EXHIBIT 10(b)
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of September 11,
1984, among HH Holding Inc., a Delaware corporation (the "Company"),
and the other parties listed on the Schedule of Stockholders attached
to this Agreement.
1. INTRODUCTION. The Company (a) is a party to the Common
Stock Subscription Agreement (the "Common Stock Subscription
Agreement"), dated as of the date hereof, among the Company and the
other parties (collectively, the "Investor Group") to this Agreement
other than Teachers Insurance and Annuity Association of America, a
New York corporation ("Teachers") and (b) pursuant to an assignment
from HH Acquiring Corp., a Delaware corporation and a wholly-owned
subsidiary of the Company ("Acquiring Corp."), has become a party to
the Purchase Agreement (the "Purchase Agreement"), dated as of August
15, 1984, between the Company (as assignee of Acquiring Corp.) and
Teachers. On the terms and conditions set forth in the Common Stock
Subscription Agreement, each member of the Investor Group has agreed,
among other things, to purchase from the Company the number of shares
of the Company's Class A Common Stock, par value $1.00 per share (the
"Class A Common Stock"), specified opposite the name of such member in
the Schedule of Stockholders attached to this Agreement. On the terms
and conditions set forth in the Purchase Agreement, Teachers has
agreed, among other things, to purchase from the Company 1,500,000
shares of the Company's Class B Common Stock, par value $1.00 per
share (the "Class B Common Stock" and, together with the Class A
Common Stock, the "Common Stock") and warrants (the "Warrants") to
purchase an additional number of shares of common stock on the terms
and conditions set forth in the Warrants. This Registration Rights
Agreement shall become effective upon the issuance of Common Stock to
the members of the Investor Group and Teachers pursuant to the Common
Stock Subscription Agreement and the Purchase Agreement, respectively.
Certain capitalized terms used in this Agreement are defined in
section 3.7.
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2. REGISTRATION UNDER SECURITIES ACT, ETC.
2.1. REGISTRATION ON REQUEST. (a) At any time or from time
to time after the third anniversary of the issuance of Common Stock
pursuant to the Common Stock Subscription Agreement and the Purchase
Agreement, upon the written request of one or more Qualified Holders
requesting that the Company effect the registration under the
Securities Act of all or any part of such Qualified Holders'
Registrable Securities and specifying the intended method of
disposition thereof, the Company shall promptly give written notice of
such requested registration to all registered holders of Registrable
Securities, and thereupon the Company shall, as expeditiously as
reasonably possible, use its best efforts to effect the registration
under the Securities Act of
(i) the Registrable Securities which the Company has been
so requested to register by such Qualified Holder or Holders, for
disposition in accordance with the intended method of disposition
stated in such request,
(ii) all other Registrable Securities the holders of which
shall have made a written request to the Company for registration
thereof within 30 days after the giving of such written notice by the
Company (which request shall specify the intended method of
disposition thereof), and
(iii) all shares of Common Stock which the Company may
elect to register in connection with the offering of Registrable
Securities pursuant to this section 2.1,
all to the extent requisite to permit the disposition (in accordance
with the intended methods thereof as aforesaid) of the Registrable
Securities and the additional shares of Common Stock, if any, so to be
registered, PROVIDED that, on and prior to the fifth anniversary of
the date of this Agreement, the Company shall not be required to
effect any registration of Registrable Securities pursuant to this
section 2.1 unless (x) a single holder of Registrable Securities has
requested the registration of a number of shares of Registrable
Securities held by such holder which is equal to or greater than 10%
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of the shares of Common Stock at the time outstanding and (y) the
aggregate number of shares of Registrable Securities requested to be
registered by all holders of Registrable Securities is equal to or
greater than 15% of the number of shares of Common Stock at the time
outstanding.
(b) REGISTRATION STATEMENT FORM. Registrations under this
section 2.1 shall be on such appropriate registration form of the
Securities and Exchange Commission as shall be selected by the
Company, and be reasonably acceptable to the holders of more than 50%
(by number of shares) of the Registrable Securities so to be disposed
of, and as shall permit the disposition of such Registrable Securities
in accordance with the intended method or methods of disposition
specified in their request for such registration. The Company agrees
to include in any such registration statement all information which
holders of Registrable Securities being registered shall reasonably
request.
