EXHIBIT 4.2
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
EAGLE TEST SYSTEMS, INC.,
THE INVESTORS
AS DEFINED HEREIN
AND
THE STOCKHOLDERS
AS DEFINED HEREIN
DATED AS OF SEPTEMBER 30, 2003
TABLE OF CONTENTS
PAGE
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1. CERTAIN DEFINITIONS............................................. 1
2. DEMAND REGISTRATIONS............................................ 3
3. FORM S-3........................................................ 4
4. PIGGYBACK REGISTRATION.......................................... 5
5. REGISTRATION PROCEDURES......................................... 6
6. EXPENSES........................................................ 8
7. INDEMNIFICATION................................................. 9
8. COMPLIANCE WITH RULE 144........................................ 12
9. AMENDMENTS...................................................... 12
10. TRANSFERABILITY OF REGISTRATION RIGHTS.......................... 12
11. RIGHTS WHICH MAY BE GRANTED TO SUBSEQUENT INVESTORS............. 12
12. DAMAGES......................................................... 13
13. MISCELLANEOUS................................................... 13
14. DISPUTE RESOLUTION.............................................. 14
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REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT is dated as of the 30th day of September, 2003, by and
among Eagle Test Systems, Inc., an Illinois corporation (the "Company"), the
persons designated as Investors on the signature pages hereto and any assignees
thereof (each, an "Investor" and collectively, the "Investors") and the persons
designated as Stockholders on the signature pages hereto and any assignees
thereof (each, a "Stockholder" and collectively the "Stockholders").
WHEREAS, the Company and certain of the Investors and the Stockholders are
simultaneously entering into a certain Stock Purchase Agreement, dated as of the
date hereof (the "Purchase Agreement"), whereby such Investors have agreed to
purchase shares of Series A Convertible Preferred Stock, par value $.01 per
share, of the Company (the "Series A Preferred Stock");
WHEREAS, on the date hereof, certain of the Investors will lend to the
Company $30,000,000 pursuant to the terms of that certain Note Purchase
Agreement dated as of the date hereof (the "Note Purchase Agreement"), in return
for convertible secured subordinated debentures (collectively, the "Convertible
Subordinated Notes") which are convertible into secured subordinated promissory
notes of the Company (collectively, the "Subordinated Notes") and warrants to
acquire shares of Common Stock of the Company (the "Warrants"); and
WHEREAS, the execution and delivery of this Agreement is an inducement and
a condition precedent to the purchase by the Investors of the Series A Preferred
Stock and the Convertible Subordinated Notes under the Purchase Agreement and
Note Purchase Agreement, as applicable.
NOW, THEREFORE, in consideration of the premises, as an inducement to the
Investors to consummate the transactions contemplated by the Purchase Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company, the Investors and the Stockholders
hereby covenant and agree with each other as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"BOARD OF DIRECTORS" means the Board of Directors of the Company.
"COMMISSION" shall mean the United States Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act and the Exchange Act.
"COMMON STOCK" shall mean the Common Stock, no par value, of the
Company and any other securities into which or for which any of the securities
described above may be
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converted or exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise.
"COMPANY" shall have the meaning set forth in the preamble and shall
include any successor or successors thereto.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, or any similar successor federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the time.
"MAJORITY INTEREST" means the Investors holding not less than a
majority in interest in the outstanding Registrable Securities held by all
Investors.
"PERSON" shall mean an individual, a corporation, a partnership, a
joint venture, a trust, an unincorporated organization, a limited liability
company or partnership, a government and any agency or political subdivision
thereof.
"REGISTRABLE SECURITIES" shall mean (i) any shares of Common Stock
held by the Investors or Stockholders, or subject to acquisition by any Investor
upon conversion of the Series A Preferred Stock or exercise of the Warrants (it
being understood that for purposes of this Agreement, an Investor will be deemed
to be a holder of Registrable Securities whenever such Investor has the right to
then acquire or obtain from the Company any Registrable Securities, whether or
not such acquisition has actually been effected) and (ii) any other securities
issued and issuable with respect to any such shares described 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; provided, however, that if an Investor owns Series A Preferred
Stock, the Investor may exercise its registration rights hereunder by converting
the shares to be sold under the relevant registration statement into Common
Stock as of the closing of the relevant offering and shall not be required to
cause such Series A Preferred Stock to be converted to Common Stock until and
unless such closing occurs, it being understood that the Company shall at the
request of the relevant Investor effect the reconversion of Common Stock into
Series A Preferred Stock, if, notwithstanding the foregoing, such a conversion
occurs and the relevant offering does not close; and provided, further, that any
Common Stock that is sold in a registered sale pursuant to an effective
registration statement under the Securities Act or pursuant to Rule 144
thereunder without restriction as to volume or otherwise pursuant to Rule 144(k)
under the Securities Act shall not be deemed Registrable Securities.
