EXHIBIT 18
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SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
by and among
INFOCROSSING, INC. (f/k/a Computer Outsourcing Services, Inc.),
MIDOCEAN CAPITAL INVESTORS, L.P.,
SANDLER CAPITAL PARTNERS V, L.P.,
SANDLER CAPITAL PARTNERS V FTE, L.P.,
SANDLER CAPITAL PARTNERS V GERMANY, L.P.,
SANDLER TECHNOLOGY PARTNERS SUBSIDIARY, LLC. ,
SANDLER CO-INVESTMENT PARTNERS, L.P.,
PRICE FAMILY LIMITED PARTNERS,
XXXX XXXXXXXX,
and
XXXXXX XXXXXXX STRATEGIC PARTNERS FUND, L.P.,
STRATEGIC ASSOCIATES, L.P.,
CAMDEN PARTNERS STRATEGIC FUND II-A, L.P.,
and
CAMDEN PARTNERS STRATEGIC FUND II-B, L.P.
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Dated as of: October 21, 2003
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS..........................................................3
Section 1.01 Definitions................................................3
Section 1.02 Internal References........................................8
ARTICLE II REGISTRATION RIGHTS.................................................9
Section 2.01 Demand Registration........................................9
Section 2.02 Piggyback Registration....................................13
ARTICLE III REGISTRATION PROCEDURES...........................................15
Section 3.01 Filings; Information......................................15
Section 3.02 Registration Expenses.....................................20
ARTICLE IV INDEMNIFICATION AND CONTRIBUTION...................................20
Section 4.01 Indemnification by the Company............................20
Section 4.02 Indemnification by Selling Holders........................21
Section 4.03 Conduct of Indemnification Proceedings....................21
Section 4.04 Contribution..............................................22
ARTICLE V MISCELLANEOUS.......................................................23
Section 5.01 Participation in Underwritten Registrations...............23
Section 5.02 Rule 144..................................................23
Section 5.03 Holdback Agreements.......................................23
Section 5.04 Termination...............................................24
Section 5.05 Amendments, Waivers, Etc..................................24
Section 5.06 Counterparts..............................................24
Section 5.07 Entire Agreement..........................................24
Section 5.08 Governing Law.............................................24
Section 5.09 Assignment of Registration Rights.........................24
Section 5.10 Specific Performance......................................25
Section 5.11 No Superior Registration Rights...........................25
Section 5.12 Additional Holders........................................25
EXECUTION COPY
SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this
"AGREEMENT"), is made as of October 21, 2003, by and among Infocrossing, Inc.
(f/k/a Computer Outsourcing Services, Inc.), a Delaware corporation, (the
"COMPANY"), MidOcean Capital Investors, L.P. (the "INITIAL MIDOCEAN HOLDER"),
Sandler Capital Partners V, L.P., Sandler Capital Partners V FTE, L.P., Sandler
Capital Partners V Germany, L.P., Sandler Technology Partners Subsidiary, LLC,
Sandler Co-Investment Partners, L.P. and Price Family Limited Partners (each an
"INITIAL SANDLER HOLDER" and, collectively, the "INITIAL SANDLER HOLDERS"), Xxxx
Xxxxxxxx, a resident of the State of New York ("LONSTEIN") and Xxxxxx Xxxxxxx
Strategic Partners Fund, L.P., Strategic Associates, L.P., Camden Partners
Strategic Fund II-A, L.P., and Camden Partners Strategic Fund II-B, L.P. (each
an "INITIAL CAMDEN HOLDER" and, collectively, the "INITIAL CAMDEN HOLDERS").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and the Initial MidOcean Holder and the Initial
Sandler Holders entered into, or have been assigned an interest in, a Securities
Purchase Agreement dated April 7, 2000 (the "SECURITIES PURCHASE AGREEMENT");
WHEREAS, pursuant to the terms of the Securities Purchase Agreement,
the Company issued (x) 157,377 shares (the "EXISTING SHARES") of the 8% Series A
Cumulative Convertible Participating Preferred Stock of the Company (the
"EXISTING SERIES A PREFERRED STOCK"), which Existing Shares were initially
convertible into 1,573,770 shares of the Common Stock, par value $.01 per share,
of the Company ("COMMON STOCK"), subject to adjustment in accordance with the
terms of the Existing Series A Preferred Stock, and (y) Series A Common Stock
Warrants (the "EXISTING WARRANTS") to purchase, initially 2,531,926 shares of
Common Stock, subject to adjustment in accordance with the terms of the Existing
Warrants;
WHEREAS, immediately prior to the transactions contemplated by this
Agreement, the Initial MidOcean Holder and the Initial Sandler Holders own, in
the aggregate, all outstanding shares of the Existing Series A Preferred Stock
and all the outstanding Existing Warrants;
WHEREAS, Lonstein is the holder of 1,587,925 shares of Common Stock
(the "LONSTEIN SHARES");
WHEREAS, Lonstein has granted the Initial MidOcean Holder and the
Initial Sandler Holders, or the Initial MidOcean Holder and the Initial Sandler
Holders have been assigned an interest in, an option (the "OPTION") to purchase
up to 750,000 shares of Common Stock currently owned by Lonstein;
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WHEREAS, on May 10, 2000, the Company, the Initial MidOcean Holder, the
Initial Sandler Holders and Lonstein entered into, or have been assigned an
interest in, a Registration Rights Agreement (the "INITIAL REGISTRATION RIGHTS
AGREEMENT") pursuant to which each of them was granted certain registration
rights;
WHEREAS, on February 1, 2002, the Company entered into a Securities
Purchase Agreement (the "CAMDEN PURCHASE AGREEMENT"), and a Warrant Agreement
dated as of February 1, 2002 with the Initial Camden Holders;
WHEREAS, pursuant to the terms of the Camden Purchase Agreement, the
Company issued to the Initial Camden Holders an aggregate of (x) $10.0 million
principal amount of Senior Subordinated Debentures due 2005, (y) warrants to
purchase, initially 2,000,000 shares of Common Stock (the "INITIAL CAMDEN
WARRANTS") subject to adjustment in accordance with the terms of such Initial
Camden Warrants and (z) warrants (the "ADDITIONAL CAMDEN WARRANTS") to purchase
additional shares of Common Stock;
WHEREAS, on February 1, 2002, each of the Initial MidOcean Holder, the
Initial Sandler Holders, Lonstein and the Initial Camden Holders entered into,
or have been assigned an interest in, an Amended and Restated Registration
Rights Agreement (the "EXISTING REGISTRATION RIGHTS AGREEMENT"), which amended
and restated the Initial Registration Rights Agreement to, among other things,
grant certain registration rights to the Initial Camden Holders;
WHEREAS, the Company has entered into an Exchange Agreement, dated as
of October 16, 2003 (the "EXCHANGE AGREEMENT"), with the Initial MidOcean Holder
and the Initial Sandler Holders, pursuant to which the parties thereto have
agreed, among other things, to an exchange of the shares of Existing Series A
Preferred Stock and the Existing Warrants for an aggregate consideration of (i)
$55.0 million in cash and (ii) $25.0 million in aggregate principal amount of
loans (the "LOANS") pursuant to the Term Loan Agreement (as defined herein);
WHEREAS, in connection with the transactions contemplated by the
Exchange Agreement, the Company has agreed pursuant to the Term Loan Agreement
and the Syndication Letter (as defined herein), among other things, (i) to
issue, under certain circumstances, warrants to purchase initially up to 250,000
shares of Common Stock (the "LENDER WARRANTS") to purchasers, transferees or
assignees, if any (each an "INITIAL LENDER HOLDER" and, collectively, the
"INITIAL LENDER HOLDERS"), of the Loans and (ii) to admit such Initial Lender
Holders as parties to this Agreement and grant them certain registration rights;
WHEREAS, it is a condition to the consummation of the transactions
contemplated by the Exchange Agreement that the parties hereto execute and
deliver this Agreement;
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WHEREAS, the Company, the Initial MidOcean Holder, the Initial Sandler
Holders, Lonstein and the Initial Camden Holders wish to amend and restate the
Existing Registration Rights Agreement as set forth below; and
WHEREAS, this Agreement replaces in its entirety the Existing
Registration Rights Agreement.
NOW THEREFORE, in consideration of the premises, mutual promises and
covenants contained in this Agreement and intending to be legally bound, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 DEFINITIONS. Terms defined in the Securities Purchase
Agreement are used herein as therein defined. In addition, the following terms,
as used herein, have the following meanings:
"ADDITIONAL CAMDEN WARRANTS" has the meaning set forth in the recitals.
"AFFILIATE" means, with respect to the Company and any Holder, any
other Person directly or indirectly controlling, controlled by, or under direct
or indirect common control with, the Company or such Holder, as the case may be.
In addition, "AFFILIATE" means with respect to any Holder, any current or former
members of or any general or limited partners or retired partners of such
Holder, or any Person or entity that directly or indirectly, through one or more
intermediaries, controls, with the general partner of such Holder, such Holder.
For the purposes of this definition, "CONTROL" when used with respect to any
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "CONTROLLING" and "CONTROLLED" have
meanings correlative to the foregoing.
"AGREEMENT" has the meaning set forth in the preamble.
"BOARD OF DIRECTORS" means the Company's Board of Directors.
"CAMDEN HOLDERS" means the Initial Camden Holders, their direct and
indirect successors and assigns and any direct or indirect transferee of any
Registrable Securities initially held by any Initial Camden Holder.
"CAMDEN PURCHASE AGREEMENT" has the meaning set forth in the recitals.
"CAMDEN WARRANTS" means all Initial Camden Warrants and all Additional
Camden Warrants.
"CAMDEN WARRANT SHARES" means all shares of Common Stock or other
securities issued upon the exercise of Camden Warrants.
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"CLOSING DATE" means October 21, 2003.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" has the meaning set forth in the recitals.
"COMPANY" has the meaning set forth in the preamble.
"DEMAND REGISTRATION" means a registration under the Securities Act
requested in accordance with Section 2.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"EXCHANGE AGREEMENT" has the meaning set forth in the recitals.
"EXCLUDED HOLDERS" has the meaning set forth in Section 2.01(f).
"EXISTING REGISTRATION RIGHTS AGREEMENT" has the meaning set forth in
the recitals.
"EXISTING SERIES A PREFERRED STOCK" has the meaning set forth in the
recitals.
"EXISTING SHARES" has the meaning set forth in the recitals.
"EXISTING WARRANTS" has the meaning set forth in the recitals.
"HOLDERS" shall mean the MidOcean Holders, the Sandler Holders, the
Lonstein Holders, the Camden Holders and the Lender Holders.
"INDEMNIFIED PARTY" has the meaning set forth in Section 4.03.
"INDEMNIFYING PARTY" has the meaning set forth in Section 4.03.
"INITIAL CAMDEN HOLDER" and "INITIAL CAMDEN HOLDERS" have the meanings
set forth in the preamble.
"INITIAL CAMDEN WARRANTS" has the meaning set forth in the recitals.
"INITIAL LENDER HOLDER" and "INITIAL LENDER HOLDERS" have the meanings
set forth in the recitals.
"INITIAL MIDOCEAN HOLDER" has the meaning set forth in the preamble.
"INITIAL SANDLER HOLDER" and "INITIAL SANDLER HOLDERS" have the
meanings set forth in the preamble.
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"INITIAL REGISTRATION RIGHTS AGREEMENT" shall have the meaning set
forth in the recitals.
"LENDER HOLDERS" means the Initial Lender Holders, their direct and
indirect successors and assigns and any direct or indirect transferee of any
Registrable Securities held by any Initial Lender Holder.
"LENDER WARRANT SHARES" means all shares of Common Stock or other
securities issued upon exercise of the Lender Warrants.
"LENDER WARRANTS" has the meaning set forth in the recitals.
"LOANS" has the meaning set forth in the recitals.
"LONSTEIN" has the meaning set forth in the preamble.
"LONSTEIN HOLDERS" means Lonstein, his direct and indirect heirs,
successors and assigns and any direct or indirect transferee of any Registrable
Securities initially held by Lonstein.
"LONSTEIN SHARES" has the meaning set forth in the recitals.
"LOSSES" has the meaning set forth in Section 4.01.
"MATERIAL ADVERSE EFFECT" has the meaning set forth in Section 2.01(f).
"MIDOCEAN HOLDERS" means the Initial MidOcean Holder, its direct and
indirect successors and assigns and any direct or indirect transferee of any
Registrable Securities initially held by the Initial MidOcean Holder.
"OPTION" has the meaning set forth in the recitals.
"OPTION SHARES" means any shares of Common Stock or other securities
issued upon the exercise of the Option.
"PERSON" means any individual, partnership, joint venture, corporation,
limited liability company, limited liability partnership, trust incorporated
organization, government, or agency or political subdivision thereof, or other
entity.
"PIGGYBACK REGISTRATION" has the meaning set forth in Section 2.02(a).
"PRIVATE PLACEMENT REGISTRATION STATEMENT" means the registration
statement required to be filed by the Company with the Commission pursuant to
the terms of the Registration Rights Agreement entered into by and among the
Company and the other parties thereto in connection with the private placement
of the Company's Common Stock and warrants on October 21, 2003 and covering the
resale by the holders of such shares of Common Stock and also shares of Common
Stock issuable upon the exercise of such warrants.
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"REGISTRABLE CAMDEN SECURITIES" means (a) any Registrable Common Stock
acquired by any Camden Holder upon the exercise of any Registrable Camden
Warrants and (b) any securities of the Company or any successor entity into
which Registrable Common Stock or Registrable Camden Warrants may hereafter be
reclassified, converted or changed. As to any particular Registrable Camden
Securities, such securities shall cease to be Registrable Camden Securities upon
the earlier to occur of (i) a registration statement with respect to the sale of
such securities shall have become effective under the Securities Act and such
securities shall have been disposed of under such registration statement in
accordance with the plan of distribution set forth therein; (ii) such securities
shall have been transferred pursuant to Rule 144; (iii) such securities shall
have been otherwise transferred or disposed of, and new certificates therefor
not bearing a legend restricting further transfer shall have been delivered by
the Company, and subsequent transfer of such securities shall not require
registration or qualification under the Securities Act or any similar state law
then in force; or (iv) such securities shall have ceased to be outstanding.
"REGISTRABLE CAMDEN WARRANTS" means the Camden Warrants, together with
any additional shares of Common Stock or other securities issued in respect
thereof (other than any Camden Warrant Shares) in connection with any stock
split, stock dividend, merger, consolidation, reclassification, recapitalization
or other similar event with respect to such Camden Warrants.
"REGISTRABLE COMMON STOCK" means the Option Shares, the Camden Warrant
Shares and the Lender Warrant Shares, in each case, together with any additional
shares of Common Stock or other securities issued in respect thereof in
connection with any stock split, stock dividend, merger, consolidation,
reclassification, recapitalization or similar event with respect to such shares
of Common Stock.
"REGISTRABLE LENDER SECURITIES" means (a) any Registrable Common Stock
acquired by any Lender Holder upon the exercise of any Registrable Lender
Warrants and (b) any securities of the Company or any successor entity into
which Registrable Common Stock or Registrable Lender Warrants may hereafter be
reclassified, converted or changed. As to any particular Registrable Lender
Securities, such securities shall cease to be Registrable Lender Securities upon
the earlier to occur of (i) a registration statement with respect to the sale of
such securities shall have become effective under the Securities Act and such
securities shall have been disposed of under such registration statement in
accordance with the plan of distribution set forth therein; (ii) such securities
shall have been transferred pursuant to Rule 144; (iii) such securities shall
have been otherwise transferred or disposed of, and new certificates therefor
not bearing a legend restricting further transfer shall have been delivered by
the Company, and subsequent transfer of such securities shall not require
registration or qualification under the Securities Act or any similar state law
then in force; or (iv) such securities shall have ceased to be outstanding.
