Exhibit 7
REGISTRATION RIGHTS AGREEMENT
May 28, 1999
To the several persons named at the foot hereof:
Ladies and Gentlemen:
WHEREAS, Prism Financial Corporation, a Delaware corporation (the
"Company"), is undertaking an initial public offering of its Common Stock
(as defined herein) pursuant to an underwriting agreement, dated as of the
date hereof, by and among the Company, the Initial Shareholders (as defined
herein) and the underwriters named therein (the "Underwriting Agreement");
WHEREAS, in connection with the Company's initial public offering,
the Company and each Initial Shareholder have entered into a Share Exchange
Agreement or received shares of the Company pursuant to acquisition
agreements, such that upon consummation of the Company's initial public
offering, each Initial Shareholder shall own the number of shares of Common
Stock set forth opposite such Initial Shareholder's name on Annex I hereto;
and
WHEREAS, the Company desires to provide to each of you, rights to
register the Common Stock of the Company owned by you.
NOW, THEREFORE, as an inducement to each of you to consummate the
transactions contemplated by the Underwriting Agreement, the Company hereby
covenants and agrees with each of you, and with each subsequent holder of
Restricted Stock (as defined herein) as follows:
1. Certain Definitions. As used herein, the following terms
shall have the following respective meanings:
"Common Stock" shall mean the Common Stock, par value $0.01 per
share, of the Company.
"Commission" shall mean the Securities and Exchange Commission,
or any other federal agency at the time administering the Securities Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the
time.
"Initial Shareholders" shall mean those persons who are
signatories to this Agreement, and their successors and assigns, and other
persons who may become holders of Restricted Stock.
"Initial Shareholder Shares" means all shares of Common Stock
owned by the Initial Shareholders on the date hereof as set forth in Annex
I hereto, as such shares may be adjusted from time to time in accordance
with Section 8 hereof.
"IPO" shall mean the initial public offering of the Company's
Common Stock under the Securities Act.
"person" means any individual, firm, corporation, partnership,
limited liability company, trust, incorporated or unincorporated
association, joint venture, joint stock company, limited liability company,
government (or an agency or political subdivision thereof) or other entity
of any kind, and shall include any successor (by merger or otherwise) of
such entity.
"Public Sale" shall mean any sale of shares of Common Stock to
the public pursuant to an offering registered under the Securities Act or
to the public pursuant to the provisions of Rule 144 (or any successor or
similar rule) adopted under the Securities Act.
"Registration Expenses" shall mean the expenses so described in
Section 6 hereof.
"Restricted Stock" shall mean the shares of Common Stock issued
to the Initial Shareholders or other persons which are required to bear a
restrictive legend, excluding Initial Shareholder Shares which have been
(i) registered under the Securities Act pursuant to an effective
registration statement filed thereunder and disposed of in accordance with
the registration statement covering them or (ii) publicly sold pursuant to
Rule 144 under the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean the expenses so described in
Section 6 hereof.
2. Required Registration.
(a) At any time on or after the 180 day anniversary of
the consummation of the IPO, the holders of at least 50% of the Restricted
Stock outstanding at such time may request the Company to register all or
any portion of the Restricted Stock held by such requesting holder or
holders for sale in the manner specified in such notice; provided, however,
that the Company shall not be obligated to effect any such registration
unless the proceeds to be realized in connection with such registration
shall not reasonably be expected to be less than $1,000,000.
