1
EXHIBIT 3
===============================================================================
REGISTRATION RIGHTS AGREEMENT
BETWEEN
DANKA BUSINESS SYSTEMS PLC
AND
CYPRESS MERCHANT BANKING PARTNERS II L.P.,
CYPRESS MERCHANT BANKING II C.V.
AND
55TH STREET PARTNERS II L.P.
DATED AS OF _________, __ 1999
===============================================================================
2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms.......................................................................
SECTION 1.2 Other Defined Terms.........................................................................
SECTION 1.3 Other Definitional Provisions...............................................................
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.2 Piggyback Registrations.....................................................................
SECTION 2.3 Piggyback Listings..........................................................................
SECTION 2.4 Preservation of Rights......................................................................
ARTICLE III
REGISTRATION PROCEDURES
SECTION 3.2 Registration Expenses.......................................................................
SECTION 3.3 Limitations on Sale or Distribution of Other Securities.....................................
SECTION 3.4 Company Right to Postpone Registration......................................................
SECTION 3.5 No Required Sale............................................................................
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1 Indemnification.............................................................................
SECTION 4.2 Contribution................................................................................
ARTICLE V
GENERAL PROVISIONS
SECTION 5.1 Rule 144....................................................................................
SECTION 5.2 Further Assurances..........................................................................
SECTION 5.3 Amendment...................................................................................
SECTION 5.4 Waiver of Jury Trial........................................................................
SECTION 5.5 Judgment Currency...........................................................................
SECTION 5.6 Severability................................................................................
SECTION 5.7 Effective Date..............................................................................
SECTION 5.8 Entire Agreement; No Third Party Beneficiaries..............................................
-i-
3
Page
----
SECTION 5.9 Assignment.................................................................................
SECTION 5.10 Counterparts...............................................................................
SECTION 5.11 Remedies...................................................................................
SECTION 5.12 Notices....................................................................................
SECTION 5.13 Governing Law; Consent to Jurisdiction.....................................................
SECTION 5.14 Interpretation.............................................................................
-ii-
4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of ________ __, 1999
between DANKA BUSINESS SYSTEMS PLC, a limited liability company organized and
existing under the laws of England and Wales (the "Company") and CYPRESS
MERCHANT BANKING PARTNERS II L.P., a Delaware limited partnership, CYPRESS
MERCHANT BANKING II C.V., a limited partnership organized under the laws of The
Netherlands, and 00XX XXXXXX PARTNERS II L.P., a Delaware limited partnership
(collectively, the "Subscribers").
W I T N E S S E T H :
WHEREAS, the Company and the Subscribers have entered into a
Subscription Agreement, dated as of November 2, 1999 (the "Subscription
Agreement"), pursuant to which the Company has agreed to issue its 6.50% Senior
Convertible Participating Shares (the "Participating Shares"), which are
convertible into Ordinary Shares, nominal value 1.25 xxxxx per share ("Ordinary
Shares"), of the Company and which may, in certain circumstances, be delivered
to such holders in the form of American Depositary Shares representing such
Ordinary Shares ("ADSs"), and the Subscribers have agreed to subscribe for the
Participating Shares;
WHEREAS, as a condition and inducement to the Subscribers'
willingness to enter into the Subscription Agreement, the Company has agreed to
provide the registration rights set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and obligations hereinafter set forth, the Company and the
Subscribers hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms. As used herein, the
following terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with, such specified
Person, for so long as such Person remains so associated to the specified
Person.
"Agreement" means this Registration Rights Agreement, as it
may be amended, supplemented, restated or modified from time to time.
-1-
5
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York City or London are authorized
or required by law to close.
"Closing" has the meaning ascribed to such term in the
Subscription Agreement.
"control" means, with respect to the relationship between or
among two or more Persons, the possession, directly or indirectly, of the power
to direct or cause the direction of the affairs or management of a Person,
whether through the ownership of voting securities, as trustee or executor, by
contract or otherwise, and the terms "controlled by" and "under common control
with" shall have correlative meanings.
"Exchange Act" means the U.S. Securities Exchange Act of
1934, as amended.
"Expenses" means any and all fees and expenses incident to
the Company's performance of or compliance with its obligations under this
Agreement (other than internal expenses incurred by the Company including the
services of the Company's executive officers and legal department), including,
without limitation: (i) registration, filing and other fees of the SEC or
relating to any U.S. or U.K. securities exchange or market registration or
qualification, (ii) fees and expenses of compliance with U.S. state and local
securities or "blue sky" laws and in connection with the preparation of a "blue
sky" survey, including reasonable fees and expenses of "blue sky" counsel,
(iii) printing and copying expenses, (iv) messenger and delivery expenses, (v)
expenses incurred in connection with any road show, (vi) fees and disbursements
of U.S., English and other counsel for the Company, (vii) with respect to each
registration, the reasonable fees and disbursements of one counsel for the
selling Holder(s) (selected by the Initiating Holder, in the case of a Demand
Registration, or by the Requisite Percentage of Participating Holders, in the
case of a Piggyback Registration), (viii) fees and disbursements of the
Company's independent public accountants (including the expenses relating to
any audit or limited review and "comfort" letters) and (ix) any other fees and
disbursements of underwriters, if any, customarily paid by issuers of
securities in the United States or the United Kingdom, as the case may be.
"Governmental Authority" means any governmental, regulatory
or administrative agency, authority, instrumentality or commission or any
court, tribunal or judicial or arbitral body of the United States (federal,
state or local), the United Kingdom, any other country or the European
Community or any other supranational organization or body.
"Holder" means each Person who owns Registrable Securities
and is either (a) a Subscriber or (b) any direct or indirect transferee of a
Subscriber which agrees to be bound by the provisions of this Agreement as a
"Holder" hereunder; provided that only a transferee to whom a Subscriber
specifically assigns the rights to make a Demand Registration shall be
permitted to make a Demand Registration Request pursuant to Section 2.1(a).
-2-
6
"Independent Investment Banking Firm" means an investment
banking firm of nationally recognized standing that is, in the reasonable
judgment of the Person engaging such firm, qualified to perform the task for
which it has been engaged.
"Initial Interest" means, with respect to any Shareholder,
all of the Participating Shares beneficially owned by such Shareholder
immediately following the Closing.
"Person" means any individual, corporation, limited liability
company, limited or general partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, government or any
agency or political subdivisions thereof or any group comprised of two or more
of the foregoing.
"Registrable Ordinary Shares" means the Ordinary Shares
issued upon conversion of the Participating Shares, including any additional
Ordinary Shares issued in respect thereof in connection with a share split,
share dividend or similar event with respect to the Ordinary Shares.
"Registrable ADSs" means the ADSs, if any, representing the
Ordinary Shares issued upon conversion of the Participating Shares, including
any additional ADSs issued in respect thereof in connection with a share split,
share dividend or similar event with respect to the Ordinary Shares underlying
such ADSs.
