EXHIBIT 4.4
EXECUTION COPY
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REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
ALLOU HEALTH & BEAUTY CARE, INC.
AND
THE PURCHASERS NAMED HEREIN
JULY 25, 2000
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") by and between Allou
Health & Beauty Care, Inc., a Delaware corporation ("Company"), RFE Investment
Partners VI, L.P., a Delaware limited partnership ("RFE"), and the other
Purchasers named herein from time to time (together with RFE, the "Purchasers")
is made as of July 25, 2000.
WHEREAS, pursuant to that certain Senior Subordinated Note and Warrant
Purchase Agreement dated as of the date hereof by and between the Company and
RFE (as amended, restated or otherwise in effect from time to time, the
"Purchase Agreement"), RFE has purchased a Class A Common Stock Purchase Warrant
dated as of the date hereof convertible into shares of the Class A Common Stock
of the Company, $.001 par value, according to the terms and conditions set forth
in the Purchase Agreement and in the Warrant; and
WHEREAS, pursuant to the Purchase Agreement, RFE may purchase
additional Warrant(s) at a Second RFE Closing (as defined therein) and an
additional investor may also purchase a Warrant at a Subsequent Closing (as
defined therein); and
WHEREAS, pursuant to the Senior Subordinated Note(s) issued by the
Company pursuant to the Purchase Agreement (the "Notes"), the holders of the
Note(s) may, at the Company's option, receive shares of Class A Common Stock in
lieu of interest payments ("Payment-In-Kind Stock" or "PIK Stock") under certain
circumstances as set forth in the Note; and
WHEREAS, it is a condition to the obligations of RFE under the Purchase
Agreement that the parties hereto execute this Agreement.
NOW, THEREFORE, incorporating the foregoing recitals and in
consideration of the promises and covenants herein contained, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Purchasers and the Company agree as follows:
SECTION I
RESTRICTIONS ON TRANSFER: REGISTRATION RIGHTS
1.1 Certain Definitions. As used in this Agreement:
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Common Stock" means collectively: (i) the Class A Common Stock, as
authorized on the date of this Agreement, (ii) the Company's Class B Common
Stock, par value $.001 per share, as authorized on the date hereof, (iii) any
other common stock of any class or classes (however designated) of the Company,
authorized on or after the date hereof, and (iv) any other securities into which
or for which any
of the securities described in (i), (ii), or (iii) above may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger, sale
of assets or otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar successor federal statute and the rules and regulations
promulgated thereunder, all as the same shall be in effect from time to time.
"Holder" means any Purchaser who holds Registrable Securities and any
holder of Registrable Securities to whom the registration rights conferred by
this Agreement have been transferred pursuant to Section 3.2 hereof.
"Qualified Public Offering" means the closing of the first underwritten
offering after the date hereof by the Company or any of its Subsidiaries (or any
successor entity) of its equity securities to the public pursuant to an
effective registration statement under the Securities Act, provided that (a)
such registration statement covers the offer and sale of Common Stock of which
the aggregate net proceeds attributable to sales for the account of the Company
or any of its Subsidiaries exceed $25,000,000 and (b) such Common Stock is
listed for trading on any of the New York Stock Exchange, the American Stock
Exchange or the NASDAQ National Market.
The terms "register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act (and any posteffective amendments filed or
required to be filed), and the declaration or ordering of the effectiveness of
such registration statement.
"Registrable Securities" means any Common Stock (i) issued or issuable
upon conversion of the Warrants, (ii) any PIK Stock, (iii) any Common Stock held
by the Purchasers however acquired or (iv) issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of the shares
referenced in (i), (ii) or (iii) above; provided, however, that such shares will
cease to be Registrable Securities when they are sold or saleable pursuant to
Rule 144 or otherwise sold to the public; provided further, however, that with
respect to holders of at least 2% of the outstanding Common Stock (or securities
convertible into Common Stock), such shares will remain Registrable Securities
(and will be entitled to exercise rights associated with Registrable Securities
hereunder) until such shares are actually sold pursuant to Rule 144 or otherwise
sold to the public.
