REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
May 22, 1997, by and among Safety Components International, Inc., a Delaware
corporation (the "Company"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
("▇▇▇▇▇▇") and Valentec International Corporation Employee Stock Ownership Plan
(the "ESOP").
W I T N E S S E T H:
WHEREAS, Zummo, Suozzi, the ESOP and the Company have entered
into that certain Stock Purchase Agreement, dated as of the date hereof (the
"Stock Purchase Agreement"), pursuant to which, among other things, ▇▇▇▇▇,
Suozzi and the ESOP have agreed to receive as consideration under the Stock
Purchase Agreement an aggregate of 1,369,200 shares of common stock, par value
$.01 per share, of the Company;
WHEREAS, the Company desires to ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ and the
ESOP registration rights with respect to such shares of common stock of the
Company; and
WHEREAS, it is a condition precedent to the consummation of
the transactions contemplated under the Stock Purchase Agreement that the
parties enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
covenants and conditions contained herein, and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS
SECTION 1.1 Definitions.
All terms not defined herein or below shall have the meaning
set forth in the Stock Purchase Agreement.
"Advice" shall have the meaning set forth in Section 3.1
hereof.
"Beneficiary" shall have the meaning set forth in the ESOP.
"Commission" means the United States Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act.
"Common Stock" means the shares of common stock, par value
$.01 per share, of the Company, acquired by ▇▇▇▇▇, Suozzi and the ESOP pursuant
to the terms of the Stock Purchase Agreement.
"Company" shall have the meaning set forth in the preamble of
this Agreement.
"Controlling Persons" shall have the meaning set forth in
Section 4.1 hereof.
"Damages" shall have the meaning set forth in Section 4.1
hereof.
"Deferral Date" shall have the meaning set forth in Section
2.4 hereof.
"Demand Registration" shall have the meaning set forth in
Section 2.1(a) hereof.
"ESOP" shall have the meaning set forth in the preamble of
this Agreement.
"Exchange Act" means 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.
"Holder" means each Initial Holder and any person who shall
hereafter acquire and hold Registrable Securities; provided, however, that a
Person who hereafter acquires Registrable Securities representing less than 5%
of the outstanding common stock of the Company (based on the number of Shares
outstanding on the date hereof) shall not be considered a Holder and shall not
be entitled to exercise any registration rights hereunder; provided, further,
however that Participants and their Beneficiaries under the ESOP shall have the
rights as Holders hereunder to the extent that they receive a distribution from
the ESOP which falls within the definition of Registrable Securities at the time
of the exercise of any such rights.
"Indemnified Party" shall have the meaning set forth in
Section 4.3 hereof.
"Indemnifying Party" shall have the meaning set forth in
Section 4.3 hereof.
"Initial Holder" means each of ▇▇▇▇▇, ▇▇▇▇▇▇ and the ESOP.
"Inspectors" shall have the meaning set forth in Section
3.1(h) hereof.
"NASD" means the National Association of Securities Dealers,
Inc.
"Participant" shall have the meaning set forth in the ESOP.
"Person" means any natural person, corporation, general
partnership, limited partnership, proprietorship, other business organization,
trust, union or association.
"Piggy-Back Registration" shall have the meaning set forth in
Section 2.2 hereof.
"Records" shall have the meaning set forth in Section 3.1(h)
hereof.
"Registrable Securities" means the shares of Common Stock and
any additional shares of common stock of the Company acquired by the Holder in
respect of the Registrable Securities by way of a dividend, stock split,
recapitalization, reclassification or other distribution. As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (i) a registration statement with respect to such
securities has been declared effective by the Commission (which may be on a Form
S-8 to the extent available) and such securities have thereafter been disposed
of, (ii) written opinion(s) to the effect that such Registrable Securities may
be sold under Rule 144 of the rules and regulations adopted under the Securities
Act without restriction as to the volume and timing of such sale shall have been
received from counsel to the Company, (iii) with respect to Persons holding
Registrable Securities representing less than 1% of the outstanding common stock
of the Company, written opinion(s) shall have been received from counsel to the
Company to the effect that (A) the exemption from the Securities Act
registration under Rule 144(d) of the rules and regulations adopted under the
Securities Act is available for sale of such Registrable Securities, or (B) such
Registrable Securities are not deemed to be "restricted securities" within the
meaning of Rule 144(a) of the rules and regulations adopted under the Securities
Act or (iv) they shall have ceased to be outstanding.
"Registration Expenses" shall have the meaning set forth in
Section 3.2 hereof.
