exv4w2






Exhibit 4.2




 









REGISTRATION RIGHTS AGREEMENT




by and among




NORTEK, INC.




and




THE HOLDERS NAMED HEREIN




 






Dated as of December 17, 2009




 










 













 









 
















REGISTRATION RIGHTS AGREEMENT




     This Registration Rights Agreement (this “Agreement”), dated as of December 17, 2009,
by and among Nortek, Inc., a Delaware corporation (the “Company”), and the Holders (as
hereinafter defined) of Common Stock (as hereinafter defined) issued by the Company on the
effective date of the Prepackaged Plans (as hereinafter defined) who agree to be or otherwise are
bound by the terms hereof, including any Additional Holders (as hereinafter defined) who
subsequently become parties to this Agreement.



     WHEREAS, under the Prepackaged Plans, the Original Holders (as hereinafter defined) will
receive shares of common stock, par value $0.01 per share (the “Common Stock”), of the
Company; and



     WHEREAS, the Company has agreed to provide the Original Holders with registration rights with
respect to such shares of Common Stock held by the Holders, on the terms and conditions set forth
herein.



     NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained in this
Agreement, and for other good and valuable consideration, the value, receipt and sufficiency of
which are acknowledged, the parties hereby agree as follows:



ARTICLE I




DEFINITIONS



          Section 1.1. Certain Defined Terms.




     As used in this Agreement, the following terms have the following meanings set forth below or
in the sections set forth below:



     “Additional Holders” shall have the meaning set forth in Section 2.10.



     “Adverse Effect” shall have the meaning set forth in Section 2.1(f).



     “Advice” shall have the meaning set forth in Section 2.7.



     “Agreement” shall have the meaning set forth in the Preamble.



     “Common Stock” shall have the meaning set forth in the Recitals.



     “Company” shall have the meaning set forth in the Preamble.



     “Company Shelf Registration” shall have the meaning set forth in Section 2.2(a).



     “Demand Registration” shall have the meaning set forth in Section 2.1(a)(i).



     “Demand Request” shall have the meaning set forth in Section 2.1(a)(i).



 









 





     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.



     “Excluded Registration” means a registration under the Securities Act (as hereinafter
defined) of (a) securities pursuant to one or more Demand Registrations pursuant to ARTICLE II
hereof, (b) securities registered on Form S-4 or S-8 or any similar successor forms, (c) securities
convertible into or exercisable or exchangeable for Common Stock and (d) securities registered on
Form S-3 or any successor form covering solely securities issued under a dividend reinvestment
program or rights offering.



     “FINRA” shall have the meaning set forth in Section 2.5(a)(xiv).



     “Governmental Authority” means any United States or non-United States federal,
provincial, state or local government or other political subdivision thereof, any entity,
authority, agency or body exercising executive, legislative, judicial, regulatory or administrative
functions of any such government or political subdivision, and any supranational organization of
sovereign states exercising such functions for such sovereign states.



     “Holder” means each of (a) the Original Holders and (b) any Additional Holder who
shall become a party to this Agreement in accordance with Section 2.10, in each case, only to the
extent such Person holds Registrable Shares.



     “Inspectors” shall have the meaning set forth in Section 2.5(a)(x).



     “Issuer Free Writing Prospectus” shall have the meaning set forth in Section 2.6.



     “Material Adverse Change” means (a) any general suspension of trading in, or
limitation on prices for, securities on the national securities exchange or over-the-counter market
on which the Common Stock is then trading; (b) the declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States of America; (c) a material outbreak
or escalation of armed hostilities or other international or national calamity involving the United
States of America or the declaration by the United States of a national emergency or war or a
change in national or international financial, political or economic conditions; or (d) any
material adverse change in the business, assets or financial condition of the Company and its
subsidiaries, taken as a whole.



     “Original Holder” means Ares Corporate Opportunities Fund II, L.P. and Ares Corporate
Opportunities Fund III, L.P.



     “Person” means any individual, partnership, firm, corporation, association, trust,
unincorporated organization, joint venture, limited liability company, Governmental Authority or
other entity.



     “Piggyback Offering” shall have the meaning set forth in Section 2.2(a).



     “Prepackaged Plans” means the First Amended Joint Prepackaged Plans of Reorganization
of NTK Holdings, Inc., et. al., dated as of October 22, 2009, which plan was confirmed on December
4, 2009, by order of the United States Bankruptcy Court for the District



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of Delaware, as the same may be amended, modified or supplemented from time to time in
accordance with the terms thereof.




     “Records” shall have the meaning set forth in Section 2.5(a)(x).



     “register,” “registered” and “registration” refer to a registration
effected by preparing and filing a registration statement in compliance with the Securities Act,
and the declaration or ordering of the effectiveness (or automatic effectiveness) of such
registration statement.



     “Registrable Shares” means (a) the shares of Common Stock owned from time to time by
any Holder (including, without limitation, shares of Common Stock issued under the Prepackaged
Plans, shares of Common Stock issuable upon exercise or conversion of warrants or other securities
issued under the Prepackaged Plan and shares of Common Stock otherwise acquired from time to time
by a Holder) and (b) any equity security issued with respect to any shares of Common Stock referred
to in clause (a) above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other reorganization or similar
transaction; provided, that any such securities shall cease to be Registrable Shares on the
earliest of the date on which such securities: (i) have been registered under the Securities Act
and disposed of in accordance with a registration statement; (ii) have been sold pursuant to Rule
144 under the Securities Act (or any successor provision); (iii) are held by a Holder that may sell
all such Registrable Shares held by it in a single day pursuant to, and in accordance with, Rule
144 under the Securities Act (or any successor provision); (iv) cease to be outstanding (whether as
a result of redemption, repurchase, conversion or otherwise); or (v) are held by any Person who is
not a Holder.



     “Representatives” means, with respect to any Person, any of such Person’s officers,
directors, employees, agents, attorneys, accountants, actuaries, consultants or financial advisors
or any other Person acting on behalf of such Person.



     “Requesting Holders” shall have the meaning set forth in Section 2.1(a)(i).



     “SEC” means the United States Securities and Exchange Commission.



     “Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.



     “Seller Affiliates” shall have the meaning set forth in Section 2.9(a).



     “Shelf Registration” shall have the meaning set forth in Section 2.1(b)(i).



     “Suspension Notice” shall have the meaning set forth in Section 2.7.



     “Transfer Notice” shall have the meaning set forth in Section 2.1(b)(ii).



          Section 1.2. Terms Generally. The definitions in Section 1.1 shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase






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“without limitation,” unless the context expressly provides otherwise. All references herein
to Articles, Sections, paragraphs, subparagraphs or clauses shall be deemed references to Articles,
Sections, paragraphs, subparagraphs or clauses of this Agreement, unless the context requires
otherwise. Unless otherwise specified, the words “this Agreement,” “herein,” “hereof,” “hereto”
and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any
particular provision of this Agreement. The word “extent” in the phrase “to the extent” shall mean
the degree to which a subject or other thing extends, and such phrase shall not mean simply “if.”
Unless expressly stated otherwise, any law defined or referred to herein means such law as from
time to time amended, modified or supplemented, including by succession of comparable successor
laws and references to all attachments thereto and instruments incorporated therein.




ARTICLE II




REGISTRATION RIGHTS



          Section 2.1. Demand Registration.




          (a) Request for Registration.




               (i) Subject to Section 2.1(c), any Holder or Holders of Registrable Shares shall have the
right to require the Company to file a registration statement under the Securities Act for a public
offering of all or part of its or their Registrable Shares (a “Demand Registration”), by
delivering to the Company written notice stating that such right is being exercised, naming, if
applicable and to the extent known by such Holder or Holders, any other Holders whose Registrable
Shares are to be included in such registration (collectively, the “Requesting Holders”),
specifying the number of each such Holder’s Registrable Shares to be included in such registration
and, subject to Section 2.1(d) hereof, describing the intended method of distribution thereof (a
“Demand Request”). Subject to Section 2.1(c), after receipt of any Demand Request, the
Company shall comply with the applicable notice requirements set forth in Section 2.1(e).