(b) Promptly following receipt of any notice under this
Section 2, the Company shall immediately notify any holders of Restricted
Stock from whom notice has not been received and shall use its best efforts
to register under the Securities Act, for Public Sale in accordance with
the method of disposition specified in such notice from requesting holders,
the number of shares of Restricted Stock specified in such notice (and in
any notices received from other holders of Restricted Stock within thirty
(30) days after their receipt of notice from the Company); provided,
however, that the number of shares of Restricted Stock to be included in
such an underwriting may be reduced pro rata among the requesting holders
of Restricted Stock if and to the extent that the managing underwriter, if
the proposed method of disposition specified by the requesting holders
shall be an underwritten public offering, shall be of the opinion that such
inclusion would materially adversely affect the marketing of the Restricted
Stock. If such method of disposition shall be an underwritten public
offering, the Company shall designate the managing underwriter of such
offering, subject to the approval of the selling holders of a majority of
the Restricted Stock covered by the offering, which approval shall not be
unreasonably withheld. Subject to paragraph (c) below, the Company shall be
obligated to use its reasonable best efforts to cause the registration
statement filed pursuant to this Section 2 to become effective not later
than 90 (ninety) days after receipt of notice pursuant to Section 2. The
Company shall be obligated to register Restricted Stock pursuant to this
Section 2 on two (2) occasions only; provided that such obligation shall be
deemed satisfied only when a registration statement covering all shares of
Restricted Stock specified in notices received as aforesaid, for sale in
accordance with the method of disposition specified by the requesting
holders, shall have become effective and, if such method of disposition is
a firm commitment underwritten public offering, all such shares shall have
been sold pursuant thereto; provided, however, that a registration
statement shall not constitute a registration request pursuant to this
Section 2 if (x) after such registration statement has become effective,
such registration or the related offer, sale or distribution of Restricted
Stock thereunder 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 attributable to the holders of such Restricted
Stock and such interference is not thereafter eliminated or (y) the
conditions specified in the underwriting agreement, if any, entered into in
connection with such registration statement are not satisfied or waived,
other than by reason of a failure by any holder of such Restricted Stock.
(c) Notwithstanding anything to the contrary in this
Agreement, the Company may delay for up to ninety (90) days the filing or
effectiveness of a registration statement pursuant to a request under this
Section 2 if the Board of Directors of the Company shall determine that
such a registration would not be in the best interests of the Company at
such time, during which period the requesting holders may withdraw their
request (provided that, if not so withdrawn, the Company will not have
breached its obligations under this Section 2 during such delay period), in
which case the requesting holders will not be deemed to have made a request
for registration under this Section 2.
(d) The Company shall be entitled to include in any
registration statement referred to in this Section 2, for sale in
accordance with the method of disposition specified by the requesting
holders, shares of Common Stock to be sold by the Company for its own
account, except as and to the extent that, in the opinion of the managing
underwriter (if such method of disposition shall be an underwritten public
offering), such inclusion would adversely affect the marketing of the
Restricted Stock (if any) to be sold.
3. Form S-3 Registration.
If at any time (i) the Company shall receive from the holders
of at least 50% of the Restricted Stock a written request or requests that
the Company effect a registration of all or any portion of the shares of
Restricted Stock on Form S- 3 or any successor thereto, and (ii) the
Company is a registrant entitled to use Form S-3 or any successor thereto
to register such shares, the Company will:
(i) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all
other holders of any shares of Restricted Stock; and
(ii) as soon as practicable, effect such registration
(including, without limitation, the execution of an undertaking to
file post- effective amendments, appropriate qualifications under
applicable blue sky or other state securities laws and appropriate
compliance with applicable regulations issued under the Securities
Act and any other government requirements or regulations) as may be
so requested and as would permit or facilitate the sale and
distribution of all or such portion of such holder's or holders'
Restricted Stock as are specified in such request, together with all
or such portion of the Restricted Stock of any holder or holders of
Restricted Stock joining in such request as are specified in a
written request given within thirty (30) days after receipt of such
written notice from the Company; provided that the Company shall not
be obligated to effect any such registration, qualification or
compliance pursuant to this Section 3 more than once in any 180-day
period and provided further that the Company shall not be obligated
to effect any such registration unless the proceeds to be realized in
connection with such registration shall not reasonably be expected to
be less than $1,000,000. Subject to the foregoing, the Company shall
file a registration statement covering the Restricted Stock so
requested to be registered as soon as practicable after receipt of
the request or requests of the holder or holders of Restricted Stock
to do so.
Notwithstanding anything to the contrary in this Agreement, (i) the Company
may delay for up to ninety (90) days the effectiveness of, and (ii) the
Company may suspend for up to thirty (30) days, not more than once during
the term of this Agreement, the effectiveness of, a registration statement
pursuant to a request under this Section 3 if the Board of Directors of the
Company shall determine such registration (or, in the case of a suspension
of a registration, sales under such registration statement) would not be in
the best interests of the Company at such time, during which period the
requesting holders may withdraw their request, in which case the requesting
holders will not be deemed to have made a request for registration under
this Section 3.
(a) Commencing one year after the Company becomes subject
to the requirements of Section 12 or 15(d) of the Securities Exchange Act
of 1934, as amended, the Company shall use its reasonable best efforts to
satisfy the registrant requirements applicable for use of registration
statements on Form S-3 (or any successor form thereto) for the resale of
securities by selling stockholders.