"Registrable Securities" means (a) the Participating Shares
(including Participating Shares issued as dividends or by way of bonus issues),
(b) the Registrable Ordinary Shares and (c) the Registrable ADSs, in each case
whether beneficially owned by a Holder as of the Closing or thereafter acquired
by such Holder. As to any particular Registrable Securities, such securities
shall cease to be Registrable Securities when (i) a registration statement with
respect to the sale of such securities shall have been declared effective under
the Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (ii) such securities shall have
been sold (other than in a privately-negotiated sale) pursuant to Rule 144 (or
any successor provision) under the Securities Act, (iii) such securities are
eligible for sale pursuant to Rule 144 without being subject to applicable
volume limitations thereunder or (iv) such securities shall have ceased to be
outstanding.
"Registration Period" means the period ending on the date
when there are no Holders of Registrable Securities.
"Requisite Percentage of Participating Holders" means, with
respect to any registration pursuant to Section 2.2., Holders of a majority in
interest of the total Registrable Securities which the Company has been
requested to register by all Holders.
"SEC" means the U.S. Securities and Exchange Commission.
"Securities Act" means the U.S. Securities Act of 1933, as
amended.
-3-
7
"Share Capital" means any and all shares, interest,
participation or other equity equivalents (however designated and whether
voting or non-voting) and any and all rights (other than any evidence of
indebtedness), warrants or options exchangeable for or convertible into such
shares, interest, participation or other equity equivalents, including, to the
fullest extent applicable, American depository receipts or similar instruments
representing any such Share Capital.
"Transfer" means, as to any security, directly or indirectly,
to sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose
of, either voluntarily or involuntarily, or to enter into any contract, option
or other arrangement or understanding with respect to the sale, transfer,
assignment, pledge, encumbrance, hypothecation or similar disposition, of such
security beneficially owned by a Person or any interest in any such security
beneficially owned by a Person.
"Voting Shares" means shares of the class or classes of Share
Capital (including, in the case of the Company, the Ordinary Shares and the
Participating Shares) pursuant to which the holders thereof have the general
voting power to vote at meetings of Shareholder (irrespective of whether or not
at the time shares of any other class or classes shall have or might have
voting power by reason of the happening of any contingency).
SECTION 1.2 Other Defined Terms. The following terms shall
have the meanings defined for such terms in the Sections set forth below:
Term Section
---- -------
ADSs preamble
Claims 2.8(a)
Demand Exercise Notice 2.1(a)
Demand Registration Request 2.1(a)
Demand Registrations 2.1(a)
Initiating Holder 2.1(a)
Initiating Holder Group 2.1(a)
Litigation 5.13
Ordinary Shares preamble
Other Holders 2.1(b)
Participating Share preamble
Piggyback Registration 2.2(a)
Piggyback Listing 2.3(a)
Subscription Agreement preamble
SECTION 1.3 Other Definitional Provisions. (a) The words
"hereof", "herein" and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Article and Section references are
to this Agreement unless otherwise specified;
-4-
8
(2) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms; and
(3) All references to U.S. federal or New York state legal
terms or concepts in this Agreement shall be deemed to include, to the fullest
extent applicable, the equivalent legal terms or concepts in or of other
jurisdictions. Notwithstanding the preceding sentence or any provision of this
Agreement to the contrary, the preceding sentence and the application of the
definitional provisions thereof shall be subject in all respects to Section
5.13 hereof.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1 Demand Registrations. (a) At any time and from
time to time after the first anniversary of the Closing and during the
Registration Period, any Subscriber (and any other Holder to whom a Subscriber
has specifically transferred its rights under this Section 2.1) shall have the
right to require the Company to file a registration statement under the
Securities Act covering all or any part of their respective Registrable
Securities, by delivering a written request therefor to the Company specifying
the number of Registrable Securities to be included in such registration by
such Holder(s), a price range acceptable to such Holder for the sale of such
Registrable Securities and the intended method of distribution thereof. All
such requests pursuant to this Section 2.1(a) are referred to herein as "Demand
Registration Requests" and the registrations so requested are referred to
herein as "Demand Registrations" (with respect to any Demand Registration, the
Holder making such demand for registration being referred to as the "Initiating
Holder" and, in the case that the Initiating Holder is a Subscriber, such
initiating Holder, together with the other Subscribers, the "Initiating Holder
Group"). As promptly as practicable, but no later than 10 Business Days after
receipt of a Demand Registration Request, the Company shall give written notice
(the "Demand Exercise Notice") of such Demand Registration Request to all
Holders of record of Registrable Securities.
(b) The Company shall include in a Demand Registration (i)
the Registrable Securities of the Initiating Holder and the other members of
the Initiating Holder Group that shall have made a written request to the
Company for inclusion thereof in such registration (which request shall specify
the maximum number of Registrable Securities intended to be disposed of by such
other members) within the time period specified below and (ii) the Registrable
Securities of any other Holder (other than members of the Initiating Holder
Group) (collectively, the "Other Holders") that shall have made a written
request to the Company for inclusion thereof in such registration (which
request shall specify the maximum number of Registrable Securities intended to
be disposed of by such Holder(s)) within 30 days after the receipt of the
Demand Exercise Notice.
(c) The Company shall, as expeditiously as practicable
following a Demand Registration Request, use its best efforts to (i) effect the
registration under the Securities Act
-5-
9
(including by means of a shelf registration pursuant to Rule 415 under the
Securities Act if so requested by the Initiating Holder and if the Company is
then eligible to use such a registration) of the Registrable Securities which
the Company has been so requested to register by the Initiating Holder Group
and the Other Holders (to the extent permitted to be included in accordance
with the terms hereof), for distribution, in accordance with such intended
method of distribution, and (ii) if requested by the Initiating Holder, obtain
acceleration of the effective date of the registration statement relating to
such registration.
(d) The rights of Holders of Registrable Securities to
request Demand Registrations pursuant to Section 2.1(a) are subject to the
following limitations: (i) in no event shall the Company be required to effect
more than four Demand Registrations pursuant to this Agreement; (ii) the
Company shall not be required to take any action to effect any Demand
Registration within the six-month period following the effective date of a
previous Demand Registration; and (iii) the Company shall not be obligated to
effect more than one Demand Registration under which the aggregate number of
Registrable Securities to be included in such Demand Registration would not
exceed 10% of the Subscribers' Initial Interest.
(e) A registration requested pursuant to this Section 2.1
will not be deemed to have been effected unless the relevant registration
statement has become effective; provided that if, after it has become
effective, the offering of Registrable Securities pursuant to such registration
is subject to any stop order, injunction or other order or requirement of the
SEC or other governmental agency or court for an aggregate of more than 30 days
in the 180 days following the date of effectiveness, such registration will be
deemed not to have been effected.