"REGISTRATION EXPENSES" shall mean the expenses so described in
Section 6 hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended
from time to time, or any similar successor federal statute, and the rules and
regulations of the Commission thereunder.
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2. DEMAND REGISTRATIONS.
(a) At any time after 180 days of the effective date of a
registration statement filed in connection with the initial public offering of
the Company's Common Stock under the Securities Act (the "IPO"), a Majority
Interest may request that the Company register under the Securities Act all or
any portion of the Registrable Securities held by such requesting Investors.
Upon receipt of such request, the Company shall promptly deliver notice of such
request to all Investors holding Registrable Securities, if any, who shall then
have thirty (30) days to notify the Company in writing of their desire to be
included in such registration. If the request for registration contemplates an
underwritten public offering, the Company shall state such in the written notice
and in such event the right of any Investor to participate in such registration
shall be conditioned upon their participation in such underwritten public
offering and the inclusion of their Registrable Securities in the underwritten
public offering to the extent provided herein. The Company will use its best
efforts to expeditiously effect the registration of all Registrable Securities
whose holders request participation in such registration under the Securities
Act and to qualify such Registrable Securities for sale under any state blue sky
law; provided, however, that the Company shall not be required to effect
registration pursuant to a request under this Section 2 more than three (3)
times for the holders of the Registrable Securities as a group. Notwithstanding
anything to the contrary contained herein, no request may be made under this
Section 2 within ninety (90) days after the effective date of a registration
statement filed by the Company covering a firm commitment underwritten public
offering. The Company may postpone the filing or the effectiveness of any
registration statement pursuant to this Section 2 for a reasonable time period,
provided that such postponements shall not exceed ninety (90) days in the
aggregate during any twelve (12) month period, if (i) the Company has been
advised by legal counsel that such filing or effectiveness would require
disclosure of a material financing, acquisition or other corporate transaction,
and the Board of Directors of the Company determines in good faith that such
disclosure is not in the best interests of the Company and its shareholders or
(ii) the Board of Directors of the Company determines in good faith that there
is a valid business purpose or reason for delaying filing or effectiveness. A
registration will not count as a requested registration under this Section 2(a)
until the registration statement relating to such registration has been declared
effective by the Commission at the request of the initiating Investors;
provided, however, that if a majority interest of the participating Investors of
Registrable Securities shall request, in writing, that the Company withdraw a
registration statement that has been filed under this Section 2(a) but not yet
been declared effective because of a material adverse change in the condition,
business or prospects of the Company and such request is made promptly after the
requesting Investors learn of such change, a majority interest of such Investors
may thereafter request the Company to reinstate such registration statement, if
permitted under the Securities Act, or to file another registration statement,
in accordance with the procedures set forth herein and unless the requesting
Investors agree to pay the incremental costs associated with such withdrawal and
subsequent reinstatement or filing, it will count as one (1) requested
registration.
(b) If a requested registration involves an underwritten public
offering and the managing underwriter of such offering determines in good faith
that the number of securities sought to be offered should be limited due to
market conditions, then the number of securities to
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be included in such underwritten public offering shall be reduced to a number
deemed satisfactory by such managing underwriter; provided, however, that the
shares to be excluded shall be determined in the following sequence: (i) first,
securities held by any other Persons (other than the Investors holding
Registrable Securities) not having registration rights or having contractual,
incidental "piggy back" rights to include such securities in the registration
statement, (ii) second, shares sought to be registered by the Company, (iii)
third, Registrable Securities of Investors who did not make the original request
for registration, and (iv) fourth, Registrable Securities of Investors who
requested such registration pursuant to Section 2(a), it being understood that
no shares shall be registered for the account of the Company or any shareholder
other than the Investors unless all Registrable Securities for which Investors
have requested registration have been registered. If there is a reduction of the
number of Registrable Securities pursuant to clauses (i), (iii) or (iv), such
reduction shall be made on a pro rata basis (based upon the aggregate number of
shares of Common Stock or Registrable Securities held by the holders in each
tranche and subject to the priorities set forth in the preceding sentence).
