Exhibit 4.5
Execution Copy
REGISTRATION RIGHTS AGREEMENT
by and among
ICG COMMUNICATIONS, INC.
and
The INITIAL HOLDERS Specified on
the Signature Pages Hereof
Dated as of the Effective Date
(as defined in the Note and Warrant Purchase Agreement)
TABLE OF CONTENTS
Page
Section 1. Definitions.....................................................................................1
Section 2. REGISTRATION UNDER THE SECURITIES ACT...........................................................5
2.1 Demand Registration.............................................................................5
2.2 Incidental Registration.........................................................................8
2.3 S-3 Registration; Shelf Registration...........................................................10
2.4 Expenses.......................................................................................11
2.5 Underwritten Offerings.........................................................................11
2.6 Conversions; Exercises.........................................................................12
Section 3. HOLDBACK ARRANGEMENTS..........................................................................12
3.1 Restrictions on Sale by Holders of Registrable Securities......................................12
3.2 Restrictions on Sale by the Company and Others.................................................13
3.3 Confidentiality of Notices.....................................................................13
Section 4. REGISTRATION PROCEDURES........................................................................13
4.1 Obligations of the Company.....................................................................13
4.2 Seller Information.............................................................................18
4.3 Notice to Discontinue..........................................................................18
Section 5. INDEMNIFICATION; CONTRIBUTION..................................................................18
5.1 Indemnification by the Company.................................................................18
5.2 Indemnification by Holders.....................................................................19
5.3 Conduct of Indemnification Proceedings.........................................................19
5.4 Contribution...................................................................................20
5.5 Other Indemnification..........................................................................21
5.6 Indemnification Payments.......................................................................21
Section 6. GENERAL PROVISIONS REGARDING REGISTRATIONS.....................................................21
6.1 Adjustments Affecting Registrable Securities...................................................21
6.2 Registration Rights to Others..................................................................21
6.3 Availability of Information; Rule 144; Rule 144A; Other Exemptions.............................22
Section 7. GENERAL........................................................................................22
7.1 Amendments and Waivers.........................................................................22
7.2 Notices........................................................................................22
7.3 Successors and Assigns.........................................................................23
7.4 Counterparts...................................................................................24
7.5 Descriptive Headings, Etc......................................................................24
7.6 Severability...................................................................................24
7.7 Governing Law..................................................................................24
7.8 Remedies; Specific Performance.................................................................24
7.9 Entire Agreement...............................................................................25
7.10 Nominees for Beneficial Owners.................................................................25
7.11 Further Assurances.............................................................................25
7.12 No Inconsistent Agreements.....................................................................25
7.13 Construction...................................................................................25
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of the
Effective Date (as defined in the Note and Warrant Purchase Agreement), is made
by and among ICG COMMUNICATIONS, INC., a Delaware corporation (the "Company"),
and the Initial Holders signatory hereto.
W I T N E S S E T H :
WHEREAS, simultaneously herewith, the Company and certain Initial
Holders are entering into a Note and Warrant Purchase Agreement (the "Note and
Warrant Purchase Agreement"), pursuant to which the Company is issuing, and the
Initial Holders are purchasing, certain securities of the Company; and
WHEREAS, in order to induce the Initial Holders to enter into the Note
and Warrant Purchase Agreement, the Company has agreed to provide certain
registration rights on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
Section 1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Affiliate" shall mean (i) with respect to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person, and (ii) with respect to any individual, shall
also mean the spouse, sibling, child, step-child, grandchild, niece, nephew or
parent of such Person, or the spouse thereof.
"Agent" shall have the meaning set forth in Section 5.1.
"CCM" shall mean, collectively, Xxxxxxxxx L.L.C., and its Affiliates.
"Claims" shall have the meaning set forth in Section 5.1.
"Common Shares" shall mean shares of common stock, par value $.01 per
share, of the Company.
"Company" shall have the meaning set forth in the preamble.
"Demand Registration" shall mean a registration required to be effected
by the Company pursuant to Section 2.1.
"Demand Registration Statement" shall mean a registration statement of
the Company which covers the Registrable Securities requested to be included
therein pursuant to the provisions of Section 2.1 and all amendments and
supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference (or deemed to be incorporated by reference) therein.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations thereunder, or any
successor statute.
"Holders" shall mean each of the Initial Holders for so long as it
owns any Registrable Securities and such of its respective heirs, successors
and assigns (including any permitted transferees of Registrable Securities)
who acquire or are otherwise the transferees of Registrable Securities,
directly or indirectly, from such Initial Holders (or any subsequent Holders),
for so long as such heirs, successors and permitted assigns own any
Registrable Securities. For purposes of this Agreement, a Person will be
deemed to be a Holder whenever such Person holds an option to purchase, or a
security convertible into or exercisable or exchangeable for, Registrable
Securities, whether or not such purchase, conversion, exercise or exchange has
actually been effected and disregarding any legal restrictions upon the
exercise of such rights. Registrable Securities issuable upon exercise of an
option or upon conversion, exchange or exercise of another security shall be
deemed outstanding for the purposes of this Agreement.
"Holders' Counsel" shall mean one firm of counsel (per registration)
to the Holders of Registrable Securities participating in such registration,
which counsel shall be selected (i) in the case of a Demand Registration or an
S-3 Registration, by the Initiating Holders holding a majority of the
Registrable Securities for which registration was requested in the Request,
and (ii) in all other cases, by the Majority Holders of the Registration.
"Incidental Registration" shall mean a registration required to be
effected by the Company pursuant to Section 2.2.
"Incidental Registration Statement" shall mean a registration
statement of the Company which covers the Registrable Securities requested to
be included therein pursuant to the provisions of Section 2.2 and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference (or
deemed to be incorporated by reference) therein.
"Initial Holders" shall mean the Persons specified as such on the
signature pages to this Agreement on the date hereof.
"Initial Public Offering" shall mean the first public offering of any
class of equity securities of the Company pursuant to a registration statement
filed with and declared effective by the SEC.
"Initiating Holders" shall mean, with respect to a particular
registration, the Holders who initiated the Request for such registration.
"Inspectors" shall have the meaning set forth in Section 4.1(g).
-2-
"Majority Holders" shall mean one or more Holders of Registrable
Securities who would hold a majority of the Registrable Securities then
outstanding.
"Majority Holders of the Registration" shall mean, with respect to a
particular registration, one or more Holders of Registrable Securities who
hold a majority of the Registrable Securities requested to be included in such
registration.
"Xxxxxx Xxxxxxx" shall mean Xxxxxx Xxxxxxx & Co., Incorporated.
"NASD" shall mean the National Association of Securities Dealers,
Inc.
"Note and Warrant Purchase Agreement" shall have the meaning set
forth in the recitals.
"Person" shall mean any individual, firm, partnership, corporation,
trust, joint venture, association, joint stock company, limited liability
company, unincorporated organization or any other entity or organization,
including a government or agency or political subdivision thereof, and shall
include any successor (by merger or otherwise) of such entity.
"Prospectus" shall mean the prospectus included in a Registration
Statement (including, without limitation, any preliminary prospectus and any
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule
430A promulgated under the Securities Act), and any such Prospectus as amended
or supplemented by any prospectus supplement, and all other amendments and
supplements to such Prospectus, including post-effective amendments, and in
each case including all material incorporated by reference (or deemed to be
incorporated by reference) therein.
