REGISTRATION RIGHTS AGREEMENT
by and between
MERIDIAN USA HOLDINGS, INC.
and
THE INVESTOR PARTIES HERETO
Dated as of June 16, 2000
REGISTRATION RIGHTS AGREEMENT
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REGISTRATION RIGHTS AGREEMENT, dated as of June 16, 2000 (this "Agreement"), by
and among MERIDIAN USA HOLDINGS, INC., a Florida corporation (the "Company"),
and U.S. BANCORP INVESTMENTS, INC. (each of the foregoing, individually with its
Affiliates, an "Investor," and, collectively, the "Investors").
W I T N E S S E T H:
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WHEREAS, the Company and the Investors have entered into that certain
Securities Purchase Agreement dated June , 2000 (the "Purchase Agreement")
providing for, among other things, the sale by the Company and the purchase by
the Investors of $8,000,000 aggregate principal amount of the Company's Series A
Convertible Notes due 2010 (the "Convertible Notes");
WHEREAS, in connection with the transactions contemplated by the Purchase
Agreement, the Company agreed to issue a warrant (the "Libra Warrant") to
purchase 698,947 shares of the Company's common stock, par value $.001 per
share, to U.S. Bancorp Investments, Inc.; and
WHEREAS, in connection with the Company and the Investors entering into the
Purchase Agreement, the Company has agreed to provide the registration rights
set forth in this Agreement.
ACCORDINGLY, the parties hereto agree as follows:
1. Certain Definitions. (a) As used in this Agreement, the following
terms shall have the meanings assigned to them below:
1.1 "Affiliate" shall mean with respect to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person.
1.2 "Commission" shall mean the United States Securities and Exchange
Commission.
1.3 "Common Stock" shall mean the common stock, $.001 par value per share of
the Company.
1.4 "Common Stock Equivalents" means and includes all shares of the
Company's Common Stock issued and outstanding at the relevant time plus (a) all
shares of Common Stock that may be issued upon exercise of any options,
warrants, including without limitation the Libra Warrant, and other rights of
any kind that are then exercisable, and (b) all shares of Common Stock that may
be issued upon conversion or exchange of (i) any convertible securities,
including without limitation the Series I Preferred, Series II Preferred and all
other preferred stock and debt securities then outstanding, which are by their
terms then convertible into or exchangeable for Common Stock, or (ii) any such
convertible securities issuable upon exercise of options, warrants or other
rights, in each case that are then exercisable.
1.5 "Exchange Act" shall mean the United States Securities Exchange Act of
1934, as amended.
1.6 "Holder" means the Investor and any assignees or transferees acquiring
Convertible Notes, shares of Series II Preferred or Registrable Securities.
1.7 "NASD" shall have the meaning ascribed to such term in Section 2.3(g)
hereof.
1.8 "Person" shall mean any natural person, corporation, partnership,
limited liability company, firm, association, trust, government, governmental
agency or other entity, whether acting in an individual, fiduciary or other
capacity.
1.9 "Registrable Securities" shall mean (i) any shares of Common Stock held
as of the date hereof by any Investor or hereafter acquired by any Investor or
Holder; (ii) any shares of Common Stock issued or issuable upon the conversion,
exercise or exchange of any other Common Stock Equivalents held as of the date
hereof by any Investor or hereafter acquired by any Investor or Holder; or (iii)
any shares issued or issuable, directly or indirectly, upon any subdivision,
combination, reclassification or redesignation of such shares or share dividend
in respect of the Common Stock referenced in clauses (i) and (ii) above. As to
any particular Registrable Securities, such securities shall cease to be
Registrable Securities when (i) a registration statement with respect to the
sale of such securities shall have been declared effective under the applicable
Securities Laws and such securities shall have been disposed of in accordance
with such registration statement or (ii) such securities shall have been sold
(other than in a privately negotiated sale) pursuant to Rule 144 (or any
successor or comparable provision) under the U.S. Securities Act and in
compliance with the requirements of Rule 144.
(a) Capitalized terms used but not otherwise defined herein shall have
the meaning assigned to such terms in the Purchase Agreement.
2. Registration Rights.
2.1 Shelf Registration.
(a) The Company shall use its best efforts to prepare and file with the
Commission pursuant to Rule 415 under the Securities Act a shelf registration
statement on Form S-1, S-3 or other appropriate form (the "Shelf Registration
Statement") covering the resale of the Registrable Securities by the Holders and
shall cause the Shelf Registration Statement to become effective under the
Securities Act no later than December 31, 2000. Such registration statement
shall comply in all material respects with the requirements of the applicable
form and include all financial statements required by the Commission to be filed
therewith. The Company shall use best efforts to keep the Shelf Registration
Statement continuously effective, subject to Section 2.1(d) hereof, until such
time as all of the Registrable Securities have been resold pursuant to the Shelf
Registration Statement or are no longer Registrable Securities. (the
"Effectiveness Period"). Prior to filing the Shelf Registration Statement or
any amendment or supplement thereto, the Company shall provide a copy thereof to
the Holders and their counsel and afford them a reasonable time to comment
thereon and the Company shall not file any registration statement or amendment
thereto or any prospectus or supplement thereto to which any Holder or the
underwriters, if any, shall reasonably object in writing.
(b) Notwithstanding the foregoing, the Company shall have the ability to
suspend the filing, effectiveness or use of such Shelf Registration Statement
for up to one 30-consecutive-day period during any consecutive 365-day period
if:
(i) an event or circumstance occurs and is continuing as a result of
which the registration statement, any related prospectus or any document
incorporated therein by reference, as then amended or supplemented or proposed
to be filed, would, in the good faith determination of the Board, contain an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading; and
(ii) (i) the Board determines in good faith that the disclosure of such an
event at such time would have a material adverse effect on the business,
operations or prospects of the Company or (ii) the disclosure otherwise relates
to a material business transaction which has not yet been publicly disclosed.
The Company shall provide written notice of any such determination to each
Holder at the address set forth on the signature page hereto or such other
address as may hereafter be designated in writing by such Holder to the Company.
2.2 Piggyback Rights.
(a) If the Company proposes to file a registration statement with the
Commission respecting an offering of any Common Stock (or other securities)
purchasable upon exercise of the Series II Preferred (other than (x) an offering
that could be registered solely on Form S-4 or S-8, or any successor form
thereto, and (y) securities offered or issued pursuant to any employment or
benefit plan or arrangement to any employee, director, partner, trustee or
consultant or advisor of or to the Company or any subsidiary of the Company),
the Company shall give prompt written notice to all the Holders of Series II
Preferred and Registrable Securities at least 30 days prior to the initial
filing of the registration statement relating to such offering (the
"Registration Statement"). Each such Holder shall have the right, within 20
days after delivery of such notice, to request in writing that the Company
include all or a portion of such of the Registrable Securities in such
Registration Statement ("Piggyback Registration Rights"). The Company shall
include in the public offering all of the Registrable Securities that a Holder
has requested be included, unless the underwriter for the public offering or the
underwriter managing the public offering (in either case, the "managing
underwriter") delivers a notice (a "Cutback Notice") pursuant to Section 2.2(b)
or 2.2(c) hereof. The managing underwriter may deliver one or more Cutback
Notices at any time prior to the execution of the underwriting agreement for the
public offering.
(b) If a proposed public offering includes both securities to be offered for
the account of the Company ("Company Shares") and shares to be sold by
shareholders, the provisions of this Section 2.2(b) shall be applicable if the
managing underwriter delivers a Cutback Notice stating that, in its opinion, the
number of shares of Common Stock that selling shareholders propose to sell
therein, whether or not such selling shareholders have the right to include
shares therein (the "Other Shares"), plus the number of Registrable Securities
that the Holders have requested to be sold therein, plus the Company Shares,
exceeds the maximum number of shares specified by the managing underwriter in
such Cutback Notice that may be distributed without materially and adversely
affecting the price, timing or distribution of the Company Shares. Such maximum
number of shares that may be so sold, excluding the Company Shares, are referred
to as the "Includible Shares."
If the managing underwriter delivers such Cutback Notice, the Company shall
be entitled to include all of the Company Shares in the public offering and each
requesting Holder (or beneficiary) exercising its registration rights (or
privileges) under this Agreement, shall be entitled to include in the public
offering up to its pro rata portion of the Includible Shares and in priority to
the inclusion of any Other Shares that are proposed to be sold in such public
offering. No shareholder that proposes to sell Other Shares in such public
offering may sell any such shares therein unless all Registrable Securities
requested by the Holders to be sold therein are so included.
(c) If a proposed public offering is entirely a secondary offering, the
provisions of this Section 2.2(c) shall be applicable if the managing
underwriter delivers a Cutback Notice stating that, in its opinion, the
aggregate number of Registrable Securities and Other Shares proposed to be sold
therein exceeds the maximum number of shares (the "Includible Secondary Shares")
specified by the managing underwriter in such Cutback Notice that may be
distributed without materially and adversely affecting the price, timing or
distribution of the Common Stock being distributed.
If the managing underwriter delivers such Cutback Notice, each requesting
Holder shall be entitled to include up to its pro rata portion of the Includible
Secondary Shares and in priority to the inclusion of any Other Shares that are
proposed to be sold in such public offering.
No shareholder that proposes to sell Other Shares in the proposed public
offering may sell any such shares therein unless all Registrable Securities
requested by the Holders to be sold therein are so included.
(d) The underwriting agreement for such public offering shall provide
that each requesting Holder shall have the right to sell its Registrable
Securities to the underwriters and that the underwriters shall purchase the
Registrable Securities at the price paid by the underwriters for the Common
Stock sold by the Company and/or selling shareholders, as the case may be.
