REGISTRATION RIGHTS AGREEMENT
Exhibit
99.4
EXECUTION
VERSION
THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into
as of November 19, 2007 by and among (i) Network CN Inc., a Delaware corporation
(the “Company”) and (ii) (a) Sculptor Finance (MD) Ireland Limited,
Sculptor Finance (AS) Ireland Limited and Sculptor Finance (SI) Ireland Limited,
as the initial purchasers of the Notes (as defined below) and (b) OZ Master
Fund, Ltd., OZ Asia Master Fund, Ltd. and OZ Global Special Investments Master
Fund, L.P., as the initial holders of the Warrants (collectively, the
“Investors”). The Investors are each sometimes referred to
individually as a “Holder” and collectively as the
“Holders”.
This
Agreement is made pursuant to the Note and Warrant Purchase Agreement dated
November 19, 2007 (the “Purchase Agreement”) among the Investors, the
Company, Shanghai Quo Advertising Company Limited and certain other individuals
named therein, which provides for, among other things, the issuance and sale
to
the Investors, in one or more closings, of the Company’s 3% Senior Secured
Convertible Notes due June 30, 2011, for an aggregate principal amount not
exceeding US$50,000,000 (the “Notes”), convertible into Conversion Shares
upon the terms and conditions set forth in the Purchase Agreement and the
Notes. In addition, the Company has agreed to issue to the Investors
at each closing of the Notes, without any further consideration thereof, certain
Warrants (as defined in the Purchase Agreement), exercisable for Warrant Shares
upon the terms and conditions set forth in the Purchase Agreement and the
Warrants. Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Purchase Agreement (as defined below).
As
an
inducement to the Investors to enter into the Purchase Agreement, and in
satisfaction of a condition to the obligations of the Investors thereunder,
the
Company has agreed to grant registration rights with respect to the Registrable
Securities (as hereinafter defined), as follows:
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1.
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Certain
Definitions.
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For
purposes of this Registration Rights Agreement the following terms shall have
the following meanings:
(a) “Aggregate
Purchase Price” means the aggregate purchase price paid at each Closing for
the Notes and Warrants held by the Holders.
(b) “Agreement”
means this Registration Rights Agreement, as the same may be amended from time
to time pursuant to the terms hereof.
(c) “Blue
Sky” means the statutes of any state regulating the sale of corporate
securities within that state.
(d) “Business
Day” means any day other than a Saturday, a Sunday, or a day on which
banking institutions in New York, New York are authorized or required by law
or
executive order to remain closed.
(e) “Closing
Date” means the date on which any Notes and Warrants in the Purchase
Agreement are issued.
(f) “Closing
Price” shall mean, on any day, (i) the closing price of the Shares (or any
other security for which a closing price must be determined) on a national
securities exchange or as quoted on the Nasdaq National Market on such day,
as
reported by the Wall Street Journal (National Edition) or (ii) if the Shares
(or
any such other security) are quoted on the Nasdaq National Market but no sale
occurs on such day, the average of the closing bid and asked prices of the
Shares (or any such other security) on the Nasdaq National Market on such day,
as reported by the Wall Street Journal (National Edition) or (iii) if the Shares
(or any such other security) are not so listed or quoted, the average of the
closing bid and asked prices of the Shares (or any such other security) in
the
U.S. over-the-counter market or (iv) if no such trading market is readily
available, the fair market value of the Shares (or any such other security)
as
determined in good faith by the Board of Directors of the Company or, if such
determination is not satisfactory to the Holders of Registrable Securities
for
whom such determination is being made, by a nationally-recognized investment
banking firm selected by the Company and Holders, the expenses for which shall
be borne equally by the Company and the Holders.
(g) “Commission”
means the Securities and Exchange Commission, or any other federal agency at
the
time administering the Exchange Act or the Securities Act, whichever is the
relevant statute for the particular purpose.
(h) “Company”
has the meaning specified in the first paragraph of this Agreement.
(i) “Default
Event” has the meaning assigned thereto in Section 2(d)
(j)
“Deferral Default Date” has the meaning assigned
thereto in Section 2(d).
(k) “Deferral
Notice” has the meaning assigned thereto in Section 5(b).
(l)
“Deferral Period” has the meaning assigned thereto in Section
5(b).
(m) “Demand
Registration” has the meaning assigned thereto in Section 4(a).
(n)
“Demand Registration Statement” means the registration statement referred
to in Section 4(a), as amended or supplemented by any amendment or supplement,
including post-effective amendments, and all materials incorporated by reference
or explicitly deemed to be incorporated by reference in such registration
statement.
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(o) “Effectiveness
Default Date” has the meaning assigned thereto in Section 2(d).
(p) “Effective
Period” has the meaning assigned thereto in Section 2(a).
(q) “Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
(r) “Filing
Date” means, with respect to the Shelf Registration Statement required to be
filed pursuant to Section 2(a) hereunder, the earlier of (A) the date on which
such Shelf Registration Statement is deemed to be filed initially with the
Commission and (B)(i) the 180th calendar
day
following the date hereof, or (ii) if the Second Closing has not occurred as
of
the 45th
calendar day following the date hereof, then in respect of the Registrable
Securities issuable upon conversion or exercise of the Notes or Warrants issued
at the Initial Closing, the Filing Date shall be the 45th calendar
day
following the date hereof, and with respect of the Registrable Securities,
if
any, issuable upon conversion or exercise of the Notes or Warrants
issued at the Second Closing, the Filing Date shall be as soon as reasonably
practicable following the Second Closing or (iii) if the Second Closing has
occurred by the 45th calendar
day
following the date hereof but the Third Closing has not occurred as of the
120th calendar
day following the date hereof, then in respect of the Registrable Securities
issuable upon conversion or exercise of the Notes or Warrants issued at the
Initial Closing and the Second Closing, the Filing Date shall be the 120th calendar
day
following the date hereof, and in respect of the Registrable Securities, if
any,
issuable upon conversion or exercise of the Notes or Warrants issued at the
Third Closing, the Filing Date shall be as soon as reasonably practicable
following the Third Closing.
(s) “Filing
Default Date” has the meaning assigned thereto in Section 2(d).
(t) “Free
Writing Prospectus” means each free writing prospectus (as defined in Rule
405 under the Securities Act) prepared by or on behalf of the Company or used
or
referred to by the Company in connection with the sale of the
Securities.
(u) “Holder(s)”
has the meaning specified in the recitals to this Agreement.
(v) “Incidental
Registration” means a registration required to be effected by the Company
pursuant to Section 3.
(w) “Incidental
Registration Statement” means the registration statement referred to in
Section 3(a), as amended or supplemented by any amendment or supplement,
including post-effective amendments, and all materials incorporated by reference
or explicitly deemed to be incorporated by reference in such registration
statement.
(x) “Initiating
Holder” has the meaning set forth in Section 4(a).
(y) “Investors”
has the meaning specified in the recitals to this Agreement.
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(z)
(aa) “Issuer
Information” has the meaning set forth in Section 8(a) hereof.
(bb) “Maintenance
Default Date” has the meaning set forth in Section 2(d)(iv).
(cc) “Majority
Holders” shall mean, on any date, holders of the majority of the Shares
constituting Registrable Securities; for the purposes of this definition,
Holders of Notes and Warrants constituting Registrable Securities shall be
deemed to be the Holders of the number of Shares into which such Notes and
Warrants are or would be convertible or exercisable for as of such
date.
(dd)
“Market Price” means, on any date of determination, the average of the
daily Closing Price of the Shares for the immediately preceding ten (10) days
on
which the relevant securities exchanges or trading systems are open for
trading.
(ee) “Material
Event” has the meaning assigned thereto in Section 5(a)(iv).
(ff) “NASD”
shall mean the National Association of Securities Dealers, Inc.
(gg) “NASD
Rules” shall mean the Conduct Rules and the By-Laws of the
NASD.
(hh) “Non-Investor
Registration” has the meaning assigned thereto in Section 4(d).
(ii) “Notes”
has the meaning specified in the recitals of this Agreement.
(jj) “Performance
Default Date” has the meaning assigned thereto in Section 2(d).
(kk) “Person”
means a corporation, association, partnership, organization, business,
individual, government or political subdivision thereof or governmental
agency.