(c) EXPENSES. The Company will pay all Registration
Expenses in connection with (i) each registration requested under this
section 2.1 if Teachers shall have requested that such registration
include all or any part of the Registrable Securities of Teachers,
PROVIDED that the provisions of this clause (i) shall not require the
Company to pay Registration Expenses in connection with any such
registration after the first three such registrations in connection
with which Teachers has so requested the registration of any
Registrable Securities of Teachers and in the case of each of such
three registrations 90% or more (by number of shares) of such
Registrable Securities were so registered, and (ii) three additional
registrations requested under this section 2.1 by one or more
Qualified Holders other than Teachers at a time when the provisions of
clause (i) above do not require the Company to pay Registration
Expenses or in connection with which Teachers has not requested the
registration of any Registrable Securities. The Registration Expenses
in connection with each other registration requested under this
section 2.1 shall be allocated among all persons on whose behalf
securities of the Company are included in such registration, pro rata
among such persons on the basis of the respective amounts of the
securities then being registered on their behalf.
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(d) EFFECTIVE REGISTRATION STATEMENT. A registration
requested pursuant to this section 2.1 will not be deemed to have been
effected (i) unless it has become effective, 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 to proceed of the holders of Registrable Securities who
initially requested registration of Registrable Securities shall be
deemed to have been effected by the Company at the request of such
holders, unless such holders shall have elected to pay all
Registration Expenses in connection with such registration, or (ii)
if, after it has become effective, such registration is interfered
with by any stop order, injunction or other order or requirement of
the Securities and Exchange Commission or other governmental agency or
of any court.
(e) PRIORITY IN REQUESTED REGISTRATIONS. If a requested
registration pursuant to this section 2.1 involves an underwritten
offering, and the managing underwriter shall advise the Company in
writing (with a copy to each holder of Registrable Securities
requesting registration) that, in its opinion, the number of
securities requested to be included in such registration (including
securities of the Company which are not Registrable Securities)
exceeds the number which can be sold in such offering, the Company
will include in such registration to the extent of the number which
the Company is so advised can be sold in such offering (i) first,
Registrable Securities requested to be included in such registration
by the holder or holders of Registrable Securities, pro rata among
such holders on the basis of the number of Registrable Securities
requested to be included by such holders, and (ii) second, securities
the Company proposes to sell and other securities of the Company
included in such registration by the holders thereof.
2.2. INCIDENTAL REGISTRATION. (a) If the Company at any
time proposes to register its Common Stock under the Securities Act
(other than a registration in connection with an acquisition in a
manner which would not permit registration of Registrable Securities
for sale to the public or in connection with an acquisition for a
consideration of $10 million or less, other than a registration on
Form S-8, or any successor form thereto, relating to a stock option
plan, stock purchase plan, managing directors' plan, savings or
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similar plan and other than pursuant to section 2.1), whether or not
for sale for its own account, the Company will each such time give
prompt written notice to all holders of Registrable Securities of its
intention to do so and of such holders' rights under this section 2.2.
Upon the written request of any such holder made 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
shall state 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 the holders of Registrable
Securities, to the extent requisite to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the
Registrable Securities so to be registered, by inclusion of such
Registrable Securities in the registration statement which covers the
Common Stock which the Company proposes to register, PROVIDED that if,
at any time after giving written notice of its intention to register
any securities and prior to the effective date of the registration
statement filed in connection with such registration, the Company
shall determine for any reason either not to register or to delay
registering such securities, the Company may, at its election, give
written notice of such determination to each holder of Registrable
Securities and, thereupon, (i) in the case of a determination not to
register, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration (but not
from its obligation to pay the Registration Expenses in connection
therewith), without prejudice, however, to the rights of any holder or
holders of Registrable Securities entitled to do so to request that
such registration be effected as a registration under section 2.1, and
(ii) in the case of a determination to delay registering, shall be
permitted to delay registering any Registrable Securities for the same
period as the delay in registering such other securities.
(b) No registration effected pursuant to a request or
requests referred to in this section 2.2 shall be deemed to have been
effected pursuant to section 2.1. The Company will pay all
Registration Expenses in connection with each registration of
Registrable Securities requested pursuant to this section 2.2.
