EXHIBIT 4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (as amended, restated, supplemented
or otherwise modified from time to time, the "Agreement") is entered into as of
this 26th day of July, 2002 by and between CANNONDALE CORPORATION, a Delaware
corporation (the "Company"), and PEGASUS PARTNERS II, L.P., a Delaware limited
partnership ("Pegasus"). Capitalized terms not defined herein shall have the
meaning given to such terms in the Note Purchase Agreement, dated as of July 26,
2002, by and between the Company and Pegasus (the "Note Purchase Agreement").
RECITALS
WHEREAS, the Company and Pegasus have entered into the Note Purchase
Agreement, pursuant to which Pegasus has agreed to purchase the Notes, and the
Company has issued two detachable warrants (the "Warrants") to Pegasus, which
Warrants may be exercised for Shares; and
WHEREAS, as a condition to its purchase of the Notes, Pegasus has
required that the parties hereto enter into this Agreement which grants Pegasus
certain rights to have its Registrable Securities (as hereinafter defined)
registered under the Securities Act.
NOW THEREFORE, in consideration of the premises and the mutual
covenants and obligations hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
SECTION 1. (a) DEFINITIONS. As used herein, each of the following terms
shall have the meaning set forth or referred to below:
"Agreement" shall have the meaning set forth in the first paragraph of
this Agreement.
"Company" shall have the meaning set forth in the first paragraph of
this Agreement.
"Delay Period" shall have the meaning set forth in SECTION 2(D) herein.
"Demand Notice" shall have the meaning set forth in SECTION 2(A)
herein.
"Demand Registration" shall have the meaning set forth in SECTION 2(A)
herein.
"Demanding Securityholders" shall have the meaning set forth in SECTION
2(A) herein.
"Exchange Act" shall mean the United States Securities Exchange Act of
1934, as amended.
"Hold Back Period" shall have the meaning set forth in SECTION 4(A)
herein.
"Inspectors" shall have the meaning set forth in SECTION 5(J) herein.
"Interruption Period" shall have the meaning set forth in SECTION 5(K)
herein.
"Losses" shall have the meaning set forth in SECTION 8(A) herein.
"NASD" shall mean the National Association of Securities Dealers, Inc.,
or any successor thereof.
"Piggyback Registration" shall have the meaning set forth in SECTION
3(A) herein.
"Proposing Holders" shall have the meaning set forth in SECTION 3(B)
herein.
"Prospectus" shall mean the prospectus included in any Registration
Statement (including a prospectus that discloses information previously omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A under the Securities Act), as amended or supplemented by
any prospectus supplement and all other amendments and supplements to such
prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such prospectus.
"Records" shall have the meaning set forth in SECTION 5(J) herein.
"Registrable Securities" shall mean (i) any shares of Common Stock
issued or issuable upon exercise of the Warrants and (ii) any other securities
issued and issuable with respect to any such shares described in clause (i)
above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation, sale of assets
or other reorganization (it being understood that, for purposes of this
Agreement, a Person shall be deemed to be a holder of Registrable Securities
whenever such Person has the right to acquire or obtain from the Company any
Registrable Securities, whether or not such acquisition has actually been
effected); PROVIDED that with respect to any Registrable Securities, such
securities shall cease to be Registrable Securities (i) when they have been
previously registered under the Securities Act, (ii) when they have been sold to
the public through a broker, dealer or market maker in compliance with Rule 144
of the Securities Act (or similar rule then in force as promulgated by the SEC),
(iii) when they have been sold in a private transaction in which the
transferor's rights under this Agreement are not assigned or (iv) during any
period in which all shares of Registrable Securities held or entitled to be held
by a Securityholder may be immediately sold under Rule 144 during any 90 day
period (assuming for such purposes exercise by cashless exercise).
"Registration" shall mean registration under the Securities Act of an
offering of Registrable Securities pursuant to a Demand Registration or a
Piggyback Registration.
"Registration Statement" shall mean any registration statement of the
Company under the Securities Act that covers any of the Registrable Securities
pursuant to the provisions of this Agreement, including the related Prospectus,
all amendments and supplements to such registration statement (including pre-
and post-effective amendments), all exhibits thereto and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
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"Required Securityholders" shall mean Securityholders holding more than
50% in number of the aggregate number of Registrable Securities, or more than
50% in number of Registrable Securities participating in a given Registration,
as the context requires.
"SEC" shall mean the United States Securities and Exchange Commission,
or any successor thereof.
"Securityholders" shall mean the holders of the Registrable Securities
outstanding.
"Shares" shall mean shares of Common Stock.
"underwritten registration or underwritten offering" shall mean a
registration under the Securities Act in which securities of the Company are
sold to an underwriter for reoffering to the public.
(b) Words used herein, regardless of the number and gender specifically used,
shall be deemed and construed to include any other number, singular or plural,
and any other gender, masculine, feminine or neuter, as the context requires.
The word "or" is not exclusive and the word "including" means "including without
limitation." Unless otherwise specified, all accounting terms used in this
Agreement shall be interpreted in accordance with generally accepted accounting
principles in the United States as in effect from time to time, applied on a
consistent basis.
