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THE PARTS SOURCE, INC.
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REGISTRATION RIGHTS AGREEMENT
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DATED AS OF _______________________, 1996
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REGISTRATION RIGHTS AGREEMENT
TABLE OF CONTENTS
SECTION PAGE
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Section 1 DEFINTIONS 1
Section 2 REGISTRATION
2.1 Registration on Request 2
2.2 Incidental Registration 4
2.3 Registration Procedures 5
2.4 Underwritten Offering 8
2.5 Preparation; Reasonable Investigation 9
2.6 Other Registrations 9
2.7 Indemnification 10
Section 3 MISCELLANEOUS
3.1 Rule 144; Legended Securities; Form S-8 13
3.2 Amendments and Waivers 13
3.3 Successors, Assigns and Transferees 13
3.4 Notices 13
3.5 Descriptive Headings 15
3.6 Governing Law 15
3.7 Counterparts 15
3.8 Severability 15
I
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement, dated as of October 22, 1996, among THE
PARTS SOURCE, INC., a Florida corporation (the "Company"), and AUTOPARTS FINANCE
COMPANY, INC., a Delaware corporation ("AFCO").
1. DEFINITIONS. For purposes of this Agreement, the following terms shall
have the following respective meanings:
"ACQUISITION": The Acquisition of The Parts Source, Inc. pursuant to the
Acquisition Agreement.
"ACQUISITION AGREEMENT": The Asset Purchase Agreement, dated as of
__________________, 1996, between The Parts Source, Inc., a Florida
corporation, and AFCO.
"COMMON STOCK": The Class A Common Stock, par value $.01 per share, of
the Company.
"EXCHANGE ACT": The Securities Exchange Act of 1934, as amended, or any
successor Federal statute, and the rules and regulations thereunder which
shall be in effect at the time.
"NASD": National Association of Securities Dealers, Inc.
"REGISTRABLE SECURITIES": Any Common Stock issued to AFCO pursuant to
the terms of the Acquisition Agreement and any securities issued or issuable
with respect to any Common Stock (i) by way of stock dividend or stock split,
(ii) in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or (iii) otherwise. As to any
particular Registrable Securities, once issued such securities shall cease to
be Registrable Securities when (a) a registration statement with respect to
the sale of such securities shall have become effective under the Securities
Act and such securities shall have been disposed of in accordance with such
registration statement, (b) Rule 144 (or any successor provision) under the
Securities Act shall be available to AFCO for distribution to the public of
such portion of the Registrable Securities, (c) subject to the provisions of
Section 3.1(b) hereof, they shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent disposition of them shall
not require registration or qualification of them under the Securities Act or
any similar state law then in force, or (d) they shall have ceased to be
outstanding.
"REGISTRATION EXPENSES": Any expenses incident to the Company's
performance of or compliance with Section 2 hereof, including, without
limitation, all registration and filing fees, all fees and expenses of complying
with securities or blue sky laws, fees and other expenses associated with
filings with the NASD, all printing expenses, the fees and disbursements of
counsel for the Company, but not including (a) the fees and expenses of any
"qualified independent underwriters" and its counsel, any fees associated with
any special auditing fees or disbursements of any counsel or advisors to AFCO,
or (b) any underwriting discounts or commissions or any transfer taxes incurred
with respect to the registration of the Registrable Securities pursuant to
Section 2 hereof.
"SECURITIES ACT": The Federal Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations thereunder which
shall be in effect at the time.
"SECURITIES AND EXCHANGE COMMISSION": The Securities and Exchange
Commission or any other Federal agency at the time administering the Securities
Act or Exchange Act.