"Registrable Securities" shall mean (i) any Warrant Shares issued or
issuable upon exercise of the Warrants, (ii) any Common Shares otherwise
purchased or acquired by the Holders or their Affiliates and (iii) any other
securities of the Company (or any successor or assign of the Company, whether
by merger, consolidation, sale of assets or otherwise) which may be issued or
issuable with respect to, in exchange for, or in substitution of, Registrable
Securities referenced in clauses (i) through (ii) above by reason of any
dividend or stock split, combination of shares, merger, consolidation,
recapitalization, reclassification, reorganization, sale of assets or similar
transaction. As to any particular Registrable Securities, such securities
shall cease to be Registrable Securities when (A) a registration statement
with respect to the sale of such securities shall have been declared effective
under the Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (B) such securities are sold
pursuant to Rule 144 (or any similar provisions then in force) under the
Securities Act, (C) such securities have been otherwise transferred, a new
certificate or other evidence of ownership for them not bearing the legend
restricting further transfer shall have been delivered by the Company and
subsequent public distribution of them shall not require registration under
the Securities Act, or (D) such securities shall have ceased to be
outstanding.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance with this Agreement by the Company and its
subsidiaries, including, without limitation (i) all SEC, stock exchange, NASD
and other registration, listing and filing fees,
-3-
(ii) all fees and expenses incurred in connection with compliance with state
securities or blue sky laws and compliance with the rules of any stock
exchange (including reasonable fees and disbursements of counsel in connection
with such compliance and the preparation of a blue sky memorandum and legal
investment survey), (iii) all expenses of any Persons in preparing or
assisting in preparing, word processing, printing, distributing, mailing and
delivering any Registration Statement, any Prospectus, any underwriting
agreements, transmittal letters, securities sales agreements, securities
certificates and other documents relating to the performance of or compliance
with this Agreement, (iv) the reasonable fees and disbursements of counsel for
the Company, (v) the reasonable fees and disbursements of Holders' Counsel,
(vi) the reasonable fees and disbursements of all independent public
accountants (including the expenses of any audit and/or "cold comfort"
letters) and the reasonable fees and expenses of other Persons, including
experts, retained by the Company, (vii) the expenses incurred in connection
with making road show presentations and holding meetings with potential
investors to facilitate the distribution and sale of Registrable Securities
which are customarily borne by the issuer, (viii) any fees and disbursements
of underwriters customarily paid by issuers or sellers of securities, and (ix)
premiums and other costs of policies of insurance against liabilities arising
out of the public offering of the Registrable Securities being registered;
provided, however, Registration Expenses shall not include discounts and
commissions payable to underwriters, selling brokers, dealer managers or other
similar Persons engaged in the distribution of any of the Registrable
Securities; and provided further, that in any case where Registration Expenses
are not to be borne by the Company, such expenses shall not include salaries
of Company personnel or general overhead expenses of the Company, auditing
fees, premiums or other expenses relating to liability insurance required by
underwriters of the Company or other expenses for the preparation of financial
statements or other data normally prepared by the Company in the ordinary
course of its business or which the Company would have incurred in any event;
and provided, further, that in the event the Company shall, in accordance with
Section 2.2 or Section 2.6 hereof, not register any securities with respect to
which it had given written notice of its intention to register to Holders,
notwithstanding anything to the contrary in the foregoing, all of the costs
incurred by the Holders in connection with such registration shall be deemed
to be Registration Expenses.
"Registration Statement" shall mean any registration statement of the
Company which covers any Registrable Securities and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference (or deemed to be
incorporated by reference) therein.
"Request" shall have the meaning set forth in Section 2.1(a).
"S-3 Registration" shall mean a registration required to be effected
by the Company pursuant to Section 2.3(a).
"SEC" shall mean the Securities and Exchange Commission, or any
successor agency having jurisdiction to enforce the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time, and the rules and regulations thereunder, or any successor
statute.
-4-
"Shelf Registration" shall have the meaning set forth in Section
2.1(a).
"Underwriters" shall mean the underwriters, if any, of the offering
being registered under the Securities Act.
"Underwritten Offering" shall mean a sale of securities of the
Company to an Underwriter or Underwriters for reoffering to the public.
"Warrant Shares" shall mean the Common Shares issued or issuable upon
the exercise of the Warrants.
"Warrants" shall mean the warrants issued to the Initial Holders
pursuant to the Note and Warrant Purchase Agreement, together with any
additional warrants issued in accordance with the terms thereof.
"Withdrawn Demand Registration" shall have the meaning set forth in
Section 2.1(a).
"Withdrawn Request" shall have the meaning set forth in Section
2.1(a).
"WRH" shall mean X.X. Xxxx Asset Management Co., L.L.C.
Section 2. REGISTRATION UNDER THE SECURITIES ACT.
2.1 Demand Registration.
(a) Right to Demand Registration.
(i) Subject to Section 2.1(c), at any time or from time to
time, one or more Holders of Registrable Securities shall have the right to
request in writing that the Company register all or part of such Holders'
Registrable Securities (a "Request") (which Request shall specify the amount
of Registrable Securities intended to be disposed of by such Holders and the
intended method of disposition thereof) by filing with the SEC a Demand
Registration Statement; provided, that (i) the reasonably anticipated
aggregate price to the public of such offering would exceed $5,000,000 or (ii)
the Registrable Securities for which such Holder requests registration
represents all of such Holder's Registrable Securities. As promptly as
practicable, but no later than 15 days after receipt of a Request, the Company
shall give written notice of such requested registration to all Holders of
Registrable Securities. Subject to Section 2.1(b), the Company shall include
in a Demand Registration (A) the Registrable Securities intended to be
disposed of by the Initiating Holders and (B) the Registrable Securities
intended to be disposed of by any other Holder which shall have made a written
request (which request shall specify the amount of Registrable Securities to
be registered and the intended method of disposition thereof) to the Company
for inclusion thereof in such registration within 30 days after the receipt of
such written notice from the Company. The Company shall, as expeditiously as
possible following a Request in accordance with Section 4, use its
commercially reasonable best efforts to cause to be filed with the SEC a
Demand Registration Statement providing for the registration under the
Securities Act of the Registrable
-5-
Securities which the Company has been so requested to register by all such
Holders, to the extent necessary to permit the disposition of such Registrable
Securities so to be registered in accordance with the intended methods of
disposition thereof specified in such Request or further requests (including,
without limitation, by means of a shelf registration pursuant to Rule 415
under the Securities Act (a "Shelf Registration") if so requested and if the
Company is then eligible to use such a registration). The Company shall use
its commercially reasonable best efforts to have such Demand Registration
Statement declared effective by the SEC as soon as practicable thereafter and
to keep such Demand Registration Statement continuously effective for the
period specified in Section 4.1(b).
(ii) A Request may be withdrawn prior to the filing of the
Demand Registration Statement by the Initiating Holders (a "Withdrawn
Request") and a Demand Registration Statement may be withdrawn prior to the
effectiveness thereof by the Initiating Holders (a "Withdrawn Demand
Registration"), and such withdrawals shall be treated as a Demand Registration
which shall have been effected pursuant to this Section 2.1, unless the
Holders of Registrable Securities to be included in such Registration
Statement reimburse the Company for its reasonable out-of-pocket Registration
Expenses relating to the preparation and filing of such Demand Registration
Statement (to the extent actually incurred), in which case such withdrawal
shall not be treated as a Demand Registration effected pursuant to this
Section 2.1 (and shall not be counted toward the number of Demand
Registrations) provided; however, that if a Withdrawn Request or Withdrawn
Registration Statement is made (A) because of a material adverse change in the
business, financial condition or prospects of the Company or (B) because the
sole or lead managing Underwriter advises that the amount of Registrable
Securities to be sold in such offering be reduced pursuant to Section 2.1(b)
by more than 10% of the Registrable Securities requested to be included in
such Registration Statement, then such withdrawal shall not be treated as a
Demand Registration effected pursuant to this Section 2.1 (and shall not be
counted toward the number of Demand Registrations), and the Company shall pay
all Registration Expenses in connection therewith. Any Holder requesting
inclusion in a Demand Registration may, at any time prior to the effective
date of the Demand Registration Statement (and for any reason) revoke such
request by delivering written notice to the Company revoking such requested
inclusion.
(iii) The registration rights granted pursuant to the
provisions of this Section 2.1 shall be in addition to the registration rights
granted pursuant to the other provisions of Section 2 hereof.