SECTION 2. DEMAND REGISTRATION. (a) At any time after the date hereof,
the Required Securityholders may make a request, in writing (a "Demand Notice"),
that the Company file a Registration Statement for the sale or other disposition
of Registrable Securities (a "Demand Registration"). At the option of such
Securityholders ("Demanding Securityholders"), such request may specify that the
requested registration will be for an offering on a delayed or continual basis
pursuant to Rule 415 under the Securities Act (a "Shelf Registration").
(b) Within 10 days after the receipt of any Demand Notice, the Company
shall give written notice of such requested Registration to all other
Securityholders.
(c) The Company shall not be required to effect a registration of
Registrable Securities pursuant to a Demand Registration (i) during the period
starting 60 days prior to the Company's good faith estimate of the date of
filing of, and ending 90 days after the effective date of any registration
statement filed by the Company under the Securities Act for any offering of
Common Stock (other than a registration statement on Form S-4 or Form S-8 or any
successor forms thereof); PROVIDED that the Company is actively employing in
good faith all commercially reasonable efforts to cause such registration
statement to become effective or (ii) more than once during any 180 day period.
In addition, the Securityholders shall not be entitled to demand more than two
Registrations on a form other than Form S-3 or any successor form under the
Securities Act. For purposes of determining whether a Demand Registration shall
have been effected, a Registration shall not be deemed to have been effected (i)
unless a Registration Statement with respect thereto has become effective, (ii)
if after such Registration Statement 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 SEC or other governmental agency or court for any reason not attributable to
Securityholders and
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such interference is not thereafter eliminated or (iii) if the conditions to
closing specified in the underwriting agreement, if any, entered into in
connection with such Registration are not satisfied or waived, other than by
reason of a failure on the part of Securityholders. If the Company shall have
complied with its obligations pursuant to a Demand Registration, the
Securityholders' right to demand a Registration shall be deemed to have been
satisfied (i) if a Demand Registration other than a Shelf Registration, upon the
effective date of such Registration, provided no stop order or similar order, or
proceedings for such an order, is thereafter entered or initiated, and (ii) if a
Shelf Registration, upon the earlier of (x) the date as of which all of the
Registrable Securities included therein shall have been disposed of pursuant to
the Registration Statement and (y) the date as of which such Demand Registration
shall have been continuously effective for a period of 270 days and the Company
shall have no further obligation and the Securityholders shall have no further
right under this Section 2 with respect to such Demand Registration.
(d) The Company shall be entitled to postpone the filing or suspend the
effectiveness for up to 90 days (the "Delay Period") of any Registration
Statement pursuant to a Demand Registration otherwise required to be prepared
and filed pursuant to this SECTION 2, if the Board of Directors of the Company
determines, in its good faith reasonable judgment, that such registration would
materially interfere with, or require premature disclosure of, any financing,
acquisition or reorganization involving the Company or any of its wholly owned
subsidiaries or would otherwise be seriously detrimental to the Company and the
Company promptly gives the Securityholders notice of such determination;
provided, however, that the Company shall not postpone its obligations in this
manner more than twice during any 12 month period.
(e) In the event that such Demand Registration involves an underwritten
offering and the managing underwriter or underwriters participating in such
offering advise the Company in writing that the total amount of securities to be
included in such offering exceeds the amount that can be sold in (or during the
time of) such offering without delaying or jeopardizing the success of such
offering (including the price per share of the securities to be sold), then the
total number of securities to be offered for the Company's own account and for
the account of all holders of securities of the Company (including the
Securityholders) who have registration rights with respect to such Registration
shall be reduced to a number deemed satisfactory by such managing underwriter or
underwriters, provided that such securities shall be excluded in the following
sequence: (i) first, securities proposed by the Company to be sold for its own
account and securities held by holders of securities of the Company other than
Registrable Securities requesting and legally entitled to include such
securities in such registration, on a PRO RATA basis (based upon the number of
securities requested (or proposed) to be registered by each such holder (and the
Company)); and (ii) second, Registrable Securities, on a PRO RATA basis (based
upon the number of Registrable Securities by each such Securityholder).
(f) The Required Securityholders may, at any time prior to the
effective date of the Registration Statement relating to such Demand
Registration, revoke such request by providing a written notice to the Company
revoking such request, in which case such request will not count toward any
quota of Demand Registrations to which Securityholders are entitled pursuant to
this Agreement or with respect to which the Company is required to pay
registration expenses pursuant to Section 6, provided that any revocation that
is made by Securityholders following filing of the associated Registration
Statement with the SEC shall count towards any quota of
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Demand Registrations granted to Securityholders unless such Securityholders
revoke their request on account of material adverse information related to the
Company that was unknown or unavailable to such Securityholders at the time they
made their request or pay all of the registration expenses that would otherwise
be paid by the Company pursuant to Section 6.
(g) The Company shall not include any securities that are not
Registrable Securities in any Registration Statement filed pursuant to this
SECTION 2 without the prior written consent of the Required Securityholders,
which consent shall not be unreasonably withheld.
