to be declared effective by the Commission as soon as
practicable. Any Shelf Registration Statement shall provide for the resale
from
time to time, and pursuant to any method or combination of methods legally
available (including, without limitation, an Underwritten Offering, a direct
sale to purchasers or a sale through brokers or agents, which may include sales
over the internet) by the Holders of any and all Registrable Shares.
(b) IPO
Registration.
If the
Company proposes to file a registration statement on Form S-1 or such other
form
under the Securities Act providing for the initial public offering of shares
of
Common Stock (the “IPO
Registration Statement”),
the
Company will notify each Holder of the proposed filing and afford each Holder
an
opportunity to include in the IPO Registration Statement all or any part of
the
Registrable Shares then held by such Holder. Each Holder desiring to include
in
the IPO Registration Statement all or part of the Registrable Shares held by
such Holder shall, within twenty (20) days after mailing or delivery of the
above-described notice from the Company, so notify the Company in writing,
and
in such notice shall inform the Company of the number of Registrable Shares
such
Holder wishes to include in the IPO Registration Statement. Any election by
any
Holder to include any Registrable Shares in the IPO Registration Statement
will
not affect the inclusion of such Registrable Shares in the Shelf Registration
Statement until such Registrable Shares have been sold under the IPO
Registration Statement.
(i) Right
to Terminate IPO Registration.
The
Company shall have the right to terminate or withdraw the IPO Registration
Statement initiated by it referred to in this Section 2(b) prior to the
effectiveness of such registration whether or not any Holder has elected to
include Registrable Shares in such registration.
(ii) Selection
of Underwriter.
The
Company shall have the sole right to select the managing underwriter(s) for
its
initial public offering, regardless of whether any Registrable Securities are
included in the IPO Registration Statement or otherwise.
(iii) Shelf
Registration not Impacted by IPO Registration Statement.
The
Company's obligation to file the Shelf Registration Statement pursuant to
Section 2(a) hereof shall not be affected by the filing or effectiveness of
the IPO Registration Statement.
6
(c) Underwriting.
The
Company shall advise all Holders of the underwriter for the Underwritten
Offering proposed under the IPO Registration Statement. The right of any such
Holder to include any of its Registrable Shares in the IPO Registration
Statement pursuant to Section 2(b) shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Shares in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Shares through such
underwriting shall enter into an underwriting agreement in customary form with
the managing underwriter(s) selected for such underwriting and complete and
execute any questionnaires, powers of attorney, indemnities, securities escrow
agreements and other documents reasonably required under the terms of such
underwriting, and furnish to the Company such information as the Company may
reasonably request in writing for inclusion in the Registration Statement;
provided,
however,
that no
Holder shall be required to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such Holder and such Holder's intended method
of distribution and any other representation required by law or reasonably
requested by the underwriters. Notwithstanding any other provision of this
Agreement, if the managing underwriter(s) determine(s) in good faith that
marketing factors require a limitation on the number of shares to be included,
then the managing underwriter(s) may exclude shares (including Registrable
Shares) from the IPO Registration Statement and Underwritten Offering, and
any
shares included in such IPO Registration Statement and Underwritten Offering
shall be allocated first,
to the
Company, and second,
to each
of the Holders requesting inclusion of their Registrable Shares in such IPO
Registration Statement (on a pro
rata
basis
based on the total number of Registrable Shares then held by each such Holder
who is requesting inclusion); provided,
however,
that
the number of Registrable Shares to be included in the IPO Registration
Statement shall not be reduced unless all other securities of the Company held
by (i) officers, directors, other employees of the Company and consultants;
and (ii) other holders of the Company’s capital stock with registration
rights that are inferior (with respect to such reduction) to the registration
rights of the Holders set forth herein, are first entirely excluded from the
underwriting and registration; provided,
further,
however,
that
Holders of Registrable Shares shall be permitted to include Registrable Shares
comprising at least 20% of the total securities included in the Underwritten
Offering proposed under the IPO Registration Statement.
By
electing to include the Registrable Shares in the IPO Registration Statement,
the Holder of such Registrable Shares shall be deemed to have agreed not to
effect any public sale or distribution of securities of the Company of the
same
or similar class or classes of the securities included in the IPO Registration
Statement or any securities convertible into or exchangeable or exercisable
for
such securities, including a sale pursuant to Rule 144 or Rule 144A under the
Securities Act, during such periods as reasonably requested (but in no event
for
a period longer than thirty (30) days prior to and one hundred eighty (180)
days
following the effective date of the IPO Registration Statement) by the
representatives of the underwriters, if an Underwritten Offering, or by the
Company in any other registration. If (i) during the last 17 days of the
restricted period described above the Company issues an earnings release or
material news or a material event relating to the Company occurs; or (ii) prior
to the expiration of such restricted period, the Company announces that it
will
release earnings results during the 16 day period beginning on the last day
of
the restricted period; the restrictions imposed by this agreement shall continue
to apply until the expiration of the 18 day period beginning on the issuance
of
the earnings release or the occurrence of the material news or material
event.
7
If
any
Holder disapproves of the terms of any such underwriting, such Holder may elect
to withdraw therefrom by written notice to the Company and the underwriter,
delivered at least ten (10) Business Days prior to the effective date of the
IPO
Registration Statement. Any Registrable Shares excluded or withdrawn from such
underwriting shall be excluded and withdrawn from the registration.
(d) Expenses.
The
Company shall pay all Registration Expenses in connection with the registration
of the Registrable Shares pursuant to this Agreement. Each Holder participating
in a registration pursuant to this Section 2 shall bear such Holder's
proportionate share (based on the total number of Registrable Shares sold in
such registration) of all discounts and commissions payable to underwriters
or
brokers in connection with a registration of Registrable Shares pursuant to
this
Agreement.
(e) Executive
Bonuses.
