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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is entered into as
of March 12, 1999 by and between PARADIGM GEOPHYSICAL LTD., an Israeli company
(the "Company"), and JERUSALEM VENTURE PARTNERS L.P., a Delaware limited
partnership and JERUSALEM VENTURE PARTNERS (ISRAEL) L.P., an Israeli limited
partnership (collectively, the "Holder"). Capitalized terms not defined herein
shall have the meanings assigned to such terms in the Purchase Agreement (as
defined below).
R E C I T A L S:
Pursuant to the terms and subject to the conditions of that certain
Share Purchase Agreement dated as of the date hereof (the "Purchase Agreement")
between the Company and the Holder, in its capacity as an investor thereunder,
the execution and delivery of this Agreement is a condition to the purchase and
sale by the Holder of certain Ordinary Shares (NIS 0.5 par value) (the "Ordinary
Shares").
A G R E E M E N T:
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Approved Underwriter" shall have the meaning set forth in
Section 2.
"Closing Date" shall mean the Closing Date as defined in the
Purchase Agreement.
"Demand Registration" shall have the meaning set forth in
Section 2.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
"Form F-3" shall mean Form F-3 under the Securities Act as in
effect on the date hereof or any successor registration form under the
Securities Act subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.
"Form F-3 Registration" shall have the meaning set forth in
Section 4.
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"Incidental Registration" shall have the meaning set forth in
Section 3.
"Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such Prospectus.
"Register", "registered" and "registration" shall mean and
refer to a registration effected by preparing and filing a Registration
Statement and taking all other actions that are necessary or appropriate in
connection therewith, and the declaration or ordering of effectiveness of such
Registration Statement by the SEC.
"Registration Expenses" shall have the meaning set forth in
Section 8.
"Registrable Securities" shall mean all Ordinary Shares held
by the Holder as of the date hereof or subsequently transferred to a permitted
transferee under Section 16 hereof, provided that such term shall not include
any such Ordinary Shares sold to the public by the Holder pursuant to a
Registration Statement under the Securities Act or sold by the Holder in a
private transaction in which Holder's rights hereunder were not assigned to the
purchasers thereof.
"Registration Statement" shall mean any registration statement
of the Company in compliance with the Securities Act that covers Registrable
Securities pursuant to the provisions of this Agreement, including, without
limitation, the Prospectus, all amendments and supplements to such Registration
Statement, including all post-effective amendments, all exhibits and all
material incorporated by reference in such Registration Statement.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
"SEC" shall mean the Securities and Exchange Commission.
"Underwritten registration" or "underwritten offering" shall
mean a registration in which securities of the Company are sold to an
underwriter or through an underwriter as agent for reoffering to the public.
2. Demand Registration.
(a) Request for Demand Registration. At any time after the
first anniversary of the Closing Date, the Holder shall be entitled to request
in writing that the Company use its best efforts to effect the registration
under the Securities Act, and under the securities or "blue sky" laws of any
jurisdiction designated by Holder, of Registrable Securities comprising at least
350,000 Ordinary Shares (including Registrable Securities as to which other
holders of Registrable Securities are also seeking registration pursuant to such
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request) in accordance with this Section 2 (each, a "Demand Registration"). Any
such request for a Demand Registration shall specify the amount of Registrable
Securities proposed to be sold and the intended method of disposition thereof.
Upon receiving a request for a Demand Registration, the Company will, as
provided in this Section 2, use its best efforts to effect the registration
under the Securities Act of the Registrable Securities which the Company has
been so requested by the Holder to register.
(b) Limitation on Demand Registrations. Notwithstanding
anything to the contrary set forth in Section 2(a) but subject to Section 8, the
Company shall not be obligated to file a Registration Statement with respect to
more than one (1) a Demand Registration upon a request by the Holder under
Section 2(a).
(c) Effective Demand Registration. A registration shall not
constitute a Demand Registration until the Registration Statement has become
effective and remains continuously effective for the lesser of (i) the period
during which all Registrable Securities registered in the Demand Registration
are sold and (ii) 180 days; provided, however, that a registration shall not
constitute a Demand Registration if (x) after such Demand Registration has
become effective, such registration or the related offer, sale or distribution
of Registrable Securities thereunder is interfered with by any stop order,
injunction or other order or requirement of the Commission or other governmental
agency or court for any reason not attributable to the Holder and such
interference is not thereafter eliminated or (y) the conditions to closing
specified in the underwriting agreement, if any, entered into in connection with
such Demand Registration are not satisfied or waived, other than by reason of a
failure by the Holder.