(b) Priority in Demand Registrations. If a Demand Registration
involves an Underwritten Offering, and the sole or lead managing Underwriter,
as the case may be, of such Underwritten Offering shall advise the Company in
writing (with a copy to each Holder requesting registration) on or before the
date five days prior to the date then scheduled for such offering that, in its
opinion, the amount of Registrable Securities requested to be included in such
Demand Registration exceeds the number which can be sold in such offering
within a price range acceptable to the Initiating Holders (such writing to
state the basis of such opinion and the approximate number of Registrable
Securities which may be included in such offering), and the Request is not
thereafter withdrawn, the Company shall include in such Demand Registration,
to
-6-
the extent of the number which the Company is so advised may be included in
such offering, the Registrable Securities requested to be included in the
Demand Registration by the Holders allocated pro rata in proportion to the
number of Registrable Securities requested to be included in such Demand
Registration by each of them. In the event the Company shall not, by virtue of
this Section 2.1(b), include in any Demand Registration all of the Registrable
Securities of any Holder requesting to be included in such Demand
Registration, such Holder may, upon written notice to the Company given within
five days of the time such Holder first is notified of such matter, further
reduce the amount of Registrable Securities it desires to have included in
such Demand Registration, whereupon only the Registrable Securities, if any,
it desires to have included will be so included and the Holders not so
reducing shall be entitled to a corresponding pro rata increase in the amount
of Registrable Securities to be included in such Demand Registration.
(c) Limitations on Registrations. The rights of Holders of
Registrable Securities to request Demand Registrations pursuant to Section
2.1(a) are subject to the following limitation: in no event shall the Company
be required to effect, in the aggregate, more than five Demand Registrations
as follows: (i) two Demand Registrations at the request of CCM, (ii) two
Demand Registrations at the request of WRH, and (iii) one Demand Registration
at the request of Xxxxxx Xxxxxxx; provided, however, that such number shall be
increased to the extent the Company (x) does not include in what would
otherwise be the final registration for which the Company is required to pay
Registration Expenses the number of Registrable Securities requested to be
registered by the Holders by reason of Section 2.1(b) or (y) terminates a
Shelf Registration pursuant to Section 2.3 prior to the time that all
Registrable Securities covered by such Shelf Registration have been sold.
(d) Underwriting; Selection of Underwriters. Notwithstanding
anything to the contrary contained in Section 2.1(a), if the Initiating
Holders holding a majority of the Registrable Securities for which
registration was requested in the Request so elect, the offering of such
Registrable Securities pursuant to such Demand Registration shall be in the
form of a firm commitment Underwritten Offering and such Initiating Holders
may require that all Persons (including other Holders) participating in such
registration sell their Registrable Securities to the Underwriters at the same
price and on the same terms of underwriting applicable to the Initiating
Holders. If any Demand Registration involves an Underwritten Offering, the
sole or managing Underwriters and any additional investment bankers and
managers to be used in connection with such registration shall be selected by
the Company, subject to the approval of the Initiating Holders (such approval
not to be unreasonably withheld).
(e) Registration of Other Securities. Whenever the Company shall
effect a Demand Registration, no securities other than the Registrable
Securities shall be covered by such registration unless the Majority Holders
of the Registration shall have consented in writing to the inclusion of such
other securities.
(f) Effective Registration Statement; Suspension. A Demand
Registration Statement shall not be deemed to have become effective (and the
related registration will not be deemed to have been effected) (i) unless it
has been declared effective by the SEC and remains effective in compliance
with the provisions of the Securities Act with respect to the disposition of
all Registrable Securities covered by such Demand Registration Statement for
the time period
-7-
specified in Section 4.1(b), (ii) if the offering of any Registrable
Securities pursuant to such Demand Registration Statement is interfered with
by any stop order, injunction or other order or requirement of the SEC or any
other governmental agency or court, or (iii) if, in the case of an
Underwritten Offering, the conditions to closing specified in an underwriting
agreement to which the Company is a party are not satisfied other than by the
sole reason of any breach or failure by the Holders of Registrable Securities
or are not otherwise waived.
(g) Other Registrations. During the period (i) beginning on the
date of a Request and (ii) ending on the date that is 90 days after the date
that a Demand Registration Statement filed pursuant to such Request has been
declared effective by the SEC or, if the Holders shall withdraw such Request
or such Demand Registration Statement, on the date of such Withdrawn Request
or such Withdrawn Registration Statement, the Company shall not, without the
consent of the Majority Holders of the Registration, file a registration
statement pertaining to any other securities of the Company.
(h) Registration Statement Form. Registrations under this Section
2.1 shall be on such appropriate registration form of the SEC (i) as shall be
selected by the Company and (ii) which shall be available for the sale of
Registrable Securities in accordance with the intended method or methods of
disposition specified in the requests for registration. The Company agrees to
include in any such Registration Statement all information which any selling
Holder, upon advice of counsel, shall reasonably request.
2.2 Incidental Registration.
(a) Right to Include Registrable Securities.
(i) If the Company at any time or from time to time proposes to
register any of its securities under the Securities Act (other than
in a registration on Form S-4 or S-8 or any successor form to such
forms and other than pursuant to Section 2.1 or 2.3) whether or not
pursuant to registration rights granted to other holders of its
securities and whether or not for sale for its own account, the
Company shall deliver prompt written notice (which notice shall be
given at least 30 days prior to such proposed registration) to all
Holders of Registrable Securities of its intention to undertake such
registration, describing in reasonable detail the proposed
registration and distribution (including the anticipated range of the
proposed offering price, the class and number of securities proposed
to be registered and the distribution arrangements) and of such
Holders' right to participate in such registration under this Section
2.2 as hereinafter provided. Subject to the other provisions of this
Section 2.2 (a) and Section 2.2(b), upon the written request of any
Holder made within 15 days after the receipt of such written notice
(which request shall specify the amount of Registrable Securities to
be registered and the intended method of disposition thereof), the
Company shall effect the registration under the Securities Act of all
Registrable Securities requested by Holders to be so registered (an
"Incidental Registration"), to the extent requisite to permit the
disposition (in accordance with the intended methods thereof as
aforesaid) of the Registrable Securities so to be registered, by
inclusion of such Registrable Securities in the Registration
Statement which covers the securities which the Company proposes to
register and shall cause such Registration Statement to become and
remain effective with respect to such Registrable
-8-
Securities in accordance with the registration procedures set forth
in Section 4. If an Incidental Registration involves an Underwritten
Offering, immediately upon notification to the Company from the
Underwriter of the price at which such securities are to be sold, the
Company shall so advise each participating Holder. The Holders
requesting inclusion in an Incidental Registration may, at any time
prior to the effective date of the Incidental Registration Statement
(and for any reason), revoke such request by delivering written
notice to the Company revoking such requested inclusion.
(ii) If at any time after giving written notice of its
intention to register any securities and prior to the effective date
of the Incidental Registration Statement filed in connection with
such registration, the Company shall determine for any reason not to
register or to delay registration of such securities, the Company
may, at its election, give written notice of such determination to
each Holder of Registrable Securities and, thereupon, (A) in the case
of a determination not to register, the Company shall be relieved of
its obligation to register any Registrable Securities in connection
with such registration (but not from its obligation to pay the
Registration Expenses incurred in connection therewith), without
prejudice, however, to the rights of Holders to cause such
registration to be effected as a registration under Section 2.1 or
2.3(a), and (B) in the case of a determination to delay such
registration, the Company shall be permitted to delay the
registration of such Registrable Securities for the same period as
the delay in registering such other securities; provided, however,
that if such delay shall extend beyond 120 days from the date the
Company received a request to include Registrable Securities in such
Incidental Registration, then the Company shall again give all
Holders the opportunity to participate therein and shall follow the
notification procedures set forth in the preceding paragraph. There
is no limitation on the number of such Incidental Registrations
pursuant to this Section 2.2 which the Company is obligated to
effect.
(iii) The registration rights granted pursuant to the
provisions of this Section 2.2 shall be in addition to the
registration rights granted pursuant to the other provisions of
Section 2 hereof.
(b) Priority in Incidental Registration. If an Incidental
Registration involves an Underwritten Offering (on a firm commitment basis),
and the sole or the lead managing Underwriter, as the case may be, of such
Underwritten Offering shall advise the Company in writing (with a copy to each
Holder requesting registration) on or before the date two days prior to the
date then scheduled for such offering that, in its opinion, the amount of
securities (including Registrable Securities) requested to be included in such
registration exceeds the amount which can be sold in such offering without
materially interfering with the successful marketing of the securities being
offered (such writing to state the approximate number of such securities which
may be included in such offering without such effect), the Company shall
include in such registration, to the extent of the number which the Company is
so advised may be included in such offering without such effect, (i) in the
case of a registration initiated by the Company, (A) first, the securities
that the Company proposes to register for its own account, (B) second, the
Registrable Securities requested to be included in such registration by the
Holders, allocated pro rata in proportion to the number of Registrable
Securities requested to be included in such registration by each of them, and
(C) third, other securities of the Company to be registered on behalf of any
other Person, and (ii) in the case of a registration initiated by a Person
-9-
other than the Company, (A) first, the Registrable Securities requested to be
included in such registration by the Holders and by any Persons initiating
such registration, allocated pro rata in proportion to the number of
securities requested to be included in such registration by each of them, (B)
second, the securities that the Company proposes to register for its own
account, and (C) third, other securities of the Company to be registered on
behalf of any other Person; provided, however, that in the event the Company
will not, by virtue of this Section 2.2(b), include in any such registration
all of the Registrable Securities of any Holder requested to be included in
such registration, such Holder may, upon written notice to the Company given
within three days of the time such Holder first is notified of such matter,
reduce the amount of Registrable Securities it desires to have included in
such registration, whereupon only the Registrable Securities, if any, it
desires to have included will be so included and the Holders not so reducing
shall be entitled to a corresponding pro rata increase in the amount of
Registrable Securities to be included in such registration.
(c) Approval of Underwriters. If any Incidental Registration
involves an Underwritten Offering, the sole or managing Underwriter(s) and any
additional investment bankers and managers to be used in connection with such
registration shall be subject to the approval of the Majority Holders of the
Registration (such approval not to be unreasonably withheld).
2.3 S-3 Registration; Shelf Registration.
(a) S-3 Registration. If at any time (i) one or more Holders of
Registrable Securities representing 25% or more of the Registrable Securities
then outstanding request that the Company file a registration statement on
Form S-3 or any successor form thereto for a public offering of all or any
portion of the shares of Registrable Securities held by such Holder or
Holders, the reasonably anticipated aggregate price to the public of which
would exceed $5,000,000, and (ii) the Company is a registrant entitled to use
Form S-3 or any successor form thereto to register such securities, then the
Company shall, as expeditiously as possible following such Request, use its
commercially reasonable best efforts to register under the Securities Act on
Form S-3 or any successor form thereto, for public sale in accordance with the
intended methods of disposition specified in such Request or any subsequent
requests (including, without limitation, by means of a Shelf Registration) the
Registrable Securities specified in such Request and any subsequent requests;
provided, that if such registration is for an Underwritten Offering, the terms
of Sections 2.1(b) and 2.1(d) shall apply (and any reference to "Demand
Registration" therein shall, for purposes of this Section 2.3, instead be
deemed a reference to "S-3 Registration"). If the sole or lead managing
Underwriter (if any) or the Majority Holders of the Registration shall advise
the Company in writing that in its opinion additional disclosure not required
by Form S-3 is of material importance to the success of the offering, then
such Registration Statement shall include such additional disclosure. Whenever
the Company is required by this Section 2.3 to use its commercially reasonable
best efforts to effect the registration of Registrable Securities, each of the
procedures and requirements of Section 2.1(a) and 2.1(e) (including but not
limited to the requirements that the Company (A) notify all Holders of
Registrable Securities from whom such Request for registration has not been
received and provide them with the opportunity to participate in the offering
and (B) use its commercially reasonable best efforts to have such S-3
Registration Statement declared and remain effective for the time period
specified herein) shall apply to such registration (and any reference in such
-10-
Sections 2.1(a) and 2.1(e) to "Demand Registration" shall, for purposes of
this Section 2.3, instead be deemed a reference to "S-3 Registration").
Notwithstanding anything to the contrary contained herein, no Request may be
made under this Section 2.3 within 90 days after the effective date of a
Registration Statement filed by the Company covering a firm commitment
Underwritten Offering in which the Holders of Registrable Securities shall
have been entitled to join pursuant to this Agreement in which there shall
have been effectively registered all shares of Registrable Securities as to
which registration shall have been requested. There is no limitation on the
number of S-3 Registrations that the Company is obligated to effect.
The registration rights granted pursuant to the provisions of this
Section 2.3(a) shall be in addition to the registration rights granted
pursuant to the other provisions of this Section 2.
(b) Shelf Registration. If a request made pursuant to Section 2.1
or 2.3(a) is for a Shelf Registration, the Company shall use its commercially
reasonable best efforts to keep the Shelf Registration continuously effective
through the date on which all of the Registrable Securities covered by such
Shelf Registration may be sold pursuant to Rule 144(k) under the Securities
Act (or any successor provision having similar effect); provided, however,
that prior to the termination of such Shelf Registration, the Company shall
first furnish to each Holder of Registrable Securities participating in such
Shelf Registration (i) an opinion, in form and substance satisfactory to the
Majority Holders of the Registration, of counsel for the Company satisfactory
to the Majority Holders of the Registration which shall state that such
Registrable Securities are freely saleable pursuant to Rule 144(k) under the
Securities Act (or any successor provision having similar effect) or (ii) a
"No-Action Letter" from the staff of the SEC which shall state that the SEC
would not recommend enforcement action if the Registrable Securities included
in such Shelf Registration were sold in a public sale other than pursuant to
an effective registration statement.
2.4 Expenses. The Company shall pay all Registration Expenses in
connection with any Demand Registration, Incidental Registration, S-3
Registration or Shelf Registration, whether or not such registration shall
become effective and whether or not all Registrable Securities originally
requested to be included in such registration are withdrawn or otherwise
ultimately not included in such registration, except as otherwise provided
with respect to a Withdrawn Request and a Withdrawn Demand Registration in
Section 2.1(a).
2.5 Underwritten Offerings.
(a) Demand Underwritten Offerings. If requested by the sole or
lead managing Underwriter for any Underwritten Offering effected pursuant to a
Demand Registration or an S-3 Registration, the Company shall enter into a
customary underwriting agreement with the Underwriters for such offering, such
agreement to be reasonably satisfactory in substance and form to each Holder
of Registrable Securities participating in such offering and to contain such
representations and warranties by the Company and such other terms as are
generally prevailing in agreements of that type, including, without
limitation, indemnification and contribution provisions to the effect and to
the extent provided in Section 5.
-11-
(b) Holders of Registrable Securities to be Parties to
Underwriting Agreement. The Holders of Registrable Securities to be
distributed by Underwriters in an Underwritten Offering contemplated by
Section 2 shall be parties to the underwriting agreement between the Company
and such Underwriters and may, at such Holders' option, require that any or
all of the representations and warranties by, and the other agreements on the
part of, the Company to and for the benefit of such Underwriters shall also be
made to and for the benefit of such Holders of Registrable Securities and that
any or all of the conditions precedent to the obligations of such Underwriters
under such underwriting agreement be conditions precedent to the obligations
of such Holders of Registrable Securities; provided, however, that the Company
shall not be required to make any representations or warranties with respect
to written information specifically provided by a selling Holder for inclusion
in the Registration Statement. No Holder shall be required to make any
representations or warranties to, or agreements with, the Company or the
Underwriters other than representations, warranties or agreements regarding
such Holder, such Holder's Registrable Securities and such Holder's intended
method of disposition.
(c) Participation in Underwritten Registration. Notwithstanding
anything herein to the contrary, no Person may participate in any underwritten
registration hereunder unless such Person (i) agrees to sell its securities on
the same terms and conditions provided in any underwritten arrangements
approved by the Persons entitled hereunder to approve such arrangement and
(ii) accurately completes and executes in a timely manner all questionnaires,
powers of attorney, indemnities, custody agreements, underwriting agreements
and other documents reasonably required under the terms of such underwriting
arrangements.
2.6 Conversions; Exercises. Notwithstanding anything to the contrary
herein, in order for any Registrable Securities that are issuable upon the
exercise of conversion rights, options or warrants to be included in any
registration pursuant to Section 2 hereof, the exercise of such conversion
rights, options or warrants must be effected no later than immediately prior
to the closing of any sales under the Registration Statement pursuant to which
such Registrable Securities are to be sold.
Section 3. HOLDBACK ARRANGEMENTS.
3.1 Restrictions on Sale by Holders of Registrable Securities. By
acquisition of Registrable Securities, each Holder of Registrable Securities
agrees, if timely requested in writing by the sole or lead managing
Underwriter in an Underwritten Offering of any Registrable Securities, not to
make any short sale of, loan, grant any option for the purchase of, or effect
any public sale or distribution, including a sale pursuant to Rule 144 (or any
successor provision having similar effect) under the Securities Act of any
Registrable Securities or any other equity security of the Company (or any
security convertible into or exchangeable or exercisable for any equity
security of the Company) (except as part of such underwritten registration),
during the time period reasonably requested by the sole or lead managing
Underwriter not to exceed 90 days, beginning on the effective date of the
applicable Registration Statement (not to exceed 120 days in any 360 day
period in the aggregate), unless the sole or lead Managing Underwriter in such
Underwritten Offering otherwise agrees; provided, that such restriction shall
only apply after such Holders of Registrable Securities have received
notification in writing from the Company that the Company has received written
agreements (and provides such Holders of
-12-
Registrable Securities with copies of same) from the Company's officers,
directors and each holder of 5% or more of the equity securities of the
Company (or any security convertible into or exchangeable or exercisable for
any of its equity securities) then outstanding to comply with Section 3.2
hereof; (provided, however, that to the extent the Company or the sole or lead
Managing Underwriter releases any Person from the foregoing restrictions in
whole or in part it shall, on the same day, notify the Initial Holders of such
release and such parties shall be automatically released to the same extent)
and; provided, further, that except in connection with an Initial Public
Offering, such restrictions shall only apply to a Holder of Registrable
Securities participating in the applicable offering.
3.2 Restrictions on Sale by the Company and Others. The Company
agrees that if timely requested in writing by the sole or lead managing
Underwriter in an Underwritten Offering of any Registrable Securities, (i) not
to make any short sale of, loan, grant any option for the purchase of, or
effect any public or private sale or distribution of any of the Company's
equity securities (or any security convertible into or exchangeable or
exercisable for any of the Company's equity securities) during the time period
reasonably requested by the sole or lead managing Underwriter not to exceed
180 days, beginning on the effective date of the applicable Registration
Statement (except as part of such underwritten registration or pursuant to
registrations on Forms S-4 or S-8 or any successor form to such forms), and
(ii) it will cause each officer and director who currently holds or acquires
equity securities (or any security convertible into or exchangeable or
exercisable for any of its equity securities) directly from the Company at any
time after the date of this Agreement (other than in a registered public
offering) and each holder of 5% or more of the equity securities of the
Company (or any security convertible into or exchangeable or exercisable for
any of its equity securities) purchased directly from the Company at any time
after the date of this Agreement (other than in a registered public offering)
to so agree; provided that except in connection with an Initial Public
Offering, such restrictions shall only apply to Holders participating in the
applicable offering.
3.3 Confidentiality of Notices. Any Holder receiving any written
notice from the Company regarding the Company's plans to file a registration
statement shall treat such notice confidentially and shall not disclose such
information to any person other than as necessary to exercise its rights under
this Agreement.
Section 4. REGISTRATION PROCEDURES.
4.1 Obligations of the Company. Whenever the Company is required to
effect the registration of Registrable Securities under the Securities Act
pursuant to Section 2 of this Agreement, the Company shall, as expeditiously
as possible:
(a) prepare and file with the SEC (promptly, and in any event
within 30 days after receipt of a request to register Registrable Securities)
the requisite Registration Statement to effect such registration, which
Registration Statement shall comply as to form in all material respects with
the requirements of the applicable form and include all financial statements
required by the SEC to be filed therewith, and the Company shall use its
commercially reasonable best efforts to cause such Registration Statement to
become effective (provided, that the Company may discontinue any registration
of its securities that are not Registrable Securities, and, under the
circumstances specified in Section 2.2, its securities that are Registrable
-13-
Securities); provided, however, that before filing a Registration Statement or
Prospectus or any amendments or supplements thereto, or comparable statements
under securities or blue sky laws of any jurisdiction, the Company shall (i)
provide Holders' Counsel and any other Inspector with an adequate and
appropriate opportunity to participate in the preparation of such Registration
Statement and each Prospectus included therein (and each amendment or
supplement thereto or comparable statement) to be filed with the SEC, which
documents shall be subject to the review and comment of Holders' Counsel, and
(ii) not file any such Registration Statement or Prospectus (or amendment or
supplement thereto or comparable statement) with the SEC to which Holder's
Counsel, any selling Holder or any other Inspector shall have reasonably
objected on the grounds that such filing does not comply in all material
respects with the requirements of the Securities Act or of the rules or
regulations thereunder;
(b) prepare and file with the SEC such amendments and supplements
to such Registration Statement and the Prospectus used in connection therewith
as may be necessary (i) to keep such Registration Statement effective and (ii)
to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such Registration
Statement, in each case until such time as all of such Registrable Securities
have been disposed of in accordance with the intended methods of disposition
by the seller(s) thereof set forth in such Registration Statement;
(c) furnish, without charge, to each selling Holder of such
Registrable Securities and each Underwriter, if any, of the securities covered
by such Registration Statement, such number of copies of such Registration
Statement, each amendment and supplement thereto (in each case including all
exhibits), and the Prospectus included in such Registration Statement
(including each preliminary Prospectus) in conformity with the requirements of
the Securities Act, and other documents, as such selling Holder and
Underwriter may reasonably request in order to facilitate the public sale or
other disposition of the Registrable Securities owned by such selling Holder
(the Company hereby consenting to the use in accordance with applicable law of
each such Registration Statement (or amendment or post-effective amendment
thereto) and each such Prospectus (or preliminary prospectus or supplement
thereto) by each such selling Holder of Registrable Securities and the
Underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by such Registration Statement or Prospectus);
(d) prior to any public offering of Registrable Securities, use
its commercially reasonable best efforts to register or qualify all
Registrable Securities and other securities covered by such Registration
Statement under such other securities or blue sky laws of such jurisdictions
as any selling Holder of Registrable Securities covered by such Registration
Statement or the sole or lead managing Underwriter, if any, may reasonably
request to enable such selling Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such selling Holder and
to continue such registration or qualification in effect in each such
jurisdiction for as long as such Registration Statement remains in effect
(including through new filings or amendments or renewals), and do any and all
other acts and things which may be necessary or advisable to enable any such
selling Holder to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such selling Holder; provided, however, that
the Company shall not be required to (i) qualify generally to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this Section 4.1(d),
-14-
(ii) subject itself to taxation in any such jurisdiction, or (iii) consent
to general service of process in any such jurisdiction;
(e) use its commercially reasonable best efforts to obtain all
other approvals, consents, exemptions or authorizations from such governmental
agencies or authorities as may be necessary to enable the selling Holders of
such Registrable Securities to consummate the disposition of such Registrable
Securities;
(f) promptly notify Holders' Counsel, each Holder of Registrable
Securities covered by such Registration Statement and the sole or lead
managing Underwriter, if any: (i) when the Registration Statement, any
pre-effective amendment, the Prospectus or any prospectus supplement related
thereto or post-effective amendment to the Registration Statement has been
filed and, with respect to the Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any request by the SEC
or any state securities or blue sky authority for amendments or supplements to
the Registration Statement or the Prospectus related thereto or for additional
information, (iii) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation or threat of any
proceedings for that or a similar purpose, (iv) of the receipt by the Company
of any notification with respect to the suspension of the qualification of any
Registrable Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation of any proceeding for such purpose, (v) of the
existence of any fact of which the Company becomes aware or the happening of
any event which results in (A) the Registration Statement containing an untrue
statement of a material fact or omitting to state a material fact required to
be stated therein or necessary to make any statements therein not misleading
or (B) the Prospectus included in such Registration Statement containing an
untrue statement of a material fact or omitting to state a material fact
required to be stated therein or necessary to make any statements therein, in
the light of the circumstances under which they were made, not misleading,
(vi) if at any time the representations and warranties contemplated by Section
2.5(b) cease to be true and correct in all material respects, and (vii) of the
Company's reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate or that there exists circumstances
