Exhibit 10.11
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REGISTRATION RIGHTS AGREEMENT
among
DE&S HOLDING CO.
DOLLAR EXPRESS, INC.
▇▇▇▇▇▇▇ SPAIN
▇▇▇▇▇▇ SPAIN
GLOBAL PRIVATE EQUITY III LIMITED PARTNERSHIP
ADVENT PGGM GLOBAL LIMITED PARTNERSHIP
ADVENT PARTNERS GPE III LIMITED PARTNERSHIP
ADVENT PARTNERS (NA) GPE III LIMITED PARTNERSHIP
ADVENT PARTNERS LIMITED PARTNERSHIP
GUAYACAN PRIVATE EQUITY FUND LIMITED PARTNERSHIP
and
DOLLAR EXPRESS INVESTMENT, LLC
Dated as of February 5, 1999
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made this made
as of this 5th day of February, 1999, by and among DE&S HOLDING CO., a
Pennsylvania corporation (the "Corporation"), DOLLAR EXPRESS, INC., a
Pennsylvania corporation ("Dollar Express"), ▇▇▇▇▇▇▇ SPAIN, ▇▇▇▇▇▇ SPAIN
(together with ▇▇▇▇▇▇▇ Spain, the "Management Shareholders"), GLOBAL PRIVATE
EQUITY III LIMITED PARTNERSHIP, a Delaware limited partnership ("GPE III"),
ADVENT PGGM GLOBAL LIMITED PARTNERSHIP, a Delaware limited partnership
("AG-PGGM"), ADVENT PARTNERS GPE III LIMITED PARTNERSHIP, a Delaware limited
partnership ("AP-GPEIII"), ADVENT PARTNERS (NA) GPE III LIMITED PARTNERSHIP, a
Delaware limited partnership ("AP- NA"), ADVENT PARTNERS LIMITED PARTNERSHIP, a
Delaware limited partnership ("APLP" and together with GPEIII, AG-PGGM,
AP-GPEIII and AP-NA, the "Advent Entities"), GUAYACAN PRIVATE EQUITY FUND
LIMITED PARTNERSHIP, a Delaware limited partnership ("Guayacan"), and DOLLAR
EXPRESS INVESTMENT, LLC, a North Carolina limited liability company ("DEI"; and,
together with Guayacan and the Advent Entities and their respective Affiliates,
collectively, the "Investors"; and each of the Investors is, individually, an
"Investor").
BACKGROUND
WHEREAS, as of February 3, 1999, the Corporation, Dollar Express, the
Management Shareholders and the Investors executed a Securities Purchase and
Contribution Agreement (the "Purchase Agreement") (capitalized terms used but
not defined herein have the meanings set forth in the Purchase Agreement);
WHEREAS, pursuant to the Purchase Agreement, the Corporation has filed
an amendment to its charter designating 3,530,000 shares of preferred stock, par
value $0.01 per share, as Series A Cumulative Convertible Preferred Stock (the
"Series A Preferred Stock");
WHEREAS, under the terms of the Purchase Agreement, the Investors may
become entitled to exercise certain warrants to purchase Common Stock (as
defined in Section 1) of the Corporation (the "Warrants");
WHEREAS, on the date hereof, the parties hereto own 100% of the
outstanding capital stock of the Corporation (whether voting or non-voting) in
the amounts set forth on Schedule 1 hereto; and
WHEREAS, as an inducement to completion of the transactions
contemplated by the Purchase Agreement the Corporation has agreed to provide the
Investors and the Management Shareholders with certain rights incident to the
ownership of shares of Stock pursuant to this Agreement.
NOW THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto, intending to be
legally bound hereby, do hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following
terms shall have the following respective meanings:
"Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute enacted hereafter, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect from time to time.
"Advent" shall mean Advent International Corporation, a
Delaware corporation, and any Affiliate of Advent International Corporation.
"Affiliate" of a Person shall mean any Person which,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person. For purposes hereof, only wholly-owned subsidiaries shall be
deemed to be Affiliates of a parent entity and the requisite amount of "control"
shall exist only if the same Person has the power to direct decisions affecting
Securities. For purposes hereof (i) except as otherwise provided herein the
partners or shareholders of an Investor shall be deemed to be Affiliates of that
Investor (but only to the extent of their pro rata interest therein), and (ii)
each Advent Entity shall be deemed to be an Affiliate of each other Advent
Entity and of Advent.
"Commission" shall mean the U.S. Securities and Exchange
Commission, or any other federal agency at the time administering the Act.
"Common Stock" shall mean (i) the class or series (however
designated) of capital stock of the Corporation, authorized on or after the date
hereof, the holders of which shall have the right, without limitation as to
amount per share, either to all or to a share of the balance of current
dividends and liquidating distributions after the payment of dividends and
distributions on any shares entitled to preference in the payment thereof, and
the holders of which shall ordinarily, in the absence of contingencies, be
entitled to vote for the election of directors of the Corporation (even though
the right so to vote has been suspended by the happening of such a contingency),
and (ii) any other securities into which or for which any of the securities
described in clause (i) above may be converted or exchanged pursuant to a plan
of recapitalization, reorganization, merger, sale of assets or otherwise.
"Corporation" shall mean DE&S Holding Co., or any successor
by merger, consolidation or other transaction, and shall include any
Subsidiaries thereof.
"Counterpart" shall mean a counterpart to this Agreement in
the form of Exhibit A hereto, pursuant to the execution of which a Person shall
become bound by all of the terms and conditions of this Agreement. Any Person
who shall become a Holder shall be required to execute and become bound by all
of the terms and conditions to this Agreement.
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"Demand Registration" shall mean an Investor Demand
Registration or a Management Demand Registration, as the case may be.
"Holder" shall mean each of the Investors and the
Management Shareholders to the extent it or he holds Registrable Securities, and
any other Person holding Registrable Securities to whom registration rights
granted under and pursuant to this Agreement have been transferred pursuant to
Section 13 hereof.
"Initiating Holders" shall mean the Initiating Investors or
the Initiating Management Holders, as the case may be.
"Investor Registrable Securities" shall mean the
Registrable Securities beneficially owned (which, for purposes of this
Agreement, shall be determined in accordance with Rule 13d-3 of the ▇▇▇▇ ▇▇▇) by
any Investor.
"IPO" shall mean the initial underwritten public offering
of Common Stock.
"Management Registrable Securities" shall mean the
Registrable Securities beneficially owned (which, for purposes of this
Agreement, shall be determined in accordance with Rule 13d-3 of the ▇▇▇▇ ▇▇▇) by
any Management Shareholder.
"Person" shall mean an individual, a sole proprietorship, a
corporation, a partnership, a limited liability company, a limited liability
partnership, a joint venture, an association, a trust, or any other entity or
organization, including a government or a political subdivision, agency or
instrumentality thereof.
"Piggyback Registration" shall have the meaning set forth
in Section 3 hereof.
"Pledge Agreement" shall mean that certain pledge agreement
entered into in connection with the (Credit Agreement dated as of February 5,
1999, by and among the Corporation, Dollar Express, and any subsidiaries
referred to therein, as borrowers, and the lenders referred to therein (the
"Lenders"), and First Union National Bank, as Administrative Agent
("Administrative Agent").
The terms "register," "registered" and "registration" refer
to a registration effected by preparing and filing a registration statement
("Registration Statement") in compliance with the Act and the declaration or
ordering of effectiveness of such Registration Statement by the Commission.
"Registered Holder" shall mean, with respect to a
particular Registration Statement, each Holder which has included Registrable
Securities in such Registration Statement.
