REGISTRATION RIGHTS AGREEMENT, dated as of June 30, 1999,
among ▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), and
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation (the "Company").
On the date hereof, Universal Commodities Corp. ("UCC") is
merging with and into the Company (the "Merger"), pursuant to which ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇, as shareholders of UCC will be issued shares of Common Stock (as
defined below). In connection with the Merger, and in consideration for their
participation therein, the Company has agreed to grant to ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇
certain rights with respect to their ownership of shares of the Company's common
stock as set forth herein.
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ are referred to herein individually as an
Employee and collectively as the Employees. If either Employee desires to sell
shares of Common Stock (whether prior to, concurrently with or following any
registration and offering by the Company of shares of its capital stock to the
public (an "Offering")), it may be necessary to register such shares under the
Securities Act (as defined below).
Accordingly, the parties hereto agree as follows:
1. Definitions. As used herein, unless the context
otherwise requires, the following terms have the following respective meanings:
"Commission" means the Securities and Exchange Commission or
any other Federal agency at the time administering the Securities Act.
"Common Stock" means any shares of common stock, par value
$.0001 per share, of the Company, now or hereafter authorized to be issued, and
any and all securities of any kind whatsoever of the Company which may be
exchanged for or converted into Common Stock, any and all securities of any kind
whatsoever of the Company which may be issued on or after the date hereof in
respect of, in exchange for, or upon conversion of shares of Common Stock
pursuant to a merger, consolidation, stock split, stock dividend,
recapitalization of the Company or otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time. Reference
to a particular section of the Exchange Act shall include a reference to the
comparable section, if any, of any such similar Federal statute.
"Person" means a corporation, an association, a partnership,
an organization, a business, a trust, an individual, or any other entity or
organization, including a government or political subdivision or an
instrumentality or agency thereof.
"Registrable Securities" means (i) any shares of Common Stock
owned by either Employee, whether prior or subsequent to the effectiveness of
this Agreement, (ii) any shares of Common Stock owned by either Employee
issuable upon exercise of a stock option, and (iii) any Common Stock issued with
respect to the Common Stock referred to in clauses (i) or (ii) by way of a stock
dividend, stock split or reverse stock split or in connection with a combination
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of shares, recapitalization, merger, consolidation or otherwise. As to any
particular Registrable Securities, such securities shall cease to be Registrable
Securities (a) when a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement, (b) when such securities shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent public distribution of them
shall not require registration of them under the Securities Act, or (c) when
such securities shall have been sold as permitted by, and in compliance with,
the Securities Act. Any certificate evidencing the Registrable Securities shall
bear a legend stating that the securities have not been registered under the
Securities Act and setting forth or referring to the restrictions on
transferability and sale of the securities.
"Registration Expenses" means all expenses incident to the
registration and disposition of the Registrable Securities pursuant to Section 2
hereof, including, without limitation, all registration, filing and applicable
national securities exchange fees, all fees and expenses of complying with state
securities or blue sky laws (including fees and disbursements of counsel to the
underwriters or the Employees and the Other Investors in connection with "blue
sky" qualification of the Registrable Securities and determination of their
eligibility for investment under the laws of the various jurisdictions), all
word processing, duplicating and printing expenses, all messenger and delivery
expenses, the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of "cold comfort" letters
or any special audits required by, or incident to, such registration, all fees
and disbursements of underwriters (other than underwriting discounts and
commissions), all transfer taxes, and the fees and expenses of counsel to the
Employees and the Other Investors; provided, however, that Registration Expenses
shall exclude, and the Employees and the Other Investors shall pay, underwriting
discounts and commissions in respect of the Registrable Securities being
registered.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act shall include a reference to the
comparable section, if any, of any such similar Federal statute.
2. Registration Under Securities Act, etc.
2.1 Registration on Request.
(a) Request. At any time or from time to time
after the six month anniversary of the closing of an initial public offering of
Common Stock, ▇▇▇▇▇▇▇ shall have the right to require the Company to effect the
registration under the Securities Act of all or part of the Registrable
Securities, by delivering a written request therefor to the Company specifying
the number of shares of Registrable Securities and the intended method of
distribution. The Company shall (i) as expeditiously as possible (but in any
event within 90 days of receipt of a written request), use its best efforts to
effect the registration under the Securities Act (including by means of a shelf
registration pursuant to Rule 415 under the Securities Act if so requested in
such request and if the Company is then eligible to use such a registration) of
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the Registrable Securities which the Company has been so requested to register
by ▇▇▇▇▇▇▇, for distribution in accordance with the intended method of
distribution set forth in the written request delivered by ▇▇▇▇▇▇▇, and (ii) if
requested, obtain acceleration of the effective date of then registration
statement relating to such registration.