"Securities Act" means 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 Holder" means a Holder who is selling Registrable
Securities pursuant to a registration statement under the Securities Act.
"Stock Purchase Agreement" shall have the meaning set forth in
the preamble of this Agreement.
"Suozzi" shall have the meaning set forth in the preamble of
this Agreement.
"Suspension Notice" shall have the meaning set forth in
Section 3.1(f) hereof.
"Trustee" shall have the meaning set forth in the ESOP.
"Underwriter" means a securities dealer who purchases any
Registrable Securities as principal in an underwritten offering and not as part
of such dealer's market-making activities.
"Withdrawal Election" shall have the meaning set forth in
Section 2.3(b) hereof.
"▇▇▇▇▇" shall have the meaning set forth in the preamble of
this Agreement.
ARTICLE 2.
REGISTRATION RIGHTS
SECTION 2.1 Demand Registration.
(a) Request for Registration by Holders of Registrable
Securities. Each Initial Holder may make up to one written request on the
Company for the registration of the Common Stock under the Securities Act, such
requests hereinafter referred to as a Demand Registration ("Demand
Registration"). Any such request shall specify the number of shares of
Registrable Securities proposed to be sold and shall also specify the intended
method of disposition thereof. The Company shall give written notice of such
registration request within 10 days after the receipt thereof to all other
Holders of Registrable Securities and shall use its best efforts to effect the
Demand Registration within 45 days after the giving of such written notice.
Within 20 days after receipt of such notice by any such Holder, such Holder may
request in writing that Registrable Securities be included in such registration
and the Company shall include in the registration statement for such Demand
Registration the Registrable Securities of all Holders requested to be so
included. Each such request by such other Holders shall specify the number of
shares of Registrable Securities proposed to be sold and the intended method of
disposition thereof. Unless the intended method of distribution is through an
underwritten offering, the Company shall have the right to elect to include all
Registrable Securities covered by this Agreement in such registration statement.
Any holder who declines after receipt of notice from the Company of such
election to have all of the Registrable Securities owned by him in such
registration statement shall forfeit his or its Demand Registration hereunder.
Whenever the Company shall effect a Demand Registration
pursuant to Section 2.1(a) in connection with an underwritten offering of
Registrable Securities, no securities other than the Registrable Securities
requested to be included shall be included among the securities covered by such
registration unless (i) the managing Underwriter or Underwriters of such
offering shall have advised the Holder of Registrable Securities to be covered
by such registration in writing that the inclusion of other securities would not
adversely affect such offering, in which case, securities to be issued by the
Company and any Persons who currently have registration rights under another
agreement with the Company may be included or (ii) all Holders of Registrable
Securities to be covered by such registration shall have consented in writing to
the inclusion of securities to be issued by the Company or securities held by
other stockholders of the Company. Whenever the Company shall effect a Demand
Registration pursuant to Section 2.1(a) other than in connection with an
underwritten offering of Registrable Securities, no securities held by
stockholders of the Company other than Holders of Registrable Securities may be
covered by such registration unless all Holders of Registrable Securities to be
covered by such registration shall have consented thereto in writing.
(b) Effective Registration. A registration will not be deemed
to have been effected as a Demand Registration unless it has been declared
effective by the Commission and the Company has complied in all material
respects with its obligations under this Agreement with respect thereto;
provided that if, after it has become effective, the offering of shares of
Common Stock pursuant to such registration is or becomes the subject of any stop
order, injunction or other order or requirement of the Commission or any other
governmental or administrative agency, or if any court prevents or otherwise
limits the sale of the shares of Common Stock pursuant to the registration at
any time after the effective date of the registration statement, such
registration will be deemed not to have been effected. If a registration
requested pursuant to this Section 2.1 is deemed not to have been effected, then
the Company shall continue to be obligated to effect such registration pursuant
to this Section 2.1. The Holders of Registrable Securities shall be permitted to
withdraw all or any part of the Registrable Securities from a Demand
Registration at any time prior to the effective date of such Demand
Registration, but shall forfeit any future right to a Demand Registration
hereunder.
(c) Selection of Underwriter. If the Selling Holders so elect,
the offering of such Registrable Securities pursuant to such Demand Registration
shall be in the form of an underwritten offering. The Selling Holders owning a
majority-in-interest of Common Stock to be sold shall select one or more
recognized firms of investment bankers reasonably acceptable to the Company to
act as Underwriter or Underwriters in connection with such offering.
(d) Deferral of Registration. Notwithstanding any other
provision of this Section 2, the Company shall not be obligated to effect the
filing of a registration statement pursuant to Section 2(a) hereof (i) during
any period when there exists an effective registration statement covering the
Registrable Securities, or (ii) if the Company shall furnish to the holders of
Registrable Securities requesting a registration statement under Section 2(a)
hereof a certificate, signed by the Company, stating that in the good faith
judgment of the board of directors of the Company it would be detrimental to the
best interests of the Company and its stockholders generally for such
registration statement to be filed at that time. The Company shall have the
right to defer the filing of a registration statement as provided in clause (ii)
of this Section 2(d) only twice in any 12-month period and only for a period not
later than the Deferral Date; provided that in such event, the Selling Holders
initiating the request for registration will be entitled to withdraw such
request.
SECTION 2.2 Piggy-Back Registration.
If at any time the Company proposes to file a registration
statement under the Securities Act with respect to an offering by the Company
for its own account or for the account of any of its respective security holders
(other than a registration statement on Form S-4 or S-8 (or any substitute form
that may be adopted by the Commission) or a Demand Registration pursuant to
Section 2.1), then the Company shall give prompt written notice of such proposed
filing to the Holders of Registrable Securities as soon as practicable (but in
no event less than 20 days before the anticipated filing date), and such notice
shall offer such Holders the opportunity to register such number of Registrable
Securities as each such Holder may request (which request shall specify the
Registrable Securities intended to be disposed of by such Holder and the
intended method of distribution thereof) (a "Piggy-Back Registration"). The
Company shall use its best efforts to cause the managing Underwriter or
Underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggy-Back Registration to be included
on the same terms and conditions as any similar securities of the Company or any
other security holder included therein and to permit the sale or other
disposition of such Registrable Securities in accordance with the intended
method of distribution thereof. Any Holder shall have the right to withdraw its
request for inclusion of its Registrable Securities in any registration
statement pursuant to this Section 2.2 by giving written notice to the Company
of its request to withdraw, provided that in the event of such withdrawal, such
Holder shall be responsible for all fees and expenses (including fees and
expenses of Holder's own counsel) incurred by such Holder prior to such
withdrawal unless such withdrawal has been made in accordance with Section
2.3(b). The Company may withdraw a Piggy-Back Registration at any time prior to
the time it becomes effective.
No registration effected under this Section 2.2, and no
failure to effect a registration under this Section 2.2, shall relieve the
Company of its obligation to effect a registration upon the request of Holders
pursuant to Section 2.1, and no failure to effect a registration under this
Section 2.2 and to complete the sale of Registrable Securities in connection
therewith shall relieve the Company of any other obligation under this Agreement
(including, without limitation, the Company's obligations under Sections 3.2 and
4.1).
SECTION 2.3 Reduction of Offering.
(a) Piggy-Back Registration. Notwithstanding anything to the
contrary contained herein, if the managing Underwriter or Underwriters of any
underwritten offering described in Section 2.2 have informed, in writing, the
Holders of the Registrable Securities requesting inclusion in such offering that
it is their opinion that the total number of shares which the Company, Holders
of Registrable Securities and any other Persons desiring to participate in such
registration intend to include in such offering is such as to materially and
adversely affect the success of such offering, then the number of shares to be
offered shall be reduced or limited in the following order of priority: (x)
first, the securities proposed by the Company to be sold for its own account;
and (y) second, to the extent necessary to reduce the total number of shares as
recommended by such managing Underwriters, the number of shares to be offered
for the account of the Holders and any other persons who currently have
registration rights under any other agreement to which the Company is a party
shall be reduced or limited on a pro rata basis in proportion to the relative
number of Registrable Securities of the Holders or securities of such persons
participating in such registration.
(b) Withdrawal Election. If, as a result of the proration
provisions of this Section 2.3, any Holder shall not be entitled to include at
least 50% of the Registrable Securities in a Piggy-Back Registration that such
Holder has requested to be included, such Holder may elect to withdraw his
request to include Registrable Securities in such registration (a "Withdrawal
Election"); provided, however, that a Withdrawal Election shall be irrevocable
and, after making a Withdrawal Election, a Holder shall no longer have any right
to include Registrable Securities in the Piggy Back Registration as to which
such Withdrawal Election was made.