SECTION 3. PIGGYBACK REGISTRATION. (a) If at any time the Company
proposes to file a Registration Statement under the Securities Act with respect
to a public offering of Shares for its own account or for the account of any
holder of Shares (other than a registration statement (i) on Form S-8 or any
successor form thereto, (ii) filed solely in connection with a dividend
reinvestment plan or employee benefit plan covering officers or directors of the
Company or its Affiliates, (iii) on Form S-4 or any successor form thereto, in
connection with a merger, acquisition, exchange offer or similar corporate
transaction or (iv) on any registration form that does not permit secondary
sales), then the Company shall give written notice of such proposed filing to
Securityholders at least 30 days before the anticipated filing date. Such notice
shall offer each Securityholder the opportunity to register such amount of
Registrable Securities as it may request (a "Piggyback Registration"). Subject
to SECTION 3(B) hereof, the Company shall include in each such Piggyback
Registration all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 20 days after such notice
has been given. Each Securityholder shall be permitted to withdraw all or any
portion of the Registrable Securities from a Piggyback Registration at any time
prior to the effective date of such Piggyback Registration.
(b) The Company shall permit Securityholders to include all such
Registrable Securities on the same terms and conditions as any similar
securities, if any, of the Company included therein. Notwithstanding the
foregoing, in the event that any Piggyback Registration involves an underwritten
offering and the managing underwriter or underwriters participating in such
offering advise the Company in writing that the total amount of securities
requested to be included in such Piggyback Registration exceeds the amount which
can be sold in (or during the time of) such offering without delaying or
jeopardizing the success of the offering (including the price per share of the
securities to be sold), then the total number of securities to be offered for
the Company's own account and for the account of all holders of securities
(including Securityholders) who have registration rights with respect to such
Registration shall be reduced to a number deemed satisfactory by such managing
underwriter or underwriters, provided that such securities shall be excluded in
the following sequence:
(i) in the event the offering was proposed by or for the account of
holders of securities of the Company (the "Proposing Holders"): (A)
first, securities proposed by the Company to be offered for its own
account; (B) second, securities held by holders of securities of the
Company other than the Proposing Holders, on a PRO RATA basis (based
upon the number of securities requested to be registered by each such
holder); (C) third, Registrable Securities, on a PRO RATA basis (based
upon the number of Registrable Securities requested to be registered
by each such Securityholder); and (D) fourth, securities held by the
Proposing Holders, on a
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PRO RATA basis (based upon the number of securities requested to be
registered by each such holder); and
(ii) in the event the offering was proposed by the Company for its own
account: (A) first, securities held by holders of securities of the
Company other than Securityholders requested and legally entitled to
include such securities in such registration, on a PRO RATA basis
(based upon the number of securities requested to be registered by
each such holder); (B) second, Registrable Securities, on a PRO RATA
basis (based upon the number of Registrable Securities requested to be
registered by each such Securityholder); and (C) third, securities
proposed by the Company to be offered for its own account.
(c) Nothing in this Agreement shall create any liability on the part of
the Company to Securityholders if the Company in its sole discretion should
decide not to file a Registration Statement proposed to be filed pursuant to
SECTION 3(A) hereof or to withdraw such Registration Statement subsequent to its
filing, regardless of any action whatsoever that any Securityholder may have
taken, whether as a result of the issuance by the Company of any notice
hereunder or otherwise.
SECTION 4. HOLDBACK AGREEMENT. (a) If (x) the Company shall file a
Registration Statement (other than a registration statement (i) on Form S-8 or
any successor form thereto, (ii) filed solely in connection with a dividend
reinvestment plan or employee benefit plan covering officers or directors of the
Company or its Affiliates or (iii) on Form S-4 or any successor form thereto, in
connection with a merger, acquisition, exchange offer or similar corporate
transaction) with respect to an underwritten public offering of Shares or
similar securities or securities convertible into, or exchangeable or
exercisable for, such securities and (y) with reasonable prior notice, the
managing underwriter or underwriters advise the Company in writing (in which
case the Company shall provide Securityholders with a copy of such underwriter's
notice) that a sale or distribution of Registrable Securities would materially
adversely affect such offering, then, to the extent not inconsistent with
applicable law, unless such managing underwriter or underwriters otherwise
agree, no Securityholder shall, directly or indirectly, sell, offer, contract or
grant any option to sell (including, without limitation, in connection with any
short sale), pledge, transfer (other than to Affiliates), establish an open "put
equivalent position" within the meaning of Rule16a-l(h) under the Exchange Act,
or otherwise dispose of any Registrable Securities held by it (except as part of
such underwritten public offering) during the period beginning seven days prior
to the effective date of such Registration Statement and continuing until the
earlier of (A) the abandonment of such offering and (B) 90 days (or such shorter
period of time as is sufficient and appropriate in the opinion of the managing
underwriter or underwriters in order to complete the sale and distribution of
securities included in such registration) after the effective date of such
Registration Statement (each such period, a "Hold Back Period"); provided, that
no Securityholder shall be subject to the restrictions contained in this SECTION
4(A) unless each officer and director of the Company regardless of the number of
Shares then owned by such officer or director and each beneficial owner (defined
in Rule 13d-3 under the Exchange Act) of at least 10% of the issued and
outstanding shares of Common Stock also agree to be bound by such restrictions.
