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EXHIBIT 10.10
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
DATED AS OF JANUARY 31, 2000
BETWEEN
KPMG CONSULTING, INC.
AND
KPMG LLP
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REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of
January 31, 2000 between KPMG Consulting, Inc., a Delaware corporation (the
"Company"), and KPMG LLP, a Delaware registered limited liability partnership
("KPMG").
RECITALS
WHEREAS, pursuant to that certain Separation Agreement dated
as of December 29, 1999 by and among the Company, KPMG Consulting, LLC, a
Delaware limited liability company, and KPMG (the "Separation Agreement"), KPMG
agreed to cause certain assets and liabilities of its consulting business to be
transferred, directly or indirectly, to the Company (the "Separation");
WHEREAS, in connection with the Separation and pursuant to the
Separation Agreement, the Company issued to KPMG and certain of its partners and
principals the Shares (as defined below) and agreed to provide certain rights to
KPMG to cause the Shares to be registered under the Securities Act (as defined
below); and
WHEREAS, the parties hereto hereby desire to set forth the
Holders' rights (as defined below) and the Company's obligations to cause the
registration of the Registrable Securities (as defined below) pursuant to the
Securities Act.
NOW, THEREFORE, in consideration of the mutual covenants
included in the Separation Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Section 1. Definitions and Usage. As used in this Agreement:
1.1. Definitions.
Agent. "Agent" means the principal placement agent on an
agented placement of Registrable Securities.
Auditor Independence Rules. "Auditor Independence Rules" means
the auditor independence rules as established by the American Institute of
Certified Public Accountants, the Commission, the ISB, the state boards of
accountancy and any other duly constituted regulatory authority, as the same may
be amended from time to time.
Commission. "Commission" shall mean the Securities and
Exchange Commission or any successor agency.
Common Stock. "Common Stock" shall mean (i) the common stock,
par value $.01 per share, of the Company, and (ii) shares of capital stock of
the Company issued by the Company in respect of or in exchange for shares of
such common stock in connection with any stock dividend or distribution, stock
split-up, recapitalization, recombination or exchange by the Company generally
of shares of such common stock.
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Continuously Effective. "Continuously Effective," with respect
to a specified registration statement, shall mean that it shall not cease to be
effective and available for Transfers of Registrable Securities thereunder for
longer than either (i) any ten (10) consecutive business days, or (ii) an
aggregate of fifteen (15) business days during the period specified in the
relevant provision of this Agreement.
Demand Registration. "Demand Registration" shall have the
meaning set forth in Section 2.1(i).
Demanding Holders. "Demanding Holders" shall have the meaning
set forth in Section 2.1(i).
Exchange Act. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
Holder. "Holders" shall mean KPMG and Transferees of KPMG's
Registrable Securities with respect to the rights that such Transferees shall
have acquired in accordance with Section 8, at such times as such Persons shall
own Registrable Securities.
Independence Conflict. An "Independence Conflict" shall be
deemed to exist in the event that the Board of Directors of KPMG determines
that, in order to comply with the Auditor Independence Rules, it is necessary or
appropriate for KPMG and/or any or all of the Qualified Partners to divest some
or all of their Registrable Securities.
Initial Public Offering. "Initial Public Offering" means the
first public offering of shares of Common Stock registered under the Securities
Act.
Initiating Substantial Holder. "Initiating Substantial Holder"
shall have the meaning set forth in Section 2.2.
ISB. "ISB" means the Independence Standards Board.
Majority Selling Holders. "Majority Selling Holders" means
those Selling Holders whose Registrable Securities included in such registration
represent a majority of the Registrable Securities of all Selling Holders
included therein; provided, however, that with respect to any registration in
which KPMG is a Selling Holder, KPMG shall be the Majority Selling Holder.
Partner Securities. "Partner Securities" shall mean: (i) the
shares of Common Stock owned by Qualified Partners on the date hereof, or shares
of Common Stock thereafter acquired, and owned by a Qualified Partner on the
date of determination, (ii) any shares of Common Stock or other securities
issued as (or issuable upon the conversion or exercise of any warrant, right or
other security which is issued as) a dividend or other distribution with respect
to, or in exchange by the Company generally for, or in replacement by the
Company generally of, such shares of Common Stock; and (iii) any securities
issued in exchange for the securities identified in (i) or (ii) in any merger or
reorganization of the Company; provided, however, that Partner Securities shall
not include any securities which have theretofore been registered and sold
pursuant to the Securities Act or which have been sold to the public pursuant to
Rule 144 or any similar rule promulgated by the Commission pursuant to the
Securities Act.
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Person. "Person" shall mean any individual, corporation,
partnership, joint venture, association, joint-stock company, limited liability
company, trust, unincorporated organization or government or other agency or
political subdivision thereof.
Piggyback Registration. "Piggyback Registration" shall have
the meaning set forth in Section 3.
Qualified Partners. "Qualified Partners" means partners and
principals of KPMG.
Register, Registered and Registration. "Register",
"registered", and "registration" shall refer to a registration effected by
preparing and filing a registration statement or similar document in compliance
with the Securities Act, and the declaration or ordering by the Commission of
effectiveness of such registration statement or document.
