EXHIBIT 10.27
FORM OF
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "AGREEMENT") is made and entered
into as of ____________ ___, 1997 by and among Engineering Animation, Inc., a
corporation organized under the laws of the State of Delaware (the
"COMPANY"), and the holders of the Company's Common Stock, par value $.01 per
share ("COMMON STOCK") listed on EXHIBIT A hereto, (individually, a "HOLDER,"
and collectively, the "HOLDERS").
WITNESSETH:
WHEREAS, the Company will acquire Technology Company Ventures, L.L.C., a
Delaware limited liability company ("TCV"), and all of the outstanding shares
of Rosetta Technologies, Inc., an Oregon corporation ("RTI"), not held by
TCV, pursuant to two Agreements and Plans of Merger dated October 29, 1997,
as amended and restated as of November 14, 1997 (the "MERGER AGREEMENTS");
WHEREAS, pursuant to the Merger Agreements, the Holders will receive
shares of Common Stock in exchange for their membership interests in TCV
and/or their stock in RTI (the "MERGER COMMON STOCK");
WHEREAS, as an inducement to enter into the Merger Agreements, the
Company has agreed to enter into this Agreement with the Holders; and
WHEREAS, in connection with the acquisition by the Company of Cimtech,
Inc., an Iowa corporation ("Cimtech"), the Company has or will issue shares
of Common Stock to the shareholders of Cimtech (the "Cimtech Holders") and
will enter into a Registration Rights Agreement with the Cimtech Holders
pursuant to which the Cimtech Holders will receive demand and "piggy-back"
registration rights.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth below, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following
terms have the meaning ascribed to them:
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in New York City are
closed.
"COMMISSION" means the U.S. Securities and Exchange Commission, or any
other U.S. federal agency at the time administering the Securities Act.
"EFFECTIVE DATE" means the date a Registration Statement becomes effective.
"EXCHANGE ACT" means the U.S. Securities Exchange Act of 1934, as
amended, or any other similar U.S. federal statute, and the rules and
regulations of the Commission thereunder, as may be in effect from time to
time.
"PROSPECTUS" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement
(including, without limitation, any prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities covered by
such Registration Statement), and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference in such
Prospectus.
"REGISTRABLE SECURITIES" means the Merger Common Stock issued to and
received by the Holders pursuant to the Merger Agreements and held
continuously from the Closing Date by such Holders and any securities that
may be issued by the Company or any successor to the Company from time to
time with respect to, in exchange for, or in replacement of such Merger
Common Stock, including, without limitation, securities issued as a stock
dividend on or pursuant to a stock split or similar recapitalization of such
shares; PROVIDED, HOWEVER, that those shares as to which the following apply
shall cease to be Registrable Securities if: (a) a Registration Statement
with respect to the sale of such Registrable Securities shall have become
effective under the Securities Act and such Registrable Securities shall have
been disposed of under such Registration Statement; (b) such Registrable
Securities shall have become transferable, and have been so transferred, in
accordance with the resale provisions of Rule 144 or any successor rule or
provision, under the Securities Act; (c) such Registrable Securities shall
have been transferred in a transaction in which the Holder's rights and
obligations under this Agreement were not assignable in accordance with this
Agreement; or (d) such Registrable Securities shall have ceased to be
outstanding.
"SECURITIES ACT" means the U.S. Securities Act of 1933, as amended, or
any similar U.S. federal statue, and the rules and regulations of the
Commission thereunder, as may be in effect from time to time.
"SHELF REGISTRATION" means a registration effected pursuant to a shelf
registration statement of the Company, on an appropriate form under Rule 415
under the Securities Act, or any similar rule that may be adopted by the
Commission, all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein. A registration statement relating to a Shelf Registration
shall be referred to herein as the "REGISTRATION STATEMENT." The Registration
Statement shall be effected on Form S-3 or any successor form prescribed by
the Commission.