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"Registered Securities" shall mean the Registrable
Securities included in a particular Registration Statement which has been
declared effective by the Commission and which has remained effective for the
minimum period required under and pursuant to the terms and conditions of this
Agreement.
"Registrable Securities" shall mean (i) any shares of
Common Stock beneficially owned (which, for purposes of this Agreement, shall be
determined in accordance with Rule 13d-3 of the ▇▇▇▇ ▇▇▇) by any Holder,
including shares of Common Stock issued or issuable from time to time upon the
conversion of the Series A Preferred Stock, (ii) any shares of Common Stock
which may, from time to time, be beneficially owned by any Holder from the
Corporation, including (without limitation) (A) shares of Common Stock issued or
issuable in respect of preemptive rights or financing participation rights
granted to any Holder, (B) upon the exercise of warrants (including the
Warrants), options or other rights to acquire shares of Common Stock, or (C)
upon the conversion or exchange of securities convertible into or exchangeable
for shares of Common Stock, and (iii) securities which were issued or received
in respect of, or in exchange or in substitution for any of the foregoing,
including, but not limited to, those arising from a stock dividend,
distribution, stock split, reclassification, reorganization, merger,
consolidation, sale or transfer of assets or other exchange of securities. As to
any particular Registrable Securities, once issued, such securities shall cease
to be Registrable Securities when (x) a Registration Statement with respect to
the sale of such securities shall have become effective under the Act and such
securities shall have been disposed of in accordance with such Registration
Statement, (y) such securities shall have ceased to be outstanding or (z) such
securities shall have been transferred as permitted by, and in compliance with,
Rule 144 (or any successor provision) promulgated under the Act.
"Series A Preferred Stock" shall mean (i) the Series A
Preferred Stock of the Corporation, par value $.01 per share, and (ii) any other
securities into which or for which any of the securities described in clause (i)
above may be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, consolidation, sale of assets or otherwise.
"Subsidiary" means, with respect to any Person, any
corporation, association or other business entity of which more than 50% of the
outstanding Voting Stock is owned, directly or indirectly, by such Person and
one or more other Subsidiaries of such Person.
"Voting Stock" means with respect to any Person, capital
stock of any class or kind ordinarily having the power to vote for the election
of directors, managers or other voting members of the governing body of such
Person.
"1934 Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute enacted hereafter, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect
from time to time.
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2. Demand Registrations.
(a) Beginning on the date which is 270 days after the date
of this Agreement, upon the receipt of a written request from the holders of a
majority of the Investor Registrable Securities ("Initiating Investors") that
the Corporation file a Registration Statement under the Act covering the
registration for the offer and sale of all or part of such Initiating Investors'
Registrable Securities (an "Investor Demand Registration"), as soon as
practicable, the Corporation shall give written notice to all other Holders of
such Investor Demand Registration and shall cause all Registrable Securities
that the Initiating Investors have requested be registered to be registered
under the Act, subject to and in accordance with the terms, conditions,
procedures and limitations contained in this Agreement. A maximum of two such
Investor Demand Registrations may be effected pursuant to this Section 2(a), and
a registration requested pursuant to this Section 2(a) shall not be deemed to
have been effected unless a Registration Statement with respect thereto has
become effective, remained continuously effective without interruption in
accordance with the provisions of Section 5(a) hereof, and the Registered
Securities shall have been disposed of in accordance with the plan of
distribution set forth therein. The Initiating Investors may terminate an
Investor Demand Registration prior to the filing of a Registration Statement
relating thereto, or require the Corporation to withdraw promptly any
Registration Statement which has been filed pursuant to this Section 2 but which
has not become effective under the Act, and such registration shall not be
deemed to be an Investor Demand Registration if either (i) it agrees to pay the
costs and expenses of such registration as set forth in Section 8 below or (ii)
such withdrawal is accompanied by notice from the Initiating Investors that, in
the good faith exercise of its reasonable judgment, there has occurred either
(x) a material adverse change in the business, results of operations, financial
condition or prospects of the Corporation, (y) a material adverse change in the
United States financial markets which makes it inadvisable to proceed with the
registration, or (z) a misstatement or omission in any preliminary prospectus
which makes it inadvisable to proceed with the registration.
(b) Beginning on the date on which the Investors have
received $35 Million of Aggregate Proceeds (as determined pursuant to Section
9(g) below), upon the receipt of a written request from the holders of a
majority of the Management Registrable Securities ("Initiating Management
Holders") that the Corporation file a Registration Statement under the Act
covering the registration for the offer and sale of all or part of such
Initiating Management Holders' Registrable Securities (a "Management Demand
Registration"), as soon as practicable, the Corporation shall give written
notice to all other Holders of such Management Demand Registration and shall
cause all Registrable Securities that the Initiating Management Holders have
requested be registered to be registered under the Act, subject to and in
accordance with the terms, conditions, procedures and limitations contained in
this Agreement. A maximum of two such Management Demand Registrations may be
effected pursuant to this Section 2(b), and a registration requested pursuant to
this Section 2(b) shall not be deemed to have been effected unless a
Registration Statement with respect thereto has become effective, remained
continuously effective without interruption in accordance with the provisions of
Section 5(a) hereof, and the Registered Securities shall have been disposed of
in accordance with the plan of distribution set forth therein. The Initiating
Management Holders may terminate a Management Demand Registration prior to the
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filing of a Registration Statement relating thereto, or require the Corporation
to withdraw promptly any Registration Statement which has been filed pursuant to
this Section 2(b) but which has not become effective under the Act, and such
registration shall not be deemed to be a Management Demand Registration if
either (i) it agrees to pay the costs and expenses of such registration as set
forth in Section 8 below or (ii) such withdrawal is accompanied by notice from
the Initiating Management Holders that, in the good faith exercise of its
reasonable judgment, there has occurred either (x) a material adverse change in
the business, results of operations, financial condition or prospects of the
Corporation, (y) a material adverse change in the United States financial
markets which makes it inadvisable to proceed with the registration, or (z) a
misstatement or omission in any preliminary prospectus which makes it
inadvisable to proceed with the registration.
3. Piggyback Registration.
(a) Subject to Section 9 hereof, if at any time the
Corporation proposes to register its Common Stock under the Act, either for its
own account or for the account of others (including and to the extent any such
registrations are effected pursuant to Section 2 hereof), in connection with the
public offering of such Common Stock solely for cash, on a registration form
that would also permit the registration of Registrable Securities (other than a
registration covering shares of Common Stock issued pursuant to an employee
benefit plan, or a registration on Form S-4 for the purpose of offering such
securities to another business entity or the shareholders of such entity in
connection with the acquisition of assets or shares of capital stock,
respectively, of such entity), the Corporation shall, each such time, promptly
give each Holder written notice of such proposal (a "Piggyback Registration
Notice"). Within 20 days after the Piggyback Registration Notice is given, the
Holders shall give notice as to the number of shares of Registrable Securities,
if any, which such Holders request to be registered simultaneously with such
registration by the Corporation ("Piggyback Registration"). The Corporation
shall include any Registrable Securities in such Registration Statement (or in a
separate Registration Statement concurrently filed) which the Holders thereof
request to be registered under the Act, subject to and in accordance with the
terms, conditions, procedures and limitations contained in this Agreement.