"Registration Expenses" means all expenses incurred by the Company in
complying with Sections 1.2, 1.3 and 1.4 including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company and for the Holders, blue sky
fees and expenses, and the expense of any special audits incident to or required
by any such registration (but excluding the compensation of regular employees of
the Company which shall be paid in any event by the Company). Registration
Expenses do not include Selling Expenses or other compensation paid to
underwriters or other agents or brokers to effect the sale or the fees of more
than one counsel for the Holders.
"Rule 144" means Rule 144 promulgated under the Securities Act, or any
similar successor rule, as the same is in effect from time to time.
"Rule 145" means Rule 145 promulgated under the Securities Act, or any
similar successor rule, as the same is in effect from time to time.
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"Rule 415" means Rule 415 promulgated under the Securities Act, or any
similar successor rule, as the same is in effect from time to time.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute and the rules and regulations of the Commission
thereunder, as are in effect from time to time.
"Selling Expenses" means all underwriting discounts, selling
commissions, and stock transfer taxes applicable to the sale of Registrable
Securities.
"Warrant" means (i) the warrants to purchase shares of Common Stock
(subject to adjustment) issued pursuant to the Purchase Agreement (including
Warrants issued at a Second RFE Closing or a Subsequent Closing pursuant to the
terms of the Purchase Agreement and Warrants issued pursuant to Section 2.12.2
of the Purchase Agreement), and (ii) any equity securities issued or issuable
directly or indirectly with respect to the Warrants in connection with a
recapitalization, merger, consolidation or other reorganization.
"Warrant Shares" means any shares of capital stock of the Company
issued upon exercise of the Warrants.
1.2 Registration at RFE's Request.
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(a) Request for Registration. At any time commencing 180 days
after the consummation of a Qualified Public Offering, RFE may request that the
Company effect an underwritten registration, qualification or compliance with
respect to Registrable Securities, by sending a written notice of such request
("Request") to the Company, then the Company shall:
(i) promptly give written notice of the proposed
registration, qualification, or compliance to all other Holders; and
(ii) as soon as practicable, use its reasonable best
efforts to effect such registration, qualification, or compliance
(including, without limitation, the execution of an undertaking to file
posteffective amendments, appropriate qualification under applicable
blue sky or other state securities laws, and appropriate compliance
with applicable regulations issued under the Securities Act and any
other governmental requirements or regulations) pursuant to the Request
and as would permit or facilitate the sale and distribution of all or
such portion of such Registrable Securities as are specified in such
Request in accordance with Section 1.7 hereof, together with all or
such portion of the Registrable Securities of any Holders joining in
such request as are specified in a written request received by the
Company within 20 days after the date the Company mails such written
notice.
Provided, however, that the Company will not be obligated to take any action to
effect any such registration, qualification, or compliance pursuant to this
Section 1.2:
(A) In any jurisdiction in which the Company
would be required to execute a general consent to service of
process in effecting such registration, qualification, or
compliance unless the Company is already subject to service in
such jurisdiction and except as may be required by the
Securities Act;
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(B) After the Company has effected two such
registrations pursuant to this Section 1.2 which have been
declared or ordered effective; or
(C) If the Company furnishes to RFE a
certificate signed by the Chief Executive Officer of the
Company stating that in the good faith judgment of the Board
of Directors of the Company it would be seriously detrimental
to the Company or its shareholders for a registration
statement to be filed in the near future ("Deferral Right"),
(provided, however, that the Company may not exercise this
Deferral Right more than once per twelve-month period) in
which case, at RFE's option, either: (i) the Company's
obligation to use its reasonable best efforts to register,
qualify or comply under this Section 1.2 will be deferred for
a period not to exceed 90 days from the date of receipt of
written request from RFE or (ii) RFE may rescind its Request.
Subject to the foregoing clauses (A) through (C), the Company shall
file a registration statement covering the Registrable Securities so requested
to be registered as soon as practicable, and in any event within 90 days, after
receipt of the Request from RFE.
(b) Underwriting. The right of any Holder to registration
pursuant to this Section 1.2 is conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable Securities in
the underwriting to the extent requested and to the extent provided herein.
