Rollover Shares shall be at least 5.1% of the sum of (x) the number of shares of Common Stock to be issued to the holders of Merger Sub Common Stock pursuant to Section 1.10 of the Recapitalization Agreement and (y) the Rollover Shares;

 

WHEREAS, the Company may hereafter issue to the Management Stockholder shares of Common Stock, as a result of the exercise by the Management Stockholder of outstanding, vested options granted to the Management Stockholder under the terms of the Company 1999 Stock Incentive Plan and the Company 1998 Stock Incentive Plan (the “ CEO Option ”) which were not cancelled at the Effective Time (as defined in the Recapitalization Agreement) pursuant to the terms of the Recapitalization Agreement;

 

WHEREAS, the Company has issued (or may hereafter issue) to the Management Stockholder shares of Common Stock, as a result of the exercise by the Management Stockholder of vested options to purchase Common Stock (such options collectively, “ Vested Options ”), which options were issued (or may hereafter be issued) to such Management Stockholder pursuant to the 2005 Stock Option Plan of Neff Corp. (the “ Stock Option Plan ”) or any other employee benefit, stock purchase or compensation plan hereafter adopted by the Board ( provided , that for the avoidance of doubt the Vested Options shall not include the CEO Option);

 

WHEREAS, the Company and the Stockholders desire to enter into this Agreement to provide for certain matters with respect to the ownership and transfer by the Stockholders of shares of Common Stock (including the Rollover Shares) owned as of the date hereof or any other shares of capital stock of the Company hereafter issued to or acquired by the Stockholders whether as a result of the exercise of Vested Options or the CEO Option or otherwise (such shares owned by the Stockholders as of the date hereof or hereafter issued to or acquired by the Stockholders, collectively, the “ Restricted Shares ”); and

 

WHEREAS, capitalized terms used herein without definition elsewhere in this Agreement are defined in Section 16.

 

AGREEMENT :

 

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements set forth herein, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties hereto, intending to be legally bound, hereby agree as follows:

 

Section 1.                Sales to Third Parties .

 

(a)            Each of the Other Stockholders and the Management Stockholder (and their respective Permitted Transferees) hereby agrees that, until the fifth anniversary of the date of this Agreement, it shall not sell, assign, transfer, convey, pledge or otherwise dispose of (collectively, “ Transfer ”) any Restricted Shares without the prior written consent of the Company, which consent shall have been authorized by a majority of the members of the Board and which consent may be (i) withheld in the sole discretion of the Board or (ii) given subject to reasonable terms and conditions determined by the Board in its sole discretion. Any Transfer of Restricted Shares after the fifth anniversary of the date of this Agreement shall be subject to the

 

2

 

provisions of Section 1(b). Each of the Other Stockholders and the Management Stockholder further agrees that in connection with any Transfer, the Other Stockholders or the Management Stockholder, as the case may be, shall, if requested by the Company, deliver to the Company an opinion of counsel in form and substance reasonably satisfactory to the Company and counsel for the Company, to the effect that the Transfer is not in violation of this Agreement or the Securities Act of 1933, as amended (the “ Securities Act ”) . In addition, the Company shall be satisfied that the Transfer is not in violation of the securities laws of any state applicable to such Transfer. Any purported Transfer in violation of the provisions of this Section 1 shall be null and void and shall have no force or effect.

 

(b)            (i)             If at any time after the fifth anniversary of the date of this Agreement, any of the Other Stockholders, the Management Stockholder or any of their respective successors and assigns through Transfers permitted hereunder or otherwise (the “ Selling Stockholders ”) shall have received a bona fide offer or offers from a third party or parties to purchase any Restricted Shares which such Selling Stockholders desire to accept, prior to selling any Restricted Shares to the third party or parties, the Selling Stockholders shall deliver a letter to Iron (the “ Offer Notice ”) signed by such Selling Stockholders, setting forth: (A) the name of the third party or parties; (B) the prospective purchase price per share of the Restricted Shares; (C) all material terms and conditions contained in the offer of the third party or parties; and (D) such Selling Stockholders’ offer (irrevocable by its terms for 60 days following the date of the delivery of such Offer Notice (such 60-day period, the “ Offer Period ”)) to sell to the Iron all (but not less than all) of the Restricted Shares covered by the offer of the third party or parties, for a purchase price per share and on other terms and conditions not less favorable to Iron than those contained in the offer of the third party or parties (an “ Offer ”).

 

(ii)            Upon receipt of such Offer Notice, Iron shall have an option to purchase any or all of the Restricted Shares described in the Offer Notice at the purchase price and upon the terms and conditions specified in the Offer. If Iron desires to exercise the option set forth in the preceding sentence, it shall deliver a notice (an “ Election Notice ”) to the Selling Stockholders, at any time during the Offer Period, which Election Notice shall specify the number of Restricted Shares subject to the Offer to be acquired.

