REGISTRATION RIGHTS AGREEMENT
by and among
CHI ENERGY, INC.
THE STOCKHOLDERS LISTED ON SCHEDULE 1,
THE WARRANTHOLDERS LISTED ON SCHEDULE 2
and
THE OPTIONHOLDERS LISTED ON SCHEDULE 3
Dated as of _________, 1997
TABLE OF CONTENTS
ARTICLE I.
DEFINITIONS AND USAGE
Section 1.1. Definitions.......................................... 1
Section 1.2. Usage................................................ 6
ARTICLE II.
DEMAND REGISTRATION RIGHTS
Section 2.1. Demand Registration Rights........................... 7
Section 2.2. Limitation on Demand Registrations................... 8
Section 2.3. Right to Include Common Stock........................ 9
Section 2.4. Underwriters and Agents.............................. 9
Section 2.5. Priority in Demand Registrations..................... 9
Section 2.6. Withdrawal........................................... 10
ARTICLE III.
PIGGYBACK REGISTRATION RIGHTS
Section 3.1. Piggyback Registration Rights........................ 10
Section 3.2. Priority in Piggyback Registrations.................. 11
Section 3.3. Limitation on Registrations.......................... 11
Section 3.4. Survival............................................. 11
ARTICLE IV.
REGISTRATION PROCEDURES AND EXPENSES
Section 4.1. Registration Procedures.............................. 12
Section 4.2. Holders' Obligations................................. 15
Section 4.3. Registration Expenses................................ 16
ARTICLE V.
INDEMNIFICATION AND CONTRIBUTION
Section 5.1. Indemnification by the Company....................... 17
Section 5.2. Indemnification by the Selling Holders............... 18
(i)
Section 5.3. Notice of Claims, Etc................................ 18
Section 5.4. Contribution......................................... 19
Section 5.5. Survival............................................. 20
ARTICLE VI.
RULE 144 AND RULE 144A
Section 6.1. Reports, Etc......................................... 20
Section 6.2. Rule 144 Information................................. 20
Section 6.3. Rule 144A Information................................ 21
ARTICLE VII.
MISCELLANEOUS
Section 7.1. Amendment Modification and Waivers:
Further Assurances................................. 21
Section 7.2. Assignment........................................... 21
Section 7.3. Invalid Provisions................................... 22
Section 7.4. Nominees for Beneficial Owners....................... 22
Section 7.5. Governing Law........................................ 22
Section 7.6. Notices.............................................. 22
Section 7.7. Entire Agreement; Integration........................ 23
Section 7.8. Injunctive Relief.................................... 24
Section 7.9. Section Headings..................................... 24
Section 7.10. Counterparts......................................... 24
Section 7.11. Filing............................................... 24
Section 7.12. Termination.......................................... 24
Section 7.13. Attorneys' Fees...................................... 24
Section 7.14. No Third Party Beneficiaries......................... 24
Section 7.15. Requisite Holders.................................... 24
Schedule 1 List of Stockholders
Schedule 2 List of Warrantholders
Schedule 3 List of Optionholders
(ii)
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement dated as of _______, 1997, by and among
CHI Energy, Inc., a Delaware corporation formerly known as Consolidated Hydro,
Inc., (the "Company"), the Stockholders listed on Schedule 1 hereto, as such
Schedule may be amended from time to time, the Warrantholders listed on Schedule
2 hereto, as such Schedule may be amended from time to time, and the
Optionholders listed on Schedule 3 hereto, as such Schedule may be amended from
time to time.
W I T N E S S E T H :
---------------------
WHEREAS, in connection with the reorganization of the Company pursuant to
chapter 11, title 11 of the United States Code (the "Bankruptcy Code"), certain
creditors and preferred stockholders of the Company will receive in exchange for
their prepetition claims against, and interests in, the Company, shares of
Common Stock and Warrants, and certain members of management of the Company will
be granted certain Options; and
WHEREAS, pursuant to the Plan, the Company has undertaken to provide
certain rights to the Holders to facilitate the resale by such Holders of their
Registrable Securities under certain circumstances; and
WHEREAS, it is intended by the Company and the Holders that this Agreement
shall become effective as of the Effective Date;
NOW, THEREFORE, in consideration of good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I.
DEFINITIONS AND USAGE
Section 1.1. Definitions. As used in this Agreement:
Affiliate. "Affiliate" shall mean when, used with reference to any Person,
any other Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with,
such Person. As used in the preceding sentence, (i) the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of the Person referred to
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whether through the ownership of voting securities, by contract, or otherwise,
and (ii) the term "controlling" and "controls" shall have meanings correlative
to the foregoing.
Agent. "Agent" shall mean the principal placement agent on an agented
placement of Registrable Securities.
Agreement. "Agreement" shall mean this Registration Rights Agreement, as
the same may be amended from time to time.
Bankruptcy Court. "Bankruptcy Court" shall mean the United States
Bankruptcy Court, District of Delaware, which Court has entered an Order
confirming the Plan.
Commission. "Commission" shall mean the United States Securities and
Exchange Commission, or any successor governmental agency or authority thereto.
Common Stock. "Common Stock" shall mean (a) collectively, the
Class A Common Stock, $.01 par value, and the Class B Common Stock, $.01 par
value, of the Company (including shares of Common Stock issued by the Company
upon the proper exercise of the Warrants and the Options), and (b) shares of
capital stock of the Company issued by the Company in respect of or in exchange
for shares of such common stock in connection with any stock dividend or
distribution, stock split-up, recapitalization, reclassification, subdivision,
recombination or exchange by the Company generally of shares of such common
stock.
Continuously Effective. "Continuously Effective," with respect to a Demand
Registration Statement, shall mean that it shall not cease to be effective and
available for Transfers of Registrable Securities thereunder for longer than
either (a) any 15 consecutive business days, or (b) an aggregate of 20 business
days during the period specified in the relevant provision of this Agreement.
Demand Registration Request. "Demand Registration Request" shall have the
meaning set forth in Section 2.1(a).
Demand Registration Statement. "Demand Registration Statement" shall have
the meaning set forth in Section 2.1(a).
Demanding Holders. "Demanding Holders" shall have the meaning set forth in
Section 2.1(a).
Effective Date. "Effective Date" shall have the meaning set forth in
Section 1.28 of the Plan.
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Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission promulgated
thereunder.
Holders. "Holders" shall mean the Stockholders, Optionholders and
Warrantholders, collectively.
Options. "Options" shall mean the options to purchase Common Stock issued
by the Company to Optionholders on the Effective Date pursuant to the Company's
1997 Management Stock Option Plan.
Option Shares. "Option Shares" shall mean the shares of Common Stock issued
by the Company to Optionholders upon exercise of an Option.
Optionholders. "Optionholders" shall mean the holders of the Options and/or
Option Shares listed on Schedule 2, as such Schedule may be amended from time to
time.
Person. "Person" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
Piggyback Registration Statement. "Piggyback Registration Statement" shall
have the meaning set forth in Section 3.1.