The Company shall (together with all Holders selling Registrable
Securities) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company (which
underwriter must be reasonably acceptable to RFE). Notwithstanding any other
provision of this Section 1.2, if the managing underwriter advises RFE in
writing that marketing factors require a limitation of the number of shares to
be underwritten, then the Company shall so advise all Holders and the number of
shares of Registrable Securities and other securities that may be included in
the registration and underwriting shall be allocated, FIRST, among all Holders
pro rata, in proportion to the respective amounts of Registrable Securities
requested to be included by such Holders in the registration statement and
SECOND, only if the Holders have been able to include 100% of the amounts of
Registrable Securities initially requested by such Holders, to the Company and
all other holders, in proportion, as nearly as practicable, to the respective
amounts of securities of the Company requested to be included by them. No
Registrable Securities or other securities excluded from the underwriting by
reason of the underwriter's marketing limitation will be included in such
registration. To facilitate the allocation of shares in accordance with the
above provisions, the Company or the underwriters may round the number of shares
allocated to any Holder or other holder to the nearest 100 shares.
If any Holder or other holder disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and RFE. The Registrable Securities and/or
other securities so withdrawn shall also be withdrawn from registration, and
such Registrable Securities and/or other securities shall not be transferred in
a public distribution prior to 180 days after the effective date of such
registration, or such other shorter period of time as the underwriters may
require. If by the withdrawal of such Registrable Securities or other
securities, a greater number of Registrable Securities held by other Holders may
be included in such registration (up to the maximum of any limitation imposed by
the underwriters), then the Company shall offer to all Holders who have included
Registrable Securities in the registration the right to include additional
Registrable Securities in the same priority, proportion and manner used in
determining the effect of the underwriter limitation in this Section 1.2(b).
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If the managing underwriter has not limited the number of Registrable
Securities to be underwritten, the Company may include securities for its own
account or for the account of others in such registration if the managing
underwriter so agrees and if the number of Registrable Securities which would
otherwise have been included in such registration and underwriting will not
thereby be limited.
1.3 Company Registration
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(a) Notice of Registration. If at any time or from time to
time, (i) the Company determines to register an offering of any of its
securities, either for its own account or the account of a security holder or
holders, other than (i) a registration relating solely to employee benefit
plans, or (ii) a registration relating solely to a Rule 145 transaction or on
Form S-4, or (iii) a registration on any registration form that does not permit
secondary sales, the Company shall:
(i) promptly give to each Holder written notice
thereof, and,
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified
in a written request by each Holder received by the Company within 20
days after the Company mails such written notice, subject to the
provisions below.
(b) Underwriting. If the offering, to be effected pursuant to
this Section 1.3 is to be an underwritten public offering, the right of any
Holder to registration pursuant to this Section 1.3 is conditioned upon the
participation by such Holder in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent provided
herein. Those parties proposing to distribute their securities through such
underwriting shall (together with the Company and the other holders distributing
their securities through such underwriting) enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by the Company. Notwithstanding any other provisions of this Section 1.3, if the
managing underwriter determines that marketing factors require a limitation of
the number of shares to be underwritten, the managing underwriter may limit the
Registrable Securities to be included in such registration. The Company shall so
advise all Holders, and the other holders distributing their securities through
such underwriting, and the number of shares of Registrable Securities, and other
securities that may be included in the registration and underwriting shall be
allocated among the Company, the Holders and the other holders as follows: FIRST
to the Company so as to permit the Company to include all shares that the
Company desires to sell; SECOND to the Holders pro-rata, in proportion to the
respective amount of Registrable Securities requested to be included by such
Holders in the registration statement; and THIRD, only if the Holders have been
able to include 100% of the amounts of Registrable Securities initially
requested by such Holders, to all other holders in proportion, as nearly as
practicable, to the respective amounts of securities entitled to inclusion
(determined with regard to any requirement of a request to be included in such
registration) in such registration held by all such other holders. To facilitate
the allocation of shares in accordance with the above provisions, the Company or
the underwriter may round the number of shares allocated to any Holder, or other
holder to the nearest 100 shares. If any Holder or other holder disapproves of
the terms of any such underwriting, such Holder or other holder may elect to
withdraw therefrom by written notice to the Company and the managing
underwriter. Any securities excluded or withdrawn from such underwriting shall
be withdrawn from such registration. If by the withdrawal of such Registrable
Securities or other securities, a greater number of Registrable Securities held
by other Holders may be included in such registration (up to the maximum of any
limitation imposed by the
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underwriters), then the Company shall offer to all Holders who have included
Registrable Securities in the registration the right to include additional
Registrable Securities in the same proportion and manner used in determining the
effect of the underwriter limitation in this Section 1.3(b).