(b) Notwithstanding the foregoing, if such Piggyback
Registration was initiated by the Corporation to effect a primary public
offering of its securities and, if at any time after giving written notice of
its intention to so register securities and before the effectiveness of the
Registration Statement filed in connection with such registration, the
Corporation determines for any reason either not to effect such registration or
to delay such registration, the Corporation may, at its election, by prior
written notice to each Holder: (i) in the case of a determination not to effect
registration, relieve itself of its obligation to register the Registrable
Securities in connection with such registration, provided that such
determination shall not preclude such Holder of Registrable Securities from
enjoying registration rights which it might otherwise possess under Section 2
hereof; or (ii) in the case of a determination to delay registration, delay the
registration of such Registrable Securities for the same period as the delay
registration of such other securities, provided that the Corporation shall not
delay any such registration more than once in any twelve month period or for a
period of exceeding 90 days.
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(c) Each Holder requesting inclusion in a registration
pursuant to this Section 3 may, at any time before the effective date of the
Registration Statement relating to such registration, revoke such request by
written notice of such revocation to the Corporation, in which case the
Corporation shall cause such Holder's Registrable Securities to be withdrawn
from such Registration Statement.
4. Registration Pursuant to Rule 415.
(a) At such time as the Corporation shall have qualified
for the use of Form S-3 (or any similar form promulgated by the Commission), but
in no event prior to one year after the effective date of the Registration
Statement for the IPO, the Investors shall have the right, in addition to and
not exclusive of the other rights set forth in this Agreement, to request on one
occasion during each year that the Corporation file a Registration Statement on
Form S-3 pursuant to Rule 415 under the Act (a "Rule 415 Request"). No Investor
shall initiate a Rule 415 Request without first consulting in good faith with
the Corporation and its investment bankers; provided that the Corporation and
investment bankers make themselves reasonably available for such consultation.
Any Rule 415 Request (i) shall be made by Investors holding not less than 25% of
the Registrable Securities, (ii) shall specify the Registrable Securities
intended to be sold or disposed of by the particular holders thereof, and (iii)
shall state the intended method or methods of disposition of such Registrable
Securities by the Investors requesting such registration. Promptly after the
Corporation receives a Rule 415 Request and subject to the provisions of the
immediately preceding sentence, the Corporation shall give written notice of a
Rule 415 Request to the Investors other than the Investors initiating the Rule
415 Request. All Registrable Securities owned by any other Investors which
notify the Corporation in writing, within 30 days after receipt of the
Corporation's notice contemplated by this sentence, that it intends to
participate in the registration contemplated by the Rule 415 Request (such
notification to include the number of Registrable Securities sought to be
included and the intended method or methods of distribution for such Registrable
Securities), subject to and in accordance with the terms, conditions, procedures
and limitations contained in this Agreement. No registration pursuant to this
Section 4 shall count as a Investor Demand Registration pursuant to Section 2,
nor shall the Investors rights under Section 2 be deemed to be waived by virtue
of a request made under this Section 4.
(b) Notwithstanding foregoing, the holders of a majority of
the Registrable Securities held by all Management Shareholders may delay a
registration under Section 4(a) above if (i) within 7 days after the Rule 415
Request they notify the Investors that the Management Shareholders intend to
demand registration of Shares under Section 2 hereof (the "Preemptive Request"),
and (ii) within 60 days after the Rule 415 Request the Corporation has filed a
Registration Statement with the Commission in respect of the Preemptive Request.
The Preemptive Request shall be deemed a request for a Management Demand
Registration under Section 2(b) hereof, provided, however that any registration
in respect of a Preemptive Request shall not count for purposes of the
limitation on the number of Management Demand Registrations. If the Corporation
has filed a Registration Statement with the Commission in respect of the
Preemptive Request, the Corporation shall, within 180 days after the
effectiveness of such Registration Statement, file a Registration Statement in
respect of the Rule 415 Request that was delayed by the Preemptive Request (the
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"Delayed 415 Registration Statement"). If the Corporation has failed to file a
Registration Statement in respect of a Preemptive Request as provided herein, it
shall promptly file the Delayed 415 Registration Statement. The Corporation
shall not file any Management Demand Registration (other than the Management
Demand Registration contemplated by this subsection (b)) until the Delayed 415
Registration Statement has been declared effective.
5. Obligations of the Corporation.
(a) Whenever required under this Agreement to effect the
registration of any Registrable Securities, the Corporation shall, as
expeditiously as reasonably possible:
(i) Prepare and file with the Commission a Registration
Statement covering such Registrable Securities and use its best efforts to cause
such Registration Statement to be declared effective by the Commission and to
keep such registration continuously effective until the date when all
Registrable Securities covered by the Registration Statement have been sold;
provided, however, in the case of registration under Section 2 or Section 3
hereof, not longer than 270 days after the effective date of the Registration
Statement or any amendments or supplements thereto. The Corporation will furnish
to each Holder of Registrable Securities covered by such Registration Statement
and the underwriters, if any, within a reasonable period of time prior to the
making of any filing thereof, copies of all such documents proposed to be filed
(excluding exhibits, unless any such person shall specifically request
exhibits), which documents will be subject to the review of each Holder and any
underwriters, and the Corporation will not file such Registration Statement or
any amendment thereto or any prospectus or any supplement thereto (including any
documents incorporated by reference therein) with the Commission if (i) the
Holders of a majority of the Registrable Securities covered by such Registration
Statement or the underwriters, if any, shall reasonably object to such filing or
(ii) information in such Registration Statement or prospectus concerning a
particular Registered Holder is inaccurate.
(ii) Prepare and file with the Commission such
amendments and post-effective amendments to such Registration Statement as may
be necessary to keep such Registration Statement effective until the applicable
date referred to in Section 5(a)(i) hereof and to comply with the provisions of
the Act with respect to the disposition of all securities covered by such
Registration Statement, and cause the prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed with the
Commission pursuant to Rule 424 under the Act.
(iii) Furnish to the Registered Holders such number of
copies of such Registration Statement, each amendment thereto, the prospectus
included in such Registration Statement (including each preliminary prospectus),
each supplement thereto and such other documents, as they may reasonably request
in order to facilitate the disposition of Registered Securities owned by them.
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(iv) Use its best efforts to register and qualify the
Registered Securities under such other securities laws of such jurisdictions as
shall be reasonably requested by any Registered Holder and do any and all other
acts and things which may be reasonably necessary or advisable to enable each
Registered Holder to consummate the disposition of the Registered Securities
owned by such Holder in such jurisdictions; provided that the Corporation shall
not be required in connection therewith or as a condition thereto to qualify
generally to transact business in any such states or jurisdictions.
(v) Promptly notify each Registered Holder at any time
when a prospectus is required to be delivered under the Act of the happening of
any event (including a reasonably detailed description of such event) as a
result of which the prospectus included in such Registration Statement contains
an untrue statement of a material fact or omits any fact necessary to make the
statements therein not misleading and, at the request of any such Holder, the
Corporation will promptly prepare a supplement or amendment to such prospectus
so that, as thereafter delivered to the purchasers of such Registered
Securities, such prospectus will not contain an untrue statement of a material
fact or omit to state any fact necessary to make the statements therein not
misleading.
(vi) Make available for inspection by any Registered
Holder, any underwriter participating in any disposition pursuant to such
Registration Statement and any attorney, accountant or other agent retained by
any such Registered Holder or underwriter, all financial and other records,
pertinent corporate documents and properties of the Corporation, and cause the
officers, directors, employees and independent accountants of the Corporation to
supply all information reasonably requested by any such Registered Holder,
underwriter, attorney, accountant or agent in connection with such Registration
Statement.
