Exhibit 10.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of February 3, 2005, by and among FRANKLIN CAPITAL CORPORATION,
a Delaware corporation ("Franklin"), Xxxxx Xxxxxxx ("Xxxxxxx") and Xx. Xxxxxxx
Xxxxxxx ("Xx. Xxxxxxx" and, together with Xxxxxxx, the "Shareholders").
Capitalized terms used and not otherwise defined in this Agreement shall have
the meanings given to them in the Merger Agreement (as defined below).
RECITALS
WHEREAS, simultaneously with the execution and delivery of this
Agreement, Franklin, SurgiCount Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of Franklin, SurgiCount Medical, Inc., a California
corporation, and the Shareholders are entering into that certain Agreement and
Plan of Merger and Reorganization (the "Merger Agreement"), dated as of even
date herewith;
WHEREAS, pursuant to Section 1.4(b) of the Merger Agreement, in
connection with the acquisition of Surgicount by Xxxxxxxx, Xxxxxxxx has agreed
to issue certain shares of Franklin Common Stock (the "Closing Stock
Consideration Shares") to the Shareholders;
WHEREAS, pursuant to Sections 1.4(c) and 5.5 of the Merger Agreement,
contingent upon the occurrence of certain events as provided for in Section 5.5,
Franklin has agreed to issue the Earn-Out Shares to the Shareholders; and
WHEREAS, in connection with the transactions contemplated by the Merger
Agreement, Franklin has further agreed to register the resale of certain of the
Closing Stock Consideration Shares and the Earn-Out Shares in accordance with
the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants, agreements and representations and warranties set forth herein, the
parties to this Agreement, intending to be legally bound, hereby agree as
follows:
AGREEMENT
1. DEFINITIONS. As used in this Agreement, the following terms shall have the
following respective meanings:
1.1 "Earn-Out Registrable Securities" shall mean any Earn-Out Shares
issued pursuant to Section 5.5 of the Merger Agreement; provided, however, that,
as to any particular Earn-Out Shares, such Earn-Out Shares will cease to be
Earn-Out Registrable Securities when they: (i) have been sold pursuant to a
Registration Statement or in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act; or (ii) can then be sold
by the Holder without registration under the Securities Act pursuant to Rule 144
under the Securities Act.
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1.2 "Majority Holders" shall mean, as of any given date, the Holders
holding a majority of the then-outstanding Closing Stock Consideration
Registrable Securities and Earn-Out Registrable Securities.
1.3 "Pro Rata Percentage" shall mean, with respect to any Holder on any
given date, the quotient (rounded to the nearest whole percent) of (i) the
number of Closing Stock Consideration Registrable Securities and Earn-Out
Registrable Securities held by such Holder as of such date, divided by (ii) the
aggregate number of Closing Stock Consideration Registrable Securities and
Earn-Out Registrable Securities outstanding as of such date.
1.4 "Register", "registered" and "registration" shall refer to a
registration of the offering and sale or resale of Closing Stock Consideration
Registrable Securities and/or Earn-Out Registrable Securities effected by
preparing and filing a registration statement in compliance with the Securities
Act and the declaration or ordering of the effectiveness of such registration
statement.
1.5 "Registration Statement" shall mean a registration statement
(including, without limitation, the related prospectus contained in such
registration statement) of Franklin under the Securities Act on Form S-3 (or any
successor form thereto) or, in the event that Franklin is not then eligible to
use Form S-3, on any other form selected by Franklin for which it then qualifies
and which permits the sale thereunder of the number and type of Closing Stock
Consideration Registrable Securities and/or Earn-Out Registrable Securities to
be included therein in accordance with this Agreement by the applicable Holders
in the manner described therein. The term "Registration Statement" shall also
include all exhibits, financial statements, schedules and documents incorporated
by reference in such Registration Statement when it becomes effective under the
Securities Act, and in the case of the references to the Registration Statement
as of a date subsequent to its effective date, all amendments or supplements to
such Registration Statement as of such subsequent date.
1.6 "Rule 144" shall mean Rule 144 promulgated under the Securities Act,
or any successor thereto.
1.7 "Closing Stock Consideration Registrable Securities" shall mean that
number of Closing Stock Consideration Shares (rounded down to the nearest whole
share) equal to the product of (i) the aggregate number of Closing Stock
Consideration Shares issued to the Shareholders pursuant to Section 1.4(c) the
Merger Agreement, multiplied by (ii) 0.90; provided, however, that, as to any
particular Closing Stock Consideration Shares, such Closing Stock Consideration
Shares will cease to be Closing Stock Consideration Registrable Securities when
they: (a) have been sold pursuant to a Registration Statement or in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act; or (b) can then be sold by the Holder without registration
under the Securities Act pursuant to Rule 144 under the Securities Act.
1.8 "Third-Party Demand Stockholder" means any Person having the right
to require that Franklin effect a registration under the Securities Act of
securities owned by such Person, other than pursuant to this Agreement, and any
other Person exercising incidental rights of
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registration pursuant to the agreement under which such first Person has the
right to require registration.
2. TRANSFER OF REGISTRATION RIGHTS. Each Shareholder may assign and delegate its
rights and obligations pursuant to this Agreement to any party or parties to
which it may from time to time transfer all of the Closing Stock Consideration
Registrable Securities and Earn-Out Registrable Securities held by such
Shareholder in accordance with the terms of this Agreement; provided, however,
that upon any such assignment and delegation of such rights and obligations
pursuant to this Agreement in accordance with this Section 2, the Shareholder
assigning and delegating such rights and obligations shall deliver to Franklin:
(i) a notice of such assignment and delegation, which shall include the identity
and address of any assignee and such other information reasonably requested by
Franklin; and (ii) an agreement, in form and substance satisfactory to Franklin
and duly executed by the transferee, to be bound by all of the terms and
conditions of this Agreement (collectively, each Shareholder, and each such
subsequent transferee who so agrees to be bound, who continues to hold Closing
Stock Consideration Registrable Securities and/or Earn-Out Registrable
Securities is referred to as a "Holder").