(c) With respect to a request for registration pursuant to Section
2(a) that is for an underwritten public offering, the managing underwriter shall
be chosen by the Investors holding not less than a majority of the Registrable
Securities to be sold in such offering, subject to the Company's consent, which
such consent shall not be unreasonably withheld. The Company may not cause any
other registration of securities for sale for its own account (other than a
registration effected solely to implement an employee benefit plan or a
transaction to which Rule 145 of the Securities Act is applicable) to become
effective within one hundred eighty (180), days following the effective date of
any registration required pursuant to this Section 2 or such lesser period as
may be consented to by the managing underwriter.
(d) An Investor requesting registration pursuant to Section 2(a)
shall provide all such information and materials and shall take all such actions
as may be reasonably required in order to permit the Company to comply with all
applicable requirements of the Commission and to obtain any desired acceleration
of such registration statement. Specifically, the Company may require such
Investor to furnish the Company with such information regarding the Investor and
the distribution of its securities as the Company may from time to time
reasonably request and as required by the Securities Act, the Exchange Act or
the Commission.
3. FORM S-3. If the Company becomes eligible to use Form S-3 (or any
comparable successor form) under the Securities Act, the Company shall use its
best efforts to qualify and remain qualified to register securities on Form S-3
(or any comparable successor form) under the Securities Act. For so long as the
Company is qualified to register securities on Form S-3 (or any comparable
successor form), an Investor or Investors holding Registrable Securities
anticipated to have an aggregate sale price (net of underwriting discounts and
commissions, if any) in excess of $500,000 shall have the right, on one or more
occasions, to request registration on Form S-3 (or any comparable successor
form) for the Registrable Securities held by such requesting Investor or
Investors; provided, however, that there shall not be more than two
registrations under this Section 3 in any twelve (12) month period. Such
requests shall be in writing and shall state the number of shares of Registrable
Securities to be disposed of and the intended method of disposition of such
shares by such Investor or Investors. The Company shall give notice to all other
Investors holding Registrable Securities of the receipt of a request for
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registration pursuant to this Section 3 and such Investors shall then have
thirty (30) days to notify the Company in writing of their desire to participate
in the registration. The Company shall use its best efforts to effect promptly
the registration of all shares on Form S-3 (or any comparable successor form) to
the extent requested by such Investor or Investors; provided, however, the
Company may postpone the filing or the effectiveness of any registration
statement pursuant to this Section 3 for a reasonable period of time, provided
that such postponements shall not exceed ninety (90) days in the aggregate
during any twelve (12) month period, if (i) the Company has been advised by
legal counsel that such filing or effectiveness would require disclosure of a
material financing, acquisition or other corporate transaction, and the Board of
Directors of the Company determines in good faith that such disclosure is not in
the best interests of the Company and its stockholders or (ii) the Board of
Directors determines in good faith that there is a valid business purpose or
reason for delaying filing or effectiveness.
4. PIGGYBACK REGISTRATION. If at any time or times, the Company shall
propose to register any of its Common Stock or securities convertible into or
exchangeable or exercisable for any of its Common Stock under the Securities Act
for sale to the public (whether in connection with a public offering of
securities by the Company (a "primary offering"), a public offering of
securities by shareholders (a "secondary offering"), or both, including pursuant
to a demand under Section 2 hereof, as provided therein, and except (i) with
respect to registration statements on Forms S-4, S-8 or another form not
available for registering the Registrable Securities for sale to the public, and
(ii) in connection with a registration effected solely to implement an employee
benefit plan or a transaction to which Rule 145 or any other similar rule of the
Commission under the Securities Act is applicable), the Company shall promptly
give written notice at the applicable address of record to each Investor and
each Stockholder then holding Registrable Securities of its intention to do so.
