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EXHIBIT 10.3
REGISTRATION AGREEMENT
THIS AGREEMENT is made as of April 18, 1997, by and among ▇▇▇▇ Group,
Inc., a Delaware corporation (the "Company"), and ▇▇▇▇▇▇▇▇▇ L.L.C., a New York
limited liability company (the "Purchaser"), and each other Person who becomes a
party to this Agreement after the date hereof pursuant to Section 3.5 below.
Certain capitalized terms used herein are defined in Section 2 below.
WHEREAS, the Purchaser is the holder of Warrants issued by the Company
in connection with the revolving credit facility provided to the Company of up
to $8,500,000 pursuant to the terms and provisions of the Loan and Security
Agreement, dated as of the date hereof, by and among the Company and the
Purchaser; and
WHEREAS, the Company presently has each of its shares of Common Stock
and its $1.70 Class B Cumulative Convertible Preferred Stock, Series D,
registered under the Exchange Act and listed on the New York Stock Exchange;
WHEREAS, in connection with the purchase of such Warrants, the Company
has agreed to provide for the registration of certain of its securities under
the Securities Act;
WHEREAS, the registration of such securities may permit the delayed or
continuous offering of the Registrable Securities of the Company;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. Registration under Securities Act, etc.
1.1. Registration on Request.
(a) Request. Upon the written request of one or more Initiating
Holders, requesting that the Company effect the registration under the
Securities Act of all or part of such Initiating Holders' Registrable
Securities and specifying the intended method of disposition thereof, which
method may include a delayed or continuous offering pursuant to Rule 415,
the Company will, subject to the terms of this Agreement, promptly give
written notice of such requested registration to all registered holders of
Registrable Securities, and thereupon the Company will use its reasonable
best efforts to effect the registration under the Securities Act of:
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(i) the Registrable Securities which the Company has been so
requested to register by such Initiating Holders for disposition in
accordance with the intended method of disposition stated in such
request,
(ii) all other Registrable Securities the holder of which shall
have made a written request to the Company for registration thereof
within 30 days after the giving of such written notice by the Company,
and
(iii) all shares of Common Stock which the Company may elect to
register in connection with the offering of Registrable Securities
pursuant to this Section 1.1 ("Additional Registrable Shares"),
all to the extent requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities and the
Additional Registrable Shares, if any, so to be registered.
(b) Registration Statement Form. Registrations under this Section 1.1
shall be on such appropriate registration form of the Commission (i) as
shall be selected by the Company and reasonably acceptable to the holders of
more than 50% (by number of shares) of the Registrable Securities so to be
registered (excluding the Additional Registrable Shares, if any) and (ii) as
shall permit the disposition of such Registrable Securities in accordance
with the intended method or methods of disposition specified in the request
for such registration by such Initiating Holders. The Company agrees to
include in any such registration statement all information which holders of
Registrable Securities being registered shall reasonably request.
(c) Expenses. The Company shall pay all Registration Expenses in
connection with any registration requested pursuant to this Section 1.1 by
any Initiating Holders of Registrable Securities. The discounts and
commissions of the underwriters or agents and transfer taxes, if any, in
connection with such registration requested under this Section 1.1 shall be
allocated pro rata among all Persons on whose behalf securities of the
Company are included in such registration, on the basis of the respective
amounts of the securities offered and sold on their behalf.
(d) Effective Registration Statement. A registration requested pursuant
to this Section 1.1 shall not be deemed to have been effected (i) unless a
registration statement with respect thereto has become effective, provided
that a registration statement which does not become effective after the
Company has filed such registration statement with respect thereto solely by
reason of the unreasonable refusal to proceed of the Initiating Holders
(which may be based upon the advice of counsel) shall be deemed to have been
effected by the Company at the request of such Initiating Holders unless the
Initiating Holders shall have elected to pay all Registration Expenses in
connection with such registration, (ii) if, after it has become effective,
such registration statement becomes subject to any stop order, injunction or
other order or requirement of the Commission or other governmental agency or
court for any reason, or (iii) the conditions to closing specified in the
Offering Agreement entered into in
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connection with such registration are not satisfied, other than by reason of
some unreasonable act or omission by such Initiating Holders.
(e) Selection of Underwriters or Agents. If a requested registration
pursuant to this Section 1.1 involves an Offering, the managing or lead
underwriter(s) or agent(s) thereof shall be selected by the holders of at
least a majority (by number of shares) of the Registrable Securities as to
which registration has been requested (other than Additional Registrable
Shares, if any) subject to prior approval of the Company, which such
approval shall not unreasonably withheld.