3. REQUIRED REGISTRATION RIGHTS.
3.1 Required Registration of Closing Stock Consideration Registrable
Securities. As promptly as practicable after the Closing Date, but in no event
later than thirty (30) days after the Closing Date, Franklin agrees to file a
Registration Statement to register the resale of all of the Closing Stock
Consideration Registrable Securities (the "Closing Stock Consideration Required
Registration"). Franklin shall use its reasonable best efforts to cause the SEC
to declare the Registration Statement effective no later than the ninetieth
(90th) day following the date the Registration Statement is filed with the SEC
(the "Registration Deadline"). In the event that the Registration Statement has
not been filed on or prior to the Registration Deadline, then in addition to any
other rights the Holders may have hereunder or under applicable law, for each
thirty (30) day period (each, a "Liquidated Damages Period") following such
Registration Deadline until the date on which the Registration Statement is
first filed or is no longer required to be filed pursuant to this Agreement,
Franklin shall pay to each Holder an amount in cash, as liquidated damages and
not as a penalty, equal to such Holder's Pro Rata Percentage of: (i) on the
final day of each of the first three (3) Liquidated Damages Periods, one percent
(1.0%) of the product of (a) the aggregate number of Closing Stock Consideration
Registrable Securities then held by the Holders, multiplied by (b) the 60-Day
VWAP; and (ii) on the final day of each Liquidated Damages Period following the
third (3rd) Liquidated Damages Period, one and one-half percent (1.5%) of the
product of (a) the aggregate number of Closing Stock Consideration Registrable
Securities then held by the Holders, multiplied by (b) the 60-Day VWAP. Once the
Registration Statement has been declared effective, Franklin shall thereafter
maintain the effectiveness of the Registration Statement until the earlier of:
(i) the date on which all of the Closing Stock Consideration Registrable
Securities held by the Holders have been sold pursuant to the Registration
Statement or Rule 144; or (ii) such time as Franklin reasonably determines,
based on the advice of counsel, that each Holder, acting independently of all
other Holders, will be eligible to sell under Rule 144 all of the Closing Stock
Consideration Registrable Securities then owned by such Holder within the volume
limitations imposed by Rule 144(e) in the three (3) month period immediately
following the termination of the effectiveness of the Registration
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Statement. Notwithstanding the foregoing, Franklin's obligations contained in
this Section 3.1 shall terminate on the second (2nd) anniversary of Closing
Date.
3.2 Required Registration of Earn-Out Registrable Securities. As
promptly as practicable after any issuance to the Shareholders of Earn-Out
Shares pursuant to Sections 1.4 (c) and 5.5 of the Merger Agreement, Franklin
agrees to file a Registration Statement to register the resale of all of the
Earn-Out Registrable Securities resulting from such Earn-Out Shares (the
"Earn-Out Required Registration" and, together with the Closing Stock
Consideration Required Registration, the "Required Registrations") and to use
its reasonable best efforts to cause the SEC to declare such Registration
Statement effective as soon as practicable thereafter. Once such Registration
Statement has been declared effective, Franklin shall thereafter maintain the
effectiveness of the Registration Statement until the earlier of: (i) the date
on which all of the Earn-Out Registrable Securities held by the Holders have
been sold pursuant to the Registration Statement or Rule 144; or (ii) such time
as Franklin reasonably determines, based on the advice of counsel, that each
Holder, acting independently of all other Holders, will be eligible to sell
under Rule 144 all of the Earn-Out Registrable Securities then owned by such
Holder within the volume limitations imposed by Rule 144(e) in the three (3)
month period immediately following the termination of the effectiveness of such
Registration Statement. Notwithstanding the foregoing, Franklin's obligations
contained in this Section 3.2 shall terminate with respect to any Earn-Out
Registrable Securities on the second (2nd) anniversary of date on which the
underlying Earn-Out Shares were first issued to the Shareholders pursuant to
Sections 1.4(c) and 5.5 of the Merger Agreement (the "Issuance Date").
3.3 Required Registration Procedures.
(a) Franklin shall advise the Holders as to the initiation of the
registration process contemplated by Section 3.1 and Section 3.2 and as to the
completion thereof. In addition, subject to Section 3.1 and Section 3.2,
Franklin shall, to the extent applicable to any Registration Statement filed
pursuant thereto:
(i) prepare and file with the SEC such amendments and
supplements to the Registration Statement as may be necessary to keep such
Registration Statement continuously effective and free from any material
misstatement or omission of facts necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading and comply
with provisions of the Securities Act with respect to the disposition of all
Closing Stock Consideration Registrable Securities and/or Earn-Out Registrable
Securities covered thereby during the periods referred to in Section 3.1 and
Section 3.2;
(ii) notify the Holders promptly when the Registration
Statement is declared effective by the SEC and furnish to each Holder such
number of prospectuses, including preliminary prospectuses, and other documents
incident thereto as the Majority Holders, on behalf of all of the Holders, may
reasonably request from time to time;
(iii) use its commercially reasonable efforts to register
or qualify such Closing Stock Consideration Registrable Securities and/or
Earn-Out Registrable Securities under such other securities or blue sky laws of
such jurisdictions of the United States where an exemption is not available and
as the Majority Holders, on behalf of any Holder or Holders, may
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reasonably request to enable such Holder or Holders to consummate the
disposition in such jurisdiction of such Closing Stock Consideration Registrable
Securities and/or Earn-Out Registrable Securities; provided, however, that in no
event xxxx Xxxxxxxx be required to: (a) qualify generally to do business in any
jurisdiction where it would not otherwise be required to be so qualified; (b)
consent to general service of process in any such jurisdiction; or (c) subject
itself to taxation in any jurisdiction where it is not already subject to
taxation;
(iv) notify the Holders at any time when a prospectus
relating to the Closing Stock Consideration Registrable Securities and/or
Earn-Out Registrable Securities is required to be delivered under the Securities
Act of the happening of a Suspension Event (as defined below) or any other 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, in light of the circumstances in which they were
made, not misleading and, subject to Section 7.2, prepare a supplement or
amendment to such prospectus, so that, as thereafter delivered to purchasers of
such Closing Stock Consideration Registrable Securities and/or Earn-Out
Registrable Securities, such prospectus will not contain any untrue statements
of a material fact or omit to state any fact necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading;
(v) use its commercially reasonable efforts to cause all
such Closing Stock Consideration Registrable Securities and/or Earn-Out
Registrable Securities to be listed on the Exchange;
(vi) with a view to making available to the Holders the
benefits of certain rules and regulations of the SEC that at any time permit the
sale of the Closing Stock Consideration Registrable Securities and/or Earn-Out
Registrable Securities to the public without registration, so long as any
Closing Stock Consideration Registrable Securities and/or Earn-Out Registrable
Securities are outstanding, use its commercially reasonable efforts for a period
of two (2) years following the Closing Date:
(1) to make and keep public information regarding
Franklin available, as those terms are understood and defined in Rule 144(c);
and
(2) to file with the SEC in a timely manner all
reports and other documents required of Franklin under the Exchange Act.
