REGISTRATION RIGHTS AGREEMENT
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This REGISTRATION RIGHTS AGREEMENT is made as of February ___, 1997,
by and among Pen-Tab Industries, Inc., a Virginia corporation (the "Company"),
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Citicorp Venture Capital, Ltd., a New York corporation ("CVC"), Alan Hodes
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("Hodes"), Michael Greenberg ("Greenberg"). Hodes and Greenberg are
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collectively referred to herein as the "Executives" and individually as an
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"Executive."
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The parties to this Agreement are parties to a Recapitalization
Agreement dated as of January __, 1997 (as amended and modified from time to
time in accordance with its terms, the "Recapitalization Agreement"). In order
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to induce the CVC and the Executives to enter into the Recapitalization
Agreement, the Company has agreed to provide the registration rights set forth
in this Agreement. The execution and delivery of this Agreement is a condition
to the Closing under the Recapitalization Agreement. Unless otherwise provided
in this Agreement, capitalized terms used herein shall have the meanings set
forth in Section 1 hereof.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. Definitions. As used herein, the following terms shall have the following
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meanings.
"Common Stock" means, collectively, (i) the Class A Common and the
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Class B Common, and (ii) any capital stock of the Company issued or issuable
with respect to the securities referred to in clause (i) by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, conversion, merger, consolidation or other reorganization.
"CVC Registrable Securities" means (i) any Common Stock acquired by
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CVC or its affiliates on or after the date hereof, and (ii) any shares of
capital stock of the Company issued or issuable with respect to the securities
referred to in clause (i) above by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, conversion, merger,
consolidation or other reorganization. For purposes of this Agreement, a Person
will be deemed to be a holder of CVC Registrable Securities whenever such Person
has the right to acquire directly or indirectly such CVC Registrable Securities
(upon conversion or exercise in connection with a transfer of securities or
otherwise, but disregarding any restrictions or limitations upon the exercise of
such right), whether or not such acquisition has actually been effected.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Executive Registrable Securities" means (i) any shares of Class A
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Common issued or issuable to the Executives on the date hereof or acquired by,
or issued or issuable to, the Executives after the date hereof and (ii) any
shares of capital stock of the Company issued or issuable with respect to the
securities referred to in clause (i) above by way of a stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. For purposes of this Agreement, a Person
will be deemed to be a holder of Executive Registrable Securities whenever such
Person has the right to acquire directly or indirectly such Executive
Registrable Securities (upon conversion or exercise in connection with a
transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected.
"Person" means an individual, a partnership, a corporation, an
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association, a joint stock company, a limited liability company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Qualified Public Offering" means the sale, in underwritten public
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offerings registered under the Securities Act, whether in a single offering or
as a result of several offerings, of shares of the Company's Common Stock having
an aggregate value of at least $30 million.
"Registrable Securities" means, collectively, the CVC Registrable
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Securities and the Executive Registrable Securities.
"Registration Expenses" means all expenses incident to the Company's
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performance of or compliance with this Agreement, including without limitation
all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws, printing expenses, messenger and delivery expenses,
fees and disbursements of counsel for the Company, fees and expenses of all
independent certified public accountants, fees and expenses of underwriters,
investment bankers or managers (in each case excluding discounts and
commissions) and fees and expenses of other Persons retained by the Company.
"Rule 144" means Rule 144 under the Securities Act (or any similar
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rule then in force).
"SEC" means the Securities and Exchange Commission.
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"Securities Act" means the Securities Act of 1933, as amended.
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2. Demand Registrations.
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(a) Requests for Registration. Subject to Section 2(b) below, at any
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time and from time to time, the holders of a majority of the CVC Registrable
Securities may request registration, whether underwritten or otherwise, under
the Securities Act of all or part of their Registrable Securities on Form S-1 or
any similar long-form registration ("Long-Form Registrations") or on Form S-2 or
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S-3 or any similar short-form registration ("Short-Form Registrations") if
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available. In addition, subject to Section 2(g) below, the holders of a
majority of the CVC Registrable Securities may request that the Company file
with the SEC a registration statement under the Securities Act on any applicable
form pursuant to Rule 415 under the Securities Act (a "415 Registration"). Each
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request for a Long-Form Registration or Short-Form Registration shall specify
the approximate number of Registrable Securities requested to be registered and
the anticipated per share price range for such offering. Within ten days after
receipt of any such request for a Long-Form Registration or Short-Form
Registration, the Company will give written notice of such requested
registration to all other holders of Registrable Securities and will include
(subject to the provisions of this Agreement) in such registration, all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within 20 days after the receipt of the Company's
notice. All registrations requested pursuant to in this Section 2(a) are
referred to herein as "Demand Registrations".