               (ii) Subject to Section 2.1(c) and Section 2.1(g), the Company shall file the registration
statement in respect of a Demand Registration as promptly as practicable and, in any event, with
respect to the filing of a Form S-1, within forty-five (45) days after receiving a Demand Request
and with respect to the filing of a Form S-3, within fifteen (15) days of receiving a Demand
Request, and shall use commercially reasonable efforts to cause the same to be declared effective
by the SEC as promptly as practicable after such filing.



          (b) Shelf Registration.




               (i) Subject to Section 2.1(c), with respect to any Demand Registration, at any time that the
Company is eligible to use Form S-3 or an automatic shelf registration statement (as defined in
Rule 405 under the Securities Act) on Form S-3 (or any successor forms) with respect to the
Registrable Shares, the Requesting Holders may request that the Company (i) file a registration
statement pursuant to Rule 415 under the Securities Act (or any successor rule) to effect such
Demand Registration, or (ii) at any time that a registration statement pursuant to Rule 415
covering Registrable Shares is effective, register additional



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Registrable Shares of the Requesting Holders pursuant to such shelf registration statement to
effect such Demand Registration (in either case, a “Shelf Registration”). For the
avoidance of doubt, a Shelf Registration shall be deemed a “Demand Registration” for all purposes
under this Agreement except as expressly provided in this Agreement.




               (ii) Subject to Section 2.1(c), any Holder or Holders with Registrable Shares registered
pursuant to a Shelf Registration that intends to effect an underwritten offering with respect to
such Registrable Shares shall deliver a notice to the Company at least ten (10) business days prior
to the commencement of such underwritten offering, stating (i) that such Holder or Holders intend
to effect an underwritten offering of all or part of the Registrable Shares included by such Holder
or Holders in the Shelf Registration, (ii) if applicable and to the extent known by such Holder,
any other Holders whose Registrable Shares are to be included in the underwritten offering, (iii)
the number of each such Holder’s Registrable Shares to be included in such underwritten offering
and (iv) the proposed timetable for such underwritten offering. Any Holder with Registrable Shares
registered pursuant to a Shelf Registration that intends to effect any other sale or transfer of
such Registrable Shares utilizing such Shelf Registration shall deliver a notice to the Company at
least three (3) business days prior to effecting such non-underwritten sale or transfer, stating
(i) that such Holder intends to effect a non-underwritten sale or transfer of all or part of the
Registrable Shares included by such Holder in the Shelf Registration, (ii) the number or dollar
amount of the Registrable Shares to be included in such sale or transfer and (iii) the proposed
manner and timetable for such sale or transfer. A notice provided by any Requesting Holder
pursuant to the first two sentences of this Section 2.1(b)(ii) is referred to herein as a
“Transfer Notice.” Subject to Section 2.1(c), after receipt of any Transfer Notice, the
Company shall comply with the applicable notice requirements set forth in Section 2.1(e).



               (iii) For the avoidance of doubt, the Company may, but shall have no obligation to, maintain
the effectiveness of any Shelf Registration in respect of any shares of Common Stock that were
Registrable Shares at the time such Shelf Registration was first declared effective but have ceased
to be Registrable Shares as a result of subsequent sales by Holders thereof.



          (c) Limitations.




               (i) The Holders shall not be permitted to request a Demand Registration prior to thirty (30)
days after the date on which a Form 10 registration statement in respect of the Company’s Common
Stock is declared effective by the SEC.



               (ii) The Holders shall not be permitted to request a Demand Registration or effect an
underwritten offering pursuant to a registration statement on Form S-1 within one hundred twenty
(120) days or, in the case of a registration statement on Form S-3 within ninety (90) days after
(x) the effective date of a previous Demand Registration (other than a Shelf Registration) or (y)
the completion of any underwritten offering pursuant to a Shelf Registration; provided, however,
that with respect to a Transfer Notice in connection with a sale or transfer of Registrable Shares
pursuant to a Shelf Registration that was effective prior to the delivery of such Transfer Notice,
if the company or any officer, director, or selling security holder shall enter into a “lock up”
agreement in connection with such previous Demand



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Registration or underwritten offering for a period of less than ninety (90) days, then the
ninety (90) day period specified in this section 2.1(c)(ii) shall be reduced to such shorter amount
of time.




               (iii) The Holders shall not be permitted to submit a Demand Request for a Demand Registration
on Form S-1 (or similar form) unless such Demand Request relates to Registrable Shares constituting
at least (a) 10% of the number of shares of Common Stock then outstanding, but in no event less
than a number of Registrable Shares equal to or exceeding a number of Registrable Shares with a
market value (which at any time the securities of the same class as the Registrable Shares are
listed on a national securities exchange shall be based upon the closing price of the Registrable
Shares on the trading day immediately preceding the date of the Demand Request or Transfer Notice
and at any other time shall be the estimated market value as of the date of the Demand Request or
Transfer Notice determined in good faith by the Company) equal to or exceeding $30 million, or (b)
1% of the number of shares of Common Stock then outstanding if such Demand Request or Transfer
Notice is submitted with respect to all of the Registrable Shares held by the Requesting Holder.



               (iv) Each Original Holder, collectively, shall not be permitted to effect more than two (2)
Demand Registrations on Form S-1 (or similar long form) during the term of this Agreement. The
limitation with respect to each Original Holder shall apply to such Original Holder and its
transferees, collectively. The Holders shall be entitled to an unlimited number of Demand
Registrations on Form S-3 (or similar short form).



          (d) Underwritten Demand Registrations.




               (i) At the request of the Holders of a majority of the Registrable Shares submitting a Demand
Request or Transfer Notice for an underwritten offering of Registrable Shares, such offering shall
be in the form of a “firm commitment.” With respect to any such underwritten offering, the Holders
of a majority of the Registrable Shares to be registered or included in such underwritten offering
shall select the investment banking firm or firms to manage the underwritten offering;
provided that such selection shall be subject to the reasonable consent of the Company,
which consent shall not be unreasonably withheld or delayed.



               (ii) If a Demand Registration is for an underwritten offering or a transfer pursuant to a
Shelf Registration involving an underwritten offering, no Holder may participate in any such
underwritten offering unless such Holder (A) agrees to sell such Holder’s Registrable Shares on the
basis provided in any underwriting arrangements approved by the Company; provided that such
arrangements are subject to the consent of the Holders of a majority of the Registrable Shares to
be registered or included in such underwritten offering, which consent shall not be unreasonably
withheld or delayed, and (B) completes and executes all questionnaires, powers of attorney, custody
agreements, indemnities, underwriting agreements and other documents reasonably required under the
terms of such underwriting arrangements; provided, however, that the obligation of
each such Holder to indemnify or contribute pursuant to any such underwriting arrangements shall
(1) only be with respect to information it provides to the Company in writing specifically for use
in such underwritten offering, (2) be several, not



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joint and several, and (3) be limited to the net amount of proceeds received by such Holder
from the sale of its Registrable Shares pursuant to such offering.




          (e) Rights of Nonrequesting Holders and the Company. Subject to Section 2.1(c), after receipt
of any Demand Request or any Transfer Notice relating to an underwritten offering pursuant to a
Shelf Registration, the Company shall promptly (but in any event within three (3) business days)
give written notice of (i) such proposed Demand Registration to all other Holders of Registrable
Shares or (ii) such Transfer Notice to such other Holders of Registrable Shares whose shares are
covered by such Shelf Registration, who shall have the right, exercisable by written notice to the
Company within ten (10) business days of their receipt of the Company’s notice in the case of a
Demand Request with respect to the filing of a registration statement and three (3) business days
of their receipt of the Company’s notice with respect to a Transfer Notice regarding an
underwritten offering pursuant to a Shelf Registration, to elect to include in such Demand
Registration or underwritten offering such portion of their Registrable Shares as they may request.
All Holders requesting to have their Registrable Shares included in a Demand Registration or
underwritten offering shall be deemed to be “Requesting Holders” for purposes of this Section 2.1.
For the avoidance of doubt, subject to Section 2.1(f), the Company may register in any Demand
Registration any equity securities of the Company; provided, that the intended method of
distribution of such other equity securities is the same as that specified in the Demand Request.




          (f) Priority on Demand Registrations. With respect to any underwritten offering based on a
Demand Registration or Shelf Registration, if the managing underwriter advises that the aggregate
number of shares proposed to be included in such registration would materially and adversely affect
the price, timing or distribution of the offering or otherwise adversely affect its success (an
“Adverse Effect”), the Company shall include in such underwritten offering (i) first, the
Registrable Shares, pro rata among the Requesting Holders on the basis of the number of Registrable
Shares owned by each such Requesting Holder, and (ii) second, any other securities requested to be
included in such underwritten offering (including securities to be sold for the account of the
Company); provided, however, that if more than 50% of the Registrable Shares
subject to a Demand Request are excluded from the applicable Demand Registration pursuant to the
terms of this Section 2.1(f), the offering shall not be deemed to constitute a Demand Registration
for the purpose of Section 2.1(c)(iv).




          (g) Deferral of Filing; Suspension of Use. The Company may defer the filing (but not the
preparation) or suspend the use of any registration statement required by or filed pursuant to
Section 2.1, at any time if (i) at the time the Company receives the Demand Request or while the
registration statement is effective, the Company or any of its subsidiaries are engaged in
confidential negotiations or other confidential business activities, disclosure of which would be
required in such registration statement (but would not be required if such registration statement
were not filed or was not being used), and the Company reasonably determines in good faith that
such disclosure would be materially detrimental to the Company and its stockholders, (ii) at the
time the Company receives the Demand Request or while the registration statement is effective, the
Company or any of its subsidiaries reasonably determines in good faith that the filing of the
registration or the use of a registration statement that is effective would require the disclosure
of material non-public information and such disclosure would be materially detrimental to the
Company and its stockholders or (iii) prior to receiving the Demand Request






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or Transfer Notice, the board of directors of the Company had determined to effect a
registered underwritten public offering of Company equity securities or Company securities
convertible into or exchangeable for Company equity securities for the Company’s account and it had
taken substantial steps (such as selecting a managing underwriter for such offering) and is
proceeding with reasonable diligence to effect such offering; provided, however,
that the Company shall not exercise its rights to deferral or suspension pursuant to this Section
2.1(g) for more than ninety (90) days (which need not be consecutive) in any twelve (12) month
period. In making any such determination to defer the filing or effectiveness, or suspend the use,
of a registration statement required by Section 2.1, the Company shall not be required to consult
with or obtain the consent of any Holder or any investment manager for any Holder, and any such
determination shall be in the sole discretion of the Company, and neither the Holders nor any
investment manager for any Holder shall be responsible or have any liability thereof. The Company
shall promptly notify the Holders of (y) any deferral or suspension pursuant to this Section 2.1(g)
and (z) the termination of any such deferral or suspension.




          (h) Withdrawal from Demand Registration. In the event of a Material Adverse Change, any
Holder may withdraw its Registrable Shares from a Demand Registration or underwritten offering at
any time (prior to a sale thereunder) by providing the Company with written notice. Upon receipt
of such written notice, the Company shall continue all efforts to secure registration or effect the
underwritten offering of the remaining Registrable Shares not requested to be withdrawn, unless
such remaining Registrable Shares would not meet the requirements of Section 2.1(c)(iii), in which
case, the Company may in its sole discretion cease all efforts to proceed with the Demand
Registration or the underwritten offering. If the Company ceases all efforts to secure
registration or effect the underwritten offering pursuant to this Section 2.1(h), then such
registration or underwritten offering shall nonetheless be deemed an effective or completed Demand
Registration or completed underwritten offering pursuant to a Shelf Registration for all purposes
hereunder unless (i) the withdrawal is made following the occurrence of a Material Adverse Change
not known to the Requesting Holders at the time of the Demand Request or Transfer Notice or (ii)
the Requesting Holders pay or reimburse the Company for all out-of-pocket fees and expenses
reasonably incurred in connection with such Demand Registration of underwritten offering;
provided that if, after a Demand Registration has become effective or an underwritten
offering of Registrable Shares has been commenced, it is interfered with by any stop order,
injunction or other order or requirement of the SEC or other governmental agency or court, it will
be deemed not to have been effected and will not count as a Demand Registration or underwritten
offering for the purpose of Section 2.1(c).




          Section 2.2. Piggyback Offerings.




          (a) Right to Piggyback. Each time the Company proposes to offer any of its equity securities
in a registered underwritten offering (other than pursuant to an Excluded Registration) under the
Securities Act (whether for the account of the Company or the account of any equity holder of the
Company other than a Holder) (a “Piggyback Offering”), the Company shall give prompt
written notice to each Holder of Registrable Shares (which notice shall be given not less than
twenty (20) days prior to (i) the offering in the case of an underwritten offering pursuant to Rule
415 under the Securities Act (or any successor rule) (a “Company Shelf Registration”) or
(ii) the anticipated filing date of the Company’s registration statement in a registration other
than a Company Shelf Registration), which notice shall offer each such






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Holder the opportunity to include any or all of its Registrable Shares in such underwritten
offering, subject to the limitations contained in Section 2.2(b) hereof. Each Holder who desires
to have its Registrable Shares included in such underwritten offering shall so advise the Company
in writing (stating the number of shares desired to be registered or included) within ten (10) days
after the date of such notice from the Company. Any Holder shall have the right to withdraw such
Holder’s request for inclusion of such Holder’s Registrable Shares in any underwritten offering
pursuant to this Section 2.2(a) by giving written notice to the Company of such withdrawal.
Subject to Section 2.2(b) below, the Company shall include in such underwritten offering all such
Registrable Shares so requested to be included therein. Notwithstanding the foregoing, the Company
may at any time withdraw or cease proceeding with any such offering if it shall at the same time
withdraw or cease proceeding with the offering of all other equity securities originally proposed
to be included in such offering.




          (b) Priority on Piggyback Offerings.




               (i) If a Piggyback Offering was initiated by the Company, and if the managing underwriter
advises that the aggregate number of shares proposed to be included in such Piggyback Offering
would cause an Adverse Effect, the Company shall include in such Piggyback Offering (A) first, the
securities the Company proposes to sell, (B) second, the Registrable Shares requested to be
included in such Piggyback Offering, pro rata among the Holders of such Registrable Shares on the
basis of the number of Registrable Shares owned by each such Holder, and (C) third, any other
securities requested to be included in such Piggyback Offering. If as a result of the provisions of
this Section 2.2(b)(i), any Holder shall not be entitled to include all Registrable Shares in such
Piggyback Offering that such Holder has requested to be so included, such Holder may withdraw its
request to include its Registrable Shares in such Piggyback Offering.



               (ii) If a Piggyback Offering was initiated by the Company on behalf of a security holder of
the Company (other than a Holder), and if the managing underwriter advises that the aggregate
number of shares proposed to be included in such Piggyback Offering would cause an Adverse Effect,
the Company shall include in such Piggyback Offering (A) first, the securities requested to be
included therein by the Company requesting such Piggyback Offering on behalf of the security
holders and the Registrable Shares requested to be included in such Piggyback Offering, pro rata
among the holders of such securities on the basis of the number of securities owned by each such
holder, (B) second, any securities proposed by the Company to be included in such Piggyback
Offering and (C) third, any other securities requested to be included in such Piggyback Offering
(including securities to be sold for the account of the Company). If as a result of the provisions
of this Section 2.2(b)(ii) any Holder shall not be entitled to include all Registrable Shares in
such Piggyback Offering that such Holder has requested to be so included, such Holder may withdraw
such Holder’s request to include Registrable Shares in such Piggyback Offering.



