1
Exhibit 10.5
REGISTRATION RIGHTS AGREEMENT
by and between
THE CIT GROUP, INC.
and
THE DAI-ICHI KANGYO BANK, LIMITED
Dated as of November __, 1997
2
TABLE OF CONTENTS
Page
----
1. DEFINITIONS.......................................................1
2. REGISTRATION UNDER THE SECURITIES ACT..............................5
2.1 DEMAND REGISTRATION...........................................5
2.2 INCIDENTAL REGISTRATION.......................................8
2.3 SHELF REGISTRATION...........................................10
2.4 EXPENSES.....................................................11
2.5 UNDERWRITTEN OFFERINGS.......................................11
2.6 CONVERSIONS; EXERCISES......................................12
2.7 POSTPONEMENTS................................................12
3. HOLDBACK ARRANGEMENTS.............................................13
3.1 RESTRICTIONS ON SALE BY HOLDERS OF REGISTRABLE SECURITIES....13
3.2 RESTRICTIONS ON SALE BY THE COMPANY AND OTHERS...............13
4. REGISTRATION PROCEDURES...........................................14
4.1 OBLIGATIONS OF THE COMPANY...................................14
4.2 SELLER INFORMATION...........................................18
4.3 NOTICE TO DISCONTINUE........................................19
5. INDEMNIFICATION; CONTRIBUTION.....................................19
5.1 INDEMNIFICATION BY THE COMPANY...............................19
5.2 INDEMNIFICATION BY HOLDERS...................................20
5.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS.......................21
5.4 CONTRIBUTION.................................................22
5.5 OTHER INDEMNIFICATION........................................22
5.6 INDEMNIFICATION PAYMENTS.....................................23
6. GENERAL...........................................................23
6.1 REGISTRATION RIGHTS TO OTHERS................................23
6.2 AVAILABILITY OF INFORMATION; RULE 144; RULE 144A;
OTHER EXEMPTIONS ...........................................23
6.3 AMENDMENTS AND WAIVERS.......................................23
6.4 NOTICES......................................................24
6.5 SUCCESSORS AND ASSIGNS.......................................25
6.6 COUNTERPARTS.................................................25
6.7 DESCRIPTIVE HEADINGS, ETC....................................26
6.8 SEVERABILITY.................................................26
6.09 GOVERNING LAW...............................................26
6.10 REMEDIES; SPECIFIC PERFORMANCE..............................26
6.11 ENTIRE AGREEMENT............................................27
6.12 NOMINEES FOR BENEFICIAL OWNERS..............................27
6.13 CONSENT TO JURISDICTION.....................................28
6.14 FURTHER ASSURANCES..........................................28
6.15 NO INCONSISTENT AGREEMENTS.................................28
6.16 CONSTRUCTION................................................28
3
REGISTRATION RIGHTS AGREEMENT (this or the "Agreement") dated as of
November __, 1997, by and between The CIT Group, Inc. a Delaware corporation
(the "Company") and The Dai-Ichi Kangyo Bank, Limited, a Japanese banking
corporation (the "Initial Holder").
W I T N E S S E T H :
WHEREAS, the Initial Holder owns all of the outstanding shares of
Class B Common Stock of the Company; and
WHEREAS, the Board of Directors of the Company has determined that
it is in the best interest of the Company to provide the Initial Holder with
certain registration rights upon the terms and subject to the conditions set
forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, and for other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall have
the following meanings:
"Affiliate" shall mean (i) with respect to any Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person, and (ii) with respect to any
individual, shall also mean the spouse, sibling, child, step-child, grandchild,
niece, nephew or parent of such Person, or the spouse of any thereof.
"Blackout Period" shall have the meaning set forth in Section 2.7.
"Class A Common Stock" shall mean the Class A Common Stock of the
Company, par value $.01 per share (and any other securities issued in respect
thereof or in exchange therefor).
"Class B Common Stock" shall mean the Class B Common Stock of the
Company, par value $.01 per share (and any other securities issued in respect
thereof or in exchange therefor).
"Common Stock" means, together, the Class A Common Stock and the
Class B Common Stock.
"Demand Registration" shall mean a registration required to be
effected by the Company pursuant to Section 2.1.
"Demand Registration Statement" shall mean a registration statement
of the Company which covers the Registrable Securities requested to be included
therein
4
pursuant to the provisions of Section 2.1 and all amendments and supplements to
such registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference (or deemed to be incorporated by reference)
therein.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations thereunder, or any
similar or successor statute.
"Holders" shall mean the Initial Holder for so long as it owns any
Registrable Securities and such of its successors and permitted assigns
(including any Permitted Transferees of Registrable Securities) who acquire or
are otherwise the transferee of Registrable Securities, directly or indirectly,
from such Initial Holder (or any subsequent Holder), for so long as such
successors and permitted assigns own any Registrable Securities. For purposes of
this Agreement, a Person will be deemed to be a Holder whenever such Person
holds an option to purchase, or a security convertible into or exercisable or
exchangeable for, Registrable Securities, whether or not such purchase,
conversion, exercise or exchange has actually been effected and disregarding any
legal restrictions upon the exercise of such rights. Registrable Securities
issuable upon exercise of an option or upon conversion, exchange or exercise of
another security shall be deemed outstanding for the purposes of this Agreement.
