Exhibit 10.23
FOILMARK, INC.
REGISTRATION RIGHTS AGREEMENT
This AGREEMENT (the "Agreement") is made as of the 23rd day of April, 1999
by and among Foilmark, Inc., a Delaware corporation (the "Company"), and the
undersigned security holders of the Company (the "Stockholders").
BACKGROUND
The Stockholders are persons and entities that own shares of common stock,
par value $.01 per share, of the Company (the "Common Stock"). As a condition
precedent to that certain Agreement and Plan of Merger (the "Merger Agreement")
dated as of November 17, 1998, by and among the Company, Foilmark Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of the
Company, and the HoloPak Technologies, Inc., a Delaware corporation, (i) the
Company has agreed to provide the registration rights provided for in this
Agreement to the Stockholders, and (ii) the Stockholders that may be deemed
"affiliates" for purposes of Rule 145 of the 1933 Act (as hereinafter defined)
have delivered to Foilmark certain letters acknowledging the same. In
consideration for delivering to Foilmark the Affiliate Letters, the sufficiency
of which is hereby acknowledged and recognized, the Company has agreed to grant
to the Stockholders the registration rights as provided herein.
WITNESSETH:
The parties hereto, each intending to be legally bound and in exchange for
the mutual covenants herein, agree as follows:
1. DEMAND REGISTRATIONS.
(a) REQUESTS FOR REGISTRATION. At any time, from the date hereof to and
including the seventh anniversary hereof, each Significant Stockholder (as
hereinafter defined) may demand registration (a "Demand Registration") under the
Securities Act of 1933, as amended (the "1933 Act"), of all or any portion of
the Registrable Securities (defined below) owned by such Significant
Stockholder. In order to accomplish such demand, the Significant Stockholder
shall send written notice of its demand to the Company, and such notice shall
specify the number of Registrable Securities sought to be registered. The
Significant Stockholders shall have, from the date hereof to and including the
seventh anniversary hereof, the right to a total of four Demand Registrations.
For purposes of this Agreement, "Significant Stockholder" shall mean Bradford
Venture Partners, L.P., a New Jersey limited partnership, and Overseas Private
Investors Partners, a Bermuda general partnership, and their respective
successors and assigns. The Company shall only be required to proceed with a
Demand Registration requested by a Significant Stockholder if the number of
Registrable Securities that the Stockholders (including the Significant
Stockholder requesting the Demand Registration) and the Company shall have
elected to include in such Demand Registration pursuant to this Section 1 is
equal to a minimum of 375,000 shares of Common Stock.
(b) PROCEDURE. Within 10 days after receipt of such a demand, the Company
will give written notice of such requested registration to all other holders of
Registrable Securities and will include in such registration, subject to the
allocation provisions below, all other Registrable Securities with respect to
which the Company has received written requests for inclusion within 20 days
after the Company's mailing of such notice, plus any securities of the Company
that the Company chooses to include on its own behalf.
(c) EXPENSES. In a Demand Registration, the Company will pay the
Registration Expenses (defined below), but the Underwriting Commissions (defined
below) will be paid by those holders of Registrable Securities whose Registrable
Securities are included in the Demand Registration in proportion to any
Registrable Securities included on their behalf.
(d) PRIORITY ON DEMAND REGISTRATIONS. If a Demand Registration is
underwritten and the managing underwriters advise the Company in writing that in
their opinion the number of Registrable Securities requested to be included
exceeds the number that can be sold in such offering, at a price reasonably
related to fair value, the Company will include in such Demand Registration (i)
first, the Registrable Securities requested to be included in such Demand
Registration by all Stockholders, including the Significant Stockholder making
the demand, pro rata on the basis of the number of Registrable Securities owned,
(ii) second, any securities that the Company desires to include on its own
behalf and (iii) third, any securities of the Company that are not Registrable
Securities and have "piggyback" registration rights. A Demand Registration shall
not be considered to be one of the Significant Stockholder's four Demand
Registrations under Section 1(a) hereof, and the Company shall pay the
Registration Expenses of such Demand Registration, if (i) the Significant
Stockholder that initiated the Demand Registration is not able to register and
sell in the Demand Registration at least 75 % of the Registrable Securities
sought to be included in the Demand Registration by such Significant
Stockholder, as specified in such Significant Stockholder's notice by which the
demand was made, or (ii) the gross proceeds of the securities included in the
Demand Registration on behalf of the Company constitute at least 20% of the
total gross proceeds of the Demand Registration.
(e) SELECTION OF UNDERWRITERS. If any Demand Registration is underwritten,
the selection of investment banker(s) and manager(s) and the other decisions
regarding the underwriting arrangements for the offering will be made by the
Significant Stockholder demanding such registration.
