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REGISTRATION RIGHTS AGREEMENT
by and between
INPUT/OUTPUT, INC.
and
SCF-IV, L.P.
Dated as of May 7, 1999
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REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and
entered into this 7th day of May 1999, by and between Input/Output Inc., a
Delaware corporation (the "COMPANY") and SCF-IV, L.P., a Delaware limited
partnership (the "PURCHASER").
RECITALS:
This Agreement is made pursuant to the Purchase Agreement, dated April
21, 1999 between the Company and the Purchaser (the "PURCHASE AGREEMENT").
In order to induce the Purchaser to enter into the Purchase Agreement, the
Company has agreed to provide the registration rights set forth in this
Agreement. The execution of this Agreement is a condition to the closing
under the Purchase Agreement.
AGREEMENT:
The parties hereby agree as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the following terms will have the
following meanings:
"DEMAND REGISTRATION" has the meaning set forth in Section 3(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time.
"INITIAL REGISTRATION DATE" has the meaning set forth in Section 3(a).
"MAJORITY" means 51% or more.
"PERSON" means any individual, partnership, corporation, limited
liability company, trust or unincorporated organization or association, or a
government or agency or political subdivision thereof.
"PIGGYBACK REGISTRATION" has the meaning set forth in Section 4(a).
"REGISTRATION EXPENSES" has the meaning set forth in Section 8(a).
"REGISTRABLE SECURITIES" means the Underlying Shares and any other
securities issued or issuable with respect to the Underlying Shares by way of
stock dividend or stock split or in connection with a combination of shares,
reclassification, recapitalization, merger, consolidation or other
reorganization; PROVIDED, HOWEVER, that a Registrable Security shall cease to
be a Registrable Security to the extent provided in Section 2(a).
"RULE 144" means Rule 144 under the Securities Act (or any similar
provisions then in force).
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
"SERIES B PREFERRED STOCK" means shares of the Company's Series B
Preferred Stock, par value $.01 per share.
"SERIES C PREFERRED STOCK" means shares of the Company's Series C
Preferred Stock, par value $.01 per share.
"SHARES" means all shares of Series B Preferred Stock or Series C
Preferred Stock that are issued and sold pursuant to the Purchase Agreement.
"SHELF REGISTRATION" has the meaning set forth in Section 5.
"UNDERLYING SHARES" means all Underlying Shares (as defined in the
Purchase Agreement) issuable upon conversion of the Shares.
"UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING" means any
registration in which securities of the Company are sold pursuant to a firm
commitment underwriting.
(b) All undefined capitalized terms used herein shall have the
meaning set forth in the Purchase Agreement.
2. SECURITIES SUBJECT TO THIS AGREEMENT.
(a) REGISTRABLE SECURITIES. The securities entitled to the
benefits of this Agreement are the Registrable Securities but, with respect
to any particular Registrable Security, only so long as such security
continues to be a Registrable Security. A Registrable Security shall cease
to be a Registrable Security when (i) it has been disposed of in a
transaction effectively registered under the Securities Act, (ii) has been
sold pursuant to Rule 144, (iii) it is held by a Person not entitled to the
benefits of registration rights under this Agreement by virtue of Section
12(f) hereof, (iv) if the holder thereof is an "affiliate" of the Company
within the meaning of Rule 144, at such time as the Registrable Securities
held by such holder constitute less than 1% of the then outstanding shares of
Common Stock of the Company and such Registrable Securities could be sold
without registration pursuant to Rule 144, (v) if the holder thereof is not
an "affiliate" of the Company within the meaning of Rule 144, at such time as
the Registrable Securities held by such holder constitute less than 4% of the
then outstanding shares of Common Stock of the Company and such Registrable
Securities could be sold freely pursuant to paragraph (k) of Rule 144, or
(vi) it has otherwise been transferred and a new certificate or other
evidence of ownership for it not bearing the legend set forth in Section
5.8(a) of the Purchase Agreement (or other legend of similar import) has been
delivered (not subject to any stop transfer order) by or on behalf of the
Company and no other restriction on transfer exists.
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(b) HOLDERS OF REGISTRABLE SECURITIES. A Person is deemed to be a
holder of Registrable Securities whenever such Person owns Registrable
Securities or has the right to acquire such Registrable Securities (whether
upon conversion, exercise or exchange of other securities or otherwise),
disregarding any legal restrictions upon the exercise of such right, whether
or not such acquisition has actually been effected.