Plan. "Plan" shall mean the Plan of Reorganization of Consolidated Hydro,
Inc. under chapter 11 of the Bankruptcy Code, which was confirmed by order of
the Bankruptcy Court on _______, 1997.
Register, Registered and Registration. "Register", "registered", and
"registration" shall refer to a registration effected by preparing and filing
with the Commission a registration statement or similar document in compliance
with the Securities Act, and the declaration or ordering by the Commission of
effectiveness of such registration statement or document.
Registrable Securities. "Registrable Securities" shall mean, on any date of
determination, (a) the Shares owned by the Stockholders; (b) the Option Shares
owned by the Optionholders; (c) the Warrants owned by the Warrantholders; (d)
the Warrant Shares owned by the Warrantholders; (e) any shares of Common Stock
or other securities issued (or issuable upon the conversion, exchange or
exercise of any warrant, option, right or other security which is issued) as a
dividend or other distribution with respect to, in exchange by the Company
generally for, or in replacement by the Company generally of, such Shares,
Warrants, Warrant Shares or Option Shares; and (f) any securities issued in
exchange for such Shares, Warrants, Warrant Shares or Option Shares pursuant to
any merger,
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recapitalization, reorganization or business combination transaction of or
involving the Company; provided, however, that (i) if, on any date of
determination, the shares of Common Stock or any securities in respect thereof
are listed on any national securities exchange or included in any U.S.
interdealer quotation system of a registered national securities association,
then only such securities held by Persons who are deemed to be "underwriters" or
"affiliates" of the Company for purposes of the Securities Act, or
Warrantholders or Optionholders otherwise ineligible to sell the Warrants,
Warrant Shares or Option Shares, as the case may be, pursuant to Rule 144(k),
shall be deemed to be Registrable Securities; and (ii) with respect to any
permitted transferee of such securities, only such securities held by permitted
transferees that have complied with the assignment requirements of Section 7.2
shall be deemed to be Registrable Securities to the extent set forth in clause
(i) above; and provided, further, however, as to any particular Registrable
Securities, such securities shall cease to constitute Registrable Securities for
all purposes of this Agreement (a) when a registration statement with respect to
the sale of such securities has been declared effective by order of the
Commission under the Securities Act and such securities have been transferred or
disposed of in accordance with the intended method(s) of distribution set forth
in the prospectus included in such registration statement, (b) when such
securities have been sold in compliance with the resale provisions of Rule 144
or any similar rule promulgated by the Commission under the Securities Act, or
(c) when such securities shall have been transferred or disposed of to any
Person who, at the time of such transfer or disposition, is not an Affiliate of
the Company, and the Holders shall have received an opinion of Company counsel
(who may be the Company's general counsel) stating that, in the opinion of such
counsel, subsequent public distribution of such securities shall neither require
registration under the Securities Act or qualification (or any similar filing)
under any state securities or blue sky laws then in effect nor the use of an
applicable exemption therefrom.
Registration Expenses. "Registration Expenses" shall mean all
expenses incident to the Company's performance of or compliance with this
Agreement, including, without limitation, (a) all registration, filing,
securities exchange listing, rating agency and National Association of
Securities Dealers, Inc. fees, (b) all registration, filing, qualification and
other fees and expenses of complying with state securities or "blue sky" laws of
all jurisdictions in which the securities are to be registered and the
reasonable legal fees and expenses incurred in connection with the "blue sky"
qualifications of the Registrable Securities, (c) all word processing,
duplicating, printing, messenger and delivery expenses incurred by the Company,
(d) the fees and disbursements of counsel for the Company and of its independent
public accountants, including, without limitation, the expenses of any special
audits or "cold comfort" letters required by or incident to such performance and
compliance, (e) the reasonable fees and disbursements incurred for one counsel
or firm of counsel selected by the Requisite Holders of the Registrable
Securities, (f) reasonable fees and disbursements of underwriters customarily
paid by issuers or sellers of securities (but excluding underwriting discounts
and commissions, broker-dealer concessions, allowances,
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and marketing expenses, and transfer taxes relating to the Registrable
Securities being registered), (g) premiums and other costs to maintain in force
directors' and officers' policies of insurance to the extent the Company elects
to obtain such insurance, and (h) fees and expenses of other Persons retained or
employed by the Company.
Requisite Holders. "Requisite Holders" shall mean any Holder or Holders of
a majority in interest of the relevant class of Registrable Securities requested
to be included in a registration or other relevant action, as the case may be.
Rule 144. "Rule 144" shall mean Rule 144 promulgated by the Commission
under the Securities Act, and any successor provision thereto.
Rule 144A. "Rule 144A" shall mean Rule 144A promulgated by the Commission
under the Securities Act, and any successor provision thereto.
Securities Act. "Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated thereunder.
Selling Holders. "Selling Holders" shall mean, with respect to a specified
registration pursuant to this Agreement, Holders whose Registrable Securities
are included in such registration.
Shares. "Shares" shall mean the shares of Common Stock distributed on the
Effective Date to creditors of the Company pursuant to the Plan.
Stockholders. "Stockholders" shall mean the holders of the Shares listed on
Schedule 1, as such Schedule may be amended from time to time.
Transfer. "Transfer" shall mean and include the act of selling, giving,
transferring, creating a trust (voting or otherwise), assigning or otherwise
disposing of (other than pledging, hypothecating or otherwise transferring as
collateral security for an underlying obligation) (and correlative words shall
have correlative meanings); provided however, that any transfer or other
disposition upon foreclosure or other exercise of remedies of a secured creditor
after an event of default under or with respect to a pledge, hypothecation or
other transfer as collateral security shall constitute a "Transfer."
Underwriters' Representative. "Underwriters' Representative" shall mean the
managing underwriter, or, in the case of a co-managed underwriting, the lead
manager, within the meaning of Rule 12b-2 under the Exchange Act.
Violation. "Violation" shall have the meaning set forth in Section 5.1.
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Warrants. "Warants" shall mean, collectively, the Series B Warrants and the
Series C Warrants issued by the Company on the Effective Date pursuant to the
Plan to holders, prior to the Effective Date, of the Company's Series F 8%
Convertible Preferred Stock, Series G 9.85% Junior Convertible Preferred Stock
and Series H 13.5% Cumulative Redeemable Exchangeable Preferred Stock.
Warrantholders. "Warrantholders" shall mean the holders of the Warrants
listed on Schedule 3, as such Schedule may be amended from time to time.
Warrant Shares. "Warrant Shares" shall mean the shares of Common Stock
issued by the Company to Warrantholders upon exercise of the Warrants.
Section 1.2. Usage. (a) References to a Person are also references to its
assigns and successors in interest (by any means whatever, including merger,
consolidation or sale of all or substantially all the assets of such Person or
otherwise, as the case may be).
(b) References to Registrable Securities "owned" by a Holder shall include
Registrable Securities beneficially owned by such Person but which are held of
record in the name of a nominee, trustee, custodian, or other agent, but shall
exclude shares of Common Stock held by a Holder in a fiduciary capacity for
customers of such Person.