(i) If
the Company does not file a Registration Statement registering the resale of
the
Accredited Investor Shares, the Rule 144A Shares, and the Regulation S Shares
within ninety (90) days after the Closing Date, other than as a result of the
Commission being unable to accept such filings, each of Max G. Caviet and Xxx
Xxxxx shall forfeit any bonus that would otherwise be payable to him in the
2007
fiscal year (or to which he or she became entitled as a result of performance
during the 2007 fiscal year), whether under an employment agreement with the
Company, a bonus plan or any other bonus arrangement, including any bonus
compensation for which payment would otherwise be deferred until after
2007.
(ii) If
the
Company does not file a Registration Statement registering the resale of the
Accredited Investor Shares, the Rule 144A Shares, and the Regulation S Shares
within two hundred forty (240) days after the Closing Date, it shall pay not
later than two hundred forty-five (245) days after the Closing Date to the
Holders (other than the Inside Holders) an aggregate of six million dollars
($6,000,000) in cash (such amounts to be paid to them pro rata, based on the
respective number of Registrable Shares then held by such Holders). If the
Company has not filed a Registration Statement registering the resale of the
Accredited Investor Shares, the Rule 144A Shares, and the Regulation S Shares
by
the end of any rolling 180-day period commencing after such 240-day period
(e.g.,
if at
the end of 420 days or 600 days after the Closing Date or the end of any such
subsequent period), the Company will make an additional payment not later than
five days after the end of each such 180-day period to the Holders (other than
the Inside Shareholders) of an aggregate of six million dollars ($6,000,000)
in
cash (or to the extent provided below, at the Company’s option in Common Stock),
such payment to be made pro rata, based on the respective number of Registrable
Shares held by such Holders. If the Company elects to make any such additional
payment in Common Stock, such stock will be valued at its Market Value as of
the
end of such 180-day period; provided,
that
the Company shall not have the option to elect to an additional payment in
Common Stock rather than cash if there has not been at least five (5) days
of
trading in the Common Stock on a stock exchange or the Portal Market during
at
least five (5) days during the last thirty (30) days of such 180-day period.
The
parties acknowledge that damages from a failure to file a Registration Statement
are difficult to measure and that the payments provided for in this Section
2(e)(ii) are reasonable liquidated damages and not a penalty.
8
3. Rules
144 and 144A Reporting
With
a
view to making available the benefits of certain rules and regulations of the
Commission that may at any time permit the sale of the Registrable Shares to
the
public without registration, the Company agrees to:
(a) make
and
keep public information available, as those terms are understood and defined
in
Rule 144 under the Securities Act, at all times after the effective date of
the
first registration under the Securities Act filed by the Company for an offering
of its securities to the general public;
(b) use
commercially reasonable efforts to file with the Commission in a timely manner
all reports and other documents required to be filed by the Company under the
Securities Act and the Exchange Act (at any time after it has become subject
to
such reporting requirements);
(c) so
long
as a Holder owns any Registrable Shares, if the Company is not required to
file
reports and other documents under the Securities Act and the Exchange Act,
it
will make available other information as required by, and so long as necessary
to permit sales of Registrable Shares pursuant to, Rule 144 or Rule 144A, and
in
any event shall make available (either by mailing a copy thereof, by posting
on
the Company’s website, or by press release) to each Holder a copy
of:
(i) the
Company’s annual consolidated financial statements (including at least balance
sheets, statements of profit and loss, statements of stockholders’ equity and
statements of cash flows) prepared in accordance with U.S. generally accepted
accounting principles, accompanied by an audit report of the Company’s
independent accountants, no later than ninety (90) days after the end of each
fiscal year of the Company; and
(ii) the
Company’s unaudited quarterly financial statements (including at least balance
sheets, statements of profit and loss, statements of stockholders’ equity and
statements of cash flows) prepared in a manner consistent with the preparation
of the Company’s annual financial statements, no later than forty-five (45) days
after the end of each fiscal quarter of the Company (other than the fourth
fiscal quarter); and
the
Company shall hold, a reasonable time after the availability of such financial
statements and upon reasonable notice to the Holders and FBR (either by mail,
by
posting on the Company’s website, or by press release), a quarterly investor
conference call to discuss such financial statements, which call will also
include an opportunity for the Holders to ask questions of management with
regard to such financial statements, and will also cooperate with, and make
management reasonably available to, FBR personnel in connection with making
Company information available to investors; and
9
(d) so
long
as a Holder owns any Registrable Shares, to furnish to the Holder promptly
upon
request (i) a written statement by the Company as to its compliance with the
reporting requirements of Rule 144 (at any time after ninety (90) days after
the
effective date of the first registration statement filed by the Company for
an
offering of its securities to the general public), and of the Securities Act
and
the Exchange Act (at any time after it has become subject to the reporting
requirements of the Exchange Act), (ii) a copy of the most recent annual or
quarterly report of the Company, and (iii) such other reports and documents
of
the Company, and take such further actions, as a Holder may reasonably request
in availing itself of any rule or regulation of the Commission allowing a Holder
to sell any such Registrable Shares without registration.
