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EXHIBIT 99.2
SHAREHOLDER AGREEMENT
This SHAREHOLDER AGREEMENT (this "Agreement"), dated as of February 15,
2001, by and among INSURANCE AUTO AUCTIONS, INC., an Illinois corporation (the
"Company"), ValueAct Capital Partners, L.P., a Delaware limited partnership
("ValueAct"), VALUEACT CAPITAL PARTNERS II, L.P., a Delaware limited partnership
("ValueAct II"), VA PARTNERS, LLC, a Delaware limited liability company ("VA
LLC"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇. (collectively with ValueAct, ValueAct II, VA LLC, ▇▇▇▇▇ and ▇▇▇▇▇, the
"Shareholders").
WHEREAS, the Shareholders own the shares of common stock, par value
$.01 per share (the "Common Stock"), of the Company listed on the attached
Schedule I; and
WHEREAS, the Shareholders have requested representation on the Board of
Directors of the Company (the "Board") and certain registration rights with
respect to their Common Stock and the Board has determined that it is in the
best interests of the Company to provide for such representation and to grant
such registration rights;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth below and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Board Representation; Independent Directors. (a)
Concurrently with the execution of this Agreement, the Board has (i) elected
▇▇▇▇▇ and ▇▇▇▇▇ as members of the Board, (ii) accepted the resignations of
▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇ ("O'Malia") and ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") from (A)
the Board, (B) all other positions they hold with the Company and any
subsidiaries of the Company and (C) any employee benefit or other trust for the
benefit of employees of the Company or any of its subsidiaries and (iii) elected
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ as Chairman of the Board. Each of ▇▇▇▇▇ and ▇▇▇▇▇ will be
entitled to receive compensation, reimbursement of expense, normal and customary
options and other benefits generally made available to all other Independent
Directors from time to time. The number of directors comprising the Board shall
not be increased without the prior written consent of ▇▇▇▇▇ and ▇▇▇▇▇.
(b) The Shareholders agree to vote or cause to be voted all Voting
Securities Owned by the Shareholders for Ubben, Kamin, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇'▇▇▇▇▇ and ▇▇▇▇ ▇.
▇▇▇▇▇▇ (collectively, the "Nominated Directors") for election as directors of
the Company at the Annual Meeting of Shareholders of the Company to be held
during June, 2001 (the "June 2001 Annual Meeting"); provided, that if any
Nominated Director is unable or unwilling to stand for election to the Board at
the June 2001 Annual Meeting, the Shareholders shall vote or cause to be voted
all Voting Securities Owned by the Shareholders for such Nominated Director's
replacement as nominated by a majority of the Board.
(c) As of the date of this Agreement, the Company has agreed to provide
O'Malia and ▇▇▇▇▇▇▇ with the separation arrangement set forth on Schedule II.
Except as set forth on Schedule II or as filed by the Company with the
Securities Exchange Commission
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before the date of this Agreement, the Company has not and will not agree to, or
provide for, any separation or other compensatory arrangement with either
O'Malia or ▇▇▇▇▇▇▇.
SECTION 2. Restrictions on Certain Actions. Without the prior consent
of the Board specifically expressed in a resolution duly adopted by the Board,
which includes the affirmative vote of two of the Independent Directors, the
Shareholders shall not:
(a) prior to the second anniversary of the date of this Agreement,
acquire or offer to acquire or agree to acquire from any Person, directly or
indirectly, by purchase or otherwise (except in connection with (i) a stock
split, reverse split or other reclassification or reorganization affecting any
class of the outstanding Voting Securities of the Company generally or (ii) a
stock dividend or other pro rata distribution by the Company to holders of its
outstanding Voting Securities) any Voting Securities unless such acquisition or
offer is in connection with (A) the acquisition of a number of Voting Securities
which results in the Shareholders collectively Owning 25% or less of the
outstanding Voting Securities; or (B) the exercise of a stock option granted to
▇▇▇▇▇ or ▇▇▇▇▇ pursuant to the Company's 1991 Stock Option Plan or a successor
plan; or
(b) prior to the close of business on the date that is the three month
anniversary of the June 2001 Annual Meeting (the "Anniversary"), initiate,
propose or otherwise cause a special meeting of the shareholders of the Company
to elect directors of the Company; or
(c) prior to the close of business on the Anniversary, deposit any
Voting Securities into a voting trust, or, other than as contemplated by this
Agreement, subject any Voting Securities to any agreement or arrangement with
respect to the voting of any Voting Securities or other agreement or arrangement
having similar effect; or
(d) prior to the close of business on the Anniversary, enter into any
transaction with the Company or one of its majority-owned subsidiaries for the
rendering of any services, or any employment, management, administration,
advisory or consulting contract with the Company or one of its majority-owned
subsidiaries, except for transactions with terms and conditions that are
determined to be "fair and reasonable" to the Company and no less favorable than
those which could be reasonably obtained from a third party, all as expressed in
a resolution duly adopted by the Board, which includes the affirmative vote of
two of the Independent Directors; or
(e) prior to the close of business on the Anniversary, seek, encourage
or support, either alone or in connection with others, the election of members
to the Board except as provided in Section 1 of this Agreement, or seek the
removal of any member of the Board other than ▇▇▇▇▇ or ▇▇▇▇▇; or
(f) request the Company (or its directors, officers, employees or
agents), directly or indirectly, to amend, waive or modify any provision of (i)
clauses (b)-(e) of this Section 2 prior to the close of business on the
Anniversary, or (ii) clauses (a) or (f) prior to the second anniversary of the
date of this Agreement.