(c) References to a document are to it as amended, waived and otherwise
modified from time to time and references to a statute or other governmental
rule are to it as amended and otherwise modified from time to time (and
references to any provision thereof shall include references to any successor
provision).
(d) References to Sections, Articles or Schedules are to sections or
articles hereof or schedules hereto, unless the context otherwise requires.
(e) The definitions set forth herein are equally applicable both to the
singular and plural forms and the feminine, masculine and neuter forms of the
terms defined.
(f) The term "including" and correlative terms shall be deemed to be
followed by "without limitation" whether or not followed by such words or words
of like import.
(g) The term "hereof" and similar terms refer to this Agreement as a whole.
(h) The "date of" any notice or request given pursuant to this Agreement
shall be determined in accordance with Section 7.6.
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ARTICLE II.
DEMAND REGISTRATION RIGHTS
Section 2.1. Demand Registration Rights. (a) At any time during the period
commencing on the (x) day next following the first anniversary of the Effective
Date and ending on the third anniversary of the Effective Date, one or more
Stockholders (the "Demanding Stockholders") and (y) day next following the third
anniversary of the Effective Date and ending on the sixth anniversary of the
Effective Date, one or more Warrantholders (the "Demanding Warrantholders" and,
together with the Demanding Stockholders, the "Demanding Holders"), shall be
entitled to deliver a written notice (a "Demand Registration Request") to the
Company requesting that the Company prepare and file with the Commission a
registration statement on an appropriate registration form (a "Demand
Registration Statement") providing, subject to Section 2.6, for the registration
under the Securities Act of the offer and sale of all or such number of such
Demanding Holder's Registrable Securities as the Demanding Holder requests in
writing; provided, however, that no request made pursuant to this Section 2.1(a)
if (i) within 12 months prior to the date of such request a Demand Registration
Statement pursuant to this Section 2.1(a) covering any Registrable Securities
shall have been declared effective by the Commission or (ii) the Registrable
Securities that the Demanding Holders seek to have included in the Demand
Registration Statement do not, in the aggregate, constitute at least 15% of the
applicable class of Registrable Securities then outstanding (it being hereby
understood for purposes of this Section 2.1 that the phrase "applicable class of
Registrable Securities" is intended to distinguish, on a class-by-class basis,
among the Common Stock, the Series B Warrants and the Series C Warrants).
Notwithstanding the foregoing sentence, in no event shall (i) a Demand
Registration Request be deemed effective pursuant to this Section 2.1 unless and
until the Registrable Securities that the Demanding Holders seek to have
included in the Demand Registration Statement, when aggregated with the
Registrable Securities that other Stockholders or Warrantholders, as applicable,
seek to have included in the Demand Registration Statement pursuant to Section
2.1(c) hereof, constitute at least 33% of the applicable class of Registrable
Securities then outstanding and (ii) any Optionholder have any right to deliver
a Demand Registration Request pursuant to this Section 2.1(a). Subject to
Section 2.1(b), after an effective Demand Registration Request is made pursuant
to this Section 2.1(a), the Company shall prepare and file the Demand
Registration Statement with the Commission as promptly as practicable. Each
Demand Registration Statement shall provide for an underwritten offering
(whether on a "firm," "best efforts" or "reasonable efforts" basis, or
otherwise) or an agented placement. Each Demand Registration Request made
pursuant to this Section 2.1(a) shall be addressed to the attention of the
Secretary of the Company, contain (with respect to each Demanding Holder making
such request) the information prescribed by Items 404 (if applicable) and 507 of
Regulation S-K under the Securities Act and General Instruction C to Schedule
13D under the Exchange Act, specify the number and class of Registrable
Securities to be registered and the intended methods of
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disposition thereof, and state that the request for a Demand Registration
Statement is being made pursuant to this Section 2.1.
(b) The Company shall be entitled to postpone for up to 120 days the filing
of any Demand Registration Statement otherwise required to be prepared and filed
with the Commission pursuant to this Section 2.1 if (i) the Board of Directors
of the Company determines, in its good faith reasonable judgment, that such
registration and the Transfer of Registrable Securities contemplated thereby
would materially interfere with, or require the premature disclosure of, any
financing, acquisition, material asset transaction, business combination
transaction, reorganization or recapitalization of or involving the Company or
any of its subsidiaries or would otherwise require the premature disclosure of
any other material nonpublic information as to which the Company has a bona fide
business purpose for maintaining confidential, and (ii) the Company promptly
provides the Demanding Holders with notice of such determination (which notice
need not disclose the fact, event or information); provided, however, that the
Company shall not, within the preceding 12 months, have postponed the filing of
any other Demand Registration Statement that subsequently was abandoned because
the Demand Registration Request relating thereto was withdrawn.
(c) Whenever the Company receives a Demand Registration Request to effect
the filing of a Demand Registration Statement of any Registrable Securities, the
Company promptly shall provide written notice of such proposed demand
registration to all other Stockholders or Warrantholders, as applicable, holding
Registrable Securities. Any such Stockholder or Warrantholder, as applicable,
may within 30 days after receipt of such notice request in writing that all of
such holder's Registrable Securities, or any portion thereof designated by such
holder, be included in the Demand Registration Statement.
Section 2.2. Limitation on Demand Registrations. The Company shall not be
obligated to prepare and file with the Commission more than three Demand
Registration Statements pursuant to Demand Registration Requests delivered by
Stockholders pursuant to Section 2.1(a)(x) and shall not be obligated to prepare
and file with the Commission more than two Demand Registration Statements
pursuant to Demand Registration Requests delivered by Warrantholders pursuant to
Section 2.1(a)(y). For purposes of the preceding sentence, a Demand Registration
Statement shall not be deemed to have been effected (a) unless and until a
registration statement with respect thereto has been declared effective by order
of the Commission, (b) if after such registration statement has become
effective, such registration or the related offer, sale or distribution of
Registrable Securities thereunder is suspended by any stop order, injunction or
other order or requirement of the Commission or other governmental agency or
court for any reason not attributable to any of the Selling Holders and such
suspension is not thereafter eliminated, or (c) if the conditions to closing
specified in any underwriting agreement containing usual and customary terms
entered into in connection with such registration are not satisfied or waived,
other than by reason of a
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failure on the part of any of the Selling Holders. The Company's obligation to
effect a given demand registration pursuant to Section 2.1 shall be deemed to
have been satisfied upon the earlier of (i) the date as of which all of the
Registrable Securities included therein shall have been disposed of pursuant to
the Demand Registration Statement, and (ii) the date as of which such Demand
Registration Statement shall have been Continuously Effective for a period of 90
days.
Section 2.3. Right to Include Common Stock. Whenever the Company receives a
request for a Demand Registration Statement covering Registrable Securities
pursuant to Section 2.1, the Company shall have the right to register in any
such Demand Registration Statement (and to include in any related offering)
shares of authorized but unissued shares of Common Stock to be sold by the
Company on a primary basis. The Company may exercise the foregoing option to
include additional primary shares by delivering written notice of such fact to
each of the Selling Holders not later than the 20th day next following the
Company's receipt of the request for a Demand Registration Statement pursuant to
Section 2.1(a).
Section 2.4. Underwriters and Agents. In any Demand Registration Statement,
the "managing underwriter(s)" within the meaning of Rule 12b-2 under the
Exchange Act or the lead agent (for an agented placement), shall be a nationally
recognized firm selected by the Company with the approval of the Majority
Holders, which approval shall not unreasonably be withheld.
Section 2.5. Priority in Demand Registrations. Whenever the Company effects
a demand registration pursuant to Section 2.1, if the Underwriters'
Representative or Agent advises the Company in writing (with a copy to each
Selling Holder) that, in its opinion, the amount of securities requested
(whether by the Company or the Selling Holders) to be registered pursuant to the
Demand Registration Statement and included in the offering contemplated thereby
exceeds the amount which can be offered and sold in such offering within a price
range acceptable to the Requisite Holders, the securities to be included in such
offering and the size of the related demand registration shall be reduced to the
amount which can be offered and sold within such price range. In the case of any
such reduction, the Company shall include in such demand registration only that
amount of Registrable Securities that the Company is so advised can be sold in
the offering, determined as follows: (i) first, Registrable Securities of those
Selling Holders that are "underwriters" or are "affiliates" of the Company (such
determination to be made by such Selling Holders upon the advice of counsel
communicated in writing to the Company) in an amount sufficient to include all
the Registrable Securities being offered for sale by such Selling Holders or in
an amount sufficient to reduce the amount of each such Selling Holder's
Registrable Securities held by it after the offering to a level that would cause
such Selling Holder to no longer be an "underwriter" or an "affiliate" of the
Company, whichever amount is less; (ii) second, all Registrable Securities (that
have not theretofore been included in the Demand Registration
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Statement pursuant to clause (i) of this Section 2.5) requested pursuant to
Section 2.1 to be included in such Demand Registration Statement by the Selling
Holders, pro rata on the basis of the amount of such securities held by such
holders; and (iii) third, all other securities of the Company requested to be
included in such Demand Registration Statement (including for purposes of this
clause (iii) Registrable Securities duly requested to be included in such Demand
Registration Statement pursuant to the exercise by any Holder of its rights
under Section 3.1.), pro rata on the basis of the amount of such Securities
requested to be included.
Section 2.6. Withdrawal. Any Holder participating in a registration
pursuant to this Agreement shall be permitted to withdraw all or part of its
Registrable Securities from such registration at any time (but not later than
five business days) prior to the effective date of the registration statement
covering such securities; provided that, in the event of a withdrawal from a
registration effected pursuant to Section 2.1 hereof, such registration shall be
deemed to have been effected for purposes of the first sentence of Section 2.2
hereof except as otherwise provided in such Section; and provided further, that
such withdrawing Holder promptly shall reimburse the Company for all
Registration Expenses theretofore paid by the Company in respect of the
registration of Registrable Securities on behalf of the withdrawing Holder.
ARTICLE III.
PIGGYBACK REGISTRATION RIGHTS
Section 3.1. Piggyback Registration Rights. (a) If at any time the Company
proposes to register equity securities or securities convertible or exchangeable
into or exercisable for equity securities (whether or not for its own account)
under the Securities Act in connection with a public offering solely for cash
(other than by a registration on Form S-4 or S-8 or any successor or similar
forms or filed in connection with an exchange offer, business combination
transaction or any offering of securities solely to the Company's existing
stockholders or otherwise pursuant to a dividend reinvestment plan or a dividend
reinvestment and stock purchase plan, and other than pursuant to Article II),
the Company shall promptly give each Holder of Registrable Securities written
notice of such proposed registration (a "Piggyback Registration Statement").
Upon the written request of each Holder receiving such Company notice delivered
within 15 days following the date of such Holder's receipt of the Company notice
(which Holder notice shall identify such Holder, the amount of Registrable
Securities sought to be included in the Piggyback Registration Statement, and
the intended methods of disposition thereof), the Company shall cause to be
included in such Piggyback Registration Statement and use commercially
reasonable efforts to be registered under the Securities Act all the Registrable
Securities that each such Holder shall have requested to be registered;
provided, however, that such right of inclusion shall not apply to any
registration statement covering an underwritten offering of convertible,
exercisable or
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exchangeable securities or equity securities other than the Common Stock if the
Underwriters' Representative or Agent shall advise the Company in writing (with
a copy to each Selling Holder) that in its opinion, the nature of the
Registrable Securities requested to be included in the Piggyback Registration
Statement would adversely affect the offering of the convertible, exercisable or
exchangeable securities or equity securities or would adversely affect the
timing thereof. The Company shall have the absolute right at any time to
withdraw or cease to prepare or file any registration statement for any offering
referred to in this Article III without any obligation or liability to any
Holder.
(b) For a period of six years from the date of this Agreement, each Holder
shall be entitled to have its Registrable Securities included in an unlimited
number of Piggyback Registration Statements pursuant to this Section 3.1.
Section 3.2. Priority in Piggyback Registrations. If the Underwriters'
Representative or Agent shall advise the Company in writing (with a copy to each
Selling Holder) that, in its opinion, the amount of securities requested to be
included in such offering (whether by the Company, the Selling Holders or other
holders of securities) exceeds the amount which can be offered and sold in such
offering within a price range acceptable to the Company, then the Company shall
include in such registration only that amount of securities which the Company is
so advised can be offered and sold in the offering as follows: (i) first, all
securities proposed by the Company to be sold for its own account; (ii) second,
Registrable Securities of each Selling Holder that has properly requested that
its Registrable Securities be included in such registration and that is an
"underwriter" or an "affiliate" of the Company (such determination to be made by
such Selling Holders upon the advice of counsel communicated in writing to the
Company) in an amount sufficient to include all the Registrable Securities being
offered for sale by such Selling Holder or an amount sufficient to reduce the
amount of such Selling Holder's Registrable Securities held by it after the
offering to a level that would cause such Selling Holder to no longer be an
"underwriter" or an "affiliate" of the Company, whichever amount is less; (iii)
third, such Registrable Securities (that have not theretofore been included in
such registration statement pursuant to clause (ii) of this Section 3.2)
requested to be included in such registration statement by each Selling Holder,
pro rata on the basis of the amount of such securities held by each such Selling
Holder; and (iv) fourth, all other securities of the Company duly requested to
be included in such registration statement.
Section 3.3. Limitation on Registrations. If the Company has previously
filed a registration statement with respect to Registrable Securities pursuant
to Section 2.1 or this Article III, and if such previous registration statement
has not been withdrawn or abandoned, the Company shall not file or cause to be
effected any other registration of any of its equity securities or securities
convertible, exercisable or exchangeable into or for its equity securities under
the Securities Act (except on Form S-8 or any successor form), whether on
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its own behalf or at the request of any holder or holders of such securities,
until a period of 180 days has elapsed from the effective date of such a
previous registration statement.
