Exhibit 4.3
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ANCHOR GLASS CONTAINER CORPORATION
STOCKHOLDERS' AGREEMENT
Dated as of August 30, 2002
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STOCKHOLDERS' AGREEMENT
This STOCKHOLDERS' AGREEMENT (this "Agreement") is made and
entered into as of August 30, 2002, by and among ANCHOR GLASS CONTAINER
CORPORATION, a Delaware corporation (the "Company"), the investors set forth on
Schedule 1 hereto (each, an "Investor" and collectively, the "Investors") and
the stockholders set forth on Schedule 2 hereto (the "Other Stockholders" and
together with the Investors, the "Stockholders").
W I T N E S S E T H :
WHEREAS, the Company and the Investors have entered into the
Reorganization Agreement, dated as of March 15, 2002 (the "Reorganization
Agreement");
WHEREAS, pursuant to the Reorganization Agreement, the
Investors and certain of the Other Stockholders shall receive shares of Common
Stock of the Company;
WHEREAS, the Company and the Pension Benefit Guaranty
Corporation (the "PBGC") have entered into the Agreement, dated as of July 31,
2002 (the "PBGC Agreement");
WHEREAS, pursuant to the PBGC Agreement, the PBGC shall
receive warrants (the "Warrants") exercisable for shares of Common Stock of the
Company;
WHEREAS, in order to induce the Investors to consummate the
transactions contemplated by the Reorganization Agreement and to induce the PBGC
to enter into the PBGC Agreement, the Company and the Other Stockholders (other
than the PBGC) are executing and delivering this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows (capitalized terms used herein
and not defined herein have the meanings set forth in the Purchase Agreement):
1. DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings:
"Affiliate" shall mean (i) with respect to any Person, any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such Person. The term "control" includes,
without limitation, the possession, directly or indirectly, of the power to
direct the management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
"Agents" shall have the meaning set forth in Section 5.1.
"Agreement" has the meaning set forth in the preamble.
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"Appraiser" shall have the meaning set forth in Section
7.4(a).
"Board of Directors" shall mean the board of directors of the
Company as constituted from time to time.
"Business Day" shall mean any day that is not a Saturday,
Sunday or day on which banking institutions in New York, New York are not
required to be open.
"Common Stock" shall mean shares of common stock, $.10 par
value, of the Company.
"Company" shall have the meaning set forth in the preamble.
"Demand Registration" shall mean a registration required to be
effected by the Company pursuant to Section 2.1.
"Demand Registration Statement" shall mean a registration
statement of the Company which covers the Registrable Securities requested to be
included therein pursuant to the provisions of Section 2.1 and all amendments
and supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference (or deemed to be
incorporated by reference) therein.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time, and the rules and regulations thereunder, or any
successor statute.
"Holders" shall mean each of the Stockholders for so long as
it owns any Registrable Securities and such of its respective heirs, successors
and permitted assigns (including any permitted transferees of Registrable
Securities) who acquire or are otherwise the transferee of Registrable
Securities, directly or indirectly, from such Stockholder (or any subsequent
Holder), for so long as such heirs, successors and permitted assigns own any
Registrable Securities. For purposes of this Agreement, a Person will be deemed
to be a Holder whenever such Person holds an option to purchase, or a security
convertible into or exercisable or exchangeable for, Registrable Securities,
whether or not such purchase, conversion, exercise or exchange has actually been
effected and disregarding any legal restrictions upon the exercise of such
rights. Registrable Securities issuable upon exercise of an option or upon
conversion, exchange or exercise of another security shall be deemed outstanding
for the purposes of this Agreement.
"Holders' Counsel" shall mean one firm of counsel (per
registration) to the Holders of Registrable Securities participating in such
registration, which counsel shall be selected by the Majority Holders of the
Registration.
"Incidental Registration" shall mean a registration required
to be effected by the Company pursuant to Section 2.2.
"Incidental Registration Statement" shall mean a registration
statement of the Company which covers the Registrable Securities requested to be
included therein pursuant to
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the provisions of Section 2.2 and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference (or deemed to be incorporated by reference)
therein.
"Initial Public Offering" shall mean the first public offering
of any class of equity securities of the Company pursuant to a registration
statement filed with and declared effective by the SEC.
"Inspector" or "Inspectors" has the meaning set forth in
Section 4.1(g).
"Investor Holders" shall mean each of the Investors and its
Affiliates for so long as it owns any Registrable Securities and such of its
respective heirs, successors and permitted assigns (including any Permitted
Transferees of Registrable Securities) who acquire or are otherwise the
transferee of Registrable Securities, directly or indirectly, from such Investor
(or any subsequent holder), for so long as such heirs, successors and permitted
assigns own any Registrable Securities.
"Investor Stockholders" shall mean the Investors and their
transferees, successors and assigns.
"Majority Holders" shall mean one or more Holders of
Registrable Securities who would hold a majority of the Registrable Securities
then outstanding.
"Majority Holders of the Registration" shall mean, with
respect to a particular registration, one or more Holders of Registrable
Securities who would hold a majority of the Registrable Securities to be
included in such registration.
"Majority Other Stockholders" shall mean one or more Other
Stockholders who would hold a majority of the Registrable Securities held by all
Other Stockholders then outstanding.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Nasdaq National Market" shall have the meaning set forth in
Section 4.1(k).
"Offered Shares" shall have the meaning set forth in Section
7.2(a).
"PBGC" shall have the meaning set forth in the preamble.
"PBGC Agreement" shall have the meaning set forth in the
preamble.
"Permitted Transferee" shall have the meaning set forth in
Section 7.6.
"Person" shall mean any individual, firm, partnership,
corporation, trust, joint venture, association, joint stock company, limited
liability company, unincorporated organization or any other entity or
organization, including a government or agency or political subdivision thereof,
and shall include any successor (by merger or otherwise) of such entity.
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"Proportionate Percentage" shall mean, with respect to any
group of Stockholders, the ratio of the number of shares of Common Stock then
owned by any member of such group to the aggregate number of shares of Common
Stock then owned by all members of such group.
"Prospectus" shall mean the prospectus included in a
Registration Statement (including, without limitation, any preliminary
prospectus and any prospectus that includes any information previously omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A promulgated under the Securities Act), and any such
Prospectus as amended or supplemented by any prospectus supplement, and all
other amendments and supplements to such Prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
(or deemed to be incorporated by reference) therein.
"Purchase Offer" shall have the meaning set forth in Section
7.2(a).
"Purchaser" has the meaning set forth in Section 7.3(a).
"Records" shall have the meaning set forth in Section 4.1(g).
"Registrable Securities" shall mean (i) any Common Stock now
held or otherwise hereafter purchased or acquired by the Stockholders, (ii) any
Common Stock issued or issuable upon exercise of any Warrant and (ii) any other
securities of the Company (or any successor or assign of the Company, whether by
merger, consolidation, sale of assets or otherwise) which may be issued with
respect to, in exchange for, or in substitution of, Registrable Securities
referenced in clause (i) and (ii) above by reason of any dividend or stock
split, combination of shares, merger, consolidation, recapitalization,
reclassification, reorganization, sale of assets or similar transaction. As to
any particular Registrable Securities, such securities shall cease to be
Registrable Securities when (A) a registration statement with respect to the
sale of such securities shall have been declared effective under the Securities
Act and such securities shall have been disposed of in accordance with such
registration statement, (B) such securities are sold pursuant to Rule 144 (or
any similar provisions then in force) under the Securities Act, (C) such
securities have been otherwise transferred, a new certificate or other evidence
of ownership for them not bearing the legend restricting further transfer shall
have been delivered by the Company and subsequent public distribution of them
shall not require registration under the Securities Act, or (D) such securities
shall have ceased to be outstanding.
"Registration Expenses" shall mean any and all expenses
incident to performance of or compliance with this Agreement by the Company and
its subsidiaries, including, without limitation (i) all SEC, stock exchange,
NASD and other registration, listing and filing fees, (ii) all fees and expenses
incurred in connection with compliance with state securities or blue sky laws
and compliance with the rules of any stock exchange (including fees and
disbursements of counsel in connection with such compliance and the preparation
of a blue sky memorandum and legal investment survey), (iii) all expenses of any
Persons in preparing or assisting in preparing, word processing, printing,
distributing, mailing and delivering any Registration Statement, any Prospectus,
any underwriting agreements, transmittal letters, securities sales agreements,
securities certificates and other documents relating to the performance of or
compliance with this Agreement, (iv) the fees and disbursements of counsel for
the Company, (v) the fees and
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disbursements of Holders' Counsel, (vi) the fees and disbursements of all
independent public accountants (including the expenses of any audit and/or "cold
comfort" letters) and the fees and expenses of other Persons, including experts,
retained by the Company, (vii) the expenses incurred in connection with making
road show presentations and holding meetings with potential investors to
facilitate the distribution and sale of Registrable Securities which are
customarily borne by the issuer, (viii) any fees and disbursements of
underwriters customarily paid by issuers or sellers of securities, and (ix)
premiums and other costs of policies of insurance against liabilities arising
out of the public offering of the Registrable Securities being registered;
provided, however, Registration Expenses shall not include discounts and
commissions payable to underwriters, selling brokers, dealer managers or other
similar Persons engaged in the distribution of any of the Registrable
Securities; and provided further, 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 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; and
provided, further, that in the event the Company shall, in accordance with
Section 2.2 or Section 2.6 hereof, not register any securities with respect to
which it had given written notice of its intention to register to Holders,
notwithstanding anything to the contrary in the foregoing, all of the costs
incurred by the Holders in connection with such registration shall be deemed to
be Registration Expenses.
"Registration Statement" shall mean any registration statement
of the Company which covers any Registrable Securities and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference (or deemed to be
incorporated by reference) therein.
"Request" shall have the meaning set forth in Section 2.1(a).
"S-3 Registration" shall mean a registration required to be
effected by the Company pursuant to Section 2.3(a).