2. REGISTRATION.
2.1. (a) REGISTRATION ON REQUEST: Subject to the provisions of Section
2.6 hereof, at any time or from time to time commencing a date ("Rights
Commencement Date") which is at least 180 calendar days following the Closing
Date (as the term "Closing Date" is defined in the Acquisition Agreement upon
written notice from AFCO, AFCO shall have the right to make one written request
that the Company effect the registration under the Securities Act of all or part
of the Registrable Securities of AFCO, which request shall specify the intended
method of disposition thereof by AFCO and the Company will thereupon use its
best efforts to effect the registration of the Registrable Securities under the
Securities Act which the Company has been so requested to register.
Notwithstanding the foregoing or anything set forth elsewhere in this Agreement,
if AFCO determines that it will make a demand for registration hereunder or that
it will request inclusion in an incidental registration as described in Section
2.2 hereof, Siege shall, before making a demand for registration hereunder, or
before its inclusion in an incidental registration as described in Section 2.2
hereof, give the Company notice of its intent to sell Registrable Securities and
before any other rights are exercisable by AFCO hereunder or any duties are to
be performed by the Company hereunder, the Company shall have fifteen (15) days
to find a lawful, alternative method for AFCO to sell the Registrable
Securities within thirty (30) days after the expiration of such fifteen (15) day
period. If the Company finds an alternative method and makes such alternative
method known to AFCO, provided the method and terms of sale are acceptable to
AFCO, AFCO will sell the Registrable Securities by such method and on such
terms, whereupon the rights of AFCO hereunder shall, upon the closing of the
sale of AFCO's Registrable Securities, terminate, but only with respect to the
Registrable Securities so sold in such private placement. If the Company does
not advise AFCO of an alternative method for selling the Registrable Securities
prior to the expiration of such fifteen (15) day period or if an alternative
method is agreed upon within such fifteen (15) day period but the sale cannot
reasonably be closed within the thirty (30) day time period described aforesaid,
AFCO thereafter may exercise its rights to registration of the Registrable
Securities under this Agreement without prejudice. With the exception of the
one hundred eighty (180) day period described in Section 2.1(a) hereof, the
running of any time period under any other provision of this Agreement shall be
tolled for such period during which the Company is seeking an alternative method
of selling the Registrable Securities or during which such sale is pending. The
Company shall bear all costs and expenses of selling the Registrable Securities
pursuant to any alternative method as provided herein except for any customary
brokerage fees and expenses, excluding, however, any legal fees and expenses of
such broker or agent.
(b) REGISTRATION STATEMENT FORM. The registration requested
pursuant to this Section 2.1 shall be effected by the filing of a registration
statement on any of Form ▇-▇, ▇▇▇▇ ▇-▇, Form S-3, or Form S-4 as chosen by the
Company that is reasonably acceptable to AFCO (or any successor form of
registration statement or other form which includes substantially the same
information as would be required to be included in a registration statement on
such forms as presently constituted).
(c) EXPENSES. Provided such registration does not include the
use of underwriters, the Company will pay all Registration Expenses in
connection with the registration which is effected as requested under
subdivision (a) of this Section 2.1, including, without limitation, all amounts
in respect of (i) any allocation of salaries of Company personnel or other
general overhead expenses of the Company or other expenses for the preparation
of financial statements or other data normally prepared by the Company in the
ordinary course of its business, but not any expenses of AFCO's personnel or
other general overhead expenses of AFCO, (ii) the expenses of any officers' and
directors' liability insurance for the Company, (iii) the expense and fees for
listing the securities to be registered on each exchange on which similar
securities issued by the Company are then listed and (iv) all fees associated
with filings required to be made with the NASD (but not the fees and expenses of
any "qualified independent underwriter" and its counsel as may be required by
the rules and regulations of the NASD). If the registration of the Registrable
Securities involves the use of an underwriter, AFCO shall bear all expenses
associated with an underwritten offer of the Registrable Securities in excess of
the cost of an offer without an underwriting of the Registrable Securities, and
all Registration Expenses to the extent required to be paid by AFCO by
applicable law.
