EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), is entered
into as of November 18, 1997, by and among Variflex, Inc., a Delaware
corporation (the "COMPANY"), Remy Capital Partners IV, L.P., a Delaware limited
partnership ("REMY") and Xxxxxxx X. Xxxx, XX ("LOSI") (Remy and Losi are
sometimes collectively referred to herein as the "HOLDERS" and each,
individually, a "HOLDER").
In consideration of the mutual promises contained herein, the
parties hereby agree as follows:
SECTION 1 CERTAIN DEFINITIONS. As used in this Agreement,
unless the context otherwise requires:
"AFFILIATE" means, with regard to any Person, (i) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such first Person; or (ii) any trust in which such
Person is the trustee and has sole voting and dispositive power.
"BUSINESS DAY" means any day that commercial banks are not
authorized or required to close in Los Angeles, California.
"COMMISSION" means the Securities and Exchange Commission or any
other similar or successor agency of the United States government administering
the Securities Act.
"COMMON STOCK" means the Common Stock of the Company, par
value $.001 per share.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, and any
similar or successor federal statute, and the rules and regulations of the
Commission thereunder, as in effect at the time.
"INITIATING HOLDER" means the Holder who has given a Demand
Notice pursuant to Section 2.1.
"OFFERING" means the registration of the Company's securities
under the Securities Act, whether underwritten or not, for sale to the public.
"PERSON" means a corporation, an association, a trust, a
partnership, a limited liability company, a joint venture, an organization, a
business, an individual, a government or political subdivision thereof or a
governmental body.
"PROSPECTUS" means the prospectus included in any Registration
Statement, together with and including any amendment or supplement to such
prospectus, covering the Offering of any portion of the Registrable Securities
covered by a Registration Statement, and all material incorporated by reference
in such Prospectus.
"REGISTRABLE SECURITIES" means shares of the Common Stock held by
the Holders or their respective Affiliates or otherwise acquired by the Holders
or their respective Affiliates (collectively, the "SHARES") and any securities
issued or issuable with respect to the Shares by way of a stock dividend or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation, reclassification or other reorganization. A security will
cease to be a Registrable Security when it (a) has been effectively registered
under the Securities Act and disposed of in accordance with the Registration
Statement covering it, (b) is distributed to the public pursuant to Rule 144 (or
any similar rule then in force) under the Securities Act, or (c) has otherwise
been transferred and a new certificate not bearing a restrictive legend and not
subject to any stop transfer order lawfully has been delivered by or on behalf
of the Company and no other restriction on transfer exists.
"REGISTRATION STATEMENT" means a registration statement filed by
the Company with the Commission covering Registrable Securities.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or
any similar federal statute, together with the rules and regulations of the
Commission promulgated thereunder, as in effect at the time.
OTHER DEFINITIONS. The following terms shall have the meanings
set forth in the following sections:
DEFINITION SECTION
"COMPANY" Introduction
"CONTROLLING PERSON" 5.1
"DEMAND NOTICE" 2.1
"DEMAND REGISTRATION STATEMENT" 2.1
"INDEMNIFIED PERSONS" 5.1
"LOSSES" 5.1
"OTHER HOLDER" 2.1
"OTHER SHARES" 2.1.1(a)
"PIGGYBACK NOTICE" 2.2.1
"PIGGYBACK REGISTRATION STATEMENT" 2.2
"REGISTERING HOLDERS" 3.1
"REGISTRATION EXPENSES" 3.13
"SHARES" 1
SECTION 2 REGISTRATION RIGHTS.
2.1 DEMAND REGISTRATION. Commencing on the date hereof, an
Initiating Holder may, by notice to the Company (the "DEMAND NOTICE"), demand
that the Company file, and the Company will file, a Registration Statement as
soon as practicable covering the Registrable Securities specified in the Demand
Notice by the Initiating Holder (a "DEMAND REGISTRATION STATEMENT"). Such Demand
Registration Statement will be filed on an appropriate form under the Securities
Act no later than ninety (90) days after the Company receives the Demand Notice.