"REGISTRABLE LENDER WARRANTS" means the Lender Warrants, together with
any additional shares of Common Stock or other securities issued in respect
thereof
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(other than any Lender Warrant Shares) in connection with any stock split, stock
dividend, merger, consolidation, reclassification, recapitalization or similar
event with respect to such Lender Warrants.
"REGISTRABLE LONSTEIN SECURITIES" means the Lonstein Shares (other than
any Lonstein Shares subject to the Option), together with any additional shares
of Common Stock or other securities issued in respect thereof in connection with
any stock split, stock dividend, merger, consolidation, reclassification,
recapitalization or similar event with respect to such shares of Common Stock.
As to any particular Registrable Lonstein Securities, such securities shall
cease to be Registrable Lonstein Securities upon the earlier to occur of (i) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of under such registration statement in accordance with the plan of
distribution set forth therein; (ii) such securities shall have been transferred
pursuant to Rule 144; (iii) such securities shall have been otherwise
transferred or disposed of, and new certificates therefor not bearing a legend
restricting further transfer shall have been delivered by the Company, and
subsequent transfer of such securities shall not require registration or
qualification under the Securities Act or any similar state law then in force;
or (iv) such securities shall have ceased to be outstanding.
"REGISTRABLE MIDOCEAN SECURITIES" means (a) any Registrable Common
Stock acquired by any MidOcean Holder upon the exercise of the Option, and (b)
any securities of the Company or any successor entity into which Registrable
Common Stock may hereafter be reclassified, converted or changed. As to any
particular Registrable MidOcean Securities, such securities shall cease to be
Registrable MidOcean Securities upon the earlier to occur of (i) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of under such registration statement in accordance with the plan of distribution
set forth therein; (ii) such securities shall have been transferred pursuant to
Rule 144; (iii) such securities shall have been otherwise transferred or
disposed of, and new certificates therefor not bearing a legend restricting
further transfer shall have been delivered by the Company, and subsequent
transfer of such securities shall not require registration or qualification
under the Securities Act or any similar state law then in force; or (iv) such
securities shall have ceased to be outstanding.
"REGISTRABLE SANDLER SECURITIES" means (a) any Registrable Common Stock
acquired by any Sandler Holders upon the exercise of the Option, and (b) any
securities of the Company or any successor entity into which Registrable Common
Stock may hereafter be reclassified, converted or changed. As to any particular
Registrable Sandler Securities, such securities shall cease to be Registrable
Sandler Securities upon the earlier to occur of (i) a registration statement
with respect to the sale of such securities shall have become effective under
the Securities Act and such securities shall have been disposed of under such
registration statement in accordance with the plan of distribution set forth
therein; (ii) such securities shall have been transferred pursuant to Rule 144;
(iii) such securities shall have been otherwise transferred or disposed of, and
new certificates therefor not bearing a legend restricting further transfer
shall have been
8
delivered by the Company, and subsequent transfer of such securities shall not
require registration or qualification under the Securities Act or any similar
state law then in force; or (iv) such securities shall have ceased to be
outstanding.
"REGISTRABLE SECURITIES" means the Registrable MidOcean Securities, the
Registrable Sandler Securities, the Registrable Lonstein Securities, the
Registrable Camden Securities and the Registrable Lender Securities.
"REQUESTING HOLDERS" means the Holders requesting a Demand
Registration, and shall include parties deemed "REQUESTING HOLDERS" pursuant to
Sections 2.01(a)(vii), (viii), (ix), (x) and (xi).
"RULE 144" means Rule 144 (or any successor rule of similar effect)
promulgated under the Securities Act.
"SANDLER HOLDERS" means the Initial Sandler Holders, their direct and
indirect successors and assigns and any direct or indirect transferee of any
Registrable Securities initially held by any Initial Sandler Holder.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"SECURITIES PURCHASE AGREEMENT" has the meaning set forth in the
recitals.
"SELLING HOLDER" means any Holder who is selling Registrable Securities
pursuant to a public offering registered hereunder.
"SHELF REGISTRATION" means a Demand Registration which is effected
pursuant to Rule 415 under the Securities Act.
"SYNDICATION LETTER" has the meaning set forth in the Term Loan
Agreement.
"TERM LOAN AGREEMENT" means the Term Loan Agreement, dated as of the
Closing Date, entered into by and among the Company, the Lenders (as defined
therein) and the other parties signatory thereto.
"UNDERWRITER" means a securities dealer who purchases any Registrable
Securities as principal in connection with a Demand Registration or a Piggyback
Registration and not as part of such dealer's market-making activities.
Section 1.02 INTERNAL REFERENCES. Unless the context indicates
otherwise, references to Articles, Sections and paragraphs shall refer to the
corresponding articles, sections and paragraphs in this Agreement, and
references to the parties shall mean the parties to this Agreement.
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ARTICLE II
REGISTRATION RIGHTS
Section 2.01 DEMAND REGISTRATION.
(a) (i) Holders of not less than a majority of the
Registrable MidOcean Securities may make up to one written request for a Demand
Registration (of which such Demand Registration may be a Shelf Registration) of
all or any part of the Registrable MidOcean Securities held by such MidOcean
Holders; PROVIDED that the MidOcean Holders shall not be entitled to a Demand
Registration if, during the 6 months preceding such request, the Holders have
requested a Demand Registration (unless such Demand Registration was preempted
pursuant to Section 2.01(e)).
(ii) Holders of not less than a majority of the
Registrable Sandler Securities may make up to one written request for a Demand
Registration (of which such Demand Registration may be a Shelf Registration) of
all or any part of the Registrable Sandler Securities held by such Sandler
Holders; PROVIDED that the Sandler Holders shall not be entitled to a Demand
Registration if, during the 6 months preceding such request, the Holders have
requested a Demand Registration (unless such Demand Registration was preempted
pursuant to Section 2.01(e)).
(iii) Holders of not less than a majority of the
Registrable Lonstein Securities may make up to two written requests for a Demand
Registration of all or any part of the Registrable Lonstein Securities held by
such Lonstein Holders; PROVIDED that the Lonstein Holders shall not be entitled
to a Demand Registration if, during the 6 months preceding such request, the
Holders have requested a Demand Registration (unless such Demand Registration
was preempted pursuant to Section 2.01(e)).
(iv) Holders of not less than a majority of the
Registrable Camden Securities may make one written request for a Demand
Registration (of which such Demand Registration may be a Shelf Registration) of
all or any part of the Registrable Camden Securities held by such Camden
Holders; PROVIDED that the Camden Holders shall not be entitled to a Demand
Registration if, during the 6 months preceding such request, the Holders have
requested a Demand Registration (unless such Demand Registration was preempted
pursuant to Section 2.01(e)).
(v) Holders of not less than a majority of the
Registrable Lender Securities may make one written request for a Demand
Registration (of which such Demand Registration may be a Shelf Registration) of
all or any part of the Registrable Lender Securities held by such Lender
Holders; PROVIDED that the Lender Holders shall not be entitled to a Demand
Registration if, during the 6 months preceding such request, the Holders have
requested a Demand Registration (unless such Demand Registration was preempted
pursuant to Section 2.01(e)).