(f) If a requested registration pursuant to this Section 2.1
involves an underwritten offering, the Initiating Holder shall have the right
to select in good faith an investment banker or bankers and managers of
nationally recognized standing to administer the offering; provided, however,
that such investment banker or bankers and managers shall be reasonably
satisfactory to the Company. The Company shall notify the Initiating Holder if
the Company objects to any investment banker or manager selected by the
Initiating Holder pursuant to this Section 2.1(f) within 10 Business Days after
the Initiating Holder has notified the Company of such selection.
(g) If the managing underwriter of any underwritten offering
shall advise the Holders participating in a Demand Registration that the
Registrable Securities covered by the registration statement cannot be sold in
such offering within a price range acceptable to the Initiating Holder, then
the Initiating Holder shall have the right to notify the Company that it has
determined that the registration statement be abandoned or withdrawn, in which
event the Company shall abandon or withdraw such registration statement. If a
requested registration pursuant to this Section 2.1 involves an underwritten
offering and the managing underwriter advises the Company that, in its opinion,
the number of securities requested to be included in such registration
(including securities of the Company which are not Registrable Securities)
exceeds the number which can be sold in such offering within a price range
reasonably acceptable to the Initiating Holder, the Company will include in
such registration only the
-6-
10
Registrable Securities requested to be included in such registration pursuant
to this Section 2.1. In the event that the number of Registrable Securities
requested to be included in such registration exceeds the number which, in the
opinion of such managing underwriter, can be sold in such offering within a
price range acceptable to the Initiating Holder, the Company shall include in
such registration the number of Registrable Securities proposed to be sold by
the Initiating Holder Group (to the extent the managing underwriter believes
that such Registrable Securities can be sold in such offering within such price
range, and if they cannot and the Initiating Holder chooses not to exercise its
rights provided in the first sentence of this paragraph, such smaller number of
Registrable Securities of the members of the Initiating Holder Group as
specified by the Initiating Holder) and, to the extent the managing underwriter
believes that additional Registrable Securities can be sold in such offering
within such price range, the number of Registrable Securities proposed to be
sold by the Other Holders, allocated pro rata among the Other Holders on the
basis of the relative number of shares of Registrable Securities requested to
be registered pursuant to clause (ii) of Section 2.1(b) by each such Holder. In
the event that the number of Registrable Securities requested by all Holders to
be included in such registration is less than the number which, in the opinion
of the managing underwriter, can be sold, the Company or other holders who are
entitled to exercise "piggyback" or similar registration rights may include in
such registration a number of securities that the Company proposes to sell up
to the number of securities that, in the opinion of the managing underwriter,
can be sold in such offering within a price range acceptable to the Initiating
Holder.
(h) If the Company at any time grants to any other holders of
Voting Shares (or securities that are convertible, exchangeable or exercisable
into Voting Shares) any rights to request the Company to effect the
registration under the Securities Act of any such Voting Shares (or any such
securities) on terms (other than with respect to the number of demands
permitted to be requested) more favorable to such holders than the terms set
forth in this Section 2.1, then the Holders shall be entitled to such more
favorable rights and benefits.
SECTION 2.2 Piggyback Registrations. (a) If, at any time
following the first anniversary of the Closing, the Company proposes or is
required to register any shares of its Share Capital under the Securities Act
(other than pursuant to (i) registrations on such form or similar form(s)
solely for registration of securities in connection with an employee benefit
plan or dividend reinvestment plan or a merger, consolidation or acquisition or
(ii) a Demand Registration pursuant to Section 2.1) on a registration statement
on Form S-1, Form S-2 or Form S-3 (or an equivalent general registration form
then in effect), whether or not for its own account, the Company shall give
reasonable written notice of its intention to do so to each of the Holders of
record (but in no event less than 20 days before the anticipated filing date).
Upon the written request of any Holder, made within 15 days following the
receipt of any such written notice (which request shall specify the maximum
number of Registrable Securities intended to be disposed of by such Holder and
the intended method of distribution thereof), the Company shall, subject to the
remainder of this Section 2.2, use its best efforts to cause all such
Registrable Securities, the Holders of which have so requested the registration
thereof, to be registered under the Securities Act (with the securities that
the Company at the time proposes to register) to permit the sale or other
disposition by such Holders (in accordance with the intended method of
-7-
11
distribution thereof) of the Registrable Securities to be so registered (such
registration, a "Piggyback Registration"). There is no limitation on the number
of Piggyback Registrations pursuant to the preceding sentence that the Company
is obligated to effect. No registration effected under this Section 2.2(a)
shall relieve the Company of its obligations to effect Demand Registrations.
(b) If, at any time after giving written notice of its
intention to register any shares of its Share Capital and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such shares of its Share Capital, the Company may, at its
election, give written notice of such determination to all Holders of record
and (i) in the case of a determination not to register, shall be relieved of
its obligation to register any Registrable Securities in connection with such
abandoned registration, without prejudice, however, to the rights of Holders
under Section 2.1, and (ii) in the case of a determination to delay such
registration of its shares of its Share Capital, shall be permitted to delay
the registration of such Registrable Securities for the same period as the
delay in registering such other shares of its Share Capital.
(c) Any Holder shall have the right to withdraw its request
for inclusion of its Registrable Securities in any registration statement
pursuant to this Section 2.2 by giving written notice to the Company of its
request to withdraw; provided, however, that (i) such request must be made in
writing prior to the earlier of the execution of the underwriting agreement or
the execution of the custody agreement with respect to such registration and
(ii) such withdrawal shall be irrevocable and, after making such withdrawal, a
Holder shall no longer have any right to include Registrable Securities in the
registration as to which such withdrawal was made.
(d) If the managing underwriter of any underwritten offering
shall inform the Company in writing of its belief that the number of
Registrable Securities requested to be included in a registration under this
Section 2.2 would materially adversely affect such offering, then the Company
will include in such registration, first, the securities proposed by the
Company to be sold for its own account, second, the Registrable Securities and
any other securities of the Company with respect to which the holders thereof
are entitled to and desire "piggyback" or similar registration rights, pro rata
among all such holders on the basis of the relative number of securities of the
Company requested to be registered pursuant to Section 2.2(a) or such other
"piggyback" or similar registration rights by each such holder and third, other
securities of the Company.
(e) If a Piggyback Registration pursuant to this Section
involves an underwritten offering, the Company shall have the right in its
reasonable discretion to select an investment banker or bankers and managers of
nationally recognized standing to administer the offering.