2.3 Registration Procedures.
(a) In connection with a registration pursuant to Section 2.1 or 2.2,
the Company agrees to:
(i) make available for inspection by a representative of the Holders,
the managing underwriter participating in any disposition pursuant to such Shelf
Registration Statement and one firm of attorneys designated by the Holders (upon
execution of customary confidentiality agreements reasonably satisfactory to the
Company and its counsel), at reasonable times and in a reasonable manner,
financial and other records, documents and properties of the Company that are
pertinent to the conduct of due diligence customary for an underwritten
offering, and cause the officers, directors and employees of the Company to
supply all information reasonably requested by any such representative,
underwriter or attorney in connection with a Shelf Registration Statement as
shall be necessary to enable such persons to conduct a reasonable investigation
within the meaning of Section 11 of the Securities Act of 1933, as amended from
time to time;
(ii) use its best efforts to cause all Registrable Securities sold under a
Shelf Registration Statement to be listed on any securities exchange or any
automated quotation system on which similar securities issued by the Company are
then listed;
(iii) provide, without charge, to Holders that are selling Registrable
Securities pursuant to such Shelf Registration Statement a reasonable number of
copies of such registration statement, each amendment and supplement thereto (in
each case including all exhibits) and the prospectus included in such Shelf
Registration Statement (including each Preliminary Prospectus) and other
documents such Holders may reasonably request;
(iv) use its best efforts to register or qualify the Registrable Securities
covered by such registration statement under such other securities or "blue sky"
laws of such jurisdictions a Holder of Registrable Securities or any managing
underwriter, if any, shall reasonably request, and do any and all other acts and
things which may be reasonably necessary or advisable to enable such sellers or
underwriter, if any, to consummate the disposition of the Registrable Securities
in such jurisdictions, except that in no event shall the Company be required to
qualify to do business as a foreign corporation in any jurisdiction where it
would not, but for the requirements of this paragraph (d), be required to be so
qualified, to subject itself to taxation in any such jurisdiction or to consent
to general service of process in any such jurisdiction;
(v) cause to be provided to the Holders that are selling Registrable
Securities pursuant to such Shelf Registration Statement and to the managing
underwriter if any disposition pursuant to such Shelf Registration Statement is
an underwritten offering, upon the effectiveness of such Shelf Registration
Statement, a customary "10b-5" opinion of independent counsel (an "Opinion") and
a customary "cold comfort" letter of independent auditors (a "Comfort Letter")
in each case addressed to such Holders and managing underwriter, if any;
(vi) cause to be provided to the Holders that are selling Registrable
Securities pursuant to such Shelf Registration Statement and to the managing
underwriter if any disposition pursuant to such Shelf Registration Statement is
an underwritten offering, an Opinion and Comfort Letter with respect to each
document, including any amendments thereto, that is incorporated by reference in
such Shelf Registration Statement; in each case addressed to such Holders and
managing underwriter, if any;
(vii) notify in writing the Holders that are selling Registrable Securities
pursuant to such Shelf Registration Statement and any managing underwriter if
any disposition pursuant to such Shelf Registration Statement is an underwritten
offering, (A) when the Shelf Registration Statement has become effective and
when any post-effective amendment thereto has been filed and becomes effective,
(B) of any request by the Commission or any state securities authority for
amendments and supplements to the Shelf Registration Statement or of any
material request by the Commission or any state securities authority for
additional information after the Shelf Registration Statement has become
effective, (C) of the issuance by the Commission or any state securities
authority of any stop order suspending the effectiveness of the Shelf
Registration Statement or the initiation of any proceedings for that purpose,
(D) if, between the effective date of the Shelf Registration Statement and the
closing of any sale of Registrable Securities covered thereby, the
representations and warranties of the Company contained in any underwriting
agreement, securities sales agreement or other similar agreement, including this
Agreement, relating to disclosure cease to be true and correct in all material
respects or if the Company receives any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation of any proceeding for such purpose, (E) of the
happening of any event during the period the Shelf Registration Statement is
effective such that such Shelf Registration Statement or the related prospectus
contains an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make statements therein not
misleading (in the case of a prospectus, in light of circumstances under which
they were made) and (F) of any determination by the Company that a
post-effective amendment to the Shelf Registration Statement would be
appropriate. The Holders hereby agree to suspend, and to cause any managing
underwriter to suspend, use of the prospectus contained in a Shelf Registration
Statement upon receipt of such notice under clause (C), (E) or (F) above until,
in the case of clause (C), such stop order is removed or rescinded or, in the
case of clauses (E) and (F), the Company has amended or supplemented such
prospectus to correct such misstatement or omission or otherwise.
