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EXHIBIT 2
REGISTRATION RIGHTS AGREEMENT
BETWEEN
PANJA INC.
AND
▇▇▇▇▇ ▇▇▇▇▇▇
DATED FEBRUARY 22, 2001
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TABLE OF CONTENTS
Article I Definitions.............................................................................................1
1.1 Definitions.............................................................................................1
1.2 Internal References.....................................................................................2
Article II Registration Rights....................................................................................3
2.1 Demand Registration.....................................................................................3
2.2 Piggyback Registration..................................................................................5
2.3 Shelf Registration......................................................................................6
Article III Registration Procedures...............................................................................8
3.1 Filings; Information....................................................................................8
3.2 Registration Expenses..................................................................................12
Article IV Indemnification and Contribution......................................................................12
4.1 Indemnification by the Company.........................................................................12
4.2 Indemnification by Selling Holders.....................................................................13
4.3 Conduct of Indemnification Proceedings.................................................................14
4.4 Contribution...........................................................................................14
Article V Miscellaneous..........................................................................................15
5.1 Participation in Underwritten Registrations............................................................15
5.2 Rule 144...............................................................................................16
5.3 Holdback Agreements....................................................................................16
5.4 Termination............................................................................................17
5.5 Amendments, Waivers, Etc...............................................................................17
5.6 Counterparts...........................................................................................17
5.7 Entire Agreement.......................................................................................17
5.8 Governing Law..........................................................................................17
5.9 Assignment of Registration Rights......................................................................17
5.10 Binding Effect.........................................................................................17
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REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as
of February 22, 2001, by and between Panja Inc., a Texas corporation (the
"Company"), and ▇▇▇▇▇ ▇▇▇▇▇▇, an individual residing in the State of Texas
("Investor").
WHEREAS, the Company and Investor entered into that certain
Subscription Agreement dated as of February 22, 2001 (the "Subscription
Agreement");
WHEREAS, the Subscription Agreement required that the parties
hereto execute and deliver this Agreement;
NOW THEREFORE, in consideration of the premises, mutual
promises and covenants contained in this Agreement and intending to be legally
bound, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS.
Unless otherwise indicated to the contrary, capitalized terms defined
in the Subscription Agreement are given the same meaning herein as therein
defined. In addition, the following terms, as used herein, have the following
meanings:
"Affiliate" or "Affiliates," as appropriate, has the same
meaning as set forth in Rule 144 (as hereinafter defined).
"Demand Registration" means a registration under the
Securities Act requested in accordance with Section 2.1.
"fair market value" as of any date means the average closing
price of the Common Stock, as reported by The Wall Street Journal for the
preceding five consecutive trading days on The Nasdaq Stock Market (or such
other exchange or quotation system on which such securities are then listed or
traded).
"Holder" or "Holders," as appropriate, means the Initial
Holder and any direct or indirect transferee of any Registrable Securities held
by any of such Persons.
"Initial Amount" on any particular date and with respect to
the Holders means the number of shares of Common Stock held by the Holder on the
date hereof.
"Initial Holder" means Investor.
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"Person" or "persons" means any individual, corporation,
partnership, limited liability company, joint venture, association, joint-stock
company, trust, unincorporated organization or other entity or government or
other agency or political subdivision thereof.
"Piggyback Registration" has the meaning set forth in Section
2.2.
"Registrable Securities" means (a) the shares of Common Stock
purchased pursuant to the Subscription Agreement, plus any additional shares of
Common Stock issued in respect thereof in connection with any stock split, stock
dividend or similar event with respect to the Common Stock, (b) any additional
shares of Common Stock held by the Initial Holder on the date hereof or later
acquired by any Holder, and (c) any securities of the Company or any successor
entity, including without limitation any parent entity of such successor, into
which Registrable Securities may hereafter be converted or changed. As to any
particular Registrable Securities, such securities shall cease to be Registrable
Securities when (i) a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of under such registration statement, (ii)
such securities shall have been transferred pursuant to Rule 144 (as hereinafter
defined), (iii) such securities shall have been otherwise transferred or
disposed of, and new certificates therefor not bearing a legend restricting
further transfer shall have been delivered by the Company, and subsequent
transfer or disposition of them shall not require their registration or
qualification under the Securities Act or any similar state law then in force,
(iv) such securities shall have ceased to be outstanding, or (v) with respect to
a Holder other than the Initial Holder, when such securities held by such Holder
constitute less than one percent of the outstanding shares of such class of
securities and such securities may be sold pursuant to Rule 144(k).
"Registration Expenses" has the meaning set forth in Section
3.2.
"Requesting Holders" means the Holders requesting a Demand
Registration, and shall include parties deemed "Requesting Holders" pursuant to
Section 2.1(a)(iii).
"Rule 144" means Rule 144 (or any successor rule of similar
effect) promulgated under the Securities Act.
"Selling Holder" means any Holder who is selling Registrable
Securities pursuant to a public offering registered hereunder.
"Shelf Registration" has the meaning set forth in Section
2.3(a).
"Underwriter" means a securities dealer who purchases any
Registrable Securities as principal and not as part of such dealer's
market-making activities.
1.2 INTERNAL REFERENCES.
Unless the context indicates otherwise, references to Articles,
Sections and paragraphs shall refer to the corresponding articles, sections and
paragraphs in this Agreement, and references to the parties shall mean the
parties to this Agreement.
