AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
BY AND AMONG
ABC-NACO INC.,
AND
THE INVESTORS SET FORTH HEREIN
DATED AS OF JUNE 25, 2001
i
TABLE OF CONTENTS
Section 1. Definitions. 3
Section 2. Covenants of the Corporation Not Surviving Conversion. 7
Section 3. Covenants of the Corporation Surviving Conversion. 8
Section 4. Registration Rights. 8
Section 5. Management Rights. 24
Section 6. Severability; Governing Law. 25
Section 7. Benefits of Agreement. 26
Section 8. Notices. 26
Section 9. Changes. 27
Section 10. Captions. 28
Section 11. Nouns and Pronouns. 28
Section 12. Merger Provision. 28
Section 13. Counterparts. 28
35
AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT
THIS IS AN AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT, (this
"Agreement"), dated as of this 25th day of June, 2001, by and among ABC-NACO
INC., a Delaware corporation (the "Corporation"), having its principal office at
2001 Butterfield Road, Suite 502, Downers Grove, Illinois 60515, and the
investors set forth on Schedule I hereto (individually referred to as an
"Investor" and collectively as the "Investors").
BACKGROUND
A. The Corporation is a corporation duly organized and existing under
the laws of the State of Delaware with an authorized capitalization of
101,000,000 shares of which (i) 1,000,000 shares are authorized as Preferred
Stock (as defined below), of which (a) 100,000 shares have been designated
Series A Preferred Stock, none of which are issued and outstanding; (b) 300,000
shares have been designated Series B Preferred Stock (as defined below), none of
which are issued and outstanding; (c) 325,000 shares have been designated Series
B-1 Preferred Stock (as defined below) 317,097.62 are issued and outstanding as
of this date and (c) 150,000 shares have been designated Series C Preferred
Stock (as defined below) all of which are issued and outstanding as of this
date; and (ii) 100,000,000 shares are authorized as Common Stock (as defined
below). All of the shares of Series B Preferred Stock were retired upon
consummation of the exchange of the Series B Preferred Stock for shares of
Series B-1 Preferred Stock pursuant to the Exchange Agreement.
B. The Corporation and the Investors have entered into the Series C Stock
Purchase Agreement (as defined below).
C. The Investors currently own 317,097.62 shares of Series B-1 Preferred
Stock and, in connection with the Closing of the Series C Stock Purchase
Agreement, that number of shares of the Corporation's Series C Preferred Stock
(including any shares hereafter acquired by the Investors, and their successors
or assigns from any person by any means, including without limitation, any
acquisition by gift, purchase, dividend, conversion, stock split,
recapitalization or otherwise, collectively, the "Shares") set forth opposite
the name of each Investor on Schedule I attached hereto. It is deemed to be in
the best interest of the Corporation that provision be made for the continuity
and stability of the business and policies of the Corporation and, to that end,
the Corporation and each of the Investors hereby set forth their agreement with
respect to the Shares.
NOW, THEREFORE, in consideration of the premises and of the mutual consents and
obligations hereinafter set forth, the parties hereto hereby further agree as
follows:
Section 1. Definitions. All capitalized terms used in this Agreement
shall have the meaning assigned to them elsewhere in this Agreement or as
specified below:
"Additional Warrant" means the Additional Closing Common Stock
Purchase Warrant of the Company issued pursuant to the Series C Purchase
Agreement, in the form attached hereto as Exhibit D-1 hereto.
"Affiliate" of a person means (i) a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by or is under
common control with, the first mentioned person, and (ii) "associate", as the
term is defined in Rule 12b-2 promulgated under the Exchange Act as in effect as
of the date of this Agreement.
"Amended Restated Certificate of Incorporation" means the Corporation's Restated
Certificate of Incorporation, as amended to date and as amended by the
Certificate of Amendment thereto, filed in the Office of the Secretary of State
of the State of Delaware, a copy of which is attached hereto as Exhibit A.
"Closing" means the closing of the transactions contemplated under the Series C
Stock Purchase Agreement.
"Closing Date" means the date on which the Closing under the Series C Stock
Purchase Agreement occurs.
"Closing Warrant" means the Closing Common Stock Purchase Warrant of the Company
issued pursuant to the Series C Purchase Agreement, in the form attached hereto
as Exhibit D-2 hereto.
"Commission" means the United States Securities and Exchange Commission.
"Common Stock" means (a) the Corporation's Common Stock, par value $.0l per
share, as authorized on the date of this Agreement, (b) any other capital stock
of any class or classes (however designated) of the Corporation, authorized on
or after the date hereof, the holders of which shall have the right, without
limitation as to amount, either to all or to a share of the balance of current
dividends and liquidating distributions after the payment of dividends and
distributions on any shares entitled to preference under the Amended Restated
Certificate of Incorporation (as the same may be amended from time to time after
the Closing), and (c) any other securities into which or for which any of the
securities described in clause (a) or (b) of this definition may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger, sale
of assets or otherwise.
"Conversion Price" means (a) with respect to the conversion of the Series B-1
Preferred Stock to Common Stock, $9.00, as may be adjusted from time to time in
accordance with the provisions of the Series B-1 Certificate of Designation, and
(b) with respect to the conversion of the Series C Preferred Stock to Common
Stock, $2.50, as may be adjusted from time to time in accordance with the
provisions of the Series C Certificate of Designation.
"Default Dividends" shall have the meaning set forth in the Series C Certificate
of Designation.
"Documents" means this Agreement, the Series C Stock Purchase Agreement, the
Series B-1 Certificate of Designation, the Series C Certificate of Designation
and the Exchange Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder, all as the same
shall be in effect at the time.
"Exchange Act Registration Statement" means a registration statement filed
pursuant to the Exchange Act, relating to any class of equity securities of the
Corporation.
"Exchange Agreement" shall mean the Exchange Agreement dated as of April 17th,
2001, between the Company and the holders of Series B Preferred Stock named
therein.
"Excluded Form" means a registration statement filed pursuant to the Securities
Act on Form S-8, S-4 or any similar or successor forms.
"Form S-3" shall mean the form under the Securities Act as is in effect on the
date hereof or any successor registration forms under the Securities Act
subsequently adopted by the Commission which permit inclusion or incorporation
of substantial information by reference to other documents filed by the
Corporation with the Commission.
"Holder" shall mean any holder of Series B-1 Preferred Stock or Series C
Preferred Stock owning of record Registrable Securities that have not been sold
to the public and, for purposes of this Agreement, a record holder of the Series
B-1 Preferred Stock or Series C Preferred Stock convertible into such
Registrable Securities shall be deemed to be the Holder of such Registrable
Securities; provided, however, that the Corporation shall in no event be
obligated to register the Series B-1 Preferred Stock or Series C Preferred
Stock, and that Holders of Registrable Securities shall not be required to
convert their shares of Series B-1 Preferred Stock or Series C Preferred Stock
into Common Stock in order to exercise the registration rights granted under
Section 4 hereof, until immediately before the effectiveness of the offering to
which the registration relates.
"Initiating Holders" shall have the meaning set forth in Section 4(d)(ii)
hereof.