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(d) INCLUSION OF OTHER SECURITIES. The Company may, at its sole
option or as may be required pursuant to any agreement with other holders of the
Company's securities, register securities (other than Registrable Securities)
for sale for the account of the Company or any person other than the Company in
the registration of the Registrable Securities. If such registration shall be
in connection with an underwritten public offering and the managing underwriters
shall advise the Company in writing that in their opinion the number of
securities requested to be included in such registration (whether by the
Company, pursuant to Section 2.1(a) or pursuant to any other rights granted by
the Company to a holder or holders of its securities ("Other Holders") to
request or demand such registration or inclusion of any securities in any such
registration) exceeds the number of such securities which can be sold in such
offering, the Company shall include in such registration the number (if any) of
securities of the Company so requested to be included which in the opinion of
such underwriters can be sold, and the Registrable Securities requested by AFCO
to be included therein and the securities of the Company requested by the Other
Holders to be included therein shall be included therein pro rata (based on the
number of shares if the requested or demanded registration is to cover only
Common Stock and, if not, based on the proposed offering price of the total
number of securities included in such underwritten public offering requested to
be included therein).
(e) EFFECTIVE REGISTRATION STATEMENT. A registration requested
pursuant to this Section 2.1 will not be deemed to have been effected unless it
has become effective for the period specified in Section 2.3(b) hereof, PROVIDED
that a registration which does not become effective after the Company has filed
a registration statement with respect thereto solely by reason of the refusal or
the inability to proceed by AFCO shall be deemed to have been effected by the
Company at the request of AFCO.
2.2. INCIDENTAL REGISTRATION. If the Company at any time prior to the
Rights Commencement Date proposes to register any of its equity securities (as
defined in the Exchange Act) under the Securities Act (other than pursuant to
Section 2.1 hereof), whether or not for sale for its own account, and the
registration form to be used may be used for the registration of Registrable
Securities, it will each such time give written notice to AFCO, at least thirty
(30) days prior to the date the registration statement for such registration is
filed with the Securities and Exchange Commission, of its intention to do so
and, upon the written request of AFCO within 30 days after the receipt of any
such notice (which request shall specify the Registrable Securities intended to
be disposed of by such holder and the intended method of disposition thereof),
the Company will 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 AFCO, to the extent required to permit the disposition
(in accordance with the intended methods thereof as aforesaid) of the
Registrable Securities so to be registered, PROVIDED that:
(a) if, at any time after giving written notice of its intention
to register any equity 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 such securities, the
Company may, at its election, give written notice of such determination to
AFCO and,
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thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration (but not from
its obligation to pay the Registration Expenses incurred to the date of
the Company's election to not register the securities), without
prejudice, however, to the rights of AFCO to request that such
registration be effected as a registration under Section 3.1 hereof; and
(b) if such registration shall be in connection with an
underwritten public offering and the managing underwriters shall advise the
Company in writing that in their opinion the number of securities requested
to be included in such registration (whether by the Company, pursuant to
this Section 2.2 or pursuant to any other rights granted by the Company to
a holder or holders of its securities to request or demand such
registration or inclusion of any such securities in any such registration)
exceeds the number of such securities which can be sold in such offering,
the Company shall include in such registration the number (if any) of
securities requested to be included (the "Other Registrable Securities")
pursuant to the Registration and Participation Agreement, dated as of
November 22, 1989, among the Company and certain of its security holders,
as such agreement may be amended, supplemented or otherwise modified from
time to time, which in the opinion of such underwriters can be sold and
shall not include in such registration any securities (other than
securities being sold by the Company, which shall have priority in being
included in such registration), including the Registrable Securities, so
requested to be included other than Other Registrable Securities unless all
Other Registrable Securities requested to be so included are included
therein (and, if in the opinion of such underwriters, some but not all of
the Other Registrable Securities may be so included, the holders of such
Other Registrable Securities shall share pro rata in the number of shares
of Other Registrable Securities included in such underwritten public
offering on the basis of the number of Other Registrable Securities
requested to be included therein), and in the case of a registration
initially requested or demanded by a holder or holders of Other Registrable
Securities, the Company shall not register Registrable Securities for sale
in any such registration unless permitted to do so by the written consent
of holders holding at least a majority (by number of shares) of the Other
Registrable Securities proposing to sell their shares in such registration.