3. DEMAND REGISTRATION.
(a) REQUESTS FOR REGISTRATION. Subject to the provisions of
Section 3(b), at any time on or after the earlier of (i) the Initial
Conversion Date as defined in the Certificate of Designation for the Series B
Preferred Stock, or (ii) the date 60 days prior to the third anniversary of
the date of the original issuance of the Series B Preferred Stock pursuant to
the Purchase Agreement (such earlier date being referred to herein as the
"INITIAL REGISTRATION DATE"), any holder or holders of at least 25% of the
then outstanding Registrable Securities may request at any time a
registration by the Company under the Securities Act of all or part of their
Registrable Securities (a "DEMAND REGISTRATION"); PROVIDED, HOWEVER that the
number of Registrable Securities to be included in such Demand Registration
must be at least 1,000,000 (such number of shares to be appropriately
adjusted in the event of any stock dividend or stock split or in connection
with a combination of shares, recapitalization, reclassification, merger,
consolidation or other reorganization) or such lesser number of Registrable
Securities as have an aggregate Market Price (as defined in the Certificate
of Designation for the Series B Preferred Stock) of at least $10,000,000 as
of the date of such request. Within ten days after receipt of such request,
the Company will serve written notice by overnight courier of such
registration request to all holders of Registrable Securities and will,
subject to the provisions of Section 3(b), include in such registration all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within 15 business days after distribution to
the applicable holder of the Company's notice. All requests made pursuant to
this Section 3(a) will specify the amount of Registrable Securities to be
registered and will also specify the intended method of disposition thereof;
PROVIDED, HOWEVER, that such method of disposition will be limited to an
underwritten offering if requested by the holders of a Majority of the
Registrable Securities requested to be included in such registration.
(b) NUMBER OF REGISTRATIONS. The holders of Registrable
Securities will be entitled to request an aggregate of two Demand
Registrations. A registration initiated as a Demand Registration will not
constitute a Demand Registration for the purposes of the foregoing (i) unless
such registration has been declared effective by the SEC and remains
effective for the period set forth in Section 7(a)(iii); PROVIDED, HOWEVER,
that, if more than 15% of the Registrable Securities requested to be included
in a Demand Registration which is an underwritten registration can be
excluded therefrom by reason of the provisions of Section 3(e), the holders
of Registrable Securities will be entitled to one additional Demand
Registration or (ii) if after such registration has been declared effective
by the SEC it is subject to any stop order, injunction or other adverse order
or action of the SEC or other governmental authority.
(c) INTENTIONALLY OMITTED.
(d) NO RIGHTS OF COMPANY OR OTHER SECURITYHOLDERS TO PIGGYBACK ON
DEMAND REGISTRATIONS. Neither the Company nor any of its securityholders
(other than the holders of
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Registrable Securities in such capacity) has any right to include any of the
Company's securities in a registration statement initiated as a Demand
Registration under this Section 3, unless (i) such securities are of the same
class as the Registrable Securities being registered, (ii) the holders of a
Majority of the Registrable Securities being registered in such registration
consent to such inclusion in writing, subject to Section 3(e), (iii) if such
Demand Registration is an underwritten offering, the managing underwriters
agree that some or all of such securities can be included without adversely
affecting such offering or offering price and (iv) the Company or the selling
securityholders, as applicable, agree to sell their securities on the same
terms and conditions as apply to Registrable Securities and the holders of
such Registrable Securities. If any securityholders of the Company (other
than the holders of Registrable Securities in such capacity) register
securities of the Company pursuant to a Demand Registration hereunder in
accordance with the provisions of this Section 3(d), such securityholders
will pay the fees and expenses of counsel to such securityholders and their
PRO RATA share of the Registration Expenses if such PRO RATA share of the
Registration Expenses for such registration are not paid by the Company for
any reason.