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(b) If (x) the Company shall file a Registration Statement in
connection with an underwritten offering made pursuant to a Demand Registration
or that involves a Piggyback Registration (other than a registration statement
(i) on Form S-8 or any successor thereto, (ii) filed solely in connection with a
dividend reinvestment plan or employee benefit plan covering officers or
directors of the Company or its Affiliates or (iii) on Form S-4, or any
successor form thereto, in connection with a merger, acquisition, exchange offer
or similar corporate transaction with respect to an underwritten public offering
of Shares or similar securities or securities convertible into, or exchangeable
or exercisable for, such securities) and (y) with reasonable prior notice, the
managing underwriter or underwriters advise the Company in writing (in which
case the Company shall provide Securityholders with a copy of such underwriter's
notice) that a sale or distribution of securities of the Company would
materially adversely affect such offering, then, to the extent not inconsistent
with applicable law, unless such managing underwriter or underwriters otherwise
agree, the Company shall not, directly or indirectly sell, offer, contract or
grant any option to sell (including, without limitation, in connection with any
short sale), pledge, transfer (other than to affiliates), establish an open "put
equivalent position" within the meaning of Rule 16a-l(h) under the Exchange Act,
or otherwise dispose of any securities of the Company (except as part of such
underwritten public offering or other than pursuant to any employee stock
option, ownership or purchase plans or 401(k) plan then existing, or upon the
conversion or exchange of convertible or exchangeable securities then
outstanding) during the applicable Hold Back Period.
SECTION 5. REGISTRATION PROCEDURES. In connection with the registration
obligations of the Company pursuant to and in accordance with SECTIONS 2 and 3
hereof (and subject to SECTIONS 2 and 3 hereof), the Company shall use
commercially reasonable best efforts to effect such Registration to permit the
sale of Registrable Securities in accordance with the intended method or methods
of disposition thereof, and pursuant thereto the Company shall as expeditiously
as possible (but subject to SECTIONS 2 and 3 hereof):
(a) prepare and, as promptly as practicable, but in no event more than
60 days after the date on which the Company receives a Demand Notice given by
Demanding Securityholders in accordance with SECTION 2(A) herein, file with the
SEC a Registration Statement for the sale of the Registrable Securities on any
form for which the Company then qualifies or which counsel for the Company shall
deem appropriate, in accordance with Securityholders' intended method or methods
of distribution thereof, if applicable, and use commercially reasonable best
efforts to cause such Registration Statement to be declared effective as
promptly as practicable following the date the Company receives such Demand
Notice and remain effective (x) if a Demand Registration other than a Shelf
Registration, for up to 270 days or until such earlier date as of which all
Registrable Securities covered by such Registration Statement shall have been
disposed of in the manner described in the Registration Statement, and (y) if a
Demand Registration that is also a Shelf Registration, for three years.
Notwithstanding the foregoing, if for any reason the effectiveness of a Demand
Registration is suspended or postponed as permitted by SECTION 2(D) above, the
foregoing period shall be extended by the aggregate number of days of such
suspension or postponement;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) to such Registration Statement, and such supplements
to the related Prospectus, as may be required by the applicable rules,
regulations or instructions under the Securities Act
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during the applicable period, in accordance with the intended methods of
disposition specified by the holders of the Registrable Securities covered by
such Registration Statement, make generally available earnings statements
satisfying the provisions of Section 1l(a) of the Securities Act (provided that
the Company shall be deemed to have complied with this clause if it has complied
with Rule 158 under the Securities Act), and cause the related Prospectus as so
supplemented to be filed pursuant to Rule 424 under the Securities Act, if
necessary; PROVIDED, HOWEVER, that before filing a Registration Statement or
Prospectus in connection with a Demand Registration, or any amendments or
supplements thereto (other than reports required to be filed by it under the
Exchange Act), the Company shall furnish to the holders of Registrable
Securities covered by such Registration Statement and each counsel for such
holders and each managing underwriter, if any, for review and comment, copies of
all documents required to be filed;
(c) notify Securityholders and confirm such notice in writing, (i) when
a Registration Statement, Prospectus or Prospectus supplement or pre-effective
or post-effective amendment thereto has been filed, and, with respect to such
Registration Statement or any post-effective amendment, when the same has become
effective, (ii) of any request by the SEC for amendments or supplements to such
Registration Statement or the related Prospectus or for additional information
regarding such Securityholders, (iii) of the issuance by the SEC of any stop
order suspending the effectiveness of such Registration Statement or the
initiation of any proceedings for that purpose, (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose and (v) at any time when a prospectus is required to be delivered under
the Securities Act, of the happening of any event that requires the making of
any changes in such Registration Statement, Prospectus or documents incorporated
or deemed incorporated therein by reference so that they will 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
in light of the circumstances then existing;
(d) use commercially reasonable best efforts to obtain the withdrawal
of any order suspending the effectiveness of such Registration Statement, or the
lifting of any suspension of the qualification or exemption from qualification
of any Registrable Securities for sale in any jurisdiction in the United States;
(e) furnish to Securityholders, counsel for Securityholders and each
managing underwriter, if any, without charge, one conformed copy of such
Registration Statement, as declared effective by the SEC, and of each
post-effective amendment thereto, in each case including financial statements
and schedules and all exhibits and reports incorporated or deemed to be
incorporated therein by reference; and deliver, without charge, such number of
copies of the preliminary prospectus, any amended preliminary prospectus, each
final Prospectus and any post-effective amendment or supplement thereto, as such
Securityholder may reasonably request in order to facilitate the disposition of
the Registrable Securities of such Securityholder covered by such Registration
Statement in conformity with the requirements of the Securities Act;
(f) prior to any public offering of Registrable Securities covered by
such Registration Statement, use commercially reasonable best efforts to
register or qualify such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the
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holders of such Registrable Securities shall reasonably request in writing;