(vii) Promptly notify the Registered Holders and the
underwriters, if any, of the following events and, if requested by any such
Person, confirm such notification in writing and provide copies of any relevant
documents relating to: (1) the filing of the prospectus or any prospectus
supplement and the Registration Statement and any amendment or post-effective
amendment thereto and, with respect to the Registration Statement and any
amendment or post-effective amendment thereto, the declaration of the
effectiveness of such documents, (2) any comment letters from or requests by the
Commission for amendments or supplements to the Registration Statement or the
prospectus or for additional information, (3) the issuance or threat of issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose,
and (4) the receipt by the Corporation of any notification with respect to the
suspension of the qualification of the Registered Securities for sale in any
jurisdiction or the initiation or threat of initiation of any proceeding for
such purpose.
(viii) Use its best efforts to prevent the entry of any
order suspending the effectiveness of the Registration Statement, or the
qualification, or exemption from qualification, of such securities included
therein for sales in any jurisdiction, and to obtain the withdrawal of any such
order, if entered.
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(ix) If reasonably requested by any underwriter or a
Registered Holder in connection with any underwritten offering, incorporate in a
prospectus supplement or post-effective amendment such information as the
underwriters and the Holders of a majority of the Registrable Securities covered
by the particular Registration Statement agree should be included therein
relating to the sale of such Registrable Securities, including, without
limitation, information with respect to the number of Registrable Securities
being sold to such underwriters, the purchase price being paid therefor by such
underwriters and any other terms of the underwritten offering of such
Registrable Securities to be sold in such offering, and make all required
filings of such prospectus supplement or post-effective amendment after being
notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment.
(x) Cooperate with the Registered Holders and the
underwriters, if any, to facilitate the timely preparation and delivery of
certificates evidencing Registered Securities and not bearing any restrictive
legends, and enable such Registered Securities to be in such lots and registered
in such names as the underwriters may request at least two business days prior
to any delivery of Registered Securities to the underwriters.
(xi) Provide a transfer agent, registrar and CUSIP
number for all Registrable Securities not later than the effective date of the
Registration Statement.
(xii) Prior to the effectiveness of the Registration
Statement and any post-effective amendment thereto and at each closing of any
underwritten offering, (i) make such representations and warranties to the
Registered Holders and the underwriters, if any, with respect to the Registered
Securities and the Registration Statement as are customarily made by issuers to
underwriters in primary underwritten public offerings and such other matters as
may be reasonably requested by such Registered Holders and underwriters or their
counsel, (ii) obtain opinions of counsel to the Corporation and updates thereof
(which opinions shall be reasonably satisfactory to the underwriters, if any,
and to the Holders of a majority of the Registered Securities) addressed to each
Registered Holder and the underwriters, if any, covering the matters customarily
covered in opinions requested in underwritten offerings and such other matters
as may be reasonably requested by such Holders and underwriters or their
counsel, (iii) obtain "cold comfort" letters and updates thereof from the
Corporation's independent certified public accountants addressed to the
Corporation and the underwriters, if any, such letters to be in customary form
and covering matters of the type customarily covered in "cold comfort" letters
required by underwriters in connection with primary underwritten public
offerings and (iv) deliver such documents and certificates as may be reasonably
requested by the Holders of a majority of the Registered Securities being sold
and by the underwriters, if any, to evidence compliance with clause (i) above
and with any customary conditions contained in the underwriting agreement or
other agreement entered into by the Corporation.
(xiii) Enter into such agreements and take all such
other reasonable actions in connection therewith in order to expedite or
facilitate the disposition of such Registered Securities and in such connection,
in the case of an underwritten offering, enter into an underwriting agreement or
other similar agreement in form, scope and substance as is customary in primary
underwritten public offerings which underwriting agreement shall, among other
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things, set forth in full the indemnification and contribution provisions and
procedures of Section 13 hereof with respect to all parties to be indemnified
pursuant to said Section and provide for customary indemnification and
contribution provisions and procedures by the underwriters of any Holders
registering Registrable Securities. The above shall be done at each closing
under such underwriting or similar agreement or as and to the extent required
thereunder.
(xiv) Use its best efforts to cause all Registered
Securities included in such Registration Statement to be listed, by the date of
first sale of Registered Securities pursuant to such registration statement, on
each securities exchange on which shares of Common Stock are then listed or
proposed by the Corporation to be listed, if any, and to use best efforts to
arrange for at least two market makers to register as such with respect to such
Registrable Securities with the National Association of Securities Dealers.
(xv) Provide such reasonable assistance in the
marketing of the Registered Securities as is customary of issuers in primary
underwritten public offerings (including participation by its senior management
in "road shows").
(xvi) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally available
to its security holders earnings statements satisfying the provisions of Section
11(a) of the Act and the Rules promulgated thereunder (including Rule 158), no
later than 45 days after the end of any twelve month period (i) commencing at
the end of any fiscal quarter in which Registered Securities are sold to
underwriters in a firm or best efforts underwritten offering or (ii) if not sold
to underwriters in such an offering, beginning with the first day of the first
fiscal quarter of the Corporation commencing after the effective date of the
Registration Statement, which earnings statement will cover such 12-month
period.
(b) If at the time of any request to register Registrable
Securities pursuant to Section 2 or Section 4 hereof, the Corporation is
preparing, or within 30 days thereafter engages a managing underwriter and
commences to prepare, a Registration Statement for a public offering (other than
a registration covering shares of Common Stock issued pursuant to an employee
benefit plan) which in fact is filed and becomes effective within 90 days after
the date the Holders made the request to register Registrable Securities, then
the Corporation may, subject to Section 3 and Section 9(c)(i) hereof, at its
option direct that such request for registration be delayed for a period not in
excess of 90 days from the date of such request. Nothing herein shall preclude
such Holder of Registrable Securities from enjoying registration rights which it
might otherwise possess under Section 3 hereof. Notwithstanding anything to the
contrary herein, the Corporation shall not be permitted pursuant to this
subsection (b) to further delay a registration to be effected pursuant to
Section 4 hereof if a Preemptive Request has been made.
(c) If at the time of any request to register Registrable
Securities pursuant to Section 2 or Section 4 hereof, the Corporation is engaged
in any material acquisition or divestiture or other business transaction with a
third party which would be adversely affected by such request to register
Registrable Securities to the material detriment of the Corporation, then the
11
Corporation may direct that such request for registration be delayed for a
period not in excess of 90 days from the date of such request. Notwithstanding
anything to the contrary herein, the Corporation shall not be permitted pursuant
to this subsection (c) to further delay a registration to be effected pursuant
to Section 4 hereof if a Preemptive Request has been made.
(d) Notwithstanding anything herein to the contrary, in no
event shall the Corporation exercise its right to delay any such registration
under this Section 5 more than once in any twelve month period or for a period
of exceeding 90 days.
6. Furnish Information. The Holders shall furnish to the
Corporation such information regarding them, the Registrable Securities held by
them, and the intended method of disposition by them of such Registrable
Securities as is customarily provided by selling securityholders and as the
Corporation or any underwriters shall reasonably request.
7. Suspension of Disposition of Registrable Securities. Each
Registered Holder agrees that, upon receipt of any notice from the Corporation
of the happening of any event of the kind described in Section 5(a)(v) or
5(a)(vii)(3) or (4) hereof, such Registered Holder will forthwith discontinue
disposition of Registered Securities until such Registered Holder's receipt of
copies of a supplemented or amended prospectus contemplated by Section 5(a)(v)
hereof, or until it is advised in writing (the "Advice") by the Corporation that
the use of the prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in the
prospectus, and, if so directed by the Corporation, such Registered Holder will
deliver to the Corporation (at the expense of the Corporation) all copies, other
than permanent file copies then in such Registered Holder's possession, of the
prospectus covering such Registered Securities at the time of receipt of such
notice. In the event the Corporation shall give any such notice, the time period
mentioned in Section 5(a)(i) hereof shall be extended by the number of days
during the period from and including the date of the giving of such notice
pursuant to Section 5(a)(v) or 5(a)(vii)(3) or (4) hereof to and including the
date when each Registered Holder shall have received the copies of the
supplemented or amended prospectus contemplated by Section 5(a)(v) hereof or the
Advice.