(f) Priority in Requested Registrations. If a requested registration
pursuant to this Section 1.1 involves an Offering, and the managing
underwriter or agent advises the Company in writing (an "Underwriter's
Letter"), with a copy to each holder of Registrable Securities requesting
registration, that, in its opinion, the number of securities to be included
in such Offering (including securities of the Company which are not
Registrable Securities) exceeds the number which may reasonably be expected
to be sold in such Offering within a price range that such managing
underwriter or agent believes is acceptable to the holders of a majority of
the Registrable Securities (other than Additional Registrable Shares, if
any) to be included in such Offering (such Underwriter's Letter to state the
basis of such belief and the approximate number of such Registrable
Securities which may be distributed without such effect, the "Marketable
Amount"), then the Company may, upon written notice to all holders of such
Registrable Securities, reduce the number of Registrable Securities to be
included in such Offering to the number equal to the Marketable Amount in
the following order of priority: (i) first, the securities of the Company
which are proposed to be included in the Offering which are not Registrable
Securities, then (ii) the securities the Company proposes to sell which are
proposed to be included in such Offerings; then (iii) pro rata among the
holders of Registrable Securities requesting such registration on the basis
of the number of such securities requested to be included by such holders.
No Registrable Securities or any other securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration.
(g) Postponement of a Requested Registration. The Company shall be
entitled to postpone the filing of a registration requested pursuant to this
Section 1.1 for a period of time of up to ninety (90) days after the receipt
of a written request by a Initiating Holder if the filing of a registration
statement would require (i) the disclosure therein, pursuant to the
Securities Act, of previously undisclosed, material pending corporate
development or undertaking, such as an acquisition or a financing, which, in
the good faith determination of the Board of Directors of the Company, would
be materially and adversely affected by such disclosure or (ii) any special
audit or the acceleration of any annual audit of the financial statements of
the Company or any subsidiary (or any company proposed to be acquired by the
Company); provided that if such disclosure or such financial statements are
required by the Exchange Act, the Company shall not be entitled to so
postpone the filing of such registration statement,
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and provided, further, that the Company shall be entitled to so postpone a
registration statement only once during any one-hundred and eighty (180) day
period.
(h) Limitations. Notwithstanding any provision of this Section 1.1 to
the contrary, the Company shall not be obligated to effect, or take any
action to effect, any such registration pursuant to this Section 1.1:
(x) In any particular jurisdiction in which the Company would be
required in execute a general consent to service of process in effecting
such registration, qualification or compliance, 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
(y) After the Company has effected three (3) such registrations
pursuant to this Section 1.1 and such registrations have been declared or
ordered effective and the sales of such Registrable Securities shall have
closed.
1.2. Incidental Registration.
(a) Right to Include Registrable Securities. If the Company at any time
proposes to register any of its equity securities under the Securities Act
(other than by a registration of Form S-4 or S-8 or any successor or similar
forms and other than pursuant to Section 1.1), whether or not for sale for
its own account, it will each such time give prompt written notice (in any
event such notice shall be provided at least 45 days prior to the filing of
such registration statement) to all holders of Registrable Securities of its
intention to do so and of such holders' rights under this Section 1.2. Upon
the written request of any such holder made within 30 days after the receipt
of any such notice, the Company will, subject to the terms of this
Agreement, use its reasonable best efforts to effect the registration under
the Securities Act of all Registrable Securities which the Company has been
so requested to register by the holders thereof, to the extent requisite to
permit the disposition of the Registrable Securities so to be registered, by
inclusion of such Registrable Securities in the registration statement which
covers the securities which the Company proposes to register, provided that
if, at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine for
any reason either not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each holder of Registrable Securities and, thereupon, (i)
in the case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses
in connection therewith), without prejudice, however, to the rights of any
holder or holders of Registrable Securities entitled to do so to request
that such registration be effected as a registration under Section 1.1, and
(ii) in the case of a determination to delay registering, shall be permitted
to delay registering any Registrable Securities, for the
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same period as the delay in registering such other securities. Any
registration effected under this Section 1.2 shall not relieve the Company
of its obligation to effect any registration upon request under Section 1.1
nor shall any such registration hereunder be deemed to have been effected
pursuant to Section 1.1. The Company will pay all Registration Expenses in
connection with each registration of Registrable Securities requested
pursuant to this Section 1.2.