"Material Adverse Effect" shall mean (i) any adverse change in the condition
(financial or otherwise), assets (including without limitation tangible and
intangible assets), liabilities, business, or results of operations or prospects
of the Company or any of its Subsidiaries, which change, individually or in the
aggregate, is material to the Company and its Subsidiaries taken as a whole, or
(ii) any event, matter, condition or effect which materially adversely impairs
the ability of the Company to perform on a timely basis its obligations under
this Agreement or the Company to consummate the transactions contemplated by
this Agreement.
"NASD" shall have the meaning set forth in Section 4(c)(xiv) hereof.
"NASDAQ" means the NASDAQ National Market.
"NYSE" means the New York Stock Exchange.
"Person" means and includes an individual, a corporation, a partnership, a
trust, an unincorporated organization and a government or any department, agency
or political subdivision thereof.
"Preferred Stock" shall mean the Corporation's Series B-1 Preferred Stock and
Series C Preferred Stock.
"Register," "registered" and "registration" shall refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement.
"Registrable Securities" means: (a) all the shares of Common Stock of the
Corporation issued or issuable upon the conversion of the shares of Series B-1
Preferred Stock or Series C Preferred Stock that are now owned or may hereafter
be acquired by any Holder or its permitted successors and assigns; (b) all
shares of Common Stock of the Corporation issued or issuable upon the exercise
of the Closing Warrant or the Additional Warrant that are now owned or may
hereafter be acquired by any Holder or its permitted successors and assigns; and
(c) any shares of Common Stock of the Corporation issued as (or issuable upon
the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of all such shares of Common Stock described in clause (a) of
this definition; excluding in all cases, however, (i) any Registrable Securities
sold pursuant to registration under the Securities Act or (ii) any Registrable
Securities publicly sold, subsequent to the Corporation's initial public
offering of securities registered under the Securities Act, pursuant to Rule 144
(or similar or successor rule) promulgated under the Securities Act.
"Registrable Securities then outstanding" means the number of shares of
Registrable Securities that are then issued and outstanding or are then issuable
pursuant to the exercise or conversion of then outstanding and then exercisable
options, warrants or convertible securities.
"Registration Expenses" shall have the meaning set forth in Section 4(d) hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder, all as the same
shall be in effect at the time.
"Series B Preferred Stock" shall mean the Corporation's authorized 300,000
shares of Series B Preferred Stock, par value $1.00 per share, all of which were
retired upon consummation of the exchange of shares of Series B Preferred Stock
for shares of Series B-1 Preferred Stock pursuant to the Exchange Agreement.
"Series B-1 Certificate of Designation" shall mean the Certificate of
Designation of Series B-1 Cumulative Convertible Participating Preferred Stock
of the Corporation. A copy of the Series B-1 Certificate of Designation is
attached hereto as Exhibit B.
"Series B-1 Preferred Stock" shall mean the Corporation's authorized 325,000
shares of Series B Cumulative Convertible Preferred Stock, par value $ 1.00 per
share, having the designations, rights, preferences and privileges and
qualifications, limitations and restrictions of preferred stock set forth in the
Series B-1 Certificate of Designation.
"Series B Stock Purchase Agreement" shall mean the Preferred Stock Purchase
Agreement dated as of February 18, 2000, by and among the Corporation and
certain of the Investors, as the same may be amended from time to time.
"Series C Certificate of Designation" shall mean the Certificate of Designation
of Series C Cumulative Convertible Participating Preferred Stock of the
Corporation. A copy of the Series C Certificate of Designation is attached
hereto as Exhibit C.
"Series C Preferred Stock" shall mean the Corporation's authorized 150,000
shares of Series C Cumulative Convertible Preferred Stock, par value $ 1.00 per
share, having the designations, rights, preferences and privileges and
qualifications, limitations and restrictions of preferred stock set forth in the
Series C Certificate of Designation.
"Series C Stock Purchase Agreement" shall mean the Series C Preferred Stock and
Common Stock Warrant Purchase Agreement dated as of April 17, 2001 by and among
the Corporation and certain of the Investors, as the same may be amended from
time to time.
"Subsidiaries" shall mean, when used with reference to a person, means a
corporation or limited liability company, the majority of the outstanding voting
securities or membership interests of which are owned directly or indirectly by
such person.
"Violation" shall have the meaning set forth in Section 4(i)(i) hereof.
Section 2. Covenants of the Corporation Not Surviving Conversion. So
long as any shares of the Preferred Stock are outstanding, the Corporation
hereby covenants and agrees as follows:
(a) Reserve for Reserved Shares. The Corporation currently has
reserved an aggregate of 22 Million (22,000,000) shares of its authorized but
unissued Common Stock for purposes of effecting the conversion of the shares of
Preferred Stock and paying the Investors dividends in Common Stock. The
Corporation shall at all times take appropriate steps to reserve and keep
available out of its authorized but unissued shares of Common Stock, for the
purpose of effecting the conversion of the shares of Preferred Stock, paying the
Investors dividends in Common Stock and paying Default Dividends in respect
to the Preferred Stock in accordance with the Series B-1 Certificate of
Designation and Series C Certificate of Designation, and otherwise complying
with the terms of this Agreement, such additional number of its duly authorized
but unissued shares of Common Stock as shall be sufficient to effect the
conversion of the shares of Preferred Stock from time to time outstanding, or
otherwise to comply with the terms of this Agreement. If at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of the shares of Preferred Stock, or otherwise to comply
with the terms of this Agreement or either the Series B-1 Certificate of
Designation or the Series C Certificate of Designation, the Corporation shall
forthwith take such corporate action as may be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes. The Corporation shall obtain any
authorization, consent, approval or other action by or make any filing with any
court or administrative body that may be required under applicable state
securities laws in connection with the issuance of shares of Common Stock upon
conversion of the shares of Preferred Stock.
(b) Rule 144. As set forth in Section 4(k) hereto, the Corporation
shall take all necessary action to comply with the requirements of Rule 144
under the Securities Act.
Section 3. Covenants of the Corporation Surviving Conversion. At all
times from the date of this Agreement the Corporation hereby agrees to the
following covenants:
(a) NASDAQ Listing. The Corporation shall take all actions necessary
or appropriate to ensure that the shares of stock issuable upon conversion of
the Series B-1 Preferred Stock and Series C Preferred Stock are listed or
authorized to be quoted on the NASDAQ or listed on any national securities
exchange on which shares of Common Stock are then listed. The Corporation will
take all actions necessary or appropriate to ensure that it maintains a public
market for its Common Stock on NASDAQ or the NYSE.
(b) Meetings with Management. The Corporation shall arrange for and
make available members of its executive management to meet with the Investors
and their representatives, at such times as the Investors shall reasonably
request, but no less frequently than on a quarterly basis (if so requested), to
discuss with the Investors and their representatives the Corporation's business,
results of operations, financial statements, prospects and any other topics or
issues that the Investors may reasonably request to be reviewed and discussed at
such meetings.
(c) Registration Rights. The Corporation shall take all necessary
action to give effect to the registration rights set forth in Section 4 hereto.
(d) Securities Filings. The Corporation shall take all necessary or
appropriate actions requested by the Investors to assist the Investors in
complying with the Investors' obligations to make any and all securities filings
under the Exchange Act, the Securities Act or the applicable state securities
laws of any state required in connection with the transactions contemplated
herein.