If AFCO requests the incidental registration of any or all of the
Registrable Securities pursuant to this Section 2.2 and if, for any reason
other than the fault or request of AFCO or the provisions of this Section
2.2(b), any or all of the Registrable Securities requested to be registered
in the incidental registration are not so registered, AFCO thereafter shall
have the right, without prejudice, to request under this Section 2.2 the
incidental registration of such Registrable Securities not so registered
provided the same limitations and restrictions set forth in this Section
2.2 apply in each such request.
The Company and, with respect to an underwritten offering, AFCO, shall pay all
Registration Expenses and expenses of an incidental registration of the
Registrable Securities under this Section 2.2 in the same manner and to the same
extent as provided in Section 2.1(c) with respect to a registration on request.
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
will promptly:
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(a) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such securities, make all required
filings with the NASD, and use its best efforts to cause such registration
statement to become effective;
(b) prepare and file with the Securities and Exchange 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 securities covered by
such registration statement until such time as all of such securities have
been disposed of in accordance with the intended methods of disposition by
the seller or sellers thereof set forth in such registration statement, but
in no event for a period of more than six months after such registration
statement becomes effective, subject, however, to the last paragraph of
this Section 2.3;
(c) furnish to counsel (if any) for AFCO, copies of all documents
proposed to be filed with the Securities and Exchange Commission in
connection with such registration, which documents will be subject to the
review, but not to any demands of such counsel;
(d) furnish to each seller of such securities such number of
conformed copies of such registration statement and of each such amendment
and supplement thereto (in each case including all exhibits, except that
the Company shall not be obligated to furnish any seller of securities with
more than two copies of such exhibits), such number of copies of the
prospectus included in such registration statement (including each
preliminary prospectus and any summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents, as such
seller may reasonably request in order to facilitate the disposition of the
securities owned by such seller;
(e) use its best efforts to register or qualify such securities
covered by such registration statement under such other securities or blue
sky laws of such jurisdictions as each seller shall request, and do any and
all other acts and things which may be necessary or advisable to enable
such seller to consummate the disposition in such jurisdictions of the
securities owned by such seller, 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 is not so qualified, or to
consent to general service of process in any such jurisdiction;
(f) furnish to each seller a signed counterpart, addressed to the
sellers, of
(i) an opinion of counsel for the Company, dated the
effective date of the registration statement, and
(ii) a "comfort" letter signed by the independent public
accountants who have certified the Company's financial statements
included in the registration
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statement,
covering substantially the same matters with respect to the registration
statement (and the prospectus included therein) and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letter delivered to the underwriters in
underwritten public offerings of securities;
(g) notify each seller of any securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of 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 light of the
circumstances then existing, and at the request of any such seller, prepare
and furnish to such seller a reasonable number of copies of a supplement to
or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing; and
(h) otherwise use its best efforts to comply with all applicable
rules and regulations of the Securities and Exchange Commission.
The Company may require AFCO to furnish to the Company such information
regarding AFCO as the Company may from time to time reasonably request in
writing and as shall be required by law in connection therewith. AFCO hereby
agrees to furnish promptly to the Company all information reasonably requested
by the Company or required to be disclosed in order to make the information
previously furnished to the Company by AFCO not materially misleading.