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ARTICLE II
REGISTRATION RIGHTS
2.1 DEMAND REGISTRATION.
(a) REQUEST FOR REGISTRATION.
(i) After the Closing, Holders of a majority of the
Registrable Securities held by all of the Holders may make up to two
written requests for a Demand Registration of all or any part of the
Registrable Securities held by the Holders; provided that (A) each such
Demand Registration by the Holders must be in respect of Registrable
Securities with a fair market value of at least $3,000,000 on the date
such request is made or all of the Registrable Securities held by the
requesting Holders if the aggregate fair market value of all of such
Registrable Securities is less than $3,000,000 and (B) the Holders
shall not be entitled to a Demand Registration if, during the 120 days
preceding such request, the Holders had requested a Demand
Registration, unless the Company preempted such Demand Registration in
accordance with Section 2.1(e) or the Company postponed the filing
thereof in accordance with Section 3.1(a) and the requesting Holders
withdrew the request for such Demand Registration. Notwithstanding the
foregoing, the Holders shall not be entitled to make a Demand
Registration while the Initial Holder is either the chief executive
officer or a director of the Company.
(ii) Any request for a Demand Registration will specify the
aggregate number of shares of Registrable Securities proposed to be
sold by the Requesting Holders and will also specify the intended
method of disposition thereof. A registration will not count as a
Demand Registration until it has become effective. Should a Demand
Registration not become effective due to the failure of a Holder to
perform its obligations under this Agreement or the inability of the
Requesting Holders to reach agreement with the Underwriters for the
proposed sale on price or other customary terms for such transaction,
or in the event the Requesting Holders withdraw or do not pursue the
request for the Demand Registration (in each of the foregoing cases,
provided that at such time the Company is in compliance in all material
respects with its obligations under this Agreement), then, subject to
Section 2.1(b), such Demand Registration shall be deemed to have been
effected; provided that (i) if the Demand Registration does not become
effective because a material adverse change has occurred, or is
reasonably likely to occur, in the condition (financial or otherwise),
business, assets or results of operations of the Company and its
subsidiaries taken as a whole subsequent to the date of the written
request made by the Requesting Holders, (ii) if the Company withdraws
the Demand Registration for any reason or preempts the request for the
Demand Registration, (iii) if, after the Demand Registration has become
effective, an offering of Registrable Securities pursuant to a
registration is interfered with by any stop order, injunction, or other
order or requirement of the SEC or other governmental agency or court
or (iv) if the Demand Registration is withdrawn at the request of the
Requesting Holders pursuant to Section 2.1(f) or Section 3.1(a), then
the Demand Registration shall not be deemed to have been effected and
will not count as a Demand Registration.
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(iii) Upon receipt of any request for a Demand Registration by
holders of a majority of the Registrable Securities held by all of the
Holders, the Company shall promptly (but in any event within 10 days)
give written notice of such proposed Demand Registration to all other
Holders and all such Holders shall have the right, exercisable by
written notice to the Company within 20 days of their receipt of the
Company's notice, to elect to include in such Demand Registration such
portion of their Registrable Securities as they may request. All such
Holders requesting to have their Registrable Securities included in a
Demand Registration in accordance with the preceding sentence shall be
deemed to be "Requesting Holders" for purposes of this Section 2.1.
(b) In the event that the Requesting Holders withdraw or do not
pursue a request for a Demand Registration and, pursuant to Section 2.1(a)
hereof, such Demand Registration is deemed to have been effected, the Holders
may reacquire such Demand Registration (such that the withdrawal or failure to
pursue a request will not count as a Demand Registration hereunder) if the
Requesting Holders reimburse the Company for any and all Registration Expenses
incurred by the Company in connection with such request for a Demand
Registration that was withdrawn or not pursued.
(c) If the Requesting Holders so elect, they may cause the
offering of such Registrable Securities pursuant to such Demand Registration to
be in the form of a "firm commitment" underwritten offering. A majority in
interest of the Requesting Holders shall have the right to select the managing
Underwriters and any additional investment bankers and managers to be used in
connection with any offering under this Section 2.1, subject to the Company's
approval, which approval shall not be unreasonably withheld.
(d) The Requesting Holders will inform the Company of the time
and manner of any disposition of Registrable Securities; provided, however, that
the Holders' only right to a shelf registration statement shall be pursuant to
Section 2.3.
(e) The Company will have the right to preempt any Demand
Registration with a primary registration by delivering written notice (within
seven business days after the Company has received a request for such Demand
Registration) of such intention to the Requesting Holders indicating that the
Company has identified a business need and use for the proceeds of the sale of
such securities and had contemplated such sale of securities prior to receiving
the Requesting Holders' notice, and the Company shall use commercially
reasonable efforts to file a registration statement for a primary registration
within 30 days of such notice. In the ensuing primary registration, the Holders
will have such piggyback registration rights as are set forth in Section 2.2
hereof. Upon the Company's preemption of a requested Demand Registration, such
requested registration will not count as the Holders' Demand Registration. If
the Company thereafter decides to abandon its intention to pursue such sale of
securities, it shall give notice thereof to any preempted Holders within two
business days following the Company's decision. The Company may exercise the
right to preempt a Demand Registration only once in any 360-day period; provided
that during any 360-day period the Company shall use its best efforts to permit
a period of at least 180 consecutive days during which the Selling Holders may
effect a Demand Registration.
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(f) Securities to be sold for the account of any Person
(including the Company) other than a Requesting Holder shall not be included in
a Demand Registration if the managing Underwriter or Underwriters shall advise
the Company and the Requesting Holders in writing that the inclusion of such
securities will materially and adversely affect the price of the offering (a
"Material Adverse Effect"). Furthermore, in the event the managing Underwriter
or Underwriters shall advise the Company or the Requesting Holders that even
after exclusion of all securities of other Persons (including the Company)
pursuant to the immediately preceding sentence, the amount of Registrable
Securities proposed to be included in such Demand Registration by Requesting
Holders is sufficiently large to cause a Material Adverse Effect, the
Registrable Securities of the Requesting Holders to be included in such Demand
Registration shall equal the number of shares which the Company and the
Requesting Holders are so advised can be sold in such offering without a
Material Adverse Effect and such shares shall be allocated pro rata among the
Requesting Holders on the basis of the number of Registrable Securities
requested to be included in such registration by each such Requesting Holder;
provided, however, that if any Registrable Securities requested to be registered
pursuant to a Demand Registration under Section 2.1 are excluded from
registration hereunder, then the Holder(s) having shares excluded ("Excluded
Holders") shall have the right to withdraw all, or any part, of their shares
from such registration and if withdrawn in full such Demand Registration shall
not be deemed to have been effected on the withdrawing Holder's or Holders'
behalf and will not count as a Demand Registration for such withdrawing
Holder(s).
2.2 PIGGYBACK REGISTRATION.
(a) After the Closing, if the Company proposes to file a
registration statement under the Securities Act with respect to an offering of
Common Stock for its own account or for the account of another Person (other
than a registration statement on Form S-4 or S-8 (or any substitute form or
rule, respectively, that may be adopted by the SEC)), the Company shall give
written notice of such proposed filing to the Holders at the address set forth
in the share register of the Company as soon as reasonably practicable (but in
no event less than 15 days before the anticipated filing date), undertaking to
provide each Holder the opportunity to register on the same terms and conditions
such number of shares of Registrable Securities as such Holder may request (a
"Piggyback Registration"). Each Holder will have seven business days after
receipt of any such notice to notify the Company as to whether it wishes to
participate in a Piggyback Registration (which notice shall not be deemed to be
a request for a Demand Registration); provided that should a Holder fail to
provide timely notice to the Company, such Holder will forfeit any rights to
participate in the Piggyback Registration with respect to such proposed
offering. If the Company or the Person for whose account such offering is being
made shall determine in its sole discretion not to register or to delay the
proposed offering, the Company may, at its election, provide written notice of
such determination to the Holders and (i) in the case of a determination not to
effect the proposed offering, shall thereupon be relieved of the obligation to
register such Registrable Securities in connection therewith, and (ii) in the
case of a determination to delay a proposed offering, shall thereupon be
permitted to delay registering such Registrable Securities for the same period
as the delay in respect of the proposed offering. As between the Company or any
other Person for whose account any such offering is being made, on one hand, and
the Selling Holders, on the other hand, the Company or such other Person, as the
case may be, shall be entitled to select the Underwriters in connection with any
Piggyback Registration.
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(b) If the Registrable Securities requested to be included in the
Piggyback Registration by any Holder differ from the type of securities proposed
to be registered by the Company and the managing Underwriter advises the Company
that due to such differences the inclusion of such Registrable Securities would
cause a Material Adverse Effect, then (i) the number of such Holders'
Registrable Securities to be included in the Piggyback Registration shall be
reduced to an amount which, in the opinion of the managing Underwriter, would
eliminate such Material Adverse Effect or (ii) if no such reduction would, in
the opinion of the managing Underwriter, eliminate such Material Adverse Effect,
then the Company shall have the right to exclude all such Registrable Securities
from such Piggyback Registration, provided that no other securities of such type
are included and offered for the account of any other Person in such Piggyback
Registration. Any partial reduction in number of Registrable Securities of any
Holder to be included in the Piggyback Registration pursuant to clause (i) of
the immediately preceding sentence shall be effected pro rata based on the ratio
which such Holder's requested shares bears to the total number of shares
requested to be included in such Piggyback Registration by all Persons other
than the Company who have the contractual right to request that their shares be
included in such registration statement and who have requested that their shares
be included. If the Registrable Securities requested to be included in the
registration statement are of the same type as the securities being registered
by the Company (whether such registration is initiated by the Company or another
security holder) and the managing Underwriter advises the Company that the
inclusion of such Registrable Securities would cause a Material Adverse Effect,
the Company will be obligated to include in such registration statement, as to
each Holder and any other Person or Persons having a contractual right to
request their shares be included in such registration only a portion of the
shares such Holder and such other Person or Persons have requested be registered
equal to the ratio which each such Holder's and such other Person's requested
shares bears to the total number of shares requested to be included in such
registration statement by all Holders and such other Person or Persons (other
than the Person or Persons initiating such registration request) having a
contractual right to request that their shares be included in such registration
statement and who have requested their shares be included. If the Company
initiated the registration, then the Company may include all of its securities
in such registration statement before any such Holder's requested shares are
included. If another security holder initiated the registration, then such
initiating security holder may include all of its securities in such
registration statement before any such Holder's requested shares are included
and the Company may not include any of its securities in such registration
statement unless all Registrable Securities requested to be included in the
registration statement by all Holders are included in such registration
statement. If as a result of the provisions of this Section 2.2(b) any Holder
shall not be entitled to include all Registrable Securities in a registration
that such Holder has requested to be so included, such Holder may withdraw such
Holder's request to include Registrable Securities in such registration
statement prior to its effectiveness. Notwithstanding the foregoing, the Holders
acknowledge that their rights under this Section 2.2 are subordinate to the
rights of Intel pursuant to Section 7(b)(iii) of the Intel Agreement.
