EXHIBIT 4.4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of January 17, 1997, among
Litigation Resources of America, Inc., a Texas corporation (the "Company") and
the purchasers whose names appear under the heading "Purchasers" (the
"Purchasers") on the signature page hereof.
1. Background. The Company is a party to a securities purchase
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agreement, dated the date hereof (the "Securities Purchase Agreement"), entered
into with the Purchasers, and Looney & Company and Xxxxx, Bury and Associates,
Inc., as Guarantors, both wholly owned subsidiaries of the Company, pursuant to
which the Company issued to the Purchasers (i) $9,000,000 of 12% Senior
Subordinated Notes (the "Notes") and (ii) 1,000,000 shares of Series A
Convertible Preferred Stock, par value $1.00 per share (the "Convertible
Preferred Stock").
In connection with the Securities Purchase Agreement, the Company
entered into this Registration Rights Agreement, to which the Purchasers who
received securities under the Securities Purchase Agreement became parties.
2. Registration under Securities Act, etc.
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2.1. Registration of Registrable Securities on Request. (a) Request.
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At any time subsequent to a Qualifying Public Offering, the holder or holders of
more than 50% (by number of shares) of the Registrable Securities shall twice
have the right to request in writing that the Company effect an underwritten
registration under the Securities Act of 1993, as amended (the "Securities
Act"), of all or part of such holders' Registrable Securities; provided, that
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the aggregate Fair Market Value (as defined in the Securities Purchase
Agreement) of the Registrable Securities to be so registered is at least
$3,000,000. The Company will promptly give written notice of such requested
registration to all other holders of Registrable Securities and all holders of
Registrable Inside Shareholder Securities, which holders shall be entitled to
include their Registrable Securities in such registration subject to Sections
2.1(b) and 2.1(g). Thereupon the Company will use its best efforts to effect the
registrations under the Securities Act of:
(i) the Registrable Securities which the Company has been so
requested to register by such holders; and
(ii) subject to Sections 2.1(b) and 2.1(g), all other Registrable
Securities and Registrable Inside Shareholder Securities which the
Company has been requested to register by the holders thereof by
written request given to the Company within 30 days after the
giving of such written notice by the Company (which request shall
specify the intended method of disposition of such Registrable
Securities and Registrable Inside Shareholder Securities) all to the
extent requisite to permit the disposition of the Registrable
Securities and Registrable Inside Shareholder Securities so to be
registered.
(b) Registration of Other Securities. Whenever the Company shall
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effect a registration pursuant to this Section 2.1, no securities other than
Registrable Securities shall be included among the securities covered by such
registration unless the managing underwriter of such offering shall have advised
each holder of Registrable Securities to be covered by such registration in
writing that the inclusion of such other securities would not in the
underwriter's reasonable judgment adversely affect the marketing or the selling
price of the Registrable Securities to be covered by such registration.
(c) Registration Statement Form. Registrations under this Section 2.1
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shall be on such appropriate registration form or prospectus of the Commission
(i) as shall be selected by the Company and as shall be reasonably acceptable to
the holders of more than 50% (by number of shares) of the Registrable Securities
so to be registered and (ii) as shall permit the disposition of such Registrable
Securities in accordance with the intended method or methods of disposition
specified in their request for such registration. The Company agrees to include
in any such registration statement all information which holders of Registrable
Securities being registered shall reasonably request.
(d) Expenses. The Company will pay all Registration Expenses in
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connection with the registration requests made pursuant to this Section 2.1.
(e) Effective Registration Statement. A registration requested
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pursuant to this Section 2.1 shall not be deemed to have been effected and shall
not count as a requested registration pursuant to Section 2.1 (a) hereof (i)
unless a registration statement with respect thereto has become effective, (ii)
unless a registration statement has been filed with the Commission and prior to
its becoming effective a majority of holders of the Registrable Securities to be
registered has decided to terminate the registration process, (iii) if after it
has become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other governmental
agency or court for any reason not the fault of a holder of Registrable
Securities and the Registrable Securities covered thereby have not been sold, or
(iv) if the conditions to closing specified in the selling agreement or
underwriting agreement entered into in connection with such registration are not
satisfied or waived by the parties thereto other than a holder of Registrable
Securities.