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SECTION 3. Transfer of Voting Securities. Nothing in this Agreement
shall be construed as prohibiting the Shareholders from selling, transferring,
pledging, hypothecating or otherwise disposing of Voting Securities.
SECTION 4. Shareholder Meetings. The Shareholders agree to be present
in person or to be represented by proxy at all shareholder meetings of the
Company so that all Voting Securities Owned by the Shareholders may be counted
for the purpose of determining the presence of a quorum at such meetings.
SECTION 5. Other Matters.
(a) Ownership of Voting Securities. The Shareholders jointly and
severally represent and warrant that Schedule I lists all Voting Securities
which are Owned by them on the date of this Agreement.
(b) Publicity. The Shareholders and the Company agree that they shall
not issue any press release or otherwise make any public statement with respect
to this Agreement except (i) for the joint press release previously agreed upon,
(ii) for such other public statements or disclosures as are mutually approved by
the Shareholders and the Company and (iii) as otherwise required by law. The
Shareholders represent and warrant that they have previously delivered to the
Company a copy of the Schedule 13D in the form in which they propose to file
with the Securities and Exchange Commission and that they have given the Company
the opportunity to comment on the proposed Schedule 13D.
(c) Registration Rights. Concurrently with the execution of this
Agreement, the Shareholders and the Company have entered into a Registration
Rights Agreement substantially in the form of Exhibit A attached hereto.
SECTION 6. Definitions. For the purpose of this Agreement the following
terms shall have the meanings specified below:
(a) "Affiliate" and "Associate" shall have the meanings prescribed in
Rule 12b-2 promulgated under the Exchange as in effect from time to time.
(b) "Independent Director" shall mean each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇. If any of the foregoing directors
are unable or unwilling to serve as a director, the Board will replace such
director with a person (i) who is not a current or past employee of or
consultant to the Company, (ii) who is not a current or past Affiliate or
Associate of a Shareholder and (iii) who is free of any current or past
relationship with the Company (other than solely as a director), the
Shareholders, their Affiliates or Associates that would interfere with their
exercise of independent judgment as members of the Board.
(c) "Own" shall mean to have a pecuniary interest in any profit derived
from a transaction in the subject securities; provided, that in no event shall
"Own" have the meaning set forth in Rule 13d-3 promulgated under the Exchange as
in effect from time to time.
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(d) "Person" shall mean an individual, partnership, corporation,
limited liability company, association, joint stock company, trust, joint
venture, unincorporated organization or other entity, or a governmental entity
or any department, agency or political subdivision thereof.
(e) "Voting Securities" shall mean the Common Stock and any other
securities of the Company entitled to vote generally in the election of
directors and any other securities (including, without limitation, rights and
options) convertible into, or exchangeable or exercisable for any of the
foregoing (whether or not presently exercisable, convertible or exchangeable.
SECTION 7. Remedies. The parties acknowledge that the breach by any
Shareholder, on the one hand, or the Company, on the other hand, of any of such
party's agreements contained herein would result in irreparable damage to the
other party which could not be adequately compensated for in monetary damages.
Accordingly, the parties agree that, in addition to any other available relief
or remedies, the parties shall be entitled to seek and obtain appropriate
injunctive or other equitable remedies for the purposes of restraining any
actual or threatened breach of or otherwise enforcing these provisions and no
bond or security will be required in connection therewith.
SECTION 8. Successors and Assigns. No party may assign (by operation of
law or otherwise) this Agreement or any part hereof or any obligation hereunder
without the prior written consent of the other party.
SECTION 9. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Illinois,
without reference to the conflict of laws principles thereof.