(e) PRIORITY ON DEMAND REGISTRATIONS. If a Demand Registration is
an underwritten offering and the managing underwriters advise the Company and
the selling holders of the Registrable Securities in writing that in their
opinion the number of Registrable Securities requested to be included exceeds
the number of securities which can be sold in such offering without adversely
affecting the proposed offering or the offering price, the Company will
include in such registration the number of Registrable Securities which in
the opinion of such underwriters can be sold without adversely affecting the
proposed offering or the offering price, and such securities will be
allocated PRO RATA among the holders of Registrable Securities on the basis
of the number of the Registrable Securities requested to be included in such
registration by their respective holders. If securities (other than
Registrable Securities) are proposed to be included by the Company or its
other securityholders in a Demand Registration which is an underwritten
offering (subject to and in accordance with the provisions of Section 3(d))
and the managing underwriters advise the Company and the selling holders of
Registrable Securities in writing that fewer than all of said other
securities can be sold, in addition to all of the Registrable Securities
being registered, without adversely affecting the proposed offering or the
offering price in such underwritten offering, those other securities which
are permitted to be included will be allocated among the Company and the
other securityholders in such proportions as such securityholders and the
Company may agree.
(f) SELECTION OF UNDERWRITERS. If any Demand Registration is an
underwritten offering, or a best efforts underwritten offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Company; PROVIDED, HOWEVER,
such investment bankers and managers must be reasonably satisfactory to the
holders of a Majority of the Registrable Securities requested to be included
in such offering.
(g) OTHER REGISTRATION RIGHTS AGREEMENTS. Without the prior
written consent of the holders of a Majority of the Registrable Securities,
the Company will not enter into any new registration rights agreements that
affect in any material respect the rights of the holders of the
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Registrable Securities.
4. PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. On or after the Initial Registration
Date, whenever the Company proposes to register any securities under the
Securities Act (excluding registrations on Form S-4 or S-8 or equivalent
forms), other than pursuant to a Demand Registration under Section 3 (a
"PIGGYBACK REGISTRATION"), the Company will give written notice to all
holders of Registrable Securities of its intention to effect such a
registration not later than the earlier to occur of (i) the tenth day
following receipt by the Company of notice of exercise of other demand
registration rights or (ii) 30 days prior to the anticipated filing date.
Subject to the provisions of Sections 4(c) and (d), the Company will include
in such Piggyback Registration all Registrable Securities with respect to
which the Company has received written requests for inclusion therein within
ten business days after the receipt by the applicable holder of Registrable
Securities of the Company's notice. The holders of Registrable Securities
will be permitted to withdraw all or any part of such holder's Registrable
Securities from a Piggyback Registration at any time prior to the date such
Piggyback Registration becomes effective with the SEC, PROVIDED THAT, in the
case of an underwritten offering, such withdrawal is consistent with
customary and reasonable restrictions agreed upon by the managing
underwriter. If a Piggyback Registration is an underwritten offering
effected under (i) Section 4(c), all Persons whose securities are included in
the Piggyback Registration will be obligated to sell their securities on the
same terms and conditions as apply to the securities being issued and sold by
the Company or (ii) Section 4(d), all Persons whose securities are included
in the Piggyback Registration will be obligated to sell their securities on
the same terms and conditions as apply to the securities being sold by the
Person or Persons who initiated the Piggyback Registration under Section
4(d). Notwithstanding the foregoing, if, at any time after giving written
notice of a Piggyback Registration but prior to the effective date of the
registration statement filed in connection therewith, the Company shall
determine for any reason not to register such securities, the Company may, at
its election give written notice of such determination to the holders of
Registrable Securities and thereupon shall be relieved of its obligation to
register any Registrable Securities in such registration.
(b) PIGGYBACK EXPENSES. The Registration Expenses of the holders
of Registrable Securities included in a Piggyback Registration will be paid
by the Company.
(c) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback
Registration is an underwritten registration on behalf of the Company, and
the managing underwriters advise the Company in writing that in their opinion
the total number or dollar amount of securities requested to be included in
such registration exceeds the number or dollar amount of securities which can
be sold in such offering without adversely affecting the offering or the
offering price, the Company will include in such registration: (i) first, all
securities the Company proposes to sell, (ii) second, up to the full number
or dollar amount of Registrable Securities requested to be included in such
registration in excess of the number or dollar amount of securities the
Company proposes to sell which, in the opinion of such underwriters, can be
sold without adversely affecting the offering or the offering price
(allocated PRO RATA among the holders of such Registrable Securities on the
basis of the dollar amount or number of Securities requested to be included
therein by each such holder) and (iii) third, such other securities (provided
such securities are of the same class as the securities being sold by the
Company) as are requested to be included in such registration equal to the
balance, if any, allocated among the holders
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of such securities in such proportions as the Company and such holders may
agree.