Upon the written request of any of such Investors or Stockholders, given within
thirty (30) days after receipt by such Investors or Stockholders of such notice,
the Company shall, subject to the limits contained in this Section 4, use its
best efforts to cause all such Registrable Securities of said requesting
Investors and/or Stockholders to be registered under the Securities Act and
qualified for sale under any state blue sky law, all to the extent required to
permit such sale or other disposition of said Registrable Securities; provided,
however, that if the Company is advised in writing in good faith by any managing
underwriter of the Company's securities being offered in a public offering
pursuant to such registration statement that the amount to be sold by Persons
other than the Company (collectively, "Selling Stockholders") is greater than
the amount that can be offered without adversely affecting the offering, the
Company may reduce the amount offered for the accounts of Selling Stockholders
(including such Investors and/or Stockholders holding shares of Registrable
Securities) to a number deemed satisfactory by such managing underwriter; and
provided further, that the shares to be excluded shall be determined in the
following sequence: (i) first, securities held by any Persons not having any
such contractual, incidental registration rights, (ii) second, securities held
by any Persons having contractual, incidental registration rights pursuant to an
agreement other than this Agreement, (iii) third, in a registration requested
pursuant to Section 2, all Registrable Securities other than those held by the
initiating Investor or Investors, (iv) fourth, the Registrable Securities sought
to be included by the Stockholders and (v) fifth, the Registrable Securities
sought to be included by the Investors; provided, however, that so long as the
Investors, upon the sale of the Registrable Securities held by the Investors
included in such
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offering, would receive net proceeds (after underwriting commissions and
discounts) that, when added together with the net proceeds received by the
Investors pursuant to all other sales of Registrable Securities under this
Section 4 or Sections 2 and 3 below (including proceeds received in connection
with the redemption by the Company of the Investors' shares of Redeemable
Preferred Stock), would equal or exceed $65,000,000, the securities held by each
Person described in clauses (iv) and (v) above sought to be included in such
registration statement in connection with such underwritten public offering
shall be excluded on a pro rata basis (based upon the aggregate holdings of
securities of the holders thereof requesting inclusion of such Registrable
Securities in such registration statement) holders thereof requesting
registration, as determined on a pro rata basis in accordance with their
holdings.
5. REGISTRATION PROCEDURES. If and whenever the Company is required by
the provisions of this Agreement to use its best efforts to effect the
registration of any of its securities under the Securities Act, the Company
will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
on the appropriate form under the Securities Act with respect to such
securities, which form shall comply as to form in all respects with the
requirements of the applicable form and include all financial statements
required by the Commission to be filed therewith, and use its best efforts to
cause such registration statement to become and remain effective until
completion of the proposed offering;
(b) prepare and file with the Commission such amendments,
post-effective amendments, and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective until the earlier of (i) the date on which all
Registrable Securities covered by such Registration Statement are sold or (ii)
nine (9) months after the effective date of the registration statement and to
comply with the provisions of the Securities Act with respect to the sale or
other disposition of all securities covered by such registration statement
whenever the seller or sellers of such securities shall desire to sell or
otherwise dispose of the same, but only to the extent provided in this
Agreement;
(c) furnish to each selling holder and the underwriters, if any,
such number of copies of such registration statement, any amendments thereto,
any documents incorporated by reference therein, the prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as such selling holder may reasonably request in
order to facilitate the public sale or other disposition of the securities owned
by such selling holder;
(d) register or qualify the securities covered by such
registration statement under the securities or state "blue sky" laws of such
jurisdictions as each selling holder may reasonably request, and do any and all
other acts and things that may be necessary under such state securities or "blue
sky" laws to enable such selling holder to consummate the public sale or other
disposition in such jurisdictions of the securities owned by such selling
holder; provided that the Company shall not be required to register or qualify
the securities in any jurisdictions which require it to qualify to do business
or subject itself to general service of process therein;
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(e) within a reasonable time before each filing of the
registration statement or prospectus or amendments or supplements thereto with
the Commission, furnish to counsel selected by the holders of Registrable
Securities copies of such documents proposed to be filed, which documents shall
be subject to the approval of such counsel, which shall not be unreasonably
withheld;
(f) immediately notify each selling holder of Registrable
Securities, such selling holders' counsel and any underwriter and (if requested
by any such Person) confirm such notice in writing, of the happening of any
event that makes any statement made in the registration statement or related