2.3 SHELF REGISTRATION.
(a) Holders of a majority of the Registrable Securities held by
all of the Holders ("Majority Holders") may, beginning 90 days after the
Closing, make a written request that the Company effect a shelf registration of
all or any portion of the Registrable Securities held by the Holders (the "Shelf
Registration") pursuant to Rule 415. Upon receipt of a request for the Shelf
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Registration, the Company shall promptly (but in any event within ten business
days) give written notice of the proposed Shelf Registration to all other
Holders, and all such Holders (including their future direct and indirect
transferees to the extent permitted by the SEC) shall have the right to include
Registrable Securities in the Shelf Registration. In the event Form S-3 (or a
comparable successor form) is not available to the Company, then the Company
shall not be required to effect such Shelf Registration. The Company shall use
commercially reasonable efforts to file as promptly as practicable (but in no
event more than 45 days after the time such obligation to file arises) with the
SEC, and thereafter shall use commercially reasonable efforts to cause to be
declared effective within 180 days after the filing thereof, a shelf
registration statement on an appropriate form under the Securities Act covering
all Registrable Securities with respect to which the Company has received
written requests from Holders for inclusion therein within 30 days after
delivery to the Holders of the Company's notice. Each such Holder's request
shall specify the number of Registrable Securities to be registered and the
intended method of disposition. Notwithstanding the foregoing, the Holders shall
not be entitled to require a Shelf Registration while the Initial Holder is
either the chief executive officer or a director of the Company.
(b) The Company shall use commercially reasonable efforts to keep
the Shelf Registration continuously effective for a period terminating the
earliest of (i) the second anniversary of the date on which the SEC declares the
Shelf Registration effective, (ii) the first anniversary of the date on which
the Initial Holder ceases to be an Affiliate, or (iii) the date on which there
are no longer any Registrable Securities covered by the Shelf Registration.
(c) The Company further agrees to supplement or make amendments
to the Shelf Registration, if required by the rules, regulations or instructions
applicable to the registration form utilized by the Company or by the Securities
Act or requested by the holders of a majority of the Registrable Securities
covered by such registration or any underwriter of the Registrable Securities.
(d) The Holders' rights to require a Shelf Registration shall
include the right to require one underwritten offering off the Shelf
Registration statement (a "take-down") plus an additional number of take-downs
equal to the number of unused Demand Registrations then remaining (as provided
in Section 2.2(a)(i)); provided that any such takedown shall be in respect of
Registrable Securities having a fair market value of at least $3,000,000 on the
date such request is made. Any Holder having Registrable Securities representing
at least a majority of the Registrable Securities included in an effective
registration statement pursuant to a Shelf Registration may request an
underwritten take-down, and the Company shall be obligated to give notice and
opportunity to participate in the take-down to the other Holders having
Registrable Securities included in the Shelf Registration, in accordance with
the same procedures, limitations and allocations applicable to a Demand
Registration (with such changes in those procedures, limitations and allocations
as are necessary to reflect that it is a take-down). No Holder may request a
take-down for a number of such Holder's Registrable Securities that exceeds the
number of that Holder's Registrable Securities already included in the effective
Shelf Registration. No other securities of the Company may be included in an
effective registration statement pursuant to a Shelf Registration other than the
Registrable Securities.
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ARTICLE III
REGISTRATION PROCEDURES
3.1 FILINGS; INFORMATION.
In connection with the registration of Registrable Securities pursuant
to Section 2.1, Section 2.2 and Section 2.3 hereof, the Company will use
commercially reasonable efforts to effect the registration of such Registrable
Securities as promptly as is reasonably practicable, and in connection with any
such request:
(a) The Company will expeditiously prepare and file with the SEC
a registration statement on any form for which the Company then qualifies and
which counsel for the Company shall deem appropriate and available for the sale
of the Registrable Securities to be registered thereunder in accordance with the
intended method of distribution thereof, and use commercially reasonable efforts
to cause such filed registration statement to become and remain effective (i)
with respect to any Demand Registration or Piggyback Registration, for such
period, not to exceed 90 days, as may be reasonably necessary to effect the sale
of such securities, (ii) with respect to a Shelf Registration, until the
earliest of (A) the second anniversary of the date on which the SEC declares the
Shelf Registration effective, (B) the first anniversary of the date on which the
Initial Holder ceases to be an Affiliate, or (C) the date on which there are no
longer any Registrable Securities covered by the Shelf Registration; provided
that if the Company shall furnish to the Selling Holder a certificate signed by
the Company's Chairman, President or any Executive Vice-President or
Vice-President stating that the Company's Board of Directors has determined in
good faith that it would be detrimental or otherwise disadvantageous to the
Company or its stockholders for such a registration statement to be filed as
expeditiously as possible because the sale of Registrable Securities covered by
such registration statement or the disclosure of information in any related
prospectus or prospectus supplement would materially interfere with any
acquisition, financing or other material event or transaction which is then
intended or the public disclosure of which at the time would be materially
prejudicial to the Company, the Company may postpone the filing or effectiveness
of a registration statement for a period of not more than 120 days; provided
that during any 360-day period the Company shall use commercially reasonable
efforts to permit a period of at least 180 consecutive days during which the
Company will make a registration statement available under this Agreement; and
provided further that if (i) the effective date of any registration statement
filed pursuant to a Demand Registration would otherwise be at least 45 calendar
days, but fewer than 90 calendar days, after the end of the Company's fiscal
year, and (ii) the Securities Act requires the Company to include audited
financials as of the end of such fiscal year, the Company may delay the
effectiveness of such registration statement for such period as is reasonably
necessary to include therein its audited financial statements for such fiscal
year. If the Company exercises its right to postpone the filing or effectiveness
of a registration statement, the applicable Requesting Holders shall be entitled
to withdraw their request for such Demand Registration and it shall not count as
a Demand Registration.
