EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of March , 1997, among
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COMPUTER GENERATED SOLUTIONS, INC., a Delaware corporation (the "Company"), and
Xxxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx (Xxxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx
together being the "Stockholders").
W I T N E S S E T H :
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WHEREAS, the Company and the Stockholders desire to enter into this
Agreement for the purpose, among others, of establishing registration rights for
the Holders (as hereinafter defined).
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following terms
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shall have the following meanings:
"Blackout Period" shall mean any Section 6(a) Period and any Section
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6(b) Period.
"Effective Period" shall mean a period commencing on the date of this
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Agreement and ending on the first date as of which all Registrable Securities
cease to be Registrable Securities.
"IPO" has the meaning specified in Section 3(a).
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"Holders" shall mean each Stockholder and each Permitted Assignee that
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becomes a holder of Registrable Securities, provided that if such Person is not
a Stockholder, such Permitted Assignee has agreed in writing to become a Holder
hereunder and to be bound by the terms and conditions of this Agreement.
"Permitted Assignee" shall mean (w) Xxxxxx Xxxxxxxx and Xxxxxx
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Xxxxxxxx and any of their descendants; (x) a spouse or surviving spouse (even if
remarried) of any individual named or described in (w) above; (y) any estate,
trust, guardianship, custodianship, curatorship or other fiduciary arrangement
for the primary benefit of any one or
more of the individuals named or described in (w) or (x) above; and (z) any
corporation, partnership, limited liability company or other business
organization controlled by and substantially all of the interests in which are
owned, directly or indirectly, by any one or more of the individuals and
entities named or described in (w), (x), and (y) above.
"Prospectus" shall mean the prospectus included in any Registration
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Statement, as amended or supplemented by any prospectus supplement and by all
other amendments and supplements, including post-effective amendments and
supplements and all material incorporated by reference in such prospectus.
"Registrable Securities" shall mean any and all shares of common stock
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of the Company (the "Common Shares") which are, on or after the date hereof,
held by any of the Stockholders or issuable to any of the Stockholders upon the
conversion or exercise of any warrant, right or other security or which are, on
or after the date hereof, issued as a dividend or other distribution with
respect to, in exchange for or in replacement of, any Common Shares or other
securities of the Company. Common Shares shall not cease to be Registrable
Securities because of their transfer to a Permitted Assignee.
"Registration Statement" means any registration statement (including a
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Shelf Registration) of the Company referred to in Section 3 or 4, including any
Prospectus, amendments and supplements to any such registration statement,
including post-effective amendments, and all exhibits and all material
incorporated by reference in any such registration statement.
"SEC" means the Securities and Exchange Commission.
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"Section 6(a) Period" has the meaning specified in Section 6(a).
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"Section 6(b) Period" has the meaning specified in Section 6(b).
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"Securities Act" means the Securities Act of 1933, as amended,
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including the rules and regulations promulgated thereunder.
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"Shelf Registration" means a "shelf" registration statement on an
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appropriate form pursuant to Rule 415 under the Securities Act (or any successor
rule that may be adopted by the SEC).
"underwritten registration or underwritten offering" shall mean an
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offering in which securities of the Company are sold to an underwriter for
reoffering to the public.
2. Securities Subject to this Agreement. The securities entitled to
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the benefits of this Agreement are the Registrable Securities. For the purposes
of this Agreement, as to any particular Registrable Securities, such Registrable
Securities shall cease to be Registrable Securities only when and to the extent
that (i) a Registration Statement covering such Registrable Securities has been
declared effective under the Securities Act and such Registrable Securities have
been disposed of pursuant to such effective Registration Statement, (ii) such
Registrable Securities are distributed to the public pursuant to and in
accordance with Rule 144 (or any similar provision then in force) under the
Securities Act, (iii) such Registrable Securities have been otherwise
transferred to a party that is not a Permitted Assignee or (iv) such Registrable
Securities have ceased to be outstanding.