               (iii) No Holder may participate in a Piggyback Offering unless such Holder (A) agrees to sell
such Holder’s Registrable Shares on the basis provided in any underwriting arrangements approved by
the Company and (B) completes and executes all questionnaires, powers of attorney, custody
agreements, indemnities, underwriting agreements and other documents, each in customary form,
reasonably required under the terms of such



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underwriting arrangements; provided, however, that the obligation of such
Holder to indemnify or contribute pursuant to any such underwriting arrangements shall (1) only be
with respect to information it provides to the Company in writing specifically for use in such
underwritten offering, (2) be several, not joint and several, and (3) be limited to the net amount
of proceeds received by such Holder from the sale of its Registrable Shares pursuant to such
registration.




          (c) Selection of Underwriters. The Company shall select the investment banking firm or firms
to manage the Piggyback Offering.




          Section 2.3. SEC Form S-3. The Company shall use its commercially reasonable efforts to cause
Demand Registrations to be registered on Form S-3 or an automatic shelf registration statement (as
defined in Rule 405 under the Securities Act) on Form S-3 (or any successor forms) once the Company
becomes eligible to use such form, and if the Company is not then eligible under the Securities Act
to use such form, Demand Registrations shall be registered on Form S-1 or any successor form. After
becoming eligible to use Form S-3 or an automatic shelf registration statement (as defined in Rule
405 under the Securities Act) on Form S-3, the Company shall use its commercially reasonable
efforts to remain so eligible.




          Section 2.4. Holdback Agreements.




          (a) The Company shall not effect any public sale or distribution of its equity securities or
any securities convertible into or exchangeable or exercisable for its equity securities, except in
each case as part of the offering pursuant to a Demand Registration, during the ninety (90) day
period (or such lesser period as the lead or managing underwriters may permit) beginning on the
effective date of any registration statement in connection with such Demand Registration (other
than a Shelf Registration), except for (i) sales or distributions pursuant to registrations on Form
S-4 or Form S-8 or any successor form, (ii) the issuance of shares of Common Stock upon the
conversion, exercise or exchange, by the holder thereof, of options, warrants or other securities
convertible into or exercisable or exchangeable for Common Stock pursuant to the terms of such
options, warrants or other securities, (iii) sales or distributions pursuant to the terms of any
other agreement to issue shares of Common Stock (or any securities convertible into or exchangeable
or exercisable for Common Stock) in effect on the date of the Demand Request, including any such
agreement in connection with any previously disclosed acquisition, merger, consolidation or other
business combination and (iv) the issuance of shares of Common Stock in connection with transfers
to dividend reinvestment plans or to employee benefit plans in order to enable any such employee
benefit plan to fulfill its funding obligations in the ordinary course.




          (b) If any Holders of Registrable Shares provide a Transfer Notice relating to an underwritten
offering of Common Stock registered pursuant to a Shelf Registration, the Company shall not effect
any public sale or distribution of its equity securities or any securities convertible into or
exchangeable or exercisable for its equity securities, except in each case as part of such
underwritten offering, during the period commencing on the day the Transfer Notice is delivered
and ending ninety (90) days following the pricing date for such underwritten offering (or such
lesser period as the lead or managing underwriters may permit), except for (i) sales or
distributions pursuant to registrations on Form S-4 or Form S-8 or any successor form, (ii) the
issuance of shares of Common Stock upon the conversion, exercise or exchange, by the






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holder thereof, of options, warrants or other securities convertible into or exercisable or
exchangeable for Common Stock pursuant to the terms of such options, warrants or other securities,
(iii) sales or distributions pursuant to the terms of any other agreement to issue shares of Common
Stock (or any securities convertible into or exchangeable or exercisable for Common Stock) in
effect on the date of the Transfer Notice, including any such agreement in connection with any
previously disclosed acquisition, merger, consolidation or other business combination and (iv) the
issuance of shares of Common Stock in connection with transfers to dividend reinvestment plans or
to employee benefit plans in order to enable any such employee benefit plan to fulfill its funding
obligations in the ordinary course.




          (c) Each Holder agrees, in the event of an underwritten offering by the Company (whether for
the account of the Company or otherwise) in which the Holder was offered an opportunity to
participate through the exercise of its Piggyback rights set forth in Section 2.2 or its rights
under Section 2.1(e) (in each case in accordance with the terms of this Agreement), not to offer,
sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise
dispose of any shares of Common Stock of the Company, or any options or warrants to purchase any
shares of Common Stock of the Company, or any securities convertible into, exchangeable for or that
represent the right to receive shares of Common Stock of the Company, whether now owned or
hereinafter acquired, owned directly by the Holder (including holding as a custodian) or with
respect to which the undersigned has beneficial ownership within the rules and regulations of the
SEC, or engage in any hedging or other transaction which is designed to or which reasonably could
be expected to lead to or result in a sale or disposition of the Common Stock even if such shares
would be disposed of by someone other than the Holder (including without limitation any short sale
or any purchase, sale or grant of any right (including without limitation any put or call option)
with respect to any of the Common Stock or with respect to any security that includes, relates to,
or derives any significant part of its value from such shares, during the ninety (90) day period
(or such lesser period in each case as the lead or managing underwriters may permit) beginning on
the effective date of the registration statement for such underwritten offering (or, in the case of
an offering pursuant to an effective shelf registration statement pursuant to Rule 415, the pricing
date for such underwritten offering) or, in the case of the Company’s first underwritten public
offering, one hundred eighty (180) days; provided, however, that (i) any applicable
period shall terminate on such earlier date as the Company gives notice to the Holders that the
Company declines to proceed with any such offering, (ii) the sum of all holdback periods applicable
to the Holders shall not exceed one hundred eighty (180) days (which need not be consecutive) in
any given twelve (12) month period or, in the case of the Company’s first underwritten public
offering, two hundred and seventy (270) days, (iii) the foregoing holdback shall be subject to
usual and customary exceptions applicable to the Holder, including (without limitation) gift,
distribution or other transfer to affiliates, partners, stockholders and other related parties and
transfers to other persons who agreed to be bound by the holdback limitations provided for
hereunder and (iv) if (x) during the last seventeen (17) days of the applicable period, the Company
releases earnings results or announces material news or a material event or (y) prior to the
expiration of the applicable period, the Company announces that it will release earnings results
during the fifteen (15) day period following the last day of the applicable period, then in each
case the applicable will be automatically extended until the expiration of the eighteen (18) day
period beginning on the date of release of the earnings results or the announcement of the material
news or material event, as applicable, unless the lead or managing underwriters waive, in writing,
such extension.






11









 







Notwithstanding the foregoing, in the event that the Company, any stockholder enters into a
more favorable “lock-up” or holdback agreement with the managing underwriters of an offering
referred to in this paragraph, then the Holders shall not be subject to any holdback or lock-up
more restrictive than such other persons.




          Section 2.5. Registration Procedures.




          (a) Whenever any Holder has requested that any Registrable Shares be registered pursuant to
this Agreement, the Company shall use its commercially reasonable efforts to effect the
registration and the sale, as applicable, of such Registrable Shares in accordance with the
intended method of disposition thereof, and pursuant thereto the Company shall as expeditiously as
possible:




               (i) prepare and file with the SEC, a registration statement on any appropriate form under the
Securities Act with respect to such Registrable Shares and use its commercially reasonable efforts
to cause such registration statement to become effective;



               (ii) prepare and file with the SEC such amendments, post-effective amendments, and supplements
to such registration statement and the prospectus used in connection therewith as may be necessary
to keep such registration statement effective (a) in the case of a Demand Registration that is not
a Shelf Registration for a period of not less than one hundred eighty (180) days (or such lesser
period as is necessary for the underwriters in an underwritten offering to sell unsold allotments)
and (b) in the case of a Demand Registration that is a Shelf Registration, until all of the shares
of Common Stock included in such registration statement cease to be Registrable Shares and comply
with the provisions of the Securities Act with respect to the disposition of all securities covered
by such registration statement during such period in accordance with the intended methods of
disposition by the selling Holders thereof set forth in such registration statement;



