REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT is made and entered into
as of April 16, 1997, among ARMOR HOLDINGS, INC., a Delaware corporation (the
"Issuer"), and those stockholders of the Company which are signatories hereto
(collectively, the "Stockholders" and individually, a "Stockholder").
WHEREAS, each Stockholder is the beneficial owner of certain
Registrable Securities (as defined below) issued by the Issuer;
WHEREAS, the Issuer, together with its wholly-owned
subsidiary Armor Holdings Limited ("Limited"), have acquired the outstanding
share capital of DSL Group Limited ("DSL") (the "Acquisition").
NOW, THEREFORE, in consideration of the premises and mutual
covenants and obligations hereinafter set forth, the Issuer and the
Stockholders, intending legally to be bound, hereby covenant and agree, as
follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the
following terms shall have the following meanings:
"Affiliate" of any person shall mean any other person who
either directly or indirectly is in control of, is controlled by, or is under
common control with such person, and "Affiliated" shall have the corresponding
meaning; provided, that for purposes of this definition, an investment entity
shall be deemed to be controlled by each of its investment manager, investment
advisor or general partner.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day in the City of New York or London on which banks are
authorized to close.
"Common Stock" shall mean the common stock, par value $.01
per share, of the Issuer.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Holder" shall mean any Stockholder and any Person that
acquires Registrable Securities from any Stockholder, including the successors
and assigns of any Stockholder that acquires Registrable Securities, directly
or indirectly, from such Person. For purposes of
this Agreement, the Issuer may deem the registered holder of a Registrable
Security as the Holder thereof.
"Person" shall mean an individual, partnership, limited
partnership, corporation, limited liability company, joint venture, trust or
unincorporated organization, a government or agency or political subdivision
thereof or any other entity.
"Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by a prospectus supplement
with respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement and by all other amendments
and supplements to the prospectus, including but not limited to post-effective
amendments and all material incorporated by reference in such prospectus.
"Registrable Securities" shall mean the Common Stock issued
in respect of the Acquisition and any other shares of Common Stock or other
securities of the Issuer issued or issuable as a result of, or in connection
with, any combination of shares, recapitalization, reclassification, merger or
consolidation, exchange or distribution in respect of the shares of Common
Stock issued in respect of the Acquisition Agreement. For purposes of this
Agreement, a Registrable Security ceases to be a Registrable Security when
either (x) it has been registered under the Securities Act and sold or
distributed to any Person pursuant to an effective Registration Statement
covering it or (y) it has been sold or distributed to any Person pursuant to
Rule 144 or Rule 145(d) and, certificates representing any such security have
been issued free of a Securities Act restrictive legend.
"Registration Statement" shall mean any Registration
Statement which covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus included therein, all
amendments and supplements to such Registration Statement, including but not
limited to post-effective amendments, all exhibits and all material
incorporated by reference in such Registration Statement.
"Rule 144" and "Rule 145" shall mean, respectively, Rule 144
and Rule 145, each promulgated under the Securities Act, as amended from time
to time, or any similar successor rule thereto that may be promulgated by the
SEC.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"SEC" shall mean the Securities and Exchange Commission.
"Selling Holder" shall mean with respect to a Registration
Statement any Holder or Electing Holder whose securities are included in such
Registration Statement.
Capitalized terms not otherwise defined herein shall be the
same meanings herein as set forth in the Agreement among Issuer, Limited and
DSL, dated the same date as
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this Agreement, for the sale and purchase of the outstanding capital stock of
DSL (the "Acquisition Agreement").
SECTION 2. REGISTRATION RIGHTS.
