EXHIBIT 10.4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, made as of the 3rd day of July, 1995, by and
among SUBURBAN OSTOMY SUPPLY CO., INC., a Massachusetts corporation (the
"Company"), those persons set forth on Schedule I as Investors (each an
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"Investor" and collectively the "Investors"), and Herbert Gray, Melvin Aronson,
Donald Benovitz, Patrick Bohan, and Stephen Aschettino (the "Management
Shareholders").
WHEREAS, the Investors are acquiring an aggregate of 280 shares of Common
Stock, no par value per share, of the Company (the "Common Stock"), pursuant to
the terms of a Stock Purchase and Redemption Agreement dated as of the date
hereof among the Company, the Investors and the Management Shareholders (the
"Purchase Agreement"); and
WHEREAS, it is a condition to the obligations of the Investors and the
Management Shareholders under the Purchase Agreement that this Agreement be
executed by the parties hereto in order to provide the Investors and the
Management Shareholders with certain registration rights with respect to the
shares of Common Stock being purchased by the Investors under the Purchase
Agreement and the shares of Common Stock held by the Management Shareholders,
and the parties are willing to execute this Agreement and to be bound by the
provisions hereof;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
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shall have the following respective meanings:
"Act" means the Securities Act of 1933, as amended, or any similar federal
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
"Commission" means the Securities and Exchange Commission, or any other
federal agency at the time administering the Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Holder" means the person who is then the record owner of Registrable
Securities which have not been sold to the public.
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"IPO Date" means the date on which shares of Common Stock shall have been
sold pursuant to a public offering (including without limitation one for the
assets or securities of other companies) pursuant to a registration statement
under the Act.
"Registrable Securities" means (i) all shares of Common Stock now owned or
hereafter acquired by any Investor or Management Shareholder; (ii) all shares of
Common Stock issuable with respect to securities of the Company convertible into
or exercisable for shares of Common Stock now owned or hereafter acquired by any
Investor or Management Shareholder; and (iii) any Common Stock issued in respect
of the shares described in clauses (i) and (ii) upon any stock split, stock
dividend, recapitalization or other similar event.
The term "register" means to register under the Act and applicable state
securities laws for the purpose of effecting a public sale of securities.
"Registration Expenses" means all expenses incurred by the Company in
compliance with Sections 2, 3 or 5 hereof, including, without limitation, all
registration and filing fees, printing expenses, transfer taxes, fees and
disbursements of counsel for the Company, blue-sky fees and expenses, fees of
transfer agents and registrars, reasonable fees and disbursements of one counsel
for all the selling Holders, and the expense of any special audits incident to
or required by any such registration.
"Selling Expenses" means all underwriting discounts and selling commissions
applicable to the sale of Registrable Securities and any transfer taxes
applicable to such sales.
2. Requested Registrations
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(a) If (i) on any two occasions at any time after December 31, 1995,
the Company shall receive from one or more Investors a written request that the
Company effect the registration of Registrable Securities representing at least
twenty-five percent (25%) of the Registrable Securities then outstanding or
issuable (or any lesser percentage if the reasonably anticipated aggregate price
to the public of the Registrable Securities to be included in such registration
would exceed $10,000,000), (ii) on any one occasion after the IPO Date, the
Company will receive from one or more Management Shareholders a written request
that the Company effect the registration of Registrable Securities representing
at least 33 1/3% of the Registrable Securities then owned by the Management
Shareholders, or (iii) on any one occasion during each calendar year which the
Company is eligible to register the sale of shares of Common Stock to the public
under the Act on Form S-3, the Company shall receive from one or more Holders of
Registrable Securities a written request that the Company effect the
registration of Registrable Securities held by such Holders having a fair market
value as of the date of such request of $1,000,000, the Company will:
(A) promptly give written notice of the proposed registration to all
other Holders; and
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(B) as soon as practicable, use all commercially reasonable efforts to
effect such registration as may be so requested and as would permit or
facilitate the sale and distribution of such portion of such Registrable
Securities as are specified in such request, together with such portion of the
Registrable Securities of any Holder or Holders joining in such request as are
specified in a written request given within twenty (20) days after receipt of
such written notice from the Company. If the underwriter managing the offering
advises the Holders who have requested inclusion of their Registrable Securities
in such registration that marketing considerations require a limitation on the
number of shares offered, such limitation shall be imposed pro rata among such
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Holders who requested inclusion of Registrable Securities in such registration
pursuant to this Section 2 or Section 3 below according to the number of
Registrable Securities requested to be registered by such Holders. No
registration initiated by the Holders hereunder shall count as a registration
under this Section 2 unless and until it shall have been declared effective and
the Holders shall have sold all of the Registrable Securities included in such
registration.