SECTION 2.4 Conflicting Company Activity. If after the filing
but prior to the effectiveness of a registration statement filed by the Company
pursuant to Section 2(a) hereof, (i) the Company shall become a party to an
agreement or filed materials with the Commission contemplating a material
business acquisition by the Company, and if in the good faith judgment of the
Company it is impracticable for the Company to have become effective a
registration statement prior to the consummation of the acquisition and, if such
proposed acquisition were consummated, the Company would be required to include
in such registration statement financial statements and/or other information
concerning the business of any other party to such proposed acquisition prior to
the time that such financial statements are otherwise required to be filed with
the Commission in accordance with the current Report on Form 8-K and the
subsequent Form 8 (75 days after the closing of any such acquisition); (ii) the
Company shall have become a party to an agreement or letter of intent
contemplating a merger or consolidation of the Company into or with, or a sale
or transfer of all or substantially all of the business and assets of the
Company to, any other corporation or entity, and if in the good faith judgment
of the Company it is impracticable for the Company to file and have become
effective a registration statement prior to the consummation of such merger,
consolidation or sale; or (iii) the Company shall have determined in good faith
based on written advice of counsel that such registration statement is required
to contain information with respect to the Company or its business and plans
which has not been publicly disclosed, and the disclosure of which, in the
Company's good faith judgment, would not be in the best interest of the Company,
then the Company shall not be deemed to have breached its agreement to use its
best efforts to cause such registration statement to become effective if it does
not use its best efforts to cause such registration statement to become
effective for a period of not more than sixty (60) days from the date on which
the Company was required to use its best efforts to cause such registration
statement to become effective (or as soon as practicable after the filing of
such Form 8 referred to in (i) above, if any) (the "Deferral Date"), or, in the
case of (ii) above the transaction contemplated by such agreement or letter of
intent (x) becomes effective, in which case the Company shall have no obligation
to cause such registration statement to become effective or (y) is abandoned, in
which case the Company shall recommence the use of its best efforts to cause
such registration statement to become effective as soon as practicable but in no
event later than the Deferral Date.
ARTICLE 3.
REGISTRATION PROCEDURES
SECTION 3.1 Filings; Information.
Whenever the Company is required to effect or cause the
registration of Registrable Securities pursuant to Section 2.1, the Company will
use its best efforts to effect the registration and the sale of such Registrable
Securities in accordance with the intended method of disposition thereof, and in
connection with any such request:
(a) Registration Statements. The Company will prepare and file
with the Commission a registration statement with respect to such securities and
use best efforts to cause such registration statement to become and remain
effective until the completion of the distribution or until all Registrable
Securities covered thereby cease to be Registrable Securities.
(b) Amendments and Supplements. The Company will prepare 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 Section
3.1(a) and to comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities covered by such registration
statement in accordance with the intended method of disposition set forth in
such registration statement for such period.
(c) Copies for Review. The Company will, as far in advance as
practical, prior to filing a registration statement or prospectus or any
amendment or supplement thereto, furnish copies of such registration statement
as proposed to be filed, together with exhibits thereto, to (i) each Selling
Holder, (ii) not more than one counsel representing all Selling Holders, to be
selected by a majority-in-interest of such Selling Holders, and (iii) each
Underwriter, if any, of the Registrable Securities covered by such registration
statement, which documents will be subject to review and approval by the
foregoing, and thereafter as far in advance as practical, furnish to such
Selling Holders, counsel and Underwriters, if any, for their review and comment
such number of copies of such registration statement, each amendment and
supplement thereto (in each case including all exhibits thereto and documents
incorporated by reference therein), the prospectus included in such registration
statement (inducing each preliminary prospectus) and such other documents or
information as such Selling Holders, counsel or Underwriters may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Selling Holders.
(d) Stop Orders. After the filing of the registration
statement, the Company will promptly notify each Selling Holder of Registrable
Securities covered by such registration statement of any stop order issued or
threatened by the Commission and use its best efforts to prevent the entry of
such stop order or to remove it if entered.
(e) Blue Sky. The Company will use its best efforts to (i)
register or qualify the Registrable Securities under such other securities or
blue sky laws of such jurisdictions in the United States as any Selling Holder
reasonably (in light of such Selling Holder's intended plan of distribution)
requests, and (ii) cause such Registrable Securities to be registered with or
approved by such other governmental agencies or authorities in the United States
as may be necessary by virtue of the business and operations of the Company and
do any and all other acts and things that may be reasonably necessary or
advisable to enable such Selling Holder to consummate the disposition of the
Registrable Securities owned by such Selling Holder; provided, that the Company
will not be required to (A) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this paragraph (e),
(B) subject itself to taxation in any such jurisdiction or (C) consent to
general service of process in any such jurisdiction.