(ll) “Prospectus”
means the prospectus included in any Relevant Registration Statement, including
any preliminary prospectus, and any such prospectus as amended or supplemented
by any amendment or prospectus supplement, including post-effective amendments,
and all materials incorporated by reference or explicitly deemed to be
incorporated by reference in such Prospectus.
(mm) “Purchase
Agreement” has the meaning specified in the first paragraph of this
Agreement.
(nn) “Registrable
Securities” means:
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(i)
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any
Shares issuable upon conversion or exercise of any Notes or Warrants,
until the earliest of (i) their effective registration under the
Securities Act and the resale of all such Shares in accordance with
the
Relevant Registration Statement, (ii) the date on which such Shares
are
(A) sold pursuant to Rule 144 under circumstances in which any legend
borne by such Shares relating to restrictions on transferability
thereof,
under the Securities Act or otherwise, is removed or (B) freely
transferable without restriction under Rule 144(k) or (iii) the date
on
which such Shares cease to be
outstanding.
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(ii)
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any
Shares issued or issuable with respect to the Registrable Securities
by
way of share dividend or share split or in connection with a combination
of shares, recapitalization, merger, consolidation or other reorganization
or otherwise and any capital stock of the Company or voting capital
stock
of the Company issuable upon conversion, exercise or exchange
thereof.
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(oo) “Registration
Expenses” has the meaning assigned thereto in Section 7.
(pp)
“Relevant Registration Statement” means any Demand Registration
Statement, Shelf Registration Statement or Incidental Registration Statement,
as
the context may require.
(qq) “Rule
144,” “Rule 405” and “Rule 415” mean, in each case, such rule
as promulgated under the Securities Act.
(rr) “Securities”
means the Notes, the Warrants, the Conversion Shares and the Warrant
Shares.
(ss)
“Securities Act” means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
(tt) “Shares”
means the shares of common stock of the Company, par value $0.001 per share
or
any other capital stock of the Company into which such shares are
reconstituted.
(uu) “Shelf
Registration Statement” means the shelf registration statement referred to
in Section 2(a), as amended or supplemented by any amendment or supplement,
including post-effective amendments, and all materials incorporated by reference
or explicitly deemed to be incorporated by reference in such Shelf Registration
Statement.
(vv) “Staff”
has the meaning assigned thereto in Section 2(e).
(ww)
“Trading Market Default Date” has the meaning assigned thereto in Section
2(d)(v).
(xx) “Underwritten
Incidental Registration” shall have the meaning assigned thereto in Section
3(b).
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(yy) “Underwritten
Offering” means a sale of securities of the Company to an underwriter or
underwriters for reoffering to the public.
(zz) “Valid
Business Reason” shall have the meaning assigned thereto in Section
5(b).
(aaa) “Warrants”
has the meaning specified in the first paragraph of this Agreement.
Unless
the context otherwise requires, any reference herein to a “Section” or “clause”
refers to a Section or clause, as the case may be, of this Agreement, and the
words “herein,” “hereof” and “hereunder” and other words of similar import refer
to this Agreement as a whole and not to any particular Section or other
subdivision. Unless the context otherwise requires, any reference to a statute,
rule or regulation refers to the same (including any successor statute, rule
or
regulation thereto) as it may be amended from time to time.
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2.
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Mandatory
Registration.
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(a) On
or prior the Filing Date, the Company shall prepare and file with the Commission
a shelf registration statement providing for the registration of, and the sale
by the Holders on a continuous or delayed basis of all of the Registrable
Securities, pursuant to Rule 415, or if Rule 415 is not available for offers
or
sales of Registrable Securities, for such other means of distribution of
Registrable Securities as the Holders may specify. The Company agrees
to use its reasonable best efforts to cause the Shelf Registration Statement
to
become effective within 180 days after the Filing Date and to keep such Shelf
Registration Statement continuously effective until such time as there are
no
longer any Registrable Securities outstanding (the “Effective
Period”). Without prejudice to any registration rights, existing
as of the date hereof, held by the Company’s securityholders with respect to the
Company’s securities, respectively, none of the Company’s securityholders (other
than Holders of Registrable Securities) shall have the right to include any
of
the Company’s securities in the Shelf Registration Statement.
(b) The
Company further agrees that it shall cause the Shelf Registration Statement
and
the related Prospectus and any amendment or supplement thereto, as of the
effective date of the Shelf Registration Statement or such amendment or
supplement, (i) to comply in all material respects with the applicable
requirements of the Securities Act; and (ii) not to contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein (in the case of
the
Prospectus, in the light of the circumstances under which they were made) not
misleading, and the Company agrees to furnish to the Holders of the Registrable
Securities copies of any supplement or amendment prior to its being used or
promptly following its filing with the Commission; provided, however,
that the Company shall have no obligation to deliver to Holders of Registrable
Securities copies of any amendment consisting exclusively of an Exchange Act
report or other Exchange Act filings otherwise publicly available on the
Company’s website. If the Shelf Registration Statement, as amended or
supplemented from time to time, ceases to be effective for any reason at any
time during the Effective Period (other than because all Registrable Securities
registered thereunder shall have been sold pursuant
thereto or shall have otherwise ceased to be Registrable Securities), the
Company shall use its reasonable best efforts to obtain the prompt withdrawal
of
any order suspending the effectiveness thereof.
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(c) Each
Holder of Registrable Securities agrees that if such Holder wishes to sell
Registrable Securities pursuant to the Shelf Registration Statement and related
Prospectus, it will do so only in accordance with Section 5. From and
after the date the Shelf Registration Statement is declared or becomes
effective, the Company shall, as promptly as is practicable, or if the use
of
the Prospectus has been suspended by the Company under Section 5(b) hereof,
within fifteen (15) days after the expiration of the period during which the
use
of the Prospectus is suspended:
(i) if
required by applicable law, file with the Commission a post-effective amendment
to the Shelf Registration Statement or prepare and, if required by applicable
law, file a supplement to the related Prospectus or a supplement or amendment
to
any document incorporated therein by reference or file any other required
document so that the Holder is named as a selling security holder in the Shelf
Registration Statement and the related Prospectus in such a manner as to permit
such Holder to deliver such Prospectus to purchasers of the Registrable
Securities in accordance with applicable law and, if the Company shall file
a
post-effective amendment to the Shelf Registration Statement, use its reasonable
best efforts to cause such post-effective amendment to be declared or to
otherwise become effective under the Securities Act as promptly as is
practicable. Notwithstanding the foregoing, the Company shall not be
required to file more than one post-effective amendment to the Shelf
Registration Statement or supplement to the related Prospectus during any thirty
(30) day period;
(ii) provide
such Holder copies of any documents filed pursuant to Section 2(c)(i);
and
(iii) notify
such Holder as promptly as practicable after the effectiveness under the
Securities Act of any post-effective amendment filed pursuant to Section
2(c)(i).