               (iii) furnish to each selling Holder of Registrable Shares and the underwriters of the
securities being registered, such number of copies of such registration statement, each amendment
and supplement thereto, the prospectus included in such registration statement (including each
preliminary prospectus and any Issuer Free Writing Prospectus), any documents incorporated by
reference therein and such other documents as such selling Holders or underwriters may reasonably
request in order to facilitate the disposition of the Registrable Shares owned by such selling
Holders or the sale of such securities by such underwriters (it being understood that, subject to
Section 2.1(g), Section 2.4(c), Section 2.6 and Section 2.7 and the requirements of the Securities
Act, Exchange Act and applicable state securities laws, the Company consents to the use of the
prospectus and any amendment or supplement thereto by each selling Holder and the underwriters in
connection with the offering and sale of the Registrable Shares covered by the registration
statement of which such prospectus, amendment or supplement is a part);



               (iv) use its commercially reasonable efforts to register or qualify such Registrable Shares
under such other securities or “blue sky” laws of such jurisdictions as the managing underwriter
reasonably requests (or, in the event the registration statement does not relate to an underwritten
offering, as the selling Holders of a majority of such Registrable Shares



12









 




being offered may reasonably request); use its commercially reasonable efforts to keep each
such registration or qualification (or exemption therefrom) effective during the period in which
such registration statement is required to be kept effective; and do any and all other acts and
things which may be reasonably necessary or advisable to enable each selling Holder to consummate
the disposition of the Registrable Shares owned by such selling Holder in such jurisdictions;
provided, however, that the Company shall not be required to (A) qualify generally
to do business in any jurisdiction where it would not otherwise be required to qualify but for this
subparagraph, (B) consent to general service of process in any such jurisdiction or (C) take any
action that would subject it to taxation in respect of doing business in any jurisdiction in which
it is not otherwise so subject;




               (v) promptly notify each selling Holder and each underwriter and (if requested by any such
Person) confirm such notice in writing (A) when a prospectus or any prospectus supplement or
post-effective amendment has been filed and, with respect to a registration statement or any
post-effective amendment, when the same has become effective, (B) of the issuance by any state
securities or other regulatory authority of any order suspending the qualification or exemption
from qualification of any of the Registrable Shares under state securities or “blue sky” laws or
the initiation of any proceedings for that purpose, or (C) of the happening of any event which
makes any statement made in a registration statement or related prospectus untrue or which requires
the making of any changes in such registration statement, prospectus or documents so that they
shall not contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not misleading, and, as
promptly as practicable thereafter, prepare and file with the SEC and furnish a supplement or
amendment to such prospectus so that, as thereafter deliverable to the purchasers of such
Registrable Shares, such prospectus shall not contain any untrue statement of a material fact or
omit a material fact necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;



               (vi) make generally available to the Company’s security holders an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act no later than thirty (30) days
after the end of the twelve (12) month period beginning with the first day of the Company’s first
fiscal quarter commencing after the effective date of a registration statement, which earnings
statement shall cover said twelve (12) month period, and which requirement shall be deemed to be
satisfied if the Company timely files complete and accurate information on Forms 10-K, 10-Q and 8-K
under the Exchange Act and otherwise complies with Rule 158 under the Securities Act;



               (vii) if requested by the managing underwriter or any selling Holder, promptly incorporate in
a prospectus supplement or post-effective amendment such information as the managing underwriter or
any selling Holder reasonably requests to be included therein, including, with respect to the
Registrable Shares being sold the intended method of distribution thereof (including, if such
intended method distribution involves hedging transactions, the inclusion of a hedge counterparty
as a selling security holder), the purchase price being paid therefor by the underwriters and with
respect to any other terms of the underwritten offering of the Registrable Shares to be sold in
such offering, and promptly make all required filings of such prospectus supplement or
post-effective amendment;



13









 







(viii) as promptly as practicable after filing with the SEC of any document which is
incorporated by reference into a registration statement (in the form in which it was incorporated),
deliver a copy of each such document to each selling Holder, if requested by such holder;



               (ix) cooperate with the selling Holders and the managing underwriter to facilitate the timely
preparation and delivery of certificates (which shall not bear any restrictive legends unless
required under applicable law) representing securities sold under any registration statement, and
enable such securities to be in such denominations and registered in such names as the managing
underwriter or such selling Holders may request at least two (2) business days prior to any sale of
the Registrable Shares and keep available and make available to the Company’s transfer agent prior
to the effectiveness of such registration statement a supply of such certificates;



               (x) promptly make available for inspection by any selling Holder, any underwriter
participating in any disposition pursuant to any registration statement, and any attorney,
accountant or other agent or Representative retained by any such selling Holder or underwriter
(collectively, the “Inspectors”), all financial and other records and pertinent corporate
documents (collectively, the “Records”) and properties of the Company, as shall be
reasonably necessary to enable them to exercise their due diligence responsibility, and cause the
Company’s officers, directors and employees to supply all information reasonably requested by any
such Inspector in connection with such registration statement; provided, however,
that, unless the disclosure of such Records is necessary to avoid or correct a misstatement or
omission in the registration statement or the release of such Records is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction, the Company shall not be required
to provide any information under this subparagraph (x) if (A) the Company believes, after
consultation with counsel for the Company, that to do so would cause the Company to forfeit an
attorney-client privilege that was applicable to such information or (B) if either (1) the Company
has requested and been granted from the SEC confidential treatment of such information contained in
any filing with the SEC or documents provided supplementally or otherwise or (2) the Company
reasonably determines in good faith that such Records are confidential and so notifies the
Inspectors in writing, unless prior to furnishing any such information with respect to clause (A)
or (B) such selling Holder of Registrable Shares requesting such information agrees to enter into a
confidentiality agreement in a form acceptable to the Company; and provided,
further, that each selling Holder of Registrable Shares agrees that it shall, upon learning
that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the
Company and allow the Company, at its expense, to undertake appropriate action and to prevent
disclosure of the Records deemed confidential;



               (xi) in the case of an underwritten offering, furnish to each underwriter a signed counterpart
of (A) an opinion or opinions of counsel to the Company, and (B) a comfort letter or comfort
letters from the Company’s independent public accountants, each in customary form and covering such
matters of the type customarily covered by opinions or comfort letters, as the case may be, as the
managing underwriter reasonably requests;



14









 







               (xii) cause the Registrable Shares included in any registration to be (A) listed on each
securities exchange, if any, on which similar securities issued by the Company are then listed or
(B) quoted on any over-the-counter market in the Registrable Shares are traded;



               (xiii) provide a transfer agent and registrar for all Registrable Shares registered hereunder
and provide a CUSIP number for the Registrable Shares included in any registration statement, not
later than the effective date of such registration statement;



               (xiv) cooperate with each selling Holder and each underwriter participating in the disposition
of such Registrable Shares and their respective counsel in connection with any filings required to
be made with the Financial Industry Regulatory Authority (“FINRA”);



               (xv) during the period when the prospectus is required to be delivered under the Securities
Act, promptly file all documents required to be filed with the SEC pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act;



               (xvi) notify each selling Holder of Registrable Shares promptly of any request by the SEC for
the amending or supplementing of such registration statement or prospectus or for additional
information;



               (xvii) subject to Section 2.1(d)(ii) and Section 2.2(b)(iii), enter into such agreements
(including underwriting agreements) as are customary in connection with an underwritten
registration; and



               (xviii) advise each selling Holder of such Registrable Shares, promptly after it receives
notice or obtains knowledge thereof, of the issuance of any stop order by the SEC suspending the
effectiveness of such registration statement or the initiation or threatening of any proceeding for
such purpose and promptly use its commercially reasonable efforts to prevent the issuance of any
stop order or to obtain its withdrawal at the earliest possible moment if such stop order should be
issued.



          (b) The selling Holders shall cooperate with the Company in the preparation and filing of any
registration statement under the Securities Act pursuant to this Agreement and provide the Company
with all information reasonably necessary to complete such preparation as the Company may, from
time to time, reasonably request, and the Company may exclude from such registration the
Registrable Shares of any selling Holder (or not proceed with such registration) if such selling
Holder unreasonably fails to furnish such information within a reasonable time after receiving such
request. Promptly following any sale or other transfer of any Registrable Shares, each Holder
shall notify the Company in writing thereof, which notice shall specify the amount of securities
involved, the date of the sale or transfer and whether the sale or transfer was effected pursuant
to an effective registration statement or otherwise.