(f) Certain Events. The Company will immediately notify each
Selling Holder of such Registrable Securities, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
occurrence of an event requiring the preparation of a supplement or amendment to
such prospectus so that, as thereafter delivered to the Holders of such
Registrable Securities, such prospectus will not contain 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 and promptly make
available to each Selling Holder any such supplement or amendment.
Upon receipt of any such notice (a "Suspension Notice") from
the Company of the happening of any event of the kind described in this Section
3.1, each Holder shall forthwith discontinue disposition of the Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until Holder is advised in writing (the "Advice") by the Company that
the use of the prospectus covering such Registrable Securities may be resumed,
and has received copies of any supplements or amendments to the prospectus or a
notice that the prospectus has been supplemented by a filing which is
incorporated by reference thereby, and, if so directed by the Company, such
Holder will, or will request the underwriters, if any, to, deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the stale prospectus covering such
Registrable Securities current at the time of receipt of such notice; provided,
however, that the Company shall use its best efforts to limit the period from
the date on which any Holder receives a Suspension Notice to the date on which
any Holder receives the Advice not to exceed 60 days.
(g) Agreements. The Company and the Selling Holders will enter
into customary agreements including, if applicable, an underwriting agreement in
customary form and which is reasonably satisfactory to the Company (which shall
not require the Selling Holder to indemnify the underwriter with respect to
misstatements or omissions in the registration statement other than such
misstatements or omissions in written material supplied by such Selling Holder
expressly for inclusion in the registration statement) and, if requested by the
underwriter(s), an agreement appointing one Person approved by a
majority-in-interest of the Holders whose Registrable Securities are to be
included in the registration, to act as attorney-in-fact for the Holder and as
escrow agent for the Registrable Securities to be included in the offering in
customary form. The Company and the Selling Holders will also take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities; and the Selling Holders may, at
their option, require that any or all of the representations, warranties and
covenants of the Company to or for the benefit of such Underwriters also be made
to and for the benefit of such Selling Holders.
(h) Due Diligence. The Company will make available to each
Selling Holder (and his counsel) and each Underwriter, if any, subject to
restrictions imposed by the United States federal government or any agency or
instrumentality thereof, copies of all correspondence between the Commission and
the Company, its counsel or auditors and will also make available for inspection
by any Selling Holder, any Underwriter participating in any disposition pursuant
to such registration statement and any attorney, accountant or other
professional retained by any such Selling Holder or Underwriter (collectively,
the "Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records") as shall
be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers and employees to supply all
information reasonably requested by any Inspectors in connection with such
registration statement. Records which the Company determines, in good faith, to
be confidential and which it notifies the Inspectors are confidential shall not
be disclosed by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such registration
statement or (ii) the disclosure or release of such Records is requested or
required pursuant to oral questions, interrogatories, requests for information
or documents or a subpoena or other order from a court of competent jurisdiction
or other process; provided, that prior to any disclosure or release pursuant to
clause (ii), the Inspectors shall provide the Company with prompt notice of any
such request or requirement so that the Company may seek an appropriate
protective order or waive such Inspectors' obligation not to disclose such
Records; and, provided further, that if failing the entry of a protective order
or the waiver by the Company permitting the disclosure or release of such
Records, the Inspectors, upon advice of counsel, are compelled to disclose such
Records, the Inspectors may disclose that portion of the Records which counsel
has advised the Inspectors that the Inspectors are compelled to disclose. Each
Selling Holder of such Registrable Securities agrees that information obtained
by it solely as a result of such inspections (not including any information
obtained from a third party who, insofar as is known to the Selling Holder after
reasonable inquiry, is not prohibited from providing such information by a
contractual, legal or fiduciary obligation to the Company) shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company or its affiliates unless and until
such information is made generally available to the public. Each Selling Holder
of such Registrable Securities further agrees that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction, give
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of the Records deemed confidential.
(i) Sales Efforts. In connection with an underwritten
offering, the Company will participate, to the extent reasonably requested by
the managing Underwriter for the offering or the Selling Holders, in customary
efforts to sell the securities under the offering, including, without
limitation, participating in "road shows."
The Company may require each Selling Holder to promptly
furnish in writing to the Company such information regarding the distribution of
the Registrable Securities as the Company may from time to time reasonably
request and such other information as may be legally required in connection with
such registration including, without limitation, all such information as may be
requested by the Commission or the NASD. The Company may exclude from such
registration any Holder who fails to provide such information.
SECTION 3.2 Registration Expenses.