2. SHELF REGISTRATION.
(a) Subject to the limitations set forth in Sections 4, 5 and 7 hereof,
on and after the later to occur of (i) the filing by the Company with the
Commission of its annual report on Form 10-K for the year ending December 31,
1997, and (ii) the date on which the Company has made available to the public
financial statements reflecting a minimum of 30 days of combined
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operations of the Company and TCV, Holders constituting at least 25% of the
total Registrable Securities then outstanding (the "INITIATING HOLDERS")
shall have the right to request that the Company use its reasonable best
efforts to promptly effect qualification and registration of the Registrable
Securities under the Securities Act on a Form S-3 Registration Statement (the
"REGISTRATION"). Such request shall specify the name and address (including
telephone and facsimile numbers) of each Holder requesting registration and
the number of shares for which each such Holder is requesting registration
(the "REGISTRATION NOTICE") and shall be sent by the Initiating Holders to
the Company. Within ten (10) Business Days following receipt of the
Registration Notice, the Company shall notify each Holder who is not an
Initiating Holder (the "NON-INITIATING HOLDERS") of the request for
registration (the "COMPANY NOTICE") and shall use reasonable best efforts to
register the number of shares of Registrable Securities specified in the
Registration Notice and in all notices received by the Company from the
Non-Initiating Holders within 15 Business Days after delivery of the Company
Notice by the Company to the Non-Initiating Holders. Initiating Holders and
Non-Initiating Holders who elect to include Registrable Securities in a
Registration Statement pursuant to this Section 2 are referred to herein
collectively as "SELLING HOLDERS".
(b) The Company shall use its reasonable best efforts to proceed with
and complete the filing of a Registration Statement in respect of the
Registrable Securities as expeditiously as possible and in doing so shall
carry out the following actions:
(i) prepare the Registration Statement;
(ii) file the Registration Statement with the Commission and use its
reasonable best efforts to cause the Registration Statement to become
effective as soon as practicable following the receipt of a request by the
Initiating Holders, and to keep such Registration Statement continuously
effective until the earlier of (A) midnight on the sixtieth (60th) day
following the Effective Date of the Registration, or at such later time as
may be established pursuant to Sections 4(d), 5(b) or 7(a) or (B) the date
on which no Registrable Securities for which the Registration has been
initiated remain unsold (each a "DISTRIBUTION PERIOD");
(iii) prepare and file as expeditiously as possible with the
Commission such amendments and supplements to the Registration Statement,
and the Prospectus, as may be necessary to keep the Registration Statement
effective during a Distribution Period;
(iv) furnish to each Selling Holder such number of copies of the
Registration Statement and the Prospectus (including each preliminary
prospectus) and any amendments or supplements thereto as such Selling
Holder may reasonably request in order to facilitate the public sale or
other disposition of the Registrable Securities;
(v) use its reasonable best efforts to register or qualify the
Registrable Securities under the state securities or "blue sky" laws of
such jurisdictions as each Selling Holder shall reasonably request and to
maintain such qualification throughout the Distribution Period, except that
the Company shall not be required for the purpose of such qualification to
qualify generally to transact business as a foreign corporation in any
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jurisdiction where it is not so qualified or, except as to matters relating
to the offer and sale of the Registrable Securities, consent to general
service of process in any such jurisdiction;
(vi) immediately notify each Selling Holder who elected to include
Registrable Securities in the Registration Statement (A) of the Effective
Date and the date when any post-effective amendment to the Registration
Statement becomes effective, (B) of any stop order or notification from the
Commission or any other jurisdiction as to the suspension of the
effectiveness of the Registration Statement, and (C) of the happening of
any event of which the Company has knowledge that would result in the
Prospectus contained in the Registration Statement, as then in effect,
including an untrue statement of a material fact or omitting to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing;
(vii) timely file with the Commission all documents required to be
filed by the Company pursuant to subsections 13(a), 13(c), 15(d), and
Section 14 of the Exchange Act, and otherwise maintain its qualification to
file a Registration Statement; and
(viii) if the holders of a majority of the Registrable Securities to
be registered on the Registration Statement so request on their notices to
the Company requesting registration, the Company shall use its reasonable
best efforts to secure an investment banking firm of the Company's choice
to act as underwriter, subject to the approval of the holders of a majority
of the Registrable Securities to be registered on the Registration
Statement, which approval shall not be unreasonably withheld, to retain one
or more underwriters (on either a "firm commitment" or "best efforts"
basis); provided that, if the Company is unable to secure a commitment from
such an underwriter within 30 days following receipt of the Registration
Notice, the Selling Holders may select one or more nationally recognized