8. Expenses of Registration.
(a) Except as provided in Section 8(b) through 8(d) hereof,
all expenses incurred in connection with a registration pursuant to this
Agreement, whether or not a registration is consummated, shall be borne by the
Corporation, including (without limitation) charges, costs, expenses,
disbursements, fees and taxes in connection with (i) the preparation and filing
of any Registration Statement, each preliminary prospectus, the final
prospectus, and any amendments or supplements thereto, and the printing and
furnishing of copies of each thereof to any underwriters and to dealers
(including costs of mailing and shipment), (ii) the preparation, issuance and
delivery of the certificates for the Registrable Securities to offered and sold
hereunder, including any stock or other transfer taxes or duties payable upon
the sale thereof, (iii) the printing of any underwriting agreement and any
dealer agreements and furnishing of copies of each to the underwriters and to
dealers (including costs of mailing and shipment) participating in any
registration, (iv) the qualification of the Registrable Securities for offering
and sale under state laws (including the legal fees and filing fees and other
12
disbursements of counsel in connection therewith) and the printing and
furnishing of copies of any blue sky surveys or legal investment surveys to the
Underwriters and to dealers, (v) the filing for listing or approval for
quotation of the Registrable Securities on the Nasdaq Stock Market or on any
national securities exchange (including the legal fees and filing fees and other
disbursements of counsel in connection therewith), (vi) filing for review of the
public offering of the Registrable Securities by the National Association of
Securities Dealers, Inc. (including the legal fees and filing fees and other
disbursements of counsel in connection therewith), (vii) the fees and expenses
of any transfer agent or registrar for the Registrable Securities, (viii) making
road show presentations with respect to the offering of the Registrable
Securities, (ix) the legal fees and disbursements charged by counsel to the
Corporation, by counsel to the underwriters, if any, (x) the fees and
disbursements charged by the accountants to the Corporation, (xi) fees and
disbursements charged by one counsel chosen by (A) the Initiating Investors, in
the case of an Investor Demand Registration, (B) the Initiating Management
Holders , in the case of a Management Demand Registration, (C) the Holders of a
majority of the Registrable Securities sought to be included in the Registration
Statement, in the case a Piggyback Registration in which the Company or any
other holder of contractual rights granted by the Corporation and consented to
by the holders of a majority of the Investor Registrable Securities ("Additional
Rights Holders") initiates such registration, and (D) the Investor initiating a
Rule 415 Request, and (xii) the fees and disbursements charged by any experts or
other consultants which any Holders participating in such registration may
reasonably request participate in the registration.
(b) Each Holder agrees to pay all underwriting discounts
and commissions and the fees and disbursements of any legal counsel retained by
it, other than the legal counsel referred to in clause (x) of Section 8(a)
above. Additionally, the Corporation agrees to use its best efforts to cause its
transfer agent or its counsel to serve as a custodian, to the extent any
underwriters participating in any such registration shall require the
participation of a custodian for any selling security holders and, in such
event, the Corporation shall be responsible for the fees and disbursements of
its transfer agent or its counsel acting in such custodial capacity.
(c) If a registration proceeding is begun under Section 2
but subsequently discontinued, whether prior to or after the filing of a
Registration Statement, at the request of the Initiating Holders, such
Initiating Holders shall have the option (exercisable by the Holders of a
majority of the Registrable Securities beneficially owned by Initiating Holders)
of either (i) reserving their right to such Demand Registration pursuant to
Section 2, in which case the Initiating Holders will pay all reasonable
out-of-pocket expenses incurred to effect such terminated registration, or (ii)
waiving their right to one future Demand Registration under Section 2 (but not
its right to effect a Piggyback Registration pursuant to Section 3 hereof if
another Holder shall initiate a Demand Registration under Section 2 hereof), in
which case the Corporation will pay the expenses of such withdrawn registration.
(c) Registered Holders may withdraw a request made within
45 days after the end of the fiscal year if the audited financial statements of
the Corporation for such year and at such year-end materially and adversely
differ from the financial information furnished to
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such Registered Holders by the Corporation at the time of their request, in
which event such Registered Holders shall not be required to pay any of the
expenses of such withdrawn registration and such withdrawn registration shall be
treated for all purposes of this Agreement as if it had never occurred.
(d) All expenses incurred in connection with a registration
which are, under this Section 8, to be borne by Registered Holders shall be
borne pro rata by the Registered Holders on the basis of the number of such
Holder's Registered Securities (or Registrable Securities proposed to be
registered, as the case may be); provided, however, that if any such cost or
expense is attributable solely to one Registered Holder and does not constitute
a normal cost or expense of such a registration, such cost or expense shall be
allocated to and borne by that Registered Holder.
9. Underwriting Requirements; Priorities.
(a) With respect to a Demand Registration pursuant to
Section 2, the investment banker(s) and managing underwriters to administer such
registration shall be selected by the mutual agreement of the Initiating Holders
and the Corporation, subject to the Corporation's obligations under its
engagement letter with ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated dated May 12, 1998,
amended May 26, 1998 and countersigned on June 1, 1998. The Corporation will
have the right to select the investment banker(s) and manager(s), if any, to
administer any offering which is initiated by the Corporation.
(b) If a registration under Section 2 hereof is an
underwritten offering and the managing underwriters advise the Corporation that
in their opinion the number of shares of Common Stock requested to be registered
exceeds the number of shares which can be sold in such offering without
materially and adversely affecting the marketability of the offering, then the
Corporation will include in such registration, before inclusion of any
securities sought to be registered by any other Person, including (without
limitation) the Corporation or any Additional Rights Holder:
(i) until the Investors shall have received $35 Million
in Aggregate Proceeds (as determined pursuant to subsection (g) below),
all of the Registrable Securities owned by any of the Holders, on the
basis of the number of Registrable Securities such Holders have
requested to be registered, allocated two-thirds to the Investors, pro
rata among them, and one-third to the Management Shareholders, pro rata
among them,
(ii) thereafter, until the Management Shareholders
shall have received $35 Million in Aggregate Proceeds (as determined
pursuant to subsection (g) below), all of the Registrable Securities
owned by any of the Holders, on the basis of the number of Registrable
Securities such Holders have requested to be registered, two-thirds to
the Management Shareholders, pro rata among them, and one-third to the
Investors, pro rata among them, and
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(iii) thereafter, all of the Registrable Securities
owned by any of the Holders, pro rata among them on the basis of the
number of Registrable Securities such Holders have requested to be
registered.