(b) Registrations effected pursuant to this Section 3
shall not be counted as requests for registration effected pursuant to
Section 2.
4. Incidental Registration. If the Company at any time (other
than pursuant to Section 2 or 3 hereof) proposes to register any of its
Common Stock under the Securities Act for sale for cash only to the public,
whether for its own account or for the account of other security holders or
both (except with respect to registration statements on Forms S-4 or S-8 or
another form not available for registering the Restricted Stock for sale to
the public, a registration statement on Form S-3 to be filed by the Company
to register shares of Common Stock issued in consideration for an
acquisition, or a registration statement on Form S-1 covering solely an
employee benefit plan), it will give written notice at such time to all
holders of outstanding Restricted Stock of its intention to do so. Upon the
written request of any such holder, given within thirty (30) days after
receipt of any such notice by the Company, to register any of its
Restricted Stock (which request shall state the intended method of
disposition thereof), the Company will use its reasonable best efforts to
cause the Restricted Stock as to which registration shall have been so
requested, to be included in the securities to be covered by the
registration statement proposed to be filed by the Company, all to the
extent requisite to permit the sale or other disposition by the holder (in
accordance with its written request) of such Restricted Stock so
registered; provided that nothing herein shall prevent the Company from
abandoning or delaying any such registration at any time. In the event that
any registration pursuant to this Section 4 shall be, in whole or in part,
an underwritten public offering of Common Stock, the Company shall not be
required to include any Restricted Stock in such underwritten offering
unless the holder shall agree to the terms and conditions of the
underwritten offering as agreed by the Company and the underwriters. The
number of shares of Restricted Stock to be included in such an underwriting
may be reduced pro rata among the requesting holders of Restricted Stock,
if and to the extent that the managing underwriter shall be of the opinion
that such inclusion would adversely affect the marketing of the securities
to be sold by the Company therein. In such event, the Company shall be
required to include in such registration, to the extent of the amount that
the managing underwriter believes may be sold without causing such adverse
effect, first, all of the securities to be offered for the account of the
Company; second, the Restricted Stock to be offered for the account of the
holders pursuant to this Section 4, pro rata based on the number of shares
of Restricted Stock owned by each such holder; and third, any other
securities requested to be included in such underwritten offering.
5. Registration Procedures. If and whenever the Company is
required by the provisions of Section 2, 3 or 4 hereof to use its
reasonable best efforts or best efforts, as the case may be, to effect the
registration of any of the Restricted Stock under the Securities Act, the
Company will, as expeditiously as possible:
(a) prepare (and afford counsel for the selling holders up to
10 business days' opportunity to review and comment thereon) and file with
the Commission a registration statement (which, in the case of an
underwritten public offering pursuant to Section 2 hereof, shall be on Form
S-1 or other form of general applicability satisfactory to the managing
underwriter selected as therein provided) with respect to such securities
and use its reasonable best efforts or best efforts, as the case may be, to
cause such registration statement to become and remain effective for the
period of the distribution contemplated thereby (determined as hereinafter
provided);
(b) prepare (and afford counsel for the selling holders
up to 10 business days' opportunity to review and comment thereon) 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 for the period
specified in paragraph (a) above and to comply with the provisions of the
Securities Act with respect to the disposition of all Restricted Stock
covered by such registration statement in accordance with the sellers'
intended method of disposition set forth in such registration statement for
such period;
(c) furnish to each seller and to each underwriter such
number of copies of the registration statement and the prospectus included
therein (including each preliminary prospectus) as such persons may
reasonably request in order to facilitate the Public Sale or other
disposition of the Restricted Stock covered by such registration statement;
(d) use its reasonable best efforts or best efforts, as
the case may be, to register or qualify the Restricted Stock covered by
such registration statement under the securities or blue sky laws of such
jurisdictions as the sellers of Restricted Stock or, in the case of an
underwritten public offering, the managing underwriter, shall reasonably
request and do any and all other acts and things which may be reasonably
necessary or advisable to enable any such seller to consummate the
disposition in such jurisdictions of the Restricted Stock owned by such
seller (provided that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise
be required to qualify but for this paragraph (d), (ii) subject itself to
taxation in any such jurisdiction or (iii) consent to general service of
process in any jurisdiction);
(e) use its reasonable best efforts to list the
Restricted Stock covered by such registration statement with any securities
exchange on which any Common Stock of the Company is then listed;
(f) immediately notify each seller under such
registration statement and each underwriter, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of
the happening of any event as a result of which the prospectus contained 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 then existing;