Registrable Securities. "Registrable Securities" shall mean,
subject to Section 8: (i) the Shares owned by Holders on the date hereof, or
shares of Common Stock thereafter acquired, and owned by a Holder on the date of
determination, (ii) any shares of Common Stock or other securities issued as (or
issuable upon the conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with respect to, or in
exchange by the Company generally for, or in replacement by the Company
generally of, such Shares and other Common Stock; and (iii) any securities
issued in exchange for Shares, other Common Stock (or other securities
identified in (ii)) in any merger or reorganization of the Company; provided,
however, that Registrable Securities shall not include any securities which have
theretofore been registered and sold pursuant to the Securities Act or which
have been sold to the public pursuant to Rule 144 or any similar rule
promulgated by the Commission pursuant to the Securities Act. For purposes of
this Agreement, a Person will be deemed to be a Holder of Registrable Securities
whenever such Person has the then-existing right to acquire such Registrable
Securities (by conversion, purchase or otherwise), whether or not such
acquisition has actually been effected.
Registrable Securities then outstanding. "Registrable
Securities then outstanding" shall mean, with respect to a specified
determination date, the Registrable Securities owned by all Holders on such
date.
Registration Expenses. "Registration Expenses" shall have the
meaning set forth in Section 6.1.
Securities Act. "Securities Act" shall mean the Securities Act
of 1933, as amended.
Selling Holders. "Selling Holders" shall mean, with respect to
a specified registration pursuant to this Agreement, Holders whose Registrable
Securities are included in such registration.
Separation Agreement. "Separation Agreement" shall have the
meaning set forth in the Recitals.
Shares. "Shares" shall mean the shares of Common Stock issued
pursuant to the Exchange (as defined in the Separation Agreement).
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Shelf Registration. "Shelf Registration" shall have the
meaning set forth in Section 2.2.
Substantial Holder. "Substantial Holder" shall mean any Holder
that owned on the date of this Agreement 15% or more of the Registrable
Securities then outstanding and such Transferee, if any, to whom such Person
Transfers Registrable Securities and assigns such Substantial Holder's rights as
a Substantial Holder as permitted by Section 8.
Transfer. "Transfer" shall mean and include the act of
selling, giving, transferring, creating a trust (voting or otherwise), assigning
or otherwise disposing of (other than pledging, hypothecating or otherwise
transferring as security) (and correlative words shall have correlative
meanings); provided, however, that any transfer or other disposition upon
foreclosure or other exercise of remedies of a secured creditor after an event
of default under or with respect to a pledge, hypothecation or other transfer as
security shall constitute a "Transfer".
Underwriters' Representative. "Underwriters' Representative"
shall mean the managing underwriter, or, in the case of a co-managed
underwriting, the managing underwriter designated as the Underwriters'
Representative by the co-managers.
Violation. "Violation" shall have the meaning set forth in
Section 7.1.
1.2. Usage.
(i) References to a Person are also references to its assigns
and successors in interest (by means of merger, consolidation or sale of all or
substantially all the assets of such Person or otherwise, as the case may be).
(ii) References to Registrable Securities "owned" by a Holder
shall include Registrable Securities beneficially owned by such Person but which
are held of record in the name of a nominee, trustee, custodian, or other agent,
but shall exclude shares of Common Stock held by a Holder in a fiduciary
capacity for customers of such Person.
(iii) References to a document are to it as amended, waived
and otherwise modified from time to time and references to a statute or other
governmental rule are to it as amended and otherwise modified from time to time
(and references to any provision thereof shall include references to any
successor provision).
(iv) References to Sections or to Schedules or Exhibits are to
sections hereof or schedules or exhibits hereto, unless the context otherwise
requires.
(v) The definitions set forth herein are equally applicable
both to the singular and plural forms and the feminine, masculine and neuter
forms of the terms defined.
(vi) The term "including" and correlative terms shall be
deemed to be followed by "without limitation" whether or not followed by such
words or words of like import.
(vii) The term "hereof," "hereto" and similar terms refer to
this Agreement as a whole.
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(viii) The "date of" any notice or request given pursuant to
this Agreement shall be determined in accordance with Section 13.
Section 2. Demand Registration.
2.1.
(i) At any time, if one or more Holders which own, or have the
right to exercise the registration rights with respect to, an aggregate of 25%
or more of the Registrable Securities then outstanding shall make a written
request to the Company (the "Demanding Holders") to file a registration
statement for the offering of Registrable Securities having a minimum aggregate
offering price of not less than $50,000,000, the Company shall cause there to be
filed with the Commission a registration statement meeting the requirements of
the Securities Act (a "Demand Registration"), and each Demanding Holder shall be
entitled to have included therein (subject to Section 2.7) all or such number of
such Demanding Holder's Registrable Securities (or, in the case of KPMG, all or
such number of its Registrable Securities and, in the event of an Independence
Conflict, all or a portion of the Partner Securities owned by Qualified
Partners) as the Demanding Holder shall request in writing; provided, however,
that unless there is an Independence Conflict (in which case this proviso shall
be inapplicable), no request may be made pursuant to this Section 2.1 if within
ninety (90) days prior to the date of such request a Demand Registration
Statement pursuant to this Section 2.1 shall have been declared effective by the
Commission. Any request made pursuant to this Section 2.1 shall be addressed to
the attention of the Secretary of the Company, and shall specify the number of
Registrable Securities (or Partner Securities held by Qualified Partners) to be
registered, the intended methods of disposition thereof and that the request is
for a Demand Registration pursuant to this Section 2.1(i).