(c) If a registration under Section 3 hereof is an
underwritten primary offering initiated by the Corporation or an Additional
Rights Holder and the managing underwriters advise the Corporation that in their
opinion the number of securities requested to be included in such registration
exceeds the number which can be sold in such offering without materially and
adversely affecting the marketability of the offering, the Corporation will
include in such registration (i) first, depending upon who initiated such
registration, the securities that the Corporation or the Additional Rights
Holders initiating such registration, proposes to sell, and (ii) second, before
inclusion of any securities sought to be registered by any other Person,
(A) until the Investors shall have received $35 Million
in Aggregate Proceeds (as determined pursuant to subsection (g) below),
all of the Registrable Securities owned by any of the Holders, on the
basis of the number of Registrable Securities such Holders have
requested to be registered, allocated two-thirds to the Investors, pro
rata among them, and one-third to the Management Shareholders, pro rata
among them,
(B) thereafter, until the Management Shareholders shall
have received $35 Million in Aggregate Proceeds (as determined pursuant
to subsection (g) below), all of the Registrable Securities owned by
any of the Holders, on the basis of the number of Registrable
Securities such Holders have requested to be registered, two-thirds to
the Management Shareholders, pro rata among them, and one-third to the
Investors, pro rata among them, and
(C) thereafter, all of the Registrable Securities owned
by any of the Holders, pro rata among them on the basis of the number
of Registrable Securities such Holders have requested to be registered;
provided, however, that if the holders of Registrable Securities have requested
that their Registrable Securities be included in a registration pursuant to
Section 3 following the Corporation's exercise of its right to delay a request
pursuant to Section 5, then the Corporation will include in such registration,
at a minimum, the lesser of (x) all Registrable Securities held by Holders
requesting registration pursuant to Section 3 hereof and (y) such number of
Registrable Securities held by Holders requesting registration pursuant to
Section 3 hereof as is equal to 50% of the total number of shares of Common
Stock being registered, such inclusion to give effect to the priorities and
allocations among the Investors and the Management Shareholders set forth in
this subsection (c); provided further that if such registration contemplates an
"over-allotment option" on the part of underwriters, to the extent such
over-allotment option is exercised and Holders of Registrable Securities were
excluded from registering any Registrable Securities pursuant to the priority
provisions of this section, then the over-allotment option shall be exercised
with respect to such Registrable Securities held by such excluded Holders, such
15
inclusion to give effect to the priorities and allocation among the Investors
and the Management Shareholders set forth in this subsection (c).
(d) In the event that the number of securities requested to
be included in a registration statement is less than that number allocated to
the Investors, on the one hand, or the Management Shareholders, on the other
hand, pursuant to Section 9(b) or (c) (the "Unused Allocation"), the Investors
or the Management Shareholders, as the case may be, may include additional
Registrable Securities under such subsections in an amount not to exceed the
Unused Allocation.
(e) No Holder may participate in any underwritten
registration hereunder unless such Holder (i) agrees to sell such Holder's
Registrable Securities on the basis provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
(f) The Corporation shall not grant registration rights to
any Person which impair in any way the priorities for inclusion in a
registration set forth in this Section 9, including, without limitation, by
providing any such Person with higher priority than or equal priority to that
provided to the parties herein with regard to any Registration Statement filed
by be Corporation, whether upon such Person's demand or otherwise.
(g) For purposes of this Agreement, "$35 Million in
Aggregate Proceeds" shall be determined, with respect to the Investors as a
group or the Management Shareholders as a group, each as of the original date of
the filing of a particular Registration Statement, and shall equal the gross
proceeds received as of the date of determination by the applicable group of
Holders from sales, if any, of Registered Securities. For purposes of making the
calculation contained in this subsection (g) and for purposes of determining the
priorities and allocations set forth in this Section 9, subsequent transferees
of Registrable Securities to whom rights under this Agreement are also assigned
shall be included in the applicable groups of Holders.
10. Rule 144 and Rule 144A. At such time as the Corporation
becomes subject to the reporting requirements of the 1934 Act, the Corporation
will file the reports required to be filed by it under the Act and the 1934 Act
and the rules and regulations adopted by the Commission thereunder, and will use
its best efforts to take such further action as any Holder of Registrable
Securities may reasonably deem to be necessary, all to the extent required from
time to time to enable such Holder to sell Registrable Securities without
registration under the Act within the limitation of the exemptions provided by
(i) Rule 144 and Rule 144A under the Act, as such Rule may be amended from time
to time or (ii) any similar rule or regulation hereafter adopted by the
Commission. Upon the request of any Holder of Registrable Securities, the
Corporation will deliver to such Holder a written statement as to whether it has
complied with such information and requirements.
16
11. Holdback Agreement.
(a) The Corporation agrees (i) not to effect any public or
private sale or distribution of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities, or
otherwise grant any option for the purchase of its equity securities (other than
options issued by the Corporation pursuant to any stock option plan or other
employee benefit plan), during the period commencing on the date the
registration statement relating to any Registrable Securities is first filed
with the Commission, and ending 180 days after the date of the final prospectus
relating to such Registrable Securities (other than a registration covering
shares of Common Stock issued pursuant to an employee benefit plan, a
registration on Form S-4 for the purpose of offering such securities to another
business entity or the shareholders of such entity in connection with the
acquisition of assets or shares of capital stock, respectively, of such entity,
or a registration effected pursuant to Rule 415 Request under Section 4 hereof),
unless the underwriters managing the registered public offering otherwise agree
and (ii) except for (A) issuances of Common Stock upon exercise of options
granted under the Corporation's stock option plan as in effect on the date
hereof and (B) issuances of Common Stock, options, warrants or other rights to
purchase Common Stock, or securities convertible into or exchangeable for Common
Stock (in each case in connection with a Business Combination transaction), not
to issue securities to any Person if, after giving effect to such issuance, such
Person would beneficially own two percent or more of the then outstanding Common
Stock unless such Person agrees, in the context of a registration contemplated
hereby, not to effect any sale or distribution of any such securities during the
period referred to above (except as part of such underwritten registration, if
otherwise permitted), unless the underwriters managing the registered public
offering otherwise agree.
(b) Subject to the rights set forth in Section 3 hereof,
each of the Holders agrees that, during the period commencing on the date when
any Registration Statement relating to (x) the IPO, (y) any public offering to
be effected subsequent to the IPO which involves the registration of securities
solely for the account of the Corporation, or (z) any registration effected
pursuant to Sections 2 or 3 hereof, is first filed with the Commission, and
ending 180 days after the date of the final prospectus relating to such public
offering, it will not and, except as may be disclosed in the prospectus to
accompany the reoffering of Registrable Securities, will not announce or
disclose any intention to, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option right or warrant to purchase, lend, or otherwise transfer or dispose
of, directly or indirectly, the Shares owned by it, or (ii) enter into any swap
or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the transfer of shares of Common Stock or other
securities by the undersigned as a gift or gifts, (B) the transfer of shares of
Common Stock or other securities of the Company by the undersigned to its
Affiliates, and (C) the sale of shares of Common Stock pursuant to the
Registration Statement relating to such registration effected pursuant to
Sections 2 or 3 hereof; provided, that, in the case of clause (A) or (B) above,
the recipient(s), donee(s) or transferee(s), respectively, agree(s) in writing
17
as a condition precedent to such issuance, gift or transfer to be bound by the
terms of this Agreement.
12. No Agreements. The Corporation has not previously, and
shall not hereafter without the prior written consent of a holders of a majority
of the Investor Registrable Securities, enter into any agreement granting rights
with respect to the registration of any of its securities (other than a
registration covering shares of Common Stock issued pursuant to an employee
benefit plan).
13. Transfer of Registration Rights. Provided that the
Corporation is given written notice by the Holder at the time of such transfer
stating the name and address of the transferee and identifying the securities
with respect to which the rights under this Agreement are being assigned, the
registration rights under this Agreement may be transferred in whole or in part
in connection with the transfer of Registrable Securities. Notwithstanding the
foregoing, if such transfer is subject to covenants, agreements or other
undertakings restricting transferability thereof the registration rights under
this Agreement shall not be transferred in connection with such transfer unless
such transfer complies with all such covenants, agreements and other
undertakings. In all cases, such registration rights shall not be transferred
unless the transferee thereof executes a Counterpart. If any Investor transfers
Registrable Securities to another Person and such Person becomes a party to this
Agreement, such Person shall be deemed an Investor for all purposes hereof.