(b) Registration of Other Securities. Whenever
the Company shall effect a registration pursuant to this Section 2.1, no
securities other than Registrable Securities shall be included among the
securities covered by such registration unless ▇▇▇▇▇▇▇ shall have consented in
writing to the inclusion therein of such other securities, which consent may be
subject to terms and conditions determined by ▇▇▇▇▇▇▇ in his sole discretion;
provided, however, that ▇▇▇▇▇▇▇ shall not unreasonably refuse to consent to the
inclusion of securities pursuant to "incidental registration" rights or "request
registration" rights granted to any other Person pursuant to a registration
rights agreement entered into with the Company on or before the date hereof.
(c) Registration Statement Form. Registrations
under this Section 2.1 shall be on such appropriate registration form of the
Commission as shall be selected by the Company and as shall be reasonably
acceptable to ▇▇▇▇▇▇▇. The Company agrees to include in any such registration
statement all information which, in the opinion of counsel to ▇▇▇▇▇▇▇ and
counsel to the Company, is necessary or desirable to be included therein.
(d) Expenses. The Company shall pay all
Registration Expenses in connection with and registration requested pursuant to
this Section 2.1.
(e) Effective Registration Statement. A
registration requested pursuant to this Section 2.1 shall not be deemed to have
been effected (including for purposes of paragraph (h) of this Section 2.1) (i)
unless a registration statement with respect thereto has become effective and
has been kept continuously effective for a period of at least 120 days (or such
shorter period which shall terminate when all the Registrable Securities covered
by such registration statement have been sold pursuant thereto), (ii) if after
it has become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other governmental
agency or court for any reason not attributable to ▇▇▇▇▇▇▇ and has not
thereafter become effective, or (iii) if the conditions to closing specified in
the underwriting agreement, if any, entered into in connection with such
registration are not satisfied or waived.
(f) Selection of Underwriters. The underwriters
of each underwritten offering of the Registrable Securities so to be registered
shall be selected by ▇▇▇▇▇▇▇.
(g) Right to Withdraw. If the managing
underwriter of any underwritten offering shall advise ▇▇▇▇▇▇▇ that the
Registrable Securities covered by the registration statement cannot be sold in
such offering within a price range acceptable to ▇▇▇▇▇▇▇, then ▇▇▇▇▇▇▇ shall
have the right to notify the Company in writing that he has determined that the
registration statement be abandoned or withdrawn, in which event the Company
shall abandon or withdraw such registration statement. In the event of such
abandonment or withdrawal, such request shall not be counted for purposes of the
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requests for registration to which ▇▇▇▇▇▇▇ is entitled pursuant to this Section
2.1.
(h) Limitations on Registration on Request.
▇▇▇▇▇▇▇ shall be entitled to require the Company to effect, and the Company
shall be required to effect, seven registrations pursuant to this Section 2.1,
provided, however, that the number of shares to be registered pursuant to any
such registration shall not exceed 740,000 shares (adjusted for any stock
splits, stock dividends or similar events after the date hereof).
(i) Postponement. The Company shall be entitled
once in any six-month period to postpone for a reasonable period of time (but
not exceeding 90 days) (the "Postponement Period") the filing of any
registration statement required to be prepared and filed by it pursuant to this
Section 2.1 if (x) the Company determines, in its reasonable judgment, that such
registration and offering would materially interfere with any material
financing, corporate reorganization or other material transaction involving the
Company or any subsidiary, or would require premature disclosure thereof, and
promptly gives ▇▇▇▇▇▇▇ written notice of such determination, containing a
general statement of the reasons for such postponement and an approximation of
the anticipated delay, or (y) the Company filed, within 90 days preceding the
registration request, a registration statement pursuant to which ACT sold, or
had the right to sell, shares of Common Stock. Notwithstanding the foregoing,
the Company shall be entitled to postpone (for only so long as necessary) the
filing of any registration statement required to be prepared and filed by it
pursuant to this Section 2.1 if it is prohibited from doing so pursuant to
another registration rights agreement between the Company and another
stockholder of the Company entered into on or prior to the date hereof. If the
Company shall postpone the filing of a registration statement, ▇▇▇▇▇▇▇ shall
have the right to withdraw the request for registration by giving written notice
to the Company at any time and, in the event of such withdrawal, such request
shall not be counted for purposes of the requests for registration to which
▇▇▇▇▇▇▇ is entitled pursuant to this Section 2.1.