 

(iii)           If Iron delivers an Election Notice, then Iron shall be obligated to purchase, and, subject to Section 1(b)(iv) below, the Selling Stockholders shall be obligated to sell to Iron, the Restricted Shares described in such Election Notice at the purchase price per share and on other terms and conditions indicated in the Offer, except that the closing of such purchase and sale shall occur on a closing date selected by Iron; provided , however , that, such closing date shall be not less than 5 days nor more than 90 days following the date of the Election Notice.

 

(iv)           If Iron does not deliver an Election Notice to the Selling Stockholders within the Offer Period or the Election Notices delivered in the aggregate relate to less than all of the Restricted Shares subject to the Offer, then the Selling Stockholders may, during the period beginning on the 61 ^st day following the receipt of the Offer Notice by Iron and ending on the 90 ^th day following the receipt of the Offer Notice by Iron, sell to the third party or parties all (but not less than all) of the Restricted Shares covered by the Offer, for the purchase price and on the other terms and conditions contained in the Offer.

 

3

 

(v)            Iron shall be permitted to assign its rights (in whole or in part) to purchase any or all of the Restricted Shares in the Offer Notice to (A) the Company and/or any one or more Principal Stockholders and (B) the NY Life Investors and their Permitted Transferees or the Mezzanine Investors and their Permitted Transferees pursuant to Section 1(b)(vi).

 

(vi)             In the event that Iron exercises its right to purchase Restricted Shares described in the Offer Notice or has assigned such right to one or more Principal Stockholders (but not in the event of an assignment of such right to the Company), Iron shall offer the NY Life Investors, each of their respective Permitted Transferees, the Mezzanine Investors and each of their respective Permitted Transferees (each, a “ Secondary Offeree ”), provided that such Secondary Offeree is not a Selling Stockholder pursuant to such Offer, the right (on the same terms and conditions and utilizing the same procedures as apply to Iron’s rights under this Section 1(b) as if such provisions had been incorporated mutis mutandis herein) to purchase that portion of Restricted Shares specified in the Election Notice which equals the proportion that the number of Restricted Shares then held by such Secondary Offeree bears to the total number of Restricted Shares then held by the Secondary Offerees and the Principal Stockholders in the aggregate.

 

(c)            Notwithstanding the foregoing but subject to Section 1(d) below, nothing in this Section 1 shall prevent the Transfer of any Restricted Shares by any Stockholder to the Company or a Permitted Transferee. In addition, the provisions of this Section 1 shall not apply to any Transfer of Restricted Shares pursuant to a Piggyback Registration Right.

 

(d)            In addition to the restrictions set forth elsewhere in this Agreement, any Transfer of Restricted Shares by a Stockholder to a transferee (including a Permitted Transferee) shall be permitted only if the transferee shall agree in writing to be bound by the terms and conditions of this Agreement by executing a signature page in the form attached as Exhibit A hereto. Upon the execution of the signature page in the form attached as Exhibit A hereto, such transferee shall be deemed to be a Stockholder for all purposes of this Agreement having the same rights and obligations as were applicable to the Transferor, except as otherwise provided herein and except that, (A) in the case of a Transfer by the Management Stockholder to a Permitted Transferee, all provisions that relate to termination of employment of the Management Stockholder and the effects thereof shall continue to apply to the Management Stockholder with respect to any Restricted Shares not transferred by the Management Stockholder, (B) in the case of a Transfer in compliance with this Agreement by the Management Stockholder to a Person other than a Permitted Family Member or a trust for the benefit of Permitted Family Members, Sections 2 and 3 of this Agreement shall cease to apply to the Restricted Shares so transferred following such Transfer, but shall continue to apply to the Management Stockholder with respect to any Restricted Shares not transferred by the Management Stockholder, (C) in the case of a Transfer of Restricted Shares by Iron made in compliance with this Agreement, such transferees shall be considered Principal Stockholders (and not Iron) for purposes of this Agreement, provided , however , that if Iron so designates or if the transferee acquires all of the remaining Restricted Shares held by Iron, in each such case, such transferee or transferees shall be considered Iron for purposes of this Agreement and shall have the rights and obligations of Iron under this Agreement and (D) the rights to cause the Company to register Restricted Securities pursuant to a Demand Registration in accordance with Section 6 shall not be automatically

 

4

 

transferred or assigned in connection with a Transfer of Restricted Shares, unless (i) such registration rights are expressly assigned (but only with all related obligations) by a Stockholder to a transferee, (ii) the Company is, within a reasonable time after such Transfer, notified of the amount of Restricted Securities with respect to which such registration rights are being assigned and (iii) the aggregate number of Demand Registrations entitled to be requested by Iron, New York Life and the Management Stockholder, as applicable, pursuant to Section 6(a)(i) shall not be increased as a result of such Transfer.

 

Section 2.                Company’s Rights to Repurchase Shares .