(d) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders
of the Company's securities (other holders of Registrable Securities in their
capacity as such), and the managing underwriters advise the Company in
writing that in their opinion the dollar amount or number of securities
requested to be included in such registration exceeds the dollar amount or
number of securities which can be sold in such offering without adversely
affecting the offering or the offering price, the Company will include in
such registration (i) first, the number or dollar amount of securities which
in the opinion of such underwriters can be sold without adversely affecting
the offering or the offering price of the securities intended to be included
therein on behalf of the other holders of the Company's securities, allocated
among the holders of such securities in such proportions as the Company and
such holders may agree, and (ii) to the extent of the balance, if any, the
Registrable Securities requested to be included in such registration,
allocated PRO RATA among the holders of such Registrable Securities on the
basis of the dollar amount or number of securities requested to be included
therein by each such holder.
(e) UNDERWRITTEN OFFERING OF DIFFERENT CLASSES OF SECURITIES.
Notwithstanding anything to the contrary in this Section 4, if a Piggyback
Registration is an underwritten offering of a class of securities of the
Company different from the Registrable Securities proposed to be included in
such offering and the managing underwriters advise that in their opinion
Registrable Securities of a different class cannot be included in such
offering without adversely affecting the offering or the offering price, then
the holders of the Registrable Securities shall not be entitled to include
Registrable Securities in such registration.
(f) SELECTION OF UNDERWRITERS. If any Piggyback Registration is
an underwritten offering, as between the Company and the holders of
Registrable Securities, the Company will have the right to select the
investment banker or investment bankers and manager or managers to administer
the offering.
5. SHELF REGISTRATION.
On or prior to the 60th day prior to the fifth anniversary of the date
of original issuance of the Series B Preferred Stock pursuant to the Purchase
Agreement, the Company shall file a registration statement on Form S-3 (or
any similar short form registration), if the Company and the transaction then
qualify for the use of such short form registration, to register for resale
from time to time pursuant to Rule 415 under the Securities Act (or any
similar or successor rule) (the "SHELF REGISTRATION") all then outstanding
Registrable Securities (unless any holder thereof instructs the Company
otherwise with respect to his Registrable Securities) and shall use its
reasonable best efforts to cause such Shelf Registration to become effective
as soon as practicable after such filing and to maintain the effectiveness of
such Shelf Registration until the first anniversary of the Mandatory
Conversion Date as defined in the Certificate of Designation for the Series B
Preferred Stock or such earlier date when all the Registrable Securities
covered by such registration statement are sold or cease to be Registrable
Securities. All Registration Expenses in connection with the Shelf
Registration shall be borne by the Company. The Company and other holders of
securities of the Company may not register securities under a registration
statement filed pursuant to this Section 5, without the consent of at least a
Majority of the Registrable Securities included in such Shelf
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Registration.
6. DEFERRAL OF FILING; SUSPENSION OF SHELF REGISTRATION STATEMENT.
Notwithstanding anything to the contrary in this Agreement:
(a) The Company may defer the filing (but not the preparation) of
a registration statement required by Section 3 or Section 5 until a date not
later than 60 days (less the number of days during the previous twelve months
that the use of a prospectus was suspended pursuant to this Section 6 or
Section 12(a)) after the date of receipt by the Company of a request for a
Demand Registration (or after the required filing date in the case of a
registration required to be filed pursuant to Section 5) if at the time the
Company receives such request it is engaged in confidential negotiations or
other confidential business activities, disclosure of which would be required
in such registration statement (but would not be required if such
registration statement were not filed) and the Company determines in good
faith that such disclosure would be materially detrimental to the Company and
its shareholders. Any registration statement the filing of which is deferred
pursuant to the foregoing shall be filed forthwith if the negotiations or
other activities are disclosed or terminated. In order to defer the filing of
a registration statement pursuant to this Section 6, the Company shall
promptly, upon determining to seek such deferral, deliver to each requesting
holder (or, in the case of a registration pursuant to Section 5, each holder)
a certificate signed by the President or Chief Financial Officer of the
Company stating that the Company is deferring such filing in accordance with
this Section 6(a). Within 20 days after receiving such certificate, the
requesting holder may withdraw such request by giving notice to the Company,
and, if withdrawn, the request for a Demand Registration shall be deemed not
to have been made for all purposes of this Agreement, PROVIDED THAT the
Company may defer the filing of a registration statement pursuant to the
foregoing not more than once during any twelve month period; and
(b) If the Company has effected the Shelf Registration pursuant to
Section 5, the Company may, at any time following the 30th day after the
effectiveness thereof and subject to the last sentence of this Section 6,
give notice to the holders of Registrable Securities directing that all sales
under such shelf registration statement must be deferred and not made for up
to 30 days (less the number of days during the previous twelve months that
the use of a prospectus was suspended pursuant to this Section 6 or Section
12(a)) if at the time the Company gives such notice, the Company is engaged
in confidential negotiations or other confidential business activities,
disclosure of which would be required to be made in the prospectus included
in such shelf registration statement (but would not be required if such sale
were not made) in order to prevent such prospectus from containing any untrue
statement of a material fact or omitting to state any material fact necessary