underwriters (on either a "firm commitment" or "best efforts" basis),
subject to the approval of the Company, which approval shall not be
unreasonably withheld;
(ix) if the Selling Holders request an underwriter pursuant to
paragraph above, the Company shall take all reasonable actions as are
necessary or advisable to expedite and facilitate the disposition of the
Registrable Securities in the manner contemplated by the Registration
Statement, to the same extent as if the Registrable Securities then being
offered were for the account of the Company, including, without limitation,
(A) entering into such customary agreements (including underwriting
agreements in customary form) as the underwriters may reasonably request,
and (B) using its best efforts to furnish: (1) an opinion of counsel
representing the Company for the purposes of such registration, dated the
date the Registrable Securities are delivered to the underwriters for sale
and addressed to the underwriters and the Selling Holders, (x) stating that
the Registration Statement has become effective under the Securities Act,
and that to the best knowledge of such counsel, no stop order suspending
its effectiveness has been issued and no proceeding for that purpose has
been instituted or is pending or contemplated under the Securities Act, (y)
stating that the Registration Statement and each amendment or
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supplement thereto, comply as to form in all material respects with the
requirements of the Securities Act (except that such counsel need not
express any opinion as to financial statements contained therein) and
(z) to such other effects as reasonably may be requested by counsel for
the underwriters, (2) letters dated the date of execution of the
underwriting agreement and the date of delivery of the Registrable
Securities (if so requested by the underwriters) and addressed to the
underwriters and the Selling Holders, from the independent public
accountants retained by the Company stating that they are independent
public accountants within the meaning of the Securities Act that, in the
opinion of those accountants, the financial statements of the Company
included in the Registration Statement, and any amendment or supplement
thereto, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and covering such other
financial matters (including information as to the period ending no more
than five (5) business days prior to the date of the letter) with
respect to the registration as the underwriters reasonably may request,
and (3) for inspection by any underwriter participating in any
distribution pursuant to the Registration Statement, and any attorney,
accountant or other agent retained by any underwriter, all pertinent
financial and other records, pertinent corporate documents and
properties of the Company, and causing the Company' officers, directors
and employees to supply all information reasonably requested by any
underwriter, attorney, and accountant or agent in connection with the
Registration Statement, on the condition that each of the foregoing have
entered into confidentiality agreements with the Company in respect of
the information contained in such records or documents.
(c) Except as provided in paragraph (d) below, the Company shall not be
required to effect more than one (1) registration pursuant to the provisions of
this Section 2. In addition, the Company may effect qualification and
registration of the Registrable Securities pursuant to this Section 2 pursuant
to an existing shelf registration statement or pursuant to an underwritten
offering in accordance with the provisions of Section 5 hereof.
(d) If (i) as a result of a material adverse change in the business,
financial results or operations of the Company occurring after a request for
registration pursuant to this Section 2, the Registration Statement is either
not made effective or withdrawn, at the request of the Selling Holders or
otherwise, before all of the Registrable Securities included thereunder have
been sold, or (ii) the number of shares of Registrable Securities to be included
in an offering pursuant to this Section 2 is reduced by more than 25% pursuant
to Section 5(b), then the Selling Holders shall have the right to request that
the Company effect one (1) additional registration pursuant to and in accordance
with the terms of this Section 2.
(e) With a view toward making available to Holders the benefits of Rule
144 promulgated under the Securities Act and any other rule or regulation of the
Commission that may at any time permit a Holder to sell Registrable Securities
without registration or pursuant to a registration statement on Form S-3, the
Company agrees to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144 promulgated under the Securities Act, at
all times;
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(ii) take such reasonable action as is necessary to maintain the
ability of the Holders to utilize Form S-3 for the sale of their
Registrable Securities;
(iii) file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
(iv) furnish to any Holder forthwith upon request, so long as the
Holder owns any Registrable Securities, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144
promulgated under the Securities Act, the Securities Act and the Exchange
Act, or that it qualifies as a registrant whose securities may be resold
pursuant to a registration statement on Form S-3, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents filed by the Company pursuant to the Securities Act or the
Exchange Act, and (iii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the
Commission that permits the selling of any Registrable Securities without
registration or pursuant to a registration statement on Form S-3.