"SEC" shall mean the Securities and Exchange Commission, or
any successor agency having jurisdiction to enforce the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time, and the rules and regulations thereunder, or any
successor statute.
"Seller" shall have the meaning set forth in Section 7.2.
"Shares" shall have the meaning set forth in Section 7.2.
"Shelf Registration" shall have the meaning set forth in
Section 2.1(a).
"Stockholder Joinder" means a joinder agreement, substantially
in the form of Exhibit A attached hereto, executed by a Person, other than a
current Stockholder, who has
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acquired Shares from a current Stockholder, with the effect that the holder
thereafter shall be deemed to be a Stockholder for all purposes of this
Agreement.
"Stockholders" shall have the meaning set forth in the
preamble.
"Transfer" shall have the meaning set forth in Section 7.1.
"Underwriters" shall mean the underwriters, if any, of the
offering being registered under the Securities Act.
"Underwritten Offering" shall mean a sale of securities of the
Company to an Underwriter or Underwriters for reoffering to the public.
"Warrant" shall have the meaning set forth in the preamble.
"Withdrawn Demand Registration" shall have the meaning set
forth in Section 2.1(a).
"Withdrawn Request" shall have the meaning set forth in
Section 2.1(a).
2. REGISTRATION UNDER THE SECURITIES ACT.
2.1. Demand Registration.
(a) Right to Demand Registration. Subject to
Section 2.1(c), at any time or from time to time, the Majority Investor Holders
shall have the right to request in writing that the Company register all or part
of such Investor Holder's Registrable Securities (a "Request") (which Request
shall specify the amount of Registrable Securities intended to be disposed of by
such Holders and the intended method of disposition thereof) by filing with the
SEC a Demand Registration Statement. As promptly as practicable, but no later
than 15 days after receipt of a Request, the Company shall give written notice
of such requested registration to all other Investor Holders of Registrable
Securities. Subject to Section 2.1(b), the Company shall include in a Demand
Registration (A) the Registrable Securities intended to be disposed of by the
Investor Holders initiating the Request and (B) the Registrable Securities
intended to be disposed of by any other Investor Holder which shall have made a
written request (which request shall specify the amount of Registrable
Securities to be registered and the intended method of disposition thereof) to
the Company for inclusion thereof in such registration within 20 days after the
receipt of such written notice from the Company. The Company shall, as
expeditiously as possible (subject to the terms of Section 4.1) following a
Request, file with the SEC a Demand Registration Statement providing for the
registration under the Securities Act of the Registrable Securities which the
Company has been so requested to register by all such Investor Holders, to the
extent necessary to permit the disposition of such Registrable Securities to be
registered in accordance with the intended methods of disposition thereof
specified in such Request or further requests (including, without limitation, by
means of a shelf registration pursuant to Rule 415 under the Securities Act (a
"Shelf Registration") if so requested and if the Company is then eligible to use
such a registration). The Company shall use its best efforts to have such Demand
Registration Statement declared effective by the SEC as soon as practicable
thereafter and to
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keep such Demand Registration Statement continuously effective for the period
specified in Section 4.1(b).
(i) A Request may be withdrawn prior
to the filing of the Demand Registration Statement by the Majority
Investor Holders of the Registration (a "Withdrawn Request") and a
Demand Registration Statement may be withdrawn prior to the
effectiveness thereof by the Majority Investor Holders of the
Registration (a "Withdrawn Demand Registration"), and such withdrawals
shall be treated as a Demand Registration which shall have been
effected pursuant to this Section 2.1, unless the Investor Holders of
Registrable Securities to be included in such Registration Statement
reimburse the Company for its reasonable out-of-pocket Registration
Expenses relating to the preparation and filing of such Demand
Registration Statement (to the extent actually incurred), in which case
such withdrawal shall not be treated as a Demand Registration effected
pursuant to this Section 2.1 (and shall not be counted toward the
maximum number of Demand Registrations described in Section 2.1(c));
provided, however, that if a Withdrawn Request or Withdrawn
Registration Statement is made (A) because of a material adverse change
in the business, financial condition or prospects of the Company, or
(B) because the sole or lead managing Underwriter advises that the
amount of Registrable Securities to be sold in such offering be reduced
pursuant to Section 2.1(b) by more than 15% of the Registrable
Securities to be included in such Registration Statement, then such
withdrawal shall not be treated as a Demand Registration effected
pursuant to this Section 2.1 (and shall not be counted toward the
maximum number of Demand Registrations described in Section 2.1(c)),
and the Company shall pay all Registration Expenses in connection
therewith. Any Investor Holder requesting inclusion in a Demand
Registration may, at any time prior to the effective date of the Demand
Registration Statement (and for any reason) revoke such request by
delivering written notice to the Company revoking such requested
inclusion.
(ii) The registration rights granted
pursuant to the provisions of this Section 2.1 shall be in addition to
the registration rights granted pursuant to the other provisions of
Section 2 hereof.
(b) Priority in Demand Registrations. If a
Demand Registration involves an Underwritten Offering, and the sole or lead
managing Underwriter, as the case may be, of such Underwritten Offering shall
advise the Company in writing (with a copy to each Investor Holder requesting
registration) on or before the date five days prior to the date then scheduled
for such offering that, in its opinion, the amount of Registrable Securities
requested to be included in such Demand Registration exceeds the number which
can be sold in such offering within a price range acceptable to the Majority
Investor Holders of the Registration (such writing to state the basis of such
opinion and the approximate number of Registrable Securities which may be
included in such offering), and the Request is not thereafter withdrawn, the
Company shall include in such Demand Registration, to the extent of the number
which the Company is so advised may be included in such offering, (i) first, the
Registrable Securities requested to be included in such registration by the
Investor Holders, allocated pro rata in proportion to the number of Registrable
Securities requested to be included in such Demand Registration by each of them
and (ii) second, other securities of the Company to be registered on behalf of
any other Person. In the event the Company shall not, by virtue of this Section
2.1(b),
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include in any Demand Registration all of the Registrable Securities of any
Investor Holder requested to be included in such Demand Registration, such
Investor Holder may, upon written notice to the Company given within five days
of the time such Investor Holder first is notified of such matter, further
reduce the amount of Registrable Securities it desires to have included in such
Demand Registration, whereupon only the Registrable Securities, if any, that it
desires to have included will be so included and the Investor Holders not so
reducing shall be entitled to a corresponding pro rata increase in the amount of
Registrable Securities to be included in such Demand Registration.
(c) Limitations on Registrations. The rights
of the Investor Holders to request Demand Registrations pursuant to Section
2.1(a) are subject to the following limitations: (i) in no event shall the
Company be required to effect a Demand Registration until after the earlier of
(A) an Initial Public Offering and (B) the first anniversary of this Agreement;
(ii) in no event shall the Company be required to effect a Demand Registration
unless the aggregate offering price, net of underwriting discounts and
commissions, is at least $1,000,000; provided, however, that the Company shall
be required to effect a Demand Registration regardless of the aggregate offering
price in the event that the Majority Investor Holders are disposing of all of
the Registrable Securities held by them; and (iii) in no event shall the Company
be required to effect, in the aggregate, more than four Demand Registrations;
provided, however, that Investor Holders shall be deemed not to have expended a
Demand Registration right to the extent the Company (x) does not include in what
would otherwise be the final registration for which the Company is required to
pay Registration Expenses the number of Registrable Securities requested to be
registered by the Holders by reason of Section 2.1(b) or (y) terminates a Shelf
Registration pursuant to Section 2.3 prior to the time that all Registrable
Securities covered by such Shelf Registration have been sold; and provided,
further, that the Registration Expenses in connection with each other Demand
Registration 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 then being registered on their behalf.
(d) Underwriting; Selection of Underwriters.
Notwithstanding anything to the contrary contained in Section 2.1(a), if the
Majority Investor Holders so elect, the offering of such Registrable Securities
pursuant to such Demand Registration shall be in the form of a firm commitment
Underwritten Offering and such Majority Investor Holders may require that all
Persons (including other Holders) participating in such registration sell their
Registrable Securities to the Underwriters at the same price and on the same
terms of underwriting applicable to the Investor Holders. If any Demand
Registration involves an Underwritten Offering, the sole or managing
Underwriters and any additional investment bankers and managers to be used in
connection with such registration shall be selected by the Majority Investor
Holders subject to the approval (not to be unreasonably withheld) of the
Company.
(e) Effective Registration Statement;
Suspension. A Demand Registration Statement shall not be deemed to have become
effective (and the related registration will not be deemed to have been
effected) (i) unless it has been declared effective by the SEC and remains
effective in compliance with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities covered by such Demand
Registration Statement for the time period specified in Section 4.1(b), (ii) if
the offering of any Registrable Securities pursuant
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to such Demand Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other governmental
agency or court, or (iii) if, in the case of an Underwritten Offering, the
conditions to closing specified in an underwriting agreement to which the
Company is a party are not satisfied (other than by the sole reason of any
breach or failure by the Holders of Registrable Securities) and are not
otherwise waived.
(f) Registration Statement Form.
Registrations under this Section 2.1 shall be on such appropriate registration
form of the SEC (i) as shall be selected by the Company subject to the approval
of the Majority Investor Holders, and (ii) which shall be available for the sale
of Registrable Securities in accordance with the intended method or methods of
disposition specified in the requests for registration. The Company agrees to
include in any such Registration Statement all information which any selling
Investor Holder, upon advice of counsel, shall reasonably request.
(g) Other Registrations. During the period
(i) beginning on the date of a Request and (ii) ending on the date that is 90
days after the date that a Demand Registration Statement filed pursuant to such
Request has been declared effective by the SEC or, if the Majority Investor
Holders shall withdraw such Request or such Demand Registration Statement, on
the date of such Withdrawn Request or such Withdrawn Registration Statement, the
Company shall not, without the consent of the Majority Investor Holders, file a
registration statement pertaining to any other securities of the Company.