(vii) advise the Holders promptly after receiving notice
or obtaining knowledge of the existence of any stop order by the SEC delaying or
suspending the effectiveness of the Registration Statement or of the initiation
or threat of any proceeding for that purpose, use its commercially reasonable
efforts to obtain the withdrawal of any such order suspending the effectiveness
of the Registration Statement at the earliest possible time, and promptly notify
the Holders of the lifting or withdrawal of any such order.
(b) Notwithstanding anything stated or implied to the contrary in
this Section 3, Franklin shall not be required to consent to, participate or
cooperate in connection with any underwritten offering of the Closing Stock
Consideration Registrable Securities and/or Earn-Out Registrable Securities or
to any specific underwriter participating in any underwritten
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public offering of the Closing Stock Consideration Registrable Securities and/or
Earn-Out Registrable Securities.
(c) Each Holder agrees to deliver a Notice and Questionnaire in
the form attached hereto as Exhibit A (the "Notice and Questionnaire") to
Franklin at least seven (7) Business Days prior to any distribution by such
Holder of Closing Stock Consideration Registrable Securities and/or Earn-Out
Registrable Securities under the Registration Statement. From and after the date
the Registration Statement is declared effective, Franklin shall, as promptly as
practicable after the date a Notice and Questionnaire is delivered by any
Holder, and in any event within the later of seven (7) Business Days after such
date or seven (7) Business Days after the expiration of any Suspension Period
(as defined below) in effect when the Notice and Questionnaire is delivered or
which comes into effect within seven (7) Business Days of such delivery: (i) if
required by applicable law, file with the SEC a post-effective amendment to the
Registration Statement or prepare and, if required by applicable law, file a
supplement to the related prospectus or an amendment or supplement to any
document incorporated therein by reference or file any other required document
so that the Holder delivering such Notice and Questionnaire is named as a
selling stockholder in the Registration Statement and so that such Holder is
permitted to deliver such prospectus to purchasers of the Closing Stock
Consideration Registrable Securities and/or Earn-Out Registrable Securities in
accordance with applicable law and, if Franklin shall file a post-effective
amendment to the Registration Statement, use commercially reasonable efforts to
cause such post-effective amendment to be declared effective under the
Securities Act as promptly as practicable; (ii) provide such Holder copies of
any documents filed pursuant to this Section 3.3(c); and (iii) notify such
Holder as promptly as practicable after the effectiveness under the Securities
Act of any post-effective amendment filed pursuant to this Section 3.3(c);
provided, however, that if such Notice and Questionnaire is delivered during a
Suspension Period, Franklin shall so inform the Holder delivering such Notice
and Questionnaire and shall take the actions set forth in the foregoing clauses
"(i)", "(ii)" and "(iii)" upon expiration of the Suspension Period.
Notwithstanding anything to the contrary contained herein, Franklin shall be
under no obligation to name any Person that is not a Holder as a selling
stockholder in the Registration Statement; provided, however, that any Person
that becomes a Holder pursuant to the provisions of Section 2 (whether or not
such Person was a Holder at the time the Registration Statement was declared
effective) shall be named as a selling stockholder in the Registration Statement
in accordance with the requirements of this Section 3.3(c).
(d) Each Holder agrees that, upon receipt of any notice from
Franklin of the happening of any event of the kind described in Section
3.3(a)(iv) and subject to Section 7.2, such Holder will forthwith discontinue
such Holder's disposition of Closing Stock Consideration Registrable Securities
and/or Earn-Out Registrable Securities pursuant to the Registration Statement
until such Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3.3(a)(iv) and, if so directed by Xxxxxxxx,
xxxx deliver to Franklin at Franklin's expense all copies, other than permanent
file copies, then in such Holder's possession, of the prospectus relating to
such Closing Stock Consideration Registrable Securities and/or Earn-Out
Registrable Securities current at the time of receipt of such notice.
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4. INCIDENTAL REGISTRATION RIGHTS.
4.1 Incidental Registration. Subject to Section 4.2, if at any time
prior to the filing of a Registration Statement in connection with a Required
Registration, Franklin proposes to register under the Securities Act any shares
of the same class as any of the Closing Stock Consideration Registrable
Securities or Earn-Out Registrable Securities (whether in an underwritten public
offering or otherwise and whether or not for the account of Franklin or for any
stockholder of Franklin), in a manner that would permit the registration under
the Securities Act of Closing Stock Consideration Registrable Securities and/or
Earn-Out Registrable Securities for sale to the public, Franklin will give
written notice to each Holder of its intention to do so not later than ten (10)
days prior to the anticipated filing date of the applicable Registration
Statement. Any Holder may elect to participate in such registration on the same
basis as the planned method of distribution contemplated by the proposed
Registration Statement by delivering to Franklin written notice of its election,
in the form of the Notice and Questionnaire, within five (5) days after its
receipt of Franklin's notice pursuant to this Section 4.1. A Holder's election
pursuant to this Section 4.1 must: (i) specify the amount of Closing Stock
Consideration Registrable Securities and/or Earn-Out Registrable Securities
desired to be included in such Registration Statement by such Holder; and (ii)
include any other information that Franklin reasonably requests to be included
in such Registration Statement. Upon its receipt of a Holder's election pursuant
to this Section 4.1, Franklin will, subject to Section 4.3, use its reasonable
best efforts to include in such Registration Statement all Closing Stock
Consideration Registrable Securities and/or Earn-Out Registrable Securities
requested to be included. Any registration of Closing Stock Consideration
Registrable Securities and/or Earn-Out Registrable Securities pursuant to this
Section 4.1 is referred to as an "Incidental Registration", and any Holder whose
Closing Stock Consideration Registrable Securities and/or Earn-Out Registrable
Securities are included at the request of such Holder in an Incidental
Registration pursuant to this Section 4.1 is referred to as a "Selling
Stockholder".