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(b) Long-Form Registrations. The holders of a majority of the CVC
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Registrable Securities will be entitled to request up to three (3) Long-Form
Registrations in which the Company will pay all Registration Expenses. A
registration will not count as the permitted Long-Form Registration until it has
become effective and unless the holders of Registrable Securities are able to
register and sell at least 90% of the Registrable Securities requested to be
included in such registration.
(c) Short-Form Registrations. In addition to the Long-Form
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Registrations provided pursuant to Section 2(b), (i) the holders of the CVC
Registrable Securities will be entitled to request an unlimited number of
Short-Form Registrations and (ii) the holders of a majority of Executive
Registerable Securities will be entitled to request an unlimited number of
Short-Form Registrations, respectively, in which the Company will pay all
Registration Expenses; provided, that with respect to clause (ii) above, if the
Company has been subject to the requirements of Section 12 or 15(d) of the
Exchange Act and the Company would be eligible to file a Short-Form Registration
but for the Company's failure to file the requisite reports in a timely manner
or any other reason, then the holders of Executive Registrable Securities will
be entitled to request up to three (3) Long-Form Registrations in which the
Company will pay all Registration Expenses. A registration will not count as the
permitted Long-Form Registration until it has become effective and unless the
holders of Registrable Securities are able to register and sell at least 90% of
the Registrable Securities requested to be included in such registration. Demand
Registrations (other than 415 Registrations) will be Short-Form Registrations
whenever
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the Company is permitted to use any applicable short form. After the Company has
become subject to the reporting requirements of the Exchange Act, the Company
will use its best efforts to make Short-Form Registrations available for the
sale of Registrable Securities.
(d) Priority on Demand Registrations. The Company will not include
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in any Long-Form Registration or Short-Form Registration any securities which
are not Registrable Securities without the prior written consent of the holders
of at least a majority of the Registrable Securities included in such
registration. If a Long-Form Registration or a Short-Form Registration is an
underwritten offering and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities and, if
permitted hereunder, other securities requested to be included in such offering
exceeds the number of Registrable Securities and other securities, if any, which
can be sold therein without adversely affecting the marketability of the
offering, the Company will include in such registration (i) first, the number of
Registrable Securities requested to be included in such registration pro rata,
if necessary, among the holders of Registrable Securities based on the number of
shares of Registrable Securities owned by each such holder and (ii) second, any
other securities of the Company requested to be included in such registration
pro rata, if necessary, on the basis of the number of shares of such other
securities owned by each such holder. Any Persons other than holders of
Registrable Securities who participate in Demand Registrations which are not at
the Company's expense must pay their share of the Registration Expenses as
provided in Section 6 hereof.
(e) Restrictions on Demand Registrations. The Company will not be
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obligated to effect any Demand Registration within six months after the
effective date of a previous Demand Registration.
(f) Selection of Underwriters. In the case of a Demand Registration
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for an underwritten offering, the holders of a majority of the Registrable
Securities to be included in such Demand Registration will have the right to
select the investment banker(s) and manager(s) to administer the offering, which
investment banker(s) and manager(s) will be nationally recognized, subject to
the Company's approval which will not be unreasonably withheld.
(g) 415 Registrations.
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(i) The holders of a majority of the CVC Registrable
Securities will be entitled to request one (1) 415 Registration. Subject to the
availability of required financial information, within 45 days after the Company
receives written notice of a request for a 415 Registration, the Company shall
file with the SEC a registration statement under the Securities Act for the 415
Registration. Within ten days after receipt of any such request for a 415
Registration, the Company will give written notice of such requested
registration to all other holders of Registrable Securities and will include
(subject to the provisions of this Agreement) in such registration, all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within 20 days after the receipt of the Company's
notice.