(b) Selection of Underwriter. The underwriter of any underwriting
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requested under this Section 2 shall be selected by the Holders holding a
majority of the Registrable Securities included therein; provided that such
underwriter must be reasonably acceptable to the Company.
3. "Piggy Back" Registrations.
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(a) If the Company shall determine to register any of its
securities, either for its own account or the account of a security holder or
holders exercising registration rights or otherwise (other than a registration
relating solely to a merger, acquisition of assets or securities or tender or
exchange offer, or to employee benefit plans or a registration on any
registration form which does not permit secondary sales or does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of Registrable Securities), the Company
will:
(i) Promptly give to each Holder of Registrable Securities written
notice thereof (which shall include the number of shares the Company or other
security holder proposes to register and, if known, the name of the proposed
underwriter).
(ii) Use its best efforts to include in such registration all the
Registrable Securities specified in a written request or requests, made by any
Holder within twenty (20) days after the date of delivery of the written notice
from the Company described in clause (i) above. If the underwriter advises the
Company that marketing considerations require a limitation on the number of
shares offered pursuant to any registration statement, then the Company may
offer all of the securities it proposes to register for its own account and such
limitation on any remaining securities that may, in the opinion of the
underwriter, be sold will be imposed pro rata among the Holders who requested
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inclusion of Registrable
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Securities in such registration according to the number of Registrable
Securities requested to be registered by each of them.
(b) The Company shall select the underwriter for an offering made
pursuant to this Section 3; provided that such underwriter must be reasonably
acceptable to the Holders of a majority of the Registrable Securities being
registered in such offering.
4. Expenses of Registration. All Registration Expenses incurred in
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connection with any registration, qualification or compliance pursuant to
Section 2, 3, or 5 shall be paid by the Company. All Selling Expenses incurred
in connection with any such registration, qualification or compliance shall be
borne by the holders of the Registrable Securities registered, pro rata on the
basis of the number of their Registrable Securities so registered.
5. Listing Application. If shares of any class of stock of the Company
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shall be listed on a national securities exchange or approved for quotation on
any over-the-counter market system, the Company shall, at its expense, include
in its listing application all of the shares of the listed class then owned by
any Holder.
6. Registration Procedures. In the case of each registration effected by
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the Company pursuant to this Agreement, the Company will keep each Holder of
Registrable Securities included in such registration advised in writing as to
the initiation of each registration and as to the completion thereof. At its
expense, the Company will do the following for the benefit of such Holders:
(a) Keep such registration effective for a period of one hundred
twenty days (120) or until the Holder or Holders have completed the distribution
described in the registration statement relating thereto, whichever first
occurs, and amend or supplement such registration statement and the prospectus
contained therein from time to time to the extent necessary to comply with the
Act and applicable state securities laws;
(b) Use its best efforts to register or qualify the Registrable
Securities covered by such registration under the applicable securities or "blue
sky" laws of such jurisdictions as the selling shareholders may reasonably
request; provided, that the Company shall not be obligated to qualify to do
business in any jurisdiction where it is not then so qualified or otherwise
required to be so qualified or to take any action which would subject it to the
service of process in suits other than those arising out of such registration or
which would subject it to taxation in such jurisdiction;
(c) Furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request;
(d) In connection with any underwritten offering pursuant to a
registration statement filed pursuant to Section 2 hereof, the Company will
enter into any underwriting
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agreement reasonably necessary to effect the offer and sale of Common Stock,
provided such underwriting agreement contains customary underwriting provisions
and is entered into by the Holder and provided further that, if the underwriter
so requests, the underwriting agreement will contain customary indemnification
and contribution provisions on the part of the Company;
(e) To the extent then permitted under applicable professional
guidelines and standards, obtain a comfort letter from the Company's independent
public accountants in customary form and covering such matters of the type
customarily covered by comfort letters and an opinion from the Company's counsel
in customary form and covering such matters of the type customarily covered in a
public issuance of securities, in each case addressed to the Holders, and
provide copies thereof to the Holders; and
(f) Permit the counsel to the selling shareholders whose expenses
are being paid pursuant to Section 5 hereof to participate in the registration
statement preparation process and to inspect and copy such corporate documents
as he may reasonably request.