2.2. Incidental Registration.
(a) Right to Include Registrable Securities.
(i) If the Company at any time or from time to time after an Initial Public
Offering proposes to register any of its securities under the Securities Act
(other than in a registration on Form S-4 or S-8 or any successor form to such
forms and other than pursuant to Section 2.1 or 2.3) whether or not pursuant to
registration rights granted to other holders of its securities and whether or
not for sale for its own account, the Company shall deliver prompt written
notice (which notice shall be given at least 45 days prior to such proposed
registration) to all Holders of Registrable Securities of its intention to
undertake such registration, describing in reasonable detail the proposed
registration and distribution (including the anticipated range of the proposed
offering price, the class and number of securities proposed to be registered and
the distribution arrangements) and of such Holders' right to participate in such
registration under this Section 2.2 as hereinafter provided. Subject to the
other provisions of this Section 2.2(a) and Section 2.2(b), upon the written
request of any Holder made within 30 days after the receipt of such written
notice (which request shall specify the amount of Registrable Securities to be
registered and the intended method of disposition thereof), the Company shall
effect the registration under the Securities Act of all Registrable Securities
requested by Holders to be so registered (an "Incidental Registration"), to the
extent required to permit the disposition (in accordance with the intended
methods thereof as aforesaid) 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 and shall cause
such Registration Statement to become and remain effective with respect to such
Registrable Securities in accordance with the registration procedures set forth
in Section 4. If an Incidental Registration involves an Underwritten Offering,
immediately upon notification to the Company from the Underwriter of the price
at
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which such securities are to be sold, the Company shall so advise each
participating Holder. The Holders requesting inclusion in an Incidental
Registration may, at any time prior to the effective date of the Incidental
Registration Statement (and for any reason), revoke such request by delivering
written notice to the Company revoking such requested inclusion.
(ii) If at any time after giving
written notice of its intention to register any securities and prior to
the effective date of the Incidental Registration Statement filed in
connection with such registration, the Company shall determine for any
reason 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, (A) in the
case of a determination not to register, the Company 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 incurred in connection therewith), without
prejudice, however, to the rights of Holders to cause such registration
to be effected as a registration under Section 2.1 or 2.3(a) and (B) in
the case of a determination to delay such registration, the Company
shall be permitted to delay the registration of such Registrable
Securities for the same period as the delay in registering such other
securities; provided, however, that if such delay shall extend beyond
120 days from the date the Company received a request to include
Registrable Securities in such Incidental Registration, then the
Company shall again give all Holders the opportunity to participate
therein and shall follow the notification procedures set forth in the
preceding paragraph. There is no limitation on the number of such
Incidental Registrations pursuant to this Section 2.2 which the Company
is obligated to effect.
(iii) The registration rights granted
pursuant to the provisions of this Section 2.2 shall be in addition to
the registration rights granted pursuant to the other provisions of
Section 2 hereof.
(b) Priority in Incidental Registration. If
an Incidental Registration involves an Underwritten Offering (on a firm
commitment basis), and the sole or the lead managing Underwriter, as the case
may be, of such Underwritten Offering shall advise the Company in writing (with
a copy to each Holder requesting registration) on or before the date five days
prior to the date then scheduled for such offering that, in its opinion, the
amount of securities (including Registrable Securities) requested to be included
in such registration exceeds the amount which can be sold in such offering
without materially interfering with the successful marketing of the securities
being offered (such writing to state the basis of such opinion and the
approximate number of such securities which may be included in such offering
without such effect), the Company shall include in such registration, to the
extent of the number which the Company is so advised may be included in such
offering without such effect, (i) in the case of a registration initiated by the
Company, (A) first, the securities that the Company proposes to register for its
own account (but solely to the extent that the proceeds thereof shall not be
used to purchase shares of common stock of the Company or other securities of
the Company), (B) second, the Registrable Securities requested to be included in
such registration by the Holders, allocated pro rata in proportion to the number
of Registrable Securities requested to be included in such registration by each
of them, and (C) third, other securities of the Company to be registered on
behalf of any other Person, and (ii) in the case of a registration initiated by
a
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Person other than the Company, (A) first, the securities requested to be
included in such registration by any Persons initiating such registration, (B)
second, the Registrable Securities requested to be included in such registration
by the Holders, (C) third, any other Persons (not including Affiliates of the
Company), allocated pro rata in proportion to the number of securities requested
to be included in such registration by each of them, and (D) fourth, the
securities that the Company proposes to register for the account of it and its
Affiliates, provided, however, that in the event the Company will not, by virtue
of this Section 2.2(b), include in any such registration all of the Registrable
Securities of any Holder requested to be included in such registration, such
Holder may, upon written notice to the Company given within three days of the
time such Holder first is notified of such matter, reduce the amount of
Registrable Securities it desires to have included in such registration,
whereupon only the Registrable Securities, if any, it desires to have included
will be so included and the Holders not so reducing shall be entitled to a
corresponding pro rata increase in the amount of Registrable Securities to be
included in such registration.
2.3. S-3 Registration; Shelf Registration.
(a) S-3 Registration. If at any time (i) any
Investor Holder requests that the Company file a registration statement on Form
S-3 or any successor form thereto for a public offering of all or any portion of
the shares of Registrable Securities held by such Investor Holder(s), the
reasonably anticipated aggregate price to the public of which would exceed
$1,000,000, and (ii) the Company is a registrant entitled to use Form S-3 or any
successor form thereto to register such securities, then the Company shall, as
expeditiously as possible following such Request, use its best efforts to
register under the Securities Act on Form S-3 or any successor form thereto, for
public sale in accordance with the intended methods of disposition specified in
such Request or any subsequent requests (including, without limitation, by means
of a Shelf Registration) the Registrable Securities specified in such Request
and any subsequent requests; provided, that if such registration is for an
Underwritten Offering, the terms of Sections 2.1(b) and 2.1(d) shall apply (and
any reference to "Demand Registration" therein shall, for purposes of this
Section 2.3, instead be deemed a reference to "S-3 Registration"). Whenever the
Company is required by this Section 2.3 to use its best efforts to effect the
registration of Registrable Securities, each of the procedures and requirements
of Section 2.1(a) and 2.1(e) (including but not limited to the requirements that
the Company (A) notify all Holders of Registrable Securities from whom such
Request for registration has not been received and provide them with the
opportunity to participate in the offering and (B) use its best efforts to have
such S-3 Registration Statement declared and remain effective for the time
period specified herein) shall apply to such registration (and any reference in
such Sections 2.1(a) and 2.1(e) to "Demand Registration" shall, for purposes of
this Section 2.3, instead be deemed a reference to "S-3 Registration").
Notwithstanding anything to the contrary contained herein, no Request may be
made under this Section 2.3 within 90 days after the effective date of a
Registration Statement filed by the Company covering a firm commitment
Underwritten Offering in which the Holders of Registrable Securities shall have
been entitled to join pursuant to this Agreement in which there shall have been
effectively registered all shares of Registrable Securities as to which
registration shall have been requested. There is no limitation on the number of
S-3 Registrations that the Company is obligated to effect. The registration
rights granted pursuant to the provisions of this Section 2.3(a) shall be in
addition to the registration rights granted pursuant to the other provisions of
this Section 2.
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(b) Shelf Registration. If a request made
pursuant to Section 2.1 or 2.3(a) is for a Shelf Registration, the Company shall
use its best efforts to keep the Shelf Registration continuously effective
through the date on which all of the Registrable Securities covered by such
Shelf Registration may be sold pursuant to Rule 144(k) under the Securities Act
(or any successor provision having similar effect); provided, however, that
prior to the termination of such Shelf Registration, the Company shall first
furnish to each Holder of Registrable Securities participating in such Shelf
Registration (i) an opinion, in form and substance satisfactory to the Majority
Holders of the Registration, of counsel for the Company satisfactory to the
Majority Holders of the Registration stating that such Registrable Securities
are freely saleable pursuant to Rule 144(k) under the Securities Act (or any
successor provision having similar effect) or (ii) a "No-Action Letter" from the
staff of the SEC stating that the SEC would not recommend enforcement action if
the Registrable Securities included in such Shelf Registration were sold in a
public sale other than pursuant to an effective registration statement.
2.4. Underwritten Offerings.
(a) Demand Underwritten Offerings. If
requested by the sole or lead managing Underwriter for any Underwritten Offering
effected pursuant to a Demand Registration or an S-3 Registration, the Company
shall enter into a customary underwriting agreement with the Underwriters for
such offering, such agreement to be reasonably satisfactory in substance and
form to the Company and the Majority Investor Holders participating in such
offering and to contain such representations and warranties by the Company and
such other terms as are generally prevailing in agreements of that type,
including, without limitation, indemnification and contribution to the effect
and to the extent provided in Section 5.
(b) Holders of Registrable Securities to be
Parties to Underwriting Agreement. The Holders of Registrable Securities to be
distributed by Underwriters in an Underwritten Offering contemplated by Section
2 shall be parties to the underwriting agreement between the Company and such
Underwriters and may, at such Holders' 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 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 under such
underwriting agreement be conditions precedent to the obligations of such
Holders of Registrable Securities; provided, however, that the Company shall not
be required to make any representations or warranties with respect to written
information specifically provided by a selling Holder for inclusion in the
Registration Statement. No Holder shall be required to make any representations
or warranties to, or agreements with, the Company or (in the case of an
Incidental Registration) the Underwriters other than representations, warranties
or agreements regarding such Holder, such Holder's Registrable Securities and
such Holder's intended method of disposition.
(c) Participation in Underwritten
Registration. Notwithstanding anything herein to the contrary, no Person may
participate in any underwritten registration hereunder unless such Person (i)
agrees to sell its securities on the same terms and conditions provided in any
underwritten arrangements approved by the Persons entitled hereunder to approve
such arrangement and (ii) accurately completes and executes in a timely manner
all questionnaires, powers of attorney, indemnities, custody agreements,
underwriting
12
agreements and other documents reasonably required under the terms of such
underwriting arrangements.