(a) Demand Registration Rights. Subject to the
provisions of the second to last sentence of this Paragraph (a) if at any time
after the closing of the Acquisition, the Issuer shall receive written notice
(a "Demand") from Holders ("Electing Holders") holding at least fifty percent
(50%) of the Registrable Securities outstanding at the time such Demand is
made, that the Holders desire to register under the Securities Act all of the
Registrable Securities held by such Electing Holders under circumstances that
would require the filing of a Registration Statement under the Securities Act,
the Issuer shall promptly upon receipt of such Demand give notice to all of
the non-Electing Holders ("Other Holders"). Upon the receipt of such notice by
an Other Holder, such Other Holder shall have until 5:00 p.m., New York City
time on the next Business Day following the date such notice is given by the
Issuer to request that the Issuer include in such Registration Statement all
Registrable Securities held by such Other Holder by giving notice to the
Issuer in accordance with Section 8, whereupon such Other Holder shall be
deemed to be an Electing Holder. Except as set forth in Section 2(b) hereof,
any other Holder failing to timely request that his shares of Registrable
Securities be included in such Registration Statement shall thereafter have no
further rights to seek registration of his Common Stock pursuant to this
Agreement. All shares of Registrable Securities which Holders request be
included in such Registration Statement are herein referred to as the "Shares"
and such Holders shall thereupon be included as Electing Holders, with respect
to the Shares. The Issuer shall then prepare and file with the SEC an
appropriate Registration Statement under the Securities Act, which shall be on
Form S-3 if available to the Issuer, with respect to the Shares as soon as
practicable thereafter and in any event within thirty (30) days of the Demand
being served. As soon as practicable, and in any event by July 10, 1997, the
Issuer shall cause to be published combined operating results of the Issuer,
including at least thirty days of combined sales and net income of Issuer, its
consolidated subsidiaries and DSL and its consolidated subsidiaries following
the Completion Date (the "Combined Results"). The Issuer will use its best
efforts to cause the Registration Statement to be declared effective as soon
as practicable after publication of the Combined Results. The Holders
collectively shall be entitled to one (1) demand registration right pursuant
to this Agreement. In the event a Registration Statement filed pursuant this
Agreement is subsequently withdrawn at the request of the majority of the
Electing Holders, such Registration Statement shall nonetheless be deemed to
be the sole demand registration right granted hereunder, and the Electing
Holders shall have no further rights hereunder.
(b) "Piggyback" Registration Rights. At any time
within one (1) year after the Completion Date, the Issuer shall, at least ten
(10) days prior to the filing of any Registration Statement under the
Securities Act (other than a registration statement filed pursuant to Section
2 (a) hereof or on a Form S-8 or Form S-4 or any successor form) relating to a
public offering of the Issuer's Common Stock after Jonathan Spiller has sold,
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transferred or disposed following the Completion Date, or proposes to sell,
transfer, or dispose of, shares of Common Stock held by him in excess of
64,666 shares, give written notice of such proposed filing and the proposed
date thereof to the Holders that own Registrable Securities, in accordance
with Section 8. If, on or before 5:00 p.m. New York City time on the tenth
(10th) day following the date on which such notice is given, the Issuer shall
receive a written request from any of such Holders requesting that the Issuer
include among the securities covered by such Registration Statement that
amount of Registrable Securities owned by such Holder equal to the "Selling
Shareholder Percentage" of the Registerable Securities held by such Holder
(the "Piggyback Shares"), then the Issuer shall include such Piggyback Shares
in such Registration Statement. The "Selling Shareholder Percentage" shall
equal 100 multiplied by a fraction whose numerator shall be such number of
shares of Common Stock sold, transferred or disposed following the Completion
Date, or proposed to be sold, transferred or disposed of by Mr. Spiller in
excess of 64,666 and whose denominator shall be 581,994. In the event that, in
the reasonable opinion of the managing underwriter of such public offering,
the full amount of the Piggyback Shares cannot be included in the Registration
Statement, the number of Piggyback Shares to be included in such Registration
Statement shall be reduced among the Holders seeking to register Registrable
Securities pro rata in accordance with the number of Registerable Securities
sought to be registered by such Holders. The Holders shall collectively be
entitled to an unlimited number of piggyback registrations pursuant to this
Section 2(b).