(g) use its reasonable best efforts or best efforts, as
the case may be (if the offering is underwritten and at the request of any
seller of Restricted Stock), to furnish, at the request of any seller, on
the date that Restricted Stock is delivered to the underwriters for sale
pursuant to such registration: (i) an opinion dated such date of counsel
representing the Company, for the purposes of such registration, addressed
to the underwriters and either addressed to such seller or specifically
entitling such seller to rely thereupon, stating that such registration
statement has become effective under the Securities Act and that (A) to the
best knowledge of such counsel, no stop order suspending the effectiveness
thereof has been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the Securities Act, (B) the
registration statement, the related prospectus, and each amendment or
supplement thereof, comply as to form in all material respects with the
requirements of the Securities Act and the applicable rules and regulations
of the Commission thereunder (except that such counsel need express no
opinion as to financial statements, the notes thereto, and the financial
schedules and other financial and statistical data contained therein) and
(C) to such other effects as may reasonably be requested by counsel for the
underwriters or by such seller or its counsel; and (ii) a letter dated such
date from the independent public accountants retained by the Company,
addressed to the underwriters and to such seller, stating that they are
independent public accountants within the meaning of the Securities Act and
that, in the opinion of such accountants, the financial statements of the
Company included in the registration statement or the prospectus, or any
amendment or supplement thereof, comply as to form in all material respects
with the applicable accounting requirements of the Securities Act, and such
letter shall additionally cover such other financial matters (including
information as to the period ending no more than five (5) business days
prior to the date of such letter) with respect to the registration in
respect of which such letter is being given as such underwriters or seller
may reasonably request; and
(h) make available for inspection by each seller, any
underwriter participating in any distribution pursuant to such registration
statement, and any attorney, accountant or other agent retained by such
seller 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 seller, underwriter, attorney, accountant or agent in connection
with such registration statement.
(i) cooperate with each seller of Restricted Stock and
each underwriter participating in the disposition of such Restricted Stock
and their respective counsel in connection with any filings required to be
made with the National Association of Securities Dealers, Inc. (the
"NASD"); and
(j) immediately notify each seller of Restricted Stock of
any stop order issued or threatened by the Commission.
For purposes of paragraphs (a) and (b) above and of Section 2(d) hereof,
the period of distribution of Restricted Stock in a firm commitment
underwritten public offering shall be deemed to extend until each
underwriter has completed the distribution of all securities purchased by
it, and the period of distribution of Restricted Stock in any other
registration shall be deemed to extend until the earlier of the sale of all
Restricted Stock covered thereby or six (6) months after the effective date
thereof.
In connection with each registration hereunder, as a condition
to the right to sell under any registration statement (a) the selling
holders of Restricted Stock will furnish to the Company in writing such
information with respect to themselves and the proposed distribution by
them as shall be reasonably necessary in order to assure compliance with
federal and applicable state securities laws; (b) any such selling holder
of Restricted Stock will enter into a written agreement with the
underwriters and the Company in such form and containing such provisions as
are customary in the securities business for such an arrangement between
major underwriters and companies of the Company's size and investment
stature, and such selling holder of Restricted Stock will use its
reasonable best efforts to cause its counsel to give any opinion
customarily given, in connection with secondary distributions under similar
circumstances; (c) during such time as any such selling holder of
Restricted Stock may be engaged in a distribution of such stock, such
selling holder of Restricted Stock will comply with all applicable laws
and, to the extent required by such laws, will, among other things (i) not
engage in any stabilization activity in connection with the securities of
the Company in contravention of such rules, (ii) distribute the Restricted
Stock owned by such selling holder of Restricted Stock solely in the manner
described in applicable registration statement or as otherwise permitted by
law, (iii) cause to be furnished to each agent or broker-dealer to or
through whom the Restricted Stock owned by such selling holder of
Restricted Stock may be offered, or to the offeree if an offer is made
directly by such holder, such copies of the applicable prospectus (as
amended and supplemented to such date) and the documents incorporated by
reference therein as may be required by such agent, broker-dealer or
offeree, provided that the Company shall have provided such selling holder
of Restricted Stock with an adequate number of copies thereof and (iv) not
bid for or purchase any securities of the Company or attempt to induce any
person to purchase any securities of the Company; and (d) on notice from
the Company of the happening of any event specified in paragraph (f) of
Section 5 hereof or the suspension of effectiveness of the registration
statement under Section 3, then such selling holder will cease offering or
distributing the Restricted Stock until the Company notifies such selling
holder that the offering and distribution of the Restricted Stock may
recommence.