2.5. Expenses. The Company shall pay all
Registration Expenses in connection with any Demand Registration, Incidental
Registration, S-3 Registration or Shelf Registration whether or not such
registration shall become effective and whether or not all Registrable
Securities originally requested to be included in such registration are
withdrawn or otherwise ultimately not included in such registration, except as
otherwise provided with respect to a Withdrawn Request and a Withdrawn Demand
Registration in Section 2.1(a).
2.6. Conversions; Exercises. Notwithstanding
anything to the contrary herein, in order for any Registrable Securities that
are issuable upon the exercise of conversion rights, options or warrants to be
included in any registration pursuant to Section 2 hereof, the exercise of such
conversion rights, options or warrants must be effected no later than
immediately prior to the closing of any sales under the Registration Statement
pursuant to which such Registrable Securities are to be sold.
3. HOLDBACK ARRANGEMENTS.
3.1. Restrictions on Sale by Holders of Registrable
Securities. Each Holder of Registrable Securities agrees, by acquisition of such
Registrable Securities, if timely requested in writing by the sole or lead
managing Underwriter, not to make any short sale of, loan, grant any option for
the purchase of or effect any public sale or distribution, of any of the
Company's equity securities (or any security convertible into or exchangeable or
exercisable for any of the Company's equity securities) during the time period
reasonably requested by the sole or lead managing Underwriter not to exceed 90
days or, in the case of an Initial Public Offering, 180 days beginning on the
effective date of the applicable registration statement (except as part of such
underwritten registration or pursuant to registrations on Forms S-4 or S-8 or
any successor form to such forms), unless the sole or lead managing Underwriter
in such Underwritten Offering otherwise agrees; provided, however, that to the
extent the Company or the sole lead managing Underwriter releases any other
Person from the foregoing or equivalent restrictions in whole or in part it
shall, on the same day, notify the Holders of such release and such parties
shall automatically be released to the same extent.
3.2. Restrictions on Sale by the Company and Others.
The Company and each Holder of Registrable Securities agree that if timely
requested in writing by the sole or lead managing Underwriter in an Underwritten
Offering of any Registrable Securities, not to make any short sale of, loan,
grant any option for the purchase of or effect any public sale or distribution
of any of the Company's equity securities (or any security convertible into or
exchangeable or exercisable for any of the Company's equity securities) during
the time period reasonably requested by the sole or lead managing Underwriter
not to exceed 90 days or, in the case of an Initial Public Offering, 180 days,
beginning on the effective date of the applicable registration statement (except
as part of such underwritten registration or pursuant to registrations on Forms
S-4 or S-8 or any successor form to such forms), unless the sole or lead
managing Underwriter in such Underwritten Offering otherwise agrees; provided,
that the Holders of Registrable Securities shall not be so bound unless each
director or officer of the Company and each holder of 5% or more of the equity
securities (or any security convertible into
13
or exchangeable or exercisable for any of its equity securities) of the Company
purchased from the Company at any time after the date of this Agreement (other
than in a registered public offering or in a public sale) also agree to be bound
by such restrictions.
4. REGISTRATION PROCEDURES.
4.1. Obligations of the Company. Whenever the
Company is required to effect the registration of Registrable Securities under
the Securities Act pursuant to Section 2 of this Agreement, the Company shall,
as expeditiously as possible:
(a) prepare and file with the SEC (promptly,
and in any event within 60 days after receipt of a request to register
Registrable Securities) the requisite Registration Statement to effect such
registration, which Registration Statement shall comply as to form in all
material respects with the requirements of the applicable form and include all
financial statements required by the SEC to be filed therewith, and the Company
shall use its best efforts to cause such Registration Statement to become
effective as soon as practicable thereafter (provided, that the Company may
discontinue any registration of its securities that are not Registrable
Securities, and, under the circumstances specified in Section 2.2, its
securities that are Registrable Securities); provided, however, that before
filing a Registration Statement or Prospectus or any amendments or supplements
thereto, or comparable statements under securities or blue sky laws of any
jurisdiction, the Company shall (i) provide Holders' Counsel and any other
Inspector (as defined below) with an adequate and appropriate opportunity to
participate in the preparation of such Registration Statement and each
Prospectus included therein (and each amendment or supplement thereto or
comparable statement) to be filed with the SEC, which documents shall be subject
to the review and comment of Holders' Counsel, and (ii) not file any such
Registration Statement or Prospectus (or amendment or supplement thereto or
comparable statement) with the SEC to which Holder's Counsel, any selling Holder
or any other Inspector shall have reasonably objected on the grounds that such
filing does not comply in all material respects with the requirements of the
Securities Act or of the rules or regulations thereunder;
(b) prepare and file with the SEC such
amendments and supplements to such Registration Statement and the Prospectus
used in connection therewith as may be necessary (i) to keep such Registration
Statement effective, and (ii) to comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Securities covered by
such Registration Statement, in each case until such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the seller(s) thereof set forth in such Registration
Statement; provided, that except with respect to any Shelf Registration, such
period need not extend beyond 12 months after the effective date of the
Registration Statement; and provided, further, that with respect to any Shelf
Registration, such period need not extend beyond the time period provided in
Section 2.3, and which periods, in any event, shall terminate when all
Registrable Securities covered by such Registration Statement have been sold
(but not before the expiration of the 90 day period referred to in Section 4(3)
of the Securities Act and Rule 174 thereunder, if applicable);
(c) furnish, without charge, to each selling
Holder of such Registrable Securities and each Underwriter, if any, of the
securities covered by such
14
Registration Statement, such number of copies of such Registration Statement,
each amendment and supplement thereto (in each case including all exhibits), and
the Prospectus included in such Registration Statement (including each
preliminary Prospectus) in conformity with the requirements of the Securities
Act, and other documents, as such selling Holder and Underwriter may reasonably
request in order to facilitate the public sale or other disposition of the
Registrable Securities owned by such selling Holder (the Company hereby
consenting to the use in accordance with applicable law of each such
Registration Statement (or amendment or post-effective amendment thereto) and
each such Prospectus (or preliminary prospectus or supplement thereto) by each
such selling Holder of Registrable Securities and the Underwriters, if any, in
connection with the offering and sale of the Registrable Securities covered by
such Registration Statement or Prospectus);
(d) prior to any public offering of
Registrable Securities, use its best efforts to register or qualify all
Registrable Securities and other securities covered by such Registration
Statement under such other securities or blue sky laws of such jurisdictions as
any selling Holder of Registrable Securities covered by such Registration
Statement or the sole or lead managing Underwriter, if any, may reasonably
request to enable such selling Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such selling Holder and to
continue such registration or qualification in effect in each such jurisdiction
for as long as such Registration Statement remains in effect (including through
new filings or amendments or renewals), and do any and all other acts and things
which may be necessary or advisable to enable any such selling Holder to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by such selling Holder;
(e) use its best efforts to obtain all other
approvals, consents, exemptions or authorizations from such governmental
agencies or authorities as may be necessary to enable the selling Holders of
such Registrable Securities to consummate the disposition of such Registrable
Securities;
(f) notify Holders' Counsel, each Holder of
Registrable Securities covered by such Registration Statement and the sole or
lead managing Underwriter, if any: (i) when the Registration Statement, any
pre-effective amendment, the Prospectus or any prospectus supplement related
thereto or post-effective amendment to the Registration Statement has been filed
and, with respect to the Registration Statement or any post-effective amendment,
when the same has become effective, (ii) of any request by the SEC or any state
securities or blue sky authority for amendments or supplements to the
Registration Statement or the Prospectus related thereto or for additional
information, (iii) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation or threat of any
proceedings for that purpose, (iv) 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 securities or blue sky laws of any
jurisdiction or the initiation of any proceeding for such purpose, (v) of the
existence of any fact of which the Company becomes aware or the happening of any
event which results in (A) the Registration Statement containing an untrue
statement of a material fact or omitting to state a material fact required to be
stated therein or necessary to make any statements therein not misleading or (B)
the Prospectus included in such Registration Statement containing an untrue
statement of a material fact or omitting to state a material fact required to be
stated therein or necessary to make any statements therein, in the light of the
15
circumstances under which they were made, not misleading, (vi) if at any time
the representations and warranties contained in any underwriting agreement in
respect of such offering cease to be true and correct in all material respects,
and (vii) of the Company's reasonable determination that a post-effective
amendment to a Registration Statement would be appropriate or that there exists
circumstances not yet disclosed to the public which make further sales under
such Registration Statement inadvisable pending such disclosure and
post-effective amendment; and, if the notification relates to an event described
in any of the clauses (ii) through (vii) of this Section 4.1(f), the Company
shall promptly prepare a supplement or post-effective amendment to such
Registration Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so that (1) such
Registration Statement shall not contain any 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 and (2) as thereafter delivered to
the purchasers of the Registrable Securities being sold thereunder, 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 in the light of the circumstances under which they were made
not misleading (and shall furnish to each such Holder and each Underwriter, if
any, a reasonable number of copies of such Prospectus so supplemented or
amended); and if the notification relates to an event described in clause (iii)
of this Section 4.1(f), the Company shall take all reasonable action required to
prevent the entry of such stop order or to remove it if entered;
(g) make available for inspection by any
selling Holder of Registrable Securities, any sole or lead managing Underwriter
participating in any disposition pursuant to such Registration Statement,
Holders' Counsel and any attorney, accountant or other agent retained by any
such selling Holder or any Underwriter (each, an "Inspector" and, collectively,
the "Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company and any subsidiaries thereof as may be
in existence at such time (collectively, the "Records") as shall be necessary,
in the opinion of such Holders' and such Underwriters' respective counsel, to
enable them to exercise their due diligence responsibility and to conduct a