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(vi) Any request for a Demand Registration will
specify the aggregate number of shares of Registrable Securities proposed to be
sold by the Requesting Holders and will also specify the intended method of
disposition thereof. Any such request for a Demand Registration shall specify
whether such registration will be a Shelf Registration. For so long as the
Initial MidOcean Holder holds Registrable MidOcean Securities, no Demand
Registration made by any MidOcean Holder shall be a Shelf Registration without
the consent of the Initial MidOcean Holder. For so long as the Initial Sandler
Holders hold Registrable Sandler Securities, no Demand Registration made by any
Sandler Holder shall be a Shelf Registration without the consent of a majority
in interest of the Initial Sandler Holders. For so long as the Initial Camden
Holders hold Registrable Camden Securities, no Demand Registration made by any
Camden Holder shall be a Shelf Registration without the consent of a majority in
interest of the Initial Camden Holders. For so long as the Initial Lender
Holders hold Registrable Lender Securities, no Demand Registration made by any
Lender Holder shall be a Shelf Registration without the consent of a majority in
interest of the Initial Lender Holders. A registration will not count as a
Demand Registration until it has become effective. If the Requesting Holders
withdraw or do not pursue the request for the Demand Registration (in each of
the foregoing cases, PROVIDED that at such time the Company is in compliance in
all material respects with its obligations under this Agreement), then such
Demand Registration shall be deemed to have been effected, provided that (i) if
the Demand Registration does not become effective because a material adverse
change has occurred, or is reasonably likely to occur, in the condition
(financial or otherwise), business, properties, assets, liabilities, operations
or prospects of the Company and its subsidiaries taken as a whole subsequent to
the date of the written request made by the Requesting Holders or (ii) if, after
the Demand Registration has become effective, an offering of Registrable
Securities pursuant to a registration is interfered with by any stop order,
injunction, or other order or requirement of the Commission or other
governmental agency or court then the Demand Registration shall not be deemed to
have been effected and will not count as a Demand Registration.
(vii) Upon receipt of any request for a Demand
Registration by Holders of not less than a majority of the Registrable MidOcean
Securities held by the MidOcean Holders, the Company shall promptly (but in any
event within ten (10) days) give written notice of such proposed Demand
Registration to all other Holders, and subject to Section 2.01(f), all such
Holders shall have the right, exercisable by written notice to the Company
within twenty (20) days of their receipt of the Company's notice, to elect to
include in such Demand Registration such portion of their Registrable Securities
as they may request. All such Holders requesting to have their Registrable
Securities included in a Demand Registration in accordance with the preceding
sentence shall be deemed to be "Requesting Holders" for purposes of this Section
2.01; PROVIDED that any Sandler Holders, any Lonstein Holders, any Camden
Holders and any Lender Holders shall not be deemed to be "Requesting Holders"
for purposes of Section 2.01(c).
(viii) Upon receipt of any request for a Demand
Registration by Holders of not less than a majority of the Registrable Sandler
Securities held by the Sandler Holders, the Company shall promptly (but in any
event within ten
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(10) days) give written notice of such proposed Demand Registration to all other
Holders, and subject to Section 2.01(f), all such Holders shall have the right,
exercisable by written notice to the Company within twenty (20) days of their
receipt of the Company's notice, to elect to include in such Demand Registration
such portion of their Registrable Securities as they may request. All such
Holders requesting to have their Registrable Securities included in a Demand
Registration in accordance with the preceding sentence shall be deemed to be
"Requesting Holders" for purposes of this Section 2.01; PROVIDED that any
MidOcean Holders, any Lonstein Holders, any Camden Holders and any Lender
Holders shall not be deemed to be "Requesting Holders" for purposes of Section
2.01(c).
(ix) Upon receipt of any request for a Demand
Registration by Holders of a majority of the Registrable Lonstein Securities
held by the Lonstein Holders, the Company shall promptly (but in any event
within ten (10) days) give written notice of such proposed Demand Registration
to all other Holders, and subject to Section 2.01(f), all such Holders shall
have the right, exercisable by written notice to the Company within twenty (20)
days of their receipt of the Company's notice, to elect to include in such
Demand Registration such portion of their Registrable Securities as they may
request. All such Holders requesting to have their Registrable Securities
included in a Demand Registration in accordance with the preceding sentence
shall be deemed to be "Requesting Holders" for purposes of this Section 2.01;
PROVIDED that any MidOcean Holders, any Sandler Holders, any Camden Holders and
any Lender Holders shall not be deemed to be "Requesting Holders" for purposes
of Section 2.01(c).
(x) Upon receipt of any request for a Demand
Registration by Holders of not less than a majority of the Registrable Camden
Securities held by the Camden Holders, the Company shall promptly (but in any
event within ten (10) days) give written notice of such proposed Demand
Registration to all other Holders, and subject to Section 2.01(f), all such
Holders shall have the right, exercisable by written notice to the Company
within twenty (20) days of their receipt of the Company's notice, to elect to
include in such Demand Registration such portion of their Registrable Securities
as they may request. All such Holders requesting to have their Registrable
Securities included in a Demand Registration in accordance with the preceding
sentence shall be deemed to be "Requesting Holders" for purposes of this Section
2.01; PROVIDED that any MidOcean Holders, any Sandler Holders, any Lonstein
Holders and any Lender Holders shall not be deemed to be "Requesting Holders"
for purposes of Section 2.01(c).
(xi) Upon receipt of any request for a Demand
Registration by Holders of not less than a majority of the Registrable Lender
Securities held by the Lender Holders, the Company shall promptly (but in any
event within ten (10) days) give written notice of such proposed Demand
Registration to all other Holders, and subject to Section 2.01(f), all such
Holders shall have the right, exercisable by written notice to the Company
within twenty (20) days of their receipt of the Company's notice, to elect to
include in such Demand Registration such portion of their Registrable Securities
as they may request. All such Holders requesting to have their Registrable
Securities included in a Demand Registration in accordance with the preceding
sentence shall be deemed to be "Requesting Holders" for purposes of this Section
2.01; PROVIDED
12
that any MidOcean Holders, any Sandler Holders, any Lonstein Holders and any
Camden Holders shall not be deemed to be "Requesting Holders" for purposes of
Section 2.01(c).
(b) In the event that the Requesting Holders withdraw or
do not pursue a request for a Demand Registration and, pursuant to Section
2.01(a) hereof, such Demand Registration is deemed to have been effected, the
Holders may reacquire such Demand Registration (such that the withdrawal or
failure to pursue a request will not count as a Demand Registration hereunder)
if the Selling Holders reimburse the Company for any and all registration
expenses pursuant to Section 3.02 actually incurred by the Company in connection
with such request for a Demand Registration.
(c) If the Requesting Holders so elect, the offering of
such Registrable Securities pursuant to such Demand Registration shall be in the
form of a "firm commitment" underwritten offering. A majority in interest of the
Requesting Holders shall have the right to select the managing Underwriters and
any additional investment bankers and managers to be used in connection with any
offering under this Section 2.01, subject to the Company's approval, which
approval shall not be unreasonably withheld.
(d) The Requesting Holders will inform the Company of the
time and manner of any disposition of Registrable Securities (which may be
pursuant to a Shelf Registration), and agree to take reasonable action to
cooperate with the Company in effecting the disposition of the Registrable
Securities in a manner that does not unreasonably disrupt the public trading
market for the Common Stock.
(e) The Company shall have the right for up to 180 days
in any consecutive 360 day period to delay or suspend any Demand Registration in
the event that the Board of Directors determines, in good faith, that it is in
the best interest of the Company for the Company to proceed with its own
offering of equity securities. The Company may so proceed by delivering written
notice (within five business days after the Company has received a request for
such Demand Registration) of such intention to the Selling Holder indicating
that the Company has identified a specific business need and use for the
proceeds of the sale of such securities and the Company shall use its best
efforts to effect a primary registration within 60 days of such notice. In the
ensuing primary registration, the Holders will have such piggyback registration
rights as are set forth in Section 2.02 hereof. Upon the Company's preemption of
a requested Demand Registration, such requested registration will not count as
the Holders' Demand Registration. The Company may exercise the right to preempt
only once in any 360-day period. Notwithstanding anything to the contrary
contained herein, during any 360-day period the Company shall not exercise its
right to preempt, delay or postpone the filing or effectiveness of any
registration statement, pre- or post-effective amendment or supplement or
prospectus supplement pursuant to this Section 2.01(e), the first proviso to
Section 3.01(a), or Section 3.01(b) for more than 180 days in the aggregate for
all such provisions during any period of 360 consecutive days.