4. Registration
Procedures
In
connection with the obligations of the Company with respect to any registration
pursuant to this Agreement, the Company shall use its commercially reasonable
efforts to effect or cause to be effected the registration of the Registrable
Shares under the Securities Act to permit the sale of such Registrable Shares
by
the Holder or Holders in accordance with the Holder’s or Holders' intended
method or methods of distribution, and the Company shall:
(a) notify
FBR and Selling Holders' Counsel, in writing, at least ten (10) Business Days
prior to filing a Registration Statement, of its intention to file a
Registration Statement with the Commission and, at least five (5) Business
Days
prior to filing, provide a copy of the Registration Statement to FBR, its
counsel, and Selling Holders' Counsel for review and comment; prepare and file
with the Commission, as specified in this Agreement, a Registration
Statement(s), which Registration Statement(s) (x) shall comply as to form in
all
material respects with the requirements of the applicable form and include
all
financial statements required by the Commission to be filed therewith and (y)
shall be acceptable to FBR, its counsel and Selling Holders’ Counsel; notify FBR
and Selling Holders' Counsel in writing, at least five (5) Business Days prior
to filing of any amendment or supplement to such Registration Statement and,
at
least three (3) Business Days prior to filing, provide a copy of such amendment
or supplement to FBR, its counsel and Selling Holders' Counsel for review and
comment; promptly following receipt from the Commission, provide to FBR, its
counsel and Selling Holders’ Counsel copies of any comments made by the staff of
the Commission relating to such Registration Statement and of the Company's
responses thereto for review and comment; and use its commercially reasonable
efforts to cause such Registration Statement to become effective as soon as
practicable after filing and to remain effective, subject to Section 5
hereof, until the earlier of (i) such time as all Registrable Shares
covered thereby have been sold in accordance with the intended distribution
of
such Registrable Shares, (ii) there are no Registrable Shares outstanding
or (iii) the second anniversary of the effective date of such Registration
Statement (subject to extension as provided in Section 5(c) hereof);
provided,
however,
that the
Company shall not be required to cause the IPO Registration Statement to remain
effective for any period longer than ninety (90) days following the effective
date of the IPO Registration Statement (subject to extension as provided in
Section 5(c) hereof); provided,
further,
that if
the Company has an effective Shelf Registration Statement on Form S-1 under
the
Securities Act and becomes eligible to use Form S-3 or such other short-form
registration statement form under the Securities Act, the Company may file
a
post-effective amendment on Form S-3 to such registration statement on Form
S-1;
10
(b) subject
to Section 4(i) hereof, (i) prepare and file with the Commission such
amendments and post-effective amendments to each such Registration Statement
as
may be necessary to keep such Registration Statement effective for the period
described in Section 4(a) hereof; (ii) cause each Prospectus contained
therein to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 or any similar rule that may
be
adopted under the Securities Act; and (iii) comply with the provisions of
the Securities Act with respect to the disposition of all securities covered
by
each Registration Statement during the applicable period in accordance with
the
intended method or methods of distribution by the selling Holders
thereof;
(c) furnish
to the Holders, without charge, as many copies of each Prospectus, including
each preliminary Prospectus, and any amendment or supplement thereto and such
other documents as such Holder may reasonably request, in order to facilitate
the public sale or other disposition of the Registrable Shares; the Company
consents to the use of such Prospectus, including each preliminary Prospectus,
by the Holders, if any, in connection with the offering and sale of the
Registrable Shares covered by any such Prospectus;
(d) use
its
commercially reasonable efforts to register or qualify, or obtain exemption
from
registration or qualification for, all Registrable Shares by the time the
applicable Registration Statement is declared effective by the Commission under
all applicable state securities or “blue sky” laws of such jurisdictions as FBR
or any Holder of Registrable Shares covered by a Registration Statement shall
reasonably request in writing, keep each such registration or qualification
or
exemption effective during the period such Registration Statement is required
to
be kept effective pursuant to Section 4(a) and do any and all other acts
and things that may be reasonably necessary or advisable to enable such Holder
to consummate the disposition in each such jurisdiction of such Registrable
Shares owned by such Holder; provided,
however,
that the
Company shall not be required to (i) qualify generally to do business in
any jurisdiction or to register as a broker or dealer in such jurisdiction
where
it would not otherwise be required to qualify but for this Section 4(d) and
except as may be required by the Securities Act, (ii) subject itself to
taxation in any such jurisdiction, or (iii) submit to the general service
of process in any such jurisdiction;
(e) use
its
commercially reasonable efforts to cause all Registrable Shares covered by
such
Registration Statement to be registered and approved by such other governmental
agencies or authorities as may be necessary to enable the Holders thereof to
consummate the disposition of such Registrable Shares; provided,
however,
that the
Company shall not be required to (i) qualify generally to do business in
any jurisdiction or to register as a broker or dealer in any jurisdiction where
it would not otherwise be required to qualify but for this Section 4(e) and
except as may be required by the Securities Act, (ii) subject itself to
taxation in any jurisdiction, or (iii) submit to the general service of
process in any jurisdiction;
(f) notify
FBR and each Holder promptly and, if requested by FBR or any Holder, confirm
such advice in writing (i) when a Registration Statement has become
effective and when any post-effective amendments and supplements thereto become
effective, (ii) of the issuance by the Commission or any state securities
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any proceedings for that purpose, (iii) of
any request by the Commission or any other federal, state or foreign
governmental authority for amendments or supplements to a Registration Statement
or related Prospectus or for additional information, (iv) of the happening
of any event during the period a Registration Statement is effective as a result
of which such Registration Statement or the related Prospectus or any document
incorporated by reference therein contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not misleading (which
information shall be accompanied by an instruction to suspend the use of the
Prospectus until the requisite changes have been made) and (v) at the
request of any such Holder, promptly to furnish to such Holder a reasonable
number of copies of a supplement to or an amendment of such Prospectus as may
be
necessary so that, as thereafter delivered to the purchaser of such securities,
such Prospectus shall not include 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;
11
(g) make
every reasonable effort to avoid the issuance of, or if issued, to obtain the
withdrawal of, any order enjoining or suspending the use or effectiveness of
a
Registration Statement or suspending of the qualification (or exemption from
qualification) of any of the Registrable Shares for sale in any jurisdiction,
as
promptly as practicable;
(h) upon
request, furnish to each requesting Holder of Registrable Shares, without
charge, at least one conformed copy of each Registration Statement and any
post-effective amendment or supplement thereto (without documents incorporated
therein by reference or exhibits thereto, unless requested);
(i) except
as
provided in Section 5, upon the occurrence of any event contemplated by
Section 4(f)(iv) hereof, use its commercially reasonable efforts to
