EXHIBIT 4.11
INVESTOR RIGHTS AGREEMENT
INVESTOR RIGHTS AGREEMENT, dated April 18, 2000, between Convergent
Communications, Inc., a Colorado corporation (the "Company"), and each of the
entities named on Exhibit A hereto (each, an "Initial Investor" and,
---------
collectively, the "Initial Investors").
The Company and the Initial Investors have entered into that certain
Securities Purchase Agreement, dated as of April 4, 2000, pursuant to which the
Initial Investors are purchasing from the Company, simultaneously with the
execution and delivery of this Agreement on the date hereof, certain securities
of the Company that are convertible into or exercisable for shares of the
Company's common stock. The Company has agreed to grant the Initial Investors
certain rights with respect to such securities and the underlying common stock
of the Company.
In consideration of the premises and the covenants and agreements
herein contained, in order to induce the Initial Investors to enter into such
Securities Purchase Agreement and consummate the transactions contemplated
thereby and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows.
ARTICLE I
DEFINITIONS
SECTION 1.01. As used in this Agreement, the following terms have the
meanings indicated:
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Exchange Act. The term "affiliated" (whether or not
capitalized) shall have a correlative meaning. For purposes hereof, the Company
shall not be deemed to be an Affiliate of any Investor or any Affiliate of any
Investor.
"Agreement" means this Investor Rights Agreement, as amended from time
to time in accordance with the terms hereof.
"Beneficial Owner" means a beneficial owner within the meaning of
Rules 13d-3 and 13d-5 under the Exchange Act, as interpreted by the Commission,
provided that a Person shall be deemed to have beneficial ownership of all
securities that such Person has a right to acquire without regard to the 60 day
limitation in subdivision (d)(i) of such Rule 13d-3. The terms (whether or not
capitalized) "beneficially own" and "owned beneficially" shall have correlative
meanings.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in either New York, New York, or the city and
state in which the principal executive offices of the Company within the United
States are located are authorized or obligated by law or executive order to
close.
1
"Closing Date" has the meaning given to such term in the Purchase
Agreement.
"Commencement Date" means the 120th day following the Closing Date.
"Commission" means the Securities and Exchange Commission or any other
federal agency then administering the Securities Act.
"Common Stock" means the Common Stock, no par value, of the Company
and any capital stock into which such Common Stock may be reclassified or
otherwise changed, and, unless the context otherwise requires, such term shall
also include all securities of the Company or any other issuer issued to the
holders of shares of Common Stock as a dividend or other distribution on, in
exchange for, in replacement of or upon the exercise of any conversion, purchase
or subscription right associated with any shares of Common Stock.
"Common Stock Rights" shall mean any Rights to subscribe for, purchase
or otherwise acquire any share or shares of Common Stock.
"Company Indemnified Parties" has the meaning set forth in Section
-------
6.02.
----
"Convertible Securities" means evidences of indebtedness, shares of
capital stock or other securities or obligations that are convertible into or
exchangeable, with or without payment of additional consideration in cash or
property, for any Common Stock, either immediately or upon the occurrence of a
specified date or a specified event or the satisfaction or happening of any
other condition or contingency.
"Demand Registration" has the meaning set forth in Section 2.01.
------------
"Disadvantageous Effect" has the meaning set forth in Section 2.07.
------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and (unless the context otherwise indicates)
the rules and regulations of the Commission promulgated thereunder, as they each
may, from time to time, be in effect.
"Existing Registration Rights" mean, as of any time of determination,
contractual commitments of the Company that existed as of January 1, 2000, were
disclosed on a schedule to the Purchase Agreement and remain in effect as of
such time, entitling Persons to exercise piggy-back registration rights if the
Company registers any of its securities for itself or for others.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" has the meaning set forth in Section 6.03.
------------
"Indemnifying Party" has the meaning set forth in Section 6.03.
------------
"Initial Investor" has the meaning set forth in the introductory
paragraph.
"Initiating Investor" has the meaning set forth in Section 2.02.
------------
2
"Investors" means:
(i) the Initial Investors,
(ii) each other Person, other than the Company or an Affiliate of the
Company, who at any time acquires any Registrable Shares directly
or indirectly from any Initial Investor or other Investor in a
transaction or chain of transactions not involving a public
offering within the meaning of and registered under the
Securities Act, and who
(A) so acquires the lesser of (1) all of the Registrable Shares
held by such Investor, and (2) 10% of the original number of
Registrable Shares initially held by all Initial Investors;
or
(B) is a constituent stockholder, partner or member (including
limited partners and retired partners or members) of an
Investor to whom Registrable Shares are distributed as part
of a distribution by such Investor to its constituent
stockholders, partners or members generally, or is a
liquidating trust established in connection with the
dissolution or winding up of any Investor; and
(iii) any Investor's successors, Affiliates and, in the case of any
Investor who is a natural person, such individual's spouse,
ancestors, lineal descendants, siblings, executors,
administrators and heirs who acquire Registrable Shares by gift,
will or intestate succession,
in each of the foregoing cases, if such Person (if not an Initial Investor)
agrees in writing to be bound by this Agreement as an Investor and for so long
as such Person continues to hold any Registrable Shares.
"Losses" has the meaning set forth in Section 6.01.
------------
"Majority Investors" means any one or more Investors who hold a total
number of Registrable Shares equal to at least a majority of the aggregate
number of Registrable Shares then held by all Investors.
"Majority Selling Investors" means, with respect to any Demand
Registration or Piggyback Registration, any one or more Selling Investors who
hold a total number of Registrable Shares equal to at least a majority of the
aggregate number of Registrable Shares that are or are to be included in such
Demand Registration or Piggyback Registration.
"New Securities" means, subject to Section 7.04, any newly issued
------------
shares of capital stock of the Company, including Common Stock and any class or
series of preferred stock, whether authorized or not, and Rights to acquire
shares of capital stock.
"New Securities Purchaser" has the meaning set forth in the definition
of "Preissuance Notice" set forth below in this Section 1.01.
------------
3
"Notes" means the Company's 13% Series B Senior Notes due 2008 issued
under the Indenture, dated as of April 2, 1998, between the Company and Norwest
Bank Colorado, N.A., a national banking association, as Trustee.
"Number of Common Shares Outstanding" has the meaning set forth in
Section 7.01.
------------
"Originally Issued Shares" means, as of any time, the aggregate number
of Conversion Securities (as defined in the Series B Articles of Amendment)
represented by the Series B Shares issued to the Investors on the Closing Date,
as such aggregate number shall have from time to time been cumulatively adjusted
as a result of the operation of the Series B Articles of Amendment.
"Pari Passu Registration Rightsholder" means:
(i) as used in Section 2.06 with respect to any Demand Registration
------------
requested by the Investors, a Person (A) who has, at the time of
such request, the right, under a then-effective written contract
entered into with the Company prior to the Closing Date and
disclosed on a schedule to the Purchase Agreement, to require
shares of Common Stock then owned by such Person to be included
in such Demand Registration and (B) who exercises that right with
respect to all or some of those shares in accordance with the
terms of such contract, if and to the extent a breach of such
--------------------
contract by the Company would result from the reduction, in the
circumstances contemplated by Section 2.06, of the number of such
------------
shares requested to be included by such Person in such Demand
Registration before any reduction in the number of Registrable
Shares sought to be included in such Demand Registration by the
Investors; or
(ii) as used in Section 3.02(b) with respect to any Piggyback
---------------
Registration in which any Investors have requested inclusion of
Registrable Shares in accordance with Section 3.01, a Person (A)
------------
who has, at the time of such request, the right, under a then-
effective written contract entered into with the Company prior to
the Closing Date and disclosed on a schedule to the Purchase
Agreement or granted after the Closing Date without violation of
Section 8.03, to require shares of Common Stock then owned by
------------
such Person to be included in such Piggyback Registration and (B)
who exercises that right with respect to all or some of those
shares in accordance with the terms of such contract, if and to
---------
the extent a breach of such contract by the Company would result
----------
from the reduction, in the circumstances contemplated by Section
-------
3.02(b), of the number of such shares requested to be included by
-------
such Person in such Piggyback Registration before any reduction
in the number of Registrable Shares sought to be included in such
Piggyback Registration by the Investors.
4
"Person" means any individual, corporation, limited liability company,
general or limited partnership, joint venture, association, joint stock company,
trust, unincorporated business or organization, government or agency or
political subdivision thereof, or other entity, whether acting in an individual,
fiduciary or other capacity.
"Piggyback Registration" has the meaning set forth in Section 3.01.
------------
"Preissuance Notice" shall be a written notice given to the Investors
pursuant to Section 7.01 no later than ten days prior to the date the Company
------------
plans to issue New Securities. Each Preissuance Notice shall (i) specify the
kind and amount of New Securities proposed to be issued, (ii) if such New
Securities consist of or include Common Stock Rights, briefly describe the terms
of such Common Stock Rights, (iii) identify each Person to whom such New
Securities are proposed to be issued (each a "New Securities Purchaser"), if
then known by the Company, (iv) state the method or manner of issuance, (v)
state the kind(s) and amount(s) of consideration for which such New Securities
are proposed to be issued and the determination of the Company's Board of
Directors of the fair market value of any such consideration other than cash
and (vi) describe the other material terms and conditions of the proposed
issuance of New Securities.
"Purchase Agreement" means the Securities Purchase Agreement, dated as
of April 4, 2000, between the Company and the Investor, as the same may be
amended from time to time in accordance with its terms.
"Qualifying Rights" means, as of any time, shares of the Series B
Preferred Stock and the Warrants, and also includes all other Common Stock
Rights which, by their terms, are exercisable for shares of Common Stock only
upon the payment, conversion, surrender, exchange or delivery by the holder of
additional consideration in cash or property in an amount or having a fair
market value per share of Common Stock which, as of such time, is equal to or
less than the fair market value per share of the Common Stock determined as of
such time.
"Registrable Shares" means (i) any and all shares of Common Stock
issued or issuable upon conversion of any Series B Share or upon exercise,
conversion or exchange of any Warrant, (ii) any and all shares of Common Stock,
and any shares of Common Stock issued or issuable upon the exercise of any
Rights or other securities, acquired by or issuable to the Investors pursuant to
Article VII of this Agreement and (iii) any other shares of Common Stock issued
in respect of any such shares (because of stock splits, stock dividends,
reclassifications, recapitalizations, or similar events); provided, however,
-------- -------
that shares of Common Stock which are Registrable Shares shall cease to be
Registrable Shares (x) upon any sale pursuant to a Registration Statement or
Rule 144 under the Securities Act, (y) upon any sale in any manner to a Person
which is not entitled to the rights provided by this Agreement or (z) with
respect to the Registrable Shares held by any specific Investor, when all such
Registrable Shares held by such Investor either (1) may be sold by such Investor
under Rule 144 under the Securities Act without limitation as to manner of sale
and without any limitation as to volume or (2) are equal to or less than the
number that may be sold by such Investor under Rule 144(e) within any three-
month period. For purposes of this Agreement, any Person shall be deemed to
hold, as of any time, (A) all issued and outstanding shares of Common Stock,
5
Registrable Shares or other securities then held or deemed to be held by such
Person, (B) all additional shares of Common Stock, Registrable Shares or other
securities which would then be held by such Person if it were assumed that all
shares of Series B Preferred Stock and Warrants, if any, then held or deemed to
be held by such Person had been duly and effectively exercised, exchanged or
converted in full at and effective as of such time, (C) all additional shares of
Common Stock, Registrable Shares or other securities which would then be held by
such Person if it were assumed that all Rights, if any, then held or deemed to
be held by such Person had been duly and effectively exercised in full at and
effective as of such time and (D) all additional shares of Common Stock,
Registrable Shares or other securities, if any, which such Person then has a
right to purchase pursuant to the preemptive rights granted pursuant to this
Agreement by virtue of any prior exercise of such preemptive rights, assuming,
in the case of each of clauses (B) and (C), that all adjustments to the kind,
number and amount of shares of capital stock or other securities issuable upon
exercise, exchange or conversion of any of the shares of Series B Preferred
Stock, Warrants or other Rights referred to in such clause required by reason of
any event or transaction occurring at or prior to such time had been duly and
effectively made as and when required by the terms thereof.
"Registration Expenses" shall mean, with respect to any Demand
Registration or Piggyback Registration all (i) registration, qualification and
filing fees, (ii) fees and expenses of compliance with securities or blue sky
laws (including the reasonable fees and disbursements of counsel for any
underwriters, dealers or placement agents in connection therewith), (iii)
printing expenses (or comparable duplication expenses) and escrow fees, (iv)
internal expenses of the Company (including all salaries and expenses of
officers and employees performing legal or accounting duties), (v) fees and
disbursements of counsel for the Company, (vi) fees and expenses for independent
certified public accountants retained by the Company (including all fees and
expenses associated with special audits or the delivery by independent certified
public accountants of a "cold comfort" letter or letters), (vii) fees and
expenses of any special experts retained by the Company in connection with such
registration, (viii) fees and expenses of listing the Registrable Shares on a
securities exchange or otherwise in connection with subdivision (r) of Section
-------
4.01, (ix) the reasonable fees and expenses of a single firm of legal counsel
----
for the Investors participating in such Demand Registration or Piggyback
Registration up to $75,000 in connection with a Demand Registration and $25,000
in connection with a Piggyback Registration and (x) all other reasonable fees,
costs, expenses and disbursements incurred in connection with or incident to the
Company's compliance with Article IV. Registration Expenses do not include
underwriting commissions or discounts payable in respect to Registrable Shares
of an Investor included in a Demand Registration or Piggyback Registration.
"Registration Statement" means a registration statement of the Company
under the Securities Act on any form for which the Company then qualifies and
which permits the sale thereunder of the number of Registrable Shares (and any
other securities of the Company) to be included therein in accordance with this
Agreement by the Selling Investors and, in the case of the Registrable Shares,
according to the method(s) of distribution determined in accordance with this
Agreement and in the case of any other securities covered thereby, according to
the plan(s) of distribution described therein, including all exhibits and
schedules to, all financial statements included in or otherwise filed with, and
all documents incorporated by reference in any such registration statement, in
each case as amended or supplemented as of any reference date.
6
"Rights" means any options, warrants, convertible or exchangeable
securities or other rights, however denominated, to subscribe for, purchase or
otherwise acquire any equity interest or other security of any class or series,
with or without payment of additional consideration in cash or property, either
immediately or upon the occurrence of a specified date or a specified event or
the satisfaction or happening of any other condition or contingency.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and (unless the context otherwise indicates) the
rules and regulations of the Commission promulgated thereunder, as they each
may, from time to time, be in effect.
"Selling Investors" means, with respect to any Demand Registration or
Piggyback Registration, any Investors holding any Registrable Shares which are
or are to be included in such Demand Registration or Piggyback Registration in
accordance with this Agreement.
"Series B Articles of Amendment" means the Amended and Restated
Articles of Incorporation of the Company setting forth the resolution of the
Board creating and authorizing the issuance of the Series B Preferred Stock and
filed with the Colorado Secretary of State or any successor provisions of the
Company's Articles of Incorporation, as the same may have been amended prior to
or concurrently with the Closing Date and thereafter may be amended.
"Series B Preferred Stock" means the Series B Senior Cumulative
Convertible Preferred Stock, no par value, of the Company.
"Series B Share" means, as of any time, any share of Series B
Preferred Stock then issued and outstanding.
"Shelf Registration" has the meaning set forth in Section 2.10.
------------
"TPG" means TPG Partners III, L.P., T3 Partners, L.P. and their
Affiliates.
"Warrant Agreement" means the Warrant Agreement, dated the date
hereof, between the Company and the Initial Investors, as it may be amended from
time to time in accordance with its terms.
"Warrants" means the Warrants to purchase shares of Common Stock
issued and sold by the Company to, and purchased by, the Initial Investors
pursuant to the Purchase Agreement and the Warrant Agreement.
"Warrant Stock" means, with respect to any Warrant at any time, the
Common Stock, each other class or series of capital stock and any Rights with
respect to any of the foregoing, any shares, number or other amount of which at
such time is deliverable upon exercise of such Warrant.
SECTION 1.02. Terms Generally; Certain Rules of Construction. The
----------------------------------------------
definitions of terms contained in this Agreement shall apply equally to both the
singular and plural forms of the terms defined and words in the singular include
the plural and words in the plural include the singular.
7
(a) Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms.
(b) The words "include", "includes" and "including" shall be deemed
to be followed by the phrase "without limitation." The words "herein",
"hereof" and "hereunder" and words of similar import refer to this
Agreement in its entirety and not to any part hereof unless the context
shall otherwise require.
(c) All references herein to Sections shall be deemed references to
Sections of this Agreement unless the context shall otherwise require.
(d) Unless otherwise expressly provided herein or unless the context
shall otherwise require, any references as of any time to any agreement or
other Contract, instrument or document or to any statute or regulation or
any specific section or other provision thereof are to it as amended and
supplemented through such time (and, in the case of a statute or regulation
or specific section or other provision thereof, to any successor of such
statute, regulation, section or other provision).
(e) Any reference herein to a "day" or number of "days" (without the
explicit qualification of "Business") shall be interpreted as a reference
to a calendar day or number of calendar days. If any action or notice is to
be taken or given on or by a particular calendar day, and such calendar day
is not a Business Day, then such action or notice shall be deferred until,
or may be taken or given on, the next Business Day.
(f) Unless otherwise expressly provided herein or unless the context
shall otherwise require, any provision of this Agreement using a defined
term (by way of example and without limitation, such as "Investors") which
is based on a specified characteristic, qualification, feature or status
shall, as of any time, refer only to such Persons who have the specified
characteristic, qualification, feature or status as of that particular
time.
(g) For purposes of this Agreement, (i) any acquisition or transfer
of any Rights to subscribe for, purchase or otherwise acquire any
Registrable Shares shall also constitute an acquisition or transfer or
proposed transfer of the Registrable Shares issuable upon the exercise,
exchange or conversion thereof and (ii) any Person who holds any Right to
subscribe for, purchase or otherwise acquire any Common Stock, Registrable
Shares or other securities shall be deemed to hold all such Common Stock,
Registrable Shares or other securities which then would be issuable if it
were assumed that such Right were then duly exercised, exchanged or
converted in full. When used with reference to any Right, the term
"exercise" shall mean to exercise the right to exchange or convert such
Right for or into, subscribe for, purchase or otherwise acquire shares of
Common Stock represented by such Right, and variants of such word
(including "exercised" and "exercisable") shall have correlative meanings.
8
(h) The terms "register", "registered" and "registration" refer to a
-------- ---------- ------------
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
ARTICLE II
DEMAND REGISTRATION
SECTION 2.01. Right to Demand Registration. The Investors shall have
----------------------------
the right to require the Company to register Registrable Shares under the
Securities Act (a "Demand Registration"), which right shall be exercisable in
the manner set forth in this Article II at any time or from time to time on or
----------
after the Commencement Date.
SECTION 2.02. Registrations. Any Investor or Investors holding in
-------------
the aggregate twenty-five percent (25%) of the Registrable Shares (the
"Initiating Investors") then held by all Investors may request, in writing, that
the Company effect a Demand Registration on any form available for such
registration under the Securities Act, of Registrable Shares constituting at
least 25% of the Registrable Shares owned by the Investors. If the Initiating
Investors intend to distribute the Registrable Shares by means of an
underwritten offering, they shall so advise the Company in their request. In
the event such Demand Registration is underwritten, the right of any other
Investor to participate in such Demand Registration shall be conditioned on such
Investor's participation in such underwriting on the same terms as the
Initiating Investors. Upon receipt of any such request, the Company shall
promptly give written notice of such proposed registration to all other
Investors. Such Investors shall have the right, by giving written notice to the
Company within thirty days after the Company provides its notice, to elect to
have included in such Demand Registration such of their Registrable Shares as
such Investors may request in such notice of election. Subject to Section 2.03,
------------
the Investors shall be entitled in the aggregate to require the Company to
effect four Demand Registrations pursuant to this Section 2.02 (any of which may
------------
be a Shelf Registration as provided in Section 2.10) and, except as provided in
------------
Section 5.01, a Demand Registration shall not be deemed to have been effected
------------
unless such registration has been declared or ordered effective and the
securities offered pursuant to such registration have been sold.
SECTION 2.03. Continuing Demand Registration. Subject to Sections
------------------------------ --------
2.06, 2.10 and 4.04, holders of Existing Registration Rights may participate in
---- ---- ----
the Investors' Demand Registrations; provided, however, that if the number of
-------- -------
Registrable Shares sought to be included by the Investors in the first of their
four Demand Registrations is reduced pursuant to Section 2.06, by reason of the
------------
inclusion in such Demand Registration of shares of Common Stock held by any
Person(s) other than Investors, by more than 25%, the registration shall not
count as a Demand Registration and if the number of Registrable Shares sought to
be included by the Investors in any subsequent Demand Registration is reduced
pursuant to Section 2.06, by reason of the inclusion in such Demand Registration
------------
of shares of Common Stock held by any Person(s) other than Investors, by more
than 10%, the registration shall not count as a Demand Registration.
9
SECTION 2.04. Reasonable Efforts by the Company. Subject to Section
--------------------------------- -------
2.05, if a Demand Registration is requested pursuant to Section 2.02 the Company
---- ------------
shall, as soon as practicable after the period of thirty days referred to in
such Section, file with the Commission and use its reasonable efforts to cause
to become effective a Registration Statement which shall cover the Registrable
Shares requested to be registered by the Selling Investors and shall take all
other actions (including those required by Article IV) as may be necessary or
----------
advisable to permit the Selling Investors to dispose of all such Registrable
Shares requested to be included in such Demand Registration in accordance with
the intended method(s) of distribution and in compliance with the Securities Act
and state "blue sky" and securities laws.
SECTION 2.05. Withdrawals. The Majority Selling Investors may, at
-----------
any time and from time to time reasonably in advance of the planned date of
consummation of the sale or other distribution of Registrable Shares pursuant to
any Demand Registration, (i) permit any Selling Investor to withdraw, in whole
or in part, from participation in such Demand Registration, (ii) permit any
Investor who was not originally a Selling Investor to become a Selling Investor
and include in such Demand Registration any or all of such Investor's
Registrable Shares or (iii) otherwise increase or decrease the number of
Registrable Shares to be included in such Demand Registration; provided,
--------
however, that if any such decrease would result in the reduction of the number
-------
of Registrable Shares to be registered in such Demand Registration to a number
that would not be sufficient to satisfy the condition stated in Section 2.02,
------------
then such decrease shall not be effective unless approved by the Majority
Selling Investors and, if so approved, the Selling Investor(s) shall be deemed
to have abandoned and terminated such Demand Registration. The Majority Selling
Investors may terminate or abandon such Demand Registration upon written notice
to the Company to that effect, in which event such Demand Registration shall be
deemed not to have been requested.
SECTION 2.06. Methods of Distribution; Reduction in Shares to be
--------------------------------------------------
Registered. (a) Subject to the last sentence of this Section 2.06(a) and to
---------- ---------------
the provisions of Section 2.06(b), the Registrable Shares of any Selling
---------------
Investor included in a Demand Registration may be registered for sale by such
Selling Investor directly or through sale or placement agents or to or through
one or more underwriters designated from time to time by such Selling Investor
and approved by the Company in its reasonable discretion and for resale by any
such underwriter or broker-dealer, through broker-dealers or in any other
manner, in one or more transactions and at a fixed price or prices, which may be
changed, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices, at prices determined on a negotiated or
competitive bid basis or at a price or prices otherwise determined by such
Selling Investor. Notwithstanding the preference of any Selling Investor in any
Demand Registration, if the Majority Selling Investors, in their sole
discretion, determine that the offering and sale of Registrable Shares pursuant
to such Demand Registration should be pursuant to an underwriting or through a
selling or placement agent or syndicate, then such Majority Selling Investors
shall have the right to select the underwriters or managing underwriter, selling
or placement agent or managing selling or placement agent or syndicate manager
for such offering and sale and to establish, by agreement with such
underwriters, managing underwriter, selling or placement agents, managing
selling or placement agent or syndicate manager or otherwise the price or prices
and other terms of such underwriting, offering and sale, and in such event no
Selling Investor who otherwise would be entitled to include Registrable Shares
in such Demand
10
Registration shall be entitled to have such Registrable Shares so included
unless they are included in such underwritten offering or offered and sold
through such selling or placement agent or syndicate at such price or prices and
on such terms. Any such managing underwriter, managing selling or placement
agent or syndicate manager selected by the Majority Selling Investors, shall be
subject to the Company's approval, which shall not be unreasonably withheld or
delayed.