2.2 Incidental Registration.
(a) Right to Include Registrable Securities. If
the Company at any time proposes to register any of its securities under the
Securities Act by registration on Form ▇-▇, ▇-▇ or S-3 or any successor or
similar form(s) (except registrations on any such Form or similar form(s) solely
for registration of securities in connection with an employee benefit plan or
dividend reinvestment plan or a merger or consolidation), whether or not for
sale for its own account, it will each such time give prompt written notice to
each of the Employees of its intention to do so and of the Employees' rights
under this Section 2.2. Upon the written request of either of the Employees
(which request shall specify the maximum number of Registrable Securities
intended to be disposed of by such Employee), made as promptly as practicable
and in any event within 30 days after the receipt of any such notice (15 days if
the Company states in such written notice or gives telephonic notice to the
Employees, with written confirmation to follow promptly thereafter, stating that
(i) such registration will be on Form S-3 and (ii) such shorter period of time
is required because of a planned filing date), the Company shall use its best
efforts to effect the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the Employees;
provided, however, that if, at any time after giving written notice of its
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intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company shall give written notice of such determination and its
reasons therefor to the Employees and (i) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from any obligation of
the Company to pay the Registration Expenses in connection therewith), without
prejudice, however, to the rights of the Employees to request that such
registration be effected as a registration under Section 2.1 and (ii) in the
case of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities, for the same period as the delay in
registering such other securities. No registration effected under this Section
2.2 shall relieve the Company of its obligation to effect any registration upon
request under Section 2.1. The Company will pay all Registration Expenses in
connection with any registration of Registrable Securities requested pursuant to
this Section 2.2.
(b) Right to Withdraw. Each Employee shall have
the right to withdraw his request for inclusion of its Registrable Securities in
any registration statement pursuant to this Section 2.2 at any time prior to the
execution of an underwriting agreement with respect thereto by giving written
notice to the Company of his request to withdraw.
(c) Priority in Incidental Registrations. If
the managing underwriter of any underwritten offering shall inform the Company
by letter of its belief that the number of Registrable Securities requested to
be included in such registration, when added to the number of other securities
to be offered in such registration, would materially adversely affect such
offering, then the Company shall include in such registration, to the extent of
the number and type which the Company is so advised can be sold in (or during
the time of) such offering without so materially adversely affecting such
offering (the "Section 2.2 Sale Amount"), (i) all of the securities proposed by
the Company to be sold for its own account; and (ii) thereafter, to the extent
the Section 2.2 Sale Amount is not exceeded, the Registrable Securities
requested by either Employee to be included in such registration pursuant to
Section 2.2(a); and any other securities of the Company requested to be included
in such registration by any holder thereof as a result of the exercise of such
holder's right to cause such securities to be so registered (reducing any such
request on a pro rata basis, as necessary, to not exceed the Section 2.2 Sale
Amount).
(d) Plan of Distribution. Any participation by
holders of Registrable Securities in a registration by the Company shall be in
accordance with the Company's plan of distribution, provided that ▇▇▇▇▇▇▇, if he
is selling in such registration, shall have the right to select the co-managing
underwriter.