(c) Terms and Conditions of Registration. In
connection with any Registration Statement filed pursuant to this Agreement
the following provisions shall apply:
(i) The Holders seeking to register Shares
or Piggyback Shares, as the case may be, will promptly provide the Issuer with
such information, required by the Securities Act and the rules and regulations
promulgated thereunder, about the Holders and their respective Affiliates, as
the Issuer shall reasonably request in order to prepare such Registration
Statement.
(ii) All expenses incident to the Issuer's
performance of or compliance with this Agreement or related to the preparation
and filing of the Registration Statement shall be paid by the Issuer,
including (except as set forth below) registration and filing fees and
expenses, fees and expenses of compliance with federal and state securities
laws, expenses of printing and fees and disbursements of Issuer's counsel and
Issuer's independent auditors, but excluding: (x) the underwriter commissions
related to the Shares or Piggyback Shares, (y) the Holders or Electing Holders
own legal fees, and (z) in the case of a Registration Statement filed pursuant
to Section 2(b), the SEC filing fee (in addition to (x) and (y) above). In
each case such fees and expenses shall be borne by the Electing Holders or
Holders pro rata in accordance with the number of Shares sought to be
registered by them.
(iii) Following the effective date of a
Registration Statement, the Issuer shall, upon the request of the Holders who
are registering Registrable Securities in
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such Registration Statement, forthwith supply such number of Prospectuses
(including preliminary prospectuses and amendments and supplements thereto)
meeting the requirements of the Securities Act and such other documents as are
referred to in the Prospectus as shall be reasonably requested by such Holders
to permit a public distribution of their Registrable Securities provided that
such Holders furnish the Issuer with such appropriate information relating to
their intentions in connection therewith as the Issuer shall reasonably
request in writing.
(iv) The Issuer shall prepare and file
such amendments and supplements to any Registration Statement filed pursuant
to this Agreement as may be necessary to keep such Registration Statement
effective and to comply in a timely manner with the provisions of the
Securities Act, the Exchange Act and applicable "Blue Sky" laws with respect
to the offer and sale or other disposition of the Registrable Securities
covered by such Registration Statement during the period set forth in Section
2(c)(vii) or required for distribution of the Piggyback Shares, as applicable
and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement during
the applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration Statement
or supplement to the Prospectus.
(v) The Electing Holders may select the
underwriter or underwriters, if any, who are to undertake the offering and
distribution of the Registrable Securities included in the Registration
Statement filed pursuant to Section 2(a) hereof, subject to the Issuer's prior
approval of the underwriter, which approval shall not be unreasonably
withheld.
(vi) The Issuer shall use its best efforts
to register the Shares of the Electing Holders covered by any such
Registration Statement filed pursuant to Section 2(a) hereof under such
securities or Blue Sky laws in such jurisdictions as the Electing Holders may
reasonably request; provided, however, that the Issuer shall not be required
to (A) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph (vi) or (B) consent
to general service of process in any such jurisdiction.
(vii) The Issuer shall use its best
efforts to keep a Registration Statement filed pursuant to the Section 2(a)
continuously effective for a period of 24 months following the date the
Registration Statement is declared effective or the sale by the Institutional
Vendors of all of their Registrable Securities, whichever shall first occur,
and provide all requisite financial statements for the periods specified in
this Section 2, as applicable. Upon the occurrence of any event that would
cause any Registration Statement or a Registration Statement filed pursuant to
Section 2(b) or the Prospectus contained therein (A) to contain a material
misstatement or omission or (B) not to be effective and usable for resale of
Registrable Securities during the period required by this Agreement, the
Issuer shall so notify the Holders whose Registrable Securities are included
in such Registration
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Statement and shall file promptly an appropriate amendment to such
Registration Statement, (1) in the case of clause (A), correcting any such
misstatement or omission, and (2) in the case of clauses (A) and (B), use its
best efforts to cause such amendment to be declared effective and such
Registration Statement and the related Prospectus to become usable for their
intended purpose(s) as soon as practicable thereafter.