(ii) The Company shall be entitled to postpone for up to 90
days the filing of any Demand Registration or Shelf Registration (as defined
below) statement otherwise required to be prepared and filed pursuant to this
Section 2.1 or to suspend the use of the prospectus included in a registration
statement filed pursuant to any Demand Registration or Shelf Registration, if
the Board of Directors of the Company determines, in its good faith reasonable
judgment, that such registration contemplated by the Demanding Holders would be
seriously detrimental to the Company and its stockholders or would delay or
result in the premature disclosure of any financing, merger, acquisition,
divestiture or extraordinary corporate development material to the Company, and
the Company promptly gives the affected Holders notice of such determination by
delivery of a certificate signed by the Chief Executive Officer of the Company;
provided, however, that in the event there is an Independence Conflict, the
Company shall not be permitted to postpone (or continue to postpone) pursuant to
this Section 2.1(ii) the filing of any Demand Registration or Shelf Registration
statement, or suspend (or continue to suspend) the use of any prospectus
included in a registration statement filed pursuant to a Demand Registration or
Shelf Registration.
(iii) Whenever the Company shall have received a demand
pursuant to Section 2.1(i) to effect the registration of any Registrable
Securities, the Company shall promptly give written notice of such proposed
registration to all other Holders (if any). Subject to Section 2.7, any such
Holder may, within twenty (20) days after receipt of such notice, request in
writing that
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all of such Holder's Registrable Securities, or any portion thereof designated
by such Holder, be included in the registration.
2.2. On or after the date of this Agreement each Substantial
Holder that shall make a written request to the Company (the "Initiating
Substantial Holder"), shall be entitled to have all or any number of such
Initiating Substantial Holder's Registrable Securities (or, in the case of KPMG,
all or such number of its Registrable Securities and, in the event of an
Independence Conflict, all or a portion of the Partner Securities owned by
Qualified Partners) included in a registration with the Commission in accordance
with the Securities Act for an offering on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act (a "Shelf Registration"). Any
request made pursuant to this Section 2.2 shall be addressed to the attention of
the Secretary of the Company, and shall specify the number of Registrable
Securities (or Partner Securities held by Qualified Partners) to be registered,
the intended methods of disposition thereof and that the request is for a Shelf
Registration pursuant to this Section 2.2.
2.3. Following receipt of a request for a Demand Registration
or a Shelf Registration, the Company shall, subject to Section 2.1(ii):
(i) File the registration statement with the Commission as
promptly as practicable, and shall use the Company's reasonable best efforts to
have the registration declared effective under the Securities Act as soon as
reasonably practicable, in each instance giving due regard to the need to
prepare current financial statements, conduct due diligence and complete other
actions that are reasonably necessary to effect a registered public offering.
(ii) Use the Company's reasonable best efforts to keep the
relevant registration statement Continuously Effective (x) if a Demand
Registration, for up to 60 days or until such earlier date as of which all the
Registrable Securities under the Demand Registration statement shall have been
disposed of in the manner described in the Registration Statement, and (y) if a
Shelf Registration, for two years. Notwithstanding the foregoing, if for any
reason the effectiveness of a registration pursuant to this Section 2 is
suspended or, in the case of a Demand Registration, postponed as permitted by
Section 2.1(ii), the foregoing period shall be extended by the aggregate number
of days of such suspension or postponement.
2.4. A registration pursuant to this Section 2 shall be on
such appropriate registration form of the Commission as shall (i) be selected by
the Company and be reasonably acceptable to the Majority Selling Holders, or by
the Initiating Substantial Holder, as the case may be, and (ii) permit the
disposition of the Registrable Securities in accordance with the intended method
or methods of disposition specified in the request pursuant to Section 2.1(i) or
Section 2.2, respectively.
2.5. The Holders shall be entitled to have their Registrable
Securities included in an unlimited number of Demand Registrations pursuant to
this Section 2.
2.6. If any registration pursuant to Section 2 involves an
underwritten public offering (whether on a "firm", "best efforts" or "all
reasonable efforts" basis or otherwise), or an agented offering, the Majority
Selling Holders, or the Initiating Substantial Holder, as the case may be, shall
have the right to select the underwriter or underwriters and manager or managers
to administer such underwritten public offering or the placement agent or agents
for such agented
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offering; provided, however, that each Person so selected shall be reasonably
acceptable to the Company.
2.7. Whenever the Company shall effect a registration pursuant
to this Section 2 in connection with an underwritten offering by one or more
Selling Holders of Registrable Securities: (i) if such Selling Holders have
requested the inclusion therein of more than one class of Registrable
Securities, and the Underwriters' Representative or Agent advises each such
Selling Holder in writing that, in its opinion, the inclusion of more than one
class of Registrable Securities would adversely affect such offering, the
Demanding Holders holding at least a majority of the Registrable Securities
proposed to be sold therein by them, shall decide which class of Registrable
Securities shall be included therein in such offering and the related
registration, and the other class shall be excluded; and (ii) if the
Underwriters' Representative or Agent advises each such Selling Holder in
writing that, in its opinion, the amount of securities requested to be included
in such offering (whether by Selling Holders or others) exceeds the amount which
can be sold in such offering within a price range acceptable to the Majority
Selling Holders, securities shall be included in such offering and the related
registration, to the extent of the amount which can be sold within such price
range, and first for the account of the Substantial Holders, and second by all
other Selling Holders.