AFCO hereby agrees that upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 2.3(g) hereof, AFCO will
promptly discontinue its disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until AFCO's receipt
of the copies of the supplemented or amended prospectus contemplated by Section
2.3(g) hereof. If so directed by the Company, AFCO will deliver to the Company
all copies, other than permanent file copies, then in AFCO's possession of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice. In the event the Company shall give any such notice, the period
mentioned in Section 2.3(b) hereof shall be extended by the number of days equal
to the number of days during the period from and including the date of the
giving of such notice to and including the date when each seller of any
Registrable Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
Section 2.3(g) hereof. The Company hereby represents and agrees that the Common
Stock is registered under the Securities Exchange Act of 1934, as amended
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("Exchange Act"); as of September 30, 1994, the Company will have been subject
to the reporting requirements of the Exchange Act for a period of at least
twelve (12) calendar months; the Company has filed in a timely manner all
reports required to be filed under the Exchange Act during the period from
September 30, 1993 to the date hereof; and the Company will send to AFCO all
reports and other documents (without exhibits) filed by the Company with the
Securities and Exchange Commission ("SEC") at the same time the Company sends
such reports and other documents to the SEC, provided, that the Company will
send to AFCO upon AFCO's request copies of all exhibits to such reports and
documents.
2.4. UNDERWRITTEN OFFERING.
(a) UNDERWRITTEN OFFERINGS EXCLUSIVE. Should AFCO request,
pursuant to Section 2.1 hereof, an underwritten offering, only securities
which are to be distributed by the underwriters may be included in the
registration. If AFCO determines, with respect to any such underwritten
offering, based on consultation with the managing underwriter or, in an
offering which is not underwritten, with an investment banker, that the
number of securities to be sold in any such offering should be limited
due to market conditions or otherwise, AFCO shall, at its sole option,
either (i) limit its sale of Registrable Securities to the number
recommended by the managing underwriters or investment banker, as the
case may be or (ii) withdraw such registration without prejudice to its
right to request a registration under Section 2.1 hereof.
(b) UNDERWRITING AGREEMENT. If requested by the underwriters
for AFCO, if Registrable Securities are to be offered through a registration
requested under Section 2.1 hereof, the Company and AFCO shall enter into an
underwriting agreement with such underwriters for such offering, such agreement
to be satisfactory in substance and form to the Company, AFCO and to the
underwriters and to contain such representations and warranties by the Company
and such other terms and provisions as are customarily contained in agreements
of this type, including, without limitation, indemnities to the effect and to
the extent provided in Section 2.7 hereof. AFCO shall be a party to such
underwriting agreement and may, at its sole option, require that any or all of
the representations and warranties by, and the agreements on the part of, the
Company to and for the benefit of such underwriters be made to and for the
benefit of AFCO and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement shall also be
conditions precedent to the obligations of AFCO.
(c) SELECTION OF UNDERWRITERS. Whenever a registration
requested pursuant to Section 2.1 hereof is for an underwritten offering, the
Company and AFCO shall select the managing underwriters mutually agreeable to
AFCO and the Company to administer the offering. If in connection with any such
underwritten offering, a "qualified independent underwriter" may be required by
the rules and regulations of the NASD, such qualified independent underwriter
shall be selected by the Company. If the Company at any time proposed to
register any of its securities under the Securities Act for sale for its own
account and such securities are to be distributed by or through one or more
underwriters, the managing underwriters shall be of nationally recognized
standing.
(d) INCIDENTAL UNDERWRITTEN OFFERINGS. Prior to the Rights
Commencement Date, subject to the provisions of the proviso to Section 2.2
hereof, and if the Company at any time
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proposes to register any of its securities under the Securities Act, whether
or not for its own account, and such securities are to be distributed by or
through one or more underwriters, the Company will use its best efforts, if
requested by AFCO to arrange for such underwriters to include the Registrable
Securities to be offered and sold by AFCO among those to be distributed by
such underwriters. AFCO shall be a party to the underwriting agreement.
AFCO shall not be required to make any representations or warranties other
than AFCO's intended method of distribution.