 

(a)            With respect to all Restricted Shares held by the Management Stockholder and his Permitted Transferees, during the period beginning on the date of the Management Stockholder’s Termination of Employment (as defined below) and ending on the nine month anniversary of the later of (A) the date of such Termination of Employment or (B) the date of the exercise of the CEO Option or any Vested Options (together, the “ Stock Options ”) held by the Management Stockholder as of the date of such Termination of Employment, the Company shall have the option to elect to repurchase Restricted Shares held by the Management Stockholder or his Permitted Transferees other than Rollover Shares (“ Call Right ”); provided , however , that, notwithstanding the foregoing, in no event shall the Company purchase any Restricted Shares pursuant to the Call Right prior to the day immediately following the six month anniversary of the date the Management Stockholder first purchased such Restricted Shares (whether pursuant to the exercise of Stock Options or otherwise). The Call Right may be exercised more than once, but must be exercised with respect to all (but not less than all) of the Restricted Shares outstanding on the date of any Call Notice (as defined below). The repurchase price payable by the Company upon exercise of the Call Right (“ Call Repurchase Price ”) shall be the Fair Market Value (as defined below) of the Restricted Shares subject to the Call Right on the date of the Call Notice; provided , however , that, notwithstanding the foregoing, in the event of the Management Stockholder’s Termination of Employment for Cause, or due to his resignation, the Call Repurchase Price shall be the lesser of (A) Fair Market Value and (B) the purchase price paid by such Management Stockholder for such Restricted Shares, if applicable. The Call Right shall be exercised by written notice (“ Call Notice ”) to the Management Stockholder given in accordance with Section 15(f) of this Agreement on or prior to the last date on which the Call Right may be exercised by the Company.

 

(b)            In addition, the Company shall have a Call Right effective immediately prior to any Change in Control that occurs following the date hereof at a price per share determined pursuant to Section 2(a).

 

(c)            The repurchase of Restricted Shares pursuant to the exercise of a Call Right shall take place on a date specified by the Company, but in no event following the later of (i) the 60 ^th day following the date of the Call Notice or (ii) the 10 ^th day following the receipt by the Company of all necessary governmental approvals. On such date, the Management Stockholder and his Permitted Transferees shall transfer the Restricted Shares subject to the Call Notice to the Company, free and clear of all liens and encumbrances, by delivering to the Company the certificates representing the Restricted Shares to be purchased, duly endorsed for transfer to the Company or accompanied by a stock power duly executed in blank, and the Company shall pay to the Management Stockholder the Call Repurchase Price in cash. The

 

5

 

Management Stockholder shall use all commercially reasonable efforts to assist the Company in order to expedite all proceedings described in this Section 2.

 

Section 3.                Management Stockholders’ Rights to Sell Shares .

 

(a)            With respect to all Restricted Shares held by the Management Stockholder and his Permitted Transferees (other than (A) the Rollover Shares and (B) the Restricted Shares held by the Management Stockholder and his Permitted Transferees pursuant to the exercise of the CEO Option), during the period beginning on the date of the Management Stockholder’s Termination of Employment by the Company without Cause or due to death or Disability and ending on the nine month anniversary of the later of (i) the date of such Termination of Employment or (ii) the date of the exercise of any Vested Options held by the Management Stockholder as of the date of such Termination of Employment, the Management Stockholder (or his representative or estate, if applicable) shall have the right to elect to require the Company to repurchase, in a single transaction, no less than all of the Restricted Shares held by the Management Stockholder and his Permitted Transferees (other than (A) the Rollover Shares and (B) the Restricted Shares held by the Management Stockholder and his Permitted Transferees pursuant to the exercise of the CEO Option) (“ Vested Option Put Right ”); provided , howeve r, that, notwithstanding the foregoing, in no event shall the Company purchase any Restricted Shares pursuant to the Vested Option Put Right prior to the day immediately following the six month anniversary of the date the Management Stockholder first purchased such Restricted Shares (whether pursuant to the exercise of Stock Options or otherwise).

 

(b)            With respect to all Restricted Shares held by the Management Stockholder and his Permitted Transferees purchased pursuant to the exercise of the CEO Option, during the period beginning on the later (such later date, the “ CEO Option Put Date ”) of (i) the date of the Management Stockholder’s Termination of Employment by the Company without Cause or due to death or Disability or (ii) the fifth anniversary of the date of this Agreement and ending on the nine month anniversary of the later of (x) the CEO Option Put Date or (y) the date of the exercise of that portion of the CEO Option held by the Management Stockholder as of the date of such Termination of Employment, the Management Stockholder (or his representative or estate, if applicable) shall have the right to require the Company to repurchase, in a single transaction, no less than all of the Restricted Shares held by the Management Stockholder and his Permitted Transferees pursuant to the exercise of the CEO Option (“ CEO Option Put Right ”, and together with the Vested Option Put Right, the “ Put Right ”); provided , howeve r, that, notwithstanding the foregoing, in no event shall the Company purchase any Restricted Shares pursuant to the CEO Option Put Right prior to the day immediately following the six month anniversary of the date the Management Stockholder first purchased such Restricted Shares.