4.2 Exceptions to Incidental Registration Rights. Franklin shall have no
obligation to effect the Incidental Registration of any Closing Stock
Consideration Registrable Securities or Earn-Out Registrable Securities pursuant
to Section 4.1 with respect to any registration: (i) effected pursuant to a
registration statement on Form S-4 (or any other registration statement
registering shares issued in a merger, consolidation, acquisition, or similar
transaction) or Form S-8 or any successor or comparable forms, or a registration
statement filed in connection with an exchange offer or any offering of
securities solely to Franklin's existing stockholders or otherwise pursuant to a
dividend reinvestment plan, stock purchase plan or other employee benefit plan;
or (ii) initiated by one or more Third-Party Demand Stockholders pursuant to one
or more registration rights agreements under which the rights of all such
Third-Party Demand Stockholders are pari passu, if (a) the applicable
registration rights agreement between Franklin and such Third-Party Demand
Stockholders prohibits the inclusion in such registration of securities other
than those offered by such Third-Party Demand Stockholders and Franklin and (b)
no securities other than those offered by such Third-Party Demand Stockholders
are included in such registration.
4.3 Limitation on Inclusion of Closing Stock Consideration Registrable
Securities and/or Earn-Out Registrable Securities; Priorities. If the proposed
method of distribution in connection with an Incidental Registration is an
underwritten public offering and
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the lead managing underwriter thereof determines in good faith that the amount
of securities to be included in such offering would adversely affect such
offering (including, without limitation, via an adverse effect on the price at
which the securities proposed to be registered may be sold), the amount of
securities to be offered may be reduced or limited to the extent necessary to
reduce the total number of securities to be included in such offering to the
amount recommended by the lead managing underwriter as follows:
(a) in connection with an offering initiated by Franklin, if
securities are being offered for the account of other Persons (including any
Holders) such reduction shall be made: (i) first, from the securities intended
to be offered by such other Persons (including any Holders), on a pro rata
basis, based on the number of Closing Stock Consideration Registrable Securities
and/or Earn-Out Registrable Securities and other securities that are requested
to be included in such offering; and (ii) second, from the number of securities
to be offered for the account of Franklin;
(b) in connection with an offering initiated by a Third-Party
Demand Stockholder, such reduction shall be made: (i) first, from securities
held by Persons who are not (a) Holders, (b) Third-Party Demand Stockholders or
(c) other stockholders entitled under any agreement between them and Franklin to
participate pari passu with the Selling Stockholders in such Incidental
Registration, and from securities being offered for the account of Franklin,
allocated between Franklin and such other Persons as Franklin may determine,
subject to any agreements between Franklin and such other Persons; (ii) second,
from the number of Closing Stock Consideration Registrable Securities and/or
Earn-Out Registrable Securities requested to be included in such offering by the
Selling Stockholders and any other stockholders entitled under any agreements
between them and Franklin to participate pari passu with the Selling
Stockholders in such Incidental Registration, on a pro rata basis, based on the
number of Closing Stock Consideration Registrable Securities and/or Earn-Out
Registrable Securities and other securities which are requested to be included
in the registration; and (iii) last, from securities being offered by the
Third-Party Demand Stockholders.
4.4 Withdrawal by Selling Stockholder. Each Selling Stockholder may, no
less than five (5) Business Days before the anticipated effective date of the
applicable Registration Statement for an Incidental Registration, withdraw some
or all of its Closing Stock Consideration Registrable Securities and/or Earn-Out
Registrable Securities from inclusion in the Registration Statement. No such
withdrawal shall relieve any withdrawing Selling Stockholder of its obligation
to pay expenses under Section 5.
4.5 Underwriters; Underwriting Agreement. In connection with any
Incidental Registration involving an underwritten public offering of securities
for the account of Franklin or a Third-Party Demand Stockholder: (i) the
managing and lead underwriters shall be selected by Franklin, unless otherwise
provided in any agreement between Franklin and any Third-Party Demand
Stockholder; and (ii) each Selling Stockholder electing to participate in the
Incidental Registration shall, as a condition to Franklin's obligation under
this Section 4 to include such Selling Stockholder's Closing Stock Consideration
Registrable Securities and/or Earn-Out Registrable Securities in such Incidental
Registration, enter into and perform its obligations under an underwriting
agreement or other similar arrangement in customary form with the managing
underwriter of such offering. Notwithstanding anything stated or implied to the
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contrary in this Section 4, Franklin shall not be required to consent to,
participate or cooperate in connection with any underwritten offering of the
Closing Stock Consideration Registrable Securities and/or Earn-Out Registrable
Securities or to any specific underwriter participating in any underwritten
public offering of the Closing Stock Consideration Registrable Securities and/or
Earn-Out Registrable Securities.
4.6 Incidental Registration Procedures.
(a) Whenever Franklin is obligated to effect the Incidental
Registration of any Closing Stock Consideration Registrable Securities and/or
Earn-Out Registrable Securities pursuant to Section 4.1, Franklin shall, to the
extent applicable to the Registration Statement:
(i) use its reasonable best efforts to cause the
applicable Registration Statement to become effective as promptly as practicable
and to prepare and file with the SEC any amendments and supplements to the
Registration Statement and to the prospectus used in connection therewith as may
be necessary to keep the Registration Statement and such prospectus effective,
current and in compliance with the provisions of the Securities Act during the
periods when Franklin is required, pursuant to the applicable registration
rights agreement between Franklin and Third-Party Demand Stockholders or
otherwise, to keep the Registration Statement effective and current;
(ii) notify the Selling Stockholders promptly when the
Registration Statement is declared effective by the SEC and furnish such number
of prospectuses, including preliminary prospectuses, and other documents
incident thereto as the Selling Stockholders may reasonably request from time to
time;
(iii) use its commercially reasonable efforts to register
or qualify such Closing Stock Consideration Registrable Securities and/or
Earn-Out Registrable Securities under such other securities or blue sky laws of
such jurisdictions of the United States where an exemption is not available and
as the Person or Persons holding a majority of the securities covered by such
Registration Statement may reasonably request to enable such Person or Persons
to consummate the disposition of the Closing Stock Consideration Registrable
Securities and/or Earn-Out Registrable Securities in such jurisdiction;
provided, however, that in no event xxxx Xxxxxxxx be required to: (a) qualify to
do business as a foreign corporation in any jurisdiction where it would not
otherwise be required to be so qualified; (b) consent to general service of
process in any such jurisdiction; or (c) subject itself to taxation in any
jurisdiction where it is not already subject to taxation;
(iv) notify the Selling Stockholders at any time when a
prospectus relating to the Closing Stock Consideration Registrable Securities
and/or Earn-Out Registrable Securities is required to be delivered under the
Securities Act of the happening of a Suspension Event or any other event as a
result of which the prospectus included in the Registration Statement contains
or would contain an untrue statement of a material fact or omits or would omit
any fact necessary to make the statements therein not misleading and, subject to
Section 7.2, prepare a supplement or amendment to such prospectus, so that, as
thereafter delivered to purchasers of such Closing Stock Consideration
Registrable Securities and/or Earn-Out Registrable Securities, such prospectus
will not contain any untrue statements of a material fact
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or omit to state any fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading;
(v) use its commercially reasonable efforts to cause all
such Closing Stock Consideration Registrable Securities and/or Earn-Out
Registrable Securities to be listed on the Exchange;
(vi) advise the Selling Stockholders promptly after
receiving notice or obtaining knowledge of the existence of any stop order by
the SEC delaying or suspending the effectiveness of the Registration Statement
or of the initiation or threat of any proceeding for that purpose, use its
commercially reasonable efforts to obtain the withdrawal of any order suspending
the effectiveness of the Registration Statement at the earliest possible time,
and promptly notify the Selling Stockholders of the lifting or withdrawal of any
such order.