reasonable investigation within the meaning of the Securities Act, and cause the
Company's and any subsidiaries' officers, directors and employees, and the
independent public accountants of the Company, to supply all information
reasonably requested by any such Inspectors in connection with such Registration
Statement;
(h) obtain an opinion from the Company's
counsel and a "cold comfort" letter from the Company's independent public
accountants who have certified the Company's financial statements included or
incorporated by reference in such Registration Statement, in each case dated the
effective date of such Registration Statement (and if such registration involves
an Underwritten Offering, dated the date of the closing under the underwriting
agreement), in customary form and covering such matters as are customarily
covered by such opinions and "cold comfort" letters delivered to underwriters in
underwritten public offerings, which opinion and letter shall be reasonably
satisfactory to the sole or lead managing Underwriter, if any, and to the
Majority Holders of the Registration, and furnish to each Holder participating
in the offering and to each Underwriter, if any, a copy of such opinion and
letter addressed to such Holder (in the case of the opinion) and Underwriter (in
the case of the opinion and the "cold comfort" letter);
16
(i) provide a CUSIP number for all
Registrable Securities and provide and cause to be maintained a transfer agent
and registrar for all such Registrable Securities covered by such Registration
Statement not later than the effectiveness of such Registration Statement;
(j) otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC and any other governmental
agency or authority having jurisdiction over the offering, and make available to
its security holders, as soon as reasonably practicable but no later than 90
days after the end of any 12-month period, an earnings statement (i) commencing
at the end of any month in which Registrable Securities are sold to Underwriters
in an Underwritten Offering and (ii) commencing with the first day of the
Company's calendar month next succeeding each sale of Registrable Securities
after the effective date of a Registration Statement, which statement shall
cover such 12-month periods, in a manner which satisfies the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) if so requested by the Majority Holders
of the Registration, use its best efforts to cause all such Registrable
Securities to be (i) duly included for quotation on the Nasdaq Stock Market's
National Market (the "Nasdaq National Market") or listed on the principal
national securities exchange on which the Company's similar securities are then
listed, if applicable, or (ii) if securities of the Company are not at the time
included on the Nasdaq National Market or listed on any national securities
exchange (or if the listing of Registrable Securities is not permitted under the
rules of each national securities exchange on which the Company's securities are
then listed), on the National Nasdaq Market or a national securities exchange
designated by the Majority Holders of the Registration;
(l) enter into and perform customary
agreements (including, if applicable, an underwriting agreement in customary
form) and provide officers' certificates and other customary closing documents;
(m) cooperate with each selling Holder of
Registrable Securities and each Underwriter participating in the disposition of
such Registrable Securities and their respective counsel in connection with any
filings required to be made with the NASD and make reasonably available its
employees and personnel and otherwise provide reasonable assistance to the
Underwriters (taking into account the needs of the Company's businesses and the
requirements of the marketing process) in the marketing of Registrable
Securities in any Underwritten Offering;
(n) cooperate with the selling Holders of
Registrable Securities and the sole or lead managing Underwriter, if any, to
facilitate the timely preparation and delivery of certificates not bearing any
restrictive legends representing the Registrable Securities to be sold, and
cause such Registrable Securities to be issued in such denominations and
registered in such names in accordance with the underwriting agreement prior to
any sale of Registrable Securities to the Underwriters or, if not an
Underwritten Offering, in accordance with the instructions of the selling
Holders of Registrable Securities at least three business days prior to any sale
of Registrable Securities;
17
(o) keep each selling Holder of Registrable
Securities advised in writing as to the initiation and progress of any
registration under Section 2 hereunder;
(p) furnish to each Holder participating in
the offering and the sole or lead managing Underwriter, if any, without charge,
at least one manually-signed copy of the Registration Statement and any
post-effective amendments thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits (including
those deemed to be incorporated by reference);
(q) if requested by the sole or lead
managing Underwriter or any selling Holder of Registrable Securities, promptly
incorporate in a prospectus supplement or post-effective amendment such
information concerning such Holder of Registrable Securities, the Underwriters
or the intended method of distribution as the sole or lead managing Underwriter
or the selling Holder of Registrable Securities reasonably requests to be
included therein and as is appropriate in the reasonable judgment of the
Company, including, without limitation, information with respect to the number
of shares of the Registrable Securities being sold to the Underwriters, the
purchase price being paid therefor by such Underwriters and with respect to any
other terms of the Underwritten Offering of the Registrable Securities to be
sold in such offering; make all required filings of such Prospectus supplement
or post-effective amendment as soon as notified of the matters to be
incorporated in such Prospectus supplement or post-effective amendment; and
supplement or make amendments to any Registration Statement if requested by the
sole or lead managing Underwriter of such Registrable Securities; and
(r) use its best efforts to take all other
steps necessary to expedite or facilitate the registration and disposition of
the Registrable Securities contemplated hereby.
4.2. Seller Information. The Company may require
each selling Holder of Registrable Securities as to which any registration is
being effected to furnish to the Company such information regarding such seller
and the disposition of such securities as the Company may from time to time
reasonably request in writing; provided, however, that such information shall be
used only in connection with such Registration. If any Registration Statement or
comparable statement under "blue sky" laws refers to any Holder by name or
otherwise as the Holder of any securities of the Company, then such Holder shall
have the right to require (i) the insertion therein of language, in form and
substance satisfactory to such Holder and the Company, to the effect that the
holding by such Holder of such securities is not to be construed as a
recommendation by such Holder of the investment quality of the Company's
securities covered thereby and that such holding does not imply that such Holder
will assist in meeting any future financial requirements of the Company and (ii)
in the event that such reference to such Holder by name or otherwise is not, in
the judgment of the Company, as advised by counsel, required by the Securities
Act or any similar federal statute or any state "blue sky" or securities law
then in force, the deletion of the reference to such Holder.
4.3. Notice to Discontinue. Each Holder of
Registrable Securities agrees by acquisition of such Registrable Securities
that, (a) upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 4.1(f)(ii) through 4.1(f)(vii), such
Holder shall forthwith discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such Holder's receipt of
18
the copies of the supplemented or amended prospectus contemplated by Section
4.1(f) and, (b) if so directed by the Company, such Holder shall 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 covering such Registrable
Securities which is current at the time of receipt of such notice. If the
Company shall give any such notice, the Company shall extend the period during
which such Registration Statement shall be maintained effective pursuant to this
Agreement (including, without limitation, the period referred to in Section
4.1(b)) by the number of days during the period from and including the date of
the giving of such notice pursuant to Section 4.1(f) to and including the date
when the Holder shall have received the copies of the supplemented or amended
prospectus contemplated by and meeting the requirements of Section 4.1(f).
5. INDEMNIFICATION; CONTRIBUTION.
5.1. Indemnification by the Company. The Company
agrees to indemnify and hold harmless, to the fullest extent permitted by law,
each Holder of Registrable Securities, its officers, directors, partners,
members, shareholders, employees, Affiliates, advisers, attorneys and agents
(collectively, "Agents") and each Person who controls such Holder (within the
meaning of the Securities Act) and its Agents with respect to each registration
which has been effected pursuant to this Agreement, against any and all losses,
claims, damages or liabilities, joint or several, actions or proceedings
(whether commenced or threatened) in respect thereof, and expenses (as incurred
or suffered and including, but not limited to, any and all expenses incurred in
investigating, preparing or defending any litigation or proceeding, whether
commenced or threatened, and the reasonable fees, disbursements and other
charges of legal counsel) in respect thereof (collectively, "Claims"), insofar
as such Claims arise out of or are based upon any untrue or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus (including any preliminary, final or summary prospectus and any
amendment or supplement thereto) related to any such registration or any
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by the Company of the Securities Act or any rule or regulation
thereunder applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, or any qualification or
compliance incident thereto; provided, however, that the Company will not be
liable in any such case to the extent that any such Claims arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
or omission or alleged omission of a material fact so made in reliance upon and
in conformity with written information furnished to the Company by a Holder
expressly for use therein. The Company shall also indemnify any Underwriters of
the Registrable Securities, their Agents and each Person who controls any such
Underwriter (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the Holders of Registrable
Securities. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of any Person who may be entitled to
indemnification pursuant to this Section 5 and shall survive the transfer of
securities by such Holder or Underwriter.
5.2. Indemnification by Holders. Each Holder (other
than the PBGC as a result of applicable federal law), if Registrable Securities
held by it are included in the securities as to which a registration is being
effected, agrees to, severally and not jointly,
19
indemnify and hold harmless, to the fullest extent permitted by law, the
Company, its directors and officers, each other Person who participates as an
Underwriter in the offering or sale of such securities and its Agents and each
Person who controls the Company within the meaning of either Section 15 of the
Securities Act of Section 20 of the Exchange Act against any and all Claims,
insofar as such Claims arise out of or are based upon any untrue or alleged
untrue statement of a material fact contained in any Registration Statement or
Prospectus (including any preliminary, final or summary prospectus and any
amendment or supplement thereto) related to such registration, 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, to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by a Holder
expressly for use therein; provided, however, that the aggregate amount which
any such Holder shall be required to pay pursuant to this Section 5.2 shall in
no event be greater than the amount of the net proceeds received by such Holder
upon the sale of the Registrable Securities pursuant to the Registration
Statement giving rise to such Claims less all amounts previously paid by such
Holder with respect to any such Claims. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of any
Person who may be entitled to indemnification pursuant to this Section 5 and
shall survive the transfer of securities by such Holder or Underwriter.