2.3 Registration Procedures. If and whenever the
Company is required to use its best efforts to effect the registration of any
Registrable Securities under the Securities Act as provided in Sections 2.1 and
2.2 hereof, the Company shall as expeditiously as possible:
(a) prepare and file with the Commission as soon as
practicable the requisite registration statement to effect
such registration (and shall include all financial statements
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required by the Commission to be filed therewith) and
thereafter use its best efforts to cause such registration
statement to become effective; provided, however, that before
filing such registration statement (including all exhibits) or
any amendment or supplement thereto or comparable statements
under securities or blue sky laws of any jurisdiction, the
Company shall furnish such documents to each Employee and each
underwriter participating in the offering of the Registrable
Securities and their respective counsel, which documents will
be subject to the review and comments of each participating
Employee, each underwriter and their respective counsel; and
provided, further, however, that the Company may discontinue
any registration of its securities which are not Registrable
Securities at any time prior to the effective date of the
registration statement relating thereto;
(b) notify the participating Employees of the
Commission's requests for amending or supplementing the
registration statement and the prospectus, and prepare and
file with the Commission such amendments and supplements to
such registration statement and the prospectus used in
connection therewith as may be necessary to keep such
registration statement effective and to comply with the
provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such
registration statement for such period as shall be required
for the disposition of all of such Registrable Securities in
accordance with the intended method of distribution thereof;
provided, that except with respect to any such registration
statement filed pursuant to Rule 415 under the Securities Act,
such period need not exceed 120 days;
(c) furnish, without charge, to the participating
Employees and each underwriter such number of conformed copies
of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such
number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed
under Rule 424 under the Securities Act, in conformity with
the requirements of the Securities Act, and such other
documents, as the participating Employees and such
underwriters may reasonably request;
(d) use its best efforts (i) to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such securities or blue sky laws
of such States of the United States of America where an
exemption is not available and as the participating Employees
or any managing underwriter shall reasonably request, (ii) to
keep such registration or qualification in effect for so long
as such registration statement remains in effect, and (iii) to
take any other action which may be reasonably necessary or
advisable to enable the participating Employees to consummate
the disposition in such jurisdictions of the securities to be
sold by such Employees, except that the Company shall not for
any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein
it would not but for the requirements of this subsection (d)
be obligated to be so qualified or to consent to general
service of process in any such jurisdiction;
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(e) use its best efforts to cause all Registrable
Securities covered by such registration statement to be
registered with or approved by such other federal or state
governmental agencies or authorities as may be necessary in
the opinion of counsel to the Company and counsel to the
participating Employees to consummate the disposition of such
Registrable Securities;
(f) furnish to the participating Employees and each
underwriter, if any, participating in the offering of the
securities covered by such registration statement, a signed
counterpart of (i) an opinion of counsel for the Company, and
(ii) a "comfort" letter signed by the independent public
accountants who have certified the Company's financial
statements included or incorporated by reference in such
registration statement, covering substantially the same
matters with respect to such registration statement (and the
prospectus included therein) and, in the case of the
accountants' comfort letter, with respect to events subsequent
to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants'
comfort letters delivered to the underwriters in underwritten
public offerings of securities (and dated the dates such
opinions and comfort letters are customarily dated) and, in
the case of the legal opinion, such other legal matters, and,
in the case of the accountants' comfort letter, such other
financial matters, as the participating Employees, or the
underwriters, may reasonably request;
(g) promptly notify the participating Employees and
each managing underwriter, if any, participating in the
offering of the securities covered by such registration
statement (i) when such registration statement, any
pre-effective amendment, the prospectus or any prospectus
supplement related thereto or post-effective amendment to such
registration statement has been filed, and, with respect to
such registration statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the
Commission for amendments or supplements to such registration
statement or the prospectus related thereto or for additional
information; (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of such registration
statement or the initiation 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 of the Registrable Securities for sale
under the securities or blue sky laws of any jurisdiction or
the initiation of any proceeding for such purpose; (v) at any
time when a prospectus relating thereto is required to be
delivered under the Securities Act, upon discovery that, or
upon the happening of any event as a result of which, the
prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, in
the light of the circumstances under which they were made, and
in the case of this clause (v), at the request of the
participating Employees, promptly prepare and furnish to such
Employees and each managing underwriter, if any, participating
in the offering of the Registrable Securities, a reasonable
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number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they
were made; and (vi) at any time when the representations and
warranties of the Company contemplated by Section 2.4(a) or
(b) hereof cease to be true and correct;
(h) otherwise comply with all applicable rules and
regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve
months beginning with the first full calendar month after the
effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder, and
promptly furnish to the participating Employees a copy of any
amendment or supplement to such registration statement or
prospectus;
(i) provide and cause to be maintained a transfer agent
and registrar (which, in each case, may be the Company) for
all Registrable Securities covered by such registration
statement from and after a date not later than the effective
date of such registration;
(j) (i) use its best efforts to cause all Registrable
Securities covered by such registration statement to be listed
on the principal securities exchange on which similar
securities issued by the Company are then listed (if any), if
the listing of such Registrable Securities is then permitted
under the rules of such exchange, or (ii) if no similar
securities are then so listed, use its best efforts to (x)
cause all such Registrable Securities to be listed on a
national securities exchange or (y) failing that, secure
designation of all such Registrable Securities as a National
Association of Securities Dealers, Inc. Automated Quotation
System ("NASDAQ") "national market system security" within the
meaning of Rule 11Aa2-1 of the Commission or (z) failing that,
to secure NASDAQ authorization for such shares and, without
limiting the generality of the foregoing, to arrange for at
least two market makers to register as such with respect to
such shares with the National Association of Securities
Dealers, Inc.;
(k) deliver promptly to counsel to the participating
Employees and each underwriter, if any, participating in the
offering of the Registrable Securities, copies of all
correspondence between the Commission and the Company, its
counsel or auditors and all memoranda relating to discussions
with the Commission or its staff with respect to such
registration statement;
(l) use its best efforts to obtain the withdrawal of
any order suspending the effectiveness of the registration
statement;
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(m) provide a CUSIP number for all Registrable
Securities, no later than the effective date of the
registration statement; and
(n) make available its employees and personnel and
otherwise provide reasonable assistance to the underwriters
(taking into account the needs of the Company's businesses) in
their marketing of Registrable Securities.
