EXHIBIT 10.2
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REGISTRATION RIGHTS AGREEMENT
Dated as of September 21, 2000
by and among
INNOVATIVE CLINICAL SOLUTIONS, LTD.
and
EACH SECURITIES HOLDER REFERRED TO HEREIN
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TABLE OF CONTENTS
PAGE
Section 1. Definitions...........................................................................................1
1.1. Defined Terms......................................................................................1
Section 2. Demand Registration Rights of Securities Holders......................................................5
2.1. Demand Registration Rights.........................................................................5
2.2. Determination......................................................................................6
2.3. Notices; Minimum Registerable Amounts..............................................................6
2.4. Discretion of Securities Holder....................................................................7
2.5. Allocation Among Initiating Securities Holders.....................................................7
2.6. Piggyback Rights of Securities Holders and the Company.............................................8
Section 3. Company Sale Events...................................................................................9
3.1. Determination......................................................................................9
3.2. Notice.............................................................................................9
3.3. Piggyback Rights of Securities Holders.............................................................9
3.4. Discretion of the Company..........................................................................9
Section 4. Black-Out Periods....................................................................................10
4.1. Black-Out Periods for Securities Holders..........................................................10
Section 5. Agreements Concerning Offerings......................................................................10
5.1. Obligations of Securities Holders.................................................................10
5.2. Obligations of the Company........................................................................10
5.3. Agreements Related to Offerings...................................................................12
5.4. Certain Expenses..................................................................................14
5.5. Reports Under the Exchange Act; Rule 144..........................................................14
5.6. Limitations on Subsequent Registration Rights.....................................................15
5.7. Indemnification and Contribution..................................................................15
5.8. Underwritten Offerings............................................................................22
5.9. Transfer of Rights Under this Agreement; Transfers of Registerable Common.........................22
5.10. Termination of Rights............................................................................22
Section 6. Sequencing of Public Sale Events.....................................................................22
6.1. Effective Notice Period...........................................................................22
6.2. Restrictive Legend on Certificates................................................................23
Section 7. Representations and Warranties of the Company........................................................24
Section 8. Representations and Warranties of the Securities Holders.............................................27
Section 9. Delivery of Comfort Letter and Legal Opinion.........................................................29
Section 10. Miscellaneous.......................................................................................29
10.1. Notices..........................................................................................29
10.2. Amendments and Waivers...........................................................................29
10.3. Termination......................................................................................30
10.4. Survival of Representations and Warranties.......................................................30
10.5. Headings.........................................................................................30
10.6. Counterparts.....................................................................................30
10.7. GOVERNING LAW....................................................................................30
10.8. Adjustment of Shares.............................................................................30
10.9. No Inconsistent Agreements.......................................................................30
10.10. Severability....................................................................................31
10.11. ENTIRE AGREEMENT................................................................................31
10.12. Listing of New Common Stock.....................................................................31
SCHEDULES
Schedule 1 - Registrable Common As of the Effective Date
EXHIBITS
Exhibit A - Securities Holders Questionnaire
Exhibit B - Supplemental Addendum
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of September 21, 2000,
by and among INNOVATIVE CLINICAL SOLUTIONS, LTD., a corporation organized under
the laws of the State of Delaware (the "COMPANY"), and each SECURITIES HOLDER
(as defined in subsection 1.1).
W I T N E S S E T H:
WHEREAS, in connection with the restructuring of the Company's 6
3/4% Convertible Subordinated Debentures due 2003 (the "Debentures"), shares of
New Common Stock (as defined below) are being issued to holders of the
Debentures; and
WHEREAS, the Company and the Securities Holders have agreed that
the Company shall provide registration rights to such Holders on the terms
herein set forth.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto hereby agree as follows:
Section 1. DEFINITIONS.
1.1. DEFINED TERMS. (a) As used in this Agreement, the terms
defined in the caption and the recitals shall have the meanings set forth
therein, and the following terms shall have the following meanings:
"AFFILIATE" shall have the meaning ascribed thereto in Rule
12b-2 under the Exchange Act as in effect on the date hereof.
"AGREEMENT" shall mean this Registration Rights Agreement, as
amended, supplemented or otherwise modified from time to time.
"COMMISSION" shall mean the United States Securities and
Exchange Commission or any successor thereto.
"COMPANY PUBLIC SALE EVENT" shall mean any sale by the
Company of New Common Stock pursuant to a Registration Statement filed
by the Company (other than a Registration Statement filed by the
Company on either Form S-4 or Form S-8) pursuant to subsection 3.1.
"COMPANY SALE NOTICE" shall mean a Notice of Offering from the
Company to each Security Holder stating that the Company proposes to
effect a Company Public Sale Event.
"DEMAND REGISTRATION" shall mean any Registration of
Registerable Common pursuant to a Registration Statement filed by the
Company in accordance with the provisions of subsection 2.2.
"EFFECTIVE DATE" shall mean September __, 2000, the date on
which New Common Stock is exchanged for Notes then held by the
Securities Holders.
"EFFECTIVE NOTICE PERIOD" shall have the meaning assigned to
such term in subsection 6.1.
"ESQF" shall mean ESQF Advisors, Inc.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended, or any successor legislation thereto.
"FORM S-1" shall mean such form of registration statement
under the Securities Act as in effect on the date hereof or any
successor form thereto.
"FORM S-3" shall mean such form of registration statement
under the Securities Act as in effect on the date hereof or any
successor form thereto.
"FORM S-4" shall mean such form of registration statement
under the Securities Act as in effect on the date hereof or any
successor form thereto.
"FORM S-8" shall mean such form of registration statement
under the Securities Act as in effect on the date hereof or any
successor form thereto.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government,
any state or other political subdivision thereof or any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"ICSL GROUP" shall mean the Company and each of its
Subsidiaries.
"INITIATING SECURITIES HOLDERS" shall have the meaning
assigned to such term in subsection 2.3(b).
"MATERIAL ADVERSE CHANGE" shall mean, for purposes of
subsections 2.4(b) and (c), any material adverse change in, or the
occurrence of any event which would reasonably be expected to have a
material adverse effect on, the business, condition (financial or
otherwise) or prospects of the ICSL Group taken as a whole (it being
understood that a change in general political, financial, banking or
capital market conditions shall not be a "Material Adverse Change"
unless such change has, or would reasonably be expected to have, a
material adverse effect on the ICSL Group as described above).
"MINIMUM REGISTERABLE AMOUNT" shall mean, on any date of
determination thereof, (i) in the case of a Demand Registration other
than a Shelf Registration, 5% of the issued and then outstanding shares
of New Common Stock or (ii) in the case of a
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Shelf Registration, 10% of the issued and then outstanding shares of
New Common Stock.
"NASD" shall mean the National Association of Securities
Dealers, Inc. or any successor thereto.
"NEW COMMON STOCK" shall mean the common stock, par value $.01
per share, of the Company and any reclassification thereof.
"NOTICE OF OFFERING" shall mean a written notice with respect
to (a) a proposed Sale Event pursuant to a Demand Registration or (b) a
Company Public Sale Event, in each case setting forth (i) the expected
maximum and minimum number of shares of Registerable Common or New
Common Stock, as the case may be, proposed to be offered and sold, (ii)
the lead managing underwriter, if applicable and known and (iii) the
proposed method of distribution and the expected timing of the
offering.
"PERSON" shall mean any individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority, limited liability company or
other entity of whatever nature.
"PIGGYBACKING NOTICE" shall have the meaning assigned to such
term in subsection 2.6(a).
"PIGGYBACKING SECURITIES HOLDER" shall have the meaning
assigned to such term in subsection 2.6(a).
"PRELIMINARY PROSPECTUS" shall mean each preliminary
prospectus included in a Registration Statement or in any amendment
thereto prior to the date on which such Registration Statement is
declared effective under the Securities Act, including any prospectus
filed with the Commission pursuant to Rule 424(a) under the Securities
Act.
"PROSPECTUS" shall mean each prospectus included in a
Registration Statement (including, without limitation, a prospectus
that discloses information previously omitted from a prospectus filed
as part of an effective Registration Statement in accordance with Rule
430A), together with any supplement thereto, as filed with, or
transmitted for filing to, the Commission pursuant to Rule 424(b) under
the Securities Act.
"PUBLIC SALE EVENT" shall mean a Securities Holder Public Sale
Event or a Company Public Sale Event, as the case may be.
"PURCHASE AGREEMENT" shall mean, in connection with any Sale
Event, any written agreement entered into by any Securities Holder
providing for the sale of Registerable Common and/or the Company
providing for the sale of New Common Stock.
"REGISTERABLE COMMON" shall mean with respect to each
Securities Holder (a) the shares of New Common Stock issued to such
Securities Holder in exchange for its Debentures (in the number, as of
the Effective Date, as set forth on Schedule 1 hereto), and (b) any
other securities issued as (or issuable upon the conversion or exercise
of any
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warrant, right or other security which is issued as) a dividend
or other distribution with respect to, or in exchange for or in
replacement of, such shares of Registerable Common; excluding in all
cases, however, any shares of Registerable Common from and after the
transfer thereof pursuant to a Registration Statement or Rule 144.
"REGISTRATION" shall mean a registration of securities
pursuant to the Securities Act.
"REGISTRATION STATEMENT" shall mean any registration statement
(including the Preliminary Prospectus, the Prospectus, any amendments
(including any post-effective amendments) thereof, any supplements and
all exhibits thereto and any documents incorporated therein by
reference pursuant to the rules and regulations of the Commission),
filed by the Company with the Commission which complies with the
requirements of the Securities Act and the rules and regulations of the
Commission thereunder in connection with any Public Sale Event.
"RESPONSIBLE OFFICER" shall mean with respect to any Person,
the president, chief executive officer, chief operating officer, chief
financial officer, vice president-finance or treasurer of such Person.
"RULE 144", shall mean Rule 144 promulgated by the Commission
under the Securities Act, or any successor to such Rule.
"RULE 415" shall mean Rule 415 promulgated by the Commission
under the Securities Act, or any successor to such Rule.
"RULE 424" shall mean Rule 424 promulgated by the Commission
under the Securities Act, or any successor to such Rule.
"RULE 430A" shall mean Rule 430A promulgated by the Commission
under the Securities Act, or any successor to such Rule.
"SALE EVENT" shall mean any sale by the Company of New Common
Stock pursuant to a Company Public Sale Event or any sale by any
Securities Holder of Registerable Common pursuant to any Registration
Statement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any successor legislation thereto.
"SECURITIES HOLDER" shall mean each entity set forth on the
signature pages of this Agreement under the heading "SECURITIES
HOLDERS", including any transferee who becomes bound by the terms of
this Agreement pursuant to Section 5.9.
"SECURITIES HOLDER PUBLIC SALE EVENT" shall mean any sale of
Registerable Common by a Securities Holder pursuant to a Demand
Registration.
"SECURITIES HOLDER SALE NOTICE" shall mean a Notice of
Offering to the Company from a Securities Holder requesting the Company
to effect a Demand Registration of
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Registerable Common (to which such Securities Holder is at the time
entitled pursuant to subsection 2.1) and stating whether such
Securities Holder is requesting that such Demand Registration be a
Shelf Registration; PROVIDED that if more than one Notice of Offering
is required to aggregate the Minimum Registerable Amount, the term
"Securities Holder Sale Notice" shall refer collectively to all such
Notices of Offering delivered by Securities Holders to the Company in
accordance with subsection 2.3(b).