2.8. In the event of an Independence Conflict, KPMG shall be
permitted to exercise its registration rights under this Agreement with respect
to any Partner Securities owned by Qualified Partners.
Section 3. Piggyback Registration.
3.1. If at any time the Company proposes to register
(including for this purpose a registration effected by the Company for
stockholders of the Company other than the Holders) Common Stock under the
Securities Act in connection with the public offering solely for cash on Form
X-0, X-0 or S-3 (or any replacement or successor forms), the Company shall
promptly give each Holder of Registrable Securities written notice of such
registration. Upon the written request of each Holder given within 20 days
following the date of such notice, the Company shall cause to be included in
such registration statement and use its reasonable best efforts to be registered
under the Securities Act all the Registrable Securities that each such Holder
shall have requested to be registered (a "Piggyback Registration"); provided,
however, that such right of inclusion shall not apply to any registration
statement covering an underwritten offering of convertible debt securities,
unless the Underwriters' Representative or Agent expressly consents thereto. The
Company shall have the absolute right to withdraw or cease to prepare or file
any registration statement for any offering referred to in this Section 3
without any obligation or liability to any Holder.
3.2. If the Underwriters' Representative or Agent shall advise
the Company in writing (with a copy to each Selling Holder) that, in its
opinion, the amount of Registrable Securities requested to be included in such
registration would materially adversely affect such offering, or the timing
thereof, then the Company will include in such registration, to the extent of
the amount and class which the Company is so advised can be sold without such
material adverse effect in such offering: First, all securities proposed to be
sold by the Company for its own account or pursuant to demand registration
rights of stockholders of the Company other than the Holders; second, the
Registrable Securities requested to be included in such registration by
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Holders pursuant to this Section 3 and all other securities being registered
pursuant to the exercise of contractual rights comparable to the rights granted
in this Section 3, pro rata based on the estimated gross proceeds from the sale
thereof; and third all other securities requested to be included in such
registration.
3.3. The Holders shall be entitled to have their Registrable
Securities included in an unlimited number of Piggyback Registrations pursuant
to this Section 3.
3.4. If the Company has previously filed a registration
statement with respect to Registerable Securities pursuant to Section 2 or
pursuant to this Section 3, and if such previous registration has not been
withdrawn or abandoned, the Company shall not be required to file or cause to be
effected any other registration of any of its equity securities or securities
convertible or exchangeable into or exercisable for its equity securities under
the Securities Act (except on Form S-8 or any successor form), whether on its
own behalf or at the request of any holder or holders of such securities, until
a period of 90 days has elapsed from the effective date of such a previous
registration.
Section 4. Registration Procedures. Whenever required under
Section 2 or Section 3 to effect the registration of any Registrable Securities,
the Company shall, as expeditiously as practicable:
4.1. Prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use the Company's
reasonable best efforts to cause such registration statement to become
effective; provided, however, that before filing a registration statement or
prospectus or any amendments or supplements thereto, including (if permitted
under the applicable registration form) documents incorporated by reference
after the initial filing of the registration statement and prior to
effectiveness thereof, the Company shall furnish to one firm of counsel for the
Selling Holders (selected by Majority Selling Holders or the Initiating
Substantial Holder, as the case may be), which may be counsel to the Company,
copies of all such documents in the form substantially as proposed to be filed
with the Commission at least four (4) business days prior to filing for review
and comment by such counsel, which opportunity to comment shall include an
absolute right to control or contest disclosure if the applicable Selling Holder
reasonably believes that it may be subject to controlling person liability under
applicable securities laws with respect thereto.
4.2. Subject to Section 2.1(ii), prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act and rules
thereunder with respect to the disposition of all securities covered by such
registration statement. If the registration is for an underwritten public
offering, the Company shall amend the registration statement or supplement the
prospectus whenever required by the terms of the underwriting agreement entered
into pursuant to Section 5.2. Subject to Rule 415 under the Securities Act and
Section 2.1(ii), if the registration statement is a Shelf Registration, the
Company shall amend the registration statement or supplement the prospectus so
that it will remain current and in compliance with the requirements of the
Securities Act for two years after its effective date, and if during such period
any event or development occurs as a result of which the registration statement
or prospectus contains a misstatement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
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therein not misleading, the Company shall promptly notify each Selling Holder,
amend the registration statement or supplement the prospectus so that each will
thereafter comply with the Securities Act and furnish to each Selling Holder of
Registerable Shares such amended or supplemented prospectus, which each such
Holder shall thereafter use in the Transfer of Registerable Shares covered by
such registration statement. Pending such amendment or supplement each such
Holder shall cease making offers or Transfers of Registerable Shares pursuant to
the prior prospectus. In the event that any Registrable Securities included in a
registration statement subject to, or required by, this Agreement remain unsold
at the end of the period during which the Company is obligated to use its
reasonable best efforts to maintain the effectiveness of such registration
statement, the Company may file a post-effective amendment to the registration
statement for the purpose of removing such Securities from registered status.