"Holders' Counsel" shall mean one firm of counsel (per registration)
to the Holders of Registrable Securities participating in such registration,
which counsel shall be selected (i) in the case of a Demand Registration, by the
Initiating Holders holding a majority of the Registrable Securities for which
registration was requested in the Request, and (ii) in all other cases, by the
Majority Holders of the Registration.
"Incidental Registration" shall mean a registration required to be
effected by the Company pursuant to Section 2.2.
"Incidental Registration Statement" shall mean a registration
statement of the Company which covers the Registrable Securities requested to be
included therein pursuant to the provisions of Section 2.2 and all amendments
and supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference (or deemed to be
incorporated by reference) therein.
"Initial Holder" shall have the meaning set forth in the preamble
hereto.
"Initiating Holders" shall mean, with respect to a particular
registration, the Holders who initiated the Request for such registration.
"Inspectors" shall have the meaning set forth in Section 4.1(g).
"Majority Holders" shall mean one or more Holders of Registrable
Securities who hold a majority of the Registrable Securities then outstanding.
-2-
5
"Majority Holders of the Registration" shall mean, with respect to a
particular registration, one or more Holders of Registrable Securities who hold
a majority of the Registrable Securities to be included in such registration.
"NASD" shall mean the National Association of Securities Dealers,
Inc.
"Permitted Transferee" shall mean any Person to which a Holder has
assigned its rights and obligations hereunder, in accordance with Section 6.5 of
this Agreement.
"Person" shall mean any individual, firm, partnership, corporation,
trust, joint venture, association, joint stock company, limited liability
company, unincorporated organization or any other entity or organization,
including a government or agency or political subdivision thereof, and shall
include any successor (by merger or otherwise) of such entity.
"Prospectus" shall mean the prospectus included in a Registration
Statement (including, without limitation, any preliminary prospectus and any
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), and any such Prospectus as amended or
supplemented by any prospectus supplement, and all other amendments and
supplements to such Prospectus, including post-effective amendments, and in each
case including all material incorporated by reference (or deemed to be
incorporated by reference) therein.
"Registrable Securities" shall mean (i) all shares of Class A Common
Stock which are issued or issuable upon the conversion of any shares of Class B
Common Stock currently held or hereafter acquired by the Initial Holder or its
successors or permitted assigns, (ii) all shares of Class A Common Stock at any
time held by or acquired by the Initial Holder or its successors or permitted
assigns, (iii) all shares of Class A Common Stock issued or issuable in exchange
for or upon conversion of any other securities of the Company now held or
hereafter acquired by the Initial Holder or its successors or permitted assigns
and (iv) any other securities of the Company (or any successor or assign of the
Company, whether by merger, consolidation, sale of assets or otherwise) which
may be issued or issuable with respect to, in exchange for, or in substitution
of, the Registrable Securities referenced in clauses (i) through (iii) above by
reason of any dividend or stock split, combination of shares, merger,
consolidation, recapitalization, reclassification, reorganization, sale of
assets or similar transaction. As to any particular Registrable Securities, such
securities shall cease to be Registrable Securities when (A) a registration
statement with respect to the sale of such securities shall have been declared
effective under the Securities Act and such securities have been disposed of in
accordance with such registration statement, (B) such securities are sold
pursuant to Rule 144 (or any similar provisions then in force) under the
Securities Act, (C) such securities have been otherwise transferred, a new
certificate or other evidence of ownership for them not bearing the legend
restricting further transfer shall have been delivered by the Company and
subsequent public distribution of them shall not require
-3-
6
registration under the Securities Act, or (D) such securities shall have ceased
to be outstanding.
"Registration Expenses" shall mean any and all expenses incident to
the performance of or compliance with this Agreement by the Company and its
subsidiaries, including, without limitation (i) all SEC, stock exchange, NASD
and other registration, listing and filing fees, (ii) all fees and expenses
incurred in connection with compliance with state securities or blue sky laws
and compliance with the rules of any stock exchange (including fees and
disbursements of counsel in connection with such compliance and the preparation
of a blue sky memorandum and legal investment survey), (iii) all expenses of any
Persons in preparing or assisting in preparing, word processing, printing,
distributing, mailing and delivering any Registration Statement, any Prospectus,
any underwriting agreements, transmittal letters, securities sales agreements,
securities certificates and other documents relating to the performance of or
compliance with this Agreement, (iv) the fees and disbursements of counsel for
the Company, (v) the fees and disbursements of Holders' Counsel, (vi) the fees
and disbursements of all independent public accountants (including the expenses
of any audit and/or "cold comfort" letters) and the fees and expenses of other
Persons, including experts, retained by the Company, (vii) the expenses incurred
in connection with making road show presentations and holding meetings with
potential investors to facilitate the distribution and sale of Registrable
Securities which are customarily borne by the issuer, (viii) any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, and (ix) premiums and other costs of policies of insurance against
liabilities arising out of the public offering of the Registrable Securities
being registered; provided, however, that Registration Expenses shall not
include discounts and commissions payable to underwriters, selling brokers,
dealer managers or other similar Persons engaged in the distribution of any of
the Registrable Securities; and, provided further, that in any case where
Registration Expenses are not to be borne by the Company, such expenses shall
not include salaries of Company personnel or general overhead expenses of the
Company, auditing fees, premiums or other expenses relating to liability
insurance required by the underwriters of the Company or other expenses for the
preparation of financial statements or other data normally prepared by the
Company in the ordinary course of its business or which the Company would have
incurred in any event.
"Registration Statement" shall mean any registration statement of
the Company which covers any Registrable Securities and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including all Prospectuses contained therein, all
exhibits thereto and all material incorporated by reference (or deemed to be
incorporated by reference) therein.
"Request" shall have the meaning set forth in Section 2.1(a).
"SEC" shall mean the Securities and Exchange Commission, or any
successor agency having jurisdiction to enforce the Securities Act.
-4-
7
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time, and the rules and regulations thereunder, or any similar or
successor statute.
"Shelf Registration" shall have the meaning set forth in Section
2.1(a).
"Underwriters" shall mean the underwriters, if any, of the offering
being registered under the Securities Act.
"Underwritten Offering" shall mean a sale of securities of the
Company to an Underwriter or Underwriters for reoffering to the public.
"Withdrawn Demand Registration" shall have the meaning set forth in
Section 2.1(a).
"Withdrawn Request" shall have the meaning set forth in Section
2.1(a).
2. REGISTRATION UNDER THE SECURITIES ACT.
2.1 Demand Registration.
(a) Right to Demand Registration. Subject to the limitations
set forth in this Section 2.1, at any time or from time to time, any Holder
shall have the right to request in writing (a "Request") that the Company
register all or any part of such Holder's Registrable Securities which are not
at such time included in an effective Shelf Registration under Section 2.3
(which Request shall specify the amount of Registrable Securities intended to be
disposed of by such Holders and the intended method of disposition thereof) by
filing with the SEC a Demand Registration Statement. As promptly as practicable,
but no later than 10 days after receipt of a Request, the Company shall give
written notice of such requested registration to all Holders of Registrable
Securities. Subject to Section 2.1(b), the Company shall include in a Demand
Registration (i) the Registrable Securities intended to be disposed of by the
Initiating Holders and (ii) the Registrable Securities intended to be disposed
of by any other Holder which shall have made a written request (which request
shall specify the amount of Registrable Securities to be registered and the
intended method of disposition thereof) to the Company for inclusion of such
Registrable Securities in such registration within 20 days after the receipt of
such written notice from the Company. The Company shall, as expeditiously as
possible following a Request, use its best efforts to cause to be filed with the
SEC a Demand Registration Statement providing for the registration under the
Securities Act of the Registrable Securities which the Company has been so
requested to register by all such Holders, to the extent necessary to permit the
disposition of such Registrable Securities so to be registered in accordance
with the intended methods of disposition thereof specified in such Request or
further requests (including, without limitation, by means of a shelf
registration pursuant to Rule 415 under the Securities Act (a "Shelf
Registration") if so requested and if the Company is then eligible to use such a
registration). The Company shall use its best efforts to have such Demand
Registration Statement declared effective by the SEC as soon as practicable
thereafter and to keep
-5-
8
such Demand Registration Statement continuously effective for the period
specified in Section 4.1(b). Notwithstanding the foregoing, the Company will not
be required to file a Demand Registration Statement for Registrable Securities
if the reasonably anticipated aggregate price to the public for such Registrable
Securities would be less than $100 million.
A Request may be withdrawn prior to the filing of the Demand
Registration Statement by the Majority Holders of the Registration (a "Withdrawn
Request") and a Demand Registration Statement may be withdrawn prior to the
effectiveness thereof by the Majority Holders of the Registration (a "Withdrawn
Demand Registration"). Any Holder requesting inclusion in a Demand Registration
may, at any time prior to the effective date of the Demand Registration
Statement (and for any reason) revoke such request by delivering written notice
to the Company revoking such requested inclusion; provided, however, that if any
Demand Registration Statement shall be withdrawn prior to the effectiveness
thereof as a result of such Holder or Holders having revoked its or their
request for inclusion in such Demand Registration Statement, such withdrawing
Holder or Holders, on a pro rata basis, as the case may be, shall reimburse the
Company for the reasonable out-of-pocket Registration Expenses relating to the
preparation and filing of such Demand Registration Statement (to the extent
actually incurred).
The registration rights granted pursuant to the provisions of
this Section 2.1 shall be in addition to the registration rights granted
pursuant to the other provisions of Section 2 hereof.
