Exhibit 10.5
WARRANTHOLDERS REGISTRATION RIGHTS AGREEMENT
WARRANTHOLDERS REGISTRATION RIGHTS AGREEMENT, dated as of February 3, 1998
(this "Agreement"), by and among JFL-EEC MERGER SUB. CO., a Delaware corporation
("Company"), ▇▇▇▇▇▇▇ NATIONAL LIFE INSURANCE COMPANY ("Purchaser I"), INDOSUEZ
ELECTRONICS PARTNERS, and OLD HICKORY FUND, L.L.C. ("Purchaser III," and,
together with Purchaser I and Purchaser II, the "Holders").
WHEREAS, the Boards of Directors of the Company and Elgar Holdings,
Inc., a Delaware corporation ("Holdings") have determined to effect a
recapitalization of Holdings and its wholly-owned subsidiary Elgar
Electronics Corporation ("Elgar") pursuant to which, among other things, (i)
JFL-EEC LLC, a Delaware limited liability company ("JFL-EEC LLC"), will make
a capital contribution in the amount of approximately $19.0 million to the
Company, (ii) the Company will issue, on the terms and subject to the
conditions set forth in this Agreement, shares of its Series A 10% Cumulative
Redeemable Preferred Stock (the "Preferred Stock") and certain warrants (the
"Warrants") in exchange for an aggregate of $10.0 million, (iii) the Company
will offer and issue $90.0 million in aggregate principal amount of 9 7/8%
Senior Notes due 2008 (the "Senior Notes"), (iv) the Company will merge with
and into Holdings, with Holdings surviving such merger and assuming the
liabilities and obligations of the Company (the "Merger"), including without
limitation the liabilities and obligations with respect to the Series A
Preferred Stock, the Warrants and the Senior Notes, (v) pursuant to the
Merger Agreement, (A) immediately prior to the Merger, Holdings will effect
an approximately 9,220 to 1 stock split, such at the effective time of the
Merger there will be approximately 9,220,000 shares of Holdings common stock,
$.01 par value per share (the "Common Stock") issued and outstanding, (B)
Carlyle-EEC Acquisition Partners, L.P., the owner of all of the issued and
outstanding capital stock of Holdings immediately prior to the Merger, will
liquidate and distribute the shares of Common Stock to its partners, and (C)
each share of the Common Stock issued and outstanding immediately prior to
the Merger, other than certain shares held by certain shareholders and
members of management, will be converted into the right to receive cash, and
(v) Holdings and Elgar will enter into a new credit facility providing for
revolving credit borrowings of up to $15.0 million (all such transactions
shall be collectively referred to herein as the "Recapitalization");and
WHEREAS, to induce the Holders to purchase the Preferred Stock and
Warrants, the Company agreed to provide the registration rights set forth in
this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
1. DEFINITIONS. Unless otherwise defined herein, the following terms
shall have the following meanings below:
"COMMON STOCK" shall mean the common stock of the Company, no par
value, upon consummation of the Merger.
"OTHER HOLDERS" shall mean Persons who are holders of record of equity
securities of the Company who have valid contractual registration rights
under the Shareholders Registration Rights Agreement entered into among
certain shareholders of the Company and the Company.
"PERSON" shall mean an individual, corporation, unincorporated
association, partnership, group (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934), trust, joint stock company, joint
venture, business trust or unincorporated organization, any governmental
entity or any other entity of whatever nature.
"REGISTRABLE SHARES" shall mean any shares of Common Stock which may
be (i) issued upon exercise of the Warrants or (ii) issued or distributed
in respect of the Common Stock referred to in clause (i) above by way of
stock dividend or stock split or other distribution, recapitalization or
reclassification. As to any particular Registrable Share, such Registrable
Share shall cease to be a Registrable Share when (i) it shall have been
sold, transferred or otherwise disposed of or exchanged pursuant to a
registration statement under the Securities Act or (ii) it shall have been
distributed to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act.