Remy will be entitled to demand that the Company file and cause to be declared
effective Demand Registration Statements on three (3) separate occasions. Losi
will be entitled to demand that the Company file and cause to be declared
effective Demand Registration Statements on three (3) separate occasions. The
Company will use its best efforts to cause any Demand Registration Statement to
be declared effective on the date requested by the managing underwriter for the
Offering (no earlier than sixty (60) days from the date of the Demand Notice),
or, if such Offering is not underwritten, as soon as practicable after the
filing with the Commission. The Company will keep such Demand Registration
Statement effective until the Offering is completed (but not more than one
hundred eighty (180) days from the effective date of the Demand Registration
Statement). Upon receipt of a Demand Notice, the Company shall provide notice
thereof to the Holder other than the Initiating Holder (the "OTHER HOLDER").
2.1.1 COMPANY/OTHER HOLDER PARTICIPATION. The Other
Holder and/or the Company can elect to register equity securities of the Company
in any Demand Registration Statement or to participate in the Offering, by
including any of their Registrable Securities in the Demand Registration
Statement, subject to the following:
(a) NOTICE. The Other Holder and/or the Company must
give notice of such election to the Initiating Holder within fifteen (15) days
after the Demand Notice was given by the Company to the Other Holder, including
the number of Shares proposed to be sold by the Other Holder and/or the Company
in the Offering (the "OTHER SHARES");
(b) CONDITIONS. The Other Holder and/or the Company must
agree to sell such Other Shares on the same basis provided in the underwriting
arrangements approved by the Initiating Holder and the Company (including
standard indemnification provisions) and to timely complete and execute all
questionnaires, powers of attorney, indemnities, holdback agreements,
underwriting agreements and other documents reasonably required by such
underwriting arrangements, by the Commission or by any state securities
regulatory body;
(c) LIMITATION ON AMOUNT. If the managing underwriter
for any underwritten Offering reasonably decides that inclusion of all or any
portion of the Other Shares in such Offering would materially and adversely
affect the ability of the underwriters to sell all of the securities requested
to be included in such Offering, and delivers to the Company its written opinion
to such effect, the number of Other Shares that may be sold in such Offering
will be limited. In such event, the number of shares of Common Stock that may be
sold in the Offering will be allocated first to the Initiating Holder, second,
to the extent available, to the Other Holder, third, to the extent available, to
the Company and, fourth, to the extent available, to any other party having
registration rights with respect to the Common Stock.
2.2 "PIGGYBACK" REGISTRATION. If at any time, or from time to
time, the Company decides to file a Registration Statement covering any shares
of its Common Stock (other than a registration statement on Form S-4 or S-8, or
any form substituted therefor) for its own account or for the account of any
stockholder (a "PIGGYBACK REGISTRATION STATEMENT"), the Holders will be entitled
to include Registrable Securities in such registration and related Offering on
the following terms and conditions.
2.2.1 NOTICE. The Company will promptly give notice of
such decision to the Holders (a "PIGGYBACK NOTICE"). The Holders will have the
right to request, by notice given to the Company within ten (10) Business Days
after it receives the Piggyback Notice, that a specific number of Registrable
Securities held by the Holders be included in the Piggyback Registration
Statement and related underwritten Offering, if any.
If the Piggyback Registration Statement relates to an
underwritten Offering, the Piggyback Notice must specify the name of the
managing underwriter for such Offering. The Piggyback Notice must also specify
the number of shares to be registered for the account of the Company and for the
account of any stockholder, and the intended method of disposition of such
shares.
2.2.2 UNDERWRITTEN OFFERING. If the Piggyback
Registration Statement relates to an underwritten Offering, as a condition to
participation in such Piggyback Registration Statement the Holders must agree to
sell its Registrable Securities on the same basis provided in the underwriting
arrangements approved by the Company (including standard indemnification
provisions) and to timely complete and execute all questionnaires, powers of
attorney, indemnities, holdback agreements, underwriting agreements and other
documents required under the terms of such underwriting arrangements, by the
Commission or by any state securities regulatory body.
2.2.3 BEST EFFORTS. The Company will use its best
efforts to include in the Piggyback Registration Statement the number of
Registrable Securities requested in response to the Piggyback Notice. If the
managing underwriter for any underwritten Offering under the Piggyback
Registration Statement reasonably decides that inclusion of all or any portion
of the Registrable Securities in such Offering would materially and adversely
affect the ability of the underwriters to sell all of the securities requested
to be included in such Offering, and delivers to the Holders its written opinion
to such effect, the number of securities that may be sold in such Offering will
be limited. Securities to be sold will be allocated first to the Company (or, if
the Offering is being made principally for the account of another Person, to
such Person), second to the Holders pro rata between the Holders based upon the
respective number of shares sought by each to be included in the Offering, and,
third, to any other third party (or to the Company if the Offering is being made
principally for the account of another Person) having registration rights with
respect to the Common Stock.
2.2.4 WITHDRAWALS. The Holders will have the right to
withdraw their Registrable Securities from the Piggyback Registration Statement,
but if the same relates to an underwritten Offering, they may only do so during
the time period and on terms agreed upon by the Holders and the underwriters for
such underwritten Offering. The Company will on five (5) Business Days notice to
the Holders have the right to withdraw any Piggyback Registration Statement at
any time prior to the effective date thereof.
2.3 SELECTION OF UNDERWRITERS. If the Registrable Securities
covered by a Demand Registration Statement are to be sold in an underwritten
Offering, the managing underwriter of such Offering may be designated by the
Initiating Holder. If the Registrable Securities included in a Piggyback
Registration Statement are to be sold in an underwritten Offering, the managing
underwriter of such Offering will be designated by the Company (or, if the
Offering is being made principally for the account of another Person, by such
Person).
SECTION 3 REGISTRATION PROCEDURES. The Company will use its best
efforts to effect any registration under Section 2 in a manner that permits the
sale of the Registrable Securities covered thereby in accordance with the
intended method or methods of disposition. The Company will, as promptly as
practicable, do the following.
3.1 REVIEW. At least five (5) Business Days before filing a
Registration Statement or Prospectus, the Company will furnish to the Holder(s)
who are participating in such Registration Statement (the "REGISTERING HOLDERS")
and the underwriters, if any, copies of all such documents proposed to be filed.
Such documents will be subject to the review of the Registering Holders and such
underwriters (and their respective counsel). The Company will not file any
Registration Statement or any Prospectus to which the Registering Holders or the
underwriters, if any, reasonably object. If the Registration Statement is a
Piggyback Registration Statement relating to an underwritten Offering and the
underwriters do not agree with such objection by the Registering Holders and the
Registering Holders are permitted to withdraw any Registrable Securities from
such Offering, the Company can file the Piggyback Registration Statement
notwithstanding such objection by the Registering Holders.
3.2 AMENDMENTS. The Company will (a) prepare and file with the
Commission such amendments and post-effective amendments to the Registration
Statement as may be necessary to keep the Registration Statement effective for
the applicable time period required herein; (b) cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the Securities Act; and (c) comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable period
in accordance with the intended methods of disposition by the Registering
Holders set forth in such Registration Statement or Prospectus supplement.
3.3 NOTIFICATION. The Company will promptly notify the
Registering Holders and the managing underwriters, and (if requested by any such
Person) confirm such notification in writing, (a) when the Prospectus has been
filed, and, with respect to the Registration Statement, when it has become
effective, (b) of any request by the Commission for amendments or supplements to
the Registration Statement or the Prospectus or for additional information, (c)
of the issuance of any stop order suspending the effectiveness of the
Registration Statement, or the refusal or suspension of qualification of
registration of Registrable Securities, or the initiation of any proceedings for
that purpose, (d) if at any time the representations and warranties of the
Company contemplated by Section 8 cease to be true and correct, and (e) of any
event that makes any material statement made in the Registration Statement, the
Prospectus or any document incorporated therein by reference untrue or that
requires the making of any changes in the Registration Statement, the Prospectus
or any document incorporated therein by reference in order to make the
statements therein not misleading in any material respect. The Company will make
every reasonable effort to obtain the withdrawal of any order suspending the
effectiveness of the Registration Statement at the earliest possible moment;
If any event contemplated by clause (e) occurs, the Company will
promptly prepare a supplement or post-effective amendment to the Registration
Statement or the Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, the Prospectus will not contain an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein not misleading. Upon receipt of any notice from
the Company that any event of the kind described in clause (e) has happened, the
Registering Holders will discontinue offering the Registrable Securities until
the Registering Holders receive the copies of the supplemented or amended
Prospectus contemplated by the previous sentence, or until they are advised in
writing by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings that are incorporated
by reference in the Prospectus. The period during which distribution of the
Shares is suspended will not be counted toward completion of the required period
of effectiveness for any Registration Statement.