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(f) Underwriters. Any registration effected pursuant to this Section
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2.1 shall at the election of the holders of at least 50% (by number of shares)
of the Registrable Securities so to be registered be an underwritten public
offering on a firm commitment basis or a best efforts basis. The managing
underwriter or underwriters thereof shall be selected by the Company and such
underwriter as well as the price, terms and provisions of the offering shall be
subject to the approval of the Company and the holders of more than 50% (by
number of share) of the Registrable Securities so to be registered.
(g) Apportionment in Registration Requested. If, in connection with
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a registration requested pursuant to this Section 2.1, the managing underwriter
shall advise the Company in writing (with a copy to each holder of Registrable
Securities and Registrable Inside Shareholder Securities requesting
registration) that, in its opinion, the number of securities requested to be
included in such registration exceeds the number which can be sold in such
offering within a price range acceptable to the holders of more than 50% (by
number of shares) of the Registrable Securities requested to be included in such
registration, the number of securities that are otherwise entitled to be
included in such registration shall be allocated in the following manner: (i)
all Registrable Inside Shareholder Securities shall be reduced, on a pro rata
basis (based on the number of securities requested to be included in such
registration) and (ii) if, after the exclusion of such securities, further
reductions are still required, the Registrable Securities requested to be
included in such registration shall be reduced pro rata among the holders
thereof requesting such registration on the basis of the percentage of the
Registrable Securities sought to be registered held by such holders of
Registrable Securities which have requested that such Registrable Securities be
included. In connection with any registration as to which the provisions of this
clause (g) apply, no securities other than Registrable or, to the extent not
excluded as set forth above, Registrable Inside Shareholder Securities shall be
covered by such registration and if the pro ration as aforesaid results in the
exclusion of in excess of 15% of the Registrable Securities originally sought to
be registered, the request shall not be counted for purposes of determining the
number of registrations pursuant to Section 2.1 hereof.
2.2 Registrations on Form S-3. Following its initial Public Offering
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the Company shall use its best efforts to qualify for registration on Form S-3
promulgated under the Securities Act or any successor form thereto ("Form S-3")
for secondary sales. Anything contained in Section 2.1 to the contrary
notwithstanding, at such time as the Company shall have qualified for the use
of Form S-3, the holder or holders of the Registrable Securities shall have the
right to request in writing an unlimited number of registrations on Form S-3 of
Registrable Securities, which request or requests shall (i) specify the number
of Registrable Securities intended to be sold or disposed
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of and the holders thereof and (ii) state the intended method of disposition of
such Registrable Securities. A requested registration on Form S-3 in compliance
with this Section 2.2 shall not count as a registration statement initiated
pursuant to Section 2.1 but shall otherwise be treated as a registration
initiated pursuant to, and shall, except as otherwise expressly provided in this
Section 2.2, be subject to Section 2.1.
2.3. "Piggyback" Registrations. (a) Right to include Registrable
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Securities. If the Company at any time proposes to register any of its
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securities under the Securities Act (other than by a registration on Form X-0,
Xxxx X-0 or any successor or similar form, or in connection with a tender offer,
merger, or other acquisition, and other than pursuant to Section 2.1 or Section
2.2), whether or not for sale for its own account, it will each such time give
prompt written notice to all holders of Registrable Securities of its intention
to do so and of such holders' right under this Section 2.3. Upon the written
request of any such holder made within 10 days after the date of any such notice
given in accordance with Section 7 hereof, the Company will use its best efforts
to effect the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the holders
thereof, to the extent requisite to permit the disposition of the Registrable
Securities so to be registered, provided that if, at any time after giving
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written notice of its intention to register any securities 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 securities, the Company may, at its election, give
written notice of such determination to each holder of Registrable Securities
and, thereupon, (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 registration (but not from its obligation to pay the Registration
Expenses in connection therewith), without prejudice, however, to the rights of
any holder or holders of Registrable Securities entitled to do so to request
that such registration be effected as a registration under Section 2.1 or
Section 2.2, and (ii) in the case of a determination to delay registering, shall
be permitted to delay registering any Registrable Securities for the same period
as the delay in registering such other securities. No registration effected
under this Section 2.3 shall relieve the Company of its obligation to effect any
registration upon request under Section 2.1 or Section 2.2. The Company will pay
all Registration Expenses in connection with each registration of Registrable
Securities requested pursuant to this Section 2.3.