The Company may require each participating Employee to furnish the Company with
such information regarding such Employee and the distribution of the Registrable
Securities as the Company may from time to time reasonably request in writing.
The Employees agree that upon receipt of any notice from the
Company of the happening of any event of the kind described in paragraph
(g)(iii) or (v) of this Section 2.3, each participating Employee will, to the
extent appropriate, discontinue his disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable Securities
until, in the case of paragraph (g)(v) of this Section 2.3, his receipt of the
copies of the supplemented or amended prospectus contemplated by paragraph
(g)(v) of this Section 2.3 and, if so directed by the Company, will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies, then in its possession, of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice. If the disposition by
the participating Employees of their securities is discontinued pursuant to the
foregoing sentence, the Company shall extend the period of effectiveness of the
registration statement by the number of days during the period from and
including the date of the giving of notice to and including the date when the
participating Employees shall have received copies of the supplemented or
amended prospectus contemplated by paragraph (g)(v) of this Section 2.3; and, if
the Company shall not so extend such period, ▇▇▇▇▇▇▇'▇ request pursuant to which
such registration statement was filed shall not be counted for purposes of the
requests for registration to which ▇▇▇▇▇▇▇ is entitled pursuant to Section 2.1
hereof.
2.4 Underwritten Offerings.
(a) Requested Underwritten Offerings. If
requested by the underwriters for any underwritten offering by ▇▇▇▇▇▇▇ pursuant
to a registration requested under Section 2.1, ▇▇▇▇▇▇▇ shall enter into a
customary underwriting agreement with a managing underwriter or underwriters
selected by him. Such underwriting agreement shall be satisfactory in form and
substance to ▇▇▇▇▇▇▇ and shall contain such representations and warranties by,
and such other agreements on the part of, the Company and such other terms as
are generally prevailing in agreements of that type, including, without
limitation, customary provisions relating to indemnification and contribution.
▇▇▇▇▇▇▇ shall be party to such underwriting agreement and may, at his 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 ▇▇▇▇▇▇▇ 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
▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇ shall not be required to make any representations or warranties
to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding ▇▇▇▇▇▇▇, his ownership of
9
and title to the Registrable Securities, and his intended method of
distribution; and any liability of ▇▇▇▇▇▇▇ to any underwriter or other person
under such underwriting agreement shall be limited to liability arising from
breach of his representations and warranties and shall be limited to an amount
equal to the proceeds (net of expenses and underwriting discounts and
commissions) that he derives from such registration.
(b) Incidental Underwritten Offerings. In the
case of a registration pursuant to Section 2.2 hereof, if the Company shall have
determined to enter into any underwriting agreements in connection therewith,
all of the Registrable Securities to be included in such registration shall be
subject to such underwriting agreements. The participating Employees may, at
their option, require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to and for the benefit of
such underwriters shall also be made to and for the benefit of the participating
Employees 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 the participating Employees. None of the participating
Employees shall be required to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such participating Employee, his ownership of
and title to the Registrable Securities, and his intended method of
distribution; and any liability of any participating Employee to any underwriter
or other Person under such underwriting agreement shall be limited to liability
arising from breach of his representations and warranties and shall be limited
to an amount equal to the proceeds (net of expenses and underwriting discounts
and commissions) that he derives from such registration.