3.4 INFORMATION INCLUDED. If requested by the managing
underwriters or the Registering Holders, the Company will immediately
incorporate in a Prospectus supplement or post-effective amendment such
information as the managing underwriters and the Registering Holders agree
should be included therein relating to the sale of the Registrable Securities,
including, but not limited to, information with respect to the number of
Registrable Securities being sold to such underwriters or other Persons, the
purchase price being paid therefor by such underwriters or other Persons and any
other terms of the distribution of the Registrable Securities to be sold in such
Offering. Such information will include, if applicable, any required disclosure
of arrangements with underwriters. The Company will make all required filings of
such Prospectus supplement or post-effective amendment as promptly as
practicable after being notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment.
3.5 COPIES. The Company will (a) promptly furnish to the
Registering Holders and each managing underwriter without charge, at least one
signed copy of the Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those incorporated
by reference), and (b) promptly deliver to the Registering Holders and the
underwriters without charge, as many copies of the Prospectus (including each
preliminary Prospectus) and any amendment or supplement thereto as such Persons
may reasonably request. The Company consents to the use of the Prospectus or any
amendment or supplement thereto by the Registering Holders and the underwriters
in connection with the Offering and sale of the Registrable Securities covered
by the Prospectus or any amendment or supplement thereto.
3.6 BLUE SKY REQUIREMENTS. Prior to any Offering of Registrable
Securities covered by a Registration Statement under Section 2, the Company will
register or qualify or cooperate with the Registering Holders, the underwriters
and their respective counsel in connection with the registration or
qualification of such Registrable Securities under the securities or blue sky
laws of such jurisdictions as the Registering Holders or underwriter reasonably
request in writing, and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of such Registrable
Securities. The Company will not be required to take any actions under this
subsection if such actions would require it to submit to the general taxation of
such jurisdiction or to file therein any general consent to service of process,
unless this limitation means that the Registrable Securities would not be
qualified (or exempt from qualification) for offer and sale in at least twenty
(20) states.
3.7 OTHER REGISTRATIONS. The Company will use its best efforts to
cause the Registrable Securities covered by the Registration Statement to be
registered with or approved by such governmental agencies or authorities other
than the Commission and state securities regulatory bodies as may be necessary
to enable the Registering Holders or the underwriters to consummate the
disposition of such Registrable Securities.
3.8 CERTIFICATES. The Company will cooperate with the Registering
Holders and the managing underwriter to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold that do
not bear any restrictive legends. Such certificates will be in such
denominations and registered in such names as the managing underwriter requests
at least two (2) business days prior to any sale of Registrable Securities to
the underwriters.
3.9 OTHER ACTIONS. In addition, the Company will (a) make such
representations and warranties to the Registering Holders and the underwriters
as are customarily made by issuers to underwriters in primary underwritten
offerings (or as may be reasonably requested by the underwriters), (b) obtain
opinions of counsel to the Company and updates (which counsel and opinions must
be reasonably satisfactory to the Registering Holders), (c) obtain customary
"cold comfort" letters and updates from the Company's independent certified
public accountants addressed to the underwriters, and use its best efforts to
obtain such a letter for the Registering Holders or to obtain a letter from such
accountants authorizing the Registering Holders to rely on such "cold comfort"
letter, (d) if an underwriting agreement is entered into, ensure it sets forth
in full the indemnification provisions and procedures of Section 4 with respect
to the Company and the Registering Holders, and (e) deliver such documents and
certificates as may be requested by the Registering Holders and the managing
underwriter to evidence compliance with clause (a) and with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company with the Registering Holders. The above will be done in
connection with each closing under such underwriting or similar agreement or as
and to the extent required thereunder.
3.10 DUE DILIGENCE. The Company will make available for
inspection by the Registering Holders, any underwriter participating in any
disposition pursuant to such Registration Statement, and any attorney or
accountant retained by the Registering Holders or managing underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors and employees to be
available to discuss and to supply all information reasonably requested by any
such person in connection with the Registration Statement. All such records,
information or documents will be subject to standard confidentiality
arrangements.