promptly prepare a supplement or post-effective amendment to a Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Shares, such Prospectus will not contain
any 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
the light of the circumstances under which they were made, not
misleading;
(j) if
requested by the representative of the underwriters, if any, or any Holders
of
Registrable Shares being sold in connection with such offering,
(i) promptly incorporate in a Prospectus supplement or post-effective
amendment such information as the representative of the underwriters, if any,
or
such Holders indicate relates to them or that they reasonably request be
included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment;
(k) in
the
case of an Underwritten Offering, use its commercially reasonable efforts to
furnish to the underwriters a signed counterpart, addressed to the underwriters,
of: (i) an opinion of counsel for the Company, dated the date of each
closing under the underwriting agreement, reasonably satisfactory to the
underwriters; and (ii) a “comfort” letter, dated the effective date of such
Registration Statement and the date of each closing under the underwriting
agreement, signed by the independent public accountants who have certified
the
Company's financial statements included in such Registration Statement, covering
substantially the same matters with respect to such Registration Statement
(and
the Prospectus included therein) and with respect to events subsequent to the
date of such financial statements, as are customarily covered in accountants'
letters delivered to underwriters in underwritten public offerings of securities
and such other financial matters as the underwriters may reasonably
request;
12
(l) enter
into customary agreements (including in the case of an Underwritten Offering,
an
underwriting agreement in customary form) and take all other action in
connection therewith in order to expedite or facilitate the distribution of
the
Registrable Shares included in such Registration Statement and, in the case
of
an Underwritten Offering, make representations and warranties to the Holders
covered by such Registration Statement and to the underwriters in such form
and
scope as are customarily made by issuers to underwriters in underwritten
offerings and confirm the same to the extent customary if and when
requested;
(m) make
available for inspection by the representative of any underwriters participating
in any disposition pursuant to a Registration Statement and any one special
counsel retained by the Holders or any one special counsel or firm of
accountants retained by the underwriters, all financial and other records,
pertinent corporate documents and properties of the Company and cause the
respective officers, directors and employees of the Company to supply all
information reasonably requested by the representative of the underwriters,
counsel or accountants in connection with a Registration Statement; provided,
however, that
such
records, documents or information that the Company determines, in good faith,
to
be confidential and notifies such representative of the underwriters, counsel
or
accountants are confidential shall not be disclosed by such representative
of
the underwriters, counsel or accountants unless (i) the release of such
records, documents or information is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction, or (ii) such records,
documents or information have been generally made available to the
public;
(n) use
its
commercially reasonable efforts (including, without limitation, seeking to
cure
any deficiencies cited by the exchange or market in the Company's listing or
inclusion application) to list or include all Registrable Shares on the New
York
Stock Exchange or The Nasdaq Stock Market;
(o) prepare
and file in a timely manner all documents and reports required by the Exchange
Act and, to the extent the Company's obligation to file such reports pursuant
to
Section 15(d) of the Exchange Act expires prior to the expiration of the
effectiveness period of the Registration Statement as required by
Section 4(a) hereof, the Company shall register the Registrable Shares
under the Exchange Act and shall maintain such registration through the
effectiveness period required by Section 4(a) hereof;
(p) provide
a
CUSIP number for all Registrable Shares, not later than the effective date
of
the Registration Statement;
(q) (i) otherwise
use its commercially reasonable efforts to comply with all applicable rules
and
regulations of the Commission, (ii) make generally available to its
stockholders, as soon as reasonably practicable, an earning statement covering
at least 12 months that satisfy the provisions of Section 11(a) of the
Securities Act and (at the Company’s option) Rule 158 (or any similar rule
promulgated under the Securities Act ) thereunder, but in no event later than
forty five (45) days after the end of the fourth full fiscal quarter ending
after the fiscal quarter in which any registration statement is declared
effective;
13
(r) provide
and cause to be maintained a registrar and transfer agent for all Registrable
Shares covered by any Registration Statement from and after a date not later
than the effective date of such Registration Statement;
(s) in
connection with any sale or transfer of the Registrable Shares (whether or
not
pursuant to a Registration Statement) that will result in the security being
delivered no longer being Registrable Shares, cooperate with the Holders and
the
representative of the underwriters, if any, to facilitate the timely preparation
and delivery of certificates representing the Registrable Shares to be sold,
which certificates shall not bear any transfer restrictive legends (other than
as required by the Company's Charter) and to enable such Registrable Shares
to
be in such denominations and registered in such names as the representative
of
the underwriters, if any, or the Holders may request at least two (2) Business
Days prior to any sale of the Registrable Shares;
(t) in
connection with the initial filing of a Shelf Registration Statement and each
amendment thereto with the Commission pursuant to Section 2(a) hereof, prepare
and, within one Business Day of such filing with the Commission, provide
information to the Holders, any underwriter or their counsel as such Holders,
such underwriter or their counsel may reasonably request in order to assist
such
Holders or such underwriter to file with the NASD all forms and information
required or requested by the NASD in order to obtain written confirmation from
the NASD that the NASD does not object to the fairness and reasonableness of
the
underwriting terms and arrangements (or any deemed underwriting terms and
arrangements) (each such written confirmation, a “No
Objections Letter”)
relating to the resale of Registrable Shares pursuant to the Shelf Registration
Statement, including, without limitation, information provided to the NASD
through its COBRADesk system, and pay all costs, fees and expenses incident
to
the NASD’s review of the Shelf Registration Statement and the related
underwriting terms and arrangements, including, without limitation, all filing
fees associated with any filings or submissions to the NASD and the legal
expenses, filing fees and other disbursements of FBR and any other NASD member
that is the holder of, or is affiliated or associated with an owner of,
Registrable Shares included in the Shelf Registration Statement (including
in
connection with any initial or subsequent member filing);
(u) in
connection with the initial filing of a Shelf Registration Statement and each
amendment thereto with the Commission pursuant to Section 2(a) hereof, provide
to FBR and its representatives the opportunity to conduct due diligence,
including, without limitation, an inquiry of the Company’s financial and other
records, and make available members of its management for questions regarding
information which FBR may request in order to fulfill any due diligence
obligation on its part; and
(w) upon
effectiveness of the first Registration Statement filed under this Agreement,
the Company will take such actions and make such filings as are necessary to
effect the registration of the Common Stock under the Exchange Act
simultaneously with or immediately following the effectiveness of the
Registration Statement.