2.5 Preparation; Reasonable Investigation. In
connection with the preparation and filing of each registration statement under
the Securities Act pursuant to this Agreement, the Company will give the
participating Employees, their underwriters, if any, and their respective
counsel, accountants and other representatives and agents the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and give each of them such access to its books and records
and such opportunities to discuss the business of the Company with its officers
and employees and the independent public accountants who have certified its
financial statements, and supply all other information reasonably requested by
each of them, as shall be necessary or appropriate, in the opinion of the
participating Employees and such underwriters' respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
2.6 Indemnification.
(a) Indemnification by the Company. The Company
agrees that in the event of any registration of any securities of the Company
under the Securities Act, the Company shall, and hereby does, indemnify and hold
harmless each Employee, his respective partners, agents and affiliates and each
other Person who participates as an underwriter in the offering or sale of such
securities, against any losses, claims, damages, or liabilities, joint or
several, to which such Employee or any such partner, agent or affiliate or
underwriter may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities, joint or several (or actions or
10
proceedings, whether commenced or threatened, in respect thereof), arise out of
or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made not misleading, or
(iii) any violation by the Company of any federal, state or common law rule or
regulation applicable to the Company and relating to action required of or
inaction by the Company in connection with any such registration, and the
Company shall reimburse such Employee and each such partner, agent or affiliate
and underwriter Person for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided that the Company shall not be liable
in any such case to the Employees or any such partner, agent, or affiliate to
the extent that any such loss, claim, damage, liability (or action or proceeding
in respect thereof) or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by or on behalf of the participating Employee, specifically stating
that it is for use in the preparation thereof; and provided, further, that the
Company shall not be liable to any Person who participates as an underwriter in
the offering or sale of Registrable Securities or any other Person, if any, who
controls such underwriter within the meaning of the Securities Act, in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense (i) arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by or on behalf of such Person or (ii) arises out of
such Person's failure to send or give a copy of the final prospectus, as the
same may be then supplemented or amended, to the Person asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable Securities to such
Person if such statement or omission was corrected in such final prospectus.
Such indemnity shall remain in full force regardless of any investigation made
by or on behalf of any Employee or any such partner, agent, affiliate or
underwriter and shall survive the transfer of such securities by such Employee.
(b) Indemnification by the Employees. As a
condition to including any Registrable Securities in any registration statement,
the Company shall have received an undertaking reasonably satisfactory to it
from each Employee so including any Registrable Securities to indemnify and hold
harmless (in the same manner and to the same extent as set forth in paragraph
(a) of this Section 2.6) the Company, and each director of the Company, each
officer of the Company and each other Person, if any, who controls the Company
within the meaning of the Securities Act, with respect to any statement or
alleged statement in or omission or alleged omission from such registration
statement, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, but only to the
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extent such statement or alleged statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company through an instrument duly executed by such Employee specifically
stating that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement; provided, however, that the liability of such indemnifying party
under this Section 2.6(b) shall be limited to the amount of proceeds (net of
expenses and underwriting discounts and commissions) received by such
indemnifying party in the offering giving rise to such liability. Such indemnity
shall remain in full force and effect, regardless of any investigation made by
or on behalf of the Company or any such director, officer or controlling Person
and shall survive the transfer of such securities by such Employee.
(c) Notices of Claims, etc. Promptly after
receipt by an indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding subsections of this
Section 2.6, such indemnified party shall, if a claim in respect thereof is to
be made against an indemnifying party, give written notice to the latter of the
commencement of such action or proceeding; provided, however, that the failure
of any indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subsections of this
Section 2.6, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice, and shall not relieve the
indemnifying party from any liability which it may have to the indemnified party
otherwise than under this Section 2.6. In case any such action or proceeding is
brought against an indemnified party, the indemnifying party shall be entitled
to participate therein and, unless in the opinion of outside counsel to the
indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, to assume the defense
thereof, jointly with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party; provided, however, that if the defendants in any such action
or proceeding include both the indemnified party and the indemnifying party and
if in the opinion of outside counsel to the indemnified party there may be legal
defenses available to such indemnified party and/or other indemnified parties
which are different from or in addition to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel to defend such action or proceeding on behalf of such indemnified party
or parties, provided, however, that the indemnifying party shall be obligated to
pay for only one counsel for all indemnified parties. After notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof and approval by the indemnified party of such counsel, the
indemnifying party shall not be liable to such indemnified party for any legal
expenses subsequently incurred by the latter in connection with the defense
thereof other than reasonable costs of investigation (unless the first proviso
in the preceding sentence shall be applicable). No indemnifying party shall be
liable for any settlement of any action or proceeding effected without its
written consent. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation.