PROVIDED, HOWEVER, that the Company shall in no event be required to qualify
generally to do business as a foreign corporation or as a dealer in any
jurisdiction where it is not at the time so qualified or to execute or file a
general consent to service of process in any such jurisdiction where it has not
theretofore done so or to take any action that would subject it to general
service of process or taxation in any such jurisdiction where it is not then
subject;
(g) upon the occurrence of any event contemplated by SECTION 5(C)(V)
above, prepare a supplement or post-effective amendment to such Registration
Statement or the related Prospectus or any document incorporated or deemed to be
incorporated therein by reference and file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities being
sold thereunder (including upon the termination of any Delay Period), 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 light of the circumstances under which they were made,
not misleading;
(h) use its commercially reasonable best efforts to cause all
Registrable Securities covered by such Registration Statement to be listed on
each securities exchange, if any, on which securities of the same class issued
by the Company are then listed or quoted and, if no such securities are so
listed, to be listed on a national securities exchange or the Nasdaq Stock
Market and, if listed on the Nasdaq Stock Market, use its commercially
reasonable best efforts to secure designation of all such Registrable Securities
covered by such Registration Statement as "NASDAQ Securities" within the meaning
of Rule 11Aa3-l promulgated under the Exchange Act or, failing that, to secure
Nasdaq Stock Market authorization for such Registrable Securities and, without
limiting the generality of the foregoing, to arrange for at least two market
makers to register as such with respect to such Registrable Securities with the
NASD;
(i) on or before the effective date of such Registration Statement,
provide the transfer agent of the Company for the Registrable Securities with
printed certificates for the Registrable Securities covered by such Registration
Statement, which are in a form eligible for deposit with The Depository Trust
Company;
(j) in connection with a Demand Registration, make available for
inspection by any Securityholder, any underwriter participating in any offering
pursuant to such Registration Statement, and any attorney, accountant or other
agent retained by any such Securityholder or underwriter (collectively, the
"Inspectors"), all financial and other records and other information, pertinent
corporate documents and properties of any of the Company and its subsidiaries
and Affiliates (collectively, the "Records"), as shall be reasonably necessary
to enable them to exercise their due diligence responsibilities; PROVIDED,
HOWEVER, that the Records that the Company determines, in good faith, to be
confidential and which it notifies the Inspectors in writing are confidential
shall not be disclosed to any Inspector unless, upon the reasonable request of
the Company, such Inspector signs a confidentiality agreement reasonably
satisfactory to the Company (which confidentiality agreement shall permit the
disclosure of such Records in the instances described in subclauses (i) and (ii)
of this sentence) or either (i) the disclosure of such Records in such
Registration Statement or the related Prospectus is necessary to avoid or
correct a material misstatement in or material omission from such Registration
Statement or Prospectus or (ii) the release of such Records, if such release is
ordered pursuant to a subpoena
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or other order from a court of competent jurisdiction; provided further,
however, that (A) any decision regarding the disclosure of information pursuant
to subclause (i) shall be made only after consultation with counsel for the
applicable Inspectors and the Company and (B) with respect to any release of
Records pursuant to subclause (ii), each Securityholder agrees that it shall,
promptly after learning that disclosure of such Records is sought in a court
having jurisdiction, give notice to the Company so that the Company, at the
Company's expense, may undertake appropriate action to prevent disclosure of
such Records; and
(k) if such offering is an underwritten offering, enter into such
agreements (including an underwriting agreement in form, scope and substance as
is customary in underwritten offerings) and take all such other appropriate and
reasonable actions requested by the managing underwriters) in order to expedite
or facilitate the disposition of such Registrable Securities, and in such
connection, (i) cause its counsel to provide opinions and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters and counsel to the Securityholders),
addressed to each Securityholder participating in such offering and each of the
underwriters as to the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested by
such managing underwriters, (ii) cause its independent certified public
accountants to provide "comfort" letters and updates thereof (and, if necessary,
any other independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in the
Registration Statement), addressed to each Securityholder participating in such
offering (unless such accountants shall be prohibited from so addressing such
letters by applicable standards of the accounting profession) and each of the
underwriters, such letters to be in customary form and covering matters of the
type customarily covered in "comfort" letters in connection with underwritten
offerings and (iii) if requested and if an underwriting agreement is entered
into, provide indemnification provisions and procedures reasonably requested by
such underwriters. The above shall be done at each closing under such
underwriting or similar agreement, or as and to the extent required thereunder.
The Company may require any Securityholder to furnish such information in
writing regarding such holder and such holder's intended method of disposition
of such Registrable Securities as it may from time to time reasonably request in
writing. If any such information is not furnished by such holder within a
reasonable period of time after receipt of such request, the Company may exclude
such holder's Registrable Securities from such Registration Statement.
Securityholders agree that, upon receipt of any notice from the Company of the
happening of any event of the kind described in SECTION 5(C)(II), 5(C)(III),
5(C)(IV) or 5(C)(V) hereof, that such holders shall forthwith discontinue
disposition of any Registrable Securities covered by such Registration Statement
or the related Prospectus until receipt of the copies of the supplement or
amendment to such Prospectus or any document incorporated or deemed to be
incorporated therein by reference, contemplated by Section 5(g) hereof, or until
such holder is advised in writing by the Company that the use of the applicable
Prospectus may be resumed (such period during which disposition is discontinued
being an "Interruption Period") and, if requested by the Company,
Securityholders shall deliver to the Company (at the expense of the Company) all
copies then in its possession, other than permanent file copies then in such
Securityholder's possession, of the Prospectus covering such Registrable
Securities at the time of receipt of such request. Securityholders further agree
not to utilize any material other than the applicable current preliminary
prospectus or Prospectus in connection with the offering and or sale of such
Registrable Securities.