(c) Right to Terminate Registration. The Company will have the
right to terminate or withdraw any registration initiated by it under this
Section 1.3 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
1.4 Form S-3 Registration. The Company shall use its reasonable best
efforts to qualify for, and remain qualified for, registration on Form S-3. So
long as and while the Company has qualified for the use of Form S-3, in addition
to the rights contained in the foregoing provisions of this Section 1, RFE will
have the right to request registration on Form S-3 at any time and from time to
time (all such requests must be in writing and state the number of shares of
Registrable Securities to be disposed of and the intended methods of disposition
of such shares). In case the Company receives from RFE a written request that
the Company effect a registration on Form S-3 and any related state securities
qualification or blue sky compliance with respect to such an amount of the
Registrable Securities owned by RFE, the Company shall:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, use its reasonable best efforts to
effect such registration and all such qualifications and compliances as may be
so requested and as would permit or facilitate the sale and distribution of all
or such portion of RFE's Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of any
other Holder or Holders joining in such request as are specified in a written
request given within 20 days after receipt of such written notice from the
Company; provided however that the Company shall not be obligated to effect any
such registration, qualification, or compliance pursuant to this Section 1.4:
(1) if Form S-3 is not available for such offering by Holder(s); (2) if the
Holders, together with the holders of any other securities of the Company
entitled to inclusion in such registration, propose to sell Registrable
Securities and such other securities (if any) at an aggregate price to the
public (net of any underwriters' discounts or commissions) of less that
$250,000; or (3) if the Company shall furnish to such Holders a certificate
signed by the President of the Company stating that in the good faith judgment
of the Board of Directors it would be seriously detrimental to the Company or
its shareholders for a registration statement to be filed in the near future, in
which case the Company's obligation to use its reasonable efforts to register,
qualify or comply under this Section 1.4 will be deferred, for a period not to
exceed 90 days from the date of receipt of written request from the Holders,
provided that the Company may not exercise this deferral right more than once
per twelve month period.
Subject to the foregoing, the Company shall effect such registration,
qualification, or compliance (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act and any other
governmental requirements or regulations) covering the Registrable Securities
and other securities so requested to be registered as soon as practicable after
receipt of the request from RFE.
If the registration to be effected pursuant to this Section 1.4 is to
be an underwritten public offering, it shall be managed by an underwriter or
underwriters selected by the Company and reasonably
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acceptable to RFE. In such event, the right of any Holder to registration
pursuant to this Section 1.4 shall be conditioned upon the participation by such
Holder in such underwriting and the inclusion of the Registrable Securities of
such Holder in the underwriting to the extent provided herein. If the managing
underwriter so selected determines that marketing factors require a limitation
of the number of shares to be underwritten, the managing underwriter may limit
the Registrable Securities held by such Holders to be included in such
registration. The Company shall so advise such Holders, and the number of shares
of Registrable Securities that may be included in the registration shall be
allocated among the Holders and other holders as follows: FIRST, among the
Holders in proportion to the respective amounts of Registrable Securities
requested to be included by each of such Holders in the registration statement
and SECOND, only if the Holders have been able to include 100% of the amounts of
Registrable Securities initially requested by such Holders, to other holders in
proportion, as nearly as practicable, to the amount of securities of the Company
requesting to be included by them in such registration. Any Registrable
Securities or other securities that are so excluded from the underwriting shall
be excluded from the registration. As used throughout this Section the term
"Form S-3" shall be deemed to include any equivalent successor form for
registration pursuant to the Act.
