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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is entered into as of
May ___, 1999 by and among (a) Paradigm Geophysical Ltd., an Israeli company
(the "Company") on the one part, (b)Shamrock Holdings, Inc., a Delaware
corporation ("Shamrock") on the second part, and (c) Eastgate Fund, L.P., an
Iowa limited partnership, Eastgate International Limited, a corporation formed
under the laws of the Commonwealth of the Bahamas, ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
Eastgate Growth Fund, an Iowa Partnership, (jointly "Eastgate"), on the third
part. (Each of Shamrock and Eastgate, severally and not jointly, shall
hereinafter be referred to as, the "Holder"). Capitalized terms not defined
herein shall have the meanings assigned to such terms in the Purchase Agreements
(as defined below).
R E C I T A L S:
Pursuant to the terms and subject to the conditions of that certain Share
Purchase Agreement dated as of April 14, 1999 (the "Shamrock Purchase
Agreements") between the Company and Shamrock, and that certain Share Purchase
Agreement dated as of May __, 1999 between the Company and Eastgate (the
"Eastgate Purchase Agreement"), the execution and delivery of this Agreement is
a condition to the purchase and sale by each Holder of certain Ordinary Shares
(NIS 0.5 par value) (the "Ordinary Shares") pursuant to the foregoing Purchase
Agreements (as defined below).
A G R E E M E N T:
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Approved Underwriter" shall have the meaning set forth in Section 2.
"Closing Date" shall mean the Closing Date as defined in the Purchase
Agreements.
"Demand Registration" shall have the meaning set forth in Section 2.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Form F-3" shall mean Form F-3 under the Securities Act as in effect
on the date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
"Form F-3 Registration" shall have the meaning set forth in Section 4.
"Incidental Registration" shall have the meaning set forth in Section
3.
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"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement, with respect
to the terms of the offering of any portion of the Registrable Securities
covered by the Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such Prospectus.
"Register", "registered" and "registration" shall mean and
refer to a registration effected by preparing and filing a Registration
Statement and taking all other actions that are necessary or appropriate in
connection therewith, and the declaration or ordering of effectiveness of such
Registration Statement by the SEC.
"Registration Expenses" shall have the meaning set forth in Section 8.
"Registrable Securities" shall mean all Ordinary Shares held by Holder
as of the date hereof or subsequently transferred to a permitted transferee
under Section 16 hereof, provided that such term shall not include any such
Ordinary Shares, (i) sold to the public by a Holder pursuant to a Registration
Statement under the Securities Act, or (ii) sold by such Holder in a private
transaction in which such Holder's rights hereunder were not assigned to the
purchasers thereof,or (iii) Ordinary Shares that can be sold according to Rule
144(k) of the Securities Act within the subsequent three (3) month period.
"Registration Statement" shall mean any registration statement of the
Company in compliance with the Securities Act that covers Registrable Securities
pursuant to the provisions of this Agreement, including, without limitation, the
Prospectus, all amendments and supplements to such Registration Statement,
including all post-effective amendments, all exhibits and all material
incorporated by reference in such Registration Statement.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"SEC" shall mean the Securities and Exchange Commission.
"Underwritten registration" or "underwritten offering" shall mean a
registration in which securities of the Company are sold to an underwriter or
through an underwriter as agent for reoffering to the public.
2. Demand Registration.
(a) Request for Demand Registration. At any time after the first
anniversary of the Closing Date, Shamrock shall be entitled to request in
writing that the Company use its best efforts to effect the registration under
the Securities Act, and under the securities or "blue sky" laws of any
jurisdiction designated by Shamrock, of Registrable Securities comprising at
least 350,000 Ordinary Shares (including Registrable Securities as to which
other holders of Registrable Securities are also seeking registration pursuant
to such request) in accordance with this Section 2 (each, a "Demand
Registration"). Any such request for a Demand Registration shall specify the
amount of Registrable Securities proposed to be sold and the intended method of
disposition thereof. Upon receiving a request for a Demand Registration, the
Company will, as provided in this Section 2, use its best efforts to effect the
registration under the Securities Act of the Registrable Securities in the
manner which the Company has been so requested by Shamrock to register.
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(b) Limitation on Demand Registrations. Notwithstanding anything to
the contrary set forth in Section 2(a) but subject to Section 8, the Company
shall not be obligated to file a Registration Statement with respect to more
than one (1) a Demand Registration upon a request by Shamrock under Section
2(a).
(c) Effective Demand Registration. A registration shall not constitute
a Demand Registration until the Registration Statement has become effective and
remains continuously effective for the lesser of: (i) the period during which
all Registrable Securities registered in the Demand Registration are sold: and
(ii) 180 days; provided, however, that a registration shall not constitute a
Demand Registration if (x) after such Demand Registration has become effective,
such registration or the related offer, sale or distribution of Registrable
Securities thereunder is interfered with by any stop order, injunction or other
order or requirement of the SEC or other governmental agency or court for any
reason not attributable to Shamrock and such interference is not thereafter
eliminated: or (y) the conditions to closing specified in the underwriting
agreement, if any, entered into in connection with such Demand Registration are
not satisfied or waived, other than by reason of a failure by Shamrock.
(d) Underwriting Procedures. If Shamrock so elects, the offering of
Registrable Securities pursuant to a Demand Registration shall be in the form of
a firm commitment underwritten offering and the managing underwriter or
underwriters selected for such offering shall be the Approved Underwriter (as
hereinafter defined in Section 2(e)) selected in accordance with Section 2(e).
With respect to any firm commitment underwritten offering, the Company shall
enter into a reasonable and customary underwriting agreement with the Approved
Underwriter. If the Approved Underwriter advises the Company in writing that, in
its opinion, the aggregate amount of Ordinary Shares requested to be included in
such offering is sufficiently large so as to have a material adverse effect on
the success of such offering, then the Company shall include in such
registration only the aggregate amount of Ordinary Shares that in the opinion of
the Approved Underwriter may be sold without any such material advereffect and
shall allocate the amount of the Ordinary Shares to be included in such
registration as follows: (i) first, Shamrock shall be permitted to include all
Registrable Securities to be registered thereby; (ii) second, Eastgate shall be
allowed to include such amount of Ordinary Shares as the Approved Underwriter
deems appropriate, pro rata among the Eastgate entities to the amount of shares
then held by each such Eastgate entity; and (iii) third, the Company and any
other shareholder exercising piggyback registration rights shall be allowed to
include such amount of Ordinary Shares as the Approved Underwriter deems
appropriate; provided, however, that the amount of Ordinary Shares to be sold by
the Company and any other shareholders under clause (iii) and/or (iv) and
intended to be included in such offering shall be reduced in its entirety prior
to any reduction of the number of Shamrock's Registrable Securities.
(e) Selection of Underwriters. If any Demand Registration is in the
form of an underwritten offering, Shamrock shall select and obtain one or more
investment banking firms of national reputation to act as the managing
underwriters of the offering (collectively, the "Approved Underwriter");
provided, however, that the Approved Underwriter shall, in any case, be
acceptable to the Company in its reasonable judgment.
3. Incidental Registration. If the Company shall determine to register
any Ordinary Shares, or any securities convertible into or exchangeable or
exercisable for Ordinary Shares, for its own account or for the account of any
shareholder (other than a registration on Forms F-4, or F-8 or any replacement
or successor form thereof), each Holder shall be entitled to include Registrable
Securities, on a pro rata basis with the other Holder based on the number of
Registrable Securities then held by each Holder, in such registration (and
related underwritten offering, if any) (each, an "Incidental Registration") on
the following terms and conditions:
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(a) The Company shall promptly give written notice of such
determination to the Holders, and the Holders shall have the right to request,
by written notice given to the Company within thirty (30) days of the receipt by
Holders of such notice of determination, that a specific number of Registrable
Securities held by Holders be included in such Registration Statement;
(b) If the proposed registration relates to an underwritten offering,
the notice called for by Section 3(a) shall specify the name of the managing
underwriter for such offering and the number of securities to be registered for
the account of the Company and for the account of any other stockholder of the
Company;
(c) If the proposed registration relates to an underwritten offering,
each Holder must: (i) sell all or a portion of its Registrable Securities on the
same basis provided in the underwriting arrangements approved by the Company;
and (ii) complete and execute all questionnaires, powers of attorney,
indemnities (but only to the extent such indemnities relate specifically to
information supplied by such Holder), hold-back agreements, underwriting
agreements and other documents on the same basis as other similarly situated
selling shareholders (or, if there are no other selling shareholders, as would
be customary in a transaction of this type) required under the terms of such
underwriting arrangements or by the SEC;
(d) If the managing underwriter for the underwritten offering under
the proposed registration to be made by the Company determines that inclusion of
all or any portion of the Registrable Securities in such offering would
adversely affect the ability of the underwriter for such offering to sell all of
the securities requested to be included for sale or the price per share in such
offering, the number of shares that may be included in such registration in such
offering shall be allocated as follows: (i) first, the Company (if such
registration was initiated thereby) or the selling shareholder exercising demand
registration rights, as the case may be, shall be permitted to include all of
the Ordinary Shares to be registered thereby; and (ii) second, the Holders, on a
pro rata basis with one another, based on the number of Registrable Securities
then held by each Holder, and any other selling shareholder exercising piggyback
registration rights shall be allowed to include such amount of Registrable
Securities as the managing underwriter(s) deems appropriate (on a pro rata basis
with one another but only to the extent that such pro rata basis applies to the
number of Ordinary Shares still retained at the time of such cutback);
(e) Each Holder shall have the right to withdraw its Registrable
Securities from the Registration Statement at any time prior to the effective
date thereof, but if the same relates to an underwritten offering, it may only
do so after the initial filing thereof during the time period and on terms
deemed appropriate by the managing underwriters for such underwritten offering;
and
(f) The Company or any other shareholder exercising demand
registration rights shall have the right to terminate or withdraw any
registration statement filing under this Section 3 prior to the effective date
of such registration for any reason without liability to the Holders as a result
thereof, whether or not either Holder has elected to include its securities in
such registration.
4. Form F-3 Registration.
(a) At any time after the first anniversary of the Closing Date,
Shamrock
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shall, subject to the provisions of this Section 4, be entitled to request that
the Company effect a registration of its Registrable Securities comprising at
least 150,000 Ordinary Shares on Form F-3 as shall be specified in such request
(a "Form F-3 Registration").
(b) As soon as practicable after receipt of any written request
pursuant to Section 4(a), the Company shall file a Form F-3 Registration
Statement covering the Registrable Securities and shall effect such registration
as would permit or facilitate the sale and distribution of all or such portion
of Shamrock's Registrable Securities as are specified in such request.
(c) At all times during which the Company is subject to the reporting
requirements of the Exchange Act, the Company shall use its best efforts to make
registrations on Form F-3 available for the sale of Registrable Securities.
(d) If Shamrock so elects, the offering of Registrable Securities
pursuant to a Form F-3 Registration shall involve a managing underwriter or
underwriters selected for such offering by Shamrock; provided, however, that
such managing underwriter shall be acceptable to the Company in its reasonable
judgment. If the managing underwriter advises the Company in writing that in its
opinion the aggregate amount of Ordinary Shares requested to be included in such
offering is sufficiently large so as to have a material adverse effect on the
success of such offering, then the Company shall include in such registration
only the aggregate amount of Ordinary Shares that in the opinion of the managing
underwriter may be sold without any such material adverse effect and shall
allocate the amount of the Ordinary Shares to be included in such registration
as follows: (i) first, Shamrock shall be permitted to include all Registrable
Securities to be registered thereby; (ii) second, Eastgate shall be allowed to
include such amount of Ordinary Shares as the Approved Underwriter deems
appropriate, pro rata among the Eastgate entities to the amount of shares then
held by each such Eastgate entity; and (iii) third, the Company and any other
shareholder exercising piggyback registration rights shall be allowed to include
such amount of Ordinary Shares as the managing underwriter deems appropriate;
pr, however, that, the amount of Ordinary Shares to be sold by the Company and
any other shareholders under clause (ii) and /or (iii) and intended to be
included in such offering shall be reduced in its entirety prior to any
reduction of the number of Holders' Registrable Securities.
(e) Each Holder shall have the right to withdraw its Registrable
Securities from the Registration Statemat any time prior to the effective date
thereof, but if the same relates to an underwritten offering, it may only do so
after the initial filing thereof during the time period and on terms deemed
appropriate by the underwriters for such underwritten offering.
(f) Notwithstanding anything to the contrary in Section 4(a) but
subject to Section 8, the Company shall not be obligated to file a Registration
Statement with respect to a Form F-3 Registration upon a request by Shamrock
under Section 4(a), if the Company has paid the Registration Expenses for one
Form F-3 Registrations in accordance with Section 8; provided, however, that
only a Form F-3 Registration that has become effective and remained continuously
effective for the lesser of: (i) the period during which all Registrable
Securities registered thereunder are sold; and (ii) 180 days shall be counted as
a Form F-3 Registration and be counted against the aforesaid limitation; and
provided, further, however, that a registration shall not constitute a Form F-3
Registration if (x) after such Form F-3 Registration 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 Holders and such interference is not
thereafter eliminated; or (y) the conditions to closing specified in the
underwriting agreement, if any, entered into in connection with such Form F-3
Registration are not satisfied or waived, other than by any reason of a failure
not attributable to the Holders.
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5. Blockage Periods. Notwithstanding any other provision of this
Agreement, the Company shall not be obligated to file any Registration Statement
under Section 2 or Section 4 hereof, if, at any time, the Company's Board of
Directors determines in good faith, as certified to the Holders in writing by
the Company's President or Chief Executive Officer, that the filing of such a
Registration Statement would be seriously detrimental to the Company. The
Company may decline to file any Registration Statement for this reason only once
in any twelve (12) month period and only for a maximum period of one hundred
twenty (120) days at any one time.
6. Restrictions on Public Sale by Holder of Registrable Securities. If
Registrable Securities are included (in whole or in part) in a Registration
Statement filed by the Company under Sections 2 through 4 for sale in an
underwritten offering, each Holder whose Registrable Securities are included in
such Registration Statement agrees, if requested by the managing underwriter(s)
of such offering, not to sell, make any short sale of, loan, grant any option
for the purchase of, dispose of or effect any public sale or distribution of
securities of the same class as (or securities exchangeable for or convertible
into securities of the same class as) Registrable Securities included in a the
Registration Statement, including a sale pursuant to Rule 144 under the
Securities Act (except as part of such underwritten registration), during the
five (5) day period prior to, and during the one hundred twenty (120) day period
(or shorter period requested by the managing underwriter(s)) beginning on the
closing date of such underwritten offering, to the extent timely notified in
writing by the Company or the managing underwriter(s).
7. Registration Procedures. In connection with the Company's registration
obligations pursuant to Sections 2 through 4 hereof, the Company will use its
best efforts to effect such registration to permit the sale of the Registrable
Securities covered thereby in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Company will as expeditiously as
possible:
(a) prepare and file with the SEC a Registration Statement with
respect to such Registrable Securities and use its best efforts to cause such
Registration Statement to become effective, and, upon the request of Shamrock or
Eastgate, if it shall be a seller under each Registration Statement, keep such
Registration Statement effective for up to one hundred eighty (180) days,
provided that, before filing any Registration Statement or Prospectus or any
amendments or supplements thereto, the Company will furnish to each Holder and
their respective counsel, copies of all such documents proposed to be filed at
least five (5) days prior thereto, and the Company will not file any such
Registration Statement or amendment thereto or any Prospectus or any supplement
thereto to which Shamrock (or Eastgate, if it shall be a seller) shall
reasonably object within such five (5) day period, provided, further, that the
Company will not name or otherwise provide any information with respect to the
Holders in any Registration Statement or Prospectus without the express written
consent of the Holders, unless required to do so by the Securities Act and the
rules and regulations thereunder;
(b) prepare and file with the SEC such amendments, post-effective
amendments and supplements to the Registration Statement and the Prospectus as
may be necessary to comply with the provisions of the Securities Act and the
rules and regulations thereunder with respect to the disposition of all
securities covered by such Registration Statement;
(c) promptly notify the Holders: (i) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective; (ii) of any request by the SEC for amendments or
supplements to the Registration Statement or the
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Prospectus or for additional information; (iii) of the issuance by the SEC of
any stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; (iv) if at any time the
representations and warranties of the Company contemplated by the Purchase
Agreements cease to be true and correct; (v) of the receipt by the Company of
any notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and (vi) of the happening of any
event which makes any statement made in the Registration Statement, the
Prospectus or any document incorporated therein by reference untrue or which
requires the making of any changes in the Registration Statement, the Prospectus
or any document incorporated therein by reference in order to make the
statements therein not misleading;
(d) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement as soon as possible;
(e) furnish to the Holders, without charge, at least one signed copy
of the Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, all documents incorporated therein
by reference and all exhibits (including those incorporated by reference);
(f) deliver to the Holders, without charge, such reasonable number of
conformed copies of the Registration Statement (and any post-effective amendment
thereto) and such number of copies of the Prospectus (including each preliminary
prospectus) and any amendment or supplement thereto (and any documents
incorporated by reference therein) as the Holders may reasonably request, all in
full conformity with the Securities Act; the Company consents to the use of the
Prospectus or any amendment or supplement thereto by the Holders in connection
with the offer and sale of the Registrable Securities covered by the Prospectus
or any amendment or supplement thereto;
(g) prior to any of Registrable Securities covered by a Registration
Statement, register or qualify or cooperate with the Holders in connection with
the registration or qualification of such Registrable Securities for offer and
sale under the securities or blue sky laws of such jurisdictions as the Holders
reasonably request, and use its best efforts to keep each such regor
qualification effective, including through new filings, or amendments or
renewals, during the period such Registration Statement is required to be kept
effective pursuant to the terms of this Agreement; and do any and all other acts
or things necessary or advisable to enable the disposition of such Registrable
Securities in all such jurisdictions reasonably requested by the Holders,
provided that under no circumstances shall the Company be required in connection
therewith or as a condition thereof to qualify to do business or to file a
general consent to service of process in any such jurisdictions;
(h) cooperate with the Holders and the managing underwriter or
underwriters to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold, free of any and all restrictive
legends, such certificates to be in such denominations and registered in such
names as the managing underwriter or underwriters, if any, or the Holders may
request;
(i) upon the occurrence of any event contemplated by Section 7(c)(vi)
above, prepare a supplement or post-effective amendment to the Registration
Statement or the Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, the Prospectus will not contain an
untrue statement of a material fact or omit to state any material
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fact necessary to make the statements therein not misleading;
(j) make generally available to the holders of the Company's
outstanding securities earnings statements satisfying the provisions of Section
ll (a) of the Securities Act, no later than sixty (60) days after the end of any
twelve (12) month period (or ninety (90) days, if such period is a fiscal year):
(x) commencing at the end of any fiscal quarter in which Registrable Securities
are sold to underwriters in a firm or best efforts underwritten offering, or, if
not sold to underwriters in such an offering; (y) beginning with the first month
of the Company's first fiscal quarter commencing after the effective date of the
Registration Statement, which statements shall cover said twelve (12) month
period;
(k) provide and cause to be maintained a transfer agent and registrar
for all Registrable Securities covered by each Registration Statement from and
after a date not later than the effective date of such Registration Statement;
(l) use its best efforts to cause all Registrable Securities covered
by each Registration Statement to be listed, subject to notice of issuance,
prior to the date of the first sale of such Registrable Securities pursuant to
such Registration Statement, on each securities exchange on which the Ordinary
Shares issued by the Company is then listed, and admitted to trading, including,
the Nasdaq Stock Market, if the Ordinary Shares are then admitted to trading on
the Nasdaq Stock Market; and
(m) enter into such agreements (including underwriting agreements in
customary form containing, among other things, reasonable and customary
indemnities) and take such other actions as the Holders shall reasonably request
in order to expedite or facilitate the disposition of such Registrable
Securities.
(n) furnish, at the request of the Holders, on the date that the
Registrable Securities are delivered to an underwriter for sale in connection
with an underwritten registration, or, in connection with any other
registration, on the date that the registration statement with respect to such
registration becomes effective: (i) an opinion, dated such date, of the counsel
representing the Company for the purpose of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders; and (ii) a
letter dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Holders, subject to the Holders
providing information reasonably requested by such independent certified public
accountants to comply with the rules governing delivery of such letters.
The Holders agree that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 7(c)(vi) hereof, the
Holders will forthwith discontinue disposition of Registrable Securities under
the Prospectus related to the applicable Registration Statement until the
Holders' receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 7(i) hereof, or until it is advised in writing by the
Company that the use of the Prospectus may be resumed. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to this
Section 7 with respect to the Registrable Securities of the Holders that the
Holders shall furnish them to the Company such information regarding themselves
and the Registrable Securities held by it as shall be required by the Securities
Act to effect the registration of the Holder's Registrable Securities.
8. Registration Expenses. All expenses incident to any registration to be
effected
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hereunder (whether or not the Registration Statement is filed or declared
effective) and incident to the Company's performance of or compliance with this
Agreement, including without limitation all registration and filing fees, fees
and expenses of compliance with securities or blue sky laws, printing expenses,
messenger and delivery expenses, National Association of Securities Dealers,
Inc., stock exchange and qualification fees, fees and disbursements of the
Company's counsel and of independent certified public accountants of the Company
(including the expenses of any special audit required by or incident to such
performance), the fees of one counsel representing the Holders in such offering
(which counsel shall be selected by Shamrock if Shamrock is participating in
such offering), expenses of the underwriters that are customarily requested in
similar circumstances by such underwriters (excluding discounts, commissions or
fees of underwriters, selling brokers, dealer managers or similar securities
industry professionals relating to the distribution of the Registrable
Securities), all such expenses being herein called "Registration Expenses," will
be borne by the Company. The Company will also pay its internal expenses, the
expense of any annual audit and the fees and expenses of any person retained by
the Company. Notwithstanding the foregoing but subject to Section 12, the
Company will not be obligated to pay Registration Expenses for more than two
Demand Registrations effected pursuant to Section 2 of this Agreement or for
more than one Form F-3 Registration effected pursuant to Section 4 of this
Agreement. Registration Expenses incurred in connection with Registration
Statements requested under Section 2 or Section 4 that are not filed or declared
effective by the SEC will be paid by the Company and will not count against such
limit; provided, however, if such Registration Statement not being filed or
declared effective as the result of the actions of Shamrock, then Shamrock may
in its sole and unlimited discretion elect to bear the Registration Expenses
(and underwriting discounts and commissions and transfer taxes, if any) of such
Demand Registration or such Form F-3 Registration, as the case may be, in which
case such registration shall not be counted as a Demand Registration under
Section 2 or a Form F-3 Registration under Section 4, as the case may be. In the
event that Shamrock bears the Registration Expenses (and underwriting discounts
and commissions and transfer taxes, if any) in connection with any Demand
Registration requested under Section 2 or Form F-3 Registration under Section 4,
such Registration Expenses shall be apportioned among the holders whose Ordinary
Shares are then being registered, on the basis of the respective amounts (by
number of Ordinary Shares) then being registerby them or on their behalf.
9. Indemnification.
(a) Indemnification by the Company. The Company agrees to indemnify
and hold harmless Holders, their respective officers, directors, partners and
employees and each person who controls Holder (within the meaning of Section 15
of the Securities Act) from and against any and all losses, claims, damages and
liabilities (including any investigation, legal or other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted) (collectively, "Damages") to which
Holder may become subject under the Securities Act, the Exchange Act or other
federal or state securities law or regulation, at common law or otherwise,
insofar as such Damages arise out of or are based upon (i) any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement, Prospectus or preliminary prospectus or any amendment or supplement
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, in
light of the circumstances under which they were made, not misleading and (iii)
any violation or alleged violation by the Company of the Securities Act, the
Exchange Act or any state securities or blue sky laws in connection with the
Registration Statement, Prospectus or preliminary prospectus or any amendment or
supplement thereto, provided that the Company will not be liable to Holder to
the extent that such Damages arise from or are based upon any untrue statement
or omission (x) based upon written information furnished to the Company by
Holders expressly for the inclusion in such Registration Statement, (y) made in
any preliminary prospectus if Holders failed to
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deliver a copy of the Prospectus with or prior to the delivery of written
confirmation of the sale by Holders to the [passerting] the claim underlying
such Damages and such Prospectus would have corrected such untrue statement or
omission and (z) made in any Prospectus if such untrue statement or omission was
corrected in an amendment or supplement to such Prospectus and Holders failed to
deliver such amendment or supplement prior to or concurrently with the sale of
Registrable Securities to the party asserting the claim underlying such Damages.
(b) Indemnification by Holders of Registrable Securities. If
Registrable Securities are sold under a Prospectus which is a part of a
Registration Statement, Shamrock and/or each of the Eastgate entities,
individually and not jointly, as to their own statements or omissions only,
agrees to indemnify and hold harmless the Company, its directors and each
officer who signed such Registration Statement and each person who controls the
Company (within the meaning of Section 15 of the Securities Act) under the same
circumstances as the foregoing indemnity from the Company to Holders to the
extent that such losses, claims, damages, liabilities or actions arise out of or
are based upon any untrue statement of a material fact or omission of a material
fact that was made in the Prospectus, the Registration Statement, or any
amendment or supplement thereto, in reliance upon and in conformity with
information relating to Shamrock or the Eastgate entity, as the case may be,
furnished in writing to the Company by such party expressly for use therein,
provided that in no event shall the aggregate liability of Shamrock or the
Eastgate entity, as the case may be, exceed the amount of the net proceeds
received by such party upon the sale of the Registrable Securities giving rise
to such indemnification obligation. The Company and Holders shall be entitled to
receive indemnities from underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the distribution, to
the same extent as customarily furnished by such persons in similar
circumstances.
(c) Procedure for Indemnification Proceedings. Any person entitled to
indemnification hereunder will: (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification; and (ii) permit
such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party; provided, however, that any
person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such person and not of
the indemnifying party unless: (A) the indemnifying party has agreed to pay such
fees or expenses; (B) the indemnifying party shall have failed to assume the
defense of such claim and employ counsel reasonably satisfactory to such person;
or (C) in the reasonable judgment of such person and the indemnifying party,
based upon advice of their respective counsel, a conflict of interest may exist
between such person and the indemnifying party with respect to such claims (in
which case, if the person notifies the indemnifying party in writing that such
person 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 claim on behalf of such person). If such defense is not assumed by the
indemnifying party, the indemnifying party will not be subject to any liability
for any settlement made without its consent (but such consent will not be
unreasonably withheld). No indemnified party will be required to consent to the
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by all claimants or plaintiffs to such
indemnified party of a release from all liability in respect to such claim or
litigation. Any indemnifying party who is not entitled to, or elects not to,
assume the defense of a claim will not be obligated to pay the fees and expenses
of more than one counsel for all parties indemnified by such indemnifying party
with respect to such claim. As used in this Section 9(c), the terms
"indemnifying party", "indemnified party" and other terms of similar import are
intended to include only the Company (and its officers, directors and control
persons as set forth above) on the one hand, and the Holders (and their
respective officers, directors, partners,
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employees, attorneys and control persons as set forth above) on the other hand,
as applicable.
(d) Contribution. If for any reason the foregoing indemnity is
unavailable, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such losses, claims, damages,
liabilities or expenses: (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other; or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, in such proportion as
is appropriate to reflect not only the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other but
also the relative fault of the indemnifying party and the indemnified party as
well as any other relevant equitable considerations. Notwithstanding the
foregoing, the Holders shall not be required to contribute any amount in excess
of the amount the Holders would have been required to pay to an indemnified
party if the indemnity under Section 9(b) hereof was available. No person found
liable for making a fraudulent misrepresentation (within the meaning of Section
11 of the Securities Act) shall be entitled to contribution from any person who
was found liable for making such fraudulent misrepresentation.
(e) Timing of Payments. An indemnifying party shall make payments of
all amounts required to be made pursuant to the foregoing provisions of this
Section 9 to or for the account of the indemnified party from time to time
promptly upon receipt of bills or invoices relating thereto or when otherwisdue
or payable.
(f) Survival. These indemnity and contribution provisions shall remain
in full force and effect, regardless of any investigation made by or on behalf
of the Holders, its officers, directors, partners, attorneys, agents or any
person, if any, who controls the Holders as aforesaid, and shall survive the
transfer of such Registrable Securities by each Holder.
10. Preparation; Reasonable Investigation. In connection with the
preparation and filing of a Registration Statement pursuant to the terms of this
Agreement:
(a) the Company shall, with respect to a Registration Statement filed
by the Company, give the Holders, the underwriter(s), if any, and their
respective counsel and accountants the opportunity to participate in the
preparation of such Registration Statement (other than reports and proxy
statements incorporated therein by reference and lawfully and properly filed
with the SEC) and each Prospectus included therein or filed with the SEC, and
each amendment thereof or supplement thereto; and
(b) the Company shall give the Holders, their underwriters, if any,
and their respective counsel and accountants reasonable access to its books and
records and opportunities to discuss the business of the Company with its
officers and the independent public accountants who have certified its financial
statements as shall be necessary, in the opinion of the Holders or such
underwriter(s), to conduct a reasonable investigation within the meaning of
Section ll(b)(3) of the Securities Act.
11. Rule 144. At all times during which the Company is subject to the
periodic reporting requirements of the Exchange Act, the Company covenants that
it will file, on a timely basis, the reports required to be filed by it under
the Securities Act and the Exchange Act and the rules and regulations adopted by
the SEC thereunder, and it will take such further action as the Holders may
reasonably request (including, without limitation, compliance with the current
public information requirements of Rule 144(c) and Rule 144A under the
Securities Act), all to the extent required from time to time to enable the
Holders to sell Registrable Securities without
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registration under the Securities Act within the limitation of the conditions
provided by: (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time; (b) Rule 144A under the Securities Act, as such Rule may be
amended from time to time; or (c) any similar rule or regulation hereafter
adopted by the SEC. Upon the request of any Holder, the Company will deliver to
such Holder a written statement verifying that it has complied with such
information requirements.
12. No Inconsistent Agreements. The Company will not enter into any
agreement offering registration rights of the nature set forth herein without
the consent of the holder(s) of the majority of the Registrable Securities held
by the Holders at such time, which consent may be withheld, in their sole
discretion; provided that the Company may grant demand and incidental
registration rights in the future to the Holders of Ordinary Shares on the
following basis (in which event the consent of the Holders will not be
required): (a) all cutbacks on incidental registrations shall be on a pro rata
basis with the Ordinary Shares held by the Holders and any other selling
shareholder exercising incidental registration rights (but only to the extent
that such pro rata basis applies to the number of Ordinary Shares still retained
at the time of such cutback); (b) an investor investing between $5,000,000 and
$10,000,000 shall be entitled to not more than one (1) demand registration right
and one F-3 Registration; (c) an investor investing between $10,000,000 and
$20,000,000 shall be entitled to not more than two (2) demand registration
rights and two F-3 Registrations; (d) an investor investing more than
$20,000,000 shall be entitled to not more than three (3) demand registration
rights and two (2) F-3 Registrations; and (e) holders of any registration rights
granted subsequent to the date hereof shall not exercise any such rights, except
incidental or registration rights, prior to the first anniversary of the closing
of the purchase of the Ordinary Shares as to which such registration rights were
granted.
13. Assignment of Rights. Each Holder may assign its respective rights
under the Agreement to: (a) any transferee of the Registrable Securities of such
Holder, if such transferee has executed this Agreement and agreed to be bound by
the terms hereof (it being understood, however, that the Holder effecting such
transfer shall retain all of its rights hereunder with respect to all
Registrable Securities not so transferred thereby); or (b) any shareholder,
subsidiary, partner, nominee or Affiliate of the Holder effecting such transfer
or any such transferee. The transferor shall, within twenty (20) days after such
transfer, furnish the Company with written notice of the name and address of
such transferee and the securities with respect to which such registration
rights are being assigned and a copy of this Agreement executed by the
Transferee.
14. Specific Performance. The Holders, in addition to being entitled to
exercise all rights provided herein or granted by law, including recovery of
damages, will be entitled to specific performance of their rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
15. Notices. All notices required or permitted under the terms of this
Agreement shall be delivered in the manner called for in the Purchase
Agreements.
16. Successors and Assigns. Subject to Section 13, this Agreement shall
inure to the benefit of the successors and permitted assigns of Holders, such
that the rights under this Agreement shall inure to the benefit of and be
binding upon such subsequent holders of Registrable Securities without the need
for an express assignment. This Agreement shall inure to the benefit of and be
binding upon the Company and any corporation resulting from any merger
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or consolidation of the Company with or into such corporation (in which the
Company is not the surviving corporation) or any corporation whose securities
are issued in exchange for Ordinary Shares.
17. Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
18. Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof and shall supersede any
prior understandings, agreements or representations, written or oral, by or
among the parties hereto.
19. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be original, and all of which together shall
constitute one instrument.
20. Amendment. Any provision of this Agreement may be amended, waived or
modified only by a writing signed by the Company and holders of a majority of
the Registrable Securities.
21. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. The parties hereby consent to
the sole and exclusive jurisdiction of any federal or state court in the State
of New York, City of New York.
[The remainder of the page is intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the day and year first above written.
PARADIGM GEOPHYSICAL LTD.
an Israeli corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President and CEO
SHAMROCK HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Name:
Title:
EASTGATE FUND L.P.
by Eastgate Management Corporation, its general
partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: HarrisKaplan
Title: President
EASTGATE INTERNATIONAL LIMITED, by Eastgate
Management Corporation, its Investment
Manager and Authorized Agent
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ EASTGATE GROWTH FUND, by
Eastgate Management Corporation, a
general partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
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