(b) Anything in this Agreement to the contrary notwithstanding,
it is understood and agreed that the Company shall not be required to keep any
shelf registration effective or useable for offers and sales of the Registrable
Securities, file a post effective amendment to a
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shelf registration statement or prospectus supplement or to supplement or amend
any registration statement, if the Company is then involved in discussions
concerning, or otherwise engaged in, any material financing or investment,
acquisition or divestiture transaction or other material business purpose if the
Company determines in good faith that the making of such a filing, supplement or
amendment at such time would interfere with such transaction or purpose;
provided that under no circumstances may such postponement exceed 90 days from
the date on which the Company notifies the Holders of such postponement, as
provided hereafter. The Company shall promptly give the Holders of Registrable
Securities written notice of such postponement containing a general statement of
the reasons for such postponement and an approximation of the anticipated delay.
Upon receipt by a Holder of Registrable Securities of notice of an event of the
kind described in this Section 3.1(b), such Holder shall forthwith discontinue
such Holder's disposition of Registrable Securities until such Holder's receipt
of notice from the Company that such disposition may continue and of any
supplemented or amended prospectus indicated in such notice. The Company shall
use commercially reasonable efforts to permit sales of Registrable Securities on
such shelf registration statement for at least 180 days during any 360-day
period. In the event the Company shall give notice of an event of the kind
described in this Section 3.1(b), the Company shall extend the period during
which the applicable registration statement shall be maintained effective as
provided in Section 3.1(a) hereof by the number of days during the period from
and including the date of the giving of such notice to the date when the Company
shall give notice to the Selling Holders that such dispositions of such
Registrable Securities may continue and shall have made available to the Selling
Holders any such supplemented or amended prospectus.
(c) The Company will, if requested, prior to filing such
registration statement or any amendment or supplement thereto, furnish to the
Selling Holders, and each applicable managing Underwriter, if any, copies
thereof, and thereafter furnish to the Selling Holders and each such
Underwriter, if any, such number of copies of such registration statement,
amendment and supplement thereto (in each case including all exhibits thereto
and documents incorporated by reference therein) and the prospectus included in
such registration statement (including each preliminary prospectus) as the
Selling Holders or each such Underwriter may reasonably request in order to
facilitate the sale of the Registrable Securities by the Selling Holders.
(d) After the filing of the registration statement, the Company
will promptly notify the Selling Holders of any stop order issued or, to the
Company's knowledge, threatened to be issued by the SEC and take all reasonable
actions required to prevent the entry of such stop order or to remove it if
entered.
(e) In addition to the requirements imposed on the Company
elsewhere herein, the Company will use commercially reasonable efforts to
qualify the Registrable Securities for offer and sale under such other
securities or blue sky laws of such jurisdictions in the United States as the
Selling Holders reasonably request; keep each such registration or qualification
(or exemption therefrom) effective during the period in which such registration
statement is required to be kept effective; and do any and all other acts and
things which may be reasonably necessary or advisable to enable each Selling
Holder to consummate the disposition of the Registrable Securities owned by such
Selling Holder in such jurisdictions; provided that the Company will not be
required to (i) qualify generally to do business in any jurisdiction where it
would not
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otherwise be required to qualify but for this Section 3.1(e), (ii) subject
itself to taxation in any such jurisdiction or (iii) consent to general service
of process in any such jurisdiction.
(f) The Company will as promptly as is practicable notify the
Selling Holders, at any time when a prospectus relating to the sale of the
Registrable Securities is required by law to be delivered in connection with
sales by an Underwriter or dealer, of the occurrence of any event requiring the
preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading and promptly make available to the Selling Holders and to
the Underwriters any such supplement or amendment. Upon receipt of any notice of
the occurrence of any event of the kind described in the preceding sentence,
Selling Holders will forthwith discontinue the offer and sale of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until receipt by the Selling Holders and the Underwriters of the
copies of such supplemented or amended prospectus and, if so directed by the
Company, the Selling Holders will deliver to the Company all copies, other than
permanent file copies then in the possession of Selling Holders, of the most
recent prospectus covering such Registrable Securities at the time of receipt of
such notice. In the event the Company shall give such notice, the Company shall
extend the period during which such registration statement shall be maintained
effective as provided in Section 3.1(a) hereof by the number of days during the
period from and including the date of the giving of such notice to the date when
the Company shall make available to the Selling Holders such supplemented or
amended prospectus. Furthermore, in the event the Company shall give such
notice, the Company shall, as promptly as is practical, prepare a supplement or
post-effective amendment to the registration statement or a supplement to the
related prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered to the purchasers of the Registrable Securities being sold
thereunder, such prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
(g) The Company will enter into customary agreements (including
an underwriting agreement in customary form) and take such other actions
(including, without limitation, participation in investor conference calls) as
are required in order to expedite or facilitate the sale of such Registrable
Securities.
