EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into this 6th day of August, 2002, by and between Input/Output Inc., a
Delaware corporation (the "Company"), and SCF-IV, L.P., a Delaware limited
partnership ("SCF").
Recitals:
This Agreement is made pursuant to the Exchange Agreement, dated August
6, 2002, between the Company and SCF (the "Exchange Agreement"). In order to
induce SCF to enter into the Exchange Agreement, the Company has agreed to
provide the registration rights set forth in this Agreement.
Agreement:
The parties hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms will have the following
meanings:
"Common Stock" means the common stock, par value $0.01 per share, of
the Company.
"Demand Registration" has the meaning set forth in Section 3(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Majority" means 51% or more.
"Market Price" means with respect to the Common Stock, on any given
day, the last reported sale price or, in case no such reported sale takes place
on such day, the average of the last closing bid and ask prices, in either case
on the New York Stock Exchange or the principal national securities exchange on
which the Common Stock is listed or admitted to trading, or if not listed or
admitted to trading on any national securities exchange, (i) the closing sale
price for such day reported by the Nasdaq Stock Market if such security is
traded over-the-counter and quoted in the Nasdaq Stock Market, or (ii) if such
security is so traded, but not so quoted on such day, the average of the closing
reported bid and ask prices of such security as reported by the Nasdaq Stock
Market or any comparable system, or (iii) if such security is not listed on the
Nasdaq Stock Market or any comparable system but is actively traded, the average
of the closing bid and ask prices as furnished by two members of the National
Association of Securities Dealers, Inc. selected from time to time by the
Company for that purpose. If such security is not listed and traded in a manner
that the quotations referred to above are available for the period required
hereunder, the Market Price shall be deemed to be the fair value per share of
such security as determined by a nationally recognized investment banking firm
selected by the Company's Board of Directors and, for so long as SCF holds at
least 25% of the Registrable Securities, is reasonably acceptable to SCF.
-1-
"Person" means any individual, partnership, corporation, limited
liability company, trust or unincorporated organization or association, or a
government or agency or political subdivision thereof.
"Piggyback Registration" has the meaning set forth in Section 4(a).
"Registration Expenses" has the meaning set forth in Section 7(a).
"Registrable Securities" means the Underlying Shares and any other
securities issued or issuable with respect to the Underlying Shares by way of
stock dividend or stock split or in connection with a combination of shares,
reclassification, recapitalization, merger, consolidation or other
reorganization; provided, however, that a Registrable Security shall cease to be
a Registrable Security to the extent provided in Section 2(a).
"Rule 144" means Rule 144 under the Securities Act (or any similar
provisions then in force).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Underlying Shares" means all shares of Common Stock issuable by the
Company upon exercise or conversion of the Warrant.
"Underwritten registration" or "underwritten offering" means any
registration in which securities of the Company are sold pursuant to a firm
commitment underwriting.
"Warrant" means the warrant issued pursuant to the Exchange Agreement.
2. SECURITIES SUBJECT TO THIS AGREEMENT.
(a) Registrable Securities. The securities entitled to the benefits
of this Agreement are the Registrable Securities but, with respect to any
particular Registrable Security, only so long as such security continues to be a
Registrable Security. A Registrable Security shall cease to be a Registrable
Security when (i) it has been disposed of in a transaction effectively
registered under the Securities Act, (ii) has been sold pursuant to Rule 144,
(iii) it is held by a Person not entitled to the benefits of registration rights
under this Agreement by virtue of Section 11(f) hereof, (iv) if the holder
thereof is an "affiliate" of the Company within the meaning of Rule 144, at such
time as the Registrable Securities held by such holder constitute less than 1%
of the then outstanding shares of Common Stock and such Registrable Securities
could be sold without registration pursuant to Rule 144, (v) if the holder
thereof is not an "affiliate" of the Company within the meaning of Rule 144, at
such time as the Registrable Securities held by such holder constitute less than
4% of the then outstanding shares of Common Stock and such Registrable
Securities could be sold freely pursuant to paragraph (k) of Rule 144, or (vi)
it has otherwise been transferred and a new certificate or other evidence of
ownership for it not bearing the legend set forth in Section 4.4 of the Exchange
Agreement (or other legend of
-2-
similar import) has been delivered (not subject to any stop transfer order) by
or on behalf of the Company and no other restriction on transfer exists.