4.3. Furnish to each Selling Holder of Registrable Securities,
without charge, such numbers of copies of the registration statement, any
pre-effective or post-effective amendment thereto, the prospectus, including
each preliminary prospectus and any amendments or supplements thereto, in each
case in conformity with the requirements of the Securities Act and the rules
thereunder, and such other related documents as any such Selling Holder may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by such Selling Holder.
4.4. Use the Company's reasonable best efforts (i), if
necessary, to register and qualify the securities covered by such registration
statement under such other securities or Blue Sky laws of such states or
jurisdictions as shall be reasonably requested by the Underwriters'
Representative or Agent (as applicable, or if inapplicable, the Majority Selling
Holders), and (ii) to obtain the withdrawal of any order suspending the
effectiveness of a registration statement, or the lifting of any suspension of
the qualification (or exemption from qualification) of the offer and transfer of
any of the Registrable Securities in any jurisdiction, at the earliest
practicable time; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
4.5. In the event of any underwritten or agented offering,
enter into and perform the Company's obligations under an underwriting or agency
agreement (including indemnification and contribution obligations of
underwriters or agents), in usual and customary form, with the managing
underwriter or underwriters of or agents for such offering. The Company shall
also reasonably cooperate with the Majority Selling Holders or Initiating
Substantial Holder, as the case may be, and the Underwriters' Representative or
Agent for such offering in the marketing of the Registerable Shares, including
making available the Company's officers, accountants, counsel, premises, books
and records for such purpose, but the Company shall not be required to incur any
material out-of-pocket expense pursuant to this sentence.
4.6. Promptly notify each Selling Holder of any stop order
issued or threatened to be issued by the Commission in connection therewith (and
take all reasonable actions required to prevent the entry of such stop order or
to remove it if entered).
4.7. Make generally available to the Company's security
holders copies of all periodic reports, proxy statements, and other information
referred to in Section 10.1 and an earnings statement satisfying the provisions
of Section 11(a) of the Securities Act no later than
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90 days following the end of the 12-month period beginning with the first month
of the Company's first fiscal quarter commencing after the effective date of
each registration statement filed pursuant to this Agreement.
4.8. Make available for inspection by any Selling Holder, any
underwriter participating in such offering and the representatives of such
Selling Holder and Underwriter (but not more than one firm of counsel to such
Selling Holders, which may be counsel to the Company), all financial and other
information as shall be reasonably requested by them, and provide the Selling
Holder, any underwriter participating in such offering and the representatives
of such Selling Holder and Underwriter the opportunity to discuss the business
affairs of the Company with its principal executives and independent public
accountants who have certified the audited financial statements included in such
registration statement, in each case all as necessary to enable them to exercise
their due diligence responsibility under the Securities Act; provided, however,
that information that the Company determines, in good faith, to be confidential
and which the Company advises such Person in writing, is confidential shall not
be disclosed unless such Person signs a confidentiality agreement reasonably
satisfactory to the Company or the related Selling Holder of Registrable
Securities agrees to be responsible for such Person's breach of confidentiality
on terms reasonably satisfactory to the Company.
4.9. Use the Company's reasonable best efforts to obtain a
so-called "comfort letter" from its independent public accountants, and legal
opinions of counsel to the Company addressed to the Selling Holders, in
customary form and covering such matters of the type customarily covered by such
letters, and in a form that shall be reasonably satisfactory to Majority Selling
Holders or the Initiating Substantial Holder, as the case be. The Company shall
furnish to each Selling Holder a signed counterpart of any such comfort letter
or legal opinion. Delivery of any such opinion or comfort letter shall be
subject to the recipient furnishing such written representations or
acknowledgments as are customarily provided by selling stockholders who receive
such comfort letters or opinions.
4.10. Provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such registration
statement.
4.11. Use all reasonable efforts to cause the Registrable
Securities covered by such registration statement (i) if the Common Stock is
then listed on a securities exchange or included for quotation in a recognized
trading market, to be listed on such securities exchange or included in such
trading market, and (ii) to be registered with or approved by such other United
States or state governmental agencies or authorities as may be necessary by
virtue of the business and operations of the Company to enable the Selling
Holders of Registrable Securities to consummate the disposition of such
Registrable Securities.
4.12. Use the Company's reasonable efforts to provide a CUSIP
number for the Registrable Securities prior to the effective date of the first
registration statement including Registrable Securities.
4.13. Take such other actions as are reasonably required in
order to expedite or facilitate the disposition of Registrable Securities
included in each such registration.
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Section 5. Holders' Obligations. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to this
Agreement with respect to the Registrable Securities of any Selling Holder of
Registrable Securities that such Selling Holder shall:
5.1. Furnish to the Company such information regarding such
Selling Holder, the number of the Registrable Securities owned by it, and the
intended method of disposition of such securities as shall be required to effect
the registration of such Selling Holder's Registrable Securities, and to
cooperate with the Company in preparing such registration;
5.2. Agree to sell their Registrable Securities to the
underwriters at the same price and on substantially the same terms and
conditions as the Company or the other Persons on whose behalf the registration
statement was being filed have agreed to sell their securities, and to execute
the underwriting agreement agreed to by the Majority Selling Holders (in the
case of a registration under Section 2) or the Company and the Majority Selling
Holders (in the case of a registration under Section 3).