(f) No securities to be sold for the account of any
Person (including the Company) other than a Requesting Holder shall be included
in a Demand
13
Registration unless the managing Underwriter or Underwriters shall advise the
Company and the Requesting Holders in writing that the inclusion of such
securities will not materially and adversely affect the price, distribution or
timing of the offering (a "MATERIAL ADVERSE EFFECT"). Any additional securities
to be included in a Demand Registration pursuant to this Section 2.01(f) shall
be included in such Demand Registration in accordance with their relative
rights. Furthermore, in the event the managing Underwriter or Underwriters shall
advise the Company or the Requesting Holders that even after exclusion of all
securities of other Persons (including the Company) pursuant to the immediately
preceding sentence, the amount of Registrable Securities proposed to be included
in such Demand Registration by Requesting Holders is sufficiently large to cause
a Material Adverse Effect, the Registrable Securities of the Requesting Holders
to be included in such Demand Registration shall equal the number of shares
which the Company and the Requesting Holders are so advised can be sold in such
offering without a Material Adverse Effect and such shares shall be allocated
pro rata among the Requesting Holders on the basis of the number of Registrable
Securities requested to be included in such registration by each such Requesting
Holder. If any Registrable Securities requested to be registered pursuant to a
Demand Registration under Section 2.01 are excluded from registration hereunder,
then the Holder(s) having shares excluded ("EXCLUDED HOLDERS") shall have the
right to withdraw all, or any part, of their shares from such registration;
PROVIDED, FURTHER, that if less than 80% of the Registrable Securities requested
to be included in such Demand Registration are actually included therein, such
registration will not count as a Demand Registration for purposes of this
Section 2.01.
(g) Notwithstanding any request for Demand Registration
made by any of the Holders pursuant to this Section 2.01, the Company shall not
be required to file a registration statement pursuant to this Section 2.01 for
the registration of Registrable Securities hereunder until such time as the
Private Placement Registration Statement has been declared effective by the
Commission. A true and correct copy of the Registration Rights Agreement for the
Private Placement has previously been furnished to the Initial Sandler Holders
and the Initial MidOcean Holder.
Section 2.02 PIGGYBACK REGISTRATION.
(a) If the Company at any time proposes to file a
registration statement under the Securities Act with respect to an offering of
securities for its own account or for the account of another Person (other than
a registration statement on Form S-4 or S-8 (or any substitute form that may be
adopted by the Commission) and other than a Demand Registration hereunder and
the Private Placement Registration Statement), the Company shall give written
notice of such proposed filing to the Holders at the address set forth in the
share register of the Company as soon as reasonably practicable (but in no event
less than 15 days before the anticipated date on which such registration will be
first filed with the Commission), undertaking to provide each Holder the
opportunity to register on the same terms and conditions such number and type of
Registrable Securities as such Holder may request (a "PIGGYBACK REGISTRATION").
Each Holder will have ten business days after receipt of any such notice to
notify the Company as to whether it wishes to participate in a Piggyback
Registration (which notice shall not
14
be deemed to be a request for a Demand Registration); PROVIDED that should a
Holder fail to provide timely notice to the Company, such Holder will forfeit
any rights to participate in the Piggyback Registration with respect to such
proposed offering. In the event that the registration statement is filed on
behalf of a Person other than the Company, the Company will use its best efforts
to have the shares of Registrable Securities that the Holders wish to sell
included in the registration statement. If the Company shall determine in its
sole discretion not to register or to delay the proposed offering, the Company
shall provide written notice of such determination to the Holders and (i) in the
case of a determination not to effect the proposed offering, shall thereupon be
relieved of the obligation to register such Registrable Securities in connection
therewith, and (ii) in the case of a determination to delay a proposed offering,
shall thereupon be permitted to delay registering such Registrable Securities
for the same period as the delay in respect of the proposed offering. As between
the Company and the Selling Holders, the Company shall be entitled to select the
Underwriters in connection with any Piggyback Registration.
(b) If the Registrable Securities requested to be
included in the Piggyback Registration by any Holder differ from the type of
securities proposed to be registered by the Company and the managing Underwriter
advises the Company that due solely to such differences the inclusion of such
Registrable Securities would cause a Material Adverse Effect, then (i) the
number of such Holders' Registrable Securities to be included in the Piggyback
Registration shall be reduced to an amount which, in the opinion of the managing
Underwriter, would eliminate such Material Adverse Effect or (ii) if no such
reduction would, in the opinion of the managing Underwriter, eliminate such
Material Adverse Effect, then the Company shall have the right to exclude all
such Registrable Securities from such Piggyback Registration, provided that no
other securities of such type are included and offered for the account of any
other Person in such Piggyback Registration. Any partial reduction in number of
Registrable Securities of any Holder to be included in the Piggyback
Registration pursuant to clause (i) of the immediately preceding sentence shall
be effected pro rata based on the ratio which such Holder's requested shares
bears to the total number of shares requested to be included in such Piggyback
Registration by all Persons other than the Company who have the contractual
right to request that their shares be included in such registration statement
and who have requested that their shares be included. If the Registrable
Securities requested to be included in the registration statement are of the
same type as the securities being registered by the Company and the managing
Underwriter advises the Company that the inclusion of such Registrable
Securities would cause a Material Adverse Effect, the Company will be obligated
to include in such registration statement, as to each Holder only a portion of
the shares such Holder has requested be registered equal to the ratio which such
Holder's requested shares bears to the total number of shares requested to be
included in such registration statement by all Persons who have the contractual
right to request that their shares be included in such registration statement
and who have requested their shares be included; PROVIDED, HOWEVER, that the
provisions of this sentence shall not be applicable to the Person or Persons
initiating such registration statement. If the Company initiated the
registration, then the Company may include all of its securities in such
registration statement before any such Holder's requested shares are included.
If another security holder initiated the registration, then the Company may not
include any
15
of its securities in such registration statement unless all Registrable
Securities requested to be included in the registration statement by all Holders
are included in such registration statement. If as a result of the provisions of
this Section 2.02(b) any Holder shall not be entitled to include all Registrable
Securities in a registration that such Holder has requested to be so included,
such Holder may withdraw such Holder's request to include Registrable Securities
in such registration statement prior to its effectiveness.
ARTICLE III
REGISTRATION PROCEDURES
Section 3.01 FILINGS; INFORMATION. In connection with the
registration of Registrable Securities pursuant to Section 2.01 and Section 2.02
hereof, the Company will use its best efforts to effect the registration of such
Registrable Securities as promptly as is reasonably practicable, and in
connection with any such request:
(a) Subject to Section 2.01(g) hereof, the Company will
expeditiously prepare and file as soon as practicable (but in any event within
60 days) with the Commission a registration statement on any form for which the
Company then qualifies and which counsel for the Company shall deem appropriate
and available for the sale of the Registrable Securities to be registered
thereunder in accordance with the intended method of distribution thereof, and
use its reasonable best efforts to cause such filed registration statement to
become and remain effective (i) with respect to any Demand Registration (other
than a Shelf Registration) or Piggyback Registration, for such period, not to
exceed 120 days, as may be reasonably necessary to effect the sale of such
securities and (ii) with respect to a Shelf Registration, until the earlier of
the sale of all Registrable Securities thereunder and the end of the 36th
calendar month from the time the Shelf Registration becomes effective; PROVIDED
that if the Company shall furnish to the Selling Holder a certificate signed by
the Company's Chairman or President stating that the Board of Directors has
determined in good faith that it would be detrimental or otherwise
disadvantageous to the Company or its shareholders for such a registration
statement to be filed as expeditiously as possible because the sale of
Registrable Securities covered by such registration statement or the disclosure
of information in any related prospectus or prospectus supplement would
materially interfere with any acquisition, financing or other material event or
transaction which is then intended or the public disclosure of which at the time
would be materially prejudicial to the Company, the Company may postpone the
filing or effectiveness of a registration statement for a period of not more
than 180 days; PROVIDED, further, that the Company shall not exercise its right
to preempt, delay or postpone any registration pursuant to Section 2.01(e), the
first proviso to this Section 3.01(a), or Section 3.01(b) for more than 180 days
in the aggregate for all such provisions during any period of 360 consecutive
days; PROVIDED, FURTHER, that the Company may exercise its rights under Section
3.01(a) only once with respect to any particular registration statement; and
PROVIDED, FURTHER, that if (i) the effective date of any registration statement
filed pursuant to a Demand Registration would otherwise be at least 45 calendar
days, but fewer than 90 calendar days, after the end of the Company's fiscal
year, and (ii) the Securities Act requires the Company to include audited
financial statements of the Company as of the end of such fiscal year, the
16
Company may delay the effectiveness of such registration statement for such
period as is reasonably necessary to include therein its audited financial
statements for such fiscal year.