7. Indemnification.
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(a) The Company will, and hereby does, indemnify each Holder, each
of its officers, directors and partners, and each person controlling such Holder
within the meaning of the Act, with respect to which registration, qualification
or compliance has been effected pursuant to this Agreement, and each
underwriter, if any, and each person who controls such underwriter within the
meaning of the Act, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus,
offering circular or other document (including any related registration
statement, notification or the like) incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein (in light of the circumstances under which they were
made, in the case of any prospectus) not misleading, or any violation by the
Company of the Act or the Exchange Act or securities act of any state or any
rule or regulation thereunder applicable to the Company and relating to action
or inaction required of the Company in connection with any such registration,
qualification or compliance, and will reimburse each such Holder, each of its
officers, directors and partners, and each person controlling such Holder, each
such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action,
whether or not resulting in any liability, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement (or
alleged untrue statement) or omission (or alleged omission) based upon written
information furnished to the Company by such Holder or underwriter and stated to
be specifically for use therein.
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(b) Each Holder will, if Registrable Securities held by him are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers and each underwriter, if any, of the Company's securities covered by
such a registration statement, each person who controls the Company or such
underwriter within the meaning of the Act and the rules and regulations
thereunder, each other such Holder and each of their officers, directors and
partners, and each person controlling such Holder, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular or
other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not (in light of the circumstances under which they were made, in the
case of any prospectus) misleading, and will reimburse the Company and such
Holder's directors, officers, partners, persons, underwriters or control persons
for any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action,
whether or not resulting in liability, in each case to the extent, but only to
the extent, that such untrue statement (or alleged untrue statement) or omission
(or alleged omission) is made in such registration statement, prospectus,
offering circular or other document in reliance upon and in conformity with
written information furnished to the Company by such Holder and stated to be
specifically for use therein; provided, however, that the obligations of each
Holder hereunder shall be limited to an amount equal to the net proceeds
received by such Holder upon sale of his securities.
(c) Each party entitled to indemnification under this Section 7 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, but the
failure of any Indemnifying Party to give such notice shall not relieve the
Indemnifying Party of its obligations under this Section 7 (except and to the
extent the Indemnifying Party has been prejudiced as a consequence thereof). The
Indemnifying Party will be entitled to participate in, and to the extent that it
may elect by written notice delivered to the Indemnified Party promptly after
receiving the aforesaid notice from such Indemnified Party, at its expense to
assume, the defense of any such claim or any litigation resulting therefrom,
with counsel reasonably satisfactory to such Indemnified Party, provided that
the Indemnified Party may participate in such defense at its expense,
notwithstanding the assumption of such defense by the Indemnifying Party, and
provided, further, that if the defendants in any such action shall include both
the Indemnified Party and the Indemnifying Party and the Indemnified Party shall
have reasonably concluded that there may be legal defenses available to it
and/or other Indemnified Parties which are different from or additional to those
available to the Indemnifying Party, the Indemnified Party or Parties shall have
the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
Indemnified Party or Parties and the fees and expenses of such counsel shall be
paid by the Indemnifying Party. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party (which consent shall not be unreasonably withheld, delayed or
conditioned), consent to entry of any judgment or enter
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into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation. Each Indemnified Party
shall (i) furnish such information regarding itself or the claim in question as
an Indemnifying Party may reasonably request in writing and as shall be
reasonably required in connection with defense of such claim and litigation
resulting therefrom and (ii) shall reasonably assist the Indemnifying Party in
any such defense, provided that the Indemnified Party shall not be required to
expend its funds in connection with such assistance.
