Exhibit 10.3
EXECUTION
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AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
among
KIRKLAND'S, INC.
AND
THE OTHER PARTIES SPECIFIED HEREIN
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Dated as of April 15, 2002
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (the
"Agreement") amends and restates a Registration Rights Agreement dated as of
June 12, 1996, and is made as of the 15th day of April, 2002, by and among
- KIRKLAND HOLDINGS L.L.C., a Delaware limited
liability company ("Holdings"),
- KIRKLAND'S INC., a corporation incorporated under
Tennessee law ("Kirkland's"),
- SSM VENTURE PARTNERS, L.P.
- JOSEPH R. HYDE, III
- JOHNSTON C. ADAMS, JR.
- JOHN H. PONTIUS
- CT/KIRKLAND EQUITY PARTNERS, L.P.,
- R-H CAPITAL PARTNERS, L.P.,
- TCW/KIRKLAND EQUITY PARTNERS, L.P.,
- CAPITAL RESOURCE LENDERS II, L.P. ("CRL"),
- ALLIED CAPITAL CORPORATION ("Allied"),
- CAPITAL TRUST INVESTMENTS, LTD. ("Capital Trust"),
- THE MARLBOROUGH CAPITAL INVESTMENT FUND, L.P.
("Marlborough" and together with CRL, Allied and
Capital Trust, the "Mezzanine Warrant Holders"),
- GLOBAL PRIVATE EQUITY II LIMITED PARTNERSHIP,
- ADVENT DIRECT INVESTMENT PROGRAM LIMITED
PARTNERSHIP,
- ADVENT PARTNERS LIMITED PARTNERSHIP,
- CARL KIRKLAND,
- ROBERT KIRKLAND,
- ROBERT ALDERSON,
- THE AMY KATHERINE ALDERSON TRUST, (the "AKA Trust"),
- THE ALLISON LEIGH ALDERSON TRUST (the "ALA Trust"),
- THE CARL T. KIRKLAND GRANTOR RETAINED ANNUITY TRUST
2001-1 (the "CTK GRAT"), and
- STEVEN COLLINS (Carl Kirkland, Robert Kirkland,
Robert Alderson, the AKA Trust, the ALA Trust, the
CTK GRAT and Steven Collins being herein referred to
collectively as the "Individual Investors").
WHEREAS, on June 12, 1996, Holdings, the Company, and those
companies then affiliated with the Company (the "Affiliated Companies") and
certain other parties consummated the transactions contemplated by a
Recapitalization Agreement, dated as of April 26, 1996 (the "Recapitalization
Agreement"), which, among other things, included the issuance by the Company
and the Affiliated Companies of shares of Class A Preferred Stock, Class B
Preferred Stock and Class C Preferred Stock in accordance with the terms of the
Recapitalization Agreement. Capitalized terms used but not defined herein have
the meanings set forth in the Recapitalization Agreement;
WHEREAS, in connection with the Company's execution of the
Senior Subordinated Note and Warrant Purchase Agreement dated on or about June
12, 1996 (the "Mezzanine Purchase Agreement"), pursuant to which the Mezzanine
Warrant Holders have loaned a total of $20,000,000 in subordinated debt to the
Company and the Affiliated Companies, the Mezzanine Warrant Holders received
warrants to purchase shares of Common Stock ("Mezzanine Warrants" and the
shares subject to the Mezzanine Warrants, the "Mezzanine Warrant Shares"); and
WHEREAS, in connection with the transactions contemplated by
the Recapitalization Agreement, the Company granted options to purchase shares
(the "Option Shares") of Common Stock to Carl Kirkland and Robert Alderson; and
WHEREAS, as an inducement to completion of the transactions
contemplated by the Recapitalization Agreement and the Mezzanine Purchase
Agreement, the Company and the Affiliated Companies provided on June 12, 1996
certain registration rights pursuant to the terms of the Registration Rights
Agreement dated as of June 12, 1996 (the "Original Registration Rights
Agreement"); and
WHEREAS, in connection with the consummation of the
transactions contemplated by the sixth amendment to that credit agreement
between the Company, the Affiliated Companies, BankBoston, N.A. and the other
lenders specified therein dated on or about July 7, 1999, the Company and the
Affiliated Companies issued to certain investors warrants to purchase shares of
Common Stock (the "1999 Warrants", and the shares subject to the 1999 Warrants
the "1999 Warrant Shares");
WHEREAS, on or about December 31, 1999, (i) the Affiliated
Companies merged with and into Kirkland's Stores, Inc., a wholly owned
subsidiary of the Company (the "Merger"), (ii) pursuant to the Merger; the
Mezzanine Warrants and the 1999 Warrants became exercisable only with respect
to shares of Common Stock of the Company;
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WHEREAS, in connection with the consummation of the
transactions contemplated by a Securities Purchase Agreement dated on or about
August 8, 2000 (the "Purchase Agreement"), the Company issued to the purchasers
specified in the Purchase Agreement additional shares of Common Stock, shares
of Class D Preferred Stock and warrants to purchase shares of Common Stock (the
"2000 Warrants," and together with the 1999 Warrants and the Mezzanine
Warrants, the "Warrants," and the shares subject to the 2000 Warrants (the
"2000 Warrant Shares"), together with the Mezzanine Warrant Shares and the 1999
Warrant Shares, the "Warrant Shares"); and
WHEREAS, the Company desires to hereby amend and restate the
Original Registration Rights Agreement, as amended, to incorporate the Class D
Preferred Stock, the 1999 Warrant Shares, the 2000 Warrant Shares and otherwise
reflect the Company's current capital structure.
NOW THEREFORE, in consideration of the premises and the
mutual terms and provisions hereof, the parties hereto hereby agree as follows:
1. Definitions. For purposes of this Agreement, the
following terms shall have the following respective meanings:
(a) "Act" shall mean the Securities Act of
1933, as amended, or any similar federal statute enacted hereafter, and the
rules and regulations of the commission thereunder, all as the same shall be in
effect from time to time.
(b) "Commission" shall mean the Securities and
Exchange Commission or any other federal agency at the time administering the
Act.
(c) "Common Stock" shall mean (i) the common
stock, par value $.01 of each of the Company and/or any successor Company, and
(ii) any other capital stock of any class or classes (however designated) of
the Company, authorized on or after the date hereof, the holders of which shall
have the right, without limitation as to amount per share, either to all or to
a share of the balance of current dividends and liquidating distributions after
the payment of dividends and distributions on any shares entitled to preference
in the payment thereof, and the holders of which shall ordinarily, in the
absence of contingencies, be entitled to vote for the election of a majority of
directors of the Company (even though the right so to vote has been suspended
by the happening of such a contingency), and (iii) any other securities into
which or for which any of the securities described in (i) or (ii) above may be
converted or exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise.
(d) "Company" shall mean Kirkland's, Inc. or
any successor by merger or similar corporate consolidation thereto.
(e) "Counterpart" shall mean a counterpart to
this Agreement in the form of Exhibit A hereto, pursuant to the execution of
which a Person shall become bound by all of the terms and conditions to this
Agreement.