Section 4. Registration Rights.
(a) Restrictive Legend. Each certificate for the Preferred Stock and
each certificate for any such securities issued to subsequent transferees of any
such certificate shall be stamped or otherwise imprinted with the following
legend and shall not be transferable except in compliance with or a valid
exception from the Securities Act and applicable state "blue sky" laws:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW. THESE SECURITIES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW."
(b) Shelf Registration.
(i) The Corporation shall, at its sole cost and expense, file with the
Commission and thereafter shall use its best efforts to cause to be declared
effective, not later than ninety (90) calendar days after the Closing Date, a
registration statement (the "Shelf Registration Statement"), on a Form S-3 or
any successor form thereto, if the Company is then eligible, relating to the
offer and sale of the shares of Common Stock issuable upon conversion of the
shares of Preferred Stock and Common Stock issuable in respect of any dividends
described in the Series B-1 Certificate of Designation on the shares of
Preferred Stock (the "Securities") by the Holders thereof, from time to time, in
accordance with the methods of distribution set forth in the Shelf
Registration Statement and Rule 415 under the Securities Act (hereinafter, the
"Shelf Registration"); provided, however, that no Holder of Securities (other
than the Investors) shall be entitled to have the Securities covered by such
Shelf Registration Statement unless such Holder of Securities agrees in writing
to be bound by all the provisions of this Agreement applicable to such Holder of
Securities.
(ii) The Corporation shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the prospectus
included therein to be lawfully delivered by the Holders of Securities until all
the shares of Securities covered by the Shelf Registration Statement have been
sold pursuant thereto. The Corporation shall be deemed not to have used its
best efforts to keep the Shelf Registration Statement effective during the
requisite period if it voluntarily takes any action that would result in Holders
of the Securities covered thereby not being able to offer and sell such
Securities during that period, unless such action is required by applicable
law.
(iii) Notwithstanding any other provisions of this Agreement to the
contrary, the Corporation shall cause the Shelf Registration Statement and the
related prospectus and any amendment or supplement thereto, as of the effective
date of the Shelf Registration Statement, amendment or supplement, (A) to comply
in all material respects with the applicable requirements of the Securities Act
and the rules and regulations of the Commission and (B) not to contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(c) Shelf Registration Procedures. In connection with any Shelf
Registration contemplated by Section 4(b) hereof, the following provisions shall
apply:
(i) The Corporation shall (A) furnish to the Investors and each Holder
of Securities, if applicable, prior to the filing thereof with the Commission, a
copy of the Shelf Registration Statement and each amendment thereof and
each supplement, if any, to the prospectus included therein and, in the event
that the Investors or any Holder of Securities, if applicable, is participating
in the Shelf Registration Statement, shall use its best efforts to reflect in
each such document, when so filed with the Commission, such comments as such
Investors or any Holder of Securities, if applicable, reasonably may propose;
and (B) include the names of the Holders of Securities who propose to sell
Securities pursuant to the Shelf Registration Statement as selling security
holders.
(ii) The Corporation shall advise (and confirm such advice in writing
if requested by the recipient of the advice) the Investors and the Holders of
Securities, if applicable:
(A) when the Shelf Registration Statement or any amendment thereto has
been filed with the Commission and when the Shelf Registration Statement or any
post-effective amendment thereto has become effective;
(B) of any request by the Commission for amendments or supplements to
the Shelf Registration Statement or the prospectus included therein or for
additional information;
(C) of the issuance by the Commission of any stop order suspending the
effectiveness of the Shelf Registration Statement or the initiation of any
proceedings for that purpose;
(D) of the receipt of the Corporation or its legal counsel of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(E) of the happening of any event that requires the Corporation to make
changes in the Shelf Registration Statement or the prospectus in order that the
Shelf Registration Statement or the prospectus does not contain an untrue
statement of a material fact nor omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
(iii) The Corporation shall use its best efforts to obtain the
withdrawal at the earliest possible time of any order suspending the
effectiveness of the Shelf Registration Statement.
(iv) The Corporation shall furnish to each Holder of Securities
included within the coverage of the Shelf Registration, without charge, at least
one copy of the Shelf Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, and, if the Holder of
Securities so requests in writing, all exhibits thereto (including those, if
any, incorporated by reference).
(v) The Corporation shall deliver to each Holder of Securities included
within the coverage of the Shelf Registration, without charge, as many copies of
the prospectus (including each preliminary prospectus) included in the Shelf
Registration Statement and any amendment or supplement thereto as such person
may reasonably request. The Corporation consents, subject to the provisions of
this Agreement, to the use of the prospectus or any amendment or supplement
thereto included in the Shelf Registration Statement by each of the selling
Holders of the Securities in connection with the offering and sale of the
Securities covered by such prospectus or any such amendment or supplement.
(vi) Prior to any public offering of the shares of Securities, pursuant
to any Shelf Registration Statement, the Corporation shall register or qualify
or cooperate with the Holders of Securities included therein and their
respective counsel in connection with the registration or qualification of the
Securities for offer and sale under the securities or "blue sky" laws of such
states of the United States as any Holder of Securities covered by such Shelf
Registration Statement; provided, however, that the Corporation shall not be
required to (A) qualify generally to do business in any jurisdiction where it is
not then so qualified or (B) take any action which would subject it to general
service of process or to taxation in any jurisdiction where it is not then so
subject.
(vii) The Corporation shall cooperate with the Holders of Securities to
facilitate the timely preparation and delivery of certificates representing the
Securities to be sold pursuant to any Shelf Registration Statement free of any
restrictive legends and in such denominations and registered in such names as
the Holders of Securities may request a reasonable period of time prior to sales
of the Securities pursuant to such Shelf Registration Statement.
(viii) Upon the occurrence of any event contemplated by paragraphs (B)
through (E) of Section 4(c)(ii) above during the period for which the
Corporation is required to maintain an effective Shelf Registration Statement,
the Corporation shall promptly prepare and file a post-effective amendment to
the Shelf Registration Statement or a supplement to the related prospectus and
any other required document so that, as thereafter delivered to Holders of
Securities, the prospectus will not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. If the Corporation notifies the Investors
and the Holders of Securities then Investors, and the Holders of Securities
shall suspend use of such prospectus, and the period of effectiveness of the
Shelf Registration Statement provided for in Section 4(b) above shall be
extended by the number of days from and including the date of the giving of such
notice to and including the date when the Investors and the Holders of
Securities shall have received such amended or supplemented prospectus pursuant
to this Section 4(c)(viii).
(ix) The Corporation will comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the Shelf
Registration and will make generally available to its security holders (or
otherwise provide in accordance with Section 11(a) of the Securities Act) an
earnings statement (which need not be audited) satisfying the provisions of
Section 11(a) of the Securities Act, no later than forty-five (45) calendar days
after the end of a 12-month period (or ninety (90) calendar days, if such period
is a fiscal year) beginning with the first month of the Corporation's first
fiscal quarter commencing after the effective date of the Registration
Statement, which statement shall cover such 12-month period.