not yet disclosed to the public which make further sales under such
Registration Statement inadvisable pending such disclosure and post-effective
amendment; and, if the notification relates to an event described in any of
the clauses (ii) through (vii) of this Section 4.1(f), the Company shall
promptly prepare a supplement or post-effective amendment to such Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that (1) such Registration
Statement shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and (2) as thereafter delivered to the
purchasers of the Registrable Securities being sold thereunder, such
Prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein in the light of the circumstances under which they were
made not misleading (and shall furnish to each such Holder and each
Underwriter, if any, a reasonable number of copies of such Prospectus so
supplemented or amended); and if the notification relates to an event
described in clause (iii) of this Section 4.1(f), the Company shall take all
reasonable action required to prevent the entry of such stop order or similar
action or to remove it if entered;
-15-
(g) make available during normal business hours for inspection by
any selling Holder of Registrable Securities, any sole or lead managing
Underwriter participating in any disposition pursuant to such Registration
Statement, Holders' Counsel and any accountant retained by any such seller or
any Underwriter (each, an "Inspector" and, collectively, the "Inspectors"),
all financial and other records, pertinent corporate documents and properties
of the Company and any subsidiaries thereof as may be in existence at such
time (collectively, the "Records") as shall be reasonably necessary, in the
opinion of such Holders' and such Underwriters' respective counsel, to enable
them to exercise their due diligence responsibility and to conduct a
reasonable investigation within the meaning of the Securities Act, and cause
the Company's and any subsidiaries' officers, directors and employees, and the
independent public accountants of the Company, to supply all information
reasonably requested by any such Inspectors in connection with such
Registration Statement; provided, however, that such inspection shall be
limited to a reasonable period of time within which to review such material
and information;
(h) obtain an opinion from the Company's counsel and a "cold
comfort" letter from the Company's independent public accountants who have
certified the Company's financial statements included or incorporated by
reference in such Registration Statement, in each case dated the effective
date of such Registration Statement (and if such registration involves an
Underwritten Offering, dated the date of the closing under the underwriting
agreement), in customary form and covering such matters as are customarily
covered by such opinions and "cold comfort" letters delivered to underwriters
in underwritten public offerings, which opinion and letter shall be reasonably
satisfactory to the sole or lead managing Underwriter, if any, and to the
Majority Holders of the Registration, and furnish to each Holder participating
in the offering and to each Underwriter, if any, a copy of such opinion and
letter addressed to such Holder (in the case of the opinion) and Underwriter
(in the case of the opinion and the "cold comfort" letter);
(i) provide a CUSIP number for all Registrable Securities and
provide and cause to be maintained a transfer agent and registrar for all such
Registrable Securities covered by such Registration Statement not later than
the effectiveness of such Registration Statement;
(j) otherwise use its commercially reasonable best efforts to
comply with all applicable rules and regulations of the SEC and any other
governmental agency or authority having jurisdiction over the offering, and
make available to its security holders, as soon as reasonably practicable but
no later than 90 days after the end of any 12-month period, an earnings
statement (i) commencing at the end of any month in which Registrable
Securities are sold to Underwriters in an Underwritten Offering and (ii)
commencing with the first day of the Company's calendar month next succeeding
each sale of Registrable Securities after the effective date of a Registration
Statement, which statement shall cover such 12-month periods, in a manner
which satisfies the provisions of Section 11(a) of the Securities Act and Rule
158 thereunder;
(k) use its commercially reasonable best efforts to cause all
Registrable Securities of the Registration to be listed on each securities
exchange on which similar securities issued by the Company are then listed
and, if no such securities are so listed, use its commercially reasonable best
efforts to cause such Registrable Securities to be listed on the New
-16-
York Stock Exchange, the American Stock Exchange or the NASDAQ Stock Market's
National Market; provided however, such obligation shall only exist to the
extent that there are a sufficient number of independent directors then in
office to meet the requirements of the applicable exchange;
(l) keep each selling Holder of Registrable Securities advised in
writing as to the initiation and progress of any registration under Section 2
hereunder;
(m) enter into and perform customary agreements (including, if
applicable, an underwriting agreement in customary form) and provide officers'
certificates and other customary closing documents;
(n) cooperate with each selling Holder of Registrable Securities
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 NASD and make reasonably available its employees
and personnel and otherwise provide reasonable assistance to the Underwriters
(taking into account the needs of the Company's businesses and the
requirements of the marketing process) in the marketing of Registrable
Securities in any Underwritten Offering;
(o) furnish to each Holder participating in the offering and the
sole or lead managing Underwriter, if any, without charge, at least one
manually-signed copy of the Registration Statement and any post-effective
amendments thereto, including financial statements and schedules, all
documents incorporated therein by reference and all exhibits (including those
deemed to be incorporated by reference);
(p) cooperate with the selling Holders of Registrable Securities
and the sole or lead managing Underwriter, if any, to facilitate the timely
preparation and delivery of certificates not bearing any restrictive legends
representing the Registrable Securities to be sold, and cause such Registrable
Securities to be issued in such denominations and registered in such names in
accordance with the underwriting agreement prior to any sale of Registrable
Securities to the Underwriters or, if not an Underwritten Offering, in
accordance with the instructions of the selling Holders of Registrable
Securities at least three business days prior to any sale of Registrable
Securities;
(q) if requested by the sole or lead managing Underwriter or any
selling Holder of Registrable Securities, immediately incorporate in a
prospectus supplement or post-effective amendment such information concerning
such Holder of Registrable Securities, the Underwriters or the intended method
of distribution as the sole or lead managing Underwriter or the selling Holder
of Registrable Securities reasonably requests to be included therein and as is
appropriate in the reasonable judgment of the Company, including, without
limitation, information with respect to the number of shares of the
Registrable Securities being sold to the Underwriters, the purchase price
being paid therefor by such Underwriters and with respect to any other terms
of the Underwritten Offering of the Registrable Securities to be sold in such
offering; make all required filings of such Prospectus supplement or
post-effective amendment as soon as notified of the matters to be incorporated
in such Prospectus supplement or post-effective amendment; and supplement or
make amendments to any Registration Statement if requested by the sole or lead
managing Underwriter of such Registrable Securities; and
-17-
(r) use its commercially reasonable best efforts to take all other
steps necessary to expedite or facilitate the registration and disposition of
the Registrable Securities contemplated hereby.
4.2 Seller Information. (a) The Company may require each selling
Holder of Registrable Securities as to which any registration is being
effected to furnish to the Company such information regarding such Holder,
such Holder's Registrable Securities and such Holder's intended method of
disposition as the Company may from time to time reasonably request in
writing; provided, that such information shall be used only in connection with
such registration.
(b) If any Registration Statement or comparable statement under
"blue sky" laws refers to any Holder by name or otherwise as the Holder of any
securities of the Company, then such Holder shall have the right to require
(i) the insertion therein of language, in form and substance satisfactory to
such Holder and the Company, to the effect that the holding by such Holder of
such securities is not to be construed as a recommendation by such Holder of
the investment quality of the Company's securities covered thereby and that
such holding does not imply that such Holder will assist in meeting any future
financial requirements of the Company, and (ii) in the event that such
reference to such Holder by name or otherwise is not in the judgment of the
Company, as advised by counsel, required by the Securities Act or any similar
federal statute or any state "blue sky" or securities law then in force, the
deletion of the reference to such Holder.
4.3 Notice to Discontinue. Each Holder of Registrable Securities
agrees by acquisition of such Registrable Securities that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 4.1(f)(ii) through (vii), such Holder shall forthwith discontinue
disposition of Registrable Securities pursuant to the Registration Statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 4.1(f) and,
if so directed by the Company, such Holder shall deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such Holder's possession of the Prospectus covering such Registrable
Securities which is current at the time of receipt of such notice. If the
Company shall give any such notice, the Company shall extend the period during
which such Registration Statement shall be maintained effective pursuant to
this Agreement (including, without limitation, the period referred to in
Section 4.1(b)) by the number of days during the period from and including the
date of the giving of such notice pursuant to Section 4.1(f) to and including
the date when the Holder shall have received the copies of the supplemented or
amended prospectus contemplated by and meeting the requirements of Section
4.1(f).
Section 5. INDEMNIFICATION; CONTRIBUTION.