(f) "Demand Piggybacker" shall have the meaning
set forth in Section 2(c) hereof.
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(g) "Demand Registration" shall mean a
Non-Mezzanine Demand Registration or a Mezzanine Demand Registration.
(h) "Holder" shall mean each of the
Shareholders if such Shareholder holds Registrable Securities and any other
person holding Registrable Securities or such other securities to whom these
registration rights have been transferred pursuant to Section 12 of this
Agreement; provided, however, that any person who acquires any of the
Registrable Securities in a distribution pursuant to a registration statement
filed by the Company under the Act or pursuant to a sale under Rule 144 under
the Act shall not be considered a Holder.
(i) "Management Investors" shall mean Carl
Kirkland and Robert Alderson, the AKA Trust, the ALA Trust and the CTK GRAT.
(j) "Mezzanine Demand Registration" shall have
the meaning set forth in Section 2(a) hereof.
(k) "Mezzanine Warrant Stock" shall mean, as of
the applicable date of determination, shares of Common Stock then issued or
issuable to the Mezzanine Warrant Holders upon exercise of the Mezzanine
Warrants, assuming the maximum potential exercise of the Mezzanine Warrants as
of such date of determination.
(l) "Non-Mezzanine Demand Registration" shall
have the meaning set forth in Section 2(b) hereof.
(m) "Person" shall mean an individual,
partnership, corporation, limited liability company, limited liability
partnership, trust, joint venture, unincorporated association, or other entity
or association.
(n) "Piggyback Registration" shall have the
meaning set forth in Section 3.
(o) "Preferred Stock" shall mean shares of the
Class A Preferred Stock, Class B Preferred Stock and Class D Preferred Stock of
the Company from time to time outstanding.
(p) "Public Offering" shall mean an
underwritten public offering of Common Stock registered pursuant to the Act
resulting in gross proceeds to the Company of at least Thirty Million Dollars
($30,000,000).
(q) The terms "register," "registered" and
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the Act and the declaration or
ordering of effectiveness of such registration statement by the Commission.
(r) "Registered Holder" shall mean, with
respect to a registration statement, each Holder of Registrable Securities
covered by such registration statement.
(s) "Registered Securities" shall mean, with
respect to a registration statement, the Registrable Securities covered by such
registration statement.
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(t) "Registrable Securities" shall mean (i)
shares of Common Stock held by the Shareholders from time to time and shall
include Warrant Shares, provided the warrants under which the Warrant Shares
may be purchased are exercised no later than the effective date of any
registration with respect to which the Holder of such warrants (A) demanded a
Demand Registration, (B) is a Demand Piggybacker, or (C) requested a Piggyback
Registration as to the Common Stock issuable upon exercise of such Warrants,
(ii) shares of Common Stock acquired by any Shareholder other than pursuant to
a registration, either from any other shareholder of the Company in compliance
with the terms of the Shareholders Agreement, or directly from the Company, and
(iii) securities issued or received in respect of, or in exchange or in
substitution for any of the foregoing, including, but not limited to, those
arising from a stock dividend, stock split, reclassification, reorganization,
merger, consolidation/sale of assets or other exchange of securities.
(u) "Shareholder" shall mean any Person who
holds, from time to time, any Common Stock, Preferred Stock or Warrants, and
who is or who becomes a party to this Agreement pursuant to the terms hereof.
(v) "Shareholders Agreement" shall mean that
certain Amended and Restated Shareholders Agreement dated as of the date hereof
and among the parties hereto, as amended from time to time.
(w) "1934 Act" shall mean the Securities
Exchange Act of 1934, as amended, or any similar federal statute enacted
hereafter, and the rules and regulations of the Commission thereunder, all as
the same shall be in effect from time to time.
2. Demand Registrations. The Holders may make a demand
for registration of Common Stock as provided in this Section 2 at any time.
(a) Mezzanine Demand. If the Company shall
receive a written request from Mezzanine Warrant Holders holding more than
sixty-six and two-thirds percent (66.67%) of the Mezzanine Warrant Stock
(determined without taking into account any shares of Common Stock previously
sold to the public in a public offering) that the Company file a registration
statement under the Act covering the registration for the offer and sale of all
or part of the Mezzanine Warrant Stock (determined without taking into account
any shares of Common Stock previously sold to the public in a public offering)
(a "Mezzanine Demand Registration"), then the Company shall promptly notify in
writing all other Holders of Registrable Securities (including other Mezzanine
Warrant Holders) (a "Company Mezzanine Demand Notice").
(b) Other Demand. If the Company shall receive
a written request from Holders of more than fifty percent (50%) of the
Registrable Securities other than the Mezzanine Warrant Stock, that the Company
file a registration statement under the Act covering the registration for the
offer and sale of all or part of such Holders' Registrable Securities (a
"Non-Mezzanine Demand Registration"), then the Company shall promptly notify in
writing all other Holders of Registrable Securities (including the Mezzanine
Warrant Holders) of such request (the "Company Non-Mezzanine Demand Notice").
Upon receipt of the Company Non-Mezzanine Demand Notice, the Mezzanine Warrant
Holders holding more than sixty-six and two-thirds percent (66.67%) of the
Mezzanine Warrant Stock (determined without taking into account any shares of
Common Stock previously sold to the public in a public offering) shall be
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entitled to render such demand for a Non-Mezzanine Demand Registration
ineffective, null and void by making a demand for registration under subsection
(a) of this Section 2 for a Mezzanine Demand Registration within thirty (30)
days after the Company Non-Mezzanine Demand Notice is given. In such event, (i)
the preempted Non-Mezzanine Demand Registration shall be treated for all
purposes, including for purposes of Section 2(d) hereof, as if it had never
been made, (ii) the Company shall give a Company Mezzanine Demand Notice to
other Holders contemplated by Section 2(a) (with all notices previously given
by other Holders in connection with such Non-Mezzanine Demand Registration
pursuant to Section 2(c) being void), and (iii) Holders other than the
Mezzanine Warrant Holders shall not be entitled to make a demand under this
Section 2(b) until the Mezzanine Demand Registration shall have been completed
or abandoned and all waiting periods required by this Agreement shall have been
complied with.
(c) Procedure. Each request for a Mezzanine
Demand Registration or a Non-Mezzanine Demand Registration shall specify the
number of shares of Registrable Securities requested to be sold. Within thirty
(30) calendar days after a Company Mezzanine Demand Notice or Company
Non-Mezzanine Demand Notice has been given, any other Holder (a "Demand
Piggybacker") may give written notice to the Company of its intent to include
its Registrable Securities in the registration (including without limitation
any Holder whose demand is preempted under Section 2(b) above). As soon as
practicable after the expiration of such thirty (30) day period, the Company
shall cause all Registrable Securities that Holders have requested be
registered to be registered under the Act, subject to the limitations contained
in this Agreement.