(b) Priority in Incidental Registrations. If (i) a registration
pursuant to this Section 1.2 involves an Offering of the securities so being
registered, whether or not for sale for the account of the Company, to be
distributed by or through one or more underwriters or agents of recognized
standing under underwriting terms appropriate for such a transaction, (ii)
the Registrable Securities so requested to be registered for sale for the
account of holders of Registrable Securities are not also to be included in
such Offering (either because the Company has not been requested so to
include such Registrable Securities pursuant to Section 1.4(b) or, if
requested to do so, is not obligated to do so under Section 1.4(b)), and
(iii) the managing underwriter or agent of such Offering shall provide the
Company (with a copy to each of the holders of the Registrable Securities
requesting such registration) with an Underwriter's Letter, then the Company
may, upon written notice to all holders of such Registrable Securities,
reduce pro rata (if and to the extent stated by such managing underwriter to
be necessary to eliminate such effect) the number of such Registrable
Securities the registration of which shall have been requested by each
holder of Registrable Securities such that the resultant aggregate number of
such Registrable Securities so included in such registration shall be equal
to the Marketable Amount, provided, that in such event, each holder shall
have an option, exercisable by written notice to the Company with 30 days
after such holder has received the Underwriter's Letter, to not participate
in such Offering and withdraw its request provided under Section 1.2(a). No
Registrable Securities or any other securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration.
1.3 Registration Procedures. If and whenever (a) the Company is
required to use its reasonable best efforts to effect the registration of any
Registrable Securities under the Securities Act as provided in Sections 1.1 and
1.2 or (b) there is a Requesting Holder in connection with any other proposed
registration by the Company under the Securities Act, the Company shall, as
expeditiously as possible:
(i) prepare and (within 90 days after the end of the period within
which requests for registration may be given to the Company or in any
event as soon thereafter as possible) (in the case of a registration
pursuant to Section 1.1, such filing to be made within 90 days after
the initial request of one or more Initiating Holders of Registrable
Securities or in any event as soon thereafter as possible) file with
the Commission the requisite registration statement to effect such
registration (including such audited financial statements as may be
required by the Securities Act (subject to Section 1.1(g)) and
thereafter use its reasonable best efforts to cause such registration
statement to become and remain effective
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in compliance with the provisions of the Securities Act, provided, that
the Company may discontinue any registration of its securities which
are not Registrable Securities (and, under the circumstances specified
in Section 1.2(a), its securities which are Registrable Securities) at
any time prior to the effective date of the registration statement
relating thereto;
(ii) prepare and file with the Commission such amendments and
supplements (including, without limitation, any document incorporated
by reference or deemed to be incorporated by reference therein) to such
registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement
until the earlier of (a) such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by
the seller or sellers thereof set forth in such registration statement
and (b) 120 days from the effective date of such registration
statement;
(iii) furnish to each seller of Registrable Securities covered by
such registration statement and each Requesting Holder and each
underwriter or agent, if any, of the securities being sold by such
seller such number of conformed copies of such registration statement
and of each such amendment and supplement thereto (in each case
including all exhibits and, upon request, all schedules, appendixes and
exhibits to any agreement or document included in any such exhibit),
such number of copies of the prospectus contained in such registration
statement (including each preliminary prospectus (or supplement
thereto) and any summary prospectus) and any other prospectus (or
supplement thereto) filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such other
documents, as such seller and underwriter or agent, if any, may
reasonably request in order to facilitate the public sale or other
disposition of the Registrable Securities owned by such seller;
(iv) use its reasonable best efforts to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such other securities laws or blue sky
laws of such jurisdictions as any seller thereof and any underwriter or
agent of the securities being sold by such seller and any Requesting
Holder shall reasonably request, to keep such registrations or
qualifications in effect for so long as such registration statement
remains in effect, and take any other action which may be reasonably
necessary or advisable to enable such seller and underwriter or agent
to consummate the disposition in such jurisdictions of the securities
owned by such seller, provided that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it
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would not but for the requirements of this subdivision (iv) be
obligated to be so qualified or to consent to general service of
process in any such jurisdiction;
(v) use its reasonable best efforts to cause all Registrable
Securities covered by such registration statement to be registered with
or approved by such other governmental agencies or authorities as may
be necessary to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities;
(vi) furnish to each seller of Registrable Securities and each
Requesting Holder a signed counterpart, addressed to such seller, such
Requesting Holder and the underwriters or agents, if any of
(x) in the case of an underwritten offering, an opinion of
counsel for the Company, dated the Offering Date, substantially in
the form delivered to the underwriter, and
(y) to the full extent permitted under the prevailing
accounting or auditing standards, a "comfort" letter (or, in the
case of such Person which does not satisfy the conditions for
receipt of a "comfort" letter specified in Statement on Auditing
Standards ("SAS") No. 72 (or any similar pronouncement), an "agreed
upon procedures" letter specified in SAS No. 75 (or any similar