 

(c)            The repurchase price payable by the Company upon exercise of the Put Right (“ Put Repurchase Price ”) shall be the Fair Market Value of the Restricted Shares subject to the Put Right on the date of the Put Notice. The Put Right shall be exercised by written notice (“ Put Notice ”) to the Company given in accordance with Section 15(f) of this Agreement on or prior to the last date on which the Put Right may be exercised by the Management Stockholder.

 

(d)            Subject to Section 5 below, the repurchase of Restricted Shares pursuant to the exercise of a Put Right shall take place on a date specified by the Company, but (subject to

 

6

 

Section 5(b)) in no event following the later of the 60 ^th day following the date of the Put Notice or the 10 ^th day following the receipt by the Company of all necessary governmental approvals. On such date, the Management Stockholder and his Permitted Transferees shall transfer the Restricted Shares subject to the Put Notice to the Company, free and clear of all liens and encumbrances, by delivering to the Company the certificates representing the Restricted Shares to be purchased, duly endorsed for transfer to the Company or accompanied by a stock power duly executed in blank, and the Company shall pay to the Management Stockholder the Put Repurchase Price. The Management Stockholder and the Company shall use their respective commercially reasonable efforts to expedite all proceedings described in this Section 3.

 

Section 4.                Involuntary Transfers .

 

(a)            In the case of any transfer of title or beneficial ownership of Restricted Shares upon default, foreclosure, forfeit, divorce, court order or otherwise, other than by a voluntary decision on the part of a Stockholder (each, an “ Involuntary Transfer ”), the Stockholder shall promptly (but in no event later than two days after the Involuntary Transfer) furnish written notice (the “ Involuntary Transfer Notice ”) to the Company indicating that the Involuntary Transfer has occurred, specifying the name of the entity to whom the shares were transferred (the “ Involuntary Transferee ”), giving a detailed description of the circumstances giving rise to, and stating the legal basis for, the Involuntary Transfer.

 

(b)            Upon the receipt of the Involuntary Transfer Notice, and for 60 days thereafter, the Company shall have the right to elect to repurchase, and the Involuntary Transferee shall have the obligation to sell, all (but not less than all) of the Restricted Shares acquired by the Involuntary Transferee for a repurchase price equal to the Fair Market Value of such shares of Common Stock as of the date of the Involuntary Transfer (the “ Involuntary Transfer Repurchase Price ” and such right, the “ Involuntary Transfer Repurchase Right ”). The Involuntary Transfer Repurchase Right shall be exercised by written notice (the “ Involuntary Transfer Repurchase Notice ”) to the Involuntary Transferee given in accordance with Section 15(f) of this Agreement on or prior to the last date on which the Involuntary Transfer Repurchase Right may be exercised by the Company.

 

(c)            Subject to Section 5 below, the repurchase of Restricted Shares pursuant to the exercise of the Involuntary Transfer Repurchase Right shall take place on a date specified by the Company, but in no event following the later of the 60 ^th day following the date of the date of the Involuntary Transfer Repurchase Notice or the 10 ^th day following the receipt by the Company of all necessary governmental approvals. On such date, the Involuntary Transferee shall transfer the Restricted Shares subject to the Involuntary Transfer Repurchase Notice to the Company, free and clear of all liens and encumbrances, by delivering to the Company the certificates representing the Restricted Shares to be purchased, duly endorsed for transfer to the Company or accompanied by a stock power duly executed in blank, and the Company shall pay to the Involuntary Transferee the Involuntary Transfer Repurchase Price. The Involuntary Transferee and the Stockholder from whom the Restricted Shares were transferred shall use all commercially reasonable efforts to assist the Company in order to expedite all proceedings described in this Section 4. If the Involuntary Transferee does not transfer the Restricted Shares to the Company as required, the Company will cancel such Restricted Shares and deposit the funds in a non-interest bearing account and make payment upon delivery.

 

7

 

Section 5.                Repurchase Limitation .

 

(a)            Notwithstanding anything to the contrary herein, except as otherwise provided by Section 5(c), the Company shall not be permitted to purchase any Restricted Shares held by any Stockholder or Involuntary Transferee upon exercise of the Put Right or the Involuntary Transfer Repurchase Right if the Board reasonably determines that:

 

(i)             the purchase of Restricted Shares would render the Company or its subsidiaries unable to meet their obligations in the ordinary course of business at any time during the one year period commencing on the date such purchase of Restricted Shares would otherwise be required taking into account any pending or proposed transactions, capital expenditures or other budgeted cash outlays by the Company which are reasonably likely to be consummated or paid, as the case may be, within such one year period, including, without limitation, any proposed acquisition of any other entity by the Company or any of its subsidiaries which is reasonably likely to be consummated within such one year period;

 

(ii)            the Company is prohibited from purchasing the Restricted Shares by applicable law restricting the purchase by a corporation of its own shares;