(d) Number of Demands. Subject to the
provisions of Section 8 below, a demand (i) may not be made unless the
reasonably anticipated price to the public of such public offering would exceed
Five Million Dollars ($5,000,000), (ii) may be made under Section 2(a) hereof a
total of one (1) time and (iii) may be made under Section 2(b) hereof a total
of two (2) times. An effective Demand Registration will not count as a Demand
Registration for purposes of the preceding sentence if (a) the Holders whose
Registrable Securities are to be included in such registration have not
registered for sale at least seventy percent (70%) of the Registrable
Securities requested to be registered in the registration statement for such
registration by such Holders, or (b) the Holders have withdrawn their request
for Demand Registration and have paid all fees and expenses as provided in
Section 8 hereof.
(e) Delay of Registration. If at the time of
any request to register Registrable Securities pursuant to Section 2(a) or (b)
the Company is preparing or within thirty (30) days thereafter commences to
prepare a registration statement for a public offering (other than a
registration effected solely to implement an employee benefit plan or a
transaction to which Rule 145 of the Commission is applicable) which in fact is
filed and becomes effective within (90) days after the request, or is engaged
in any activity which, in the good faith determination of the Company's Board
of Directors, would be adversely affected by the requested registration to the
material detriment of the Company, then the Company may at its option direct
that such request be delayed for a period not in excess of four (4) months from
the date of such request to register Registrable Securities, such right to
delay a request to be exercised by the Company not more than once in any one
(1) year period. Nothing in this Section 2(e) shall preclude a holder of
Registrable Securities from enjoying registration rights which it might
otherwise possess under Section 3 hereof.
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3. Piggyback Registration. Subject to Section 9, if at
any time the Company proposes to register any of its equity securities under
the Act, either for its own account or for the account of others (unless
already covered by Section 2 hereof) or pursuant to a request under Section 4
hereof, in connection with the public offering of such equity securities solely
for cash, on a registration form that would also permit the registration of
Registrable Securities (other than registration statement on Form S-8 or any
successor form, or a registration in connection with any stock option, stock
purchase or other benefit plan or for the purpose of offering such securities
to another business entity or the shareholders of such entity in connection
with the acquisition of assets or shares of capital stock, respectively, of
such entity), the Company shall, each such time, promptly give each Holder
written notice of such proposal (a "Piggyback Registration Notice"). Within
thirty (30) days after the Piggyback Registration Notice is given, the Holders
shall give notice as to the number of shares of Registrable Securities, if any,
which such Holders request be registered simultaneously with such registration
by the Company ("Piggyback Registration"). The Company shall use its best
efforts to include any Registrable Securities in such registration statement
(or in a separate registration statement concurrently filed) which the Holders
thereof request to be so included and to cause such registration statement to
become effective with respect to such Registrable Securities in accordance with
the registration procedures set forth in Section 5 hereof. Notwithstanding the
foregoing, if at any time after giving written notice of its intention to
register equity securities and before the effectiveness of the registration
statement filed in connection with such registration, the Company determines
for any reason either not to effect such registration or to delay such
registration, the Company may, at its election, by delivery of prior written
notice to each Holder, (i) in the case of a determination not to effect
registration, relieve itself of its obligation to register the Registrable
Securities in connection with such registration or (ii) in the case of a
determination to delay registration, delay the registration of such Registrable
Securities for the same period as the delay in the registration of such other
equity securities. Each Holder requesting inclusion in a registration pursuant
to this Section 3 may, at any time before the effective date of the
registration statement relating to such registration, revoke such request by
delivering written notice of such revocation to the Company (which notice shall
be effective only upon receipt by the Company, notwithstanding the provisions
of Section 18 hereof); provided, however, that if the Company, in consultation
with its financial and legal advisors, determines that such revocation would
require a recirculation of the prospectus contained in the registration
statement, then such Holder shall have no right to revoke its request.
4. Registrations on Forms S-2 and S-3. After the
conclusion by the Company of an initial public offering of its Common Stock
(which for purposes hereof shall include any Registrable Securities sold
pursuant to Section 2 above) pursuant to a registration under the Act, at such
time as the Company shall have qualified for the use of Forms S-2 and/or S-3
(as the case may be), or any similar form or forms promulgated by the
Commission, the Holders of Registrable Securities shall each have the right to
request an unlimited number of registrations on Form S-2 and/or Form S-3 (as
the case may be). Any such request shall be in writing, shall specify the
Registrable Securities intended to be sold or disposed of by the Holders
thereof, shall state the intended method of disposition of such Registrable
Securities by the Holder(s) requesting such registration and shall relate to
Registrable Securities (i) in an amount exceeding two percent (2%) of all
shares of Common Stock then outstanding, or (ii) having proposed gross cash
offering proceeds (prior to deduction of underwriters commissions and expenses,
if any) of Two Million Dollars ($2,000,000) or more for all Registrable
Securities to be included, on the basis of a reasonable (in light of the
current market price) proposed per share
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offering price. The Company shall be obligated to effect such registration or
registrations on Form S-2 or Form S-3 (as the case may be) as soon as
practicable after receipt of such a request; provided, however, that the
Company shall not be obligated to effect the filing of a registration pursuant
to this Section 4 (i) during the period starting with the date ninety (90) days
prior to the Company's estimated date of filing of, and ending on a date one
hundred eighty (180) days following the effective date of, a registration
statement pertaining to a public offering of Common Stock for the account of
the Company, provided that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective and
that, in the good faith judgment of the Company's underwriter for an
underwritten offering or of the Company's Board of Directors for any other
offering, an offering pursuant to such a registration statement would interfere
in any material respect with the successful marketing (including pricing) of
the Common Stock to be included in the Company's proposed registration
statement, or (ii) if the Company's Board of Directors shall determine in good
faith that such filing will interfere in any material respect with a pending or
contemplated financing, merger, sale or assets, recapitalization or other
similar corporate action of the Company. In the event the Company's obligations
are abated pursuant to the foregoing proviso, and if any of the Holders on
whose behalf the requested registration statement would be filed and who were
unable to have all of the Registrable Securities included in the Company's
registration statement pursuant to Section 3 then want such registration
statement to be filed, the Company shall file such registration statement as
promptly as practicable following (x) one hundred eighty (180) days after the
effective date of the registration statement with respect to the offering
referred to in clause (i) above, or (y) the date on which the transactions
referred to in clause (ii) above shall have been completed or abandoned as the
case may be); provided further, however, that the Company shall not be
obligated to file and cause to become effective (a) more than two (2)
registrations on Forms S-2 and/or S-3 in any one twelve (12) month period or
(b) any registration on Form S-2 and/or S-3 within six (6) months after the
effective date of any previous registration statement filed under Section 2 or
Section 3, with respect to which all Holders who had requested the inclusion of
any such shares in a registration statement were entitled to include in such
registration statement all Registrable Securities requested to be included
therein. No registration pursuant to this Section 4 shall count as a Demand
Registration pursuant to Section 2.