(b) Holders of Registrable Securities. A Person is deemed to be a
holder of Registrable Securities whenever such Person owns Registrable
Securities or has the right to acquire such Registrable Securities (whether upon
conversion, exercise or exchange of other securities or otherwise), disregarding
any legal restrictions upon the exercise of such right, whether or not such
acquisition has actually been effected.
3. DEMAND REGISTRATION.
(a) Requests for Registration. Subject to the provisions of Section
3(b), SCF or any holder or holders of at least a Majority of the then
outstanding Registrable Securities may request at any time a registration by the
Company under the Securities Act of all or part of their Registrable Securities
(a "Demand Registration"); provided, however that the number of Registrable
Securities to be included in such Demand Registration must be at least 500,000
(such number of shares to be appropriately adjusted in the event of any stock
dividend or stock split or in connection with a combination of shares,
recapitalization, reclassification, merger, consolidation or other
reorganization). Within ten days after receipt of such request, the Company will
serve written notice by overnight courier of such registration request to all
holders of Registrable Securities and will, subject to the provisions of Section
3(b), include in such registration all Registrable Securities with respect to
which the Company has received written requests for inclusion therein within 15
business days after distribution to the applicable holder of the Company's
notice. All requests made pursuant to this Section 3(a) will specify the amount
of Registrable Securities to be registered and will also specify the intended
method of disposition thereof; provided, however, that such method of
disposition will be limited to an underwritten offering if requested by the
holders of a Majority of the Registrable Securities requested to be included in
such registration.
(b) Number of Registrations. The holders of Registrable Securities
will be entitled to request only one Demand Registration. A registration
initiated as a Demand Registration will not constitute a Demand Registration for
the purposes of the foregoing (i) unless such registration has been declared
effective by the SEC and remains effective for the period set forth in Section
6(a)(iii); provided, however, that, if more than 15% of the Registrable
Securities requested to be included in a Demand Registration which is an
underwritten registration can be excluded therefrom by reason of the provisions
of Section 3(d), the holders of Registrable Securities will be entitled to one
additional Demand Registration or (ii) if after such registration has been
declared effective by the SEC it is subject to any stop order, injunction or
other adverse order or action of the SEC or other governmental authority.
(c) No Rights of Company or Other Securityholders to Piggyback on
Demand Registrations. Neither the Company or any of its securityholders (other
than the holders of Registrable Securities in such capacity) has any right to
include any of the Company's securities in a registration statement initiated as
a Demand Registration under this Section 3, unless (i) such securities are of
the same class as the Registrable Securities being registered, (ii) the holders
of a Majority of the Registrable Securities being registered in such
registration consent to such
-3-
inclusion in writing, subject to Section 3(d), (iii) if such Demand Registration
is an underwritten offering, the managing underwriters agree that some or all of
such securities can be included without adversely affecting such offering or
offering price and (iv) the Company or the selling securityholders, as
applicable, agree to sell their securities on the same terms and conditions as
apply to Registrable Securities and the holders of such Registrable Securities.
If any securityholders of the Company (other than the holders of Registrable
Securities in such capacity) register securities of the Company pursuant to a
Demand Registration hereunder in accordance with the provisions of this Section
3(c), such securityholders will pay the fees and expenses of counsel to such
security holders and their pro rata share of the Registration Expenses if such
pro rata share of the Registration Expenses for such registration are not paid
by the Company for any reason.
(d) Priority on Demand Registrations. If a Demand Registration is
an underwritten offering and the managing underwriters advise the Company and
the selling holders of the Registrable Securities in writing that in their
opinion the number of Registrable Securities requested to be included exceeds
the number of securities which can be sold in such offering without adversely
affecting the proposed offering or the offering price, the Company will include
in such registration the number of Registrable Securities which in the opinion
of such underwriters can be sold without adversely affecting the proposed
offering or the offering price, and such securities will be allocated pro rata
among the holders of Registrable Securities on the basis of the number of the
Registrable Securities requested to be included in such registration by their
respective holders. If securities (other than Registrable Securities) are
proposed to be included by the Company or its other securityholders in a Demand
Registration which is an underwritten offering (subject to and in accordance
with the provisions of Section 3(c)) and the managing underwriters advise the
Company and the selling holders of Registrable Securities in writing that fewer
than all of said other securities can be sold, in addition to all the
Registrable Securities being registered, without adversely affecting the
proposed offering or the offering price in such underwritten offering, those
other securities which are permitted to be included will be allocated among the
Company and the other securityholders in such proportions as such
securityholders and the Company may agree.
(e) Selection of Underwriters. If any Demand Registration is an
underwritten offering, or a best efforts underwritten offering, the investment
banker or investment bankers and manager or managers that will administer the
offering will be selected by the Company; provided, however, such investment
bankers and manages must be reasonably satisfactory to the holders of a Majority
of the Registrable Securities requested to be included in such offering.
(f) Other Registration Rights Agreements. Without the prior written
consent of the holders of a Majority of the Registrable Securities, the Company
will not enter into any new registration rights agreements that adversely affect
in any material respect the rights of the holders of the Registrable Securities.
4. PIGGYBACK REGISTRATIONS.
(a) Right to Piggyback. Whenever the Company proposes to register
any securities under the Securities Act (excluding registrations on Form S-4 or
S-8 or equivalent
-4-
forms), other than pursuant to a Demand Registration under Section 3 (a
"Piggyback Registration"), the Company will give written notice to all holders
of Registrable Securities of its intention to effect such a registration not
later than the earlier to occur of (i) the tenth day following receipt by the
Company of notice of exercise of other demand registration rights or (ii) 30
days prior to the anticipated filing date. Subject to the provisions of Section
4(c) and (d), the Company will include in such Piggyback Registration all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within ten business days after the receipt by the
applicable holder of Registrable Securities of the Company's notice. The holders
of Registrable Securities will be permitted to withdraw all or any part of such
holder's Registrable Securities from a Piggyback Registration at any time prior
to the date such Piggyback Registration becomes effective with the SEC, provided
that, in the case of an underwritten offering, such withdrawal is consistent
with customary and reasonable restrictions agreed upon by the managing
underwriter. If a Piggyback Registration is an underwritten offering effected
under (i) Section 4(c), all Persons whose securities are included in the
Piggyback Registration will be obligated to sell their securities on the same
terms and conditions as apply to the securities being issued and sold by the
Company or (ii) Section 4(d), all Persons whose securities are included in the
Piggyback Registration will be obligated to sell their securities on the same
terms and conditions as apply to the securities being sold by the Person or
Persons who initiated the Piggyback Registration under Section 4(d).
Notwithstanding the foregoing, if, at any time after giving written notice of a
Piggyback Registration but prior to the effective date of the registration
statement filed in connection therewith, the Company shall determine for any
reason not to register such securities, the Company may, at its election give
written notice of such determination to the holders of Registrable Securities
and thereupon shall be relieved of its obligation to register any Registrable
Securities in such registration.
(b) Piggyback Expenses. The Registration Expenses of the holders of
Registrable Securities included in a Piggyback Registration will be paid by the
Company.
(c) Priority on Primary Registrations. If a Piggyback Registration
is an underwritten registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the total
number or dollar amount of securities requested to be included in such
registration exceeds the number or dollar amount of securities which can be sold
in such offering without adversely affecting the offering or the offering price,
the Company will include in such registration: (i) first, all securities the
Company proposes to sell, (ii) second, up to the full number or dollar amount of
Registrable Securities requested to be included in such registration in excess
of the number or dollar amount of securities the Company proposes to sell which,
in the opinion of such underwriters, can be sold without adversely affecting the
offering or the offering price (allocated pro rata among the holders of such
Registrable Securities on the basis of the dollar amount or number of
Registrable Securities requested to be included therein by each such holder) and
(iii) third, such other securities (provided such securities are of the same
class as the securities being sold by the Company) as are requested to be
included in such registration equal to the balance, if any, allocated among the
holders of such securities in such proportions as the Company and such holders
may agree.
(d) Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the Company's securities (other
-5-
holders of Registrable Securities in their capacity as such), and the managing
underwriters advise the Company in writing that in their opinion the dollar
amount or number or securities requested to be included in such registration
exceeds the dollar amount or number of securities which can be sold in such
offering without adversely affecting the offering or the offering price, the
Company will include in such registration (i) first, the number or dollar amount
of securities which in the opinion of such underwriters can be sold without
adversely affecting the offering or the offering price of the securities
intended to be included therein on behalf of the other holders of the Company's
securities, allocated among the holders of such securities in such proportions
as the Company and such holders may agree, and (ii) to the extent of the
balance, if any, the Registrable Securities requested to be included in such
registration, allocated pro rata among the holders of such Registrable
Securities on the basis of the dollar amount or number of securities requested
to be included therein by each such holder.
(e) Underwritten Offering of Different Classes of Securities.
Notwithstanding anything to the contrary in this Section 4, if a Piggyback
Registration is an underwritten offering of a class of securities of the Company
different from the Registrable Securities proposed to be included in such
offering and the managing underwriters advise that in their opinion Registrable
Securities of a different class cannot be included in such offering without
adversely affecting the offering or the offering price, then the holders of the
Registrable Securities shall not be entitled to include Registrable Securities
in such registration.
(f) Selection of Underwriters. If any Piggyback Registration is an
underwritten offering, as between the Company and the holders of Registrable
Securities, the Company will have the right to select the investment banker or
investment bankers and manager or managers to administer the offering.
5. DEFERRAL OF FILING.
Notwithstanding anything to the contrary in this Agreement, the Company
may defer the filing (but not the preparation) of a registration statement
required by Section 3 until a date not later than 60 days (less the number of
days during the previous twelve months that the use of a prospectus was
suspended pursuant to this Section 5 or Section 11(a)) after the date of receipt
by the Company of a request for a Demand Registration if at the time the Company
receives such request it is 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) and the Company determines in good faith that such disclosure
would be materially detrimental to the Company and its shareholders. Any
registration statement the filing of which is deferred pursuant to the foregoing
shall be filed forthwith if the negotiations or other activities are disclosed
or terminated. In order to defer the filing of a registration statement pursuant
to this Section 5, the Company shall promptly, upon determining to seek such
deferral, deliver to each requesting holder a certificate signed by the
President or Chief Financial Officer of the Company stating that the Company is
deferring such filing in accordance with this Section 5. Within 20 days after
receiving such certificate, the requesting holder may withdraw such request by
giving notice to the Company, and, if withdrawn, the request for a Demand
Registration shall be deemed not to have been made for all
-6-
purposes of this Agreement, provided that the Company may defer the filing of a
registration statement pursuant to the foregoing not more than once during any
twelve month period.
6. REGISTRATION PROCEDURES.
(a) Whenever the Company is obligated to register any Registrable
Securities in accordance with the terms and conditions of this Agreement, the
Company will use its best efforts to effect the registration and to permit the
sale of such Registrable Securities in accordance with the intended method of
disposition thereof, and pursuant thereto the Company will as expeditiously as
possible:
(i) prepare and file with the SEC, not later than 60 days after
receipt of a request to file a registration statement with respect to such
Registrable Securities, a registration statement with respect to such
Registrable Securities, and use its best efforts to cause such registration
statement to become effective; provided, however, that before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company will furnish to the counsel selected by the holders of a Majority of
the Registrable Securities being registered in such registration statement
copies of all such documents proposed to be filed, which documents will be
subject to the review of such counsel; each such registration statement will be
on a form for which the Company then qualifies, which is available for the sale
of the Registrable Securities in accordance with the intended method of
disposition thereof and which is reasonably satisfactory to the holders of a
Majority of the Registrable Securities being registered (or the managing
underwriters in the case of a firm or best efforts underwriting offering);
(ii) notify each seller of Registrable Securities of any stop
order issued by the SEC and take all reasonable actions required to prevent the
entry of such stop order or to remove it at the earliest possible time if
entered;
(iii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
a period of not less than 90 days, or such shorter period as may be required if
all Registrable Securities covered by such registration statement are sold prior
to the expiration of such 90-day period (except in connection with an
underwritten offering, in which case such registration statement shall be kept
effective as long as the underwriters reasonably request in the underwriting
agreement), 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
sellers thereof set forth in such registration statement;
(iv) furnish to each seller of Registrable Securities such
number of copies of such registration statement, each amendment and supplement
thereto (in each case including all exhibits thereto), the prospectus included
in such registration statement (including each preliminary prospectus) and such
other documents as such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;
-7-
(v) use all commercially reasonable efforts to register or
qualify such Registrable Securities under such other securities or blue sky laws
of such jurisdictions as any seller reasonably requests and do any and all other
acts and things which may be reasonably necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller; provided, however, that the Company will 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 Section 6(a)(v), (B)
subject itself to taxation in any such jurisdiction or (C) consent to general
service of process in any such jurisdiction.