(h) At the request of any Underwriter in connection with an
underwritten offering the Company will furnish (i) an opinion of counsel,
addressed to the Underwriters, covering such customary matters as the managing
Underwriter may reasonably request and (ii) a comfort letter or comfort letters
from the Company's independent public accountants covering such customary
matters as the managing Underwriter may reasonably request.
(i) If requested by the managing Underwriter or any Selling
Holder, the Company shall promptly incorporate in a prospectus supplement or
post effective amendment such information as the managing Underwriter or any
Selling Holder reasonably requests to be included therein, including without
limitation, with respect to the Registrable Securities being
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sold by such Selling Holder, the purchase price being paid therefor by the
Underwriters and with respect to any other terms of the underwritten offering of
the Registrable Securities to be sold in such offering, and promptly make all
required filings of such prospectus supplement or post effective amendment.
(j) The Company shall promptly make available for inspection by
any Selling Holder or Underwriter participating in any disposition pursuant to
any registration statement, and any attorney, accountant or other agent or
representative retained by any such Selling Holder or Underwriter (collectively,
the "Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records"), as shall
be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information requested by any such Inspector in connection with such
registration statement; provided, however, that unless the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in the
registration statement or the release of such Records is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction, the Company
shall not be required to provide any information under this subparagraph (j) if
(A) the Company believes, after consultation with counsel for the Company, that
to do so would cause the Company to forfeit an attorney-client privilege that
was applicable to such information or (B) if either (1) the Company has
requested and been granted from the SEC confidential treatment of such
information contained in any filing with the SEC or documents provided
supplementally or otherwise or (2) the Company reasonably determines in good
faith that such Records are confidential and so notifies the Inspectors in
writing unless prior to furnishing any such information with respect to (A) or
(B) such Holder of Registrable Securities requesting such information agrees to
enter into a confidentiality agreement in customary form and subject to
customary exceptions; provided further, however, that each Holder of Registrable
Securities agrees that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the Company and
allow the Company, at its expense, to undertake appropriate action and to
prevent disclosure of the Records deemed confidential.
(k) The Company shall cause the Registrable Securities included
in any registration statement to be (A) listed on each securities exchange, if
any, on which similar securities issued by the Company are then listed, or (B)
authorized to be quoted and/or listed (to the extent applicable) on the Nasdaq
National Market if the Registrable Securities so qualify.
(l) The Company shall provide a CUSIP number for the Registrable
Securities included in any registration statement not later than the effective
date of such registration statement.
(m) The Company shall cooperate with each Selling Holder and each
Underwriter participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc.
(n) The Company shall participate in any financial roadshow
organized for purposes of publicizing the sale or other disposition of the
Registrable Securities. Such participation shall include, but not be limited to,
dispatch by the Company of personnel to assist
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in each presentation made during the roadshow, and provision of Company data
needed for purposes of the roadshow.
(o) The Company shall, during the period when the prospectus is
required to be delivered under the Securities Act, promptly file all documents
required to be filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act.
(p) The Company will make generally available to its security
holders, as soon as reasonably practicable, an earnings statement covering a
period of twelve months, beginning within three months after the effective date
of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and the rules and regulations
of the SEC thereunder.
The Company may require Selling Holders promptly to furnish in writing
to the Company such information regarding such Selling Holders, the plan of
distribution of the Registrable Securities and other information as the Company
may from time to time reasonably request or as may be legally required in
connection with such registration.
3.2 REGISTRATION EXPENSES.
In connection with any Registration effected hereunder, the Company
shall pay all expenses incurred in connection with such registration (the
"Registration Expenses"), including without limitation: (i) registration and
filing fees with the SEC and the National Association of Securities Dealers,
Inc., (ii) all fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with blue
sky qualifications of the Registrable Securities), (iii) printing expenses,
messenger and delivery expenses, (iv) fees and expenses incurred in connection
with the listing or quotation of the Registrable Securities, (v) fees and
expenses of counsel to the Company and the reasonable fees and expenses of
independent certified public accountants for the Company (including fees and
expenses associated with the special audits or the delivery of comfort letters
together with the reasonable fees and expenses of one special legal counsel for
all Selling Holders), (vi) the reasonable fees and expenses of any additional
experts retained by the Company in connection with such registration, (vii) all
roadshow costs and expenses not paid by the Underwriters, and (viii) the fees
and expenses of other persons retained by the Company will be borne by the
Company, whether or not any registration statement becomes effective; provided
that in no event shall Registration Expenses include any underwriting discounts
or commissions or transfer taxes or the fees and expenses of more than one
counsel for the Selling Holders.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
4.1 INDEMNIFICATION BY THE COMPANY.
The Company agrees to indemnify and hold harmless each Selling Holder
and its Affiliates and their respective officers, directors, partners,
stockholders, members, employees, agents and representatives and each Person (if
any) which controls a Selling Holder within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act, from and
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against any and all losses, claims, damages, liabilities, costs and expenses
(including reasonable attorneys' fees) caused by, arising out of, resulting from
or related to any untrue statement or alleged untrue statement of a material
fact contained or incorporated by reference in any registration statement or
prospectus relating to the Registrable Securities (as amended or supplemented if
the Company shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by or based upon any information furnished in
writing to the Company by or on behalf of such Selling Holder expressly for use
therein or by the Selling Holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished the Selling Holder with copies of the same; provided,
however, that the Company shall have no obligation to indemnify under this
sentence to the extent any such losses, claims, damages or liabilities have been
finally and non-appealably determined by a court to have resulted from such
Selling Holder's willful misconduct or gross negligence. The Company also agrees
to indemnify any Underwriters of the Registrable Securities, their officers and
directors and each person who controls such Underwriters on substantially the
same basis as that of the indemnification of the Selling Holders provided in
this Section 4.1, except insofar as such losses, claims, damages or liabilities
are caused by or based upon any information furnished in writing to the Company
by or on behalf of such Underwriter expressly for use therein or by the
Underwriter's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company has
furnished the Underwriter with copies of the same; provided, however, that the
Company shall have no obligation to indemnify under this sentence to the extent
any such losses, claims, damages or liabilities have been finally and
non-appealably determined by a court to have resulted from any such
Underwriter's willful misconduct or gross negligence.
4.2 INDEMNIFICATION BY SELLING HOLDERS.
Each Selling Holder agrees to indemnify and hold harmless the Company,
its officers and directors, and each Person, if any, which controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the Company
to each Selling Holder, but only with respect to claims arising from (i)
information furnished in writing by or on behalf of such Selling Holder
expressly for use in any registration statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto, or any
preliminary prospectus; (ii) any failure by such Selling Holder to deliver a
copy of a registration statement or prospectus or any amendment or supplement
thereto as required by the Securities Act or the rules or regulations
thereunder; or (iii) any failure by such Selling Holder to stop using the
registration statement or prospectus or any amendment or supplement thereto
after receipt of written notice from the Company to stop. Each Selling Holder
also agrees to indemnify and hold harmless any Underwriters of the Registrable
Securities, their officers and directors and each person who controls such
Underwriters on substantially the same basis as that of the indemnification of
the Company provided in this Section 4.2, but only with reference to information
furnished in writing by or on behalf of such Selling Holder expressly for use in
any registration statement or prospectus relating to the Registrable Securities,
or any amendment or supplement thereto, or any preliminary prospectus. Each such
Selling Holder's liability under this Section 4.2 shall be
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limited to an amount equal to the net proceeds (after deducting the underwriting
discount and expenses) received by such Selling Holder from the sale of such
Registrable Securities by such Selling Holder. The obligation of each Selling
Holder shall be several and not joint.
4.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS.
In case any proceeding (including any governmental investigation) shall
be instituted involving any Person in respect of which indemnity may be sought
pursuant to Section 4.1 or Section 4.2, such Person (the "Indemnified Party")
shall promptly notify the Person against whom such indemnity may be sought (the
"Indemnifying Party") in writing and the Indemnifying Party, upon the request of
the Indemnified Party, shall retain counsel reasonably satisfactory to such
Indemnified Party to represent such Indemnified Party and any others the
Indemnifying Party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the Indemnified Party and the Indemnifying Party and, in the written
opinion of counsel for the Indemnified Party, representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying Party shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
of attorneys (in addition to any local counsel) at any time for all such
Indemnified Parties, and that all such fees and expenses shall be reimbursed as
they are incurred. In the case of any such separate firm for the Indemnified
Parties, such firm shall be designated in writing by the Indemnified Parties.
The Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent (not to
be unreasonably withheld), or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment.
4.4 CONTRIBUTION.
If the indemnification provided for in this Article IV is unavailable
to an Indemnified Party in respect of any losses, claims, damages or liabilities
in respect of which indemnity is to be provided hereunder, then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall to the
fullest extent permitted by law contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities in
such proportion as is appropriate to reflect the relative fault of such party in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company, a Selling Holder and the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
such party and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
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The Company and each Selling Holder agrees that it would not be just
and equitable if contribution pursuant to this Section 4.4 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Article IV, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and each Selling
Holder shall not be required to contribute any amount in excess of the amount by
which the net proceeds of the offering (before deducting expenses) received by
such Selling Holder exceeds the amount of any damages which such Selling Holder
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
ARTICLE V
MISCELLANEOUS
5.1 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
No Person may participate in any underwritten registered offering
contemplated hereunder unless such Person (a) agrees to sell its securities on
the basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements, (b) completes and executes all
questionnaires, powers of attorney, custody arrangements, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements and this Agreement and (c) furnishes in
writing to the Company such information regarding such Person, the plan of
distribution of the Registrable Securities and other information as the Company
may from time to time request or as may be legally required in connection with
such registration; provided, however, that no such Person shall be required to
make any representations or warranties in connection with any such registration
other than representations and warranties as to (i) such Person's ownership of
his or its Registrable Securities to be sold or transferred free and clear of
all liens, claims and encumbrances, (ii) such Person's power and authority to
effect such transfer and (iii) such matters pertaining to compliance with
securities laws as may be reasonably requested; provided further, however, that
the obligation of such Person to indemnify pursuant to any such underwriting
agreements shall be several, not joint and several, among such Persons selling
Registrable Securities, and the liability of each such Person will be in
proportion to, and provided further that such liability will be limited to, the
net amount received by such Person from the sale of such Person's Registrable
Securities pursuant to such registration.
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5.2 RULE 144.
The Company covenants that it will file any reports required to be
filed by it under the Securities Act and the Exchange Act and that it will take
such further action as the Holders may reasonably request to the extent required
from time to time to enable the Holders to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 under the Securities Act, as such Rule may be amended from
time to time, or 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 as to whether it has complied with such reporting
requirements.
5.3 HOLDBACK AGREEMENTS.
(a) The Holders. Each Holder, for so long as he or it
individually owns Registrable Securities representing 10 percent or more of the
voting power of the outstanding voting securities of the Company, agrees, in the
event of an underwritten offering by the Company (whether for the account of the
Company or otherwise) not to offer, sell, contract to sell or otherwise dispose
of any Registrable Securities, or any securities convertible into or
exchangeable or exercisable for such securities, including any sale pursuant to
Rule 144 under the Securities Act (except as part of such underwritten
offering), during the 14 days prior to, and during the 90-day period (or such
lesser period as the lead or managing underwriters may require) beginning on,
the effective date of the registration statement for such underwritten offering
(or, in the case of an offering pursuant to an effective shelf registration
statement pursuant to Rule 415, the pricing date for such underwritten
offering), provided that in connection with such underwritten offering each
officer and director of the Company and holder of 10 percent or more of the
Common Stock is subject to restrictions substantially equivalent to those
imposed on the Holders.
(b) Restrictions on Public Sale by the Company. The Company
agrees that upon receipt of a request from the managing Underwriters in an
underwritten offering of Registrable Securities covered by a registration
statement filed pursuant to a Demand Registration or a take-down, not to effect
any public or private sale or distribution of its equity securities (except as
part of such underwritten offering), including a sale pursuant to Regulation D
under the Securities Act, during the period beginning 14 days prior to, and
ending 90 days (or such lesser period as the lead or managing underwriters may
require) after, the effective date of such underwritten offering or in the case
of such an underwritten offering pursuant to an effective Shelf Registration
statement pursuant to Rule 415, the pricing date of such underwritten offering,
(except (w) on Form S-8 or any successor form to such Form, (x) upon the
exercise of any warrants, options or other securities exercisable or convertible
into Common Stock outstanding on the date hereof or (y) the grant or exercise of
options to employees of the Company pursuant to any duly adopted employee stock
option plan); provided, however, that such period shall be extended by the
number of days from and including the date of the giving of any notice pursuant
to Section 3.1(f) hereof to and including the date when each seller of
Registrable Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
Section 3.1(f) hereof, provided that, in connection with such underwritten
offering each Holder agrees to restrictions substantially equivalent to those
imposed on the Company.
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5.4 TERMINATION.
The registration rights granted under this Agreement will terminate
upon the earliest of (i) such time as there shall no longer be any Registrable
Securities, (ii) the termination of the Subscription Agreement by reason of a
breach thereof by the Initial Holder, or (iii) five years after such time as the
Initial Holder ceases to be either the chief executive officer or a director of
the Company.
5.5 AMENDMENTS, WAIVERS, ETC.
This Agreement may not be amended, waived or otherwise modified or
terminated except by an instrument in writing signed by the Company and the
Holders of at least a majority of the Registrable Securities then held by all
the Holders, if the amendment is to be effective against the Holders.
5.6 COUNTERPARTS.
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement. Each party need not sign
the same counterpart.
5.7 ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof. Effective as of the Closing, the
Initial Holder hereby waives any and all rights that he has under that certain
Registration Rights Agreement dated March 30, 1995, as amended, by and among the
Company and the signatories thereto.
5.8 GOVERNING LAW.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Texas regardless of the laws that might otherwise
govern under applicable principles of conflicts of law thereof.
5.9 ASSIGNMENT OF REGISTRATION RIGHTS.
Each Holder of the Registrable Securities may assign all or any part of
its rights under this Agreement to any person to whom such Holder sells,
transfers, assigns or pledges such Registrable Securities. In the event that the
Holder shall assign its rights pursuant to this Agreement in connection with the
transfer of less than all its Registrable Securities, the Holder shall also
retain its rights with respect to its remaining Registrable Securities.
5.10 BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of the
Company and any successor organization which shall succeed to substantially all
of the business and property of the Company, whether by merger, consolidation,
acquisition of all or substantially all of the assets of the Company or
otherwise, including by operation of law ("Successor"). The Company hereby
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covenants and agrees that it shall cause any Successor to adopt and assume this
Agreement. If a parent entity of the Company or its Successor becomes the issuer
of the Registrable Securities, then the Company or such Successor shall cause
such parent entity to adopt and assume this Agreement to the same extent as if
the parent entity were the Company or such Successor.
* * * * *
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IN WITNESS WHEREOF, the Company and Investor have caused this Agreement
to be signed on its behalf by its officer thereunto duly authorized as of the
date first written above.
PANJA INC.
By:
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Name:
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Title:
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