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The Company shall use its best efforts to cause the 415 Registration to be
declared effective under the Securities Act as soon as practical after filing,
and once effective, the Company shall (subject to the provisions of clause (ii)
below) cause such 415 Registration to remain effective for such time period as
is specified in such request, but for no time period longer than the period
ending on the earlier of (i) the third anniversary of the date of filing of the
415 Registration or (ii) the date on which all CVC Registrable Securities have
been sold pursuant to the 415 Registration or (iii) the date as of which there
are no longer any CVC Registrable Securities in existence; provided if the 415
Registration included Executive Registrable Securities, Section 2(g)(ii) and
(iii) shall also apply to such Executive Registrable Securities.
(ii) If the holders of a majority of the CVC Registrable
Securities or the holders of Executive Registrable Securities notify the Company
in writing that they intend to effect the sale of all or substantially all of
the CVC Registrable Securities or Executive Registrable Securities, respectively
held by such holders pursuant to a single integrated offering pursuant to a then
effective registration statement for a 415 Registration (a "Takedown"), the
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Company and each holder of Registrable Securities shall not effect any public
sale or distribution of its equity securities, or any securities convertible
into or exchangeable or exercisable for its equity securities, during the 90-day
period beginning on the date such notice of a Takedown is received.
(iii) If in connection with any Takedown the managing
underwriters (selected in accordance with clause (iv) below) advise the Company
that, in its opinion, the inclusion of any other securities other than CVC
Registrable Securities and/or Executive Registrable Securities would adversely
affect the marketability of the offering, then no such securities shall be
permitted to be included. Additionally, if in connection with such an offering,
the number of CVC Registrable Securities and/or Executive Registrable Securities
and other securities (if any) requested to be included in such Takedown exceeds
the number of CVC Registrable Securities and/or Executive Registrable Securities
and other securities which can be sold in such offering without adversely
affecting the marketability of the offering, the company shall include in such
Sale (i) first, the CVC Registrable Securities and/or Executive Registrable
Securities requested to be included in such Takedown, pro rata among the holders
of such Registrable Securities on the basis of the number of CVC Registrable
Securities and/or Executive Registrable Securities owned by each such holder,
and (ii) second, other securities requested to be included in such Takedown to
the extent permitted hereunder.
(iv) The holders of a majority of the CVC Registrable Securities
and/or Executive Registrable Securities shall have the right to retain and
select an investment banker and manager to administer the 415 Registration and
any Takedown pursuant thereto, subject to the Company's approval which will not
be unreasonably withheld.
(v) In addition to the provisions in Section 6 below, all
Registration Expenses incurred in connection with the management of the 415
Registration (whether incurred
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by the Company or the holders of the CVC Registrable Securities and/or Executive
Registrable Securities) shall be borne by the Company.
(h) Other Registration Rights. Except as provided in this Agreement,
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the Company will not grant to any Persons the right to request the Company to
register any equity securities of the Company, or any securities convertible or
exchangeable into or exercisable for such securities, without the prior written
consent of the holders of a majority of the Registrable Securities.
(i) Deferral of Rights. Notwithstanding any provision of this
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Agreement to the contrary, CVC shall have no right to require the registration
of or to sell any CVC Registrable Shares during the period any shares of Series
1 Senior Preferred Stock of the Company is issued and outstanding.
3. Piggyback Registrations.
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(a) Right to Piggyback. Whenever the Company proposes to register
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any of its Common Stock under the Securities Act (other than pursuant to a
Demand Registration, and other than pursuant to a registration statement on Form
S-8 or S-4 or any similar form or in connection with a registration the primary
purpose of which is to register debt securities (i.e., in connection with a
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so-called "equity kicker") and a registration form to be used may be used for
the registration of Registrable Securities (a "Piggyback Registration"), the
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Company will give prompt written notice to all holders of Registrable Securities
of its intention to effect such a registration and will include in such
registration all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 20 days after the receipt
of the Company's notice. Notwithstanding the foregoing, in connection only with
the initial registered public offering of the Company's securities which
offering is a primary offering (other than as set forth in Section 5(c) below),
no Registrable Securities shall be included in such registration without the
prior written consent of the holders of a majority of Registrable Securities.
(b) Priority on Primary Registrations. If a Piggyback Registration
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is an underwritten primary registration on behalf of the Company, the Company
will include in such registration all securities requested to be included in
such registration; provided, that if the managing underwriters advise the
Company in writing that in their opinion the number of securities requested to
be included in such registration exceeds the number which can be sold in such
offering without adversely affecting the marketability of the offering, the
Company will include in such registration (i) first, the securities the Company
proposes to sell, (ii) second, the Registrable Securities requested to be
included in such registration, pro rata among the holders of such Registrable
Securities on the basis of the number of shares of Registrable Securities owned
by each such holder, and (iii) third, other securities, if any, requested to be
included in such registration.