1.5 Expenses of Registration. All Registration Expenses incurred in
connection with the registration, qualification or compliance pursuant to
Sections 1.2, 1.3, and 1.4 will be borne by the Company; provided, however, that
in connection with any registration of securities, the Company will only be
responsible for the fees and costs of one counsel for all of the Holders; and,
further, provided, that if the Company has already filed one Form S-3
registration during the calendar year pursuant to any Holder's request, if the
Holders request a second Form S-3 registration within that same calendar year,
the Registration Expenses incurred in connection with such second Form S-3
registration will be borne pro rata by the Holders up to a maximum of $10,000,
with the increment above $10,000, if any, to be borne by the Company. All
Selling Expenses relating to securities so registered will be borne by the
holders of such securities pro rata on the basis of the number of shares of
securities so registered on their behalf. The Company will not be required to
pay for any expenses of any registration proceeding begun pursuant to Section
1.2 or 1.4 if the registration request is subsequently withdrawn at the request
of the Holders of a majority of the Registrable Securities to be registered (in
which case all Holders withdrawing the request shall bear such expenses),
unless, in the case of a registration under Section 1.2, RFE agrees to forfeit
its right to one registration under such Section.
1.6 Lock-up. Each of the Holders hereby agrees not to offer, sell, make
any short sale of, loan, grant any option for the purchase of, or otherwise
dispose of any of the Company's Common Stock held of record or beneficially
owned by such person (other than those included in the registration) during the
period of time not to exceed 180 days determined by the Board of Directors of
the Company upon advice of its managing underwriter, from and after the
effective date of the registration statement for a Qualified Public Offering,
provided that the obligations of the Holders under this Section 1.6 shall not
apply unless each officer and director of the Company, each beneficial owner of
1% or more of each class of the Company's Common Stock and each Holder is bound
by similar restrictions. Such restriction shall not apply to shares registered
in such offering. In order to enforce this provision, the Company may impose
stop-transfer instructions with respect to such shares until the end of such
period. The obligations described in this Section 1.6 will not apply to a
registration relating solely to employee benefit plans on Form S-1 or Form S-8
or similar forms that may be promulgated in the future.
1.7 Registration Procedures. If and whenever the Company is
required by the provisions of this Section 1 to use its reasonable best efforts
to effect promptly the registration of Registrable Securities the Company shall:
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(a) Prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use its reasonable
best efforts to cause such registration statement to become and remain effective
as provided herein.
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
current and to comply with the provisions of the Securities Act with respect to
the sale of or other disposition of all Registrable Securities covered by such
registration statement, including such amendments and supplements as may be
necessary to reflect the intended method of disposition of the prospective
seller or sellers of such Registrable Securities (but for no longer than one
hundred eighty (180) days (excluding any period during which sales are suspended
pursuant to Section 1.7(d)) subsequent to the effective date of such
registration in the case of a registration statement on Form S-1 (or any similar
form of registration statement required to set forth substantially identical
information)); provided, however, that (i) such period shall be extended for a
period of time equal to the period the underwriter recommends that all the
Holders refrain from selling the securities included in such registration due to
marketing conditions or other conditions which adversely affect the offer and
sale of such securities; and (ii) in the case of any registration of Registrable
Securities on Form S-3 which is intended to be offered on a continuous or
delayed basis, such period shall be extended, if necessary, to keep the
registration statement effective for at least 180 days (excluding any period
during which sales are suspended pursuant to Section 1.7(d)), provided that Rule
415 permits an offering on a continuous or delayed basis, and provided further
that applicable rules under the Securities Act governing the obligation to file
a post-effective amendment permit, in lieu of filing a post-effective amendment
that (x) includes any prospectus required by Section 10(a)(3) of the Securities
Act or (y) reflects facts or events representing a material or fundamental
change in the information set forth in the registration statement, the
incorporation by reference of information required to be included in (x) and (y)
above to be contained in periodic reports filed pursuant to Section 13 or 15(d)
of the Exchange Act in the registration statement.
(c) Furnish to each prospective seller of Registrable
Securities such number of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents, as such seller may reasonably request in order to facilitate
the public sale or other disposition of the Registrable Securities of such
seller.
(d) Notify each seller of Registrable Securities covered by
such registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and at the request of any such seller, prepare and furnish to such
seller 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
purchasers of such shares, 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 not misleading in the light
of the circumstances then existing.
(e) Cause all such Registrable Securities registered pursuant
hereto to be listed on each securities exchange or approved for quotation on any
inter-dealer quotation system on which similar securities issued by the Company
are then listed or quoted.