(b) If a Demand Registration is for or includes an underwritten
offering or an offering through a sales or placement agent or syndicate, and the
managing underwriter, such sales or placement agent, or the managing sales agent
or the syndicate manager determines in good faith that inclusion in such
registration of all Registrable Shares and other securities, if any, requested
or proposed to be included in such offering exceeds the number that could be
sold without having an adverse effect on such offering, including the price at
which the Majority Selling Investors propose to sell their Registrable Shares
included in such offering, then the number of Registrable Shares to be offered
for the accounts of the Selling Investors shall be reduced or limited on such
basis in proportion to the respective numbers of Registrable Shares requested to
be included in such offering by the Selling Investors, to the extent necessary
to reduce the total number of shares to be included in such offering to the
amount recommended by such managing underwriter, agent, managing sales agent or
syndicate manager; provided, however, that if, without violation of Section
-------- ------- -------
2.10, in connection with such Demand Registration securities other than
----
Registrable Shares held by Selling Investors are being offered (whether for the
account of the Company or any Person other than an Investor), such reduction
shall be made (i) first, from any shares proposed to be sold for the accounts of
the Company or other Persons who are neither Investors nor Pari Passu
Registration Rights Holders, allocated among the Company and such other Persons
in such manner as may be acceptable to the Company and (ii) second, from the
Registrable Shares requested to be included in such registration by the
Investors and Pari Passu Registration Rights Holders (allocated, if necessary,
pro rata among all such Investors and such Pari Passu Registration Rights
--- ----
Holders on the basis of the relative numbers of shares each such Person has
requested to be included in such registration), it being understood and agreed
that the securities referred to in clause (i) above shall not be included in any
such offering unless or until all the Registrable Shares requested to be
included in such offering by the Investors are so included.
SECTION 2.07. Right of the Company to Suspend Registration. The
--------------------------------------------
Company shall be entitled to suspend, for a reasonable period of time not in
excess of ninety days after its receipt of a request for a Demand Registration
pursuant to Section 2.02, the filing of any Registration Statement which it
------------
otherwise would be required to file pursuant to this Article II, if (i) at any
----------
time prior to the filing of such Registration Statement the Board of Directors
of the Company determines, in good faith and in the exercise of reasonable
business judgment, that such filing would materially interfere with or otherwise
adversely affect in any material respect any material planned financing,
acquisition, corporate reorganization or other transaction involving the Company
(a "Disadvantageous Effect") and (ii) the Company gives all Selling Investors
written notice of such suspension; provided, however, that a suspension pursuant
-------- -------
to this Section 2.07 or pursuant to Section 4.02 by reason of the existence of
------------ ------------
one or more Disadvantageous Effects shall be authorized only once during any
twelve-month period. In the event of any suspension pursuant to this Section
-------
2.07, then unless the request for the Demand
----
11
Registration is withdrawn pursuant to the last sentence of this Section 2.07,
------------
the Company shall file such Registration Statement as soon as practicable after
the first to occur of (w) the consummation of the transaction which is the
asserted basis for such Disadvantageous Effect, (x) the abandonment or
termination of such transaction prior to consummation, (y) the determination by
the Board of Directors of the Company that such filing would not or would no
longer result in such Disadvantageous Effect and (z) the ninety-first (91st) day
after the receipt of the applicable Demand Notice. If the Company shall suspend
the filing of any Registration Statement pursuant to this Section 2.07, the
------------
Majority Selling Investors shall have the right to withdraw the Demand Notice
for such registration by giving written notice to the Company prior to
expiration of such suspension period.
SECTION 2.08. Form of Registration Statement. If in connection with
------------------------------
a Demand Registration, the Company proposes to effect such registration through
the filing of a Registration Statement on a particular registration form
available for such registration under the Securities Act and either the
underwriters or managing underwriter, selling or placement agent or managing
selling or placement agent or syndicate manager, if any, in connection with such
Demand Registration shall advise the Company in writing of its or their
reasonable and good faith opinion that the use of another available form is of
material importance to the success of the proposed offering or sale or other
distribution contemplated, then such Demand Registration shall be effected on
such other form.
SECTION 2.09. No Other Participants in Demand Registration. Unless
--------------------------------------------
otherwise agreed by the Majority Investors, neither the Company nor any other
Person except Investors and holders of Existing Registration Rights shall be
permitted to include any shares of Common Stock, Rights or other securities for
registration, offering, sale or distribution in any Demand Registration.
SECTION 2.10. Shelf Registration. (a) The Company shall use its
------------------
reasonable best efforts to qualify for registration on Form S-3 or any
comparable or successor form or forms. Any request by any Investor for a Demand
Registration pursuant to Section 2.02 or Section 2.03 may, at the election of
------------ ------------
the Initiating Investor by specification in the applicable request, include a
request that all or any of the Registrable Shares requested to be included in
such Demand Registration be registered under the Securities Act for offering and
sale on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act (a "Shelf Registration") to be made effective on or after the Commencement
Date. In the event of any such request for a Shelf Registration, the notice
given by the Initiating Investor pursuant to Section 2.02 shall state that such
------------
request was for or included a Shelf Registration. To the extent that a request
for a Demand Registration is for or includes a Shelf Registration, no Selling
Investor participating in such Shelf Registration shall be required to provide
information with respect to the desired price range for the Registrable Shares
requested to be included therein by any Selling Investor or the intended
method(s) of disposition or distribution thereof except to the extent and at the
time or times required in order to satisfy the applicable requirements of
Regulation S-K promulgated by the Commission. The method(s) of distribution of
the Registrable Shares of any Selling Investor included in any Shelf
Registration may be any method or methods permitted by Rule 415 of the
Securities Act and any such Selling Investor may change such method or methods
of distribution at any time and from time to time while the Registration
Statement relating to such Shelf
12
Registration is required to remain effective in accordance with the terms of
Section 2.10(b) hereof, provided that such Selling Investor provides to the
Company the information reasonably required to permit compliance with the
applicable requirements of Regulation S-K promulgated by the Commission.
(b) The Company shall use all reasonable efforts to keep each
Registration Statement filed with respect to any Shelf Registration continuously
effective until the later of (i) two years from the date on which the Commission
declares such Registration Statement effective or (ii) three years from the
Closing Date. Such period shall be automatically extended by the aggregate
number of days, if any, during which any delay, deferral, postponement or
suspension is in effect with respect to such Registration Statement.
(c) The Company shall effect any Shelf Registration requested
pursuant to this Agreement on a Registration Statement of the Company under the
Securities Act on any form, including Form S-3, for which the Company then
qualifies and which permits the offering and distribution thereunder of the
number of Registrable Shares to be included therein in accordance with the
method(s) of distribution determined in accordance with this Agreement.
(d) The fact that a Registration Statement with regard to a Shelf
Registration is effective as of a particular time shall not prejudice or
otherwise affect the rights of the Selling Investors to participate in any such
Demand Registration requested by any other Investors or to participate in any
Piggyback Registration.
ARTICLE III
PIGGYBACK REGISTRATION
SECTION 3.01. Right to Require Piggyback Registration. (a) If at any
---------------------------------------
time or from time to time, the Company shall determine to register any of its
securities, either for its own account or the account of a security holder or
holders (other than (i) a registration statement on Form S-4 or S-8 (or any
substitute form that may be adopted by the SEC) or (ii) a registration statement
filed in connection with an offer of securities solely to the Company's existing
security holders) in a transaction that may be used for the registration of
Registrable Shares for distribution by any one or more of the methods permitted
by Section 3.02(a), then upon each and every such occasion the Company shall
---------------
give prior written notice of such proposed registration to each Investor of its
intention to do so promptly and in any event not later than the tenth Business
Day before the anticipated filing date of the applicable Registration Statement.
Such notice shall specify whether the proposed registration is for the account
of the Company, for the account of one or more other Persons or both and also
specify the kind and number or amount of securities proposed to be registered on
behalf of each thereof and the proposed offering price or prices and
distribution methods and arrangements. Upon the terms and subject to the
conditions and limitations set forth in this Article III, each Investor may
elect to participate in such registration by giving the Company, within ten days
after such notice has been given by the Company, a written request to register
any or all of such Investor's Registrable Shares in connection with such
registration (any such registration as to which any such request is made being
sometimes referred to as an "Piggyback Registration"); provided, however, that
-------- -------
if the registration is a
13
"demand" registration made pursuant to the exercise of Existing Registration
Rights in accordance with the original terms thereof and if, by the original
terms of such Existing Registration Rights, the holders having such Existing
Registration Rights have the right to exclude from such demand registration
securities proposed to be registered by any Persons except holders of such
Existing Registration Rights, then the Investors shall not be entitled to
participate in such registration unless the holders of such Existing
Registration Rights participating in such registration otherwise agree in
writing.
(b) Any such request by an Investor shall state (i) the kind and
number of Registrable Shares to be included in such registration by such
Investor (ii) such Investor's preferred method of distribution of such
Registrable Shares permitted by Section 3.02(a) and (iii) any other information
that the Company reasonably requests in such notice given by it to the
Investors. Upon receipt of one or more of such requests, the Company shall,
subject to Section 3.03, as soon as practicable, file with the Commission and
use its reasonable efforts to cause to become effective, a Registration
Statement which shall cover the Registrable Shares requested to be registered by
the requesting Investors and shall take all such other actions (including those
required by Article IV) as may be necessary or advisable to permit the
requesting Investors to dispose of all such Registrable Shares requested to be
included in such Piggyback Registration in accordance with the permitted
intended method or methods of distribution in compliance with the Securities Act
and state "blue sky" and securities laws.
SECTION 3.02. Methods of Distribution; Reduction in Number of Shares
------------------------------------------------------
to be Registered. (a) Subject to Section 3.02(b), Section 3.02(c) and Section
---------------- --------------- --------------- -------
4.5, the Registrable Shares of any Investor included in a Piggyback Registration
---
may be registered for sale by such Investor directly or through sales or
placement agents designated from time to time or to or through one or more
underwriters or broker-dealers designated from time to time by such Investor and
for resale by any such underwriter or broker-dealer, in one or more transactions
and at a fixed price, which may be changed, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices, at prices
determined on a negotiated or competitive bid basis or at a price otherwise
determined by such Investor.
(b) If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
advise the Investors as a part of the written notice given pursuant to Section
-------
3.01. In such event, the right of any Investor to participate in such
----
registration pursuant to this Article III shall be conditioned upon such
-----------
Investor's participation in such underwriting and the inclusion of Registrable
Shares in the underwriting to the extent provided herein. Subject to Section
-------
4.04, if any Piggyback Registration is for (or includes) an underwritten
----
offering, the Company will permit each Investor who elects to include any of his
Registrable Shares in such Piggyback Registration to elect to include any or all
of such Registrable Shares in such underwritten offering on the same terms and
conditions as any similar securities included therein. In a registration
pursuant to Section 3.01 hereof involving an underwritten public offering, if
------------
the managing underwriter or underwriters of such underwritten offering have
informed, in writing, the Company and each Investor who requested Registrable
Shares to be included in such offering that in such underwriter's or
underwriters' reasonable opinion the total number of securities which the
Company, the Investors who requested Registrable Shares to be included in such
offering and any other Persons desiring
14
to participate in such registration intend to include in such offering is such
as to materially and adversely affect the success of such offering, including
the price at which such securities can be sold, then the Company will be
required to include in such registration only the amount of securities which it
so advised should be included in such registration. In such event:
(i) if the registration was initiated by any security holder(s) of
the Company exercising "demand" registration rights, securities
shall be registered in such offering in the following order of
priority (unless a different order is specified in the document
granting such holder's demand rights which is in effect prior to
the Closing Date):
(A) first, the securities, if any, which the Company proposes to
-----
register and the securities such security holder(s)
initiating such registration propose to register, allocated,
if necessary, pro rata among the Company and such holder(s)
--- ----
on the basis of the relative numbers of shares each such
Person proposes to include in the registration, provided
--------
that if such initiating holder or holders are Investors, the
Company shall not be entitled to include any securities in
such registration without the prior written consent of the
Majority Investors and, as among Investors there shall be no
priority and Registrable Securities sought to be included by
Investors shall be included pro rata based on the amount of
--- ----
securities sought to be registered by such Persons
(B) second, provided that no securities sought to be included by
------ --------
the Company or such initiating holder(s) have been excluded
from such registration, the securities which have been
requested to be included in such registration by Investors
pursuant to this Agreement (unless the initiating holder(s)
are Investors, in which case clause (i)(A) shall govern the
priority of the Investors) or by Pari Passu Registration
Rights Holders (allocated, if necessary, pro rata among all
--- ----
such Investors and Pari Passu Registration Rights Holders on
the basis of the relative numbers of shares each such Person
has requested to include in registration), and
(C) third, provided that no securities sought to be included
----- --------
under clause(i)(A) or (i)(B) have been excluded, the
securities of all other Persons sought to be included in
such registration (allocated, if necessary, among such
Persons in such manner as the Company deems acceptable); or
(ii) if the registration was initiated by the Company, otherwise than
by reason of any such exercise of "demand" registration rights,
securities shall be registered in such offering in the following
order of priority:
(A) first, the securities, if any, which the Company proposes to
-----
register,
15
(B) second, provided that no securities sought to be included by
------ --------
the Company have been excluded from such registration, the
securities which have been requested to be included in such
registration by Investors pursuant to this Agreement or by
Pari Passu Registration Rights Holders (allocated, if
necessary, pro rata among all such Investors and Pari Passu
--- ----
Registration Rights Holders on the basis of the relative
numbers of shares each such Person has requested to include
in registration), and
(C) third, provided that no securities sought to be included
----- --------
under clause(ii)(A) or (ii)(B) have been excluded, the
securities of all other Persons sought to be included in
such registration (allocated, if necessary, among such
Persons in such manner as the Company deems acceptable).