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(c) If (i) a registration pursuant to this section 2.2
involves an underwritten offering of the securities so being
registered, whether or not for sale for the account of the Company, to
be distributed (on a firm commitment basis) by or through one or more
underwriters of recognized standing under underwriting terms
appropriate for such a transaction, (ii) the Registrable Securities so
requested to be registered for sale for the account of holders of
Registrable Securities are not also to be included in such
underwritten offering (either because the Company has not been
requested so to include such Registrable Securities pursuant to
section 2.4 or, if requested to do so, is not obligated to do so under
section 2.4), and (iii) the managing underwriter of such underwritten
offering shall inform the holders of the Registrable Securities
requesting such registration by letter of its belief that the
distribution of all or a specified number of such Registrable
Securities concurrently with the securities being distributed by such
underwriters would interfere with the successful marketing of the
Common Stock being distributed by such underwriters (such writing to
state the basis of such belief and the approximate number of such
Registrable Securities which may be distributed without such effect),
then the Company may, upon written notice to all holders of such
Registrable Securities, reduce pro rata (if and to the extent stated
by such managing underwriter to be necessary to eliminate such effect)
the number of such Registrable Securities the registration of which
shall have been requested by each holder of Registrable Securities so
that the resultant aggregate number of such Registrable Securities so
included in such registration shall be equal to the number of shares
stated in such managing underwriter's letter.
2.3. REGISTRATION PROCEDURES. If and whenever the Company
is required by the provisions of this Agreement to use its best
efforts to effect or cause the registration of any Registrable
Securities under the Securities Act as provided in this Agreement, the
Company shall, as expeditiously as possible:
(a) prepare and file with the Securities and Exchange
Commission (in the case of a registration pursuant to section
2.1, such filing to be made within 60 days after the initial
request of one or more Qualified Holders of Registrable
Securities or in any event as soon thereafter as possible) the
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requisite registration statement with respect to such Registrable
Securities (including such audited financial statements as may be
required by the Securities Act or the rules and regulations
promulgated thereunder) and use its best efforts to cause such
registration statement to become and remain effective, PROVIDED
that before filing such registration statement or any amendments
thereto, the Company will furnish to the counsel selected by the
holders of Registrable Securities which are to be included in
such registration copies of all such documents proposed to be
filed, which documents will be subject to the review of such
counsel;
(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 maintain the effectiveness of such registration
statement and to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement until the earlier of 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 or (i) in the case of a
registration pursuant to section 2.1, the expiration of 180 days
after such registration statement becomes effective, or (ii) in
the case of a registration pursuant to section 2.2, the
expiration of 90 days after such registration statement becomes
effective, PROVIDED that if less than all the Registrable
Securities are withdrawn from registration after the expiration
of the relevant period, the shares to be so withdrawn shall be
allocated pro rata among the holders thereof on the basis of the
respective numbers of Registrable Securities held by them
included in such registration;
(c) furnish to each seller of Registrable Securities
covered by such registration statement and each underwriter, if
any, of the securities being sold by such seller such number of
copies of such registration statement and of each such amendment
and supplement thereto (in each case including all exhibits),
such number of copies of the prospectus included in
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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 and underwriter, if any, may reasonably request in
order to facilitate the public sale or other disposition of the
Registrable Securities owned by such seller;
(d) use its best efforts to register or qualify all
Registrable Securities covered by such registration statement
under such other securities laws or blue sky laws of such
jurisdictions as any seller and each underwriter, if any, of the
securities being sold by such seller shall reasonably request, to
keep such registrations or qualifications in effect for so long
as the registration statement remains in effect and do any and
all other acts and things which may be necessary or advisable to
enable such seller and underwriter, if any, to consummate the
disposition in such jurisdictions of such Registrable 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 would not but
for the requirements of this paragraph (d) be obligated to be
qualified, to subject itself to taxation in any such jurisdiction
or to consent to general service of process in any such
jurisdiction;
(e) use its best efforts to cause all Registrable
Securities covered by such registration statement to be
registered with or approved by such other governmental agencies
or authorities as may be necessary to enable the seller or
sellers thereof to consummate the disposition of such Registrable
Securities;