(b) Priority in Demand Registrations. If a Demand Registration
involves an Underwritten Offering, and the sole or lead managing Underwriter, as
the case may be, of such Underwritten Offering shall advise the Company in
writing (with a copy to each Holder requesting registration) on or before the
date that is five days prior to the date then scheduled for such offering that,
in its opinion, the amount of Registrable Securities requested to be included in
such Demand Registration exceeds the number which can be sold in such offering
within a price range acceptable to the Majority Holders of the Registration
(such writing to state the basis of such opinion and the approximate number of
Registrable Securities which may be included in such offering), the Company
shall include in such Demand Registration, to the extent of the number which the
Company is so advised may be included in such offering, the Registrable
Securities requested to be included in the Demand Registration by the Holders
allocated pro rata in proportion to the number of Registrable Securities
requested to be included in such Demand Registration by each of them. In the
event the Company shall not, by virtue of this Section 2.1(b), include in any
Demand Registration all of the Registrable Securities of any Holder requesting
to be included in such Demand Registration, such Holder may, upon written notice
to the Company given within five days of the time such Holder first is notified
of such matter, reduce the amount of Registrable Securities it desires to have
included in such Demand Registration, whereupon only the Registrable Securities,
if any, it desires to have included will be so included and the Holders not so
-6-
9
reducing shall be entitled to a corresponding increase in the amount of
Registrable Securities to be included in such Demand Registration.
(c) Limitations on Registrations. Until such time, if any, that the
total number of shares of Class B Common Stock then outstanding represents less
than 25% of the aggregate number of shares of Common Stock then outstanding,
there shall be no limit on the number of occasions on which Holders of
Registrable Securities may exercise their right to request registration under
this Section 2.1. After such time, if any, as the total number of shares of
Class B Common Stock then outstanding represents less than 25% of the aggregate
number of shares of Common Stock then outstanding, Holders of Registrable
Securities may exercise their rights under this Section 2.1 (through notice
delivered by any Holder of Registrable Securities) on not more than four
occasions in the aggregate for all such Holders; provided, however, that if the
Initial Holder and/or its subsidiaries continue to hold any Registrable
Securities after such four additional Demand Registrations, then the Initial
Holder and/or its subsidiaries may, on up to two additional occasions, request
the registration of all or any part of its or their remaining Registrable
Securities under this Section 2.1. Notwithstanding anything herein to the
contrary, the Company shall not be obligated to effect a Demand Registration
unless 150 days have elapsed since the last day that a prior Demand Registration
Statement remained effective (or, if earlier, the day on which the last of the
Registrable Securities covered by such prior Demand Registration Statement was
sold).
(d) Underwriting; Selection of Underwriters. Notwithstanding
anything to the contrary contained in Section 2.1(a), if the Initiating Holders
holding a majority of the Registrable Securities for which registration was
requested in the Request so elect, the offering of such Registrable Securities
pursuant to such Demand Registration shall be in the form of a firm commitment
Underwritten Offering; and such Initiating Holders may require that all Persons
(including other Holders) participating in such registration sell their
Registrable Securities to the Underwriters at the same price and on the same
terms of underwriting applicable to the Initiating Holders. If any Demand
Registration involves an Underwritten Offering, the sole or managing
Underwriters and any additional investment bankers and managers to be used in
connection with such registration shall be selected by the Initiating Holders
holding a majority of the Registrable Securities for which registration was
requested in the Request, subject to the approval of the Company (such approval
not to be unreasonably withheld).
(e) Registration of Other Securities. Whenever the Company shall
effect a Demand Registration, no securities other than the Registrable
Securities shall be covered by such registration unless the Majority Holders of
the Registration shall have consented in writing to the inclusion of such other
securities.
(f) Effective Registration Statement; Suspension. A Demand
Registration Statement shall not be deemed to have become effective (and the
related registration will not be deemed to have been effected) (i) unless it has
been declared effective by the SEC and remains effective in compliance with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such
-7-
10
Demand Registration Statement for the time period specified in Section 4.1(b),
(ii) if the offering of any Registrable Securities pursuant to such Demand
Registration Statement is interfered with by any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or court, or
(iii) if, in the case of an Underwritten Offering, the conditions to closing
specified in an underwriting agreement to which the Company is a party are not
satisfied other than by the sole reason of any breach or failure by the Holders
of Registrable Securities or are not otherwise waived.
(g) Other Registrations. During the period (i) beginning on the date
of a Request and (ii) ending on the date that is 90 days after the date that a
Demand Registration Statement filed pursuant to such Request has been declared
effective by the SEC or, if the Holders shall withdraw such Request or such
Demand Registration Statement, on the date of such Withdrawn Request or such
Withdrawn Registration Statement, the Company shall not, without the consent of
the Majority Holders of the Registration, file a registration statement
pertaining to any other equity securities of the Company.
(h) Registration Statement Form. Registrations under this Section
2.1 shall be on such appropriate registration form of the SEC (i) as shall be
selected by the Initiating Holders holding a majority of the Registrable
Securities for which registration was requested in the Request, and (ii) which
shall be available for the sale of Registrable Securities in accordance with the
intended method or methods of disposition specified in the requests for
registration. The Company agrees to include in any such Registration Statement
all information which any selling Holder, upon advice of counsel, shall
reasonably request.