to make the statements therein not misleading and the Company determines in
good faith that such disclosure would be materially detrimental to the
Company. Any such notice given pursuant to this Section 6(b) shall be
accompanied by a certificate signed by the President or Chief Financial
Officer of the Company stating that the Company is deferring such filing in
accordance with this Section 6(b). A suspension of the Shelf Registration
pursuant to this Section 6(b) shall be lifted immediately if the negotiations
or other activities are disclosed or terminated. The Company may suspend the
use of the Shelf Registration pursuant to this Section 6(b) not more than
once during any twelve month period.
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7. REGISTRATION PROCEDURES.
(a) Whenever the Company is obligated to register any Registrable
Securities in accordance with the terms and conditions of this Agreement, the
Company will use its best efforts to effect the registration and to permit the
sale of such Registrable Securities in accordance with the intended method of
disposition thereof, and pursuant thereto the Company will as expeditiously as
possible:
(i) prepare and file with the SEC, not later than 60 days
after receipt of a request to file a registration statement with respect
to such Registrable Securities (or on or prior to the required filing
date specified in Section 5 with respect to the Shelf Registration), a
registration statement with respect to such Registrable Securities, and
use its best efforts to cause such registration statement to become
effective; PROVIDED, HOWEVER, that before filing a registration
statement or prospectus or any amendments or supplements thereto, the
Company will furnish to the counsel selected by the holders of a
Majority of the Registrable Securities being registered in such
registration statement copies of all such documents proposed to be
filed, which documents will be subject to the review of such counsel;
each such registration statement will be on a form for which the Company
then qualifies, which is available for the sale of the Registrable
Securities in accordance with the intended method of disposition thereof
and which is reasonably satisfactory to the holders of a Majority of the
Registrable Securities being registered (or the managing underwriters in
the case of a firm or best efforts underwriting offering);
(ii) notify each seller of Registrable Securities of any stop
order issued by the SEC and take all reasonable actions required to
prevent the entry of such stop order or to remove it at the earliest
possible time if entered;
(iii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for a period of not less than 90 days, or such
shorter period as may be required if all Registrable Securities covered
by such registration statement are sold prior to the expiration of such
90-day period (except in connection with an underwritten offering, in
which case such registration statement shall be kept effective as long
as the underwriters reasonably request in the underwriting agreement and
except in the case of the Shelf Registration, which shall be kept
effective for the applicable period specified in Section 5), and comply
with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement
during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration
statement;
(iv) furnish to each seller of Registrable Securities such
number of copies of such registration statement, each amendment and
supplement thereto (in each case including all exhibits thereto), the
prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such seller;
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(v) use all commercially reasonable efforts to register or
qualify such Registrable Securities under such other securities or blue
sky laws of such jurisdictions as any seller reasonably requests and do
any and all other acts and things which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such seller;
PROVIDED, HOWEVER, that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 7(a)(v), (ii)
subject itself to taxation in any such jurisdiction or (iii) consent to
general service of process in any such jurisdiction;
(vi) use all commercially reasonable efforts to cause the
Registrable Securities covered by such registration statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof
to consummate the disposition of such Registrable Securities;
(vii) notify each seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event as a result of
which the prospectus included in such registration statement or any
document incorporated therein by reference contains an untrue statement
of a material fact or omits to state any material fact necessary to make
the statements therein not misleading, and prepare and file promptly
with the SEC a supplement or amendment to such prospectus or any such
document incorporated therein by reference so that, as thereafter
delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein
not misleading;
(viii) cause all such Registrable Securities to be listed on
each securities exchange on which similar securities issued by the
Company are then listed;
(ix) provide a transfer agent and registrar for all
Registrable Securities and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such
registration statement;
(x) enter into such customary agreements (including an
underwriting agreement in customary form with customary lock-up
provisions not to exceed 180 days) and take all such other actions in
connection therewith as the holders of a Majority of the Registrable
Securities being registered or the managing underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities;
(xi) make available for inspection by any seller of
Registrable Securities, any underwriter participating in any disposition
pursuant to such registration statement, and any attorney, accountant or
other agent retained by any such seller or underwriter, all financial
and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such
registration statement;
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(xii) obtain a cold comfort letter from the Company's
independent public accountants in customary form and covering such
matters of the type customarily covered by cold comfort letters as the
holders of a Majority of the Registrable Securities being registered or
the managing underwriters reasonably request; and
(xiii) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the SEC, and make available to
its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first month after the effective
date of the Registration Statement, which earnings statement will
satisfy the provisions of Section 11(a) of the Securities Act.