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(d) Contribution. If the indemnification
provided for in this Section 2.6 shall for any reason be held by a court to be
unavailable to an indemnified party under subsection (a) or (b) hereof in
respect of any loss, claim, damage or liability, or any action in respect
thereof, then, in lieu of the amount paid or payable under subsection (a) or (b)
hereof, the indemnified party and the indemnifying party under subsection (a) or
(b) hereof shall contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating the same), (i) 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, which resulted in such loss, claim, damage or
liability, or action in respect thereof, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations, or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law or if the allocation provided in this clause (ii) provides a greater amount
to the indemnified party than clause (i) above, in such proportion as shall be
appropriate to reflect not only the relative fault but also the relative
benefits received by the indemnifying party and the indemnified party from the
offering of the securities covered by such registration statement as well as any
other relevant equitable considerations. The parties hereto agree that it would
not be just and equitable if contributions pursuant to this Section 2.6(d) were
to be determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to in the
preceding sentence of this Section 2.6(d). No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. The participating Employees' obligations to
contribute as provided in this subsection (d) are several and not joint and
shall be in proportion to the relative value of their respective Registrable
Securities covered by such registration statement. In addition, no Person shall
be obligated to contribute hereunder any amounts in payment for any settlement
of any action or claim effected without such Person's consent, which consent
shall not be unreasonably withheld. Notwithstanding anything in this subsection
(d) to the contrary, no indemnifying party (other than the Company) shall be
required to contribute any amount in excess of the proceeds (net of expenses and
underwriting discounts and commissions) received by such party from the sale of
the Registrable Securities in the offering to which the losses, claims, damages
or liabilities of the indemnified parties relate.
(e) Other Indemnification. Indemnification and
contribution similar to that specified in the preceding subsections of this
Section 2.6 (with appropriate modifications) shall be given by the Company and
the participating Employees with respect to any required registration or other
qualification of securities under any federal, state or blue sky law or
regulation of any governmental authority other than the Securities Act. The
indemnification agreements contained in this Section 2.6 shall be in addition to
any other rights to indemnification or contribution which any indemnified party
may have pursuant to law or contract and shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the transfer of any of the Registrable
Securities by any of the Employees.
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(f) Indemnification Payments. The
indemnification and contribution required by this Section 2.6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or expense, loss, damage or liability
is incurred.
2.7 Unlegended Certificates. In connection with
the offering of any Registrable Securities registered pursuant to this Section
2, the Company shall (i) facilitate the timely preparation and delivery to the
Employees and the underwriters, if any, participating in such offering, of
unlegended certificates representing ownership of such Registrable Securities
being sold in such denominations and registered in such names as requested by
the Employees or such underwriters and (ii) instruct any transfer agent and
registrar of such Registrable Securities to release any stop transfer orders
with respect to any such Registrable Securities.
2.8 Limitation on Sale of Securities. The Company
hereby agrees that if it shall previously have received a request for
registration pursuant to Section 2.1 or 2.2 hereof, and if such previous
registration shall not have been withdrawn or abandoned, the Company shall not
effect any public or private offer, sale or distribution of its securities or
effect any registration of any of its equity securities under the Securities Act
(other than a registration on Form S-8 or any successor or similar form which is
then in effect), whether or not for sale for its own account, until a period of
90 days (or such shorter period as the participating Employees shall be advised
by their managing underwriter) shall have elapsed from the effective date of
such previous registration, and the Company shall so provide in any registration
rights agreements hereafter entered into with respect to any of its securities.
2.9 No Required Sale. Nothing in this Agreement
shall be deemed to create an independent obligation on the part of either of the
Employees to sell any Registrable Securities pursuant to any effective
registration statement.
3. Rule 144. The Company shall take all actions reasonably
necessary to enable holders of Registrable Securities to sell such securities
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144, or (b) any similar rule or regulation
hereafter adopted by the Commission including, without limiting the generality
of the foregoing, filing on a timely basis all reports required to be filed by
the Exchange Act. Upon the request of an Employee, the Company will deliver to
such Employee a written statement as to whether it has complied with such
requirements.
4. Amendments and Waivers. This Agreement may be amended,
modified or supplemented only by written agreement of the party against whom
enforcement of such amendment, modification or supplement is sought.