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SECTION 6. REGISTRATION EXPENSES. Whether or not any Registration
Statement is filed or becomes effective, as between the Company and
Securityholders, the Company shall pay all costs, fees and expenses incident to
the Company's performance of or compliance with this Agreement with respect to
any Piggyback Registration and the first two (2) Demand Registrations, including
(i) all registration and filing fees, including NASD filing fees, (ii) all fees
and expenses of compliance with securities or Blue Sky laws, including
reasonable fees and disbursements of counsel in connection therewith, (iii)
printing expenses (including expenses of printing certificates for Registrable
Securities and of printing prospectuses if the printing of prospectuses is
requested by any Securityholder or the managing underwriter, if any), (iv)
messenger, telephone and delivery expenses, (v) fees and disbursements of all
independent certified public accountants of the Company (including expenses of
any "cold comfort" letters required in connection with this Agreement) and all
other persons retained by the Company in connection with such Registration
Statement, (vi) reasonable fees and disbursements of one counsel selected to
represent all Securityholders, (vii) fees and disbursements of underwriters
customarily paid by the issuers of securities and (viii) all other costs, fees
and expenses incident to the Company's performance or compliance with this
Agreement. The Company shall, with respect to any Registration, pay its internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), fees and
disbursements of counsel for the Company, the expense of any annual audit or
quarterly review, the expense of any liability insurance and the expenses and
fees for listing the Registrable Securities on each securities exchange on which
similar securities issued by the Company are then listed. Notwithstanding the
foregoing, any discounts, commissions or brokers' fees or fees of similar
securities industry professionals and any transfer taxes relating to the
disposition of the Registrable Securities by Securityholders, will be payable by
such holders and the Company will have no obligation to pay any such amounts.
SECTION 7. UNDERWRITING REQUIREMENTS. (a) Subject to SECTION 7(B)
hereof, the Required Securityholders shall have the right, by written notice, to
require that a Demand Registration provide for an underwritten offering.
(b) In the case of any underwritten offering pursuant to a Demand
Registration, the Required Securityholders participating in such offering shall
select the institution or institutions that shall manage or lead such offering,
which institution or institutions shall be reasonably satisfactory to the
Company. In the case of any underwritten offering pursuant to a Piggyback
Registration in connection with a public offering of Shares for the account of
the Company, the Company shall select the institution or institutions that shall
manage or lead such offering. No Securityholder shall be entitled to participate
in an underwritten offering unless and until it has entered into an underwriting
or other agreement with such institution or institutions for such offering in
such form as the Company and such institution or institutions shall reasonably
determine and such holder completes and executes all questionnaires, powers of
attorney, indemnities and other documents reasonably required under the terms of
such agreements.
(c) Securityholders shall supply in writing such information as the
underwriters (or the Company as set forth in SECTION 5(K) herein) reasonably
request in writing.
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SECTION 8. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company shall, without
limitation as to time, indemnify and hold harmless, to the full extent permitted
by law, each of the Securityholders whose Registrable Securities are covered by
a Registration Statement or Prospectus, the shareholders, members, partners,
officers, directors and agents and employees of each such holder, each Person
who controls such Securityholder (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the shareholders, members,
partners, officers, directors, agents and employees of each such controlling
Person, to the fullest extent lawful, from and against any and all losses,
claims, damages, liabilities, judgments, costs (including, without limitation,
costs of investigation, preparation and reasonable attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or based upon any untrue
or alleged untrue statement of a material fact contained in such Registration
Statement or Prospectus or any amendment or supplement thereto, or any
preliminary prospectus, or arising out of or based upon any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of a Prospectus, in the light of the
circumstance under which they were made) not misleading, except insofar as the
same are based upon information furnished in writing to the Company by or on
behalf such Securityholder expressly for use therein.