(f) notify each seller of Registrable 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 Company's becoming aware that 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
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the light of the circumstances then existing, and promptly
prepare and furnish to such seller and each underwriter, if any,
a reasonable number of copies of a prospectus supplemented or
amended so that, as thereafter delivered to the purchasers of
such Registrable Securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the
circumstances then existing;
(g) otherwise use its best efforts to comply with all
applicable rules and regulations of the Securities and Exchange
Commission, and make available to its security holders, as soon
as reasonably practicable, an earnings statement covering the
period of at least twelve months, but not more than eighteen
months, beginning with the first day of the Company's first
calendar quarter after the effective date of the registration
statement, which earnings statement shall satisfy the provisions
of section 11(a) of the Securities Act;
(h) provide a transfer agent and registrar for all such
Registrable Securities covered by such registration statement not
later than the effective date of such registration statement;
(i) enter into such agreements and take such other actions
as sellers of such Registrable Securities holding 51% of the
shares so to be sold shall reasonably request in order to
expedite or facilitate the disposition of such Registrable
Securities;
(j) furnish to each seller of Registrable Securities a
signed counterpart, addressed to such seller (and the
underwriters, if any), of
(i) an opinion of counsel for the Company, dated the
effective date of such registration statement (and, if such
registration includes an underwritten public offering, an
opinion dated the date of the closing under the underwriting
agreement), reasonably satisfactory in
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form and substance to such seller and
(ii) a "comfort" letter, dated the effective date of
such registration statement (and, if such registration
includes an underwritten public offering, a letter dated the
date of the closing under the underwriting agreement),
signed by the independent public accountants who have
certified the Company's financial statements included in
such registration statement,
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and,
in the case of the accountants' 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' letters delivered to the underwriters in
underwritten public offerings of securities and, in the case of
the accountants' letter, such other financial matters, as such
seller (or the underwriters, if any) may reasonably request;
(k) give the holders of Registrable Securities whose
Registrable Securities are registered under such registration
statement 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
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 statements as shall be necessary, in the
opinion of the respective counsel of such holders and such
underwriters, to conduct a reasonable investigation within the
meaning of the Securities Act; and
(l) use its best efforts to list all Registrable Securities
covered by such registration statement on each securities
exchange on which any of the securities of the same class as the
Registrable Securities are then listed.
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Each holder of Registrable Securities shall be deemed to
have agreed by acquisition of such Registrable Securities that upon
receipt of any notice from the Company of the occurrence of any event
of the kind described in paragraph (f) of this section 2.3, such
holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement covering
such Registrable Securities until such holder's receipt of the copies
of the supplemented or amended prospectus contemplated by paragraph
(f) of this section 2.3 and, if so directed by the Company, will
deliver to the Company (at the Company's expense) all copies, other
than permanent file copies, then in such holder'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 paragraph (b) of this section 2.3
shall be extended by the length of the period from 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 paragraph (f) of
this section 2.3.
If any such registration or comparable statement refers to
any holder by name or otherwise as the holder of any securities of the
Company then such holder shall have the right to require (i) the
insertion therein of language, in form and substance satisfactory to
such holder, to the effect that the holding by such holder of such
securities is not to be construed as a recommendation by such holder
of the investment quality of the Company's securities covered thereby
and that such holding does not imply that such holder will assist in
meeting any future financial requirements of the Company, or (ii) in
the event that such reference to such holder by name or otherwise is
not required by the Securities Act or any similar federal statute then
in force, the deletion of the reference to such holder. The Company
may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information
regarding such seller and the distribution of such securities as the
Company may from time to time reasonably request in writing.
If, in connection with any registration under section 2.1
which is proposed by the Company to be on Form S-3 or any similar
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short form registration statement which is a successor to Form S-3,
the managing underwriters, if any, shall advise the Company in writing
that in their opinion the use of another permitted form is of material
importance to the success of the offering, then such registration
shall be on such other permitted form.