5.3. Conduct of Indemnification Proceedings.
Promptly after receipt by an indemnified party of notice of any Claim or the
commencement of any action or proceeding involving a Claim under this Section 5,
such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party pursuant to Section 5, (a) notify the
indemnifying party in writing of the Claim or the commencement of such action or
proceeding; provided, that the failure of any indemnified party to provide such
notice shall not relieve the indemnifying party of its obligations under this
Section 5, except to the extent the indemnifying party is materially and
actually prejudiced thereby and shall not relieve the indemnifying party from
any liability which it may have to any indemnified party otherwise than under
this Section 5, and (b) permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party;
provided, however, that any indemnified party shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party has agreed in writing to pay such fees and
expenses, (ii) the indemnifying party shall have failed to assume the defense of
such claim and employ counsel reasonably satisfactory to such indemnified party
within 20 days after receiving notice from such indemnified party that the
indemnified party believes it has failed to do so, or (C) in the reasonable
judgment of any such indemnified party, based upon advice of counsel, a conflict
of interest shall exist between such indemnified party and the indemnifying
party with respect to such claims; it being understood, however, that the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to no more than one firm of local counsel) at any time for all such
indemnified parties. No indemnifying party shall be liable for any settlement of
any such claim or action effected without its written consent, which consent
shall not be unreasonably withheld. No indemnifying party shall, without the
consent of the indemnified party, consent to entry of any judgment or enter into
any
20
settlement of any claim or action in respect of which indemnification or
contribution may be sought hereunder, unless such settlement, (x) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim, (y) does not include a statement as to or an admission of
fault, culpability or a failure to act, by or on behalf of any indemnified
party, and (z) does not provide for any action on the part of any party other
than the payment of money damages which is to be paid in full by the
indemnifying party.
5.4. Contribution. If the indemnification provided
for in Section 5.1 or 5.2 from the indemnifying party for any reason is
unavailable to (other than by reason of exceptions provided therein), or is
insufficient to hold harmless an indemnified party hereunder in respect of any
Claim, then the 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 Claim in such proportion as is appropriate to reflect the
relative fault of the indemnifying party, on the one hand, and the indemnified
party, on the other hand, in connection with the actions which resulted in such
Claim, as well as any other relevant equitable considerations. The relative
fault of such 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. If, however, the foregoing allocation is not permitted by
applicable law, then each indemnifying party shall contribute to the amount paid
or payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative faults but also the relative benefits of the
indemnifying party and the indemnified party as well as any other relevant
equitable considerations.
5.5. Indemnification Payments. The indemnification
and contribution required by this Section 5 shall be made by periodic payments
of the amount thereof in immediately available funds during the course of any
investigation or defense, as and when bills are received or any expense, loss,
damage or liability is incurred.
5.6. Other Indemnification. Indemnification similar
to that specified in the preceding Sections 5.1 and 5.2 (with appropriate
modifications) shall be given by the Company and each selling Holder of
Registrable Securities (other than the PBGC as a result of applicable federal
law) 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. The indemnity agreements contained
herein shall be in addition to any other rights to indemnification or
contribution which any indemnified party may have pursuant to law or contract.
6. GENERAL PROVISIONS REGARDING REGISTRATIONS.
6.1. Adjustments Affecting Registrable Securities.
The Company agrees that it shall not effect or permit to occur any combination
or subdivision of shares which would adversely affect the ability of the Holder
of any Registrable Securities to include such Registrable Securities in any
registration contemplated by this Agreement or the marketability of such
Registrable Securities in any such registration.
21
6.2. Registration Rights to Others. The Company
represents and warrants that it is not currently a party to any agreement with
respect to its securities granting registration rights to Persons other than the
Holders. If the Company shall at any time hereafter provide to any holder of any
securities of the Company rights with respect to the registration of such
securities under the Securities Act (not including any such rights which have
been previously granted), (i) such rights shall not be in conflict with or
adversely affect any of the rights provided in this Agreement to the Holders and
(ii) if such rights are provided on terms or conditions more favorable to such
holder than the terms and conditions provided in this Agreement, the Company
shall provide (by way of amendment to this Agreement or otherwise) such more
favorable terms or conditions to the Holders.
6.3. Availability of Information; Rule 144; Rule
144A; Other Exemptions. So long as the Company shall not have filed a
registration statement pursuant to Section 12 of the Exchange Act or a
registration statement pursuant to the requirements of the Securities Act, the
Company shall, at any time and from time to time, upon the request of any Holder
of Registrable Securities and upon the request of any Person designated by such
Holder as a prospective purchaser of any Registrable Securities, furnish in
writing to such Holder or such prospective purchaser, as the case may be, a
statement as of a date not earlier than 12 months prior to the date of such
request of the nature of the business of the Company and the products and
services it offers and copies of the Company's most recent balance sheet and
profit and loss and retained earnings statements, together with similar
financial statements for such part of the two preceding fiscal years as the
Company shall have been in operation, all such financial statements to be
audited to the extent audited statements are reasonable available, provided
that, in any event the most recent financial statements so furnished shall
include a balance sheet as of a date less than 16 months prior to the date of
such request, statements of profit and loss and retained earnings for the 12
months preceding the date of such balance sheet, and, if such balance sheet is
not as of a date less than 6 months prior to the date of such request,
additional statements of profit and loss and retained earnings for the period
from the date of such balance sheet to a date less than 6 months prior to the
date of such request. If the Company shall have filed a registration statement
pursuant to the requirements of Section 12 of the Exchange Act or a registration
statement pursuant to the requirements of the Securities Act, the Company
covenants that it shall timely file any reports required to be filed by it under
the Securities Act or the Exchange Act (including, but not limited to, the
reports under Sections 13 and 15(d) of the Exchange Act referred to in
subparagraph (c) of Rule 144 under the Securities Act), and that it shall take
such further action as any Holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (i) Rule 144 and Rule 144A under
the Securities Act, as such rules may be amended from time to time, or (ii) any
other rule or regulation now existing or hereafter adopted by the SEC. Upon the
request of any Holder of Registrable Securities, the Company shall deliver to
such Holder a written statement as to whether it has complied with such
requirements.
7. RESTRICTIONS ON TRANSFERS APPLICABLE TO
SECURITYHOLDERS.
7.1. General Restriction. No Other Stockholder nor
any of its Permitted Transferees may, directly or indirectly, sell, assign,
transfer, pledge, bequeath,
22
hypothecate, mortgage, grant any proxy with respect to, or in any other way
encumber or otherwise dispose of (collectively, a "Transfer") any Shares except
pursuant to the provisions of this Section 7 and Section 9 hereof.
7.2. Rights of First Refusal. (a) Subject to
Section 7.3 hereof, if at any time an Other Stockholder or a Permitted
Transferee of an Other Stockholder wishes to Transfer all or any portion of
shares of its shares of Common Stock ("Shares") owned by it (the "Seller")
pursuant to the terms of a bona fide offer received from a third party, such
Seller shall submit to each Investor Holder such offer in writing to sell such
Shares (the "Offered Shares") on terms and conditions, including price, on which
such Seller proposes to sell such Shares to such third party (the "Purchase
Offer"). The Purchase Offer shall disclose (i) the identity of the proposed
purchaser or transferee, (ii) the Offered Shares proposed to be sold or
transferred, (iii) the total number of Shares owned by the Seller, (iv) the
agreed terms, including price of the sale or transfer, and any other material
facts relating to the sale or transfer. The Purchase Offer shall further state
that each Investor Holder may acquire, in accordance with the provisions of this
Section 7.2, the Offered Shares for the same price and upon the same terms and
conditions set forth therein. The Purchase Offer shall also provide that, in
order for the Purchase Offer to be effective, the Investor Holders must purchase
an aggregate of all, but not less than all, of the Offered Shares. Each Investor
Holder shall have the right to purchase that number of the Offered Shares as
shall be equal to (i) the aggregate number of Offered Shares multiplied by (ii)
its Proportionate Percentage. The amount of shares each Investor Holder is
entitled to purchase under this Section 7.2 shall be referred to as its "Pro
Rata Share". Within thirty (30) days after receipt of the Purchase Offer, each
Investor Holder shall give notice to such Seller of its intent to purchase all
or any portion of its Proportionate Percentage, which communication shall be
delivered to such Seller pursuant to Section 10.2 below and shall, when taken in
conjunction with the Purchase Offer be deemed to constitute a valid, legally
binding and enforceable agreement between the Seller and such Investor Holder
for the sale and purchase of the Shares covered thereby. In the event that any
Investor Holder does not elect to purchase its Pro Rata Share (or any portion
thereof) during such thirty (30) day period, then the Seller shall give prompt
written notice to each Investor Holder who has elected to purchase its Pro Rata
Share, and such Investor Holder who so elect shall have the right to purchase,
on a pro rata basis with any Investor Holder who so elect, such Pro Rata Share
(or any portion thereof) not purchased by any Investor Holder by giving notice
to the Seller within ten (10) days after receipt of such notice from the Seller.
In the event that an Investor Holder shall elect to purchase all or part of the
Offered Shares covered by the Purchase Offer, such Investor Holder shall
individually communicate in writing such election to purchase to the Seller.
(b) If any part of the Purchase Offer
involves consideration other than cash, the Investor Stockholders shall have the
right to substitute for such consideration an equivalent amount of cash, as
determined under Section 7.4.
(c) Transfers of Shares under the terms of
Section 7.2 shall be made at the offices of the Company on a mutually
satisfactory Business Day within 90 days after the expiration of the last
applicable period described in Section 7.2(a). Delivery of certificates or other
instruments evidencing such Shares duly endorsed for Transfer shall be made on
such date against payment of the purchase price therefor.
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(d) In the event that the Investor
Stockholders, taken together, do not purchase the Offered Shares offered by
Seller pursuant to Section 7.2, the Offered Shares may be sold by such a Seller
to the third party purchaser at any time within the ninety (90) days after such
applicable fifteen (15) or five (5) day period referenced in Section 7.2(a) has
expired, but subject to the provisions of Section 7.3 below. Any such sale shall
be at not less than the price and upon other terms and conditions, if any, not
more favorable to the third party purchaser than those specified in the Purchase
Offer. Any Shares not sold within such ninety (90) day period shall continue to
be subject to the requirements of Section 7.2 hereof. Subject to the provisions
of Section 10.3 hereof, any transferee of Shares under Section 7.2 shall be
entitled to the benefits conferred by and subject to the restrictions imposed by
this Agreement.