SECTION 2.3 Piggyback Listings. (a) If, at any time following
the first anniversary of the Closing, the Company proposes or is required to
list any shares of its Share Capital on the London Stock Exchange (other than
following registration under the Securities Act in accordance with this
Agreement), whether or not for its own account, the Company shall
-8-
12
give reasonable written notice of its intention to do so to each of the Holders
of record. Upon the written request of any Holder, made within 15 days
following the receipt of any such written notice (which request shall specify
the maximum number of Ordinary Shares or, if securities issued by the Company
similar to other Registrable Securities are then listed or quoted on the London
Stock Exchange, such other Registrable Securities ("U.K. Listed Shares")
intended to be disposed of by such Holder and the intended method of
distribution thereof), the Company shall, subject to the remainder of this
Section 2.3, use its best efforts to cause all such U.K. Listed Shares, the
Holders of which have so requested the listing thereof, to be listed on the
London Stock Exchange (with the securities that the Company at the time
proposes to list) to permit the sale or other disposition by such Holders (in
accordance with the intended method of distribution thereof) of the U.K. Listed
Shares to be so listed (such listing, a "Piggyback Listing"). There is no
limitation on the number of Piggyback Listings pursuant to the preceding
sentence that the Company is obligated to effect. No listings effected under
this Section 2.3(a) shall relieve the Company of its obligations to effect
Demand Registrations.
(b) If, at any time after giving written notice of its
intention to list any shares of its Share Capital in accordance with Section
2.3(a) and prior to the listing of such shares, the Company shall determine for
any reason not to list or to delay listing of such shares of its Share Capital,
the Company may, at its election, give written notice of such determination to
all Holders of record and (i) in the case of a determination not to list, shall
be relieved of its obligation to list any U.K. Listed Shares in connection with
such abandoned listing, without prejudice, however, to the rights of Holders
under Section 2.1, and (ii) in the case of a determination to delay such
listing of its shares of its Share Capital, shall be permitted to delay the
listing of such U.K. Listed Shares for the same period as the delay in listing
such other shares of its Share Capital.
(c) Any Holder shall have the right to withdraw its request
for inclusion of its U.K. Listed Shares in any listing pursuant to this Section
2.3 by giving written notice to the Company of its request to withdraw;
provided, however, that (i) such request must be made in writing prior to the
earlier of the execution of the underwriting agreement or the execution of the
custody agreement with respect to such listing and (ii) such withdrawal shall
be irrevocable and, after making such withdrawal, a Holder shall no longer have
any right to include U.K. Listed Shares in the listing as to which such
withdrawal was made.
(d) If the managing underwriter of any underwritten offering
shall inform the Company in writing of its belief that the number of U.K.
Listed Shares requested to be included in a listing under this Section 2.3
would materially adversely affect such offering, then the Company will include
in such listing, first, the securities proposed by the Company to be sold for
its own account, second, the U.K. Listed Shares and any other securities of the
Company with respect to which the holders thereof are entitled to and desire
"piggyback" or similar rights, pro rata among all such holders on the basis of
the relative number of securities of the Company requested to be listed
pursuant to Section 2.3(a) or such other "piggyback" or similar registration
rights by each such holder and third, other securities of the Company.
-9-
13
(e) If a Piggyback Listing pursuant to this Section 2.3
involves an underwritten offering, the Company shall have the right in its
reasonable discretion to select an investment banker or bankers and managers of
nationally recognized standing to administer the offering.
(f) If and whenever the Company is required by the provisions
of this Section 2.3 to effect or cause the listing of any U.K. Listed Shares,
the Company shall (i) comply with all applicable laws and the requirements of
the relevant securities exchange or market or quotation system in respect of
such listing; (ii) consult with the Holders in respect of all aspects of such
listing; and (iii) comply with the reasonable requests of the Holders in
respect of the form and content of any documents (including, without
limitation, listing particulars and circulars) prepared in connection with such
listing, and otherwise in connection with the procedural requirements for
listing.
SECTION 2.4 Preservation of Rights. The Company shall not
grant any registration or listing rights to third parties which contravene the
rights of Holders granted hereunder.
ARTICLE III
REGISTRATION PROCEDURES
SECTION 3.1 Registration Procedures. Subject to Section
2.2(b), if and whenever the Company is required by the provisions of this
Agreement to effect or cause the registration of any Registrable Securities
under the Securities Act as provided in this Agreement, the Company shall, as
expeditiously as practicable:
(a) prepare and file with the SEC a registration statement on
an appropriate registration form of the SEC for the disposition of such
Registrable Securities in accordance with the intended method of disposition
thereof, which form (i) shall be selected by the Company (provided, that if any
registration requested pursuant to this Agreement which is proposed by the
Company to be effected by filing of a registration statement on Form S-3 (or
any successor or similar short-form registration statement) shall be in
connection with an underwritten public offering, and if the managing
underwriter shall advise the Company in writing that, in its opinion, it is of
material importance to the success of such proposed offering to include in such
registration statement information not required to be included pursuant to Form
S-3, then the Company shall supplement such registration statement as
reasonably requested by such managing underwriter) and (ii) shall, in the case
of a shelf registration, be available for the sale of the Registrable
Securities by the selling Holders thereof and such registration statement shall
comply as to form in all material respects with the requirements of the
applicable form and include all financial statements required by the SEC to be
filed therewith, and the Company shall use its best efforts to cause such
registration statement to become effective (provided, however, that before
filing a registration statement or prospectus or any amendments or supplements
thereto, or comparable statements under U.S. state securities or "blue sky"
laws, the Company
-10-
14
will furnish to one counsel for the Holders participating in the planned
offering (selected by the Initiating Holder, in the case of a Demand
Registration, or the Requisite Percentage of Participating Holders, in the case
of a Piggyback Registration) and the underwriters, if any, copies of all such
documents proposed to be filed (including all exhibits thereto), which
documents will be subject to the reasonable review and, in the case of a Demand
Registration, reasonable comment of such counsel, and the Company shall not
file any registration statement or amendment thereto or any prospectus or
supplement thereto with respect to a Demand Registration to which the Holders
of a majority of the Registrable Securities covered by such registration
statement or the managing underwriter, if any, shall reasonably object in
writing;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all Registrable
Securities covered by such registration statement in accordance with the
intended methods of disposition by the seller or sellers thereof set forth in
such registration statement in each case until the earlier of (i) such time as
all such Registrable Securities have been disposed of in accordance with the
intended methods of disposition set forth in such registration statement by the
Holder or Holders thereof and (ii) the expiration of 120 days from the date
such registration statement first becomes effective;
(c) furnish, without charge, to each seller of such
Registrable Securities and each underwriter, if any, of the securities covered
by such registration statement such number of copies of such registration
statement, each amendment and supplement thereto (in each case including all
exhibits), and the prospectus included in such registration statement
(including each preliminary prospectus and summary prospectus), in conformity
with the requirements of the Securities Act, such documents incorporated by
reference in such registration statement, and such other documents, as such
seller and underwriter may reasonably request in order to facilitate the
disposition of the Registrable Securities as contemplated by such registration
statement;
(d) use its best efforts to register or qualify all
Registrable Securities covered by such registration statement under such other