2.2 Incidental Registration.
(a) Right to Include Registrable Securities. If the Company at any
time or from time to time proposes to register any of its equity securities
under the Securities Act (other than in a registration on Form S-4 or S-8 or any
successor form to such forms and other than pursuant to Section 2.1 or 2.3)
whether or not pursuant to registration rights granted to other holders of its
securities and whether or not for sale for its own account, the Company shall
deliver prompt written notice (which notice shall be given at least 30 days
prior to such proposed registration) to all Holders of Registrable Securities of
its intention to undertake such registration, describing in reasonable detail
the proposed registration and distribution (including the anticipated range of
the proposed offering price, the class and number of securities proposed to be
registered and the distribution arrangements) and of such Holders' right to
participate in such registration under this Section 2.2 as hereinafter provided.
Subject to the other provisions of this paragraph (a) and Section 2.2(b), upon
the written request of any Holder made within 20 days after the receipt of such
written notice (which request shall specify the amount of Registrable Securities
to be registered and the intended method of disposition thereof), the Company
shall effect the registration under the Securities Act of all Registrable
Securities requested by Holders to be so registered (an "Incidental
Registration"), to the extent requisite to permit the disposition (in accordance
with the intended methods
-8-
11
thereof as aforesaid) of the Registrable Securities so to be registered, by
inclusion of such Registrable Securities in the Registration Statement which
covers the securities which the Company proposes to register and shall cause
such Registration Statement to become and remain effective with respect to such
Registrable Securities in accordance with the registration procedures set forth
in Section 4. If an Incidental Registration involves an Underwritten Offering,
immediately upon notification to the Company from the Underwriter of the price
at which such securities are to be sold, the Company shall so advise each
participating Holder. The Holders requesting inclusion in an Incidental
Registration may, at any time prior to the effective date of the Incidental
Registration Statement (and for any reason), revoke such request by delivering
written notice to the Company revoking such requested inclusion.
If at any time after giving written notice of its intention to
register any securities and prior to the effective date of the Incidental
Registration Statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each Holder of Registrable Securities and, thereupon, (A) in
the case of a determination not to register, the Company shall be relieved of
its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses
incurred in connection therewith), without prejudice, however, to the rights of
Holders to cause such registration to be effected as a registration under
Section 2.1 and (B) in the case of a determination to delay such registration,
the Company shall be permitted to delay the registration of such Registrable
Securities for the same period as the delay in registering such other
securities; provided, however, that if such delay shall extend beyond 120 days
from the date the Company received a request to include Registrable Securities
in such Incidental Registration, then the Company shall again give all Holders
the opportunity to participate therein and shall follow the notification
procedures set forth in the preceding paragraph. There is no limitation on the
number of such Incidental Registrations pursuant to this Section 2.2 which the
Company is obligated to effect.
The registration rights granted pursuant to the provisions of this
Section 2.2 shall be in addition to the registration rights granted pursuant to
the other provisions of Section 2 hereof.
(b) Priority in Incidental Registration. If an Incidental
Registration involves an Underwritten Offering (on a firm commitment basis), and
the sole or the lead managing Underwriter, as the case may be, of such
Underwritten Offering shall advise the Company in writing (with a copy to each
Holder requesting registration) on or before the date that is five days prior to
the date then scheduled for such offering that, in its opinion, the amount of
securities (including Registrable Securities) requested to be included in such
registration exceeds the amount which can be sold in such offering without
materially interfering with the successful marketing of the securities being
offered (such writing to state the basis of such opinion and the approximate
number of such securities which may be included in such offering without such
effect), the Company shall include in such registration, to the extent of the
number which the Company is so advised may be
-9-
12
included in such offering without such effect, (i) in the case of a registration
initiated by the Company, (A) first, the securities that the Company proposes to
register for its own account, (B) second, the Registrable Securities requested
to be included in such registration by the Holders, allocated pro rata in
proportion to the number of Registrable Securities requested to be included in
such registration by each of them, and (C) third, other securities of the
Company to be registered on behalf of any other Person, and (ii) in the case of
a registration initiated by a Person other than the Company, (A) first, the
Registrable Securities requested to be included in such registration by the
Holders and by any Persons initiating such registration, allocated pro rata in
proportion to the number of securities requested to be included in such
registration by each of them, (B) second, the securities that the Company
proposes to register for its own account, and (C) third, other securities of the
Company to be registered on behalf of any other Person; provided, however, that
in the event the Company will not, by virtue of this Section 2.2(b), include in
any such registration all of the Registrable Securities of any Holder requested
to be included in such registration, such Holder may, upon written notice to the
Company given within three days of the time such Holder first is notified of
such matter, reduce the amount of Registrable Securities it desires to have
included in such registration, whereupon only the Registrable Securities, if
any, it desires to have included will be so included and the Holders not so
reducing shall be entitled to a corresponding increase in the amount of
Registrable Securities to be included in such registration.
(c) Selection of Underwriters. If any Incidental Registration
involves an Underwritten Offering, the sole or managing Underwriter(s) and any
additional investment bankers and managers to be used in connection with such
registration shall be selected by the Company, subject to the approval of the
Majority Holders of the Registration (such approval not to be unreasonably
withheld).
