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