(e) HOLD BACK AGREEMENTS. 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, AFCO hereby agrees not to effect any public sale or distribution,
including any sale pursuant to Rule 144 of the Securities Act, of any
Registrable Securities, and to use AFCO's best efforts not to effect any such
public sale or distribution of any other equity securities of the Company or
any securities convertible into or exchangeable or exercisable for any equity
security of the Company (other than as part of such underwritten public
offering) within 30 days prior to and 90 days after the effective date of
such registration statement, and the Company agrees to cause each holder of
any equity security, or of any security convertible into or exchangeable or
exercisable for any equity security, of the Company purchased from the
Company at any time other than in a public offering, to enter into a similar
agreement with the Company. The Company further agrees not to effect any
public sale or distribution of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities, within
30 days prior to and 90 days after the effective date of such registration
statement (except as part of such underwritten public offering or pursuant to
a registration on Form ▇-▇, ▇-▇ or any successor forms).
2.5. PREPARATION; REASONABLE INVESTIGATION. If AFCO should request the
registration of the Registrable Securities pursuant to Section 2.1 hereof,
AFCO shall have the right to select legal counsel (who is reasonably
acceptable to the Company), provided such counsel's work product is reviewed
by separate counsel chosen by the Company before the registration statement
for such registration is filed with the Securities and Exchange Commission,
with AFCO's counsel making such changes to the registration statement as the
Company's separate counsel shall advise, with all legal fees and expenses of
AFCO's counsel to be paid by AFCO, and all legal fees and expenses of the
Company's separate counsel to be paid by the Company. In addition, in
connection with the preparation and filing of a registration statement
registering Registrable Securities under the Securities Act, the Company will
give AFCO and their underwriters, if any, and their respective counsel and
accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Securities and Exchange Commission, and each amendment thereof or supplement
thereto, and will give each of them such access to its books and records and
such opportunities to discuss the business of the Company with its officers
and the independent public accountants who have certified its financial
statement as shall be necessary, in the opinion of such holders' and such
underwriters' respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
2.6. OTHER REGISTRATIONS. 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
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in Sections 2.1 and 2.2 hereof, and if such registration shall not have been
withdrawn or abandoned, the Company shall not be obligated to and shall not
effect any registration of any of its securities (including Registrable
Securities) under the Securities Act, whether of its own accord or at the
request or demand of AFCO, until a period of six months shall have lapsed
from the effective date of such previous registration; and the Company shall
so provide in any registration agreement with respect to any of its
securities.
2.7. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. In the event of any registration
of any Registrable Securities under the Securities Act pursuant to Section
2.1 or 2.2 hereof, the Company will indemnify and hold harmless AFCO, its
directors, officers and employees, each other person who participates as an
underwriter, broker or dealer in the offering or sale of such securities and
each other person, if any, who controls AFCO or any such participating person
within the meaning of the Securities Act, against any losses, claims, damages
or liabilities, joint or several, to which AFCO or any such director, officer
or employee or participating person or controlling person may become subject
under the Securities Act, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or (ii) any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Company will reimburse AFCO and
each such director, officer, employee, participating person and controlling
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 extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or 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 AFCO or participating person specifically stating
that it is for use in the preparation thereof or arises out of or is based on
AFCO's or such participating person's failure to deliver a copy of the
registration statement or prospectus or any amendment or supplement thereto
after the Company has furnished AFCO with a sufficient number of the same;
and PROVIDED, FURTHER, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage or liability or expense
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission in the prospectus, if such untrue
statement or alleged untrue statement or omission or alleged omission is
completely corrected in an amendment or supplement to the prospectus and AFCO
thereafter fails to deliver such prospectus as so amended or supplemented
prior to or concurrently with the sale of Registrable Securities to the
person asserting such loss, damage, liability or expense after the Company
had furnished AFCO with a significant number of copies of the same or if AFCO
received notice from the Company of the existence of such untrue statement or
alleged untrue statement or omission or alleged omission and AFCO continued
to dispose of
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Registrable Securities prior to the time of the receipt of either (aa) an
amended or supplemented prospectus which completely corrected such untrue
statement or omission or (bb) a notice from the Company that the use of the
existing prospectus may be resumed. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of AFCO
or any such director, officer, employee, participating person or controlling
person and shall survive the transfer of such securities by AFCO.