3. Piggy-Back Registration Rights. (a) If, at any time after the
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effective date of an initial public offering of Common Shares pursuant to a
registration statement filed under the Securities Act (an "IPO"), the Company
proposes to register any securities under the Securities Act in connection with
any offering of its securities, whether or not for its own account, the Company
shall (i) give written notice at least fifteen business days prior to the filing
thereof to each Holder of Registrable Securities, specifying the approximate
date on which the Company proposes to file such Registration Statement and the
intended method of distribution in connection therewith, and advising such
Holder of such Holder's right to have any or all of the Registrable Securities
then held by such Holder included among the securities to be covered thereby and
(ii) at the written request of any such Holder given to the Company at least two
business days prior to the proposed filing date, include among the securities
covered by such Registration Statement the number of Registrable Securities that
such Holder shall have requested be so included. Subject to reduction in
accordance with paragraph (b) of
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this Section 3, the Company shall cause the Registration Statement to include
the Registrable Securities requested to be included in the Registration
Statement.
(b) If the lead managing underwriter of an underwritten offering made
pursuant to this Section 3(a) shall advise the Company in writing (with a copy
to the Holders of Registrable Securities participating in such offering) that,
in its opinion, the number of Registrable Securities requested to be included in
such registration exceeds the number which can be sold in such offering within a
price range acceptable to the Company, the Company will reduce the Registrable
Securities to be included in such offering to the number which the Company is so
advised can be sold in such offering within such price range. Any such
reduction shall be on a pro rata basis based on the total number of Registrable
Securities to be included in such Registration Statement by the Company and
stockholders of the Company, including Holders of Registable Securities.
(c) Nothing in this Section 3 shall create any liability on the part
of the Company to the Holders of Registrable Securities if the Company for any
reason should decide not to file a Registration Statement proposed to be filed
under Section 3(a) or to withdraw such Registration Statement subsequent to its
filing, regardless of any action whatsoever that a Holder may have taken,
whether as a result of the issuance by the Company of any notice hereunder or
otherwise.
(d) A request by Holders to include Registrable Securities in a
proposed offering pursuant to Section 3(a) shall not be deemed to be a request
for a demand registration pursuant to Section 4.
4. Demand Registration Rights. (a) Upon the written request of a
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Holder or Holders of Registrable Securities that the Company effect the
registration with the SEC, under and in accordance with the provisions of the
Securities Act, of all or part of such Holder's or Holders' Registrable
Securities and specifying the aggregate number of shares of Registrable
Securities requested to be so registered, the Company will promptly give written
notice of such requested registration to all other Holders of Registrable
Securities. Within 15 days after receipt of the Company's notice each such
other Holder shall notify the Company in writing as to whether such Holder
wishes to have any or all of its Registrable Securities included in such
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requested registration. Thereupon, the Company shall use its best efforts to
file a Registration Statement as expeditiously as practicable (the terms of any
underwritten offering or other distribution to be determined by the Holders of a
majority of the Registrable Securities so requested to be registered). The
Holders shall have unlimited rights to make demand registrations; provided,
however, that the Company shall not be required to take any action pursuant to
this Section 4:
(i) if the Company has effected a registration pursuant to this
Section 4 within the 90-day period next preceding such request;
(ii) if the Company shall at the time have effective a Shelf
Registration pursuant to which the Holder or Holders that requested
registration could effect the disposition of such Registrable Securities
pursuant to an underwritten offering or such other method of distribution
requested by such Holder or Holders; or
(iii) during the pendency of any Blackout Period;
and provided, further, that the Company shall be permitted to satisfy
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its obligations under this Section 4(a) by amending (to the extent permitted by
applicable law) any Shelf Registration previously filed by the Company under the
Securities Act so that such Shelf Registration (as amended) shall permit the
disposition (in accordance with the intended methods of disposition specified as
aforesaid) of all of the Registrable Securities for which a demand for
registration has been made under this Section 4(a).