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(f) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such registration statement and a CUSIP number
of all such Registrable Securities in each case not later than the effective
date of such registration.
(g) Otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but not more than eighteen
months, beginning with the first month after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 1.1 (a) of the Securities Act.
(h) In connection with any underwritten public offering
pursuant to a registration statement filed pursuant to Section 1.2, 1.3 or 1.4
hereof, the Company will enter into an underwriting agreement reasonably
necessary to effect the offer and sale of Common Stock, provided such
underwriting agreement contains customary underwriting provisions and provided
further that, if the underwriter so requests, the underwriting agreement will
contain customary contribution provisions.
(i) Each seller of Registrable Securities shall not (until
further notice) effect sales of shares covered by any registration statement
after receipt of telegraphic, facsimile or written notice from the Company to
suspend sales to permit the Company to correct or update a registration
statement or prospectus.
1.8 No Other Registration Rights Agreements. The Company represents and
warrants that, except as set forth on Schedule 5.1.4 to the Purchase Agreement,
it has not entered into any other agreements with any person in any way
obligating the Company to provide registration for any of its securities.
1.9 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) The Company will indemnify each Holder, each of its
officers and directors and partners, and each person controlling such Holder
within the meaning of Section 15 of the Securities Act and each underwriter, if
any, and each person who controls any underwriter within the meaning of Section
15 of the Securities Act, against all expenses, claims, losses, damages or
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained, on the effective date thereof, in any registration statement, in
any prospectus contained therein, or in any amendment or supplement thereto, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein (in
the case of a prospectus, in the light of the circumstances under which they
were made) not misleading, or any violation by the Company of any rule or
regulation promulgated under the Securities Act applicable to the Company in
connection with any such registration, qualification or compliance, and the
Company will reimburse each such Holder, each of its officers and directors and
partners and each person controlling such Holder, each such underwriter and each
person who controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating, preparing or defending any
such claim, loss, damage, liability or action, provided that the Company will
not be liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity
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with written information furnished to the Company by such Holder or underwriter
or their respective agents to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers and its legal counsel and independent accountants,
and each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such underwriter
within the meaning of Section 15 of the Securities Act, and any other Holders
against all claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained, on the
effective date thereof, in any such registration statement, any prospectus
contained therein, 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 the case of a prospectus, in the light of the circumstances under
which they were made) not misleading, and will reimburse the Company, and such
directors, officers, persons, underwriters or control persons for any legal or
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement or prospectus in reliance upon and in conformity with written
information furnished to the Company by such Holder or its agent and stated to
be specifically for use therein; provided, however, that the obligations of each
Holder hereunder shall be limited to an amount equal to the net proceeds to each
such Holder of Registrable Securities sold as contemplated herein.
(c) Each party entitled to indemnification under this Section
1.9 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 1 to the extent such failure is not
prejudicial. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. Notwithstanding anything to the contrary contained in this Section
1.8(c), the Indemnified Party shall have the right to employ its own counsel in
any action, claim, litigation, proceeding or investigation, and the fees and
expenses thereof shall be borne by the Indemnified Party, unless the Indemnified
Party shall have reasonably concluded that there may be one or more legal
defenses available to it which are different from or additional to those
available to the Indemnifying Party, in which case the Indemnifying Party shall
bear all of such Indemnified Party's legal and other fees and expenses which
arise in defense thereof. Notwithstanding the foregoing, the Indemnifying Party
shall bear the fees and expenses of only one additional counsel to be retained
on behalf of the Indemnified Parties. In such event, the Indemnifying Party
shall not have the right to direct the defense of such action, claim,
litigation, proceeding or investigation on behalf of the Indemnified Party.
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(d) If the indemnification provided for in this Section 1.9 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
herein, then the Indemnifying Party, in lieu of indemnifying the Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
with respect to such loss, liability, claim, damage or expense in the proportion
that is appropriate to reflect the relative fault of the Indemnifying Party and
the Indemnified Party in connection with the statements or omissions that
resulted in such loss, liability, claim, damage or expense, as well as any other
relevant equitable considerations. The relative fault of the Indemnifying Party
and the Indemnified Party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of material fact or the
omission (or alleged omission) to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
1.10 Information by Holder. The holder or holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such person(s) and the distribution proposed by such
person(s) as the Company may reasonably request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Section 1.