(c) If, as a result of the provisions of Section 3.02(b), any Investor
shall not be entitled to include all Registrable Securities in a Piggy-Back
Registration that such Investor has requested to be included, such Investor may
elect to withdraw his request to include Registrable Securities in such
registration.
SECTION 3.03. Withdrawal of Registration. The Company may, without
--------------------------
the consent of any Investor, delay, suspend, abandon or withdraw any Piggyback
Registration and any related proposed offering or other distribution in which
any Investor has requested inclusion of Registrable Shares pursuant to this
Article III.
-----------
ARTICLE IV
OBLIGATIONS WITH RESPECT TO REGISTRATION
SECTION 4.01. In General. Whenever the Company is obligated by the
----------
provisions of Article II or Article III to effect the registration of any
---------- -----------
Registrable Shares under the Securities Act, the Company shall use its
reasonable efforts to effect the registration of all Registrable Shares which
any Investor has requested to be included therein for offering, sale and
distribution in accordance with the permitted intended methods of distribution
thereof as quickly as practicable, and in connection therewith the Company will
do the following as expeditiously as possible:
(a) prepare and file with the Commission a Registration Statement on
any form for which the Company then qualifies and which is available for
the registration of the Registrable Shares requested to be registered in
accordance with the intended methods of distribution thereof, (i) include
in the Registration Statement all Registrable Shares requested to be
included pursuant to Article II or Article III (as the case may be), and
---------- -----------
(ii) use its reasonable efforts to cause such Registration Statement to
become effective;
(b) prepare and file with the Commission such amendments and post-
effective amendments and supplements to the Registration Statement or any
prospectus as may be
16
necessary to keep the Registration Statement effective, current and in
compliance with the provisions of the Securities Act, until the last to
occur of (i) the sale or other distribution of all of the Registrable
Shares covered by such Registration Statement in accordance with the
intended methods of distribution thereof, (ii) the expiration of all
periods during which transactions in Registrable Shares by a dealer are not
exempt from the provisions of Section 5 of the Securities Act by virtue of
Section 4(3) of the Securities Act or during which any dealer is obligated
under the Securities Act to deliver a prospectus in connection with
transactions involving Registrable Shares and (iii) the expiration of all
other periods, if any, during which the Registration Statement is required
to remain effective in order to avoid a violation of applicable law by any
Investor or the Company related to the sale or other distribution of all of
the Registrable Shares covered by such Registration Statement in accordance
with the intended methods of distribution thereof;
(c) at least three Business Days prior to filing any Registration
Statement or prospectus or any amendment or supplement thereto, furnish to
each Investor and each underwriter, if any, of the Registrable Shares
covered by such Registration Statement copies of the current draft of such
Registration Statement or prospectus (including documents to be
incorporated by reference therein), which documents will be subject to the
reasonable review and comments of such Investors (and their respective
counsel) during such three Business Day period, and if any Investor objects
in writing to any statements in any such documents with respect to such
Investor or the distribution of the Registrable Shares to be included by
him in such Registration Statement, the Company shall, subject to
applicable law, promptly revise such statements to such Investor's
reasonable satisfaction;
(d) promptly notify each Investor of the effectiveness of the
Registration Statement;
(e) furnish to each Investor without charge and as soon as such
documents become available to the Company, at least one copy of the
Registration Statement and each amendment thereto, and such number of
conformed copies thereof, copies of the prospectus (including each
preliminary prospectus and each amendment or supplement thereto), in each
case together with all exhibits thereto and all documents incorporated by
reference in any of such documents as such Investor may reasonably (in
light of such Investor's intended method of distribution) request in order
to facilitate the disposition of the Registrable Shares being sold by such
Investor (it being understood that the Company consents to the use, in
compliance with the Securities Act, of each preliminary prospectus and
prospectus and each amendment or supplement thereto by each Investor, each
underwriter, broker, dealer, placement agent and other securities industry
professional and each agent of each Investor in connection with the
offering, sale and distribution of the Registrable Shares covered thereby);
(f) promptly notify each Investor, at any time when a prospectus
relating to Registrable Shares of such Investor covered by the Registration
Statement is required to be delivered under the Securities Act, of the
happening of any event as a result of which the preliminary prospectus or
prospectus included in such Registration Statement or any
17
prospectus supplement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and
the Company will, as promptly as practicable thereafter, prepare and file
with the Commission and furnish to each Investor a supplement or amendment
to such preliminary prospectus, prospectus or prospectus supplement so
that, as thereafter delivered to the prospective purchasers of the
Registrable Shares being distributed by such Investor, such preliminary
prospectus, prospectus or prospectus supplement will not contain any 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;
(g) enter into customary agreements (including, in the case of an
underwritten offering, an underwriting agreement in customary form) and
make such representations and warranties to any underwriters, brokers,
dealers, placement agents and other Persons involved in the distribution of
the Registrable Shares included in such Registration Statement as in form,
substance and scope are customarily made by issuers in similar
circumstances or which may be reasonably requested;
(h) furnish to each underwriter, broker, dealer or placement agent
participating in any offering or sale or other distribution pursuant to
such Registration Statement a signed counterpart of (i) an opinion of
counsel to the Company addressed to such underwriter, broker, dealer or
placement agent (as the case may be) and (ii) a "cold comfort" letter or
letters from the Company's independent certified public accountants, each
in customary form and covering such matters of the type customarily covered
by legal opinions or "cold comfort" letters (as the case may be) in similar
offerings, sales or distributions of securities of similarly situated
issuers and such other matters as the Majority Selling Investors may
reasonably request;
(i) prepare and file with the Commission promptly upon the request of
any such Investor, any amendments or supplements to such Registration
Statement or the applicable prospectus which, in the reasonable opinion of
counsel for such Investor, is required under the Securities Act in
connection with the distribution of Registrable Shares by such Investor;
(j) effective on or prior to the date the Registration Statement
becomes effective, use its reasonable efforts to register or qualify the
Registrable Shares covered by a Registration Statement under the securities
or blue sky laws of such jurisdictions in the United States as the Majority
Selling Investors or any underwriter, broker, dealer or placement agent
participating in the offering or sale or other distribution of the
Registrable Shares covered thereby shall reasonably request, and do any and
all other acts and things which may be reasonably necessary to enable each
Selling Investor to consummate the offering and disposition of such
Registrable Shares in such jurisdictions of such Registrable Shares in
accordance with the permitted methods of distribution described in such
Registration Statement; provided, however, that the Company shall in no
-------- -------
event be required to qualify generally to do business as a foreign
corporation in any
18
jurisdiction where it is not otherwise required to be so qualified or, to
conform its capitalization or the composition of its assets at the time to
the securities or blue sky laws of such jurisdiction;
(k) make generally available to the Company's security-holders
earnings statements satisfying the provisions of the last sentence of
Section 11(a) of the Securities Act no later than forty-five days after the
end of the twelve-month period beginning with the first month of the first
fiscal quarter commencing after the effective date of the Registration
Statement, which earnings statements shall cover said twelve-month period;
(l) promptly notify each Selling Investor and each underwriter,
broker, dealer and placement agent participating in any offering or sale or
other distribution of securities covered by such Registration Statement of
the issuance or threatened issuance of any stop order or other order
suspending the effectiveness of the Registration Statement or preventing or
suspending the use of any preliminary prospectus, prospectus or prospectus
supplement; use reasonable efforts to prevent the issuance of any such
threatened stop order or other order, and if any such order is issued, use
its best efforts to obtain the lifting or withdrawal of such order at the
earliest possible moment and promptly notify each Selling Investor and each
such underwriter, broker, dealer and placement agent of any such lifting or
withdrawal;
(m) as promptly as practicable after filing with the Commission of any
document which is incorporated by reference into a Registration Statement,
notify each Selling Investor of such filing and deliver a copy of such
document to each Selling Investor;
(n) cooperate with each Selling Investor and the underwriters,
brokers, dealers and placement agents participating in any offering or sale
or other distribution of securities covered by such Registration Statement
to facilitate the timely preparation and delivery of certificates, not
bearing any restrictive legends, unless otherwise required by such
Investor, representing the securities covered by such Registration
Statement, and enable all Registrable Shares of such Selling Investor
covered thereby to be in such denominations and registered in such names as
such Selling Investor may request;
(o) use its reasonable efforts to cause the Registrable Shares covered
by the Registration Statement to be registered with or approved by such
other governmental authorities within the United States and its territories
as may be necessary to enable the Selling Investors to consummate the
disposition of such securities in accordance with the intended methods of
disposition;
(p) cooperate with the Selling Investors and the underwriters,
brokers, dealers and placement agents participating in any offering or sale
or other distribution of securities covered by such Registration Statement
in making any filings or submissions required to be made, and in furnishing
all appropriate information in connection therewith, with the National
Association of Securities Dealers, Inc., any national
19
securities exchange, any other "self-regulatory organization" (as defined
in the Exchange Act) or with any governmental authority;
(q) promptly notify each Selling Investor and each underwriter,
broker, dealer and placement agent participating in any offering or sale or
other distribution of securities covered by such Registration Statement of
the issuance or threatened issuance of any order suspending the
registration or qualification of any Registrable Shares covered by such
Registration Statement for disposition in any jurisdiction; use its
reasonable efforts to prevent the issuance of any such threatened order
and; if any such order is issued, use its reasonable best efforts to obtain
the lifting or withdrawal of such order at the earliest possible moment and
promptly notify each Selling Investor and each such underwriter, broker,
dealer and placement agent of any such lifting or withdrawal;
(r) if any shares of Common Stock or any other capital stock or
securities of the same class, series, issue or other type as any
Registrable Shares covered by such Registration Statement are or upon
consummation of all sales and other distributions covered by such
Registration Statement will be listed, qualified or otherwise eligible for
trading or quotation on a national securities exchange or The Nasdaq Stock
Market, use its reasonable best efforts to cause, by the date of the first
sale of any Registrable Shares pursuant to such Registration Statement, all
Registrable Shares covered by such Registration Statement to be listed,
qualified or eligible for trading or quotation on each such exchange or
quotation system;
(s) take, and use its reasonable efforts to cause each of the
respective Affiliates of the Company to take, all action necessary to
effect each registration, offering, sale and distribution of the
Registrable Shares contemplated hereby, including preparing and filing any
required financial or other information;
(t) make available to each registrar, transfer agent, trustee or
similar agent or fiduciary for each class, series, issue or other type of
Registrable Shares a supply of certificates or other instruments evidencing
or constituting such Registrable Shares which shall be in a form complying
with the requirements of such registrar, transfer agent, trustee or similar
agent or fiduciary promptly after the registration of such Registrable
Shares;
(u) in the case of an underwritten offering, use its reasonable best
efforts to cause the senior executive officers of the Company to
participate in the customary "road show" presentations that may be
reasonably requested by the managing underwriter or underwriters in any
such underwritten offering and otherwise to facilitate, cooperate with, and
participate in each proposed offering contemplated herein and customary
selling efforts related thereto; and
(v) take all other actions which are reasonably necessary or which may
be reasonably requested by the Majority Selling Investors or the Majority
Investors or any underwriter, broker, dealer or placement agent
participating in any offering or sale or other distribution of securities
covered by such Registration Statement to effect the
20
registration and qualification of the Registrable Shares covered by such
Registration Statement and to facilitate the disposition thereof in
accordance with the respective plans of distribution of the Selling
Investors.
SECTION 4.02. Suspension of Registration Proceedings.