2. INCIDENTAL REGISTRATIONS.
(a) RIGHT TO INCLUDE REGISTRABLE SHARES. After the completion
of the initial public offering by the Company of its Common Stock, each time the
Company shall determine to file a registration statement under the Securities
Act in connection with the proposed offer and sale for cash of Common Stock
(other than debt securities which are convertible into Common Stock and other
than registration statements on Form S-4 or S-8) either by it or by any holders
of its outstanding equity securities, the Company shall give prompt written
notice of its determination to each Holder and of such Holder's rights under
this Section 2, at least 20 days prior to the anticipated filing date of such
registration statement. Upon the written request of each Holder made within 15
days after the receipt of any such notice from the Company, (which request shall
specify the Registrable Shares intended to be disposed of by such Holder), the
Company shall use its best efforts to effect the registration under the
Securities Act of all Registrable Shares which the Company has been so requested
to register by the Holders thereof, to the extent required to permit the
disposition of the Registrable Shares so to be registered; PROVIDED, HOWEVER,
that (i) if, at any time after giving written notice of its intention to
register any securities and prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to proceed with the proposed registration of the
securities to be sold by it, the Company may, at its election, give written
notice of such determination to each Holder of Registrable Shares and thereupon
shall be relieved of its obligation to register any Registrable Shares in
connection with such registration (but not from its obligation to pay the
Registration Expenses in connection therewith) and (ii) if such registration
involves an underwritten offering, all Holders of Registrable Shares requesting
to be included in the Company's registration must sell their Registrable Shares
to the underwriters on the same terms and conditions as apply to the Company,
with such differences, including any with respect to indemnification, as may be
customary or appropriate in combined primary and secondary offerings (provided
that no Holder shall be required to provide indemnification which is more
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expansive than the indemnification provided in Section 9(b) hereof and
provided, further, that the representations and warranties provided by any
Holder shall be limited to such matters as the authority of such Holder to
sell its Registrable Shares, its title thereto and the absence of liens
thereon). If a registration requested pursuant to this Section 2(a) involves
an underwritten public offering, any Holder of Registrable Shares requesting
to be included in such registration may elect in writing prior to the
effective date of the registration statement filed in connection with such
registration, not to register such securities in connection with such
registration. No registration effected under this Section 2 shall relieve
the Company of its obligations to effect one registration upon request under
Section 4 hereof.
(b) PRIORITY IN INCIDENTAL REGISTRATIONS. If a registration
pursuant to this Section 2 involves an underwritten offering and the managing
underwriter in good faith advises the Company in writing that, in its
opinion, the number of securities which the Company, the Holders and any
other Persons intend to include in such registration exceeds the largest
number of securities which can be sold in such offering without having an
adverse effect on such offering (including the price at which such securities
can be sold), then the Company shall include in such registration: (i) FIRST,
100% of the securities the Company proposes to sell for its own account; and
(ii) SECOND, such number of Registrable Shares which the Holders have
requested to be included in such registration and such number of securities
which Other Holders have requested to be included in such registration which,
in the opinion of such managing underwriter, can be sold without having the
adverse effect referred to above, such number of Registrable Shares and
securities of Other Holders to be included on a pro rata basis among all
requesting Holders and Other Holders on the basis of the relative number of
shares of Common Stock requested to be included in such registration by such
Holders and Other Holders; and (iii) THIRD, to the extent that the number of
securities which are to be included in such registration pursuant to clauses
(i) and (ii), in the aggregate, is less than the number of securities which
the Company has been advised can be sold in such offering without having the
adverse effect referred to above, such number of other securities requested
to be included in the offering for the account of any other Persons which, in
the opinion of such managing underwriter, can be sold without having the
adverse effect referred to above, such number to be allocated pro rata among
all holders of such other securities on the basis of the relative number of
such other securities each other person has requested to be included in such
registration.
3. HOLDBACK AGREEMENTS. If any registration of Registrable Shares
shall be effected in connection with an underwritten public offering, the
Holders agree not to effect any public sale or distribution without the
consent of the managing underwriter (except in connection with such public
offering), of any equity securities of the Company, or of any security
convertible into or exchangeable or exercisable for any equity security of
the Company (in each case, other than as part of such underwritten public
offering), during the 120-day period (or such lesser period as the managing
underwriter may permit) beginning on the effective date of such registration,
if, and to the extent, the managing underwriter of any such offering
determines such action is necessary or desirable to effect such offering and
if and to the extent that each director and executive officer of the Company
so agrees; PROVIDED, HOWEVER, that each Holder has received the written
notice required by Section 2(a) hereof.
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4. REGISTRATION ON DEMAND.