(b) The Company may require each seller of Registrable Securities as
to which any registration is being effected to furnish to the Company such
information regarding the distribution of such securities as the Company may
from time to time reasonably request.
8. REGISTRATION EXPENSES.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of the Registrable
Securities), printing expenses, messenger, telephone and delivery expenses,
and fees and disbursements of counsel for the Company and of all independent
certified public accountants (including the expenses of any special audit or
"cold comfort" letters required by or incident to such performance), fees and
expenses of underwriters customarily paid by the issuer of securities
(excluding discounts and commissions), the reasonable fees and expenses of
any special experts retained by the Company or at the request of the managing
underwriters in connection with such registration and fees and expenses of
other Persons retained by the Company (all such expenses being herein called
"REGISTRATION EXPENSES"), will be borne by the Company; provided; however,
that all out of pocket Registration Expenses incurred by the Company pursuant
to Section 3 shall be borne by the Sellers of Registrable Securities and
other persons (including the Company) selling Common Stock pursuant to the
applicable registration statement on a pro rata basis based on the number of
shares of Common Stock to be sold pursuant to such registration statement.
(b) In connection with each registration hereunder, the holders of
the Registrable Securities included therein shall be responsible for all fees
and expenses of their counsel and for all underwriting discounts and
commissions payable in respect of any sales of Registrable Securities.
9. INDEMNIFICATION; CONTRIBUTION.
(a) INDEMNIFICATION BY COMPANY. In the event of any registration
of Registrable Securities hereunder, the Company agrees to indemnify to the
full extent permitted by law, each holder of Registrable Securities, its
officers, directors and partners and each Person who controls such holder
(within the meaning of the Securities Act and the Exchange Act) against all
losses, claims, damages, liabilities and expenses (or actions in respect
thereof) arising out of or based upon any untrue or alleged untrue statement
of a material fact contained in any registration statement, prospectus or
preliminary prospectus relating to the registration of such Registrable
Securities or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary
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to make the statements therein not misleading, except insofar as the same are
contained in any information furnished in writing to the Company by such
holder expressly for use therein. The Company will reimburse each holder of
Registrable Securities, its officers, directors, constituent partners and
controlling Persons for any legal and other expenses as incurred in
connection with investigating or defending any such losses, claims, damages,
liabilities, expenses or actions. In connection with a firm commitment or
best efforts underwritten offering, the Company will indemnify the
underwriters or agents, their officers, directors, partners and each Person
who controls such underwriters (within the meaning of the Securities Act and
the Exchange Act) or agents to the same extent as provided above (or such
greater extent as may be customarily required by the managing underwriters)
with respect to the indemnification of the holders of Registrable Securities.
(b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. In
connection with any registration statement in which a holder of Registrable
Securities is participating, each such holder will furnish to the Company in
writing such information and affidavits as the Company reasonably requests
for use in connection with any such registration statement or prospectus and
agrees to indemnify, to the extent permitted by law, the Company, its
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act and the Exchange Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue or
alleged untrue statement of a material fact or any omission or alleged
omission of a material fact required to be stated in the registration
statement or prospectus or any amendment thereof or supplement thereto or
necessary to make the statements therein not misleading, to the extent, but
only to the extent, that such untrue statement or omission is contained in
any written information or affidavit furnished by such holder specifically
for such registration statement and then only to the extent of the net
proceeds received by such holder from the sale of Registrable Securities
pursuant to such registration statement in reliance upon such information.