(d) Underwriting Procedures. If the Holder so elects, the
offering of Registrable Securities pursuant to a Demand Registration shall be in
the form of a firm commitment underwritten offering and the managing underwriter
or underwriters selected for such offering shall be the Approved Underwriter (as
hereinafter defined) selected in accordance with Section 2(e). With respect to
any firm commitment underwritten offering, the Company shall enter into a
reasonable and customary underwriting agreement with the Approved Underwriter.
If the Approved Underwriter advises the Company in writing that in its opinion
the aggregate amount of Ordinary Shares requested to be included in such
offering is sufficiently large to have a material adverse effect on the success
of such offering, then the Company shall include in such registration only the
aggregate amount of Ordinary Shares that in the opinion of the Approved
Underwriter may be sold without any such material adverse effect and shall
allocate the amount of the Ordinary Shares to be included in such registration
as follows: (i) first, the Holder shall be permitted to include all Registrable
Securities to be registered thereby; and (ii) second, the Company and any other
shareholder exercising piggyback registration rights shall be allowed to include
such amount of Ordinary Shares as the Approved Underwriter deems appropriate;
provided, however, that the amount of Ordinary Shares to be sold by the Company
and any other shareholders under clause (ii) and intended to be included in such
offering shall be reduced in its entirety prior to any reduction of the number
of Holder's Registrable Securities.
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(e) Selection of Underwriters. If any Demand Registration is
in the form of an underwritten offering, the Holder shall select and obtain one
or more investment banking firms of national reputation to act as the managing
underwriters of the offering (collectively, the "Approved Underwriter");
provided, however, that the Approved Underwriter shall, in any case, be
acceptable to the Company in its reasonable judgment.
3. Incidental Registration. If the Company shall determine to
register any Ordinary Shares, or any securities convertible into or exchangeable
or exercisable for Ordinary Shares, for its own account or for the account of
any stockholder (other than a registration on Forms F-4, or F-8 or any
replacement or successor form thereof), the Holder shall be entitled to include
Registrable Securities in such registration (and related underwritten offering,
if any) (each, an "Incidental Registration") on the following terms and
conditions:
(a) The Company shall promptly give written notice of such
determination to Holder, and Holder shall have the right to request, by written
notice given to the Company within thirty (30) days of the receipt by Holder of
such notice of determination, that a specific number of Registrable Securities
held by Holder be included in such Registration Statement;
(b) If the proposed registration relates to an underwritten
offering, the notice called for by Section 3(a) shall specify the name of the
managing underwriter for such offering and the number of securities to be
registered for the account of the Company and for the account of any other
stockholder of the Company;
(c) If the proposed registration relates to an underwritten
offering, Holder must (i) sell all or a portion of its Registrable Securities on
the same basis provided in the underwriting arrangements approved by the Company
and (ii) complete and execute all questionnaires, powers of attorney,
indemnities (but only to the extent such indemnities relate specifically to
information supplied by Holder), hold-back agreements, underwriting agreements
and other documents on the same basis as other similarly situated selling
shareholders (or, if there are no other selling shareholders, as would be
customary in a transaction of this type) required under the terms of such
underwriting arrangements or by the SEC;
(d) If the managing underwriter for the underwritten offering
under the proposed registration to be made by the Company determines that
inclusion of all or any portion of the Registrable Securities in such offering
would adversely affect the ability of the underwriter for such offering to sell
all of the securities requested to be included for sale or the price per share
in such offering, the number of shares that may be included in such registration
in such offering shall be allocated as follows: (i) first, the Company or the
selling shareholder exercising demand registration rights, as the case may be,
shall be permitted to include all Ordinary Shares to be registered thereby; and
(ii) second, the Holder and any other selling shareholder exercising piggyback
registration rights shall be allowed to include such amount of Registrable
Securities as the managing underwriter(s) deems appropriate (on a pro rata basis
with one another but only to the extent that such pro rata basis applies to the
number of Ordinary Shares still retained at the time of such cutback);
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(e) Holder shall have the right to withdraw its Registrable
Securities from the Registration Statement at any time prior to the effective
date thereof, but if the same relates to an underwritten offering, it may only
do so after the initial filing thereof during the time period and on terms
deemed appropriate by the underwriters for such underwritten offering; and
(f) The Company or any other shareholder exercising demand
registration rights shall have the right to terminate or withdraw any
registration statement filing under this Section 3 prior to the effective date
of such registration for any reason without liability to Holder as a result
thereof, whether or not Holder has elected to include such securities in such
registration.