(a) DEMAND BY HOLDERS. At any time on or after the later of
(i) the February 3, 2003 and (ii) the one hundred and eighty-first (181st)
day after completion of the initial public offering by the Company of its
Common Stock, upon the written request by Holders of at least 66K% of all
Registrable Shares, that the Company effect the registration under the
Securities Act of all or part of the Registrable Shares of such requesting
party, and specifying the amount and intended method of disposition thereof,
the Company shall promptly give notice of such requested registration to all
other Holders and, as expeditiously as possible, use its best efforts to
effect the registration under the Securities Act of: (i) the Registrable
Shares which the Company has been so requested to register; and (ii) all
other Registrable Shares which the Company has been requested to register by
any other Holder by written request received by the Company within 15 days
after the giving of such written notice by the Company (which request shall
specify the intended method of disposition of such Registrable Shares);
PROVIDED, HOWEVER, that the Company shall not be required to effect such
registration unless the Registrable Shares requested to be so registered have
an aggregate proposed offering price of not less than $5,000,000; and
PROVIDED, FURTHER, HOWEVER, that the Company shall not be required to effect
more than one registration pursuant to this Section 4(a) unless (X) all of
the Registrable Shares that the Holders initially requesting registration
pursuant to this Section 4(a) requested to be registered are not included in
such registration statement or (Y) the Company is eligible to file on Form
S-3, in which case the Holders shall be entitled to request an unlimited
number of registrations pursuant to this Section 4(a) except that the Company
shall not be required to effect such registration pursuant to this clause (Y)
unless the Registrable Shares requested to be so registered have an aggregate
proposed offering price of not less than $5,000,000 and no other registration
statement on Form S-3 has been filed by the Company and been declared
effective within the previous twelve months. Promptly after the expiration
of the 15-day period referred to in clause (ii) above, the Company shall
notify all Holders to be included in the registration of the other Holders
participating in such registration and the number of Registrable Shares
requested to be included therein. The Holders initially requesting a
registration pursuant to this Section 4(a) may, at any time prior to the
effective date of the registration statement relating to such registration,
revoke such request by providing a written notice to the Company revoking
such request; PROVIDED, HOWEVER, that if such revocation occurs after the
date of the filing of such registration statement, then the Registration
Expenses incurred by the Company in connection with the revoked request shall
be payable by the Holders participating in such demand registration.
(b) EFFECTIVE REGISTRATION STATEMENT. A registration requested
pursuant to this Section 4 shall not be deemed to have been effected unless it
has become effective under the Securities Act and has remained effective for 180
days or such shorter period as all the Registrable Shares included in such
registration have actually been sold thereunder.
(c) PRIORITY IN DEMAND REGISTRATIONS. If a demand registration
pursuant to this Section 4 involves an underwritten offering and the managing
underwriter in good faith advises the Company in writing that, in its opinion,
the number of securities requested to be included in such registration
(including securities of the Company which are not Registrable Shares) exceeds
the largest number of securities which can be sold in such offering without
having
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an adverse effect on such offering (including the price, acceptable to the
Holders requesting such registration, at which such securities can be sold),
then the Company will include in such registration (i) FIRST, 100% of the
Registrable Shares requested to be registered pursuant to Section 4(a)
(provided that if the number of Registrable Shares requested to be registered
pursuant to Section 4(a) exceeds the number which the Company has been
advised can be sold in such offering without having the adverse effect
referred to above, the number of such Registrable Shares to be included in
such registration by the Holders shall be allocated pro rata among such
Holders on the basis of the relative number of Registrable Shares each Holder
has requested to be included in such registration); and (ii) SECOND, to the
extent that the number of Registrable Shares requested to be registered
pursuant to Section 4(a) is less than the number of securities which the
Company has been advised can be sold in such offering without having the
adverse effect referred to above, such number of shares of equity securities
that, FIRST, the Company and, SECOND, Other Holders may request to be
included in such registration.