(viii) The Issuer shall advise the Selling
Holders promptly (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any Registration
Statement or any post-effective amendment thereto, when the same has become
effective, (B) of any request by the SEC for amendments to the Registration
Statement or amendments or supplements to the Prospectus, (C) of the issuance
by the SEC of any stop order suspending the effectiveness of the Registration
Statement under the Securities Act or of the suspension by any state
securities commission of the qualification of the Registrable Securities for
offering or sale in any jurisdiction, or the initiation of any proceeding for
any of the preceding purposes. If at any time the SEC shall issue any stop
order suspending the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the
Registrable Securities under state securities or Blue Sky laws, the Issuer
shall use its best efforts to obtain the withdrawal or lifting of such order
as soon as practicable.
(ix) Upon request by any Electing Holder,
the Issuer shall furnish to each Electing Holder named in the Registration
Statement or Prospectus to be filed pursuant to the Section 2(a) herein before
filing with the SEC and any underwriter, copies of any Registration Statement
or any Prospectus included therein or any amendments or supplements to any
such Registration Statement or Prospectus which documents will be subject to
the review and comment of such Electing Holders for a period of at least two
Business Days. The Issuer will not file any such Registration Statement or
Prospectus or any amendment or supplement to such Registration Statement or
Prospectus to which the selling Holders of the Registrable Securities covered
by such Registration Statement or the underwriter(s) in connection with such
sale, if any, shall reasonably object within two Business Days after the
receipt thereof.
(x) The Issuer shall if requested by any
Electing Holders or the underwriter(s) in connection with such sale, if any,
promptly include in any Registration Statement or Prospectus, pursuant to a
supplement or post-effective amendment if necessary, such information as such
Electing Holders and underwriter(s), if any, may reasonably request to have
included therein, including, without limitation, Registrable Securities,
information with respect to the amount of Registrable Securities being sold to
such underwriters(s), the purchase price being paid therefor and any other
terms of the offering of the Registrable Securities to be sold in such
offering; and make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after the Issuer is notified
of the matters to be included in such Prospectus supplement or post-effective
amendment.
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(xi) The Issuer shall furnish to each
Selling Holder, or underwriter, if any without charge, at least one copy of
the Registration Statement, as first filed with the SEC and of each amendment
thereto, including all documents incorporated by reference therein and all
exhibits (including exhibits incorporated therein by reference).
(xii) Subject to receipt of an opinion of
counsel to a Selling Holder which is satisfactory in form and substance to
counsel to the Issuer, the Issuer shall in connection with any sale of
Registrable Securities that will result in such securities no longer being
Restricted Securities, as defined in Rule 144 promulgated under the Securities
Act, cooperate with the selling Holders and the underwriter(s), if any, to
facilitate the preparation and delivery of certificates representing such
securities to be sold and not bearing any restrictive legends to permit
delivery of the related transaction.
(xiii) The Issuer shall use reasonable
efforts to cause the disposition of the Registrable Securities covered by the
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the seller
or sellers thereof or the underwriter(s), if any, to consummate the
disposition of such Registrable Securities, subject to the proviso contained
in clause (vi) above.
(xiv) The Issuer shall cooperate and
assist in any filings required to be made with the NASD and in the performance
of any reasonable due diligence investigation by any Electing Holder or
underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD.
(xv) The Issuer shall provide promptly to
each selling Holder upon request each document filed with the SEC pursuant to
the requirements of Section 13 or Section 15(d) of the Securities Exchange Act
of 1934.
(xvi) Each Selling Holder agrees that,
upon receipt of the notice referred to in Section 2(c)(vii) or any notice from
the Issuer of the existence of any fact of the kind described in Section
2(c)(viii) hereof, such Selling Holder will forthwith discontinue disposition
of Registrable Securities pursuant to the applicable Registration Statement
until such Selling Holder's receipt of the copies of a supplemented or amended
Prospectus, or until it is advised in writing by the Issuer that the use of
the Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus (the
"Advice"). If so directed by the Issuer, each Selling Holder will dispose of
all copies, other than permanent file copies then in such Selling Holder's
possession, of the Prospectus covering such Registrable Securities that was
current at the time of receipt of either such notice. In the event the Issuer
shall give any such notice, the time period regarding the effectiveness of
such Registration Statement set forth in Section 2(c)(vii) shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 2(c)(vii) or Section
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2(c)(viii) hereof to and including the date when each Selling Holder covered
by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus or shall have received the Advice.