(f) CONTEMPORANEOUS DEMAND. If any holder of the Company's securities that
is not a holder of Registrable Securities under this Agreement exercises demand
registration rights to have the Company register its securities under the 1933
Act (a "Non-Stockholder Registration") within a period of 30 days before or
after the time any Significant Stockholder shall have requested a Demand
Registration, then (i) the holders of Registrable Securities that desire to be
included in the Non-Stockholder Registration and the holders of securities other
than Registrable Securities that have registration rights with respect to such
registration shall be entitled to participate in the Non-Stockholder
Registration on a pro rata basis, according to the number of shares owned by the
holders seeking to have securities included in such registration, (ii) the
Company will pay all of the Registration Expenses of the Non-Stockholder
Registration (to the extent obligated under
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its agreement with such holder) and (iii) the Non-Stockholder Registration shall
not count as a Demand Registration with respect to any Significant Stockholder
that shall have requested a Demand Registration with such time period unless the
Significant Stockholder is able to register and sell at least 75% of the
Registrable Securities sought to be registered by that Stockholder in its Demand
Registration.
(g) WITHDRAWAL OF DEMAND. If any holder of Registrable Securities
disapproves of the terms of the underwritten public offering, such holder may
elect to withdraw the request for a Demand Registration by providing written
notice to the Company. In the event of such withdrawal, and if such holder
reimburses the Company for its Registration Expenses arising directly from such
holder's request for a Demand Registration, such initial request shall not count
for purposes of determining the number of Demand Registrations to which the
Significant Stockholders are entitled pursuant to Section 1(a) hereof.
(h) LIMITATIONS ON DEMANDS. The Company shall be entitled to postpone for
a reasonable period of time not to exceed [90] days the filing of any
registration statement otherwise required to be prepared and filed by it if, at
the time it receives the request for a Demand Registration, the Company
determines, in its reasonable judgment, that such Demand Registration would
materially interfere with any then pending financing, acquisition, corporate
reorganization or other material transaction involving the Company and/or any of
its subsidiaries, and promptly give the Significant Stockholder(s) who have
requested registration of all or part of their Registrable Securities written
notice of such determination and the reasons therefor. In such event, the
Significant Stockholder(s) who have requested registration of all or a part of
their Registrable Securities shall have the right to withdraw the request for a
Demand Registration by giving written notice to the Company within 30 days after
receipt of the notice of postponement (and, in the event of such withdrawal,
such request shall be ignored for purposes of determining the number of Demand
Registrations to which the Significant Stockholders are entitled pursuant to
Section 1(a)).
2. PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. Whenever the Company or any other holder proposes
to register any of its securities under the 1933 Act (other than a Demand
Registration), and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), the Company
will give prompt written notice to all holders of Registrable Securities and
will include in such Piggyback Registration, subject to the allocation
provisions below, all Registrable Securities with respect to which the Company
has received written requests from the Stockholders for inclusion within 20 days
after the Company's mailing of such notice. The Company shall not select a form
of registration statement which imposes, for its use, limitations on the maximum
value or number of securities to be registered if these limitations would
preclude registration of the Registrable Securities that the Company has been
requested to include in such registration,
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(b) PIGGYBACK EXPENSES. In all Piggyback Registrations, the Company will
pay the Registration Expenses related to the Registrable Securities of the
Stockholders, but the Stockholders will pay the Underwriting Commissions related
to their Registrable Securities.
(c) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration is an
underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number that
can be sold in such offering, at a price reasonably related to fair value, the
Company will allocate the securities to be included as follows: first, the
securities the Company proposes to sell on its own behalf; and second,
Registrable Securities requested to be included in such registration, pro rata
on the basis of the number of Registrable Securities owned among the
Stockholders.
(d) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration is
initiated as an underwritten secondary registration on behalf of holders of the
Company's securities (other than a Demand Registration pursuant to Section 1),
and the managing underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in such registration
exceeds the number that can be sold in such offering, the Company will allocate
the securities to be included as follows: first, the securities requested to be
included by the holders initiating such registration; and second, Registrable
Securities requested to be included in such registration, pro rata on the basis
of the number of Registrable Securities owned among the Stockholders.
(e) SELECTION OF UNDERWRITERS. If any Piggyback Registration is
underwritten, the selection of investment banker(s) and manager(s) and the other
decisions regarding the underwriting arrangements for the offering will be made
by the Company if the registration is under Section 2(c) hereof, or by the
holders initiating such registration, if the registration is under Section 2(d)
hereof.