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(c) Priority on Secondary Registrations. If a Piggyback Registration
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is an underwritten secondary registration on behalf of holders of the Company's
securities (which registration was consented to pursuant to Section 2(h) above),
and the managing underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in such registration
exceeds the number which can be sold in such offering without adversely
affecting the marketability of the offering, the Company will include in such
registration (i) first, the securities requested to be included therein by the
holders requesting such registration, (ii) second, the Registrable Securities
requested to be included in such registration, pro rata among the holders of
such Registrable Securities on the basis of the number of shares of Registrable
Securities owned by each such holder, and (iii) third, other securities
requested to be included in such registration not covered by clause (i) above.
(d) Selection of Underwriters. If any Piggyback Registration is an
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underwritten offering, the investment banker(s) and manager(s) for the offering
will be selected by the Company.
(e) Other Registrations. If the Company has previously filed a
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registration statement with respect to Registrable Securities pursuant to this
Section 3, and if such previous registration has not been withdrawn or
abandoned, the Company will not file or cause to be effected any other
registration of any of its equity securities or securities convertible or
exchangeable into or exercisable for its equity securities under the Securities
Act (except on Forms S-4 or S-8 or any successor forms), whether on its own
behalf or at the request of any holder or holders of such securities, until a
period of at least six months has elapsed from the effective date of such
previous registration.
4. Holdback Agreements.
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(a) Each holder of Registrable Securities hereby agrees not to effect
any public sale or distribution (including sales pursuant to Rule 144) of equity
securities of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and the 180-day
period beginning on the effective date of any Demand Registration (other than a
415 Registration) or Piggyback Registration for a public offering to be
underwritten on a firm commitment basis in which Registrable Securities are
included (except as part of such underwritten registration), unless the
underwriters managing the registered public offering otherwise agree.
(b) The Company agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and during the 180-day period beginning on the effective date of any
underwritten Demand Registration (other than a 415 Registration) or Piggyback
Registration (except as part of such underwritten registration or pursuant to
registrations on Forms S-4 or S-8 or any successor forms), unless the
underwriters managing
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the registered public offering otherwise agree, and (ii) to cause each holder of
Registrable Securities (other than the Other Purchaser) and each other holder of
at least 5% (on a fully diluted basis) of Common Stock, or any securities
convertible into or exchangeable or exercisable for Common Stock, purchased from
the Company at any time after the date of this Agreement (other than in a
registered public offering) to agree not to effect any public sale or
distribution (including sales pursuant to Rule 144) of any such securities
during such period (except as part of such underwritten registration, if
otherwise permitted), unless the underwriters managing the registered public
offering otherwise agree.
5. Registration Procedures. Whenever the holders of Registrable
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Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, the Company will use its best efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof, and pursuant thereto the Company will as
expeditiously as possible:
(a) prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective (provided that before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company will furnish to the counsel selected by the holders of a majority of
the Registrable Securities covered by such registration statement copies of all
such documents proposed to be filed);
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective for a period of
not less than six months and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement;
(c) if requested by the holders of a majority of the CVC Registrable
Securities in connection with any Demand Registration requested by such holders,
use its commercially reasonable efforts to cause to be included in such
registration Common Stock having an aggregate value (based on the midpoint of
the proposed offering price range specified in the registration statement used
to offer such securities) of up to $30 million, to be offered in a primary
offering of the Company's securities contemporaneously with such offering of
Registrable Securities;
(d) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
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(e) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller (provided that the Company will not be required to (i) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subsection, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process (i.e., service of
process which is not limited solely to securities law violations) in any such
jurisdiction);
(f) notify each seller of such Registrable Securities, 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 contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company will
promptly prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading;
(g) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on the Nasdaq National Market System
("Nasdaq Market") and, if listed on the Nasdaq Market, use its best efforts to
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secure designation of all such Registrable Securities covered by such
registration statement as a Nasdaq "National Market System security" within the
meaning of Rule 11Aa2-1 of the SEC or, failing that, to secure Nasdaq Market
authorization for such Registrable Securities and, without limiting the
generality of the foregoing, to arrange for at least two market makers to
register as such with respect to such Registrable Securities with the National
Association of Securities Dealers;
(h) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(i) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities (including, without limitation, effecting a stock split
or a combination of shares);
(j) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the
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Company's officers, directors, employees and independent accountants to supply
all information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(k) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security holders, as
soon as reasonably practicable, an earning statement covering the period of at
least twelve months beginning with the first day of the Company's first full
calendar quarter after the effective date of the registration statement, which
earning statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder;
(l) permit any holder of Registrable Securities which holder, in its
sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of the Company, to participate in the preparation of such
registration or comparable statement and to require the insertion therein of
material, furnished to the Company in writing, which in the reasonable judgment
of such holder and its counsel should be included;
(m) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of such order;
(n) use its best efforts to cause such 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 sellers
thereof to consummate the disposition of such Registrable Securities; and
(o) obtain a "cold comfort" letter from the Company's independent
public accountants in customary form and covering such matters of the type
customarily covered by "cold comfort" letters as the holders of a majority of
the Registrable Securities being sold reasonably request.