"SECURITIES HOLDER'S QUESTIONNAIRE" shall mean the
questionnaire to be provided by each Securities Holder to the Company
in connection with a Public Sale Event, substantially in the form of
Exhibit A, as the same from time to time may be amended, supplemented
or otherwise modified.
"SHELF REGISTRATION" shall mean any Registration of
Registerable Common pursuant to a Registration Statement filed by the
Company in accordance with the provisions of subsection 2.2 and which
provides for the offering of Registerable Common to be made on a
continuous basis pursuant to Rule 415.
"SUBSIDIARY" " shall mean, as to any Person, a corporation,
partnership or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening
of a contingency) to elect the majority of the board of directors or
other managers of such corporation, partnership or other entity are at
that time owned directly or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise qualified,
all references to a "Subsidiary" or "Subsidiaries" in this Agreement
shall refer to a Subsidiary or Subsidiaries of the Company.
"SUPPLEMENTAL ADDENDUM" shall mean a Supplemental Addendum,
substantially in the form of Exhibit B to this Agreement.
"TERMINATION DATE" shall mean, as to each Securities Holder,
the date on which counsel to the Company delivers an opinion in
accordance with subsection 5.10 to such Securities Holder.
(b) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and section,
subsection, schedule and exhibit references are to this Agreement.
Section 2. DEMAND REGISTRATION RIGHTS OF SECURITIES HOLDERS.
2.1. DEMAND REGISTRATION RIGHTS. At any time prior to the
Termination Date, each Securities Holder shall have the right, subject to
subsections 2.3 and 6.1, to request an unlimited number of Demand Registrations,
and the Company shall be obligated to provide a Demand Registration in response
to each such request.
2.2. DETERMINATION. Subject to the terms and conditions
hereof, if the Company shall at any time receive a Securities Holder Sale Notice
in accordance with subsection 2.3 representing at least the Minimum Registerable
Amount, then the Company shall (a) (i) in the
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case of a Registration Statement on Form S-1, use its reasonable best efforts to
file such Registration Statement within 45 days, and in any event, but subject
to subsection 5.3(b), make such filing within 75 days, of the receipt of such
Securities Holder Sale Notice or (ii) in the case of a Registration Statement on
Form S-3, use its reasonable best efforts to file such Registration Statement
within 30 days, and in any event, but subject to subsection 5.3(b), make such
filing within 60 days (PROVIDED that such time periods shall begin on the date
of the Company's receipt of the Securities Holder Sale Notice which, together
with any earlier delivered Securities Holder Sale Notice, represents the
applicable Minimum Registerable Amount), which Registration Statement shall
cover the maximum number of shares of Registerable Common set forth in such
Securities Holder Sale Notice, and, if applicable, such additional shares of New
Common Stock as permitted under subsection 2.6 and (b) use its best efforts to
facilitate such Demand Registration as provided herein. Notwithstanding the
foregoing, the Company may delay the filing of (but not its obligation to
expeditiously prepare) any Registration Statement relating to a Demand
Registration for a reasonable period of time (not in excess of 90 days) if the
Board of Directors of the Company reasonably determines to delay such filing
and, within ten (10) days of such determination, the Company provides each
Securities Holder that delivered a Securities Holder Sale Notice with a
certificate signed by the Chairman of the Board of Directors of the Company or
the Chief Executive Officer of the Company stating that, in the good faith
judgment of the Board of Directors of the Company, the filing of such
Registration Statement would adversely affect any material business situation,
transaction or negotiation then contemplated by the Company or materially and
adversely affect the Company. The Company shall promptly give notice to each
such Securities Holder of the end of any delay period under this subsection.
Subject to any extension under subsection 4.1(b), the Company shall keep any
Demand Registration Statement effective for a period of (i) in the case of a
Demand Registration other than a Shelf Registration, until the earlier of (x)
the four (4) month anniversary of the date that the Registration Statement with
respect thereto is declared effective by the Commission and (y) the date on
which all of the Registerable Common covered by such Registration Statement has
been sold and (ii) in the case of a Shelf Registration, until the earlier of (x)
two (2) years following the date the Registration Statement with respect thereto
is declared effective by the Commission and (y) the date on which all of the
Registerable Common covered by such Registration Statement has been sold or, in
each case, such shorter period if any such Registration is terminated in
accordance with the terms hereof prior to the end of the applicable period.
2.3. NOTICES; MINIMUM REGISTERABLE AMOUNTS. (a) Subject to
subsection 2.1, any Securities Holder may send a Securities Holder Sale Notice
to the Company in respect of a Demand Registration. Simultaneously with the
delivery to the Company of a Securities Holder Sale Notice, the Securities
Holder so requesting a Demand Registration shall deliver to each other
Securities Holder a copy of such Securities Holder Sale Notice and such other
information as such Securities Holder may deem appropriate.
(b) Notwithstanding subsection 2.3(a), no Securities Holder
Sale Notice delivered by a Securities Holder shall be effective to require the
Company to provide a Demand Registration, unless (i) the aggregate number of
shares of New Common Stock represented by such Securities Holder Sale Notice
equals or exceeds the Minimum Registerable Amount or (ii) within twenty (20)
days of the delivery of the first Securities Holder Sale Notice in respect of an
aggregate number of shares of New Common Stock that does not equal or exceed the
Minimum
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Registerable Amount one or more additional Securities Holder Sale Notices are
delivered by Securities Holders then entitled to request a Demand Registration
pursuant to subsection 2.1(a) such that the aggregate number of shares of New
Common Stock represented by all such Securities Holder Sale Notices (including
the Securities Holder Sale Notice which commenced such twenty (20) day period)
is at least equal to the Minimum Registerable Amount. All Securities Holders
delivering Securities Holder Sale Notices in accordance with the immediately
preceding sentence are hereinafter referred to as the "Initiating Securities
Holders". Subject to subsection 2.4, the delivery of any Securities Holder Sale
Notice pursuant to this subsection 2.3(b), shall be deemed a request by each
Initiating Securities Holder under subsection 2.1 for a Demand Registration,
PROVIDED that if all Securities Holder Sale Notices so delivered do not
represent at least the Minimum Registerable Amount, then all such Securities
Holder Sale Notices shall be deemed null and void and shall not constitute a
request for Demand Registration under subsection 2.1 by any Initiating
Securities Holder.
(c) Any Securities Holder Sale Notice may be revised from time
to time prior to the earlier of (i) the execution of the Purchase Agreement, if
any, for such offering and (ii) the effectiveness of the Registration Statement
for such offering; PROVIDED that in no event may a Securities Holder Sale Notice
be revised so as to reduce the aggregate number of shares of New Common Stock
represented by such Securities Holder Sale Notice below the Minimum Registerable
Amount.
(d) The Company shall promptly provide a Securities Holder
Questionnaire (i) in the case of a Demand Registration, to each Securities
Holder that delivers a Securities Holder Sale Notice in accordance with this
subsection 2.3 and each Piggybacking Securities Holder and (ii) in the case of a
Company Public Sale Event, to each Securities Holder that has indicated its
desire pursuant to subsection 3.3 to participate in such Sale Event.
2.4. DISCRETION OF SECURITIES HOLDER. In connection with any
Securities Holder Public Sale Event, subject to the provisions of this
Agreement, the Securities Holder requesting a Demand Registration (if such
Public Sale Event was initiated by an individual Securities Holder) or the
Initiating Securities Holders owning a majority of the aggregate number of
shares of Registerable Common that all such Initiating Securities Holders are
seeking to include in such Public Sale Event (if such Public Sale Event was
initiated by Initiating Securities Holders), in its or their sole discretion, as
the case may be, shall determine whether (i) to proceed with, withdraw from or
terminate such proposed Securities Holder Public Sale Event, (ii) to enter into
one or more Purchase Agreements for such Securities Holder Public Sale Event and
(iii) to take such actions as may be necessary to close the sale of Registerable
Common contemplated by such offering, including, without limitation, waiving any
conditions to closing such sale which have not been fulfilled.
2.5. ALLOCATION AMONG INITIATING SECURITIES HOLDERS. In
connection with any Demand Registration requested by Initiating Securities
Holders in accordance with subsection 2.3, if the lead managing underwriter
selected by such Initiating Securities Holders in accordance with subsection 5.8
with respect to such offering (or, if the offering is not underwritten, if a
financial advisor to such Initiating Securities Holders) determines that
marketing factors require a limitation on the number of shares of Registerable
Common to be offered and sold in such offering, there shall be included in the
offering only that number of shares of Registerable
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Common that such lead managing underwriter or financial advisor, as the case may
be, reasonably and in good faith believes will not jeopardize the success of the
offering, which shares of Registerable Common shall be allocated among the
Initiating Securities Holders on a PRO RATA basis based on the number of shares
of Registerable Common each such Initiating Securities Holder seeks to include
in such offering.
2.6. PIGGYBACK RIGHTS OF SECURITIES HOLDERS AND THE COMPANY.
(a) In connection with any Demand Registration that has been requested by a
Securities Holder or Initiating Securities Holders, as the case may be, in
accordance with subsections 2.1 and 2.3, any other Securities Holder then
holding Registerable Common (a "PIGGYBACKING SECURITIES HOLDER") and the Company
shall be entitled, subject to subsection 2.6(b), to participate on the same
terms and conditions as such Securities Holder in the Securities Holder Public
Sale Event relating thereto and offer and sell shares of Registerable Common or
shares of New Common Stock, respectively, therein as provided in this subsection
2.6. Any party desiring to so participate shall give written notice (a
"PIGGYBACKING NOTICE") to the Securities Holder requesting such Demand
Registration and, if such party is not the Company, to the Company no later than
fifteen (15) days following receipt of a Securities Holder Sale Notice, of the
aggregate number of shares of Registerable Common that such Piggybacking
Securities Holder or shares of New Common Stock that the Company, as the case
may be, then desires to offer and sell in such Securities Holder Public Sale
Event.
(b) The extent to which a Piggybacking Securities Holder or
the Company may participate in any Securities Holder Public Sale Event in
accordance with paragraph (a) of this subsection 2.6 shall be limited to that
number of shares of Registerable Common or shares of New Common Stock that will
not require a reduction in the number of shares of Registerable Common of the
Initiating Securities Holders or the Securities Holder requesting such Demand
Registration to be included therein or change in a manner materially adverse to
such Initiating Securities Holders or Securities Holder, as the case may be, the
proposed method of the offering, including, without limitation, the economic
benefits to such Initiating Securities Holders or Securities Holder. If the lead
managing underwriter selected by the Initiating Securities Holders or the
Securities Holder initiating such Securities Holder Public Sale Event (or, if
the offering is not underwritten, a financial advisor to such Initiating
Securities Holders or Securities Holder) determines that marketing factors
require a limitation on the number of shares of Registerable Common or shares of
New Common Stock to be offered and sold in such offering, there shall be
included in the Registration Statement with respect to such offering only that
number of shares of Registerable Common held by such Securities Holders or
shares of New Common Stock to be sold by the Company, if any, that such lead
managing underwriter or financial advisor, as the case may be, reasonably and in
good faith believes will not jeopardize the success of the offering, which
shares shall be allocated FIRST among the Piggybacking Securities Holders on a
PRO RATA basis based on the number of shares of Registerable Common each such
Securities Holder is seeking to include in such offering and SECOND to the
Company.