2.4. UNDERWRITTEN OFFERINGS. (a) SELECTION OF
UNDERWRITERS. If a requested registration pursuant to section 2.1
involves an underwritten offering, the underwriter or underwriters
thereof shall be selected by the holders of at least a majority (by
number of shares) of the Registrable Securities as to which
registration has been requested and shall be acceptable to the
Company, which shall not unreasonably withhold its acceptance of such
underwriters.
(b) UNDERWRITING AGREEMENT. If requested by the
underwriters for any underwritten offering by holders of
Registrable Securities pursuant to a registration requested under
section 2.1, the Company will enter into an underwriting
agreement with such underwriters for such offering, such
agreement to be satisfactory in substance and form to the
Company, each such holder and the underwriters and to contain
such representations and warranties by the Company and such other
terms as are customarily contained in agreements of that type,
including, without limitation, indemnities to the effect and to
the extent provided in section 2.5. The holders of Registrable
Securities which are to be distributed by such underwriters shall
be parties to such underwriting agreement and may, at their
option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be
made to and for the benefit of such holders of Registrable
Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting
agreement be conditions precedent to the obligations of such
holders of Registrable Securities. Such holders of Registrable
Securities shall not be required to make any representations or
warranties to or agreements with the Company or the underwriters
other than representations, warranties or agreements regarding
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such holders and such holders' intended methods of distribution.
(c) INCIDENTAL UNDERWRITTEN OFFERINGS. If the Company at
any time proposes to register any of its Common Stock under the
Securities Act as contemplated by section 2.2 and such securities
are to be distributed by or through one or more underwriters, the
Company will, if requested by any holder of Registrable
Securities as provided in section 2.2, use its best efforts to
arrange for such underwriters to include all the Registrable
Securities to be offered and sold by such holder among the
securities to be distributed by such underwriters, PROVIDED that
if the managing underwriter of such underwritten offering shall
inform the holders of the Registrable Securities requesting such
registration and the holders of any other shares of Common Stock
which shall have exercised, in respect of such underwritten
offering, registration rights comparable to the rights under
section 2.2 by letter of its belief that inclusion in such
underwritten distribution of all or a specified number of such
Registrable Securities or of such other shares of Common Stock so
requested to be included would interfere with the successful
marketing of the Common Stock (other than such Registrable
Securities and other shares of Common Stock so requested to be
included) by the underwriters (such writing to state the basis of
such belief and the approximate number of such Registrable
Securities and shares of other Common Stock so requested to be
included which may be included in such underwritten offering
without such effect), then the Company may, upon written notice
to all holders of such Registrable Securities and of such other
shares of Common Stock so requested to be included, exclude pro
rata from such underwritten offering (if and to the extent stated
by such managing underwriter to be necessary to eliminate such
effect) the number of such Registrable Securities and shares of
such other Common Stock so requested to be included the
registration of which shall have been requested by each holder of
Registrable Securities and by the holders of such other Common
Stock so that the resultant aggregate number of such Registrable
Securities and of such other shares of Common Stock so requested
to be included which are included in such underwritten offering
shall be equal to the approximate number
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of shares stated in such managing underwriter's letter. The
holders of Registrable Securities whose Registrable Securities
are to be distributed by such underwriters shall be parties to
the underwriting agreement between the Company and such
underwriters and may, at their option, require that any or all of
the representations and warranties by, and the other agreements
on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such
holders of Registrable Securities and that any or all of the
conditions precedent to the obligations of such underwriters
under such underwriting agreement be conditions precedent to the
obligations of such holders of Registrable Securities. Such
holders of Registrable Securities shall not be required to make
any representations or warranties to or agreements with the
Company or the underwriters other than representations,
warranties or agreements regarding such holders and such holders'
intended methods of distribution.
(d) HOLDBACK AGREEMENTS. (i) Each holder of Registrable
Securities shall be deemed to have agreed by acquisition of such
Registrable Securities, if so required by the managing
underwriter, not to effect any public sale or distribution of
such securities during the seven days prior to and the 90 days
after any underwritten registration pursuant to section 2.1 or
2.2 has become effective, except as part of such underwritten
registration, whether or not such holder participates in such
registration.