(b) Anything in this Agreement to the contrary
notwithstanding, it is understood and agreed that the Company shall not be
required to keep any Shelf Registration effective or useable for offers and
sales of the Registrable Securities, file a post effective amendment to a Shelf
Registration statement or prospectus supplement or to supplement or amend any
registration statement, if the Company is then involved in discussions
concerning, or otherwise engaged in, any material financing or investment,
acquisition or divestiture transaction or other material business purpose, if
the Board of Directors has determined in good faith that the making of such a
filing, supplement or amendment at such time would interfere with such
transaction or purpose. The Company shall promptly give the Holders of
Registrable Securities written notice of such postponement containing a general
statement of the reasons for such postponement and an approximation of the
anticipated delay. Upon receipt by a Holder of Registrable Securities of notice
of an event of the kind described in this Section 3.01(b), such Holder shall
forthwith discontinue such Holder's disposition of Registrable Securities until
such Holder's receipt of notice from the Company that such disposition may
continue and of any supplemented or amended prospectus indicated in such notice.
Notwithstanding anything to the contrary contained herein, the Company shall not
be entitled to preempt, delay or postpone the filing or effectiveness of any
registration statement, pre- or post-effective amendment or supplement to any
registration statement or prospectus supplement pursuant to Section 2.01(e), the
first proviso of Section 3.01(a), or this Section 3.01(b) for more than 180 days
in the aggregate for all such provisions during any period of 360 consecutive
days.
(c) Before filing a registration statement or prospectus
or any amendments or supplements thereto, the Company will furnish to any
Selling Holder and to the applicable managing Underwriters, if any, draft copies
of all such documents proposed to be filed at least ten (10) business days prior
thereto, which documents will be subject to the reasonable review of such
Selling Holders, the applicable managing Underwriters, if any, and their
respective counsel, agents and representatives, and the Company will not file
any registration statement or amendment thereto or any prospectus or any
supplement thereto (including such documents incorporated by reference) to which
any Selling Holder or Underwriter shall reasonably object.
(d) The Company will notify the Selling Holders
requesting such registration and (if requested) confirm such advice in writing,
as soon as practicable after notice thereof is received by the Company (i) when
the registration statement or any amendment thereto has been filed or becomes
effective, the prospectus or any amendment or supplement to the prospectus has
been filed, (ii) of any request by the Commission for amendments or supplements
to the registration statement or the prospectus or for additional information,
(iii) if at any time the representations and warranties contemplated by Section
5.01 cease to be true and correct and (iv) of the receipt by the Company of any
notification with respect to the suspension of the
17
qualification of the Registrable Securities for offering or sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose.
(e) After the filing of the registration statement, the
Company will promptly notify the Selling Holders of any stop order issued, or,
to the Company's knowledge, threatened to be issued, by the Commission and use
its best efforts to prevent the entry of such stop order or to remove it if
entered.
(f) The Company will prepare and file with the Commission
such amendments, post-effective 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 120
days (or such shorter period which will terminate when all Registrable
Securities covered by such registration statement have been sold or withdrawn,
but not prior to the expiration of the applicable period referred to in Section
4(3) of the Securities Act and Rule 174 thereunder, if applicable), cause the
prospectus to be supplemented by any required prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Securities Act, 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 Selling Holders set
forth in such registration statement.
(g) The Company will furnish to each Selling Holder
requesting such registration and the managing Underwriter, if any, without
charge, one signed copy and such number of conformed copies of such registration
statement, each amendment and supplement thereto, the prospectus included in
such registration statement (including each preliminary prospectus) and any
amendments or supplements thereto, any documents incorporated by reference
therein and such other documents as any such Selling Holder or such managing
Underwriter may reasonably request in order to facilitate the disposition of the
Registrable Securities (it being understood that the Company consents to the use
of the prospectus (including the preliminary prospectus) and any amendment or
supplement thereto by the Selling Holder requesting such registration and the
managing Underwriter, if any, in connection with the offering and sale of the
Registrable Securities covered by the prospectus or any amendment or supplement
thereto).
(h) The Company will use its best efforts to qualify the
Registrable Securities for offer and sale under such other securities or blue
sky laws of such jurisdictions in the United States as the Selling Holders
reasonably request; keep each such registration or qualification (or exemption
therefrom) effective during the period in which such registration statement is
required to be kept effective; and do any and all other acts and things which
may be reasonably necessary or advisable to enable each Selling Holder to
consummate the disposition of the Registrable Securities owned by such Selling
Holder in such jurisdictions; PROVIDED 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 paragraph 3.01(h), (ii) subject
itself to
18
taxation in any such jurisdiction or (iii) consent to general service of process
in any such jurisdiction.
(i) The Company will as promptly as is practicable notify
the Selling Holders, at any time when a prospectus relating to the sale of the
Registrable Securities is required by law to be delivered under the Securities
Act, of the occurrence of any event requiring the preparation of a supplement or
amendment to such prospectus 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 required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading and promptly make
available to the Selling Holders and to the Underwriters any such supplement or
amendment. Upon receipt of any notice of the occurrence of any event of the kind
described in the preceding sentence, Selling Holders will forthwith discontinue
the offer and sale of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until receipt by the Selling
Holders and the Underwriters of the copies of such supplemented or amended
prospectus and, if so directed by the Company, the Selling Holders will deliver
to the Company all copies, other than permanent file copies then in the
possession of Selling Holders, of the most recent prospectus covering such
Registrable Securities at the time of receipt of such notice. In the event the
Company shall give such notice, the Company shall extend the period during which
such registration statement shall be maintained effective as provided in Section
3.01(a) hereof by the number of days during the period from and including the
date of the giving of such notice to the date when the Company shall make
available to the Selling Holders such supplemented or amended prospectus.
(j) The Company will enter into customary agreements
(including an underwriting agreement in customary form, including customary
representations, warranties, covenants, conditions and indemnities) and take
such other actions as are required or reasonably requested by the Selling
Holders or the managing Underwriter in order to expedite or facilitate the sale
of such Registrable Securities.
(k) At the request of any Underwriter in connection with
an underwritten offering the Company will furnish (i) an opinion of counsel,
addressed to the Underwriters, covering such customary matters as the managing
Underwriter may reasonably request and (ii) a comfort letter or comfort letters
(and updates thereof) from the Company's independent public accountants covering
such customary matters as the managing Underwriter may reasonably request.
(l) If requested by the managing Underwriter or any
Selling Holder, the Company shall promptly incorporate in a prospectus
supplement or post effective amendment such information as the managing
Underwriter or any Selling Holder reasonably requests to be included therein,
including without limitation, with respect to the Registrable Securities being
sold by such Selling Holder, the purchase price being paid therefor by the
Underwriters and with respect to any other terms of the underwritten offering of
the Registrable Securities to be sold in such offering, and
19
promptly make all required filings of such prospectus supplement or post
effective amendment.