1.11 Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Registrable Securities to the public without registration, the
Company shall use its reasonable best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(b) File with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act; and
(c) Furnish to any Holder promptly upon request, a written
statement as to its compliance with the reporting requirements of Rule 144 of
the Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the
Company and other information in the possession of or reasonably obtainable by
the Company as a Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Holder to sell any such securities
without registration.
1.12 Termination of Registration Rights. The rights of each Holder
under this Section 1 terminate on the tenth anniversary of the date of this
Agreement or, if earlier, the date on which such Holder ceases to hold
Registrable Securities or Warrants exercisable for Registrable Securities.
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SECTION 2
COVENANTS OF THE COMPANY
The Company hereby covenants and agrees as follows:
2.1 No Conflicting Agreements. The Company will not grant any
registration rights to any third party which conflict with, are superior to or
are pari passu with, the rights herein so long as any of the registration rights
in this Agreement remain in effect.
SECTION 3
MISCELLANEOUS
3.1 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of New York, as applied to agreements among New York
residents entered into and to be performed entirely within New York.
3.2 Jurisdiction and Venue.
(i) Each of the parties hereto hereby irrevocably and
unconditionally submits, for himself, herself or itself and its, his or
her property, to the nonexclusive jurisdiction of any New York State
court or federal court of the United States of America sitting in New
York, New York and any appellate court from any thereof, in any action
or proceeding arising out of or relating to this Agreement or for
recognition or enforcement of any judgment, and each of the parties
hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in
any such New York State court or, to the extent permitted by law, in
any such federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law.
(ii) Each of the parties hereto irrevocably and
unconditionally waives, to the fullest extent that he, she or it may
legally and effectively do so, any objection that he, she or it may now
or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to the Agreement in any New York
State or federal court sitting in New York, New York. Each of the
parties hereto irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such
action or proceeding in any such court.
(iii) Each of the parties further agrees that the
mailing of any process required by any such court by certified or
registered mail, return receipt requested, to the address for notice
herein provided shall constitute valid and lawful service of process
against him, her or it, without the necessity for service by any other
means provided by law.
3.3 Waiver of Jury Trial. NO PARTY TO THIS AGREEMENT OR ANY ASSIGNEE,
SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF A PARTY SHALL SEEK A JURY TRIAL IN
ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER LITIGATION PROCEDURE BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER
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AGREEMENTS OR THE DEALINGS OR THE RELATIONSHIP BETWEEN THE PARTIES. NO PARTY
WILL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED,
WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT OR HAS NOT BEEN WAIVED. THE
PROVISIONS OF THIS SECTION HAVE BEEN FULLY DISCUSSED BY THE PARTIES HERETO, AND
THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NEITHER PARTY HAS IN ANY WAY
AGREED WITH OR REPRESENTED TO THE OTHER PARTY THAT THE PROVISIONS OF THIS
SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
3.4 Remedies. The Holders are entitled to enforce their rights under
this Agreement to recover damages (including reasonable attorneys' fees and
costs, whether incurred in litigation, mediation, arbitration, bankruptcy or
administrative proceedings or any appeals therefrom) by reason of any breach of
any provision of this Agreement and to exercise all other rights existing in
their favor. The Company and the Holders agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any Holder may in its or his sole discretion apply to any
court of law or equity of competent jurisdiction for specific performance and/or
injunctive relief (without posting a bond or other security) in order to enforce
or prevent any violation of the provisions of this Agreement.