5. REGISTRATION PROCEDURES.
(a) If and whenever the Company is required by the provisions of
Sections 2 or 4 hereof to use its best efforts to effect or cause the
registration of Registrable Shares, the Company shall as expeditiously as
possible:
(i) prepare and, in any event within 60 days after the
end of the period within which a request for registration may be given to the
Company, file with the Securities and Exchange Commission (the "SEC") a
registration statement with respect to such Registrable Shares and use its
best efforts to cause such registration statement to become effective;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for a period not in excess of 180 days and to comply with the
provisions of the Securities Act, the Exchange Act, and the rules and
regulations promulgated thereunder with respect to the disposition of all the
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the Holders thereof
set forth in such registration statement; PROVIDED, that the Company shall
notify each Holder of Registrable Shares covered by such registration
statement of any stop order issued or threatened by the SEC, any other order
suspending the use of any preliminary prospectus or of the suspension of the
qualification of the registration statement for offering or sale in any
jurisdiction, and take all reasonable actions required to prevent the entry
of such stop order, other order or suspension or to remove it if entered;
(iii) furnish to each Holder and each underwriter, if
applicable, of Registrable Shares covered by such registration statement such
number of copies of the registration statement and of each amendment and
supplement thereto (in each case including all exhibits), such number of
copies of the prospectus included in such registration statement (including
each preliminary prospectus and summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents as each Holder
of Registrable
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Shares covered by such registration statement may reasonably request in order
to facilitate the disposition of the Registrable Shares owned by such Holder;
(iv) use its best efforts to register or qualify such
Registrable Shares covered by such registration statement under the state
securities or blue sky laws of such jurisdictions as each Holder of
Registrable Shares covered by such registration statement and, if applicable,
each underwriter, may reasonably request, and do any and all other acts and
things which may be reasonably necessary to consummate the disposition in
such jurisdictions of the Registrable Shares owned by such Holder; PROVIDED,
HOWEVER, that in connection therewith, the Company shall not be required to
(A) qualify as a foreign corporation to do business or to register as a
broker or dealer in any such jurisdiction where it would not otherwise be
required to qualify or register but for this clause (iv), (B) subject itself
to taxation in any jurisdiction or (C) file a general consent to service of
process in any such jurisdiction.
(v) use its best efforts to cause such Registrable
Shares covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the Holders thereof to consummate the disposition of such
Registrable Shares;
(vi) if at any time when a prospectus relating to the
Registrable Shares is required to be delivered under the Securities Act any
event shall have occurred as the result of which any such prospectus as then
in effect would include an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, immediately give written notice
thereof to each Holder and the managing underwriter, if any, of such
Registrable Shares and prepare and furnish to each such Holder a reasonable
number of copies of an amended or supplemental prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such Registrable
Shares, such prospectus shall not include an untrue statement of material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
(vii) use its best efforts to cause such Registrable
Shares to be accepted for listing or quotation on any securities exchange or
automated quotation system on which similar securities of the Company are
then listed, and enter into customary agreements including a listing
application and indemnification agreement in customary form, provided that
the applicable listing requirements are satisfied, and provide a transfer
agent and registrar for such Registrable Shares covered by such registration
statement not later than the effective date of such registration statement;
(viii) enter into such customary agreements (including an
underwriting agreement in customary form) and take such other actions as each
Holder of Registrable Shares being sold or the underwriter, if any,
reasonably requests in order to expedite or facilitate the disposition of
such Registrable Shares, including customary indemnification and opinions;
(ix) to the extent reasonably requested by the Holders of
at least 51% of the Registrable Shares being sold, or the underwriters, if
any, use its best efforts to obtain
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a "cold comfort" letter or letters from the Company's independent public
accountants in customary form and covering matters of the type customarily
covered by "cold comfort" letters;
(x) make available, at the Company's expense, for
inspection by representatives of any Holder of Registrable Shares covered by
such registration statement, by any underwriter participating in any
disposition to be effected pursuant to such registration statement and by any
attorney, accountant or other agent retained by such Holders or any such
underwriter (collectively, the "HOLDER REPRESENTATIVES"), all financial and
other records, pertinent corporate documents and properties of the Company
and its subsidiaries (excluding any such records and documents as are
protected by attorney-client privilege or which the Company is prohibited
from disclosing pursuant to the terms of any nondisclosure agreements to
which the Company or any of its subsidiaries is a party; PROVIDED that, to
the extent permitted under any such nondisclosure agreement, the Company
shall disclose any information subject to such nondisclosure agreement upon
execution and delivery by such Holder or Holder Representative of a
confidentiality agreement for the benefit of the parties to such
nondisclosure agreement);
(xi) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable after the effective date
of the registration statement, an earnings statement which shall satisfy the
provisions of Section 11(a) of the Securities Act and the rules and
regulations promulgated thereunder; and
(xii) notify counsel for the Holders of Registrable Shares
included in such registration statement and the managing underwriter, if any,
immediately, and confirm the notice in writing, (A) when the registration
statement, or any post-effective amendment to the registration statement,
shall have become effective, or any supplement to the prospectus or any
amendment prospectus shall have been filed and (B) of any request of the SEC
to amend the registration statement or amend or supplement the prospectus or
for additional information.