(ii) The Company agrees (x) if so required by the managing
underwriter, not to effect any public sale or distribution of its
equity securities or securities convertible into or exchangeable
or exercisable for any of such securities during the seven days
prior to and the 90 days after any underwritten registration
pursuant to section 2.1 has become effective, except as part of
such underwritten registration and except in connection with a
stock option plan, stock purchase plan, managing directors' plan,
savings or similar plan, or an acquisition of a business, merger
or exchange of stock for stock, and (y) to cause each holder of
its equity securities or of any securities convertible into or
exchangeable or
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exercisable for any of such securities, in each case purchased
directly from the Company at any time after the date of this
Agreement (other than in a public offering), to agree not to
effect any such public sale or distribution of such securities
during such period, except as part of such underwritten
registration.
2.5. INDEMNIFICATION. (a) INDEMNIFICATION BY THE COMPANY.
In the event of any registration of any securities of the Company
under the Securities Act, the Company will, and hereby does,
indemnify and hold harmless in the case of any registration
statement filed pursuant to section 2.1 or 2.2, the holder of any
Registrable Securities which are covered by such registration
statement, its directors and officers, each other Person who
participates as an underwriter in the offering or sale of such
Registrable Securities and each other Person, if any, who
controls such holder or any such underwriter within the meaning
of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such holder or any such
director or officer or underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any
registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, and the Company will reimburse such holder and each
such director, officer, underwriter 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 (i) the Company
shall not be liable in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon an
untrue
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statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance upon and in conformity with
written information furnished to the Company specifically stating
that it is for use in the preparation thereof and (ii) the
provisions of this section 2.5(a) shall not inure to the benefit
of any underwriter (or any person controlling such underwriter)
on account of any losses, claims, damages, liabilities or actions
arising from the sale of securities to any Person if such
underwriter failed to send or give a copy of the related
prospectus, as the same may be then amended or supplemented, to
such Person within the time required by the Securities Act. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such holder or any such
director, officer, underwriter or controlling person and shall
survive the transfer of such securities by such holder.
(b) INDEMNIFICATION BY THE SELLERS. The Company may
require, as a condition to including any Registrable Securities
in any registration statement filed pursuant to section 2.3, that
the Company shall have received an undertaking satisfactory to it
from the prospective seller of such securities, to indemnify and
hold harmless (in the same manner and to the same extent as set
forth in subdivision (a) of this section 2.5) the Company, each
director of the Company, each officer of the Company and each
other person, if any, who controls the Company within the meaning
of the Securities Act, with respect to any statement or alleged
statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the
Company through an instrument duly executed by such seller
specifically stating that it is for use in the preparation of
such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. Such
indemnity shall
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remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any such director, officer
or controlling person and shall survive the transfer of such
securities by such seller.
(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
subdivisions of this section 2.5, 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 herein shall not relieve the
indemnifying party of its obligations under the preceding
subdivisions of this section 2.5, except to the extent that the
indemnifying party is actually prejudiced by such failure to give
notice. Incase any such action is brought against an indemnified
party, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, the indemnifying
party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party
similarly notified, to the extent that it may wish, with counsel
reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs
of investigation. No indemnifying party shall consent to entry
of any judgment or enter into any settlement without the consent
of the indemnified party or 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, or a covenant not to sue, in respect of such claim or
litigation. No indemnified party shall consent to entry of any
judgment or enter into any settlement of any such action the
defense of which has been assumed by an indemnifying party
without the consent of such indemnifying party.
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(d) OTHER INDEMNIFICATION. Indemnification similar to that
specified in the preceding subdivisions of this section 2.5 (with
appropriate modifications) shall be given by the Company and each
seller of Registrable Securities with respect to any required
registration or other qualification of such Registrable
Securities under any federal or state law or regulation of any
governmental authority, other than the Securities Act.
(e) PAYMENTS. The indemnification required by this section
2.5 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when
bills are received or expense, loss, damage or liability is
incurred.
3. GENERAL.
3.1 ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The
Company agrees that it shall not effect or permit to occur any
combination or subdivision of shares which would adversely affect the
ability of the holder of any Registrable Securities to include such
Registrable Securities in any registration contemplated by this
Agreement or the marketability of such Registrable Securities in any
such registration.