prospectus untrue, or which requires the making of any changes in such
registration statement or prospectus so that they will not contain any untrue
statement of a material fact, or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; and thereafter, prepare
and file with the Commission and furnish a supplement or amendment to such
prospectus so that, as thereafter deliverable to the purchasers of such
Registrable Securities, such prospectus will not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading;
(g) use its best efforts to prevent the issuance of any order
suspending the effectiveness of a registration statement, and if one is issued,
immediately notify each selling holder of Registrable Securities of the receipt
of such notice and use its reasonable best efforts to obtain the withdrawal of
any order suspending the effectiveness of a registration statement at the
earliest possible moment;
(h) if requested by the managing underwriter or underwriters (if
any), any selling holder, or such selling holder's counsel, promptly incorporate
in a prospectus supplement or post-effective amendment such information as such
Person requests to be included therein with respect to the selling holder or the
securities being sold, including, without limitation, with respect to the
securities being sold by such selling holder to such underwriter or
underwriters, the purchase price being paid therefor by such underwriter or
underwriters and with respect to any other terms of an underwritten offering of
the securities to be sold in such offering, and promptly make all required
filings of such prospectus supplement or post-effective amendment;
(i) make available to each selling holder, any underwriter
participating in any disposition pursuant to a registration statement, and any
attorney, accountant or other agent or representative retained by any such
selling holder or underwriter (collectively, the "Inspectors"), all financial
and other records, pertinent corporate documents and properties of the Company
(collectively, the "Records"), as shall be reasonably necessary to enable them
to exercise their due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information requested by any
such Inspector in connection with such registration statement subject, in each
case, to such confidentiality agreements as the Company shall reasonably
request;
(j) enter into any reasonable underwriting agreement required by
the proposed managing underwriter or underwriter(s) for the selling holders, if
any, and use its best
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efforts to facilitate the public offering of the securities; provided, however,
that no Investor or Stockholder shall be required to make any representations or
warranties other than with respect to its title to the Registrable Securities
and any written information provided by it to the Company specifically for use
in the registration statement, and if the proposed managing underwriter or
underwriter(s) require that representations or warranties be made and that
indemnification be provided, the Company shall make all such representations and
warranties and provide all such indemnities, including, without limitation, in
respect of the Company's business, operations and financial information and the
disclosures relating thereto in the prospectus;
(k) cause the securities covered by such registration statement to
be listed on the securities exchange or quoted on the quotation system on which
the similar securities issued by the Company are then listed or quoted (or, if
the Common Stock is not yet listed or quoted, then on such exchange or quotation
system as the selling holders of Registrable Securities and the Company shall
determine);
(l) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission and make generally available to its
shareholders, in each case as soon as practicable, but not later than 30 days
after the close of the period covered thereby, an earnings statement of the
Company that will satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder (or any comparable successor provisions); and
(m) otherwise cooperate with the underwriter(s), the Commission
and other regulatory agencies and take all reasonable actions and execute and
deliver or cause to be executed and delivered all documents reasonably necessary
to effect the registration of any securities under this Agreement.
(n) during the period when the prospectus is required to be
delivered under the Securities Act, promptly file all documents required to be
filed with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act;
(o) appoint a transfer agent and registrar for all Registrable
Securities covered by a registration statement not later than the effective date
of such registration statement;
(p) in connection with an underwritten offering, to the extent
reasonably requested by the managing underwriter for the offering or the selling
holders, participate in and support customary efforts to sell the securities in
the offering, including, without limitation, participating in "road shows".
6. EXPENSES. All expenses incurred by the Company, the Investors and
the Stockholders in effecting the registrations provided for in Sections 2, 3
and 4, including, without limitation, all registration and filing fees, exchange
or NASDAQ listing fees, printing expenses, reasonable fees and disbursements of
counsel for the Company and one counsel for the Investor or Investors and/or
Stockholder or Stockholders participating in such registration as a group
(selected by a majority in interest of the holders of Registrable Securities who
participate in the registration), underwriting expenses (other than commissions
or discounts), expenses of any
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audits incident to or required by any such registration and expenses of
complying with the securities or blue sky laws of any jurisdictions (all of such
expenses referred to as "Registration Expenses"), shall be paid by the Company.