SECTION 10. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered by hand, by facsimile transmission (which is confirmed) or by
overnight courier service, such as Federal Express, to the parties as follows or
at such other address as a party may specify by notice to the others:
If to the Shareholders:
ValueAct Capital Partners
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to:
Dechert
4000 ▇▇▇▇ Atlantic Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company:
Insurance Auto Auctions, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
Fax Number:(▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 11. Entire Agreement; Amendments; Counterparts. This Agreement
supersedes all prior agreements and understandings and contains the entire
understanding of the parties with respect to the subject matter hereof. This
Agreement may be amended only by a writing signed by the party to be charged;
provided that the Company may only amend this Agreement with the prior written
consent of the Board specifically expressed in a resolution duly adopted by the
Board, which includes the affirmative vote of two of the Independent Directors.
This Agreement may be executed in counterparts, each of which shall be deemed to
be an original, but all of which together shall constitute one and the same
instrument. SECTION 12. Waiver. The failure of any party to insists upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a continuing waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement. Any waiver
must be in writing.
SECTION 13. Severability. If any term, provision or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid or
unenforceable, the remainder of the terms, provisions and restrictions shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated, and the parties agree to negotiate in good faith an amendment to
this Agreement to cure any such invalidity or unenforceability in a manner
designed to effect most closely the purpose of such term, provision or
restriction.
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SECTION 14. Expenses. Each party hereto shall pay its own expenses
incurred in connection with this Agreement.
SECTION 15. Captions. The captions in this Agreement are for
convenience of reference only and shall not be given any effect in the
interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
COMPANY:
INSURANCE AUTO AUCTIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: Chief Executive Officer
SHAREHOLDERS:
VALUEACT CAPITAL PARTNERS, L.P.
VALUEACT CAPITAL PARTNERS II, L.P.
BY: VA PARTNERS, LLC, its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Managing Member
VA PARTNERS, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Managing Member
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
-----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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SCHEDULE I
STOCK OWNERSHIP
Shareholder Number of Voting Securities
----------- ---------------------------
ValueAct Capital Partners, L.P. 1,735,310
ValueAct Capital Partners II, L.P. 130,690
▇▇▇▇▇ ▇. ▇▇▇▇▇ 58,457
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SCHEDULE II
SEPARATION ARRANGEMENT
INSURANCE AUTO AUCTIONS, INC.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
February 15, 2001
▇▇. ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇▇:
We have received your letter of resignation as chairman of the board
and member of the board of directors of Insurance Auto Auctions, Inc. (the
"Company"). In that regard, we want to confirm in writing with you our
understanding of the terms of your resignation.
Your Consulting Agreement dated December 1, 1998, as amended on
November 18, 1999 with the Company is hereby terminated. Notwithstanding Section
4(a)(v) of your Consulting Agreement with the Company, the Company will pay you
$100,000 through December 1, 2001, less any payments you have previously
received for the year December 1, 2000 to December 1, 2001, with such amount
payable promptly after our receipt of your countersignature to this letter.
Consistent with the terms of the Consulting Agreement, the Board of Directors of
the Company has agreed that all of your outstanding options to acquire 82,000
shares of the Company's common stock are fully vested and will be exercisable
until the earlier to occur of the expiration of the term of the options or March
31, 2002. Your resignation from the board has automatically terminated the
Consulting Agreement and except as provided in this letter neither you nor the
Company will have any continuing obligation thereunder. Your Indemnification
Agreement dated as of February 24, 1999 with the Company will remain in full
force and effect entitling you to the continued indemnification provided for in
the Indemnification Agreement for any action taken or not taken while serving in
an indemnified capacity through the time of your resignation.
Additionally, the Company will reimburse you and ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
collectively, up to $4,000 for legal fees relating solely to this matter.
You have informed us that you have no intention to provide the Company
with a letter describing any disagreement with the Company on any matter
relating to the Company's operations, policies or practices of a nature that
would require disclosure under Item 6 of Form 8-K promulgated under the
Securities Exchange Act of 1934, as amended.
If you agree to the foregoing, please countersign this letter in the
space provided below and return a copy of the letter to me.
INSURANCE AUTO AUCTIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇, Chief Executive Officer
Acknowledged and agreed to
this 15th day of February, 2001
/s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
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INSURANCE AUTO AUCTIONS, INC.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
February 15, 2001
▇▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇▇▇▇:
We have received your letter of resignation from the board of directors
of Insurance Auto Auctions, Inc. (the "Company"). In that regard, we want to
confirm in writing with you our understanding of the terms of your resignation.
The Board of Directors of the Company has extended the period during
which you may exercise all your outstanding options until March 31, 2002. Your
Indemnification Agreement with the Company dated as of February 24, 1999 will
remain in full force and effect entitling you to the continued indemnification
provided for in the Indemnification Agreement for any action taken or not taken
while serving in an indemnified capacity through the time of your resignation.
Additionally, the Company will reimburse you and ▇▇▇▇▇▇ ▇'▇▇▇▇▇,
collectively, up to $4,000 for legal fees relating solely to this matter.