--------------------------------------
Notwithstanding anything to the contrary contained herein, if at any time after
the filing of a Registration Statement in a Demand Registration but before it is
declared effective by the Commission the Company determines, in its reasonable
business judgment, that such offering, sale or other distribution covered
thereby would result in a Disadvantageous Effect, then the Company may suspend
the offering, sale or distribution of any of the Registrable Shares pursuant to
such Registration Statement by giving written notice to such effect to each
Selling Investor; provided, however, that (i) the Company may not require such
-------- -------
suspension unless such suspension is also required on the part of each and every
Person (including the Company) who proposes to offer, sell or otherwise
distribute any securities pursuant to such Registration Statement and (ii) a
suspension pursuant to this Section 4.02 or pursuant to Section 2.07 by reason
------------ ------------
of the existence of one or more Disadvantageous Effects shall be authorized only
once during any twelve-month period. Any such suspension pursuant to this
Section 4.02 shall terminate upon the first to occur of (i) the consummation of
------------
the transaction which is the asserted basis for such Disadvantageous Effect,
(ii) the abandonment or termination of such transaction by the Majority Selling
Investors prior to consummation (which will constitute the withdrawal of the
Demand Notice with respect to such Demand Registration), (iii) the determination
by the Board of Directors of the Company that such offering, sale or other
distribution would not or would no longer result in such Disadvantageous Effect
and (iv) the ninety-first day after the written notice of such suspension is
given in accordance with this Section.
SECTION 4.03. Procedures if Stop Order Issued. Each Selling
-------------------------------
Investor, upon receipt of any written notice from the Company of the happening
of any event of the kind described in Section 4.01(f), will forthwith
---------------
discontinue disposition of Registrable Shares pursuant to the applicable
Registration Statement until such Selling Investor's receipt of the copies of
the supplemented or amended preliminary prospectus, prospectus or prospectus
supplement contemplated by Section 4.01(f), and, if so directed by the Company,
---------------
such Selling Investor will deliver to the Company all copies in its possession
of the most recent preliminary prospectus, prospectus or prospectus supplement
covering such Registrable Shares at the time of receipt of such notice. In the
event the Company shall give any such notice after a Registration Statement has
become effective, the Company shall extend the period during which the
effectiveness of such Registration Statement shall be maintained pursuant to
Section 4.01(b) hereof by the number of days during the period from and
---------------
including the date of the giving of notice pursuant to Section 4.01(f) to the
---------------
date when the Company shall make available to each Selling Investor the copies
of the supplemented or amended preliminary prospectus, prospectus or prospectus
supplement contemplated by Section 4.01(f).
---------------
SECTION 4.04. Participation in Underwritten Offers. No Investor or
------------------------------------
other Person who otherwise has a right to participate in any underwritten
offering in connection with a Demand Registration or a Piggyback Registration
shall be entitled to so participate unless such Person (i) agrees to sell its
securities on the basis provided in any underwriting arrangements applicable to
all stockholders who participate therein (including so-called "lock-up"
21
arrangements) and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and this Agreement;
provided, that in the case of any Demand Registration, the Majority Selling
--------
Investors shall have the right to determine those arrangements by agreement with
the managing underwriter(s) as provided in Section 2.06(a).
SECTION 4.05. Restriction on Other Sales. If, in the case of the
--------------------------
first underwritten offering after the date of this Agreement that consists of or
includes offerings of Common Stock for the account of the Company registered
pursuant to Section 5 of the Securities Act, the managing underwriter(s) for
such offering determine in good faith that public sales of Common Stock by the
Investors otherwise than as part of such offering would adversely affect the
success of such offering, and if the Investors, collectively, then own
Registrable Shares constituting 5% or more of the fully diluted shares of Common
Stock then outstanding (after giving effect to all sales, including any by
Investors, and issuances of Common Stock or Rights to acquire Common Stock
pursuant to the Registration Statement covering such offering), then to the
extent requested by such managing underwriter(s), no Investor shall effect any
sale or distribution into the public market of any Common Stock owned by such
Investor, other than as part of such underwritten offering (to the extent that
such Investor has the right or is otherwise allowed to participate therein), for
such period after the effective date of the Registration Statement covering such
offering as such managing underwriter(s) shall specify, provided that (i) such
--------
period shall not exceed ninety days and (ii) each of the executive officers and
the directors of the Company who beneficially own Common Stock or Rights to
acquire Common Stock, and each Person who holds a number of shares of Common
Stock (including shares issuable upon exercise of Rights but excluding shares
acquired in a public market) equal to or greater than the number of Registrable
Shares held (after giving effect to any sales pursuant to such Registration
Statement) by the Investors, collectively, also agree to be subject to the same
restrictions for the same period and any waiver or release from such restriction
granted to any such officer, director or Person is also granted to each of the
Investors with respect to the same number of shares. Any contract or agreement
entered into on or after the date hereof pursuant to which the Company issues
any securities or becomes or may become obligated to register or to permit the
participation in the registration of any securities of the Company shall contain
restrictions upon the holders of such securities equivalent to those imposed
upon the Investors under this Section. The provisions of this Section 4.05
------------
shall not prevent the conversion, exchange or exercise of any securities
pursuant to their respective terms into or for other securities of the Company
or any public sale or other distribution by any of the Investors with the prior
consent of the Company, and are supplemental to any similar requirements imposed
by the Securities Act.
ARTICLE V
EXPENSES OF REGISTRATION
SECTION 5.01. Expenses. Except as provided in the last sentence of
--------
this Section 5.01, all Registration Expenses incurred in connection with or
------------
otherwise incident to any Demand Registration or Piggyback Registration and the
offering or sale or other distribution of any Registrable Shares in connection
therewith shall be borne by the Company, whether or not any Registration
Statement filed in connection therewith ever becomes effective or any such sale
22
or other distribution ever is consummated. Underwriting discounts and selling
commissions attributable to the Registrable Shares included in such registration
shall be borne by the holders of such Registrable Shares pro rata on the basis
of the respective numbers of such included Registrable Shares. Subject to the
last sentence of this Section 5.01, the Company shall not be required to pay the
------------
Registration Expenses of any Demand Registration begun pursuant to Section 2.02
------------
that is withdrawn at the request of the Majority Selling Investors, unless the
Majority Investors elect in writing to have such registration counted as a
Demand Registration. In any such case, (i) the Holders of Registrable Shares to
have been registered shall bear all such Registration Expenses pro rata on the
basis of the number of shares to have been registered, and (ii) the Company
shall not be deemed to have effected a Demand Registration for purposes of the
last sentence of Section 2.02. Notwithstanding the foregoing, however, the
------------
Company shall pay such Registration Expenses (and shall not be deemed to have
effected a Demand Registration for purposes of the last sentence of Section
-------
2.02) if the withdrawal is pursuant to Section 2.07 or Section 3.02.
---- ------------ ------------
ARTICLE VI
INDEMNIFICATION AND CONTRIBUTION
SECTION 6.01. Indemnification by the Company. The Company shall
------------------------------
indemnify and hold harmless each Investor, each former Investor, each Person (if
any) who controls such Investor or former Investor within the meaning of the
Securities Act or the Exchange Act and each of their respective Affiliates,
partners, directors, officers, employees and agents (collectively, the "Investor
Indemnified Parties") from and against any liabilities, obligations, losses,
damages, assessments, fines and penalties of any kind or nature, including all
amounts paid or agreed to be paid in settlement of any claim, action, suit,
hearing, proceeding or investigation (collectively, "Losses"), whether direct,
indirect, joint or several, and subject to Section 6.03, also shall indemnify
------------
and reimburse each Investor Indemnified Party for all reasonable fees, costs and
expenses (including reasonable fees and disbursements of counsel) in connection
with preparing for, defending against or settling, prosecuting any appeal of any
judgment entered in, or otherwise as a result of, any claim, action, suit,
hearing, proceeding or investigation, in each case which in any manner results
from, arises out of, or is based upon or related or attributable to (i) any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement as originally filed or in any amendment thereof, or
in any preliminary, final or summary prospectus, or in any amendment thereof or
supplement thereto, or any omission or alleged omission to state in any thereof
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) any violation by the Company of any
federal or state law, rule or regulation or common law applicable to the Company
and relating to action required of or inaction by the Company in connection with
any Demand Registration or Piggyback Registration; provided, however, that, in
-------- -------
the case of clause (i), the Company shall not be obligated to indemnify any
Investor or any of its controlling Persons, Affiliates, partners, directors,
officers, employees or agents for any Loss to the extent (and only to the
extent) that such Loss arises from any such untrue statement made in or omission
from the Registration Statement or any amendment thereof, or any related
preliminary, final or summary prospectus or any amendment thereof or supplement
thereto, which statement or omission related to information about such Investor
or its proposed plan of distribution of the
23
Registrable Shares of such Investor covered by such Registration Statement and
was made or omitted in reliance upon and in conformity with the latest
information about such Investor or its proposed plan of distribution of the
Registrable Shares of such Investor covered by such Registration Statement which
was provided to the Company by such Investor in writing and stated in writing to
be specifically for use in such Registration Statement (or amendment thereto) or
such prospectus (or amendment thereof or supplement thereto). The Company will
also indemnify each underwriter, selling broker, dealer manager, placement agent
and similar securities industry professional participating in the distribution
of Registrable Shares, its officers and directors and each Person who controls
such Person (within the meaning of the Securities Act) to the extent required by
such underwriter; provided, however, that if the Company and any such
-------- -------
underwriter, selling broker, dealer manager or similar industry professional
enters into an underwriting, purchase or other agreement relating to such
distribution which contains provisions relating to indemnification and
contribution between the Company and such Person, such provisions shall be
deemed to govern indemnification and contribution as between the Company and
such Person.
SECTION 6.02. Indemnification by Each Investor. Each Investor,
--------------------------------
individually and not jointly, shall indemnify and hold harmless the Company and
each Person, if any, who controls the Company within the meaning of the
Securities Act and the Exchange Act (the "Company Indemnified Parties") and the
Investor Indemnified Parties (other than such indemnifying Investor and its
controlling Persons, Affiliates, partners, directors, officers, employees and
agents) from and against any Loss to which such Company Indemnified Parties
and/or Investor Indemnified Parties may become subject, and subject to Section
-------
6.03, also shall indemnify and reimburse each Company Indemnified Party for all
----
reasonable fees, costs and expenses (including reasonable fees and disbursements
of counsel) in connection with preparing for, defending against or settling,
prosecuting any appeal of any Judgment entered in, or otherwise as a result of
any claim, action, suit, hearing, proceeding or investigation, in each case
insofar and to the extent (and only insofar and to the extent) as such Loss or
such claim, action, suit, hearing, proceeding or investigation arises out of or
is based upon any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement pursuant to which any Registrable
Shares of such Investor were offered and sold or in any related preliminary,
final or summary prospectus, or in any amendment thereof or supplement thereto,
or any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, if the statement or
omission related to information about such Investor or its proposed plan of
distribution of the Registrable Shares of such Investor covered by such
Registration Statement and was made or omitted in reliance upon and in
conformity with the latest information about such Investor or its proposed plan
of distribution of the Registrable Shares of such Investor covered by such
Registration Statement which was provided by such Investor in writing and stated
in writing to be specifically for inclusion therein; provided, however, that
-------- -------
such Investor will not indemnify or hold harmless any Company Indemnified Party
and/or Investor Indemnified Party from or against any such Loss, fee, cost or
expense if the untrue statement, omission or alleged untrue statement or
omission upon which such Losses or expenses are based was contained in or
omitted from (as the case may be) any preliminary prospectus, prospectus or
summary prospectus, or any amendment thereof or supplement thereto,
24
used after such time as the Company was advised by or on behalf of such Investor
or the Company had knowledge that the information about such Selling Investor
contained therein needs to be corrected, revised or supplemented.
SECTION 6.03. Procedures. Each party claiming a right to
----------
indemnification under this Article VI (the "Indemnified Party") shall give
----------
notice to the party from whom such indemnification is or may be sought (the
"Indemnifying Party") promptly after such Indemnified Party has actual knowledge
of any claim as to which indemnification may be sought, and the Indemnifying
Party may participate at its own expense in the defense, or if it so elects,
assume the defense of any such claim and any action or proceeding resulting
therefrom, including the employment of counsel and the payment of all expenses.
The failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party from its obligations to indemnify such
Indemnified Party, except to the extent the Indemnified Party's failure to so
notify actually and materially prejudices the Indemnifying Party's ability to
defend against such claim, action or proceeding. In the event that the
Indemnifying Party elects to assume the defense in any action or proceeding, an
Indemnified Party shall have the right to employ separate counsel in any such
action or proceeding and to participate in the defense thereof, but such
Indemnified Party shall pay the fees and expenses of such separate counsel
unless (i) the Indemnifying Party has agreed to pay such fees and expenses, (ii)
any relief other than the payment of money is sought against the Indemnified
Party or (iii) the named parties to any such action or proceeding (including any
impleaded parties) include such Indemnified Party and the Indemnifying Party,
and such Indemnified Party shall have been advised by counsel that there is a
conflict of interest between such Indemnified Party and the Indemnifying Party
in the conduct of the defense of such action (in which case, if such Indemnified
Party notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not assume the defense of such action or proceeding on such
Indemnified Party's behalf, it being understood, however, that the Indemnifying
Party shall not, in connection with any one such action or proceeding or
separate but substantially similar or related actions or proceedings arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys at any time for
all Indemnified Parties, which firm shall be designated in writing by the
applicable Indemnified Parties). If the Indemnifying Party elects not to
defend, or if, after commencing or undertaking any such defense, the
Indemnifying Party fails to prosecute or withdraws from such defense or fails to
appeal any Judgment adverse or unfavorable to the Indemnified Party, the
Indemnified Party shall have the right to undertake the defense, settlement or
appeal thereof (as the case may be), at the Indemnifying Party's expense. If
the Indemnified Party assumes the defense of any such claim, investigation,
action, suit, hearing or proceeding pursuant to this Section 6.03 and proposes
------------
to settle the same prior to a final judgment thereon or to forgo or abandon any
appeal available after final judgment thereon, then the Indemnified Party shall
give the Indemnifying Party prompt written notice thereof and the Indemnifying
Party shall have the right to participate in the settlement, assume or reassume
the defense thereof or prosecute such appeal, in each case at the Indemnifying
Party's expense. The Indemnifying Party shall not, without written consent of
such Indemnified Party, settle or compromise or consent to entry of any judgment
with respect to any such claim, investigation, action, suit, hearing or
proceeding (i) in which any relief other than the payment of money damages is or
may be sought against such
25
Indemnified Party or (ii) which does not include as an unconditional term
thereof the giving by the claimant, Person conducting such investigation or
initiating such hearing, plaintiff or petitioner to such Indemnified Party of a
release from all liability with respect to such claim, investigation, action,
suit or proceeding and all other claims or causes of action (known or unknown)
arising or which might arise out of the same facts.
SECTION 6.04. Contribution. In order to provide for just and
------------
equitable contribution if a claim for indemnification pursuant to the
indemnification provisions of this Article VI is made but it is found in a final
----------
judgment by a court of competent jurisdiction (not subject to further appeal)
that such indemnification may not be enforced in such case, even though the
express provisions hereof provide for indemnification in such case or the
indemnification provided for under this Article VI, even though so provided for,
----------
otherwise is unavailable to or insufficient to hold any Indemnified Party
harmless to the full extent provided herein with respect to any Loss (or any
fees, costs or expenses) for which such indemnification is provided for, then
the Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses (i) in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party, on the one
hand, and such Indemnified Party, on the other, in connection with the
statements or omissions which resulted in such Losses or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative fault referred to
in clause (i) above but also the relative benefits received by the Indemnifying
Party, on the one hand, and such Indemnified Party, on the other, from the
subject offering or distribution, as well as any other relevant equitable
considerations. Relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by (or omitted to be 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.
The relative benefits received by the Indemnifying Party, on the one hand, and
the Indemnified Party, on the other, shall be deemed to be in the same
proportion as the net proceeds of the offering or other distribution received by
the Indemnifying Party bears to the net proceeds of the offering or other
distribution received by the Indemnified Party. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Company and the Investors agree that it would
not be just and equitable if contributions pursuant to this Section 6.04 were to
------------
be determined by pro rata allocation (even if all Investors were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
-------
6.04.
----
SECTION 6.05. Limit on Liability of Investors. The parties agree, to
-------------------------------
the maximum extent permitted by law, that the obligations and liability of each
Selling Investor with respect to any Demand Registration or Piggyback
Registration, whether for indemnification pursuant to Section 6.02, contribution
------------
pursuant to Section 6.04 or otherwise, shall not in any event exceed in the
------------
aggregate the amount of net proceeds received by such Selling Investor from the
sale of the Registrable Shares sold by such Selling Investor in such Demand
Registration or Piggyback Registration.
26
ARTICLE VII
RIGHT OF FIRST OFFER
SECTION 7.01. Issuance of New Securities. Subject to Section 7.04,
-------------------------- ------------
if and whenever the Company issues any New Securities, each Investor holding at
least 10% of the Originally Issued Shares will have the right, but not the
obligation, to purchase such New Securities up to an amount sufficient to permit
it to maintain its percentage common equity interest in the Company (based on
the Number of Common Shares Outstanding immediately prior to the issuance of the
New Securities). The "Number of Common Shares Outstanding" as of any time means
the sum of (i) the number of shares of Common Stock which then are actually
issued and outstanding, plus (ii) the total number of additional shares of
Common Stock which would then be issued and outstanding if it were assumed that
all Qualifying Rights, if any, then held by the Investors and other holders of
Qualifying Rights were then duly exercised in full (whether or not then
exercisable). Within ten Business Days after the receipt of such Preissuance
Notice, each Investor may exercise its rights under this Section 7.01 by giving
------------
written notice to that effect to the Company. Failure to give such notice
within that ten Business Days period or failure to pay at the required time the
purchase price for any New Securities as to which a right to purchase will have
been exercised will constitute a waiver of the rights granted by this Section
-------
7.01 as to the particular issuance of New Securities specified in the Company's
----
Preissuance Notice. In the event that any Investor does not exercise its rights
under this Section 7.01, such Investor's pro rata share of the New Securities
------------
shall be re-offered to those Investors, if any, who did exercise their rights
under this Section 7.01. Within ten Business Days after the receipt of written
------------
notice of such re-offering (the "Subsequent Notice"), each such Investor may
exercise its further rights by giving written notice to that effect to the
Company.
SECTION 7.02. Per Share Price; Valuations. The per share purchase
---------------------------
price to be paid upon exercise of the rights granted under this Article VII will
-----------
be equal to the lowest per share consideration at which the New Securities are
offered or proposed to be offered by the Company to any New Securities
Purchaser. The consideration for which New Securities are offered or proposed
to be offered will be determined as follows: (i) in case of the proposed
issuance of New Securities for cash, the consideration to be received by the
Company will be the amount of cash for which the New Securities are proposed to
be issued and (ii) in case of the proposed issuance of New Securities in whole
or in part for consideration other than cash, the value of the consideration to
be received by the Company other than cash will be the fair market value of that
consideration as reasonably determined by the Board of Directors of the Company
in good faith. If any Investor within five days of receipt of any Preissuance
Notice notifies the Company in writing that it objects to any statement of the
fair market value of any security or other property contained therein, the
Company and the Investors shall attempt in good faith to agree on the fair
market value of such security or other property. If they are unable to so agree
within five Business Days after such notice of objection was given, then within
five Business Days thereafter, the Company and the Majority Investors shall
select one appraiser and the Company and the Majority Investors shall submit to
such appraiser (and each other) a brief written statement of their position
regarding the matter in dispute and supporting arguments, and each shall be
given a period of five Business Days thereafter to submit to the other and to
the appraiser a written response to such written statement of the other. Such
appraiser shall within
27
fifteen days of the date of its selection, resolve such dispute by choosing
either the position of the Company set forth in such written statement so
submitted by the Company or the position of the Investors set forth in such
written statement so submitted by the Majority Investors, whichever in the
opinion of the appraiser, in its sole discretion, is more consistent with the
purposes and intent of this Agreement. Decisions with respect to such
determination made pursuant to this Section 7.02 by the Majority Investors shall
------------
be binding on all Investors. Any determination of fair market value for
purposes of this Article VII by agreement of the Company and the Majority
-----------
Investors or by an appraiser appointed as provided in this Section 7.02 shall be
------------
final and binding on the Company, and each Investor for all purposes of this
Article VII. Promptly after any final determination of fair market value
-----------
pursuant to this Section 7.02, the Company shall give each Investor a written
------------
notice stating such fair market value. Each appraiser shall be a nationally
recognized appraiser or investment banking firm which has substantial experience
in making appraisals similar to that being made, which is not directly or
indirectly affiliated with the Company or any other Person who is a party to or
otherwise interested in the event resulting in the need for such appraisal and
which has no interest (other than the receipt of customary fees) in such event.
In the event the appraiser agrees with the written statement submitted by the
Investors, the fees and expenses of any appraiser appointed in connection with
an appraisal pursuant to this Article VII shall be paid by the Company. In the
event the appraiser agrees with the written statement submitted by the Company,
the fees and expenses of any appraiser appointed in connection with an appraisal
pursuant to this Article VII shall be paid by the Investors.
-----------
SECTION 7.03. Representations, Warranties and Certain Covenants. In
-------------------------------------------------
connection with each issuance of New Securities to any Investor pursuant to this
Article VII, the Company shall, in the event the Company is making
-----------
representations, warranties and/or covenants to the New Securities Purchaser,
make to each Investor such representations, warranties, and covenants as are
customarily made by issuers in similar instances (but which in no event shall be
less favorable to the Investors than those contemplated by the Preissuance
Notice or otherwise made to or for the benefit of any New Securities Purchaser)
and each Investor shall be separately and independently entitled to rely on such
representations and warranties, to the benefit of such covenants and to exercise
all available rights and remedies in the event of any breach or violation of any
such representations, warranties and covenants. Any representations and
warranties made by an Investor shall consist solely of such representations and
warranties relating to (i) such Investor's authority to consummate the purchase
of the New Securities from the Company and (ii) other similar representations
and warranties as are customarily given by similarly situated purchasers of
securities similar to those being purchased by an Investor in a similar
transaction but no Investor shall be required to give any such representation or
warranty which the New Securities Purchaser does not give. The representations,
warranties, covenants and agreements of each Investor shall be several and not
joint and the representations and warranties of the Investor and of the Company
(unless, in the case of the Company, otherwise required by the New Securities
Purchasers) shall terminate upon the earlier of (i) the termination of any
representation or warranty made by the New Securities Purchaser or by the
Company and (ii) one year after closing. The right of each Investor to purchase
the full number of New Securities which such Investor is entitled to purchase
under this Article VII shall not be subject to any conditions whatsoever, other
-----------
than the accuracy of the representations made by such Investor, the payment of
28
the purchase price therefor determined as provided herein, and the consummation
of the transaction between the Company and the New Securities Purchaser. If any
Investor shall fail for any reason to purchase any New Securities which it has
elected to purchase, the sole right, remedy and recourse of the Company, the New
Securities Purchaser, and the complying Investors, as the case may be, shall be
the right of the Company to issue to the New Securities Purchaser and the other
Investors, pro rata based on their respective participations in the transaction
as determined pursuant to Section 7.01, additional New Securities equal in kind
------------
and number or other relevant amount to the New Securities which such Investor
failed to purchase at the closing, in which event the Majority Investors may
elect to postpone the closing for five Business Days. Unless the Company and
any Investor otherwise agree, the closing of any issuance of New Securities to
any Investor pursuant to this Article VII shall take place at the principal
-----------
executive offices of the Company at 11:00 A.M., local time, on the later of (i)
the thirtieth day following the expiration of the period of fifteen Business
Days after the later of (A) the date of the relevant Preissuance Notice was
given (except if there is a relevant Subsequent Notice, in which case the date
of such Subsequent Notice) and (B) the date all disputes as to the valuations
have been resolved and (ii) the fifteenth Business Day following the expiration
of all applicable waiting periods, if any, under the HSR Act and the receipt of
all consents, approvals and authorizations from governmental authorities or
other Persons which the Majority Investors believe to be necessary or desirable
in connection with the acquisition of the New Securities to be issued to the
Investor. The Company shall execute such documents and instruments as may be
necessary or reasonably requested to effectuate the issuance of New Securities
to any Investor.
SECTION 7.04. Limitations. The provisions of this Article VII will
----------- -----------
not apply to (i) shares of Common Stock issued as a stock dividend to all
holders of shares of Common Stock or upon any subdivision or combination of
shares of Common Stock, (ii) securities issued for the acquisition by the
Company of another entity or business by merger or such other transaction as
would result in the ownership by the Company of not less than a majority of the
voting power of the other entity or for the purchase of all the assets of an
entity or business, (iii) shares of Common Stock or Rights that are sold by the
Company pursuant to a bona fide public offering pursuant to a registration
---- ----
statement filed under the Act, (iv) shares of Common Stock or Rights issued
pursuant to the Company's stock option plans in existence at the date of this
Agreement or other such stock option plans as approved by the Series B
Directors, (v) the shares of Series B Preferred Stock or Warrants issued
pursuant to the Purchase Agreement or any other Common Stock Rights or any
shares of Common Stock issued upon conversion or exercise thereof, (vi) shares
of Common Stock issued upon exercise of any Common Stock Rights as to which the
Holders shall have been afforded the opportunity to exercise their rights of
first refusal pursuant to this Article VII, or (vii) securities issued upon
exercise of Common Stock Rights outstanding on the Closing Date and described in
the Purchase Agreement or disclosed on a schedule to the Purchase Agreement.