The holders of Registrable Securities will reimburse, to the extent of the
net proceeds received by the holders of Registrable Securities, the Company,
its officers, directors and controlling persons for any legal and other
expenses as incurred in connection with investigation or defending any such
losses, claims, damages, liabilities, expenses or actions.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled
to indemnification hereunder will (i) give prompt notice to the indemnifying
party of any claim with respect to which it seeks indemnification (but
omission of such notice shall not relieve the indemnifying party from
liability hereunder except to the extent such indemnifying party is actually
prejudiced by such failure to give notice) and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest may exist
between such indemnified and indemnifying parties with respect to such claim,
permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party. If such defense is
not assumed by the indemnifying party, the indemnifying party will not be
subject to any liability for any settlement made without its consent (but
such consent will not be unreasonably withheld). No indemnifying party will
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of an unconditional release from all
liability in respect to such claim or litigation. An indemnifying party who
is not entitled to, or elects not to, assume the defense of a claim will not
be obligated to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to such claim,
unless an actual conflict of interest exists between such indemnified party
and any other of such indemnified parties with respect to such claim, in
which event the indemnifying party will be obligated to pay the fees and
expenses of such
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additional counsel or counsels.
(d) CONTRIBUTION. If the indemnification provided for in Section
9(a) is unavailable or insufficient to hold harmless each of the indemnified
parties against any losses, claims, damages, liabilities and expenses (or
actions in respect thereof) to which such persons may become subject under
the Securities Act, then the indemnifying party shall, in lieu of
indemnifying each party entitled to indemnification hereunder, contribute to
the amount paid or payable by such party as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and such
indemnified persons on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses. The relative fault of such persons
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact, or omission or alleged
omission to state a material fact, relates to information supplied by or
concerning the indemnifying party on the one hand, or by such indemnified
person on the other, and such person's relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 9(d) were determined by PRO RATA
allocation or by any other allocation that does not take into account the
equitable considerations referred to in this Section 9(d). No person guilty
of fraudulent misrepresentation within the meaning of the Act shall be
entitled to contribution from any person that is not guilty of such
fraudulent misrepresentation.
10. RULE 144.
The Company covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder (or, if the Company is not required
to file such reports, it will, upon the request of any holder of Registrable
Securities, make publicly available such information), and it will take such
further action as any holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such holder
to sell Registrable Securities without registration under the Securities Act
within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of
any holder of Registrable Securities, the Company will deliver to such holder
a written statement that it has complied with such requirements.
11. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS; LOCKUP.
No Person may participate in any underwritten registration hereunder
unless such Person (i) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (ii) completes and executes all
customary questionnaires, powers of attorney, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
If a holder of Registrable Securities is participating in a Piggyback
Registration that is an underwritten registration, such holder will (if
requested by the managing underwriter) enter into an agreement not to sell or
otherwise transfer or dispose of any Registrable Securities or other
securities of the Company held by such holder for a specified period of time
(not to exceed 120 days) following the effective date of the registration
statement. Such agreement shall be in writing in a form reasonably
satisfactory to the
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holder, the Company and the managing underwriter. The Company may impose
stop transfer instructions with respect to the Registrable Securities or
other securities subject to the foregoing restriction until the end of the
lock-up period.
12. MISCELLANEOUS.
(a) RIGHT TO SUSPEND. The Company may, by notice in writing to
each holder of Registrable Securities, require the holder of Registrable
Securities to suspend use of any prospectus included in a registration
statement filed hereunder if the Company reasonably determines that it
contains an untrue statement of a material fact or omits to state any
material fact necessary to make the statements therein not misleading or that
any transaction in which the Company is engaged or proposes to engage would
require an amendment to such registration statement or a supplement to such
prospectus (including any such amendment or supplement made through
incorporation by reference to a report filed under Section 13 of the Exchange
Act). Each holder of Registrable Securities agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described
in this Section 12(a), such holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such holder's receipt of the copies of a
properly supplemented or amended prospectus, and, if so directed by the
Company, such holder will deliver to the Company all copies, other than
permanent file copies, then in such holder's possession, of the most recent
prospectus covering such Registrable Securities at the time of receipt of
such notice. In the event the Company gives any such notice, the time period
mentioned in Section 7(a)(iii), if applicable, will be extended by the number
of days during the period from and including the date of the giving of such
notice to and including the date when each seller of Registrable Securities
covered by such registration statement has received the copies of such
supplemented or amended prospectus. The Company agrees to use its reasonable
best efforts to cause any suspension of use of any prospectus pursuant to
this paragraph to be as short a period of time as possible.