pronouncement) and interim report specified in SAS No. 71 (or any
similar pronouncement), in each case, dated the Offering Date,
signed by the independent public accountants who have certified the
Company's financial statements included in such registration
statement, covering substantially the same matters with respect to
such registration statement (and the prospectus (as amended and
supplement) included therein) and, in the case of the accountants'
letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities and, in
the case of the accountants' letter, such other financial matters,
and, in the case of the legal opinion, (if applicable) such other
legal matters, as such seller or such Requesting Holder (or the
lead or managing underwriters or agents, if any) may reasonably
request;
(vii) notify the holders of Registrable Securities and the
lead or managing underwriter(s) or agent(s), if any, promptly and
confirm such advice in writing promptly thereafter:
(v) when the registration statement, the prospectus or any
prospectus supplement related thereto or amendment to the
registration statement has been filed, and, with respect to the
registration statement
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or any post-effective amendment thereto, when the same has become
effective;
(w) of any comments by the Commission or any request by the
Commission for amendments or supplements to the registration
statement or the prospectus (or any supplement thereto) or for
additional information;
(x) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the
initiation or contemplation of any proceedings by any Person for
that purpose;
(y) if at any time the representations and warranties of the
Company made as contemplated by Section 1.4 cease to be true and
correct in any material respect; and
(z) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable
Securities for sale under the U.S. or applicable foreign securities
or blue sky laws of any jurisdiction or the initiation or threat of
any proceeding for such purpose;
(viii) notify each seller of Registrable Securities covered by such
registration statement and each Requesting Holder, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, immediately upon the happening of any event as a result
of which, the prospectus (including any amendment or supplement
thereto) included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statement therein not misleading in the light of the circumstances
under which they were made, and at the request of any such seller or
Requesting Holder promptly prepare and furnish to such seller or
Requesting Holder and each underwriter or agent, if any, a reasonable
number of copies of a supplement to, or an amendment of, such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they
were made;
(ix) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first full calendar quarter
after the effective date of such registration statement, which earnings
statement shall satisfy the provisions
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of Section 11(a) of the Securities Act and Rule 158 thereunder, and
will furnish to each such seller and each Requesting Holder at least
five business days prior to the filing thereof a copy of any amendment
or supplement to such registration statement or prospectus and shall
not file any thereof to which any such seller or any Requesting Holder
shall have reasonably objected on the grounds that such amendment or
supplement does not comply in all material respects with the
requirements of the Securities Act;
(x) make available for inspection by a representative or
representatives of the holders of Registrable Securities, each such
representative representing the holders of not less than a majority of
the Registrable Securities included in the registration, any
underwriter or agent participating in any disposition pursuant to the
registration statement and any attorney or accountant retained by such
selling holders or underwriter or agent (each, an "Inspector"), all
financial and other records, pertinent corporate documents and
properties of the Company (the "Records"), and cause the Company's
officers, directors and employees to supply all information reasonably
requested by any such Inspector in connection with such registration in
order to permit a reasonable investigation within the meaning of
Section 11 of the Securities Act;
(xi) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of
such registration statement;
(xii) enter into such customary agreements and take such other
customary actions as sellers of such Registrable Securities holding
more than 50% of the shares so to be sold shall reasonably request in
order to expedite or facilitate the disposition of such Registrable
Securities; and
(xiii) use its reasonable best efforts to list all Registrable
Securities covered by such registration statement on any securities
exchange on which any of the securities of the same class as the
Registrable Securities are then listed and, if not so listed, to be
listed on the NASD automated quotation system and, if listed on the
NASD automated quotation system, use its reasonable best efforts to
secure designation of all such Registrable Securities covered by such
registration statement as a NASDAQ "national market system security"
within the meaning of Rule 11Aa2-1 of the Commission or, failing that,
to secure NASDAQ authorization for such Registrable Securities and,
without limiting the generality of the foregoing, to arrange for at
least two market makers to register as such with respect to such
Registrable Securities with the NASD.
As a condition to its obligations hereunder, the Company may require
each seller of Registrable Securities as to which any registration is being
effected to furnish to the Company such information necessary for compliance
with Regulation S-K under the Securities
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Act regarding such seller, the Registrable Securities of such seller and the
distribution of such securities as the Company may reasonably request in
writing.
Each holder of Registrable Securities hereby agrees that, upon receipt
of any notice from the Company of the occurrence of any event of the kind
described in subdivision (viii) of this Section 1.3, such holder will forthwith
discontinue such holder's disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities until such
holder's receipt of the copies of the supplemented or amended prospectus
contemplated by subdivision (viii) of this Section 1.3 and, if so directed by
the Company, will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies, then in such holder's possession of the
prospectus relating to such Registrable Securities current at the time of
receipt of such notice.