 

(iii)           the purchase of Restricted Shares would constitute a breach of, default, or event of default under, or is otherwise prohibited by, the terms of any loan agreement, indenture or other agreement or instrument to which the Company or any of its subsidiaries is a party (the “ Financing Documents ”) and the Company is not able to obtain the requisite consent of any of its lenders to the purchase of Restricted Shares or in the reasonable opinion of the Board, the purchase of the Restricted Shares would be detrimental in view of the financial condition (presented or projected) of the Company; or

 

(iv)           the purchase of Restricted Shares would be prohibited by the terms of the Company’s charter or bylaws; provided , however , that after the date of this Agreement, the Company shall not amend the Company’s charter or bylaws to explicitly prohibit the purchase of Restricted Shares hereunder; and provided , further , however , that this clause (iv) shall not be deemed to limit the issuance by the Company of Securities that by their terms limit the ability of the Company to redeem or repurchase its Securities.

 

The events described in (i) through (iv) above each constitute a “ Repurchase Limitation .”

 

(b)            In the event of a Repurchase Limitation, the Company shall notify in writing the Management Stockholder or Involuntary Transferee who exercised the Put Right or with respect to whom the Involuntary Transfer Repurchase Right has been exercised (a “ Limitation Notice ”). The Limitation Notice shall specify the nature of the Repurchase Limitation. The Management Stockholder shall have ten days after delivery by the Management Stockholder of the Limitation Notice to withdraw the exercise of its Put Right. The Company shall thereafter repurchase the Restricted Shares described in an Involuntary Transfer Repurchase Notice or a Put Notice that is not withdrawn, in accordance with Section 5(c) and Section 5(d).

 

8

 

(c)            With respect to a Limitation Notice relating to the Company’s Involuntary Transfer Repurchase Right or a Put Right that is not withdrawn by the Management Stockholder pursuant to Section 5(b), the Company shall repurchase the Restricted Shares described in the Involuntary Transfer Repurchase Notice soon as reasonably practicable after all Repurchase Limitations cease to exist (or the Company may elect, but shall have no obligation, to cause its nominee to repurchase the Restricted Shares while any Repurchase Limitations continue to exist); provided , however that if some, but not all of the Restricted Shares to be repurchased, can be so repurchased without creating a Repurchase Limitation, then the Company shall consummate such repurchase to the fullest extent it is able without causing a Repurchase Limitation in accordance with the terms of this Agreement (without giving effect to this Section 5). In the event the Company suspends its obligations to repurchase the Restricted Shares pursuant to a Repurchase Limitation, (i) the Company shall provide written notice to the Management Stockholder or Involuntary Transferee as soon as practicable after all Repurchase Limitations cease to exist (the “ Reinstatement Notice ”); (ii) the Fair Market Value of the Restricted Shares subject to the Put Notice or Involuntary Transfer Repurchase Notice shall be equal to the greater of the Fair Market Value of the Restricted Shares as of the date of the date of the Involuntary Transfer Repurchase Notice, as the case may be, and the Fair Market Value determined as of the date the Reinstatement Notice is delivered to the Management Stockholder or the Involuntary Transferee, which Fair Market Value shall be used to determine the Repurchase Price or Involuntary Transfer Repurchase Price in the manner described above; and (iii) the repurchase shall occur on a date specified by the Company within 10 days following the determination of the Fair Market Value of the Restricted Shares to be repurchased as provided in clause (ii) above.

 

(d)            Notwithstanding anything in this Section 5 to the contrary, in the event of a Repurchase Limitation, then, in the sole discretion of the Board, the Company may purchase the Restricted Shares subject to the Put Right or Involuntary Transfer Repurchase Right, as applicable, and, in lieu of cash consideration, issue a promissory note to such Management Stockholder or Involuntary Transferee, as applicable, in the amount of the Put Repurchase Price or Involuntary Transfer Purchase Price, as applicable, the terms of which promissory note shall be acceptable to the Company’s senior lenders and shall not result in a breach or violation of any of the Financing Documents. The promissory note shall (i) bear simple interest at the prime rate as published in the Wall Street Journal on the date such payment is due and owing from such date to the date such payment is made and (ii) have such other reasonable terms and conditions as may be determined by the Company. All payments of interest accrued under the promissory note shall be paid only at the date of payment by the Company of the principal amount of such promissory note.

 

(e)            With respect to a Put Right that is subject to a Repurchase Limitation that has not been withdrawn by the Management Stockholder in accordance with Section 5(b), if the Company does not elect to repurchase the Restricted Shares pursuant to the provisions of Section 5(d) within twenty days following the date of receipt by the Management Stockholder of the Limitation Notice, then such Put Notice shall be deemed to be withdrawn for purposes of this Agreement.

 

9

 

Section 6.                Demand Registrations .

 

(a)            Number of Registrations .