(b) Each Selling Stockholder agrees that, upon receipt of any
notice from Franklin of the happening of any event of the kind described in
Section 4.6(a)(iv), such Selling Stockholder will forthwith discontinue such
Selling Stockholder's disposition of Closing Stock Consideration Registrable
Securities and/or Earn-Out Registrable Securities pursuant to the Registration
Statement until such Selling Stockholder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 4.6(a)(iv) and, if so
directed by Xxxxxxxx, xxxx deliver to Franklin at Franklin's expense all copies,
other than permanent file copies, then in such Selling Stockholder's possession,
of the prospectus relating to such Closing Stock Consideration Registrable
Securities and/or Earn-Out Registrable Securities current at the time of receipt
of such notice.
5. EXPENSES. Except as required by law, all expenses incurred by Franklin in
complying with its obligations to effect any Required Registration and any
Incidental Registration pursuant to this Agreement, including, without
limitation, all: (i) registration, application, qualification, filing, listing,
transfer and registrar fees; (ii) printing expenses; (iii) fees and
disbursements of counsel and accountants for Franklin; and (iv) blue sky fees
and expenses (including, without limitation, fees and disbursements of counsel
related to all blue sky matters) incurred in connection with any registration,
qualification or compliance pursuant to Sections 3 and 4 shall be borne by
Franklin. All underwriting or brokerage discounts and selling commissions
applicable to a sale incurred in connection with any registration of Closing
Stock Consideration Registrable Securities and/or Earn-Out Registrable
Securities and the legal fees and other expenses of a Holder or Selling
Stockholder shall be borne by such Holder or Selling Stockholder.
6. FURTHER INFORMATION. Each Holder, in the case of a Required Registration, and
each Selling Stockholder, in the case of an Incidental Registration, shall
cooperate with Franklin in connection with the preparation of the Registration
Statement, and for so long as Franklin is obligated to keep the Registration
Statement effective, such Holder or Selling Stockholder shall provide to
Franklin, in writing, for use in the Registration Statement, all information
regarding such Holder or Selling Stockholder, its intended method of disposition
of the applicable Closing Stock Consideration Registrable Securities and/or
Earn-Out Registrable Securities and such other information as Franklin may
reasonably request to prepare the Registration Statement and to
10
maintain the currency and effectiveness thereof. Each Holder and each Selling
Stockholder shall indemnify Franklin with respect to such information in
accordance with Section 8.
7. DELAY, WITHDRAWAL OR SUSPENSION OF REGISTRATION.
7.1 Delay or Withdrawal of Registration. Franklin may, without the
consent of any Holder or Selling Stockholder, delay, suspend, abandon, or
withdraw any proposed registration in which any Holder or Selling Stockholder
has requested inclusion of such Holder's or Selling Stockholder's Closing Stock
Consideration Registrable Securities and/or Earn-Out Registrable Securities
pursuant to this Agreement.
7.2 Right of Suspension.
(a) Notwithstanding any other provision of this Agreement to the
contrary, Franklin shall have the right, exercisable at any time subject to the
limitations set forth in Section 7.2(b), to suspend the availability of the
Registration Statement and offers and sales of the Closing Stock Consideration
Registrable Securities and/or Earn-Out Registrable Securities pursuant thereto
whenever, in the good-faith judgment of the management of Franklin: (i)
continuing such availability or permitting such offers and sales could
reasonably be expected to have an adverse effect upon a pending or proposed
significant corporate event, or negotiations, discussions or pending proposals
with respect thereto; (ii) there exists a material development or a potential
material development with respect to or involving Franklin that Franklin would
be obligated to disclose in the prospectus used in connection with the
Registration Statement, which disclosure, in the good-faith judgment of
Franklin, after consultation with counsel, would be premature or otherwise
inadvisable at such time; or (iii) the Registration Statement contains an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances, not misleading (each of the events described in the foregoing
clauses "(i)", "(ii)" and "(iii)" being referred to herein as a "Suspension
Event"). In the event that a Suspension Event shall occur and Franklin shall
determine to suspend the availability of the Registration Statement and offers
and sales of the Closing Stock Consideration Registrable Securities and/or
Earn-Out Registrable Securities pursuant thereto, Franklin shall, in addition to
performing those acts required to be performed under the Securities Act and/or
the Exchange Act, or otherwise deemed advisable by Franklin, deliver to the
Holders and/or Selling Stockholders, as applicable, written notice thereof,
signed by an officer of Franklin. Upon receipt of such notice, such Holders
and/or Selling Stockholders shall discontinue disposition of the Closing Stock
Consideration Registrable Securities and/or Earn-Out Registrable Securities
pursuant to the Registration Statement until such Holders and/or Selling
Stockholders: (i) are advised in writing by Franklin that the use of the
Registration Statement and offers of the Closing Stock Consideration Registrable
Securities and/or Earn-Out Registrable Securities pursuant thereto may be
resumed; (ii) have received copies of a supplemental or amended prospectus, if
applicable; and (iii) have received copies of any additional or supplemental
filings which are incorporated or deemed to be incorporated by reference into
such prospectus. Franklin will exercise reasonable commercial efforts to ensure
that the use of the Registration Statement and prospectus may be resumed as
quickly as practicable.