14
The
Company may require the Holders to furnish to the Company such information
regarding the proposed distribution by such Holder of such Registrable Shares
as
the Company may from time to time reasonably request in writing or as shall
be
required to effect the registration of the Registrable Shares, and no Holder
shall be entitled to be named as a selling stockholder in any Registration
Statement and no Holder shall be entitled to use the Prospectus forming a part
thereof if such Holder does not provide such information to the Company. Each
Holder further agrees to furnish promptly to the Company in writing all
information required from time to time to make the information previously
furnished by such Holder not misleading.
Each
Holder agrees that, upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 4(f)(iii) or 4(f)(iv) hereof,
such Holder will immediately discontinue disposition of Registrable Shares
pursuant to a Registration Statement until such Holder's receipt of the copies
of the supplemented or amended Prospectus. If so directed by the Company, such
Holder will deliver to the Company (at the expense of the Company) all copies
in
its possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Shares current at the
time of receipt of such notice.
5. Black-Out
Period
(a) Subject
to the provisions of this Section 5 and a good faith determination by a
majority of the independent members of the Board of Directors of the Company
that it is in the best interests of the Company to suspend the use of the
Registration Statement, following the effectiveness of a Registration Statement
(and the filings with any international, federal or state securities
commissions), the Company, by written notice to FBR and the Holders, may direct
the Holders to suspend sales of the Registrable Shares pursuant to a
Registration Statement for such times as the Company reasonably may determine
is
necessary and advisable (but in no event for more than an aggregate of ninety
(90) days in any rolling twelve (12)-month period commencing on the Closing
Date
or more than sixty (60) days in any rolling 90-day period), if any of the
following events shall occur: (i) the representative of the underwriters of
an
Underwritten Offering of primary shares by the Company has advised the Company
that the sale of Registrable Shares pursuant to the Registration Statement
would
have a material adverse effect on the Company’s primary offering; (ii) the
majority of the independent members of the Board of Directors of the Company
shall have determined in good faith that (A) the offer or sale of any
Registrable Shares would materially impede, delay or interfere with any proposed
financing, offer or sale of securities, acquisition, corporate reorganization
or
other significant transaction involving the Company, (B) after the advice
of counsel, the sale of Registrable Shares pursuant to the Registration
Statement would require disclosure of non-public material information not
otherwise required to be disclosed under applicable law, and (C)
(x) the Company has a bona fide business purpose for preserving the
confidentiality of such transaction, (y) disclosure would have a material
adverse effect on the Company or the Company’s ability to consummate such
transaction, or (z) the proposed transaction renders the Company unable to
comply with Commission requirements, in each case under circumstances that
would
make it impractical or inadvisable to cause the Registration Statement (or
such
filings) to become effective or to promptly amend or supplement the Registration
Statement on a post-effective basis, as applicable; or (iii) the majority
of the independent members of the Board of Directors of the Company shall have
determined in good faith, after the advice of counsel, that it is required
by
law, rule or regulation or that it is in the best interests of the Company
to
supplement the Registration Statement or file a post-effective amendment to
the
Registration Statement in order to incorporate information into the Registration
Statement for the purpose of (1) including in the Registration Statement
any prospectus required under Section 10(a)(3) of the Securities Act;
(2) reflecting in the prospectus included in the Registration Statement any
facts or events arising after the effective date of the Registration Statement
(or of the most-recent post-effective amendment) that, individually or in the
aggregate, represents a fundamental change in the information set forth therein;
or (3) including in the prospectus included in the Registration Statement
any material information with respect to the plan of distribution not disclosed
in the Registration Statement or any material change to such information. Upon
the occurrence of any such suspension, the Company shall use all reasonable
efforts to cause the Registration Statement to become effective or to promptly
amend or supplement the Registration Statement on a post-effective basis or
to
take such action as is necessary to make resumed use of the Registration
Statement compatible with the Company’s best interests, as applicable, so as to
permit the Holders to resume sales of the Registrable Shares as soon as
possible.
15
(b) In
the
case of an event that causes the Company to suspend the use of a Registration
Statement (a “Suspension
Event”),
the
Company shall give written notice (a “Suspension
Notice”)
to FBR
and the Holders to suspend sales of the Registrable Shares and such notice
shall
state generally the basis for the notice and that such suspension shall continue
only for so long as the Suspension Event or its effect is continuing and the
Company is using all reasonable efforts and taking all reasonable steps to
terminate suspension of the use of the Registration Statement as promptly as
possible. The Holders shall not effect any sales of the Registrable Shares
pursuant to such Registration Statement (or such filings) at any time after
it
has received a Suspension Notice from the Company and prior to receipt of an
End
of Suspension Notice (as defined below). If so directed by the Company, each
Holder will deliver to the Company (at the expense of the Company) all copies
other than permanent file copies then in such Holder’s possession of the
Prospectus covering the Registrable Shares at the time of receipt of the
Suspension Notice. The Holders may recommence effecting sales of the Registrable
Shares pursuant to the Registration Statement (or such filings) following
further notice to such effect (an “End
of
Suspension Notice”)
from
the Company, which End of Suspension Notice shall be given by the Company to
the
Holders and FBR in the manner described above promptly following the conclusion
of any Suspension Event and its effect.