          (c) Each of the parties shall treat all notices of proposed transfers and registrations, and
all information relating to any blackout periods under Section 2.1(g) received from another party
with the strictest confidence (and in accordance with the terms of any applicable confidentiality
agreement among the Company and the Holder) and shall not






15









 







disseminate such information, except that the Company may disclose such information if, upon
the advice of counsel, it is required under applicable law.




          Section 2.6. Issuer Free Writing Prospectuses. The Company represents and agrees that, unless
it obtains the prior consent of the Holders of a majority of the Registrable Shares participating
in a registration or offering or the approval of the counsel for such Holders, and each of the
Holders represents and agrees that, unless it obtains the prior consent of the Company, it shall
not make any offer relating to the Registrable Shares that would constitute an “issuer free writing
prospectus,” as defined in Rule 433 under the Securities Act (an “Issuer Free Writing
Prospectus”), or that would otherwise constitute a “free writing prospectus,” as defined in
Rule 405 under the Securities Act, required to be filed with the SEC. The Company represents that
any Issuer Free Writing Prospectus shall not include any information that conflicts with the
information contained in a registration statement or prospectus and that any Issuer Free Writing
Prospectus, when taken together with the information in the registration statement and the
prospectus, shall not include any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the circumstances under which
they were made, not misleading.




          Section 2.7. Suspension of Dispositions. Each Holder agrees by acquisition of any Registrable
Shares that, upon receipt of any notice (a “Suspension Notice”) from the Company of the
happening of any event of the kind described in Section 2.5(a)(v)(C) such Holder will forthwith
discontinue disposition of Registrable Shares until such Holder’s receipt of the copies of the
supplemented or amended prospectus, or until it is advised in writing (the “Advice”) by the
Company that the use of the prospectus may be resumed, and has received copies of any additional or
supplemental filings which are incorporated by reference in the prospectus, and, if so directed by
the Company, such Holder will deliver to the Company all copies, other than permanent file copies
then in such Holder’s possession, of the prospectus covering such Registrable Shares current at the
time of receipt of such notice. In the event the Company shall give any such notice, the time
period regarding the effectiveness of registration statements set forth in Section 2.5(a)(ii)
hereof shall be extended by the number of days during the period from and including the date of the
giving of the Suspension Notice to and including the date when each seller of Registrable Shares
covered by such registration statement shall have received the copies of the supplemented or
amended prospectus or the Advice. The Company shall use its commercially reasonable efforts and
take such actions as are reasonably necessary to render the Advice as promptly as practicable.




          Section 2.8. Registration Expenses. The Company shall pay all reasonable fees and expenses
incident to the performance of or compliance with its obligations under this ARTICLE II, including
(a) all registration and filing fees, including fees and expenses (i) with respect to filings
required to be made with the SEC, all applicable securities exchanges and/or FINRA and (ii) of
compliance with securities or “blue sky” laws including any fees and disbursements of counsel for
the underwriter(s) in connection with “blue sky” qualifications of the Registrable Shares pursuant
to Section 2.5(a)(v), (b) printing expenses, including expenses of printing certificates for
Registrable Shares in a form eligible for deposit with The Depository Trust Company and of printing
prospectuses if the printing of prospectuses is requested by the managing underwriter(s), if any,
or by the Holder, (c) messenger, telephone and delivery expenses of the Company, (d) fees and
disbursements of counsel for the Company, (e) expenses






16









 







of the Company and underwriters incurred in connection with any “road show”, (f) reasonable
fees and disbursements of one firm of legal counsel to the Holders (which fees and disbursements
shall not exceed $40,000 with respect to the first Demand Registration requested hereunder and
$25,000 with respect to each subsequent Demand Registration and each underwritten takedown) and (g)
fees and disbursements of all independent certified public accountants (including, without
limitation, the expenses of any special audit and “cold comfort” letters required by or incident to
this Agreement) and any other Persons, including special experts, retained by the Company. For the
avoidance of doubt, the Company shall not be required to pay any, and each Holder shall pay its
own, underwriting discounts and commissions, and transfer taxes, if any, relating to the sale or
disposition of Registrable Shares pursuant to any registration statement, or any other expenses of
any Holder. In addition, the Company shall bear all of its internal expenses (including all
salaries and expenses of its officers and employees performing legal or accounting duties), the
expense of any annual audit, the fees and expenses incurred in connection with the listing of the
securities to be registered on any securities exchange or inter-dealer quotation system on which
similar securities issued by the Company are then listed and the fees and expenses of any Person,
including special experts, retained by the Company.




          Section 2.9. Indemnification.




          (a) The Company agrees to indemnify and reimburse, to the fullest extent permitted by law,
each seller of Registrable Shares, and each of its employees, advisors, agents, representatives,
partners, officers, and directors and each Person who controls such seller (within the meaning of
the Securities Act or the Exchange Act) and any agent or investment advisor thereof (collectively,
the “Seller Affiliates”) (i) against any and all losses, claims, damages, liabilities and
expenses, joint or several (including, without limitation, attorneys’ fees and disbursements except
as limited by Section 2.9(c)) based upon, arising out of, related to or resulting from any untrue
or alleged untrue statement of a material fact contained in any registration statement, prospectus
or preliminary prospectus or any amendment thereof or supplement thereto, or any omission or
alleged omission of a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) against any and all losses, liabilities, claims, damages
and expenses whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of
any litigation or investigation or proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon, arising out of, related to or resulting from any
such untrue statement or omission or alleged untrue statement or omission or any breach of this
Agreement, and (iii) against any and all costs and expenses (including reasonable fees and
disbursements of counsel) as may be reasonably incurred in investigating, preparing or defending
against any litigation, investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon, arising out of, related to or resulting from any
such untrue statement or omission or alleged untrue statement or omission, or such violation of the
Securities Act or Exchange Act, to the extent that any such expense or cost is not paid under
subparagraph (i) or (ii) above; except insofar as any such statements are made in reliance upon
information furnished in writing to the Company by such seller or any Seller Affiliate for use
therein or arise from such seller’s or any Seller Affiliate’s failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements thereto after the Company has
furnished such seller or Seller Affiliate with a sufficient number of copies of the same. The
reimbursements required by this






17









 







Section 2.9(a) will be made by periodic payments during the course of the investigation or
defense, as and when bills are received or expenses incurred.




          (b) In connection with any registration statement in which a seller of Registrable Shares is
participating, each such seller will furnish to the Company in writing such information as the
Company reasonably requests for use in connection with any such registration statement or
prospectus and, to the fullest extent permitted by law, each such seller will indemnify the Company
and its directors and officers and each Person who controls the Company (within the meaning of the
Securities Act or the Exchange Act) against any and all losses, claims, damages, liabilities and
expenses (including, without limitation, reasonable attorneys’ fees and disbursements except as
limited by Section 2.9(c)) resulting from any untrue statement or alleged untrue statement of a
material fact contained in the registration statement, prospectus or any preliminary prospectus or
any amendment thereof or supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not misleading, but only
to the extent that such untrue statement or alleged untrue statement or omission or alleged
omission is contained in any information so furnished in writing by such seller or any of its
Seller Affiliates specifically for inclusion in the registration statement; provided that
the obligation to indemnify will be several, not joint and several, among such sellers of
Registrable Shares, and the liability of each such seller of Registrable Shares will be in
proportion to the net amount received by such seller from the sale of Registrable Shares pursuant
to such registration statement, and, provided, further, that such liability will be
limited to, the net amount received by such seller from the sale of Registrable Shares pursuant to
such registration statement; provided, however, that such seller of Registrable
Shares shall not be liable in any such case to the extent that prior to the filing of any such
registration statement or prospectus or amendment thereof or supplement thereto, such seller has
furnished in writing to the Company information expressly for use in such registration statement or
prospectus or any amendment thereof or supplement thereto which corrected or made not misleading
information previously furnished to the Company.