securities or "blue sky" laws of such jurisdictions within the United States as
any sellers of Registrable Securities or any managing underwriter, if any,
shall reasonably request, to the extent such registration or qualification is
required by law, and do any and all other acts and things that may be necessary
or advisable to enable such sellers or underwriter, if any, to consummate the
disposition of the Registrable Securities in such jurisdictions, except that in
no event shall the Company be required to qualify generally to do business as a
foreign corporation in any jurisdiction where it would not, but for the
requirements of this paragraph (d), be required to be so qualified, to subject
itself to taxation in any such jurisdiction or to consent to general service of
process in any such jurisdiction;
(e) enter into such customary agreements (including an
underwriting agreement in customary form, which may include customary
indemnification provisions in favor of underwriters and other persons in
addition to, or in substitution for, the provisions of Section 4.1
-11-
15
hereof) and take such other actions as the Initiating Holder, in the case of a
Demand Registration, or the underwriters, if any, shall reasonably request in
order to expedite or facilitate the disposition of such Registrable Securities;
(f) obtain (i) any opinion of U.S., English and other counsel
for the Company, dated the date of the closing under the underwriting agreement
with respect to such offering, in customary form and in form and scope
reasonably satisfactory to the underwriter and its counsel and (ii) any
"comfort" letter signed by the independent public accountants in customary form
and covering matters of the type customarily covered by "comfort" letters;
(g) notify each Holder selling Registrable Securities covered
by such registration statement and each managing underwriter, if any, as soon
as practicable: (i) when the registration statement, any pre-effective
amendment, the prospectus or any prospectus supplement related thereto or
post-effective amendment to the registration statement has been filed and, with
respect to the registration statement or any post-effective amendment, when the
same has become effective; (ii) of any request by the SEC or state securities
authority for amendments or supplements to the registration statement or the
prospectus related thereto or for additional information; (iii) of the issuance
by the SEC of any stop order suspending the effectiveness of the registration
statement or the initiation of any proceedings for that purpose; (iv) of the
receipt by the Company of any notification with respect to the suspension of
the qualification of any Registrable Securities for sale under the U.S. state
securities or "blue sky" laws or the initiation of any proceeding for such
purpose; and (v) of the existence of any fact of which the Company becomes
aware that results in the registration statement, the prospectus related
thereto or any document incorporated therein by reference containing an untrue
statement of a material fact or omitting to state a material fact required to
be stated therein or necessary to make any statement therein not misleading;
and, if the notification relates to an event described in clause (v), the
Company shall, as soon as reasonably practicable, subject to Section 3.1(b),
prepare and furnish to each such seller and each underwriter, if any, a
reasonable number of copies of a prospectus as supplemented or amended so that,
as thereafter delivered to the Holders of such Registrable Securities, the
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 the light of the circumstances under which they were made
not misleading;
(h) use its best efforts to comply with all applicable rules
and regulations of the SEC, and make available to its security holders, as soon
as reasonably practicable after the effective date of the registration
statement (and in any event within 16 months thereafter), an earning statement
(which need not be audited) covering the period of at least 12 consecutive
months beginning with the first day of the Company's first calendar quarter
after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and the rules and regulations thereunder;
(i) use its best efforts to (i) cause all such Registrable
Securities covered by such registration statement to be listed on each U.S. or
U.K. securities exchange or market or quotation system on which similar
securities issued by the Company are then listed or quoted (if
-12-
16
any), and provide a transfer agent and registrar for such Registrable
Securities not later than the effective date of such registration statement;
(ii) comply with all applicable laws and the requirements of the relevant
securities exchange or market or quotation system in respect of such listing;
(iii) consult with the Holders in respect of all aspects of such listing; and
(iv) comply with the reasonable requests of the Holders in respect of the form
and content of any documents (including, without limitation, listing
particulars and circulars) prepared in connection with such listing, and
otherwise in connection with the procedural requirements for listing;
(j) deliver, as soon as practicable, to each Holder and one
counsel for the selling Holders participating in the offering and each
underwriter, if any, copies of all correspondence between the SEC and the
Company, its counsel or auditors and any memoranda relating to discussions with
the SEC or its staff with respect to the registration statement, other than
those portions of any such memoranda that contain information subject to
attorney-client privilege with respect to the Company or other shareholders,
and, upon receipt of such confidentiality agreements as the Company may
reasonably request, make reasonably available for inspection by any seller of
such Registrable Securities covered by such registration statement, by any
underwriter, if any, participating in any disposition to be effected pursuant
to such registration statement and by any attorney, accountant or other agent
retained by any such seller or any such underwriter, all pertinent financial
and other records, pertinent corporate documents and properties of the Company,
and cause all of the Company's officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(k) use reasonable efforts to prevent the issuance of any
stop order suspending the effectiveness of the registration statement or of any
order preventing or suspending the use of any preliminary prospectus and, if
any such order is issued, to obtain the withdrawal of any such order at the
earliest possible moment;
(l) provide a CUSIP number for all Registrable Securities
sold pursuant to the Registration Statement, not later than the effective date
of the registration statement;
(m) make reasonably available its employees and personnel and
otherwise provide reasonable assistance to the underwriters (taking into
account the needs of the Company's businesses and the requirements of the
marketing process) in the marketing of Registrable Securities in any
underwritten offering;
(n) promptly prior to the filing of any document that is to
be incorporated by reference into the registration statement or the prospectus
(after the initial filing of such registration statement), provide copies of
such document to one counsel for the selling Holders and to each managing
underwriter, if any, and make the Company's representatives reasonably
available for discussion of such document and make such changes in such
document concerning the selling Holders prior to the filing thereof as such
counsel for such selling Holders or underwriters may reasonably request;
-13-
17
(o) furnish to each Holder participating in the offering and
the managing underwriter, without charge, at least one signed copy of the
registration statement and each post-effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(p) cooperate with each seller of Registrable Securities and
each underwriter or agent participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings required
to be made with the National Association of Securities Dealers, Inc.;
(q) use reasonable efforts to make available the executive
officers of the Company to participate with the Holders of Registrable
Securities and any underwriters in any "road shows" or other selling efforts
that may be reasonably requested by the selling Holders in connection with the
methods of distribution for the Registrable Securities;
(r) cooperate with the selling Holders of Registrable
Securities and the managing underwriter, if any, to facilitate the timely
preparation and delivery of certificates not bearing any restrictive legends
representing the Registrable Securities to be sold, and cause such Registrable
Securities to be issued in such denominations and registered in such names in
accordance with the underwriting agreement prior to any sale of Registrable
Securities to the underwriters or, if not an underwritten offering, in
accordance with the instructions of the selling Holders of Registrable
Securities at least two Business Days prior to any sale of Registrable
Securities; and
(s) take all such other reasonable actions as are necessary
or advisable or reasonably requested by the selling Holders of Registrable
Securities in order to expedite or facilitate the disposition of such
Registrable Securities.