5. Obligation of the Company. Whenever required under
this Agreement to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the Commission a
registration statement covering such Registrable Securities and use its best
efforts to cause such registration statement to be declared effective by the
Commission and to keep such registration effective until the earlier of (i) the
date when all Registrable Securities covered by the registration statement have
been sold or (ii) in the case of a registration under Section 2 or 3 hereof,
nine (9) months after the effective date of the registration statement or
prospectus or any amendments or supplements thereto, or (iii) in the case of a
shelf registration, the applicable period permitted under the Act. The Company
will furnish to each Holder of Registrable Securities covered by such
registration statement and the underwriters, if any, copies of all such
documents proposed to be filed (excluding exhibits, unless any such person
shall specifically request exhibits), which documents will be subject to the
review (for a reasonable period of time in light of all facts and
circumstances) of each Holder and the underwriters, and the Company will not
file such
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registration statement or any amendment thereto or any prospectus or any
supplement thereto including any documents incorporated by reference therein)
with the Commission if (i) the Holders of a majority of the Registrable
Securities covered by such registration statement or the underwriters, if any,
shall reasonably object to such filing or (ii) information in such registration
statement or prospectus concerning a particular Registered Holder is
inaccurate.
(b) Prepare and file with the Commission such
amendments and post-effective amendments to such registration statement as may
be necessary to keep such registration statement effective until the earlier of
the dates referred to in clauses (i) and (ii) of Section 5(a) hereof and to
comply with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement, and cause the prospectus to
be supplemented by any required prospectus supplement, and as so supplemented
to be filed with the commission pursuant to Rule 424 under the Act.
(c) Furnish to the Registered Holders such
number of copies of such registration statement, each amendment thereto, the
prospectus included in such registration statement (including each preliminary
prospectus), each supplement thereto and such other documents, as they may
reasonably request in order to facilitate the disposition of Registered
Securities owned by them.
(d) Use its best efforts to register and
qualify the Registered Securities under such other securities laws of such
jurisdictions as shall be reasonably requested by any Registered Holder and do
any and all other acts and things which may be reasonably necessary or
advisable to enable each Registered Holder to consummate the disposition of the
Registered Securities owned by such Holder in such jurisdictions; provided that
the Company shall not be required in connection therewith or as a condition
thereto to qualify generally to transact business in any such states or
jurisdictions; and provided further that (anything in this Agreement to the
contrary notwithstanding with respect to the bearing of expenses) if any
jurisdiction in which the Registered Securities shall be qualified shall
require that expenses incurred in connection with the qualification of the
Registered Securities in that jurisdiction be borne by selling shareholders,
then such expenses shall be payable by the Registered Holders pro rata, to the
extent required by such jurisdiction.
(e) Promptly notify each Registered Holder at
any time when a prospectus is required to be delivered under the Act relating
to the happening of any event as a result of which the prospectus included in
such registration statement contains an untrue statement of a material fact or
omits any fact necessary to make the statements therein not misleading and, at
the request of any such Holder, the Company will promptly prepare a supplement
or amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Registered Securities, such prospectus will not contain an
untrue statement of a material fact or omit to state any fact necessary to make
the statements therein not misleading.
(f) Make available for inspection by any
Registered Holder, any underwriter participating in any disposition pursuant to
such registration statement and any attorney, accountant or other agent
retained by any such Registered Holder or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, and cause
the officers, directors, employees and independent accountants of the Company
to supply all information reasonably requested by any such Registered Holder,
underwriter, attorney,
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accountant or agent in connection with such registration statement, which
information shall be subject to reasonable restrictions concerning
confidentiality and nondisclosure.
(g) Promptly notify the Registered Holders and
the underwriters, if any, of the following events and (if requested by any such
person) confirm such notification in writing and provide copies of any relevant
documents relating to: (1) the filing of the prospectus or any prospectus
supplement and the registration statement and any amendment or post-effective
amendment thereto and, with respect to the registration statement and any
amendment or post-effective amendment thereto, the declaration of the
effectiveness of such documents, (2) any comment letters from or requests by
the Commission for amendments or supplements to the registration statement or
the prospectus or for additional information, (3) the issuance or threat of
issuance by the Commission of any stop order suspending the effectiveness of
the registration statement or the initiation of any proceedings for that
purpose and (4) the receipt by the Company of any notification with respect to
the suspension of the qualification of the Registered Securities for sale in
any jurisdiction or the initiation or threat of initiation of any proceeding
for such purpose.
(h) Make every reasonable effort to prevent the
entry of any order suspending the effectiveness of the registration statement
and obtain the withdrawal of any such order, if entered.
(i) If reasonably requested by any underwriter
or a Registered Holder in connection with any underwritten offering,
incorporate in a prospectus supplement or post-effective amendment such
information as the underwriters and the Holders of a majority of the Registered
Securities agree should be included therein relating to the sale of the
Registered Securities, including, without limitation, information with respect
to the number of Registered Securities being sold to such underwriters, the
purchase price being paid therefor by such underwriters and any other terms of
the underwritten offering of the Registered Securities to be sold in such
offering, and make all required filings of such prospectus supplement or
Post-effective amendment after being notified of the matters to be incorporated
in such prospectus supplement or post-effective amendment.
(j) Cooperate with the Registered Holders and
the underwriters, if any, to facilitate the timely preparation and delivery of
certificates evidencing Registered Securities and not bearing any restrictive
legends, and enable such Registered securities to be in such lots and
registered in such names as the underwriters may request at least two (2)
business days prior to any delivery of Registered Securities to the
underwriters.
(k) Provide a transfer agent, registrar and
CUSIP number for all Registrable Securities not later than the effective date
of the registration statement.
(l) Prior to the effectiveness of the
registration statement and any post-effective amendment thereto and at each
closing of any underwritten offering, (i) make such representations and
warranties to the Registered Holders and the underwriters, if any, with respect
to the Registered Securities and the registration statement as are customarily
made by issuers to underwriters in primary underwritten offerings; (ii) obtain
opinions of counsel to the Company and updates thereof (which opinions shall be
reasonably satisfactory to the underwriters, if any, and to the Holders of a
majority of the Registered Securities) addressed to
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each Registered Holder and the underwriters, if any, covering the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by such Holders and underwriters
or their counsel; (iii) obtain "cold comfort" letters and updates thereof from
the Company's independent certified public accountants addressed to the
Registered Holders and the underwriters, if any, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters by underwriters in connection with primary underwritten
offerings; and (iv) deliver such documents and certificates as may be
reasonably requested by the Holders of a majority of the Registered Securities
being sold and by the underwriters, if any, to evidence compliance with clause
(i) above and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company.
(m) Enter into such agreements and take all
such other reasonable actions in connection therewith in order to expedite or
facilitate the disposition of such Registered Securities and in such
connection, in the case of an underwritten offering, enter into an underwriting
agreement or other similar agreement in form, scope and substance as is
customary in underwritten offerings which underwriting agreement shall set
forth in full the indemnification provisions and procedures of Section 13
hereof with respect to all parties to be indemnified pursuant to said Section.
The above shall be done at each closing under such underwriting or similar
agreement or as and to the extent required thereunder.
(n) Use its best efforts to cause all
Registered Securities included in such registration statement to be listed, by
the date of first sale of Registered Securities pursuant to such registration
statement, on each securities exchange on which shares of Common Stock are then
listed or proposed by the Company to be listed, if any.
(o) Provide such reasonable assistance in the
marketing of the Registered Securities as is customary of issuers in public
offerings (including participation by its senior management in "road shows"),
subject to reasonable time and expense constraints.