          (c) Any Person entitled to indemnification hereunder will (i) give prompt written notice to
the indemnifying party of any claim with respect to which it seeks indemnification (provided that
the failure to give such notice shall not limit the rights of such Person) and (ii) unless in such
indemnified party’s reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume
the defense of such claim with counsel reasonably satisfactory to the indemnified party;
provided, however, that any person entitled to indemnification hereunder shall have
the right to employ separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such person unless (A) the indemnifying
party has agreed to pay such fees or expenses or (B) the indemnifying party shall have failed to
assume the defense of such claim and employ counsel reasonably satisfactory to such person. If
such defense is not assumed by the indemnifying party as permitted hereunder, the indemnifying
party will not be subject to any liability for any settlement made by the indemnified party without
its consent (but such consent will not be unreasonably withheld). If such defense is assumed by
the indemnifying party pursuant to the provisions hereof, such indemnifying party shall not settle
or otherwise compromise the applicable claim unless (i) such settlement or compromise contains a
full and unconditional release of the indemnified party from all liabilities (in equity or in law)
arising out of such






18









 







applicable claim, (ii) such settlement does not include a statement as to an admission of
fault, culpability or a failure to act by or on behalf of any indemnified party, (iii) such
settlement does not include an injunction or similar limitation on any activities of any
indemnified party or (iv) the indemnified party otherwise consents in writing. An indemnifying
party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated
to pay the fees and expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified
party, a conflict of interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim, in which event the indemnifying party shall be
obligated to pay the reasonable fees and disbursements of such additional counsel or counsels.




          (d) Each party hereto agrees that, if for any reason the indemnification provisions
contemplated by Section 2.9(a) or Section 2.9(b) are unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, claims, damages, liabilities or expenses
(or actions in respect thereof) referred to therein, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of such losses, claims,
liabilities or expenses (or actions in respect thereof) in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and the indemnified party in connection with
the actions which resulted in the losses, claims, damages, liabilities or expenses as well as any
other relevant equitable considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by such indemnifying party or indemnified party, and the
parties’ relative intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 2.9(d) were determined by pro rata allocation (even if the
Holders or any underwriters or all of them were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable considerations referred to
in this Section 2.9(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or expenses (or actions in respect thereof) referred to above
shall be deemed to include any legal or other fees or expenses reasonably incurred by such
indemnified party in connection with investigating or, except as provided in Section 2.9(c),
defending any such action or claim. Notwithstanding the provisions of this Section 2.9(d), no
Holder shall be required to contribute an amount greater than the dollar amount by which the net
proceeds received by such Holder with respect to the sale of any Registrable Shares exceeds the
amount of damages which such Holder has otherwise been required to pay by reason of any and all
untrue or alleged untrue statements of material fact or omissions or alleged omissions of material
fact made in any registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto related to such sale of Registrable Shares. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
The Holders’ obligations in this Section 2.9(d) to contribute shall be several in proportion to the
amount of Registrable Shares registered by them and not joint.




          If indemnification is available under this Section 2.9, the indemnifying parties shall
indemnify each indemnified party to the full extent provided in Section 2.9(a) and Section 2.9(b)
without regard to the relative fault of said indemnifying party or indemnified party or any






19









 







other equitable consideration provided for in this Section 2.9(d) subject, in the case of the
Holders, to the limited dollar amounts set forth in Section 2.9(b).




          (e) The indemnification and contribution provided for under this Agreement will remain in full
force and effect regardless of any investigation made by or on behalf of the indemnified party or
any officer, director or controlling Person of such indemnified party and will survive the transfer
of securities.




          (f) The Company shall also provide indemnification and contribution to any underwriters of the
Registrable Shares, their officers, directors, and employees and each Person who controls such
underwriters (within the meaning of Section 15 of the Securities Act) to the same extent as
provided above with respect to the indemnification of Seller Affiliates. The Company shall confirm
such obligation to such underwriter and such other persons in writing promptly upon request by any
Holder.




          Section 2.10. Transfer of Registration Rights. The rights and obligations of each Holder
under this Agreement may be assigned to any Person that directly acquires securities from an
Holder, but only if (a) such securities acquired by such Person shall continue to constitute
Registrable Shares, following the consummation of such transaction; (b) the respective Holder
agrees in writing with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company concurrent with such transfer or assignment and (c)
concurrent with such transfer or assignment, such transferee or assignee furnishes the Company with
written notice of the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being transferred or assigned, and the transferee or
assignee agrees in writing with the Company to be bound by all the provisions and obligations
contained herein as a Holder hereunder (any such Person to which Registrable Shares are transferred
in accordance with this Section 2.10, an “Additional Holder”); provided that the
indemnification and contribution obligations of a Holder under Section 2.9 hereof with respect to
any sales of other Registrable Shares occurring for the account of such Holder prior to such
transfer or assignment shall not be affected by any such transfer or assignment.




          Section 2.11. Preservation of Rights. The Company will not (a) grant any registration rights
to third parties which are inconsistent with the rights granted hereunder or (b) enter into any
agreement, take any action, or permit any change to occur, with respect to its securities that
violates the rights expressly granted to the Holders in this Agreement.




ARTICLE III




TERMINATION



          The rights and obligations of any specific Holder, and of the Company as to such specific
Holder, under this Agreement shall terminate, if earlier, on the date on which such Holder ceases
to beneficially own any securities that constitute Registrable Shares except with respect to any
rights and obligations relating to any registration of securities that was consummated at or prior
to the time of such termination. Notwithstanding the foregoing, all liabilities or obligations
under Section 2.9 and ARTICLE IV shall remain in effect in accordance with the terms of such
provisions.







20









 








ARTICLE IV




MISCELLANEOUS



          Section 4.1. Notices. Any notice, request, instruction, consent, document or other
communication required or permitted to be given under this Agreement shall be in writing and shall
be deemed to have been sufficiently given or served for all purposes (a) upon delivery when
personally delivered; (b) on the later of the scheduled delivery date or the first business day
following such delivery date (if scheduled for delivery on a day that is not a business day) after
having been sent by a nationally or internationally recognized overnight courier service (charges
prepaid); (c) at the time received when sent by registered or certified mail, return receipt
requested, postage prepaid; or (d) at the time when confirmation of successful transmission is
received (or the first business day following such receipt if the date of such receipt is not a
business day) if sent by facsimile, in each case, to the recipient at the address or facsimile
number, as applicable, indicated below:




          If to the Company:



Nortek, Inc.

50 Kennedy Plaza, Suite 1900

Providence, Rhode Island 02903

Attention: General Counsel

Telephone: (401) 751-1600

Facsimile: (401) 751-4610



with a copy to:

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, New York 10153

Attention: Simeon Gold, Esq.

Telephone: (212) 310-8000

Facsimile: (212) 310-8007



with a copy to:

Ropes & Gray LLP

1 International Place

Boston, Massachusetts 01880

Attention: John Ayer, Esq.

Telephone: (617) 951-7937

Facsimile: (617) 235-0240




          If to a Holder, at its address listed on the signature page hereof



with a copy to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019






21









 







Attention: Andrew N. Rosenberg

                Raphael M. Russo

Telephone: (212) 373-3000

Facsimile: (212) 757-3990



provided, however, if any party shall have designated a different addressee and/or
contact information by notice in accordance with this Section 4.1, then to the last addressee as so
designated.




          Section 4.2. Authority. Each of the parties hereto represents to the other that (a) it has
the corporate or other organizational power and authority to execute, deliver and perform this
Agreement, (b) the execution, delivery and performance of this Agreement by it has been duly
authorized by all necessary corporate or organizational action and no such further action is
required, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement
is a legal, valid and binding obligation, enforceable against it in accordance with its terms
subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors’ rights generally and general equity principles.




          Section 4.3. No Third Party Beneficiaries. This Agreement shall be for the sole and exclusive
benefit of (a) the Company and its successors and permitted assigns, (b) each Holder (including any
trustee thereof) and (c) each of the Persons entitled to indemnification under Section 2.9 hereof.
Nothing in this Agreement shall be construed to give any other Person any legal or equitable right,
remedy or claim under this Agreement.