SECTION 7.05. Terms of Payment of Purchase Price. Subject to Section
---------------------------------- -------
7.03 and the rest of this Section, each issuance of New Securities to each
----
Investor must be on terms not less favorable to such Investor than the most
favorable terms on which the Company issues or proposes to issue in the
transaction in connection with which the preemptive right is being exercised New
Securities to any New Securities Purchaser, any other Investor or any other
Person (without discrimination based on differences in the number or amount of
New Securities to be
29
acquired). Without limiting the generality of the immediately preceding
sentence, (i) each Investor must be given the same options and rights of
election, if any, as to the kind(s) or amount(s) of consideration to be paid or
delivered for New Securities as any other purchaser is given or was proposed to
be given in the Preissuance Notice and (ii) the purchase price to be paid by
each Investor upon exercise of its rights under this Article VII will be paid
-----------
upon terms which are not less favorable than those on which the New Securities
are sold to any other purchaser, unless those terms provide for payment in a
manner which could not reasonably be duplicated by any Investor, such as the
transfer of specific property to the Company, in which event such payment will
be in cash in an amount equal to the fair market value of such specific property
as reasonably determined by the Board of Directors in good faith. The giving of
a Preissuance Notice shall constitute the representation and warranty by the
Company to each Investor that (i) the proposed issuance is not subject to
conditions, contingencies or material terms not disclosed in the Preissuance
Notice or in the accompanying documents delivered therewith; and (ii) neither
the amount or kind of consideration offered by the New Securities Purchaser for
the New Securities nor any other terms of the proposed issuance or of any other
transaction or proposed transaction with the New Securities Purchaser or any of
its Affiliates have been established for the purpose of circumventing,
increasing the cost of exercising or otherwise impairing any Investor's right of
first refusal pursuant to this Article VII or increasing the probability that
any Investor's right of first refusal will not be exercised in full.
SECTION 7.06. Issuance to Others Not Permitted Absent Compliance. If
--------------------------------------------------
the Company does not issue and deliver, to each Investor, on or before the 120th
day after the date the applicable Preissuance Notice with respect to any
proposed issuance of New Securities is given, all New Securities which such
Investor is entitled to be issued in accordance with the provisions of this
Article VII for any reason other than the failure of such exercising Investor to
-----------
tender the purchase price therefor if and when required by this Article VII,
-----------
then the Company shall not be entitled to issue any New Securities pursuant to
the related Preissuance Notice. If, after compliance with Section 7.02, there
------------
remains any portion of the New Securities specified in a Preissuance Notice
which have not been elected to be acquired by one or more Investors, the Company
shall be entitled to issue such remaining portion to the Persons, in the manner
and on terms and conditions not materially more favorable to the purchaser than
those specified in such Preissuance Notice, but only if such issuance is
consummated not later than the 120th day after the date such Preissuance Notice
was given. If such issuance is not so consummated within such period, then the
Company shall not be entitled to issue any such New Securities without again
complying with the provisions of this Article VII. Notwithstanding the
foregoing provisions of this Article VII, unless a binding purchase agreement
-----------
entered into pursuant to this Article VII by the Company and such Investor
-----------
otherwise provides, the Company may, without liability to any Investor, abandon
the proposed issuance of New Securities.
SECTION 7.07. Rights Apply to Each Issuance of New Securities.
-----------------------------------------------
Subject to the last sentence of Section 7.01, the provisions of this Article VII
-----------
shall apply successively to each and every issuance or proposed issuance of any
New Securities.
30
ARTICLE VIII
CERTAIN OTHER COVENANTS OF THE COMPANY
The Company hereby covenants and agrees as follows:
SECTION 8.01. Financial Information. So long as an Investor is the
---------------------
Beneficial Owner of at least 10% of the Originally Issued Shares, the Company
will furnish to such Investor the following reports:
(a) Within the applicable time period required under the Exchange Act,
after the end of each fiscal year of the Company, the information required
by Form 10-K (or any successor form thereto) under the Exchange Act with
respect to such period (including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" section that describes
the consolidated financial condition and results of operations of the
Company), together with a report thereon by the Company's certified
independent accountants;
(b) Within the applicable time period required under the Exchange Act
after the end of each of the first three fiscal quarters of each fiscal
year of the Company, the information required by Form 10-Q (or any
successor from thereto) under the Exchange Act with respect to such period
(including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" section that describes the consolidated
financial condition and results of operations of the Company);
(c) Any current reports on Form 8-K (or any successor forms) required
to be filed under the Exchange Act; and
(d) As soon as practicable upon approval or adoption by the Company's
Board of Directors, the Company will furnish such Investor with the
Company's budget and operating plan (including projected balance sheets and
profit and loss and cash flow statements) for such fiscal year.
SECTION 8.02. (a) Board Representation. For so long as TPG is the
--------------------
Beneficial Owner of at least 40% of the Originally Issued Shares held by it at
the Closing Date, the Investors shall vote all shares of capital stock of the
Company held by them and otherwise use best efforts to cause (i) the Board to
consist of seven members, of whom two members will be individuals designated by
TPG, one member will be an individual designated by Sandler Capital Partners IV,
L.P., a Delaware limited partnership, one member will be the Chief Executive
Officer of the Company, one member will be an independent director acceptable to
TPG in its discretion and the remaining two members will be other individuals
reasonably acceptable to TPG; and (ii) at least one-third of the members of each
committee of the Board to consist of Series B Directors. The directors whom, at
any time and from time to time, TPG is entitled to designate under this Section
8.02(a), are sometimes herein referred to as the "Series B Directors". As of
the Closing Date, the directors of the Board shall be in the classes of the
Board specified in Exhibit A. The Parties recognize that certain of the
---------
directors referred to in clause (i)
31
of the immediately preceding sentence will not be designated at the Closing
Date. Accordingly, the Parties shall use best efforts to cause to exist
vacancies on the Board in respect of such undesignated directors and to fill
those vacancies with individuals satisfying the requirements of clause (i) of
the immediately preceding sentence at the earliest practicable time.
(b) Qualifications of Independent Directors. For purposes hereof, an
---------------------------------------
"independent director" is an individual who (unless otherwise approved by the
Series B Directors or, if there is no Series B Director, by TPG) (i) has either
a significant financial investment in the Company or a significant strategic
position or expertise relative to the business of the Company and (ii) is not
(A) an officer or employee of the Company or any of its Subsidiaries, (B) a
director, employee, partner, manager or other member of management of any
Affiliate of the Company (except a director of a Subsidiary of the Company), (C)
a relative of any Person described in subclause (ii)(A) or (ii)(B) or (D) a
trustee of any trust or estate in which any Person described in subclause
(ii)(A), (ii)(B) or (ii)(C) is a beneficiary and has a substantial beneficial
interest.
(c) Removal. The Investors shall vote, and otherwise shall use all
-------
reasonable efforts to cause any director designated by an Investor to be removed
at and only at the request of such Investor. The Investors and the Company
(subject to the fiduciary duties of the members of the Board) shall use their
best efforts to cause any vacancy in the office of a director designated by an
Investor resulting from death, resignation or removal or existing for any other
reason whatsoever to be filled only by such Investor. In addition, in the event
that the holders of the Series B Shares shall have the right to elect Majority
Directors pursuant to Section 11(b) of the Series B Articles of Amendment and
such right is terminated by operation of the last sentence of such Section
11(b), the Investors shall use best efforts to cause any additional directors
elected pursuant to such Section 11(b) to be removed as promptly as practicable
and, in the event that the holders of the Series B Shares shall have the right
to elect Designated Directors pursuant to Section 7.1 of the Series B Articles
of Amendment and such right is terminated by operation of Section 7.1, the
Investors shall use best efforts to cause any additional directors elected
pursuant to such Section 7.1 to be removed as promptly as practicable.
(d) Indemnification. The Company shall (i) to the fullest extent
---------------
permitted by applicable law, indemnify the holders of the Series B Preferred
Stock and each current and former Series B Director who is made a party or
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such Person is or was a shareholder or director of the
Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such Person in connection with such action, suit or proceeding and (ii) pay
in advance, or advance to each such shareholder, director and former director
for payment of, expenses incurred in defending any such action, suit or
proceeding to the maximum extent permitted by applicable law. The rights
conferred on any Person by this Section 8.02(d) shall not be exclusive of any
---------------
other rights which such Person may have or acquire under any
32
statute, under the Company's Articles of Incorporation, under the Company's By-
laws, under any agreement, vote of stockholders or disinterested directors or
otherwise.
(e) Actions Prohibited Under Series B Articles of Amendment. For so
-------------------------------------------------------
long as TPG is the Beneficial Owner of at least 40% of the Originally Issued
Shares, the Company shall not, and the Investors shall use best efforts to cause
the Company not to, take any action prohibited by Section 11(e) of the Series B
-------------
Articles of Amendment.
(f) Operating Committee. For so long as TPG is the Beneficial Owner of
-------------------
at least 40% of the Originally Issued Shares, in the event that the Company
shall fail to comply with any material provision of (A) its annual budget
(including, without limitation, by falling at least fifteen percent (15%) short
of any of the revenue or EBITDA targets established in any such budget (as
adjusted for any acquisitions made by the Company after the setting of such
targets)) or (B) any of the budget, restrictive or financial covenants in the
Indenture or in any other credit agreement with respect to Indebtedness in
excess of $5,000,000 to which the Company is a party (whether or not such
agreement is existing as of the date hereof), the Investors and the Company
(subject to the fiduciary duties of the members of the Board) shall use their
best efforts to cause the Board to establish, if such committee does not already
exist, and maintain an Operating Committee consisting of five members, two of
whom shall be the Series B Directors, one of whom shall be a representative of
Sandler (as defined below) and two of whom shall be other members of the Board.
The Operating Committee shall have the sole power and authority to direct
management in the implementation of the Company's long-term and annual operating
plans and budget.
(g) Board Observer Rights. In the event that any Investor declines to
---------------------
designate a director of the Company which it is entitled to designate pursuant
to Section 8.02(a), the Investors shall take such action as is necessary to
---------------
cause such Investor to have the right, in its sole discretion, to have
representatives (in the same number as the number of directors which such
Investor has the right to designate pursuant to Section 8.02(a)) appointed by
---------------
them attend any one or more meetings of the Board as observers, and not as
directors, which representatives shall be entitled to receive the same notices
of meetings of and proposed actions by the Board as directors generally, but
shall not be entitled to any voting or consent rights of a director.
SECTION 8.03. Additional Piggyback Registration Rights. From and
----------------------------------------
after the Closing Date, the Company shall not (i) grant to any Person rights to
participate in any Piggyback Registration that are more favorable than the
rights granted to the Investors in the case of a cut-back in a Piggyback
Registration or (ii) grant any Person a right to piggyback on a Demand
Registration unless such Persons agree that in the event of any required cut-
back, such Persons shall have their security proposed to be included in such
registration reduced prior to any reduction in Registrable Shares of the
Investors included in such registration.
ARTICLE IX
MISCELLANEOUS
33
SECTION 9.01. Securities Act Legend. Except as otherwise provided in
---------------------
this Section 9.01, each stock certificate or other instrument evidencing the
------------
Series B Shares, the Warrants, any Conversion Stock or any Warrant Stock shall
bear a legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR OTHER
SECURITIES LAWS. THEY ARE `RESTRICTED SECURITIES' WITHIN THE MEANING
OF SEC RULE 144. THE SHARES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND SUCH LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
ACT AND SUCH LAWS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO
THE REASONABLE SATISFACTION OF THE COMPANY. THE SALE, TRANSFER OR
OTHER DISPOSITION OF THE SECURITIES IS ALSO SUBJECT TO COMPLIANCE WITH
THE TERMS AND CONDITIONS OF THAT CERTAIN INVESTORS RIGHTS AGREEMENT,
DATED AS OF APRIL 18, 2000, AS SUPPLEMENTED, MODIFIED AND AMENDED FROM
TIME TO TIME, AMONG THE COMPANY AND THE INVESTORS NAMED THEREIN, A
COPY OF WHICH AGREEMENT IS AVAILABLE FOR INSPECTION DURING REGULAR
BUSINESS HOURS AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY. A
COPY OF THE DESIGNATIONS, PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS
APPLICABLE TO THIS CLASS OF SECURITIES WILL BE FURNISHED TO THE
SHAREHOLDER ON REQUEST IN WRITING AND WITHOUT CHARGE."