(b) The Company will not include any securities that are not
Registrable Securities in any Registration Statement (including a Shelf
Registration referred to in the second proviso of Section 4(a)) filed pursuant
to a demand made under this Section 4 without the prior written consent of the
Holders of a majority in number of the Registrable Securities covered by such
Registration Statement (including a Shelf Registration referred to in the second
proviso of Section 4(a)).
(c) If the lead managing underwriter of an underwritten offering made
pursuant to this Section 4 shall advise the Company in writing (with a copy to
the Holders of Registrable Securities participating in such offering) that,
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in its opinion, the number of Registrable Securities requested to be included in
such registration exceeds the number which can be sold in such offering within a
price range acceptable to the Holders of a majority in number of the Registrable
Securities requested to be included in such offering, the Company will reduce
the Registrable Securities requested to be included in such offering to the
number which the Company is so advised can be sold in such offering within such
price range. Any such reduction shall be on a pro rata basis based on the total
number of Registrable Securities to be included in such Registration Statement
by each Holder.
5. Selection of Underwriters. In connection with any offering
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pursuant to a Registration Statement filed pursuant to a demand made in
accordance with Section 4, the Company shall have the right to select a managing
underwriter or underwriters to administer the offering, so long as such managing
underwriter or underwriters shall be reasonably satisfactory to Holders of a
majority in number of the Registrable Securities to be included in such
offering; provided, however, that such Holders shall have the right to select
one co-managing underwriter, so long as such co-managing underwriter shall be
reasonably satisfactory to the Company. The managing underwriter or
underwriters selected by the Company shall be deemed reasonably satisfactory to
Holders of a majority in number of the Registrable Securities to be included in
such offering unless such Holders send a written notice of objection to the
Company within 10 days of receipt of notice from the Company of the appointment
of a managing underwriter or underwriters and the co-managing underwriter
selected by such Holders shall be deemed to be reasonably satisfactory to the
Company unless the Company sends a written notice of objection to such Holders
within 10 days of receipt of notice from such Holders of the appointment of a
co-managing underwriter.
6. Blackout Periods. (a) If the Company determines in good faith
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that the registration and distribution of Registrable Securities (or the use of
the Registration Statement or related Prospectus) would interfere with any
pending financing, acquisition, corporate reorganization or any other corporate
development involving the Company or any of its subsidiaries (or would require
premature disclosure thereof) and promptly gives the Holders of Registrable
Securities written notice of such determination, the Company shall be entitled
to postpone the
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filing of the Registration Statement, any amendment thereto or any Prospectus
supplement otherwise required to be prepared and filed by the Company pursuant
to Section 3 or 4 and/or elect that the Registration Statement (including any
Prospectus contained therein) not be used for a reasonable period of time, but
not to exceed 90 days (a "Section 6(a) Period"). Any such written notice shall
contain a general statement of the reasons for such postponement or restriction
on use and an estimate of the anticipated delay. The Company shall promptly
notify each Holder of the expiration or earlier termination of a Section 6(a)
Period.
(b) If (i) during the Effective Period, the Company shall file a
registration statement (other than in connection with the registration of
securities issuable pursuant to an employee stock option, stock purchase or
similar plan on Form S-8 or pursuant to a merger, exchange offer or a
transaction of the type specified in Rule 145(a) under the Securities Act) with
respect to any Common Shares and (ii) with reasonable written prior notice, (A)
the Company (in the case of a non-underwritten offering pursuant to such
registration statement) advises the Holders in writing that a sale or
distribution of Registrable Securities would adversely affect such offering or
(B) the managing underwriter or underwriter (in the case of an underwritten
offering) advise the Company in writing (in which case the Company shall notify
the Holders), that a sale or distribution of Registrable Securities would
adversely impact such offering, then each Holder shall refrain from effecting
any sale or distribution of Registrable Securities (other than any Registrable
Securities included in any Registration Statement), including sales pursuant to
Rule 144 under the Securities Act, during the 10-day period prior to, and during
the 180-day period beginning on, the effective date of such registration
statement (a "Section 6(b) Period"); provided that this Section 6(b) shall not
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restrict the offer or sale of any Registrable Securities which have already been
registered pursuant to a Registration Statement or otherwise relieve the Company
of its obligations pursuant to Sections 3 and 4.