7. INDEMNIFICATION.
(a) Incident to any registration statement referred to in this
Agreement, and subject to applicable law, the Company shall indemnify and hold
harmless each underwriter and each Investor and Stockholder (including its
partners (including partners of partners and stockholders of any such partners),
and directors, officers, employees and agents of any of them, and each person
who controls any of them within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act (a "Controlling Person") (each an "Indemnified
Party" and collectively, the "Indemnified Parties") who offers or sells any such
Registrable Securities in connection with such registration statement, from and
against any and all losses, claims, expenses, damages or liabilities, joint or
several (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted), as the same are incurred to which they, or
any of them, may become subject under the Securities Act, the Exchange Act,
other federal or state statutory law or regulation, at common law, or otherwise,
insofar as such losses, claims, expenses, damages or liabilities (or action in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained, on the effective date
thereof, in any registration statement under which such securities were
registered under the Securities Act (including any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereto),
(ii) 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 (iii) any violation by the Company of the Securities Act, any state
securities or "blue sky" laws or any rule or regulation thereunder in connection
with such registration, and except as otherwise provided in Section 7(d), the
Company shall reimburse each such Indemnified Party in connection with
investigating or defending any such liability as expenses in connection with the
same are incurred; provided, however, that the Company shall not be liable to
any Indemnified Party in any such case to the extent that any such liability
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement, preliminary
or final prospectus, or amendment or supplement thereto in reliance upon and in
conformity with information furnished in writing to the Company by such
Indemnified Party specifically for use therein; and provided further, that the
Company shall not be required to indemnify any Indemnified Party against any
liability arising from any untrue or misleading statement or omission contained
in any preliminary prospectus if such deficiency is corrected in the final
prospectus or for any liability that arises out of the failure of any
Indemnified Party to deliver a prospectus as required by the Securities Act.
(b) Each selling holder, if any, selling Registrable Securities
included in such registration being effected shall indemnify and hold harmless
each underwriter, the Company (including its directors, officers, employees and
agents), and each other Selling Stockholder (including its partners (including
partners of partners and stockholders of such partners) and directors, officers,
employees and agents of any of them), and each person who controls any of them
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act,
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from and against any and all losses, claims, damages, expenses and liabilities,
joint or several, to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law, or otherwise to the same extent provided in Section
7(a) above, insofar as such liability (or actions in respect thereof) arises out
of or is based upon (i) any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in any registration
statement under which securities were registered under the Securities Act, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, or (ii) any omission or alleged omission by such selling
holder to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in the case of (i) and
(ii) to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in such
registration statement, preliminary or final prospectus, amendment or supplement
thereto in reliance upon and in conformity with information furnished in writing
to the Company by such selling holder specifically for use therein. Subject to
the foregoing limitation, such selling holder, if any, shall reimburse any
Indemnified Party for any legal fees incurred in investigating or defending any
such liability; provided, however, in no event, however, shall the liability of
any selling holder for indemnification under this Section 7 in its capacity as a
seller or Registrable Securities exceed the lesser of (i) that proportion of the
total of such losses, claims, damages, expenses or liabilities indemnified
against equal to the proportion of the total securities sold under such
registration statement which is being sold by such selling holder, or (ii) the
amount equal to the proceeds to such selling holder of the securities sold in
any such registration; and provided further, that no selling holder shall be
required to indemnify any Person against any liability arising from any untrue
or misleading statement or omission contained in any preliminary prospectus if
such deficiency is corrected in the final prospectus or for any liability which
arises out of the failure of any Person to deliver a prospectus as required by
the Securities Act.