(b) Each Holder of Registrable Shares hereby agrees that,
upon receipt of any notice from the Company of the happening of any event of
the type described in Section 5(a)(vi) hereof, such Holder shall forthwith
discontinue disposition of such Registrable Shares covered by such
registration statement or related prospectus until such Holder's receipt of
the copies of the supplemental or amended prospectus contemplated by Section
5(a)(vi) hereof. In the event the Company shall give any such notice, the
period mentioned in Section 5(a)(ii) hereof shall be extended by the number
of days during the period from and including the date of the giving of such
notice pursuant to Section 5(a)(vi) hereof and including the date when such
Holder shall have received the copies of the supplemental or amended
prospectus contemplated by Section 5(a)(vi) hereof. If for any other reason
the effectiveness of any registration statement filed pursuant to Section 4
hereof is suspended or interrupted prior to the expiration of the time period
regarding the maintenance of the effectiveness of such Registration Statement
required by Section 5(a)(ii) hereof so that Registrable Shares may not be
sold pursuant thereto, the applicable time period shall be extended by the
number of days equal to the number of days during the period beginning with
the date of such suspension or interruption to and ending with the date when
the sale of Registrable Shares pursuant to such registration statement may be
recommenced.
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(c) Each Holder hereby agrees to provide the Company, upon
receipt of its request, with such information about such Holder to enable the
Company to comply with the requirements of the Securities Act and to execute
such certificates as the Company may reasonably request in connection with such
information and otherwise to satisfy any requirements of law. Each Holder
further agrees to furnish to the Company in writing such information regarding
the Holder and his, her or its proposed distribution of Registrable Shares as
the Company may from time to time reasonably request.
6. UNDERWRITTEN REGISTRATIONS. Subject to the provisions of Sections
2, 3 and 4 hereof, any of the Registrable Shares covered by a registration
statement may be sold in an underwritten offering at the discretion of the
Holder thereof. In the case of an underwritten offering pursuant to Section
2 hereof, the managing underwriter or underwriters that will administer the
offering shall be selected by the Company, PROVIDED that such managing
underwriter or underwriters is reasonably satisfactory to the Holders of a
majority of the Registrable Shares to be registered. In the case of any
underwritten offering pursuant to Section 4 hereof, the managing underwriter
or underwriters that will administer the offering shall be selected by the
Holders of a majority of the Registrable Shares to be registered, PROVIDED
that such underwriters are reasonably satisfactory to the Company.
7. SUSPENSION OF REGISTRATION REQUIREMENT.
(a) Notwithstanding anything to the contrary set forth in
this Agreement, the Company's obligation to use its best efforts to cause a
registration statement and any filings with any state securities authorities
to become effective or to amend or supplement any such registration statement
or filings shall be suspended during such period as circumstances exist
(including, without limitation, pending negotiations relating to, or the
consummation of, any transaction) which (i) would require additional
disclosure of material information by the Company in such registration
statement or filing which the Company has a bona fide business purpose for
not disclosing in such registration statement or (ii) render the Company
unable to comply with SEC requirements (any such circumstances hereinafter
referred to as a "Suspension Event"); PROVIDED that any suspension as a
result of a Suspension Event shall occur on not more than one occasion during
any 365-day period and shall continue only for so long as such event or its
effect is continuing and in no event shall any such suspension continue for
more than 120 days. To the extent that any such suspension occurs during a
period in which a registration statement has been filed pursuant hereto and
remains effective, the time during which the Company shall be required to
maintain the effectiveness of such registration statement shall be extended
for the number of days during which such suspension continued.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, the Company shall not be required to cause a registration statement
requested pursuant to Section 4(a) to become effective during the period
beginning 30 days prior to the Company's good faith estimate of the date of
filing of, and ending 180 days after the effective date of, a Company-initiated
registration, provided that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective.