2.3 Shelf Registration. If a request made pursuant to this Section 2 is
for a Shelf Registration, the Company shall use its best efforts to keep the
Shelf Registration continuously effective through the date on which all of the
Registrable Securities covered by such Shelf Registration may be sold pursuant
to Rule 144(k) under the Securities Act (or any successor provision having
similar effect); provided, however, that prior to the termination of such Shelf
Registration, the Company shall first furnish to each Holder of Registrable
Securities participating in such Shelf Registration (i) an opinion, in form and
substance satisfactory to the Majority Holders of the Registration, of counsel
for the Company satisfactory to the Majority Holders of the Registration stating
that such Registrable Securities are freely saleable pursuant to Rule 144(k)
under the Securities Act (or any successor provision having similar effect) or
(ii) a "No-Action Letter" from the staff of the SEC stating that the SEC would
not recommend enforcement action if the Registrable Securities included in such
Shelf Registration were sold in a public sale other than pursuant to an
effective registration statement.
2.4 Expenses. The Company shall pay all Registration Expenses in
connection with any Demand Registration, Incidental Registration or Shelf
Registration, whether or not such registration shall become effective and
whether or not all Registrable Securities originally requested to be included in
such registration are withdrawn or
-10-
13
otherwise ultimately not included in such registration, except as otherwise
provided with respect to a Withdrawn Request and a Withdrawn Demand Registration
in Section 2.1(a). Each Holder shall pay all discounts and commissions payable
to underwriters, selling brokers, managers or other similar Persons engaged in
the distribution of such Holder's Registrable Securities pursuant to any
registration pursuant to this Section 2.
2.5 Underwritten Offerings.
(a) Demand Underwritten Offerings. If requested by the sole or lead
managing Underwriter for any Underwritten Offering effected pursuant to a Demand
Registration, the Company shall enter into a customary underwriting agreement
with the Underwriters for such offering, such agreement to be reasonably
satisfactory in substance and form to each Holder of Registrable Securities
participating in such offering and to contain such representations and
warranties by the Company and such other terms as are generally prevailing in
agreements of that type, including, without limitation, indemnification and
contribution to the effect and to the extent provided in Section 5.
(b) Holders of Registrable Securities to be Parties to Underwriting
Agreement. The Holders of Registrable Securities to be distributed by the
Underwriters in an Underwritten Offering contemplated by Section 2 shall be
parties to the underwriting agreement between the Company and such Underwriters
and may, at such Holders' option, require that any or all of the representations
and warranties by, and the other agreements on the part of, the Company to and
for the benefit of such Underwriters shall also be made to and for the benefit
of such Holders of Registrable Securities and that any or all of the conditions
precedent to the obligations of such Underwriters under such underwriting
agreement be conditions precedent to the obligations of such Holders of
Registrable Securities; provided, however, that the Company shall not be
required to make any representations or warranties with respect to written
information specifically provided by a selling Holder for inclusion in the
Registration Statement. No Holder shall be required to make any representations
or warranties to, or agreements with, the Company or the Underwriters other than
representations, warranties or agreements regarding such Holder, such Holder's
Registrable Securities and such Holder's intended method of disposition.
(c) Participation in Underwritten Registration. Notwithstanding
anything herein to the contrary, no Person may participate in any underwritten
registration hereunder unless such Person (i) agrees to sell its securities on
the same terms and conditions provided in any underwritten arrangements approved
by the Persons entitled hereunder to approve such arrangement and (ii)
accurately completes and executes in a timely manner all questionnaires, powers
of attorney, indemnities, custody agreements, underwriting agreements and other
documents reasonably required under the terms of such underwriting arrangements.
2.6 Conversions; Exercises. Notwithstanding anything to the contrary
herein, in order for any Registrable Securities that are issuable upon the
exercise of conversion rights, options or warrants to be included in any
registration pursuant to
-11-
14
Section 2 hereof, the exercise of such conversion rights, options or warrants
must be effected no later than immediately prior to the closing of any sales
under the Registration Statement pursuant to which such Registrable Securities
are to be sold
2.7 Postponements. The Company shall be entitled to postpone a
Demand Registration and to require the Holders of Registrable Securities to
discontinue the disposition of their securities covered by a Shelf Registration
during any Blackout Period (as defined below) (i) if the Board of Directors of
the Company determines in good faith that effecting such a registration or
continuing such disposition at such time would have a material adverse effect
upon a proposed sale of all (or substantially all) of the assets of the Company
or a merger, reorganization, recapitalization or similar current transaction
materially affecting the capital structure or equity ownership of the Company,
or (ii) if the Company is in possession of material information which the Board
of Directors of the Company determines in good faith it is not in the best
interests of the Company to disclose in a registration statement at such time;
provided, however, that the Company may only delay a Demand Registration
pursuant to this Section 2.7 by delivery of a Blackout Notice (as defined below)
within 30 days of delivery of the request for such Registration under Section
2.1 or Section 2.3, as applicable, and may delay a Demand Registration and
require the Holders of Registrable Securities to discontinue the disposition of
their securities covered by a Shelf Registration only for a reasonable period of
time not to exceed 90 days (or such earlier time as such transaction is
consummated or no longer proposed or the material information has been made
public) (the "Blackout Period"). There shall not be more than one Blackout
Period in any 12-month period. The Company shall promptly notify the Holders in
writing (a "Blackout Notice") of any decision to postpone a Demand Registration
or to discontinue sales of Registrable Securities covered by a Shelf
Registration pursuant to this Section 2.7 and shall include a general statement
of the reason for such postponement, an approximation of the anticipated delay
and an undertaking by the Company promptly to notify the Holders as soon as a
Demand Registration may be effected or sales of Registrable Securities covered
by a Shelf Registration may resume. In making any such determination to initiate
or terminate a Blackout Period, the Company shall not be required to consult
with or obtain the consent of any Holder, and any such determination shall be
the Company's sole responsibility. Each Holder shall treat all notices received
from the Company pursuant to this Section 2.7 in the strictest confidence and
shall not disseminate such information. If the Company shall postpone the filing
of a Demand Registration Statement, the Majority Holders of Registrable
Securities who were to participate therein shall have the right to withdraw the
request for registration. Any such withdrawal shall be made by giving written
notice to the Company within 30 days after receipt of the Blackout Notice. The
Company shall pay all Registration Expenses in connection with such withdrawn
registration request.