4. Form F-3 Registration.
(a) At any time after the first anniversary of the Closing
Date, Holder shall, subject to the provisions of this Section 4, be entitled to
request that the Company effect a registration of Holder's Registrable
Securities comprising at least 150,000 Ordinary Shares on Form F-3 as shall be
specified in such request (a "Form F-3 Registration").
(b) As soon as practicable after receipt of any written
request pursuant to Section 4(a), the Company shall file a Form F-3 Registration
Statement covering the Registrable Securities and shall effect such registration
as would permit or facilitate the sale and distribution of all or such portion
of Holder's Registrable Securities as are specified in such request.
(c) At all times during which the Company is subject to the
reporting requirements of the Exchange Act, the Company shall use its best
efforts to make registrations on Form F-3 available for the sale of Registrable
Securities.
(d) If the Holder so elects, the offering of Registrable
Securities pursuant to a Form F-3 Registration shall involve a managing
underwriter or underwriters selected for such offering by the Holder; provided,
however, that such managing underwriter shall be acceptable to the Company in
its reasonable judgment. If the managing underwriter advises the Company in
writing that in its opinion the aggregate amount of Ordinary Shares requested to
be included in such offering is sufficiently large to have a material adverse
effect on the success of such offering, then the Company shall include in such
registration only the aggregate amount of Ordinary Shares that in the opinion of
the managing underwriter may be sold without any such material adverse effect
and shall allocate the amount of the Ordinary Shares to be included in such
registration as follows: (i) first, the Holder shall be permitted to include all
Registrable Securities to be registered thereby; and (ii) second, the Company
and any other shareholder exercising piggyback registration rights shall be
allowed to include such amount of Ordinary Shares as the managing underwriter
deems appropriate; provided, however, that, the amount of Ordinary Shares to be
sold by the Company and any other
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shareholders under clause (ii) and intended to be included in such offering
shall be reduced in its entirety prior to any reduction of the number of
Holder's Registrable Securities.
(e) Holder shall have the right to withdraw its Registrable
Securities from the Registration Statement at any time prior to the effective
date thereof, but if the same relates to an underwritten offering, it may only
do so after the initial filing thereof during the time period and on terms
deemed appropriate by the underwriters for such underwritten offering.
(f) Notwithstanding anything to the contrary in Section 4(a)
but subject to Section 8, the Company shall not be obligated to file a
Registration Statement with respect to a Form F-3 Registration upon a request by
the Holder under Section 4(a), if the Company has paid the Registration Expenses
for one Form F-3 Registrations in accordance with Section 8.
5. Blockage Periods. Notwithstanding any other provision of this
Agreement, the Company shall not be obligated to file any Registration Statement
under Section 2 or Section 4 at any time that the Company's Board of Directors
determines in good faith, as certified to the Holder in writing by the Company's
President or Chief Executive Officer, that the filing of such a Registration
Statement would be seriously detrimental to the Company. The Company may decline
to file any Registration Statement for this reason only once in any 12-month
period and only for a maximum period of 180 days at any one time.
6. Restrictions on Public Sale by Holder of Registrable
Securities. If Registrable Securities are included (in whole or in part) in a
Registration Statement filed by the Company under Sections 2 through 4 for sale
in an underwritten offering, Holder agrees, if requested by the managing
underwriter(s) of such offering, not to sell, make any short sale of, loan,
grant any option for the purchase of, dispose of or effect any public sale or
distribution of securities of the same series and class as (or securities
exchangeable or exercisable for or convertible into securities of the same
series and class as) the Registrable Securities included in the Registration
Statement, including a sale pursuant to Rule 144 under the Securities Act
(except as part of such underwritten registration), during the five (5) day
period prior to, and during the one hundred twenty (120) day period (or shorter
period requested by the managing underwriter(s)) beginning on the closing date
of such underwritten offering, to the extent timely notified in writing by the
Company or the managing underwriter(s).