3. SHAREHOLDER OBLIGATIONS. In connection with the filing of the
Registration Statement, each Holder will furnish to the Company as expeditiously
as possible, such documents or information with respect to itself and the
proposed sale or distribution of the Registrable Securities, as is reasonably
necessary in order to assure compliance of U.S. federal and applicable state
securities laws. In addition, as a condition to any proposed sale or
distribution of the Registrable Securities, each Holder agrees that, in
connection with any proposed sale or distribution of Registrable Securities,
such Holder will comply with applicable prospectus delivery requirements, and
that such shares of Registrable Securities will be sold or distributed in
accordance with the method of sale set forth in the Registration Statement.
4. DELAYS IN REGISTRATION.
(a) The obligations of the Company with respect to the Registration
Statement (as set out in Section 2 hereof) and the rights of the Holders to
distribute the Registrable Securities pursuant to this Agreement and any
Registration Statement, may be suspended by the Company on the occurrence of any
of the following events:
(i) the Company has made an initial determination to conduct a
primary, secondary or combined primary and secondary public offering
pursuant to which Holders shall have the right to include therein
Registrable Securities in accordance with Section 4(e) hereof;
(ii) the Company is about to make a normal course disclosure
containing information of a material nature; or
(iii) the Company is engaged in any activity at any time that, in the
good faith determination of its management or Board of Directors, would
have a material effect on the Company and would be adversely affected by
the continued compliance with this Agreement or the continued distribution
of the Registrable Securities by the Holders (each a "MATERIAL ACTIVITY").
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(b) In the event of a suspension pursuant to paragraph (a) of this Section
4, the Company shall use its best efforts to limit the length of such suspension
to:
(i) under paragraph 4(a)(i), a period from the date of such
determination until the earlier of (a) the decision by the Company not to
pursue the public offering or (b) for a period of one hundred and twenty
(120) days, more or less, from the effective date of the registration
statement relating to such public offering, provided that during such
suspension, the Company will proceed with reasonable best efforts to file
the appropriate documentation in respect of, and otherwise complete, such
public offering as expeditiously as practicable;
(ii) under paragraph 4(a)(ii), to a period of five (5) Business
Days, more or less; and
(iii) under paragraph 4(a)(iii), in the case of each Material
Activity, for a period of sixty (60) days, more or less, and in any event
to end not later than the termination of the Material Activity giving rise
to the suspension.
(c) The Company shall promptly give the Holders' notice of both the
beginning and end of any suspension under subsection 4(a).
(d) To the extent that any suspension under paragraph 4(b)(i) or (iii)
occurs following the commencement of the Distribution Period, the Distribution
Period shall be extended by the length of such suspension.
(e) If the Company at any time prior to the second anniversary of the
date of this Agreement proposes to conduct a public offering pursuant to
Section 4(a)(i) hereof or proposes to file a Registration Statement on behalf
of any selling stockholder of the Company (except, in each case, with respect
to registration statements on Forms X-0, X-0 or another form not available
for registering the Registrable Securities for sale to the public), each such
time it will give written notice to all Holders of outstanding Registrable
Securities of its intention to do so at least fifteen (15) days prior to
filing a registration statement for such an offering. Upon the written
request of any such Holder, received by the Company within 15 Business Days
after the giving of any such notice by the Company, to register any of its
Registrable Securities, the Company will use reasonable best efforts to cause
the Registrable Securities as to which registration shall have been so
requested to be included in the securities to be covered by the registration
statement proposed to be filed by the Company. If the Company is advised in
writing in good faith by any managing underwriter of the Common Stock being
offered in such public offering that the number of Common Stock proposed to
be offered is greater than the amount which can be offered without adversely
affecting the offering, the Company may, at its sole discretion, reduce the
number of Registrable Securities included in the offering, provided that the
securities to be included in such an offering shall first be allocated to the
Company, then pro rata among the Holders and the Cimtech Holders as a group,
then to any other person seeking to include securities in such offering.
Notwithstanding the foregoing provisions, the Company may withdraw any
registration statement referred to in this Section 4(e) without thereby
incurring any liability to the holders of Registrable Securities.
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5. UNDERWRITTEN OFFERINGS.
(a) If, in connection with any proposed distribution by the Holders under
Section 2 hereof, the Selling Holders shall request an underwriter pursuant to
Section 2(b)(viii) or if a Selling Holder wishes to include securities in an
underwritten offering pursuant to Section 4(e), then the right of any Selling
Holder to participate in such distribution shall be subject to the following
conditions:
(i) the Selling Holder shall enter into, and perform its
obligations under, an underwriting agreement in customary form with the
managing underwriter selected for the underwriting;
(ii) during the course of such public offering, the Selling Holder
shall cooperate with the Company and take such actions as are customarily
required by underwriters in such circumstances;
(iii) during the period that any registration statement in respect of
such public offering is effective, the Selling Holder shall make no other
distribution of Registrable Securities; and
(iv) if the underwriters for the public offering of securities of
the Company so request in writing of the Selling Holders and certain
officers and directors of the Company, each Selling Holder shall agree not
to sell publicly any or any other Common Stock of the Company (other than
Registrable Securities or other Common Stock of the Company being
registered in such offering), without the consent of such underwriters, for
a period of not more than the lesser of (i) 180 days following the
effective date of the registration statement relating to such offering, and
(ii) the period during which the requested officers of the Company agree
not to effect such sales.
(b) If the Company is advised in writing in good faith by any managing
underwriter of the Common Stock being offered in such public offering that the
number of shares of Common Stock proposed to be offered is greater than the
amount which can be offered without adversely affecting the offering, the
Company may, at its sole discretion, reduce the number of Registrable Securities
included in the offering, provided that the securities to be included in such an
offering shall first be allocated to the Company, then pro rata among the
Holders and the Cimtech Holders as a group, then to any other person seeking to
include securities in such offering. If the Company is advised to decline to
include all or part of the Registrable Securities in such public offering, the
Distribution Period shall be extended by the aggregate of the suspension
initiated pursuant to Section 4(b)(i) hereof in respect of such public offering
and the period that the registration statement in respect of such public
offering is effective.
6. EXPENSES.
(a) The Company will pay all expenses in connection with the registration
of Registrable Securities effected by the Company pursuant to Section 2 or
Section 4(e) hereof (including, without limitation an underwritten offering made
pursuant to the provisions of Section 5 hereof) other than Selling Expenses.
Holders of Registrable Securities registered
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pursuant to this Agreement shall pay all Selling Expenses associated with
such registration, with each Holder bearing a pro rata portion of the Selling
Expenses based upon the number of Registrable Securities registered by each
Holder. The term "SELLING EXPENSE" means all underwriting discounts and
selling commissions and stock transfer fees and taxes applicable to the sale
of the Registrable Securities.
(b) The expenses in connection with the registration of Registrable
Securities effected by the Company pursuant to Section 2 hereof include,
without limitation, all expenses incurred by the Company in complying with
Section 2 hereof (including, without limitation an underwritten offering made
pursuant to the provisions of Section 5 hereof), including all registration
and filing fees, printing expenses, fees in connection with the listing of
the Registrable Securities with any securities exchange, fees and
disbursements of counsel to the Company and independent public accountants
for the Company, fees and expenses (including counsel fees) incurred in
connection with complying with state securities or "blue sky" laws, fees of
the National Association of Securities Dealers, Inc., transfer taxes, fees of
transfer agents and registrars; PROVIDED HOWEVER, that expenses payable by
the Company with respect to counsel for the Selling Holders shall be limited
to not more than $15,000 in fees (plus reasonable out of pocket expenses) of
one special counsel for the Selling Holders, who shall be reasonably
acceptable to the Company. The terms of this Section 6 shall not require
either party to pay any charges or amounts for routine internal costs
incurred by the other party in carrying out the transfers contemplated in
this Agreement.
7. SALE OF REGISTRABLE SECURITIES DURING THE DISTRIBUTION PERIOD.
(a) In order to assure compliance with the Securities Act, during any
Distribution Period the Company shall comply with either (i) or (ii) below:
(i) Except in the event that paragraph (ii) below applies, the
Company shall (A) when and if deemed necessary by the Company, prepare and
file with the Commission a post-effective amendment to the Registration
Statement or a supplement to the related Prospectus or a supplement or
amendment to any document incorporated therein by reference or file any
other required document so that such Registration Statement will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and so that, as thereafter delivered to purchasers
of the Registrable Securities being sold thereunder, such Prospectus will
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; (B) provide the Holders of Registrable Securities
included in such Registration Statement copies of any documents filed
pursuant to Section 7(a)(i)(A); and (C) if the Company has filed a post-
effective amendment to the Registration Statement which has not yet been
declared effective, the Company will notify each such Holder to that
effect, and shall use its reasonable best efforts to secure the
effectiveness of such post-effective amendment and shall immediately notify
each such Holder when the amendment has become effective.