3.11 BEST EFFORTS. The Company will otherwise use its best
efforts to comply with all applicable rules and regulations of the Commission
and state securities regulatory bodies.
3.12 SECTION 11(A) NOTICE. The Company will make generally
available to its stockholders earnings statements satisfying the provisions of
Section 11(a) of the Securities Act no later than thirty (30) days after the end
of any twelve (12) month period (or sixty (60) days, if such period is a fiscal
year) (a) commencing at the end of any fiscal quarter in which Registrable
Securities are sold to underwriters in a firm or best efforts underwritten
Offering, or, if not sold to underwriters in such an Offering, (b) beginning
with the first month of the Company's first fiscal quarter commencing after the
effective date of the Registration Statement, which statements will cover such
twelve (12) month period.
3.13 EXPENSES. Except as set forth in the last sentence of this
subsection and in subsection 6.13.4, all expenses incident to the Company's
performance of or compliance with this Agreement, including, but not limited to,
all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws, printing expenses, messenger expenses, telephone
and delivery expenses, and fees and disbursements of Company counsel and of
independent certified public accountants of the Company (including the expenses
of any special audit required by or incident to such performance), will be borne
by the Company. The Company will also pay its internal expenses, the expense of
any annual audit and the fees and expenses of any Person retained by the
Company. In addition, the Company will pay all reasonable fees and disbursements
of one counsel (designated by the Initiating Holder, and if there is no
Initiating Holder, by a majority of the Holders participating in the Offering)
to the Holders. All such expenses are referred to herein as "REGISTRATION
EXPENSES." All underwriting fees and commissions with respect to an underwritten
Offering, and transfer taxes, if any, will be borne by each Holder in proportion
to the number of Registrable Securities sold by such Holder.
SECTION 4 INDEMNIFICATION.
4.1 INDEMNIFICATION BY THE COMPANY. The Company will indemnify
and hold harmless the Registering Holders, their respective officers, directors,
agents (including, but not limited to counsel) and employees and each Person who
controls the Registering Holders (within the meaning of Section 15 of the
Securities Act) (each, a "CONTROLLING Person") (all of the foregoing are
"INDEMNIFIED PERSONS") from and against any and all losses, claims, damages and
liabilities (including any investigation, legal or other expenses ("LOSSES")
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claim asserted) to which the Indemnified
Person may become subject under the Securities Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such Losses arise out of or are based upon (a) any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement, Prospectus or preliminary prospectus or any amendment or supplement
thereto or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading or (b) any violation by the Company of the Securities Act or the
Exchange Act, or other federal or state law applicable to the Company and
relating to any action or inaction required of the Company in connection with
such registration. In addition, the Company will reimburse the Indemnified
Person for any investigation, legal or other expenses incurred by such
Indemnified Person in connection with investigating or defending any such Loss.
The Company will not be liable with respect to the portion of any such Loss that
arises out of or is based upon any alleged untrue statement or alleged omission
made in such Registration Statement, preliminary Prospectus, Prospectus, or
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by the Indemnified Person specifically for
use therein. Such indemnity will remain in full force and effect regardless of
any investigation made by or on behalf of the Indemnified Person, and will
survive the transfer of such securities by the Indemnified Person. The Company
will also indemnify underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, their
officers and directors and each Person who controls such Persons (within the
meaning of Section 15 of the Securities Act) to the same extent customarily
requested by such Persons in similar circumstances.
4.2 INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. If the
Holders sell Registrable Securities under a Prospectus that is part of a
Registration Statement, the Holders will indemnify and hold harmless the
Company, its directors and each officer who signed such Registration Statement
and each Person who controls the Company (within the meaning of Section 15 of
the Securities Act) under the same circumstances as the foregoing indemnity from
the Company to the Holders to the extent that such Losses arise out of or are
based upon any untrue statement of a material fact or omission of a material
fact that was made in the Prospectus, the Registration Statement, or any
amendment or supplement thereto, in reliance upon and in conformity with written
information relating to the Holders furnished to the Company by the Holders
expressly for use therein. In no event will the aggregate liability of the
Holders exceed the amount of the net proceeds received by the Holders upon the
sale of the Registrable Securities giving rise to such indemnification
obligation. Such indemnity will remain in full force and effect regardless of
any investigation made by or on behalf of the Company or such officer, director,
employee or Controlling Person, and will survive the transfer of such securities
by the Holders. The Company and the Holders will be entitled to receive
indemnities from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, to the same
extent as customarily furnished by such Persons in similar circumstances.