(d) Upon
the occurrence of any Default Event (as defined below), as partial relief for
the damages suffered therefrom by the Holders (which remedy shall not be
exclusive of any other remedies which are available at law or in equity; and
provided that the Holders shall be entitled to pursue an action of specific
performance of the Company’s obligations under Section 2(a) above and any such
actions at law, in equity, for specific performance or otherwise shall not
require the Holder to post a bond), the Company shall pay to each Holder, as
liquidated damages and not as a penalty (it being agreed that would not be
feasible to ascertain the extent of such damages with precision), such amounts
and at such times as shall be determined pursuant to this Section 2(d). For
such
purposes, each of the following shall constitute a “Default
Event”:
(i) if
the Shelf Registration Statement is not filed with the Commission on or prior
to
the Filing Date (it being understood that if the Company files the Shelf
Registration Statement without affording Holders the opportunity to review
and
comment on the same as required by Section 5(a)(ii), the Company shall not
be
deemed to
have
satisfied this Section 2(d)(i)), then commencing on the day after the Filing
Date (the “Filing Default Date”), the Company shall pay to each Holder of
Registrable Securities, an amount in cash equal to one thirtieth of one percent
of the Aggregate Purchase Price paid by such Holder for each day from the Filing
Default Date until such date that the Shelf Registration Statement is filed,
payable at the end of each 30-day period after the Filing Default Date;
or
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(ii) if
the Shelf Registration Statement is not declared effective and does not
otherwise become effective within 180 days following the Filing Date, then
commencing on the 181st day after
the
Filing Date, (the “Effectiveness Default Date”) the Company
shall pay to each Holder of Registrable Securities, an amount in cash equal
to
one thirtieth of one percent of the Aggregate Purchase Price paid by such Holder
for each day from the Effectiveness Default Date until such date that the Shelf
Registration Statement is declared effective, payable at the end of each 30-day
period after the Effectiveness Default Date; or
(iii) if
the Company has failed to perform their obligations set forth in Sections 2(c)
and 5(a) hereof within the time periods required therein, then commencing on
the
first day after the date by which the Company was required to perform such
obligations (the “Performance Default Date”), the Company shall pay to
each Holder of Registrable Securities, an amount in cash equal to one thirtieth
of one percent of the Aggregate Purchase Price paid by such Holder for each
day
from the Performance Default Date until such date that the obligations set
forth
in Sections 2(c) and 5(a) are performed, payable at the end of each 30-day
period after the Performance Default Date;
(iv) if
at any time during the Effective Period, the Shelf Registration Statement ceases
to be effective (other than pursuant to Section 5(b) hereof) (the
“Maintenance Default Date”), then the Company shall pay to each Holder of
Registrable Securities for each day after the Shelf Registration Statement
ceases to be effective until the date upon which the Shelf Registration
Statement is again declared effective, an amount in cash equal to one thirtieth
of one percent of the Aggregate Purchase Price paid by such Holder with respect
to any Registrable Securities not previously sold or transferred by the Holder
pursuant to the Shelf Registration Statement as of the time it ceased to be
effective, payable at the end of each 30-day period after the Maintenance
Default Date; or
(v) if
the Company’s Shares are suspended, delisted or fail to be quoted on any Trading
Market while the Registrable Securities are still held by the Holder (provided
that such suspension, delisting or failure to be quoted which did not directly
arise out of or result from any action or inaction of the Company shall not
be
deemed to be a suspension or delisting for purposes of this Section 2(d)(v))
(the “Trading Market Default Date”), the Company shall pay to each Holder
of Registrable Securities, an amount in cash equal to one thirtieth of one
percent of the Aggregate Purchase Price paid by such Holder for each
day from the Trading Market Default Date until such date that the Shares are
again listed or quoted on a Trading Market or on which the suspension ends
(as
the case may be), payable at the end of each 30-day period after the Trading
Market Default Date.
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(vi) if
the aggregate duration of Deferral Periods in any period exceeds the number
of
days permitted in respect of such period pursuant to Section 5(b) hereof, then
commencing on the day the aggregate duration of Deferral Periods in any period
exceeds the number of days permitted in respect of such period (and again on
the
first day of any subsequent Deferral Period during such period) (the
“Deferral Default Date”), the Company shall pay to each Holder of
Registrable Securities, an amount in cash equal to one thirtieth of one percent
of the Aggregate Purchase Price paid by such Holder for each day until such
date
of the termination of the Deferral Period that caused the limit on the aggregate
duration of the Deferral Periods in a period set forth in Section 5(b) to be
exceeded, payable at the end of each 30-day period following such Deferral
Default Date;
provided,
however, that the payment obligations of the Company shall not be payable
under more than one clause above for any given period of time. If any
payment under this Section 2(d) is not received by the Holders when such payment
is due, then in addition to any other remedies that may be available to the
Holders, interest at the rate of 1% per 30-day period (prorated for periods
less
than 30 days) shall accrue on the outstanding balance of the delinquent payment
until such delinquent payment is paid in full; provided,
further that the total amount of partial liquidated damages payable
by
the Company pursuant to this Section 2(d) shall be capped at 12% of the
Aggregate Purchase Price paid by Holders under the Purchase
Agreement. The Company’s payment obligations on the Registrable
Securities shall cease to accrue (1) upon the filing of the Shelf Registration
Statement (in the case of clause (i) above), (2) upon the effectiveness of
the
Shelf Registration Statement (in the case of clause (ii) above), (3) upon the
performance by the Company of its obligations set forth in Sections 2(c) and
5(a) hereof within the time periods required therein (in the case of
clause (iii) above), (4) upon the effectiveness of the Shelf Registration
Statement which had ceased to remain effective (in the case of clause (iv)
above), (5) upon the date which the Shares are again listed or quoted on a
Trading Market or on which the suspension ends (as the case may be) (6) upon
the
termination of the Deferral Period that caused the limit on the aggregate
duration of Deferral Periods in a period set forth in Section 5(b) to be
exceeded (in the case of clause (vi) above), or (7) upon the termination of
certain transfer restrictions on the Registrable Securities as a result of
the
application of Rule 144(k) or any successor provision. The foregoing clauses
shall in no way limit the effect of any subsequent Default Event requiring
the
payment by the Company.
The
Company shall notify the Holders
promptly upon the happening of each and every Default Event. Any
Holder may seek any available remedy for the enforcement of this Agreement,
including for the enforcement of the Company’s payment obligation under this
Section 2(d).
(e)
Subject to Section 5(d) and notwithstanding the foregoing, the Holders
acknowledge that the staff of the Commission (the “Staff”) has recently
given enhanced scrutiny to registration statements attempting to register the
resale of shares and warrant shares obtained by purchasers in private placements
and that such Staff reviews have resulted in registrants being denied the use
of
Rule 415 under the Securities Act. Accordingly, notwithstanding
anything herein to the contrary, the Holders agree that the Company shall not
be
obligated to pay any amount of liquidated damages under this Section 2(d) in
the
event that (i) the Company has failed to perform its obligations as set forth
in
Sections 2(c) and 5(a) hereof within the time periods required therein, or
(ii)
the Shelf Registration Statement is not declared effective on or prior to the
Effectiveness Default Date, in each case, as a result, in whole or in part,
of
(A) the failure of any Holder to provide information relating to the Holder
and
its proposed method of sale or any other information concerning the Holder
that
is required by the Commission to be included in the Shelf Registration
Statement, or (B) any delays resulting from questions or issues raised by the
Commission or any other regulatory agency, market or exchange concerning any
Holder (or the affiliates of any Holder) regarding the eligibility of the
Company or the Holders to rely on Rule 415 or relating to a determination by
the
Commission that either the Company or the Holders are ineligible to rely on
Rule
415 under the Securities Act with respect to the registration of any of the
Registrable Securities for resale by the Holders on a continuous or delayed
basis, or (C) the failure to register all of the Registrable Securities required
to be registered hereunder as a result of questions or issues relating to the
eligibility of the Company or the Holders to rely on Rule 415. If two
or more Shelf Registrations are required to be filed pursuant to Section 5(d)
hereof, any additional Shelf Registration Statement filed as a result of issues
relating to the eligibility of the Company or the Holders to rely on Rule 415
after the Company has met its initial obligation under Section 2(a) hereof
shall
not be subject to the partial liquidated damages provisions of Section
2(d).
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(f) A
Shelf Registration Statement pursuant to this Section 2 will not be deemed
to
have become effective unless it has been declared effective by the SEC or is
automatically effective upon filing with the SEC as provided by Rule 462 under
the Securities Act.
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3.
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Incidental
Registration.
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(a) If
at any time from and after the date hereof, the Company proposes to register
any
of its securities under the Securities Act (other than (A) any registration
of
public sales or distributions solely by and for the account of the Company
of
securities issued pursuant to any employee benefit or similar plan or any
dividend reinvestment plan, or (B) pursuant to Section 2 or 4 hereof), either
in
connection with a primary offering for cash for the account of the Company
or a
secondary offering, the Company will, each time it intends to effect such a
registration, give written notice to all Holders at least ten (10) but no more
than thirty (30) business days prior to the expected initial filing of a
Registration Statement with the Commission pertaining thereto, informing such
Holders of its intent to file such Registration Statement, the expected filing
date, and of the Holders’ rights to request the registration of the Registrable
Securities held by such Holder (the “Company Notice”). Upon
the written request of any Holder made within ten (10) business days after
any
such Company Notice is given (which request shall specify the Registrable
Securities intended to be disposed of by such Holder or its transferees and,
unless the applicable registration is intended to effect a primary offering
of
Shares for cash for the account of the Company, the intended method of
distribution thereof), the Company will use its reasonable best efforts to
effect the registration under the Securities Act of all Registrable Securities
which the Company has been so requested to register by such Holders to the
extent required to permit the disposition (in accordance with the intended
methods of distribution thereof or, in the case of a registration which is
intended to effect a primary offering for cash for the account of the Company,
in accordance with the Company’s intended method of distribution) of the
Registrable Securities so requested to be registered, including, if necessary,
by filing with the Commission a post-effective amendment or a supplement to
the
Incidental Registration Statement or the related Prospectus or any document
incorporated therein by reference or by filing
any other required document or otherwise supplementing or amending the
Incidental Registration Statement, if required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Incidental Registration Statement or by the Securities Act, any state securities
or blue sky laws, or any rules and regulations thereunder.
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The
registration rights granted pursuant to the provisions of this Section 3(a)
shall be unlimited and in addition to the registration rights granted pursuant
to the other provisions of this Agreement.
(b) Amount
of Inclusion. The Company shall be required to include in the
Incidental Registration the percentage of the Registrable Securities held by
the
Holders in such registration as will equal the fraction, (x) the numerator
of
which shall be the number of all the Registrable Securities and (y) the
denominator of which shall be the number of shares of the outstanding capital
stock of the Company on a fully-diluted basis, in each case, immediately prior
to the effectiveness of such registration statement. The number of
Registrable Securities to be included in the Incidental Registration shall
be
allocated pro rata among the Holders thereof requesting inclusion in
such Incidental Registration on the basis of the number of securities requested
to be included by all such Holders.
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4.
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Demand
Registration
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(a) At
any time immediately after the Closing Date, any Holder (each, an “Initiating
Holder”), may demand registration (each, a “Demand Registration”)
under the Securities Act, of all or any portion of the Registrable Securities
owned by such Initiating Holder. In order to accomplish such demand, the
Initiating Holder shall send written request of the demand to the Company (which
request shall specify the Registrable Securities intended to be disposed of
by
such Holder or its transferees and the intended method of distribution
thereof). The Company shall, within 10 days of the receipt thereof,
give written notice of such request to all Holders and shall, use their
reasonable best efforts to file as soon as practicable, and in any event within
90 days of the receipt of such request, a registration statement under the
Securities Act covering all Registrable Securities (each, a “Demand
Registration Statement) which the Holders request to be registered within 20
days of the mailing of such notice by the Company, provided,
however, in no event shall the Company be obligated to effect a Demand
Registration unless the Holders propose to sell Registrable Securities at an
aggregate price to the public of at least US$5,000,000 (calculated based on
the
Market Price of the Company’s Shares on the date of filing of the Demand
Registration with respect to such Registrable Securities); provided,
further, that the Company shall not be obligated to effect more
than
three Demand Registrations (except that two or more registration statements
filed in response to one demand shall be counted as one Demand
Registration).
(b) If
the Demand Registration is underwritten and the managing underwriters advise
the
Company in writing that in their opinion the number of Registrable Securities
requested to be included exceeds the number that can be sold in such offering,
at a price reasonably related to fair value, then the Company shall include
in
such registration only the aggregate amount of Registrable Securities that
the
underwriter believes may be sold and shall reduce the amount of Registrable
Securities to be included in such registration, first, as to the
Company, second as to each of the securityholders of the Company,
third as to the Holders (who are not Initiating Holders and who
requested
to participate in such registration pursuant to Section 4(a) hereof) as a group,
if any, pro rata within each group based on the number of Registrable Securities
owned by each such Holder, and fourth as to the Initiating Holders as a
group, pro rata within each group based on the number of Registrable Securities
owned by each Initiating Holder. A registration shall not be considered to
be a
Demand Registration under Section 4, if (i) as a result of the foregoing
allocation, the Initiating Holders are not able to register and sell in the
Demand Registration at least 75% of the Registrable Securities sought to be
included in the Demand Registration Statement by such Holders, (ii) the gross
proceeds of the securities included in the registration on behalf of the Company
constitute at least 20% of the total gross proceeds of the Demand Registration;
(iii) the Demand Registration Statement requested by the Initiating Holders
does
not become effective for any reason within 180 days of the request for Demand
Registration by an Initiating Holder pursuant to Section 4(a); (iv) after the
Demand Registration has become effective, such registration or the related
offer, sale or distribution of Registrable Securities thereunder is interfered
with by any stop order, injunction or other order or requirement of the
Commission or other governmental agency or court for any reason not attributable
to such Initiating Holder and such interference is not thereafter eliminated;
or
(v) the conditions specified in the underwriting agreement, if any, entered
into
in connection with such Demand Registration are not satisfied or waived, other
than by reason of a failure by such Initiating Holders.
11
(c) If
any Demand Registration is underwritten, the selection of investment banker(s)
and manager(s) and the other decisions regarding the underwriting arrangements
for the offering will be made by the Initiating Holders holding a majority
of
the Registrable Securities and be reasonably acceptable to the
Company
(d) If
any holder of the Company’s securities that is not a holder of Registrable
Securities under this Agreement exercises demand registration rights to have
the
Company register its securities under the Securities Act (a “Non-Investor
Registration”) within a period of 30 days before or after the time the
Holder shall have requested a Demand Registration, then the Holder's Demand
Registration shall have priority over the Non-Investor
Registration.
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5.
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Registration
Procedures.
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The
following provisions shall apply to
the Relevant Registration Statement filed pursuant to Sections 2, 3 and 4,
as
the case may be:
(a) the
Company shall:
(i) prepare
and file with the Commission a registration statement on any form which may
be
utilized by the Company and which shall permit the disposition of the
Registrable Securities in accordance with the intended method or methods
thereof, as specified in writing by the Holders of the Registrable Securities,
and use their reasonable best efforts to cause such registration statement
to
become effective in accordance with Section 2(a), 3(a) or 4(a) above, as the
case may be;
12
(ii) before
filing any Relevant Registration Statement or Prospectus or any amendments
or
supplements thereto with the Commission, furnish to the Investors copies of
all
such documents proposed to be filed and use reasonable best efforts to reflect
in each such document when so filed with the Commission such comments as the
Investors reasonably shall propose within three (3) Business Days of the
delivery of such copies to the Investors;
(iii) use
their reasonable best efforts to prepare and file with the Commission such
amendments and post-effective amendments to the Relevant Registration Statement
and file with the Commission any other required document as may be necessary
to
keep such Relevant Registration Statement continuously effective until the
expiration of the Effective Period; cause the related Prospectus to be
supplemented by any required prospectus supplement, and as so supplemented
to be
filed pursuant to Rule 424 (or any similar provisions then in force) under
the
Securities Act; and comply with the provisions of the Securities Act applicable
to it with respect to the disposition of all Registrable Securities covered
by
such Relevant Registration Statement during the Effective Period in accordance
with the intended methods of disposition by the sellers thereof set forth in
such Relevant Registration Statement as so amended or such Prospectus as so
supplemented;
(iv) promptly
notify the Holders of Registrable Securities (A) when such Relevant Registration
Statement or the Prospectus included therein or any amendment or supplement
to
the Prospectus or post-effective amendment has been filed with the Commission,
and, with respect to such Relevant Registration Statement or any post-effective
amendment, when the same has become effective, (B) of any request, following
the
effectiveness of the Relevant Registration Statement, by the Commission or
any
other Federal or state governmental authority for amendments or supplements
to
the Relevant Registration Statement or related Prospectus or for additional
information, (C) of the issuance by the Commission of any stop order suspending
the effectiveness of such Relevant Registration Statement or the initiation
or
written threat of any proceedings for that purpose, including the receipt by
the
Company of any notice of objection of the Commission to the use of a Relevant
Registration Statement or any post-effective amendment thereto pursuant to
Rule
401(g)(2) under the Securities Act, (D) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or written
threat of any proceeding for such purpose, (E) of the occurrence of (but not
the
nature of or details concerning) any event or the existence of any fact (a
“Material Event”) as a result of which any Relevant Registration
Statement shall contain any 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 not misleading, or any Prospectus shall contain any 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 (provided,
however, that no notice by the Company shall be required pursuant to this
clause (E) in the event that the Company either promptly files a prospectus
supplement to update the Prospectus or a Form 8-K or other appropriate Exchange
Act report that is incorporated by reference into the Relevant Registration
Statement, which, in either case, contains the requisite information with
respect to such Material
Event that results in such Relevant Registration Statement no longer containing
any untrue statement of material fact or omitting to state a material fact
necessary to make the statements contained therein not misleading), (F) of
the
determination by the Company that a post-effective amendment to the Relevant
Registration Statement will be filed with the Commission, which notice may,
at
the discretion of the Company (or as required pursuant to Section 5(b)), state