Section 3.4. Survival. The obligations of the Company and the Selling
Holders of Registrable Securities under this Article III shall survive until the
third anniversary of the date of this Agreement.
ARTICLE IV.
REGISTRATION PROCEDURES AND EXPENSES
Section 4.1. Registration Procedures. Whenever required under Article II or
Article III to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as practicable:
(a) Prepare and file with the Commission a registration
statement with respect to such Registrable Securities, subject to Section 2.2,
and use commercially reasonable efforts to cause such registration statement to
become effective, in each instance giving due regard to the need to prepare
current financial statements, conduct due diligence and complete other actions
that are reasonably necessary to effect a registered public offering; provided,
however, that before filing a registration statement or prospectus or any
amendments or supplements thereto, including documents incorporated by reference
after the initial filing of the registration statement and prior to
effectiveness thereof, the Company shall use commercially reasonable efforts to
furnish to one firm of legal counsel for the Selling Holders (selected by the
Requisite Holders) copies of all such documents in the form substantially as
proposed to be filed with the Commission at least five business days prior to
filing for review and comment by such counsel.
(b) (i) Use commercially reasonable efforts to keep each
Demand Registration Statement Continuously Effective for up to 90 days or until
such earlier date as of which all the Registrable Securities under the Demand
Registration Statement shall have been disposed of in the manner described in
the Demand Registration Statement. As soon as reasonably practicable after the
occurrence of any fact or event that makes untrue any statement of a material
fact made in a registration statement or that requires the making of any
additions to or changes in a registration statement in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading, the Company shall prepare and file a supplement or amendment to such
registration statement or related prospectus, or a document incorporated therein
by reference, so that such registration statement and related prospectus shall
not contain any such untrue statement of a material fact or any such omission of
a material fact; provided, however, that if the Board of Directors of the
Company determines, in its good faith reasonable judgment, that the Transfer of
Registrable
12
Securities pursuant to the registration statement would materially interfere
with, or require the premature disclosure of, any financing, business
combination transaction, acquisition or reorganization involving the Company or
any of its subsidiaries or otherwise would require premature disclosure of any
other material nonpublic information as to which the Company has a bona fide
business purpose for maintaining confidential, then for so long as such
circumstances or such business purpose continues to exist (provided that the
number of days of any such suspension may not exceed an aggregate of 120 days in
any 360-day period), the Company shall not be required to prepare or file any
such supplement amendment or document.
(ii) Notify each Holder whose Registrable Securities have been included in
a registration statement as soon as practicable after the Company discovers or
otherwise becomes or is made aware of the existence of any fact or event of the
kind described in Section 2.1(b) or 4.1(b)(i), and each Holder agrees by its
receipt of a Registrable Security pursuant to the Plan that, upon receipt of any
such notice from the Company of the existence of any fact or event of the kind
described in Section 2.1(b) or 4.1(b)(i) (which notice need not disclose the
fact, event or information), such Holder will forthwith discontinue the
disposition of any Registrable Securities pursuant to the registration statement
until such Holder's receipt of the copies of a supplemented or amended
prospectus as contemplated by Section 4.1(b)(i), or until it is advised in
writing by the Company that the use of the prospectus related to the
registration statement may be resumed, and has received copies of any additional
or supplemental filings that are incorporated by reference in such prospectus.
If so directed by the Company, each Holder will deliver to the Company all
copies, other than permanent file copies then in such Holder's possession, of
the prospectus covering such Registrable Securities that was current at the time
of receipt of such notice.
(iii) Notwithstanding the foregoing, if, in the case of a Demand
Registration Statement, the filing thereof with the Commission is postponed due
to circumstances of the type described in the proviso to Section 2.1(b)(i), the
period for filing a Demand Registration Statement shall be extended by the
aggregate number of days of such postponement.
(c) Subject to Section 4.1(b)(i), prepare and file with the Commission such
amendments, supplements or incorporated documents to such registration statement
and the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration statement. If the
registration statement provides for an underwritten offering, the Company shall
amend the registration statement or supplement the prospectus whenever required
by the terms of the underwriting agreement entered into pursuant to Section
4.1(f). In the event that any Registrable Securities included in a registration
statement subject to or required by this Agreement remain unsold at the end of
the period during which the Company is obligated to use commercially reasonable
efforts to maintain the effectiveness of such registration statement, the
Company may file a post-
13
effective amendment to the registration statement for the purpose of removing
such securities from registered status.
(d) Furnish to each Selling Holder of Registrable Securities copies of the
registration statement, any pre-effective or post-effective amendment thereto,
the prospectus, including each preliminary prospectus and any amendments or
supplements thereto, in each case in conformity with the requirements of the
Securities Act.
(e) Use commercially reasonable efforts (i) to register and qualify the
securities covered by such registration statement under the securities or blue
sky laws of such states or jurisdictions as shall be reasonably requested by the
Underwriters' Representative or Agent (as applicable, or if inapplicable the
Requisite Holders), and (ii) to obtain the withdrawal of any order suspending
the effectiveness of a registration statement, or the lifting of any suspension
of the qualification (or exemption from qualification) of the offer and transfer
of any of the Registrable Securities in any jurisdiction, at the earliest
practicable moment; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business,
subject itself to taxation or to file a general consent to service of process in
any states or jurisdictions where it is not now so subject.
(f) In the event of Demand Registration Statement, enter into and perform
the Company's obligations under an underwriting or agency agreement (including
indemnification and contribution obligations of underwriters or agents), in
usual and customary form, with the managing underwriter or underwriters of or
agents for such offering. The Company shall also cooperate with the Requisite
Holders and the Underwriters' Representative or Agent for such offering in the
marketing of the Registrable Securities, including making reasonably available
the Company's officers, accounts, counsel, premises, and books and records for
such purpose.
(g) Promptly notify each Selling Holder of any stop order issued or
threatened to be issued by the Commission in connection therewith (and take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered).
(h) Make generally available to the Company's security holders an earnings
statement satisfying the provisions of Section 11(a) of the Securities Act no
later than 90 days following the end of the 12-month period beginning with the
first month of the Company's first fiscal quarter commencing after the effective
date of each registration statement filed pursuant to this Agreement.
(i) Make reasonably available for inspection by any underwriter
participating in such offering and not more than one firm of legal counsel to
all underwriters and one firm of legal counsel to all Selling Holders, all
financial and other information as
14
shall be reasonably requested by them, and provide the foregoing Persons the
opportunity to discuss the business affairs of the Company with its principal
executives and independent public accountants who have certified the audited
financial statements included in such registration statement, in each case to
the extent necessary to enable them to exercise their due diligence
responsibility under the Securities Act; provided, however, that information
that the Company determines, in good faith, to be confidential and which the
Company advises such Person in writing, is confidential shall not be disclosed
unless such Person signs a confidentiality agreement reasonably satisfactory to
the Company.