In connection with each registration pursuant to Sections 2, 3
and 4 hereof covering an underwritten public offering, the Company agrees
to enter into a written agreement with the managing underwriter selected in
the manner herein provided in such form and containing such provisions as
are customary in the securities business for such an arrangement between
major underwriters and companies of the Company's size and investment
stature; provided, however, that such agreement shall not contain any such
provision applicable to the Company which is inconsistent with the
provisions hereof; and provided, further, that the time and place of the
closing under said agreement shall be as mutually agreed upon between the
Company and such managing underwriter.
6. Expenses. All expenses incurred by the Company in complying
with Sections 2, 3 or 4 hereof, including without limitation all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees of the
NASD, transfer taxes, fees of transfer agents and registrars, costs of
insurance and reasonable fees and expenses of not more than one counsel for
the Initial Shareholders (not more than $50,000 in fees for such counsel),
but excluding any Selling Expenses, are herein called "Registration
Expenses." All underwriting discounts and selling commissions applicable to
the sale of Restricted Stock are herein called "Selling Expenses."
The Company will pay all Registration Expenses in connection
with each registration statement filed pursuant to Sections 2, 3 and 4
hereof. All Selling Expenses in connection with any registration statement
filed pursuant to Section 2, 3 or 4 hereof shall be borne by the
participating sellers in proportion to the number of shares sold by each,
or by such persons other than the Company (except to the extent the Company
shall be a seller) as they may agree.
7. Indemnification.
(a) In the event of a registration of any of the Restricted
Stock under the Securities Act pursuant to Section 2, 3 or 4 hereof, the
Company will indemnify and hold harmless each seller of such Restricted
Stock thereunder and each underwriter of Restricted Stock thereunder and
each officer, director and each other person, if any, who controls such
seller or underwriter within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which such
seller or underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions 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 Restricted Stock
was registered under the Securities Act pursuant to Section 2, 3 or 4, any
preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon 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, and will reimburse each such seller, each such underwriter and
each such controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that (i) the
indemnity in this Section 7 shall not apply to any amounts paid in
settlement of any such loss, claim, damage or liability if settlement is
affected without the consent of the Company, and (ii) the Company will not
be liable in any such case if and to 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 so made in
conformity with information furnished by such seller, such underwriter or
such controlling person in writing specifically for use in such
registration statement or prospectus.
(b) In the event of a registration of any of the Restricted
Stock under the Securities Act pursuant to Section 2, 3 or 4 hereof, to the
extent permitted by law each seller of such Restricted Stock thereunder,
severally and not jointly, will indemnify and hold harmless the Company and
each officer, director and each other person, if any, who controls the
Company within the meaning of the Securities Act, each officer of the
Company who signs the registration statement, each director of the Company,
each underwriter and each person who controls any underwriter within the
meaning of the Securities Act, against all losses, claims, damages or
liabilities, joint or several, to which the Company or such officer or
director or underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the registration statement under which such Restricted Stock
was registered under the Securities Act pursuant to Section 2, 3 or 4, any
preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon 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, and will reimburse the Company and each such officer, director,
underwriter and controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that
such seller will be liable hereunder in any such case if and only to 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 reliance upon and in conformity with information
pertaining to such seller, as such, furnished in writing to the Company by
such seller specifically for use in such registration statement or
prospectus; and provided, further, that the liability of each seller
hereunder shall be limited to the proportion of any such loss, claim,
damage, liability or expense which is equal to the proportion that the
public offering price of shares sold by such seller under such registration
statement bears to the total public offering price of all securities sold
thereunder, but not to exceed the proceeds (net of underwriting discounts
and commissions) received by such seller from the sale of Restricted Stock
covered by such registration statement.