7. Registration Procedures. In connection with the Company's
registration obligations pursuant to Sections 2 through 4 hereof, the Company
will use its best efforts to effect such registration to permit the sale of the
Registrable Securities covered thereby in accordance with the intended method or
methods of disposition thereof, and pursuant thereto the Company will act as
expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement
with respect to such Registrable Securities and use its best efforts to cause
such Registration Statement to become effective, and, upon the request of
Holder, keep such registration statement effective for up to one hundred eighty
(180) days, provided that, before filing any Registration
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Statement or Prospectus or any amendments or supplements thereto, the Company
will furnish to Holder and its counsel, copies of all such documents proposed to
be filed at least five (5) days prior thereto, and the Company will not file any
such Registration Statement or amendment thereto or any Prospectus or any
supplement thereto to which Holder shall reasonably object within such five (5)
day period, provided, further, that the Company will not name or otherwise
provide any information with respect to Holder in any Registration Statement or
Prospectus without the express written consent of Holder, unless required to do
so by the Securities Act and the rules and regulations thereunder;
(b) prepare and file with the SEC such amendments,
post-effective amendments and supplements to the Registration Statement and the
Prospectus as may be necessary to comply with the provisions of the Securities
Act and the rules and regulations thereunder with respect to the disposition of
all securities covered by such Registration Statement;
(c) promptly notify the Holder (i) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus or for additional
information, (iii) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose, (iv) if at any time the representations and warranties of the
Company contemplated by the Purchase Agreement cease to be true and correct, (v)
of the receipt by the Company of any notification with respect to the suspension
of the qualification of the Registrable Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose and (vi) of
the happening of any event which makes any statement made in the Registration
Statement, the Prospectus or any document incorporated therein by reference
untrue or which requires the making of any changes in the Registration
Statement, the Prospectus or any document incorporated therein by reference in
order to make the statements therein not misleading;
(d) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the Registration Statement at the
earliest possible moment;
(e) furnish to Holder, without charge, at least one signed
copy of the Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, all documents incorporated therein
by reference and all exhibits (including those incorporated by reference);
(f) deliver to Holder, without charge, such reasonable number
of conformed copies of the Registration Statement (and any post-effective
amendment thereto) and such number of copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto (and any
documents incorporated by reference therein) as Holder may reasonably request,
all in full conformity with the Securities Act; the Company consents to the use
of the Prospectus or any amendment or supplement thereto by the Holder
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in connection with the offer and sale of the Registrable Securities covered by
the Prospectus or any amendment or supplement thereto;
(g) prior to any offering of Registrable Securities covered by
a Registration Statement, register or qualify or cooperate with Holder in
connection with the registration or qualification of such Registrable Securities
for offer and sale under the securities or blue sky laws of such jurisdictions
as Holder reasonably requests, and use its best efforts to keep each such
registration or qualification effective, including through new filings, or
amendments or renewals, during the period such Registration Statement is
required to be kept effective pursuant to the terms of this Agreement; and do
any and all other acts or things necessary or advisable to enable the
disposition in all such jurisdictions reasonably requested by Holder, provided
that under no circumstances shall the Company be required in connection
therewith or as a condition thereof to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions;
(h) cooperate with Holder and the managing underwriter or
underwriters to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold, free of any and all restrictive
legends, such certificates to be in such denominations and registered in such
names as the managing underwriter or underwriters, if any, or Holder may
request;
(i) upon the occurrence of any event contemplated by Section
7(c)(vi) above, prepare a supplement or post-effective amendment to the
Registration Statement or the Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities, the Prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading;
(j) make generally available to the holders of the Company's
outstanding securities earnings statements satisfying the provisions of Section
ll(a) of the Securities Act, no later than sixty (60) days after the end of any
twelve (12) month period (or ninety (90) days, if such period is a fiscal year)
(i) commencing at the end of any fiscal quarter in which Registrable Securities
are sold to underwriters in a firm or best efforts underwritten offering, or, if
not sold to underwriters in such an offering, (ii) beginning with the first
month of the Company's first fiscal quarter commencing after the effective date
of the Registration Statement, which statements shall cover said twelve (12)
month period;
(k) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by each Registration Statement
from and after a date not later than the effective date of such Registration
Statement;
(l) use its best efforts to cause all Registrable Securities
covered by each Registration Statement to be listed, subject to notice of
issuance, prior to the date of the first sale of such Registrable Securities
pursuant to such Registration Statement, on each securities exchange on which
the Ordinary Shares issued by the Company is then listed, and admitted to
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trading on the Nasdaq Stock Market, if the Ordinary Shares are then admitted to
trading on the Nasdaq Stock Market; and
(m) enter into such agreements (including underwriting
agreements in customary form containing, among other things, reasonable and
customary indemnities) and take such other actions as Holder shall reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities.