(e) The election by an Investor Stockholder
not to exercise its rights under this Section 7.2 in any one instance shall not
affect the rights of such Investor Stockholder as to any subsequent proposed
Transfer. Any Transfer by any Other Stockholder of any of its shares of Common
Stock without first giving the Investor Stockholders the rights described in
this Section 7.2 shall be void and of no force or effect.
7.3. Right of Co-Sale. (a) If any Investor Holder
wishes to Transfer any Shares owned by such Investor Holder to any other Person
(the "Purchaser") in one or more transactions (other than a Permitted Transfer)
and immediately after giving effect to such transaction(s) the Investor
Stockholders in the aggregate will own less than 51% of the Company's
outstanding shares of Common Stock, pursuant to the terms of a bona fide offer
received from a third party, such transferring Investor Holder shall submit to
the Other Stockholders the terms of such offer in writing to sell such Shares
(the "Co-Sale Shares") on terms and conditions, including price, on which such
Seller proposes to sell such Shares to such third party (the "Co-Sale Offer").
The Co-Sale Offer shall disclose (i) the identity of the proposed purchaser or
transferee, (ii) the Co-Sale Shares proposed to be sold or transferred, (iii)
the total number of Shares owned by the Seller, (iv) the agreed terms, including
price of the sale or transfer, and any other material facts relating to the sale
or transfer. Each Other Stockholder shall have the right to require, as a
condition to such sale or disposition, that the Purchaser purchase from such
Other Stockholder at the same price and on the same terms and conditions as
involved in such sale or disposition by such transferring Investor Stockholder,
the number of Shares owned by such Other Stockholder equal to the aggregate
number of Shares to be purchased by the Purchaser multiplied by its
Proportionate Percentage. Within ten (10) days after receipt of the Co-Sale
Offer, any such Other Stockholder shall give notice to such Investor Stockholder
of its intent to sell all or any portion of its Pro Rata Share, which
communication shall be delivered to such transferring Investor Holder pursuant
to Section 10.2 below.
(b) The Investor Stockholder intending to
Transfer Shares and each participating Other Stockholder shall sell to the
Purchaser all of the Shares proposed to be sold by them at a price and upon
other terms and conditions, if any, not more favorable to the Purchaser than
those originally offered in the Co-Sale Offer. If there are no participating
Other Stockholders, the Investor Stockholder shall sell to the Purchaser all of
the Shares proposed to be sold by it at a price and upon other terms and
conditions, if any, not more favorable to the Investor Holder than those
originally offered in the Co-Sale Offer. The Investor Holder and the Other
Stockholders shall use their best efforts to obtain the agreement of the
Purchaser to the participation of the participating Other Stockholders in the
contemplated sale, and the Investor
24
Holder shall not sell any Shares to the Purchaser if the Purchaser declines to
permit the participating Other Stockholders to participate pursuant to the terms
of this Section 7.3. The provisions of this Section 7.3 shall not apply to
transfers pursuant to Section 7.6 hereof. Subject to the provisions of Section
10.3 hereof, any transferee of Shares under this Section 7.3 shall be entitled
to the benefits conferred by and subject to the restrictions imposed by this
Agreement.
(c) Transfers of Shares under the terms of
this Section 7.3 shall be made at the offices of the Company on a mutually
satisfactory Business Day within 90 days after the expiration of the last
applicable period described in Section 1.3(a). Delivery of certificates or other
instruments evidencing such Shares duly endorsed for transfer shall be made on
such date against payment of the purchase price therefor.
(d) The election by an Other Stockholder not
to exercise its rights under this Section 7.3 in any one instance shall not
affect the rights of that Other Stockholder as to any subsequent proposed
Transfer.
7.4. Value of Non-Cash Consideration. (a) In the
event that the Purchase Offer under Section 7.2 is proposed to be paid in
consideration other than cash, such consideration shall be valued as follows for
purposes of determining the amount to be paid by the Holder exercising its right
of first refusal:
(i) The value of such non-cash
consideration shall be determined in the first instance by mutual
agreement of the Seller, on the one hand, and the Investor, on the
other. If such parties are unable to determine the value of such
consideration within 15 days of the Offering Notice, such value shall
be determined by an appraisal of the non-cash consideration to be
conducted by an Appraiser (as defined below) selected in accordance
with the procedures set forth below. The Appraiser shall be instructed
to determine the value of the non-cash consideration within 30 days.
All fees and expenses incurred in connection with any appraisal shall
be paid by the Company.
(ii) The "Appraiser" shall (A) be a
United States nationally prominent, independent appraiser, (B) have
experience in and be otherwise knowledgeable about the valuation or
appraisal of such non-cash consideration and (C) agree to enter into a
confidentiality agreement with the parties and to comply with such
other conditions as the parties mutually agree upon in connection with
any such valuation or appraisal. The Appraiser shall be jointly
designated by the Seller, on the one hand, and the Investor, on the
other; provided, however, that if the two sides cannot agree on an
Appraiser within 15 days of the Offering Notice, then each side shall
designate an Appraiser, the two Appraisers so selected shall jointly
designate a third Appraiser, and such third Appraiser shall be the sole
"Appraiser" and shall alone conduct the appraisal provided for above.
The conclusions of the Appraiser, or the valuation agreed to by the
specified parties, as the case may be, shall be conclusive with respect
to the non-cash consideration on both the party that Transfers the
Offered Shares and the parties desiring to purchase the relevant shares
of Common Stock, and shall not be subject to dispute or review.
25
7.5. Drag-Along Right.
(a) In the event one or more Investor
Stockholders holding at least 51% of the outstanding Shares (the "Transferor")
propose to Transfer all of the Shares held by the Transferor to a third party (a
"Transferee"), such Transferor or such Transferee, to the extent authorized by
such Transferor, may require the Other Stockholders and any other Investor
Stockholders to participate in such Transfer and sell or transfer all the Shares
held by such Stockholders in the manner and on the same terms and conditions as
such Transferor (the "Drag-Along Right").
(b) No later than ten (10) days prior to the
consummation of the Transfer, the Transferor shall delivery a written notice to
the Other Stockholders (and any other Investor Stockholder) specifying the names
and address of the proposed parties to such Transfer and the terms and
conditions thereof. In the event such written notice is given, any warrants and
options held by each Stockholder which are then presently exercisable (or become
exercisable as a result of the transaction that is the subject of the notice),
shall be exercised by the Stockholders for Common Stock, which Common Stock
shall also be subject to the Drag-Along Right, and such options and warrants to
the extent not then exercisable (or to the extent such options and warrants
would not become exercisable as a result of such transaction) shall
automatically be cancelled. The closing of the Transfer shall be held at such
time and place as the Transferor or the Transferee shall reasonable specify.
Prior to or at such closing, each Stockholder shall deliver stock certificates
representing the Shares, duly endorsed for transfer, and each such Stockholder
shall represent and warrant that (i) such Stockholder is the record and
beneficial owner of such Shares and (ii) such Shares are being transferred free
and clear of any liens, charges, claims or encumbrances (other than restrictions
imposed pursuant to applicable Federal and state securities laws and this
Agreement). Each Stockholder agrees to take all actions necessary and desirable
in connection with the consummation of the Transfer, including without
limitation, the waiver of all appraisal rights available to any such Stockholder
under applicable law, and shall make such additional representations and
warranties as shall be customary in transactions of a similar nature.
7.6. Permitted Transfers. Any Stockholder may,
subject to Section 9, transfer Shares to any Affiliate of such Stockholder (each
such Person, a "Permitted Transferee"). Any transfer pursuant to this Section
7.6 may be effected without complying with the provisions of Section 7.2 or 7.3.
Upon the consummation of, and as a condition to, any transfer pursuant to this
Section 7.6, the transferee must execute a Stockholder Joinder in the form of
Exhibit A hereto and thereby become a party to, and be bound by, the terms and
provisions of this Agreement. References in this Agreement to Shares held or
owned by any Stockholder shall be deemed to include Shares held or owned by any
such Permitted Transferee(s).
8. COVENANTS AND AGREEMENTS.
8.1. Information Rights of Investor Stockholders.
For as long as any Investor Stockholder owns Shares representing at least 5% of
the Shares outstanding on the date of this Agreement, the Company shall deliver
to such Investor Stockholder:
26
(a) within 30 days after the end of each
month and 60 days after the end of each quarter (except the last) in each fiscal
year of Company, a consolidated and consolidating balance sheet of the Company
as of the end of such quarter, and consolidated and consolidating statements of
income and cash flow of the Company for such quarter and the portion of the
fiscal year ending with such quarter, setting forth in each case in comparative
form the figures for the corresponding periods a year earlier;
(b) within 90 days after the end of each
fiscal year of the Company, a consolidated and consolidating audited balance
sheet of the Company as of the end of such fiscal year, and a consolidated
audited statement of income, changes in stockholders' equity and changes in
financial position of the Company for such fiscal year, in each case prepared in
accordance with generally accepted accounting principles, consistently applied.
Such audited financial statements shall be audited by an independent accounting
firm of national reputation;
(c) such other information about the Company
as any Investor Stockholder may reasonably request.
8.2. Information Rights of Other Stockholders.
During any period when the Company is not subject to the reporting requirements
of Section 13 or Section 15(d) under the Exchange Act, the Company shall deliver
to each Other Stockholder:
(a) within 60 days after the end of each
quarter (except the last fiscal quarter of the year) in each fiscal year of
Company, a consolidated and consolidating balance sheet of the Company as of the
end of such quarter, and consolidated and consolidating statements of income and
cash flow of the Company for such quarter and the portion of the fiscal year
ending with such quarter, setting forth in each case in comparative form the
figures for the corresponding periods a year earlier; and
(b) within 90 days after the end of each
fiscal year of the Company, a consolidated and consolidating audited balance
sheet of the Company as of the end of such fiscal year, and a consolidated
audited statement of income, changes in stockholders' equity and changes in
financial position of the Company for such fiscal year, in each case prepared in
accordance with generally accepted accounting principles, consistently applied.