The Company may require as a condition precedent to the Company's obligations
under this Section 3.1 that each seller of Registrable Securities as to which
any registration is being effected furnish the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing and as shall be required by law,
by the SEC or by any securities exchange or market or quotation system on which
the Registrable Securities are to be listed or quoted in connection therewith;
provided, that such information shall be used only in connection with such
registration and the fulfillment of the Company's obligations under this
Agreement. Each Holder of Registrable Securities agrees that upon receipt of any
notice from the Company of the happening of any event of the kind described in
clause (v) of paragraph (g) of this Section 3.1, such Holder will discontinue
such Holder's disposition of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until such Holder's receipt of
the copies of a supplemented or amended prospectus as contemplated by paragraph
(g) of this Section 3.1 and, if so directed by the Company, will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies,
then in such Holder's possession of any prospectus covering such Registrable
Securities that was in effect at the time of receipt of such notice. In the
event the
-14-
18
Company shall give any such notice, the 120-day period mentioned in paragraph
(b) of this Section 3.1 shall be extended by the number of days during such
period from and including the date of the giving of such notice to and including
the date when each seller of any Registrable Securities covered by such
registration statement shall have received the copies of the supplemented or
amended prospectus contemplated by paragraph (g) of this Section 3.1. If any
such registration statement or comparable statement under "blue sky" laws refers
to any Holder by name or otherwise as the Holder of any securities of the
Company, then such Holder shall have the right to require (i) the insertion
therein of language, in form and substance satisfactory to such Holder and the
Company, to the effect that the holding by such Holder of such securities is not
to be construed as a recommendation by such Holder of the investment quality of
the Company's securities covered thereby and that such holding does not imply
that such Holder will assist in meeting any future financial requirements of the
Company or (ii) in the event that such reference to such Holder by name or
otherwise is not in the judgment of the Company, as advised by counsel, required
by the Securities Act or any similar federal statute or any state "blue sky" or
securities law then in force, the deletion of the reference to such Holder.
SECTION 3.2 Registration Expenses. To the fullest extent
permitted by applicable laws, the Company will pay (or promptly reimburse the
payment of) all Expenses incurred in connection with each registration
statement filed pursuant to this Agreement and the fulfillment of the Company's
obligations under this Agreement, provided, however, that all underwriting
discounts and selling commissions applicable to the sale of the Registrable
Securities in connection with any registration statement filed pursuant to this
Agreement shall be borne by the Holders of the Registrable Securities sold
pursuant to such registration statement, pro rata in proportion to the number
of Registrable Securities of each such Holder included in such registration.
SECTION 3.3 Limitations on Sale or Distribution of Other
Securities. (a) To the extent requested in writing by a managing underwriter,
if any, of any registration effected pursuant to Section 2.1 and 2.2, each
Holder of Registrable Securities agrees not to Transfer, including, without
limitation, any sale pursuant to Rule 144 under the Securities Act, any
Registrable Securities (other than as part of such underwritten public
offering) during the time period reasonably requested by the managing
underwriter, not to exceed 90 days from the effective date of the registration
statement (and the Company hereby also so agrees (except that the Company may
effect any sale or distribution of any such securities pursuant to a
registration on Form S-8 or any successor or similar form that is then in
effect or upon the conversion, exchange or exercise of any then outstanding
options, warrants, rights or other securities convertible into or exchangeable
or exercisable for Registrable Securities or on Form S-4 or any successor or
similar form that is then in effect for a merger, acquisition or other
transaction and related distributions of securities) to use its reasonable best
efforts to cause each holder, directly or indirectly, of at least 1% of any
Share Capital of the Company purchased from the Company at any time other than
in a public offering so to agree); provided that with respect to registrations
effected pursuant to Section 2.2, each Holder of Registrable Securities shall
only be required to agree to one such period of restriction on Transfer in any
365-day period.
-15-
19
(b) The Company hereby agrees that, if it shall previously
have received a request for registration pursuant to Section 2.1 hereof or
postponed pursuant to Section 3.4 hereof, and if such previous registration
shall not have been withdrawn or abandoned, the Company shall not Transfer any
Registrable Securities (other than as part of such underwritten public
offering, a registration on Form S-8 or any successor or similar form that is
then in effect or upon the conversion, exchange or exercise of any then
outstanding options, warrants, rights or other securities convertible into or
exchangeable or exercisable for Registrable Securities or on Form S-4 or any
successor or similar form that is then in effect for a merger, acquisition or
other transaction and related distributions of securities) during the time
period reasonably requested by the managing underwriter, not to exceed 90 days
from the effective date of the registration statement.
SECTION 3.4 Company Right to Postpone Registration. The
Company shall be entitled to postpone for a reasonable period of time (but not
exceeding 120 days) the filing or effectiveness of any registration statement
otherwise required to be prepared and filed by it pursuant to this Agreement if
the Company determines (i) in its good faith judgment after consultation with
its external U.S. securities counsel of nationally recognized standing that
such registration and offering would require premature disclosure of material
information which the Company has a bona fide business purpose for preserving
as confidential or (ii) in its good faith judgment after consulting with an
Independent Investment Banking Firm that the filing of the registration
statement and the related sale of securities of the Company would be reasonably
likely to have an adverse affect on the Company's financing plans or any
planned material transaction involving the Company, including, without
limitation, sales of securities of the Company, in each case provided that the
Company promptly gives the Holders of Registrable Securities requesting
registration thereof pursuant to Section 2.1 written notice of such delay. If
the Company shall so postpone the filing or effectiveness of a registration
statement, such Holders of Registrable Securities requesting registration
thereof pursuant to Section 2.1 shall have the right to withdraw the request
for registration by giving written notice to the Company within 30 days after
receipt of the notice of postponement and, in the event of such withdrawal,
such request shall not be counted for purposes of the requests for registration
to which Holders of Registrable Securities are entitled pursuant to Section 2.1
hereof. The Company shall not be permitted to postpone registration pursuant to
this Section 3.4 more than once in any 365-day period.
SECTION 3.5 No Required Sale. Nothing in this Agreement shall
be deemed to create an independent obligation on the part of any Holder to sell
any Registrable Securities pursuant to any effective registration statement.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
-16-
20
SECTION 4.1 Indemnification. (a) In the event of any
registration of any securities of the Company under the Securities Act pursuant
this Agreement, the Company will, and hereby does, indemnify and hold harmless,
to the fullest extent permitted by all applicable laws, each seller of any
Registrable Securities covered by such registration statement, its directors,
officers, affiliates, employees, shareholders, members and general and limited
partners (and the directors, officers, affiliates, employees, shareholders,
members and general and limited partners thereof), each other Person who
participates as an underwriter in the offering or sale of such securities, each
director, officer, employee, shareholder, member or general and limited partner
of such underwriter, and each other Person, if any, who controls such seller or
any such underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, against any and all losses, claims, damages or
liabilities, joint or several, actions or proceedings (whether commenced or
threatened) in respect thereof ("Claims") and expenses (including reasonable
fees of counsel and any amounts paid in any settlement effected with the
Company's consent, which consent shall not be unreasonably withheld) to which
each such indemnified party may become subject under the Securities Act or
otherwise, insofar as such Claims or expenses arise out of or are based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in any registration statement under which such securities were
registered under the Securities Act, together with the documents incorporated
by reference therein or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary, final or summary
prospectus or listing particulars or any amendment or supplement thereto,
together with the documents incorporated by reference therein, or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided,
however, that the Company shall not be liable to any such indemnified party in
any such case to the extent such Claim or expense arises out of or is based
upon any untrue statement or alleged untrue statement of a material fact or
omission or alleged omission of a material fact made in such registration
statement or amendment thereof or supplement thereto or in any such prospectus
or any preliminary, final or summary prospectus in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such indemnified party specifically for use therein. Such indemnity and
reimbursement of expenses shall remain in full force and effect regardless of
any investigation made by or on behalf of such indemnified party and shall
survive the Transfer of such securities by such seller.