(xvii) The Issuer will file the reports
required to be filed by it under the Securities Act and the Exchange Act of
1934, as amended and the rules and regulations promulgated thereunder and will
take such further action as any Electing Holders of Registrable Securities may
reasonably request, all to the extent required from time to time to enable
such Electing Holder to sell Registrable Securities without registration under
the Securities Act within the limitations of the exemptions provided by: (i)
Rule 144, as such Rule may be amended from time to time or (ii) a similar rule
or regulation thereafter adopted by the SEC.
(xviii) The Issuer agrees that the
Electing Holders can appoint an underwriter reasonably acceptable to the
Issuer, and the Issuer agrees to negotiate and enter into a customary
underwriting agreement with such underwriter that is reasonably acceptable to
the Issuer, and the Issuer shall take further action reasonably requested by
such underwriter in order to facilitate the registration and disposition of
such Registrable Securities in any underwritten offering to be made of
Registrable Securities in accordance with this Agreement. In addition, the
Issuer shall cooperate in the performance of any reasonable due diligence
investigation by a representative of the Electing Holders and any managing
underwriter including making available for inspection necessary corporate
documents and records, and the Issuer shall make available company personnel
for discussion of such investigation. If the Issuer shall receive any legal
opinions, auditors opinions or comfort letters in connection with the
registration of any Registrable Securities, it shall provide copies of the
same to a representative of the Electing Holders where permitted, provided
that, if not permitted, the Issuer shall seek such permission.
(d) Indemnification
(i) The Issuer agrees to indemnify and
hold harmless (i) each Holder and (ii) each person, if any, who controls
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) any Holder (any of the persons referred to in this clause (ii)
being hereinafter referred to as a "controlling person") and (iii) the
respective of officers, directors, partners, employees, representatives and
agents of any Holder or any controlling person (any person referred to in
clause (i), (ii) or (iii) may hereinafter be referred to as an "Indemnified
Holder"), to the fullest extent lawful, joint and several from and against any
and all losses, claims, damages, liabilities, judgments, actions and expenses,
joint or several (including without limitation and as incurred, reimbursement
of all reasonable costs of investigating, preparing, pursuing or defending any
claim or action, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, including the reasonable fees and expenses
of counsel to any Indemnified Holder) directly or indirectly caused by,
related to, based upon, arising out of or in connection with any untrue
statement or alleged untrue statement of a material fact contained in any
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Registration Statement, preliminary prospectus or Prospectus (or any amendment
or supplement thereto), or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation of the Issuer of any rule
or regulation under the Securities Act except insofar as such losses, claims,
damages, liabilities or expenses are caused by an untrue statement or omission
or alleged untrue statement or omission that is made in reliance upon and in
conformity with information relating to any of the Holders furnished in
writing to the Company by any of the Holders expressly for use therein.