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(c) The Company shall give the holders written notice
immediately upon the occurrence of any Suspension Event instructing such
holders to suspend sales of Registrable Shares as a result of such Suspension
Event. The Holders agree that after receipt of such notice they will not
effect any sales of Registrable Shares pursuant to any registration statement
filed pursuant to this Agreement until such time as such Holders shall have
received further notice from the Company that such sales may be recommenced,
which notice shall be given by the Company not later than five days after the
conclusion of any such Suspension Event.
8. EXPENSES.
(a) The fees, costs and expenses of all registrations in
accordance with Sections 2 and 4 hereof shall be borne by the Company,
subject to the provisions of Section 8(b) hereof.
(b) The fees, costs and expenses of registration to be borne
as provided in Section 8(a) hereof shall include, without limitation, all
expenses incident to the Company's performance of or compliance with this
Agreement, including without limitation all SEC and stock exchange or NASD
registration and filing fees and expenses, fees and expenses of compliance
with securities or blue sky laws (including without limitation reasonable
fees and disbursements of counsel for the underwriters, if any, or for the
selling Holders in connection with blue sky qualifications of the Registrable
Shares), rating agency fees, printing expenses (including expenses of
printing certificates for Registrable Shares and prospectuses), the fees and
expenses incurred in connection with the listing of the securities to be
registered on each securities exchange or automated quotation system on which
similar securities issued by the Company are then listed, and fees and
disbursements of counsel for the Company and all independent certified public
accountants (including the expenses of any annual audit, special audit and
"cold comfort" letters required by or incident to such performance and
compliance) (but in any event not including any underwriting discounts or
commissions or transfer taxes, if any, attributable to the sale of
Registrable Shares by such Holders) (collectively, "Registration Expenses").
9. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. In the event of any
registration of any securities of the Company under the Securities Act
pursuant to Sections 2 or 4 hereof, the Company shall, and it hereby does,
indemnify and hold harmless, to the extent permitted by law, each of the
Holders of any Registrable Shares covered by such registration statement,
each affiliate of such Holder and their respective directors and officers
(and the directors, officers, affiliates and controlling Persons thereof),
each other Person who participates as an underwriter in the offering or sale
of such securities and each other Person, if any, who controls such Holder or
any such underwriter within the meaning of the Securities Act (collectively,
the "Indemnified Parties"), against any and all losses, claims, damages or
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liabilities, joint or several, and expenses (including any amounts paid in
any settlement effected with the Company's consent, which consent shall not
be unreasonably withheld and including any expenses paid in connection with
the enforcement of the indemnification rights contained herein) to which any
Indemnified Party may become subject under the Securities Act, state
securities or blue sky laws, common law, any other applicable law, foreign or
domestic, or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof, whether or not
such Indemnified Party is a party thereto) or expenses arise out of or are
based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary, final
or summary prospectus contained therein, or any amendment or supplement
thereto, (ii) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading or (iii) any violation by the Company of any federal,
state or common law rule or regulation applicable to the Company and relating
to action required of or inaction by the Company in connection with any such
registration, and the Company shall reimburse such Indemnified Party for any
legal or any other expenses reasonably incurred by it in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; PROVIDED that the Company shall not be liable to any Indemnified
Party in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out
of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement or amendment
or supplement thereto or in any such preliminary, final or summary prospectus
in reliance upon and in conformity with written information with respect to
such Holder furnished to the Company by such Holder specifically for use
therein. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Holder or any Indemnified
Party and shall survive the transfer of such securities by such Holder.