3. HOLDBACK ARRANGEMENTS.
3.1 Restrictions on Sale by Holders of Registrable Securities. Each
Holder of Registrable Securities agrees, by acquisition of such Registrable
Securities, if timely requested in writing by the sole or lead managing
Underwriter in an Underwritten
-12-
15
Offering of any Registrable Securities, not to make any short sale of, loan,
grant any option for the purchase of or effect any public sale or distribution,
including a sale pursuant to Rule 144 (or any successor provision having similar
effect) under the Securities Act of any Registrable Securities or any other
equity security of the Company (or any security convertible into or exchangeable
or exercisable for any equity security of the Company) (except as part of such
underwritten registration), during the nine business days (as such term is used
in Regulation M under the Exchange Act) prior to, and during the time period
reasonably requested by the sole or lead managing Underwriter not to exceed 90
days, beginning on the effective date of the applicable Registration Statement.
3.2 Restrictions on Sale by the Company and Others. The Company
agrees that (i) if timely requested in writing by the sole or lead managing
Underwriter in an Underwritten Offering of any Registrable Securities, not to
make any short sale of, loan, grant any option for the purchase of or effect any
public sale or distribution of any of the Company's equity securities (or any
security convertible into or exchangeable or exercisable for any of the
Company's equity securities) during the nine business days (as such term is used
in Regulation M under the Exchange Act) prior to, and during the time period
reasonably requested by the sole or lead managing Underwriter not to exceed 90
days, beginning on the effective date of the applicable Registration Statement
(except as part of such underwritten registration or pursuant to registrations
on Forms S-4 or S-8 or any successor form to such forms), and (ii) it will cause
each holder of equity securities (or any security convertible into or
exchangeable or exercisable for any of its equity securities) of the Company
purchased from the Company at any time after the date of this Agreement (other
than in a registered public offering) to so agree.
4. REGISTRATION PROCEDURES.
4.1 Obligations of the Company. Whenever the Company is required to
effect the registration of Registrable Securities under the Securities Act
pursuant to Section 2 of this Agreement, the Company shall, as expeditiously as
possible:
(a) prepare and file with the SEC (promptly, and in any event within
60 days after receipt of a request to register Registrable Securities) the
requisite Registration Statement to effect such registration, which Registration
Statement shall comply as to form in all material respects with the requirements
of the applicable form and include all financial statements required by the SEC
to be filed therewith, and the Company shall use its best efforts to cause such
Registration Statement to become effective (provided, that the Company may
discontinue any registration of its securities that are not Registrable
Securities, and, under the circumstances specified in Section 2.2, its
securities that are Registrable Securities); provided, however, that before
filing a Registration Statement or Prospectus or any amendments or supplements
thereto, or comparable statements under securities or blue sky laws of any
jurisdiction, the Company shall (i) provide Holders' Counsel and any other
Inspector with an adequate and appropriate opportunity to participate in the
preparation of such Registration Statement and each Prospectus included therein
(and each amendment or supplement thereto or comparable statement) to be filed
with the SEC, which documents shall be subject to the
-13-
16
review and comment of Holders' Counsel, and (ii) not file any such Registration
Statement or Prospectus (or amendment or supplement thereto or comparable
statement) with the SEC to which Holder's Counsel, any selling Holder or any
other Inspector shall have reasonably objected on the grounds that such filing
does not comply in all material respects with the requirements of the Securities
Act or of the rules or regulations thereunder;
(b) prepare and file with the SEC such amendments and supplements to
such Registration Statement and the Prospectus used in connection therewith as
may be necessary (i) to keep such Registration Statement effective, and (ii) to
comply with the provisions of the Securities Act with respect to the disposition
of all Registrable Securities covered by such Registration Statement, in each
case until such time as all of such Registrable Securities have been disposed of
in accordance with the intended methods of disposition by the seller(s) thereof
set forth in such Registration Statement; provided, that except with respect to
any Shelf Registration, such period need not extend beyond nine months after the
effective date of the Registration Statement; and provided, further, that with
respect to any Shelf Registration, such period need not extend beyond the time
period provided in Section 2.3, and which periods, in any event, shall terminate
when all Registrable Securities covered by such Registration Statement have been
sold (but not before the expiration of the 90 day period referred to in Section
4(3) of the Securities Act and Rule 174 thereunder, if applicable);
(c) furnish, without charge, to each selling Holder of such
Registrable Securities and each Underwriter, if any, of the securities covered
by such Registration Statement, such number of copies of such Registration
Statement, each amendment and supplement thereto (in each case including all
exhibits), and the Prospectus included in such Registration Statement (including
each preliminary Prospectus) in conformity with the requirements of the
Securities Act, and other documents, as such selling Holder and Underwriter may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Securities owned by such selling Holder (the Company hereby