(b) Apportionment in "Piggyback" Registrations. If (i) a registration
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pursuant to this Section 2.3 involves an underwritten offering of the securities
being registered, whether or not for sale for the account of the Company, to be
distributed (on a firm commitment basis) by or through one or
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more underwriters of recognized national or regional standing under underwriting
terms appropriate for such a transaction, and (ii) the managing underwriter of
such underwritten offering shall inform the Company and the holders of the
Registrable Securities requesting such registration by letter that marketing
considerations require a limitation on the number of securities that can be
included in such registration, then the Company may include all securities
proposed by the Company to be sold for its own account or the maximum amount
that the underwriter considers saleable and such limitation on any remaining
securities that may, in the opinion of the underwriter, be sold will be imposed
(x) first upon holders of securities other than the Investors and their
transferees until the total aggregate proceeds received by all Investors and
their transferees from the sale of equity securities of the Company equals $1.0
million and (y) second, pro rata among all shareholders who are entitled to
include shares in such registration statement according to the number of
Registrable Securities and other securities each such shareholder requested to
be included in such registration statement; provided, however, that instead of
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such a pro rata reduction, the holders of the Registrable Securities shall have
the right at their sole option to include in the registration all of the
Registrable Securities and to exclude any and all other securities to the extent
necessary to reduce the number of securities to the level recommended by the
managing underwriter. Any such election by the Investors to exclude any other
securities from the registration in accordance with the preceding sentence shall
constitute the exercise by the Investors of one demand right under Section 2.1.
At such time as the Investors have received proceeds that equal $1.0 million
from the sale of Registrable Securities, clause (x) above in this Section 2.3(b)
shall terminate and clause (y) above in this Section 2.3(b) shall thereafter
govern apportionment in registrations under Section 2.3. To the extent that any
Registrable Securities or other securities are excluded from the registration
pursuant to this Section 2.3(b), no shares of Common Stock issued to management
of the Company after the date hereof pursuant to a stock option (or any other
type of benefit plan) ("Option Shares") shall be included in such registration.
Notwithstanding the foregoing, if the registration referred to herein involves
an underwritten offering of securities being registered for sale by holders of
securities other than Registrable Securities (pursuant to the exercise by such
holders of demand registration rights or otherwise), the Company will include in
such registration the securities proposed by such holders to be sold and may
decrease the number of Registrable Securities and such other securities
exercising "piggyback" registration rights proposed to be sold in such
registration (pro rata on the basis of the percentage of the securities sought
to be registered by such holders of Registrable Securities, and such other
securities exercising "piggyback" registration rights) proposed to be sold in
such registration to the extent necessary to reduce the number of securities to
be included in the registration to the level recommended by the managing
underwriter. In such case, (x) no securities shall be
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offered for sale by the Company and (y) no Option Shares shall be included in
such registration.