If the notification relates to an event described in clauses (E) or
(F), the Company shall promptly prepare and furnish to such seller and each
underwriter, if any, a reasonable number of copies of a prospectus supplemented
or amended so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading;
(viii) comply with all applicable rules and regulations of the Commission
and make generally available to its security holders, as soon as reasonably
practicable after the effective date of the registration statement (and in any
event within 15 months thereafter), an earnings statement (which need not be
audited) covering the period of at least twelve consecutive months beginning
with the first day of the Company's first calendar quarter after the effective
date of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(ix) provide and cause to be maintained a transfer agent and registrar for
all such Registrable Securities covered by such registration statement not later
than the effective date of such registration statement;
(x) enter into such customary agreements (including, if applicable, an
underwriting agreement) and take such other actions as the Holders shall
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities. The Holders of the Registrable Securities which are to
be distributed by such underwriters shall be parties to such underwriting
agreement and may, at their option, require that the Company, and in such case
the Company will, make to, and for the benefit of, the Holders the
representations, warranties and covenants of the Company which are being made
to, and for the benefit of, such underwriters and which are of the type
customarily provided to institutional investors in secondary offerings;
(xi) deliver promptly to each Holder participating in the offering and each
underwriter, if any, copies of all correspondence between the Commission and the
Company, its counsel or auditors and all memoranda relating to discussions with
the Commission and its staff with respect to the registration statement, other
than those portions of any such correspondence and memoranda which contain
information subject to attorney-client privilege with respect to the Company,
and, upon receipt of such confidentiality agreements as the Company may
reasonably request, make reasonably available for inspection by any Holder of
such Registrable Securities covered by such registration statement, by any
underwriter, if any, participating in any disposition to be effected pursuant to
such registration statement and by any attorney, accountant or other agent
retained by any such Holder or any such underwriter, all pertinent financial and
other records, pertinent corporate documents and properties of the Company, and
cause all of the Company's officers, directors and employees to supply all
information reasonably requested by any such Holder, underwriter, attorney,
accountant or agent in connection with such registration statement;
(xii) use its best efforts to obtain the withdrawal of any order suspending
the effectiveness of the registration statement;
(xiii) provide a CUSIP number for all Registrable Securities not later than
the effective date of the registration statement;
(xiv) make reasonably available its employees and personnel and otherwise
provide reasonable assistance to the underwriters in the marketing of
Registrable Securities in any underwritten offering;
(xv) promptly prior to the filing of any document which is to be
incorporated by reference into the registration statement or the prospectus
(after the initial filing of such registration statement) provide copies of such
document to counsel to the seller of Registrable Securities and to the managing
underwriter, if any, and make the Company's representatives reasonably available
for discussion of such document and make such changes in such document
concerning such sellers prior to the filing thereof as counsel for such sellers
or underwriters may reasonably request;
(xvi) cooperate with the sellers of Registrable Securities and the managing
underwriter, if any, to facilitate the timely preparation and delivery of
certificates not bearing any restrictive legends representing the Registrable
Securities to be sold, and cause such Registrable Securities to be issued in
such denominations and registered in such names in accordance with the
underwriting agreement prior to any sale of Registrable Securities to the
underwriters or, if not an underwritten offering, in accordance with the
instructions of the sellers of Registrable Securities at least three business
days prior to any sale of Registrable Securities; and
(xvii) take all such other commercially reasonable actions as are necessary
or advisable in order to expedite or facilitate the disposition of such
Registrable Securities.
(b) Each Holder of Registrable Securities sold pursuant to a
registration statement, by requesting that such securities be included such
registration statement, hereby (i) agrees to provide the Company with
information with respect to such Holder that the Company reasonably requests in
connection with such registration statement.
(c) If any such registration statement or comparable statement under "blue
sky" laws refers to any Holder by name or otherwise as the Holder of any
securities of the Company, then such Holder shall have the right to require,
acting reasonably, (i) the insertion therein of language, in form and substance
satisfactory to such Holder, to the effect that the holding by such Holder of
such securities is not to be construed as a recommendation by such Holder of the
investment quality of the Company's securities covered thereby and that such
holding does not imply that such Holder will assist in meeting any future
financial requirements of the Company, or (ii) in the event that such reference
to such Holder by name or otherwise is not in the judgment of the Company, as
advised by counsel, required by the Securities Act or any similar federal
statute or any state "blue sky" or United States securities law then in force,
the deletion of the reference to such Holder.
2.4 Registration Expenses.
2.4.1 "Expenses" shall mean any and all fees and expenses incident to
the Company's performance of or compliance with this Article 2, including,
without limitation: (i) Commission, stock exchange or NASD registration and
filing fees and all listing fees and fees with respect to the inclusion of
securities in the Nasdaq National Market; (ii) fees and expenses of compliance
with Securities Laws or "blue sky" laws and in connection with the preparation
of a "blue sky" survey, including, without limitation, reasonable fees and
expenses of blue sky counsel; (iii) printing and copying expenses; (iv)
messenger and delivery expenses; (v) expenses incurred in connection with any
road show; (vi) fees and disbursements of counsel for the Company; (vii) fees
and disbursements of all independent public accountants (including the expenses
of any audit and/or "cold comfort" letter) and fees and expenses of other
persons, including special experts, retained by the Company; and (viii) any
other reasonable fees and disbursements of underwriters, if any, customarily
paid by issuers.