(c) The period for which a Registration Statement shall be kept
effective pursuant to Section 7(b) shall be extended by a number of days equal
to the number of days of any Blackout Period occurring during such period. The
beginning of any Blackout Period shall be at least 120 days after the end of any
prior Blackout Period. Notwithstanding
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anything to the contrary contained herein, the aggregate number of days included
in all Blackout Periods during any consecutive 18 months during the Effective
Period shall not exceed 180 days.
(d) During the five day period prior to, and during the 90 day period
commencing on, the effective date of a registration statement filed by the
Company on behalf of Holders in connection with an underwritten offering
pursuant to Section 4(a), the Company hereby agrees not to effect (except
pursuant to employee benefit plans or to the extent permitted by Holders of a
majority of outstanding Registrable Securities) any public sale or distribution
of Common Shares.
7. Registration Procedures. If and whenever the Company is required
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to use its best efforts to effect or cause the registration of any Registrable
Securities under the Securities Act as provided in this Agreement, the Company
shall, as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement with
respect to such Registrable Securities on any form for which the Company
then qualifies or that counsel for the Company shall deem appropriate, and
which form shall be available for the sale of the Registrable Securities in
accordance with the intended methods of distribution thereof proposed by
the Holders of Registrable Securities to be included in such Registration
Statement, and use its best efforts to cause such Registration Statement to
become and remain effective in accordance with the provisions hereof;
(b) prepare and file with the SEC amendments and post-effective
amendments to such Registration Statement as may be necessary to maintain
the effectiveness of such registration and to otherwise comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement until the earlier of (x)
the date which is 180 days after the effective date of such registration
statement and (y) such time as all Registrable Securities covered by such
Registration Statement have ceased to be Registrable Securities (it being
understood that the Company at its option may determine to maintain such
effectiveness for a longer period, whether pursuant to a Shelf Registration
or otherwise), and cause the related Prospectus to be
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supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the Securities Act for such period
of time as a Prospectus is required to be delivered; provided, however,
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that a reasonable time before filing a Registration Statement or
Prospectus, 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, the managing underwriter
and their respective counsel for review and comment, copies of all
documents proposed to be filed and shall not file any such documents (other
than as aforesaid) to which any of them reasonably object prior to the
filing thereof;
(c) furnish to each Holder of such Registrable Securities and to any
underwriter in connection with an underwritten offer such number of
conformed copies of such Registration Statement and of each amendment and
post-effective amendment thereto (in each case including all exhibits) and
such number of copies of any Prospectus or Prospectus supplement and such
other documents as such Holder or underwriter may reasonably request in
order to facilitate the disposition of the Registrable Securities by such
Holder or underwriter (the Company hereby consents to the use (subject to
the limitations set forth in the last paragraph of this Section 7) of the
Prospectus or any amendment or supplement thereto in connection with such
disposition);
(d) use its best efforts to register or qualify such Registrable
Securities covered by such Registration Statement under such other
securities or "blue sky" laws of such jurisdictions as each Holder of such
Registrable Securities shall reasonably request, except that the Company
shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction where, but for the
requirements of this Section 7(d), it would not be obligated to be so
qualified, to subject itself to taxation in any such jurisdiction, or to
consent to general service of process in any such jurisdiction;
(e) notify each Holder of any such Registrable Securities covered by
such Registration Statement, at any time when a Prospectus relating thereto
is required to be delivered under the Securities Act of the
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Company's becoming aware that the Prospectus included in such Registration
Statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, and at the request of any such Holder, prepare
and furnish to such Holder a reasonable number of copies of an amendment or
supplement to such Registration Statement or related Prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, such Prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing;
(f) notify each such Holder of Registrable Securities covered by such
Registration Statement at any time:
(i) when the Prospectus or any Prospectus supplement or post-
effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same
has become effective;
(ii) of any request by the SEC for amendments or supplements
to the Registration Statement or the Prospectus or for other
additional information;
(iii) of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement or any order
preventing the use of a related Prospectus, or the initiation (or any
overt threats) of any proceedings for such purposes;
(iv) of the receipt by the Company of any notification of the