4.3 CONTRIBUTION. If the indemnification provided for in the
foregoing Sections is unavailable to an indemnified party or is insufficient to
hold such indemnified party harmless for any Losses in respect of which the
foregoing Sections would otherwise apply by their terms (other than by reason of
exceptions provided in the foregoing Sections), then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, will have a
joint and several obligation to contribute to the amount paid or payable by such
indemnified party as a result of such Losses. Such contribution will be in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party, on the one hand, and such indemnified party, on the other hand, in
connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The relative
fault of such indemnifying party, on the one hand, and indemnified party, on the
other hand, will be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has been
taken or made by, or relates to information supplied by, such indemnifying party
or indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent any such action, statement or
omission. The amount paid or payable by a party as a result of any such Losses
will be deemed to include any investigation, legal or other fees or expenses
incurred by such party in connection with any investigation or proceeding, to
the extent such party would have been indemnified for such expenses if the
indemnification provided for in the foregoing Sections was available to such
party.
4.4 CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled
to indemnification hereunder will (a) give prompt notice to the indemnifying
party of any claim with respect to which it seeks indemnification, and (b)
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. Any Person entitled to
indemnification hereunder will have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel will be at the expense of such Person and not of the indemnifying party
unless (x) the indemnifying party has agreed to pay such fees or expenses, (y)
the indemnifying party has failed to assume the defense of such claim and employ
counsel reasonably satisfactory to such Person, or (z) in the opinion of counsel
of the Person to be indemnified, a conflict of interest may exist between such
Person and the indemnifying party with respect to such claims. In the case of
(z), if the Person notifies the indemnifying party in writing that such Person
elects to employ separate counsel at the expense of the indemnifying party, the
indemnifying party will not have the right to assume the defense of such claim
on behalf of such Person. If such defense is not assumed by the indemnifying
party, 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). No indemnified party will be required to consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term the giving of a release, by all claimants or plaintiffs, to such
indemnified party from all liability in respect to such claim or litigation. Any
indemnifying party who is not entitled to, 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 in each relevant jurisdiction for all parties indemnified by such
indemnifying party with respect to such claim.
SECTION 5 OTHER AGREEMENTS.
5.1 HOLDBACK AGREEMENTS.
5.1.1 RESTRICTIONS ON PUBLIC SALE BY THE COMPANY. The
Company agrees not to effect any public or private sale or distribution of
securities of the same class as the Registrable Securities, or convertible into
or exchangeable or exercisable for securities of the same class as the
Registrable Securities, including a sale pursuant to Regulation D under the
Securities Act, during the ten (10) day period prior to, and during the ninety
(90) day period beginning on the closing date of, an Offering made pursuant to a
Demand Notice.
5.1.2 RESTRICTIONS ON PUBLIC SALE BY THE HOLDERS. If
requested by the managing underwriter of an underwritten offering, the Holders
will not effect any public sale or distribution of securities of the same class
(or securities exchangeable or exercisable for or convertible into securities of
the same class) as the securities included in the Offering, including, but not
limited to, a sale pursuant to Rule 144 of the Securities Act during the ten
(10) day period prior to and the ninety (90) day period (or shorter period
requested by the underwriter) subsequent to an Offering.
5.2 RULE 144. The Company will file, on a timely basis, all
reports required to be filed by it under the Securities Act and the Exchange
Act, and will take such further action and provide such documents as any holder
of Registrable Securities may request, all to the extent required from time to
time to enable the Holders to sell Registrable Securities without registration
under the Securities Act within the limitation of the conditions 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.
Upon the request of the Holders, the Company will deliver to the Holders a
written statement verifying that it has complied with such information and
requirements.
5.3 REPRESENTATIONS AND WARRANTIES.
5.3.1 VALIDITY. The Company represents and warrants
to the Holders that this Agreement has been duly and validly executed and
delivered by the Company and constitutes a legally valid and binding agreement
of the Company enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization and
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and except that the remedy of specific performance
and injunctive and other forms of equitable relief are subject to certain
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought and except as rights to indemnity and
contribution hereunder may be limited by federal or state securities laws.