(b) REMEDIES. Each holder of Registrable Securities, in addition
to being entitled to exercise all rights granted by law, including recovery
of damages, will be entitled to specific performance of its rights under this
Agreement.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given unless the Company has
obtained the written consent of at least a Majority of the outstanding
Registrable Securities.
(d) REGISTRABLE SECURITIES HELD BY THE COMPANY OR ITS AFFILIATES.
Whenever the consent or approval of holders of all or any specified
percentage of Registrable Securities is required hereunder, Registrable
Securities held by the Company or any of its affiliates (other than a
Purchaser if it is such an affiliate) will not be counted in determining
whether such consent or approval was given by such holders.
(e) NOTICES. All notices hereunder shall be in writing and shall
be effective (a) on the day on which delivered if delivered personally or
transmitted by telex or telegram or telecopier with evidence of receipt, (b)
one business day after the date on which the same is delivered to a
nationally
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recognized overnight courier service with evidence of receipt, or (c) five
business days after the date on which the same is deposited, postage prepaid,
in the U.S. mail, sent by certified or registered mail, return receipt
requested, and addressed to the party to be notified at the address set forth
in the Purchase Agreement for the Company, or at the address for the holder
of the Registrable Securities set forth in a registry maintained by the
Company, or at such other address and/or telecopy or telex number and/or to
the attention of such other person as the Company or the holder of the
Registrable Securities may designate by ten-day advance written notice.
(f) SUCCESSORS AND ASSIGNS; TRANSFER OF REGISTRATION RIGHTS. This
Agreement will inure to the benefit of and be binding upon the successors and
assigns of each of the parties; PROVIDED HOWEVER that the registration rights
granted by this Agreement may be transferred only (i) by operation of law, or
(ii) to any Person to whom the Purchaser sells or otherwise transfers
Registrable Securities who (x) upon such transfer, will hold 1,000,000 or
more Registrable Securities (such number of shares to be appropriately
adjusted in the event of any stock dividend or stock split or in connection
with a combination of shares, recapitalization, reclassification, merger,
consolidation or other reorganization) and (y) agrees to be bound by the
terms and conditions of this Agreement and signs an addendum to this
Agreement to such effect.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of
which when so executed will be deemed to be an original and all of which
taken together will constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for convenience
of reference only and will not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW; JURISDICTION. This Agreement will be governed
by and construed in accordance with the laws of the State of Texas, without
giving effect to conflict of law principles. Any holder of Registrable
Securities may bring any action or proceeding to enforce or arising out of
this Agreement or in the instruments and agreements annexed hereto in any
court of competent jurisdiction.
(j) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein will not be affected or impaired
thereby.
(k) ENTIRE AGREEMENT. This Agreement is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein with respect to the registration rights granted
by the Company with respect to the securities sold pursuant to the Purchase
Agreement. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
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(l) ATTORNEY'S FEES. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof or thereof is
validly asserted as a defense, the successful party will be entitled to recover
reasonable attorney's fees in addition to any other available remedy.
(m) EXCHANGE SECURITIES. If any securities are issued in exchange
for the Shares pursuant to the provisions of Section 5.11 of the Purchase
Agreement, this Agreement shall be interpreted to provide for registration
rights equivalent to those provided hereunder with respect to any shares of
common stock (or any securities into which such common stock is exchanged,
converted, reclassified or recapitalized) of the Company issuable upon
conversion, exercise or exchange of such securities.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
INPUT/OUTPUT INC.
By: /s/ X.X. Xxxxxxxx
-----------------------------------------
Name: X. X. Xxxxxxxx
Title: Chief Executive Officer
SCF-IV, L.P.
By: SCF-IV, G.P., Limited Partnership,
its General Partner
By: X. X. Xxxxxxx & Associates, Incorporated,
its General Partner
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Managing Director
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