(vi) use all commercially reasonable efforts to cause the
Registrable Securities covered by such registration statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to consummate the disposition
of such Registrable Securities;
(vii) notify each seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement or any document incorporated
therein by reference contains an untrue statement of a material fact or omits to
state any material fact necessary to make the statements therein not misleading,
and prepare and file promptly with the SEC a supplement or amendment to such
prospectus or any such document incorporated therein by reference so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
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;
(viii) cause all such Registrable Securities to be listed on
each securities exchange on which similar securities issued by the Company are
then listed;
(ix) provide a transfer agent and registrar for all Registrable
Securities and a CUSIP number for all such Registrable Securities, in each case
not later than the effective date of such registration statement;
(x) enter into such customary agreements (including an
underwriting agreement in customary form with customary lock-up provisions not
to exceed 180 days) and take all such other actions in connection therewith as
the holders of a Majority of the Registrable Securities being registered or the
managing underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities;
(xi) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information reasonably requested
by any such seller, underwriter, attorney, accountant or agent in connection
with such registration statement;
-8-
(xii) obtain a cold comfort letter from the Company's
independent public accountants in customary form and covering such matters of
the type customarily covered by cold comfort letters as the holders of a
Majority of the Registrable Securities being registered or the managing
underwriters reasonably request; and
(xiii) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but nor more than eighteen
months, beginning with the first month after the effective date of the
Registration Statement, which earnings statement will satisfy the provisions of
Section 11(a) of the Securities Act.
(b) The Company may require each seller of Registrable Securities
as to which any registration is being effected to furnish to the Company such
information regarding the distribution of such securities as the Company may
from time to time reasonably request.
7. REGISTRATION EXPENSES.
(a) All expenses 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 (including reasonable fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of the Registrable
Securities), printing expenses, messenger, telephone and delivery expenses, and
fees and disbursements of counsel for the Company and of all independent
certified public accountants (including the expenses of any special audit or
"cold comfort" letters required by or incident to such performance), fees and
expenses of underwriters customarily paid by the issuer of securities (excluding
discounts and commissions), the reasonable fees and expenses of any special
experts retained by the Company or at the request of the managing underwriters
in connection with such registration and fees and expenses of other Persons
retained by the Company (all such expenses being herein called "Registration
Expenses"), will be borne by the Company; provided, however, that all out of
pocket Registration Expenses incurred by the Company pursuant to Section 3 shall
be borne by the sellers of Registrable Securities and other persons (including
the Company) selling Common Stock pursuant to the applicable registration
statement on a pro rata basis based on the number of shares of Common Stock to
be sold pursuant to such registration statement.
(b) In connection with each registration hereunder, the holders of
the Registrable Securities included therein shall be responsible for all fees
and expenses of their counsel and for all underwriting discounts and commissions
payable in respect of any sales of Registrable Securities.
8. INDEMNIFICATION; CONTRIBUTION.
(a) Indemnification by Company. In the event of any registration of
Registrable Securities hereunder, the Company agrees to indemnify to the full
extent permitted by law, each holder of Registrable Securities, its officers,
directors and partners and each Person
-9-
who controls such holder (within the meaning of the Securities Act and the
Exchange Act) against all losses, claims, damages, liabilities and expenses (or
actions in respect thereof) arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in any registration statement,
prospectus or preliminary prospectus relating to the registration of such
Registrable Securities or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are contained in any
information furnished in writing to the Company by such holder expressly for use
therein. The Company will reimburse each holder of Registrable Securities, its
officers, directors, constituent partners and controlling Persons for any legal
and other expenses as incurred in connection with investigating or defending any
such losses, claims, damages, liabilities, expenses or actions. In connection
with a firm commitment or best efforts underwritten offering, the Company will
indemnify the underwriters or agents, their officers, directors, partners and
each Person who controls such underwriters (within the meaning of the Securities
Act and the Exchange Act) or agents to the same extent as provided above (or
such greater extent as may be customarily required by the managing underwriters)
with respect to the indemnification of the holders of Registrable Securities.