(d) No Holder shall be required to participate in a registration
pursuant to which it would be required to execute an underwriting agreement in
connection with a registration effected under Section 2 or 3 which imposes
indemnification obligations on such Holder more onerous than those imposed
hereunder; provided, however, that the Company shall not be deemed to breach the
provisions of Section 2 or 3 if a Holder is not permitted to participate in a
registration on account of his refusal to execute an underwriting agreement on
the basis of this subsection (d).
8. Information by Holder. Each Holder of Registrable Securities included
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in any registration shall furnish to the Company such information regarding such
Holder and the distribution proposed by such Holder as the Company may
reasonably request in writing and as shall be reasonably required in connection
with any registration, qualification or compliance referred to in this Agreement
or otherwise required by applicable state or federal securities laws.
9. Limitations on Registration Rights. From and after the date of this
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Agreement, the Company shall not, without the prior written consent of the
Holders of a majority of the outstanding Registrable Securities, enter into any
agreement with any holder or prospective holder of any securities of the Company
which would give any such holder or prospective holder (a) the right to require
the Company, upon any registration of any of its securities, to include, among
the securities which the Company is then registering, securities owned by such
holder, unless under the terms of such agreement, such holder or prospective
holder may include such securities in any such registration only to the extent
that the inclusion of its securities will not limit the number of Registrable
Securities sought to be included by the Holders of Registrable Securities or
reduce the offering price thereof; or (b) the right to require the Company to
initiate any registration of any securities of the Company.
10. Exception to Registration. The Company shall not be required to effect
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a registration under this Agreement if (i) in the written opinion of counsel for
the Company, which counsel and the opinion so rendered shall be reasonably
acceptable to the Holders of Registrable Securities, such Holders may sell
without registration under the Act all Registrable Securities for which they
requested registration under the provisions of the Act and in the manner and in
the quantity in which the Registrable Securities were proposed to be sold, or
(ii) the Company shall have obtained from the Commission a "no-action" letter to
that effect; provided that this Section 10 shall not apply to sales made under
Rule 144(k) or any successor rule promulgated by the Commission until after the
effective date of the Company's initial registration of shares under the
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Act. Notwithstanding the foregoing, in no event shall the provisions of this
Section 10 be construed to preclude a Holder of Registrable Securities from
exercising rights under Section 3 for a period of three years after the
effective date of the Company's initial registration of shares under the Act.
11. Rule 144 Reporting. With a view to making available the benefits of
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certain rules and regulations of the Commission which may permit the sale of
restricted securities (as that term is used in Rule 144 under the Act) to the
public without registration, the Company agrees to:
(a) make and keep public information available as those terms are
understood and defined in Rule 144 under the Act, at all times from and after
ninety days following the effective date of the first registration under the Act
filed by the Company for an offering of its securities to the general public;
(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the Act and
the Exchange Act at any time after it has become subject to such reporting
requirements; an d
(c) so long as a Holder owns any restricted securities, furnish to
the Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 (at any time from and
after ninety days following the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Act and 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 so filed
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.
12. Damages. The Company recognizes and agrees that the Holder of
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Registrable Securities shall not have an adequate remedy if the Company fails to
comply with the provisions of this Agreement, and that damages will not be
readily ascertainable, and the Company expressly agrees that in the event of
such failure any Holder of Registrable Securities shall be entitled to seek
specific performance of the Company's obligations hereunder and that the Company
will not oppose an application seeking such specific performance.