In case any action or proceeding (including any governmental
or regulatory investigation or proceeding) shall be brought or asserted
against any of the Indemnified Holders with respect to which indemnity may be
sought against the Company, such Indemnified Holder (or the Indemnified Holder
controlled by such controlling person) shall promptly notify the Company in
writing (provided, that the failure to give such notice shall not relieve the
Company of any liability which it may have pursuant to this Agreement except
to the extent that such failure to give notice damages the Company solely as a
result of the failure to provide timely notice). Such Indemnified Holder shall
have the right to employ its own counsel in any such action and the fees and
expenses of such counsel shall be paid, as incurred, by the Company
(regardless of whether it is ultimately determined that an Indemnified Holder
is not entitled to indemnification hereunder). The Company shall not, in
connection with any one such action or proceeding or separate but
substantially similar or related actions 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 (in addition to any local counsel) at any time for such Indemnified
Holders, which firm shall be designated by the Holders. The Company shall be
liable for any settlement of any such action or proceeding effected with the
Company's prior written consent, which consent shall not be withheld
unreasonably, and the Company agrees to indemnify and hold harmless each
Indemnified Holder from and against any loss, claim, damage, liability or
expense by reason of any settlement of any action effected with the written
consent of the Company. The Company shall not, without the prior written
consent of each Indemnified Holder, settle or compromise or consent to the
entry of judgment in or otherwise seek to terminate any pending or threatened
action, claim, litigation or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not any Indemnified Holder is
a party thereto), unless such settlement, compromise, consent or termination
includes an unconditional release of each Indemnified Holder from all
liability arising out of such action, claim, litigation or proceeding.
(ii) Each Holder of Registrable Securities
agrees, severally and not jointly, to indemnify and hold harmless the Company,
and its directors, of officers, and any person controlling (within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act) the
Company, and the respective officers, directors, partners, employees,
representatives and agents of each such person, to the same extent as the
foregoing indemnity from the Company to each of the Indemnified Holders, but
only with respect to claims and actions based on information relating to such
Holder furnished in
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writing by such Holder expressly for use in any Registration Statement. In
case any action or proceeding shall be brought against the Company or its
directors or officers or any such controlling person in respect of which
indemnity may be sought against a Holder of Registrable Securities, such
Holder shall have the rights and duties given the Company, and the Company,
such directors or officers or such controlling person shall have the rights
and duties given to each Holder by the preceding paragraph. In no event shall
any Holder be liable or responsible for any amount in excess of the amount by
which the total received by such Holder with respect to its sale of
Registrable Securities pursuant to a Registration Statement exceeds (i) the
value of the Registrable Securities received by such Holder on Completion,
determined as set forth in the definition of Consideration Shares in the
Acquisition Agreement and (ii) the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
(iii) If the indemnification provided for
in this Section 2(d) is unavailable to an indemnified party under Section
2(d)(i) or Section 2(d)(ii) hereof (other than by reason of exceptions
provided in those Sections) in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate
to reflect the relative fault of the Company, on the one hand, and of the
Indemnified Holder, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
fault of the Company, on the one hand, and of the Indemnified Holder, on the
other hand, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company or by the Indemnified Holder and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above shall
be deemed to include, subject to the limitations set forth in the second
paragraph of Section 2(d)(i), any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any
action or claim.
The Company and each Holder of Registrable Securities agree
that it would not be just and equitable if contribution pursuant to this
Section 2(d)(iii) were determined by pro rata allocation (even if the Holders
were treated as one entity for such purpose) or by any other method of
allocation which does not take account the equitable considerations referred
to in the immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities or
expenses referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
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Notwithstanding the provisions of this Section 2(d), no Holder or its related
Indemnified Holders shall be required to contribute, in the aggregate, any
amount in excess of the net proceeds received by such Holder with respect to
the sale of its Registrable Securities pursuant to a Registration Statement.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 1 l(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Holders' obligations to contribute pursuant to this Section 2(d)(iii) are
several in proportion to the respective numbers of shares of Common Stock
issued to them pursuant to the Acquisition Agreement hereunder and not joint.
SECTION 3. COOPERATION WITH THE ISSUER. The offering and
sale of Shares or Piggyback shares, as the case may be, by any Holder shall
comply in all material respects with the applicable terms, provisions and
requirements set forth in this Agreement and any such Holder shall cooperate
with the Issuer in respect thereof in a timely fashion.
SECTION 4. NO INCONSISTENT AGREEMENTS. The Issuer will not,
on or after the date of this Agreement, enter into any agreement with respect
to its securities that is inconsistent with the rights granted to the Holders
in this Agreement or otherwise conflicts with the provisions hereof. The
rights granted to the Holders hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the Issuer's
securities under any agreement in effect on the date hereof.