2.4.2 The Company shall pay all Expenses with respect to any Shelf
Registration Statement affected pursuant to Section 2.1 whether or not such
Shelf Registration Statement becomes effective or does not remain effective for
the period contemplated by Section 2.1(a). The Company shall pay all Expenses
of the Holders with respect to any registration effected under Section 2.2.
2.4.3 Notwithstanding the foregoing, (i) the provisions of this Section 2.4
shall be deemed amended to the extent necessary to cause these expense
provisions to comply with United States "blue sky" laws of each state or the
Securities Laws of any other jurisdiction in which the offering is made; (ii) in
connection with any registration hereunder, each Holder of Registrable
Securities being registered shall pay all underwriting discounts and commissions
and any transfer taxes, if any, attributable to the Registrable Securities, pro
rata with respect to payments of discounts and commissions in accordance with
the number of shares included in the offering by such Holder; and (iii) the
Company shall be responsible for all of its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties).
2.5 Liquidated Damages. If (i) a registration statement or
registration statements including all of the Registrable Securities has not been
declared effective by the Commission on or prior to the first anniversary of the
date of the initial issuance of the Series II Preferred, or (ii) a Shelf
Registration Statement is declared effective but prior to the end of the
Effective Period (A) shall thereafter cease to be effective or fail to be usable
for its intended purpose without being succeeded immediately by a post-effective
amendment to such Shelf Registration Statement that cures such failure and that
is itself declared effective immediately thereafter or (B) the use of such Shelf
Registration Statement is suspended by the Company for one or more periods
exceeding 60 days in the aggregate (each event referred to in clause (i) and
(ii), a "Registration Default"), then in addition to such other remedies as
shall be available to the Holder of such Registrable Securities, the Company
shall pay to each Holder of Registrable Securities affected thereby liquidated
damages in cash in an amount equal to three percent (3%) of the then current
Special Liquidation Payment (as defined in the Series II Designation) for each
thirty (30) day period or portion thereof that such Registration Default
continues; provided that in no event shall the Company be required to pay
liquidated damages pursuant to this Section 2.5 (i) in excess of three percent
(3%) of the then current Special Liquidation Payment for any such thirty (30)
day period or (ii) for any such thirty (30) day period if the Company is
required to pay liquidated damages pursuant to Section 6(j) of the Series II
Designation for such thirty (30) day period.
All accrued and liquidated damages shall be paid to the Holders
entitled thereto, monthly in arrears. Notwithstanding the fact that any
securities for which liquidated damages are due cease to be Registrable
Securities, all obligations of the Company to pay liquidated damages with
respect to securities shall survive until such time as such obligations with
respect to such securities shall have been satisfied in full.
2.6 Certain Limitations on Registration Rights. In the case of any
registration under Section 2.1 pursuant to an underwritten offering, or in the
case of registration under Section 2.2 if the Company has determined to enter
into an underwriting agreement in connection therewith, all securities to be
included in such registration shall be subject to an underwriting agreement and
no Person may participate in such registration unless such Person agrees to sell
such Person's securities on the basis provided therein and completes and/or
executes all questionnaires and other documents which must be executed in
connection therewith, and provides such other information to the Company or the
underwriter as may be necessary to register such Person's securities.
2.7 No Required Sale. Nothing in this Agreement shall be deemed to create
an independent obligation on the part of any Holder to sell any Registrable
Securities pursuant to any effective registration statement.
3. Indemnification.
3.1 In the event of any registration of any securities of the Company
under the Securities Act pursuant to Article 2, the Company shall, and hereby
does, indemnify and hold harmless, to the fullest extent permitted by law, the
Holder of any Registrable Securities, its directors, officers, fiduciaries,
employees and shareholders or general and limited partners (and the directors,
officers, employees and shareholders thereof), each other Person who
participates as an underwriter, if any, in the offering or sale of such
securities, each officer, director, employee, shareholder or partner of such
underwriter, and each other Person, if any, who controls such seller or any such
underwriter within the meaning of the Securities Act, against any and all
losses, claims, damages or liabilities, joint or several, actions or proceedings
(whether commenced or threatened) in respect thereof and expenses (including
reasonable fees of counsel and any amounts paid in any settlement effected with
the Company's consent, which consent shall not be unreasonably withheld or
delayed) to which each such indemnified party may become subject under the
Securities Act or otherwise ("Claims"), insofar as such Claims arise out of or
are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any registration statement under which such
securities were registered under the Securities Act or 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; (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary, final or summary prospectus or any amendment or supplement thereto,
together with the documents incorporated by reference therein, or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; or (iii) any
violation by the Company of any federal, state, or common law rule or regulation
applicable to the Company and relating to action required or inaction of the
Company in connection with any such registration, and the Company will reimburse
any such indemnified party for any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
Claim as such expenses are incurred; provided, however, that the Company shall
not be liable to any such indemnified party in any such case to the extent such
Claim arises solely out of any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission of a material fact made in such
registration statement or amendment thereof or supplement thereto or in any such
prospectus or any preliminary, final or summary prospectus in reliance upon, and
in conformity with, written information furnished to the Company by, or on
behalf of, such indemnified party specifically for use therein. Such indemnity
and reimbursement of expenses shall remain in full force and effect regardless
of any investigation made by, or on behalf of, such indemnified party and shall
survive the transfer of such securities by such seller.