 

(i)             Demand Rights . Commencing on the date that is six (6) months after the effective date of the IPO, holders of Restricted Securities shall be entitled to make a written request (a “ Demand ”) of the Company to register all or part of their Restricted Securities under the Securities Act (a “ Demand Registration ”) in an amount equal to at least (1)  with respect to any Stockholder, other than the Management Stockholder and its Permitted Transferees, $10 million of Restricted Securities or (2) with respect to the Management Stockholder and its Permitted Transferees, the lesser of (x) $10 million of Restricted Securities or (y) (A) in the case of the first Demand Registration initiated by the Management Stockholder, 50% of Restricted Securities then held, in the aggregate, by the Management Stockholder and its Permitted Transferees or (B) in the case of the second Demand Registration initiated by the Management Stockholder, 100% of Restricted Securities then held by the Management Stockholder and its Permitted Transferees, provided , however , that not more than an aggregate of:  (A) four (4) Demand Registrations initiated by one or more Principal Stockholders, (B) two (2) Demand Registrations initiated by one or more NY Life Investors, (C) two (2) Demand Registrations initiated by the Management Stockholder and (D) two (2) Demand Registrations initiated by one or more Mezzanine Investors, may be made pursuant to the rights granted by this Section 6(a)(i), provided , further , that the Company shall not be forced to effectuate (i) more than one (1) Demand Registration (pursuant to this Section 6(a)(i) or any other similar agreement) in any three hundred sixty (360) day period or (ii) a Demand Registration in the event that the Company is in the process of filing, or has filed, a registration statement for an Underwritten Offering pursuant to which the Company has delivered or will deliver a Piggy Back Notice, so long as (A) with respect to a Demand Registration that involves an Underwritten Public Offering, the Company files such registration statement pursuant to the Piggy Back Notice within one hundred twenty (120) days following the date the Demand Registration is requested and (B) with respect to a Demand Registration that does not involve an Underwritten Public Offering, the Company files such registration statement pursuant to the Piggy Back Notice within one hundred eighty (180) days following the date the Demand Registration is requested

 

(ii)            Selection of Underwriter . Any Demand Registration hereunder shall be on any appropriate form under the Securities Act permitting registration of such Restricted Securities for resale by the Stockholders in the manner or manners designated by them, including, without limitation, pursuant to one or more underwritten offerings. The selection of investment bankers and managers, if any, shall be made by the Company, provided , however , that the investment bankers and managers so selected shall be reasonably satisfactory to the Initiating Stockholder. If requested, the Company shall enter into an underwriting or purchase agreement with an investment banking firm in connection with a Demand Registration, containing representations, warranties, indemnities and agreements then customarily included in underwriting or purchase agreements by such underwriter with respect to secondary distributions of securities.

 

10

 

(b)            Registration . The Company shall file a registration statement with respect to each Demand Registration and use its commercially reasonable efforts to cause the same to be declared effective as promptly as practicable following such Demand, but not later than one hundred twenty (120) days thereafter. Before filing a registration statement or any prospectus naming the selling Stockholders, or any amendments or supplements thereto, the Company will furnish to counsel for the selling Stockholders copies of all documents proposed to be filed. Unless all of the Restricted Securities covered by the registration statement have earlier been sold or withdrawn from sale, the Company shall keep any such Registration Statement effective for a period of at least one hundred eighty (180) days after such registration statement is first declared effective plus a period equal to (x) any period during which the selling Stockholders are prohibited from making sales because of any stop order, injunction or other order or requirement of the Commission or any other governmental agency or court plus (y) any Demand Suspension Period (as defined below) (the “ Demand Period ”), and a registration will not count as a Demand Registration unless it is declared effective by the Commission and remains effective until the earlier of (1) such time as all of the Restricted Securities included in such registration have been sold or disposed of or withdrawn from sale by the selling Stockholders or (2) the expiration of their Demand Period; provided , however , that if the registration remains effective for a shorter period, such registration will count as a Demand Registration if the Initiating Stockholder has sold an aggregate of at least seventy percent (70%) of its Restricted Securities included in such registration. In addition, a request for registration shall not be deemed to constitute a Demand Registration if the registration has been declared effective by the Commission and afterwards:  (i) the conditions to closing specified in the purchase agreement or underwriting agreement entered into in connection with such Demand Registration are not satisfied other than by reason of some act or omission by the selling Stockholders; (ii) the Company voluntarily takes any action that would result in the selling Stockholders not being able to sell such Restricted Securities covered thereby during the Demand Period; (iii) after it has become effective, such Demand Registration becomes subject to any stop order, injunction or other order or requirement of the Commission or other governmental agency or court and such order, injunction or requirement is not promptly withdrawn or lifted, and such Demand Registration has not otherwise remained effective for the Demand Period (including effective periods both before and after the order, injunction or requirement is made or imposed); or (iv) such Demand Registration does not involve an underwritten offering and the selling Stockholders determine not to proceed following any delay imposed hereunder by the Company pursuant to the immediately following sentence; provided , however , that prior to such a delay under clauses (iii) or (iv), the Initiating Stockholder has not sold more than seventy percent (70%) of the Restricted Securities included in such registration. Notwithstanding the foregoing, the Company may, at any time, delay the filing or delay or suspend the effectiveness of the Demand Registration or, without suspending such effectiveness, instruct the selling Stockholders not to sell any securities included in the Demand Registration, if the Board shall have determined in good faith (as evidenced by a certificate signed by an executive officer of the Company delivered to the selling Stockholders) that proceeding with the Demand Registration at such time may have a material adverse effect on the Company or the Company shall have determined upon the advice of counsel that it would be required to disclose any actions taken by the Company in good faith and for valid business reasons, including without limitation, the acquisition or divestiture of assets, which disclosure may have a material adverse effect on the Company or on such actions (a “ Demand Suspension Period ”), by providing the selling