(p) Otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission, and make generally
available to its security holders earnings statements satisfying the provisions
of Section 11(a) of the Act, no later than forty-five (45) days after the end
of any twelve (12) month period (i) commencing at the end of any fiscal quarter
in which Registered Securities are sold to underwriters in a firm or best
efforts underwritten offering, or (ii) if not sold to underwriters in such an
offering, beginning with the first day of the first fiscal quarter of the
Company commencing after the effective date of the registration statement.
6. Furnish Information. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to this
Agreement that the Holders shall furnish to the Company such information
regarding them, the Registrable Securities held by them, and the intended
method of disposition of such Registrable Securities as the Company shall
reasonably request and as shall be required in connection with the action to be
taken by the Company.
7. Suspension of Disposition of Registrable Securities.
Each Registered Holder agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 5(e) or 5(g)(3)
or (4) hereof, such Registered Holder will
-11-
forthwith discontinue disposition of Registered Securities until such
Registered Holder's receipt of copies of a supplemented or amended prospectus
contemplated by Section 5(e) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the prospectus may be resumed, and has
received copies of any additional or supplemental filings which are
incorporated by reference in the prospectus, and, if so directed by the
Company, such Registered Holder will deliver to the Company (at the expense of
the company) all copies, other than permanent file copies then in such
Registered Holder's possession, of the prospectus covering such Registered
Securities at the time of receipt of such notice. In the event the Company
shall give any such notice, the time period mentioned in Section 5(a) hereof
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 5(e) or 5(g)(3) or
(4) hereof to and including the date when each Registered Holder shall have
received the copies of the supplemented or amended prospectus contemplated by
Section 5(e) hereof or the Advice.
8. Expenses of Registration.
(a) Except as provided in Section 8(b) through
8(d) hereof, all expenses incurred in connection with a registration pursuant
to Sections 2, 3 or 4 (excluding underwriters' discounts and commissions),
including, without limitation all registration and qualification fees, fees and
disbursements of counsel for the Company, and, the reasonable fees and
disbursements of one (1) counsel chosen by the Registered Holders owning a
majority of the Registered Securities (or by the Registered Holders owning a
majority of the Mezzanine Warrant Stock constituting Registered Securities in
the case of a Mezzanine Demand Registration) shall be borne by the Company.
(b) If a registration proceeding is begun under
Section 2 but subsequently withdrawn at the request of the Registered Holders
owning a majority of the Registered Securities (or at the request of Registered
Holders owning a majority of the Mezzanine Warrant Stock constituting
Registered Securities in the case of a Mezzanine Demand Registration) such
Registered Holders shall have the option (exercisable by Registered Holders
owning a majority of the Registered Securities, or a majority of the Mezzanine
Warrant Stock constituting Registered Securities in the case of a Mezzanine
Demand Registration) of either (i) reserving their right to such Demand
Registration pursuant to Section 2, in which case the Registered Holders will
pay all expenses of such registration proceeding, or (ii) waiving their right
to one (1) Demand Registration under Section 2 (Section 2(a) if the
registration proceeding originated with a demand under Section 2(a) hereof), in
which case the Company will pay the expenses of such registration proceeding.
(c) Registered Holders may withdraw a request
made within forty-five (45) days after the end of the fiscal year if the
audited financial statements of the Company for such year and at such year-end
materially and adversely differ from the financial information furnished to
such Holders by the Company at the time of their request, in which event such
Registered Holders shall not be required to pay any of the expenses of such
withdrawn registration and such withdrawn registration shall be treated for all
purposes of this Agreement, including without limitation Section 2(d) hereof,
as if it had never occurred.
(d) All expenses incurred in connection with a
registration which are, under this Section 8, to be borne by Registered Holders
shall be borne pro rata by the Registered
-12-
Holders on the basis of the number of such Holder's Registered Securities (or
Registrable Securities proposed to be registered, as the case may be);
provided, however, that if any such cost or expense is attributable solely to
one Registered Holder and does not constitute a normal cost or expense of such
a registration, such cost or expense shall be allocated to and borne by that
Registered Holder.
9. Underwriting Requirements: Priorities.
(a) (i) With respect to a Mezzanine Demand
Registration pursuant to Section 2(a), the Registered Holders owning a majority
of the Mezzanine Warrant Stock included in the registration shall have the
right to select the investment banker(s) and manager(s), if any, to administer
such registration, subject to the approval of the Company, which will not be
unreasonably withheld. With respect to a Non-Mezzanine Demand Registration
pursuant to Section 2(b), the Registered Holders owning a majority of the
Registered Securities shall have the right to select the investment banker(s)
and manager(s) to administer such registration, subject to the approval of the
Company, which will not be unreasonably withheld.
(ii) The Registered Holders owning a
majority of the Registered Securities included in any registration under
Section 4 shall have the right to select the investment banker(s) and
manager(s), if any, to administer the offering, if any, subject to the approval
of the Company, which will not be unreasonably withheld.
(iii) The Company will have the right to
select the investment banker(s) and manager(s), if any, to administer any
offering to which Section 3 hereof is applicable.
(b) (i) if a registration under Section
2(a) hereof is an underwritten offering and the managing underwriters advise
the Company in writing that in their opinion the number of Registrable
Securities requested to be registered by the Mezzanine Warrant Holders and
Demand Piggybackers exceeds the number of shares which can be sold at the
desired price in such offering, the Company will include in such registration
(i) first, the Mezzanine Warrant Stock demanded to be registered under Section
2 (a) and the Mezzanine Warrant Stock held by Demand Piggybackers (pro rata
among the Holders thereof based on the number of shares of Mezzanine Warrant
Stock such Holders have requested to be registered), and (ii) second,
Registrable Securities other than Mezzanine Warrant Stock owned by Demand
Piggybackers (pro rata among the Holders thereof on the basis of the number of
Registrable Securities such Holders have requested to be registered); provided
that, such aggregate Registered Securities shall not exceed the number of
Registrable Securities requested to be included which in the opinion of such
underwriters can be sold at the desired price.
(ii) If a registration under Section
2(b) hereof is an underwritten offering and the managing underwriters advise
the Company in writing that in their opinion the number of shares of Common
Stock requested to be registered exceeds the number of shares which can be sold
at the desired price in such offering, then the Company will include in such
registration Registrable Securities owned by Holders requesting registration of
Registrable Securities with respect to such registration pro rata among such
Holders on the basis of the number of Registrable Securities such Holders have
requested to be registered; provided
-13-
that, such aggregate Registered Securities shall not exceed the number of
Registrable Securities requested to be included therein which in the opinion of
such underwriters can be sold at the desired price.
(iii) If a registration under Section 3
hereof is an underwritten registration and the managing underwriters advise the
Company in writing that in their opinion the number of securities requested to
be included in such registration exceeds the number which can be sold at the
desired price in such offering, the Company will include in such registration
(i) first, the securities the Company proposes to sell; (ii) second, the
Registrable Securities held by the Holders (other than Management Investors)
requesting to be included in such registration pursuant to Section 3 hereof
(pro rata among the respective Holders thereof on the basis of the number of
Registered Securities such Holders have requested to be registered); and (iii)
third, the Registrable Securities held by the Management Investors requesting
to be included in such registration pursuant to Section 3 hereof (pro rata
among such Management Investors on the basis of the number of Registered
Securities such Management Investors have requested to be registered).