2.4. Registration Procedures. If and whenever the Company is required
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to use its best efforts to effect the registration of any Registrable Securities
and under the Securities Act as provided in Sections 2.1, 2.2 and 2.3, the
Company will as expeditiously as possible:
(i) prepare and (as soon thereafter as possible or in any event
no later than 45 days after the end of the period within which
requests for registration may be given to the Company) file with the
Commission the requisite registration statement to effect such
registration and thereafter use its best efforts to cause such
registraton statement to become effective, provided that the Company
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may discontinue any registration of its securities which are not
Registrable Securities (and, under the circumstances specified in
Section 2.3(a), its securities which are Registrable Securities) at
any time prior to the effective date of the registration statement
relating thereto;
(ii) 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 to comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such registration statement until such time as all of such
securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof set forth in
such registration statement or for 6 months, whichever period is
shorter;
(iii) furnish to each seller of Registrable Securities covered by
such registration statement such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto, such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424 or
Rule 430A under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, as such
seller may reasonably request;
(iv) use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement
under such other securities or blue sky laws of such jurisdictions as
each seller thereof shall reasonably request, to keep
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such registration or qualification in effect for so long as such
registration statement remains in effect, and take any other action
which may be reasonably necessary to enable such seller to consummate
the disposition in such jurisdictions of the securities owned by such
seller, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation
in any jurisdiction wherein it would not but for the requirements of
this subdivision (iv) be obligated to be so qualified or to consent to
general service of process in any such jurisdiction or subject itself
to be required to pay any franchise or income taxes in any such
jurisdiction;
(v) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities;
(iv) furnish to each seller of Registrable Securities a signed
counterpart, addressed to such seller, except as provided in (y) below
(and the underwriters, if any), of
(x) an opinion of counsel for the Company, dated the
effective date of such registration statement (and, if such
registration includes an underwritten public offering, dated the
date of the closing under the underwriting agreement), reasonably
satisfactory in form and substance to counsel for all such
sellers or, if such registration includes an underwritten public
offering, to such underwriter, and
(y) a "comfort" letter, dated the effective date of such
registration statement (and, if such registration includes an
underwritten public offering, dated the date of the closing under
the underwriting agreement), signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement, addressed to each
seller, to the extent the same can be reasonably obtained, and
addressed to the underwriters, if any, covering substantially the
same matters with respect to such registration statement (and the
prospectus included therein) and, in the case of the accountants'
letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in
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accountants' letters delivered to the underwriters in
underwritten public offerings of securities and such other
financial matters as such seller or such holder (or the
underwriters, if any) may reasonably request;
(vii) 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, upon
discovery that, or upon 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 any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances under which they were made, and at the request of any
such seller or holder promptly prepare to furnish to such seller or
holder a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light
of the circumstances under which they were made;
(viii) otherwise use its 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 full calender
month after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of
the Securities Act, and, in the case of a registration requested
pursuant to Section 2.1 or 2.2 hereof, will furnish to each such
seller at least two business days prior to the filing thereof a copy
of any amendment or supplement to such registration statement or
prospectus and shall not file any thereof to which any such seller
shall have reasonably objected on the grounds that such amendment or
supplement does not comply in all material respects with the
requirements of the Securities Act or of the rules or regulations
thereunder;
(ix) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement from
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and after a date not later than the effective date of such
registration statement; and
(x) use its best efforts to list all Registrable Securities
covered by such registration statement on any securities exchange on
which any of the Registrable Securities is then listed.
Notwithstanding the foregoing, the Company may defer its obligations
under Section 2.1 and Section 2.2 to file a registration statement, but not its
obligations to initiate the process of preparing the applicable registration
statement, for a period of no more than (i) 90 days in any 365-day period, if
the Company's Board of Directors determines in good faith based upon a written
opinion of counsel that filing such a registration statement would require a
public disclosure by the Company, which disclosure would interfere with a
material transaction then under consideration by the Company, provided that once
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such information has been publicly disclosed, the Company shall promptly proceed
to fulfill its obligations under Section 2.1 and (ii) 180 days from the most
recent effective date of any registration statement of the Company filed under
the Securities Act and pursuant to Section 2.1 occurring prior to the request
for registration made pursuant to Section 2.1.
The Company may require each proposed seller of Registrable Securities
as to which any registration is being effected to promptly furnish the Company,
as a condition precedent to including such holder's Registrable Securities in
any registration, such information regarding such seller and the distribution of
such securities as the Company may from time to time reasonably request in
writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that upon receipt of any notice from the Company of the
happening of any event of the kind described in subdivision (vii) of this
Section 2.4, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (vii) of this
Section 2.4 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 the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
2.5. Underwritten Offerings. (a) Requested Underwritten Offerings.
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If requested by the underwriters for any offering by holders of Registrable
Securities pursuant to a registration requested under Section 2.1, the Company
will enter into an underwriting agreement with such underwriters for such
offering, such agreement to be satisfactory in substance and form
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to the Company, to holders of more than 50% (by number of shares) of the
Registrable Securities included in such registration and the underwriters and to
contain such representations and warranties by the Company and such other terms
as are generally prevailing in agreements of this type, including, without
limitation, indemnities to the effect and to the extent provided in Section 2.7.