that it constitutes a Deferral Notice, in which event the provisions of Section
5(b) shall apply or (G) at any time when a Prospectus is required to be
delivered under the Securities Act, that the Relevant Registration Statement,
Prospectus, Prospectus amendment or supplement or post-effective amendment
does
not conform in all material respects to the applicable requirements of the
Securities Act and the rules and regulations of the Commission
thereunder;
13
(v) prior
to any public offering of the Registrable Securities pursuant to the Relevant
Registration Statement, use their reasonable best efforts to register or
qualify, or cooperate with the Holders of Registrable Securities included
therein and their respective counsel in connection with the registration or
qualification of, such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as any such Holders reasonably
requests in writing and do any and all other acts or things necessary or
advisable to enable the offer and sale in such jurisdictions of the Registrable
Securities covered by the Relevant Registration Statement; prior to any public
offering of the Registrable Securities pursuant to the Relevant Registration
Statement, use its reasonable best efforts to keep each such registration or
qualification (or exemption therefrom) effective during the Effective Period
in
connection with such Holder’s offer and sale of Registrable Securities pursuant
to such registration or qualification (or exemption therefrom) and do any and
all other acts or things necessary or advisable to enable the disposition in
such jurisdictions of such Registrable Securities in the manner set forth in
the
Relevant Registration Statement and the related Prospectus; provided
that the Company will not be required to qualify generally to do business in
any
jurisdiction where it is not then so qualified or to take any action which
would
subject it to general service of process or to taxation in any such jurisdiction
where it is not then so subject;
(vi) use
its reasonable best efforts to prevent the issuance of, and if issued, to obtain
the withdrawal of any order suspending the effectiveness of the Relevant
Registration Statement or, in the event of an objection of the Commission
pursuant to Rule 401(g)(2), promptly file an amendment to such Relevant
Registration Statement on the proper form, and to lift any suspension of the
qualification of any of the Registrable Securities for sale in any jurisdiction
in which they have been qualified for sale, in each case at the earliest
practicable date;
(vii) upon
reasonable notice, for a reasonable period prior to the filing of the Relevant
Registration Statement, and throughout the Effective Period, (i) make reasonably
available for inspection by a representative of the Majority Holders of the
Registrable Securities being sold (and their counsel) and any underwriter (and
its counsel) participating in any disposition of the Registrable Securities
pursuant to such Relevant Registration Statement, all relevant financial and
other records, pertinent corporate documents and properties of the Company
and
its subsidiaries and (ii) use reasonable
best efforts to have their officers, directors, employees, accountants and
counsel supply all relevant information reasonably requested by such
representative for the Majority Holders of Registrable Securities or any such
underwriter in connection with such Relevant Registration
Statement;
14
(viii) if
requested by or on behalf of the Majority Holders of the Registrable Securities
being sold in an underwriting or the managing underwriters (if any) in
connection with such Relevant Registration Statement, use their reasonable
best
efforts to cause (i) their counsel to deliver an opinion relating to the
Relevant Registration Statement and the Registrable Securities in customary
form, (ii) their officers to execute and deliver all customary documents and
certificates requested by or on behalf of the Majority Holders of the
Registrable Securities being sold or the managing underwriters (if any) and
(iii) their independent registered public accounting firm to provide a letter
confirming that they are an independent registered public accounting firm within
the rules and regulations adopted by the Commission and the Public Accounting
Oversight Board (United States) and as required by the Securities Act with,
in
the case of an amendment or supplement that includes audited financial
information, such changes as may be necessary to reflect the amended or
supplemented financial information.
(ix)
if reasonably requested by any Holder, promptly incorporate in a prospectus
supplement or post-effective amendment to the Relevant Registration Statement
such information as such Holder shall, on the basis of a written opinion of
nationally-recognized counsel experienced in such matters, determine to be
required to be included therein by applicable law and make any required filings
of such prospectus supplement or such post-effective amendment;
provided, that the Company shall not be required to take any actions
under this Section 5(a)(ix) that are not, in the reasonable opinion of counsel
for the Company, in compliance with applicable law;
(x) promptly
furnish to each Holder, upon their request and without charge, at least one
(1)
conformed copy of the Relevant Registration Statement and any amendments
thereto, including financial statements but excluding schedules, all documents
incorporated or deemed to be incorporated therein by reference and all exhibits;
provided, however, that the Company shall have no obligation to deliver
to Holders a copy of any amendment consisting exclusively of an Exchange Act
report or other Exchange Act filing otherwise publicly available on the
Company’s website;
(xi)
during the Effective Period, deliver to each Holder in connection with any
sale
of Registrable Securities pursuant to the Relevant Registration Statement,
without charge, as many copies of the Prospectus relating to such Registrable
Securities (including each preliminary prospectus) and any amendment or
supplement thereto as such Holder may reasonably request; and the Company hereby
consents (except during such periods that a Deferral Notice is outstanding
and
has not been revoked) to the use of such Prospectus or each amendment or
supplement thereto by each Holder in connection with any offering and sale
of
the Registrable Securities covered by such Prospectus or any amendment or
supplement thereto in the manner set forth therein; and
15
(xii) cooperate
with the Holders of Registrable Securities to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be sold
pursuant to the Relevant Registration Statement free of any restrictive legends
and in such denominations and registered in such names as the Holders thereof
may request in writing at least two business days prior to sales of Registrable
Securities pursuant to such Relevant Registration Statement.
(b) Upon
(A) the issuance by the Commission of a stop order suspending the effectiveness
of the Relevant Registration Statement or the initiation of proceedings with
respect to the Relevant Registration Statement under Section 8(d) or 8(e) of
the
Securities Act, (B) the occurrence of any event or the existence of any Material
Event as a result of which the Relevant Registration Statement shall contain
any
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 not misleading,
or any Prospectus shall contain any 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, or (C) the occurrence or existence of any corporate
development that, in the good faith business judgment of the Board of Directors
of the Company (each, a “Valid Business Reason”), makes it appropriate to
suspend the availability of the Relevant Registration Statement and the related
Prospectus, the Company will (i) in the case of clause (B) above, subject to
the
third sentence of this provision, as promptly as is practicable prepare and
file
a post-effective amendment to such Relevant Registration Statement or a
supplement to the related Prospectus or any document incorporated therein by
reference or file any other required document that would be incorporated by
reference into such Relevant Registration Statement and Prospectus so that
such
Relevant Registration Statement does not contain any 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 not misleading, and such Prospectus
does not contain any 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, as thereafter delivered (or, to the extent permitted by law, made
available) to the purchasers of the Registrable Securities being sold
thereunder, and, in the case of a post-effective amendment to the Relevant
Registration Statement, subject to the third sentence of this provision, use
reasonable best efforts to cause it to be declared effective or otherwise become
effective as promptly as is practicable, and (ii) give notice to the Holders
that the availability of the Relevant Registration Statement is suspended (a
“Deferral Notice”). Upon receipt of any Deferral Notice, each
Holder agrees not to sell any Registrable Securities pursuant to the Relevant
Registration Statement until such Holder’s receipt of copies of the supplemented
or amended Prospectus provided for in clause (i) above, or until it is advised
in writing by the Company that the Prospectus may be used, and has received
copies of any additional or supplemental filings that are incorporated or deemed
incorporated by reference in such Prospectus. The Company will use
its reasonable best efforts to ensure that the use of the Prospectus may be
resumed (x) in the case of clause (A) above, as promptly as is practicable,
(y)
in the case of clause (B) above, as soon as, in the good faith business judgment
of the Board of Directors, public disclosure of such Material Event would not
be
prejudicial to or contrary to the interests of the Company, but in no event
more
than 90 days from the date in which a Deferral Notice is required to be
delivered to the Holders and (z) in the case of clause (C) above, as soon as,
in
the good faith business judgment
of the Board of Directors, such suspension is no longer appropriate, but in
no
event more than 90 days from the date in which a Deferral Notice is required
to
be delivered to the Holders; provided that the period during which the
availability of the Relevant Registration Statement and any Prospectus is
suspended (the “Deferral Period”), without the Company incurring any
payment obligation pursuant to Section 2(d), shall not exceed 120 days in the
aggregate in any 12 month period.