suspension of the qualification of any of the Registrable Securities
for sale in any jurisdiction or the initiation (or overt threats) of
any proceeding for that purpose; and
(v) if at any time the representations and warranties of the
Company contemplated by
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paragraph (i)(i) below cease to be true and correct in all material
respects;
(g) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security
holders an earnings statement that shall satisfy the provisions of Section
11(a) of the Securities Act, provided that the Company shall be deemed to
have complied with this paragraph if it has complied with Rule 158 of the
Securities Act;
(h) use its best efforts to cause all such Registrable Securities to
be listed on any securities exchange or automated quotation system on which
the class of Registrable Securities being registered is then listed, if
such Registrable Securities are not already so listed and if such listing
is then permitted under the rules of such exchange or market, as the case
may be, and to provide a transfer agent and registrar for such Registrable
Securities covered by such Registration Statement no later than the
effective date of such Registration Statement;
(i) enter into agreements (including an underwriting agreement in the
form customarily entered into by the Company in a comparable underwritten
offering) and take all other appropriate and all commercially reasonable
actions in order to expedite or facilitate the disposition of such
Registrable Securities and in such connection, whether or not an
underwriting agreement is entered into and whether or not the registration
is an underwritten registration:
(i) make such representations and warranties to the Holders of
such Registrable Securities and the underwriters, if any, in form,
substance and scope as are customarily made by the Company to
underwriters in comparable underwritten offerings;
(ii) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions shall be reasonably satisfactory
(in form, scope and substance) to the managing underwriters, if any,
and the Holders of a majority in number of the Registrable Securities
being sold) addressed to all such Holders of Registrable Securities
included in such Registration Statement and the underwriters
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covering the matters customarily covered in opinions requested in
comparable underwritten offerings by the Company;
(iii) obtain "cold comfort" letters and updates thereof from
the Company's independent certified public accountants addressed to
the selling Holders of Registrable Securities and the underwriters, if
any, such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters by independent
accountants in connection with comparable underwritten offerings on
such date or dates as may be reasonably requested by the managing
underwriter;
(iv) provide the indemnification in accordance with the
provisions and procedures of Section 10 hereof to all parties to be
indemnified pursuant to such Section; and
(v) deliver such documents and certificates as may be
reasonably requested by the Holders of a majority in number of the
Registrable Securities being sold and the managing underwriters, if
any, to evidence compliance with clause (f) above and with any
customary conditions contained in the underwriting agreement or other
agreement entered into by the Company;
(j) cooperate with the Holders of Registrable Securities covered by
such Registration Statement and the managing underwriter or underwriters to
facilitate, to the extent reasonable under the circumstances, the timely
preparation and delivery of certificates (not bearing any restrictive
legends) representing the securities to be sold under such Registration
Statement, and enable such securities to be in such denominations and
registered in such names as the managing underwriter or underwriters, if
any, or such Holders may request and/or in a form eligible for deposit with
the Depository Trust Company;
(k) make available for inspection by any Holder included in such
Registration Statement, any underwriter participating in any disposition
pursuant to such Registration Statement, and any attorney, accountant or
other agent retained by any such Holder
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or underwriter (collectively, the "Inspectors"), reasonable access to
appropriate officers of the Company and the Company's subsidiaries to ask
questions and to obtain information reasonably requested by such Inspector
and 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
responsibility; provided, however, that the Records that the Company
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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 such Inspector signs a confidentiality agreement
reasonably satisfactory to the Company or either (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission of a
material fact in such Registration Statement or (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction; provided, further, that any decision regarding the
disclosure of information pursuant to subclause (i) shall be made only
after consultation with counsel for the applicable Inspectors; and
provided, further, that each Holder agrees that it will, promptly after
learning that disclosure of such Records is sought in a court having
jurisdiction, give notice to the Company and allow the Company, at the
Company's expense, to undertake appropriate action to prevent disclosure of
such Records; and
(l) in the event of the issuance of any stop order suspending the
effectiveness of the Registration Statement or of any order suspending or
preventing the use of any related Prospectus or suspending the
qualification of any Registrable Securities included in the Registration
Statement for sale in any jurisdiction, the Company will use all
commercially reasonable efforts promptly to obtain its withdrawal.