(c) Notwithstanding
any provision herein to the contrary, if the Company shall give a Suspension
Notice pursuant to this Section 5, the Company agrees that it shall extend
the period of time during which the applicable Registration Statement shall
be
maintained effective pursuant to this Agreement by the number of days during
the
period from the date of receipt by the Holders of the Suspension Notice to
and
including the date of receipt by the Holders of the End of Suspension Notice
and
copies of the supplemented or amended Prospectus necessary to resume
sales.
16
6. Indemnification
and Contribution
(a) The
Company agrees to indemnify and hold harmless (i) each Holder of
Registrable Shares and any underwriter (as determined in the Securities Act)
for
such Holder (including, if applicable, FBR), (ii) each Person, if any, who
controls (within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act), any such Person described in clause (i)
(any of the Persons referred to in this clause (ii) being hereinafter referred
to as a “Controlling
Person”),
and
(iii) the respective officers, directors, partners, employees,
representatives and agents of any such Person or any Controlling Person (any
Person referred to in clause (i), (ii) or (iii) may hereinafter be referred
to
as a “Purchaser
Indemnitee”),
to
the fullest extent lawful, from and against any and all losses, claims, damages,
judgments, actions, out-of-pocket expenses, and other liabilities (the
“Liabilities”),
including without limitation and as incurred, reimbursement of all reasonable
costs of investigating, preparing, pursuing or defending any claim or action,
or
any investigation or proceeding by any governmental agency or body, commenced
or
threatened, including the reasonable fees and expenses of counsel to any
Purchaser Indemnitee, joint or several, directly or indirectly related to,
based
upon, arising out of or in connection with any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement
or
Prospectus (as amended or supplemented if the Company shall have furnished
to
such Purchaser Indemnitee any amendments or supplements thereto), or any
preliminary Prospectus or any other document used to sell the Shares, or any
omission or alleged omission to state therein 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, except insofar as
such
Liabilities arise out of or are based upon (i) any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and
in
conformity with information relating to any Purchaser Indemnitee furnished
to
the Company or any underwriter in writing by such Purchaser Indemnitee expressly
for use therein, or (ii) any untrue statement contained in or omission from
a preliminary Prospectus if a copy of the Prospectus (as then amended or
supplemented, if the Company shall have furnished to or on behalf of the Holder
participating in the distribution relating to the relevant Registration
Statement any amendments or supplements thereto) was not sent or given by or
on
behalf of such Holder to the Person asserting any such Liabilities who purchased
Shares, if such Prospectus (or Prospectus as amended or supplemented) is
required by law to be sent or given at or prior to the written confirmation
of
the sale of such Shares to such Person and the untrue statement contained in
or
omission from such preliminary Prospectus was corrected in the Prospectus (or
the Prospectus as amended or supplemented). The Company shall notify the Holders
promptly of the institution, written threat or written assertion of any claim,
proceeding (including any governmental investigation), or litigation of which
it
shall have become aware in connection with the matters addressed by this
Agreement which involves the Company or a Purchaser Indemnitee. The indemnity
provided for herein shall remain in full force and effect regardless of any
investigation made by or on behalf of any Purchaser Indemnitee.
(b) In
connection with any Registration Statement in which a Holder of Registrable
Shares is participating, such Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company, each Person who controls the Company
within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act and the respective partners, directors,
officers, members, representatives, employees and agents of such Person or
Controlling Person to the same extent as the foregoing indemnity from the
Company to each Purchaser Indemnitee, but only with reference to untrue
statements or omissions or alleged untrue statements or omissions made in
reliance upon and in conformity with information relating to such Holder
furnished to the Company in writing by such Holder expressly for use in any
Registration Statement or Prospectus, any amendment or supplement thereto or
any
preliminary Prospectus. The liability of any Holder pursuant to this paragraph
shall in no event exceed the net proceeds received by such Holder from sales
of
Registrable Shares giving rise to such obligations.
17
(c) If
any
suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any Person
in respect of which indemnity may be sought pursuant to paragraph (a) or (b)
above, such Person (the “Indemnified
Party”),
shall
promptly notify the Person against whom such indemnity may be sought (the
“Indemnifying
Party”),
in
writing of the commencement thereof (but the failure to so notify an
Indemnifying Party shall not relieve it from any liability which it may have
under this Section 6, except to the extent the Indemnifying Party is
materially prejudiced by the failure to give notice), and the Indemnifying
Party, upon request of the Indemnified Party, shall retain counsel reasonably
satisfactory to the Indemnified Party to represent the Indemnified Party and
any
others the Indemnifying Party may reasonably designate in such proceeding and
shall pay the reasonable fees and expenses actually incurred by such counsel
related to such proceeding. Notwithstanding the foregoing, 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 in writing to the contrary,
(ii) the Indemnifying Party failed within a reasonable time after notice of
commencement of the action to assume the defense and employ counsel reasonably
satisfactory to the Indemnified Party, (iii) the Indemnifying Party and its
counsel do not actively pursue the defense of such action or (iv) the named
parties to any such action (including any impleaded parties), include both
such
Indemnified Party and the Indemnifying Party, or any Affiliate of the
Indemnifying Party, and such Indemnified Party shall have been reasonably
advised by counsel that either (x) there may be one or more legal defenses
available to it which are different from or additional to those available to
the
Indemnifying Party or such Affiliate of the Indemnifying Party or (y) a
conflict may exist between such Indemnified Party and the Indemnifying Party
or
such Affiliate of the Indemnifying Party (in which case the Indemnifying Party
shall not have the right to assume nor direct the defense of such action on
behalf of such Indemnified Party, it being understood, however, that the
Indemnifying Party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the fees
and
expenses of more than one separate firm of attorneys (in addition to any local
counsel), for all such Indemnified Parties, which firm shall be designated
in
writing by those Indemnified Parties who sold a majority of the Registrable
Shares sold by all such Indemnified Parties and any such separate firm for
the
Company, the directors, the officers and such control Persons of the Company
as
shall be designated in writing by the Company). The Indemnifying Party shall
not
be liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, but if settled with
such consent or if there is a final judgment for the plaintiff, the Indemnifying
Party agrees to indemnify any Indemnified Party from and against any Liability
of a character for which such Indemnified Party would be liable under paragraph
(a) or (b), as applicable, of this Section 6 by reason of such settlement or
judgment. No Indemnifying Party shall, without the prior written consent of
the
Indemnified Party, effect any settlement of any pending or threatened proceeding
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 claims that are the subject matter of such
proceeding.