5.1 Indemnification by the Company. The Company agrees to indemnify
and hold harmless, to the fullest extent permitted by law, each Holder of
Registrable Securities, its officers, directors, partners, members,
shareholders, employees, Affiliates and agents (collectively, "Agents") and
each Person who controls such Holder (within the meaning of the Securities
Act) and its Agents with respect to each registration which has been effected
pursuant to this Agreement, against any and all losses, claims, damages or
liabilities, joint or several, actions or proceedings (whether commenced or
threatened) in respect thereof, and expenses (as
-18-
incurred or suffered and including, but not limited to, any and all expenses
incurred in investigating, preparing or defending any litigation or
proceeding, whether commenced or threatened, and the reasonable fees,
disbursements and other charges of legal counsel) in respect thereof
(collectively, "Claims"), insofar as such Claims arise out of or are based
upon any untrue or alleged untrue statement of a material fact contained in
any Registration Statement or Prospectus (including any preliminary, final or
summary prospectus and any amendment or supplement thereto) related to any
such registration or any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act or any rule
or regulation thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration, or
any qualification or compliance incident thereto; provided, however, that the
Company will not be liable in any such case to the extent that any such Claims
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact or omission or alleged omission of a material
fact so made in reliance upon and in conformity with written information
furnished to the Company in an instrument duly executed by such Holder
specifically stating that it was expressly for use therein. The Company shall
also indemnify any Underwriters of the Registrable Securities, their Agents
and each Person who controls any such Underwriter (within the meaning of the
Securities Act) to the same extent as provided above with respect to the
indemnification of the Holders of Registrable Securities. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of any Person who may be entitled to indemnification pursuant to this
Section 5 and shall survive the transfer of securities by such Holder or
Underwriter.
5.2 Indemnification by Holders. Each Holder, if Registrable
Securities held by it are included in the securities as to which a
registration is being effected, agrees to, severally and not jointly,
indemnify and hold harmless, to the fullest extent permitted by law, the
Company, its directors and officers, each other Person who participates as an
Underwriter in the offering or sale of such securities and its Agents and each
Person who controls the Company or any such Underwriter (within the meaning of
the Securities Act) and its Agents against any and all Claims, insofar as such
Claims arise out of or are based upon any untrue or alleged untrue statement
of a material fact contained in any Registration Statement or Prospectus
(including any preliminary, final or summary prospectus and any amendment or
supplement thereto) related to such registration, or 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, to the extent, but
only to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company in an instrument duly executed by
such Holder specifically stating that it was expressly for use therein;
provided, however, that the aggregate amount which any such Holder shall be
required to pay pursuant to this Section 5.2 shall in no event be greater than
the amount of the net proceeds received by such Holder upon the sale of the
Registrable Securities pursuant to the Registration Statement giving rise to
such Claims less all amounts previously paid by such Holder with respect to
any such Claims. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such indemnified party
and shall survive the transfer of such securities by such Holder or
Underwriter.
5.3 Conduct of Indemnification Proceedings. Promptly after receipt by
an indemnified party of notice of any Claim or the commencement of any action
or proceeding
-19-
involving a Claim under this Section 5, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party pursuant
to Section 5, (a) notify the indemnifying party in writing of the Claim or the
commencement of such action or proceeding; provided, that the failure of any
indemnified party to provide such notice shall not relieve the indemnifying
party of its obligations under this Section 5, except to the extent the
indemnifying party is materially and actually prejudiced thereby and shall not
relieve the indemnifying party from any liability which it may have to any
indemnified party otherwise than under this Section 5, and (b) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that any indemnified
party shall have the right to employ separate counsel and to participate in
the defense of such claim, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the indemnifying party has
agreed in writing to pay such fees and expenses, (ii) the indemnifying party
shall have failed to assume the defense of such claim and employ counsel
reasonably satisfactory to such indemnified party within 10 days after
receiving notice from such indemnified party that the indemnified party
believes it has failed to do so, (iii) in the reasonable judgment of any such
indemnified party, based upon advice of counsel, a conflict of interest may
exist between such indemnified party and the indemnifying party with respect
to such claims (in which case, if the 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 claim on behalf of such indemnified party)
or (D) such indemnified party is a defendant in an action or proceeding which
is also brought against the indemnifying party and reasonably shall have
concluded that there may be one or more legal defenses available to such
indemnified party which are not available to the indemnifying party. No
indemnifying party shall be liable for any settlement of any such claim or
action effected without its written consent, which consent shall not be
unreasonably withheld. In addition, without the consent of the indemnified
party (which consent shall not be unreasonably withheld), no indemnifying
party shall be permitted to consent to entry of any judgment with respect to,
or to effect the settlement or compromise of any pending or threatened action
or claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential
party to such action or claim), unless such settlement, compromise or judgment
(1) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim, (2) does not include a
statement as to or an admission of fault, culpability or a failure to act, by
or on behalf of any indemnified party, and (3) does not provide for any action
on the part of any party other than the payment of money damages which is to
be paid in full by the indemnifying party.
5.4 Contribution. If the indemnification provided for in Section 5.1
or 5.2 from the indemnifying party for any reason is unavailable to (other
than by reason of exceptions provided therein), or is insufficient to hold
harmless, an indemnified party hereunder in respect of any Claim, then 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 Claim in such proportion as is appropriate to reflect the relative
fault of the indemnifying party, on the one hand, and the indemnified party,
on the other hand, in connection with the actions which resulted in such
Claim, as well as any other relevant equitable considerations. The relative
fault of such indemnifying party and indemnified party shall be determined by
reference to, among other things, whether any action in question, including
any untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact, has been made by, or relates
-20-
to information supplied by, such indemnifying party or indemnified party, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such action. If, however, the foregoing allocation is
not permitted by applicable law, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party in such proportion as
is appropriate to reflect not only such relative faults but also the relative
benefits of the indemnifying party and the indemnified party as well as any
other relevant equitable considerations.
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 the immediately preceding
paragraph. The amount paid or payable by a party as a result of any Claim
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth in Section 5.3, any legal or other fees,
costs or expenses reasonably incurred by such party in connection with any
investigation or proceeding. Notwithstanding anything in this Section 5.4 to
the contrary, no indemnifying party (other than the Company) shall be required
pursuant to this Section 5.4 to contribute any amount in excess of the net
proceeds received by such indemnifying party from the sale of the Registrable
Securities pursuant to the Registration Statement giving rise to such Claims,
less all amounts previously paid by such indemnifying party with respect to
such Claims. 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.
5.5 Other Indemnification. Indemnification similar to that specified
in the preceding Sections 5.1 and 5.2 (with appropriate modifications) shall
be given by the Company and each selling Holder of Registrable Securities with
respect to any required registration or other qualification of securities
under any Federal or state law or regulation of any governmental authority,
other than the Securities Act. The indemnity agreements contained herein shall
be in addition to any other rights to indemnification or contribution which
any indemnified party may have pursuant to law or contract.
5.6 Indemnification Payments. The indemnification and contribution
required by this Section 5 shall be made by periodic payments of the amount
thereof during the course of any investigation or defense, as and when bills
are received or any expense, loss, damage or liability is incurred.
Section 6. GENERAL PROVISIONS REGARDING REGISTRATIONS.
6.1 Adjustments Affecting Registrable Securities. The Company agrees
that it shall not effect or permit to occur any combination or subdivision of
shares which would adversely affect the ability of the Holder of any
Registrable Securities to include such Registrable Securities in any
registration contemplated by this Agreement or the marketability of such
Registrable Securities in any such registration.
6.2 Registration Rights to Others. Since the filing of the Second
Amended Joint Plan of Reorganization filed by the Company with the Bankruptcy
Court, dated as of April 3, 2002 as modified, the Company has not previously
entered into an agreement with respect to its
-21-
securities granting any registration rights to any Person. If the Company
shall at any time hereafter provide to any holder of any securities of the
Company rights with respect to the registration of such securities under the
Securities Act, (i) such rights shall not be in conflict with or adversely
affect any of the rights provided in this Agreement to the Holders and (ii) if
such rights are provided on terms or conditions more favorable to such holder
than the terms and conditions provided in this Agreement, the Company shall
provide (by way of amendment to this Agreement or otherwise) such more
favorable terms or conditions to the Holders.