3.5 Successors and Assigns, Assignment of Rights. The rights and
benefits of a Purchaser hereunder may be assigned to a transferee or assignee in
connection with transfer or assignment of any Warrants or Registrable Securities
owned by such Purchaser (a) to any person or entity provided that (i) such
transfer may be effected in accordance with applicable securities laws, (ii)
such transferee or assignee acquires at least 100,000 Warrants or shares of
Registrable Securities, (iii) then such transferee or assignee is a mutual fund,
bank, institutional investor, or fund, investment partnership or other entity
which regularly engages in the purchase or holding of securities which are
characterized as "mezzanine securities" or which are otherwise similar to the
Notes and the Warrants (provided that this condition shall apply only so long as
an Event of Default has not occurred and is not continuing), and (iv) such
assignee or transferee executes a written instrument agreeing to be bound by the
terms and provisions of this Agreement, (b) to any person or entity which is a
majority-owned subsidiary of a Holder or controls, is controlled by or under
common control with the Holder, (c) to a member of the Advisory Board of, or to
a member of, the Purchaser, (d) to a constituent partner of a Purchaser or the
estate of such a constituent partner or a liquidating trust for the benefit
thereof or to any affiliated fund of a Purchaser, and (e) to a successor trustee
of a Purchaser in its capacity as trustee. Any such transfer or assignment
permitted hereby shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
3.6 Entire Agreement; Amendment; Waiver. This Agreement constitutes the
full and entire understanding and agreement between the parties with regard to
the subjects hereof. Neither this Agreement nor any term hereof may be amended,
waived, discharged or terminated, except by a written instrument signed by the
Company, the holders of a majority of the Registrable Securities (computed on a
fully diluted basis assuming exercise or conversion of all securities
exercisable for or convertible into Registrable Securities, including the
Warrants, including RFE so long as it holds any Registrable Securities or
Warrants) and any such amendment, waiver, discharge or termination shall be
binding upon all the parties hereto, but in no event shall the obligation of any
party hereto be materially increased, except upon the written consent of such
party. The addition of an additional Purchaser as a party to this Agreement at a
subsequent closing shall require the written consent of the Company and RFE, and
the execution of a signature page hereto by such Purchaser.
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3.7 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by United States
first-class mail, postage prepaid, sent by facsimile or delivered personally by
hand or nationally recognized courier addressed (a) if to a Purchaser, as
indicated on the list of Purchasers attached to the Purchase Agreement, or at
such other address as such Purchaser or permitted assignee shall have furnished
to the Company in writing, or (b) if to the Company, at such address or
facsimile number as the Company shall have furnished to each Purchaser in
writing. All such notices and other written communications shall be effective on
the date of facsimile transfer or delivery, or on the date delivery is refused.
3.8 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any Purchaser (in any capacity hereunder), upon any
breach or default of the Company under this Agreement shall impair any such
right, power or remedy of such Purchaser nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of or in
any similar breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any Purchaser (in any capacity hereunder)
of any breach or default under this Agreement or any waiver on the part of any
Purchaser of any provisions or conditions of this Agreement must be made in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or otherwise
afforded to any Purchaser, shall be cumulative and not alternative.
3.9 Separability. In case any provision of the Agreement is found to be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions will not in any way be affected or impaired thereby.
3.10 Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing or interpreting this Agreement.
3.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which is an original, but all of which together shall
constitute one instrument.
3.12 Aggregation Of Stock. All shares of the Registrable Securities
held or acquired by affiliated entities or persons shall be aggregated together
for the purpose of determining the availability of any rights under this
Agreement.
3.13 No Third Party Beneficiaries. Except as set forth in Section 1.9,
the covenants and agreements set forth herein are for the sole and exclusive
benefit of the parties hereto and their respective successors and assigns and
such covenants and agreements shall not be construed as conferring, and are not
intended to confer, any rights or benefits upon any other persons.
3.14 Fees and Expenses. The Company shall pay the reasonable fees and
expenses incurred in connection with the enforcement, waiver, modification or
amendment of any provision hereof or of any related agreement, including,
without limitation, reasonable fees and disbursements of one counsel for the
Purchasers. In connection with any proceeding between the Purchasers and the
Company with respect to the enforcement of any rights and benefits arising
hereunder, the prevailing party shall have its reasonable fees and expenses
paid.
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IN WITNESS WHEREOF, the undersigned parties have caused this Agreement
to be duly executed and delivered as of the date first written above.
THE COMPANY: ALLOU HEALTH & BEAUTY CARE, INC.
By:
Name: Xxxxx Xxxxxxxxxxx
Title: President and Chief Financial Officer
RFE: RFE INVESTMENT PARTNERS VI, L.P.
By: RFE Associates VI, LLC, its General Partner
By:
Name: Xxxxxx X. Xxxxxx
Title: Managing Member
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