(x) Each Holder of Securities to be sold pursuant to the Shelf
Registration Statement shall furnish to the Corporation such information
regarding the Holder and the distribution of the Securities as the Corporation
may from time to time reasonably require and request for inclusion in the Shelf
Registration Statement (and shall promptly correct any information previously
furnished if the inclusion of such information in such Shelf Registration
Statement would be materially misleading), and the Securities of any Holder that
unreasonably fails to furnish such information that unreasonably fails to
furnish such information within a reasonable time after receiving such request.
(xi) The Corporation shall enter into such customary agreements
(including if requested an underwriting agreement in customary form) and take
all such other action, if any, as any Holder of Securities shall reasonably
request in order to facilitate the disposition of the Securities pursuant to any
Shelf Registration. If an underwriting agreement is entered into pursuant to
this paragraph, the Corporation shall cause any such agreement to contain
indemnification provisions and procedures substantially similar to those set
forth in Section 4(i) hereof (or such other procedures acceptable to the Holders
of a majority of the aggregate principal amount of the Securities registered
under the applicable Shelf Registration Statement and the managing underwriters,
if any) with respect to all parties to be indemnified pursuant to Section 4(i)
hereof.
(xii) In the case of any Shelf Registration, the Corporation shall (A)
make reasonably available for inspection by the Holders of Securities, any
underwriter participating in any disposition pursuant to the Shelf Registration
Statement and any attorney, accountant or other agent retained by the Holders of
Securities or any such underwriter all relevant financial and other records,
pertinent corporate documents and properties of the Corporation and (B) cause
the Corporation's officers, directors, employees, accountants and auditors to
supply all relevant information reasonably requested by the Holders of
Securities or any such underwriter, attorney, accountant or agent in connection
with the Shelf Registration Statement, in each case as shall be reasonably
necessary, in the judgment of the Holder or any such underwriter, attorney,
accountant or agent referred to in this paragraph, to conduct a reasonable
investigation within the meaning of Section 11 of the Securities Act; provided,
however, that the foregoing inspection and information gathering shall be
coordinated on behalf of the Investors and Holders of Securities by one counsel
designated by and on behalf of such other parties; and provided, further, that
as to any information that is designated in writing by the Corporation, in good
faith, as confidential at the time of delivery, such information shall be kept
confidential by the Holders of Securities or by any such underwriter, attorney,
accountant or other agent.
(xiii) In the case of any Shelf Registration, (A) the Corporation, if
reasonably requested by Holders of a majority of the Securities covered by such
Shelf Registration, which request shall not be more frequent than once per
fiscal quarter, shall cause its counsel to deliver an opinion and updates
thereof relating to the Securities in customary form addressed to such Holders
of Securities and dated, in the case of the initial opinion, the effective date
of such Shelf Registration Statement, provided such opinion is requested prior
to the effective date (it being agreed that the matters to be covered by such
opinion shall include such matters as are customarily included in opinions
requested in underwritten offerings); and (B) the Corporation, if requested by
any majority of Holders of Securities covered by such Shelf Registration, shall
cause its officers to execute and deliver all customary documents and
certificates and updates thereof reasonably requested.
(xiv) In the event that any broker-dealer registered under the Exchange
Act shall underwrite any Securities or participate as a member of an
underwriting syndicate or selling group or "assist in the distribution" (within
the meaning of the Rules of Fair Practice and the By-Laws of the National
Association of Securities Dealers, Inc. ("NASD")) thereof, whether as a Holder
of such Securities or as an underwriter, a placement or sales agent or a broker
or dealer in respect thereof, or otherwise, the Corporation shall use its best
efforts to assist such broker-dealer in complying with the requirements of such
Rules and By-Laws, including, without limitation, by (A) if such Rules or
By-Laws shall so require, engaging a "qualified independent underwriter" (as
defined in Section 2720 thereof) to participate in the preparation of the
Registration Statement relating to such Securities, to exercise usual standards
of due diligence in respect thereto and, if any portion of the offering
contemplated by such Shelf Registration Statement is an underwritten offering or
is made through a placement or sales agent, to recommend the yield of such
Securities, (B) indemnifying any such qualified independent underwriter to the
extent of the indemnification of underwriters provided in Section 4(i) hereof,
and (C) providing such information to such broker-dealer as may be required in
order for such broker-dealer to comply with the requirements of the Rules of
Fair Practice of the NASD.
(xv) The Corporation shall use its best efforts to take all other steps
necessary to effect the registration of the Securities covered by a Shelf
Registration Statement contemplated hereby.
(d) Demand Registration. In addition to the Shelf Registration
referred to in Section 4(b) hereof, the Holders of at least thirty-three (33%)
of the Registrable Securities then outstanding may elect to require the
Corporation to effect, at the Corporation's sole cost and expense, a
registration of Registrable Securities under this Section 4(d) (the "Holders'
Demand Request"):
(i) If the Corporation receives the Holders' Demand Request that the
Corporation file a registration statement on Form S-1 or S-3 (or similar
successor forms) under the Securities Act covering the registration of the
Registrable Securities, then the Corporation shall, within ten (10) business
days after the receipt thereof, give written notice of such request to all
Holders, and effect, as soon as practicable, the registration under the
Securities Act of all Registrable Securities which the Holders request to be
registered and included in such registration, subject only to the limitations of
this Section 4(d).
(ii) If the Holders initiating the registration request under this
Section 4(d) ("Initiating Holders") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Corporation as a part of their request made pursuant to this Section
4(d) and the Corporation shall include such information in the written notice
referred to in Section 4(d)(i) hereof. In such event, the right of any Holder
to include such Holder's Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the managing underwriter or
underwriters selected for such underwriting.
(iii) The Corporation is obligated to effect only one (1) such
registration unless the Shelf Registration Statement referred to in Section 4(b)
is not declared, or if declared, does not remain effective then the Corporation
shall be obligated to effect two (2) such registrations one of which shall be
exercisable by the holders of Series B-1 Preferred Stock and one which shall be
exercisable by the holders of Series C Preferred Stock, each of which shall be
pursuant to the terms of this Section 4(d) set forth above.
(iv) All expenses incurred in connection with a demand registration
effected pursuant to this Section 4(d), including without limitation all federal
and "blue sky" registration and qualification fees, printers' and accounting
fees, fees and disbursements of counsel for the Corporation, and of one counsel
for the participating Holders together (the "Registration Expenses") shall be
borne by the Corporation.
(e) Piggyback Registrations.
(i) The Corporation shall notify all Holders of Registrable Securities
in writing at least forty-five (45) calendar days prior to filing any
registration statement under the Securities Act for purposes of effecting a
public offering of securities of the Corporation (including, but not limited to,
registration statements relating to secondary offerings of securities of
the Corporation, but excluding registration statements on an Excluded Form or
relating to any employee benefit plan or a corporate reorganization) and shall
afford each such Holder an opportunity to include in such registration statement
all or any part of the Registrable Securities then held by such Holder. Each
Holder desiring to include in any such registration statement all or any part of
the Registrable Securities held by such Holder shall, within twenty (20)
calendar days after receipt of the above-described notice from the Corporation,
so notify the Corporation in writing, and in such notice shall inform the
Corporation of the number of Registrable Securities such Holder wishes to
include in such registration statement. If a Holder decides not to include all
of its Registrable Securities in any registration statement thereafter filed by
the Corporation, such Holder shall nevertheless continue to have the right to
include any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Corporation with respect to
offerings of its securities, all upon the terms and conditions set forth
herein.