(j) In the event of a Demand Registration Statement, use commercially
reasonable efforts to obtain a "comfort letter" from its independent public
accountants and legal opinions of counsel to the Company addressed to each
underwriter or agent and each Holder who is a Selling Holder, in customary form
and covering such matters of the type customarily covered by such letters and in
a form that shall be reasonably satisfactory to the Requisite Holders and the
Underwriters' Representative or Agent. The Company shall furnish to each
underwriter or agent a signed counterpart of any such comfort letter or legal
opinion. Delivery of any comfort letter shall be subject to the recipient
furnishing such written representations or acknowledgments as are customarily
provided under SAS No. 72. Nothing in the immediately preceding sentence shall
be deemed to require an underwriter or agent to make representations and
warranties if the underwriter or agent is willing to receive a letter in the
form to be provided to underwriters or agents not making representations and
warranties under SAS No. 76.
(k) Provide and cause to be maintained a transfer agent and registrar for
all Registrable Securities covered by such registration statement from and after
a date not later than the effective date of such registration statement.
(l) Use commercially reasonable efforts to cause the Registrable Securities
covered by such registration statement, if then listed on a national securities
exchange or included for quotation in a U.S. inter-dealer quotation system of a
registered national securitied association, to continue to be so listed or
included for a reasonable period of time after the offering.
(m) Provide a CUSIP number for all Registrable Securities covered by such
registration statement not later than the effective date of such registration
statement.
(n) In the event of a Demand Registration Statement, if any broker-dealer
registered under the Exchange Act shall be an "Affiliate" (as defined in Rule
2729(b)(1) of the rules and regulations of the National Association of
Securities Dealers, Inc., (the "NASD Rules"), or any successor provisions
thereto) of the Company or has a "conflict of interest" (as such term is defined
in Rule 2720(b)(7) of the NASD Rules, or any successor provisions thereto) and
such broker-dealer shall underwrite, participate as a member of an underwriting
15
syndicate or selling group or assist in the distribution of any Registrable
Securities covered by a registration statement, whether as a holder of such
Registrable Securities or as an underwriter, a placement or sales agent or a
broker or dealer in respect thereof, or otherwise, the Company shall assist such
broker-dealer in complying with the requirements of the NASD Rules, including,
without limitation, by (A) engaging a "qualified independent underwriter" (as
such term is defined in Rule 2720(b)(15) of the NASD Rules or any successor
provision(s) thereto) to participate in the preparation of the registration
statement relating to such Registrable Securities, to exercise usual and
customary standards of due diligence in respect thereof and to recommend the
public offering price of such Registrable Securities and the related
underwriting discounts and commissions and broker or dealer selling concessions
and allowances, (B) indemnifying such qualified independent underwriter to the
extent set forth in Article V hereof, and (C) providing all such information as
reasonably may be necessary to ensure compliance by such broker-dealer with the
requirements of the NASD Rules.
Section 4.2. Holders' Obligations. (a) It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Agreement
with respect to the Registrable Securities of any Selling Holder that such
Selling Holder shall:
(i) furnish to the Company such information regarding such Selling
Holder and its affiliates, the number of Registrable Securities owned and
proposed to be sold by it, the intended method of disposition of such
securities and any other information as shall be required to effect the
registration of such Selling Holder's Registrable Securities and cooperate
with the Company in preparing such registration statement and in complying
with the requirements of the Securities Act;
(ii) agree to sell its Registrable Securities to the underwriters at
the same price and on substantially the same terms and conditions as the
Company or the other Persons on whose behalf the registration statement was
filed have agreed to sell their securities, and execute the underwriting
agreement agreed to by the Company and the Requisite Holders together with
all customary custody arrangements, lock-up letters, indemnities
questionnaires and other documents reasonably required by the underwriters
or agents and agreed to by the Requisite Holders.
(b) In the event that a Demand Registration Statement or a Piggyback
Registration Statement becomes effective, if and to the extent requested by the
managing underwriter or lead agent for the offering relating thereto, no Holder
shall offer, sell or agree to sell or otherwise dispose of or transfer, in the
case of a Demand Registration Statement or Piggyback Registration Statement
covering Registrable Securities or securities convertible into or exchangeable
or exercisable for any Registrable Securities (other than, in the case of the
Selling Holders under the Demand Registration Statement or Piggyback
Registration Statement, pursuant to such Demand Registration Statement or
Piggyback Registration
16
Statement, as the case may be), or exercise any right to register any such
securities, during the period commencing 10 days prior to the anticipated
effective date of such registration statement and ending 90 days from the
effective date of such registration statement. In order to enforce the foregoing
agreement, the Company shall be entitled to impose stop-transfer instructions
with respect to the Registrable Securities of each Holder until the end of such
period.
Section 4.3. Registration Expenses. Expenses in connection with
registrations pursuant to this Agreement shall be allocated and paid as follows:
(a) With respect to not more than two demand registrations effected on
behalf of Stockholders pursuant to Section 2.1(a)(x) and not more than one
demand registration effected on behalf of Warrantholders pursuant to Section
2.1(a)(y), the Company shall bear and pay all of the Registration Expenses
incurred in connection with the registration and offering of Registrable
Securities with respect thereto; provided, however, that, the Selling Holders
shall pay (i) underwriting discounts and commissions relating to the Registrable
Securities sold by them pursuant to any such registration statement and (ii) all
fees and disbursements of any additional counsel not required to be paid by the
Company and any other advisors to the Selling Holders.
(b) The Company shall bear and pay all Registration Expenses incurred in
connection with any Piggyback Registration Statements pursuant to Article III,
and with respect to the third demand registration, if any, effected on behalf of
Stockholders pursuant to Section 2.1(a)(x) and the second demand registration,
if any, effected on behalf of Warrantholders pursuant to Section 2.1(a)(y),
other than (i) underwriting discounts and commissions relating to Registrable
Securities, (ii) the portion of any filing fees allocable to the Registrable
Securities included in such registration by the Selling Holders and (iii) the
fees and disbursements of any additional counsel not required to be paid by the
Company and other advisors to the Selling Holders (each of which expenses in
clauses (i) and (ii) shall be paid on a pro rata basis by the Selling Holders of
Registrable Securities included in such Piggyback Registration Statement and
which expenses in clause (iii) shall be paid on a pro rata basis by the Selling
Holders for which the expenses are incurred).
ARTICLE V.