5. Adjustments. In the event of any change in the
capitalization of the Company as a result of any stock split, stock dividend,
reverse split, combination, recapitalization, merger, consolidation, or
otherwise, the provisions of this Agreement shall be appropriately adjusted. 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 Employees
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to include any Registrable Securities in any registration contemplated by this
Agreement or the marketability of such Registrable Securities in any such
registration.
6. Notice. All notices and other communications hereunder
shall be in writing and, unless otherwise provided herein, shall be deemed to
have been given when received by the party to whom such notice is to be given at
its address set forth below, or such other address for the party as shall be
specified by notice given pursuant hereto:
(a) If to ▇▇▇▇▇▇▇, to:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to ▇▇▇▇▇▇▇▇
(b) If to ▇▇▇▇▇▇▇▇, to:
▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to ▇▇▇▇▇▇▇
(c) If to the Company, to it at:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
7. Assignment; Third Party Beneficiaries. This Agreement shall
be binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective heirs, successors and permitted assigns. This
Agreement may not be assigned by the Company. Either Employee may, at his
election, at any time or from time to time, assign his rights under this
Agreement, in whole or in part, to any purchaser of shares of Common Stock held
by him.
8. Remedies. The parties hereto agree that money damages or
other remedy at law would not be sufficient or adequate remedy for any breach or
violation of, or a default under, this Agreement by them and that, in addition
to all other remedies available to them, each of them shall be entitled to an
injunction restraining such breach, violation or default or threatened breach,
violation or default and to any other equitable relief, including without
limitation specific performance, without bond or other security being required.
In any action or proceeding brought to enforce any provision of this Agreement
(including the indemnification provisions thereof), the successful party shall
be entitled to recover reasonable attorneys' fees in addition to its costs and
expenses and any other available remedy.
9. No Inconsistent Agreements. The Company will not, on or
after the date of this Agreement, enter into any agreement with respect to its
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securities which is inconsistent with the rights granted to the Employees in
this Agreement or otherwise conflicts with the provisions hereof, other than any
customary lock-up agreement with the underwriters in connection with any
Offering effected hereunder, pursuant to which the Company shall agree not to
register for sale, and the Company shall agree not to sell or otherwise dispose
of, Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, for a specified period (not to exceed 180 days)
following such Offering. The Company has not previously entered into any
agreement with respect to its securities granting any registration rights to any
Person. The rights granted to the Employees hereunder do not in any way conflict
with and are not inconsistent with any other agreements to which the Company is
a party or by which it is bound.
11. Descriptive Headings. The descriptive headings of the
several sections and paragraphs of this Agreement are inserted for reference
only and shall not control or otherwise affect the meaning hereof.
12. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights and obligations of the parties
hereto shall be governed by, the laws of the Delaware, without giving effect to
the conflicts of law principles thereof. Each of the parties hereto hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts of Delaware and the United States of America located in the County
of New Castle for any action or proceeding arising out of or relating to this
Agreement and the transactions contemplated hereby (and agrees not to commence
any action or proceeding relating thereto except in such courts), and further
agrees that service of any process, summons, notice or document by U.S.
registered mail to its respective address set forth in Section 6 hereof shall be
effective service of process for any action or proceeding brought against it in
any such court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any action or
proceeding arising out of this Agreement or the transactions contemplated hereby
in the courts of Delaware or the United States of America located in the County
of New Castle, and hereby further irrevocably and unconditionally waives and
agrees not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient forum.
13. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
14. Invalidity of Provision. The invalidity or
unenforceability of any provision of this Agreement in any jurisdiction shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of this Agreement, including
that provision, in any other jurisdiction. If any restriction or provision of
this Agreement is held unreasonable, unlawful or unenforceable in any respect,
such restriction or provision shall be interpreted, revised or applied in a
manner that renders it lawful and enforceable to the fullest extent possible
under law.
15. Further Assurances. Each party hereto shall do and perform
or cause to be done and performed all further acts and things and shall execute
and deliver all other agreements, certificates, instruments, and documents as
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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.
16. Entire Agreement; Effectiveness. This Agreement
constitutes the entire agreement, and supersedes all prior agreements and
understandings, oral and written, between the parties hereto with respect to the
subject matter hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officers thereunto duly
authorized.
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: _________________________
Name:
Title:
_____________________________
▇▇▇▇ ▇▇▇▇▇▇▇
_____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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