11
(b) Franklin's right to suspend the effectiveness of the
Registration Statement and the offers and sales of the Closing Stock
Consideration Registrable Securities and/or Earn-Out Registrable Securities
pursuant thereto, as described in Section 7.2(a), shall be for a period of time
(the "Suspension Period") beginning on the date of the occurrence of the
Suspension Event and expiring on the earlier to occur of: (i) the date on which
the Suspension Event ceases; or (ii) forty-five (45) days after the date of the
occurrence of the Suspension Event; provided, however, that there shall not be
more than two (2) Suspension Periods in any twelve (12) month period.
8. INDEMNIFICATION.
8.1 Indemnification by Franklin. Franklin shall indemnify and hold
harmless each Holder and Selling Stockholder of Closing Stock Consideration
Registrable Securities and/or Earn-Out Registrable Securities covered by a
Registration Statement pursuant to this Agreement, any Person who controls such
Holder or Selling Stockholder within the meaning of the Securities Act, and any
officer, director, employee, agent, partner, member or Affiliate of such Holder
or Selling Stockholder (each, a "Holder/Selling Stockholder Indemnified Party"),
from and against, and will reimburse each such Holder/Selling Stockholder
Indemnified Party with respect to, any and all claims, actions, demands, losses,
damages, liabilities, costs and expenses to which such Holder/Selling
Stockholder Indemnified Party may become subject under the Securities Act or
otherwise, insofar as such claims, actions, demands, losses, damages,
liabilities, costs or expenses arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of any material fact contained in such
Registration Statement; or (ii) the omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein (in the case of any preliminary
prospectus or prospectus, in light of the circumstances under which they were
made) not misleading; provided, however, that Franklin shall not be liable in
any such case to the extent that any such claim, action, demand, loss, damage,
liability, cost or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission (a) made in reliance on
and conformity with information furnished by any Holder/Selling Stockholder
Indemnified Party in writing specifically for use in the preparation of the
Registration Statement or (b) which was cured in an amendment or supplement to
the Registration Statement delivered to the applicable Holder(s) and/or Selling
Stockholder(s) on a timely basis to permit proper delivery thereof prior to the
date on which any Registrable Shares were transferred or sold by such Holder(s)
and/or Selling Stockholder(s) pursuant to such Registration Statement.
8.2 Indemnification by the Holders. Each Holder and each Selling
Stockholder of Closing Stock Consideration Registrable Securities and/or
Earn-Out Registrable Securities covered by a Registration Statement pursuant to
this Agreement shall indemnify and hold harmless Franklin, any Person who
controls Franklin within the meaning of the Securities Act, and any officer,
director, employee, agent, partner, member or Affiliate of Franklin (each, a
"Franklin Indemnified Party") from and against, and will reimburse each such
Franklin Indemnified Party with respect to, any and all claims, actions,
demands, losses, damages, liabilities, costs or expenses to which such Franklin
Indemnified Party may become subject under the Securities Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses arise out of or
are based upon: (i) any untrue or alleged untrue statement of any material fact
contained in such Registration Statement; or (ii) the omission or alleged
omission to
12
state in the Registration Statement a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
preliminary prospectus or prospectus, in light of the circumstances under which
they were made) not misleading; provided, however, that (a) the indemnification
obligation of each Holder and each Selling Stockholder pursuant to this Section
8.2 shall apply only to the extent that the untrue statement or alleged untrue
statement referenced in the foregoing clause "(i)" or the omission or alleged
omission referenced in the foregoing clause "(ii)" was so made in reliance on
and conformity with written information furnished by such Holder or such Selling
Stockholder specifically for use in the preparation of the Registration
Statement and (b) the liability of any Holder or Selling Stockholder pursuant to
this Section 8.2 shall be limited to an amount not to exceed the net proceeds
received by such Holder or such Selling Stockholder from the sale of Closing
Stock Consideration Registrable Securities and/or Earn-Out Registrable
Securities pursuant to the Registration Statement which gives rise to such
obligation to indemnify.
8.3 Procedures. Promptly after receipt by a party indemnified pursuant
to the provisions of Section 8.1 or Section 8.2 of notice of the commencement of
any action involving the subject matter of the foregoing indemnity provisions,
such indemnified party will, if a claim thereof is to be made against the
indemnifying party pursuant to the provisions of Section 8.1 or Section 8.2,
notify the indemnifying party of the commencement thereof; provided, however,
that the omission to so notify the indemnifying party will not relieve it from
any liability which it may have to an indemnified party otherwise than under
this Section 8 and shall not relieve the indemnifying party from liability under
this Section 8 except to the extent that such indemnifying party is materially
prejudiced by such omission. In case such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party shall have the right to participate in, and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume 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 to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party pursuant to the
provisions of Section 8.1 or Section 8.2 for any legal or other expense
subsequently incurred by such indemnified party in connection with the defense
thereof. No indemnifying party shall be liable to an indemnified party for any
settlement of any action or claim effected without the consent of the
indemnifying party. No indemnifying party will consent to entry of any judgment
or enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of an
unconditional release from all liability in respect to such action, claim or
litigation.
9. DISPOSITION OF CLOSING STOCK CONSIDERATION REGISTRABLE SECURITIES AND/OR
EARN-OUT REGISTRABLE SECURITIES.
9.1 Restrictions on Disposition. Each Holder agrees not to make any
disposition of all or any portion of its Closing Stock Consideration Registrable
Securities and/or Earn-Out Registrable Securities unless:
(a) A Registration Statement covering such Closing Stock
Consideration Registrable Securities and/or Earn-Out Registrable Securities is
then in effect and such disposition is made in accordance with such Registration
Statement; or
13
(b) Such disposition is effected in full compliance with all
applicable federal and state securities laws, including, without limitation, the
Securities Act, and such transferor provides Franklin with: (i) any and all
information requested by Franklin that is reasonably necessary for Franklin to
determine that the transfer was effected in accordance with all applicable
federal and state securities laws; and (ii) all of the information required by
Section 2, in the event that such disposition involves all of such Holder's
Closing Stock Consideration Registrable Securities and/or Earn-Out Registrable
Securities and the transferor intends to assign and delegate its rights under
this Agreement to the transferee in accordance with Section 2.