(b) INDEMNIFICATION BY SECURITYHOLDERS. In connection with any
Registration Statement in which a Securityholder is participating, such
Securityholder shall, without limitation as to time, indemnify and hold
harmless, to the full extent permitted by law, the Company and its shareholders,
members, partners, directors, officers, agents and employees, each Person who
controls the Company (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act) and the shareholders, members, partners,
directors, officers, agents and employees of such controlling Person, to the
fullest extent lawful, from and against any and all Losses, as incurred, arising
out of or based upon any untrue or alleged untrue statement of a material fact
contained in such Registration Statement or the related Prospectus or any
amendment or supplement thereto, or any preliminary prospectus, or arising out
of or based upon any omission or alleged omission of a material fact required to
be stated therein or necessary to make the statements therein (in the case of a
Prospectus, in the light of the circumstance under which they were made) not
misleading, to the extent, but only to the extent, that such untrue or alleged
untrue statement or omission or alleged omission is based upon any information
furnished in writing by or on behalf of such Securityholder to the Company
expressly for use in such Registration Statement or Prospectus. Each
Securityholder's indemnity obligations under this SECTION 8 shall be limited to
the total sales proceeds (net of all underwriting discounts and commissions)
actually received by such Securityholder in connection with the applicable
offering.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any Person shall be
entitled to indemnity hereunder (an "indemnified party"), such indemnified party
shall give prompt notice to the party from which such indemnity is sought (the
"indemnifying party") of any claim or of the commencement of any proceeding with
respect to which such indemnified party seeks indemnification or contribution
pursuant hereto; PROVIDED, HOWEVER, that the delay or failure to so notify the
indemnifying party shall not relieve the indemnifying party from any obligation
or liability except to the extent that the indemnifying party has been
prejudiced by such delay or
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failure. The indemnifying party shall have the
right, exercisable by giving written notice to an indemnified party promptly
after the receipt of written notice from such indemnified party of such claim or
proceeding, to assume, at the indemnifying party's expense, the defense of any
such claim or proceeding, with counsel reasonably satisfactory to such
indemnified party; PROVIDED, HOWEVER, that (i) an indemnified party shall have
the right to employ separate counsel in any such claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless: (1) the indemnifying
party agrees to pay such fees and expenses; (2) the indemnifying party fails
promptly to assume the defense of such claim or proceeding or fails to employ
counsel reasonably satisfactory to such indemnified party; or (3) the named
parties to any proceeding (including impleaded parties) include both such
indemnified party and the indemnifying party, and such indemnified party shall
have been advised by counsel that there may be one or more material legal
defenses available to it that are inconsistent with those available to the
indemnifying party or that a conflict of interest is likely to exist among such
indemnified party and any other indemnified parties (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party); and (ii) subject to clause (3) above, the
indemnifying party shall not, in connection with any one such claim or
proceeding or separate but substantially similar or related claims or
proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one firm of attorneys (together with appropriate local counsel) at any time for
all of the indemnified parties, or for fees and expenses that are not
reasonable. Whether or not such defense is assumed by the indemnifying party,
such indemnified party shall not be subject to any liability for any settlement
made without its consent (which consent shall not be unreasonably withheld). The
indemnifying party shall not consent to entry of any judgment or enter into any
settlement without the consent (which consent shall not be unreasonably
withheld) of the indemnified party unless (i) there is no finding or admission
of any violation of any rights of any Person and no effect on any other claims
that may be made against the indemnified party, (ii) the sole relief provided is
monetary damages that are paid in full by the indemnifying party and (iii) such
judgment or settlement includes as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release, in form and
substance reasonably satisfactory to the indemnified party, from all liability
in respect of such claim or litigation for which such indemnified party would be
entitled to indemnification hereunder.
(d) CONTRIBUTION. If the indemnification provided for in this SECTION 8
is unavailable to an indemnified party in respect of any Losses (other than in
accordance with its terms), then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the indemnifying party, on
the one hand, and such indemnified party, on the other hand, in connection with
the actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such indemnifying
party, on the one hand, and indemnified party, on the other hand, shall be
determined by reference to, among other things, whether any action in question,
including any untrue statement of a material fact or omission or alleged
omission to state a material fact, has been taken by, or relates to information
supplied by, such indemnifying party or indemnified party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent any such action, statement or omission. The amount paid or payable by a
party as a result of any Losses shall be deemed to include any legal or other
fees or
13
expenses incurred by such party in connection with any investigation or
exceeding. The parties hereto agree that it would not be just and equitable if
contribution pursuant to this SECTION 8(D) were determined by PRO RATA
allocation or by any other method of location that does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this SECTION 8(D), an indemnifying party that is a Securityholder shall not be
required to contribute any amount which is in excess of the amount by which the
total proceeds (net of all underwriting discounts and commissions) received by
such Securityholder from the sale of such holder's Registrable Securities in the
applicable offering exceeds the amount of any damages that such indemnifying
party 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 1l(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contributions contained in any underwriting agreement
entered into by the Company and Securityholders in connection with any
underwritten public offering are in conflict with the foregoing provisions, the
provisions in the underwriting agreement shall control.
SECTION 9. ADDITIONAL REGISTRATION RIGHTS. (a) Except as set forth in
that certain Registration Rights Agreement, dated as of April 27, 2001, by and
among the Company, Xxxxx X. Xxxx and Xxxxxx X. Xxxxxxxxxx, as of the date
hereof, the Company has no outstanding registration rights held by any of the
holders of the Company's outstanding securities.
(b) The Company shall not, without the consent of the Required
Securityholders, grant to any other Person any demand registration rights or any
piggyback registration rights which have priority over or are otherwise
inconsistent with the registration rights granted pursuant to this Agreement.
SECTION 10. TRANSFERABILITY OF REGISTRATION RIGHTS. The registration
rights set forth in this Agreement are transferable to each transferee of
Registrable Securities who receives at least 100,000 shares of Registrable
Securities (as currently constituted and subject to subsequent adjustments for
stock splits, stock dividends, reverse stock splits and the like), subject to
compliance with any transfer restrictions contained in any agreement with the
Company. Each subsequent holder of Registrable Securities must consent in
writing to be bound by the terms and conditions of this Agreement in order to
acquire the rights granted pursuant to this Agreement.
SECTION 11. MISCELLANEOUS.