(iv) If a registration under Section 4
hereof is an underwritten offering and the managing underwriters advise the
Company in writing that in their opinion the number of Registrable Securities
requested to be registered exceeds the number of shares which can be sold at
the desired price in such offering, the Company will include in such
registration the number of Registrable Securities requested to be included
which in the opinion of such underwriters can be sold at the desired price.
Registrable Securities held by the Holders requesting to be included in such
registration shall be included pro rata among the respective Holders thereof on
the basis of the number of Registrable Securities such Holders have requested
to be registered.
(c) Notwithstanding the priorities set forth in
Section 9(b), in the event Individual Investors request registration of
Registrable Securities under Sections 2(a) (as Demand Piggybackers), 2(b), 3 or
4 hereof, such Individual Investors, or any one of them, shall be given
priority over all other holders of Registrable Securities (other than Mezzanine
Warrant Holders) to the extent such priority is necessary to allow such
Individual Investors to sell enough Registrable Securities to qualify any
redemption of other Company securities from such Individual Investor occurring
simultaneously with (or part of a series of related transactions with) such
offering for sale or exchange treatment under Section 302(b)(2) of the Internal
Revenue Code of 1986, as amended; provided that the priority provided by this
subparagraph (c) shall not extend to Registrable Securities which constitute
more than one and one-half percent (1.5%) of the outstanding Common Stock of
the Company at the time of (and measured prior to) such redemption (the
"Priority Inversion Percent"); and provided further, that the rights provided
to Individual Investors pursuant to this subparagraph (c) may be terminated by
Holdings if Holdings shall, or shall cause the Company to, purchase the
Priority Inversion Percent from the Individual Investor and thereby reduce the
number of Individual Investors' Registrable Securities requested to be
registered.
(d) In the case of a non-underwritten Demand
Registration, the priorities provided in Section 9(b)(i) or (ii) shall apply in
the event the number of shares salable (in the opinion of the Board of
Directors) is less than the total number of Registrable Securities sought to be
registered.
-14-
(e) No Holder may participate in any
underwritten registration hereunder unless such Holder (i) agrees to sell such
Holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
(f) The Company shall not grant registration
rights to any person which impair in any way the priorities for inclusion in a
registration set forth in this Section 9, including, without limitation, by
providing any such person with higher priority than or equal priority to that
provided to the Parties herein with regard to any registration statement filed
by be Company, whether upon such person's demand or otherwise. In addition, in
any demand registration rights granted to any such person, the Company shall
provide that such demand registration rights shall be subject to a right of the
Mezzanine Warrant Holders to render such a demand thereunder ineffective by
making demand for registration under Section 2(a) of this Agreement in
accordance with the procedures set forth in Section 2(b) hereof.
Notwithstanding anything to the contrary contained in this paragraph (f),
nothing in this paragraph (f) shall restrict the Company's ability to register
on Form S-8 (or any successor form) shares issuable upon exercise of options
which may be granted pursuant to any Stock Option Plan adopted by the Company
after the date hereof, providing for the issuance of shares of Common Stock to
certain employees of the Company.
10. Rule 144.
(a) The Company shall not be obligated under
Section 2, 3 or 4 hereof to register or include in any registration statement
Registrable Securities that any Holder has requested to be registered if the
Company shall furnish such Holder with a written opinion of counsel to the
Company, which opinion shall be reasonably satisfactory to such Holder, that
all Registrable Securities that such Holder holds may be publicly offered, sold
and distributed within a single ninety (90) day period without registration
under the Act pursuant to Rule 144 promulgated by the Commission under the Act;
provided, however, that the provisions of this Section 10(a) shall not apply if
such Holder requesting registration shall provide to the Company written advice
from a refutable investment banker reasonably satisfactory to such Holder and
the Company, that the per share price reasonably likely to be attainable in a
sale under Rule 144 (net of expenses of such sale) is not substantially as
great as the per share price reasonably likely to be attainable pursuant to a
Registration under the applicable section. The cost of obtaining a letter from
an investment banker containing such advice shall be borne by the Company.
(b) At such time as the Company becomes subject
to the reporting requirements of the 1934 Act, the Company will file the
reports required to be filed by it under the Act and the 1934 Act and the rules
and regulations adopted by the Commission thereunder, and will use its best
efforts to take such further action as any Holder of Registrable Securities may
reasonably deem to be necessary, all to the extent required from time to time
to enable such Holder to sell Registrable Securities without registration under
the Act within the limitation of the exemptions provided by (i) Rule 144 under
the Act, as such Rule may be amended from time to time, or (ii) any similar
rule or regulation hereafter adopted by the Commission. Upon the request of any
Holder of Registrable Securities, the Company will deliver to such Holder a
written statement as to whether it has complied with such information and
requirements.
-15-
11. Lockup Agreement.
(a) All Holders agree that, upon the request of
and to the extent required by the underwriter(s) managing (i) an initial
underwritten public offering of Common Stock, or (ii) any other registration of
Common Stock at the time of which such Holder is a Restricted Holder (as
defined in this section 11(a)), such Holders will not sell, make any short sale
of, pledge, grant any option for the purchase of or otherwise dispose of any
Registrable Securities (other than those included in the registration) without
the prior written consent of the Company or such underwriters), as the case may
be, during the seven (7) days prior to, and during the one hundred twenty (120)
day period beginning on, the effective date of such registration as the Company
or the underwriters) may specify. For purposes of this section 11(a),
"Restricted Holder" shall mean any Holder who beneficially owns (within the
meaning of Rule 13d-3 of the 1934 Act or any successor rule) five percent (5%)
or more of the Common Stock ("5% Holder"), any director or officer of the
Company (without regard to his or her level of ownership of Common Stock), or
any Holder whose Registrable Securities are being included in the registration
(without regard to the amount of Registrable Securities being registered). Any
lockup imposed on Holders pursuant to clause (i) of this Section 11(a) shall be
imposed on all Holders and any lockup imposed on Restricted Holders pursuant to
clause (ii) of this Section 11(a) shall be imposed on all Restricted Holders.
(b) The Company agrees (i) not to effect any
public sale or distribution of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities, during the
seven (7) days prior to and during the one hundred twenty (120) day period
beginning on the effective date of any registration statement related to an
registered underwritten public offering pursuant to which Registrable
Securities are to be sold (except as part of such underwritten registration or
pursuant to registrations on Form S-8 or any successor form), unless the
underwriters) managing the registered public offering otherwise agree, and (ii)
to use its best efforts to cause each holder of at least five percent (5%) (on
a fully-diluted basis) of its equity securities, or any securities convertible
into or exchangeable or exercisable for such securities, in either case
purchased from the Company at any time after the date of this Agreement (other
than in a registered public offering) to agree not to effect any sale or
distribution of any such securities during such period (except as part of such
underwritten registration, if otherwise permitted), unless the underwriters
managing the registered public offering otherwise agree.