(b) INDEMNIFICATION BY THE HOLDERS AND UNDERWRITERS. The
Company may require, as a condition to including any Registrable Shares in
any registration statement filed in accordance with Sections 2 or 4 hereof,
that the Company shall have received an undertaking reasonably satisfactory
to it from the Holders of such Registrable Shares or any underwriter to,
severally and not jointly, indemnify and hold harmless (in the same manner
and to the same extent as set forth in Section 9(a) hereof) the Company with
respect to any statement or alleged statement in or omission or alleged
omission from such registration statement, any preliminary, final or summary
prospectus contained therein, or any amendment or supplement, if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information with respect to such
Holder or such underwriter furnished to the Company by such Holder or such
underwriter specifically for use in such registration statement, preliminary,
final or summary prospectus or amendment or supplement, or a document
incorporated by reference into any of the foregoing; PROVIDED that no such
Holder shall be liable for any indemnity claims in excess of the amount of
net proceeds received by such Holder from the sale of Registrable Shares.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any of the Holders, or
any of their respective affiliates, directors, officers or controlling
Persons, and shall survive the transfer of such securities by such Holder.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an
indemnified party hereunder of written notice of the commencement of any action
or proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 9, such indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; PROVIDED that the failure of the
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its
10
obligations under this Section 9, except to the extent that the indemnifying
party is actually materially prejudiced by such failure to give notice. In
case any such action is brought against an indemnified party, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not
be liable to such indemnified party for any legal or other expenses
subsequently incurred by the latter in connection with the defense thereof
other than reasonable costs of investigation; PROVIDED that the indemnified
party shall have the right to employ counsel to represent the indemnified
party and its respective controlling persons, directors, officers, general or
limited partners, employees or agents who may be subject to liability arising
out of any claim in respect of which indemnity may be sought by the
indemnified party against such indemnifying party under this Section 9
PROVIDED that the employment of such counsel shall be at the expense of the
indemnified party, unless (i) the indemnifying party shall have agreed in
writing to pay the expenses of such counsel, (ii) the indemnifying party
shall not have promptly employed counsel reasonably satisfactory to the
indemnified party to assume the defense of such action or counsel or (iii)
any indemnified party shall have reasonably concluded that there may be
defenses available to such indemnified party or its respective controlling
persons, directors, officers, employees or agents which are in conflict with
or in addition to those available to the indemnifying party, and in that
event the reasonable fees and expenses of one firm of separate counsel for
the indemnified party (in addition to the reasonable fees and expenses of one
firm serving as local counsel) shall be paid by the indemnifying party. No
indemnifying party shall 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 a release from all
liability in respect to such claim or litigation.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 9 shall for any reason be unavailable to any indemnified party under
Section 9(a) or 9(b) hereof or is insufficient to hold it harmless in respect of
any loss, claim, damage or liability, or any action in respect thereof referred
to therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or
liability, or action in respect thereof, (i) in such proportion as shall be
appropriate to reflect the relative benefits received by the indemnified party
and indemnifying party or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) but also the relative
fault of the indemnified party and indemnifying party with respect to the
statements or omissions which resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. Notwithstanding any other provision of this Section 9(d), no
Holder of Registrable Shares shall be required to contribute an amount greater
than the dollar amount of the proceeds received by such Holder with respect to
the sale of any such Registrable Shares. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) OTHER INDEMNIFICATION. Indemnification and contribution
similar to that specified in the preceding subdivisions of this Section 9 (with
appropriate modifications) shall be given by the Company and each Holder of
Registrable Shares with respect to any required
11
registration or other qualification of securities under any federal or state
law or regulation or governmental authority other than the Securities Act.
(f) NON-EXCLUSIVITY. The obligations of the parties under this
Section 9 shall be in addition to any liability which any party may otherwise
have to any other party.
10. ASSIGNABILITY. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors
and permitted assigns. In addition, and whether or not any express
assignment shall have been made, the provisions of this Agreement which are
for the benefit of the parties hereto other than the Company shall also be
for the benefit of and enforceable by any subsequent Holder of any
Registrable Shares, subject to the provisions contained herein. The Company
may not assign any of its rights or delegate any of its duties under this
Agreement without the written consent of the Holders of 66K% of the
Registrable Shares; PROVIDED, HOWEVER, that it is understood and agreed by
the parties that the Company will be merged with and into Holdings, with
Holdings as the surviving corporation, pursuant to the Merger, and, upon
consummation of the Merger, this Agreement and the rights and obligations of
the Company hereunder will be transferred to and assumed by Holdings, and the
definition of "Registrable Shares" contained herein will refer to the common
stock of Holdings issuable upon exercise of the Warrants (which such Warrants
will become exercisable for shares of the common stock of Holdings by
operation of law upon consummation of the Merger).
11. NOTICES. Any and all notices, designations, consents, offers,
acceptances or any other communications shall be given in writing by either
(a) personal delivery to and receipted for by the addressee or by (b)
telecopy or registered or certified mail which shall be addressed, in the
case of the Company, in care of ▇.▇. ▇▇▇▇▇▇ & Company, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, facsimile (▇▇▇) ▇▇▇-▇▇▇▇, attention of ▇▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, and in the case of Holders, to the address or addresses thereof
appearing on the books of the Company or of the transfer agent and registrar
for the Registrable Shares.