In connection with any Demand Registration pursuant to Section
2.1 hereof and any Piggy-Back Registration under Section 2.2 hereof, the Company
shall pay the following registration expenses incurred in connection with the
registration thereunder (the "Registration Expenses"): (i) all registration and
filing fees, (ii) fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of counsel in connection with
blue sky qualifications of the Registrable Securities), (iii) processing,
duplicating and printing expenses, (iv) the Company's internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), (v) the fees and expenses
incurred in connection with the listing of the Registrable Securities, (vi)
reasonable fees and disbursements of counsel for the Company and customary fees
and expenses for independent certified public accountants retained by the
Company (including the expenses of any comfort letters or costs associated with
the delivery by independent certified public accountants of a comfort letter or
comfort letters requested but not the cost of any audit other than a year end
audit), (vii) the reasonable fees and expenses of any special experts retained
by the Company in connection with such registration and (viii) any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities. The Company shall have no obligation to pay any other underwriting
fees, discounts or commissions attributable to the sale of Registrable
Securities, the costs of counsel to the Holder or Holders or the cost of any
special audit required, such costs to be borne by the Holder or Holders making
the request.
ARTICLE 4.
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1 Indemnification by the Company.
The Company shall, to the full extent permitted by law,
indemnify and hold harmless each Selling Holder, its partners, officers,
directors, employees and agents, and each Person, if any, who controls such
Selling Holder within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, together with the partners, officers, directors,
employees and agents of such controlling Person (collectively, the "Controlling
Persons"), from and against any loss, claim, damage, liability, reasonable
attorneys' fees, cost or expense and costs and expenses of investigating and
defending any such claim, joint or several, and any action in respect thereof
(collectively, the "Damages") to which such Selling Holder, its partners,
officers, directors, employees and agents, and any such Controlling Person may
become subject under the Securities Act or otherwise, insofar as such Damages
(or actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of, or are based upon, any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or
prospectus relating to the Registrable Securities or any amendment or supplement
thereto, or arises out of, or are based upon, 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 any violation by the Company of
any federal or state securities laws or any rule or regulation thereof, except
insofar as the same are based upon information furnished in writing to the
Company by a Selling Holder expressly for use therein, and shall reimburse each
Selling Holder, its partners, officers, directors, employees and agents, and
each such Controlling Person for any legal and other expenses reasonably
incurred by that Selling Holder, its partners, officers, directors, employees
and agents, or any such Controlling Person in investigating or defending or
preparing to defend against any such Damages or proceedings; provided, however,
that the Company shall not be liable to any Selling Holder to the extent that
any such Damages (or action or proceeding in respect thereof) arise out of or
are based upon an untrue statement or omission made in any preliminary
prospectus if (i) such Selling Holder failed to send or deliver a copy of the
final prospectus with or prior to the delivery of written confirmation of the
sale by such Selling Holder to the Person asserting the claim from which such
Damages arise, and (ii) the final prospectus would have corrected such untrue
statement or such omission; provided further, that the Company shall not be
liable to any Selling Holder in any such case to the extent that any such
Damages arise out of or are based upon an untrue statement or omission in any
prospectus if (x) such untrue statement or omission is corrected in an amendment
or supplement to such prospectus, and (y) having previously been furnished by or
on behalf of the Company with copies of such prospectus as so amended or
supplemented, such Selling Holder thereafter fails to deliver such prospectus as
so amended or supplemented prior to or concurrently with the sale of a
Registrable Security to the Person asserting the claim from which such Damages
arise. The Company also agrees to indemnify any Underwriters of the Registrable
Securities, their officers and directors and each Person who controls such
Underwriters on substantially the same basis as that of the indemnification of
the Selling Holders provided in this Section 4.1.
SECTION 4.2 Indemnification by Selling Holders.
Each Selling Holder shall, to the full extent permitted by
law, severally but not jointly, indemnify and hold harmless the Company, its
officers, directors, employees and agents and each Person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, together with the partners, officers, directors, employees
and agents of such controlling Person, to the same extent as the foregoing
indemnity from the Company to such Selling Holder, but only with reference to
information related to such Selling Holder, or its plan of distribution,
furnished in writing by such Selling Holder or on such Selling Holder's behalf
expressly for use in any registration statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto, or any
preliminary prospectus and the aggregate amount which may be recovered from any
Selling Holder of Registrable Securities pursuant to the indemnification
provided for in this Section 4.2 in connection with any registration and sale of
Registrable Securities shall be limited to the total proceeds received by such
Holder from the sale of such Registrable Securities. In case any action or
proceeding shall be brought against the Company or its officers, directors,
employees or agents or any such controlling Person or its officers, directors,
employees or agents, in respect of which indemnity may be sought against such
Selling Holder, such Selling Holder shall have the rights and duties given to
the Company, and the Company or its officers, directors, employees or agents, or
such controlling Person, or its officers, directors, employees or agents, shall
have the rights and duties given to such Selling Holder, by the preceding
paragraph. Each Selling Holder also agrees to indemnify and hold harmless any
Underwriters of the Registrable Securities, their officers and directors and
each Person who controls such Underwriters on substantially the same basis as
that of the indemnification of the Company provided in this Section 4.2. The
Company shall be entitled to receive indemnities from Underwriters, selling
brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as provided above, with
respect to information so furnished in writing by such Persons specifically for
inclusion in any prospectus or registration statement.