12. Transfer of Registration Rights. Provided that the
Company is given written notice by the Holder at the time of such transfer
stating the name and address of the transferee and identifying the securities
with respect to which the rights under this Agreement are being assigned, the
registration rights under this Agreement may be transferred in whole or in part
in connection with the transfer of Registrable Securities. Notwithstanding the
foregoing, if such transfer is subject to covenants, agreements or other
undertakings restricting transferability thereof the registration rights under
this Agreement shall not be transferred in connection with such transfer unless
such transfer complies with all such covenants, agreements and other
undertakings. In all cases, such registration rights shall not be transferred
unless the transferee thereof executes a counterpart signature page, agreeing
the assume and be bound by the obligations imposed upon Holders pursuant to
this Agreement.
13. Indemnification. In the event any Registrable
Securities are included in a registration statement under this Agreement:
-16-
(a) To the full extent permitted by law, the
Company will and hereby does (i) indemnify and hold harmless each Holder, each
director, officer, partner, employee, or agent of or for such Holder, any
underwriter (as defined in the Act) for such Holder, and each person, if any,
who controls such Holder or underwriter within the meaning of the Act, against
any losses, claims, damages or liabilities, joint or several, to which they may
become subject under the Act and applicable state securities laws insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based on any untrue or alleged untrue statement of any
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
in light of the circumstances under which it was made or necessary to make the
statements therein not misleading, or arise out of any violation by the company
of any securities law, rule or regulation applicable to the Company and
relating to action or inaction required of the company in connection with any
such registration; and (ii) will reimburse each such person or entity for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Section 13(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld or delayed) nor shall
the Company be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon an
untrue statement or an alleged untrue statement or omission or alleged omission
made in connection with such registration statement, preliminary prospectus,
final prospectus, or amendments or supplements thereto in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by or on behalf of any such Holder, underwriter or
controlling person.
(b) To the full extent permitted by law, each
Holder requesting or joining in a registration under this Agreement will and
hereby does (i) indemnify and hold harmless the Company, each of its directors,
each of its officers who have signed the registration statement, each person,
if any, who controls the Company within the meaning of the Act, and any
Underwriter (as defined in the Act) for the Company, each other holder and each
person, if any, who controls such other Holder within the meaning of Section 15
of the Act, against any losses, claims, damages or liabilities, joint or
several, to which the Company or any such director, officer, controlling
person, other Holder or underwriter may become subject, under the Act and
applicable state securities laws, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances, in each case 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, or amendments or supplements
thereto, in reliance upon and in conformity with written information furnished
by such Holder expressly for use in connection with such registration; and (ii)
reimburse any legal or other expenses reasonably incurred by the Company or any
such director, officer, other Holder, controlling person or underwriter
attributable to investigating or defending any loss, claim, damage, liability
or action
-17-
indemnified by such Holder pursuant to clause (i); provided, however, that the
indemnity agreement contained in this Section 13(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of such Holder (which consent shall
not be unreasonably withheld or delayed).
In no event shall the liability of any Registered Holder be
greater than the dollar amount of the proceeds received by such Registered
Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) Promptly after receipt by an indemnified
party under this Section 13 of notice of the commencement of any action or
knowledge of a claim that would, if asserted, give rise to a claim for
indemnity hereunder, such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 13, notify the
indemnifying party in writing of the commencement thereof or knowledge thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties. The failure to notify an indemnifying party
promptly of the commencement of any such action or of the knowledge of any such
claim, if prejudicial to any material extent to his ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 13 to the extent so prejudiced, but the
omission so to notify the indemnifying party will not relieve him of any
liability that he may have to any indemnified party otherwise than under this
Section 13.
(d) If the indemnification provided for in this
Section 13 is for any reason, other than pursuant to the terms thereof, held to
be unavailable to an indemnified party in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to therein,
then each indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the indemnifying and indemnified parties from the offering of
Common Stock. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law or otherwise results in a
materially inequitable result (as determined by the Board of Directors of the
Company in its reasonable discretion), then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the indemnifying and indemnified parties in
connection with the statements) or omissions) which resulted in such losses,
claims, damages, liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by a
party shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by such party bears to
the total net proceeds from the offering received by all parties. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact relates to information
supplied by the Company or a Holder and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Holders agree that it would not be
just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation or by any other method of allocation take
into account the equitable considerations referred to above in this subsection
(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or
-18-
liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. No Person guilty of fraudulent
misrepresentation within the meaning of Section 11(f) of the Act shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
14. Remedies. In addition to being entitled to exercise
all rights provided in this Agreement as well as all rights granted by law,
including recovery of damages, each Holder of Registrable Securities will be
entitled to specific performance of its rights under this Agreement. The
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Agreement
and hereby agrees not to raise the defense in any action for specific
performance that a remedy at law would be adequate.
15. Subsequent Issuances by the Company. If the Board of
Directors of the Company determines that any Person hereafter issued hereafter
issued any Common Stock, Preferred Stock or Warrants by the Company should
become a party to this Agreement, then the execution of a Counterpart to this
Agreement by such Person shall result in such Person being deemed to be a
Shareholder hereunder for all purposes of this Agreement.
16. Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Company has obtained the written
consent of all of the Holders; provided, however, that any such waiver or
consent will be effective against any Holder actually executing a written
waiver or consent whether or not other Holders of the outstanding Registrable
Securities grant such waiver or consent.
17. Filing Notices and Copies. The Company shall provide
to each Holder of Registrable Securities such number of copies of any
registration statement, amendment thereto (including post-effective amendments)
or other report, document or notice that is filed with the Securities and
Exchange Commission or other authority under the securities laws, as may be
reasonably requested by such Holder of Registrable Securities. In addition, the
Company shall provide prior notice to any Holder of Registrable Securities of
any such filing of a registration statement or amendment thereto, provided that
the foregoing notice provision shall not shorten any other advance notice
provision contained in this Agreement.
18. Notices. All notices and other communications
hereunder shall be in writing and shall be given to the person either
personally or by sending a copy thereof by first class or express mail, postage
prepaid, or by telegram (with messenger service specified), telex or TWX (with
answerback received) or courier services, charges prepaid, or by telecopier, to
such party's address (or to such party's telex, TWX, telecopier or telephone
number). If the notice is sent by mail, it shall be deemed to have been given
to the person entitled thereto five (5) business days after being deposited in
the United States mail, and if the notice is sent by telegraph or courier
services, it shall be deemed to have been given to the person entitled thereto
one (1) business day after deposited with a telegraph office or courier service
for delivery to that person or, in the case of telex, TWX, or telecopy when
dispatched.
-19-
If to Holdings, to:
Kirkland Holdings L.L.C.
75 State Street
Boston, MA 02109
Attention: David M. Mussafer
Telecopy No.: (617) 951-0568
With a copy to:
Pepper Hamilton LLP
3000 Two Logan Square
Philadelphia, PA 19103
Attention: Robert A. Friedel, Esq.
Telecopy No.: (215) 981-4750
If to the Management Investors or the Company, to:
Kirkland's, Inc.