13. Representations and Warranties of the Company. The Company represents
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and warrants to the Investors as follows:
(a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action and will not
violate any provision of law, any order of any court or other agency of
government, the Articles of Organization or By-laws of the Company or any
provision of any indenture, agreement or other
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instrument to which it or any or its properties or assets is bound, conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement or other instrument or
result in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the properties or assets of the Company.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, except as (A) the enforceability
thereof may be limited by bankruptcy, reorganization, insolvency, moratorium,
fraudulent conveyance or other laws of general applicability affecting the
enforcement of creditors' or secured parties' rights or debtors' obligations
generally, (B) the availability of specific performance or other equitable
remedies may be limited by equitable principles of general applicability
(whether such matter is considered in a proceeding at law or in equity); and
(C) the indemnification and contribution provisions with respect to securities
law matters may be limited by applicable securities laws or principles of public
policy.
14. Miscellaneous.
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(a) All covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto (including without
limitation transferees of any Registrable Securities), whether or not so
expressed.
(b) All notices, requests, consents and other communications
hereunder shall be in writing and shall be mailed by certified or registered
mail, return receipt requested, postage prepaid, or telecopied or sent by other
facsimile method addressed as follows:
If to the Company, any Investor or the Management Shareholders, at the
address of such party set forth on Schedule I hereto or the most recent
address as is shown on the stock records of the Company; and
If to any subsequent Holder of Registrable Securities, to it at such
address as may have been furnished to the Company in writing by such
Holder; or, in any case, at such other address or addresses as shall have
been furnished in writing to the Company (in the case of a Holder of
Registrable Securities) or to the Holders of Registrable Securities (in
the case of the Company) in accordance with the provisions of this
paragraph.
(c) This Agreement shall be governed by and construed in accordance
with the laws of The Commonwealth of Massachusetts without regard to the
conflict of laws provisions thereof.
(d) This Agreement may not be amended or modified, and no provision
hereof may be waived, without the written consent of the Company and the holders
of at least a majority
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of the outstanding Registrable Securities; provided, however that if any
amendment adversely affects the Investors or the Management Shareholders as a
class, such amendment shall also require the consent of the Holders of a
majority of the Registrable Securities held by such class.
(e) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(f) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
* * * * * * * * * *
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IN WITNESS WHEREOF, this Agreement has been executed as of the date and
year first above written.
MANAGEMENT SHAREHOLDERS: COMPANY:
SUBURBAN OSTOMY SUPPLY CO., INC.
/s/ Herbert Gray
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Herbert Gray By: /s/ Herbert Gray
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/s/ Melvin Aronson Name
- ------------------ Title:
Melvin Aronson
/s/ Donald Benovitz INVESTORS:
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Donald Benovitz SUMMIT VENTURES III, L.P.
/s/ Patrick Bohan By: Summit Partners III, L.P.,
- ----------------- General Partner
Patrick Bohan
By: Stamps, Woodsum & Co. III,
/s/ Stephen Aschettino General Partner
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Stephen Aschettino
By: /s/ Martin J. Mannion
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General Partner
SUMMIT INVESTORS II, L.P.
By: /s/ Martin J. Mannion
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Authorized Signatory
SUMMIT SUBORDINATED DEBT
FUND, L.P.
By: Summit Partners SD, L.P.
Its General Partner
By: /s/ Martin J. Mannion
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General Partner
THE BEAR STEARNS COMPANIES, INC.
By: /s/ David Glaser
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Name:
Title:
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Schedule I
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Company
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Suburban Ostomy Supply Co., Inc.
75 October Hill Road
Holliston, MA 01746
Attention: President
Investors
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Name and Address
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Summit Ventures III, L.P.
One Boston Place
Boston, MA 02108
Attn: Joseph F. Trustey
Summit Investors II, L.P.
One Boston Place
Boston, MA 02108
Attn: Joseph F. Trustey
Summit Subordinated Debt Fund, L.P.
One Boston Place
Boston, MA 02108
Attn: Joseph F. Trustey
The Bear Stearns Companies, Inc.
245 Park Avenue
New York, NY 10167
Attn: Robert Yedid
Management Shareholders
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Herbert Gray
Melvin Aronson
Donald Benovitz
Patrick Bohan
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Stephen Aschettino
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