(ii) If the registration statement under which the Corporation gives
notice under this Section 4(e) (the "Piggyback Registration") is for an
underwritten offering, the Corporation shall so advise the Holders of
Registrable Securities. In such event, the right of any such Holder's
Registrable Securities to be included in a registration pursuant to this Section
4(e) shall be conditioned upon such Holder's participation in such underwriting
and the inclusion of such Holder's Registrable Securities in the underwriting to
the extent provided herein. All Holders proposing to distribute their
Registrable Securities through such underwriting shall enter into an
underwriting agreement in such customary form with the managing underwriter or
underwriters selected for such underwriting. If any Holder disapproves of the
terms of any such underwriting, such Holder may elect to withdraw therefrom by
written notice to the Corporation and the underwriter, delivered at least five
(5) business days prior to the effective date of the registration statement.
Any Registrable Securities excluded or withdrawn from such underwriting shall be
excluded and withdrawn from the registration.
(iii) If any of the Registrable Securities registered pursuant to any
Piggyback Registration are to be sold in one or more firm commitment
underwritten offerings, and the managing underwriters advise in writing the
Corporation and the holders of such Registrable Securities that in its or their
opinion or, in the case of a Piggyback Registration not being underwritten, the
Corporation shall reasonably determine (and notify the holders of Registrable
Securities of such determination), after consultation with an investment banker
of nationally recognized standing, that the number of shares of Common Stock
(including Registrable Securities) proposed to be sold in such offering exceeds
the maximum number of shares of Common Stock that can be sold in such offering,
the Corporation shall include in such registration only such maximum number of
shares of Common Stock (including Registrable Securities) which, in the opinion
of such underwriter or underwriters, or the Corporation, as the case may be,
selected in the following order of priority: (A) first, all of the shares of
Common Stock that the Corporation proposes to sell for its own account, if any,
and (B) second, the securities requested to be included therein, and which the
managing underwriters shall in their reasonable discretion deem advisable,
allocated pro rata, based upon the number of shares of Common Stock that each
such person shall have requested to be included therein.
(iv) All Registration Expenses incurred in connection with a
registration pursuant to this Section 4(e) shall be borne by the Corporation.
(f) Additional Registration Rights. If the Corporation grants
registration rights to holders of any security of the Corporation which are more
favorable to such holders than the registration rights granted hereunder,
then such more favorable registration rights shall also be deemed to be granted
to the Holders of the Registrable Securities hereunder, and the Corporation
covenants and agrees to take any and all steps necessary to modify the terms of
this Agreement to so provide.
(g) Obligations of the Corporation. Whenever required to effect the
registration of any Registrable Securities under this Agreement, the Corporation
shall, as expeditiously as reasonably possible:
(i) Except as otherwise provided in Section 4(b), prepare and file with
the Commission a registration statement with respect to such Registrable
Securities and use its best efforts to cause such registration statement to
become and remain effective within one hundred fifty (150) calendar days of
notice from the Holders of the Registrable Securities provided, however, that
before filing a registration statement or prospectus or any amendments or
supplements thereto pursuant to Section 4(e), including documents incorporated
by reference after the initial filing of the registration statement and prior to
effectiveness thereof, the Corporation shall furnish to one firm of counsel for
the Holders (selected by a majority of the Holders) copies of all such documents
in the form substantially as proposed to be filed with the Commission at least
four (4) business days prior to filing for review and comment by such counsel,
which opportunity to comment shall include an absolute right to control or
contest disclosure if the applicable Holder reasonably believes that it may be
subject to controlling person liability under applicable securities laws with
respect thereto;
(ii) Except as otherwise provided in Section 4(b), prepare and file
with the Commission such amendments and supplements to such registration
statement and the prospectus used to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement and to keep such registration statement effective, in the
case of a firm commitment underwriting, until each underwriter has completed the
distribution of all securities purchased by it and, in the case of any other
offering, until the earlier of the sale of all Registrable Securities covered
thereby or one hundred eighty (180) calendar days after the effective date
thereof; provided, however, that such 180-day period shall be extended for a
period of time equal to the period the Holder refrains from selling any
Registrable Securities included in such registration at the request of an
underwriter of the Common Stock or if the Corporation has provided the notice
described in subparagraph (vii) below;
(iii) In connection with a registration pursuant to Section 4(e),
promptly notify each Holder of any stop order issued or threatened to be issued
by the Commission in connection therewith (and take all reasonable actions
required to prevent the entry of such stop order or to remove it if entered);
(iv) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with her documents as they may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by them that are included in such registration;
(v) Use its best efforts (i) to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably requested by the Holders, and
(ii) in connection with a registration pursuant to Section 4(e), to obtain the
withdrawal of any order suspending the effectiveness of a registration
statement, or the lifting of any suspension of the qualification (or exemption
from qualification) of the offer and transfer of any of the Registrable
Securities in any jurisdiction, at the earliest possible moment; provided, that
the Corporation shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions;
(vi) Use its best efforts to list the securities covered by such
registration statement with any securities exchange, if any, on which the Common
Stock of the Corporation is then listed;
(vii) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement;
(viii) Notify each Holder of Registrable Securities and each
underwriter under such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Securities Act of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state 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, and promptly thereafter, prepare and furnish to all
Holders a reasonable number of copies of an amended to or supplemental
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not include an
untrue statement of stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing;
(ix) Furnish, at the request of any Holder requesting registration of
Registrable Securities, on the date that such Registrable Securities are
delivered to the underwriters for sale, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (A) an opinion, dated as of such date, of the
counsel representing the Corporation for the purposes of such registration, in
form and substance as is customarily given to underwriters in an underwritten
public offering and reasonably satisfactory to a majority in interest of the
Holders requesting registration, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities, and (B) a
"comfort" letter dated as of such date, from the independent certified public
accountants of the Corporation, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering and reasonably satisfactory to a majority in interest of the
Holders requesting registration, addressed to the underwriters, if any, and to
the Holders requesting registration of the Registrable Securities;
(x) In connection with a registration pursuant to Section 4(e), provide
and cause to be maintained a transfer agent and registrar for all Registrable
Securities covered by such registration statement from and after a date note
later than the effective date of such registration statement;
(xi) Make available for inspection by each seller of Registrable
Securities, any underwriter participating in any registration statement, and any
attorney, accountant by such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Corporation, and
cause the Corporation's officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(xii) In connection with a registration pursuant to Section 4(e), use
the Corporation's reasonable efforts to provide a CUSIP number for the
Registrable Securities prior to the effective date of the first registration
statement including Registrable Securities; and
(xiii) In connection with a registration pursuant to Section 4(e), take
such other actions as are reasonably required in order to expedite or facilitate
the disposition of Registrable Securities included in each such registration.
(h) Furnish Information. It shall be a condition precedent to the
obligations of the Corporation to take any action pursuant to Sections 4(b),
4(d) and 4(e) that the selling Holders shall furnish to the Corporation such
information regarding themselves, the Registrable Securities held by them, and
the intended method of disposition of such securities as shall be required to
effect the registration of their Registrable Securities.