(n) furnish, at the request of Holder, on the date that
Registrable Securities are delivered to an underwriter for sale in connection
with an underwritten registration, or, in connection with any other
registration, on the date that the registration statement with respect to such
registration becomes effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purpose of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to Holder, and (ii) a
letter dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to Holder, subject to Holder providing
information reasonably requested by such independent certified public
accountants to comply with the rules governing delivery of such letters.
Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 7(c)(vi)
hereof, Holder will forthwith discontinue disposition of Registrable Securities
under the Prospectus related to the applicable Registration Statement until
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 7(i) hereof, or until it is advised in writing by the
Company that the use of the Prospectus may be resumed. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to this
Section 7 with respect to the Registrable Securities of Holder that Holder shall
furnish to the Company such information regarding itself and the Registrable
Securities held by it as shall be required by the Securities Act to effect the
registration of Holder's Registrable Securities.
8. Registration Expenses. All expenses incident to any registration to
be effected hereunder (whether or not the Registration Statement is filed or
declared effective) and incident to the Company's performance of or compliance
with this Agreement, including without limitation all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, National Association of Securities
Dealers, Inc., stock exchange and qualification fees, fees and disbursements of
the Company's counsel and of independent certified public accountants of the
Company (including the expenses of any special audit required by or incident to
such performance), the fees of one counsel representing Holder in such offering,
expenses of the underwriters that are customarily requested in similar
circumstances by such underwriters (excluding discounts, commissions or fees of
underwriters, selling brokers, dealer managers or similar securities industry
professionals relating to the distribution of the Registrable Securities), all
such expenses being herein called "Registration Expenses," will be borne by the
Company. The Company will also pay its internal
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expenses, the expense of any annual audit and the fees and expenses of any
person retained by the Company. Notwithstanding the foregoing but subject to
Section 12, the Company will not be obligated to pay Registration Expenses for
more than two Demand Registrations effected pursuant to Section 2 of this
Agreement or for more than one Form F-3 Registration effected pursuant to
Section 4 of this Agreement. Registration Expenses incurred in connection with
Registration Statements requested under Section 2 or Section 4 that are not
filed or declared effective by the SEC will be paid by the Company and will not
count against such limit; provided, however, if such Registration Statement not
being filed or declared effective is the result of the actions of Holder, then
Holder shall bear the Registration Expenses of such Demand Registration or such
Form F-3 Registration, as the case may be, in which case such registration shall
not be counted as a Demand Registration under Section 2 or a Form F-3
Registration under Section 4, as the case may be. In the event that Holder bears
the Registration Expenses (and underwriting discounts and commissions and
transfer taxes, if any) in connection with any Demand Registration requested
under Section 2 or Form F-3 Registration under Section 4, such Registration
Expenses shall be apportioned among the holders whose Ordinary Shares are then
being registered, on the basis of the respective amounts (by number of Ordinary
Shares) then being registered by them or on their behalf.
9. Indemnification.
(a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless Holder, its officers, directors, partners and
employees and each person who controls Holder (within the meaning of Section 15
of the Securities Act) from and against any and all losses, claims, damages and
liabilities (including any investigation, legal or other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted) (collectively, "Damages") to which
Holder may become subject under the Securities Act, the Exchange Act or other
federal or state securities law or regulation, at common law or otherwise,
insofar as such Damages arise out of or are based upon (i) any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement, Prospectus or preliminary prospectus or any amendment or supplement
thereto, (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading and (iii)
any violation or alleged violation by the Company of the Securities Act, the
Exchange Act or any state securities or blue sky laws in connection with the
Registration Statement, Prospectus or preliminary prospectus or any amendment or
supplement thereto, provided that the Company will not be liable to Holder to
the extent that such Damages arise from or are based upon any untrue statement
or omission (x) based upon written information furnished to the Company by
Holder expressly for the inclusion in such Registration Statement, (y) made in
any preliminary prospectus if Holder failed to deliver a copy of the Prospectus
with or prior to the delivery of written confirmation of the sale by Holder to
the party asserting the claim underlying such Damages and such Prospectus would
have corrected such untrue statement or omission and (z) made in any Prospectus
if such untrue statement or omission was corrected in an amendment or
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supplement to such Prospectus and Holder failed to deliver such amendment or
supplement prior to or concurrently with the sale of Registrable Securities to
the party asserting the claim underlying such Damages.