The holders of the Registrable Securities will cooperate with the Company in the
negotiation of the underwriting agreement and will give consideration to the
reasonable requests of the Company regarding the form thereof, provided that
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nothing herein contained shall diminish the foregoing obligations of the
Company. The holders of Registrable Securities to be distributed by such
underwriters shall be parties to such underwriting agreement and may, at their
option, require that any or all of the representations and warranties by, and
the other agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such holders of Registrable
Securities. Any such holder of Registrable Securities shall not be required to
make any representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements typical in an
offering of that type, including those regarding such holder, such holder's
Registrable Securities, and such holder's intended method of distribution, any
other information supplied by such holder to the Company for use in the
Registration Statement and any other representation required by law.
(b) Incidental Underwritten Offerings. If the Company at any time
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proposes to register any of its securities under the Securities Act as
contemplated by Section 2.3 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any holder
of Registrable Securities as provided in Section 2.3 and subject to the
provisions of Section 2.3(a), 2.3(b) and 2.4, arrange for such underwriters to
include all the Registrable Securities to be offered and sold by such holder
among the securities to be distributed by such underwriters. The holders of
Registrable Securities to be distributed by such underwriters shall be parties
to the underwriting agreement between the Company and such underwriters and may,
at their option, require that any or all of the representations and warranties
by, and the other agreements on the part of, the Company to and for the benefit
of such underwriters shall also be made to and for the benefit of such holders
of Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders of Registrable Securities. Any such
holder of Registrable Securities shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations,
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warranties, or agreements typical in an offering of this type, including those
regarding such holder, such holder's Registrable Securities and such holder's
intended method of distribution, any other information supplied by such holder
to the Company for use in the Registration Statement and any other
representation required by law.
2.6. Preparation; Reasonable Investigation. In connection with the
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preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, the underwriters, if
any, and their respective counsel (such holders' counsel to be appointed by the
holders of more than 50% (by number of shares) of Registrable Securities so to
be registered, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the opinion of such holders' and such underwriters' respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act.
2.7. Indemnification. (a) Indemnification by the Company. In the
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event of any registration of any securities of the Company under the Securities
Act, the Company will, and hereby does, indemnify and hold harmless the seller
of any Registrable Securities covered by such registration statement, its
directors and officers, each other Person who participates as an underwriter in
the offering or sale of such securities and such other Person, if any, who
controls such seller or any such underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such seller or any such director or officer or underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatend, in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Company will reimburse such seller and each such
director, officer, underwriter and controlling person for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding; provided,
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however, that the Company will not be liable in any such case to
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the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, said preliminary or final
prospectus or said amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by an instrument duly executed
by such seller, specifically for use in the preparation thereof. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such seller or any such director, officer, underwriter or
controlling person and shall survive the transfer of such securities by such
seller.
(b) Indemnification by the purchasers. The Purchasers will, and
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hereby do, severally and not jointly, indemnify and hold harmless (in the same
manner and to the same extent as set forth in subdivision (a) of this Section
2.7) the Company, each director of the Company, each officer of the Company and
each other Person, if any, who controls the Company within the meaning of the
Securities Act with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, 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 by such Purchaser for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. Such indemnity shall
remain in full force and effect, regardless of any investigation made by or on
behalf of the Company or any such director, officer or controlling Person and
shall survive the transfer of such securities by such Purchaser with respect to
information furnished by such Purchaser prior to such transfer.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
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party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this Section 2.7, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action, provided that the failure of any indemnified party to give notice
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as provided herein shall not relieve the indemnifying party of its obligations
under the preceding subdivisions of this Section 2.7, except to the extent that
the indemnifying party is prejudiced by such failure to give notice. In case any
such action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
party and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after
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notice from the indemnifying party to such indemnified party of its election so
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
the latter in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party, shall, without the consent of the
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.
(d) Other Indemnification. Indemnification similar to that specified
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in the preceding subdivisions of this Section 2.7 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification of
securities under any Federal or state law or regulation of any governmental
authority other than the Securities Act.