3. HOLDBACK AGREEMENTS.
Neither any Stockholder nor the Company shall effect any public sale or
distribution of equity securities of the Company or any securities convertible
into or exchangeable or exercisable for such securities during the seven days
prior to and the 90 days after any underwritten Demand Registration or
underwritten Piggyback Registration has become effective (except as part of such
underwritten registration if required by law or by the underwriter of such
offering).
4. REGISTRATION PROCEDURES.
Whenever the holders of Registrable Securities have requested that any
Registrable Securities be registered pursuant to Section 1 or 2 of this
Agreement, the Company will, as expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such
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registration statement to become effective (provided that before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company will furnish each Stockholder with copies of all such documents
proposed to be filed);
(b) prepare and file with the Securities and Exchange 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 for a period of not less than 120 days;
(c) furnish to each Stockholder such number of copies of such registration
statement, each amendment and supplement thereto and the prospectus included in
such registration statement (including each preliminary prospectus), and such
other documents as such Stockholder may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Stockholder;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
the managing underwriter(s) may reasonably request;
(e) notify each Stockholder at any time when a prospectus relating thereto
is required to be delivered under the 1933 Act within the period that the
Company is required to keep the registration statement effective of the
happening of any event as a result of which the prospectus included in such
registration statement contains an untrue statement of a material fact or omits
any fact necessary to make the statements therein not misleading, and, at the
request of any such Stockholders, the Company will prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements therein not misleading;
(f) cause all such Registrable Securities to be listed or included on
securities exchanges or eligible for quotation on the NASDAQ National Market
System on which similar securities issued by the Company are then listed or
included;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including an underwriting
agreement in customary form) and take such other customary actions as may be
reasonably necessary to expedite or facilitate the disposition of such
Registrable Securities;
(i) obtain a "comfort" letter addressed to the Company and the
Stockholders from the Company's independent pubic accountants in customary form
and covering such matters of the type customarily covered by "comfort" letters;
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(j) make available for inspection by any Stockholder, any underwriter
participating in any disposition pursuant to such registration statement, and
any attorney, accountant or other agent retained by any such Stockholder or
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such
Stockholder, underwriter, attorney, accountant or agent in connection with such
registration statement; and
(k) use its best efforts to obtain an opinion from the Company's counsel
in such form and covering such matters as may reasonably be agreed upon by the
Company and such Stockholder at that time.
5. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company hereby indemnifies each Stockholder, its officers and
directors, and each person who controls such holder (within the meaning of the
1933 Act), against all losses, claims, damages, liabilities and expenses arising
out of or resulting from any untrue or alleged untrue statement of material fact
contained in any registration statement, prospectus or preliminary prospectus 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 except
insofar and to the extent as the same are caused by or contained in any
information furnished to the Company by such holder expressly for use therein or
by any such holder's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such holder with a sufficient number of copies of the same. In
connection with an underwritten offering, the Company will indemnify the
underwriters, their officers and directors, and each person who controls such
underwriters (within the meaning of the 0000 Xxx) to the same extent as provided
above with respect to the indemnification of the Stockholders.
(b) In connection with any registration statement in which a Stockholder
is participating, each such holder will furnish to the Company in writing such
information as is reasonably requested by the Company for use in any such
registration statement or prospectus concerning such Stockholder and will
indemnify the Company, its directors and officers and each person who controls
the Company (within the meaning of the 0000 Xxx) against any losses, claims,
damages, liabilities and expenses resulting from any untrue or alleged untrue
statement of material fact or any omission or alleged omission of a material
fact required to be stated in the registration statement or prospectus or any
amendment thereof or supplement thereto or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement or
omission is contained in information so furnished by such holder specifically
for use in preparing the registration statement. Notwithstanding the foregoing,
the liability of a Stockholder under this Section 5(b) shall be limited to an
amount equal to the net proceeds actually received by the Stockholder from the
sale of Registrable Securities covered by the registration statement.
(c) Any person entitled to indemnification hereunder will (i) give prompt
notice to the indemnifying party of any claim with respect to which it seeks
indemnification and (ii) unless in
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such indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party will not be subject to any liability for any settlement
made without its consent (but such consent will not be unreasonably withheld).
An indemnifying party who is not entitled, or elects not, to assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim.
(d) If the indemnification provided for in this Section 5 is unavailable
to an indemnified party under paragraphs (a) and (b) hereof in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then an
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or Registration Expenses (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Stockholder(s) on the other hand from the
offering of the Registrable Securities, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
Stockholder(s) on the other in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company on the one hand and the Stockholder(s) on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bears to the total net proceeds from
the offering (before deducting expenses) received by the Stockholder(s), in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault of the Company on the one hand and the Stockholder(s) on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or by
the Stockholder(s) and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(e) The Company and the Significant Stockholders agree that it would not
be just and equitable if contribution pursuant to this Section 5 were determined
by a pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the foregoing, the liability of a Stockholder under
this Section 5(e) shall be limited to an amount equal to the net proceeds
actually received by the Stockholder from the sale of Registrable Securities
covered by the registration statement.