The Company may require each Holder as to which any registration is
being effected to furnish the Company with such information regarding such
Holder and pertinent to the disclosure requirements relating to the registration
and the distribution of such securities as the Company may from time to time
reasonably request in writing.
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Each Holder agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 7(e) or Section
7(f)(iii) or (iv), such Holder shall forthwith discontinue disposition of
Registrable Securities pursuant to the Prospectus or Registration Statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 7(e) or, in
the case of any such notice of an event of the kind described in Section
7(f)(iii) or (iv), until it is advised (the "Advice") in writing by the Company
that the use of the applicable Prospectus can be resumed, and, in any such case,
if so directed by the Company, such Holder will 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
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the period mentioned in Section 7(b) shall be extended by
the number of days during the period from the date of the giving of such notice
pursuant to Section 7(e) or Section (f), as the case may be, through the date
when each Holder of Registrable Securities covered by such Registration
Statement shall have received the copies of the supplemented or amended
Prospectus contemplated by Section 7(e) or the Advice, as the case may be.
8. Registration Expenses. With respect to a Demand Registration or
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Piggy-Back Registration, the Company shall bear and pay all expenses incurred in
connection with any registration, filing or qualification of Registrable
Securities with respect to the registrations made pursuant to Sections 3 or 4 as
the case may be, including (without limitation) all registration, filing, and
qualification fees, printers' and accounting fees, fees and disbursements of
counsel for the Company and the Holders (it being understood that only fees and
disbursements of one counsel to all Holders of Registrable Securities shall be
paid and borne by the Company), but excluding underwriting discounts and
commissions relating to Registrable Securities.
9. Rule 144. The Company agrees that it shall timely file the
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reports required to be filed by it under the Securities Act or the Exchange Act
(including, without limitation, the reports under sections 13 and 15(d) of the
Exchange Act referred to in paragraph (c)(l) of Rule 144 under the Securities
Act), and shall take such further actions as any Holder may reasonably request,
all to the
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extent required to enable Holders to sell Registrable Securities, from time to
time, pursuant to the resale limitations of (a) Rule 144 under the Securities
Act, as such rule may be hereafter amended, or (b) any similar rules or
regulations hereafter adopted by the SEC. Upon the written request of any
Holder, the Company shall deliver to such Holder a written statement verifying
that it has complied with such requirements.
10. Indemnification; Contribution. (a) Indemnification by the
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Company. The Company agrees to indemnify and hold harmless each Holder of
Registrable Securities included in any Registration Statement, its trustees,
officers and directors and each Person who controls such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act),
and any agent or investment adviser thereof against all losses, claims, damages,
liabilities and expenses (including reasonable attorneys' fees and expenses)
incurred by such party pursuant to any actual or threatened action, suit,
proceeding or investigation arising out of or based upon (i) any untrue or
alleged untrue statement of material fact contained in any Registration
Statement, any Prospectus or preliminary Prospectus, or any amendment or
supplement to any of the foregoing or (ii) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein (in the case of a Prospectus or a preliminary Prospectus,
in light of the circumstances then existing) not misleading, except in each case
insofar as the same arise out of or are based upon, any such untrue statement or
omission made in reliance on and in conformity with information with respect to
such Holder furnished in writing to the Company by such Holder or its counsel
expressly for use therein. In connection with an underwritten offering, the
Company will indemnify the underwriters thereof, their officers, directors and
agents and each Person who controls such underwriters (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) to the same
extent as provided above with respect to the indemnification of the Holders.