(e) Indemnification Payments. The indemnification required by this
------------------------
Section 2.7 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
2.8. Adjustments Affecting Registrable Securities. The Company will
--------------------------------------------
not effect or permit to occur any combination or subdivision of shares which
would adversely affect the ability of the holders of Registrable Securities to
include such Registrable Securities in any registration of its securities
contemplated by this Section 2 or the marketability of such Registrable
Securities under any such registration.
3. Definitions. As used herein, unless the context otherwise
-----------
requires, the following terms have the following respective meanings:
Commission: The Securities and Exchange Commission or any other Federal
----------
agency at the time administering the Securities Act.
Common Stock: All shares now or hereafter authorized and designated as the
------------
Common Stock of the Company and stock of any other class with which such
shares may hereafter have been exchanged or reclassified.
Convertible Preferred Stock: As defined in Section 1.
---------------------------
Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
Inside Shareholders: Xxxxxxx X. Xxxxxx, and Xxxxxxx Xxxxx.
-------------------
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Person: A corporation, an association, a partnership, a limited liability
------
company, a business, an individual, a governmental or political subdivision
thereof or a governmental agency.
Qualifying Public Offering: The sale by one or more Persons in an
--------------------------
underwritten offering registered under the Securities Act of any equity
securities of the Company (or its successor) which results in aggregate
gross proceeds from such sales (before underwriters' discounts and selling
commissions) to the Company greater than or equal to $15,000,000.
Registrable Inside Shareholder Securities: (a) All shares of Common Stock
-----------------------------------------
held by the Inside Shareholders or any Shareholder Relation on the date
hereof or (b) Common Stock by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise upon any required
adjustments.
As to any particular Registrable Inside Shareholder Securities, such
securities shall cease to be Registrable Inside Shareholder Securities when
(a) a registration statement with respect to the sale of such securities
shall have become effective under the Securities Act and such securities
shall have been disposed of in accordance with such registration statement,
(b) they shall have been distributed to the public pursuant to Rule 144 (or
any successor provision) under the Securities Act, or (c) they shall have
ceased to be outstanding.
Registrable Securities: The Common Stock Issuable upon the conversion of
----------------------
Convertible Preferred Stock held by the Purchasers and any Convertible
Preferred Stock or Common Stock by way of stock dividend or stock split or
in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise upon any required
adjustments.
As to any particular Registrable Securities, such securities shall cease
to be Registrable Securities when (a) a registration statement with respect
to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (b) they shall have been
distributed to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act, or (c) they shall have ceased to be outstanding.
Registration Expenses: All expenses incident to the Company's performance
---------------------
of or compliance with Section 2, including, without limitation, all
registration, filing and National Association of Securities Dealers, Inc.
fees, all
14
fees and expenses of complying with securities or blue sky laws, all word
processing, duplicating and printing expenses, messenger and delivery
expenses, the reasonable fees and disbursements of counsel for the Company
and of its independent public accountants, including the expenses of any
special audits or "cold comfort" letters required by or incident to such
performance and compliance, the reasonable fees and disbursements of a
single counsel retained by the holder or holders of more than 50% (by
number of shares) of the Registrable Securities being registered, premiums
and other costs of policies of insurance obtained by the Company against
liabilities arising out of the public offering of the Registrable
Securities being registered and any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities, including reasonable
fees of underwriters counsel incurred in the qualification of the
Securities under blue sky laws, but excluding all agency fees and
commissions, underwriting discounts and commissions and transfer taxes, if
any.
Securities Act: The Securities Act of 1933, as amended.
--------------
Shareholder Relation: (i) Any Other Permitted Transferee of an individual
--------------------
Shareholder, (ii) any inter-vivos trust whose principal beneficiary is such
individual Shareholder or any Other Permitted Transferee of such individual
Shareholder created during their respective lifetimes and not as a result
of death, (iii) any family limited partnership in which an individual
Shareholder is a general or limited partner, and (iv) the legal
representative or guardian of such individual Shareholder or any Other
Permitted Transferee of such individual Shareholder appointed during their
respective lifetimes and not as a result of death.