SECTION 4.3 Conduct of Indemnification Proceedings.
Promptly after receipt by any person in respect of which
indemnity may be sought pursuant to Section 4.1 or 4.2 (an "Indemnified Party")
of notice of any claim or the commencement of any action, the Indemnified Party
shall, if a claim in respect thereof is to be made against the Person against
whom such indemnity may be sought (an "Indemnifying Party"), notify the
Indemnifying Party in writing of the claim or the commencement of such action;
provided, that the failure to notify the Indemnifying Party shall not relieve it
from any liability which it may have to an Indemnified Party otherwise than
under Section 4.1 or 4.2 and except to the extent of any actual prejudice
resulting therefrom. If any such claim or action shall be brought against an
Indemnified Party, and it shall notify the Indemnifying Party thereof, the
Indemnifying Party shall be entitled to participate therein, and, to the extent
that it wishes, jointly with any other similarly notified Indemnifying Party, to
assume the defense thereof with counsel reasonably satisfactory to the
Indemnified Party. After notice from the Indemnifying Party to the Indemnified
Party of its election to assume the defense of such claim or action, the
Indemnifying Party shall not be liable to the Indemnified Party for any legal or
other expenses subsequently incurred by the Indemnified Party in connection with
the defense thereof other than reasonable costs of investigation; provided, that
the Indemnified Party shall have the right to employ separate counsel to
represent the Indemnified Party and its controlling Persons who may be subject
to liability arising out of any claim in respect of which indemnity may be
sought by the Indemnified Party against the Indemnifying Party, but the fees and
expenses of such counsel shall be for the account of such Indemnified Party
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or (ii) in the reasonable judgment of
the Company and such Indemnified Party, representation of both parties by the
same counsel would be inappropriate due to actual or potential conflicts of
interest between them, it being understood, however, that the Indemnifying Party
shall not, in connection with any one such claim or action or separate but
substantially similar or related claims or actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all Indemnified Parties, or for fees
and expenses that are not reasonable. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
claim or pending or threatened proceeding in respect of which the Indemnified
Party is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability arising out
of such claim or proceeding. Whether or not the defense of any claim or action
is assumed by the Indemnifying Party, such Indemnifying Party will not be
subject to any liability for any settlement made without its consent, which
consent will not be unreasonably withheld.
SECTION 4.4 Contribution.
If the indemnification provided for in this Article 4 is
unavailable to the Indemnified Parties in respect of any Damages referred to
herein, then each Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
as a result of such Damages (i) as between the Company and the Selling Holders
on the one hand and the Underwriters on the other (subject to the terms of a
customary underwriting agreement), in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Selling Holders on
the one hand and the Underwriters on the other from the offering of the
Registrable Securities, or if such allocation is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits but also the relative fault of the Company and the Selling Holders on
the one hand and of the Underwriters on the other in connection with the
statements or omissions which resulted in such Damages, as well as any other
relevant equitable considerations, and (ii) as between the Company on the one
hand and each Selling Holder on the other, in such proportion as is appropriate
to reflect the relative fault of the Company and of each Selling Holder in
connection with such statements or omissions, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Holders on the one hand and the Underwriters on the other (subject to
the terms of a customary underwriting agreement) shall be deemed to be in the
same proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
and the Selling Holders bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the prospectus. The relative fault of the Company and the Selling
Holders on the one hand and of the Underwriters on the other (subject to the
terms of a customary underwriting agreement) shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and the Selling Holders or by the
Underwriters. The relative fault of the Company on the one hand and of each
Selling Holder on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Selling Holders agree that it would not be
just and equitable if contribution pursuant to this Section 4.4 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
Damages referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, 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
Section 4.4, the maximum obligation of each Selling Holder for contribution
relating to a registration hereunder shall be limited to the proceeds received
by it from the sale of Registrable Securities pursuant to such registration. 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. Each Selling Holder's
obligations to contribute pursuant to this Section 4.4 is several in the
proportion that the proceeds of the offering received by such Selling Holder
bears to the total proceeds of the offering received by all the Selling Holders
and not joint.