You have informed us that you have no intention to provide the Company
with a letter describing any disagreement with the Company on any matter
relating to the Company's operations, policies or practices of a nature that
would require disclosure under Item 6 of Form 8-K, promulgated under the
Securities Exchange Act of 1934, as amended.
If you agree to the foregoing, please countersign this letter in the
space provided below and return a copy of the letter to me.
INSURANCE AUTO AUCTIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇, Chief Executive Officer
Acknowledged and agreed to
this 15th day of February, 2001
/s/▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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EXHIBIT A
INSURANCE AUTO AUCTIONS, INC.
REGISTRATION RIGHTS AGREEMENT
February 15, 2001
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of February 15, 2001 by and among Insurance Auto Auctions, Inc.,
an Illinois corporation (the "Company"), ValueAct Capital Partners, L.P., a
Delaware limited partnership ("ValueAct"), ValueAct Capital Partners II, L.P., a
Delaware limited partnership ("ValueAct II" and together with ValueAct, the
"Investors").
RECITALS
WHEREAS, pursuant to a Stock Purchase Agreement, dated as of February
8, 2001 (the "Purchase Agreement"), among the Investors and Allstate Insurance
Company, the Investors purchased an aggregate of 1,667,000 shares of Common
Stock (the "Purchased Stock"), par value $0.001 per share (the "Common Stock"),
of the Company;
WHEREAS, the Company desires for the Investors to enter into a
shareholder agreement pursuant to which the Investors will agree to certain
restrictions on acquiring additional shares of Common Stock (the "Shareholder
Agreement"); and
WHEREAS, as an inducement for the Investors to enter into the
Shareholder Agreement, the Company desires to enter into this Agreement with the
Investors.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally bound
hereby, hereby agree as follows:
1. REGISTRATION RIGHTS.
1.1. DEFINITIONS.
(a) "AS-CONVERTED BASIS" means assuming the conversion into Common
Stock or exercise for Common Stock of all securities directly or indirectly
convertible into, or exercisable for, Common Stock.
(b) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(c) "FORM S-3" means such form under the Securities Act as is in
effect on the date hereof or any successor registration form under the
Securities Act subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.
(d) "HOLDER" means any person owning of record Registrable
Securities that have not been sold to the public or pursuant to Rule 144
promulgated under the Securities Act or
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any assignee of record of such Registrable Securities to whom rights under this
Section have been duly assigned in accordance with this Agreement.
(e) "INITIATING HOLDER" means any Holder or Holders who in the
aggregate are Holders of not less than 50% of the then-outstanding Registrable
Securities which have not been sold to the public.
(f) "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement.
(g) "REGISTRABLE SECURITIES" means: (i) all shares of Purchased
Stock and (ii) any shares of Common Stock or other securities issued in
connection with any stock split, stock dividend, recapitalization,
reorganization, merger, sale of assets or similar event relating to the
foregoing; excluding in all cases, however, any securities that would otherwise
be Registrable Securities that have been sold by a person in a transaction in
which rights under this Section 1 are not assigned in accordance with this
Agreement or any securities that would otherwise be Registrable Securities that
have been sold to the public or sold pursuant to Rule 144 promulgated under the
Securities Act.
(h) "REGISTRATION EXPENSES" means all expenses incurred by the
Company in complying with Sections 1.2, 1.3 and 1.5 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel and accountants for the Company, fees and expenses of
one counsel for all the Holders, blue sky fees and expenses and the expense of
any special audits incident to or required by any such registration (but
excluding the compensation of regular employees of the Company, which shall be
paid in any event by the Company).
(i) "SELLING EXPENSES" means all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities.
1.2. REQUESTED REGISTRATION.
(a) Request for Registration by Initiating Holders. If the Company
shall receive from an Initiating Holder, at any time, a written request that the
Company effect any registration with respect to all or a part of the Registrable
Securities, the Company will:
(i) promptly give written notice of the proposed registration
to all other Holders of Registrable Securities; and
(ii) as soon as practicable, use its best efforts to effect
such registration of the sale of the Registrable Securities requested by the
Initiating Holder, together with all or such portion of the Registrable
Securities of any other Holder or Holders joining in such request as are
specified in written requests received by the Company within 30 days after
written notice from the Company is given under Section 1.2(a)(i)above; provided,
however, that the
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Company shall not be obligated to effect, or take any action to effect, any such
registration pursuant to this Section 1.2:
(1) In any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act or
applicable rules or regulations thereunder; or
(2) After the Company has effected three such
registrations pursuant to this Section 1.2 and such registrations have been
declared or ordered effective and the sales of such Registrable Securities shall
have closed.