(b) INDEMNIFICATION BY AFCO. In the event of any registration of
any Registrable Securities under the Securities Act pursuant to Section 2.1
or 2.2 hereof, AFCO will indemnify and hold harmless the Company, its
directors, officers and employees, each other person who participates as an
underwriter, broker or dealer in the offering or sale of such securities and
each other person, if any, who controls the Company or any such participating
person within the meaning of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which the Company or any such
director, officer or employee or participating person or controlling person
may become subject under the Securities Act, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise
out of or are based upon (i) any untrue statement or alleged untrue statement
of a material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or (ii) any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and AFCO will reimburse the Company and
each such director, officer, employee, participating person and controlling
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 AFCO shall not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or 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 AFCO through an instrument duly executed by
the Company or participating person specifically stating that it is for use
in the preparation thereof or arises out of or is based on the Company's or
such participating person's failure to deliver a copy of the registration
statement or prospectus or any amendment or supplement thereto after AFCO has
furnished the Company with a sufficient number of the same; and PROVIDED,
FURTHER, that AFCO shall not be liable in any such case to the extent that
any such loss, claim, damage or liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission in the prospectus, if such untrue statement or alleged
untrue statement or omission or alleged omission is completely corrected in
an amendment or supplement to the prospectus and the Company thereafter fails
to deliver such prospectus as so amended or supplemented prior to or
concurrently with the sale of Registrable Securities to the person asserting
such loss, damage, liability or expense after AFCO had furnished the Company
with a significant number of copies of the same or if the Company received
notice from AFCO of the existence of such untrue statement or alleged untrue
statement or omission or alleged omission and the Company continued to
dispose of Registrable Securities prior to the time of the receipt of either
(aa) an amended or supplemented prospectus which completely corrected such
10
untrue statement or omission or (bb) a notice from AFCO that the use of the
existing prospectus may be resumed. 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, employee, participating person or
controlling person and shall survive the transfer of such securities by the
Company.
(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 paragraphs of this Section
2.7, such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the latter of the
commencement of such action, PROVIDED that the failure of any indemnified
party to give notice as provided therein shall not relieve the indemnifying
party of its obligations under the preceding paragraphs of this Section 2.7.
In case any such action is brought against an indemnified party, the
indemnifying party will be entitled to participate in and to assume the
defense thereof, to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof, PROVIDED that if such
indemnified party and the indemnifying party reasonably determine, based upon
advice of their respective independent counsel, that a conflict of interest
may exist between the indemnified party and the indemnifying party with
respect to such action and that it is thus advisable for such indemnified
party to be represented by separate counsel, such indemnified party may
retain other counsel, satisfactory to the indemnifying party, to represent
such indemnified party, and the indemnifying party shall pay all reasonable
fees and expenses of such counsel. No indemnifying party in the defense of
any such claim or litigation, shall, except with the consent of such
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 of such claim or litigation.
(d) OTHER INDEMNIFICATION. Indemnification similar to that
specified in the preceding paragraphs of this Section 2.7 (with appropriate
modifications) shall be given by the Company and AFCO with respect to any
required registration or other qualification of such Registrable Securities
under any Federal or state law or regulation or governmental authority other
than the Securities Act.
(e) OTHER REMEDIES. If for any reason the foregoing indemnity is
unavailable, or is insufficient to hold harmless and indemnified party, then
the indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party on the one hand and the
indemnified party on the other or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, in such proportion
as is appropriate to reflect not only the relative benefits received by the
indemnifying party on the other hand and the indemnified party on the other
but also the relative fault of the indemnifying party and the indemnified
party as well as any other relevant equitable considerations. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be
11
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. No party shall be liable for contribution
under this clause (e) except to the extent and under such circumstances as
such party would have been liable to indemnify under this Section 2.7 if such
indemnification were enforceable under applicable law.
3. MISCELLANEOUS.
3.1. RULE 144; LEGENDED SECURITIES; FORM S-8.
(a) The Company, in compliance with Section 12 of the Exchange Act,
covenants that it will continue to file the reports required to be filed by
it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the Securities and Exchange Commission thereunder to
enable AFCO to sell shares of Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by
(i) Rule 144 under the Securities Act, as such Rule may be amended from time
to time, without giving effect to Rule 144A, or (ii) any similar rule or
regulation hereafter adopted by the Securities and Exchange Commission.
(b) The Company agrees and AFCO understands that the Company will
not issue original or replacement certificates for shares of Registrable
Securities without a legend restricting further transfer unless such shares
have been sold to the public pursuant to an effective registration statement
under the Securities Act or Rule 144 thereunder, or unless otherwise
permitted under the Securities Act.
3.2 AMENDMENTS AND WAIVERS. This Agreement may be amended, and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall have
obtained the written consent to such amendment, action or omission to act, of
AFCO.
3.3 SUCCESSORS, ASSIGNS AND TRANSFEREES. This Agreement and the
rights hereunder shall l be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. In addition,
and whether or not any express assignment shall have been made, the
provisions of this Agreement which are for the benefit of the parties hereto
other than the Company shall also be for the benefit of and enforceable by
any subsequent holder of any Registrable Securities.
3.4 NOTICES. All notices, requests, demands or other communications
provided for hereunder shall be in writing and shall be deemed to have been
duly given to any party (i) when delivered personally (by courier service or
otherwise), (ii) when delivered by telex and confirmed
12
by receipt of the proper telex answer back, (iii) five days after being
mailed by first class mail, postage prepaid (registered or certified mail,
return receipt requested), (iv) when receipt acknowledged, if telecopied, or
(v) the next business day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery, in each case to the
applicable address set forth below, or to such other address as such party
may have designated to the other in writing,
The Parts Source, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇, President
or at such other address or addresses as the Company may have designated in
writing to the Company. A copy of any notice or other communication given
under the Agreement shall also be given to:
Schifino & ▇▇▇▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esquire
All notices to AFCO shall be sent to:
Autoparts Finance Company, Inc.
c/o A.P.S., Inc.
▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Vice President & General Counsel
or at such other address or addresses as AFCO may have designated in writing
to the Company.
A copy of any notice or other communication given under the Agreement shall
also be given to:
------------------------------
------------------------------
------------------------------
------------------------------
3.5. DESCRIPTIVE HEADINGS. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for convenience only
and do not constitute a part of this Agreement.
3.6. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the
internal laws of the State of New York without regard to principles of
conflicts of laws.
3.7. COUNTERPARTS. This Agreement may be executed simultaneously in
one or more counterparts, and by different parties on separate counterparts,
each of which shall be deemed an original, but all such counterparts shall
together constitute one and the same instrument.
13
3.8. 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
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
IN WITNESS WHEREOF, each of the undersigned has executed this Agreement
or caused this Agreement to be executed on its behalf as of the date first
written above.
THE PARTS SOURCE, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇
-------------------------------------
Title: President
-------------------------------------
AUTOPARTS FINANCE COMPANY, INC.
By: /s/ E. ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: E. ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Title: Vice President
------------------------------------
SCHEDULE A
CAPITAL STOCK SUMMARY
AT OCTOBER 16, 1996
Common Stock
------------
Authorized: 10,000,000 shs.
Outstanding: 3,185,000 shs.
Preferred Stock
---------------
Authorized: 2,000,000 shs.
Outstanding: None
Stock Options
-------------
Authorized: 175,000 shs.
Outstanding: 130,000 shs.
Stock Warrants
--------------
Outstanding: Five year warrants to purchase 110,000 shares of
Common Stock at $11.20 per share.
The Parts Source, Inc.