3.2 Each Holder of Registrable Securities that are included in the
securities as to which any registration under Section 2.1 or 2.2 is being
effected shall, severally and not jointly, indemnify and hold harmless (in the
same manner and to the same extent as set forth in Section 3.1) to the extent
permitted by law, the Company, its officers, directors, fiduciaries, employees
and shareholders or general and limited partners (and the directors, officers,
employees, and shareholders thereof), each Person controlling the Company within
the meaning of the Securities Act with respect to any untrue statement or
alleged untrue statement of any material fact in, or omission or alleged
omission of any material fact from, such registration statement, any
preliminary, final or summary prospectus contained therein, or any amendment or
supplement thereto, if such statement or alleged statement or omission or
alleged omission was made in reliance upon, and in conformity with, written
information furnished to the Company or its representatives by, or on behalf of,
such Holder specifically for use therein and shall reimburse such indemnified
party for any legal or other expenses reasonably incurred in connection with
investigating or defending any such Claim as such expenses are incurred;
provided, however, that the aggregate amount which any such Holder shall be
required to pay pursuant to this Section 3.2 and Sections 3.3 and 3.5 shall in
no case be greater than the amount of the net proceeds received by such Holder
upon the sale of the Registrable Securities pursuant to the registration
statement giving rise to such Claim. Such indemnity and reimbursement of
expenses shall remain in full force and effect regardless of any investigation
made by, or on behalf of, such indemnified party and shall survive the transfer
of such securities by such Holder.
3.3 Indemnification similar to that specified in the preceding Sections 3.1
and 3.2 (with appropriate modifications) shall be given by the Company and the
seller of Registrable Securities with respect to any required registration or
other qualification of securities under any state securities and "blue sky"
laws.
3.4 Any person entitled to indemnification under this Agreement shall
promptly notify the indemnifying party in writing of the commencement of any
action or proceeding with respect to which a claim for indemnification may be
made pursuant to this Article 3, but the failure of any indemnified party to
provide such notice shall not relieve the indemnifying party of its obligations
under this Article 3, except to the extent the indemnifying party is materially
prejudiced thereby and shall not relieve the indemnifying party from any
liability which it may have to any indemnified party otherwise than under this
Article 3. In case any action or proceeding is brought against an indemnified
party, it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, unless in the
reasonable opinion of outside counsel to the indemnified party a conflict of
interest between such indemnified and indemnifying parties may exist in respect
of such Claim, to assume the defense thereof jointly with any other indemnifying
party similarly notified, to the extent that it chooses, with counsel reasonably
satisfactory to such indemnified party (who shall not, except with the written
consent of the indemnified party, be counsel to the indemnifying party), and
after notice from the indemnifying party to such indemnified party that it so
chooses, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation; provided, however, that (i) if the indemnifying party fails to
take reasonable steps necessary to defend diligently the action or proceeding
within 20 days after receiving notice from such indemnified party that the
indemnified party believes it has failed to do so; (ii) if such indemnified
party who is a defendant in any action or proceeding which is also brought
against the indemnifying party reasonably shall have concluded that there may be
one or more legal defenses available to such indemnified party which are not
available to the indemnifying party; or (iii) if representation of both parties
by the same counsel is otherwise inappropriate under applicable standards of
professional conduct, then, in any such case, the indemnified party shall have
the right to assume or continue its own defense as set forth above (but with no
more than one firm of counsel for all indemnified parties in each jurisdiction,
except to the extent any indemnified party or parties reasonably shall have
concluded that there may be legal defenses available to such party or parties
which are not available to the other indemnified parties or to the extent
representation of all indemnified parties by the same counsel is otherwise
inappropriate under applicable standards of professional conduct) and the
indemnifying party shall be liable for any expenses therefor (including, without
limitation, any such counsel's fees). No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or Claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (A) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (B) does not include a
statement as to, or an admission of, fault, culpability or a failure to act, by,
or on behalf of, any indemnified party.