9.2 Exceptions to Restrictions. Notwithstanding the provisions of
Section 9.1, no restrictions shall apply to a disposition of Closing Stock
Consideration Registrable Securities or Earn-Out Registrable Securities by a
Holder that is: (i) a partnership transferring to its partners or former
partners in accordance with partnership interests; (ii) a corporation
transferring to a wholly owned subsidiary or a parent corporation that owns all
of the capital stock of the Holder; (iii) a limited liability company
transferring to its members or former members in accordance with their interest
in the limited liability company; or (iv) an individual transferring to the
Holder's family member or trust for the benefit of an individual Holder;
provided, however, that in the event that such disposition involves all of such
Holder's Closing Stock Consideration Registrable Securities and/or Earn-Out
Registrable Securities and the transferor intends to assign and delegate its
rights under this Agreement to the transferee pursuant to Section 2, the
transferor shall be obligated to deliver to Franklin all of the information
required by Section 2.
10. MISCELLANEOUS.
10.1 Attorneys' Fees. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements in addition to any other
relief to which the prevailing party may be entitled.
10.2 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed effectively given: (i)
upon personal delivery to the party to be notified; (ii) when sent by confirmed
electronic mail or facsimile if sent during normal business hours of the
recipient; if not, then on the next Business Day; (iii) five (5) Business Days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid; or (iv) one (1) Business Day after deposit with a
nationally recognized overnight courier, specifying next-day delivery, with
written verification of receipt. All communications shall be sent to the
respective parties at the following addresses (or at such other addresses as
shall be specified by notice given in accordance with this Section 10.2):
If to Franklin:
Franklin Capital Corporation
000 Xxxxxxxx Xxxxxxxxx, 00xx Xxxxx,
Xxxxx 0000
Xxxxx Xxxxxx, XX 00000
Attn: Xxxxxx "Xxxx" Xxxx III
Fax: (000) 000-0000
E-mail: xxxx@xxxxxx.xxx
14
With a copy (which shall not constitute notice) to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
Fax: (000) 000-0000
E-mail: xxxxxxxxxxx@xxxxxxxxxxxx.xxx
If to the Shareholders:
Xxxxx Xxxxxxx and Xx. Xxxxxxx Xxxxxxx
c/o SurgiCount Medical, Inc.
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Fax: (000) 000-0000
E-mail: xxxxxxxxxxxx@xxxxxxx.xxx
With a copy (which shall not constitute notice) to:
Xxxxxx Xxxxxx White & XxXxxxxxx LLP
000 Xxxxxxxxxxx Xxxx
Xxxxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
E-mail: xxxxxxx@xxxx.xxx
Notwithstanding the foregoing, the parties expressly acknowledge and agree that,
for purposes of delivering any notice pursuant to this Agreement: (i) any such
notice delivered to either Shareholder in accordance with this Section 10.2
shall be deemed to have been delivered to both Shareholders; and (ii) any such
notice given by either Shareholder in accordance with this Section 10.2 shall be
deemed to have been given by both Shareholders.
10.3 Headings. The bold-face headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
10.4 Governing Law; Jurisdiction and Venue. This Agreement shall be
construed in accordance with, and governed in all respects by, the internal laws
of the State of California without giving effect to its principles of conflicts
of laws. Any legal action or other legal proceeding relating to this Agreement
or the enforcement of any provision of this Agreement shall be brought or
otherwise commenced exclusively in any state or federal court located in the
County of Los Angeles, State of California. Each of the parties hereto: (i)
expressly and irrevocably consents and submits to the jurisdiction of each state
and federal court located in the County of Los Angeles, State of California, in
connection with any legal proceeding; (ii) agrees that service of any process,
summons, notice or document by U.S. mail addressed to such party at the address
set forth in Section 10.2 shall constitute effective service of such process,
15
summons, notice or document for purposes of any such legal proceeding; (iii)
agrees that each state and federal court located in the County of Los Angeles,
State of California, shall be deemed to be a convenient forum; and (iv) agrees
not to assert, by way of motion, as a defense or otherwise, in any such legal
proceeding commenced in any state or federal court located in the County of Los
Angeles, State of California, any claim that it is not subject personally to the
jurisdiction of such court, that such legal proceeding has been brought in an
inconvenient forum, that the venue of such proceeding is improper or that this
Agreement or the subject matter of this Agreement may not be enforced in or by
such court.
10.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their successors and permitted
assigns, if any, and, with respect to each Shareholder, such Shareholder's
heirs, executors and administrators.
10.6 Waiver. No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy. No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person, and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
10.7 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of Franklin and the Majority Holders.
10.8 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then: (i) such
provision shall be excluded from this Agreement; (ii) the balance of the
Agreement shall be interpreted as if such provision were so excluded; and (iii)
the balance of the Agreement shall be enforceable in accordance with its terms.
10.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
10.10 Entire Agreement. This Agreement, together with each of the other
Transaction Documents and the schedules and exhibits hereto and thereto, set
forth the entire understanding of the parties hereto relating to the subject
matter hereof and thereof and supersede all prior agreements and understandings
among or between any of the parties relating to the subject matter hereof and
thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
16
IN WITNESS WHEREOF, the parties have duly executed this REGISTRATION
RIGHTS AGREEMENT as of the Signing Date.
FRANKLIN: SHAREHOLDERS:
FRANKLIN CAPITAL CORPORATION
By: /s/ Xxxxxx "Xxxx" Xxxx III /s/ Xxxxx Xxxxxxx
--------------------------------------- ----------------------------
Xxxxxx "Xxxx" Xxxx III Xxxxx Xxxxxxx
Chairman and Chief Executive Officer
/s/ Xx. Xxxxxxx Xxxxxxx
----------------------------
Xx. Xxxxxxx Xxxxxxx
EXHIBIT A
NOTICE AND QUESTIONNAIRE
The undersigned beneficial holder of Closing Stock Consideration
Registrable Securities and/or Earn-Out Registrable Securities of Franklin
Capital Corporation ("Franklin") understands that Franklin has filed or intends
to file with the Securities and Exchange Commission (the "SEC") a Registration
Statement under the Securities Act of 1933, as amended (the "Securities Act"),
for the registration and resale of the Closing Stock Consideration Registrable
Securities and/or Earn-Out Registrable Securities in accordance with the terms
of the Registration Rights Agreement, dated as of February 3, 2005 (the
"Registration Rights Agreement"), by and among Franklin and the purchasers of
Franklin's securities thereunder. The Registration Rights Agreement is available
from Franklin upon request at the address set forth below. Capitalized terms
used and not otherwise defined herein shall have the respective meanings given
to them in the Registration Rights Agreement to which this Notice and
Questionnaire is attached as Exhibit A.