(b) Indemnification by Holder of Registrable Securities. In
connection with any registration statement in which a holder of Registrable
Securities is participating, each such holder will furnish to the Company in
writing such information and affidavits as the Company reasonably requests for
use in connection with any such registration statement or prospectus and agrees
to indemnify, to the extent permitted by law, the Company, its directors and
officers and each Person who controls the Company (within the meaning of the
Securities Act and the Exchange Act) against any losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged untrue statement
of a material fact or any omission or alleged omission of a material fact
required to be stated in the registration statement or prospectus or any
amendment thereof or supplement thereto or necessary to make the statements
therein not misleading, to the extent, but only to the extent, that such untrue
statement or omission is contained in any written information or affidavit
furnished by such holder specifically for such registration statement and then
only to the extent of the net proceeds received by such holder from the sale of
Registrable Securities pursuant to such registration statement in reliance upon
such information. The holders of Registrable Securities will reimburse, to the
extent of the net proceeds, received by the holders of Registrable Securities,
the Company, its officers, directors and controlling persons for any legal and
other expenses as incurred in connection with investigation or defending any
such losses, claims, damages, liabilities, expenses or actions.
(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 (but omission of
such notice shall not relieve the indemnifying party from liability hereunder
except to the extent such indemnifying party is actually prejudiced by such
failure to give notice) and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest may exist between such indemnified and
indemnifying parties with respect to such claim, permit such indemnifying party
to assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. 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).
-10-
No indemnifying party will consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of an unconditional release
from all liability in respect to such claim or litigation. 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 an actual conflict of interest exists between such indemnified party and
any other such indemnified parties with respect to such claim, in which event
the indemnifying party will be obligated to pay the fees and expenses of such
additional counsel or counsels.
(d) Contribution. If the indemnification provided for in Section
8(a) is unavailable or insufficient to hold harmless each of the indemnified
parties against any losses, claims, damages, liabilities and expenses (or
actions in respect thereof) to which such persons may become subject under the
Securities Act, then the indemnifying party shall, in lieu of indemnifying each
party entitled to indemnification hereunder, contribute to the amount paid or
payable by such party as a result of such losses, claims, damages, liabilities
or expenses in such proportion as is appropriate to reflect the relative fault
of the indemnifying party on the one hand and such indemnified persons on the
other in connection with the statements or omissions or alleged statements or
omissions that resulted in such losses, claims, damages, liabilities or
expenses. The relative fault of such persons 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 or concerning the indemnifying party on the one hand,
or by such indemnified person on the other, and such person's 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 8(d) were determined by pro
rata allocation or by any other allocation that does not take into account the
equitable considerations referred to in this Section 8(d). No person guilty of
fraudulent misrepresentation within the meaning of the Act shall be entitled to
contribution from any person that is not guilty of such fraudulent
misrepresentation.
9. RULE 144.
The Company covenants that it will file 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 (or, if the Company is not required to
file such reports, it will, upon the request of any holder of Registrable
Securities, make publicly available such information), and it will take such
further action as any holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such holder to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of any holder of
Registrable Securities, the company will deliver to such holder a written
statement that it has complied with such requirements
-11-
10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS; LOCKUP.
No Person may participate in any underwritten registration hereunder
unless such Person (a) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes and executes all
customary questionnaires, powers of attorney, underwriting agreements and other
documents required under the terms of such underwriting arrangements. If a
holder of Registrable Securities is participating in a Piggyback Registration
that is an underwritten registration, such holder will (if requested by the
managing underwriter) enter into an agreement not to sell or otherwise transfer
or dispose of any Registrable Securities or other securities of the Company held
by such holder for a specified period of time (not to exceed 180 days) following
the effective date of the registration statement. Such agreement shall be in
writing in a form reasonably satisfactory to the holder, the Company and the
managing underwriter. The Company may impose stop transfer instructions with
respect to the Registrable Securities or other securities subject to the
foregoing restriction until the end of the lock-up period.