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(ii) In the event of (A) any request by the Commission or any other
federal or state governmental authority during the period of effectiveness
of the Registration Statement for amendments or supplements to the
Registration Statement or related Prospectus or for additional information;
(B) the issuance by the Commission or any other federal or state
governmental authority of any stop order suspending the effectiveness of
the Registration Statement or the written threat or initiation of any
proceedings for that purpose; (C) the receipt by the Company of any
notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for sale
in any jurisdiction or the initiation or threatening of any proceeding for
such purpose; (D) any event or circumstance which necessitates the making
of any changes in the Registration Statement or Prospectus, or any document
incorporated or deemed to be incorporated therein by reference, so that, in
the case of the Registration Statement, it will not contain any untrue
statement of a material fact or any omission to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and that in the case of the Prospectus, it will not contain
any untrue statement of a material fact or any omission to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; (E) that, in accordance with Section 4(a)(i) hereof, the
Company has made an initial determination to conduct a public offering; (F)
that, in accordance with Section 4(a)(ii) hereof, the Company is in
possession of material information that it deems advisable not to disclose
in a Registration Statement or (G) that, in the good faith judgment of the
Company's Board of Directors, in accordance with the provision of Section
4(a)(iii) hereof, it is advisable to suspend use of the Prospectus for a
period of time; then, subject to and in accordance with Section 4 hereof,
the Company shall deliver written notice to the Holders to the effect of
the foregoing and, upon receipt of such notice, each such Holder's
Distribution Period will not commence until such Holder receives copies of
the supplemented or amended Prospectus provided for in Section 7(a)(i)
hereof, or until it is advised in writing by the Company, pursuant to
Section 4(c) hereof, that the Prospectus may be used, and has received
copies of any additional or supplemental filings that are incorporated or
deemed incorporated by reference in such Prospectus.
(iii) In the event any of the events or circumstances listed in
the foregoing paragraph (ii) occur or exist after a Distribution Period has
commenced, subject to Section 4 hereof, the Company shall have the same
right to suspend such Distribution Period by delivery of written notice as
the Company would have had if the Distribution Period had not yet
commenced, and any such suspension of a Distribution Period shall be deemed
included within the meaning of the term "suspension" for all purposes under
this Agreement.
(b) The Holders selling securities pursuant to a Registration Statement
hereunder shall notify the Company in writing within three (3) Business Days
following each such sale and such notice shall include the number of shares
sold, the price of the sale and, if known to the Holder, the identity of the
purchaser.
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(c) Each Holder who following the consummation of the transactions
contemplated by the Purchase Agreement will be an employee of the Company
will sell Registrable Securities only in accordance with the terms of the
Company's policy on xxxxxxx xxxxxxx.
(d) The Holders will advise any broker or dealer acting on its behalf in
respect of the sale of the Registrable Securities, and any prospective
purchasers of the Registrable Securities, of the constraints set out in this
Section 7.
8. INDEMNIFICATION.
(a) The Company, will indemnify and hold harmless each Holder, the
officers, directors, partners, agents and employees of each Holder, any
underwriter and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act, against all losses, claims, damages
or liabilities, joint or several (collectively "CLAIMS"), to which they may
become subject under the Securities Act, the Exchange Act or other federal or
state law (excepting Claims related to or arising from a breach by such
Holder of its obligations under Sections 4(a), 5(a)(iii), or 7(b)), in so far
as the Claims (or actions in respect thereof) arise out of or are based on
any of the following (collectively, a "VIOLATION"): (i) any untrue statement
or alleged untrue statement of any material fact contained in the
Registration Statement or any amendment or supplement thereto, or the
omission or alleged omission to state in those documents a material fact
required to be stated therein, or necessary to make the statements therein,
not misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary Prospectus or the Prospectus or
any amendment or supplement thereto, or the omission or alleged omission to
state in those documents a material fact 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, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any
state securities law; and reimburse each such Holder, officer, director,
partner, agent, employee, underwriter or controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating
or defending any Claims; PROVIDED HOWEVER, that the indemnity agreement
contained in this Section 8(a) shall not apply to amounts paid in settlement
of any such Claims, if such settlement is effected without the consent of the
Company, which consent shall not be unreasonably withheld, conditioned or
delayed. This indemnity shall not apply to any Claims that arise out of, or
are based upon, an untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with information
provided by any such Holder in writing specifically for the purposes of
filing or maintaining the effectiveness of the Registration Statement.
(b) Each Holder will indemnify and hold harmless the Company, each of its
officers, directors, partners, agents or employees, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter
and any other Holder or any of its directors, officers, partners, agents or
employees or any person who controls such Holder, against any Claims to which
the Company or any such director, officer, partner, agent, employee, controlling
person or underwriter, or other such Holder or director, officer, partner,
agent, employee or controlling person may become subject, under the Securities
Act, the Exchange Act or other federal or state law, insofar as such Claims
arise out of or are based upon (i) any Violation, in
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each case to the extent (and only to the extent) that such Violation occurs
in reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration, or (ii) the
failure of such Holder to (A) comply with applicable prospectus delivery
requirements, or (B) effect each sale by such Holder of Registrable
Securities included in the Registration Statement in accordance with the
method of sale set forth in the Registration Statement. In addition, each
such Holder will reimburse any reasonable legal or other expenses reasonably
incurred by the Company or any such director, officer, partner, agent,
employee, controlling person or underwriter, other Holder, officer, director,
partner, agent, employee or controlling person in connection with
investigating or defending any such Claims. Notwithstanding anything
contained in this Agreement to the contrary, the indemnity agreement
contained in this Section 8(b) shall not apply to amounts paid in settlement
of any such Claims if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld, conditioned or
delayed; PROVIDED FURTHER, that the aggregate liability of each Holder in
connection with any sale of Registrable Securities pursuant to a Registration
Statement in which a Violation occurred shall be limited to the net proceeds
received by such Holder from such sale.
(c) As soon as it becomes aware of the commencement of an action
respecting a Claim, the indemnified party shall promptly notify the
indemnifying party, although failure to notify shall not relieve the
indemnifying party from any liability to indemnify the indemnified party.
Following receipt of that notice, the indemnifying party may participate in
and, to the extent it wishes and upon giving notice to the indemnified party,
assume and undertake the defense of the action using counsel satisfactory to
it; provided that, if the indemnified party includes more than one Holder,
such counsel shall be satisfy to the Holders of a majority of the Registrable
Securities held by all such indemnified Holders. In that event, the
indemnifying party will not be liable to the indemnified party for any legal
expenses subsequently incurred by the indemnified party in connection with
the defense of the action, other than reasonable costs of investigation and
of liaison with the indemnifying party's counsel. Notwithstanding the
foregoing, an indemnified party shall have the right to retain its own
counsel, with reasonable fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding.
(d) If the indemnification provided for above is held by a court of
competent jurisdiction to be unavailable, then the indemnifying party, in
lieu of such indemnification, shall contribute to the amount paid or payable
by the indemnified party in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and the indemnified
party on the other hand in connection with the statements or omissions that
resulted in the Claims, as well as other equitable considerations. The
relative fault of the parties shall be determined by reference to, among
other things, whether the alleged untrue statement of a material fact or
omission to state a material fact relates to information supplied by the
indemnifying party or the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
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(e) The indemnity agreements of the Company and the Holders set forth
in this Section 8 are subject to the condition that, insofar as they relate
to any Violation made in a preliminary Prospectus but eliminated or remedied
in the amended Prospectus on file with the Commission at the time the
Registration Statement in question becomes effective or the amended
Prospectus filed with the Commission pursuant to Commission Rule 424(b) (the
"Final Prospectus"), such indemnity agreement shall not inure to the benefit
of any person if a copy of the Final Prospectus was furnished to the
indemnified party and was not furnished to the person asserting the Claim at
or prior to the time such action is required by the Securities Act.
(f) The provisions of this Section 8 shall survive the expiration or
termination of this Agreement and shall expire at the end of any applicable
limitation period.