(c) If the indemnification provided for in this Section 7 for any
reason is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party in respect of any losses, claims, damages, expenses or
liabilities referred to therein, then each indemnifying party under this Section
7, in lieu of indemnifying such indemnified party thereunder, shall contribute
to the amount paid or payable by such indemnified party as a result of such
losses, claims, damages, expenses or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, the
selling holders and the underwriters from the offering of the Registrable
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company, the other selling holders and the underwriters in
connection with the statements or omissions which resulted in such losses,
claims, damages, expenses or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company, the
selling holders and the underwriters shall be deemed to be in the same
respective proportions that the net proceeds from the offering (before deducting
expenses) received by the Company, and the selling holders and the underwriting
discount received by the underwriters, in each case as set forth in the table on
the cover page of the applicable prospectus, bear to the aggregate public
offering price of the Registrable Securities. The relative fault of the Company,
the selling holders and the
10
underwriters 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, the selling holders or the underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company, the Investors, the Stockholders and the underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata or per capita allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. In no event, however, shall
a selling holder be required to contribute any amount under this Section 7(d) in
excess of the lesser of (i) that proportion of the total of such losses, claims,
damages, expenses or liabilities indemnified against equal to the proportion of
the total Registrable Securities sold under such registration statement that are
being sold by such selling holder or (ii) the proceeds received by such selling
holder from its sale of Registrable Securities under such registration
statement. No Person found guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not found guilty of such fraudulent
misrepresentation.
11
(d) The amount paid by an indemnifying party or payable to an
indemnified party as a result of the losses, claims, damages, expenses and
liabilities referred to in this Section 7 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, payable as the same are incurred. The indemnification and
contribution provided for in this Section 7 will remain in full force and effect
regardless of any investigation made by or on behalf of the indemnified parties
or any officer, director, employee, agent or controlling person of the
indemnified parties.
8. COMPLIANCE WITH RULE 144. In the event that the Company (i)
registers a class of securities under Section 12 of the Exchange Act or (ii)
shall commence to file reports under Section 13 or 15(d) of the Exchange Act,
the Company will use its best efforts thereafter to file with the Commission
such information as is required under the Exchange Act for so long as there are
holders of Registrable Securities; and in such event, the Company shall use its
best efforts to take all action as may be required as a condition to the
availability of Rule 144 or Rule 144A under the Securities Act (or any
comparable successor rules). The Company shall furnish to any holder of
Registrable Securities upon request a written statement executed by the Company
as to the steps it has taken to comply with the current public information
requirement of Rule 144 or Rule 144A (or such comparable successor rules). After
the occurrence of the first underwritten public offering of Common Stock
pursuant to an offering registered under the Securities Act on Form S-1 or Form
SB-1 (or any comparable successor forms), subject to the limitations on
transfers imposed by this Agreement, the Company shall use its best efforts to
facilitate and expedite transfers of Registrable Securities pursuant to Rule 144
or Rule 144A under the Securities Act, which efforts shall include timely notice
to its transfer agent to expedite such transfers of Registrable Securities.
9. AMENDMENTS. The provisions of this Agreement may be amended only
with the written consent of the Company and a Majority Interest; provided,
however, that any amendment to Sections 4 or 7 that adversely affects the rights
of the Stockholders shall require the prior written consent of a majority in
interest of the outstanding Registrable Securities held by Stockholders.
10. TRANSFERABILITY OF REGISTRATION RIGHTS. The registration rights set
forth in this Agreement are transferable to each permitted transferee of
Registrable Securities. Each subsequent holder of Registrable Securities must
consent in writing to be bound by the terms and conditions of this Agreement in
order to acquire the rights granted pursuant to this Agreement. The transferor
of Registrable Securities shall give the Company written notice at the time of
such transfer stating the name and address of the transferee and identifying the
Registrable Securities transferred.
11. RIGHTS WHICH MAY BE GRANTED TO SUBSEQUENT INVESTORS. Other than
permitted transferees of Registrable Securities under Section 10 hereof, the
Company shall not, without the prior written consent of a Majority Interest, (a)
allow purchasers of the Company's securities to become a party to this Agreement
or (b) grant any other registration rights to any third parties other than
subordinate piggyback registration rights.
12
12. DAMAGES. The Company recognizes and agrees that each holder of
Registrable Securities will not have an adequate remedy if the Company fails to
comply with the terms and provisions of this Agreement and that damages will not
be readily ascertainable, and the Company expressly agrees that, in the event of
such failure, it shall not oppose an application by any holder of Registrable
Securities or any other Person entitled to the benefits of this Agreement
requiring specific performance of any and all provisions hereof or enjoining the
Company from continuing to commit any such breach of this Agreement.