Section 3. COMPANY PUBLIC SALE EVENTS.
3.1. DETERMINATION. Subject to subsection 6.1, the Company may
at any time effect a Company Public Sale Event pursuant to a Registration
Statement filed by the Company,
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PROVIDED that the Company gives each Securities Holder a Company Sale Notice, no
less than 21 days prior to the filing of the related Registration Statement.
3.2. NOTICE. The Company Sale Notice shall contain a statement
that the Securities Holders are entitled to participate in such offering and the
number of shares of Registerable Common which represents the best estimate of
the lead managing underwriter (or, if not known or applicable, the Company) that
will be available for sale by the Securities Holders in the proposed offering.
3.3. PIGGYBACK RIGHTS OF SECURITIES HOLDERS. (a) If the
Company shall have delivered a Company Sale Notice, Securities Holders shall be
entitled to participate on the same terms and conditions as the Company in the
Company Public Sale Event to which such Company Sale Notice relates and to offer
and sell shares of Registerable Common therein only to the extent provided in
this subsection 3.3. Each Securities Holder desiring to participate in such
offering shall notify the Company in writing, by delivering a Piggybacking
Notice no later than ten (10) days following receipt of a Company Sale Notice in
respect of a Company Public Sale Event of the aggregate number of shares of
Registerable Common that such Securities Holder then desires to sell in the
offering.
(b) Each Securities Holder desiring to participate in a
Company Public Sale Event may include shares of Registerable Common in any
Registration Statement relating to a Company Public Sale Event to the extent
that the inclusion of such shares shall not reduce the number of shares of New
Common Stock to be offered and sold by the Company to be included therein or
change in a manner materially adverse to the Company the proposed method of the
offering, including, without limitation, the economic benefits to the Company.
If the lead managing underwriter selected by the Company for such offering (or,
if the offering is not underwritten, a financial advisor to the Company)
determines that marketing factors require a limitation on the number of shares
of Registerable Common to be offered and sold in such Company Public Sale Event,
there shall be included in the offering only that number of shares of
Registerable Common, if any, that such lead managing underwriter or financial
advisor, as the case may be, reasonably and in good faith believes will not
jeopardize the success of the offering, which shares of Registerable Common
shall be allocated among such Securities Holders on a PRO RATA basis based on
the number of shares of Registerable Common each such Securities Holder is
seeking to include in such Sale Event.
3.4. DISCRETION OF THE COMPANY. . In connection with any
Company Public Sale Event, subject to the provisions of this Agreement, the
Company, in its sole discretion, shall determine whether (a) to proceed with,
withdraw from or terminate such Company Public Sale Event, (b) to enter into the
Purchase Agreement for such Company Public Sale Event, and (c) to take such
actions as may be necessary to close the sale of New Common Stock contemplated
by such offering, including, without limitation, waiving any conditions to
closing such sale which have not been fulfilled.
Section 4. BLACK-OUT PERIODS.
4.1. BLACK-OUT PERIODS FOR SECURITIES HOLDERS. (a) No
Securities Holder shall offer to sell or sell any shares of Registerable Common
pursuant to a Demand Registration, and
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the Company shall not be required to supplement or amend any Registration
Statement or otherwise facilitate the sale of Registerable Common pursuant
thereto, during the 90-day period (or such lesser number of days until the
Company makes its next required filing under the Exchange Act) immediately
following the receipt by each Securities Holder of a certificate of an
authorized officer of the Company to the effect that the Board of Directors of
the Company has in good faith and for valid business reasons requested that the
Securities Holders refrain from selling shares of Registerable Common; PROVIDED,
HOWEVER, that the identity of a potential purchaser or purchasers of
Registerable Common from a Securities Holder shall not constitute a valid
business reason. Any period described in this subsection 4.1(a) during which
Securities Holders are not able to sell shares of Registerable Common pursuant
to a Demand Registration is herein referred to as a "black-out" period. The
Company shall notify each Securities Holder of the expiration or earlier
termination of any "black-out" period (the nature and pendency of which need not
be disclosed during such "black-out" period).
(b) The period during which the Company is required pursuant
to subsection 2.2 to keep any Demand Registration effective shall be extended by
a number of days equal to the number of days, if any, of any "black-out" period
applicable to Securities Holders pursuant to this subsection 4.1 occurring
during such period, plus a number of days equal to the number of days during
such period, if any, of any period during which the Securities Holders are
unable to sell any shares of Registerable Common pursuant to a Demand
Registration as a result of the happening of any event of the nature described
in subsection 5.3(c)(ii), 5.3(c)(iii) or 5.3(c)(v).
Section 5. AGREEMENTS CONCERNING OFFERINGS.
5.1. OBLIGATIONS OF SECURITIES HOLDERS. (a) Each Securities
Holder shall, upon the reasonable request of the Company, advise the Company of
the number of shares of Registerable Common then held or beneficially owned by
it.
(b) It shall be a condition precedent to the obligations of
the Company to effect a Registration of any shares of Registerable Common that
the Securities Holders desiring to participate in a Public Sale Event shall have
furnished to the Company a completed Securities Holder's Questionnaire and such
additional information regarding themselves, the Registerable Common held by
them and the intended method of disposition of such securities as shall be
required by law or the Commission to effect the Registration of their
Registerable Common and any other information relating to such Registration
reasonably requested by the Company.
5.2. OBLIGATIONS OF THE COMPANY. Whenever required under this
Agreement to proceed with a Registration of any Registerable Common, the Company
shall, subject to the terms and conditions of this Agreement, as expeditiously
as reasonably possible:
(a) In accordance with subsection 2.2, prepare and file with
the Commission a Registration Statement with respect to such
Registerable Common and use its best efforts to cause such Registration
Statement to become effective.
(b) Prepare and file with the Commission such amendments
(including post-effective amendments) to such Registration Statement
and supplements to the related Prospectus used in connection with such
Registration Statement, and otherwise use its
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best efforts, to the end that such Registration Statement reflects the
plan of distribution of the securities registered thereunder that is
included in the relevant Notice of offering, if any, in respect of a
Demand Registration and, subject to subsection 2.2, is effective until
the completion of the distribution contemplated by such Registration
Statement or so long thereafter as a dealer is required by law to
deliver a Prospectus in connection with the offer and sale of the
shares of Registerable Common covered by such Registration Statement.
(c) Notify the Securities Holders selling Registerable Common,
at any time when a Prospectus relating thereto is required to be
delivered under the Securities Act, when the Company becomes aware of
the occurrence of any event, as a result of which the Prospectus
included in such Registration Statement (as then in effect) contains an
untrue statement of material fact or omits to state a material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and use its best efforts to
prepare and file promptly, and in any event within 20 days, with the
Commission a supplement or amendment to such Prospectus so that, as
thereafter delivered to purchasers of such Registerable Common, such
Prospectus will not contain an untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading.
(d) Provide to any Securities Holder requesting to include
Registerable Common in such Registration Statement and any managing
underwriter participating in any distribution thereof, and to any
attorney, accountant or other agent retained by such Securities Holder
or managing underwriter, reasonable access to appropriate officers and
directors of the Company to ask questions and to obtain information
reasonably requested by any such Person in connection with such
Registration Statement or any amendment thereto, PROVIDED, HOWEVER,
that (i) in connection with any such access or request, any such
requesting Persons shall cooperate to the extent reasonably practicable
to minimize any disruption to the operation by the Company of its
business and (ii) any records, information or documents shall be kept
confidential by such requesting Persons, unless (x) such records,
information or documents are in the public domain or otherwise publicly
available other than through disclosure by such requesting party or (y)
disclosure of such records, information or documents is required by
court or administrative order or by applicable law (including, without
limitation, the Securities Act).
(e) Furnish to the participating Securities Holders, such
number of copies of a Prospectus, including a Preliminary Prospectus,
in conformity with the requirements of the Securities Act, and such
other documents as they may reasonably request in order to facilitate
the disposition of Registerable Common owned by them.
(f) Use its best efforts to register and qualify the
securities covered by such Registration Statement under such other
securities or "Blue Sky" laws of such jurisdictions in the United
States as shall be reasonably requested by the Securities Holders,
PROVIDED 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
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process in any such states or jurisdictions or to make any filing or
take any other action which could subject it to taxation as a result
of such filing.
(g) Enter into and perform its obligations under a Purchase
Agreement, if the offering is an underwritten offering, in usual and
customary form, with the managing underwriter of such underwritten
offering; PROVIDED, HOWEVER, that each Securities Holder participating
in such Public Sale Event shall also enter into and perform its
obligations under such Purchase Agreement so long as such obligations
are usual and customary obligations of selling stockholders in a
registered public offering.
5.3. AGREEMENTS RELATED TO OFFERINGS. Subject to the terms and
conditions hereof, in connection with any Demand Registration:
(a) The Company will cooperate with any underwriters for, and
the Securities Holders of, the shares of Registerable Common proposed
to be sold pursuant to a Registration Statement, and will, unless the
parties to the Purchase Agreement otherwise agree, enter into a
Purchase Agreement not inconsistent with the terms and conditions of
this Agreement and containing such other terms and conditions of a type
and form reasonable and customary for companies of similar size and
credit rating (including, but not limited to, such provisions for
delivery of a "comfort letter" and legal opinion as are customary), and
take all such other reasonable actions as are necessary or advisable to
permit, expedite and facilitate the disposition of such shares of
Registerable Common in the manner contemplated by such Registration
Statement in each case to the same extent as if all the shares of
Registerable Common then being offered were for the account of the
Company.
(b) Neither a Registration Statement nor any amendment or
supplement thereto will be filed by the Company until counsel for the
Initiating Securities Holder or the securities Holder delivering the
relevant effective Securities Holder Sale Notice shall have had a
reasonable opportunity to review the same and each Securities Holder
participating in such Sale Event shall have had a reasonable
opportunity to exercise its rights under subsection 5.2(d) with respect
thereto. No amendment to such Registration Statement naming any
Securities Holder as a selling security holder shall be filed with the
Commission until such Securities Holder shall have had a reasonable
opportunity to review such Registration Statement as originally filed.
Neither such Registration Statement nor any related Prospectus or any
amendment or supplement thereto shall be filed by the Company with the
Commission which shall be disapproved (for reasonable cause) by the
managing underwriters named therein or any participating Securities
Holders within a reasonable period after notice thereof.
(c) The Company will use its reasonable efforts to keep the
Securities Holders informed of the Company's best estimate of the
earliest date on which such Registration Statement or any
post-effective amendment thereto will become effective and will notify
each Securities Holder and the managing underwriters participating in
the distribution pursuant to such Registration Statement promptly (i)
when such Registration Statement or any post-effective amendment to
such Registration Statement becomes effective, (ii) of any request by
the Commission for an amendment or any supplement to such Registration
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Statement or any related Prospectus, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of such
Registration Statement or of any order preventing or suspending the use
of any related Prospectus or the initiation or threat of any proceeding
for that purpose, (iv) of the suspension of the qualification of any
shares of New Common Stock included in such Registration Statement for
sale in any jurisdiction or the initiation or threat of a proceeding
for that purpose, (v) of any determination by the Company that an event
has occurred (the nature and pendency of which need not be disclosed
during a "black-out period" pursuant to subsection 4.1) which makes
untrue any statement of a material fact made in such Registration
Statement or any related Prospectus or which requires the making of a
change in such Registration Statement or any related Prospectus in
order that the same will not contain any 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 and (vi) of the
completion of the distribution contemplated by such Registration
Statement if it relates to a Company Sale Event.
(d) In the event of the issuance of any stop order suspending
the effectiveness of such Registration Statement or of any order
suspending or preventing the use of any related Prospectus or
suspending the qualification of any shares of Common Stock included in
such Registration Statement for sale in any jurisdiction, the Company
will use its reasonable best efforts promptly to obtain its withdrawal.
(e) The Company agrees to otherwise use its best efforts to
comply with all applicable rules and regulations of the Commission, and
make available to its security holders, as soon as reasonably
practicable, but not later than fifteen months after the effective date
of such Registration Statement, an earnings statement covering the
period of at least twelve months beginning with the first full fiscal
quarter after the effective date of such Registration Statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder.
(f) The Company shall, subject to permitted "black-out"
periods, upon the happening of any event of the nature described in
subsection 5.3(c)(ii), 5.3(c)(iii) or 5.3(c)(v), as expeditiously as
reasonably possible, prepare a supplement or post-effective amendment
to the applicable Registration Statement or a supplement to the related
Prospectus or any document incorporated therein by reference or file
any other required documents and deliver a copy thereof to each
Securities Holder so that, as thereafter delivered to the purchasers of
the Registerable Common being sold thereunder, such Prospectus will not
contain 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, in light of the circumstances under which they were
made, not misleading.
(g) ) Upon receipt of any notice from the Company of the
happening of any event of the kind described in subsection 5.2(c), each
Securities Holder will immediately discontinue disposition of the
Registerable Common pursuant to the Registration Statement relating to
such Registerable Common until such Securities Holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by
subsection 5.2(c), or until such Securities Holder has been advised in
writing by the Company that
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the use of the Prospectus may be resumed and has received copies of
any additional or supplemental filings which are incorporated by
reference therein. If reasonably requested by the Company, the
Securities Holders will, or will request the managing underwriter or
underwriters, if any, to, deliver to the Company all copies, other
than permanent file copies, of the Prospectus covering the
Registerable Common current at the time of receipt of such notice.
5.4. CERTAIN EXPENSES. The Company shall pay all fees,
disbursements and expenses in connection with the performance of its obligations
hereunder, including, without limitation, all registration and filing fees,
printing expenses, auditors' fees, listing fees, registrar and transfer agents'
fees, reasonable fees and disbursements of one counsel (and appropriate local
counsel) to the Securities Holders in connection with each Sale Event (which
counsel shall be selected by EQSF, if any Affiliate of EQSF is participating in
such Sale Event, and if no such Affiliate is participating, by the Securities
Holders holding a majority of the Registrable Securities that are the subject of
such Sale Event) and counsel for the Company, expenses (including reasonable
fees and disbursements of counsel) of complying with applicable securities or
"Blue Sky" laws and the fees of the NASD or other governing body of any
securities exchange on which the New Common Stock is listed in connection with
its review of any offering contemplated in such Registration Statement, but not
including underwriting fees, discounts and commissions.
5.5. REPORTS UNDER THE EXCHANGE ACT; RULE 144. (a) The
Company agrees to:
(i) file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act or
the Exchange Act; and
(ii) furnish to any Securities Holder forthwith upon request
(A) a written statement by the Company that it has complied with the
current public information and reporting requirements of Rule 144 or
any similar rule or regulation hereafter adopted by the Commission and
the Exchange Act, (B) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by
the Company, and (C) such other information as is available to the
Company without unreasonable cost or expense and may be reasonably
requested in connection with availing any Securities Holder of any rule
or regulation of the Commission which permits the selling of any such
securities without Registration or pursuant to such rule or regulation.
(b) During any period in which the Company is not subject to
Section 13 or 15(d) of the Exchange Act, the Company shall, upon the request of
any Securities Holder, make available to such Securities Holder and any
prospective purchaser of Registerable Common designated by such Securities
Holder the information required by Rule 144(c) in order to permit resales of the
Registerable Common held by such Securities Holder pursuant to Rule 144.
(c) Any Securities Holder selling shares of Registerable
Common pursuant to Rule 144 shall promptly deliver to the Company a copy of the
completed Form 144 filed by such Securities Holder with the Commission.
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5.6. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of Securities Holders owning a majority of the Registerable
Common held by Securities Holders at such time, enter into any agreement (other
than this Agreement) which would allow any holder or prospective holder of New
Common Stock (a) on demand of such holder to cause the Company to effect a
Registration of such securities prior to the thirty (30) month anniversary of
the Effective Date, (b) to include such securities in any Registration Statement
filed under subsection 2.2 hereof to the exclusion of shares of Registerable
Common that any Securities Holder desires to include in any such offering or (c)
to include such securities in any Company Public Sale Event to the exclusion of
shares of Registerable Common that any Securities Holder desires to include in
any such offering.
5.7. INDEMNIFICATION AND CONTRIBUTION. In connection with a
Demand Registration, provisions substantially in conformity with the following
provisions shall be contained in the related Purchase Agreement unless the
parties to such Purchase Agreement agree otherwise:
(i) The Company shall agree to indemnify and hold harmless
each Securities Holder and each Person, if any, who controls such
Securities Holder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act against any losses, claims,
damages or liabilities, joint or several, or actions in respect thereof
to which such Securities Holder or controlling Person may become
subject under the Securities Act, or otherwise (collectively,
"LOSSES"), insofar as such Losses arise out of, or are based upon, any
untrue statement or alleged untrue statement of any material fact
contained in such Registration Statement, any related Preliminary
Prospectus or any related Prospectus, or any amendment or supplement
thereto, or arise out of, or are based upon 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, and will
reimburse such Securities Holder or controlling Person for any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such Loss; PROVIDED, however, that the
Company shall not be so liable to the extent that any such Loss arises
out of, or is based upon, an untrue statement or alleged untrue
statement of a material fact or an omission or alleged omission to
state a material fact in said Registration Statement, said Preliminary
Prospectus, said Prospectus or any said amendment or supplement in
reliance upon, and in conformity with, written information furnished to
the Company by or on behalf of a Securities Holder specifically for use
therein. Notwithstanding the foregoing, the Company shall not be liable
in any such case to the extent that any such Loss arises out of, or is
based upon, an untrue statement or alleged untrue statement or omission
or alleged omission made in any Preliminary Prospectus if (A) such
Securities Holder failed to send or deliver a copy of the Prospectus
with or prior to the delivery of written confirmation of the sale of
Registerable Common to the Person asserting such Loss or who purchased
such Registerable Common which is the subject thereof if, in either
case, such delivery is required by the Securities Act and (B) the
Prospectus would have corrected such untrue statement or omission or
alleged untrue statement or alleged omission; and the Company shall not
be liable in any such case to the extent that any such Loss arises out
of, or is based upon, an untrue statement or alleged untrue statement
of a material fact or omission or alleged omission to state a material
fact in the Prospectus, if
-15-
such untrue statement or alleged untrue statement, omission or alleged
omission is corrected in an amendment or supplement to the Prospectus
and if, having previously been furnished by or on behalf of the
Company with copies of the Prospectus as so amended or supplemented,
such Securities Holder thereafter fails to deliver such Prospectus as
so amended or supplemented, prior to or concurrently with the sale of
Registerable Common to the Person asserting such Loss or who purchased
such Registerable Common which is the subject thereof if, in either
case, such delivery is required by the Securities Act. This indemnity
agreement will be in addition to any liability which the Company may
otherwise have.
(ii) Each Securities Holder severally shall agree to indemnify
and hold harmless the Company, each of its officers and directors who
sign the Registration Statement, each other Securities Holder and each
Person, if any, who controls the Company or such other Securities
Holder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act against any Losses to which the Company,
such officers or directors, such other Securities Holder or such
controlling Person may become subject under the Securities Act, or
otherwise, insofar as such Losses arise out of, or are based upon, any
untrue statement or alleged untrue statement of any material fact
contained in such Registration Statement, any related Preliminary
Prospectus or any related Prospectus, or any amendment or supplement
thereto, or arise out of, or are based upon 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, and will
reimburse the Company, such officers or directors, such other
Securities Holder or such controlling Person for any legal or other
expenses reasonably incurred by them in connection with investigating
or defending any such Loss, in each case to the extent, but only to the
extent, that any such Loss arises out of, or is based upon, an untrue
statement or alleged untrue statement of a material fact or an omission
or alleged omission to state a material fact in said Registration
Statement, said Preliminary Prospectus or said Prospectus, or any said
amendment or supplement in reliance upon, and in conformity with,
written information furnished to the Company by or on behalf of such
Securities Holder specifically for use therein; PROVIDED, HOWEVER, that
the liability of each Securities Holder on account of the foregoing
shall be limited to an amount equal to the net proceeds of the sale of
shares of Registerable Common by such Securities Holder in the offering
which gave rise to the liability.
(iii) The Company shall agree to indemnify and hold harmless
each underwriter and each Person, if any, who controls any such
underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act against any Losses to which such
underwriter or controlling Person may become subject under tile
Securities Act, or otherwise, insofar as such Losses arise out of, or
are based upon, any untrue statement or alleged untrue statement of any
material fact contained in such Registration Statement, any related
Preliminary Prospectus or any related Prospectus, or any amendment or
supplement thereto, or arise out of, or are based upon 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, and
will reimburse such underwriter or controlling Person for any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such Loss; PROVIDED, HOWEVER, that the
-16-
Company shall not be so liable to the extent that any such Loss arises
out of, or is based upon, an untrue statement or alleged untrue
statement of a material fact or an omission or alleged omission to
state a material fact in said Registration Statement, said Preliminary
Prospectus or said Prospectus or any said amendment or supplement in
reliance upon, and in conformity with, written information furnished to
the Company by or on behalf of such underwriter specifically for use
therein. Notwithstanding the foregoing, the Company shall not be liable
in any such case to the extent that any such Loss arises out of, or is
based upon, an untrue statement or alleged untrue statement or omission
or alleged omission made in any Preliminary Prospectus if (A) such
underwriter failed to send or deliver a copy of the Prospectus with or
prior to the delivery of written confirmation of the sale of
Registerable Common to the Person asserting such Loss or who purchased
such Registerable Common which is the subject thereof if, in either
case, such delivery is required by the Securities Act and (B) the
Prospectus would have corrected such untrue statement or omission or
alleged untrue statement or alleged omission; and the Company shall not
be liable in any such case to the extent that any such Loss arises out
of, or is based upon, an untrue statement or alleged untrue statement
of a material fact or omission or alleged omission to state a material
fact in the Prospectus, if such untrue statement or alleged untrue
statement, omission or alleged omission is corrected in an amendment or
supplement to the Prospectus and if, having previously been furnished
by or on behalf of the Company with copies of the Prospectus as so
amended or supplemented, such underwriter thereafter fails to deliver
such Prospectus as so amended or supplemented, prior to or concurrently
with the sale of Registerable Common to the Person asserting such Loss
or who purchased such Registerable Common which is the subject thereof
if, in either case, such delivery is required by the Securities Act.
This indemnity agreement will be in addition to any liability which the
Company may otherwise have, PROVIDED that the Company shall only be
required to provide the indemnification described in this subsection
5.7(a)(iii) to an underwriter and each Person, if any, who controls
such underwriter if such underwriter agrees to indemnification
provisions substantially in the form set forth in subsection 5.7(b).
(iv) Each Securities Holder severally shall agree to indemnify
and hold harmless each underwriter and each Person, if any, who
controls such underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act against any Losses,
joint or several, or actions in respect thereof to which such
underwriter or such controlling Person may become subject under the
Securities Act, or otherwise, insofar as such Losses arise out of, or
are based upon, any untrue statement or alleged untrue statement of any
material fact contained in such Registration Statement, any related
Preliminary Prospectus or any related Prospectus, or any amendment or
supplement thereto, or arise out of, or are based upon 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, and
will reimburse such underwriter or such controlling Person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such Loss, in each case to the extent,
but only to the extent, that any such Loss arises out of, or is based
upon, an untrue statement or alleged untrue statement of a material
fact or an omission or alleged omission to state a material fact in
said Registration Statement, said Preliminary Prospectus or said
Prospectus, or any said amendment or supplement in reliance upon, and
in conformity
-17-
with, written information furnished to the Company by or on behalf of
such Securities Holder specifically for use therein; PROVIDED that the
liability of such Securities Holder on account of the foregoing shall
be limited to an amount equal to the net proceeds of the sale of
shares of Registerable Common by such Securities Holder in the
offering which gave rise to the liability. Notwithstanding the
foregoing, such Securities Holder shall not be liable in any such case
to the extent that any such Loss arises out of, or is based upon, an
untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus if (A) such underwriter
failed to send or deliver a copy of the Prospectus with or prior to
the delivery of written confirmation of the sale of Registerable
Common to the Person asserting such Loss or who purchased such
Registerable Common which is the subject thereof if, in either case,
such delivery is required by the Securities Act and (B) the Prospectus
would have corrected such untrue statement or omission or alleged
untrue statement or alleged omission; and such Securities Holder shall
not be liable in any such case to the extent that any such Loss arises
out of, or is based upon, an untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state
a material fact in the Prospectus, if such untrue statement or alleged
untrue statement, omission or alleged omission is corrected in an
amendment or supplement to the Prospectus and if, having previously
been furnished with copies of the Prospectus as so amended or
supplemented, such underwriter thereafter fails to deliver such
Prospectus as so amended or supplemented, prior to or concurrently
with the sale of Registerable Common to the Person asserting such Loss
or who purchased such Registerable Common which is the subject thereof
if, in either case, such delivery is required by the Securities Act.
No Securities Holder shall be required to provide the indemnification
described in this subsection 5.7(a)(iv) to an underwriter or any
Person who controls such underwriter if such underwriter has not
agreed to indemnification provisions substantially in the form set
forth in subsection 5.7(b).
(v) Promptly after receipt by an indemnified party pursuant to
the indemnification provisions of such Purchase Agreement of notice of
any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to such indemnification provisions, notify
the indemnifying party in writing of the claim or the commencement of
that action; PROVIDED, HOWEVER, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may
have to the indemnified party otherwise than pursuant to the
indemnification provisions of such Purchase Agreement unless the
indemnifying party is materially prejudiced by such lack of notice. If
any such claim or action shall be brought against an indemnified party,
and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate in defense of such claim, and,
to the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel
reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, (x) the indemnifying party shall
not be liable to the indemnified party pursuant to the indemnification
provisions hereof or of such Purchase Agreement for any legal or other
expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation,
(y) the indemnifying party shall not be liable for the costs and
expenses of or Losses arising out of any settlement of such claim or
action unless such settlement was
-18-
effected with the consent of the indemnifying party and (z) the
indemnified party shall be obligated to cooperate with the
indemnifying party in the investigation of such claim or action;
PROVIDED, HOWEVER, that the Securities Holders (together with their
respective controlling Persons) and the underwriters (together with
their respective controlling Persons) shall each as a separate group
have the right to employ one separate counsel to represent such
Securities Holders and such underwriters (and their respective
controlling Persons) who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by such
Securities Holders and underwriters against the Company pursuant to
the indemnification provisions of such Purchase Agreement if, in the
reasonable judgment of either Securities Holders' counsel or counsel
for the underwriters, there exists an actual or potential conflict of
interest between such Securities Holders (and its controlling persons)
on the one hand and such underwriters (and their controlling persons)
on the other, and in that event the reasonable fees and expenses of
both such separate counsel shall also be paid by the Company.
(a) As a condition to agreeing in any Purchase Agreement to
the indemnification provisions described in subsection 5.7(a)(iii) and
5.7(a)(iv) in favor of an underwriter participating in the offering covered by
the related Registration Statement and its controlling Persons, the Company and
the Securities Holders participating in an offering pursuant to such
Registration Statement may require that such underwriter agree in the Purchase
Agreement to provisions substantially in the form set forth in subsection
5.7(a)(v) and to severally indemnify and hold harmless the Company, each of its
officers and directors who sign such Registration Statement, each Securities
Holder participating in such offering and each Person, if any, who controls the
Company or such Securities Holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act against any Losses to which the
Company, such officers and directors, such Securities Holder or such controlling
Person may become subject under the Securities Act, or otherwise, insofar as
such Losses arise out of, or are based upon, any untrue statement or alleged
untrue statement of any material fact contained in such Registration Statement
in which such underwriter is named as an underwriter, any related Preliminary
Prospectus or any related Prospectus, or any amendment or supplement thereto, or
arise out of, or are based upon 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, and to reimburse the Company, such officers
and directors, such Securities Holder or such controlling Person for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such Loss in each case to the extent, but only to the extent,
that any such Loss arises out of, or is based upon, an untrue statement or
alleged untrue statement of a material fact or an omission or alleged omission
to state a material fact in said Registration Statement, said Preliminary
Prospectus or said Prospectus or any said amendment or supplement in reliance
upon, and in conformity with, written information furnished to the Company by or
on behalf of such underwriter specifically for use therein.
(b) In order to provide for just and equitable contribution
between the Company and such Securities Holders in circumstances in which the
indemnification provisions described in this subsection 5.7 and contained in any
Purchase Agreement are for any reason insufficient or inadequate to hold the
indemnified party harmless (other than as a result of their nonapplicability in
accordance with their terms), the Company and such Securities Holders shall
contribute to the aggregate Losses (including any investigation, legal and other
expenses
-19-
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claims asserted, but after deducting any
contribution actually received from Persons other than the Company and such
Securities Holders) incurred by the Company and one or more of its directors or
its officers who sign such Registration Statement or such Securities Holders or
any controlling Person of any of them, in such proportion as is appropriate to
reflect their relative degrees of fault in connection with the actions which
resulted in such Losses, as well as any other relevant equitable considerations.
The relative fault of the Company and of such Securities Holder shall be
determined by reference to, among other things, whether the untrue or allegedly
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by such
Securities Holder and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
PROVIDED, HOWEVER, that the liability of each such Securities Holder to make
such contribution shall be limited to an amount equal to the net proceeds of the
sale of shares of Registerable Common by such Securities Holder in the offering
which gave rise to the liability. As among themselves, such Securities Holders
agree to contribute to amounts payable by other such Securities Holders in such
manner as shall, to the extent permitted by law, give effect to the provisions
in such Purchase Agreement comparable to subsection 5.7(a)(ii). The Company and
such Securities Holders agree that it would not be just and equitable if their
respective obligations to contribute pursuant to this subsection 5.7(c) were to
be determined by PRO RATA allocation (other than as set forth above) of the
aggregate Losses by reference to the proceeds realized by such Securities
Holders in a sale pursuant to said Registration Statement or said Prospectus or
by any other method of allocation which does not take account of the
considerations set forth in this subsection 5.7(c). No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution under this subsection from any
Person who was not guilty of such fraudulent misrepresentation.
(c) The Company and the Securities Holders participating in an
offering pursuant to a Registration Statement agree that, if the underwriters
participating in a Public Sale Event are agreeable, the Purchase Agreement, if
any, relating to such Registration Statement shall contain provisions to the
effect that in order to provide for just and equitable contribution between such
underwriters on the one hand and the Company and such Securities Holders on the
other hand in circumstances in which the indemnification provisions of such
Purchase Agreement are for any reason insufficient or inadequate to hold the
indemnified party harmless (other than as a result of their non-applicability in
accordance with their terms), the Company and such Securities Holders on the one
hand and such underwriters on the other hand will contribute on the basis herein
set forth to the aggregate Losses (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or claims asserted, but after deducting any
contribution actually received from Persons other than the Company and such
Securities Holders and such underwriters), incurred by the Company and one or
more of its directors or its officers who sign such Registration Statement or
such Securities Holders or such underwriters, or any controlling Person of any
of them, in such proportion as is appropriate to reflect their relative degrees
of fault in connection with the actions which resulted in such Losses, as well
as any other relevant equitable considerations. The relative fault of the
Company, of such Securities Holders and of such underwriter shall be determined
by reference to, among other things, whether the untrue or allegedly untrue
statement of a material fact or the omission or alleged omission to state a
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material fact relates to information supplied by the Company, by such Securities
Holders or by such underwriter and the parties, relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. Notwithstanding the provisions set forth above, (x) no underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the shares of New Common Stock 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 (y)
the liability of each such Securities Holder to make such contribution shall be
limited to an amount equal to the net proceeds of the sale of shares of
Registerable Common by such Securities Holder in the offering which gave rise to
the liability. As among themselves, such Securities Holders agree to contribute
to amounts payable by other such Securities Holders in such manner as shall, to
the extent permitted by law, give effect to the provisions in such Purchase
Agreement comparable to subsection 5.7(a)(ii). As between the Company and such
Securities Holders, such parties agree that it would not be just and equitable
if their respective obligations to contribute pursuant to this subsection 5.7(d)
were to be determined by PRO RATA allocation (other than as set forth above) of
the aggregate Losses by reference to the proceeds realized by such Securities
Holders in a sale pursuant to said Registration Statement or said Prospectus or
by any other method of allocation which does not take account of the
considerations set forth in this subsection 5.7(d). No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution under the provisions set forth
above from any Person who was not guilty of such fraudulent misrepresentation.
(d) The obligations of the Company and the Securities Holders
participating in any distribution of shares of Registerable Common under the
provisions of this subsection 5.7 and provisions in any Purchase Agreement
substantially similar to subsections 5.7(a), 5.7(b), 5.7(c) or 5.7(d) shall
survive the termination of any or all of the other provisions of this Agreement
or such Purchase Agreement.
5.8. UNDERWRITTEN OFFERINGS. If at any time any of the
Securities Holders participating in a Demand Registration desire to sell
Registerable Common in an underwritten offering, the investment banker or
investment bankers that will manage the offering will be selected by (a) if such
Demand Registration was initiated by Initiating Securities Holders, the
Initiating Securities Holders owning a majority of the aggregate number of
shares of Registerable Common that all such Initiating Securities Holders are
seeking to include in the related Sale Event and (b) if such Demand Registration
was initiated by an individual Securities Holder, the Securities Holder
requesting such Securities Holder Public Sale Event, PROVIDED that such
investment banker or bankers must be reasonably satisfactory to the Company.
5.9. TRANSFER OF RIGHTS UNDER THIS AGREEMENT; TRANSFERS OF
REGISTERABLE COMMON. (a) At any time, the rights and obligations of a Securities
Holder under this Agreement may be transferred by a Securities Holder to a
transferee of not less than 20% of such Security Holder's Registerable Common,
PROVIDED that, within a reasonable period of time (but in no event later than 10
days) after such transfer, (i) the transferring Securities Holder shall have
furnished the Company and the other Securities Holders written notice of the
name and address of such transferee and the Registerable Common with respect to
which such rights are being transferred and (ii) such transferee shall furnish
the Company and the Securities Holders (other
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than the transferring Securities Holder) a copy of a duly executed Supplemental
Addendum by which such transferee (A) assumes all of the obligations and
liabilities of its transferor hereunder, (B) enjoys all of the rights of its
transferor hereunder and (C) agrees to be bound hereby.
(b) Except with respect to transfers pursuant to paragraph (a)
above, a transferee of Registerable Common shall neither assume any liabilities
or obligations nor enjoy any rights hereunder and shall not be bound by any of
the terms hereof.
5.10. TERMINATION OF RIGHTS. The rights granted under this
Agreement shall terminate as to each Securities Holder at such time as such
Securities Holder shall receive, either before or after the Company's receipt of
a Securities Holder Sale Notice or a Piggybacking Notice, an opinion of counsel
to the Company in form reasonably satisfactory to counsel to such Securities
Holder that all of the Registerable Common then held by such Securities Holder
can be sold within a given three (3) month period commencing on the date of such
opinion in a transaction or transactions exempt from the Registration
requirements of the Securities Act.
Section 6. SEQUENCING OF PUBLIC SALE EVENTS.
6.1. EFFECTIVE NOTICE PERIOD. (a) Subject to subsections
6.1(b) and 6.1(c), during the term of this Agreement, no priority of right shall
exist between or among Securities Holders or between any Securities Holder, on
the one hand, and the Company, on the other, with respect to providing a Notice
of Offering with respect to, and effecting, a Public Sale Event. Once properly
given, a Securities Holder Sale Notice or a Company Sale Notice regarding a
Company Public Sale Event, as the case may be, shall be effective (and shall
preclude any such Notice of Offering by another party except in accordance with
clause (ii) of Section 2.3(b)) during the period (the "EFFECTIVE NOTICE PERIOD")
commencing on the date of such Notice of Offering and ending on the earliest of
(a) withdrawal of such Notice of Offering (notice of which shall be promptly
effected in the same manner as such Notice of Offering), (b) the abandonment of
the Public Sale Event to which such Notice of Offering relates (notice of which
shall be promptly effected in the same manner as such Notice of Offering) and
(c) the later of (i) 150 days after such a Notice of Offering has been given,
PROVIDED that the Registration Statement relating to such Notice of Offering has
been declared effective within 90 days of such Notice of Offering, and (ii) 90
days after the closing date of the Public Sale Event to which such Notice of
Offering relates.
(b) Upon the termination of an Effective Notice Period, any
Securities Holder so entitled pursuant to subsection 2.1 or the Company can
provide a Notice of Offering, PROVIDED that if such Notice of Offering is given
within 12 months after the end of an Effective Notice Period by the party that
gave the immediately preceding Notice of Offering, any other party shall, for
the 45-day period following its receipt of such Notice of Offering, have the
right to preempt such Notice of Offering by itself delivering a Notice of
Offering.
(c) Notwithstanding subsection 6.1(a), the Company will have
the right to preempt any Demand Registration by delivering a Company Sale Notice
(within five Business Days after the Company has received the required
Securities Holder Sales Notice) to the Securities Holders indicating that the
Company has identified a specific business need and use for the proceeds of the
related sale and that the Company shall effect such registration as
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promptly as practicable. In connection with such registration, the Securities
Holders will have such piggyback registration rights as are set forth in Section
3.3 hereof. The Company may exercise the foregoing right to preempt only once in
any 360-day period.
6.2. RESTRICTIVE LEGEND ON CERTIFICATES. (a) Each Certificate
evidencing shares of New Common Stock issued in exchange for Notes, subject to
paragraph (b) below, be stamped or otherwise imprinted with a conspicuous legend
in the following form:
"The securities evidenced by this certificate may be sold only
pursuant to a Registration Statement effective under the
Securities Act of 1933, as amended (the "Act"), or an
exemption from the provisions of Section 5 Act."
(b) A holder of a certificate evidencing shares of New Common
Stock bearing the legend specified in paragraph (a) shall be entitled to receive
from the Company, whether or not in connection with a sale or proposed sale, a
new certificate or certificates evidencing an identical number of shares (the
transfer expenses for which shall be paid by the Company) but without such
legend at such time as (i) such shares are sold pursuant to a Registration
Statement effective under the Securities Act, (ii) such holder furnishes the
Company with a certificate to the effect that such holder is not an affiliate or
an "underwriter" within the meaning of Section 1145(b) of the Bankruptcy Code
and, upon the request of the Company, an opinion of counsel reasonably
satisfactory to the Company to such effect and to the effect that such shares
may be sold without registration under the Securities Act or (iii) the
registration rights granted in this Agreement otherwise terminate in accordance
with subsection 5.10. The shares of the New Common Stock represented by any such
replacement certificate issued without the legend specified in paragraph (a)
pursuant to the immediately preceding sentence shall cease to be Registerable
Common for all purposes of this Agreement.
Section 7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. In
connection with the Registration Statement in respect of any Demand
Registration, the Company shall, on the date of effectiveness of such
Registration Statement with the Commission (the "effective date"), certify to
each Securities Holder in a certificate of a Responsible Officer of the Company
to the effect that the representations and warranties set forth below are true
and correct at and as of the effective date. In connection with any other Sale
Event in which Securities Holders participate, except as otherwise may be agreed
upon by such participating Securities Holders and the Company, the Company shall
represent and warrant in the Purchase Agreement relating to such Sale Event to
the Securities Holders and any underwriters participating in such Sale Event as
follows (except as otherwise indicated, each reference in this Section to "the
Registration Statement" shall refer to a Registration Statement in respect of
any Demand Registration or other such Sale Event in which Securities Holders
participate, including all information deemed to be a part thereof, as amended,
and each reference to "the Prospectus" shall refer to the related Prospectus):
(a) (i) When the Registration Statement became (in the case of
a Demand Registration to be filed pursuant to a Shelf Registration) or
shall become effective, the Registration Statement did or will comply
as of its effective date in all material respects with the applicable
requirements of the Securities Act and the rules and regulations
-23-
thereunder; (ii) when the Prospectus is filed in accordance with Rule
424(b), the Prospectus (and any supplements thereto) will comply in all
material respects with the applicable requirements of the Securities
Act and the rules and regulations thereunder; (iii) the Registration
Statement did not or will not as of its effective date contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading; and (iv) the Prospectus, if not
filed pursuant to Rule 424(b), did not or will not as of the date
thereof, and on the date of any filing pursuant to Rule 424(b), the
Prospectus (together with any supplement thereto) will not, include any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that the Company makes no representations or warranties as to
the information contained in or omitted from the Registration
Statement, or the Prospectus (or any supplement thereto) in reliance
upon and in conformity with information furnished in writing to the
Company by or on behalf of any Securities Holder specifically for use
in connection with the preparation of the Registration Statement or the
Prospectus (or any supplement thereto) or any information furnished in
writing to the Company by or on behalf of any underwriter specifically
for use in connection with the preparation of the Registration
Statement or the Prospectus (or any supplement thereto), other than
that the Company has no knowledge of any such untrue statement or
omission in respect of such information.
(b) The public accountants who certified the Company's
financial statements in the Registration Statement are independent
certified public accountants within the meaning of the Securities Act
and the applicable published rules and regulations thereunder; the
historical consolidated financial statements, together with the related
schedules and notes, forming part of the Registration Statement and the
Prospectus comply in all material respects with the requirements of the
Securities Act and the rules and regulations thereunder and have been
prepared, and present fairly in all material respects the consolidated
financial condition, results of operations and changes in financial
condition of the Company and its consolidated Subsidiaries at the
respective dates and for the respective periods indicated, in
accordance with generally accepted accounting principles applied
consistently throughout such periods (except as specified therein); and
the historical consolidated financial data set forth in the Prospectus
are derived from the accounting records of the Company and its
consolidated Subsidiaries, and are a fair presentation of the data
purported to be shown; and the pro forma consolidated financial
statements (if any), together with the related notes, forming part of
the Registration Statement and the Prospectus, comply in all material
respects with the requirements of Regulation S-X under the Securities
Act.
(c) Except as may be set forth in the Prospectus, each member
of the ICSL Group has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the jurisdiction in
which it is chartered or organized, with the corporate power and
authority to own its properties and conduct its business as described
in the Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction
which requires such qualification where the failure to be so qualified
would materially adversely affect the business, operations, property or
financial condition of the ICSL Group taken as a whole.
-24-
(d) Except as may be set forth in the Prospectus, all the
outstanding shares of capital stock of each Subsidiary have been duly
authorized and validly issued and are fully paid and nonassessable by
the issuer, and all outstanding shares of capital stock of the
Subsidiaries are owned by the Company either directly or through
Subsidiaries free and clear of any security interests, claims, liens or
encumbrances (other than those granted to secure the obligations of the
ICSL Group in respect of the Company's working capital facility), in
each case where the failure to so own the capital stock of a Subsidiary
would materially adversely affect the business, operations, property or
financial condition of the ICSL Group taken as a whole.
(e) Except as may be set forth in the Prospectus, no member of
the ICSL Group is in violation of any term or provision of any charter,
by-law, franchise, license, permit, judgment, decree or order or any
applicable statute, rule or regulation, which violation is material to
the business, operations, property or financial condition of the ICSL
Group taken as a whole.
(f) Except as may be set forth in the Prospectus, no default
exists and no event has occurred which with notice, lapse of time, or
both, would constitute a default, in the due performance and observance
of any term, covenant or condition of any agreement to which the
Company or any of the Subsidiaries is a party or by which it or any of
them is bound, which default would materially adversely affect the
business, operations, property or financial condition of the ICSL Group
taken as a whole.
(g) Except as may be set forth in the Prospectus, each member
of the ICSL Group has all requisite corporate power and authority and
has received and is operating in compliance in all material respects
with all governmental or regulatory or other franchises, grants,
authorizations, approvals, licenses, permits, easements, consents,
certificates and orders, necessary to own its properties and conduct
businesses as currently owned and conducted and as proposed to be
conducted, except where the failure to do so would not materially
adversely affect the business, operations, property or financial
condition of the ICSL Group, taken as a whole.
(h) Except as may be described in the Prospectus, since the
date of the most recent financial statements included in the
Prospectus, there has been no material adverse change in the business,
operations, property or financial condition of the ICSL Group taken as
a whole, whether or not arising from transactions in the ordinary
course of business.
(i) Except as may be described in the Prospectus, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the best knowledge of the
Company, threatened against any member of the ICSL Group or against any
of their respective properties or revenues, existing or future which,
if adversely determined, could reasonably be expected to have a
material adverse effect on the business, property or financial
condition of the ICSL Group taken as a whole, or which otherwise is of
a character required to be disclosed in the Prospectus; there is no
franchise, contract or other document of a character required to be
described in the Registration Statement or the Prospectus, or to be
filed as an exhibit, which is not
-25-
adequately described or filed as required; and such franchises,
contracts and other documents that are described in the Prospectus
conform in all material respects to the descriptions thereof contained
in the Prospectus.
(j) Except as may be described in the Prospectus, there is no
pending or, to the best knowledge of the Company, threatened action,
suit, or judicial, arbitral, rule-making or other administrative or
other proceeding against the Company which challenges the validity of
(i) this Agreement or (ii) any Purchase Agreement entered into in
connection with the offering or any action taken or to be taken
pursuant to or in connection with such agreements.
(k) The Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms in
all material respects to the description thereof contained in the
Prospectus; all of the issued and outstanding shares of capital stock
of the Company have been duly authorized and validly issued and, except
as set forth in the Prospectus, are fully paid and nonassessable.
(l) The Company has all requisite corporate power and
authority, has taken all requisite corporate action, and has received
and is in compliance with all governmental, judicial and other
authorizations, approvals and orders, necessary in connection with the
offering, and to carry out the provisions and conditions of this
Agreement and the Purchase Agreement, if any, related thereto, except
for such approvals and conditions that need to be obtained or satisfied
as are set forth in the Prospectus and such approvals or authorizations
as may be required under the Securities Act, the securities or "Blue
Sky" laws of any jurisdiction or the rules of any securities exchange
on which the New Common Stock is listed in connection with the purchase
and distribution of shares of New Common Stock in the offering. The
Purchase Agreement, if any, entered into in connection with the
offering has been duly authorized, executed and delivered by the
Company and is a valid and binding and enforceable obligation of the
Company, enforceable against the Company in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles; PROVIDED, that no representation is made as to the
validity, binding effect or enforceability of any provision that
purports to provide indemnification of any Person for any Losses
resulting from violation by such person of any applicable securities or
"Blue Sky" laws.
(m) To the best knowledge of the Company, neither the sale of
the New Common Stock to be sold pursuant to the Registration Statement,
nor the execution, delivery or performance by the Company of the
Purchase Agreement, if any, entered into in connection with the
offering or the consummation of any other of the transactions
contemplated in such Purchase Agreement, if any, will conflict with,
result in a breach of, or constitute a default under, the charter or
by-laws of the Company or any of the Subsidiaries or the terms of any
material indenture or other material agreement or instrument to which
the Company or any of the Subsidiaries is a party or by which it or any
of them is bound, or any material statute applicable to the Company or
any of the
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Subsidiaries or any material order, decree, rule or regulation
applicable to the Company or any of the Subsidiaries of any
Governmental Authority.
(n) Except (i) as set forth in the Prospectus, (ii) for rights
to registration pursuant to a Registration Statement on Form S-8 and
(iii) to the extent permitted under subsection 5.6, no holders of
securities of the Company have rights to the registration of such
securities under any Registration Statement except the Securities
Holders.
For purposes of the foregoing representations and warranties, the Company may
assume that any agreement is the valid and binding obligation of any other
parties to such agreement.
Section 8. REPRESENTATIONS AND WARRANTIES OF THE SECURITIES
HOLDERS. Each participating Securities Holder shall, in connection with a Sale
Event, if required by the terms of a Purchase Agreement relating to such Sale
Event, for itself severally and not jointly represent and warrant to the
Company, the underwriter or underwriters, if any, and each other Securities
Holder participating in such Sale Event as follows:
(a) Such Securities Holder has all requisite power and
authority to enter into and carry out the terms of this Agreement and
such Purchase Agreement and the other agreements and instruments
related to such agreements to which it is a party.
(b) Each of this Agreement and such Purchase Agreement has
been duly authorized, executed and delivered by or on behalf of such
Securities Holder, and constitutes the valid, binding and enforceable
obligation of such Securities Holder, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles; PROVIDED, that no
representation is made as to the validity, binding effect or
enforceability of any provision purporting to provide indemnification
of any person for any Losses resulting from violation by such person of
any applicable securities or "Blue Sky" laws.
(c) Such Securities Holder, immediately prior to any sale of
shares of Registerable Common pursuant to such Purchase Agreement, will
have good title to such shares of Registerable Common, free and clear
of all liens, encumbrances, equities or claims (other than those
created by this Agreement); and, upon payment therefor, good and valid
title to such shares of Registerable Common will pass to the purchaser
thereof, free and clear of any lien, charge or encumbrance created or
caused by such Securities Holder.
(d) Such Securities Holder has not taken and will not take,
directly or indirectly, any action designed to constitute or which has
constituted or which might reasonably be expected to cause or result
in, under the Exchange Act or the rules or regulations promulgated
thereunder or other applicable law, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or
resale of shares of Registerable Common.
(e) (i) Written information furnished by or on behalf of such
Securities Holder to the Company expressly for use in the Registration
Statement, any related Preliminary
-27-
Prospectus, or any related Prospectus or any amendment or supplement
thereto will not contain, in each case as of the date such information
was furnished, any untrue statement of a material fact or omit to
state any material fact required to be stated or necessary to make the
statements in such information not misleading.
(f) To the best knowledge of such Securities Holder, neither
the sale of the Registerable Common to be sold pursuant to the
Registration Statement, nor the execution, delivery or performance by
such Securities Holder of the Purchase Agreement, if any, entered into
in connection with the offering or the consummation of any other of the
transactions contemplated in such Purchase Agreement, if any, will
conflict with, result in a breach of, or constitute a default under,
the charter or by-laws of such Securities Holder or the terms of any
material indenture or other material agreement or instrument to which
such Securities Holder is a party or by which it is bound, or any
material statute applicable to such Securities Holder or any material
order, decree, rule or regulation applicable to such Securities Holder
of any Governmental Authority.
Section 9. DELIVERY OF COMFORT LETTER AND LEGAL OPINION. On
the date that a Registration Statement relating to a Sale Event in which
Securities Holders participate is declared effective by the Commission, the
Company shall comply with the following:
(a) The Company shall have received, and delivered to each
Securities Holder participating in such Sale Event, a copy of the
"comfort" letter or letters, or updates thereof according to customary
practice, of the independent certified public accountants who have
certified the Company's financial statements included in the
Registration Statement covering substantially the same matters with
respect to the Registration Statement (including the Prospectus) and
with respect to events subsequent to the date of the Company's
financial statements as are customarily covered in accountants' letters
delivered to underwriters in underwritten public offerings of
securities. The Company will use its reasonable best efforts to cause
such "comfort" letters to be addressed to such Securities Holders.
(b) Each Securities Holder and any underwriters participating
in such offering shall have received an opinion and any updates thereof
of outside counsel to the Company reasonably satisfactory to such
Securities Holders and underwriters covering substantially the same
matters as are customarily covered in opinions of issuer's counsel
delivered to underwriters in underwritten public offerings of
securities, addressed to each of such Securities Holders and
underwriters participating in such offering and dated the closing date
thereof.
Section 10. MISCELLANEOUS.
10.1. NOTICES. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
facsimile transmission), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when actually delivered or, in the
case of notice by facsimile transmission, when sent and confirmation of receipt
is received. Notices to the Securities Holders shall be deemed to have been
given or
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made when sent. All notices shall be addressed as follows or to such other
address as may be hereafter designated in writing by the respective parties
hereto:
The Company: Innovative Clinical Solutions, Ltd.
00 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Telecopy: 000-000-0000
The Securities Holders: The address of each Securities Holder as
set forth on the signature pages hereof as
the same may be changed by each such
Securities Holder from time to time by
written notice to the Company and the other
Securities Holders.
10.2. AMENDMENTS AND WAIVERS. The Securities Holders of not
less than 66-2/3% of the Registerable Common held or beneficially owned by
Securities Holders at any point in time and the Company may from time to time
enter into written amendments, supplements or modifications to this Agreement
for the purpose of adding any provisions hereto or thereto or changing in any
manner the rights of the Securities Holders or the Company hereunder or
thereunder, and the Securities Holders of not less than 66-2/3% of the
Registerable Common held or beneficially owned by Securities Holders at any
point in time may execute a written instrument waiving, on such terms and
conditions as may be specified therein, any of the requirements of this
Agreement which are solely for the benefit of the Securities Holders and where
such waiver does not adversely affect the interests of the Company; PROVIDED,
HOWEVER, that no such waiver and no such amendment, supplement or modification
shall (i) adversely affect the rights of a Securities Holder under Section 2
hereof or (ii) amend, modify or waive any provision of Section 5 or this
subsection 10.2, in each case without the written consent of each Securities
Holder. Any such waiver and any such amendment, modification or supplement shall
apply equally to each of the Securities Holders and the Company.
10.3. TERMINATION. This Agreement and the respective
obligations and agreements of the parties hereto, except as otherwise expressly
provided herein, shall terminate on the Termination Date.
10.4. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as
they may by their terms relate to an earlier date, all representations and
warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the termination of any or all of the
provisions of this Agreement.
10.5. HEADINGS. The descriptive headings of the several
sections and subsections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
10.6. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of such counterparts shall together constitute one and the same
agreement.
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10.7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
10.8. ADJUSTMENT OF SHARES. Each reference to a number of
shares of Common Stock in this Agreement shall be adjusted proportionately to
reflect any stock dividend, split or reverse split or the like affected with
respect to all outstanding shares of New Common Stock.
10.9. NO INCONSISTENT AGREEMENTS. The Company will not on or
after the date of this Agreement enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the Securities
Holders in this Agreement or otherwise conflicts with the provisions hereof.
10.10. SEVERABILITY. Any provision of this Agreement
prohibited or rendered unenforceable by any applicable law of any jurisdiction
shall as to such jurisdiction be ineffective to the extent of such prohibition
or unenforceability, without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
10.11. ENTIRE AGREEMENT. THIS AGREEMENT CONSTITUTES THE ENTIRE
AGREEMENT AMONG THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.
10.12. LISTING OF NEW COMMON STOCK. The Company shall use its
reasonable best efforts to cause the New Common Stock to be listed or admitted
to trading on the NASDAQ National Market.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first written above.
INNOVATIVE CLINICAL SOLUTIONS, LTD.
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President and Chief Executive Officer
SECURITIES HOLDERS:
THIRD AVENUE TRUST ON BEHALF OF THIRD AVENUE VALUE FUND
SERIES
x/x Xxxxx Xxxxxx Funds
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman, Chief Executive Officer
AGGRESSIVE CONSERVATIVE INVESTMENT FUND, L.P. (f/k/a
X.X. Xxxxxxx Pilot Fish Opportunity Fund, L.P.)
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Name: Xxxxx X. Xxxxx
Title: President
[SIGNATURE PAGES TO REGISTRATION RIGHTS AGREEMENT]
EQSF ADVISERS, INC., as sub-adviser for
SUN AMERICA STYLE SELECT SERIES
SMALL-CAP VALUE PORTFOLIO
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman and Chief Executive Officer
X.X. XXXXXXX ADVISERS, INC., as adviser for the
account of
XXXXX XXXX TRUST
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
By: /s/ Xxxxx X. Xxxxx
---------------------------------------------
Name: Xxxxx X. Xxxxx
Title: President and Chief Operations Officer
[SIGNATURE PAGES TO REGISTRATION RIGHTS AGREEMENT]
SCHEDULE 1
REGISTERABLE COMMON
AS OF THE EFFECTIVE DATE
=============================================================================================================
SHARES OF
REGISTERABLE
SECURITIES HOLDER COMMON PERCENTAGE
-------------------------------------------------------------------------------------------------------------
Third Avenue Trust on behalf of Third Avenue Value Fund Series 5,308,740 44.240%
-------------------------------------------------------------------------------------------------------------
Aggressive Conservative Investment Fund, L.P. 243,540 2.030%
-------------------------------------------------------------------------------------------------------------
Sun America Style Select Series Small-Cap Value Portfolio 108,000 0.900%
-------------------------------------------------------------------------------------------------------------
Xxxxx Xxxx Trust 24,300 0.203%
-------------------------------------------------------------------------------------------------------------
TOTAL 5,684,580 47.372%
=============================================================================================================
EXHIBIT A
SECURITIES HOLDER'S QUESTIONNAIRE
Please complete and return immediately to Innovative Clinical
Solutions, Ltd. at the following address:
Attention: Chief Financial Officer
The information requested below is required for purposes of
any Public Sale Event pursuant to the Registration Rights Agreement dated as of
September __, 2000 (the "Agreement") that may be initiated from time to time. If
you do not furnish the Company with the requested information, you will not be
entitled to participate in any such registration. Unless otherwise defined
herein, capitalized terms shall have the meanings ascribed thereto in the
Agreement.
Please do not leave any request for information unanswered. If
your response to a request is "no" or "not applicable," please so state. If
additional space is required, please attach additional sheets to the end of this
Questionnaire, clearly identifying the portion hereof to which they relate.
If you have any questions regarding this Questionnaire, please
contact ______________________.
I. Information required for notices.
Institution Name: _______________________________________
Street Address: _______________________________________
Post Office Box: _______________________________________
City/State/Zip: _______________________________________
Fed. Tax ID. No. _______________________________________
(if any): _______________________________________
Telecopier Number:
Contacts (Please include alternative contacts).
1. Name: _______________________________________
Title: _______________________________________
Function: _______________________________________
Business Telephone: ____________________________________
Exhibit A
Page 2
2. Name: _______________________________________
Title: _______________________________________
Function: _______________________________________
Business Telephone: ____________________________________
II. Information required by the Securities Act of 1933, as amended, and related
regulations.
A. FEDERAL SECURITIES LAWS
1. NAME AND ADDRESS. Give your name and address exactly
as they should appear in any Prospectus.
_______________________________________
_______________________________________
_______________________________________
_______________________________________
2. OWNERSHIP OF REGISTERABLE COMMON. State the number of
shares of Registerable Common, if any, owned by you or your affiliates as of the
date hereof.
Shares of Registerable Common: ____________________________
3. BENEFICIAL OWNERSHIP OF NEW COMMON STOCK. Please furnish
the following information, in the tabular form indicated, as to the shares of
New Common Stock beneficially owned (see definition at end of Questionnaire) by
you (including amounts held in your Trust Department in discretionary accounts):
If such ownership is
shared with others,
indicate nature and
Number of Nature of extent of such
Shares(1) Beneficial Ownership(2) Shared Ownership
----------------
(1) Include shares which you have the right to acquire through the
exercise of options, warrants or other securities on or before 60 days after the
estimated date of the Prospectus.
(2) Please indicate the extent to which you have sole voting power,
shared voting power, sole investment power and shared investment power with
respect to shares of New Common Stock you beneficially own.
-2-
Exhibit A
Page 3
4. DISCLAIMER OF BENEFICIAL OWNERSHIP. Please indicate below
the number and description of any shares of New Common Stock with respect to
which you disclaim beneficial ownership and whether such shares are included in
the figure(s) reported above.
5. FIVE PERCENT BENEFICIAL OWNERS. Please give the name and
address of any Person, corporation or other entity, other than the parties to
the Agreement, known to you to own beneficially 5% or more of the outstanding
New Common Stock (i.e., ______ shares or more).
NOTE: For purposes of your response to this question, the term "Person" includes
two or more Persons acting as a partnership, limited partnership,
syndicate, or other group for the purpose of acquiring, holding or
disposing of the Company's securities.
6. UNDERWRITERS. Please describe briefly and state the nature
of any relationship or interest that you have or any associate of yours (see
definition at end of Questionnaire) has, in any underwriter of the securities to
be offered. If you are a member or controlling Person of a firm that may be an
underwriter of the securities to be offered, briefly describe your relationship
to, and interest in, such underwriter.
NOTE: The underwriters will be listed in the final amendment to the Registration
Statement, a copy of which will be sent to you at a later date.
7. MATERIAL RELATIONSHIPS. Please list all material
relationships that you now have, or have had since _______________, with the
Company or any of its affiliates, other than your ownership of the New Common
Stock or your participation in the Company's bankruptcy case.
B. NASD REGULATIONS.
8. NASD MEMBERSHIP. State whether you are a "member" of the
National Association of Securities Dealers, Inc. (the "NASD"), a "Person
associated with a member" or an "underwriter or a related Person" with respect
to the proposed offering.
NOTES: (1) The NASD By-Laws define "member" to mean
either any broker or dealer admitted to membership in the
NASD.
(2) The NASD By-Laws define "Person associated with a
member" to mean every sole proprietor, partner, officer,
director or branch manager of any member, or any natural
Person occupying a similar status or performing similar
functions, or any natural Person engaged in the investment
banking or securities business who is directly or indirectly
controlling or controlled by such member, whether or not any
such Person is registered or exempt from Registration with the
NASD.
(3) The NASD has interpreted "underwriter or a
related Person" with respect to a proposed offering to include
an underwriter, underwriters' counsel, financial consultants
and advisers, finders, members of the selling or distribution
group, and any and all other Persons "associated with" or
"related to" any of such Persons.
-3-
Exhibit A
Page 4
9. PURCHASE BY NASD AFFILIATES. If your answer to the
preceding question was "yes," please furnish the following information, in the
tabular form indicated, as to all purchases and acquisitions (including
contracts to purchase or to acquire) by you, of warrants, options or any other
securities of the Company or any subsidiary thereof, during the preceding 12
months, as well as all proposed purchases or acquisitions by you which are to be
consummated in whole or in part prior to, at the time of or within six months
after the effectiveness of the Registration Statement.
Purchaser or Seller or Amount and Price or
Prospective Prospective Name of Other
Date Purchaser Seller Securities Consideration
-------- ------------ ------------ ------------ ------------
-------- ------------ ------------ ------------ ------------
-------- ------------ ------------ ------------ ------------
-------- ------------ ------------ ------------ ------------
10. DEALINGS WITH COMPANY. Please describe any other dealings
within the preceding 12 months not already described in response to the
foregoing questions between the Company or any subsidiary or controlling
shareholder thereof and any underwriter, related Person of such underwriter,
NASD member or Person associated with such member affiliated with you, as such
terms are defined in the Notes to Question 10.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS TO ANY PERSON
WHO MAY BE LIABLE IN RESPECT OF A REGISTRATION OR OTHER OFFERING PURSUANT TO THE
AGREEMENT THAT THE ANSWERS GIVEN IN THIS QUESTIONNAIRE ARE CORRECTLY STATED TO
THE KNOWLEDGE, INFORMATION AND BELIEF OF THE UNDERSIGNED. THE UNDERSIGNED HEREBY
AGREES TO PROMPTLY NOTIFY THE COMPANY OF ANY CHANGE IN SUCH ANSWERS WHICH MAY
OCCUR DURING THE PERIOD BEGINNING WITH THE DATE BELOW AND ENDING ON THE DATE 90
DAYS AFTER THE EFFECTIVE DATE OF ANY REGISTRATION STATEMENT RELATING TO A
REGISTRATION OR OTHER OFFERING PURSUANT TO THE AGREEMENT. THE UNDERSIGNED HEREBY
AGREES, FOLLOWING NOTICE OF ANY PROPOSED REGISTRATION TO UPDATE AND AMEND THIS
QUESTIONNAIRE IF THERE IS ANY MATERIAL CHANGE IN THE ABOVE INFORMATION AND TO
PROVIDE ANY ADDITIONAL INFORMATION REQUESTED BY THE COMPANY PURSUANT TO THE
AGREEMENT.
Dated: ______________, 19__.
Holder:
------------------------------
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
-4-
DEFINITIONS
As used in this Questionnaire:
"AFFILIATE" means a Person or organization that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the Company.
An "ASSOCIATED PERSON" means (1) any corporation or
organization (other than the Company or a majority owned subsidiary) of which
you are an executive officer or partner or are, directly or indirectly, the
beneficial owner of 10% or more of any class or equity securities and (2) any
trust or other estate in which you have substantial beneficial interest or to
which you serve as trustee or in a similar fiduciary capacity.
Securities "OWNED BENEFICIALLY" by you are securities (whether
or not registered in your name) in which you have or share (directly or
indirectly through any contract, arrangement, understanding, relationship or
otherwise) (i) voting power, which includes the power to vote or direct the
voting of the securities, or (ii) investment power, which includes the power to
dispose, or direct the disposition, of the securities. You are also deemed to be
the beneficial owner of any securities which you have the right to acquire
immediately or within 60 days (a) through the exercise of any option, warrant or
right, (b) through the conversion of a security or (c) pursuant to the power to
revoke, or the automatic termination of, a trust, discretionary account or
similar arrangement.
Thus, securities held in the name of other individuals, in the
name of an estate or trust or pursuant to a pledge agreement where you have
either the power to direct the voting of the securities or the disposition of
such securities should be listed as "owned beneficially" by you. The Commission
has also taken the position that securities held by your spouse, minor children,
or other relatives sharing your home should be shown as "owned beneficially" by
you on the theory that, absent special circumstances you are able to exercise a
controlling influence over the purchase, sale or voting of such securities.
EXHIBIT B
SUPPLEMENTAL ADDENDUM
The undersigned is a holder of New Common Stock of Innovative
Clinical Solutions, Ltd. The undersigned hereby agrees as follows:
The undersigned hereby accepts the terms of and becomes a
party to (as a Securities Holder) the Registration Rights Agreement dated as of
_______________, 2000 by and among Innovative Clinical Solutions, Ltd. (the
"Company") and each Securities Holder named therein. In connection therewith,
the undersigned agrees to (A) assume all obligations and liabilities thereunder,
(B) enjoy all of the rights thereunder, (C) be bound thereby and (D) perform and
comply with the agreements and commitments on the part of the undersigned, as
assignee, set forth in the Registration Rights Agreement.
As used in this Supplemental Addendum, capitalized terms
defined in the Registration Rights Agreement shall have their respective defined
meanings.
Name of
Address: Institution:_____________________
By____________________________
Title:
Date: _______________, _____
(i)