1.4. Offerings.
(a) Requested Offerings. If requested by the underwriters or agents for
any Offering by holders of Registrable Securities pursuant to a registration
requested under Section 1.1, the Company will enter into an underwriting
agreement or similar agreement, e.g., distribution or selling agency
agreement (each, an "Offering Agreement") with such underwriters or agents
for such Offering, such agreement to be reasonably satisfactory in substance
and form to the Company, each such holder and the underwriters or agents,
and to contain such representations and warranties by the Company and such
other terms and provisions as are generally prevailing in agreements of this
type, including, without limitations, indemnities to the effect and to the
extent provided in Section 1.7. The holders of the Registrable Securities
will cooperate in good faith with the Company in the negotiation of the
Offering Agreement and will give consideration to the reasonable suggestions
of the Company regarding the form thereof, provided that nothing herein
contained shall diminish the foregoing obligations of the Company. The
holders of Registrable Securities to be distributed by such underwriters or
agents shall be parties to such Offering Agreement and may, at their option,
require that any or all of the representations and warranties by, and the
other agreements on the part of, the Company to and for the benefit of such
underwriters or agents shall also be made to and for the benefit of such
holders of Registrable Securities and that any or all of the conditions
precedent to the obligations of such underwriters or agents under such
Offering Agreement be conditions precedent to the obligations of such
holders of Registrable Securities.
(b) Incidental Underwritten Offerings. If the Company at any time
proposes to register any of its securities under the Securities Act as
contemplated by Section 1.2 and such securities are to be distributed by or
through one or more underwriters or agents, the Company will, if requested
by any holder of Registrable Securities as provided in Section 1.2 and
subject to the provisions of Section 1.2(b), use its reasonable best efforts
to arrange for such underwriters or agents to include all the Registrable
Securities to be offered and sold by such holder among the securities to be
distributed by such underwriters or agents.
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(c) Holdback Agreements.
(i) Each holder of Registrable Securities agrees, if so required
by the managing underwriter or agent, not to sell, make any short sale
of, loan, grant any option for the purchase of, effect any public sale
or distribution of or otherwise dispose of any equity securities of the
Company, during a period of 30 days after the Offering Date of any
Offering, except as part of such Offering. Notwithstanding the
foregoing sentence, each holder of Registrable Securities subject to
the foregoing sentence shall be entitled to sell during the foregoing
period securities in a sale exempt from registration under the
provisions of the Securities Act.
(ii) The Company agrees (x) not to sell, make any short sale of,
loan, grant any option for the purchase of, effect any public sale or
distribution of or otherwise dispose of its equity securities or
securities convertible into or exchangeable or exercisable for any of
such securities during the seven days prior to and the 90 days after
the Offering Date of any Offering pursuant to Section 1.1 or 1.2,
except as part of such registration and except pursuant to
registrations on Form ▇-▇, ▇-▇ or any successor or similar forms
thereto, and (y) to cause each holder of its equity securities or any
securities convertible into or exchangeable or exercisable for any of
such securities, in each case purchased directly from the Company at
any time after the date of this Agreement (other than in a public
offering, including an offering registered on Form S-8) to agree not to
sell, make any short sale of, loan, grant any option for the purchase
of, effect any such public sale or distribution of or otherwise dispose
of such securities during such period except as part of such
registration.
(d) Participation in Offerings. No Person may participate in any
Offering hereunder unless such Person (i) agrees to sell such Person's
securities on the basis provided in any Offering Agreements approved,
subject to the terms and conditions hereof, by the Company and the holders
of a majority of Registrable Securities to be included in such Offering and
(ii) completes and executes all questionnaires, indemnities, Offering
Agreements and other documents (other than powers of attorney) required
under the terms of such Offering Agreements.
1.5 Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, their underwriters or
agents, if any, each Requesting Holder and their respective counsel and
accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them such access to its books and records and such opportunities to discuss
the business of the Company with its directors, officers, legal counsel and the
independent public accountants who have certified its financial statements as
shall be necessary, in the reasonable opinion of such holders' and such
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underwriters' or agents' respective counsel, to conduct a "reasonable
investigation" within the meaning of Section 11 of the Securities Act.
1.6. Rights of Requesting Holders. The Company will not file any
registration statement under the Securities Act (other than by a registration on
Form ▇-▇, ▇-▇ or any successor form), unless it shall first have given to each
holder of Registrable Securities at the time outstanding (other than any such
Person who acquired all such securities held by such Person in a public offering
registered under the Securities Act or as the direct or indirect transferee of
shares initially issued in such an offering), at least 30 days prior written
notice thereof. Any such Person who shall so request within 30 days after such
notice (a "Requesting Holder") shall have the rights of a Requesting Holder
provided in Sections 1.3, 1.5 and 1.7. In addition, if any such registration
statement refers to any Requesting Holder by name or otherwise as the holder of
any securities of the Company, then such holder shall have the right to require
therein language, in form and substance reasonably satisfactory to such holder,
relating to such holder to the extent that such reference to such holder by name
or otherwise is not required by the Securities Act, the limitation or deletion
of the reference to such holder to such extent.