(b) Underwriting; Request by Initiating Holders. If the Initiating
Holder intends to distribute the Registrable Securities covered by its request
by means of an underwriting, it shall so advise the Company as a part of its
request and the Company shall include such information in the written notice
referred to in Section 1.2(a)(i). In such event, the right of any Holder to
include such Holder's Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by the Initiating Holder and such Holder) to the
extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company as provided in
Section 1.6(e)) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the Initiating
Holder and reasonably acceptable to the Company. Notwithstanding the foregoing,
if the managing underwriter advises the Company and the Initiating Holder in
writing that marketing factors require a limitation of the number of shares to
be included in the registration, then the Company shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated first to the Initiating Holder (and if more than
one entity constitutes the Initiating Holder, then subject to the next sentence,
the allocation shall be among such entities, in such proportion (as nearly as
practicable) among them pro rata based on the amount of Registrable Securities
held by each of them (calculated on an As-Converted Basis)), and second among
all other Holders who sought to include Registrable Securities in the
registration, in such proportion (as nearly as practicable) among such other
Holders pro rata based on the amount of Registrable Securities owned by each of
them (calculated on an As-Converted Basis). For any Holder which is a
partnership or corporation, the partners, retired partners and stockholders of
such Holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "Holder," and any pro rata reduction with respect to such
"Holder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"Holder," as defined in this sentence. In connection with a registration under
this Section 1.2, the Company may include securities to be sold for its own
account, but not for the account of any other person other than a Holder on the
terms described herein. If a registration under this Section 1.2 is to be
effected through an underwriting, the right of the Company to include securities
in such registration shall be conditioned upon the Company's participation in
such underwriting and the inclusion of such
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15
securities in the underwriting (unless otherwise mutually agreed by the
Initiating Holder and the Company) to the extent provided herein.
Notwithstanding the foregoing, if the managing underwriter advises the Company
and the Initiating Holder in writing that marketing factors require a limitation
of the number of shares to be included in the registration, then all securities
that the Company sought to be included in the registration shall be removed from
the registration before any Registrable Securities are removed from the
registration. Any securities excluded from an underwriting under this section
shall be withdrawn from the registration.
(c) Notwithstanding the foregoing, if the Company shall furnish to
the Initiating Holder a certificate signed by the President or Chief Executive
Officer of the Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company and
its shareholders for such registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, then the Company
shall have the right to defer such filing for a period of not more than 90 days
after receipt of the request of the Initiating Holder; provided, however, that
the Company may not utilize this right or the similar right set forth in Section
1.5(b)(ii) more than once in any twelve-month period.
(d) Except for registration statements on Form ▇-▇, ▇▇▇▇ ▇-▇ or
successor forms thereto, the Company will not file with the Commission any other
registration statement, whether for its own account or that of other
stockholders, from the date of receipt of a notice from the Initiating Holders
pursuant to this Section 1.2 until the completion of the distribution
contemplated by such notice (or the earlier termination of such distribution or
requested registration), except where the Company is contemplating a
registration solely for its own account and defers the registration requested by
the Initiating Holders under Section 1.2(c) to permit the Company to complete
such registration for its own account.
1.3. PIGGYBACK REGISTRATIONS.
(a) Notice. The Company shall notify all Holders of Registrable
Securities in writing at least 30 days prior to filing any registration
statement under the Securities Act for purposes of effecting a public offering
of securities of the Company whether for its own account or the account of other
stockholders or both (excluding any registration statements on Form ▇-▇, ▇▇▇▇
▇-▇ or successor forms thereto, and a registration under Section 1.2 or Section
1.5) and will afford each such Holder an opportunity to include in such
registration statement all or any part of the Registrable Securities then held
by such Holder. Each Holder desiring to include in any such registration
statement all or any part of the Registrable Securities held by such Holder
shall, within 15 days after receipt of the above-described notice from the
Company, so notify the Company in writing, and in such notice shall inform the
Company of the number of Registrable Securities such Holder wishes to include in
such registration statement. If a Holder decides not to include all of its
Registrable Securities in any registration statement thereafter filed by the
Company, such Holder shall nevertheless continue to have the right to include
any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth herein.
