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