INDEMNIFICATION AND CONTRIBUTION
Section 5.1. Indemnification by the Company. If any Registrable Securities
are included in an effective registration statement under this Agreement, to the
extent permitted by applicable law, the Company shall indemnify and hold
harmless each Selling Holder, its directors, officers, shareholders, employees,
investment advisors, agents and
17
Affiliates, and each other Person, if any, who controls such Selling Holder
within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act, from and against any and all losses, claims, damages, liabilities
and expenses, including attorneys' fees and disbursements and expenses of
investigation ("Losses"), incurred by such party pursuant to any actual or
threatened action, suit, proceeding or investigation, to which any of the
foregoing Persons may become subject under the Securities Act, the Exchange Act
or other federal or state laws, insofar as such Losses arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in such effective registration statement, preliminary prospectus if
used prior to the effective date of the registration statement in which such
preliminary prospectus is included (unless such statement is corrected in the
final prospectus and the Company previously furnished copies thereof to the
Selling Holders or such other Persons) or final prospectus (as supplemented, if
the Company shall have filed with the Commission any supplement thereto) if used
during the period in which the Company is required to keep the registration
statement to which such prospectus relates current and otherwise in compliance
with Section 10(a) of the Securities Act, or the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading (collectively, a "Violation");
provided, however, that the indemnification required by this Section 5.1 shall
not apply to amounts paid in settlement of any such Loss, if such settlement is
effected without the consent of the Company (such consent not to unreasonably be
withheld), nor shall the Company be liable in any such case for any such Loss if
it arises out of or is based upon a Violation which occurs in reliance upon and
in conformity with written information furnished to the Company by the
indemnified party expressly for use in connection with such registration; and
provided, further, that the Company shall have no obligation to provide any
indemnification hereunder if any such Losses arise out of or are based upon an
untrue statement or alleged untrue statement or omission or alleged omission in
or from the final prospectus, if such untrue statement or alleged untrue
statement or omission or alleged untrue omission shall have been corrected in a
supplement to the final prospectus and the Selling Holder or any other Person
seeking indemnification hereunder shall have failed to deliver (or cause to be
delivered) such final prospectus as so supplemented prior to or
contemporaneously with the sale of the Registrable Securities covered by a
registration statement to the Person asserting such Losses after the Company
shall have furnished the Selling Holder or other Persons seeking indemnification
hereunder with a sufficient number of copies thereof in a manner and a time
sufficient to permit delivery of the same.
Section 5.2. Indemnification by the Selling Holders. If any Registrable
Securities are included in a registration statement under this Agreement, to the
extent permitted by applicable law, each Selling Holder shall indemnify and hold
harmless the Company, its directors, officers, shareholders, employees,
investment advisors, agents and Affiliates, and each other Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act, any other Selling Holder and any controlling
Person of any such other Selling Holder from and against any and
18
all losses, claims, damages, liabilities and expenses, including attorneys' fees
and disbursements and expenses of investigation, incurred by such party pursuant
to any actual or threatened action, suit, proceeding or investigation, to which
any of the foregoing Persons may otherwise become subject under the Securities
Act, the Exchange Act or other federal or state laws, insofar as such losses,
claims, damages, liabilities and expenses arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Selling Holder expressly for use in connection with such
registration statement; provided, however, that (a) the indemnification required
by this Section 5.2 shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or expense if settlement is effected without the
consent of the relevant Selling Holder of Registrable Securities, which consent
shall not be unreasonably withheld, (b) in no event shall the amount of any
indemnity under this Section 5.2 and of the contribution obligation of a Selling
Holder under Section 5.4 exceed the net proceeds from the applicable offering
received by such Selling Holder, and (c) the obligation to provide
indemnification hereunder shall be several, and not joint and several, among the
indemnifying parties.
Section 5.3. Notice of Claims, Etc. Promptly after receipt by an
indemnified party under this Article V of notice of the commencement of any
action, suit, proceeding, investigation or threat thereof made in writing for
which such indemnified party may make a claim under this Article V, such
indemnified party shall deliver to the indemnifying party a written notice of
the commencement thereof. The failure to deliver written notice to the
indemnifying party within a reasonable time following the commencement of any
such action, if and to the extent materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Article V but shall not relieve the
indemnifying party of any liability that it may have to any indemnified party
otherwise than pursuant to this Article V. Any fees and expenses incurred by the
indemnified party (including any fees and expenses incurred in connection with
investigating or preparing to defend such action or proceeding) shall be paid to
the indemnified party, as incurred (as evidenced by reasonably itemized invoices
submitted to the indemnifying party), within 30 days of written notice thereof
to the indemnifying party. Any such indemnified party shall have the right to
employ separate counsel in any such action, claim or proceeding, and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be borne and paid for by such indemnified party unless (a) the
indemnifying party shall have failed promptly to assume the defense of such
action, claim or proceeding with counsel reasonably satisfactory to the
indemnified party, or (b) the named parties to any such action, claim or
proceeding (including any impleaded parties) include both such indemnified party
and the indemnifying party, and such indemnified party shall have been advised
by its counsel that there may be one or more legal defenses available to it
which are different from or in addition to those available to the indemnifying
party and that the assertion of such defenses would either be compromised or
create a conflict of interest such that counsel employed by the indemnifying
party could not represent the indemnified party (in which
19
case, if such indemnified party notifies the indemnifying party in writing that
it elects to employ separate counsel at the expense of the indemnifying party,
the indemnifying party shall not have the right to assume the defense of such
action, claim or proceeding on behalf of such indemnified party; it being
understood, however, that the indemnifying party shall not, in connection with
any one such action, claim or proceeding or separate but substantially similar
or related actions, claims or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all such indemnified parties, unless
the indemnified party shall have been advised by its counsel that a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such action, claim or proceeding such that
the counsel could not represent the indemnified party and any other of such
indemnified parties, in which event the indemnifying party shall be obligated to
pay the fees and expenses of such additional counsel or counsels). No
indemnifying party shall be liable to an indemnified party for any settlement of
any action, proceeding or claim without the prior written consent of the
indemnifying party, which consent shall not be unreasonably withheld.
Section 5.4. Contribution. If the indemnification required by this Article
V from the indemnifying party is unavailable to an indemnified party hereunder
in respect of any losses, claims, damages liabilities or expenses referred to in
this Article V:
(a) The indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified 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 and indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to, among other things,
whether any Violation has been committed by, or relates to information supplied
by, such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such Violation. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 5.1 and Section 5.2,
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
(b) The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5.4 were determined by pro rata allocation
or by any other method of allocation which does not take into account the
equitable considerations referred to in Section 5.4(a). 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.
20
Section 5.5. Survival. The obligations of the Company and the Selling
Holders of Registrable Securities under this Article V shall survive the
completion of any offering of Registrable Securities pursuant to a registration
statement under this Agreement.
ARTICLE VI.
RULE 144 AND RULE 144A
Section 6.1. Reports, Etc. The Company will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations promulgated by the Commission thereunder and will take such further
action as any Holder reasonably may request, to the extent required from time to
time to enable the Holder to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by (a)
Rule 144, (b) Rule 144A, or (c) any similar rule or regulation hereafter adopted
by the Commission. Upon the request of any Holder, the Company will deliver to
that Holder a written statement as to whether it has complied with such
requirements, a copy of the most recent annual or quarterly report of the
Company and such other reports or documents so filed as a Holder may reasonably
request in availing itself of any rule or regulation of the Commission allowing
a Holder to sell any such securities without registration.