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16
(b) Underwriting. If a registration statement under which the
Company gives notice under Section 1.3(a) is for an underwritten offering, then
the Company shall so advise the Holders of Registrable Securities in the notice
delivered under Section 1.3(a). In such event, the right of any such Holder's
Registrable Securities to be included in a registration pursuant to this Section
1.3 shall be conditioned upon such Holder's participation in such underwriting
and the inclusion of such Holder's Registrable Securities in the underwriting to
the extent provided herein. All Holders proposing to distribute their
Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the managing underwriter or
underwriter(s) selected for such underwriting. Notwithstanding any other
provision of this Agreement, if the managing underwriter(s) determine(s) in good
faith that marketing factors require a limitation of the number of shares to be
underwritten, then the managing underwriter(s) may exclude shares (including
Registrable Securities) from the registration and the underwriting, and the
number of shares that may be included in the registration and the underwriting
shall be allocated, first, to the Company, second, to each of the Holders of
Registrable Securities requesting inclusion of their Registrable Securities in
such registration statement, to be allocated among such Holders pro rata based
on the amount of Registrable Securities (calculated on an As-Converted Basis)
owned by each such Holder and third, to any other holders of the Company's
securities; provided, however, that the right of the underwriters to exclude
Registrable Securities from the registration and underwriting as described above
shall be restricted so that the number of Registrable Securities included in any
such registration is not reduced below twenty-five percent (25%) of the
Registrable Securities that the Holders initially proposed to be registered. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
excluded and withdrawn from the registration. For any Holder which is a
partnership or corporation, the partners, retired partners and stockholders of
such Holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "Holder," and any pro rata reduction with respect to such
"Holder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"Holder," as defined in this sentence.
1.4. EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with three demand registrations (pursuant to Section 1.2), all
piggyback registrations (pursuant to Section 1.3) and all S-3 registrations
(pursuant to Section 1.5) shall be borne by the Company, and all Selling
Expenses shall be borne by the Holders of the securities so registered pro rata
on the basis of the number of their shares so registered.
1.5. FORM S-3 REGISTRATION. In case the Company shall receive from one
or more Holders a written request or requests that the Company effect a
registration on Form S-3 with respect to all or a part of the Registrable
Securities owned by such Holders, provided the number of shares requested to be
sold would have an aggregate price to the public of at least $1,000,000, then
the Company will:
(a) promptly give written notice of the proposed registration to
all other Holders of Registrable Securities; and
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17
(b) as soon as practicable, use its best efforts to effect the
registration of the sale of the Registrable Securities specified in such
request, together with all or such portion of the Registrable Securities of any
Holder or Holders joining in such request as are specified in a written request
received by the Company within 30 days after written notice from the Company is
given under Section 1.5(a) above; provided, however, that the Company shall not
be obligated to effect any such registration pursuant to this Section 1.5:
(i) if Form S-3 is not available for such offering by the
Holders;
(ii) if the Company shall furnish to the Holders a certificate
signed by the President or Chief Executive Officer of the Company stating that
in the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such Form S-3
Registration to be effected at such time, in which event the Company shall have
the right to defer the filing of the Form S-3 registration statement for an
aggregate of not more than 90 days after receipt of the request of the Holders;
provided, however, that the Company may not utilize this right or the similar
right set forth in Section 1.2(c) more than once in any twelve-month period; or
(iii) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, unless the Company is already
subject to service in such jurisdiction and except as may be required by the
Securities Act or applicable rules or regulations thereunder.
A registration under this Section 1.5 shall not constitute a
registration under Section 1.2 nor shall a registration statement under Section
1.2 constitute a registration under this Section 1.5.
1.6. OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities under this Agreement, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and keep such registration statement
effective until the distribution is completed, but not more than 180 days,
provided that such 180-day period shall be extended for a period of time equal
to the period the Holder refrains from selling any Registrable Securities
included in such registration statement due to circumstances described in
Section 1.6(f).
(b) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and all
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18
amendments and supplements thereto, and such other documents as they may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by them that are included in such registration.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions unless
the Company is already subject to service in such jurisdiction and except as may
be required by the Securities Act or applicable rules or regulations thereunder.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act if such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing and, following such notification, promptly deliver to each Holder
copies of all amendments or supplements referred to in paragraphs (b) and (c) of
this Section 1.6.
(g) Furnish, at the request of any Holder registering Registrable
Securities, on the date that such Registrable Securities are delivered to the
underwriters for sale, if such securities are being sold through underwriters,
or on the date that the registration statement becomes effective, if such
securities are not being sold through underwriters, (i) an opinion, dated as of
such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering addressed to the underwriters, if any, and if
there are no underwriters, to the Holders requesting registration of Registrable
Securities and (ii) a "comfort" letter dated as of such date, from the
independent certified public accountants of the Company, in form and substance
as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering and reasonably satisfactory to a
majority in interest of the Holders requesting registration, addressed to the
underwriters, if any, and if there are no underwriters, to the Holders
requesting registration of Registrable Securities.
(h) Use its best efforts to list the Registrable Securities
covered by such registration statement with any securities exchange or
interdealer quotation system on which the Common Stock is then listed or quoted.