P.O. Box 7222
Jackson, TN 38303-7222
Attention: Robert Alderson
Telecopy No.: (731) 664-9345
With a copy to:
Baker, Donelson, Bearman & Caldwell
20th Floor
First Tennessee Building
165 Madison Avenue
Memphis, TN 38103
Attention: Robert Walker, Esq.
Telecopy No.: (901) 577-2303
If to Robert Kirkland, to:
Robert Kirkland
760 Sanders Chapel Road
Union City, Tennessee 38261
Telecopy No.: (731) 885-7850
With a copy to:
Warner Law Firm PLC
308 West Church Street
Union City, Tennessee 38261
Attention: John L. Warner, Jr., Esquire
Telecopy No.: (731) 885-2440
-20-
If to Mezzanine Warrant Holders, to:
Capital Resource Lenders II, L.P.
85 Merrimac Street
Suite 200
Boston, MA 02114
Attention: Alexander S. McGrath
Telecopy No.: (617) 723-9819
Allied Capital Corporation
1919 Pennsylvania Avenue, N.W.
3rd Floor
Washington, D.C. 20006
Attention: Susan Gallagher
Telecopy No.: (202) 659-2053
The Marlborough Capital Investment Fund, L.P.
9 Newbury Street
Boston, MA 02116
Attention: Margaret Laroix
Telecopy No.: (617)421-9631
Capital Trust Investments, Ltd.
575 Fifth Avenue, 40th Floor
New York, NY 10017
Attention: John P. Oswald
Telecopy No.: (212) 490-6950
With a copy to:
Testa, Hurwitz & Thibeault, LLP
High Street Tower
125 High Street
Boston, MA 02110
Attention: Andrew E. Taylor, Jr., Esquire
Telecopy No.: (617) 248-7100
If to any other party hereto, to the address of record as
most recently provided to the Company. Upon request by any party hereto, the
Company agrees to provide address and telecopier information for any other
party for the purpose of providing a notice in accordance with this Section 18.
Notice of any change in any such address shall also be given in the manner set
forth above. Whenever the giving of notice is required, the giving of such
notice may be waived by the party entitled to receive such notice.
19. 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
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shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
20. Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
21. Governing Law. This Agreement shall be governed by
and construes in accordance with the laws of the State of Delaware.
22. Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained imp herein shall not be affected or impaired
thereby.
23. Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and matter contained herein. There are
no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein with respect to the registration rights granted by
the Company with respect to the Registrable Securities. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
24. Parties Benefited. Nothing in this Agreement,
express or implied, is intended to confer upon any third party any rights,
remedies, obligations or liabilities.
25. Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
heirs, personal representatives, successors and assigns including, without
limitation, subsequent Holders of Registrable Securities agreeing to be bound
by all and the terms and conditions of this Agreement.
IN WITNESS WHEREOF, this Amended and Restated Registration
Rights Agreement has been executed as of the date and year first above written.
KIRKLAND HOLDINGS L.L.C.
By:
----------------------------------------
Name:
Title:
KIRKLAND'S, INC.
By:
----------------------------------------
Name:
Title:
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SSM VENTURE PARTNERS, L.P.
By:
----------------------------------------
Name:
Title:
-------------------------------------------
JOSEPH R. HYDE, III
-------------------------------------------
JOHNSTON C. ADAMS, JR.
-------------------------------------------
JOHN H. PONTIUS
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CT/KIRKLAND EQUITY PARTNERS, L.P.
By:
----------------------------------------
Name:
Title:
R-H CAPITAL PARTNERS, L.P.
By:
----------------------------------------
Name:
Title:
TCW/KIRKLAND EQUITY PARTNERS, L.P.
By:
----------------------------------------
Name:
Title:
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CAPITAL RESOURCE LENDERS II, L.P., by
CAPITAL RESOURCE PARTNERS II, L.P., its
General Partner
By:
----------------------------------------
Name:
Title:
ALLIED CAPITAL CORPORATION
By:
----------------------------------------
Name:
Title:
THE MARLBOROUGH CAPITAL INVESTMENT FUND,
L.P., by MARLBOROUGH CAPITAL MANAGEMENT,
L.P., its general partner
By:
----------------------------------------
Margaret Lanoix, its authorized partner
CAPITAL TRUST INVESTMENTS, LTD.
By:
----------------------------------------
Name:
Title:
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GLOBAL PRIVATE EQUITY II LIMITED
PARTNERSHIP
By:
----------------------------------------
Name:
Title:
ADVENT DIRECT INVESTMENT PROGRAM LIMITED
PARTNERSHIP
By:
----------------------------------------
Name:
Title:
ADVENT PARTNERS LIMITED PARTNERSHIP
By:
----------------------------------------
Name:
Title:
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-------------------------------------------
CARL KIRKLAND
-------------------------------------------
ROBERT KIRKLAND
-------------------------------------------
ROBERT ALDERSON
THE AMY KATHERINE ALDERSON TRUST
By:
----------------------------------------
Name:
Title:
THE ALLISON LEIGH ALDERSON TRUST
By:
----------------------------------------
Name:
Title:
THE CARL T. KIRKLAND GRANTOR
RETAINED ANNUITY TRUST 2001-1
By:
----------------------------------------
Name:
Title:
-------------------------------------------
STEVEN COLLINS
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EXHIBIT A
COUNTERPART
THIS INSTRUMENT forms part of the Amended and Restated
Registration Rights Agreement (the "Agreement") made as of the 1st day of April
2002, among Kirkland Holdings L.L.C., Kirkland's Inc., SSM Venture Partners,
L.P., Joseph R. Hyde, III, Johnston C. Adams, Jr., John H. Pontius, CT/Kirkland
Equity Partners, L.P., R-H Capital Partners, L.P., TCW/Kirkland Equity
Partners, L.P., Capital Resource Lenders II, L.P., Allied Capital Corporation,
The Marlborough Capital Investment Fund, L.P., Capital Trust Investments, Ltd.,
Global Private Equity II Limited Partnership, Advent Direct Investment Program
Limited Partnership, Advent Partners Limited Partnership, Carl Kirkland, Robert
Kirkland, Robert Alderson, The Amy Katherine Alderson Trust, The Allison Leigh
Alderson Trust, The Carl T. Kirkland Grantor Retained Annuity Trust 2001-1 and
Steven Collins, and any additional Shareholders of the Company (as defined in
the Agreement), from time to time, which Agreement permits execution by
counterpart. The undersigned hereby acknowledges having received a copy of the
said Agreement (which is annexed hereto as Schedule I) and having read the said
Agreement in its entirety, and for good and valuable consideration, receipt and
sufficiency of which is hereby acknowledged, hereby agrees that the terms and
conditions of the said Agreement shall be binding upon the undersigned as a
Shareholder and such terms and conditions shall enure to the benefit of and be
binding upon the undersigned and its successors and permitted assigns.
IN WITNESS WHEREOF, the undersigned has executed this
instrument this ____ day of ___________, 200_ .
-------------------------------------------
(Signature of Shareholder)
-------------------------------------------
(Name in block letters)
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