(i) Indemnification. In the event any Registrable Securities are
included in a registration statement under Sections 4(b), 4(d) or 4(e):
(i) To the extent permitted by law, the Corporation shall indemnify and
hold harmless each Holder, the partners, officers and directors of each
Holder, any underwriter (as defined in the Securities Act) for such Holder and
each person, if any, who controls such Holder or underwriter within the meaning
of the Securities Act or the Exchange Act, against any losses, claims, damages,
or liabilities (joint or several), and, in connection with a registration
pursuant to Sections 4(b) or 4(e), including attorneys' fees and disbursements
and expenses of investigation, incurred by such party pursuant to any actual or
threatened action, suit, proceeding or investigation, to which they may become
subject under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof arise out of or are based upon any of the following statements,
omissions or violations (collectively, a "Violation")):
(A) any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto,
(B) the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein not
misleading, or
(C) any violation or alleged violation by the Corporation of the
Securities Act, the Exchange Act, any federal or state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
federal or state securities law in connection with the offering covered by such
registration statement, and the Corporation shall reimburse each such Holder, or
a partner, officer or director, underwriter or controlling person of such Holder
for any legal or other expenses reasonably incurred by them, as incurred, in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 4(i) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Corporation (which consent shall not be unreasonably withheld
or delayed), nor shall the Corporation be liable in any case for any such loss,
claim, damage, liability or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by such Holder, or a partner, officer, director, underwriter or
controlling person of such Holder; provided, further, that the indemnity
agreement contained in this Section 4(i) shall not apply to any underwriter to
the extent that any such loss is based on or arises out of an untrue statement
or alleged untrue statement of a material fact, or an omission or alleged
omission to state a material fact, contained in or omitted from any preliminary
prospectus if the final prospectus shall correct such untrue statement or
alleged untrue statement, or such omission or alleged omission, and a copy of
the final prospectus has not been sent or given to such person at or prior to
the confirmation of sale to such person if such underwriter was under an
obligation to deliver such final prospectus and failed to do so. With respect
to registrations pursuant to Sections 4(b) and 4(e), the Corporation also shall
indemnify underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in the distribution, their officers,
directors, agents and employees and each person who controls such persons
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) to the same extent as provided above with respect to the
indemnification of the Holders.
(ii) To the extent permitted by law, each selling Holder shall
indemnify and hold harmless the Corporation, each of its directors and officers
who have signed the registration statement, each person, if any, who controls
the Corporation within the meaning of the Securities Act, any underwriter and
any other Holder selling securities under such registration statement or any of
such other Holder's partners, directors or officers or any person who controls
such Holder within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages or liabilities (joint or several) to which
the Corporation or any such director, officer, controlling person, underwriter
or other such Holder, or a partner, director, officer or controlling person of
such other Holder may become subject under the Securities Act, the Exchange Act
or other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration;
and each such Holder shall reimburse any legal or other expenses reasonably
incurred by the Corporation or any such director, officer, controlling person,
underwriter or other Holder, partner, officer, director or controlling person of
such other Holder in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 5(j) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; and provided, further, that the total amounts
payable in indemnity by a Holder under this Section 4(i)(ii) in respect of any
Violation shall not exceed the net proceeds received by such Holder in the
registered offering out of which such Violation arises.
(iii) Promptly after receipt by an indemnified party under this Section
4(i) of notice of the commencement of any action (including any governmental
action), such indemnified party shall, if a claim in respect thereof is to be
made against any indemnifying party under this Section 4(i), deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 4(i), but the omission so to deliver
written notice to the indemnifying party shall not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section
4(i).
(iv) With respect to registrations pursuant to Sections 4(b) and 4(e),
any fees and expenses incurred by the indemnified party (including any fees and
expenses incurred in connection with investigating or preparing to defend such
action or proceeding) shall be paid to the indemnified party, as incurred,
within thirty (30) days of written notice thereof to the indemnifying party
(regardless of whether it is ultimately determined that an indemnified party is
not entitled to indemnification hereunder). Any such indemnified party shall
have the right to employ separate counsel in any such action, claim or
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be the expenses of such indemnified party unless (A) the
indemnifying party has agreed to pay such fees and expenses or (B) the
indemnifying party shall have failed to promptly assume the defense of such
action, claim or proceeding or (C) the named parties to any such action, claim
or proceeding (including any impleaded parties) include both such indemnified
party and the indemnifying party, and such indemnified party shall have been
advised by counsel that there may be one or more legal defenses available to it
which are different from or in addition to those available to the indemnifying
party and that the assertion of such defenses would create a conflict of
interest such that counsel employed by the indemnifying party could not
faithfully represent the indemnified party (in which case, if such indemnified
party notifies the indemnifying party in writing that it elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such action, claim or
proceeding on behalf of such indemnified party, it being understood, however,
that the indemnifying party shall not, in connection with any one such action,
claim or proceeding or separate but substantially similar or related actions,
claims or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (together with appropriate local
counsel) at any time for all such indemnified parties, unless in the reasonable
judgment of such indemnified parties with respect to such action, claim or
proceeding, in which event the indemnifying party shall be obligated to pay the
fees and expenses of such additional counsel or counsels). No indemnifying
party shall be liable to an indemnified party for any settlement of any action,
proceeding or claim without the written consent of the indemnifying party, which
consent shall not be unreasonably withheld or delayed.
(v) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (A) any Holder
exercising rights under this Agreement, or any controlling person of any such
Holder, makes a claim for indemnification pursuant to this Section 4(i) but it
is judicially determined (by the entry of a final judgment or decree by a court
of competent jurisdiction and the expiration of time to appeal or the denial of
the last right of appeal) that such indemnification may not be enforced in such
case notwithstanding the fact that this Section 4(i) provides for
indemnification in such case, or (B) contribution under the Securities Act may
be required on the part of any such selling Holder or any such controlling
person in circumstances for which indemnification is provided under this Section
4(i), then, and in each such case, the Corporation or such Holder shall
contribute to the aggregate losses, claims, damages or liabilities as is
appropriate to reflect not only the relative benefits received by the
indemnified party and the indemnifying party, but also the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action; provided,
however, that, in any such case, (1) no such Holder shall be required to
contribute any amount in excess of the public offering price of all such
Registrable Securities offered and sold by such Holder pursuant to such
registration statement; and (2) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(vi) The obligations of the Corporation and Holders under this Section
4(i) shall survive the completion of any offering of Registrable Securities in a
registration statement, and the termination of this Agreement.
(j) "Market Stand-Off' Agreement. Each Holder hereby agrees that it
shall not, to the extent requested by the Corporation and an underwriter of
Common Stock of the Corporation, sell or otherwise transfer or dispose of any
Registrable Securities (other than Registrable Securities being registered in
such offering) for up to that period of time following the effective date of a
registration statement of the Corporation filed under the Securities Act as is
requested by the managing underwriter(s) of such offering, not to exceed one
hundred twenty (120) calendar days; provided, however, that:
(i) such agreement shall be applicable only to the first such
registration statement of the Corporation which covers securities to be sold on
its behalf to the public in an underwritten offering but not to Registrable
Securities sold pursuant to such registration statement; and
(ii) all officers, directors and ten percent (10%) or greater
stockholders of the Corporation, provided such stockholders have acquired such
securities directly from the Corporation, then holding Common Stock of the
Corporation, shall enter into similar agreements.