Section 6.2. Rule 144 Information. If at any time the Company is not
required to file reports in compliance with either Section 13 or Section 15(d)
of the Exchange Act, the Company at its expense will, forthwith upon the request
of any Holder, make available adequate current public information with respect
to the Company within the meaning of paragraph (c)(2) of Rule 144.
Section 6.3. Rule 144A Information. If at any time the Company is not
required to file reports in compliance with either Section 13 or Section 15(d)
of the Exchange Act, the Company at its expense will forthwith upon the request
of any Holder or prospective purchaser, provide to the Holder and any
prospective purchaser reasonably current information with respect to the Company
within the meaning of paragraph (d)(4) of Rule 144A.
ARTICLE VII.
MISCELLANEOUS
Section 7.1. Amendment Modification and Waivers: Further Assurances. (a)
This Agreement may be amended with the consent of the Company, and the Company
may
21
amend this Agreement or take any action herein prohibited, or omit to perform
any act herein required to be performed by it, only if the Company shall have
obtained the written consent to such amendment, action or omission to act of
Holders owning Registrable Securities possessing a majority in number of the
Registrable Securities then outstanding (based on the number of shares of Common
Stock representing, or issuable upon exercise for, the Registrable Securities)
and, in the case of any amendment, action of omission to act that adversely
affects any group of Holders differently from any other group of Holders, the
written consent of the Holders of a majority in number of the Registrable
Securities owned by such group of Holders.
(b) No waiver of any terms or conditions of this Agreement shall operate as
a waiver of any other breach of such terms and conditions or any other term or
condition, nor shall any failure to enforce any provision hereof operate as a
waiver of such provision or of any other provision hereof. No written waiver
hereunder, unless it by its own terms explicitly provides to the contrary, shall
be construed to effect a continuing waiver of the provisions being waived and no
such waiver in any instance shall constitute a waiver in any other instance or
for any other purpose or impair the right of the party against whom such waiver
is claimed in all other instances or for all other purposes to require full
compliance with such provision.
(c) Each of the parties hereto shall execute all such further instruments
and documents and take all such further action as any other party hereto may
reasonably require in order to effectuate the terms and purposes of this
Agreement.
Section 7.2. Assignment. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties and their respective successors
and permitted assigns of Registrable Securities. Each Holder may assign any of
its rights hereunder (in whole or in part) to one or more transferees of
Registrable Securities; provided, however, that any such transferees of
Registrable Securities agrees in writing, in form and substance satisfactory to
the Company, to be bound by all of the terms and provisions hereof and to join
this Agreement as a party hereto; and provided, further, that no such assignment
of rights shall be effective with respect to Registrable Securities that, as a
result of such transfer, have ceased to be Registrable Securities by reason of
the second sentence of the definition of Registrable Securities set forth in
Section 1.1. Without limiting the foregoing, no such assignment shall be binding
upon or obligate the Company to any such assignee unless and until the Company
has received notice of the assignment as herein provided, which notice (a)
references this Agreement and (b) sets forth the address of any assignee for the
purpose of any notices hereunder. The Company hereby agrees to amend from time
to time Schedules 1, 2 and 3 to reflect the transfers and assignments effected
in accordance with this Section 7.2.
22
Section 7.3. Invalid Provisions. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future law, (a)
such provision will be fully severable, (b) this Agreement will be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance herefrom, and (d) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Agreement a legal, valid and enforceable provision as similar
in terms to such illegal, invalid or unenforceable provision as may be possible.
Section 7.4. Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election, be treated as the holder of
such Registrable Securities for purposes of request or other action by any
Holder or Holders pursuant to this Agreement or any determination of any amount
of shares of Registrable Securities held by any Holder or Holders of Registrable
Securities contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities. For purposes of this Agreement, "beneficial ownership" and
"beneficial owner" refer to beneficial ownership as defined in Rule 13d-3
(without regard to the 60-day provision in paragraph (d)(1)(i) thereof) under
the Exchange Act.
Section 7.5. Governing Law. THIS AGREEMENT SHALL BE GOV- ERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD
TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
Section 7.6. Notices. All notices and requests given pursuant to this
Agreement shall be in writing and shall be made by hand-delivery, first-class
mail (registered or certified, return receipt requested), confirmed facsimile or
overnight air courier guaranteeing next business day:
(a) If to the Company, to:
CHI, Inc.
000 Xxxxxxxxxx Xxxxxxxxx,
Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
23
With a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Attention: Simeon Gold, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) If to a Stockholder, to the address for such Stockholder set forth on
Schedule 1.
(c) If to a Warrantholder, to the address for such Optionholder set forth
on Schedule 2.
(d) If to an Optionholder, to the address for such Noteholder set forth on
Schedule 3.
Except as otherwise provided in this Agreement, the date of each such notice and
request shall be deemed to be, and the date on which each such notice and
request shall be deemed given shall be: (i) at the time delivered, if personally
delivered or mailed; (ii) when receipt is acknowledged, if sent by facsimile;
and (iii) the next business day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next business day delivery.
Section 7.7. Entire Agreement; Integration. This Agreement supersedes all
prior agreements between or among any of the parties hereto with respect to the
subject matter contained herein, and this agreement embodies the entire
understanding among the parties relating to such subject matter.
Section 7.8. Injunctive Relief. Each of the parties hereto acknowledges
that in the event of a breach by any of them of any material provision of this
Agreement, the aggrieved party may be without an adequate remedy at law. Each of
the parties therefore agrees that in the event of such a breach hereof the
aggrieved party may elect to institute and prosecute proceedings in any court of
competent jurisdiction to enforce specific performance or to enjoin the
continuing breach hereof by seeking or obtaining any such relief, the aggrieved
party shall not be precluded from seeking or obtaining any other relief to which
it may be entitled.
Section 7.9. Section Headings. Section headings are for convenience of
reference only and shall not affect the meaning of any provision of this
Agreement.
24
Section 7.10. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which shall together
constitute one and the same instrument. All signatures need not be on the same
counterpart.
Section 7.11. Filing. A copy of this Agreement and of all amendments
thereto shall be filed at the principal executive office of the Company with the
Secretary of the Company.
Section 7.12. Termination. This Agreement may be terminated at any time by
a written instrument signed by the parties hereto. Unless sooner terminated in
accordance with the immediately preceding sentence or as otherwise expressly
provided in this Agreement, the parties' obligations under this Agreement (other
than Article V hereof) shall terminate in their entirety on the sixth
anniversary of the date hereof, except with respect to rights which have vested
and, in accordance with the terms and subject to the conditions of this
Agreement, have been properly exercised prior to such date.
Section 7.13. No Third-Party Beneficiaries. Nothing herein expressed or
implied is intended to confer upon any Person, other than the parties hereto or
their respective permitted assigns, successors, heirs and legal representatives,
or any indemnified party hereunder, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first written above.
CHI ENERGY, INC.
By:
Name:
Title:
25
SCHEDULE 1
LIST OF STOCKHOLDERS
1-I
SCHEDULE 2
LIST OF WARRANTHOLDERS
2-I
SCHEDULE 3
LIST OF OPTIONHOLDERS
3-I