(i) Make available for inspection by each seller of Registrable
Securities, any underwriter participating in any distribution pursuant to such
registration statement, and any
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19
attorney, accountant or other agent retained by such seller or underwriter (an
"Advisor"), all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement. Such seller will keep, and will cause its Advisors to keep, such
information confidential subject to Section 2.14.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 1.6(f), such holder will
forthwith discontinue disposition of such Registrable Securities covered by such
Registration Statement until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by paragraphs (b) and (c) of
this Section 1.6, or until it is advised in writing by the Company that the use
of the applicable prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in such
prospectus; provided, however, that the Company shall not be permitted to cause
the discontinuation of dispositions of such Registrable Securities hereunder for
more than one 60-day period in any period of 365 days.
1.7. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Sections 1.2, 1.3 and
1.5 that the selling Holders shall furnish to the Company such information
regarding themselves, the Registrable Securities held by them, and the intended
method of disposition of such securities as shall be required to timely effect
the registration of Registrable Securities.
1.8. INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Sections 1.2, 1.3 or 1.5:
(a) By the Company. To the extent permitted by law, the Company
will indemnify and hold harmless each Holder, the partners, members, officers
and directors of each Holder, any underwriter (as defined in the Securities Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Exchange Act against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "VIOLATION"):
(i) any untrue statement or alleged untrue statement of a
material fact contained or incorporated by reference in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto;
(ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or
(iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any federal or state securities law or any
rule or regulation
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20
promulgated under the Securities Act, the Exchange Act or any federal or state
securities law in connection with the offering covered by such registration
statement;
and the Company will reimburse each such Holder, partner, member, officer or
director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them, as incurred, in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this subsection shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs (A) in reliance upon and
in conformity with written information furnished in writing and expressly stated
for use in connection with such registration by such Holder, partner, member,
officer, director, underwriter or controlling person of such Holder or (B) as a
result of such Holder, partner, member, officer or director, underwriter or
controlling person failing to deliver a copy of the prospectus (as then amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto), if required by law to so deliver, at or prior to the
written confirmation of the sale of the Registrable Securities, and if the
prospectus (as so amended or supplemented) would have cured the defect giving
rise to such losses, claims, damages or liabilities, unless such failure is the
result of noncompliance by the Company with Section 1.6(c) hereof.
(b) By Selling Holders. To the extent permitted by law, each
selling Holder will, severally and not jointly, if Registrable Securities held
by such Holder are included in the securities as to which such registration is
being effected, indemnify and hold harmless the Company, each of its directors,
each of its officers who have signed the registration statement, each person, if
any, who controls the Company within the meaning of the Securities Act, any
underwriter (as defined in the Securities Act) and any other Holder selling
securities under such registration statement or any of such other Holder's
partners, members, directors or officers or any person who controls such
underwriter or other Holder within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages or liabilities (joint or
several) to which the Company or any such director, officer, controlling person,
underwriter or other such Holder, or a member, partner, director, officer or
controlling person of such underwriter or other Holder may become subject under
the Securities Act, the Exchange Act, any federal or state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
federal or state securities law in connection with the offering covered by such
registration statement, insofar as such losses, claims, damages or liabilities
(or actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder by an instrument duly executed by such Holder and stated to be
specifically for use in such registration; and each such Holder will reimburse
any legal or other expenses reasonably incurred by the Company or any such
director, officer, controlling person, underwriter or other Holder, partner,
member, officer, director or controlling person of such other Holder or
underwriter in connection with investigating or defending any such loss, claim,
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21
damage, liability or action; provided, however, that the indemnity agreement
contained in this subsection shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably
withheld; and provided further, that the total amounts payable in indemnity by a
Holder under this Section 1.8(b) in respect of any Violation shall not exceed
the net proceeds received by such Holder in the registered offering out of which
such Violation arises.
(c) Notice. Promptly after receipt by an indemnified party of
notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 1.8, deliver to the indemnifying party
a written notice of the commencement thereof and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the indemnifying party, if the
defendants include both the indemnifying party and the indemnified party and the
indemnified party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to the indemnifying party or if the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the indemnifying
party. The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, if materially
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.8, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under Section 1.8.
(d) Contribution. If the indemnification provided for in this
Section 1.8 is unavailable to a party entitled to indemnification, then the
indemnifying party shall contribute to the aggregate losses, claims, damages or
liabilities of the indemnified party as is appropriate to reflect the relative
fault of the indemnified party and the indemnifying party, as well as any other
relevant equitable considerations. The relative fault of the indemnifying party
and indemnified party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action; provided,
however, that, in any such case, (1) no Holder shall be required to contribute
any amount in excess of the public offering price of all Registrable Securities
offered and sold by such Holder pursuant to such registration statement; and (2)
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) Survival. The obligations of the Company and Holders under
this Section 1.8 shall survive the completion of any offering of Registrable
Securities in a registration statement.