In order to enforce the foregoing covenant, the Corporation may impose stop
transfer instructions with respect to the then-remaining Registrable Securities
of each Holder (and the shares or securities of every other person subject to
the foregoing restriction) until the end of such period.
(k) Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Registrable Securities to the public without registration, the
Corporation agrees to:
(i) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(ii) File with the Commission in a timely manner all reports and other
documents required of the Corporation under the Securities Act and the Exchange
Act; and
(iii) So long as a Holder owns any Registrable Securities, furnish to
the Holder forthwith upon request a written statement by the Corporation as to
its compliance with the reporting requirements of said Rule 144, and of the
Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Corporation, and such other reports and documents of the
Corporation as a Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Holder to sell any such securities
without registration.
(l) Removal of Legends, Etc. Notwithstanding the foregoing provisions
of this Section 4, the restrictions imposed by this Section 4 upon the
transferability of any Registrable Securities shall cease and terminate when any
such Registrable Securities are sold or otherwise disposed of in accordance
with the intended method of disposition by the seller or sellers thereof set
forth in the registration statement which does not require that the securities
transferred bear the legend set forth in Section 4(a). Whenever the
restrictions imposed by this Section 4 shall terminate as herein provided, the
Holder of any Registrable Securities as to which such restrictions have
terminated shall be entitled to receive from the Corporation, without expense,
one or more new certificates not bearing the restrictive legend set forth in
Section 4(a) and not containing any other reference to the restrictions imposed
by this Section 4.
(m) Filing of Reports Under the Exchange Act. The Corporation shall
give prompt notice to the Investor of:
(i) the filing of an Exchange Act Registration Statement; and
(ii) the effectiveness of such Exchange Act Registration Statement and
the number of shares of such class of equity securities outstanding as reported
in such Exchange Act Registration Statement, in order to enable the parties to
this Agreement to comply with any reporting requirements under the Exchange Act
or the Securities Act. The Corporation shall, at any time after the Corporation
shall register any shares of Common Stock under the Securities Act and upon the
written request of any Investor, file an Exchange Act Registration Statement
relating to any class of Equity Securities of the Corporation then held by the
Investors, whether or not the class of equity securities with respect to which
such request is made shall be held by at least the number of persons which would
require the filing of a registration statement under Section 12(g)(1) of the
Exchange Act. The Corporation shall comply with all the reporting requirements
of the Exchange Act, and shall comply with all other public information
reporting requirements of the Commission as a condition to the availability of
an exemption from the Securities Act (under Rule 144 thereof, as amended from
time to time, or successor rule thereto or otherwise) for the sale of Common
Stock by the Investors. The Corporation shall cooperate with Investor in
supplying such information as may be necessary for the Investors to complete and
file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of an exemption from the
Securities Act (under Rule 144 thereof or otherwise) for the sale of Common
Stock by any Investor.
(n) Underwritten Registration. Except in the case of an offering under
a registration under Section 4(d), if any of the Registrable Securities are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will administer the offering will be
selected by the Corporation and, in the case of a registration effected under
Sections 4(b) or 4(e), approved in writing by the Holders of at least
thirty-three (33%) percent of the Registrable Securities requesting inclusion of
their Registrable Securities in such registration statement. In the event of
underwritten offering of Registrable Securities in connection with a Holders'
Demand Request, the investment banker or investment bankers and manager or
managers that will administer the offering will be selected by the Holders of at
least thirty-three (33%) percent of the Registrable Securities requesting
inclusion of their Registrable Securities in such registration statement under
Section 4(d).
Section 5. Management Rights.
(a) Board of Directors. So long as not less than twenty-five percent
(25%) of the originally issued shares of Series B-1 Preferred Stock and Series C
Preferred Stock, collectively, are held by the Investors, the holders of
shares of Series B-1 Preferred Stock and Series C Preferred Stock shall be
entitled to nominate three (3) persons to the Corporation's Board of Directors
(the "Preferred Nominee") whether by annual meeting, special meeting, written
consent or otherwise of which one (1) Preferred Nominee shall be a designee of
Furman Selz Private Investments LLC (in its capacity as manager of Furman Selz
Investors II L.P.) and one (1) Preferred Nominee shall be a designee of Furman
Selz Private Investments III LLC (in its capacity as manager of ING Furman Selz
Investors III LP). A vacancy in any directorship entitled to be elected by the
holders of record of shares of Series B-1 Preferred Stock and Series C Preferred
Stock (including without limitation, a vacancy resulting from the decision
during an earlier election by the holders of the Series B-1 Preferred Stock and
the Series C Preferred Stock not to fill the directorship to be held by the
Preferred Nominee) shall be filled only by vote or written consent of the
holders of record of shares of Series B-1 Preferred Stock and Series C Preferred
Stock, in the manner set forth in the Series B-1 Certificate of Designation and
the Series C Certificate of Designation. Each Preferred Nominee who shall have
been elected as provided in Paragraph A.8.(b) of the Series B-1 Certificate of
Designation and the Series C Certificate of Designation may be removed during
his or her term of office, whether with or without cause, by the holders of
record of a majority of the shares of Series B-1 Preferred Stock and Series C
Preferred Stock then outstanding. The holders of record of a majority of the
shares of Series B-1 Preferred Stock and Series C Preferred Stock then
outstanding shall have the right to call meetings of the Board of Directors and
management of the Corporation, upon no less than ten (10) calendar days' prior
written notice; provided, that such meetings are called no more frequently than
once per fiscal quarter. The Board of Directors shall not be permitted to
establish any committees unless one (1) elected Preferred Nominee is invited to
serve on such committee, including any special committee created by the Board of
Directors not in the ordinary course of business, and the Corporation shall
cause such elected Preferred Nominee to be so appointed.
(b) Observer Rights. In the event that the Investors no longer have
the right to nominate directors pursuant to Section 5(a) above, the Investors
shall have the observer and inspection rights set forth below.
(i) The Corporation shall give to each Investor notice of each meeting
of the Board of Directors of the Corporation at the same time and in the same
manner as notice is given to the directors of the Corporation. One (1) designee
of each of Furman Selz Private Investments LLC (in its capacity as manager
of Furman Selz Investors II L.P.) and Furman Selz Private Investments III LLC
(in its capacity as manager of ING Furman Selz Investors III LP) shall be
entitled to attend in person, as an observer, all meetings held in person and to
listen to telephone meetings of the Board of Directors of the Corporation solely
for the purpose of allowing the Investors to have current information with
respect to the affairs of the Corporation. The Corporation shall provide to
such parties in connection with each meeting their respective observer designee
is entitled to attend, whether or not present at such meeting, copies of all
notices, minutes, consents, and all other materials or information that it
provides to the directors of the Corporation with respect to such meeting, at
the same time such materials and information are given to the directors of the
Corporation (except that materials and information provided to directors of the
Corporation at meetings at which a designee of such parties is not present shall
be provided to such parties promptly after the meeting). The observer rights
afforded by this Section 3(c) shall apply for so long as the Investors and their
affiliates own any shares of either Series B-1 Preferred Stock or Series C
Preferred Stock; provided, however, that such rights shall not apply upon the
filing of a registration statement under the Securities Act by the Corporation
in which all of the Registrable Securities of the Investors are included.