4. Rule 144. If the Company shall have filed a registration
--------
statement pursuant to the requirements of Section 12 of the Exchange Act or a
registration statement pursuant to the requirements of the Securities Act, the
Company will file the reports required to be filed by it, and in the manner
required to be filed by it, under the Securities Act and the Exchange Act (or,
if the Company is not required to file such reports, will, upon the request of
any holder of Registrable Securities, make publicly available other information)
and will take such further action as any holder of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time or (b) any similar
rule or regulation hereafter adopted by the Commission ("Rule 144"). Upon the
request of any holder of Registrable Securities, the Company will deliver to
such holder a written statement as to whether it has complied with such
requirements.
15
5. Amendments and Waivers. This Agreement may be amended and the
----------------------
Company may take any action herein prohibited or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the holder or
holders of 66 2/3% or more (by number of shares) of Registrable Securities. Each
holder of any Registrable Securities at the time or thereafter outstanding shall
be bound by any consent authorized by this Section 5, whether or not such
Registrable Securities shall have been marked to indicate such consent.
6. Nominees for Beneficial Owners. In the event that any Registrable
------------------------------
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may upon the giving of written notice to the Company,
at its election, be treated as the holder of such Registrable Securities for
purposes of any request or other action by any holder or holders of Registrable
Securities pursuant to this Agreement or any determination of any number or
percentage of shares of Registrable Securities held by any holder or holders of
Registrable Securities contemplated by this Agreement. The Company may require
assurances reasonably satisfactory to it of such owner's beneficial ownership of
such Registrable Securities.
7. Notices. All communications provided for hereunder shall be sent
-------
by first-class mail or overnight courier and (a) if addressed to a party other
than the Company, addressed to such party in the manner set forth in the
Securities Purchase Agreement, as the case may be, or at such other address as
such party shall have furnished to the Company in writing, or (b) if addressed
to any other holder of Registrable Securities, at the address that such holder
shall have furnished to the Company in writing, or, until any such other holder
so furnishes to the Company an address, then to and at the address of the last
holder of such Registrable Securities who has furnished an address to the
Company, or (c) if addressed to the Company, at Litigation Resources of America,
Inc., 3850 NationsBank Center, 000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000-0000,
Attn: G. Xxxx Xxxxx, President to the attention of its President, or at such
other address, or to the attention of such other officer, as the Company shall
have furnished to each holder of Registrable Securities at the time outstanding.
8. Assignment. This Agreement shall be binding upon and inure to the
----------
benefit of and be enforceable by the parties hereto and their respective
successors and assigns. In addition, and whether or not any express assignment
shall have been made, the provisions of this Agreement which are for the benefit
of the parties hereto other than the Company shall also be for the benefit of
and enforceable by any subsequent holder of any Registrable Securities or
Registrable Inside Shareholder Securities, subject to the provisions respecting
the minimum numbers or percentages of shares of Registrable Securities
16
required in order to be entitled to certain rights, or take certain actions,
contained herein.
9. Descriptive Headings. The descriptive headings of the several
--------------------
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
10. Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with, and the rights of the parties shall be governed by, the laws of
the State of New York.
11. Counterparts. This Agreement may be executed simultaneously in
------------
any number of counterparts, each of which shall be deemed an original, but all
such counterparts shall together constitute one and the same instrument.
17
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
LITIGATION RESOURCES OF AMERICA, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name : Xxxxxxx X. Xxxxxx
Title: CEO
18
THE PURCHASERS:
DELAWARE STATE EMPLOYEES'
RETIREMENT FUND
By: Pecks Inside Shareholders Partners Ltd.
Its Investment Advisor
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Xxxxxx X. Xxxxxx
Managing Director
DECLARATION OF TRUST FOR DEFINED
BENEFIT PLAN OF ICI AMERICAN HOLDINGS INC.
By: Pecks Inside Shareholders Partners Ltd.
Its Investment Advisor
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Xxxxxx X. Xxxxxx
Managing Director
DECLARATION OF TRUST FOR DEFINED
BENEFIT PLAN OF ZENECA HOLDINGS INC.
By: Pecks Inside Shareholders Partners Ltd.
Its Investment Advisor
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Xxxxxx X. Xxxxxx
Managing Director
19