Such audited financial statements shall be audited by an independent accounting
firm of national reputation.
9. OTHER TRANSFER PROVISIONS.
9.1. Other Transfer Restrictions. Anything
contained herein to the contrary notwithstanding, any Person not already a
Stockholder who acquires Shares from a Stockholder pursuant to Section 7 shall
execute a Stockholder Joinder and from that point forward shall be deemed to be
a Stockholder for all purposes of this Agreement.
9.2. Legends. Each certificate representing Shares
held by a Stockholder shall be stamped or otherwise imprinted with a legend in
substantially the following form:
27
"THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE
CONDITIONS SPECIFIED IN THE STOCKHOLDERS' AGREEMENT
DATED AS OF AUGUST 30, 2002, AS IT MAY BE AMENDED FROM
TIME TO TIME, BY AND AMONG ANCHOR GLASS CONTAINER
CORPORATION (THE "COMPANY") AND THE STOCKHOLDERS PARTY
THERETO AND NO TRANSFER OF THESE SECURITIES SHALL BE
VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT
NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD
OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY."
9.3. Procedures For Transferring. Upon request by
the Company, any Stockholder seeking to Transfer Shares shall deliver a written
opinion, addressed to the Company, of counsel for such Stockholder, stating that
in the opinion of such counsel (which opinion and counsel shall be reasonably
satisfactory to the Company), the proposed Transfer does not involve a
transaction requiring registration or qualification of such Shares under the
Securities Act; provided, however, that no such opinion shall be required in the
case of a Transfer by any Investor Stockholder to its Affiliates or, if any
Stockholder is a partnership or limited liability company, a Transfer by any
Stockholder or its Affiliates to its partners or members. Subject to Section 7,
such Stockholder shall be entitled to Transfer such Shares in accordance with
the terms of the Purchase Offer delivered to the Company and the Stockholders,
if the Company does request such opinion within five days after delivery of such
notice, or, if it requests such opinion, after it has received such opinion.
Each certificate or other instrument evidencing the securities issued upon the
Transfer of any Shares (and each certificate or other instrument evidencing any
untransferred balance of such Shares) shall bear the legends set forth in
Section 9.2.
9.4. Failure to Deliver Shares. If a Stockholder
becomes obligated to sell any Shares to an Other Stockholder or a Transferee
pursuant to Sections 7.2 or 7.5 hereof (a "Purchasing Party") under this
Agreement and fails to deliver such Shares in accordance with the terms of this
Agreement, such Purchasing Party may, at its option, in addition to all other
remedies it may have, may send to such Stockholder the purchase price for such
Shares as specified in connection with such sale. Thereupon, the Company upon
written notice to such Stockholder, (a) shall cancel on its books the
certificate or certificates representing the Shares to be sold and (b) shall
issue, in lieu thereof, in the name of such Purchasing Party a new certificate
or certificates representing such Shares, and thereupon all of said
Stockholder's rights in and to such Shares shall terminate.
10. GENERAL.
10.1. Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified, supplemented or terminated, and waivers or consents to departures from
the provisions hereof may not be given,
28
without the written consent of each of the Company, the Investors and the
Majority Other Stockholders; provided, however, that nothing herein shall
prohibit any amendment, modification, supplement, termination, waiver or consent
to departure the effect of which is limited only to those Stockholders who have
agreed to such amendment, modification, supplement, termination, waiver or
consent to departure.
10.2. Notices. All notices, requests, consents and
other communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument and shall be deemed to have been duly given
when delivered in person, by telecopy, by nationally-recognized overnight
courier, or by first class registered or certified mail, postage prepaid,
addressed to such party at the address set forth below or such other address as
may hereafter be designated in writing by the addressee as follows:
if to any Stockholder, to the address and telecopier numbers set forth
on Exhibit B hereto:
and
if to the Company, to the address set forth below:
Anchor Glass Container Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
All such notices, requests, consents and other communications
shall be deemed to have been delivered (a) in the case of personal delivery or
delivery by telecopy, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next Business Day and (c) in the
case of mailing, on the third Business Day following such mailing if sent by
certified mail, return receipt requested.
10.3. Successors and Assigns. Without limiting the
restrictions on Transfer contained in this Agreement, the Company and the
Stockholders shall cause any Person, other than a current Stockholder, who
acquires Shares from a Stockholder to become a Stockholder hereunder by
executing a Stockholder Joinder. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, successors
and assigns.
29
10.4. Counterparts. This Agreement may be executed
in two or more counterparts, each of which, when so executed and delivered,
shall be deemed to be an original, but all of which counterparts, taken
together, shall constitute one and the same instrument.
10.5. Descriptive Headings, Etc. The headings in
this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning of terms contained herein. Unless the context of
this Agreement otherwise requires: (1) words of any gender shall be deemed to
include each other gender; (2) words using the singular or plural number shall
also include the plural or singular number, respectively; (3) the words
"hereof", "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Section and paragraph references are to the
Sections and paragraphs of this Agreement unless otherwise specified; (4) the
word "including" and words of similar import when used in this Agreement shall
mean "including, without limitation," unless otherwise specified; (5) "or" is
not exclusive; and (6) provisions apply to successive events and transactions.
10.6. Severability. In the event that any one or
more of the provisions, paragraphs, words, clauses, phrases or sentences
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision, paragraph, word, clause,
phrase or sentence in every other respect and of the other remaining provisions,
paragraphs, words, clauses, phrases or sentences hereof shall not be in any way
impaired, it being intended that all rights, powers and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
10.7. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF DELAWARE,
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE
(WHETHER OF THE STATE OF DELAWARE, OR ANY OTHER JURISDICTION) THAT WOULD CAUSE
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN
FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL
CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER
SUCH JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE
LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
10.8. Jurisdiction and Venue.
(a) Each of the parties hereto hereby
irrevocably and unconditionally submits, for itself or himself and its or his
property, to the exclusive jurisdiction of any New York state court sitting in
New York county or federal court of the United States of America sitting in New
York county, and any appellate court presiding thereover, in any action or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereunder or thereunder or for recognition or enforcement of any
judgment relating thereto, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York state court
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or, to the extent permitted by law, in any such federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
(b) Each of the parties hereto irrevocably
and unconditionally waives, to the fullest extent it or he may legally and
effectively do so, any objection that it or he may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement or the transactions contemplated hereunder or thereunder in any
State or federal court sitting in New York county. Each of the parties hereto
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(c) The parties hereto further agree that
the notice of any process required by any such court in the manner set forth in
Section 10.2 shall constitute valid and lawful service of process against them,
without the necessity for service by any other means provided by law.
10.9. Remedies; Specific Performance. The parties
hereto acknowledge that money damages would not be an adequate remedy at law if
any party fails to perform in any material respect any of its obligations
hereunder, and accordingly agree that each party, in addition to any other
remedy to which it may be entitled at law or in equity, shall be entitled to
seek to compel specific performance of the obligations of any other party under
this Agreement, without the posting of any bond, in accordance with the terms
and conditions of this Agreement in any court specified in Section 10.8 hereof,
and if any action should be brought in equity to enforce any of the provisions
of this Agreement, none of the parties hereto shall raise the defense that there
is an adequate remedy at law. Except as otherwise provided by law, a delay or
omission by a party hereto in exercising any right or remedy accruing upon any
such breach shall not impair the right or remedy or constitute a waiver of or
acquiescence in any such breach. No remedy shall be exclusive of any other
remedy. All available remedies shall be cumulative.
10.10. Entire Agreement. This Agreement contains the
entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein and supersedes all prior agreements and
understandings between the Company and the other parties to this Agreement with
respect to such subject matter.
10.11. Termination. (a) Except as provided in Section
10.11(b), this Agreement, and the respective rights and obligations of the
Stockholders and the Company, shall terminate upon the earlier to occur of the
following: (i) the sale of all or substantially all of the assets or business of
the Company by merger, sale of assets or otherwise unless the holders of capital
stock of the Company immediately prior thereto shall, immediately thereafter,
hold as a group the right to cast at least a majority of votes of all holders of
voting securities of the resulting or surviving corporation or entity on any
matter on which any such holder of voting securities shall be entitled to vote
or (ii) with respect to each Stockholder, at such time such Stockholder no
longer holds, or is deemed to hold, any Shares.
(b) Section 7.2, Section 7.3 and Section 7.5
shall terminate upon the consummation of an Initial
Public Offering.
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10.12. Further Assurances. Each party hereto shall do
and perform or cause to be done and performed all such further acts and things
and shall execute and deliver all such other agreements, certificates,
instruments and documents as any other party hereto reasonably may request in
order to carry out the intent and accomplish the purposes of this Agreement and
the consummation of the transactions contemplated hereby.
10.13. Construction. The Company, the Investors and
the Other Stockholders acknowledge that each of them has had the benefit of
legal counsel of its own choice and has been afforded an opportunity to review
this Agreement with its legal counsel and that this Agreement shall be construed
as if jointly drafted by the Company, the Investors and the Other Stockholders.
10.14. No Inconsistent Agreement. The Company will
not hereafter enter into any agreement which is inconsistent with the rights
granted to the Stockholders in this Agreement.
10.15. Costs and Attorneys' Fees. In the event that
any action, suit or other proceeding is instituted concerning or arising out of
this Agreement, the Company and the Holders agree that the prevailing party
shall recover from the non-prevailing party all of such prevailing party's costs
and reasonable attorneys' fees incurred in each and every such action, suit or
other proceeding, including any and all appeals or petitions therefrom;
provided, however, that the PBGC shall only be liable for such fees to the
extent provided under applicable federal law.
[Remainder of this page intentionally left blank. Signature
page follows.]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
THE COMPANY:
ANCHOR GLASS CONTAINER
CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
STOCKHOLDERS:
ANCHOR GLASS CONTAINER HOLDING
LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Authorized Signatory
PENSION BENEFIT GUARANTY
CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Deputy Director
Corporate Finance Negotiations Dept.
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/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇
34