(m) The Company shall promptly make available for
inspection by any Selling Holder or Underwriter participating in any disposition
pursuant to any registration statement, and any attorney, accountant or other
agent or representative retained by any such Selling Holder or Underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, as shall be reasonably necessary to enable them to exercise their due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information requested by any such Selling Holder or
Underwriter in connection with such registration statement.
(n) The Company shall cause the Registrable Securities
included in any registration statement to be (A) listed on each securities
exchange, if any, on which similar securities issued by the Company are then
listed, or (B) authorized to be quoted and/or listed (to the extent applicable)
on the Nasdaq National Market if the Registrable Securities so qualify.
(o) The Company shall provide a CUSIP number, registrar
and transfer agent for the Registrable Securities included in any registration
statement not later than the effective date of such registration statement.
(p) The Company shall cooperate with each Selling Holder
and each Underwriter participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings required
to be made with the National Association of Securities Dealers, Inc.
(q) The Company shall during the period when the
prospectus is required to be delivered under the Securities Act, promptly file
all documents required to be filed with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act.
(r) The Company will make generally available to its
security holders, as soon as reasonably practicable, an earnings statement
covering a period of 12 months, beginning within three months after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder.
(s) The Company will use its best efforts to cause all
such Registrable Securities to be listed on each securities exchange or quoted
on each inter-dealer quotation system on which the Common Stock is then listed
or quoted.
The Company may require Selling Holders promptly to furnish in writing
to the Company such information regarding such Selling Holders, the plan of
distribution of the Registrable Securities and other information as may be
legally required in connection with such registration.
20
Section 3.02 REGISTRATION EXPENSES. The Company will pay all
registration expenses of the Selling Holders in connection with any Demand
and/or Piggyback Registrations including but not limited to (i) registration and
filing fees with the Commission and the National Association of Securities
Dealers, Inc., (ii) fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of counsel in connection with
blue sky qualifications of the Registrable Securities), (iii) printing expenses,
(iv) fees and expenses incurred in connection with the listing or quotation of
the Registrable Securities, (v) fees and expenses of counsel to the Company and
the reasonable fees and expenses of independent certified public accountants for
the Company (including fees and expenses associated with the special audits or
the delivery of comfort letters), (vi) the reasonable fees and expenses of any
additional experts retained by the Company in connection with such registration,
(vii) all roadshow costs and expenses not paid by the Underwriters, (viii)
rating agency fees and (ix) fees and expenses of counsel to the holders of
Registrable Securities. The Company will not be required to pay for any
underwriting discounts and commissions attributable to the sale of Registrable
Securities.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
Section 4.01 INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless, to the fullest extent permitted by applicable law,
each Selling Holder and its Affiliates and their respective officers, directors,
partners, stockholders, members, employees, agents and representatives and each
Person (if any) which controls a Selling Holder within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages, liabilities, costs and expenses
(including attorneys' fees) (collectively, "LOSSES") caused by, arising out of,
resulting from or related to any untrue statement or alleged untrue statement of
a material fact contained in any registration statement, preliminary prospectus
or prospectus relating to the Registrable Securities (as amended or supplemented
from time to time), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such Losses are caused by
or contained in or based upon any information furnished in writing to the
Company by or on behalf of such Selling Holder or any Underwriter expressly for
use therein (which was not subsequently corrected in writing prior to or
concurrently with the sale of Registrable Securities to the Person asserting the
Loss) or by the Selling Holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished the Selling Holder with copies of the same. The Company
also agrees to indemnify any Underwriters of the Registrable Securities, their
officers and directors and each Person who controls such Underwriters on
substantially the same basis as that of the indemnification of the Selling
Holders provided in this Section 4.01. Notwithstanding the foregoing, the
Company shall have no obligation to indemnify under this Section 4.01 to the
extent any such Losses have been finally and non-appealably
21
determined by a court of competent jurisdiction to have resulted from a Selling
Holder's or Underwriter's willful misconduct or gross negligence.
Section 4.02 INDEMNIFICATION BY SELLING HOLDERS. The Selling
Holders agree to indemnify and hold harmless, to the fullest extent permitted by
applicable law, the Company and its Affiliates and their respective officers,
directors, partners, stockholders, members, employees, agents and
representatives and each Person (if any) which controls the Company within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all Losses caused by, arising out of, resulting
from or related to any untrue statement or alleged untrue statement of a
material fact contained in any registration statement, preliminary prospectus or
prospectus relating to the Registrable Securities (supplemented from time to
time) or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only insofar as
such Losses are caused by or contained in or based upon any information
furnished in writing to the Company by or on behalf of such Selling Holder or
any Underwriter expressly for use therein (which was not subsequently corrected
in writing prior to or concurrently with the sale of Registrable Securities to
the Person asserting the Loss). Notwithstanding the foregoing, the Selling
Holder shall have no obligation to indemnify under this Section 4.02 to the
extent that any such Losses have been finally and non-appealably determined by a
court of competent jurisdiction to have resulted from the Company's willful
misconduct or gross negligence.
Section 4.03 CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any
proceeding (including any governmental investigation) shall be instituted or
threatened involving any Person in respect of which indemnity may be sought
pursuant to Section 4.01 or Section 4.02, such Person (the "INDEMNIFIED PARTY")
shall promptly notify the Person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing (it being understood that the failure to give
such notice shall not relieve any Indemnifying Party from any liability which it
may have hereunder except to the extent the Indemnifying Party is actually and
materially prejudiced by such failure) and the Indemnifying Party, upon the
request of the Indemnified Party, shall retain counsel reasonably satisfactory
to such Indemnified Party to represent such Indemnified Party and any other
Persons the Indemnifying Party may designate in such proceeding and shall pay
the fees and disbursements of such counsel related to such proceeding. If the
Indemnifying Party does not elect within 15 days after receipt of the notice
required hereby to assume the defense of any proceeding, the Indemnified Party
may assume such defense with counsel of its choice at the cost and expense of
the Indemnifying Party. In any such proceeding where the Indemnifying Party has
assumed the defense, any Indemnified Party shall have the right to retain its
own counsel and participate in the defense, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party unless (i) the
Indemnifying Party and the Indemnified Party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the Indemnified Party and the
Indemnifying Party and, in the opinion of counsel for the Indemnified Party,
22
representation of both parties by the same counsel would be inappropriate due to
actual or potential conflicting interests between them or there exist defenses
available to the Indemnified Party which are not available to the Indemnifying
Party. It is understood that the Indemnifying Party shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel for each such jurisdiction) at any time for all
such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Indemnified Parties, such firm shall be designated in writing by the Indemnified
Parties. The Indemnifying Party shall not settle any claim or proceeding without
the written consent of the Indemnified Party, unless such settlement (x)
requires no relief or penalty other than the payment of money damages, (y) does
not require any Indemnified Party to admit culpability or fault in any respect
and (z) contains a full and complete release of the Indemnified Party with
respect to all matters arising from the facts giving rise to the underlying
claim or proceeding. The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent (not to be unreasonably withheld), or if there be a
final judgment for the plaintiff, the Indemnifying Party shall indemnify and
hold harmless such Indemnified Parties from and against any loss or liability
(to the extent stated above) by reason of such settlement or judgment.