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6. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
No Stockholder may participate in any underwritten registration hereunder
unless such holder (a) agrees to sell such holder's securities on the basis
provided in any underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements under Section 1(e) or 2(e) hereof, and
(b) completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
7. DEFINITIONS.
(a) The term "Registrable Securities" means (i) the Common Stock of the
Company registered in the names of the Stockholders from time to time, and (ii)
any securities issued or to be issued with respect to the securities referred to
in clause (i) of this Section 7(a) by way of a stock dividend or stock split or,
in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. As to any particular Registrable
Securities, such securities will cease to be Registrable Securities when they
have been effectively registered under the 1933 Act and disposed of in
accordance with the registration statement covering them.
(b) The term "Registration Expenses" means all expenses incident to the
Company's performance of or compliance with this Agreement, including all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws, printing expenses, messenger and delivery expenses, expenses and
fees for listing the securities to be registered on exchanges on which similar
securities issued by the Company are then listed, and fees and disbursements of
counsel for the Company, and of all independent certified public accountants,
underwriters (other than Underwriting Commissions) and the reasonable fees and
disbursements of a single counsel for the Stockholders in the event of a Demand
Registration.
(c) The term "Underwriting Commissions" means all underwriting discounts
or commissions relating to the sale of securities of the Company, but excludes
any expenses reimbursed to underwriters.
8. MISCELLANEOUS.
(a) NOTICES. All notices that are required or permitted hereunder shall be
in writing and shall be sufficient if personally delivered or sent by mail,
facsimile message or Federal Express or other delivery service. Any notices
shall be deemed given upon the earlier of the date when received at, or the
third day after the date when sent by registered or certified mail or the day
after the date when sent by Federal Express to, the address or fax number set
forth below, unless such address or fax number is changed by notice to the other
party hereto.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement may be
amended or terminated and the Company may take any action herein prohibited, or
omit to perform any act herein required to be performed by it, only if
previously approved in writing by the Stockholders.
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(c) BINDING EFFECT. This Agreement will bind and inure to the benefit of
the respective successors (including any successor resulting from a merger or
similar reorganization), assigns, heirs, and personal representatives of the
parties hereto. Without limiting the generality of the foregoing, if a
Stockholder liquidates or reorganizes such that its assets are transferred to
its own stockholders or partners or to another entity, such stockholders,
partners or entity shall succeed to all of the rights of such Stockholder
hereunder.
(d) PRIOR AGREEMENTS. This Agreement is the only agreement among the
Company and any of the Stockholders with respect to the subject matter hereof,
and any prior agreements between the Company and any of the Stockholders
relating to the subject matter of this Agreement are terminated as of the date
hereof and shall have no further force and effect.
(e) GOVERNING LAW. All questions concerning the construction, validity and
interpretation of this Agreement will be governed by the internal law, not the
law of conflicts, of the State of New York.
(f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be considered to be an original instrument and
to be effective as of the date first written above. Each such copy shall be
deemed an original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.
(g) INTERPRETATION. Unless the context of this Agreement clearly requires
otherwise (i) references to the plural include the singular, the singular the
plural, the part the whole, (ii) references to one gender include all genders,
(iii) "or" has the inclusive meaning frequently identified with the phrase
"and/or" and (iv) "including" has the inclusive meaning frequently identified
with the phrase "but not limited to." The section and other headings contained
in this Agreement are for reference purposes only and shall not control or
affect the construction of this Agreement or the interpretation thereof in any
respect.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above. This Agreement shall be binding
upon any party that execute and delivers a copy hereof, irrespective of whether
any of the parties listed below (other than the Company) do not also become a
party hereto.
FOILMARK, INC.
By: /s/
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Name: Xxxxx X. Xxxxx, Xx.
Title: President & Chief Executive Officer
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BRADFORD VENTURE PARTNERS, L.P.
By: Bradford Associates, General Partner
By: /s/
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Name:
Title:
OVERSEAS PRIVATE INVESTOR PARTNERS
By: Overseas Private Investors, Ltd.,
General Partner
By: /s/
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Name:
Title:
/s/
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Xxxxx X. Xxxxxx
/s/
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Xxxxxx X. Xxxxx
/s/
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Xxxxxxx X. Xxxxxxx
/s/
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Xxxxx Xxxxx
/s/
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Xxxxxx X. Share
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