3.2 RULE 144. If the Company shall have filed a
registration statement pursuant to the requirements of section 12 of
the Exchange Act or a registration statement pursuant to the
requirements of the Securities Act, the Company covenants that it will
timely file the reports required to be filed by it under the
Securities Act or the Exchange Act (including but not limited to the
reports under sections 13 and 15(d) of the Exchange Act referred to in
subparagraph (c)(1) of Rule 144 adopted by the Securities and Exchange
Commission under the Securities Act) and the rules and regulations
adopted by the Securities and Exchange Commission thereunder, and will
take such further action as any holder of Registrable Securities may
reasonably request, all to the extent required from time to time to
enable such holder to sell Registrable Securities without registration
under the Securities Act within the
55
limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (ii)
any similar rule or regulation hereafter adopted by the Securities and
Exchange Commission. Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
3.3 NOMINEES FOR BENEFICIAL OWNERS. In the event that
Registrable Securities are held by a nominee for the beneficial owner
thereof, the beneficial owner thereof may, at its option, be treated
as the holder of such Registrable Securities for purposes of any
request or other action by any holder or holders of Registrable
Securities pursuant to this Agreement (or any determination of any
number or percentage of shares constituting Registrable Securities
held by any holder or holders of Registrable Securities contemplated
by this Agreement).
3.4 STOCKHOLDERS AGREEMENT. Notwithstanding anything above
to the contrary, all transfers of Registrable Securities subject to
the provisions of the Stockholders Agreement shall, during the term
thereof, be made in accordance with said provisions.
3.5 AMENDMENTS AND WAIVERS. Any term of this Agreement may
be amended and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the
Company, Teachers and the holders of 60% or more of the shares of
Common Stock originally issued pursuant to the Common Stock
Subscription Agreement, or issued in exchange or substitution
therefor, at the time outstanding. Each holder of any shares of
Common Stock at the time or thereafter outstanding shall be bound by
any consent authorized by this section 3.5, whether or not such shares
of Common Stock shall have been marked to indicate such consent. The
Company will not consent to any modification, supplement or waiver in
connection with the registration rights provisions of the Purchase
Agreement.
3.6 NOTICES. Except as otherwise provided in this
Agreement, notices and other communications under this Agreement
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shall be in writing and shall be delivered, or mailed by first-class
mail, postage prepaid, addressed, (a) if to a party other than the
Company, to such party at the address set forth in the Schedule of
Stockholders attached to this Agreement, or at such other address as
such party shall have furnished to the Company in writing and (b) if
to the Company, at 40 N.E. Loop 410, San Antonio, Texas 78216, to the
attention of its Secretary, or at such other address, or to the
attention of such other officer, as the Company shall have furnished
to each holder of Registrable Securities at the time outstanding.
3.7 CERTAIN DEFINITIONS. As used in this Agreement, the
following terms have the following respective meanings:
ACQUIRING CORP.: As defined in section 1 of this Agreement.
CLASS A COMMON STOCK: As defined in section 1 of this
Agreement.
CLASS B COMMON STOCK: As defined in section 1 of this
Agreement.
COMMON STOCK: As defined in section 1 of this Agreement.
COMMON STOCK SUBSCRIPTION AGREEMENT: As defined in section
1 of this Agreement.
COMPANY: As defined in the first paragraph of this
Agreement.
EXCHANGE ACT: The Securities Exchange Act of 1934, or any
similar federal statute, and the rules and regulations of the
Securities and Exchange Commission thereunder, all as the same shall
be amended from time to time.
INVESTOR GROUP: As defined in section 1 of this Agreement.
MARKET PRICE: The last sale price, regular way, of the
Common Stock on any date, or, if there shall have been no sale on any
57
such date, the average of the closing bid and asked prices of the
Common Stock on such date, in each case as officially reported on the
principal national securities exchange on which the Common Stock is at
the time listed or admitted to trading, or if the Common Stock is not
then listed or admitted to trading on any national securities exchange
but is designated as a national market system security by the NASD,
the last trading price of the Common Stock on such date, or if there
shall have been no trade on such date or if the Common Stock is not so
designated, the average of the closing bid and asked prices of the
Common Stock on such date as shown by the NASD automated quotation
system. If at any time the Common Stock is not listed on any exchange
or quoted in the domestic over-the-counter market, the "Market Price"
shall be deemed to be the fair value thereof, as determined in good
faith by an independent brokerage firm selected by the Company and
satisfactory to holders of a majority of the Registrable Securities in
respect of which a request for registration under section 2.1 has been
made, as of a date which is within 15 days preceding the date as of
which the determination is to be made.