          Section 4.4. Cooperation. Each party hereto shall take such further action, and execute such
additional documents, as may be reasonably requested by any other party hereto in order to carry
out the purposes of this Agreement.




          Section 4.5. GOVERNING LAW; FORUM SELECTION. THIS AGREEMENT, THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT, AND ANY CLAIM OR CONTROVERSY DIRECTLY OR INDIRECTLY BASED UPON OR
ARISING OUT OF THIS AGREEMENT (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY), INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, SHALL IN ALL RESPECTS BE GOVERNED BY AND
INTERPRETED, CONSTRUED AND DETERMINED EXCLUSIVELY IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF DELAWARE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW THAT WOULD REQUIRE THE APPLICATION OF
THE LAW OF ANY OTHER JURISDICTION. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO
SUBMIT TO THE EXCLUSIVE JURISDICTION OF SITTING IN THE CITY OF WILMINGTON, DELAWARE, OR THE
DELAWARE STATE COURT SITTING IN THE CITY OF WILMINGTON, DELAWARE, AND ANY APPELLATE COURT
THEREFROM, FOR THE RESOLUTION OF ANY AND ALL DISPUTES, CONTROVERSIES, CONFLICTS, LITIGATION OR
ACTIONS ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE SUBJECT MATTER HEREOF AND AGREES NOT
TO COMMENCE ANY LITIGATION OR ACTIONS ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE SUBJECT
MATTER HEREOF IN ANY OTHER COURT.







22









 








          Section 4.6. WAIVER OF JURY TRIAL. EACH PARTY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY
DISPUTE IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR ANY MATTERS DESCRIBED OR CONTEMPLATED
HEREIN, AND AGREES TO TAKE ANY AND ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH WAIVER.




          Section 4.7. Successors and Assigns. Except as otherwise expressly provided herein, including
pursuant to Section 2.10, neither this Agreement nor any of the rights, interests or obligations
provided by this Agreement may be assigned by any party (whether by operation of law or otherwise)
without the prior written consent of the other parties, and any such assignment without such prior
written consent shall be null and void.




          Section 4.8. Entire Agreement. This Agreement (together with the Annex) contains the final,
exclusive and entire agreement and understanding of the parties with respect to the subject matter
hereof and thereof and supersedes all prior and contemporaneous agreements and understandings,
whether written or oral, among the parties with respect to the subject matter hereof and thereof.
This Agreement shall not be deemed to contain or imply any restriction, covenant, representation,
warranty, agreement or undertaking of any party with respect to the transactions contemplated
hereby or thereby other than those expressly set forth herein or therein, and none shall be deemed
to exist or be inferred with respect to the subject matter hereof.




          Section 4.9. Severability. Whenever possible, each term and provision of this Agreement will
be interpreted in such manner as to be effective and valid under law. If any term or provision of
this Agreement, or the application thereof to any Person or any circumstance, is held to be
illegal, invalid or unenforceable, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be legal, valid and enforceable, the intent and
purpose of such illegal, invalid or unenforceable provision and (b) the remainder of this Agreement
or such term or provision and the application of such term or provision to other Persons or
circumstances shall remain in full force and effect and shall not be affected by such illegality,
invalidity or unenforceability, nor shall such invalidity or unenforceability affect the legality,
validity or enforceability of such term or provision, or the application thereof, in any
jurisdiction.




          Section 4.10. Enforcement of this Agreement. The parties agree that irreparable damage would
occur in the event that any provision of this Agreement were not performed in accordance with its
specific terms or were otherwise breached. It is accordingly agreed that the parties shall,
without the posting of a bond, be entitled, subject to a determination by a court of competent
jurisdiction, to an injunction or injunctions to prevent any such failure of performance under, or
breaches of, this Agreement, and to enforce specifically the terms and provisions hereof and
thereof, this being in addition to all other remedies available at law or in equity, and each party
agrees that it will not oppose the granting of such relief on the basis that the requesting party
has an adequate remedy at law.




          Section 4.11. Amendment. This Agreement may not be amended, modified or supplemented except
upon the execution and delivery of a written agreement executed by a duly






23









 







authorized representative or officer of the Company and any and each of the Holders of
Registrable Shares who owns more than 10% of all Registrable Shares.




          Section 4.12. Headings. The descriptive headings of the Articles, Sections and paragraphs of,
and the Annex to, this Agreement are included for convenience only, do not constitute a part of
this Agreement and shall not be deemed to limit, modify or affect any of the provisions hereof.




          Section 4.13. Counterparts; Facsimiles. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which taken together shall
constitute one and the same Agreement. All signatures of the parties may be transmitted by
facsimile or electronic delivery, and each such facsimile signature or electronic delivery
signature (including a pdf signature) will, for all purposes, be deemed to be the original
signature of the party whose signature it reproduces and be binding upon such party.




          Section 4.14. Time Periods. Unless otherwise specified in this Agreement, an action required
under this Agreement to be taken within a certain number of days shall be taken within that number
of calendar days (and not business days); provided, however, that if the last day
for taking such action falls on a day that is not a business day, the period during which such
action may be taken shall be automatically extended to the next business day.




          Section 4.15. Availability of Rule 144 and Other Exemptions Under the Securities Acts. The
availability of the registration rights provided hereby shall not limit the ability of any Holder
to rely upon any other available exemption under the Securities Act with respect to the disposition
of any Registrable Shares. The Company covenants that it shall (a) file any reports required to be
filed by it under the Exchange Act and (b) take such further action as each Holder may reasonably
request (including providing any information necessary to comply with Rule 144 promulgated under
the Securities Act), all to the extent required from time to time to enable such Holder to sell
Registrable Shares without registration under the Securities Act within the limitation of the
exemptions provided by (i) Rule 144 promulgated under the Securities Act, as such rule may be
amended from time to time, or Regulation S promulgated under the Securities Act or (ii) any similar
rules or regulations hereafter adopted by the Commission. The Company shall, upon the request of
any Holder, deliver to such Holder a written statement as to whether it has complied with such
requirements.




[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]








24









 








     IN WITNESS WHEREOF, the parties hereto, being duly authorized, have executed and delivered
this Registration Rights Agreement on the date first above written



	 	 	 	 	 
	 	NORTEK, INC.

 	 
	 	By:  	/s/  Kevin W. Donnelly
 	 
	 	 	Name:  	Kevin W. Donnelly 	 
	 	 	Title:  	Vice President, General Counsel and Secretary 	 



Signature
Page to Nortek Registration Rights Agreement

 









 







	 	 	 	 	 
	 	ARES CORPORATE OPPORTUNITIES FUND II, L.P.




By: ACOF Operating Manager II, L.P., its
manager

 	 
	 	By:  	/s/  Bennett Rosenthal
 	 
	 	 	Name:  	Bennett Rosenthal 	 
	 	 	Title:  	Senior Partner 	 
	 
	 	Address:

            2000 Avenue of the Stars 12th Floor

             Los Angeles, CA 90067

             Attn: Bennett Rosenthal

Tel:   (310) 201-4100

Fax:   (310) 201-4157

 	 
	 	 	 
	 	 	 
	 	 	 
	 
	 	ARES CORPORATE OPPORTUNITIES FUND III, L.P.







By: ACOF Operating Manager III, LLC, its
manager

 	 
	 	By:  	/s/  Bennett Rosenthal
 	 
	 	 	Name:  	Bennett Rosenthal 	 
	 	 	Title:  	Senior Partner 	 
	 
	 	Address:

             2000 Avenue of the Stars 12th Floor

             Los Angeles, CA 90067

             Attn: Bennett Rosenthal

Tel:  (310) 201-4100

Fax:  (310) 201-4157

 	 
	 	 	 
	 	 	 
	 	 	 


Signature
Page to Nortek Registration Rights Agreement


 









 






	 	 	 	 	 



Annex I




	 	 	 
	Holder	 	Number of Shares of Common Stock
	Ares Corporate Opportunities Fund II, L.P.
	 	2,184,081
	Ares Corporate Opportunities Fund III, L.P.
	 	2,490,727
	 
	 	 
	Total:
	 	4,674,808