1.9. RULE 144 REPORTING. With a view to making available the benefits
of certain rules and regulations of the SEC which may at any time permit the
sale of the Registrable Securities
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to the public without registration, after such time as a public market exists
for the Common Stock, the Company agrees to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date of the first registration under the Securities Act filed by
the Company for an offering of its securities to the general public;
(b) File with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
(at any time after it has become subject to such reporting requirements); and
(c) So long as a Holder owns any Registrable Securities, furnish
to the Holder forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of Rule 144 (at any time after 90
days after the effective date of the first registration statement filed by the
Company for an offering of its securities to the general public), and of the
Securities Act and the Exchange Act (at any time after it has become subject to
the reporting requirements of the Exchange Act), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
of the Company as a Holder may reasonably request in availing itself of any rule
or regulation of the SEC allowing a Holder to sell any such securities without
registration (at any time after the Company has become subject to the reporting
requirements of the Exchange Act).
1.10. TERMINATION OF REGISTRATION RIGHTS. The registration rights
granted pursuant to Section 1 will terminate with respect to a particular
Holder, at such time as such Holder can sell all of its Registrable Securities
under Rule 144 during any three-month period.
2. MISCELLANEOUS.
2.1. SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and permitted transferees and
permitted assigns of the parties.
2.2. GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of New York as applied to contracts made and to be
performed entirely within that state between residents of that state, without
giving effect to principles of conflicts of laws.
2.3. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one instrument.
2.4. TITLES AND SUBTITLES. The titles of the paragraphs and
subparagraphs of this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
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2.5. STOCK SPLITS, ETC. All share numbers used in this Agreement are
subject to adjustment in the case of any stock split, reverse stock split,
combination or similar events.
2.6. NOTICES. Any notice required or permitted to be given to a party
pursuant to the provisions of this Agreement will be in writing and will be
effective on (a) the date of delivery in person, or the date of delivery by
facsimile with confirmation receipt, (b) the business day after deposit with a
nationally-recognized courier or overnight service, including Express Mail, for
United States deliveries or (c) five (5) business days after deposit in the
United States mail by registered or certified mail for United States deliveries.
All notices not delivered personally or by facsimile will be sent with postage
and other charges prepaid and properly addressed to the party to be notified at
the address set forth below such party's signature on this Agreement or at such
other address as such party may designate by ten (10) days advance written
notice to the other parties hereto. All notices for delivery outside the United
States will be sent by facsimile, or by nationally recognized courier or
overnight service. Any notice given hereunder to more than one person will be
deemed to have been given, for purposes of counting time periods hereunder, on
the date given to the last party required to be given such notice. Notices shall
be sent to the following addresses, or such other addresses as a party may
provide to the other parties from time to time:
If to the Company, to:
Insurance Auto Auctions, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a required copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to either Investor, to:
ValueAct Capital Partners, L.P.
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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With a required copy to:
Dechert
4000 ▇▇▇▇ Atlantic Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
2.7. ATTORNEYS' FEES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
2.8. AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the party against whom enforcement of such amendment
or waiver is sought.
2.9. SEVERABILITY. If any provision of this Agreement is held to be
unenforceable under applicable law, then such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision was so excluded and shall be enforceable in accordance with its terms.
2.10. ENTIRE AGREEMENT. The Loan Documents constitute the full and
entire understanding and agreement between the parties with respect to the
subject matter hereof and supersedes all prior negotiations, correspondence,
agreements, understandings, duties or obligations among the parties with respect
to the subject matter hereof.
2.11. FURTHER ASSURANCES. From and after the date of this Agreement,
upon the request of a party, the other parties shall execute and deliver such
instruments, documents or other writings as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement.
2.12. ASSIGNMENT. Rights under this Agreement may be assigned in
connection with any transfer or assignment of Registrable Securities provided
that: (a) such transfer may otherwise be effected in accordance with applicable
securities laws, and (b) such other party agrees in writing with the Company to
be bound by all of the provisions of this Agreement to the same extent as the
transferor.
2.13. CHANGES IN STOCK. If, and as often as, there is any change in the
Common Stock by way of a stock split, stock dividend, combination or
reclassification, or through a merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be made to
the provisions hereof so that the rights granted hereby shall continue with
respect to the Common Stock as so changed.
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2.14. CONFIDENTIALITY. Information that each Investor has agreed to
keep confidential pursuant to this Agreement shall not be considered to be
confidential, and may therefore be disclosed by the Investors free of
restrictions hereunder, if such information (i) is or becomes generally
available to the public other than by disclosure in violation of this Agreement,
(ii) was properly within such Investor's possession prior to its being furnished
by the Company to such Investor, or (iii) becomes available to the Investors
through disclosure by third parties who have the right to disclose such
information.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
INSURANCE AUTO AUCTIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: Chief Executive Officer
VALUEACT CAPITAL PARTNERS, L.P.
VALUEACT CAPITAL PARTNERS II, L.P.
BY: VA PARTNERS, LLC, its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Managing Member
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