18
(d) If
the
indemnification provided for in paragraphs (a) and (b) of this Section 6 is
for any reason held to be unavailable to an Indemnified Party in respect of
any
Liabilities referred to therein (other than by reason of the exceptions provided
therein) or is insufficient to hold harmless a party indemnified thereunder,
then each Indemnifying Party under such paragraphs, 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 Liabilities (i) in such
proportion as is appropriate to reflect the relative benefits of the Indemnified
Party on the one hand and the Indemnifying Party(ies) on the other in connection
with the statements or omissions that resulted in such Liabilities, 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 benefits referred to in clause (i) above but also the relative fault
of
the Indemnifying Party(ies) and the Indemnified Party, as well as any other
relevant equitable considerations. The relative fault of the Company on the
one
hand and any Purchaser Indemnitees on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by such Purchaser Indemnitees
(or the related Holder) and the parties' relative intent, knowledge, access
to
information and opportunity to correct or prevent such statement or
omission.
(e) The
parties agree that it would not be just and equitable if contribution pursuant
to this Section 6 were determined by pro
rata
allocation (even if such Indemnified Parties were treated as one entity for
such
purpose), or by any other method of allocation that does not take account of
the
equitable considerations referred to in paragraph 6(d) above. Notwithstanding
the provisions of this Section 6, in no event shall a Purchaser Indemnitee
be required to contribute any amount in excess of the amount by which proceeds
received by such Purchaser Indemnitee from sales of Registrable Shares exceeds
the amount of any damages that such Purchaser Indemnitee has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. For purposes of this Section 6, each Person, if any,
who controls (within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act) FBR or a Holder of Registrable Shares
shall have the same rights to contribution as FBR or such Holder, as the case
may be, and each Person, if any, who controls (within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act) the
Company, and each officer, director, partner, employee, representative, agent
or
manager of the Company shall have the same rights to contribution as the
Company. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party
in
respect of which a claim for contribution may be made against another party
or
parties, notify each party or parties from whom contribution may be sought,
but
the omission to so notify such party or parties shall not relieve the party
or
parties from whom contribution may be sought from any obligation it or they
may
have under this Section 6 or otherwise, except to the extent that any party
is materially prejudiced by the failure to give notice. 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
indemnity and contribution agreements contained in this Section 6 will be
in addition to any liability which the Indemnifying Parties may otherwise have
to the Indemnified Parties referred to above. The Purchaser Indemnitees’
obligations to contribute pursuant to this Section 6 are several in
proportion to the respective number of Shares sold by each of the Purchaser
Indemnitees hereunder and not joint.
19
7. Market
Stand-off Agreement
Each
Holder hereby agrees that it shall not, to the extent requested by the Company
or an underwriter of securities of the Company, directly or indirectly sell,
offer to sell (including without limitation any short sale), grant any option
or
otherwise transfer or dispose of any Registrable Shares or other shares of
Common Stock of the Company or any securities convertible into or exchangeable
or exercisable for shares of Common Stock of the Company then owned by such
Holder (other than to donees or partners of the Holder who agree to be similarly
bound) for a period of sixty (60) days following the effective date of an IPO
Registration Statement of the Company filed under the Securities Act;
provided,
however,
that:
(a) the
restrictions above shall not apply to Registrable Shares sold pursuant to the
IPO Registration Statement;
(b) all
executive officers and directors of the Company then holding shares of Common
Stock of the Company or securities convertible into or exchangeable or
exercisable for shares of Common Stock of the Company enter into similar
agreements;
(c) the
Holders shall be allowed any concession or proportionate release allowed to
any
officer or director that entered into similar agreements (with such proportion
being determined by dividing the number of shares being released with respect
to
such officer or director by the total number of issued and outstanding shares
held by such officer or director); provided,
that
nothing in this Section 7(c) shall be construed as a right to proportionate
release for the executive officers and directors of the Company upon the
expiration of the 60-day period applicable to all Holders other than the
executive officers and directors of the Company;
(d) this
Section 7 shall not be applicable if a Shelf Registration Statement of the
Company filed under the Securities Act has been declared effective prior to
the
filing of an IPO Registration Statement.
In
order
to enforce the foregoing covenants, the Company shall have the right to place
restrictive legends on the certificates representing the securities subject
to
this Section 7 and to impose stop transfer instructions with respect to the
Registrable Shares and such other securities of each Holder (and the securities
of every other Person subject to the foregoing restriction) until the end of
such period.
8.
Termination
of the Company's Obligation
The
Company shall have no obligation pursuant to this Agreement with respect
to any
Registrable Shares proposed to be sold by a Holder in a registration pursuant
to
this Agreement if, in the opinion of counsel to the Company, all such
Registrable Shares proposed to be sold by a Holder may be sold in a three-month
period without registration under the Securities Act pursuant to Rule 144
under
the Securities Act.
20
9.