If any such registration or comparable statement refers to any holder by name or
otherwise as the holder of any securities of the Company and if, in its sole and
exclusive judgment, such holder is or might be deemed to be a controlling person
of the Company, such holder shall have the right to require (i) the insertion
therein of language, in form and substance satisfactory to such holder and
presented to the Company in writing, 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
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the Securities Act or any similar Federal statute then in force, the deletion of
the reference to such holder; provided that with respect to this clause (ii)
such holder shall furnish to the Company an opinion of counsel to such effect,
which opinion and counsel shall be reasonably satisfactory to the Company.
6. Registration Expenses.
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(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including, without limitation, all Registration
Expenses, will be borne by the Company.
(b) In connection with each Demand Registration, each Piggyback
Registration and each 415 Registration, the Company will reimburse the holders
of Registrable Securities covered by such registration for the reasonable fees
and disbursements of one counsel chosen by the holders of a majority of the
Registrable Securities initially requesting such registration.
7. Indemnification.
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(a) The Company agrees to indemnify, to the extent permitted by law,
each holder of Registrable Securities, its officers and directors and each
Person who controls such holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses arising out of or
based upon any untrue or alleged untrue statement of material fact contained in
any registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse such holder, director, officer or
controlling person for any legal or other expenses reasonably incurred by such
holder, director, officer or controlling person in connection with the
investigation or defense of such loss, claim, damage, liability or expense,
except insofar as the same are caused by or contained in any information
furnished in writing to the Company by such holder expressly for use therein or
by such holder's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such holder with a sufficient number of copies of the same. In
connection with an underwritten offering, the Company will indemnify such
underwriters, their officers and directors and each Person who controls such
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the holders of Registrable
Securities.
(b) In connection with any registration statement in which a holder
of Registrable Securities is participating, each such holder will furnish to the
Company in writing such information and affidavits relating to such holder as
the Company reasonably requests for use in connection with any such registration
statement or prospectus and, to the extent permitted by law, will indemnify the
Company, its directors and officers and each Person who controls
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the Company (within the meaning of the Securities Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of material fact contained in the registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
only to the extent that such untrue statement or omission is contained in any
information or affidavit so furnished in writing by such holder; provided, that
the obligation to indemnify will be individual to each holder and will be
limited to the net amount of proceeds received by such holder from the sale of
Registrable Securities pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and will survive the transfer of securities. The Company also
agrees to make such provisions, as are reasonably requested by any indemnified
party, for contribution to such party in the event the Company's indemnification
is unavailable for any reason.
8. Participation in Underwritten Registrations. No Person may
-------------------------------------------
participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (b) completes and executes all customary
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements; provided, that no holder of Registrable Securities included in any
underwritten registration shall be required to make any representations or
warranties to the Company or the underwriters other than representations and
warranties regarding such holder and such holder's intended method of
distribution.