(a) RULES 144 AND 144A. The Company covenants that it will file any
reports required to be filed by it under the Securities Act and the Exchange Act
and will make and keep current public information regarding the Company
available so as to enable Securityholders to sell such Registrable Securities
(i) without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rules 144 and 144A under the Securities Act, as each
such Rule may be amended from time to time or (b) any similar rule or rules
hereafter adopted by the SEC, so long as the exemptions provided for in each
such Rule would otherwise be available to such holders at such time and/or (ii)
pursuant to a registration statement on Form S-3 (or any successor form
thereto). Upon the request of any Securityholder, the Company will
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forthwith deliver to such holder a written statement as to whether it has
complied with the reporting requirements of Rules 144 and 144A or whether it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(or any successor forms thereto).
(b) TERMINATION. This Agreement and the obligations of the Company and
the Securityholders (other than SECTION 8 hereof) shall terminate on the first
date on which no Registrable Securities remain outstanding.
(c) NOTICES. All notices, demands, requests or other communications
that may be or are required to be given, served, or sent by any party to any
other party pursuant to this Agreement shall be sufficiently given or made if in
writing and either delivered in person with receipt acknowledged or sent by
registered mail, return receipt requested, postage prepaid, or by Federal
Express or another overnight courier service addressed as follows:
(i) If to the Company:
Cannondale Corporation
00 Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxx & Xxxxxx
Two Stamford Plaza
000 Xxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Facsimile: (000) 000-0000
(ii) If to Pegasus:
Pegasus Partners II, L.P.
00 Xxxxx Xxxx
Xxx Xxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Uri
Xxxx Xxxxx
Facsimile: (000) 000-0000
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with a copy to:
Sidley Xxxxxx Xxxxx & Xxxx
Bank Xxx Xxxxx
00 Xxxxx Xxxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx
Facsimile: (000) 000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, or three (3) Business Days after the same
shall have been deposited in the United States mail, or one (1) Business Day
after the same shall have been delivered to Federal Express or another overnight
courier service.
(d) SEVERABILITY. If any provision of this Agreement shall be declared
to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
(e) ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, devisees, legatees,
legal representatives, successors and permitted assigns.
(f) NO THIRD PARTY BENEFICIARY. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or assigns, and it is not the intention of the parties to
confer third-party beneficiary rights upon any other Person other than any
Person entitled to indemnity under SECTION 8.
(g) ENTIRE AGREEMENT. This Agreement represents the entire agreement of
the parties and shall supersede any and all previous contracts, arrangements or
understandings between the parties hereto with respect to the subject matter
hereof.
(h) AMENDMENTS AND WAIVERS. Except as otherwise provided herein, 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 the Required
Securityholders, which amendment, modification, supplement, waiver or departure
shall be binding on all Securityholders.
(i) INTERPRETATION. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(j) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be one and the same agreement, and shall become
effective when counterparts have been signed by each of the parties and
delivered to each other party.
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(k) REMEDIES. No remedy conferred by any of the provisions of this
Agreement is intended to be exclusive of any other remedy, and each and every
remedy hall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise. The election of any one or more remedies by any party hereto shall
not constitute a waiver by any such party of the right to pursue any other
available remedies.
It is acknowledged that a breach of the provisions of this Agreement
could not be compensated adequately by money damages. Accordingly, any party
hereto shall be entitled, in addition to any other right or remedy available to
it, to an injunction restraining such breach or threatened breach and to
specific performance of any provisions of this Agreement, and in either case no
bond or other security shall be required in connection therewith. If any action
shall be brought in equity to enforce any of the provisions of this Agreement,
none of the parties hereto shall raise the defense that there is an adequate
remedy at law and each of the parties hereto waives any and all defenses it may
have on the ground of lack of jurisdiction or competence of the court to grant
such injunction or other equitable relief. The existence of this right will not
preclude any such Person from pursuing any other rights and remedies at law or
in equity which such Person may have.
(l) GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE. In all respects,
including all matters of construction, validity and performance, this Agreement
and the obligations arising hereunder shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York applicable to
contracts made and performed in such state, without regard to the principles
thereof regarding conflicts of laws, and any applicable laws of the United
States of America. THE COMPANY AND EACH SECURITYHOLDER HEREBY IRREVOCABLY SUBMIT
TO THE JURISIDCTION OF THE STATE AND FEDERAL COURTS SITTING IN NEW YORK, NEW
YORK IN ANY ACTION, SUIT OR PROCEEDING ARISING IN CONNECTION WITH THIS
AGREEMENT, AND HEREBY CONSENT TO PERSONAL JURISDICTION, WAIVE ANY OBJECTION AS
TO JURISDICTION OR VENUE, AND AGREE NOT TO ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION OR VENUE, IN XXX XXXX XX XXX XXXX, XXXXX XX XXX XXXX. Service of
process on the Company or a Securityholder in any action arising out of or
relating to this Agreement shall be effective if mailed to such party in
accordance with the procedures and requirements set forth in SECTION 1L(C).
Nothing herein shall preclude any Securityholder or the Company from bringing
suit or taking other legal action in any other jurisdiction.
(m) MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE UNITED
STATES STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE
PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A UNITED STATES JUDGE APPLYING
SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER THIS AGREEMENT.
17
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date and year first written above.
CANNONDALE CORPORATION
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Assistant Treasurer
PEGASUS PARTNERS II, L.P.
By: Pegasus Investors II, L.P., its General Partner
By: Pegasus Investors II GP, L.L.C., its General Partner
By: /s/ Xxxxx Uri
-------------------------------------------
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