1.7. Indemnification.
(a) Indemnification by the Company. In the event of any registration of
any securities of the Company under the Securities Act, the Company will,
and hereby does, indemnify and hold harmless in the case of any registration
statement filed pursuant to Section 1.1 or 1.2, the holder of any
Registrable Securities covered by such registration statement, its directors
and officers, each other Person who participates as an underwriter in the
offering or sale of such securities and each other Person, if any, who
controls such holder or any such underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such holder or Requesting Holder or any such director of
officer or underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (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 any material fact contained in any registration
statement under which such securities were registered under the Securities
Act, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or 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, and the
Company will reimburse such holder, such Requesting Holder and each such
director, officer, underwriter and controlling person for any legal or any
other expenses reasonably incurred by them in connection with investigating
or defending (or preparing to investigate and defend) any such loss, claim,
liability, action or proceeding, provided that the Company shall not be
liable to any such Person in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such
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registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such holder
or Requesting Holder, as the case may be, specifically stating that it is
for use in the preparation thereof.
(b) Indemnification by the Sellers. The Company may require, as a
condition to including any Registrable Securities in any registration
statement filed pursuant to Section 1.3, that the Company shall have
received an undertaking substantially in the form of Section 1.7(a) from the
prospective seller of such Registrable Securities, to indemnify and hold
harmless (in the same manner and to the same extent as set forth in
subdivision (a) of this Section 1.7) the Company, each director of the
Company, each officer of the Company and each other person, if any, who
controls the Company within the meaning of the Securities Act, with respect
to any statement or alleged statement in or omission or alleged omission
from such registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, if such statement or alleged statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such seller specifically stating
that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement. Any such indemnity shall remain in full force and effect,
regardless of any investigation made by or on behalf of the Company or any
such director, officer or controlling person and shall survive the transfer
of such securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this Section 1.7, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the commencement
of such action, provided that the failure of any indemnified party to give
notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding subdivisions of this Section 1.7, except to
the extent that the indemnifying party is actually prejudiced by such
failure to give notice. In case any such action is brought against an
indemnified party, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may
exist in respect of such claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that the indemnifying
party may wish, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party for any legal or other
expenses subsequently incurred by the latter in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the consent of the indemnified party, consent to entry of any
judgment or enter into any settlement of any such action which does not
include as an unconditional term thereof the giving by the claimant or
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plaintiff to such indemnified party of a release from all liability , or a
covenant not to ▇▇▇, in respect to such claim or litigation. No indemnified
party shall consent to entry of any judgment or enter into any settlement of
any such action the defense of which has been assumed by an indemnifying
party without the consent of such indemnifying party.
(d) Other Indemnification. Indemnification similar to that specified in
the preceding subdivisions of this Section 1.7 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification
of securities under any Federal or state law or regulation of any
governmental authority, other than the Securities Act.
(e) Indemnification Payments. The indemnification required by this
Section 1.7 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred, in any event, not later
than 10 days after such amount is requested by the indemnified party.
(f) Contribution. If the indemnification provided for in the preceding
subdivisions of this Section 1.7 is unavailable to an indemnified party in
respect of any expense, loss, claim, damage or liability referred to
therein, 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 expense, loss, claim, damage or
liability referred to therein, then each indemnifying party,. in lieu of
indemnifying such indemnifying party, shall contribute to the amount paid or
payable by such indemnified party as a result of such expense, loss, claim,
damage or liability (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the holder or
underwriter, as the case may be, on the other form the distribution of the
Registrable Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand and of
the holder or underwriter, as the case may be, on the other in connection
with the statement or omissions which resulted in such expense, loss, damage
or liability, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the holder or
underwriter, as the case may be, on the other in connection with the
distribution of the Registrable Securities shall be deemed to be in the same
proportion as the total net proceeds received by the Company from the
initial sale of the Registrable Securities by the Company to the purchasers
pursuant to the Offering Agreement bear to the gain, if any, realized by the
selling holder or the underwriting discounts and commissions received by the
underwriter, as the case may be. The relative fault of the Company on the
one hand and of the holder or underwriter, as the case may be, on the other
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or omission to state a
material fact relates to information supplied by the Company, by the
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holder or by the underwriter and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission, provided that the foregoing contribution agreement shall not
inure to the benefit of any indemnified party if indemnification would be
unavailable to such indemnified party by reason of the provisions contained
in the first sentence of subdivision (a) of this Section 1.7, and in no
event shall the obligation of any indemnifying party to contribute under
this subdivision (f) exceed the amount that such indemnifying party would
have been obligated to pay by way of indemnification if the indemnification
provided for under subdivisions (a) or (b) of this Section 1.7 had been
available under the circumstances.