(c) Promptly after receipt by an indemnified party
hereunder of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notify the indemnifying party in writing
thereof, but the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to any indemnified party
other than under this Section 7. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of
the commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake
the defense thereof with counsel reasonably satisfactory to such
indemnified party, and, after notice from the indemnifying party to such
indemnified party of its election so to assume and undertake the defense
thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 7 for any legal expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation and of liaison with counsel so selected;
provided, however, that, if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there are reasonable defenses
available to it which are different from or additional to those available
to the indemnifying party, or if the interests of the indemnified party
reasonably are in conflict with the interests of the indemnifying party,
the indemnified party shall have the right to select a separate counsel and
to assume such legal defenses and otherwise to participate in the defense
of such action, with the reasonable expenses and fees of such separate
counsel and other expenses related to such participation to be reimbursed
by the indemnifying party as incurred. No settlement of any such claim,
loss, damage, liability or action shall be made by the indemnified party
without the prior written consent (not to be unreasonably withheld or
delayed) of the indemnifying party.
Notwithstanding the foregoing, any indemnified party shall have
the right to retain its own counsel in any such action, but the fees and
disbursements of such counsel shall be at the expense of such indemnified
party unless (i) the indemnifying party shall have failed to retain counsel
for the indemnified person as aforesaid or (ii) the indemnifying party and
such indemnified party shall have mutually agreed to the retention of such
counsel. It is understood that the indemnifying party shall not, in
connection with any action or related actions in the same jurisdiction, be
liable for the fees and disbursements of more than one separate firm
qualified in such jurisdiction to act as counsel for the indemnified party.
The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss
or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in paragraphs (a) and
(b) of this Section 7 is unavailable or insufficient to hold harmless an
indemnified party under such paragraphs in respect of any losses, claims,
damages or liabilities or actions in respect thereof referred to therein,
then each indemnifying party shall in lieu of indemnifying such indemnified
party contribute to the amount paid or payable by such indemnified party as
a result of such losses, claims, damages, liabilities or actions in such
proportion as appropriate to reflect the relative fault of the Company, on
the one hand, and the sellers of such Restricted Stock, on the other, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or actions as well as any other relevant
equitable considerations, including the failure to give any notice under
paragraph (c) of this Section 7. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact relates to information supplied by the
Company, on the one hand, or the sellers of such Restricted Stock, on the
other hand, and to the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company and the sellers of Restricted Stock agree that it
would not be just and equitable if contributions pursuant to this paragraph
were determined by pro rata allocation (even if all of the sellers of such
Restricted Stock were treated as one entity for such purpose) or by any
other method of allocation which did not take account of the equitable
considerations referred to above in this paragraph. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities or action in respect thereof, referred to above in this
paragraph, shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this paragraph, the sellers of such Restricted Stock shall
not be required to contribute any amount in excess of the amount, if any,
by which the total price at which the Common Stock sold by each of them was
offered to the public exceeds the amount of any damages which they would
have otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission. No person guilty of fraudulent
misrepresentations (within the meaning of Section 11(f) of the Securities
Act), shall be entitled to contribution from any person who is not guilty
of such fraudulent misrepresentation.
The indemnification of underwriters provided for in this
Section 7 shall be on such other terms and conditions as are at the time
customary and reasonably required by such underwriters. In that event the
indemnification of the sellers of Restricted Stock in such underwriting
shall at the sellers' request be modified to conform to such terms and
conditions.
8. Changes in Restricted Stock. If, and as often as, there are
any changes in the Common Stock by way of stock split, stock dividend,
combination or reclassification, or through merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof, as may be required, so
that the rights and privileges granted hereby shall continue with respect
to the Common Stock as so changed and shall apply to any securities
received in any such transaction.
9. Rule 144 Reporting. The Company agrees with you as
follows:
(a) From and after such time as the Company becomes
subject to the reporting requirements of the Exchange Act, the Company
shall make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times
from and after the date it is first required to do so.
(b) The Company shall file with the Commission in a
timely manner all reports and other documents as the Commission may
prescribe under Section 13(a) or 15(d) of the Exchange Act at any time
after the Company has become subject to such reporting requirements of the
Exchange Act.
(c) The Company shall furnish to such holder of
Restricted Stock forthwith upon request (i) a written statement by the
Company as to its compliance with the reporting requirements of Rule 144
(at any time from and after the date it first becomes subject to such
reporting requirements), and of the Securities Act and the Exchange Act (at
any time after it has become subject to such reporting requirements), (ii)
a copy of the most recent annual or quarterly report of the Company, and
(iii) such other reports and documents so filed as a holder may reasonably
request to avail itself of any rule or regulation of the Commission
allowing a holder of Restricted Stock to sell any such securities without
registration.