Limitations
on Subsequent Registration Rights
From
and
after the date of this Agreement, the Company shall not, without the prior
written consent of Holders beneficially owning not less than a majority of
the
then outstanding Registrable Shares (provided,
however,
that
for purposes of this Section 9, Registrable Shares that are owned, directly
or
indirectly, by an Affiliate of the Company shall not be deemed to be
outstanding), enter into any agreement with any holder or prospective holder
of
any securities of the Company that would allow such holder or prospective holder
(a) to include such securities in any Registration Statement filed pursuant
to the terms hereof, unless under the terms of such agreement, such holder
or
prospective holder may include such securities in any such registration only
to
the extent that the inclusion of his securities will not reduce the amount
of
Registrable Shares of the Holders that is included, or (b) to have his
securities registered on a registration statement that could be declared
effective prior to, or within one hundred eighty (180) days of, the effective
date of any Registration Statement filed pursuant to this
Agreement.
10.
Miscellaneous
(a) Remedies.
In the
event of a breach by the Company of any of its obligations under this Agreement,
each Holder, in addition to being entitled to exercise all rights provided
herein or, in the case of FBR, in the Purchase/Placement Agreement, or granted
by law, including recovery of damages, will be entitled to specific performance
of its rights under this Agreement. Subject to Section 6, 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 and
hereby further agree that, in the event of any action for specific performance
in respect of such breach, it shall waive the defense that a remedy at law
would
be adequate.
(b) Amendments
and Waivers.
The
provisions of this Agreement, including the provisions of this sentence, may
not
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given, without the written consent of
the
Company and Holders beneficially owning not less than a majority of the then
outstanding Registrable Shares; provided,
however,
that for
purposes of this Section 11(b), (i) Registrable Shares that are owned, directly
or indirectly, by an Affiliate of the Company shall not be deemed to be
outstanding and (ii) the provisions of Section 2(e)(ii) may be amended,
modified, supplemented or waived with the written consent of the Company and
FBR. No amendment shall be deemed effective if by its terms it expressly
discriminates against any Holder. Notwithstanding the foregoing, a waiver or
consent to or departure from the provisions hereof with respect to a matter
that
relates exclusively to the rights of a Holder 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 may be given
by
such Holder; provided
that the
provisions of this sentence may not be amended, modified or supplemented except
in accordance with the provisions of the immediately preceding
sentence.
(c) Notices.
All
notices and other communications, provided for or permitted hereunder shall
be
made in writing by delivered by facsimile (with receipt confirmed), overnight
courier or registered or certified mail, return receipt requested, or by
telegram
21
(i) if
to a
Holder, at the most current address given by the transfer agent and registrar
of
the Shares to the Company;
(ii) if
to the
Company at the offices of the Company at 0 Xxxx Xxxxxx, Xxxxxxxx, XX 00,
Xxxxxxx, Xxxxxxxxx:
Xxx Xxxxx; (facsimile: 441-292-5796) with a copy to: with
a
copy to LeBoeuf, Lamb, Xxxxxx & XxxXxx LLP, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Xxxxxxx X. Xxxxxxxxx (facsimile
212-649-9483);
and
(iii) If
to
FBR, at the offices of FBR at 0000
Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention: Compliance
Department, (facsimile: 703-312-9698); with a copy to Sidley Austin LLP,
Xxx
Xxxxx Xxxxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxx X. Xxxx (facsimile:
312-853-7036).
(d) Successors
and Assigns.
This
Agreement shall inure to the benefit of and be binding upon the successors
and
assigns of each of the parties hereto, including, without limitation and without
the need for an express assignment or assumption, subsequent Holders. The
Company agrees that the Holders shall be third party beneficiaries to the
agreements made hereunder by FBR and the Company, and each Holder shall have
the
right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights hereunder; provided,
however,
that
such Holder fulfills all of its obligations hereunder.
(e) 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.
(f) Headings.
The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
(g) 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 HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE
COURT
IN THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING IN NEW YORK IN RESPECT
OF
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
AND
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
AND
ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
22
(h) 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 invalidated, and the parties hereto shall use their commercially reasonable
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 hereto 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.
(i) Entire
Agreement.
This
Agreement, together with the Purchase/Placement Agreement, is intended by the
parties hereto 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.
(j) Registrable
Shares Held by the Company or its Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Shares is required hereunder, Registrable Shares held by the Company
or its Affiliates shall not be counted in determining whether such consent
or
approval was given by the Holders of such required percentage.
(k) Adjustment
for Stock Splits, etc.
Wherever
in this Agreement there is a reference to a specific number of shares or
liquidated damages payable with respect to any Registrable Shares, then upon
the
occurrence of any subdivision, combination, or stock dividend of such shares,
the specific number of shares or amount of liquidated damages payable with
respect to any Registrable Shares so referenced in this Agreement shall
automatically be proportionally adjusted to reflect the effect on the
outstanding shares of such class or series of stock by such subdivision,
combination, or stock dividend.
(l) Survival.
This
Agreement is intended to survive the consummation of the transactions
contemplated by the Purchase/Placement Agreement. The indemnification and
contribution obligations under Section 6 of this Agreement shall survive
the termination of the Company's obligations under Section 2 of this
Agreement.
(m) Attorneys’
Fees.
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 prevailing
party, as determined by the court, shall be entitled to recover its reasonable
attorneys’ fees in addition to any other available remedy.
23
IN
WITNESS WHEREOF,
the
parties have executed this Agreement as of the date first above
written.
By:______/s/
Xxxxxxxx X. Turin_____________
Name: Xxxxxxxx
X. Xxxxx
Title: Chief
Operating Officer, General Counsel and Assistant Secretary
FRIEDMAN,
BILLINGS, XXXXXX & CO., INC.
By:______/s/
Xxxxx X. Kleebatt______________
Name: Xxxxx
X.
Kleebatt
Title: Executive
Vice President
Each
of
the undersigned, Max G. Caviet and Xxx Xxxxx, hereby acknowledges and agrees
to
the provisions of Section 2(e) of the foregoing Registration Rights
Agreement.
__/s/
Max G. Caviet_______________________
Max
G.
Caviet
__/s/
Xxx Xxxxx ________________________
Xxx
Xxxxx
24