The Company and the holders of Registrable Securities agree that it
would not be just and equitable if contribution pursuant to this subdivision
(f) were determined by pro rata allocation (even if the holders, Requesting
Holders and any underwriters or agents were treated as one entity for such
purpose) or by any other method of allocation that 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 losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations
set forth in the preceding sentence and subdivision (c) of this Section 1.7,
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 subdivision (f), no holder of
Registrable Securities or underwriter shall be required to contribute any
amount in excess of the amount by which (i) in the case of any such holder,
the net proceeds received by such holder from the sale of Registrable
Securities or (ii) in the case of an underwriter, the total price at which
the Registrable Securities purchased by it and distributed to the public
were offered to the public exceeds, in any such case, the amount of any
damages that such holder or underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission. 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.
(g) The foregoing indemnity agreement of the Company is subject to the
condition that, insofar as it relates to any loss, claim, liability or
damage made in a preliminary prospectus but eliminated or remedied in the
amended prospectus on file with the Commission at the time the registration
statement in question becomes effective or the amended prospectus filed with
the Commission pursuant to Commission Rule 424(b) (the "Final Prospectus"),
such indemnity or contribution agreement shall not inure to the benefit of
any underwriter or holder of Registrable Securities if a copy of the Final
Prospectus was furnished to the underwriter or such holder and was not
furnished to the person asserting the loss, liability, claim or damage at or
prior to the time such action is required by the Securities Act.
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2. Certain Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
Affiliates: Shall have the meaning ascribed thereto by the Securities
Act.
Commission: The Securities and Exchange Commission (or, as the context
may require, the staff of the Securities and Exchange Commission) or any other
federal agency at the time administering the Securities Act.
Common Stock: The common stock of the Company and any security into
which such Common Stock shall have been changed or any security resulting from
any reclassification of such Common Stock.
Initiating Holders: Any holder or holders of Registrable Securities and
initiating a request pursuant to Section 1.1 for the registration of all or part
of such holder's Registrable Securities.
NASD: The National Association of Securities Dealers, Inc.
Offering: Any offer or solicitation of any offer to purchase
Registrable Securities registered under the Securities Act whether or not by a
firm commitment or best offer underwriting or in connection with a delayed or
continuous offering in compliance with Rule 415 under the Securities Act (or any
successor or similar rule).
Offering Agreement: As defined in Section 1.4.
Offering Date: (a) if the applicable Offering is an underwritten
offering, then the closing date of such Offering; or (b) if the applicable
Offering is in connection with a delayed or continuous offering in compliance
with Rule 415, then the date the applicable registration statement is declared
effective by the Commission [and the relevant closing date of such Offering].
Other Securities: Any stock (other than Common Stock) and other
securities of the Company or any other Person (corporate or otherwise) which the
holders of the Warrants at any time shall be entitled to receive, or shall have
received, upon the exercise of the Warrants, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities.
Person: A corporation, an association, a partnership, an organization,
a business, an individual, a government or political subdivision thereof or a
governmental agency.
Registrable Securities: (a) Any shares of Common Stock or Other
Securities issued or issuable upon exercise of any Warrant, (b) any securities
issued or issuable with respect to any securities referred to in the foregoing
subdivision by way of stock dividend or
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stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization, and (c) any securities issued or
issuable with respect to any Warrants in connection with (i) a recapitalization,
merger, consolidation or other reorganization or (ii) otherwise. As to any
particular Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (A) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (B) they shall have been distributed to the public pursuant to Rule
144 (or any successor provision) under the Securities Act, (C) they shall have
been otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of them shall not require registration or qualification
of them under the Securities Act or any similar state law then in force, or (d)
they shall have ceased to be outstanding.
Registration Expense: All reasonable expenses incident to the Company's
performance of or compliance with Section 1, including, without limitation, all
registration, filing and NASD fees, all fees and expenses of complying with
securities or blue sky laws, all word processing, duplicating and printing
expenses, messenger and delivery expenses, the fees and disbursements of counsel
for the Company and of its independent public accountants, including the
expenses of any special audits, agreed upon procedures, interim reports, or
"cold comfort" letters required by or incident to such performance and
compliance, the fees and disbursements of any counsel and accountants (which
fees and disbursements of such counsel and accountants shall not exceed $15,000)
retained by the holder or holders of more than 50% of the Registrable Securities
being registered (other than Additional Registrable Shares), costs of policies
of insurance against liabilities arising out of the public offering of the
Registrable Securities being registered, if any, and any fees and disbursements
of underwriters or agents customarily paid by issuers or sellers of securities,
but excluding underwriting discounts and commissions and transfer taxes, if any,
provided that, in any case where Registration Expenses are not to be borne by
the Company, such expenses shall not include salaries of Company personnel or
general overhead expenses of the Company, auditing fees, premiums or other
expenses relating to liability insurance required by underwriters or agents of
the Company or other expenses for the preparation of financial statements or
other data normally prepared by the Company in the ordinary course of its
business or which the Company would have incurred in any event.