 

11

 

Stockholders with written notice of such Demand Suspension Period. The Company shall use its commercially reasonable efforts to provide such notice at least ten (10) days prior to the commencement of such a Demand Suspension Period; provided , however , that in any event the Company shall provide such notice no later than the commencement of such Demand Suspension Period; provided , further , that in no event shall the Demand Suspension Periods (A) with respect to a Demand Registration that involves an Underwritten Public Offering exceed one hundred twenty (120) days in any three hundred sixty (360) day period (including for these purposes any delay permitted by clause (ii) of the last proviso contained in Section 6(a)(i)) and (B) with respect to a Demand Registration that does not involve an Underwritten Public Offering exceed one hundred eighty (180) days in any three hundred sixty (360) day period (including for these purposes any delay permitted by clause (ii) of the last proviso contained in Section 6(a)(i)); and provided , further , that in the event that a Demand Suspension Period was instituted by the Company in order to prevent disclosure of non-public information, such Demand Suspension Period shall end upon the earlier to occur of (i) ten (10) days following the disclosure to the public by the Company of the relevant non-public information and (ii) the last day of the relevant periods described above.

 

The Company further agrees to supplement or amend such registration statement with respect to such Demand Registration, as required by the registration form utilized by the Company or by the instructions applicable to such registration form or by the Securities Act for the registration of securities or as reasonably requested (which request shall result in the filing of a supplement or amendment subject to approval thereof by the Company, which approval shall not be unreasonably withheld) by any selling Stockholder or any managing underwriter of Restricted Securities to which such Demand Registration relates, and the Company agrees to (i) furnish to the selling Stockholders (and any managing underwriter) copies, in substantially the form proposed to be used and/or filed, of any such supplement or amendment as promptly as practicable prior to its being used and/or filed with the Commission and (ii) use commercially reasonable efforts to provide such supplement or amendment to the selling Stockholders (and any managing underwriter) within three business days prior to its being used and/or filed with the Commission.

 

(c)            Inclusion of Restricted Securities . Any written request for a Demand Registration shall specify the number of Restricted Securities requested to be registered and the intended methods of disposition thereof. Within ten (10) days after receipt of such Demand, the Company shall give written notice of such registration request to all holders of Restricted Securities which have not made the Demand, and the Company shall include in such registration all Restricted Securities with respect to which the Company has received written requests for inclusion therein within fifteen (15) days after the date on which such notice is given. Each such request shall also specify the aggregate number of Restricted Securities requested to be registered. The Company may also include in such Demand Registration shares of Common Stock for the account of the Company and any other Persons who hold shares of Common Stock.

 

(d)            Priority on Demand Registrations . If a Demand Registration is an underwritten registration and the managing underwriters of such offering determine in their good faith judgment and advise the company in writing that the aggregate number of (i) Restricted Securities of the selling Stockholders exercising their rights to participate in the Demand Registration on a demand basis pursuant to this Section 6 (or pursuant to any other similar

 

12

 

agreement with the Company); (ii) shares of Common Stock of the Company; and (iii) shares of Common Stock of any other Persons entitled to participate in such Demand Registration, in each case proposed to be included in such registration statement, exceeds the maximum number of shares of Common Stock that can reasonably be expected to be sold within a price range acceptable to the Company and the selling Stockholders, then the number of shares to be included in such registration shall include (i) first, 100% of the Restricted Securities proposed to be sold by the Initiating Stockholder (together with all other additional holders of the Company’s securities (including the Stockholders) exercising their rights to participate in such Demand Registration pursuant to this Agreement or any other agreement), such amount to be allocated pro rata among all such holders based upon the number of issued and outstanding securities of the class to be registered that are owned by each applicable holder as of the date of the Demand, and (ii) second, 100% of the shares of Common Stock proposed to be sold by the Company. Any request for registration with respect to which such a market “cutback” with respect to such selling Stockholders occurs shall be deemed to constitute a Demand Registration for all purposes of this Section 6; provided , however , that if any such market “cutback” occurs with respect to a Demand Registration and the Initiating Stockholder is not able to sell at least seventy percent (70%) of the Restricted Securities which the Initiating Stockholder proposed to sell pursuant to such Demand Registration, then such request for registration will not count against the number of Demands to which the Initiating Stockholder is entitled pursuant to this Section 6.