(b) Each Holder of Registrable Securities that are included
in the securities as to which any registration under Section 2.1 or 2.2 is
being effected (and, if the Company requires as a condition to including any
Registrable Securities in any registration statement filed in accordance with
Section 2.1 or 2.2, any underwriter) shall, severally and not jointly,
indemnify and hold harmless (in the same manner and to the same extent as set
forth in paragraph (a) of this Section 4.1) to the extent permitted by law the
Company, its directors and officers, each Person controlling the Company within
the meaning of the Securities Act and all other prospective sellers and their
directors, officers, general and limited partners and respective controlling
Persons with respect to any untrue statement or alleged untrue statement of any
-17-
21
material fact in, or omission or alleged omission of any material fact from,
such registration statement, any preliminary, final or summary prospectus or
listing particulars, or any amendment or supplement thereto, if such statement
or alleged statement or omission or alleged omission was made in reliance upon
and in conformity with written information furnished to the Company or its
representatives by or on behalf of such Holder specifically for use therein and
reimburse such indemnified party for any legal or other expenses reasonably
incurred in connection with investigating or defending any such Claim as such
expenses are incurred; provided, however, that the aggregate amount that any
such Holder shall be required to pay pursuant to this Section 4.1(b) and
Section 4.2 shall in no case be greater than the amount of the net proceeds
received by such person upon the sale of the Registrable Securities pursuant to
the registration statement giving rise to such Claim.
(c) Indemnification similar to that specified in the
preceding paragraph (a) of this Section 4.1 (with appropriate modifications)
shall be given by the Company with respect to any required registration or
other qualification of securities under any U.S. state securities and "blue
sky" laws.
(d) Any person entitled to indemnification under this
Agreement shall notify promptly the indemnifying party in writing of the
commencement of any action or proceeding with respect to which a claim for
indemnification may be made pursuant to this Section 4.1, but the failure of
any indemnified party to provide such notice shall not relieve the indemnifying
party of its obligations under the preceding paragraphs of this Section 4.1,
except to the extent the indemnifying party is materially prejudiced thereby,
and shall not relieve the indemnifying party from any liability that it may
have to any indemnified party otherwise than under this Article IV. In case any
action or proceeding is brought against an indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, unless in the reasonable
opinion of outside counsel to the indemnified party a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim, to assume the defense thereof jointly with any other indemnifying party
similarly notified, to the extent that it chooses, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election to assume the defense thereof,
the indemnifying party shall not be liable to such indemnified party for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that if (i) the indemnifying party fails to
take reasonable steps necessary to defend diligently the action or proceeding
within 20 days after receiving notice from such indemnified party that the
indemnified party believes it has failed to do so; (ii) such indemnified party
who is a defendant in any action or proceeding that is also brought against the
indemnifying party reasonably shall have concluded that there may be one or
more legal defenses available to such indemnified party that are not available
to the indemnifying party; or (iii) representation of both parties by the same
counsel is otherwise inappropriate under applicable standards of professional
conduct, then, in any such case, the indemnified party shall have the right to
assume or continue its own defense as set forth above (but with no more than
one firm of counsel for all indemnified parties in each jurisdiction who shall
be approved by the
-18-
22
majority of the participating Holders in the registration in respect of which
such indemnification is sought), and, to the fullest extent permitted by all
applicable laws, the indemnifying party shall be liable for any expenses
therefor. No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (x)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (y) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(e) The indemnity agreements contained herein shall be in
addition to any other rights to indemnification or contribution that any
indemnified party may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any investigation made or
omitted by or on behalf of any indemnified party and shall survive the Transfer
of the Registrable Securities by any such party.
(f) The indemnification and contribution required by this
Section 4.1 and Section 4.2 shall be made by periodic payments of reasonable
frequency of the amount thereof during the course of the investigation or
defense, as and when bills are received or expense, loss, damage or liability
is incurred.
SECTION 4.2 Contribution. (a) If for any reason the indemnity
provided for in Section 4.1 is unavailable or is insufficient to hold harmless
an indemnified party under Sections 4.1(a), (b) or (c) in respect of any Claims
or expenses (including reasonable fees of counsel and any amounts paid in any
settlement effected with the indemnifying party's consent, which consent shall
not be unreasonably withheld), then each indemnifying party, in lieu of
indemnifying such indemnified party, shall, to the fullest extent permitted by
all applicable laws, contribute to the amount paid or payable by such
indemnified party as a result of such Claims or expenses (i) as between the
Company and the Holders of Registrable Securities covered by a registration
statement, on the one hand, and the underwriters, on the other, in such
proportion as is appropriate to reflect the relative benefits received by the
Company and such Holders, on the one hand, and the underwriters, on the other,
from the offering of the Registrable Securities, or if such allocation is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits but also the relative fault of the Company and
such Holders, on the one hand, and of the underwriters, on the other, in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations, and (ii) as between the Company, on the one hand, and each
holder of Registrable Securities covered by a registration statement, on the
other, in such proportion as is appropriate to reflect the relative fault of
the Company and of each such holder in connection with such statements or
omissions, as well as any other relevant equitable considerations. The relative
benefits received by the Company and such Holders, on the one hand, and the
underwriters, on the other, shall be deemed to be in the same proportion as the
total proceeds from the offering (net of underwriting discounts and
-19-
23
commissions but before deducting expenses) received by the Company and such
Holders bear to the total underwriting discounts and commissions received by
the underwriters. The relative fault of the Company and such Holders, on the
one hand, and of the underwriters, 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 and such Holders
or by the underwriters. The relative fault of the Company, on the one hand, and
of each such Holder, on the other, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
relates to information supplied by such party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
(b) The Company and the Holders of Registrable Securities
agree that it would not be just and equitable if contribution pursuant to this
Section 4.2 were determined by pro rata allocation (even if the underwriters
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 the next preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the next preceding paragraph shall be deemed to include, subject
to the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 4.2, no underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public exceeds the amount
of any damages that such underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission, and no holder of Registrable Securities shall be required to
contribute any amount in excess of the amount by which the total price at which
the Registrable Securities of such holder were offered to the public exceeds
the amount of any damages that such holder has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Each
Holder's obligation to contribute pursuant to this Section 4.2 is several in
the proportion that the proceeds of the offering received by such Holder bears
to the total proceeds of the offering received by all the Holders and not
joint. The aggregate amount that any such Holder shall be required to pay
pursuant to this Section 4.2 and Section 4.1(b) shall in no case be greater
than the amount of the net proceeds received by such person upon the sale of
the Registrable Securities pursuant to the registration statement giving rise
to such Claim.