Section 6. Expenses of Registration. Expenses in connection
with registrations pursuant to this Agreement shall be allocated and paid as
follows:
6.1. With respect to each Demand Registration and Shelf
Registration, the Company shall bear and pay all expenses incurred in connection
with any registration, filing, or qualification of Registrable Securities with
respect to such Demand Registrations for each Selling Holder (which right may be
assigned to any Person to whom Registrable Securities are Transferred as
permitted by Section 8), including all registration, filing and National
Association of Securities Dealers, Inc. fees, all fees and expenses of complying
with securities or blue sky laws, all word processing, duplicating and printing
expenses, messenger and delivery expenses, the reasonable fees and disbursements
of counsel for the Company, and of the Company's independent public accountants,
including the expenses of "cold comfort" letters required by or incident to such
performance and compliance, and, if counsel to the Company is not acting in such
capacity, the reasonable fees and disbursements (up to $25,000) of one firm of
counsel for the Selling Holders of Registrable Securities (selected by Demanding
Holders owning a majority of the Registrable Securities owned by Demanding
Holders to be included in a Demand Registration or by the Initiating Substantial
Holder, as the case may be) (the "Registration Expenses"), but excluding
underwriting discounts and commissions relating to Registrable Securities (which
shall be paid on a pro rata basis by the Selling Holders).
6.2. The Company shall bear and pay all Registration Expenses
incurred in connection with any Piggyback Registrations pursuant to Section 3
for each Selling Holder (which right may be Transferred to any Person to whom
Registrable Securities are Transferred as permitted by Section 8), but excluding
underwriting discounts and commissions relating to Registrable Securities (which
shall be paid on a pro rata basis by the Selling Holders).
6.3. Any failure of the Company to pay any Registration
Expenses as required by this Section 6 shall not relieve the Company of its
obligations under this Agreement.
Section 7. Indemnification; Contribution. If any Registrable
Securities are included in a registration statement under this Agreement:
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7.1. To the extent permitted by applicable law, the Company
shall indemnify and hold harmless each Selling Holder, each Person, if any, who
controls such Selling Holder within the meaning of the Securities Act, and each
officer, director, partner, principal and employee of such Selling Holder and
such controlling Person, against any and all losses, claims, damages,
liabilities and expenses (joint or several), including attorneys' fees and
disbursements and expenses of investigation, incurred by such party pursuant to
any actual or threatened action, suit, proceeding or investigation, or to which
any of the foregoing Persons may become subject under the Securities Act, the
Exchange Act or other federal or state laws, insofar as such losses, claims,
damages, liabilities and expenses arise out of or are based upon any of the
following statements, omissions or violations (collectively a "Violation"):
(i) Any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein, or any amendments
or supplements thereto;
(ii) The omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading; or
(iii) Any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any applicable state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
applicable state securities law;
provided, however, that the indemnification required by this Section 7.1 shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or expense if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or expense to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in conformity with written information
furnished to the Company by the indemnified party expressly for use in
connection with such registration. The Company shall also indemnify underwriters
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 Selling Holders;
provided, however, that the indemnity agreement contained in this Section 7
shall not apply to any underwriter to the extent that any such loss is based on
or arises out of an untrue statement or alleged untrue statement of a material
fact, or an omission or alleged omission to state a material fact, contained in
or omitted from any preliminary prospectus if the final prospectus shall correct
such untrue statement or alleged untrue statement, or such omission or alleged
omission, and a copy of the final prospectus has not been sent or given to such
person at or prior to the confirmation of sale to such person if such
underwriter was under an obligation to deliver such final prospectus and failed
to do so.
7.2. To the extent permitted by applicable law, each Selling
Holder shall indemnify and hold harmless the Company, each of its directors,
each of its officers who shall have signed the registration statement, each
Person, if any, who controls the Company within the meaning of the Securities
Act, any other Selling Holder, any controlling Person of any such other Selling
Holder and each officer, director, partner, principal and employee of such other
Selling Holder and such controlling Person, against any and all losses, claims,
damages, liabilities and expenses (joint and several), including attorneys' fees
and disbursements and expenses of
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investigation, incurred by such underwriters party pursuant to any actual or
threatened action, suit, proceeding or investigation, or to which any of the
foregoing Persons may otherwise become subject under the Securities Act, the
Exchange Act or other federal or state laws, insofar as such losses, claims,
damages, liabilities and expenses arise out of or are based upon any Violation,
in each case to the extent (and only to the extent) that such Violation occurs
in reliance upon and in conformity with written information furnished by such
Selling Holder expressly for use in connection with such registration; provided,
however, that (x) the indemnification required by this Section 7.2 shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or expense if settlement is effected without the consent of the relevant Selling
Holder of Registrable Securities, which consent shall not be unreasonably
withheld, and (y) in no event shall the amount of any indemnity under this
Section 7.2 exceed the gross proceeds from the applicable offering received by
such Selling Holder. The Selling Holders shall also indemnify underwriters 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 Company; provided,
however, that the indemnity agreement contained in this Section 7 shall not
apply to any underwriter to the extent that any such loss is based on or arises
out of an untrue statement or alleged untrue statement of a material fact, or an
omission or alleged omission to state a material fact, contained in or omitted
from any preliminary prospectus if the final prospectus shall correct such
untrue statement or alleged untrue statement, or such omission or alleged
omission, and a copy of the final prospectus has not been sent or given to such
person at or prior to the confirmation of sale to such person if such
underwriter was under an obligation to deliver such final prospectus and failed
to do so.