14. Indemnification and Contribution.
(a) To the fullest extent permitted by law, the
Corporation will and hereby does (i) indemnify and hold harmless each Holder,
each director, officer, partner, employee, affiliate, or agent of or for such
Holder, any Underwriter (as defined in the Act) for such Holder, and each
Person, if any, who controls such Holder or underwriter within the meaning of
the Act, against any losses, claims, damages, costs or liabilities, joint or
several, to which they may become subject insofar as such losses, claims,
damages, costs or liabilities (or actions in respect thereof) arise out of, are
caused by, or are based on any untrue or alleged untrue statement of any
material fact contained in any Registration Statement filed with the Commission,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which it was made, or arise out of any
violation by the Corporation of any securities law, rule or regulation
applicable to the Corporation and relating to action or inaction required of the
Corporation in connection with any such registration; and (ii) will reimburse
each such Person or entity for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, costs, liability, or action; provided, however, that the indemnity
agreement contained in this Section 14(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Corporation (which consent
shall not be unreasonably withheld, delayed or conditioned) nor shall the
Corporation be liable to a Holder, underwriter or controlling person in any such
case for any such loss, claim, damage, liability or action to the extent that it
18
arises out of or is based upon an untrue statement or an alleged untrue
statement or omission or alleged omission made in connection with any such
Registration Statement, preliminary prospectus, final prospectus, or amendments
or supplements thereto, in reliance upon and in conformity with information
furnished in writing expressly for use in connection with such registration by
or on behalf of any such Holder or controlling person of such Holder. This
indemnity shall be in addition to other indemnification arrangements to which
the Corporation and any Holders may otherwise be party.
(b) To the fullest extent permitted by law, each Holder
requesting or joining in a registration under this Agreement, severally and not
jointly, will and hereby does (i) indemnify and hold harmless the Corporation,
each of its directors, each of its officers who have signed the Registration
Statement, each Person, if any, who controls the Corporation within the meaning
of the Act, and any Underwriter (as defined in the Act) for the Corporation,
each other Holder and each Person, if any, who controls such other Holder within
the meaning of Section 15 of the Act, against any losses, claims, damages or
liabilities, joint or several, to which the Corporation or any such director,
officer, controlling person, other Holder or underwriter may become subject,
under the Act and applicable state securities laws, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in such Registration Statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which it was made, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in such Registration Statement, preliminary or
final prospectus, or amendments or supplements thereto, in reliance upon and in
conformity with information furnished in writing by or on behalf of such Holder
expressly for use in such Registration Statement and (ii) reimburse any legal or
other expenses reasonably incurred by the Corporation or any such director,
officer, other Holder, controlling person or Underwriter attributable to
investigating or defending any loss, claim, damage, liability or action
indemnified by such Holder pursuant to clause (i); provided, however, that the
indemnity agreement contained in this Section 14(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of such Holder (which consent shall
not be unreasonably withheld, delayed or conditioned).
(c) Promptly after receipt by an indemnified party under
this Section 14 of notice of the commencement of any action or knowledge of a
claim that would, if asserted, give rise to a claim for indemnity hereunder,
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 14, notify the indemnifying party in
writing of the commencement thereof or knowledge thereof and the indemnifying
party shall have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties. If prejudicial to any material extent to his
ability to defend such action, the failure to notify an indemnifying party
promptly of the commencement of any such action or of the knowledge of any such
claim, shall relieve such indemnifying party of any liability to the indemnified
19
party under this Section 14 to the extent so prejudiced, but the omission so to
notify the indemnifying party will not relieve him of any liability that he may
have to any indemnified party otherwise than under this Section 14. Each
indemnified party shall have the right to employ separate counsel in such
action, claim or proceeding and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of each indemnified party
unless: (i) such indemnifying party has agreed to pay such expenses, (ii) such
indemnifying party has failed promptly to assume the defense and employ counsel
reasonably satisfactory to such indemnified party or (iii) such indemnified
party shall have been advised in writing by counsel that either there may be one
or more legal defenses available to it which are different from or in addition
to those available to such indemnifying party or such affiliate or controlling
person or a conflict of interest may exist if such counsel represents such
indemnified party and such indemnifying party or its affiliate or controlling
person; provided, however, that such indemnifying party shall not, in connection
with any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be responsible hereunder for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel), which counsel shall be designated by such indemnified party.
(d) The indemnifying party's liability to any such
indemnified party hereunder shall not be extinguished solely because any other
indemnified party is not entitled to indemnity hereunder. The indemnification
provided for under this Agreement will remain in full force and effect
regardless of any investigation made by or on behalf of the indemnified party or
any officer, director or controlling person of such indemnified party, and will
survive the transfer of securities. No Person guilty of fraudulent
misrepresentation within the meaning of Section 11(f) of the Act shall be
entitled to indemnification from any Person who was not guilty of such
fraudulent misrepresentation.
(e) If the indemnification provided for in this Section 14
is for any reason, other than pursuant to the terms thereof, held to be
unavailable or insufficient to an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative
fault of the indemnifying and indemnified parties in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative fault but also the relative benefits received by the indemnifying and
indemnified parties from the offering of Registrable Securities. The relative
benefits received by a party shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by
such party bears to the total net proceeds from the offering received by all
parties. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
relates to information supplied by the Corporation or a Holder and the parties'
20
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Corporation and the Holders agree that
it would not be just and equitable if contribution pursuant to this subsection
(e) were determined by pro rata allocation or by any other method of allocation
taking into account the equitable considerations referred to above in this
subsection (e). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (e) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No Person guilty of
fraudulent misrepresentation within the meaning of Section 11(f) of the Act
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(f) The liability of each Holder in respect of any
indemnification or contribution obligation of such Holder arising under this
Agreement with respect to a particular registration statement shall not in any
event exceed an amount equal to the net proceeds to such Holder (after deduction
of all underwriters' discounts and commissions and all other expenses paid by
such Holder in connection with the registration in question) from the
disposition of the Registrable Securities disposed of by such Holder pursuant to
such registration.
15. Remedies. In addition to being entitled to exercise all
rights provided in this Agreement as well as all rights granted by law,
including recovery of damages, each Holder of Registrable Securities will be
entitled to specific performance of its rights under this Agreement. The
Corporation agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agrees not to raise the defense in any action for specific
performance that a remedy at law would be adequate.
16. Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Corporation has obtained the written consent of the
holders of a majority of the Investor Registrable Securities.
17. Future Changes in Registration Requirements. In the event
that the registration requirements under the Act are amended or eliminated to
accommodate a "Company registration" or similar approach, this Agreement shall
be deemed amended to the extent necessary to reflect such changes and the intent
of the parties hereto with respect to the benefits and obligations of the
parties, and in such connection, the Corporation shall use reasonable efforts to
provide Holders of Registrable Securities equivalent benefits to those provided
under this Agreement.
18. Filing Notices and Copies. The Corporation shall provide
to each Holder of Registrable Securities such number of copies of any
Registration Statement, amendment thereto (including post-effective amendments)
or other report, document or notice that is filed with the Commission or other
authority under the securities laws, as may be reasonably requested by such
Holder of Registrable Securities. In addition, the Corporation shall provide
prior notice to any Holder of Registrable Securities of any such filing of a
21
Registration Statement or amendment thereto, provided that the foregoing notice
provision shall not shorten any other advance notice provision contained in this
Agreement.