ARTICLE 5.
MISCELLANEOUS
SECTION 5.1 Participation in Underwritten Registrations.
No Person may participate in any underwritten registration
hereunder unless such Person (a) agrees to sell such Person's securities on the
basis provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements, and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and these registration rights.
SECTION 5.2 Lock-up Agreement.
For so long as the Holder has the right to have Registrable
Securities included in any registration pursuant to this Agreement, the Holder
agrees in connection with any registration of the Company's securities, upon the
request of the underwriters managing any underwritten offering of the Company's
securities, not to sell, make any short sale of, pledge, grant any option for
the purchase of or otherwise dispose of any Registrable Securities without the
prior written consent of the Company or such underwriters, as the case may be,
during a lock-up period as the underwriters may reasonably specify. This
provision shall apply only if any Registrable Securities of the Holder are
included in the offering.
SECTION 5.3 Rule 144 and 144A.
The Company covenants that it will file any reports required
to be filed by it under the Securities Act and the Exchange Act and that it will
take such further action as any Holder may reasonably request, all to the extent
required from time to time to enable Holders to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 or Rule 144A under the Securities Act, or
(b) any similar rule or regulation hereafter adopted by the Commission. Upon the
request of any Holder, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
SECTION 5.4 Amendment and Modification.
This Agreement may not be amended, modified or supplemented,
except by written agreement among the parties.
SECTION 5.5 Binding Effect; Entire Agreement.
This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns and executors, administrators and heirs. This Agreement
sets forth the entire agreement and understanding among the parties as to the
subject matter hereof and supersedes all prior discussions, agreements and
understandings of any and every nature among them.
SECTION 5.6 Severability.
In the event that any provision of this Agreement or the
application of any provision hereof is declared to be illegal, invalid or
otherwise unenforceable by a court of competent jurisdiction, the remainder of
this Agreement shall not be affected except to the extent necessary to delete
such illegal, invalid or unenforceable provision unless that provision held
invalid shall substantially impair the benefits of the remaining portions of
this Agreement.
SECTION 5.7 Notices.
Any notice, demand, request, waiver, or other communication
under this Agreement shall be in writing (including facsimile or similar
writing) and shall be deemed to have been duly given (i) on the date of service
if personally served or on the date after transmission if sent via overnight
mail, (ii) on the third day after mailing if mailed to the party to whom notice
is to be given, by first class mail, registered, return receipt requested,
postage prepaid or (iii) on the date sent if sent by facsimile, to the parties
at the following addresses or facsimile numbers with a copy sent by mail as
aforesaid on the same date (or at such other address or facsimile number for a
party as shall be specified by like notice):
(1) If to the Company, to:
Safety Components International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(2) If to the Holder, at the most current address, and
with a copy to be sent to each additional address,
given by such Holder to the Company in writing,
with copies (which shall not constitute notice) to:
Shereff, Friedman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 5.8 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND
GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT
TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
SECTION 5.9 Headings.
The headings in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement, nor shall they
affect their meaning, construction or effect.
SECTION 5.10 Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original instrument and all of which
together shall constitute one and the same instrument.
SECTION 5.11 Further Assurances.
Each party shall cooperate and take such action as may be
reasonably requested by another party in order to carry out the provisions and
purposes of this Agreement and the transactions contemplated hereby.
SECTION 5.12 Remedies.
In the event of a breach or a threatened breach by any party
to this Agreement of its obligations under this Agreement, any party injured or
to be injured by such breach will be entitled to specific performance of its
rights under this Agreement or to injunctive relief, in addition to being
entitled to exercise all rights provided in this Agreement and granted by law.
The parties agree that the provisions of this Agreement shall be specifically
enforceable, it being agreed by the parties that the remedy at law, inducing
monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense or objection in any action for
specific performance or injunctive relief that a remedy at law would be adequate
is waived.
SECTION 5.13 Pronouns.
Whenever the context may require, any pronouns used herein
shall be deemed also to include the corresponding neuter, masculine or feminine
forms.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
SAFETY COMPONENTS INTERNATIONAL, INC.
By:
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
and Chief Financial Officer
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
VALENTEC INTERNATIONAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
By:
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Name: W. ▇▇▇▇▇ ▇▇▇▇▇
Title: Trustee