3.5 If for any reason the foregoing indemnity is unavailable or is
insufficient to hold harmless an indemnified party under Sections 3.1, 3.2 or
3.3, then each indemnifying party shall contribute to the amount paid or payable
by such indemnified party as a result of any Claim in such proportion as is
appropriate to reflect the relative fault of the indemnifying party, on the one
hand, and the indemnified party, on the other hand, with respect to such
offering of securities. The relative fault 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 indemnifying party or the indemnified party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. If, however, the
allocation provided in the second preceding sentence is not permitted by
applicable law, then each indemnifying party shall contribute to the amount paid
or payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative faults, but also any other relevant equitable
considerations. The parties hereto agree that it would not be just and
equitable if contributions pursuant to this Section 3.5 were to be determined by
pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to in the preceding sentences
of this Section 3.5. The amount paid or payable in respect of any Claim shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such Claim.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the U.S. Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. Notwithstanding
anything in this Section 3.5 to the contrary, no indemnifying party (other than
the Company) shall be required pursuant to this Section 3.5 to contribute any
amount in excess of the net proceeds received by such indemnifying party from
the sale of Registrable Securities in the offering to which the losses, claims,
damages or liabilities of the indemnified parties relate, less the amount of any
indemnification payment made pursuant to Sections 3.2 and 3.3.
3.6 The indemnity agreements contained herein shall be in addition to any
other rights to indemnification or contribution which any indemnified party may
have pursuant to law or contract and shall remain operative and in full force
and effect regardless of any investigation made or omitted by, or on behalf of,
any indemnified party and shall survive the transfer of the Registrable
Securities by any such party.
3.7 The indemnification and contribution required by this Article 3 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
4. Underwritten Offerings
4.1 Requested Underwritten Offerings If requested by the underwriters
for any underwritten offering by the Holders pursuant to a registration under
Section 2.1, the Company shall enter into a customary underwriting agreement
with the underwriters. Such underwriting agreement shall be satisfactory in
form and substance to the Company and the Holders that own a majority of the
Registrable Securities included by the Holders in such offering acting
reasonably and shall contain such representations and warranties by, and such
other agreements on the part of, the Company and such other terms as are
generally prevailing in agreements of that type, including, without limitation,
indemnities and contribution agreements. Any Holder participating in the
offering shall be a party to such underwriting agreement and may, at its option,
require that any or all of the representations and warranties made by, and the
other agreements on the part of, the Company to, and for the benefit of, such
underwriters shall also be made to, and for the benefit of, such Holder and that
any or all of the conditions precedent to the obligations of such underwriters
under such underwriting agreement be conditions precedent to the obligations of
such Holder; provided, however, that the Company shall not be required to make
any representations or warranties with respect to information specifically
provided by a selling Holder of Registrable Securities for inclusion in the
registration statement. Such underwriting agreement shall also contain such
representations and warranties by the participating Holders as are customary in
agreements of that type.
4.2 Piggyback Underwritten Offerings. In the case of a registration
pursuant to Section 2.2 hereof, if the Company shall have determined to enter
into any underwriting agreements in connection therewith, all of the Holders'
Registrable Securities to be included in such registration shall be subject to
such underwriting agreement. Any Holder participating in such registration may,
at it option, require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to, and for the benefit of,
such underwriters shall also be made to, and for the benefit of, such Holder and
that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to the
obligations of such Holder. Such underwriting agreements shall also contain
such representations and warranties by the participating Holders as are
customary in agreements of that type.
4.3 Underwriting Services If a registration pursuant to Section 2.1
involves an underwritten offering, then Holders that own a majority of the
Registrable Securities included by the Holders in such offering shall select the
underwriter from underwriting firms of national reputation in the United States
subject to the approval of the Company, such approval not to be unreasonably
withheld.
5. General
5.1 Rule 144. The Company covenants that (a) so long as it remains
subject to the reporting provisions of the Exchange Act, it will timely file the
reports required to be filed by it under the Securities Act or the Exchange Act
(including, without limitation, the reports under Sections 13 and 15(d) of the
Exchange Act referred to in subparagraph (c)(1) of Rule 144 under the Securities
Act), and (b) will take such further action as any Holder of Registrable
Securities may reasonably request, all to the extent required from time to time
to enable such Holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by (i) Rule
144 under the Securities 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
requirements.
5.2 Nominees for Beneficial Owners If Registrable Securities are held by a
nominee for the beneficial owner thereof, the beneficial owner thereof may, at
its option, be treated as the Holder of such Registrable Securities for purposes
of any request or other action by any Holder of Registrable Securities pursuant
to this Agreement (or any determination of any number or percentage of shares
constituting Registrable Securities held by any Holder of Registrable Securities
contemplated by this Agreement); provided, however, that the Company shall have
received written assurances reasonably satisfactory to it of such beneficial
ownership.
5.3 Amendments. The terms and provisions of this Agreement may be modified
or amended, or any of the provisions hereof waived, temporarily or permanently,
pursuant to the prior written consent of the Company and the party adversely
affected by such modification or waiver.