NASD: The National Association of Securities Dealers, Inc.
PERSON: A corporation, an association, a partnership, an
organization, a business, an individual, a government or political
subdivision thereof or a governmental agency.
PURCHASE AGREEMENT: As defined in section 1 of this
Agreement.
QUALIFIED HOLDERS: Any holder or holders of Registrable
Securities making a written request pursuant to section 2.1 for the
registration of all or part of the Registrable Securities held by such
holder or holders if on the date of such request (a) the Market Price
of such Registrable Securities to be registered exceeds $40,000,000
and (b) the number of shares of such Registrable Securities to be
registered is equal to or greater than 10% of the number of shares of
Common Stock at the time outstanding.
REGISTRABLE SECURITIES: All shares of Class A Common Stock
issued or issuable pursuant to the Common Stock Subscription
58
Agreement or the Purchase Agreement, upon exercise of any Warrants or
upon conversion of any shares of Class B Common Stock issued pursuant
to the Purchase Agreement or upon exercise of any Warrants, including
any securities issued or issuable with respect to such shares of
Common Stock or Warrants by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise, except for shares
of Common Stock which have been distributed to the public pursuant to
a registration statement or Rule 144 (or any successor provision)
under the Securities Act. Holders of Warrants or shares of Class B
Common Stock shall be deemed to be holders of the Registrable
Securities which are at the time issuable upon exercise of such
Warrants or upon conversion of such shares of Class B Common Stock.
REGISTRATION EXPENSES: All expenses incident to the
Company's performance of or compliance with section 2, including,
without limitation, all registration, filing and NASD fees, all fees
and expenses of complying with securities or blue sky laws, all
printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits and/or "cold
comfort" letters required by or incident to such performance and
compliance, the fees and disbursements of a single counsel retained by
the holders of the Registrable Securities being registered (or, if
Teachers has requested the registration of Registrable Securities in
connection with a registration under section 2, at Teachers' election,
one counsel for Teachers and one counsel for all other holders of
Registrable Securities being registered) and any fees and
disbursements of underwriters customarily paid by issuers or sellers
of securities, but excluding underwriting discounts and commissions
and transfer taxes, if any, PROVIDED that, in any case where
Registration Expenses are not to be borne by the Company, such
expenses shall not include salaries of Company personnel or general
overhead expenses of the Company, and shall not include auditing fees,
premiums or other expenses relating to liability insurance required by
underwriters or the Company, or other expenses for the preparation of
financial statements or other data normally prepared by the Company in
the ordinary course of its business or which the Company would have
incurred in any event.
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SECURITIES ACT: The Securities Act of 1933, or any similar
federal statute, and the rules and regulations of the Securities and
Exchange Commission thereunder, all as the same shall be amended from
time to time.
SECURITIES AND EXCHANGE COMMISSION: The U.S. Securities and
Exchange Commission, or any other federal agency at the time
administering the Exchange Act or the Securities Act, whichever is the
relevant statute for the particular purpose.
STOCKHOLDERS AGREEMENT: The Stockholders Agreement, dated
as of the date of this Agreement, in the form set forth as Exhibit I
to the Purchase Agreement.
TEACHERS: As defined in section 1 of this Agreement.
WARRANTS: As defined in section 1 of this Agreement.
3.8 MISCELLANEOUS. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties thereto, whether so expressed or
not. This Agreement embodies the entire agreement and understanding
between the Company and each other party hereto and supersedes all
prior agreements and understandings relating to the subject matter
hereof. This Agreement shall be construed and enforced in accordance
with and governed by the law of the State of Delaware, without
reference to the principles of the conflicts of laws thereof. The
headings in this Agreement are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof. This
Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be duly executed on the date first written above.
HH HOLDING INC.
By /s/ Donald R. Crews
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By /s/ Kent M. Phillips
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