Requesting Holder: As defined in Section 1.6.
Rule 415: Rule 415 under the Securities Act (or any successor or
similar rule).
Securities Act: 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.
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Warrants: Any of the Warrants originally issued by the Company to the
Purchaser on the date hereof and any Warrants issued in substitution therefor in
accordance with the terms and provisions thereof.
3. Miscellaneous.
3.1. No Inconsistent Agreements. The Company shall not hereafter
enter into any agreement with respect to its securities or amend any of its
charter documents which is inconsistent with or violates the rights granted to
the holders of Registrable Securities in this Agreement.
3.2. Adjustments Affecting Registrable Securities. The Company shall
not take any action, or permit any change to occur, with respect to its
securities which would materially and adversely affect the ability of the
holders of Registrable Securities to include such Registrable Securities in a
registration undertaken pursuant to this Agreement or which would materially and
adversely affect the marketability of such Registrable Securities in any such
registration (including, without limitation, effecting a stock split or a
combination of shares).
3.3. Remedies. Any Person having rights under any provision of this
Agreement shall be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
3.4. Amendments and Waivers. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the holders of Registrable Securities unless
such modification, amendment or waiver is approved in writing by (i) the Company
and (ii) the holders of at least a majority of the Registrable Securities then
in existence who are a party to this Agreement; provided that no such amendment
or action which materially adversely affects any one holder of Registrable
Securities, as such, vis-a-vis the other holders of Registrable Securities, as
such, shall be effective against such holder without the prior written consent
of such holder. The failure of any party to enforce any of the provisions of
this Agreement shall in no way be construed as a waiver of such provisions and
shall not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
3.5. Additional Parties. Each Person who after the date of this
Agreement is the assignee or transferee of any of the Warrants shall be
entitled, but not obligated, to execute a counterpart to this Agreement and
become a party hereto (each, an "Additional Party").
3.6. Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the
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respective successors and assigns of the parties hereto whether so expressed or
not including, without limitation, any Person which is the successor to the
Company. In addition, whether or not any express assignment has been made, the
provisions of this Agreement which are for the benefit of purchasers or holders
of Registrable Securities are also for the benefit of, and enforceable by, any
subsequent holder of Registrable Securities.
3.7. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
3.8. Entire Agreement. Except as otherwise expressly set forth
herein, this document embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
3.9. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.
3.10. Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
3.11. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PRINCIPLES THEREOF.
3.12. Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable overnight courier service
(charges prepaid) or mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to holder of Registrable Securities at the address
indicated on the books and records of the Company and to the Company at its
principal executive office (to the attention of the Company's president) or to
such other address or to the attention of such other person as the recipient
party has specified by prior written notice to the sending party.
3.13 Judicial Proceedings. Any legal action, suit or proceeding
brought against the Company with respect to this Agreement may be brought in any
federal court of the Southern District of New York or any state court located in
New York County, State of New York, and by execution and delivery of this
Agreement, the Company irrevocably waives any claim (by way of motion, as a
defense or otherwise) of improper venue, that it is not subject personally to
the jurisdiction of such court, that such courts are an inconvenient forum or
that this Agreement or the subject matter may not be enforced in or by
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such court. The Company hereby irrevocably consents to the service of process of
any of the aforementioned courts in any such action, suit or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, at
its address provided for in Section 3.12, such service to become effective 10
days after such mailing. Nothing herein contained shall be deemed to affect the
right of any party to serve process in any manner permitted by law or commence
legal proceedings or otherwise proceed against any other party in any other
jurisdiction to enforce judgments obtained in any action, suit or proceeding
brought pursuant to this Section. EACH OF THE PURCHASER AND THE COMPANY HEREBY
IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING, WHETHER AT
LAW OR EQUITY, BROUGHT BY IT OR THE PURCHASER IN CONNECTION WITH THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
3.14 Interpretation. Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine and/or neuter
forms, and the singular form of nouns and pronouns shall include the plural and
vice versa. Unless the context otherwise requires, any reference to a prospectus
or a prospectus supplement shall include all documents incorporated by
reference, or deemed to be incorporated by reference, therein in accordance with
the Securities Act.
3.15 Termination. The registration rights set forth in this
Agreement shall not be available to any holder of Registrable Securities if, in
the opinion of counsel to the Company, upon which opinion the Purchaser shall be
expressly entitled to rely, all of the Registrable Securities then owned by such
holders could be sold in any 90-day period pursuant to Rule 144.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this
Registration Agreement on the day and year first above written.
▇▇▇▇ GROUP, INC.
By: /s/ D. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------------
Name: ▇. ▇▇▇▇▇▇ Stricklland
Title: President & Chief Executive Officer
▇▇▇▇▇▇▇▇▇ L.L.C.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
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