5.4 Notices. All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument delivered in person or sent by telecopy, nationally
recognized overnight courier or first class registered or certified mail, return
receipt requested, postage prepaid, addressed to such party at the address set
forth below or such other address as may hereafter be designated in writing by
such party to the other parties:
(i) if to the Company, to:
Meridian USA Holdings, Inc.
3350 N.W. 2nd Avenue
Boca Raton, FL 33431
Attention: Alan J. Posner
Facsimile (561) 417-6888
with copies to:
Aronauer, Goldfarb, Sills & Re, LLP
444 Madison Avenue
New York, NY 10022
Attention: Samuel Goldfarb, Esq.
Facsimile: (212) 755-6006
(ii) if to a Holder, at address set forth on the signature page hereto or
such other address as may hereafter be designated in writing by such Holder to
the Company.
Each Holder, by written notice given to the Company in accordance with this
Section 5.4, may change the address to which such notice or other communications
are to be sent to such Holder. All such notices, requests, consents and other
communications shall be deemed to have been given when received.
5.5 Miscellaneous.
5.5.1 This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and the respective successors, personal
representatives and assigns of the parties hereto, whether so expressed or not.
No Person other than a Holder shall be entitled to any benefits under this
Agreement, except as otherwise expressly provided herein. This Agreement and
the rights of the parties hereunder may be assigned by any of the parties hereto
to any transferee of Registrable Securities; provided that upon the consummation
of, and as a condition to, any such assignment the transferee assumes the
obligations of the assignor under, and agrees to be bound by the terms of, this
Agreement.
5.5.2 This Agreement and the other writings referred to herein or delivered
pursuant hereto which form a part hereof contain the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior and
contemplated arrangements and understandings with respect thereto.
5.5.3 This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without giving effect to the principles of
conflicts of law thereof.
5.5.4 The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be a part of this
Agreement.
5.5.5 This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed an original instrument, but all such
counterparts together shall constitute but one instrument.
5.5.6 Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid, but if any provision of
this Agreement is held to be invalid or unenforceable in any respect, such
invalidity or unenforceability shall not render invalid or unenforceable any
other provision of this Agreement. If any provision shall be held to be
invalid, such provision shall be deemed valid to the extent permitted by law.
5.5.7 It is hereby agreed and acknowledged that it will be impossible to
measure in money the damages that would be suffered if the parties fail to
comply with any of the obligations herein imposed on them and that in the event
of any such failure, an aggrieved person will be irreparably damaged and will
not have an adequate remedy at law. Any such person, therefore, shall be
entitled to injunctive relief, including specific performance, to enforce such
obligations, without the posting of any bond, and, if any action should be
brought in equity to enforce any of the provisions of this Agreement, none of
the parties hereto shall raise the defense that there is an adequate remedy at
law.
5.5.8 Each party hereto shall do and perform or cause to be done and
performed all such further acts and things and shall execute and deliver all
such other agreements, certificates, instruments, and documents as any other
party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
5.5.9 Each of the parties hereto hereby irrevocably and unconditionally
consents to submit to the exclusive jurisdiction of the courts of the State of
New York and of the United States of America, in each case located in the County
of New York, for any action, proceeding or investigation in any court or before
any governmental authority ("Litigation") arising out of or relating to this
Agreement and the transactions contemplated hereby (and agrees not to commence
any Litigation relating thereto except in such courts), and further agrees that
service of any process, summons, notice or document by registered mail to its
respective address set forth in this Agreement shall be effective service of
process for any Litigation brought against it in any such court. Each of the
parties hereto hereby irrevocably and unconditionally waives any objection to
the laying of venue of any Litigation arising out of this Agreement or the
transactions contemplated hereby in the courts of the State of New York or the
United States of America, in each case located in the County of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such Litigation brought in any such court has
been brought in an inconvenient forum. EACH OF THE PARTIES IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
AND ALL RIGHTS TO TRIAL BY JURY IN CONNECTION WITH ANY LITIGATION ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
5.6 No Inconsistent Agreements. Without the prior written consent of
Holders representing a majority of the Registrable Securities, the Company will
not, on or after the date of this Agreement, enter into any agreement with
respect to its securities which is inconsistent with the rights granted in this
Agreement or otherwise conflicts with the provisions hereof, other than any
lock-up agreement with the underwriters in connection with any registered
offering effected hereunder, pursuant to which the Company shall agree not to
register for sale, and the Company shall agree not to sell or otherwise dispose
of, Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock for a specified period following the registered
offering.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date set forth above.
MERIDIAN USA HOLDINGS, INC.
By: /s/ Mark Streisfeld
-----------------------
Name: Mark Streisfeld
Title: President
U.S. BANCORP INVESTMENTS, INC.
By: /s/ Jess M. Ravich
Name: Jess M. Ravich
Title:Chairman
Address for Notice:
11766 Wilshire Boulevard, Suite 870
Los Angeles, CA 90025
Attention: General Counsel
Facsimile: (310) 312-5640