 

(e)            Compliance . Notwithstanding any other provisions hereof, the Company agrees that (i) any registration statement filed in connection with a Demand Registration, and all amendments thereto, and any prospectus forming a part thereof, and all supplements thereto, will comply in all material respects with the Securities Act and the rules and regulations thereunder, (ii) any registration statement filed in connection with a Demand Registration will not, and any amendments thereto will not, when it becomes effective, contain 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 and (iii) any prospectus forming part of any registration statement filed in connection with a Demand Registration will not, and all supplements to such prospectus will not, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements, in the light of the circumstances under which they are made, not misleading.

 

Section 7.                Piggyback Registration Rights .

 

(a)            Participation . Subject to Section 7(b), if at any time after the date hereof the Company has an Underwritten Offering, whether or not for its own account, then the Company shall give prompt notice (the “ Piggyback Notice ”) to the Stockholders and the Stockholders shall be entitled to include in such registration statement the Restricted Securities held by them. The Piggyback Notice shall offer the Stockholders the right, subject to Section 7(b) (the “ Piggyback Registration Right ”), to register such number of shares of Restricted Securities as each Stockholder may request and shall set forth (i) the anticipated filing date of such registration statement and (ii) the number of shares of Common Stock that is proposed to be included in such registration statement. Subject to Section 7(b), the Company shall include in such registration statement such shares of Restricted Securities for which it has received written requests to register such shares within 15 days after the Piggyback Notice has been given.

 

13

 

(b)            Underwriter’s Cutback . Notwithstanding the foregoing, if a registration pursuant to this Section 7 involves an Underwritten Offering (other than in the case of a Demand Registration requested by an Initiating Stockholder pursuant to Section 6, in which case the provisions with respect to priority of inclusion in such Underwritten Offering set forth in Section 6(d) shall apply) of any class of Restricted Securities and the managing underwriter or underwriters of such proposed Underwritten Offering are of the view that the total or kind of securities which the Company and any other persons or entities intend to include in such offering would be reasonably likely to adversely affect the price, timing or distribution of the securities offered in such offering, then such Underwritten Offering shall include (i) first, 100% of the securities the Company proposes to sell (unless the Company agrees to reduce the securities to be sold by the Company), and (ii) second, the amount of securities which all holders of securities of the Company (including the Stockholders) have requested to be included in such registration pursuant to this Agreement or any other similar agreement with the Company that the managing underwriter or underwriters believes can be sold without such adverse effect referred to above, such amount to be allocated pro rata among all such holders of securities of the Company based upon the number of issued and outstanding securities of the class to be registered that are owned by each applicable holder as of the date of the Piggyback Notice.

 

(c)            Company Control . The Company may decline to file a registration statement after giving the Piggyback Notice, or withdraw a registration statement after filing and after such Piggyback Notice, but prior to the effectiveness of the registration statement, provided that the Company shall promptly notify each Stockholder in writing of any such action and provided further that the Company shall bear all reasonable expenses incurred by each such Stockholder or otherwise in connection with such withdrawn registration statement. Notwithstanding any other provision herein, except as set forth in Section 6(a)(ii), the Company shall have sole discretion to select any and all underwriters that may participate in any Underwritten Offering.

 

(d)            Participation in Underwritten Offerings . No Person may participate in any Underwritten Offering hereunder unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Persons entitled to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, lock-ups and other documents required for such underwriting arrangements. Nothing in this Section 7(d) shall be construed to create any additional rights regarding the piggyback registration of Restricted Securities in any Person otherwise than as set forth herein.

 

(e)            Expenses .

 

(i)             All expenses incident to the Company’s performance of or compliance with Section 6 and Section 7 of this Agreement, including, without limitation, all registration, qualification and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, fees and disbursements of custodians, and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters (excluding discounts and commissions) and other persons retained by the Company (all such expenses being herein called “ Registration Expenses ”), shall be borne by the Company,

 

14

 

and the Company shall pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed or qualifying the securities to be registered for trading on each system on which similar securities issued by the Company are from time to time qualified or on the NASD automated quotation system, provided , however , that each holder of shares of Common Stock shall pay all applicable underwriting fees, discounts and similar charges with respect to the Restricted Securities sold by such holder pursuant to such registration statement.

 

(ii)            In connection with each Demand Registration and each registration pursuant to this Section 7, in addition to the Company’s counsel, the Company shall reimburse the holders of Restricted Securities included in such registration for the reasonable fees and disbursements of one counsel (which counsel shall be selected by holders of a majority of the Restricted Securities included in the applicable registration) to represent all of the holders of Restricted Securities.

 

(f)             Termination of Registration Rights . No Stockholder shall be entitled to exercise any right provided in Section 6 or Se