Notwithstanding the foregoing provisions of this Section 10(a), the Company will
not be liable to any Holder, any Person who participates as an underwriter in
the offering or sale of Registrable Securities or any other Person, if any, who
controls such Holder or underwriter (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act), under the indemnity agreement
in this Section 10(a) for any such
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loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense that arises out of such Holder's or other Person's failure to send or
deliver a copy of a final Prospectus to the Person asserting an untrue statement
or alleged untrue statement or omission or alleged omission at or prior to the
written confirmation of the sale of the Registrable Securities to such Person if
such statement or omission was corrected in such final Prospectus and the
Company has previously furnished copies thereof to such Holder and underwriter
in accordance with this Agreement.
(b) Indemnification by Holders of Registrable Securities. In
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connection with the any registration of Registrable Securities pursuant to this
Agreement, each Holder of Registrable Securities included in such registration
shall furnish to the Company and any underwriter in writing such information,
including the name, address and the amount of Registrable Securities held by
such Holder, as the Company or any underwriter reasonably requests for use in
the Registration Statement relating to such registration or the related
Prospectus and agrees to indemnify and hold harmless the Company, all other
Holders and any underwriter, each such party's officers and directors and each
Person who controls each such party (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act), and any agent or investment
adviser thereof against all losses, claims, damages, liabilities and expenses
(including reasonable attorneys' fees and expenses) incurred by each such party
pursuant to any actual or threatened action, suit, proceeding or investigation
arising out of or based upon (i) any untrue or alleged untrue statement of
material fact contained in any Registration Statement, any Prospectus or
preliminary Prospectus, or any amendment or supplement to any of the foregoing
or (ii) any omission or alleged omission to state therein a material tact
required to be stated therein or necessary to make the statements therein (in
the case of a Prospectus or a preliminary Prospectus, in light of the
circumstances then existing) not misleading, but only to the extent that any
such untrue statement or omission is made in reliance on and in conformity with
information with respect to such Holder furnished in writing to the Company or
any underwriter by such Holder or its counsel specifically for inclusion
therein.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
--------------------------------------
indemnification hereunder agrees to give prompt written notice to the
indemnifying party after the
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receipt by such indemnified party of any written notice of the commencement of
any action, suit, proceeding or investigation or threat thereof made in writing
for which such indemnified party may claim indemnification or contribution
pursuant to this Section 10 (provided that failure to give such notification
shall not affect the obligations of the indemnifying party pursuant to this
Section 10 except to the extent the indemnifying party shall have been actually
prejudiced as a result of such failure). In case any such action shall be
brought against any indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under these indemnification provisions for any
legal expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. Notwithstanding the foregoing, if (i)
the indemnifying party shall not have employed counsel reasonably satisfactory
to such indemnified party to take charge of the defense of such action within a
reasonable time after notice of commencement of such action, or (ii) the actual
or potential defendants in, or targets of, any such action include both the
indemnifying party and such indemnified party and such indemnified party shall
have reasonably concluded that there may be legal defenses available to it which
are different from or additional to those available to the indemnifying party
which, if the indemnifying party and such indemnified party were to be
represented by the same counsel, could result in a conflict of interest for such
counsel or materially prejudice the prosecution of the defenses available to
such indemnified party, then such indemnified party shall have the right to
employ separate counsel, in which case the fees and expenses of one counsel or
firm of counsel (plus one local counsel or firm of counsel) selected by a
majority in interest of the indemnified parties shall be borne by the
indemnifying party and the fees and expenses of all other counsel retained by
the indemnified parties shall be paid by the indemnified parties. No indemnified
party shall consent to entry of any
17
judgment or enter into any settlement without the consent (which consent, in the
case of an action, suit, claim or proceeding shall not be unreasonably withheld)
of each indemnifying party.