(b) Indemnification by Holder of Registrable Securities. If
Registrable Securities are sold under a Prospectus which is a part of a
Registration Statement, Holder agrees to indemnify and hold harmless the
Company, its directors and each officer who signed such Registration Statement
and each person who controls the Company (within the meaning of Section 15 of
the Securities Act) under the same circumstances as the foregoing indemnity from
the Company to Holder to the extent that such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue statement of a
material fact or omission of a material fact that was made in the Prospectus,
the Registration Statement, or any amendment or supplement thereto, in reliance
upon and in conformity with information relating to Holder furnished in writing
to the Company by Holder expressly for use therein, provided that in no event
shall the aggregate liability of Holder exceed the amount of the net proceeds
received by Holder upon the sale of the Registrable Securities giving rise to
such indemnification obligation. The Company and Holder shall be entitled to
receive indemnities from underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the distribution, to
the same extent as customarily furnished by such persons in similar
circumstances.
(c) Conduct of Indemnification Proceedings. Any person
entitled to indemnification hereunder will (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) 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 and not
of the indemnifying party unless (A) the indemnifying party has agreed to pay
such fees or expenses, (B) the indemnifying party shall have failed to assume
the defense of such claim and employ counsel reasonably satisfactory to such
person or (C) in the reasonable judgment of such person and the indemnifying
party, based upon advice of their respective counsel, a conflict of interest may
exist between such person and the indemnifying party with respect to such claims
(in which case, if the person notifies the indemnifying party in writing that
such person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such person). If such defense is not assumed by the
indemnifying party, the indemnifying party will not be subject to any liability
for any settlement made without its consent (but such consent will not be
unreasonably withheld). No indemnified party will be required to consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by all claimants or plaintiffs to such
indemnified party of a release from all liability in respect to such claim or
litigation. Any 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. As used in this Section 9(c), the terms
"indemnifying party", "indemnified party" and other terms of similar import are
intended to include only the Company (and its officers,
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directors and control persons as set forth above) on the one hand, and Holder
(and its officers, directors, partners, employees, attorneys and control persons
as set forth above) on the other hand, as applicable.
(d) Contribution. If for any reason the foregoing indemnity is
unavailable, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, in such proportion as
is appropriate to reflect not only the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other but
also the relative fault of the indemnifying party and the indemnified party as
well as any other relevant equitable considerations. Notwithstanding the
foregoing, Holder shall not be required to contribute any amount in excess of
the amount Holder would have been required to pay to an indemnified party if the
indemnity under Section 9(b) hereof was available. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11 of the Securities
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
(e) Timing of Payments. An indemnifying party shall make
payments of all amounts required to be made pursuant to the foregoing provisions
of this Section 9 to or for the account of the indemnified party from time to
time promptly upon receipt of bills or invoices relating thereto or when
otherwise due or payable.
(f) Survival. The indemnity and contribution agreements
contained in this Section 9 shall remain in full force and effect, regardless of
any investigation made by or on behalf of Holder, its officers, directors,
partners, attorneys, agents or any person, if any, who controls Holder as
aforesaid, and shall survive the transfer of such Registrable Securities by
Holder.
10. Preparation; Reasonable Investigation. In connection with the
preparation and filing of a Registration Statement pursuant to the terms of this
Agreement:
(a) the Company shall, with respect to a Registration
Statement filed by the Company, give the Holder, the underwriters, if any, and
their respective counsel and accountants the opportunity to participate in the
preparation of such Registration Statement (other than reports and proxy
statements incorporated therein by reference and lawfully and properly filed
with the SEC) and each Prospectus included therein or filed with the SEC, and
each amendment thereof or supplement thereto; and
(b) the Company shall give the Holder, its underwriters, if
any, and their respective counsel and accountants such reasonable access to its
books and records and such opportunities to discuss the business of the Company
with its officers and the independent public accountants who have certified its
financial statements as shall be necessary, in the
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opinion of Holder or such underwriters, to conduct a reasonable investigation
within the meaning of Section ll(b)(3) of the Securities Act.