(ii) The Corporation and its Subsidiaries will upon reasonable notice
(A) give each of the Investors and their authorized representatives access
during regular business hours to all of the Corporation's and its Subsidiaries'
offices and to all books and records of each, (B) permit each of the Investors
to make such inspections as it may require (and the Corporation shall cooperate
with such Investor in any inspections), and (C) cause its officers and those of
its Subsidiaries to furnish each of the Investors with such financial and
operating data and other information with respect to the business and properties
of the Corporation and its Subsidiaries as such Investor may from time to time
request. The Investors shall maintain the confidentiality of any confidential
and proprietary information so obtained by it which is not otherwise available
from other sources that are free from similar restrictions; provided, however,
that the foregoing shall in no way limit or otherwise restrict the ability of
each of the Investors or such authorized representatives to disclose any such
information concerning the Corporation or its Subsidiaries which such Investor
may be required to disclose (x) to such Investor's partners, board members or
stockholders, to the extent required to satisfy such Investor's fiduciary
obligations to such Persons, or (y) otherwise pursuant to or as required by law;
provided further, that, to the extent legally permitted, the Investors will
notify the Corporation of such disclosure and afford the Corporation an
opportunity promptly to oppose such disclosure.
Section 6. Severability; Governing Law. If any provisions of this
Agreement is determined to be illegal and unenforceable by any court of law, the
remaining provisions shall be severable and enforceable in accordance with
their terms. The parties hereto agree that Investor would suffer irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached by the Corporation. It is accordingly agreed that Investor shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any state court
located in the State of New York, or the United States District Court for the
Southern District of New York or any federal court in the State of New York (as
to which the Corporation agrees to submit to jurisdiction for the purposes of
such or any other action), this being in addition to any other remedy to which
Investor is entitled at law or in equity, and, if an Investor is successful on
the merits in any such action, that the costs and expenses (including reasonable
attorneys' fees) incurred by Investor in seeking enforcement of this Agreement
or the Certificate of Designation shall be the sole and exclusive responsibility
of the Corporation. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York as to matters within the
scope thereof, and as to all other matters shall be governed by and construed in
accordance with the internal law of the State of Delaware.
Section 7. Benefits of Agreement. This Agreement shall be binding upon
and inure benefit of the parties and their respective successors and assigns,
legal representatives and heirs. Subject to the terms of this Agreement,
including the five percent (5%) limitation set forth below, the Investor may
transfer any or all of its rights hereunder to any purchaser or transferee of
all or a portion of the currently outstanding shares of Series B Preferred
Stock, including any right or interest therein, without the prior written
consent of the Corporation or any stockholder of the Corporation. In the event
that a transfer involves at least five percent (5%) of the currently outstanding
shares of Series B Preferred Stock, including any right or interest therein,
such transferee shall be deemed to be "Investor," and a "Holder", as
appropriate, for purposes of this Agreement, and may again transfer such rights
in accordance with, and subject to, the terms of this Agreement.
Section 8. Notices. All notices, requests, claims, demands and other
communication hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by cable, telegram, facsimile transmission
with confirmation of receipt, or telex, or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties as
follows:
if to Investors:
c/o FS Private Investments LLC, Manager
c/o FS Private Investments III LLC, Manager
55 East 52nd Street, 37th Floor
New York, New York 10055-0002
Attention: James L. Luikart
Phone: (212) 284-1700
Fax: (212)284-1717
with a required copy to:
Dechert
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103-2793
Attention: Carmen J. Romano, Esq.
Phone: (215) 994-4000
Fax: (215) 994-2222
if to the Company:
ABC-NACO INC.
2001 Butterfield Road
Suite 502
Downers Grove, Illinois 60515
Attention: Wayne R. Rockenbach
Senior Vice President and Chief Financial Officer
Phone: (630) 792-2010
Fax: (630) 916-6429
with required copies to:
ABC-NACO Inc.
335 Eisenhower Lane South
Lombard, IL 60148
Attention: Mark F. Baggio, Esq.
Vice President, General Counsel
and Secretary
Phone: (630) 792-2010
Fax: (630) 916-6429
Schiff Hardin & Waite
6600 Sears Tower
Chicago, Illinois 60606
Attention: Robert J. Regan, Esq.
Phone: (312) 258-5606
Fax: (312) 258-5700
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
Section 9. Changes. The terms and provisions of this Agreement may not
be modified, amended, or any of the provisions hereof waived, temporarily
or permanently, except pursuant to the written consent of the parties hereto;
except that any rights applicable to Investor may be waived by Investor without
the consent of the Corporation, or the other stockholders of the Corporation.
Section 10. Captions. The captions herein are inserted for convenience
only and are not intended to define, limit, extend or describe the scope of this
Agreement or affect the construction hereof.
Section 11. Nouns and Pronouns. Whenever the context may require, any
pronoun herein shall include the corresponding masculine, feminine or neuter
forms and the singular form of names and pronouns shall include the plural and
vice-versa.
Section 12. Merger Provision. This Agreement (as the same may be
amended from time), the Series B Stock Purchase Agreement, the Exchange
Agreement and the Series C Stock Purchase Agreement, constitute the entire
agreement and understanding among the parties pertaining to the subject matter
hereof and supersede all prior and contemporaneous agreements therewith.
Section 13. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on their behalf
ABC-NACO INC.
By:_________________________________
Name: Wayne R. Rockenbach
Title: Chief Financial Officer
INVESTORS:
FURMAN SELZ INVESTORS II L.P.
FS EMPLOYEE INVESTORS LLC
FS PARALLEL FUND L.P.
By: FS PRIVATE INVESTMENTS
LLC, Manager
By:_________________________________
Name: James L. Luikart
Title: Managing Member
ING FURMAN SELZ INVESTORS III L.P.
ING BARINGS U.S. LEVERAGED EQUITY
PLAN LLC
ING BARINGS GLOBAL LEVERAGED
EQUITY PLAN LTD.
By: FS PRIVATE INVESTMENTS III,
LLC, Manager
By:
Name:
Title
[signatures continued on next page]
INVESTORS:
By:
James Dowling
SCHEDULE I
Investors Series B Preferred Stock Series B-1 Preferred Stock Series
C Preferred Stock
FURMAN SELZ INVESTORS II L.P. 0 139,303.54 65,895
FS EMPLOYEE INVESTORS LLC 0 11,938.43 5,640
FS PARALLEL FUND L.P. 0 6,777.77 3,210
ING FURMAN SELZ INVESTORS III L.P. 0 110,107.15 52,080
ING BARINGS U.S. LEVERAGED EQUITY PLAN LLC 0 33,484.93 15,840
ING BARINGS GLOBAL LEVERAGED EQUITY PLAN LTD. 0 14,427.66 6,825
JAMES DOWLING 0 1,058.13 510
EXHIBIT A
Amended Restated Certificate of Incorporation
EXHIBIT B
Series B-1 Certificate of Designation
EXHIBIT C
Series C Certificate of Designation
EXHIBIT D-1
Additional Warrant
EXHIBIT D-2
Closing Warrant