-20-
24
ARTICLE V
GENERAL PROVISIONS
SECTION 5.1 Rule 144. The Company covenants and agrees that
(i) so long as it remains subject to the reporting provisions of the Exchange
Act, it will timely file the reports required to be filed by it under the
Securities Act or the Exchange Act (including, but not limited to, the reports
under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph
(c)(1) of Rule 144 under the Securities Act), and (ii) 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 Holders to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (x) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (y) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of any Holder, the
Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
SECTION 5.2 Further Assurances. At any time or from time to
time after the date hereof, the parties agree to cooperate with each other, and
at the request of any other party, to execute and deliver any further
instruments or documents and to take all such further action as the other party
may reasonably request in order to evidence or effectuate the consummation of
the transactions contemplated hereby and to otherwise carry out the intent of
the parties hereunder.
SECTION 5.3 Amendment. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 5.4 Waiver of Jury Trial. TO THE FULLEST EXTENT
PERMITTED BY LAW, THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
TRANSACTION.
SECTION 5.5 Judgment Currency. The Company agrees that, if a
judgment or order given or made by any court for the payment of any amount due
to the Subscribers hereunder is expressed in currency (the "judgment currency")
other than the currency (the "denomination currency") in which such amount is
payable, to the fullest extent permitted by all applicable laws, it shall
indemnify the Subscribers against any deficiency arising or resulting from any
variation in rates of exchange between the date as of which the amount in the
denomination currency is notionally converted into the amount in the judgment
currency for the purposes of such judgement or order and the date of actual
payment thereof. This indemnity shall constitute a separate and independent
obligation from the other obligations contained in this Agreement, shall give
rise to a separate and independent cause of action, will apply irrespective of
any indulgence granted from time to time and shall continue in full force and
-21-
25
effect notwithstanding any judgment or order for a liquidated sum or sums in
respect of any amounts so due in respect hereof under any such judgment or
order.
SECTION 5.6 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.
SECTION 5.7 Effective Date. This Agreement shall become
effective immediately upon the Closing.
SECTION 5.8 Entire Agreement; No Third Party Beneficiaries.
(a) This Agreement constitutes the entire agreement and supersedes all prior
agreements and undertakings, both written and oral, between the parties with
respect to the subject matter hereof.
(b) Except for the provisions of Article IV relating to
Indemnified Parties, this Agreement shall be binding upon and inure solely to
the benefit of each party hereto and their permitted assigns, and nothing in
this Agreement, express or implied, is intended to or shall confer upon any
other Person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
SECTION 5.9 Assignment. Except as expressly provided herein,
neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto, in whole or in part
(whether by operation of law or otherwise), without the prior written consent
of the other parties hereto, and any attempt to make any such assignment
without such consent shall be null and void; provided, however, that the
Subscribers may, without the consent of any of the other parties to this
Agreement, (i) assign its rights and obligations hereunder to any Person or
Persons to whom it is entitled to assign the Participating Shares in accordance
with the Subscription Agreement, subject to such Person or Persons agreeing to
be bound by the terms of this Agreement and (ii) subject to compliance with the
terms of the legend set forth in Section 5.12 of the Subscription Agreement,
transfer any or all of the Participating Shares to one or more other Persons.
Subject to the preceding sentence, this Agreement will be binding upon, inure
to the benefit of and be enforceable by, the parties and their respective
successors and assigns.
SECTION 5.10 Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that each party need not sign the same counterpart.
SECTION 5.11 Remedies. (a) Each party hereto acknowledges
that money damages would not be an adequate remedy in the event that any of the
covenants or agreements
-22-
26
in this Agreement are not performed in accordance with its terms, and it is
therefore agreed that in addition to and without limiting any other remedy or
right it may have, the non-breaching party will have the right to an
injunction, temporary restraining order or other equitable relief in any court
of competent jurisdiction enjoining any such breach and enforcing specifically
the terms and provisions hereof.
(b) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise or beginning of the exercise
of any thereof by any party shall not preclude the simultaneous or later
exercise of any other such right, power or remedy by such party.
SECTION 5.12 Notices. Any notice, request, claim, demand or
other communication under this Agreement shall be in writing, shall be either
personally delivered, delivered by facsimile transmission or sent by reputable
overnight courier service (charges prepaid) to the address for such Person set
forth below or such other address as the recipient party has specified by prior
written notice to the other parties hereto and shall be deemed to have been
given hereunder when receipt is acknowledged for personal delivery or facsimile
transmission or one day after deposit with a reputable overnight courier
service:
(a) if to the Subscribers:
c/o The Cypress Group
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
(b) if to the Company:
Danka Business Systems PLC
000 Xxxxxxxxxxx Xxxx
Xxxxxx X00 XXX, Xxxxxxx
Fax: (000-00-000) 000-0000
Attention: Corporate Secretary
-23-
27
with copies to:
Danka Holding Company
00000 Xxxxx Xxxxxx Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Attention: General Counsel
Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
Xxxxx X. Xxxxxxxxx, Esq.
Xxx X. Xxxx, Esq.
SECTION 5.13 Governing Law; Consent to Jurisdiction. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of New York and the United States District Court for the Southern
District of New York for any action, order, writ, injunction, judgment, fine or
decree outstanding or suit, litigation, proceeding, arbitral action,
investigation or claim, including, without limitation, those involving any
Governmental Authority ("Litigation") in any court or before any Governmental
Authority arising out of or relating to this Agreement and the transactions
contemplated hereby and further agrees that service of any process, summons,
notice or document by U.S. mail to its respective address set forth in this
Agreement shall be effective service of process for any Litigation brought
against it in any such court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any Litigation
arising out of this Agreement or the transactions contemplated hereby in the
courts of the State of New York sitting in the Borough of Manhattan in the City
of New York, and hereby further irrevocably and unconditionally waives and
agrees not to plead or claim in any such court that any such Litigation brought
in any such court has been brought in an inconvenient forum.
SECTION 5.14 Interpretation. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
-24-
28
IN WITNESS WHEREOF, each of the undersigned has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
DANKA BUSINESS SYSTEMS PLC
By:
-------------------------------
Name:
Title:
[Signatures for this Agreement continue on the following page]
29
CYPRESS MERCHANT BANKING
PARTNERS
II L.P.
By: Cypress Associates II LLC, its
General Partner
By:
----------------------------------
Name:
Title:
CYPRESS MERCHANT BANKING C.V.
By: Cypress Associates II LLC, its
Managing General Partner
By:
----------------------------------
Name:
Title:
00XX XXXXXX PARTNERS II L.P.
By: Cypress Associates II LLC, its
General Partner
By:
----------------------------------
Name:
Title:
