EXHIBIT 10.4
FIRST AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
This First Amended and Restated Registration Rights Agreement (this
"Agreement") dated as of April 1, 1996 between THE KSI GROUP, INC., a Delaware
corporation (the "Company"), and BT CAPITAL PARTNERS, INC., a Delaware
corporation ("Purchaser").
RECITALS
WHEREAS, pursuant to that certain Stock Purchase Agreement dated as of May
31, 1995, by and among Kinetic Systems, Inc., a California corporation ("KSI
CA") and Purchaser ("Purchase Agreement"), Purchaser has purchased shares of
Preferred Stock from KSI CA which shares are convertible into shares of KSI CA's
Series B Common Stock which in turn are exchangeable for shares of KSI CA's
Series A Common Stock and KSI CA agreed to provide certain rights to Purchaser
to cause the shares of Series A Common Stock which Purchaser may from time to
time hold to be registered pursuant to the Securities Act.
WHEREAS, KSI CA and Purchaser entered into a Registration Rights Agreement
on May 31, 1995 (the "Original Agreement") pursuant to which KSI CA granted
Purchaser certain registration rights.
WHEREAS, on March 31, 1996, all of the shareholders of KSI CA, including
Purchaser, exchanged all of their shares of KSI CA for shares of the Company.
WHEREAS, the parties wish to amend and restate the Original Agreement in
its entirety as follows to make Purchaser's rights applicable to shares of the
Company instead of shares of KSI CA.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Definitions and Usage.
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As used in this Agreement:
1.1 Definitions.
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Agent. "Agent" shall mean the principal placement agent on an
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agented placement of Registrable Securities.
Commission. "Commission" shall mean the Securities and Exchange
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Commission.
Common Stock. "Common Stock" shall mean (i) the Series A Common
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Stock, par value $.01 per share, of the Company, (ii) shares of capital stock of
the Company or any legal successor issued by the Company or any other person in
respect of or in exchange for shares of such Series A Common Stock in connection
with any stock dividend or distribution, stock split-up, recapitalization,
recombination, exchange, merger or reorganization, and (iii) shares of capital
stock of the Company or any legal successor issued by the Company or any other
person which is convertible into, or exchangeable from such shares of Series A
Common Stock.
Continuously Effective. "Continuously Effective", with respect to
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a specified registration statement, shall mean that it shall not cease to be
effective and available for Transfers of Registrable Securities thereunder for
longer than either (i) any ten (10) consecutive business days, or (ii) an
aggregate of fifteen (15) business days during the period specified in the
relevant provision of this Agreement.
Demand Registration. "Demand Registration" shall have the meaning
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set forth in Section 2.1(i).
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Demanding Holders. "Demanding Holders" shall have the meaning set
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forth in Section 2.1(i).
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Exchange Act. "Exchange Act" shall mean the Securities Exchange Act
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of 1934.
Founding Shareholders. "Founding Shareholders" shall mean
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individually, or collectively, Xxxxxxx X. Xxxxxx, Xx., Xxxxx X. Xxxxxx, The
Xxxxxx Family 1991 Trust, and Xxxxx X. Xxxxxxx.
Holder. "Holder" shall mean Purchaser and Transferees of
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Purchaser's Registrable Securities with respect to the rights that such
Transferees shall have acquired in accordance with Section 8, at such times as
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such Persons shall own Registrable Securities.
Initial Public Offering. "Initial Public Offering" shall mean the
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first offering of shares of Common Stock registered pursuant to Section 5 of the
Securities Act.
Majority Selling Holders. "Majority Selling Holders" shall mean
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those Selling Holders whose Registrable Securities included in such registration
represent a majority of the Registrable Securities of all Selling Holders
included therein.
Person. "Person" shall mean any individual, corporation,
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partnership, joint venture, association, joint-stock company, limited liability
company, trust, unincorporated organization or government or other agency or
political subdivision thereof.
Preferred Stock. "Preferred Stock" shall mean the preferred stock,
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par value $.01 per share, of the Company.
Piggyback Registration. "Piggyback Registration" shall have the
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meaning set forth in Section 3.
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Purchase Agreement. "Purchase Agreement" shall have the meaning set
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forth in the Recitals.
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Register, Registered and Registration. "Register", "registered", and
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"registration" shall refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Securities
Act, and the declaration or ordering by the Commission of effectiveness of such
registration statement or document.
Registrable Securities. "Registrable Securities" shall mean, subject
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to Section 8 and Section 10.3: (i) shares of Common Stock originally issued to a
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Holder and owned by a Holder on the date of determination, (ii) any shares of
Common Stock or other securities issued as a dividend or other distribution with
respect to, or in exchange by the Company generally for, or in replacement by
the Company generally of, shares of Common Stock then issuable upon the
conversion and/or exchange of the Shares; and (iii) any voting security issued
in exchange for Shares in any reorganization of the Company; provided, however,
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that Registrable Securities shall not include any Securities which have
theretofore been registered and sold pursuant to the Securities Act or which
have been sold to the public pursuant to Rule 144 or any similar rule
promulgated by the Commission pursuant to the Securities Act, and, provided
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further, the Company shall have no obligation under Sections 2 and 3 to register
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any Registrable Securities of a Holder if the Company shall deliver to the
Holders requesting such registration an opinion of counsel reasonably
satisfactory to such Holders and its counsel to the effect that the proposed
sale or disposition of all of the Registrable Securities for which registration
was requested does not require registration under the Securities Act for a sale
or disposition in a single public sale, and offers to remove any and all legends
restricting transfer from the certificates evidencing such Registrable
Securities. For purposes of this Agreement, a Person will be deemed to be a
holder of Registrable Securities whenever such Person has the then-existing
right to acquire such Registrable Securities (by conversion, purchase or
otherwise), whether or not such acquisition has actually been effected.
Registrable Securities then outstanding. "Registrable Securities then
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outstanding" shall mean, with respect to a specified determination date, the
Registrable Securities owned by all Holders on such date.
Registration Expenses. "Registration Expenses" shall have the meaning
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set forth in Section 6.1.
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S-3 Registration. "S-3 Registration" shall mean a registration of
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shares being sold for the account of Selling Holders which is then eligible for
inclusion by the Company in a Form S-3 or Form S-2 Registration Statement (or
any successor form which is substantially similar to Form S-2 or S-3 as in
effect on the Closing Date).
Securities Act. "Securities Act" shall mean the Securities Act of
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1933.
Selling Holders. "Selling Holders" shall mean, with respect to a
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specified registration pursuant to this Agreement, Holders whose Registrable
Securities are included in such registration.
Shares. "Shares" shall mean the shares of Preferred Stock sold
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pursuant to the Purchase Agreement and all shares of Preferred Stock issued as
dividends thereon.
Substantial Holder. "Substantial Holder" shall mean any Holder or
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affiliated group of Holders that owns on the date of determination 50% or more
of the Registrable Securities then outstanding.
Transfer. "Transfer" shall mean and include the act of selling,
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giving, transferring, creating a trust (voting or otherwise), assigning or
otherwise disposing of (other than pledging, hypothecating or otherwise
transferring as security) (and correlative words shall have correlative
meanings); provided however, that any transfer or other disposition upon
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foreclosure or other exercise of remedies of a secured creditor after an event
of default under or with respect to a pledge, hypothecation or other transfer as
security shall constitute a "Transfer".
Underwriters' Representative. "Underwriters' Representative" shall
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mean the managing underwriter, or, in the case of a co-managed underwriting, the
managing underwriter designated as the Underwriters' Representative by the co-
managers.
Violation. "Violation" shall have the meaning set forth in Section
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7.1.
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1.2 Usage.
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(i) References to a Person are also references to its assigns and
successors in interest (by means of merger, consolidation or sale of all or
substantially all the assets of such Person or otherwise, as the case may be).
(ii) References to Registrable Securities "owned" by a Holder shall
include Registrable Securities beneficially owned by such Person but which are
held of record in the name of a nominee, trustee, custodian, or other agent, but
shall exclude shares of Common Stock held by a Holder in a fiduciary capacity
for customers of such Person.
(iii) References to a document are to it as amended, waived and
otherwise modified from time to time and references to a statute or other
governmental rule are to it as amended and otherwise modified from time to time
(and references to any provision thereof shall include references to any
successor provision).
(iv) References to Sections or to Schedules or Exhibits are to
sections hereof or schedules or exhibits hereto, unless the context otherwise
requires.
(v) The definitions set forth herein are equally applicable both to
the singular and plural forms and the feminine, masculine and neuter forms of
the terms defined.
(vi) The term "including" and correlative terms shall be deemed to be
followed by "without limitation" whether or not followed by such words or words
of like import.
(vii) The term "hereof" and similar terms refer to this Agreement as
a whole.
(viii) The "date of" any notice or request given pursuant to this
Agreement shall be determined in accordance with Section 13.
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Section 2. Demand Registration.
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2.1
(i) At any time on or after six (6) months after the Initial Public
Offering if one or more Holders who collectively own an aggregate of 51% or more
of the Registrable Securities then outstanding shall make a written request to
the Company (the "Demanding Holders"), the Company shall cause there to be filed
with the Commission a registration statement meeting the requirements of the
Securities Act (a "Demand Registration"), and each Demanding Holder shall be
entitled to have included therein (subject to Section 2.7) all or such number of
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such Demanding Holder's Registered Shares, as the Demanding Holder shall request
in writing. Any request made pursuant to this Section 2.1 shall be addressed to
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the attention of the Secretary of the Company, and shall specify the number of
Registrable Securities to be registered, the intended methods of disposition
thereof and that the request is for a Demand Registration pursuant to this
Section 2.1(i).
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(ii) The Company shall be entitled to postpone for up to sixty (60)
days the filing of any Demand Registration statement otherwise required to be
prepared and filed pursuant to this Section 2.1, if the Board determines, in its
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good faith reasonable judgment (with the concurrence of the managing
underwriter, if any), that such registration and the Transfer or Registrable
Securities contemplated thereby would materially interfere with, or require
premature disclosure of, any financing, acquisition or reorganization involving
the Company or any of its wholly owned subsidiaries and the Company promptly
gives the Demanding Holders notice of such determination; provided, however,
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that the Company shall not have postponed pursuant to this Section 2.1(ii) the
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filing of any other Demand Registration statement otherwise required to be
prepared and filed pursuant to this Section 2.1 during the twelve (12) month
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period ended on the date of the relevant request pursuant to Section 2.1(i).
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(iii) Whenever the Company shall have received a demand pursuant to
Section 2.1(i) to effect the registration of any Registrable Shares, the Company
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shall promptly give written notice of such proposed registration to all Holders.
Any such Holder may, within twenty (20) days after receipt of such notice,
request in writing that all of such Holder's Registrable Securities, or any
portion thereof designated by such Holder, be included in the registration.
2.2 At any time, or from time to time, when the Company is eligible
to use Form S-2 or Form S-3 (or any similar successor form) in connection with a
S-3 Registration, Holders of Registrable Securities amounting to not less than
1% of the shares of Common Stock then outstanding, may request that the Company
file a S-3 Registration Statement covering the sale of the number of Registrable
Securities specified in the request. Any request made pursuant to this Section
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2.2 shall be addressed to the attention of the Secretary of the Company, and
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shall specify the number of Registrable Securities to be registered, the
intended methods of disposition thereof and that the request is for a Shelf
Registration pursuant to this Section 2.2.
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2.3 Following receipt of a request for a Demand Registration or an S-
3 Registration, the Company shall:
(i) File the registration statement with the Commission as promptly as
practicable, and shall use the Company's best efforts to have the registration
declared effective under the Securities Act as soon as reasonably practicable,
in each instance giving due regard to the need to prepare current financial
statements, conduct due diligence and complete other actions that are reasonably
necessary to effect a registered public offering.
(ii) Use the Company's best efforts to keep the relevant registration
statement Continuously Effective (x) if a Demand Registration, for up to two
hundred and seventy (270) days or until such earlier date as of which all the
Registrable Securities under the Demand Registration statement shall have been
disposed of in the manner described in the Registration Statement, and (y) if a
S-3 Registration, for so long as Company remains eligible to use a S-3
Registration, but not in excess of three (3) years. Notwithstanding the
foregoing, if for any reason the effectiveness of a registration pursuant to
this Section 2 is suspended or, in the case of a Demand Registration, postponed
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as permitted by Section 2.1(ii), the foregoing period shall be extended by the
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aggregate number of days of such suspension or postponement.
2.4 The Company shall be obligated to effect no more than one (1)
Demand Registration, except that if following completion of a Demand
Registration and the expiration of at least twelve (12) months from completion
of the Initial Public Offering the Demanding Holders request a S-3 Registration
and the Company is then ineligible to file a Form S-3 Registration Statement,
the Holders will be entitled to require the Company to effect a second Demand
Registration at Company's expense. For purposes of the preceding sentence,
registration shall not be deemed to have been effected (i) unless a registration
statement with respect thereto has become effective, (ii) if after such
registration statement has become effective, such registration or the related
offer, sale or distribution of Registrable Securities thereunder is interfered
with by any stop order, injunction or other order or requirement of the
Commission or other governmental agency or court for any reason not attributable
to the Selling Holders and such interference is not thereafter eliminated, or
(iii) if the conditions to closing specified in the underwriting agreement, if
any, entered into in connection with such registration are not satisfied or
waived. If the Company shall have complied with its obligations under this
Agreement, a right to demand a registration pursuant to this Section 2 shall be
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deemed to have been satisfied (i) if a Demand Registration, upon the date as of
which
all of the Registrable Securities included therein shall have been disposed of
pursuant to the Registration Statement, and (ii) if a S-3 Registration, upon the
effective date of a S-3 Registration, provided no stop order or similar order,
or proceedings for such an order, is thereafter entered or initiated or, upon
request of the Initiating Substantial Holder, such S-3 Registration is
subsequently withdrawn.
2.5 A registration pursuant to this Section 2.1 shall be on such
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appropriate registration form of the Commission as shall (i) be selected by the
Company and be reasonably acceptable to the Majority Selling Holders, or by the
Initiating Substantial Holder, as the case may be, and (ii) permit the
disposition of the Registrable Securities in accordance with the intended method
or methods of disposition specified in the request pursuant to Section 2.1(i).
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2.6 If any registration pursuant to Section 2 involves an
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underwritten offering (whether on a "firm", "best efforts" or "all reasonable
efforts" basis or otherwise), or an agented offering, the Majority Selling
Holders, shall have the right to select the underwriter or underwriters and
manager or managers to administer such underwritten offering or the placement
agent or agents for such agented offering, the choice of such underwriter to be
subject to the Company's consent, not to be unreasonably withheld. No consent
of Company shall be required to retain as underwriter any firm which acted as a
managing underwriter of the Initial Public Offering.
2.7 Whenever the Company shall effect a registration pursuant to this
Section 2 in connection with an underwritten offering by one or more Selling
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Holders of Registrable Securities if the Underwriters' Representative or Agent
advises each such Selling Holder in writing that, in its opinion, the amount of
securities requested to be included in such offering (whether by Selling Holders
or others) exceeds the amount which can be sold in such offering within a price
range acceptable to the Majority Selling Holders, the securities which may be
included in such offering and the related registration, shall be reduced to such
amount which can be sold within such price range, and shall be on a pro rata
basis among all Selling Holders in accordance with the number of shares
requested to be included in such registration pursuant to this Section 2. In
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the event and to the extent the Underwriters' Representative or Agent advises
the Company in writing that, in its opinion, shares in addition to the
Registrable Securities may be included on such offering without adversely
affecting the price which the Majority Selling Holders are likely to receive for
their securities, the Company may permit the inclusion in such offering and such
registration of shares of Common Stock owned by any one or more Founding
Shareholders who request such registration (pro rata among them based on their
proportionate ownership of shares of Common Stock). This provision is for the
express benefit of the Founding Shareholders, may not be amended or modified
without their consent, and may be enforced directly by them.
3. Piggyback Registration.
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3.1 If at any time the Company proposes to register (including for
this purpose a registration effected by the Company for itself as well as for
shareholders of the Company other than the Holders) securities under the
Securities Act in connection with the public offering solely for cash on Form X-
0, X-0 or S-3 (or any replacement or successor
forms), including the Initial Public Offering, the Company shall promptly give
each Holder of Registrable Securities written notice of such registration (a
"Piggyback Registration"). Upon the written request of each Holder given within
twenty (20) days following the date of such notice, the Company shall cause to
be included in such registration statement and use its best efforts to be
registered under the Securities Act all the Registrable Securities that each
such Holder shall have requested to be registered. The Company shall have the
absolute right to withdraw or cease to prepare or file any registration
statement for any offering referred to in this Section 3 without any obligation
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or liability to any Holder.
3.2 If the Underwriters' Representative or Agent shall advise the
Company in writing (with a copy to each Selling Holder) that, in its opinion,
the amount of Registrable Securities requested to be included in such
registration would materially adversely affect such offering, or the timing
thereof, then the Company will include in such registration, to the extent of
the amount and class which the Company is so advised can be sold without such
material adverse effect in such offering: First, securities proposed to be sold
by the Company for its own account; second, the number of Registrable Securities
requested to be included in such registration by Holders pursuant to this
Section 3 equalling one-half of the total number of securities proposed to be
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sold by all Persons other than the Company; third, all other securities being
registered pursuant to the exercise of contractual rights comparable to the
rights granted in this Section 3, pro rata based on the estimated gross proceeds
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from the sale thereof; and fourth, all other securities requested to be included
in such registration, including shares of Common Stock owned by one or more
Founding Shareholders (pro rata among them based on their proportionate
ownership of shares of Common Stock). This provision is for the express benefit
of the Founding Shareholders, may not be amended or modified without their
consent, and may be enforced directly by them.
3.3 Each Holder shall be entitled to have its Registrable Securities
included in an unlimited number of Piggyback Registrations pursuant to this
Section 3.
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4. Registration Procedures. Whenever required under Section 2 or Section
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3 to effect the registration of any Registrable Securities, the Company shall,
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as expeditiously as practicable:
4.1 Prepare and file with the Commission a registration statement
with respect to such Registrable Securities and use the Company's best efforts
to cause such registration statement to become effective; provided, however,
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that before filing a registration statement or prospectus or any amendments or
supplements thereto, including documents incorporated by reference after the
initial filing of the registration statement and prior to effectiveness thereof,
the Company shall furnish to one firm of counsel for the Selling Holders
(selected by Majority Selling Holders or the Initiating Substantial Holder, as
the case may be) copies of all such documents in the form substantially as
proposed to be filed with the Commission at least four (4) business days prior
to filing for review and comment by such counsel, which opportunity to comment
shall include an absolute right to control or contest disclosure if the
applicable Selling Holder reasonably believes that it may be subject to
controlling person liability under applicable securities laws with respect
thereto.
4.2 Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act and rules thereunder with respect to the
disposition of all securities covered by such registration statement. If the
registration is for an underwritten offering, the Company shall amend the
registration statement or supplement the prospectus whenever required by the
terms of the underwriting agreement entered into pursuant to Section 5.2.
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Subject to Rule 415 under the Securities Act, if the registration statement is a
Shelf Registration, the Company shall amend the registration statement or
supplement the prospectus so that it will remain current and in compliance with
the requirements of the Securities Act for three (3) years after its effective
date, and if during such period any event or development occurs as a result of
which the registration statement or prospectus contains a misstatement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, the Company shall
promptly notify each Selling Holder, amend the registration statement or
supplement the prospectus so that each will thereafter comply with the
Securities Act and furnish to each Selling Holder of Registerable Shares such
amended or supplemented prospectus, which each such Holder shall thereafter use
in the Transfer of Registerable Shares covered by such registration statement.
Pending such amendment or supplement each such Holder shall cease making offers
or Transfers of Registerable Shares pursuant to the prior prospectus. In the
event that any Registrable Securities included in a registration statement
subject to, or required by, this Agreement remain unsold at the end of the
period during which the Company is obligated to use its best efforts to maintain
the effectiveness of such registration statement, the Company may file a post-
effective amendment to the registration statement for the purpose of removing
such Securities from registered status.
4.3 Furnish to each Selling Holder of Registrable Securities, without
charge, such numbers of copies of the registration statement, any pre-effective
or post-effective amendment thereto, the prospectus, including each preliminary
prospectus and any amendments or supplements thereto, in each case in conformity
with the requirements of the Securities Act and the rules thereunder, and such
other related documents as any such Selling Holder may reasonably request in
order to facilitate the disposition of Registrable Securities owned by such
Selling Holder.
4.4 Use the Company's best efforts (i) to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such states or jurisdictions as shall be reasonably requested
by the Underwriters' Representative or Agent (as applicable, or if inapplicable,
the Majority Selling Holders), and (ii) to obtain the withdrawal of any order
suspending the effectiveness of a registration statement, or the lifting of any
suspension of the qualification (or exemption from qualification) of the offer
and transfer of any of the Registrable Securities in any jurisdiction, at the
earliest possible moment; provided, however, that the Company shall not be
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required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions.
4.5 In the event of any underwritten or agented offering, enter into
and perform the Company's obligations under an underwriting or agency agreement
(including indemnification and contribution obligations of underwriters or
agents), in usual and customary form, with the managing underwriter or
underwriters of or agents for such offering. The Company shall also cooperate
with the Majority Selling Holders and the Underwriters' Representative or Agent
for such offering in the marketing of the Registerable Shares, including making
available the Company's officers, accountants, counsel, premises, books and
records for such purpose, but the Company shall not be required to incur any
material out-of-pocket expense pursuant to this sentence.
4.6 Promptly notify each Selling Holder of any stop order issued or
threatened to be issued by the Commission in connection therewith (and take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered).
4.7 Make generally available to the Company's security holders copies
of all periodic reports, proxy statements, and other information referred to in
Section 10.1 and an earnings statement satisfying the provisions of 11(a) of
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the Securities Act no later than ninety (90) days following the end of the
twelve (12)-month period beginning with the first month of the Company's first
fiscal quarter commencing after the effective date of each registration
statement filed pursuant to this Agreement.
4.8 Make available for inspection by any Selling Holder, any
underwriter participating in such offering and the representatives of such
Selling Holder and Underwriter (but not more than one (1) firm of counsel to
such Selling Holders), all financial and other information as shall be
reasonably requested by them, and provide the Selling Holder, any underwriter
participating in such offering and the representatives of such Selling Holder
and Underwriter the opportunity to discuss the business affairs of the Company
with its principal executives and independent public accountants who have
certified the audited financial statements included in such registration
statement, in each case all as necessary to enable them to exercise their due
diligence responsibility under the Securities Act; provided, however, that
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information that the Company determines, in good faith, to be confidential and
which the Company advises such Person in writing, is confidential shall not be
disclosed unless such Person signs a confidentiality agreement reasonably
satisfactory to the Company or the related Selling Holder of Registrable
Securities agrees to be responsible for such Person's breach of confidentiality
on terms reasonably satisfactory to the Company.
4.9 Use the Company's best efforts to obtain a so-called "comfort
letter" from its independent public accountants, and legal opinions of counsel
to the Company, addressed to the Underwriter, in customary form and covering
such matters of the type customarily covered by such letters, and in a form that
shall be reasonably satisfactory to the Underwriter's Representative. The
Company shall furnish to each Selling Holder a copy of each such comfort letter
or legal opinion.
4.10 Provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such registration
statement.
4.11 Use all reasonable efforts to cause the Registrable Securities
covered by such registration statement (i) if the Common Stock is then listed on
a securities exchange or included for quotation in a recognized trading market,
to continue to be so listed or included for a reasonable period of time after
the offering, and (ii) to be registered with or approved by such other United
States or state governmental agencies or authorities as may be necessary by
virtue of the business and operations of the Company to enable the Selling
Holders of Registrable Securities to consummate the disposition of such
Registrable Securities.
4.12 Use the Company's reasonable efforts to provide a CUSIP number
for the Registrable Securities prior to the effective date of the first
registration statement including Registrable Securities.
4.13 Take such other actions as are reasonably required in order to
expedite or facilitate the disposition of Registrable Securities included in
each such registration.
5. Holders' Obligations. It shall be a condition precedent to the
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obligations of the Company to take any action pursuant to this Agreement with
respect to the Registrable Securities of any Selling Holder of Registrable
Securities that such Selling Holder shall:
5.1 Furnish to the Company such information regarding such Selling
Holder, the number of the Registrable Securities owned by it, and the intended
method of disposition of such securities as shall be required to effect the
registration of such Selling Holder's Registrable Securities, and to cooperate
with the Company in preparing such registration;
5.2 Agree to sell their Registrable Securities to the underwriters at
the same price and on substantially the same terms and conditions as the Company
or the other Persons on whose behalf the registration statement was being filed
have agreed to sell their securities, and to execute the underwriting agreement
agreed to by the Majority Selling Holders (in the case of a registration under
Section 2) or the Company and the Majority Selling Holders (in the case of a
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registration under Section 3).
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6. Expenses of Registration. Expenses in connection with registrations
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pursuant to this Agreement shall be allocated and paid as follows:
6.1 With respect to each Demand Registration or S-3 Registration, the
Company shall bear and pay all expenses incurred in connection with any
registration, filing, or qualification of Registrable Securities with respect to
such Demand Registration or S-3 Registration for each Selling Holder (which
right may be assigned to any Person to whom Registrable Securities are
Transferred as permitted by Section 9), including all registration, filing and
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National Association of Securities Dealers, Inc. fees, all fees and expenses of
complying with securities or blue sky laws, all word processing, duplicating and
printing
expenses, messenger and delivery expenses, the reasonable fees and disbursements
of counsel for the Company, and of the Company's independent public accountants,
including the expenses of "cold comfort" letters required by or incident to such
performance and compliance, and the reasonable fees and disbursements of one (1)
firm of counsel for all the Selling Holders of Registrable Securities (selected
by Demanding Holders owning a majority of the Registrable Securities owned by
Demanding Holders to be included in a Demand Registration) (the "Registration
Expenses"), but excluding underwriting discounts and commissions relating to
Registrable Securities (which shall be paid on a pro rata basis by the Selling
Holders).
6.2 The Company shall bear and pay all Registration Expenses incurred
in connection with any Piggyback Registrations pursuant to Section 3 for each
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Selling Holder (which right may be Transferred to any Person to whom Registrable
Securities are Transferred as permitted by Section 9), but excluding
---------
underwriting discounts and commissions relating to Registrable Securities (which
shall be paid on a pro rata basis by the Selling Holders of Registrable
Securities).
6.3 Any failure of the Company to pay any Registration Expenses as
required by this Section 6 shall not relieve the Company of its obligations
---------
under this Agreement.
7. Indemnification; Contribution. If any Registrable Securities are
-----------------------------
included in a registration statement under this Agreement:
7.1 To the extent permitted by applicable law, the Company shall
indemnify and hold harmless each Selling Holder, each Person, if any, who
controls such Selling Holder within the meaning of the Securities Act, and each
officer, director, partner, and employee of such Selling Holder and such
controlling Person, against any and all losses, claims, damages, liabilities and
expenses (joint or several), including attorneys' fees and disbursements and
expenses of investigation, incurred by such party pursuant to any actual or
threatened action, suit, proceeding or investigation, or to which any of the
foregoing Persons may become subject under the Securities Act, the Exchange Act
or other federal or state laws, insofar as such losses, claims, damages,
liabilities and expenses arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"):
(i) Any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein, or any amendments or
supplements thereto;
(ii) The omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein not
misleading; or
(iii) Any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any applicable state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
applicable state securities law;
provided, however, that the indemnification required by this Section 7.1 shall
-------- ------- -----------
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or expense if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or expense to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in conformity with written information
furnished to the Company by the indemnified party expressly for use in
connection with such registration; provided, further, that the indemnity
-------- -------
agreement contained in this Section 7 shall not apply to any underwriter to the
---------
extent that any such loss is based on or arises out of an untrue statement or
alleged untrue statement of a material fact, or an omission or alleged omission
to state a material fact, contained in or omitted from any preliminary
prospectus if the final prospectus shall correct such untrue statement or
alleged untrue statement, or such omission or alleged omission, and a copy of
the final prospectus has not been sent or given to such person at or prior to
the confirmation of sale to such person if such underwriter was under an
obligation to deliver such final prospectus and failed to do so.
7.2 To the extent permitted by applicable law, each Selling Holder
shall indemnify and hold harmless the Company, each of its directors, each of
its officers who shall have signed the registration statement, each Person, if
any, who controls the Company within the meaning of the Securities Act, any
other Selling Holder, any controlling Person of any such other Selling Holder
and each officer, director, partner, and employee of such other Selling Holder
and such controlling Person, against any and all losses, claims, damages,
liabilities and expenses (joint and several), including attorneys' fees and
disbursements and expenses of investigation, incurred by such party pursuant to
any actual or threatened action, suit, proceeding or investigation, or to which
any of the foregoing Persons may otherwise become subject under the Securities
Act, the Exchange Act or other federal or state laws, insofar as such losses,
claims, damages, liabilities and expenses arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Selling Holder expressly for use in connection with such
registration; provided, however, that (x) the indemnification required by this
-------- -------
Section 7.2 shall not apply to amounts paid in settlement of any such loss,
-----------
claim, damage, liability or expense if settlement is effected without the
consent of the relevant Selling Holder of Registrable Securities, which consent
shall not be unreasonably withheld, and (y) in no event shall the amount of any
indemnity under this Section 7.2 exceed the gross proceeds from the applicable
-----------
offering received by such Selling Holder.
7.3 Promptly after receipt by an indemnified party under this Section
-------
7 of notice of the commencement of any action, suit, proceeding, investigation
-
or threat thereof made in writing for which such indemnified party may make a
claim under this Section 7, such indemnified party shall deliver to the
---------
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
-------- -------
have the right to retain its own
counsel, with the fees and disbursements and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time following the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 7 but shall not relieve the indemnifying
---------
party of any liability that it may have to any indemnified party otherwise than
pursuant to this Section 7. Any fees and expenses incurred by the indemnified
---------
party (including any fees and expenses incurred in connection with investigating
or preparing to defend such action or proceeding) shall be paid to the
indemnified party, as incurred, within thirty (30) days of written notice
thereof to the indemnifying party (regardless of whether it is ultimately
determined that an indemnified party is not entitled to indemnification
hereunder). Any such indemnified party shall have the right to employ separate
counsel in any such action, claim or proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be the expenses
of such indemnified party unless (i) the indemnifying party has agreed to pay
such fees and expenses or (ii) the indemnifying party shall have failed to
promptly assume the defense of such action, claim or proceeding or (iii) the
named parties to any such action, claim or proceeding (including any impleaded
parties) include both such indemnified party and the indemnifying party, and
such indemnified party shall have been advised by counsel that there may be one
or more legal defenses available to it which are different from or in addition
to those available to the indemnifying party and that the assertion of such
defenses would create a conflict of interest such that counsel employed by the
indemnifying party could not faithfully represent the indemnified party (in
which case, if such indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such action, claim or proceeding on behalf of such indemnified party, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action, claim or proceeding or separate but substantially similar
or related actions, claims or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one (1) separate firm of attorneys (together with
appropriate local counsel) at any time for all such indemnified parties, unless
in the reasonable judgment of such indemnified party a conflict of interest may
exist between such indemnified party and any other of such indemnified parties
with respect to such action, claim or proceeding, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels). No indemnifying party shall be liable to an
indemnified party for any settlement of any action, proceeding or claim without
the written consent of the indemnifying party, which consent shall not be
unreasonably withheld.
7.4 If the indemnification required by this Section 7 from the
---------
indemnifying party is unavailable to an indemnified party hereunder in respect
of any losses, claims, damages, liabilities or expenses referred to in this
Section 7:
---------
(i) The indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying
party and indemnified parties shall be determined by reference to, among other
things, whether any Violation has been committed by, or relates to information
supplied by, such indemnifying party or indemnified parties, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such Violation. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in Section 7.1 and
-----------
Section 7.2, any legal or other fees or expenses reasonably incurred by such
-----------
party in connection with any investigation or proceeding.
(ii) The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 7.4 were determined by pro rata
-----------
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in Section 7.4(i). No Person guilty of
--------------
fraudulent misrepresentation (within the meaning of 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation.
7.5 If indemnification is available under this Section 7, the
---------
indemnifying parties shall indemnify each indemnified party to the full extent
provided in this Section 8 without regard to the relative fault of such
---------
indemnifying party or indemnified party or any other equitable consideration
referred to in Section 7.4.
-----------
7.6 The obligations of the Company and the Selling Holders of
Registrable Securities under this Section 7 shall survive the completion of any
---------
offering of Registrable Securities pursuant to a registration statement under
this Agreement, and otherwise.
8. Transfer of Registration Rights. Rights with respect to Registrable
-------------------------------
Securities may be Transferred as follows: all rights of a Holder with respect
to Registrable Securities pursuant to this Agreement may be Transferred by such
Holder to any of its Person in connection with the Transfer of Registrable
Securities to such Person, in all cases, if (x) any such Transferee that is not
a party to this Agreement shall have executed and delivered to the Secretary of
the Company a properly completed agreement substantially in the form of Exhibit
-------
A, and (y) the Transferor shall have delivered to the Secretary of the Company,
-
no later than fifteen (15) days following the date of the Transfer, written
notification of such Transfer setting forth the name of the Transferor, name and
address of the Transferee, and the number of Registrable Securities which shall
have been so Transferred.
9. Holdback. Each Holder entitled pursuant to this Agreement to have
--------
Registrable Securities included in a registration statement prepared pursuant to
this Agreement, if so requested by the Underwriters' Representative or Agent in
connection with an offering of any
Registrable Securities, and if similar agreements are executed by each Person
including securities for sale in such Registration, shall not effect any public
sale or distribution of shares of Common Stock or any securities convertible
into or exchangeable or exercisable for shares of Common Stock, including a sale
pursuant to Rule 144 under the Securities Act (except as part of such
underwritten or agented registration), during the fifteen (15)-day period prior
to, and during the one hundred and eighty (180)-day period beginning on, the
date such registration statement is declared effective under the Securities Act
by the Commission, provided that such Holder is timely notified of such
--------
effective date in writing by the Company or such Underwriters' Representative or
Agent. In order to enforce the foregoing covenant, the Company shall be entitled
to impose stop-transfer instructions with respect to the Registrable Securities
of each Holder until the end of such period.
10. Covenants of the Company. The Company hereby agrees and covenants as
------------------------
follows:
10.1 The Company shall file as and when applicable, on a timely
basis, all reports required to be filed by it under the Exchange Act. If the
Company is not required to file reports pursuant to the Exchange Act, upon the
request of any Holder of Registrable Securities, the Company shall make publicly
available the information specified in subparagraph (c)(2) of Rule 144 of the
Securities Act, and take such further action as may be reasonably required from
time to time and as may be within the reasonable control of the Company, to
enable the Holders to Transfer Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by Rule 144
under the Securities Act or any similar rule or regulation hereafter adopted by
the Commission.
10.2 (i) The Company shall not, and shall permit its majority owned
subsidiaries to, effect any public sale or distribution of any shares of Common
Stock or any securities convertible into or exchangeable or exercisable for
shares of Common Stock, during the five (5) business days prior to, and during
the ninety (90)-day period beginning on, the commencement of a public
distribution of the Registrable Securities pursuant to any registration
statement prepared pursuant to this Agreement (other than by the Company
pursuant to such registration if the registration is pursuant to Section 3).
---------
The Company shall not effect any registration of its securities (other than on
Form X-0, Xxxx X-0, or any successor forms to such forms or pursuant to such
other registration rights agreements as may be approved in writing by the
Majority Selling Holders or the Initiating Substantial Holder, as the case may
be), or effect any public or private sale or distribution of any of its
securities, including a sale pursuant to Regulation D under the Securities Act,
whether on its own behalf or at the request of any holder or holders of such
securities from the date of a request for a Demand Registration pursuant to
Section 2.1 until the earlier of (x) ninety (90) days following the date as of
-----------
which all securities covered by such Demand Registration statement shall have
been Transferred, and (y) one hundred and eighty (180) days following the
effective date of such Demand Registration statement, unless the Company shall
have previously notified in writing all Selling Holders of the Company's desire
to do so, and Selling Holders owning a majority of the Registrable Securities or
the Underwriters' Representative, if any, shall have consented thereto in
writing.
(ii) Any agreement entered into after the date of this Agreement
pursuant to which the Company or any of its majority owned subsidiaries issues
or agrees to issue any privately placed securities similar to any issue of the
Registrable Securities (other than (x) shares of Common Stock pursuant to a
stock incentive, stock option, stock bonus, stock purchase or other employee
benefit plan of the Company approved by its Board of Directors, and (y)
securities issued to Persons in exchange for ownership interests in any Person
in connection with a business combination in which the Company or any of its
majority owned subsidiaries is a party) shall contain a provision whereby
holders of such securities agree not to effect any public sale or distribution
of any such securities during the periods described in the first sentence of
Section 10.2(i), in each case including a sale pursuant to Rule 144 under the
---------------
Securities Act (unless such Person is prevented by applicable statute or
regulation from entering into such an agreement).
10.3 The Company shall not grant to any Person (other than a Holder
of Registrable Securities) any registration rights with respect to securities of
the Company, or enter into any agreement, that would entitle the holder thereof
to have securities owned by it included in a Demand Registration or, without
consent of Purchaser, which gives such Person the right to participate in any
Piggyback Registration or terms more favorable to such person than are provided
to Purchaser under the Agreement.
11. Amendment, Modification and Waivers; Further Assurances.
-------------------------------------------------------
(i) This Agreement may be amended with the consent of the Company and
the Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall have obtained
the written consent of Holders owning Registrable Securities possessing a
majority in number of the Registrable Securities then outstanding to such
amendment, action or omission to act.
(ii) No waiver of any terms or conditions of this Agreement shall
operate as a waiver of any other breach of such terms and conditions or any
other term or condition, nor shall any failure to enforce any provision hereof
operate as a waiver of such provision or of any other provision hereof. No
written waiver hereunder, unless it by its own terms explicitly provides to the
contrary, shall be construed to effect a continuing waiver of the provisions
being waived and no such waiver in any instance shall constitute a waiver in any
other instance or for any other purpose or impair the right of the party against
whom such waiver is claimed in all other instances or for all other purposes to
require full compliance with such provision.
(iii) Each of the parties hereto shall execute all such further
instruments and documents and take all such further action as any other party
hereto may reasonably require in order to effectuate the terms and purposes of
this Agreement.
12. Assignment; Benefit. This Agreement and all of the provisions hereof
-------------------
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective heirs, assigns, executors, administrators or successors;
provided, however, that except as specifically provided herein with respect to
-------- -------
certain matters, neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned or delegated by the Company
without the prior written consent of Holders owning Registrable Securities
possessing a majority in number of the Registrable Securities outstanding on the
date as of which such delegation or assignment is to become effective. A Holder
may Transfer its rights hereunder to a successor in interest to the Registrable
Securities owned by such assignor only as permitted by Section 8.
---------
13. Miscellaneous.
-------------
13.1 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING
REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
13.2 Notices. All notices and requests given pursuant to this
-------
Agreement shall be in writing and shall be made by hand-delivery, first-class
mail (registered or certified, return receipt requested), confirmed facsimile or
overnight air courier guaranteeing next business day delivery to the relevant
address specified on Schedule 1 to this Agreement or in the relevant agreement
----------
in the form of Exhibit A whereby such party became bound by the provisions of
---------
this Agreement. Except as otherwise provided in this Agreement, the date of
each such notice and request shall be deemed to be, and the date on which each
such notice and request shall be deemed given shall be: at the time delivered,
if personally delivered or mailed; when receipt is acknowledged, if sent by
facsimile; and the next business day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next business day delivery. This
Agreement shall terminate as to any Holder when all of the Registrable
Securities held by such Holder could be sold by such Holder pursuant to Rule
144(k) or pursuant to Rule 144(e)(1)(i).
13.3 Entire Agreement; Integration. This Agreement supersedes all
-----------------------------
prior agreements between or among any of the parties hereto with respect to the
subject matter contained herein and therein, and such agreements embody the
entire understanding among the parties relating to such subject matter.
13.4 Injunctive Relief. Each of the parties hereto acknowledges
-----------------
that in the event of a breach by any of them of any material provision of this
Agreement, the aggrieved party may be without an adequate remedy at law. Each
of the parties therefore agrees that in the event of such a breach hereof the
aggrieved party may elect to institute and prosecute proceedings in any court of
competent jurisdiction to enforce specific performance or to enjoin the
continuing breach hereof. By seeking or obtaining any such relief, the aggrieved
party shall not be precluded from seeking or obtaining any other relief to which
it may be entitled.
13.5 Section Headings. Section headings are for convenience of
----------------
reference only and shall not affect the meaning of any provision of this
Agreement.
13.6 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, and all of which shall
together constitute one and the same instrument. All signatures need not be on
the same counterpart.
13.7 Severability. If any provision of this Agreement shall be
------------
invalid or unenforceable, such invalidity or unenforceability shall not affect
the validity and enforceability of the remaining provisions of this Agreement,
unless the result thereof would be unreasonable, in which case the parties
hereto shall negotiate in good faith as to appropriate amendments hereto.
13.8 Filing. A copy of this Agreement and of all amendments thereto
------
shall be filed at the principal executive office of the Company with the
corporate recorder of the Company.
13.9 Termination. This Agreement may be terminated at any time by a
-----------
written instrument signed by the parties hereto. Unless sooner terminated in
accordance with the preceding sentence, this Agreement (other than Section 7
---------
hereof) shall terminate in its entirety on such date as there shall be no
Registrable Securities outstanding, provided that any shares of Common Stock
--------
previously subject to this Agreement shall not be Registrable Securities
following the sale of any such shares in an offering registered pursuant to this
Agreement.
13.10 Attorneys' Fees. In any action or proceeding brought to
---------------
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees (including any fees incurred in any appeal) in
addition to its costs and expenses and any other available remedy.
13.11 No Third Party Beneficiaries. Except as provided in Sections
----------------------------
2.7 and 3.3, nothing herein expressed or implied is intended to confer upon any
person, other than the parties hereto or their respective permitted assigns,
successors, heirs and legal representatives, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first written above.
KINETIC SYSTEMS, INC.,
a California corporation
By: /s/ Xxxxx X. Xxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxx
Title: COO
BT CAPITAL PARTNERS, INC.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Managing Director
THE KSI GROUP, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxx
Title: COO
EXHIBIT A
to Registration
Rights Agreement
AGREEMENT TO BE BOUND
BY THE REGISTRATION RIGHTS AGREEMENT
The undersigned, being the transferee of ______ shares of the Preferred
Stock, $.01 par value per share, of The KSI Group, Inc., a Delaware corporation
(the "Company"), as a condition to the transfer of such securities, acknowledges
that matters pertaining to the registration of Registrable Securities is
governed by the Registration Rights Agreement dated as of April 1, 1996 between
the Company and the Purchaser referred to therein (the "Agreement"), and the
undersigned hereby (1) acknowledges receipt of a copy of the Agreement, and (2)
agrees to be bound as a Holder by the terms of the Agreement, as the same has
been or may be amended from time to time.
Agreed to this __ day of _____, 199_.
_________________________________
_________________________________*
_________________________________*
*Include address for notices.
A-1
SCHEDULE 1
Addresses
---------
BT Capital Partners,Inc.
1 BT Plaza
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Corporate Secretary
Telecopy: 212/250-4819
With copies to:
BT Capital Partners, Inc.
000 Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx
Telecopy: 213/620-8244
and:
Sidley & Austin
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx
Telecopy: 213/896-6600
A-2