6.3 Availability of Information; Rule 144; Rule 144A; Other
Exemptions. If the Company shall have filed a registration statement pursuant
to the requirements of Section 12 of the Exchange Act or a registration
statement pursuant to the requirements of the Securities Act, the Company
covenants that it shall timely file any reports required to be filed by it
under the Securities Act or the Exchange Act (including, but not limited to,
the reports under Sections 13 and 15(d) of the Exchange Act referred to in
subparagraph (c) of Rule 144 under the Securities Act), and that it shall take
such further action as any Holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Registrable Securities without registration under the Securities Act
within the limitation of the exemptions provided by (i) Rule 144 and Rule 144A
under the Securities Act, as such rules may be amended from time to time, or
(ii) any other rule or regulation now existing or hereafter adopted by the
SEC. Upon the request of any Holder of Registrable Securities, the Company
shall deliver to such Holder a written statement as to whether it has complied
with such requirements.
Section 7. GENERAL.
7.1 Amendments and Waivers. The provisions of this Agreement may not
be amended, modified, supplemented or terminated, and waivers or consents to
departures from the provisions hereof may not be given, without the written
consent of the Company and the Majority Holders; provided, however, that (i)
no such amendment, modification, supplement, waiver or consent to departure
shall reduce the aforesaid percentage of Registrable Securities without the
written consent of all of the Holders of Registrable Securities, (ii) no such
amendment, modification, supplement, waiver or consent shall adversely affect
any Holder without the prior written consent of such Holder, and (iii) except
as otherwise set forth in this Section 7.1, nothing herein shall prohibit any
amendment, modification, supplement, termination, waiver or consent to
departure the effect of which is limited only to those Holders who have agreed
to such amendment, modification, supplement, termination, waiver or consent to
departure.
7.2 Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, telecopier, any
courier guaranteeing overnight delivery or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to the applicable
party at the address set forth below or such other address as may hereafter be
designated in writing by such party to the other parties in accordance with
the provisions of this Section:
(i) If to the Company, to:
-22-
ICG Communications, Inc.
000 Xxxxxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxx and Xxxxxx Xxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxx and Xxxxxxx X. Xxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
(ii) If to the Initial Holders, to the address set forth on the
signature pages hereto.
(iii) If to any subsequent Holder, to the address of such
Person set forth in the records of the Company.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; when receipt is
acknowledged, if telecopied; on the next business day, if timely delivered to
a courier guaranteeing overnight delivery; and five days after being deposited
in the mail, if sent first class or certified mail, return receipt requested,
postage prepaid.
7.3 Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs,
successors and permitted assigns (including any permitted transferee of
Registrable Securities) as hereinafter provided. Any Holder may assign to any
transferee of its Registrable Securities (other than a transferee that
acquires such Registrable Securities in a registered public offering or
pursuant to a sale under Rule 144 of the Securities Act (or any successor
rule)), its rights and obligations under this Agreement; provided, however, if
any transferee shall take and hold Registrable Securities, such transferee
shall promptly notify the Company and by taking and holding such Registrable
Securities such transferee shall automatically be entitled to receive the
benefits of and be conclusively deemed to have agreed to be bound by and to
perform all of the terms and provisions of this Agreement as if it were a
party hereto (and shall, for all purposes, be deemed a Holder under this
Agreement). If the Company shall so request, any heir, successor or assign
(including any transferee) shall agree in writing to acquire and hold the
Registrable Securities subject to all of the terms hereof. For purposes of
this Agreement, "successor" for any entity other than a natural person shall
mean a successor to such entity as a result of such entity's merger,
consolidation, sale of substantially all of its assets, or similar
transaction. Except as provided above or otherwise permitted by this
Agreement, neither this Agreement nor any right, remedy, obligation or
liability arising hereunder or by reason hereof shall be assignable by any
Holder or by the Company without the consent of the other parties hereto.
-23-
7.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which, when so executed and delivered, shall be deemed
to be an original, but all of which counterparts, taken together, shall
constitute one and the same instrument.
7.5 Descriptive Headings, Etc. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein. Unless the context of this Agreement
otherwise requires: (a) words of any gender shall be deemed to include each
other gender; (b) words using the singular or plural number shall also include
the plural or singular number, respectively; (c) the words "hereof", "herein"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Section and paragraph references are to the Sections and
paragraphs of this Agreement unless otherwise specified; (d) the word
"including" and words of similar import when used in this Agreement shall mean
"including, without limitation," unless otherwise specified; (e) "or" is not
exclusive; and (f) provisions apply to successive events and transactions.
7.6 Severability. In the event that any one or more of the
provisions, paragraphs, words, clauses, phrases or sentences contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the other remaining provisions,
paragraphs, words, clauses, phrases or sentences hereof shall not be in any
way impaired, it being intended that all rights, powers and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
7.7 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York (without giving effect
to the conflict of laws principles thereof). The parties hereto irrevocably
submit to the exclusive jurisdiction of any state or federal court setting in
the County of New York in the State of New York over any suit, action or
proceeding arising out of or relating to this Agreement. To the fullest extent
they may effectively do so under applicable law, the parties hereto
irrevocably waive and agree not to assert, by way of motion, as a defense or
otherwise, any claim that they are not subject to the jurisdiction of any such
court, any objection that they may now or hereafter have to the laying of the
venue of any such suit, action or proceeding brought in any such court and any
claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
7.8 Remedies; Specific Performance. The parties hereto acknowledge
that money damages would not be an adequate remedy at law if any party fails
to perform in any material respect any of its obligations hereunder, and
accordingly agree that each party, in addition to any other remedy to which it
may be entitled at law or in equity, shall be entitled to seek to compel
specific performance of the obligations of any other party under this
Agreement, without the posting of any bond, in accordance with the terms and
conditions of this Agreement in any court specified in Section 7.7 hereof, and
if any action should be brought in equity to enforce any of the provisions of
this Agreement, none of the parties hereto shall raise the defense that there
is an adequate remedy at law. Except as otherwise provided by law, a delay or
omission by a party hereto in exercising any right or remedy accruing upon any
such breach shall not impair the right or remedy or constitute a waiver of or
acquiescence in any such breach. No remedy shall be
-24-
exclusive of any other remedy. All available remedies shall be cumulative. The
failure to file a Demand Registration Statement within 90 days of a Request
under Section 2.1 or 2.3 shall constitute, in the absence of an injunction
having been imposed or a Withdrawn Request, a breach thereof entitling the
Holders to remedies hereunder.
7.9 Entire Agreement. This Agreement, the Note and Warrant Purchase
Agreement and the Warrant (collectively, the "Other Agreements") are intended
by the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, representations, warranties, covenants or undertakings
relating to such subject matter, other than those set forth or referred to
herein or in the Other Agreements. This Agreement and the Other Agreements
supersede all prior agreements and understandings between the Company and the
other parties to this Agreement with respect to such subject matter.
7.10 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 in writing delivered to the
Company, be treated as the holder of such Registrable Securities for purposes
of any request or other action by any holder or holders of Registrable
Securities pursuant to this Agreement or any determination of any number or
percentage 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.
7.11 Further Assurances. Each party hereto shall do and perform or
cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments and
documents as any other party hereto reasonably may request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
7.12 No Inconsistent Agreements. The Company will not hereafter enter
into any agreement which is inconsistent with the rights granted to the
Holders in this Agreement.
7.13 Construction. The Company and the Initial Holders acknowledge
that each of them has had the benefit of legal counsel of its own choice and
has been afforded an opportunity to review this Agreement with its legal
counsel and that this Agreement shall be construed as if jointly drafted by
the Company and the Holders.
-25-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first written above.
COMPANY:
ICG Communications, Inc.
By: _____________________________
Name:
Title:
INITIAL HOLDERS:
XXXXXXXXX L.L.C.
By: _______________________
Name:
Title:
Notice Address: 000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx
XXXXXX XXXXXXX & CO.,
INCORPORATED
By: _____________________________
Name:
Title:
Notice Address: 0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
X.X. XXXX ASSET MANAGEMENT CO. L.L.C.
as investment manager on behalf of the
beneficial owners of the Common Stock
By: _____________________________
Name:
Title:
Notice Address: 1776 On The Green
00 Xxxx Xxxxx
-00-
Xxxxxxxxxx, XX 00000
Attention: Xxx Xxxxxxxx
-27-