In order to sell or otherwise dispose of any Closing Stock Consideration
Registrable Securities and/or Earn-Out Registrable Securities pursuant to the
Registration Statement, a beneficial owner of Closing Stock Consideration
Registrable Securities generally will be required to be named as a selling
securityholder in the related prospectus, deliver a prospectus to purchasers of
Closing Stock Consideration Registrable Securities and be bound by the
Registration Rights Agreement. Beneficial owners that do not complete this
Notice and Questionnaire and deliver it to Franklin as provided below will not
be named as selling securityholders in the prospectus and therefore will not be
permitted to sell any Closing Stock Consideration Registrable Securities or
Earn-Out Registrable Securities pursuant to the Registration Statement.
Certain legal consequences may arise from being named as selling
securityholders in the Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of Closing Stock Consideration
Registrable Securities and/or Earn-Out Registrable Securities are advised to
consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Registration
Statement.
Notice
------
The undersigned beneficial owner (the "Selling Stockholder") of Closing
Stock Consideration Registrable Securities and/or Earn-Out Registrable
Securities hereby requests that Franklin include in the Registration Statement
the Closing Stock Consideration Registrable Securities and/or Earn-Out
Registrable Securities beneficially owned by it and listed below in Item 3
(unless otherwise specified under Item 3) pursuant to the Registration
Statement. The undersigned Selling Stockholder, by signing and returning this
Notice and Questionnaire, understands that it will be bound by the terms and
conditions of this Notice and Questionnaire and the Registration Rights
Agreement.
The undersigned Selling Stockholder hereby provides the following
information to Franklin and represents and warrants that such information is
accurate and complete:
Questionnaire
-------------
1. (a) Full Legal Name of Selling Stockholder:
(b) Full legal name of registered holder (if not the same as (a)
above) through which Closing Stock Consideration Registrable
Securities and/or Earn-Out Registrable Securities listed in Item
3 below are held:
(c) Full legal name of broker-dealer or other third party through
which Closing Stock Consideration Registrable Securities and/or
Earn-Out Registrable Securities listed in Item 3 below are held:
(d) Full legal name of DTC participant (if applicable and if not the
same as (b) or (c) above) through which Closing Stock
Consideration Registrable Securities and/or Earn-Out Registrable
Securities listed in Item 3 below are held:
2. Address for Notices to Selling Stockholder:
Telephone:
-------------------------------------------------------------
Fax:
-------------------------------------------------------------------
Contact Person:
--------------------------------------------------------
3. Beneficial ownership of Closing Stock Consideration Registrable
Securities and/or Earn-Out Registrable Securities:
---------------------
--------------------------------------------------------------------------------
Unless otherwise indicated in the space provided below, all shares of
Franklin Common Stock listed in response to Item 3 above will be
included in the Registration Statement. If the undersigned does not
wish all such shares of common stock to be so included, please indicate
below the number of shares to be included:
-----------------------------
4. Beneficial Ownership of Franklin's securities owned by the Selling
Stockholder:
----------------------------------------------------------
Except as set forth below in this Item 4, the undersigned is not
the beneficial or registered owner of any securities of Franklin
other than the Closing Stock Consideration Registrable Securities
and/or Earn-Out Registrable Securities listed above in Item 3.
(a) Type and amount of other securities beneficially owned by the
Selling Stockholder:
----------------------------------------------
(b) CUSIP No(s). of such other securities beneficially owned:
---------
5. Relationship with Franklin:
--------------------------------------------
Except as set forth below, neither the undersigned nor any of its
Affiliates, directors or principal equity holders (5% or more) has held
any position or office or has had any other material relationship with
Franklin (or its predecessors or Affiliates) during the past three
years.
State any exceptions to the foregoing here:
----------------------------------
The Selling Stockholder acknowledges that it understands its obligation
to comply with the provisions of the Exchange Act, and the rules thereunder
relating to stock manipulation, particularly Regulation M thereunder (or any
successor rules or regulations) and the provisions of the Securities Act
relating to prospectus delivery, in connection with any offering of Closing
Stock Consideration Registrable Securities and/or Earn-Out Registrable
Securities pursuant to the Registration Statement. The Selling Stockholder
agrees that neither it nor any person acting on its behalf will engage in any
transaction in violation of such provisions.
The Selling Stockholder hereby acknowledges its obligations under the
Registration Rights Agreement to indemnify and hold harmless certain persons set
forth therein. Pursuant to the Registration Rights Agreement, Franklin has
agreed under certain circumstances to indemnify the Selling Stockholders against
certain liabilities.
In accordance with the undersigned Selling Stockholder's obligation
under the Registration Rights Agreement to provide such information as maybe
required by law for inclusion in the Registration Statement, the undersigned
Selling Stockholder agrees to promptly notify Franklin of any inaccuracies or
changes in the information provided herein that may occur subsequent to the date
hereof at any time while the Registration Statement remains effective. All
notices hereunder and pursuant to the Registration Rights Agreement shall be
made in accordance with Section 10.2 of the Registration Rights Agreement.
In the event any Selling Stockholder transfers all of the Closing Stock
Consideration Registrable Securities and/or Earn-Out Registrable Securities
listed in Item 3 above after the date on which such information is provided to
Franklin, the Selling Stockholder will notify the transferees at the time of
transfer of its rights and obligations under this Notice and Questionnaire and
the Registration Rights Agreement.
By signing below, the Selling Stockholder consents to the disclosure of
the information contained herein in its answers to Items 1-5 above and the
inclusion of such information in the Registration Statement. The Selling
Stockholder understands that such information will be relied upon by Franklin
without independent investigation or inquiry in connection with the preparation
or amendment of the Registration Statement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned Selling Stockholder, by authority
duly given, has caused this Notice and Questionnaire to be executed and
delivered either in person or by its authorized agent.
Selling Stockholder:
By:
---------------------------------
Name:
------------------------------
Title:
-----------------------------
Dated:
-----------------
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO:
Franklin Capital Corporation
000 Xxxxxxxx Xxxxxxxxx, 00xx Xxxxx, Xxxxx 0000
Xxxxx Xxxxxx, XX 00000