SECTION 5. POST-REGISTRATION OBLIGATIONS.
(a) Restrictions on the Issuer. From the date
hereof and continuing for a period of 120 days from the date on which a
Registration Statement filed pursuant to Section 2(a) is declared effective by
the SEC (the "Restricted Period"), the Issuer may not, without the written
consent of the Electing Holders, offer, sell, transfer or otherwise dispose of
or issue any Common Stock or other securities convertible or exchangeable for
Common Stock until the earlier of: (i) the receipt by all of the Electing
Holders of a bona fide offer to purchase all of their Registrable Securities
at a price not less than $8.56 per share whether or not such offer is accepted
by all of the Electing Holders or (ii) the Issuer has offered in writing to
the Electing Holders to participate in any private placement or underwritten
public offering (the "Offering") of the Issuer's Common Stock on a pari passu
basis with the Issuer provided: (x) the price per share of the Offering (the
"Offering Price") is at least equal to $8.56 per share and the Offering Price
is equal to or greater than 85% of the average closing price of the Common
Stock on the American Stock Exchange computed over the twenty trading days
immediately prior to the date the underwriting agreement is signed by the
Electing Holder with respect to the Offering and (y) to the extent that, in
the opinion of the underwriter, all of the Shares requested to be registered
by the Issuer and the Electing Holders cannot be sold in an Offering, then all
of the Shares of the Electing Holders registered pursuant to the Registration
Statement shall be sold prior to the sale of any shares of the Issuer at the
offering price. Notwithstanding the foregoing sentence, nothing contained in
this Agreement shall restrict the Issuer, or any subsidiary of the Issuer from
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offering, selling, transferring or otherwise disposing of or issuing Common
Stock in connection with the Issuer's contemplated acquisition of Gorandel
Trading Ltd. or outstanding contractual obligations, including the issuance of
Common Stock upon the exercise of options or conversion of any outstanding
convertible securities. Each Electing Holder shall notify the Issuer in
writing within five Business Days of receipt of the offer from the Issuer to
participate in the Offering of its intention to participate in the Offering
("Notice of Participation"), or the offer of the Issuer shall be deemed to
have been declined. If the Electing Holders receive an offer pursuant to
Section 5(a)(i) and reject such an offer then the Issuer shall be released
from any restrictions on the offer, sale, transfer, disposition or issuance of
Common Stock contained in this Section 5(a); provided, however, the Electing
Holders shall nonetheless continue to have the right to have their Common
Stock included in any underwritten public offering of the Issuer's Common
Stock during the Restricted Period on a pari passu basis with the Issuer,
subject to the condition set forth in Section 5(a)(ii)(y) at the offering
price.
(b) Restrictions on Electing Holders. If any
Electing Holder declines to participate in an Offering pursuant to Section
5(a)(ii) by failing to timely deliver a Notice of Participation, then for a
period of ninety (90) days starting on the sixth business day following
receipt by such Electing Holder of an offer by the Issuer given pursuant to
Section 5(a)(ii), such Electing Holder shall not offer, sell, transfer or
otherwise dispose of any Registrable Securities in any transaction either
public or private. Upon the expiration of such ninety day period, for an
additional period of ninety (90) days thereafter all Registrable Securities
sold by such Electing Holder shall be sold by such Electing Holder through the
underwriter selected by the Issuer to conduct the Offering, as such
underwriter may determine in its discretion provided it shall use its
reasonable efforts in connection with such sale.
(c) Coordination of Sales Activities. The Issuer
and Electing Holders agree to use their best efforts to inform the other party
as to any offer made to such party with regard to the Common Stock so as to
effect the provisions of this Section 4.
SECTION 6. AMENDMENTS AND WAIVERS. The provisions of this
Agreement, including the provisions of this Section 6, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Issuer has obtained the prior
written consent of the Holders of a majority of the Registrable Securities at
the time of any such amendment.