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9. Rule 144 Reporting. With a view to making available to the
------------------
holders of Registrable Securities the benefits of certain rules and regulations
of the SEC which may permit the sale of the Registrable Securities to the public
without registration, the Company agrees to use its best efforts to:
(a) make and keep current public information available, within the
meaning of Rule 144 or any similar or analogous rule promulgated under the
Securities Act, at all times after it has become subject to the reporting
requirements of the Exchange Act;
(b) file with the SEC, in a timely manner, all reports and other
documents required of the Company under the Securities Act and Exchange Act
(after it has become subject to such reporting requirements); and
(c) so long as any party hereto owns any Registrable Securities,
furnish to such Person forthwith upon request, a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time commencing 90 days after the effective date of the first
registration filed by the Company for an offering of its securities to the
general public), the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements); a copy of the most recent
annual or quarterly report of the Company; and such other reports and documents
as such Person may reasonably request in availing itself of any rule or
regulation of the SEC allowing it to sell any such securities without
registration.
10. Notices. All notices, demands or other communications to be
-------
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when delivered personally,
mailed by certified or registered mail, return receipt requested and postage
prepaid, or sent via a nationally recognized overnight courier, or sent via
facsimile to the recipient followed by delivery by reputable overnight courier
service. Such notices, demands and other communications will be sent to the
address indicated below:
To the Company:
--------------
Pen-Tab Industries, Inc.
167 Kelley Drive
Front Royal, Virginia 22630
Attention: Mr. Alan Hodes
Telecopy No.: (540) 622-2008
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With copies, which shall not constitute notice, to:
--------------------------------------------------
Rudnick & Wolfe
203 North LaSalle Street
Chicago, Illinois 60601
Attention: Stephen A. Landsman, Esq.
Telecopy No.: (312) 236-7516
Citicorp Venture Capital, Ltd.
399 Park Avenue
14th Floor
New York, New York 10043
Attention: Mr. Thomas F. McWilliams
Telecopy No.: (212) 888-2940
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022-4675
Attention: Kirk A. Radke, Esq.
Telecopy No.: (212) 446-4900
To CVC:
------
Citicorp Venture Capital, Ltd.
399 Park Avenue
14th Floor
New York, New York 10043
Attention: Mr. Thomas F. McWilliams
Telecopy No.: (212) 888-2940
With a copy, which shall not constitute notice, to:
--------------------------------------------------
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022-4675
Attention: Kirk A. Radke, Esq.
Telecopy No.: (212) 446-4900
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To either of the Executives:
---------------------------
Pen-Tab Industries, Inc.
167 Kelley Drive
Front Royal, VA 22630
Attention: Alan Hodes and Michael Greenberg
Telecopy No.: (540) 622-2008
With a copy, which shall not constitute notice, to:
--------------------------------------------------
Rudnick & Wolfe
203 North LaSalle Street
Chicago, Illinois 60601
Attention: Stephen A. Landsman, Esq.
Telecopy No.: (312) 236-7516
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
11. Miscellaneous.
-------------
(a) No Inconsistent Agreements. The Company will not enter into any
--------------------------
agreement which is inconsistent with or violates the rights granted to the
holders of Registrable Securities in this Agreement.
(b) Remedies. Any Person having rights under any provision of this
--------
Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
(c) Amendments and Waivers. Except as otherwise provided herein, the
----------------------
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company and holders of 75% of the Registrable Securities;
provided, that no amendment or waiver which adversely affects the holders of the
Executive Registrable Securities vis-a-vis the other holders of Registrable
Securities shall be effective without the prior written consent of the holders
of 75% of the Executive Registrable Securities. For avoidance of doubt, the
addition of a party to this Agreement shall not, in and of itself, be considered
an amendment which
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adversely effects the holders of the Executive Registrable Securities vis-a-vis
the other holders of Registrable Securities.
(d) Successors and Assigns. All covenants and agreements in this
----------------------
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities.
(e) Severability. Whenever possible, each provision of this
------------
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
(f) Counterparts. This Agreement may be executed simultaneously in
------------
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will constitute
one and the same Agreement.
(g) Descriptive Headings. The descriptive headings of this Agreement
--------------------
are inserted for convenience only and do not constitute a part of this
Agreement.
(H) GOVERNING LAW. THE CORPORATE LAWS OF THE STATE OF VIRGINIA WILL
-------------
GOVERN ALL QUESTIONS CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS
STOCKHOLDERS. ALL OTHER QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND
INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
PEN-TAB INDUSTRIES, INC.
By:_____________________________________
Name:
Title:
CITICORP VENTURE CAPITAL, LTD.
By:_____________________________________
Name:
Title:
________________________________________
ALAN HODES
________________________________________
MICHAEL GREENBERG