Exhibit 4.3
FORM OF
REGISTRATION RIGHTS AGREEMENT
May __, 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
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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
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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-
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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.
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(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
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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
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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
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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
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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
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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.
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(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
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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
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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,
14
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).
15
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 (000) 000-0000,
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
16
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:
-------------------------------------
Name:
Title:
----------------------------------------
Xxxxx X. Xxxxxx
----------------------------------------
Xxxxx X. Xxxxxx
----------------------------------------
Xxxx X. Filler
----------------------------------------
Xxxx Xxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxx
----------------------------------------
Xxxxx X. Xxxxxxx
----------------------------------------
Xxxxxx Xxxxxxx
CTC TRUST
By:
-------------------------------------
Name:
Title:
DONROSE TRUST
By:
-------------------------------------
Name:
Title:
JBR TRUST #4
By:
-------------------------------------
Name:
Title:
T&M CHILDREN'S TRUST
By:
-------------------------------------
Name:
Title:
GEM VALUE/PRISM, LLC
By:
-------------------------------------
Name:
Title:
XXXXXX CAPITAL TRUST
By:
-------------------------------------
Name:
Title:
