Exhibit 10.9
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into on January 20, 2004, by and among ▇▇▇▇▇▇ INDUSTRIES, INC., a
Tennessee corporation (the "COMPANY"), CONTRARIAN FUNDS, LLC, a Delaware limited
liability company ("CONTRARIAN") and HARBOURSIDE INVESTMENTS, LLLP, a Georgia
limited liability limited partnership ("HARBOURSIDE").
WHEREAS, Contrarian is purchasing from the Company 734,151 shares of
the Company's Common Stock, par value $.01 per share (the "COMMON STOCK"),
pursuant to the Exchange Agreement, dated as of even date herewith, by and
between the Company and Contrarian (the "CONTRARIAN EXCHANGE AGREEMENT");
WHEREAS, Harbourside is purchasing from the Company 583,556 shares of
the Company's Common Stock pursuant to the Exchange Agreement, dated as of even
date herewith, by and between the Company and Harbourside (the "HARBOURSIDE
EXCHANGE Agreement" and together with the Contrarian Exchange Agreement, the
"EXCHANGE AGREEMENTS");
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and obligations hereinafter set forth, the parties hereto, intending
legally to be bound, hereby agree as follows.
Section 1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
"ADDITIONAL SECURITIES" shall have the meaning set forth in Section
3(d) hereof.
"AGREEMENT" shall have the meaning set forth in the preamble hereof.
"BASE REGISTRATION" shall have the meaning set forth in SECTION 3(A)
hereof.
"BASE REGISTRATION STATEMENT" shall have the meaning set forth in
SECTION 3(B) hereof.
"BASE REGISTRATION PERIOD" shall have the meaning set forth in SECTION
3(B) hereof.
"BUSINESS DAY" means any day other than a Legal Holiday.
"COMMON STOCK" shall have the meaning set forth in the preamble hereto.
"COMPANY" shall have the meaning set forth in the preamble hereto.
"CONTRARIAN EXCHANGE AGREEMENT" shall have the meaning set forth in the
preamble hereto.
"EXCHANGE ACT" shall have the meaning set forth in SECTION 8(A) hereof.
"EXCHANGE AGREEMENTS" shall have the meaning set forth in the preamble
hereof.
"EXCHANGE PRICE" shall mean the highest sale or bid price of the Common
Stock from the date that is sixty (60) days following the date hereof, through
the date on which the Base Registration Statement becomes effective.
"GOVERNMENTAL AUTHORITY" shall mean any supranational, national,
federal, state, municipal, local or foreign government, any court, tribunal,
arbitrator, administrative agency, commission or other governmental official,
authority or instrumentality, in each case whether domestic or foreign, any
stock exchange or similar self-regulatory organization or any quasi-governmental
or private body exercising any regulatory, taxing or other governmental or
quasi-governmental authority.
"HARBOURSIDE EXCHANGE AGREEMENT" shall have the meaning set forth in
the preamble hereof.
"INDEMNIFIABLE COSTS AND EXPENSES" shall have the meaning set forth in
SECTION 8(A) hereof.
"LAW" shall mean all laws, statutes, constitutions and ordinances, and
all regulations, rules and other pronouncements issued, enacted, adopted,
promulgated, implemented or otherwise put into effect by or under the authority
of any Governmental Authority having the effect of law of the United States, any
foreign country, or any domestic or foreign state, province, commonwealth, city,
country, municipality, territory, protectorate, possession or similar
instrumentality, or any Governmental Authority thereof;
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"OTHER HOLDERS" shall have the meaning set forth in SECTION 3(C)
hereof.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company or government or other entity.
"PIK SECURITIES" shall have the meaning set forth in the definition of
Registrable Securities.
"PRELIMINARY PROSPECTUS" shall mean a preliminary prospectus included
in a Registration Statement or filed with the SEC pursuant to Rule 424(a)
promulgated under the Securities Act.
"PROSPECTUS" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by a prospectus supplement with respect to
the terms of the offering of any portion of the Registrable Securities covered
by such Registration Statement and
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by all other amendments and supplements to the prospectus, including
post-effective amendments, and all material incorporated by reference in such
Prospectus.
"REGISTRABLE SECURITIES" shall mean (i) the Common Stock issued to
Contrarian and Harbourside pursuant to the Exchange Agreements and (ii) all
securities (the "PIK SECURITIES") issued or issuable by way of dividend, stock
split or other distribution with respect to any Registrable Securities.
"REGISTRATION EXPENSES" shall have the meaning set forth in SECTION 7
hereof.
"REGISTRATION STATEMENT" shall mean any registration statement that is
filed with the SEC under the Securities Act which covers any of the Registrable
Securities pursuant to the provisions of this Agreement, including the
Prospectus included therein, all amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and all material
incorporated by reference in such Registration Statement.
"REQUESTING HOLDER" shall have the meaning set forth in SECTION 4
hereof.
"RESTRICTED SECURITIES" shall have the meaning set forth in SECTION 2
hereof.
"RULE 144" shall mean Rule 144 promulgated under the Securities Act, as
amended from time to time, or any similar successor rule thereto that may be
promulgated by the SEC.
"SEC" shall mean the United States Securities and Exchange Commission,
or any other federal agency at the time administering the Securities Act.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended (or
any similar successor federal statute), and the rules and regulations
thereunder, as the same are in effect from time to time.
"SECURITYHOLDERS" shall mean Contrarian, Harbourside and any Person to
whom the rights under this Agreement are assigned pursuant to SECTION 18 hereof.
"SELLING SECURITYHOLDER" shall mean any Securityholder whose
Registrable Securities are included in a Registration Statement.
"TRIGGER EVENT" shall have the meaning set forth in SECTION 3(D)
hereof.
"UNDERWRITTEN OFFERING" shall mean a registered offering in which
securities of the Company are sold to an underwriter pursuant to a firm
commitment underwriting agreement for reoffering to the public.
Section 2. SECURITIES SUBJECT TO THIS AGREEMENT. The securities
entitled to the benefits of this Agreement are the Registrable Securities but,
with respect to any particular Registrable Security, only so long as such
security continues to be a Restricted Security. A Registrable Security that has
ceased to be a Restricted Security cannot thereafter become a Registrable
Security. As used herein, a "RESTRICTED SECURITY" is a Registrable Security
which has
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not been effectively registered under the Securities Act and distributed in
accordance with an effective Registration Statement and which has not become
eligible to be sold in reliance on Rule 144(k).
Section 3. IMMEDIATE REGISTRATION.
(a) FILING. The Company shall promptly, but in no event later than
sixty (60) days following the date hereof (time being of the essence), file a
Registration Statement on Form S-1 (or, if Form S-1 is not then available to the
Company, on such appropriate form of registration statement, if any, as is then
available to the Company to effect a registration for resale of securities of
the Company covering all of the Registrable Securities) (the "BASE
REGISTRATION"). Such Registration Statement shall also cover, to the extent
allowable under the Securities Act, such indeterminate number of additional
shares of Common Stock resulting from stock splits, stock dividends or similar
transactions.
(b) EFFECTIVENESS OF REGISTRATION STATEMENT. The Company shall use its
best efforts to (i) cause the Registration Statement relating to the Base
Registration (the "BASE REGISTRATION STATEMENT") to become effective as promptly
as practicable after the Base Registration Statement is filed with the SEC, and
(ii) thereafter keep the Base Registration Statement effective continuously for
the period (the "BASE REGISTRATION PERIOD") ending on the earlier of (A) the
date on which all Registrable Securities become eligible to be sold in reliance
on Rule 144(k) and (B) the date on which all Registrable Securities covered by
the Base Registration Statement have been sold and the distribution contemplated
thereby has been completed.
(c) INCLUSION OF OTHER SECURITIES. The Company may not include any
other securities, whether for its own account or for the account of other
holders of the Company's securities ("OTHER HOLDERS"), in the Base Registration
pursuant to this SECTION 3.
(d) ADDITIONAL REGISTRABLE SECURITIES. If, after filing or
effectiveness of the Base Registration Statement, the Company issues any PIK
Securities (such issuance, a "TRIGGER EVENT") occurs then the Company shall
prepare and file with the SEC one or more Registration Statements on Form S-1
(or, if Form S-1 is not then available to the Company, on such appropriate form
of registration statement, if any, as is then available to the Company) to
effect a registration for resale of all such PIK Securities (the "ADDITIONAL
SECURITIES"). Such Registration Statement also shall cover, to the extent
allowable under the Securities Act, such indeterminate number of additional
shares of Common Stock or PIK Securities resulting from stock splits, stock
dividends or similar transactions with respect to the Additional Securities. A
Registration Statement covering the Additional Securities shall be filed by the
Company with the SEC within ninety (90) days after the occurrence of the Trigger
Event. The Company shall use its best efforts to cause the Registration
Statement to be filed pursuant to this SECTION 3(D) and to be declared effective
by the SEC as promptly as practicable. The Company shall keep the Registration
Statement filed pursuant to this SECTION 3(D) effective continuously during the
Base Registration Period, and such Registration Statement shall be deemed an
Base Registration for all purposes of this Agreement. The provisions of this
SECTION 3(D) shall apply to successive Trigger Events.
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(e) FAILURE TO COMPLY. If any Registration Statement under this SECTION
3 is not filed within the time periods set forth in any provision of SECTION
3(A) or SECTION 3(D) hereof, as the case may be, the Company shall pay, in cash,
to each such Securityholder, or its designee, an amount equal to the lesser of
(i) the difference between the highest closing market price for the Common Stock
during the period after the Registration Statement was required to have been
filed and through the time that it is actually filed, LESS the Exchange Price,
multiplied by the number of Registrable Securities then owned, and (ii) the
product of (x) a number of shares of Common Stock equal to ten percent (10%) of
the number of Registrable Securities then held by such Securityholder,
multiplied by (y) the Exchange Price. The Company shall pay the applicable cash
amount to such Securityholder within five (5) days of the Securityholder's
giving notice to the Company of the Securityholder's election to receive such
cash payment.
Section 4. PIGGYBACK REGISTRATIONS. If the Company at any time proposes
to file a registration statement (other than a registration on Form S-4 or Form
S-8 or any successor forms thereto) with respect to securities, whether for its
own account or for the account of any Other Holder or Other Holders that have
requested such registration (a "REQUESTING HOLDER"), the Company shall, in each
case, give written notice of such proposed filing to the Securityholders at
least twenty (20) days before the anticipated filing date of any such
registration statement by the Company, and such notice shall offer to the
Securityholders the opportunity to have any or all of the Registrable Securities
held by the Securityholders included in such registration statement. If any
Securityholder desires to have its Registrable Securities registered under this
SECTION 4, it shall so advise the Company in writing within ten (10) days after
the date of receipt of such notice (which request shall set forth the type and
amount of Registrable Securities for which registration is requested), and the
Company shall use its commercially reasonable efforts to include in such
registration statement all such Registrable Securities so requested to be
included therein. Anything to the contrary in this Agreement notwithstanding,
the Company may withdraw or postpone a registration statement referred to in
this SECTION 4 at any time before it becomes effective or withdraw, postpone or
terminate the offering after it becomes effective without any liability or
obligation to any Securityholder.
Section 5. REGISTRATION PROCEDURES.
(a) GENERAL. In connection with the Company's registration obligations
pursuant to SECTION 3 and SECTION 4 hereof, the Company will:
(i) prepare and file with the SEC a new Registration Statement
or such amendments and post-effective amendments to an existing
Registration Statement as may be necessary to keep such Registration
Statement effective for the time periods set forth in SECTION 3(B) and
SECTION 3(D) hereof; PROVIDED, that as soon as practicable, but in no
event later than five (5) Business Days before filing such Registration
Statement, the Company shall furnish to the Selling Securityholder(s)
copies of all such documents proposed to be filed, which documents
shall be subject to the review of the Selling Securityholder(s) and
their counsel;
(ii) notify the Selling Securityholder(s) promptly (A) when a
new Registration Statement, Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any new
Registration Statement or post-
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effective amendment, when it has become effective, (B) of any request
by the SEC for amendments or supplements to any Registration Statement
or Prospectus or for additional information, (C) of the issuance by the
SEC of any comments with respect to any filing (and to reply thereto as
promptly as reasonably practicable), (D) of any stop order suspending
the effectiveness of any Registration Statement or the initiation of
any proceedings for that purpose (and use commercially reasonable
efforts to obtain the withdrawal of such order), (E) of any suspension
of the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose, or (F) if there is any misstatement or omission of any
material fact in any Registration Statement, Prospectus or any document
incorporated therein by reference or if any event occurs which requires
the making of any changes in any Registration Statement, Prospectus or
any document incorporated therein by reference in order to make the
statements therein (in the case of any Prospectus, in the light of the
circumstances under which they were made) not misleading;
(iii) if reasonably requested by a Selling Securityholder,
promptly incorporate in a Prospectus supplement or post-effective
amendment such information with respect to such Selling Securityholder
and its proposed plan of distribution as such Selling Securityholder
reasonably requests be included therein, and promptly make all required
filings of such Prospectus supplement or post-effective amendment;
(iv) furnish to each Selling Securityholder, without charge,
as many conformed copies as may reasonably be requested of the then
effective Registration Statement and any post-effective amendments
thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those
incorporated by reference);
(v) deliver to each Selling Securityholder, without charge, as
many copies as may reasonably be requested of the then effective
Prospectus (including each prospectus subject to completion) and any
amendments or supplements thereto;
(vi) use commercially reasonable efforts to register or
qualify, or cooperate with the Selling Securityholder(s) in connection
with the registration or qualification of, such Registrable Securities
for offer and sale under the securities or blue sky laws of such
jurisdictions as such Selling Securityholder(s) reasonably requests;
PROVIDED, HOWEVER, that the Company will not be required to (A) qualify
to do business in any jurisdiction where it would not otherwise be
required to qualify, but for this paragraph (vi), (B) subject itself to
general taxation in any such jurisdiction or (C) file a general consent
to service of process in any such jurisdiction;
(vii) cooperate with the Selling Securityholder(s) to
facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any
restrictive legends; enable such Registrable Securities to be in such
denominations and registered in such names as the managing underwriters
or Selling Securityholders may request at least two (2) Business Days
prior to any sale of Registrable Securities to the underwriters; and
take such actions as the Selling Securityholders or managing
underwriters may reasonably request to fulfill requirements
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of the Depositary Trust Company or Cede & Co. for the holding of the
Registrable Securities by any such entity;
(viii) otherwise use its commercially reasonable efforts to
comply in all material respects with all applicable rules and
regulations of the SEC relating to such registration and the
distribution of the securities being offered and make generally
available to its securities holders an earnings statement satisfying
the provisions of Section 11(a) of the Securities Act;
(ix) cooperate and assist in any filings required to be made
with the National Association of Securities Dealers, Inc. and any stock
exchanges on which the Registrable Securities are then listed; and
(x) upon reasonable notice and during normal business hours,
provide reasonable access to the Company's personnel and auditors for
the purpose of permitting the Selling Securityholders and their counsel
to conduct due diligence in connection with any such Registration
Statement.
(b) CESSATION OF SALES. Each Selling Securityholder agrees that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in SECTION 5(A)(II) hereof, such Selling Securityholder will forthwith
discontinue disposition of Registrable Securities pursuant to the then current
Prospectus until (i) such Selling Securityholder is advised in writing by the
Company that a new Registration Statement covering the offer of Registrable
Securities has become effective under the Securities Act, (ii) such Selling
Securityholder receives copies of any required supplemented or amended
Prospectus, or (iii) such Selling Securityholder is advised in writing by the
Company that the use of the Prospectus may be resumed; PROVIDED, HOWEVER, that
the Company shall use its best efforts to cure any such misstatement, omission
or event that is applicable to the Registration Statement as soon as reasonably
practicable after delivery of such notice pursuant to clause (F) of SECTION
5(A)(II) hereof. Such periods of discontinued use of the Registration Statement
shall not exceed 90 days in any single instance and shall not exceed a total of
180 days in any calendar year. If so directed by the Company, on the happening
of such event, each Selling Securityholder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Selling Securityholder's possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice.
Section 6. LIMITATION ON REGISTRATION RIGHTS. Anything to the contrary
contained in this Agreement notwithstanding, when in the written opinion of
counsel for the Company registration of all Registrable Securities owned by a
Securityholder is not required by the Securities Act and other applicable
securities laws in connection with a proposed sale of such Registrable
Securities, such Securityholder shall have no rights pursuant to SECTION 4
hereof to request Registrable Securities be included in a Registration Statement
in connection with such proposed sale and the Company shall promptly provide to
the transfer agent and such Securityholder's broker in connection with any sale
transaction a written opinion addressed to such Securityholder and the transfer
agent to the effect set forth above, reasonably sufficient in form and substance
to permit the transfer agent to issue certificates for such Registrable
Securities without any legend restricting transfer thereof.
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Section 7. REGISTRATION EXPENSES. All reasonable out-of-pocket expenses
incident to the Company's performance of or compliance with this Agreement,
including, without limitation, all registration and filing fees, fees and
expenses in connection with compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with blue
sky qualifications or registrations (or the obtaining of exemptions therefrom)
of the Registrable Securities), printing expenses (including expenses of
printing Prospectuses), messenger and delivery expenses, fees and disbursements
of the Company's counsel and their independent certified public accountants,
Securities Act liability insurance (if the Company elects to obtain such
insurance), fees and expenses of any special experts retained by the Company in
connection with any registration hereunder, all fees and expenses of other
Persons retained by the Company in connection with the registration of the
Registrable Securities pursuant hereto (all such expenses being referred to as
"REGISTRATION EXPENSES"), shall be borne 50% by Harbourside and Contrarian in
proportion to their ownership of Registrable Securities, up to a maximum of
$50,000, and 50% by the Company and, to the extent such Registration Expenses
are in excess of $100,000, they shall be borne by the Company; PROVIDED, that
Registration Expenses shall not include any underwriting discounts, commissions,
brokerage or other similar fees attributable to the sale of the Registrable
Securities, which shall be borne entirely by the Selling Securityholders.
Section 8. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and
hold harmless, to the full extent permitted by law, but without duplication,
each Selling Securityholder and its officers, directors, stockholders,
employees, advisors and agents, and each Person who controls (within the meaning
of the Securities Act) a Selling Securityholder, against all losses, claims,
damages, liabilities, costs and expenses (including reasonable costs of
investigation and reasonable legal fees and expenses) ("INDEMNIFIABLE COSTS AND
EXPENSES") resulting from (i) any untrue statement (or alleged untrue statement)
of a material fact in, or any omission (or alleged omission) of a material fact
required to be stated in, any Registration Statement or Prospectus or necessary
to make the statements therein (including any such statements or omissions
incorporated by reference therein) (in the case of a Prospectus, in light of the
circumstances under which they were made) not misleading, except insofar as the
same are made in reliance upon or in conformity with any information furnished
in writing to the Company by such Selling Securityholder expressly for use
therein, or (ii) any violation or alleged violation by the Company of the
Securities Act, the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), any state securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law in connection with
the offering covered by such Registration Statement. The Company shall not be
required to indemnify any party pursuant to this SECTION 8(A) with respect to
any loss, claim, damage, liability, cost or expense resulting from an untrue or
alleged untrue statement or omission or alleged omission of a material fact in a
Preliminary Prospectus to the extent that (i) a court of competent jurisdiction
has found by final and nonappealable order that any such loss, claim, damage,
liability, cost or expense of such party results from the fact that such party
sold Registrable Securities to a person to whom there was not sent or given, at
or prior to the written confirmation of such sale, a copy of the Prospectus as
then amended or supplemented (excluding documents incorporated by reference);
(ii) if such party failed to make efforts generally consistent with the then
prevailing industry practice to effect such delivery; and (iii) (A) such
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delivery to such person is required by Section 5 of the Act, (B) the Company has
furnished copies of such Prospectus as amended or supplemented to such party a
reasonable period of time prior to the party being required so to deliver such
Prospectus as amended or supplemented and (C) such Prospectus as amended or
supplemented corrected the untrue or alleged untrue statement or omission or
alleged omission of material fact contained in the Preliminary Prospectus. The
Company will also indemnify underwriters participating in the distribution,
their officers, directors, employees, partners and agents, and each Person who
controls such underwriters (within the meaning of the Securities Act), to the
same extent as provided above with respect to the indemnification of the Selling
Securityholder(s), if so requested.
(b) INDEMNIFICATION BY THE SELLING STOCKHOLDER(S). In connection with
any Registration Statement, each Selling Securityholder will furnish to the
Company in writing such information as the Company reasonably requests as
required under the Securities Act for use in connection with the preparation of
any such Registration Statement or Prospectus and agrees to indemnify and hold
harmless, to the full extent permitted by law, but without duplication, the
Company, its officers, directors, stockholders, employees, advisors and agents,
and each Person who controls (within the meaning of the Securities Act) the
Company, against all Indemnifiable Costs and Expenses resulting from (i) any
untrue statement of a material fact in, or any omission of a material fact
required to be stated in, the Registration Statement or Prospectus or necessary
to make the statements therein (in the case of a Prospectus in light of the
circumstances under which they were made) not misleading to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission is
made in reliance upon or in conformity with any information so furnished in
writing by such Selling Securityholder to the Company expressly for use in such
Registration Statement or Prospectus, or (ii) any violation or alleged violation
by such Selling Securityholder of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law in connection with the
offering covered by such Registration Statement. No Selling Securityholder shall
be required to provide indemnification under this SECTION 8(B) in excess of an
amount equal to the net proceeds to such Securityholder from the disposition of
the Registrable Securities disposed of by such Securityholder pursuant to such
Registration Statement.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification (PROVIDED, HOWEVER,
that any delay or failure to give such notice shall not relieve the indemnifying
party of its obligations under this SECTION 8 except to the extent that the
defense of such claim by the indemnifying party is actually materially and
adversely prejudiced as a result thereof), and (ii) permit such indemnifying
party to assume the defense of such claim with counsel of such indemnifying
party's choice; PROVIDED, HOWEVER, that any Person entitled to indemnification
hereunder shall have the right to employ separate counsel and to participate in
(but not control) the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such indemnified Person unless the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to the indemnified party in a timely
manner; PROVIDED, FURTHER, HOWEVER, that if the indemnified party is advised by
its counsel that (i) there is a conflict of interest between the indemnifying
party and the indemnified party with respect to such claim, or (ii) the
indemnified party has defenses to such claim that are different from or in
addition to those
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available to the indemnifying party, then the indemnified party may assume the
defense of such claim with counsel of its choice that is reasonably satisfactory
to the indemnifying party. The indemnifying party will not be subject to any
liability for any settlement made without the indemnifying party's consent. No
indemnifying party shall, without the written consent of the indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability arising out of such action or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of any indemnified party. An indemnifying party who is not
entitled to, or elects not to, assume the defense of the claim will not be
obligated to pay the fees and expenses of more than one counsel (except one (1)
local counsel if required in a specific instance) for all parties indemnified by
such indemnifying party with respect to such claim, which fees and expenses
shall be paid as they are incurred.
(d) CONTRIBUTION. If for any reason the indemnification provided for in
SECTION 8(A) or SECTION 8(B) hereof is unavailable to an indemnified party or is
insufficient to hold it harmless as contemplated by SECTION 8(A) or SECTION 8(B)
hereof, respectively, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such loss, claim,
damage, liability or expense in such proportion as is appropriate to reflect not
only the relative benefits received by the indemnifying party but also the
relative fault of the indemnifying party and the indemnified party, as well as
any other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the indemnifying party or
parties on the one hand, or the indemnified party or parties on the other hand,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. No Selling
Securityholder shall be required to provide contribution under this SECTION 8(D)
in excess of an amount equal to the net proceeds to such Securityholder from the
disposition of the Registrable Securities disposed of by such Securityholder
pursuant to such Registration Statement. 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 misrepresentations.
(e) CONFLICT WITH UNDERWRITING AGREEMENT. Notwithstanding the
foregoing, to the extent that the indemnification and contribution provisions
contained in any underwriting agreement entered into in connection with any
Underwritten Offering conflict with the foregoing, the provisions of such
underwriting agreement shall control.
Section 9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. (a)
Securityholders holding a majority in interest of the Registrable Securities may
request that the Base Registration provide for an Underwritten Offering. Upon
such request, the Company shall select one or more managing underwriters for
such offering which shall be reasonably satisfactory to the Securityholders and
shall enter into a customary underwriting agreement and other documents with
such managing underwriter(s) with respect to such Underwritten Offering.
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(b) No Securityholder may participate in any Underwritten Offering
hereunder unless it (i) agrees to sell the Registrable Securities included
therein on the basis provided in any underwriting arrangements approved by the
Persons entitled hereunder to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements, custodial arrangements and other documents required under the terms
of such underwriting arrangements. Nothing in this SECTION 9 shall be construed
to create any additional rights regarding the registration of Registrable
Securities in any Person otherwise than as set forth herein.
Section 10. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Securityholders that:
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and, to
consummate the transactions contemplated by this Agreement. The execution,
delivery and performance by the Company of this Agreement and the transactions
contemplated by this Agreement, have been duly authorized by all necessary
corporate action (including, without limitation, the approval of the Company's
board of directors) and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to register the Registrable
Securities as contemplated herein.
(b) This Agreement has been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
(c) Any Additional Securities to be issued hereunder have been and will
be (i) duly authorized, validly issued, fully paid and non assessable, (ii) free
from preemptive and any other similar rights, and (iii) free from any taxes,
liens, charges or security interest with respect thereto.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement conflict with,
or will result in any violation or breach of or event of default under any
provision of (i) the Articles of Incorporation, as amended, or the Bylaws, as
amended, of the Company or (ii) any Law or order, in each case, applicable to
the Company or its respective properties or assets or (iii) whether or not with
notice or lapse of time, or both any agreement indenture or instrument to which
the Company is a party or by which its assets are bound.
(e) Except as pursuant to this Agreement, the Company has not granted
any registration rights to any Person.
(f) The Company has reserved, and shall at all times hereafter reserve
and keep available for issuance, such number of its duly authorized but unissued
shares of Common Stock as will be sufficient to permit the issuance of the
Additional Shares, and will cause appropriate evidence of ownership of such to
be delivered to the Securityholders upon their request for delivery of such.
11
Section 11. CERTAIN COVENANTS BY THE COMPANY.
(a) Upon request by any Securityholder, the Company will inform such
Securityholder whether it is in current compliance with its most recent periodic
filing obligations under the Exchange Act and has been in compliance with such
filing obligations for the past 12 months.
(b) Upon obtaining an opinion to the Company from counsel to a
Securityholder that is reasonably satisfactory in form and substance to the
Company to the effect that the Securityholder's Registrable Securities are no
longer subject to restrictions on resale under the Securities Act, the Company
will instruct its transfer agent to issue to such Securityholder a certificate
representing such Registrable Securities without any legend affixed thereto, and
such Registrable Securities shall no longer be Restricted Securities.
(c) From and after the date of this Agreement, the Company shall not,
without the prior written consent of a majority in interest of the
Securityholders, enter into any agreement with any holder or prospective holder
of any securities of the Company which would allow such holder or prospective
holder to (i) require any registration by the Company of any of the Company's
securities, (ii) participate in any registration of Registrable Securities by
the Company or any Securityholder, or (iii) receive any registration rights
which are superior or PARI PASSU to the rights granted to Contrarian and
Harbourside hereunder.
Section 12. AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this SECTION 12, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless such amendment, modification, waiver or consent is in
writing and duly executed by the Company and a majority in interest of the
Securityholders, which majority shall include Contrarian and Harbourside. Any
such amendment, modification, supplement or consent that is agreed to by a
majority in interest of the Securityholders (including Contrarian and
Harbourside) shall be binding on all other Securityholders and the successors
and assigns of all Securityholders. No waiver of any provision of this Agreement
shall constitute a waiver of any other provision of this Agreement and no waiver
on one occasion shall constitute a waiver on any future occasion with respect to
the same or any other provision of this Agreement.
Section 13. NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telecopier, or air-courier guaranteeing overnight delivery:
(a) If to Contrarian, initially at Contrarian Funds, LLC, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇,
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇, Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇, and thereafter at
such other address as may be designated from time to time by notice given in
accordance with the provisions of this SECTION 13, with copy to ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq., Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇, Facsimile No.: (212)
715-8348.
12
(b) If to Harbourside, initially at Harbourside Investments, LLLP, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
General Partner, Telephone: (▇▇▇) ▇▇▇-▇▇▇▇, Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇, and
thereafter at such other address as may be designated from time to time by
notice given in accordance with the provisions of this SECTION 13, with copy to
________________________.
(c) If to a Securityholder other than Contrarian or Harbourside, at the
most current address given by such Securityholder to the Company, in accordance
with the provisions of this SECTION 13.
(d) If to the Company, initially at ▇▇▇▇▇▇ Industries, Inc., ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention: A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, III,
Chairman of the Special Committee, Telephone: (▇▇▇) ▇▇▇-▇▇▇▇, Facsimile No.:
(▇▇▇) ▇▇▇-▇▇▇▇, and thereafter at such other address as may be designated from
time to time by notice given in accordance with the provisions of this SECTION
13, with a copy to ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., Telephone No.: (404)
▇▇▇-▇▇▇▇, Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇.
(e) All such notices and other communications shall be deemed to have
been delivered and received (i) in the case of personal delivery, facsimile,
telecopier or telegram, on the date of such delivery, (ii) in the case of air
courier, on the Business Day after the date when sent and (iii) in the case of
mailing, on the third (3rd) Business Day following such mailing.
Section 14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts (including by telecopy), all of which shall be considered one and
the same agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other party, it being
understood that all parties need not sign the same counterpart.
Section 15. HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
Section 16. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in the State of New York, without regard to
any laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 17. SEVERABILITY. If any provision of this Agreement is held or
declared by a court of competent jurisdiction to be illegal, invalid or
unenforceable under any present or future Law, and if the rights or obligations
of any party hereto under this Agreement will not be materially and adversely
affected thereby, (a) such provision will be fully severable, (b) this Agreement
will be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof, (c) the remaining provisions of
this Agreement will remain in full force and effect and will not be affected by
the illegal, invalid or unenforceable provision or by its severance herefrom and
(d) in lieu of such illegal, invalid or unenforceable provision, there will be
added automatically as a part of this Agreement a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.
13
Section 18. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Except as otherwise expressly provided in
SECTION 8 hereof, this Agreement shall not confer any rights or remedies upon
any Person other than the parties hereto and their respective successors and
permitted assigns. The Company may not assign any of its rights or obligations
hereunder. A Securityholder may assign its rights under this Agreement to any
Person to whom it transfers Registrable Securities without any recourse by the
assignee against such Securityholder. Upon any such assignment, the assignee
shall be deemed to have agreed to, and shall, be bound by all of the terms and
provisions of this Agreement as if such assignee had executed and delivered this
Agreement on the date hereof.
Section 19. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and is not intended to
confer upon any other person any rights or remedies hereunder.
[SIGNATURE PAGE FOLLOWS]
14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
▇▇▇▇▇▇ INDUSTRIES, INC.
By: /s/ A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name: A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman, Special
Committee of the
Board of Directors
CONTRARIAN FUNDS, LLC
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Member
HARBOURSIDE INVESTMENTS, LLLP
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: General Partner