Section 4.04 CONTRIBUTION. If the indemnification provided for in
this Article IV is unavailable to an Indemnified Party in respect of any Losses
in respect of which indemnity is to be provided hereunder, then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall to the
fullest extent permitted by law contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of such party in connection with the
statements or omissions that resulted in such Losses, as well as any other
relevant equitable considerations. The relative fault of the Company, each
Selling Holder and the Underwriters shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by such party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and each Selling Holder agrees that it would not be just
and equitable if contribution pursuant to this Section 4.04 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Party as a result of the
Losses referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Article IV, no Selling Holder shall be
23
required to indemnify for or contribute any amount in excess of the amount by
which the net proceeds of the offering received by such Selling Holder exceeds
the amount of any damages which such Selling Holder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
ARTICLE V
MISCELLANEOUS
Section 5.01 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No
Person may participate in any underwritten registered offering contemplated
hereunder unless such Person (a) agrees to sell its securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements, (b) completes and executes all
questionnaires, powers of attorney, custody arrangements, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements and this Agreement and (c) furnishes in
writing to the Company such information regarding such Person, the plan of
distribution of the Registrable Securities and other information as the Company
may from time to time request or as may be legally required in connection with
such registration; PROVIDED, HOWEVER, that no such Person shall be required to
make any representations or warranties in connection with any such registration
other than representations and warranties as to (i) such Person's ownership of
his or its Registrable Securities to be sold or transferred free and clear of
all liens, claims and encumbrances, (ii) such Person's power and authority to
effect such transfer and (iii) such matters pertaining to compliance with
securities laws as may be reasonably requested; PROVIDED FURTHER, HOWEVER, that
the obligation of such Person to indemnify pursuant to any such underwriting
agreements shall be several, not joint and several, among such Persons selling
Registrable Securities, and the liability of each such Person will be in
proportion to, and limited to, the net amount received by such Person from the
sale of such Person's Registrable Securities pursuant to such registration.
Section 5.02 RULE 144. The Company covenants that it will file any
reports required to be filed by it under the Securities Act and the Exchange Act
and that it will take such further action as the Holders may reasonably request
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 exemptions provided by Rule 144 under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission. Upon the request of any Holder, the Company
will deliver to such Holder a written statement as to whether it has complied
with such reporting requirements.
Section 5.03 HOLDBACK AGREEMENTS. Each Holder agrees, in the event
of an underwritten offering for the account of the Company, not to offer, sell,
contract to sell
24
or otherwise dispose of any Registrable Securities, or any securities
convertible into or exchangeable or exercisable for such securities, including
any sale pursuant to Rule 144 under the Securities Act (except as part of such
underwritten offering), during the 14 days prior to, and during the 120 day
period (or such lesser period as the lead or managing underwriters may require)
beginning on, the effective date of the registration statement for such
underwritten offering (or, in the case of an offering pursuant to an effective
shelf registration statement pursuant to Rule 415, the pricing date for such
underwritten offering).
Section 5.04 TERMINATION. The registration rights granted under
this Agreement will terminate at such time as there shall no longer be any
Registrable Securities.
Section 5.05 AMENDMENTS, WAIVERS, ETC. This Agreement may not be
amended, waived or otherwise modified or terminated except by an instrument in
writing signed by the Company and Holders of at least 66-2/3% of the Registrable
Securities then held by all Holders, if the amendment is to be effective against
the Holders, provided that to the extent such amendment, waiver, discharge or
termination could reasonably be expected to adversely affect the rights of a
particular Holder or class of Holders in a manner different from its effect on
all other Holders or classes of Holders, then such Holder (or a
majority-in-interest determined by holdings of Registrable Securities on a
fully-converted basis) of such class of Holders, as the case may be, must
consent to such amendment, waiver, discharge or termination, PROVIDED FURTHER
that each of the Holders hereby waives any notice requirement, approval or
consent under this Agreement and the Existing Registration Rights Agreement in
connection with, and grants any and all of its consents and approvals under this
Agreement and the Existing Registration Rights Agreement to permit, the
consummation of the Exchange and the Private Placement (as such terms are
defined in the Exchange Agreement) and all transactions contemplated thereby and
effected in connection therewith.
Section 5.06 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement. Each party need not sign the same counterpart.
Section 5.07 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof,
including, without limitation, the Existing Registration Rights Agreement.
Section 5.08 GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York regardless
of the laws that might otherwise govern under applicable principles of conflicts
of law thereof.
Section 5.09 ASSIGNMENT OF REGISTRATION RIGHTS. Each Holder of the
Registrable Securities may assign all or any part of its rights under this
Agreement to any Person to whom such Holder sells, transfers or assigns such
Registrable Securities. In the event that the Holder shall assign its rights
pursuant to this Agreement in connection with
25
the transfer of less than all its Registrable Securities, the Holder shall also
retain his rights with respect to its remaining Registrable Securities.
Section 5.10 SPECIFIC PERFORMANCE. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by the
Holders by reason of any breach by it of the provisions of this Agreement and
hereby agrees that the Holders, in addition to any remedies which they may have
at law, including monetary damages, will be entitled to the remedy of specific
performance.
Section 5.11 NO SUPERIOR REGISTRATION RIGHTS. The Company will not
grant registration rights superior to those of the Holders pursuant to this
Agreement.
Section 5.12 ADDITIONAL HOLDERS. In the event of a sale, transfer
or assignment of any Loan under the Term Loan Agreement, as a result of, and in
connection with, which the Company is required pursuant to the Syndication
Letter to issue Lender Warrants to the purchaser, transferee or assignee, as the
case may be, of such Loan, such purchaser, transferee or assignee, as the case
may be, shall become a party to this Agreement as an "Initial Lender Holder"
upon receipt from such purchaser, assignee or transferee, as the case may be, of
a fully executed signature page hereto or other instrument of joinder reasonably
acceptable to the Company.
[Remainder of page intentionally left blank]
26
IN WITNESS WHEREOF, the Company and the Holders have caused this
Agreement to be signed on its behalf by its officer thereunto duly authorized as
of the date first written above.
INFOCROSSING, INC.
By: /s/ Xxxx Xxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxx
Title: Chief Executive Officer
MIDOCEAN CAPITAL INVESTORS, L.P.
By: MidOcean Capital Partners, L.P., its
general partner
By: Existing Fund GP, LTD.,
its general partner
By: /s/ Xxxxxx Spring
-------------------------------------
Name:
Title:
SANDLER CAPITAL PARTNERS V, L.P.
By: Sandler Investment Partners, L.P.,
General Partner
By: Sandler Capital Management,
General Partner
By: MJDM Corp., a General Partner
By: /s/ Xxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
27
SANDLER CAPITAL PARTNERS V FTE, L.P.
By: Sandler Investment Partners, L.P.,
General Partner
By: Sandler Capital Management,
General Partner
By: MJDM Corp., a General Partner
By: /s/ Xxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
SANDLER CAPITAL PARTNERS V GERMANY, L.P.
By: Sandler Investment Partners, L.P.,
General Partner
By: Sandler Capital Management,
General Partner
By: MJDM Corp., a General Partner
By: /s/ Xxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
SANDLER TECHNOLOGY PARTNERS,
SUBSIDIARY, LLC
By: Sandler Technology Partners, L.P.,
Manager
By: Sandler Investment Partners, L.P.,
General Partner
By: Sandler Capital Management,
General Partner
By: MJDM Corp., a General Partner
By: /s/ Xxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
28
SANDLER CO-INVESTMENT PARTNERS, L.P.
By: Sandler Capital Management,
General Partner
By: MJDM Corp., a General Partner
By: /s/ Xxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
PRICE FAMILY LIMITED PARTNERS
By: /s/ Xxxxxxx Xxxxx
-------------------------------------
Name: Xxxxxxx Xxxxx
Title: General Partner
/s/ Xxxx Xxxxxxxx
-----------------------------------------
Xxxx Xxxxxxxx
CAMDEN PARTNERS STRATEGIC
FUND II-A, L.P.
By: Camden Partners Strategic II, LLC.,
its General Partner
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Member
CAMDEN PARTNERS STRATEGIC
FUND II-B, L.P.
By: Camden Partners Strategic II, LLC,
its General Partner
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Member
29
XXXXXX, XXXXXXX STRATEGIC PARTNERS
FUND, L.P.
By: Camden Partners Strategic II, LLC.,
its General Partner
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: General Partner
STRATEGIC ASSOCIATES, L.P.
By: Camden Partners Strategic II, LLC.,
its General Partner
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: General Partner