11. MISCELLANEOUS.
(a) Right to Suspend. The Company may, by notice in writing to
each holder of Registrable Securities, require the holder of Registrable
Securities to suspend use of any prospectus included in a registration statement
filed hereunder if the Company reasonably determines that it contains an untrue
statement of a material fact or omits to state any material fact necessary to
make the statements therein not misleading or that any transaction in which the
Company is engaged or proposes to engage would require an amendment to such
registration statement or a supplement to such prospectus (including any such
amendment or supplement made through incorporation by reference to a report
filed under Section 13 of the Exchange Act). Each holder of Registrable
Securities agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in this Section 11(a), such holder
will forthwith discontinue disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until such holder's
receipt of the copies of a properly supplemented or amended 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 most
recent prospectus covering such Registrable Securities at the time of receipt of
such notice. In the event the Company gives any such notice, the time period
mentioned in Section 6(a)(iii), if applicable, will be extended by the number of
days during the period from and including the date of the giving of such notice
to and including the date when each seller of Registrable Securities covered by
such registration statement has received the copies of such supplemented or
amended prospectus. The Company agrees to use its reasonable best efforts to
cause any suspension of use of any prospectus pursuant to this paragraph to be
as short a period of time as possible.
(b) Remedies. Each holder of Registrable Securities, in addition
to being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement.
-12-
(c) Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given unless the Company has obtained the
written consent of at least a Majority of the outstanding Registrable
Securities.
(d) Registrable Securities Held by the Company or its Affiliates.
Whenever the consent or approval of holders of all or any specified percentage
of Registrable Securities is required hereunder, Registrable Securities held by
the Company or any of its affiliates (other than SCF if it is such an affiliate)
will not be counted in determining whether such consent or approval was given by
such holders.
(e) Notices. All notices hereunder shall be in writing and shall
be effective (i) on the day on which delivered if delivered personally or
transmitted by telex or telegram or telecopier with evidence of receipt, (ii)
one business day after the date on which the same is delivered to a nationally
recognized overnight courier service with evidence of receipt, or (iii) five
business days after the date on which the same is deposited, postage prepaid, in
the U.S. mail, sent by certified or registered mail, return receipt requested,
and addressed to the party to be notified at the address set forth in the
Exchange Agreement for the Company, or at the address for the holder of the
Registrable Securities set forth in a registry maintained by the Company, or at
such other address and/or telecopy or telex number and/or to the attention of
such other person as the Company or the holder of the Registrable Securities may
designate by ten-day advance written notice.
(f) Successors and Assigns; Transfer of Registration Rights. This
Agreement will inure to the benefit of and be binding upon the successors and
assigns of each of the parties; provided however that the registration rights
granted by this Agreement may be transferred only (i) by operation of law, or
(ii) to any Person to whom SCF sells or otherwise transfers Registrable
Securities who (A) upon such transfer, will hold 500,000 or more Registrable
Securities (such number of shares to be appropriately adjusted in the event of
any stock dividend or stock split or in connection with a combination of shares,
recapitalization, reclassification, merger, consolidated or other
reorganization) and (B) agrees to be bound by the terms and conditions of this
Agreement and signs an addendum to this Agreement to such effect.
(g) Counterparts. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed will be deemed to be an original and all of which taken
together will constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience
of reference only and will not limit or otherwise affect the meaning hereof.
(i) Governing Law; Jurisdiction. This Agreement will be governed
by and construed in accordance with the laws of the State of Texas, without
giving effect to conflict of law principles. Any holder of Registrable
Securities may bring any action or proceeding to enforce or arising out of this
Agreement or in the instruments and agreements annexed hereto in any court of
competent jurisdiction.
-13-
(j) 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 will not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the securities sold pursuant to the Exchange Agreement. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
(l) Attorney's Fees. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof or
thereof is validly asserted as a defense, the successful party will be entitled
to recover reasonable attorney's fees in addition to any other available remedy.
-14-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
INPUT/OUTPUT INC.
By: /s/ C. XXXXXX XXXXX
-------------------------------------
Name: C. Xxxxxx Xxxxx
-----------------------------------
Title: Vice President
----------------------------------
SCF-IV, L.P.
By: SCF-IV, G.P., Limited Partnership,
its General Partner
By: X. X. Xxxxxxx & Associates,
Incorporated, its General Partner
By: /s/ XXXXXX X. XXXXX
--------------------------------------
Name: Xxxxxx X. Xxxxx
------------------------------------
Title: Managing Director
-----------------------------------
-15-