19. Foreclosure Upon Securities. Notwithstanding anything
herein to the contrary, this Agreement shall not apply to any equity securities
of the Corporation, or to any equity securities of Dollar Express or any other
Subsidiary, upon foreclosure on any such equity securities ("Foreclosed
Securities") by the Lenders (or the Administrative Agent on their behalf)
pursuant to the Pledge Agreement, but continuing only for so long as the Lenders
shall hold Foreclosed Securities.
20. Notices. All notices and other communications hereunder
shall be in writing and shall be given to the Person either by hand delivery or
by United States express mail, postage prepaid, or by overnight courier services
guaranteeing next business day delivery, charges prepaid, or by telecopier, to
such party's address or to such party's telecopy number. Copies of all notices
to the Corporation and to the Management Shareholder shall be sent to Fox,
Rothschild, O'Brien & ▇▇▇▇▇▇▇, LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq., telecopy (215)
299-2150, and copies of all notices to any Investor shall be sent to ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., telecopy (▇▇▇) ▇▇▇-▇▇▇▇. If the notice is
sent by United States express mail or by overnight courier services, it shall be
deemed to have been given to the Person entitled thereto one business day after
deposited with the post office or the courier service for delivery to that
Person or, in the case of a notice given by hand delivery or telecopy, when
received. Notice of any change in any such address shall also be given in the
manner set forth above. Whenever the giving of notice is required, the giving of
such notice may be waived by the party entitled to receive such notice.
21. Interpretation. Unless the context of this Agreement
otherwise requires, (i) words of any gender include each gender and the neuter;
(ii) words using the singular or plural number also include the plural or
singular number, respectively; (iii) the terms "hereof," "herein," "hereby" and
derivative or similar words refer to this entire Agreement; (iv) the terms
"Article" or "Section" refer to the specified Article or Section of this
Agreement; and (v) the term "including" or similar words shall be construed as
to refer to such matter without limitation thereof. Whenever this Agreement
refers to a number of days, such number shall refer to calendar days unless
business days are specified. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
22. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania without
regard to the application of the principles of conflicts or choice of laws.
23. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
22
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
24. Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement with regard to the subject
matter hereof and intended to be a complete and exclusive statement of the
agreement and matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the rights granted by the Corporation with respect to the
Registrable Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
25. Counterparts; Facsimile Signatures. This Agreement may be
executed, including by facsimile signature, in one or more counterparts, each of
which when so executed shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
26. Parties Benefitted. Nothing in this Agreement, express or
implied, is intended, except as set forth herein, to confer upon any third party
any rights, remedies, obligations or liabilities.
27. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
personal representatives, successors and assigns including, without limitation,
subsequent Holders of Registrable Securities agreeing to be bound by all and the
terms and conditions of this Agreement.
23
IN WITNESS WHEREOF, this Registration Rights Agreement has
been executed as of the date and year first above written.
DE&S HOLDING CO.
By: /s/ ▇▇▇▇▇▇ Spain
--------------------------------------------
Name: ▇▇▇▇▇▇ Spain
Title: President
DOLLAR EXPRESS, INC.
By: /s/ ▇▇▇▇▇▇▇ Spain
--------------------------------------------
Name: ▇▇▇▇▇▇▇ Spain
Title: Chief Executive Officer
▇▇▇▇▇▇▇ SPAIN
/s/ ▇▇▇▇▇▇▇ Spain
------------------------------------------------
▇▇▇▇▇▇ SPAIN
/s/ ▇▇▇▇▇▇ Spain
------------------------------------------------
GLOBAL PRIVATE EQUITY III LIMITED PARTNERSHIP
By: Advent International Limited Partnership,
its General Partner
By: Advent International Corporation,
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice-President
24
ADVENT PGGM GLOBAL LIMITED PARTNERSHIP
By: Advent International Limited Partnership,
its General Partner
By: Advent International Corporation,
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice-President
ADVENT PARTNERS GPE III LIMITED PARTNERSHIP
By: Advent International Corporation,
General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice-President
ADVENT PARTNERS (NA) GPE III LIMITED PARTNERSHIP
By: Advent International Corporation,
General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice-President
ADVENT PARTNERS LIMITED PARTNERSHIP
By: Advent International Corporation,
General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice-President
25
GUAYACAN PRIVATE EQUITY FUND
LIMITED PARTNERSHIP
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice-President
Advent International Corporation
DOLLAR EXPRESS INVESTMENT, LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Manager, Dollar Express
Investment, LLC
26
Schedule 1
TO
REGISTRATION RIGHTS AGREEMENT
OWNERSHIP INTERESTS
Common Stock
▇▇▇▇▇▇▇ Spain 3,235,000 shares
▇▇▇▇▇▇ Spain 3,235,000 shares
Global Private Equity III Limited Partnership warrant to purchase 335,833 shares
Advent PGGM Global Limited Partnership warrant to purchase 51,463 shares
Advent Partners GPE III Limited Partnership warrant to purchase 5,071 shares
Advent Partners (NA) GPE III Limited Partnership warrant to purchase 1,500 shares
Advent Partners Limited Partnership warrant to purchase 2,204 shares
Guayacan Private Equity Fund Limited Partnership warrant to purchase 11,904 shares
Dollar Express Investment, LLC Limited Partnership warrant to purchase 8,692 shares
Preferred Stock
Global Private Equity III Limited Partnership 2,845,180 shares
Advent PGGM Global Limited Partnership 435,990 shares
Advent Partners GPE III Limited Partnership 42,960 shares
Advent Partners (NA) GPE III Limited Partnership 12,708 shares
Advent Partners Limited Partnership 18,674 shares
Guayacan Private Equity Fund Limited Partnership 100,852 shares
Dollar Express Investment, LLC Limited Partnership 73,636 shares
Exhibit A
TO
REGISTRATION RIGHTS AGREEMENT
COUNTERPART
THIS INSTRUMENT forms part of the Registration Rights Agreement (the
"Agreement") made as of the __ day of ___________, 1999, by and among DE&S
Holding Co., a Pennsylvania corporation, Dollar Express, Inc., a Pennsylvania
corporation, ▇▇▇▇▇▇▇ Spain, ▇▇▇▇▇▇ Spain, Global Private Equity III Limited
Partnership, a Delaware limited partnership, Advent PGGM Global Limited
Partnership, a Delaware limited partnership, Advent Partners GPE III Limited
Partnership, a Delaware limited partnership, Advent Partners (NA) GPE III
Limited Partnership, a Delaware limited partnership, Advent Partners Limited
Partnership, a Delaware limited partnership, Guayacan Private Equity Fund
Limited Partnership, a Delaware limited partnership, Dollar Express Investment,
LLC, a North Carolina limited liability company, and any additional Holders (as
defined in the Agreement), from time to time, which Agreement permits execution
(including by facsimile) by counterpart. The undersigned hereby acknowledges
having received a copy of the Agreement (which is annexed hereto as Annex I) and
having read the Agreement in its entirety, and for good and valuable
consideration, receipt and sufficiency of which is hereby acknowledged, hereby
agrees that the terms and conditions of the Agreement shall be binding upon the
undersigned as a Holder, and such terms and conditions shall inure to the
benefit of and be binding upon the undersigned, and its successors and permitted
assigns.
IN WITNESS WHEREOF, the undersigned has executed this
instrument this ____ day of _________________, ____.
--------------------------------------
(Signature of Holder)
--------------------------------------
(Print Name of Person, if an Entity)
--------------------------------------
(Print Name & Title of Person Signing)