5.3.2 NO INCONSISTENT AGREEMENTS. The Company
represents and warrants that it has not previously entered into, and will not on
or after the date of this Agreement enter into, any agreement with respect to
its securities that is inconsistent with the terms of this Agreement, including
any agreement that impairs or limits the registration rights granted to the
Holders or that otherwise conflicts with the provisions hereof or would preclude
the Company from discharging its obligations under this Agreement.
5.3.3 FURNISH INFORMATION. The Company will promptly
deliver to the Holders copies of all financial statements, reports and proxy
statements that the Company is required to send to its stockholders generally.
SECTION 6 MISCELLANEOUS PROVISIONS.
6.1 AMENDMENTS; WAIVERS. Amendments, waivers, demands, consents
and approvals under this Agreement must be in writing and designated as such. No
failure or delay in exercising any right will be deemed a waiver of such right.
6.2 INTEGRATION. This Agreement is the entire agreement between
the parties pertaining to its subject matter, and supersedes all prior
agreements and understandings of the parties in connection with such subject
matter.
6.3 INTERPRETATION; GOVERNING LAW. This Agreement is to be
construed as a whole and in accordance with its fair meaning. This Agreement is
to be interpreted in accordance with the laws of the State of California.
6.4 HEADINGS. Headings of Sections and subsections are for
convenience only and are not a part of this Agreement.
6.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which constitute one agreement.
6.6 SUCCESSORS AND ASSIGNS. This Agreement is binding upon and
inures to the benefit of each party and such party's respective heirs, personal
representatives, successors and assigns. Nothing in this Agreement, express or
implied, is intended to confer any rights or remedies upon any other person.
6.7 REPRESENTATION BY COUNSEL; INTERPRETATION. Each party
acknowledges that it has been represented by counsel in connection with this
Agreement. Any rule of law, including, but not limited to, Section 1654 of the
California Civil Code, or any legal decision that would require interpretation
of any claimed ambiguities in this Agreement against the party that drafted it,
has no application and is expressly waived.
6.8 SPECIFIC PERFORMANCE. In view of the uniqueness of the
matters contemplated by this Agreement, the Holders would not have an adequate
remedy at law for money damages if this Agreement is not being performed in
accordance with its terms. The /Company therefore agrees that the Holders will
be entitled to specific enforcement of the terms hereof in addition to any other
remedy to which it may be entitled.
6.9 TIME IS OF THE ESSENCE. Time is of the essence in the
performance of each and every term, provision and covenant in this Agreement.
6.10 SEVERABILITY. The provisions of this Agreement are
severable. The invalidity, in whole or in part, of any provision of this
Agreement shall not affect the validity or enforceability of any other of its
provisions. If one or more provisions hereof shall be so declared invalid or
unenforceable, the remaining provisions shall remain in full force and effect
and shall be construed in the broadest possible manner to effectuate the
purposes hereof. The parties further agree to replace such void or unenforceable
provisions of this Agreement with valid and enforceable provisions which will
achieve, to the extent possible, the economic, business and other purposes of
the void or unenforceable provisions.
6.11 NOTICES. All notices, demands and requests required by this
Agreement shall be in writing and shall be deemed to have been given for all
purposes (i) upon personal delivery, (ii) one (1) business day after being sent,
when sent by professional overnight courier service for next business day
delivery from and to locations within the continental United States, (iii) five
(5) days after posting when sent by registered or certified mail, or (iv) on the
date of receipt by the sending party of confirmation of the successful
transmission of the facsimile, as printed by the facsimile machine, when sent by
facsimile. Any party hereto may from time to time by notice in writing served
upon the others as provided herein, designate a different mailing address or a
different party to which such notices or demands are thereafter to be addressed
or delivered.
6.12 FURTHER ACTIONS. Subject to the terms and conditions of this
Agreement, each of the parties agrees to use all commercially reasonable efforts
to take, or cause to be taken, all action necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
6.13 ARBITRATION.
6.13.1 Any and all disputes of any nature (whether
sounding in
contract or in tort) arising out of or relating to this Agreement shall be
initiated, maintained and determined exclusively by binding arbitration in the
County of Los Angeles, State of California, pursuant to Section 6.13.3. The
parties agree irrevocably to submit themselves, in any suit to confirm the
judgment or finding of such arbitrator, to the jurisdiction of the United States
District Court for the Central District of California and the jurisdiction of
any court of the State of California located in Los Angeles County and waive any
and all objections to jurisdiction that they may have under the laws of the
State of California or the United States.