All such notices and communications shall be deemed to have been duly
given and effective: when delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
and when receipt acknowledged, if telecopied.
12. ARBITRATION. Any controversy, dispute or claim arising out of, in
connection with or in relation to the interpretation, performance or breach of
this Agreement shall be determined, at the request of any party, by arbitration
in a city mutually agreeable to the parties to such controversy, dispute or
claim, or, failing such agreement, in New York, New York, before and in
accordance with the then-existing Rules for Commercial Arbitration of the
American Arbitration Association, and any judgment or award rendered by the
arbitrator will be final, binding and unappealable and judgment may be entered
by any state or Federal court having jurisdiction thereof. The pre-trial
discovery procedures of the Federal Rules of Civil Procedure shall apply to any
arbitration under this Section 12. Any controversy concerning whether a dispute
is an arbitrable dispute or as to the interpretation or enforceability of this
Section 12 shall be determined by the arbitrator. The arbitrator shall be a
retired or former United States District Judge or other person acceptable to
each of the parties, provided such individual has substantial
12
professional experience with regard to corporate or partnership legal
matters. The parties intend that this agreement to arbitrate be valid,
enforceable and irrevocable.
13. SEVERABILITY. If any provision of this Agreement or any portion
thereof is finally determined to be unlawful or unenforceable, such provision or
portion thereof shall be deemed to be severed from this Agreement. Every other
provision, and any portion of such an invalidated provision that is not
invalidated by such a determination, shall remain in full force and effect.
14. AMENDMENTS, WAIVERS. This Agreement may not be amended, modified or
supplemented and no waivers of or consents to departures from the provisions
hereof may be given unless consented to in writing by the Company and the
Holders of at least 66K% of the Registrable Shares.
15. ATTORNEYS' FEES. In any action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the successful party shall be entitled to recover reasonable
attorneys' fees in addition to any other available remedy.
16. ENTIRE AGREEMENT. This Agreement contains the entire agreement among
the parties hereto with respect to the transactions contemplated herein and
understandings among the parties relating to the subject matter hereof. Any and
all previous agreements and understandings between or among the parties hereto
regarding the subject matter hereof are, whether written or oral, superseded by
this Agreement.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which,
together, shall constitute one and the same instrument.
18. CAPTIONS. The captions contained in this Agreement are for reference
purposes only and are not part of this Agreement.
19. LIMITATION OF LIABILITY OF SHAREHOLDERS AND OFFICERS OF COMPANY. ANY
OBLIGATION OR LIABILITY WHATSOEVER OF THE COMPANY WHICH MAY ARISE AT ANY TIME
UNDER THIS AGREEMENT OR ANY OBLIGATION OR LIABILITY WHICH MAY BE INCURRED BY IT
PURSUANT TO ANY INSTRUMENT, TRANSACTION OR UNDERTAKING CONTEMPLATED HEREBY SHALL
BE SATISFIED OUT OF THE COMPANY'S ASSETS ONLY. NO SUCH OBLIGATION OR LIABILITY
SHALL BE PERSONALLY BINDING UPON, NOR SHALL RESORT FOR THE ENFORCEMENT THEREOF
BE HAD TO, THE PROPERTY OF ANY OF THE COMPANY'S SHAREHOLDERS (SOLELY AS A RESULT
OF THEIR STATUS AS SHAREHOLDERS), DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS,
REGARDLESS OF WHETHER SUCH OBLIGATION OR LIABILITY IS IN THE NATURE OF CONTRACT,
TORT OR OTHERWISE. NOTWITHSTANDING THE FOREGOING, THIS SECTION 19 SHALL NOT IN
ANY WAY AFFECT OR LIMIT ANY RIGHTS OR OBLIGATIONS OF THE COMPANY OR ANY HOLDER
UNDER THIS AGREEMENT.
13
20. GOVERNING LAW. This Agreement is made pursuant to and shall be
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the date aforesaid.
JFL-EEC MERGER SUB CO.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Title: President
▇▇▇▇▇▇▇ NATIONAL LIFE INSURANCE COMPANY
By: PPM America, Inc., its agent
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director
INDOSUEZ ELECTRONICS PARTNERS
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
OLD HICKORY FUND I, L.L.C.
By: PPM America, Inc., as Manager
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director
14