11. Rule 144. At all times during which the Company is subject to
the periodic reporting requirements of the Exchange Act, the Company covenants
that it will file, on a timely basis, the reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder, and it will take such further action as Holder
may reasonably request (including, without limitation, compliance with the
current public information requirements of Rule 144(c) and Rule 144A under the
Securities Act), all to the extent required from time to time to enable Holder
to sell Registrable Securities without registration under the Securities Act
within the limitation of the conditions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, (b) Rule 144A
under the Securities Act, as such Rule may be amended from time to time, or (c)
any similar rule or regulation hereafter adopted by the SEC. Upon the request of
Holder, the Company will deliver to such holder a written statement verifying
that it has complied with such information requirements.
12. No Inconsistent Agreements. The Company will not enter into
any agreement offering registration rights of the nature set forth herein
without the consent of Holder, which consent may be withheld, in its sole
discretion; provided that the Company may grant demand and incidental
registration rights in the future to the holders of Ordinary Shares on the
following basis (in which event the consent of the Holder will not be required):
(a) all cutbacks on incidental registrations shall be on a pro rata basis with
the Ordinary Shares held by Holder and any other selling shareholder exercising
incidental registration rights (but only to the extent that such pro rata basis
applies to the number of Ordinary Shares still retained at the time of such
cutback); (b) an investor investing between $5,000,000 and $10,000,000 shall be
entitled to not more than one demand registration right and one F-3
Registration; (c) an investor investing between $10,000,000 and $20,000,000
shall be entitled to not more than two demand registration rights and two F-3
Registrations; (d) an investor investing greater than $20,000,000 shall be
entitled to not more than three demand registration rights and two F-3
Registrations; and (e) holders of any registration rights granted subsequent to
the date hereof shall not exercise any such rights, except incidental
registration rights, prior to the first anniversary of the closing of the
purchase of the Ordinary Shares as to which such registration rights were
granted.
13. Assignment of Rights. Holder may assign its rights under the
Agreement to (a) any transferee of the Registrable Securities of Holder, if such
transferee has executed this Agreement and agreed to be bound by the terms
hereof (it being understood, however, that Holder shall retain all of Holder's
rights hereunder with respect to all Registrable Securities not so transferred
thereby) or (b) any stockholder, subsidiary, partner, nominee or affiliate of
Holder or any such transferee. The transferor shall, within twenty (20) days
after such transfer, furnish the Company with written notice of the name and
address of such transferee and the securities with respect to which such
registration rights are being assigned.
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14. Specific Performance. Holder, in addition to being entitled to
exercise all rights provided herein or granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
15. Notices. All notices required or permitted under the terms of this
Agreement shall be delivered in the manner called for in the Purchase Agreement.
16. Successors and Assigns. Subject to Section 13, this Agreement shall
inure to the benefit of the successors and assigns of Holder, such that the
rights under this Agreement shall inure to the benefit of and be binding upon
subsequent holders of Registrable Securities without the need for an express
assignment. This Agreement shall inure to the benefit of and be binding upon the
Company and any corporation resulting from any merger or consolidation of the
Company with or into such corporation (in which the Company is not the surviving
corporation) or any corporation whose securities are issued in exchange for
Ordinary Shares.
17. Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
18. Entire Agreement. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter hereof and shall supersede and
preempt any prior understandings, agreements or representations, written or
oral, by or among the parties hereto.
19. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be original, and all of which together shall
constitute one instrument.
20. Amendment. Any provision of this Agreement may be amended, waived
or modified only by a writing signed by the Company and holders of a majority of
the Registrable Securities.
21. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of Israel.
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IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the day and year first above written.
COMPANY: PARADIGM GEOPHYSICAL LTD.
By: /s/ Xxxxx Xxxxx
___________________________________
Name:___________________________
Title:____________________________
HOLDER: JERUSALEM VENTURE PARTNERS L.P
By: /s/ Xxxx Xxxxxxxx
___________________________________
Name:___________________________
Title:____________________________
JERUSALEM VENTURE PARTNERS (ISRAEL) L.P
By: /s/ Xxxx Xxxxxxxx
___________________________________
Name:___________________________
Title:____________________________
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