SECTION 7. REMEDIES. Each Holder having rights under any
provision of this Agreement shall be entitled to enforce such rights
specifically or to recover damages or to exercise any other remedy available
to it at law or in equity. The foregoing rights and remedies shall be
cumulative and the exercise of any right or remedy provided herein shall not
preclude any Person from exercising any other right or remedy provided herein.
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SECTION 8. NOTICES. All notices and other communications
provided for or permitted hereunder shall be made in writing by facsimile
transmission, hand-delivery, registered first-class mail, return receipt
requested, telex, or air-courier guaranteeing overnight delivery and shall be
effective upon receipt:
(a) If to a Holder, at the most current address
given by such Holder to the Issuer in accordance with the provisions of this
Section 8, which address initially is, with respect to each Holder, the
address set forth on Schedule I of this Agreement.
(b) If to the Issuer, initially at its address set
forth on Schedule I of this Agreement and thereafter at such other address as
may be designated from time to time by notice given in accordance with the
provisions of this Section 8.
SECTION 9. SUCCESSORS AND ASSIGNS. This Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties hereto, including any successors by merger to the Issuer.
SECTION 10. COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
SECTION 11. HEADINGS; CONSTRUCTION. The headings in this
Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof. Unless the context otherwise requires,
all references to Sections are to Sections of this Agreement, "or" is
inclusively disjunctive, and words in the singular include the plural and vice
versa. In computing any period of time specified in this Agreement or in any
notices, the date of the act or event from which such period of time is to be
measured shall be included, any such period shall expire at 5:00 p.m., New
York City time, on the last day of such period.
SECTION 12. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of New
York, without regard to the principles of the conflict of laws thereof.
SECTION 13. JURISDICTION; FORUM.
(a) Each party hereto consents and submits to the
jurisdiction of any state court sitting in the County of New York or federal
court sitting in the Southern District of the State of New York in connection
with any dispute arising out of or relating to this Agreement. Each party
hereto waives any objection to the laying of venue in such courts and any
claim that any such action has been brought in an inconvenient forum. To the
extent permitted by law, any judgment in respect of a dispute arising out of
or relating to this Agreement may be enforced in any other jurisdiction within
or outside the United States by
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suit on the judgment, a certified copy of such judgment being conclusive
evidence of the fact and amount of such judgment.
(b) Each party hereto agrees that personal service
of process may be effected by any of the means specified in Section 8,
addressed to such party. The foregoing shall not limit the rights of any party
to serve process in any other manner permitted by law.
SECTION 14. SEVERABILITY. If one or more of the provisions
hereof, or the application thereof in any circumstance, is held invalid,
illegal or unenforceable in any respect, for any reason, the validity,
legality and enforceability of the remaining provisions hereof shall not be in
any way affected or impaired thereby, and the provision held to be invalid,
illegal or unenforceable shall be reformed to the minimum extent necessary,
and in a manner as consistent with the purposes thereof as is practicable, so
as to render it valid, legal and enforceable, it being intended that all of
the rights and privileges of the Holders hereunder shall be enforceable to the
fullest extent permitted by law.
SECTION 15. ENTIRE AGREEMENT. This Agreement is intended by
the parties hereto as a final expression of their agreement and is intended to
be a complete and exclusive statement of the agreement and understanding of
the parties hereto in respect of the subject matter contained herein. There
are no restrictions, promises, warranties or undertakings, other than those
set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
SECTION 16. STOCK LEGEND. The Issuer shall cause its counsel
to provide, at Issuer's expense, any legal opinions reasonably required by the
transfer agent of the Issuer upon transfer of Registrable Securities in
connection with transfers (including pledges) pursuant to Rule 144 under the
Securities Act and removal of Securities Act legend on certificates
representing such Securities which are not the subject for an effective
Registration Statement, provided that the Holder of such Securities provides
such counsel with appropriate representation letters from such Holder and its
broker, a copy of a duly filed Form 144, if required, and such other back up
certificates and documentation reasonably requested by such counsel.
* * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
By:
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Name:
Title:
HOLDERS:
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Schedule I
Addresses
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