16
(c) Each
Holder of Registrable Securities agrees that upon receipt of any Deferral Notice
from the Company, such Holder shall forthwith discontinue (and cause any
placement or sales agent or underwriters acting on their behalf to discontinue)
the disposition of Registrable Securities pursuant to the registration statement
applicable to such Registrable Securities until such Holder (i) shall have
received copies of such amended or supplemented Prospectus 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 at the time
of
receipt of such notice or (ii) shall have received notice from the Company
that
the disposition of Registrable Securities pursuant to the Relevant Registration
may continue.
(d) In
the event the Staff or the Commission seeks to characterize any offering
pursuant to a Relevant Registration Statement filed pursuant to this Agreement
as constituting an offering of securities by or on behalf of the Company, or
in
any other manner, such that the Staff or the Commission does not permit such
Relevant Registration Statement to become effective and used for resales in
a
manner that does not constitute such an offering and with respect to the Shelf
Registration Statement, permit the continuous resale at the market by the
Holders participating therein (or as otherwise may be acceptable to each Holder)
without being named therein as an “underwriter,” then the Company shall reduce
the number of shares to be included in such Registration Statement by all
Holders (subject to the priorities set forth in the remainder of this paragraph)
until such time as the Staff and the Commission shall so permit such Relevant
Registration Statement to become effective as aforesaid. In making such
reduction, the Company shall reduce or eliminate the shares in the following
manner:
First,
Shares, if any, to be included by the Company.
Second,
Shares, if any, to be included by each of the securityholders of the Company
(other than the Holders).
Third,
Shares to be included by all Holders as a group, pro rata within each group
based on the number of Registrable Securities owned by such Holder;
provided, however that with respect to any Demand Registration
pursuant to Section 4, Holders (who are not Initiating Holders and who requested
to participate in such registration pursuant to Section 4(a) hereof) shall
first
be reduced as a group, on a pro rata basis based on the number of Registrable
Securities owned by each such Holder before Initiating Holders are reduced;
provided, further, that if the inclusion of shares by a
particular Holder or a particular set of Holders results in the Staff or the
Commission’s “by or on behalf of the Company” offering position, the shares held
by such Holder or set of Holders shall be the only shares subject to reduction
(and if by a set of Holders on a pro
rata
basis by such Holders or on such other basis as would result in the exclusion
of
the least number of shares by all such Holders).
17
In
addition, in the event that the Staff or the Commission requires any Holder
seeking to sell securities under a Relevant Registration Statement filed
pursuant to this Agreement to be specifically identified as an “underwriter” in
order to permit such Registration Statement to become effective, and such Holder
does not consent to being so named as an underwriter in such Relevant
Registration Statement, then, in each such case, the Company shall reduce the
total number of Registrable Securities to be registered on behalf of such
Holder, until such time as the Staff or the Commission does not require such
identification or until such Holder accepts such identification and the manner
thereof. In the event of any reduction in Registrable Securities
pursuant to this paragraph, the Company shall thereafter use its reasonable
best
efforts to find alternative methods to register the Registrable Securities
with
the Commission for resale by any affected Holder; and (ii) in the event the
Company, after conducting a pre-filing conference with the Commission, if
possible, reasonably determines that it is unable to, or it is inadvisable
for
the Company to attempt to, register all of the Registrable Securities in a
single registration statement, then the Company may elect to fulfill the
registration requirements under Section 2, 3 or 4 hereof by registering the
Registrable Securities in two or more Relevant Registration Statements, provided
that the Company shall use its reasonable best efforts to file each subsequent
Relevant Registration Statement no later than the earlier of (A) 60 days
following the date on which the last of the Registrable Securities registered
under the preceding Relevent Registration Statement were sold or (B) 6 months
following the date on which the preceding Relevant Registration Statement was
declared effective; provided, however that two or more
registration statements filed in response to one demand shall be counted as
one
Demand Registration; provided, further, that the Company
agrees to grant the special registration right under this Section 5(d) as many
times as is necessary to permit the resale of all Registrable
Securities.
(e) The
Company shall comply with all applicable rules and regulations of the Commission
and make generally available to its securityholders earning statements (which
need not be audited) satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule promulgated under
the Securities Act) no later than (i) 40 days after the end of any 12-month
period (or 60 days after the end of any 12-month period if such period is a
fiscal year) if the Company is at such time an “accelerated filer” and (ii) 45
days after the end of any 12-month period (or 90 days after the end of any
12-month period if such period is a fiscal year) if the Company is not an
“accelerated filer” commencing on the first day of the first fiscal quarter of
the Company commencing after the effective date of the Relevant Registration
Statement, which statements shall cover said 12-month periods.
(f) The
Company shall provide a CUSIP number for all Registrable Securities covered
by
the Relevant Registration Statement not later than the initial effective date
of
such Relevant Registration Statement and provide the Holders and the transfer
agent for the Shares with printed certificates for the Registrable Securities
that are in a form eligible for deposit with The Depository Trust
Company.
18
(g) The
Company shall use its reasonable best efforts to provide such information as
is
required for any filings required to be made with the National Association
of
Securities Dealers, Inc.
(h) Until
the expiration of two years after the Closing Date, the Company will not, and
will not permit any of its “affiliates” (as defined in Rule 144) to, resell any
of the Registrable Securities that have been reacquired by any of them except
pursuant to an effective registration statement under the Securities
Act.
(i) The
Company shall enter into such customary agreements and take all such other
necessary, reasonable and lawful actions in connection therewith (including
those requested by the Majority Holders of the Registrable Securities covered
by
the Relevant Registration Statement) in order to expedite or facilitate
disposition of such Registrable Securities.
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6.
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Holder’s
Obligations.
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(a) The
Company may require each Holder of Registrable Securities as to which any
registration pursuant to Section 2(a), 3(a) or 4(a), as the case may be, is
being effected to furnish to the Company such information regarding such Holder
and such Holder’s intended method of distribution of such Registrable Securities
as the Company may from time to time reasonably request in writing, but only
to
the extent that such information is required in order to comply with the
Securities Act. Each such Holder agrees to notify the Company as
promptly as practicable of any inaccuracy or change in information previously
furnished by such Holder to the Company or of the occurrence of any event in
either case as a result of which any Prospectus relating to such registration
contains or would contain an untrue statement of a material fact regarding
such
Holder or such Holder’s intended method of disposition of such Registrable
Securities or omits to state any material fact regarding such Holder or such
Holder’s intended method of disposition of such Registrable Securities required
to be stated therein or necessary to make the statements therein not misleading,
and promptly to furnish to the Company any additional information required
to
correct and update any previously furnished information or required so that
such
Prospectus shall not contain, with respect to such Holder or the disposition
of
such Registrable Securities, 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 not misleading.
(b) Each
Holder further agrees not to sell any Registrable Securities pursuant to the
Relevant Registration Statement without delivering, or causing to be delivered,
a Prospectus to the purchasers thereof and, following termination of the
Effective Period, to notify the Company, within ten (10) business days of a
request by the Company, of the amount of Registrable Securities sold pursuant
to
the Relevant Registration Statement and, in the absence of a response, the
Company may assume that all of the Holder’s Registrable Securities were so
sold.
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7.
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Registration
Expenses.