13. MISCELLANEOUS.
(a) All notices, requests, demands and other communications
provided for hereunder shall be in writing and mailed (by first class registered
or certified mail, postage prepaid), telegraphed, sent by express overnight
courier service or electronic facsimile transmission (with a copy by mail), or
delivered to the applicable party at the addresses indicated below:
If to the Company:
Eagle Test Systems, Inc.
620 South Butterfield Road
Mundelein, IL 60060-4483
Telecopy No.: (847) 367-8640
with a copy to:
Katten Muchin Zavis Rosenman
525 West Monroe, Suite 1600
Chicago, IL 60661-3693
Attention: Howard S. Lanznar
Telecopy No.: (312) 902-1061
If to the Investors:
TA Associates, Inc.
125 High Street
Suite 2500
Boston, MA 02110
Attention: Michael C. Child and Jameson J. McJunkin
Telecopy No.: (617) 574-6728
If to any other holder of Registrable Securities:
At such Person's address for notice as set forth in the books
and records of the Company:
13
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to other parties complying as to delivery with
the terms of this subsection (a). All such notices, requests, demands and other
communications shall, when mailed, telegraphed or sent, respectively, be
effective (i) two days after being deposited in the mails or (ii) one day after
being delivered to the telegraph company, deposited with the express overnight
courier service or sent by electronic facsimile transmission, respectively,
addressed as aforesaid.
(b) This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois, without giving effect to
conflict of laws principles thereof.
(c) 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.
(d) 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.
14. DISPUTE RESOLUTION. All disputes, claims, or controversies arising
out of or relating to this Agreement, or any other agreement executed and
delivered pursuant to this Agreement, or the negotiation, validity or
performance hereof and thereof or the transactions contemplated hereby, that are
not resolved by mutual agreement shall be resolved in accordance with the
provisions set forth in Sections 6.7 and 6.8 of the Purchase Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
14
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed as of the date first set forth above.
THE COMPANY:
EAGLE TEST SYSTEMS, INC.
By: /s/ Leonard Foxman
-----------------------------------
Name: Leonard Foxman
Title: President
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
LEONARD FOXMAN
By: /s/ Leonard Foxman
-----------------------------------
Leonard Foxman
FOXMAN FAMILY, LLC
By: /s/ Leonard Foxman
-----------------------------------
Leonard Foxman
Its: Manager
EAGLE TEST SYSTEMS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
By: /s/ Leonard Foxman
-----------------------------------
Leonard Foxman, not in his
individual capacity or in
his capacity as
shareholder, director or
officer of the Corporation,
but solely as trustee of
the Eagle Test Systems
Employee Stock Ownership
Plan
JACK WEIMER
By: /s/ Jack Weimer
-----------------------------------
Jack Weimer
STEVE DOLLENS
By: /s/ Steve Dollens
-----------------------------------
Steve Dollens
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
INVESTORS:
TA IX L.P.
By: TA Associates IX LLC, its General Partner
By: TA Associates, Inc., its Manager
By: /s/ Michael C. Child
-----------------------------------
Name: Michael C. Child
Its: Managing Director
TA/ATLANTIC AND PACIFIC IV L.P.
By: TA Associates AP IV L.P., its General Partner
By: TA Associates, Inc., its General Partner
By: /s/ Michael C. Child
-----------------------------------
Name: Michael C. Child
Its: Managing Director
TA STRATEGIC PARTNERS FUND A L.P.
By: TA Associates SPF L.P., its General Partner
By: TA Associates, Inc., its General Partner
By: /s/ Michael C. Child
-----------------------------------
Name: Michael C. Child
Its: Managing Director
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
TA STRATEGIC PARTNERS FUND B L.P.
By: TA Associates SPF L.P., its General Partner
By: TA Associates, Inc., its General Partner
By: /s/ Michael C. Child
-----------------------------------
Name: Michael C. Child
Its: Managing Director
TA INVESTORS LLC
By: TA Associates, Inc., its Manager
By: /s/ Michael C. Child
-----------------------------------
Name: Michael C. Child
Its: Managing Director
TA SUBORDINATED DEBT FUND, L.P.
By: TA Associates SDF LLC, its General Partner
By: TA Associates, Inc., its Manager
By: /s/ Michael C. Child
-----------------------------------
Name: Michael C. Child
Its: Managing Director
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]