Any holder of any such certificate or instrument bearing the foregoing legend
shall be entitled to promptly receive from the Company, without expense, a new
certificate or instrument of identical tenor representing the same kind of
securities and the same number or other amount thereof not bearing such legend
if such securities shall have been effectively registered under the Securities
Act and are sold or otherwise disposed of in accordance with the intended method
of disposition by the seller thereof set forth in the registration statement, or
such securities may be freely transferred by such holder by reason of an
exemption from registration under the Securities Act, or such legend otherwise
is not required in order to ensure compliance with the Securities Act. The
written opinion of Cleary, Gottlieb, Xxxxx & Xxxxxxxx, or other legal counsel
selected by such holder and reasonably satisfactory to the Company with respect
to any of the foregoing or with respect to any question concerning whether any
proposed transfer of any such securities would violate the Securities Act shall
be sufficient to determine the issue.
SECTION 9.02. Rule 144. The Company covenants that following the
--------
initial registration of any Common Stock, it will file any reports required to
be filed by it under the Securities Act and the Exchange Act so as to enable
Investors who continue to hold any
34
Registrable Shares to sell such Registrable Shares without registration under
the Securities Act within the limitation of the exemptions provided by (i) Rule
144 under the Securities Act, as such Rule may be amended from time to time, or
(ii) any similar rule or rules now in effect or hereafter adopted by the
Commission. Upon the request of any Investor, the Company will promptly deliver
to such Investor a written statement as to whether it has complied with such
requirements.
SECTION 9.03. Amendments and Waivers. The provisions of this
----------------------
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers of or consents to departures from the
provisions hereof may not be given, unless approved in writing by the Company
and by the Majority Investors. Notwithstanding the foregoing, any waiver or
departure with respect to any matter which relates exclusively to the rights and
obligations of Investors in a specific Piggyback Registration or Demand
Registration, which relates only to the Registrable Shares being registered
pursuant to that Piggyback Registration or Demand Registration, which applies
only to such specific Piggyback Registration or Demand Registration, and which
does not directly or indirectly adversely affect the rights of any other
Investor with respect to any Registrable Shares not being so registered, shall
be authorized and effective if approved in writing by the Company and the
Majority Investors.
SECTION 9.04. Termination. The provisions of this Agreement shall
-----------
terminate as to any particular Investor, other than the provisions of Article
VI, which shall survive any such termination indefinitely, at the first time as
of which all Registrable Shares held by such Investor may be publicly sold by
such Investor pursuant to Rule 144 under the Securities Act without registration
or qualification under the Securities Act or state securities laws, without
limitations as to volume or manner of sale and without any limitation,
restriction or condition; provided, however, that any obligations of the Company
-------- -------
pursuant to Article V or any other provision of this Investor Rights Agreement
---------
with respect to any pending or completed Demand Registration or Piggyback
Registration which have not been fully performed shall survive until fully
performed. In the case of any dispute concerning whether the condition stated
in the immediately preceding sentence has been satisfied as of any time, the
opinion of an independent law firm of nationally recognized standing selected by
the Majority Investors reasonably satisfactory to the Company shall be final and
conclusive. The fees and expense of such law firm will be paid by the losing
party to such dispute.
SECTION 9.05. Certain Mergers and Other Events. If the Company
--------------------------------
proposes to consummate any consolidation, merger, binding share exchange or
reorganization in which the Company is not the continuing corporation or any
sale, conveyance, transfer or lease to another Person of the properties and
assets of the Company as an entirety or substantially as an entirety and if, as
a result of or in connection with such transaction, the Investors would receive
or would be entitled to receive, in exchange for or otherwise with respect to
the Registrable Shares held by them, any common stock, other capital stock or
other securities of the successor or acquiring corporation or any Affiliate
thereof or any Rights for any such common stock, capital stock or other
securities, then the Company shall not consummate such transaction unless the
successor or acquiring Person (as the case may be) shall, in a manner reasonably
satisfactory to the Majority Investors, grant to the Investors registration
rights which shall be no less favorable to the
35
Investors than the provisions of this Agreement. In the event of (i) any
reclassification, reorganization or change of the outstanding shares of Common
Stock or other capital stock of the Company, (ii) any consolidation, merger,
binding share exchange or reorganization to which the Company is party (other
than a consolidation, merger, share exchange or reorganization in which the
Company is the continuing corporation and which does not result in any
reclassification of or change in the Registrable Shares of any class, series or
type), (iii) any event which results in the securities deliverable upon exercise
or conversion of any Common Stock Rights referred to in the definitions of
Registrable Shares in Section 1.01 consisting of or including any securities
------------
other than shares of Common Stock, or (iv) any other event of any kind occurs
which results in a change in the securities constituting or included in the
Registrable Shares immediately before such event, then the Investors shall be
entitled to registration rights with respect to all such securities issued or
issuable to them by reason thereof which are comparable in all material respects
to those provided for herein with respect to Registrable Shares. In the event
any dispute relating to this Section 9.5 shall arise, then such dispute shall
-----------
promptly thereafter be submitted for resolution by an independent law firm of
recognized national standing selected by the Company and reasonably acceptable
to the Majority Investors (acting as provided above in this Section), whose
decision (with the advice of an independent investment banking firm of
recognized national standing selected by such law firm, if such law firm
believes it advisable to seek such advice) shall be final and conclusive. The
reasonable fees and expenses of such law firm (and of any such investment
banking firm) shall be paid by the Company.
SECTION 9.06. Determinations Generally. Unless otherwise expressly
------------------------
provided herein, all decisions and determinations required or permitted to be
made hereunder by any Investor (including any decision as to whether to give any
consent or approval) shall be made by such Person in its sole discretion.
SECTION 9.07. Binding Effect; Successors and Assigns; Entire
----------------------------------------------
Agreement. Except as expressly provided in this Agreement, nothing in this
---------
Agreement, express or implied, is intended or shall be construed to confer upon
or give any creditor, stockholder or Affiliate of the Company or any other
Person except the parties and the Persons who from time to time are Investors
any remedy or claim under or by reason of this Agreement or any term, covenant
or condition hereof, all of which shall be for the sole and exclusive benefit of
the parties. This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the Company and the Persons who from time to
time are Investors and their respective successors and permitted assigns.
Except as otherwise specifically permitted or contemplated by this Agreement,
neither this Agreement nor any of the rights, interests or obligations of the
Company hereunder shall be assigned or delegated without the prior written
consent of the Majority Investors. The provisions of Article VI shall inure to
----------
the benefit of, and be enforceable by, each of the Investor Indemnified Parties
and the Company Indemnified Parties. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter herein and supersede
all prior agreements and undertakings, both written and oral, among the parties,
or any of them, with respect to the specific subject matter hereof.
SECTION 9.08. Interpretation. The headings of the articles and
--------------
sections contained in this Agreement are solely for the purpose of reference,
are not part of the agreement of the parties and shall not affect the meaning or
interpretation of this Agreement.
36
SECTION 9.09. No Implied Waivers. No action taken pursuant to this
------------------
Agreement, including, without limitation, any investigation by or on behalf of
any party or beneficiary, shall be deemed to constitute a waiver by the party or
beneficiary taking such action of compliance with any agreements, covenants,
obligations or commitments contained herein or made pursuant hereto. The waiver
by any party of a breach or benefit of any provision of this Agreement shall not
operate or be construed as a waiver of any preceding or succeeding breach and no
failure by any party or beneficiary to exercise any right, privilege or remedy
hereunder shall be deemed a waiver of such party's or beneficiary's rights,
privileges or remedies hereunder or shall be deemed a waiver of such party's or
beneficiary's rights to exercise the same at any subsequent time.
SECTION 9.10. Further Assurances. Each party shall cooperate and
------------------
take such actions as may be reasonably requested by another party in order to
carry out the provisions and purposes of this Agreement and the transactions
contemplated hereby. The obligations of the Company with respect to the
Registrable Shares of any Investor included in any Demand Registration or
Piggyback Registration are subject to the compliance by such Investor with the
immediately preceding sentence, but the failure of any Investor to so comply
shall not affect the Company's obligations with respect to the Registrable
Shares of any other Investor included therein.
SECTION 9.11. Counterparts. This Agreement may be executed in
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to constitute one and the same agreement. In addition
to any other lawful means of execution or delivery, this Agreement may be
executed by facsimile signatures and may be delivered by the exchange of
counterparts of signature pages by means of telecopier transmission.
SECTION 9.12. Notices. All notices, requests, demands, claims, and
-------
other communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two Business Days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to the Company:
Convergent Communications, Inc.
000 Xxxxxxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxx, Esq.
Xxxxxx, Xxxx & Xxxxxxxx L.L.P.
37
0000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
38
If to any Investor, to such Investor at such Investor's address specified
on Schedule 1 or supplied by such Investor in writing to the Company for
purposes hereof, with a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, facsimile transmission ordinary mail, or electronic mail), but
no such notice, request, demand, claim, or other communication shall be deemed
to have been duly given unless and until it actually is received by the intended
recipient. Any party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other Parties notice in the manner herein set forth.
SECTION 9.13. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York without giving
effect to any choice or conflict of law provision or rule (whether of the State
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York; provided, however,
that matters subject to the Business Corporation Act of the State of Colorado
shall be governed thereby.
SECTION 9.14. Severability. If any provision of this Agreement or
------------
the application thereof to any person or circumstance is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to Persons or
circumstances other than those as to which it has been held invalid, void or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, provided, that if any provision
--------
hereof or thereof or the application of any such provisions shall be so held to
be invalid, void or unenforceable by a court of competent jurisdiction, then
such court may substitute therefor a suitable and equitable provision in order
to carry out, so far as may be valid and enforceable, the intent and purpose of
the invalid, void or unenforceable provision and, if such court shall fail or
decline to do so, the parties shall negotiate in good faith a suitable and
equitable substitute provision. To the extent that any such provision shall be
judicially unenforceable in any one or more states, such provision shall not be
affected with respect to any other state, each provision with respect to each
state being construed as several and independent.
SECTION 9.15. Specific Performance. Without intending to limit the
--------------------
remedies available to any of the parties, each of the Investors and the Company
acknowledges and agrees that a violation, breach or threatened by the other of
any term of this Agreement will cause such party irreparable injury for which an
adequate remedy at law is not available. The parties agree that each party
shall have the right of specific performance and, accordingly, shall
39
be entitled to an injunction, restraining order or other form of equitable
relief, in addition to any and all other rights and remedies at law, from any
court of competent jurisdiction restraining any other party from committing any
breach or threatened breach of, or otherwise specifically to enforce, any
provision of this Agreement and all such rights will be cumulative. The parties
further agree that any defense in any action for specific performance that a
remedy at law would be adequate is waived.
SECTION 9.16. Sandler Capital Agreements. Sandler Capital Partners
--------------------------
IV, L.P., Sandler Capital Partners IV FTE, L.P. and Sandler Capital Partners V,
L.P., each an Initial Investor hereunder, agree on behalf of themselves and
their Affiliates (collectively, "Sandler") for the benefit of the Investors that
notwithstanding the other terms of this Agreement or the terms of any securities
or agreement to which Sandler may be a party:
(i) the Investors shall be entitled to exercise piggyback
registration rights hereunder in connection with any demand
registration right exercised by Sandler otherwise than pursuant
to this Agreement with respect to a number of Registrable Shares
not to exceed 50% of the securities sought to be registered by
Sandler pursuant to such demand registration; and
(ii) the issuance, exercise, conversion or accumulation of dividends
in respect of any Series B Share or Warrant shall not result in
any adjustment to the exercise price of any warrants held by
Sandler or other holder of similar warrants or the number of
securities for which such warrants are exercisable.
If requested, Sandler shall execute and deliver such instruments as shall be
necessary or desirable to effect the foregoing agreements.
(Signatures continued on the next page)
40
IN WITNESS WHEREOF, the parties have executed this Investor Rights
Agreement as of the date first written above.
CONVERGENT COMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxx
-----------------------------------------
Xxxxxx X. Xxxx, Chief Executive Officer
TPG CONVERGENT I, LLC
By: /s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President
SANDLER CAPITAL PARTNERS V, L.P.
By: Sandler Investment Partners, L.P.,
General Partner
By: Sandler Capital Management,
General Partner
By: MJDM Corp., a General
Partner
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxxxx
President
41
SANDLER CAPITAL PARTNERS IV, L.P.
By: Sandler Investment Partners, L.P.,
General Partner
By: Sandler Capital Management,
General Partner
By: MJDM Corp., a General
Partner
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxxxx
President
SANDLER CAPITAL PARTNERS IV FTE, L.P.
By: Sandler Investment Partners, L.P.,
General Partner
By: Sandler Capital Management,
General Partner
By: MJDM Corp., a General
Partner
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxxx
President
42