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The
Company agrees to bear and to pay
or cause to be paid promptly upon request being made therefor all expenses
incident to the Company’s performance of or compliance with this Agreement,
including, but not limited to, (a) all Commission and any NASD registration
and
filing fees and expenses, (b) all fees and expenses in connection with the
qualification of the Registrable Securities for offering and sale under the
State securities and Blue Sky laws referred to in Section 5(a)(v) hereof,
including reasonable fees and disbursements of one counsel for the placement
agent or underwriters, if any, in connection with such qualifications, (c)
all
expenses relating to the preparation, printing, distribution and reproduction
of
the Relevant Registration Statement, the related Prospectus and each amendment
or supplement to each of the foregoing, the certificates representing the
Registrable Securities and all other documents relating hereto, (d) all fees
and
expenses of Holders in connection with any Relevant Registration Statement,
whether or not such registration statement becomes effective, (e) fees and
expenses of any escrow agent or custodian, and of the registrar and transfer
agent for the Shares, (f) fees, disbursements and expenses of counsel and
independent certified public accountants of the Company (including the expenses
of any opinions or “cold comfort” letters required by or incident to such
performance and compliance), (g) all underwriting discounts and commissions
and
placement agent fees and commissions attributable to the sale of such
Registrable Securities, and (h) fees, expenses and disbursements of any other
Persons, including special experts, retained by the Company in connection with
the Relevant Registration Statements (collectively, the “Registration
Expenses”). To the extent that any Registration Expenses are
incurred, assumed or paid by any Holder of Registrable Securities or any
underwriter or placement agent therefor, the Company shall reimburse such Person
for the full amount of the Registration Expenses so incurred, assumed or paid
promptly after receipt of a documented request therefor.
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8.
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Indemnification.
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(a) The
Company shall indemnify and hold harmless each Holder, its affiliates, their
respective officers, directors, employees, representatives and agents, and
each
person, if any, who controls such Holder within the meaning of the Securities
Act or the Exchange Act (collectively referred to for purposes of this Section
8
and Section 9 as a Holder) from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including,
without limitation, any loss, claim, damage, liability or action relating to
purchases and sales of Securities), to which that Holder may become subject,
whether commenced or threatened, under the Securities Act, the Exchange Act,
any
Blue Sky laws, any other federal or state statutory law or regulation, any
applicable laws in a jurisdiction other than the United States, at common law
or
otherwise, insofar as such loss, claim, damage, liability or action arises
out
of, or is based upon, (i) any untrue statement or alleged untrue statement
of a material fact contained in any such Registration Statement, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus, any Free Writing Prospectus or any “issuer information” (“Issuer
Information”) filed or required to be filed pursuant to Rule 433(d) under
the Securities Act or (ii) any omission or alleged omission to state
therein a material fact required to be stated therein or necessary in order
to
make the statements therein, in the light of the circumstances under which
they
were made, not misleading, and shall reimburse each Holder promptly upon demand
for any legal or other expenses reasonably incurred by that Holder in connection
with investigating
or defending or preparing to defend against or appearing as a third party
witness in connection with any such loss, claim, damage, liability or action
as
such expenses are incurred; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, an untrue statement or
alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with any written information
provided by a Holder; and provided, further, that with respect to any
such untrue statement in or omission from any related preliminary prospectus,
the indemnity agreement contained in this Section 8(a) shall not inure to the
benefit of any Holder from whom the person asserting any such loss, claim,
damage, liability or action received Securities to the extent that such loss,
claim, damage, liability or action of or with respect to such Holder results
from the fact that both (A) a copy of the final prospectus was not sent or
given to such person at or prior to the written confirmation of the sale of
such
Registrable Securities to such person and (B) the untrue statement in or
omission from the related preliminary prospectus was corrected in the final
prospectus unless, in either case, such failure to deliver the final Prospectus
was a result of non-compliance by the Company with
Section 5. This indemnity agreement shall be in addition to any
liability that the Company may otherwise have.
20
The
Company also shall indemnify and
hold harmless as provided in this Section 8(a) or contribute as provided in
Section 8 hereof with respect to any loss, claim, damage, liability or action
of
each underwriter, if any, of Registrable Securities registered under the
Relevant Registration Statement, its affiliates, their respective officers,
directors, employees, representatives and agents, and each person, if any,
who
controls such underwriter within the meaning of the Securities Act or the
Exchange Act on substantially the same basis as that of the indemnification
of
the selling Holders provided in this paragraph (a) and shall, if requested
by
any Holder, enter into an underwriting agreement reflecting such
agreement.
(b) Each
Holder shall indemnify and hold harmless the Company and its respective
affiliates, its officers, directors, employees, representatives and agents,
and
each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act (collectively referred to for purposes of
this Section 8(b) and Section 9 as the Company), from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which the Company may become subject, whether commenced or threatened, under
the Securities Act, the Exchange Act, applicable Blue Sky laws, any other
federal or state statutory law or regulation, any applicable laws in a
jurisdiction other than the United States, at common law or otherwise, insofar
as such loss, claim, damage, liability or action arises out of, or is based
upon, (i) any untrue statement or alleged untrue statement of a material fact
contained in any such Registration Statement or any prospectus forming part
thereof or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case
only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with any
information furnished to the Company by such Holder, and shall reimburse the
Company for any legal or other expenses reasonably incurred by the Company
in
connection with investigating or defending or preparing to defend against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred;
provided, however, that no such Holder shall be liable for any
indemnity claims hereunder in excess of the amount of net proceeds received
by
such Holder from the sale of Registrable Securities pursuant to such Relevant
Registration Statement unless such liability is the direct result of the
Holder's gross negligence, willful misconduct or fraud. This
indemnity agreement will be in addition to any liability which any such Holder
may otherwise have.
21
(c) Promptly
after receipt by an indemnified party under this Section 8 of notice of any
claim or the commencement of any action, the indemnified party shall, if a
claim
in respect thereof is to be made against the indemnifying party pursuant to
Section 8(a) or 7(b), notify the indemnifying party in writing of the claim
or the commencement of that action; provided, however, that the failure
to notify the indemnifying party shall not relieve it from any liability which
it may have under this Section 8 except to the extent that it has been
materially prejudiced (through the forfeiture of substantive rights or defenses)
by such failure; and provided, further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may have
to
an indemnified party otherwise than under this Section 8. If any such
claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any
other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from
the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable
to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than the reasonable costs of investigation; provided,
however, that an indemnified party shall have the right to employ its own
counsel in any such action, but the fees, expenses and other charges of such
counsel for the indemnified party will be at the expense of such indemnified
party unless (1) the employment of counsel by the indemnified party has been
authorized in writing by the indemnifying party, (2) the indemnified party
has
reasonably concluded (based upon advice of counsel to the indemnified party)
that there may be legal defenses available to it or other indemnified parties
that are different from or in addition to those available to the indemnifying
party, (3) a conflict or potential conflict exists (based upon advice of counsel
to the indemnified party) between the indemnified party and the indemnifying
party (in which case the indemnifying party will not have the right to direct
the defense of such action on behalf of the indemnified party) or (4) the
indemnifying party has not in fact employed counsel reasonably satisfactory
to
the indemnified party to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will
be at
the expense of the indemnifying party or parties. It is understood
that the indemnifying party or parties shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees, disbursements and other charges of more than one separate
firm
of attorneys (in addition to any local counsel) at any one time for all such
indemnified party or parties. Each indemnified party, as a condition
of the indemnity agreements contained in Sections 8(a) and 8(b), shall use
all
reasonable best efforts to cooperate with the indemnifying party in the defense
of any such action or claim. No indemnifying party shall be liable
for any settlement of any such action effected without its written consent
(which consent shall not be unreasonably withheld), but if settled with its
written consent or if there be a final judgment for the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability
by
reason of such settlement or judgment or if the indemnifying party has not
paid
the expenses and fees for which it is liable 20 days after notice by the
indemnified party of request for reimbursement. No indemnifying party
shall, without the prior written consent of the indemnified party (which consent
shall not be unreasonably withheld), effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could
have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement (i) includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter
of
such proceeding and (ii) does not include a statement or admission of fault,
culpability or a failure to act, by or on behalf of the indemnified
party.
22
(d) The
provisions of this Section 8 and Section 9 shall remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder,
the
Company or any of the indemnified Persons referred to in this Section 8 and
Section 9, and shall survive the sale by a Holder of securities covered by
the
Relevant Registration Statement.
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9.
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Contribution.