(d) Contribution. If the indemnification from the indemnifying party
------------
provided for in this Section 10 is unavailable to an indemnified party hereunder
in respect of any losses, claims, damages, liabilities or expenses referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities and expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified party in connection with the actions which resulted in
such losses, claims, damages, liabilities and expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying
party and indemnified party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, such indemnifying
party or indemnified party, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such action. The amount
paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include, subject
to the limitations set forth in Section 10(c), any legal and other fees and
expenses reasonably incurred by such indemnified party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 10(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 10(d), no underwriter shall be
required to
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contribute any amount in excess of the amount by which the total price at which
the Registrable Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission and no Holder shall be required to
contribute any amount in excess of the amount by which the total price at which
the Registrable Securities of such Holder were offered to the public exceeds the
amount of any damages which such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
If indemnification is available under this Section 10, the
indemnifying parties shall indemnify each indemnified party to the fullest
extent provided in Section 10(a) or (b), as the case may be, without regard to
the relative fault of such indemnifying parties or indemnified party or any
other equitable consideration provided for in this Section 10(d).
(e) The provisions of this Section 10 shall be in addition to any
liability which any party may have to any other party and shall survive any
termination of this Agreement. The indemnification provided by this Section 10
shall remain in full force and effect irrespective of any investigation made by
or on behalf of an indemnified party, so long as such indemnified party does not
act in a fraudulent, reckless or grossly negligent manner.
11. Participation in Underwritten Offerings. No Holder may
---------------------------------------
participate in any underwritten offering hereunder unless such Holder (a) in the
case of a registration pursuant to Section 3, agrees to sell such Holder's
securities on the basis provided in any underwriting arrangements approved by
the Company in its reasonable discretion and (b) completes and executes all
questionnaires, powers of attorney, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements.
12. Miscellaneous. (a) Remedies. Each Holder, in addition to being
------------- --------
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.
(b) 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,
19
unless the Company has obtained the written consent of Holders of at least a
majority in number of the Registrable Securities then outstanding.
(c) Notices. Notices, requests, permissions, waivers, and other
-------
communications hereunder shall be in writing and shall be deemed to have been
duly given if signed by the respective Persons giving them (in the case of any
corporation the signature shall be by an officer thereof) and delivered by hand,
deposited in the United States mail (registered or certified, return receipt
requested), properly addressed and postage prepaid, or delivered by telecopy:
If to a Stockholder, to:
Xxxxxx Xxxxxxxx
00 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Xxxxxx Xxxxxxxx
0 Xxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
If to the Company, to:
COMPUTER GENERATED SOLUTIONS, INC.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: General Counsel
(d) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and assigns of each of the
parties; provided, however, that any successor to a Holder shall have agreed in
writing to become a Holder under this Agreement and to be bound by the terms and
conditions hereof.
(e) Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
20
(f) Descriptive Headings. The descriptive headings used herein are
--------------------
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(g) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
(h) Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all remaining provisions contained
herein shall not be in any way impaired thereby, it being intended that all of
the rights and privileges of the Holders shall be enforceable to the fullest
extent permitted by law.
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(i) Entire Agreement. This Agreement is intended by the parties as a
----------------
final expression and a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter hereof.
There are no restrictions, promises, warranties or undertakings with respect to
the subject matter hereof, other than those set forth or referred to herein.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COMPUTER GENERATED SOLUTIONS, INC.
By:
----------------------------------
Name:
Title:
-------------------------------------
Xxxxxx Xxxxxxxx
-------------------------------------
Xxxxxx Xxxxxxxx
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