9. EXPIRATION OF REGISTRATION RIGHTS.
The obligations of the Company under Section 2 of this Agreement to
register the Registrable Securities shall expire and terminate upon the
earlier of (i) the second anniversary of the date of this Agreement; or (ii)
at such time when the Holders have sold the last of the Registrable
Securities; provided, however, that such obligations shall be extended until
the last day of the Distribution Period, if the Distribution Period has
commenced on or prior to, and is suspended on or has not expired by, the date
on which such obligations would otherwise expire.
10. RESTRICTIONS ON TRANSFERS OF COMMON SHARES.
The Holders agree and understand that the issuance of the Registrable
Securities has not been, and, except as contemplated in this Agreement, the
sale or other disposition thereof by the Holders will not be, registered
under the Securities Act or the securities laws of any state and that such
shares may be sold or disposed of only in one or more transactions registered
under the Securities Act and, where applicable, such state laws or as to
which an exemption from the registration requirements of the Securities Act
and, where applicable, such state laws is available. The Holders acknowledge
that, except as expressly set forth in this Agreement, the Holders have no
right to require the Company to cause the registration of any Registrable
Securities. The Holders understand and agree that each certificate
representing any Registrable Securities (each, a "CERTIFICATE") shall be
subject to stop transfer instructions and shall bear the following legend:
"THE COMMON SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND SUCH STATE LAWS."
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The Company hereby agrees that it will, upon the request of the Holders,
eliminate any stop transfer instructions and any restrictive legend on any
certificates representing the Registrable Securities if (i) in the opinion of
counsel, including in-house counsel with demonstrated expertise in matters
relating to federal securities laws, which counsel and opinion (in form,
scope and substance) shall be reasonably satisfactory to the Company, the
Holders are entitled to sell or dispose of the Registrable Securities
represented by such Certificate without registration; (ii) such shares are
being disposed of by the Holders under a Registration Statement pursuant to
Section 2 herein and in compliance with the Securities Act and applicable
state and securities laws; or (iii) the Holder has held the Registrable
Securities for at least two years and has not been an affiliate of the
Company for at least three months and represents to the Company in writing
that the Holder is, therefore, eligible to resell such Registrable Securities
pursuant to Rule 144(k) under the Securities Act.
11. BINDING ON SUCCESSORS. This Agreement is binding upon and shall
inure to the benefit of the respective successors and assigns of the parties,
whether so expressed or not.
12. NO ASSIGNMENT. No Holder may assign this Agreement or any of the
rights or obligations hereunder without the express written consent of the
Company; provided, however, that this Agreement and the rights and
obligations of the Holders may be assigned with the prior written consent of
the Company, which shall not be unreasonably withheld, (i) if the Holder is
an individual, to an immediate family member, (ii) if the Holder is a limited
partnership, to its limited partners, (iii) if the Holder is a corporation,
to its stockholders, and (iv) if the Holder is a limited liability company,
to its members, and on condition that such transferee pursuant to clauses
(i), (ii), (iii) or (iv) agrees in writing to be bound by the terms of this
Agreement.
13. NOTICE. All notices, requests, consents or other communications
required pursuant to this Agreement shall be in writing and shall be
delivered personally, mailed by certified or registered mail (return receipt
requested), or sent by facsimile addressed as follows:
if to the Company:
Engineering Animation, Inc.
0000 Xxxxx Xxxx Xxxxx
Xxxx, Xxxx 00000
Fax: (000) 000-0000
Attention: Secretary
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with a copy to:
Xxxxxxx, Carton & Xxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
if to any Holder, at the address set forth on EXHIBIT A hereto,
or, to such other address as may be given pursuant to this Section 13.
14. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware (irrespective of its choice
of law principles).
15. AMENDMENT. This Agreement may not be amended without the written
consent of the Company and the Holders of a majority of the Registrable
Securities then outstanding. The failure of a party to enforce any right set
forth in this Agreement, or granted at law or in equity, shall in no way be
construed to be a waiver of such right, or affect the validity of this
Agreement or any part thereof, or the right thereafter to enforce each and
every provision of this Agreement.
16. UNENFORCEABLE PROVISION. If any provision of this Agreement is
held to be illegal, invalid, or unenforceable, such provision shall be
severed from this Agreement and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement.
17. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Registration
Rights Agreement as of the date first written above.
THE COMPANY
ENGINEERING ANIMATION, INC.
By:______________________________
Title:___________________________
THE HOLDERS
_________________________________
Print Name: _____________________
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