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If
the indemnification provided for in
Section 8 is unavailable or insufficient to hold harmless an indemnified party
under Section 8(a) or 8(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable
by
such indemnified party as a result of such loss, claim, damage or liability,
or
action in respect thereof, (i) in such proportion as shall be appropriate
to reflect the relative benefits received by the Company from the offering
and
sale of the Notes and Warrants, on the one hand, and a Holder with respect
to
the sale by such Holder of Registrable Securities, on the other, or (ii) if
the allocation provided by clause (i) above is not permitted by applicable
law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company
on
the one hand and such Holder on the other with respect to the statements or
omissions that resulted in such loss, claim, damage or liability, or action
in
respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the
one hand and a Holder on the other with respect to such offering and such sale
shall be deemed to be in the same proportion as the total net proceeds from
the
offering of the Securities (before deducting expenses) received by or on behalf
of the Company, on the one hand, and the total discounts and commissions
received by such Holder with respect to the Securities, on the other, bear
to
the total gross proceeds from the sale of Securities. The relative
fault 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 the Company or information supplied
by the Company on the one hand or to any information contained in the relevant
information supplied by such Holder on the other, the intent of the parties
and
their relative knowledge, access to information and opportunity to correct
or
prevent such untrue statement or omission. The parties hereto agree
that it would not be just and equitable if contributions pursuant to this
Section 9 were to be determined by pro rata allocation or by any other
method of allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or liability, or action
in respect thereof, referred to above in this Section
9
shall be deemed to include, for purposes of this Section 9, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending or preparing to defend any such action or
claim. Notwithstanding the provisions of this Section 9, an
indemnifying party that is a Holder of Registrable Securities shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities sold by such indemnifying party to
any
purchaser exceeds the amount of any damages which such indemnifying party has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission unless such party is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) with respect to such statement or 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. The Holders’
obligations to contribute pursuant to this Section 9 are several and not
joint.
23
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10.
|
Rule
144A and Rule 144.
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So
long
as any Registrable Securities remain outstanding, the Company shall use its
reasonable best efforts to file the reports required to be filed by it under
Rule 144A(d)(4) under the Securities Act and the Exchange Act in a timely manner
and, if at any time the Company is not required to file such reports, it will,
upon the written request of any Holder of Registrable Securities, make publicly
available other information so long as necessary to permit sales of such
Holder’s securities pursuant to Rules 144 and 144A. The Company
covenants that it will take such further action as any Holder of Registrable
Securities may reasonably request, all to the extent required from time to
time
to enable such Holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by Rules
144
and 144A (including, without limitation, the requirements of Rule
144A(d)(4)). Upon the written 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. Notwithstanding the foregoing,
nothing in this Section 11 shall be deemed to require the Company to register
any of its securities pursuant to the Exchange Act.
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11.
|
Miscellaneous.
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(a) Amendments
and Waivers. The provisions of this Agreement may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the written
consent of Majority Holders. Notwithstanding the foregoing, a waiver
or consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose Registrable Securities are
being sold pursuant to the Relevant Registration Statement and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of a majority in aggregate amount of the Registrable Securities being
sold by such Holders pursuant to the Relevant Registration
Statement.
(b) Notices. All
notices and other communications provided for or permitted hereunder shall
be
made in writing by hand-delivery, first-class mail, telecopier or air courier
guaranteeing next-day delivery:
(i) If
to the Company, initially at the address set forth in the Purchase Agreement;
and
(ii) If
to the Holders, initially at its address set forth in the Purchase
Agreement.
24
All
such
notices and communications shall be deemed to have been duly given: when
delivered by hand, if personally delivered; one business day after being
delivered to a next-day air courier; five business days after being deposited
in
the mail; and when receipt is acknowledged by the recipient’s telecopier
machine, if sent by telecopier.
(c) Successors
and Assigns. This Agreement shall be binding upon the parties
hereto and their respective successors and assigns. Unless otherwise provided
herein, the Holders may assign their rights hereunder to any of its affiliates,
provided that such assignment shall be in compliance with the Securities
Act.
(d) Counterparts. This
Agreement may be executed in any number of counterparts (which may be delivered
in original form or by telecopier) and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same
agreement.
(e) Definition
of Terms. For purposes of this Agreement, (a) the term “business
day” means any day on which the New York Stock Exchange, Inc. is open for
trading, (b) the term “subsidiary” has the meaning set forth in Rule 405
under the Securities Act and (c) except where otherwise expressly provided,
the
term “affiliate” has the meaning set forth in Rule 405 under the Securities
Act.
(f)
Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning
hereof.
(g) Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New
York.
(h) Remedies. In
the event of a breach by the Company or by any Holder of any of their respective
obligations under this Agreement, each Holder or the Company, as the case may
be, in addition to being entitled to exercise all rights granted by law,
including recovery of damages (other than the recovery of damages for a breach
by the Company of its obligations under Section 2 hereof for which the Company
has paid pursuant to Section 5 hereof), will be entitled to specific performance
of its rights under this Agreement. The Company and each Holder agree
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of any of the provisions of this Agreement and
hereby further agree that, in the event of any action for specific performance
in respect of such breach, it shall waive the defense that a remedy at law
would
be adequate.
(i) No
Inconsistent Agreements. Each of the Company represents, warrants
and agrees that (i) it has not entered into, and shall not, on or after the
date
of this Agreement, enter into any agreement that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof, (ii) it has not previously entered
into any agreement which remains in effect granting any registration rights
with
respect to any of its debt securities to any person, except registration rights
granted under that certain Common Stock Purchase Agreement dated February 9,
2006 between the Company and Bloompoint Investments Limited (it being understand
that such registration rights shall be waived in a separate agreement on or
prior to the date hereof) and (iii) without limiting the generality of the
foregoing, without the written consent of the Majority Holders of Registrable
Securities, it shall not grant to any person the right to request the Company
to
register any debt securities of the Company under the Securities Act unless
the
rights so granted are not in conflict or inconsistent with the provisions of
this Agreement.
25
(j)
No Piggyback on Registrations. None of the Company or any of
its respective security holders (other than the Holders of Registrable
Securities in such capacity) shall have the right to include any securities
of
the Company in the Relevant Registration Statement other than Registrable
Securities.
(k) Severability. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would
have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void
or
unenforceable.
(l)
Survival. The respective indemnities, agreements,
representations, warranties and each other provision set forth in this Agreement
or made pursuant hereto shall remain in full force and effect regardless of
any
investigation (or statement as to the results thereof) made by or on behalf
of
any Holder of Registrable Securities, any director, officer or partner of such
Holder, any agent or underwriter or any director, officer or partner thereof,
or
any controlling person of any of the foregoing, and shall survive delivery
of
and payment for the Registrable Securities pursuant to the Purchase Agreement
and the transfer and registration of Registrable Securities by such
Holder.
(m) Securities
Held by the Company, etc. Whenever the consent or approval of
Holders of a specified percentage of Registrable Securities is required
hereunder, Shares held by the Company or its affiliates (other than subsequent
Holders of Shares if such subsequent Holders are deemed to be affiliates solely
by reason of their holdings of such Shares) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
[Signature
Page(s) to Follow]
26
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.
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By:
|
||
| Name: | |||
| Title: | |||
| SCULPTOR FINANCE (MD) IRELAND LIMITED | |||
|
|
By:
|
||
| Name : | |||
| Title: | |||
| SCULPTOR FINANCE (AS) IRELAND LIMITED | |||
| By: | |||
| Name: | |||
| Title: | |||
| SCULPTOR FINANCE (SI) IRELAND LIMITED | |||
| By: | |||
| Name: | |||
| Title: | |||
| OZ ASIA MASTER FUND, LTD. | |||
| By: | OZ Management LP, its Investment Manager | ||
|
By:
|
Och-Ziff Holding Corporation, its General Partner | ||
| By: | |||
| Name: | Xxxx Xxxxx | ||
| Title: | CFO | ||
| OZ ASIA MASTER FUND, LTD. | |||
| By: | OZ Management LP, its Investment Manager | ||
| By: | Och-Ziff Holding Corporation, its General Partner | ||
| By: | |||
| Name: | Xxxx Xxxxx | ||
| Title: | CFO | ||
| OZ GLOBAL SPECIAL INVESTMENTS MASTER FUND, L.P. | |||
| By: | OZ Advisors LP, its General Partner | ||
| By: | Och-Ziff Holding Corporation, its General Partner | ||
| By: | |||
| Name: | Xxxx Xxxxx | ||
| Title: | CFO | ||