7.3. Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, suit, proceeding,
investigation or threat thereof made in writing for which such indemnified party
may make a claim under this Section 7, such indemnified party shall deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties. The failure to deliver written notice to the
indemnifying party within a reasonable time following the commencement of any
such action, if materially prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the indemnified party
under this Section 7 to the extent of such material prejudice, but shall not
relieve the indemnifying party of any liability that it may have to any
indemnified party otherwise than pursuant to this Section 7. Any fees and
expenses incurred by the indemnified party (including any fees and expenses
incurred in connection with investigating or preparing to defend such action or
proceeding) shall be paid to the indemnified party, as incurred, within thirty
(30) days of written notice thereof to the indemnifying party. Any such
indemnified party shall have the right to employ separate counsel in any such
action, claim or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be borne by such indemnified party
unless (i) the indemnifying party has agreed to pay such fees and expenses or
(ii) the indemnifying party shall have failed to promptly assume the defense of
such action, claim or proceeding or (iii) the named parties to any such action,
claim or proceeding (including any 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 legal defenses
available to it which are
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different from or in addition to those available to the indemnifying party and
that the assertion of such defenses would create a conflict of interest such
that counsel employed by the indemnifying party could not faithfully represent
the indemnified party (in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action, claim or proceeding on behalf of
such indemnified party, it being understood, however, that the indemnifying
party shall not, in connection with any one such action, claim or proceeding or
separate but substantially similar or related actions, claims or proceedings in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (together with appropriate local counsel) at any time
for all such indemnified parties, unless in the reasonable judgment of such
indemnified party a conflict of interest may exist between such indemnified
party and any other of such indemnified parties with respect to such action,
claim or proceeding, in which event the indemnifying party shall be obligated to
pay the fees and expenses of such additional counsel or counsels). No
indemnifying party shall be liable to an indemnified party for any settlement of
any action, proceeding or claim effected without the written consent of the
indemnifying party, which consent shall not be unreasonably withheld.
7.4. If the indemnification required by this Section 7 from
the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to in
this Section 7:
(i) 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 or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether any Violation has been committed by, or relates to
information supplied by, such indemnifying party or indemnified parties, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such Violation. 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 7.1 and Section 7.2, any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
(ii) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7.4 were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in Section 7.4(i). 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.
7.5. If indemnification is available under this Section 7, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in this Section 7 without regard to the relative fault of such
indemnifying party or indemnified party or any other equitable consideration
referred to in Section 7.4.
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7.6. The obligations of the Company and the Selling Holders of
Registrable Securities under this Section 7 shall survive the completion of any
offering of Registrable Securities pursuant to a registration statement under
this Agreement, and otherwise.
Section 8. Transfer of Registration Rights. Rights with
respect to Registrable Securities may be Transferred to any Person in connection
with the Transfer to such Person of a number of Registrable Securities equal to
5% or more of the Registrable Securities outstanding on the date of this
Agreement, if (x) any such Transferee shall have executed and delivered to the
Secretary of the Company a properly completed agreement substantially in the
form of Exhibit A, and (y) the Transferor shall have delivered to the Secretary
of the Company, no later than 15 days following the date of the Transfer,
written notification of such Transfer setting forth the name of the Transferor,
name and address of the Transferee, and the number of Registrable Securities
which shall have been so Transferred.
Section 9. Holdback. Subject to such exceptions as may be
agreed between the Holders and the Underwriters' Representative or Agent, each
Holder entitled pursuant to this Agreement to have Registrable Securities
included in a registration statement prepared pursuant to this Agreement, if so
requested by the Underwriters' Representative or Agent in connection with an
offering of any Registrable Securities, shall not effect any public sale or
distribution of shares of Common Stock or any securities convertible into or
exchangeable or exercisable for shares of Common Stock, including a sale
pursuant to Rule 144 under the Securities Act (except as part of such
underwritten or agented registration), during the 180-day period (or such other
period as may be agreed between the Holder and such Underwriters' Representative
or Agent) beginning on the date such registration statement is declared
effective under the Securities Act by the Commission, provided that such Holder
is timely notified of such effective date in writing by the Company or such
Underwriters' Representative or Agent; and provided, further, that if the
executive officers and directors of the Company are subject to a "holdback"
period in connection with such offering that is shorter than 180 days, then the
Holders' holdback period shall be shortened to such shorter period. In order to
enforce the foregoing covenant, the Company shall be entitled to impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder until the end of such period.
Section 10. Covenants of the Company. The Company hereby
agrees and covenants as follows:
10.1. The Company shall file as and when applicable, on a
timely basis, all reports required to be filed by it under the Exchange Act.