6.13.2 In case of a dispute, any party may commence the
arbitration by giving written notice to the other pursuant to Section 6.11. The
Arbitrator will be a retired judge of the United States District Court for the
Central District of California or of the Superior Court of the State of
California in and for the County of Los Angeles. The arbitration proceeding will
be conducted by means of a reference pursuant to California Code of Civil
Procedure Section 638(1). Within ten (10) business days after receipt of the
notice requesting arbitration, the parties shall attempt in good faith to agree
upon the Arbitrator to whom the dispute will be referred and on a joint
statement of contentions. Unless agreement as to an Arbitrator is theretofore
reached, within ten (10) business days after receipt of the notice requesting
arbitration, each party shall submit the names of three (3) retired judges who
have served at least five (5) years as trial judges in the Superior Court of the
State of California or in the United States District Court. Either party may
then file a petition seeking the appointment by the presiding Judge of the
Superior Court of one of the persons so named as "referee" in accordance with
said Code of Civil Procedure 638(1), which petition shall recite in a clear and
meaningful manner the factual basis of the controversy between the parties and
the issues to be submitted to the referee for decision. Each party hereby
consents to the jurisdiction of the Superior Court in and for the County of Los
Angeles for such action and agrees that service of process will be deemed
completed when a notice similarly sent would be deemed received under Section
6.11.
6.13.3 The hearing before the Arbitrator shall be held
within thirty (30) days after the parties reach agreement as to the identity of
the Arbitrator (or within thirty (30) days after the appointment by the court).
Unless more extensive discovery is expressly permitted by the Arbitrator, each
party shall have only the right to one document production request, shall serve
but one set of interrogatories and shall only be entitled to depose those
witnesses which the Arbitrator expressly permits, it being the parties'
intention to minimize discovery procedures and to hold the hearing on an
expedited basis. The Arbitrator shall establish the discovery schedule promptly
following submission of the joint statement of intentions (or the filing of the
answer to the petition), which schedule shall be strictly adhered to. All
decisions of the Arbitrator shall be in writing and shall not be subject to
appeal. The Arbitrator shall make all substantive rulings in accordance with
California law and shall have authority equal to that of a Superior Court Judge
to grant equitable relief in an action pending in Los Angeles Superior Court in
which all parties have appeared. The Arbitrator shall use its best efforts to
hear the dispute on consecutive days and to render a decision and award within
thirty (30) days. Unless otherwise agreed to by the parties to the dispute being
arbitrated, a court reporter shall be present at and record the proceedings of
the hearing. All motions shall be heard at the time of the hearing. The
Arbitrator shall determine which rules of evidence, and which procedural rules,
shall apply. In the absence of a determination thereof by the Arbitrator, the
rules of the American Arbitration Association, not inconsistent with this
Section 6.13, shall apply to the conduct of the proceeding.
6.13.4 The fees and costs of the Arbitrator shall be
shared equally by all disputing parties. The Arbitrator shall award legal fees,
disbursements and other expenses to the prevailing party or parties for such
amounts as determined by the Arbitrator to be appropriate. Judgment upon the
Arbitrator's award may be entered as if after trial in accordance with
California law. Should a party fail to pay fees as required, the other party or
parties may advance the same and shall be entitled to a judgment from the
Arbitrator in the amount of such fees plus interest at the prime rate as
determined by the Bank of America. Any award issued by the Arbitrator shall bear
interest at the judgment rate in effect in the State of California from the date
determined by the Arbitrator.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officers as of the day and year
first above written.
VARIFLEX, INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
Address: 0000 Xxxxx Xxxxxxxx Xxx.
Xxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
REMY CAPITAL PARTNERS IV, L.P.
By: REMY INVESTORS, LLC, a Delaware
limited liability company
Its: General Partner
By:
----------------------------
Name: Xxxx Xxxxxx
Title: Managing Member
Address: 0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
----------------------------------
XXXXXXX X. XXXX, XX
Address: 0000 Xxxxx Xxxxxxxx Xxx.
Xxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