10. Holdback Agreement. If and to the extent requested by the
Company, the Initial Shareholders agree (i) not to effect any public sale
or distribution of any Restricted Stock or of any securities convertible
into or exchangeable or exercisable for such Restricted Stock, including a
sale pursuant to Rule 144, and (ii) not to make any request for a
registration under Sections 2 or 3 of this Agreement, during the 120-day
period or such shorter period agreed upon by such holder beginning thirty
days prior to the anticipated effective date of a registration statement
filed by the Company (except as part of such registration filed by the
Company).
11. Effectiveness. This agreement shall become effective upon
consummation of the IPO; provided, however, that if the IPO has not
occurred on or prior to July 31, 1999, this agreement shall not become
effective and shall be void.
12. Miscellaneous.
(a) All covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto, including, without
limitation, the rights to indemnification under Section 7 hereof, shall
bind and inure to the benefit of the respective successors and permitted
assigns of the parties hereto whether so expressed or not. Without limiting
the generality of the foregoing, the registration rights conferred herein
on the holders of Restricted Stock shall inure to the benefit of any and
all subsequent holders from time to time of the Restricted Stock.
(b) All notices, requests, consents and other
communications hereunder shall be in writing and shall be mailed by first
class registered mail, postage prepaid, addressed as follows:
if to the Company, to it at 000 X. Xxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000, attention: Chief Financial Officer, facsimile number (312)
494-0273, with a copy to Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois),
000 X. Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, attention: Xxxx Xxxxxxxxx,
Esq., facsimile number (000) 000-0000;
if to any holder of Restricted Stock, to him, her or it, as the
case may be, at its address as set forth on Annex I hereto or any
subsequent address provided by such holder to the Company and the other
Initial Shareholders;
or, in any case, at such other address or addresses as shall
have been furnished in writing to the Company (in the case of a holder of
Restricted Stock), or to the holders of Restricted Stock (in the case of
the Company).
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
(d) This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof. This Agreement may
not be waived, modified or amended, nor may the Company grant any third
party any registration rights more favorable than or inconsistent with any
of those contained herein as long as any of the registration rights under
this Agreement remains in effect, except in writing executed by the
Company, the holders of a majority of the Initial Shareholders' Shares;
provided, however, that any such amendment, modification or waiver shall
affect all of the holders of Initial Shareholders' Shares in the same
manner and that no such amendment, modification or waiver that would
adversely affect the rights or alter the obligations of any holder of
Initial Shareholders' Shares hereunder or confer on any holder of Initial
Shareholders' Shares any benefit not shared ratably by all of the other
holders of Initial Shareholders' Shares will be effective without the prior
written approval of any such adversely affected holder of Initial
Shareholders' Shares.
(e) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(f) If any provision of this Agreement shall be held to
be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any
manner affect or render illegal, invalid or unenforceable any other
provision of this Agreement, and this Agreement shall be carried out as if
any such illegal, invalid or unenforceable provision were not contained
herein.
Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this letter, whereupon this letter
(herein sometimes called "this Agreement") shall be a binding agreement
between the Company and you.
Very truly yours,
PRISM FINANCIAL CORPORATION
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Name:
Title:
/s/ Xxxxx X. Xxxxxx
--------------------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxx
--------------------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxx X. Filler
--------------------------------------------
Xxxx X. Filler
/s/ Xxxx Xxxxx Xxxxxxx
--------------------------------------------
Xxxx Xxxxx Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxx X. Xxxxxxx
--------------------------------------------
Xxxxx X. Xxxxxxx
/s/ Xxxxxx Xxxxxxx
--------------------------------------------
Xxxxxx Xxxxxxx
CTC TRUST
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxxx, Co-Trustee
By: /s/ Xxxxxxxx X. Xxxxxxxxx
-----------------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
Title: Co-Trustee
DONROSE TRUST
By: /s/ Xxxxxxxx X. Xxxxxxxx
----------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Trustee
JBR TRUST #4
By: /s/ Xxxxxxxx X. Xxxxxxxxx
---------------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
Title: Trustee
T&M CHILDREN'S TRUST
By: /s/ Xxxxx Xxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxx
Title: Trustee
GEM VALUE/PRISM, LLC
By: GEM Value Fund, L.P.
By: GEM Value Partners, LLC
By: /s/ Xxxxx Xxxxxx
--------------------------------------
Name: Xxxxx Xxxxxx
Title: President
XXXXXX CAPITAL TRUST
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Solely in his capacity as Trustee