10.2. The Company shall not, and shall not permit its majority
owned subsidiaries to, effect any public sale or distribution of any shares of
Common Stock or any securities convertible into or exchangeable or exercisable
for shares of Common Stock, during the 180-day period beginning on the
commencement of a public distribution of the Registrable Securities pursuant to
any registration statement prepared pursuant to this Agreement (other than by
the Company pursuant to such registration if the registration is pursuant to
Section 2). The Company shall not effect any registration of its securities
(other than on Form X-0, Xxxx X-0, or any successor forms to such forms or
pursuant to such other registration rights agreements as may be approved in
writing by the Majority Selling Holders or the Initiating Substantial Holder, as
the case may be), or effect any public or private sale or distribution of any of
its securities,
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including a sale pursuant to Regulation D under the Securities Act, whether on
its own behalf or at the request of any holder or holders of such securities
from the date of a request for a Demand Registration pursuant to Section 2.1
until the earlier of (x) 180 days following the date as of which all securities
covered by such Demand Registration statement shall have been Transferred, and
(y) 180 days following the effective date of such Demand Registration statement,
unless the Company shall have previously notified in writing all Selling Holders
of the Company's desire to do so, and Selling Holders owning a majority of the
Registrable Securities or the Underwriters' Representative, if any, shall have
consented thereto in writing.
Section 11. Amendment, Modification and Waivers; Further
Assurances.
(i) This Agreement may be amended with the consent of the
Company and Holders owning Registrable Securities possessing a majority in
number of such Registrable Securities then outstanding.
(ii) No waiver of any breach of the terms or conditions of
this Agreement shall operate as a waiver of any other breach of such terms and
conditions or any other term or condition, nor shall any failure to enforce any
provision hereof operate as a waiver of such provision or of any other provision
hereof. No written waiver hereunder, unless it by its own terms explicitly
provides to the contrary, shall be construed to effect a continuing waiver of
the provisions being waived and no such waiver in any instance shall constitute
a waiver in any other instance or for any other purpose or impair the right of
the party against whom such waiver is claimed in all other instances or for all
other purposes to require full compliance with such provision.
(iii) Each of the parties hereto shall execute all such
further instruments and documents and take all such further action as any other
party hereto may reasonably require in order to effectuate the terms and
purposes of this Agreement.
Section 12. Assignment; Benefit. This Agreement and all of the
provisions hereof shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, assigns, executors, administrators or
successors. A Holder may Transfer its rights hereunder to a successor in
interest to the Registrable Securities owned by such assignor only as permitted
by Section 8.
Section 13. Miscellaneous.
13.1. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
13.2. Notices. All notices and requests given pursuant to this
Agreement shall be in writing and shall be made by hand-delivery, first-class
mail (registered or certified, return receipt requested), confirmed facsimile or
overnight air courier guaranteeing next business day delivery to the relevant
address specified on Schedule 1 to this Agreement or in the relevant agreement
in the form of Exhibit A whereby such party became bound by the provisions of
this Agreement. Except as otherwise provided in this Agreement, the date of each
such notice and
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request shall be deemed to be, and the date on which each such notice and
request shall be deemed given shall be: at the time delivered, if personally
delivered or mailed; when receipt is acknowledged, if sent by facsimile; and the
next business day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next business day delivery.
13.3. Entire Agreement; Integration. This Agreement supersedes
all prior agreements between or among any of the parties hereto with respect to
the subject matter contained herein and therein, and such agreements embody the
entire understanding among the parties relating to such subject matter.
13.4. Injunctive Relief. Each of the parties hereto
acknowledges that in the event of a breach by any of them of any material
provision of this Agreement, the aggrieved party may be without an adequate
remedy at law. Each of the parties therefore agrees that in the event of such a
breach hereof the aggrieved party may elect to institute and prosecute
proceedings in any court of competent jurisdiction to enforce specific
performance or to enjoin the continuing breach hereof. By seeking or obtaining
any such relief, the aggrieved party shall not be precluded from seeking or
obtaining any other relief to which it may be entitled.
13.5. Section Headings. Section headings are for convenience
of reference only and shall not affect the meaning of any provision of this
Agreement.
13.6. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, and all of which
shall together constitute one and the same instrument.
13.7. Severability. If any provision of this Agreement shall
be invalid or unenforceable, such invalidity or unenforceability shall not
affect the validity and enforceability of the remaining provisions of this
Agreement, unless the result thereof would be unreasonable, in which case the
parties hereto shall negotiate in good faith as to appropriate amendments
hereto.
13.8. Filing. A copy of this Agreement and of all amendments
thereto shall be filed at the principal executive office of the Company with the
Secretary of the Company.
13.9. Termination. This Agreement may be terminated at any
time by a written instrument signed by the parties hereto. Unless sooner
terminated in accordance with the preceding sentence, this Agreement (other than
Section 7 hereof) shall terminate in its entirety on the earlier to occur of (i)
the ten (10) year anniversary of the date of this Agreement, and (ii) such date
as there shall be no Registrable Securities outstanding.
13.10. Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees (including any fees incurred in any appeal) in
addition to its costs and expenses and any other available remedy.
13.11. No Third Party Beneficiaries. Nothing herein expressed
or implied is intended to confer upon any Person (including the Qualified
Partners), other than the parties
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hereto or their respective permitted assigns, successors, heirs and legal
representatives, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the date first written above.
KPMG LLP
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Deputy Chairman
KPMG CONSULTING, INC.
By: /s/ Xxxxxxxx X. XxXxxxx
---------------------------------------
Name: Xxxxxxxx X. XxXxxxx
Title: Co-Chief Executive Officer,
Co-President
Signature Page to
Registration Rights Agreement
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