consenting to the use in accordance with applicable law of each such
Registration Statement (or amendment or post-effective amendment thereto) and
each such Prospectus (or preliminary prospectus or supplement thereto) by each
such selling Holder of Registrable Securities and the Underwriters, if any, in
connection with the offering and sale of the Registrable Securities covered by
such Registration Statement or Prospectus);
(d) prior to any public offering of Registrable Securities, use its
best efforts to register or qualify all Registrable Securities and other
securities covered by such Registration Statement under such other securities or
blue sky laws of such jurisdictions as any selling Holder of Registrable
Securities covered by such Registration Statement or the sole or lead managing
Underwriter, if any, may reasonably request to enable such selling Holder to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by such selling Holder and to continue such registration or qualification
in effect in each such jurisdiction for as long as such Registration Statement
remains in effect (including through new filings or amendments or renewals), and
do any and all other acts and things which may be necessary or advisable to
enable any such selling
-14-
17
Holder to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such selling Holder; provided, however, that the Company
shall not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 4.1(d), (ii) subject itself to taxation in any such jurisdiction, or
(iii) consent to general service of process in any such jurisdiction;
(e) use its reasonable best efforts to obtain all other approvals,
consents, exemptions or authorizations from such governmental agencies or
authorities as may be necessary to enable the selling Holders of such
Registrable Securities to consummate the disposition of such Registrable
Securities;
(f) promptly notify Holders' Counsel, each Holder of Registrable
Securities covered by such Registration Statement and the sole or lead managing
Underwriter, if any: (i) when the Registration Statement, any pre-effective
amendment, the Prospectus or any prospectus supplement related thereto or
post-effective amendment to the Registration Statement 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 or any state
securities or blue sky authority for amendments or supplements to the
Registration Statement or the Prospectus related thereto 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 or threat of any
proceedings for that purpose, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of any
Registrable Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation of any proceeding for such purpose, (v) of the
existence of any fact of which the Company becomes aware or the happening of any
event which results in (A) the Registration Statement containing an untrue
statement of a material fact or omitting to state a material fact required to be
stated therein or necessary to make any statements therein not misleading, or
(B) any Prospectus included in such Registration Statement containing an untrue
statement of a material fact or omitting to state a material fact required to be
stated therein or necessary to make any statements therein, in the light of the
circumstances under which they were made, not misleading, (vi) if at any time
the representations and warranties contemplated by Section 2.5(b) cease to be
true and correct in all material respects, and (vii) of the Company's reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate or that there exists circumstances not yet disclosed to the
public which make further sales under such Registration Statement inadvisable
pending such disclosure and post-effective amendment; and, if the notification
relates to an event described in any of the clauses (ii) through (vii) of this
Section 4.1(f), the Company shall promptly prepare a supplement or
post-effective amendment to such Registration Statement or related Prospectus or
any document incorporated therein by reference or file any other required
document so that (1) such Registration Statement shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(2) as thereafter delivered to the purchasers of the Registrable Securities
being sold thereunder, such Prospectus shall not include 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
-15-
18
the light of the circumstances under which they were made not misleading (and
shall furnish to each such Holder and each Underwriter, if any, a reasonable
number of copies of such Prospectus so supplemented or amended); and if the
notification relates to an event described in clause (iii) of this Section
4.1(f), the Company shall take all reasonable action required to prevent the
entry of such stop order or to remove it if entered;
(g) make available for inspection by any selling Holder of
Registrable Securities, any sole or lead managing Underwriter participating in
any disposition pursuant to such Registration Statement, Holders' Counsel and
any attorney, accountant or other agent retained by any such seller or any
Underwriter (each, an "Inspector" and, collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and properties of the
Company and any subsidiaries thereof as may be in existence at such time
(collectively, the "Records") as shall be necessary, in the opinion of such
Holders' and such Underwriters' respective counsel, to enable them to exercise
their due diligence responsibility and to conduct a reasonable investigation
within the meaning of the Securities Act, and cause the Company's and any
subsidiaries' officers, directors and employees, and the independent public
accountants of the Company, to supply all information reasonably requested by
any such Inspectors in connection with such Registration Statement;
(h) obtain an opinion from the Company's counsel and a "cold
comfort" letter from the Company's independent public accountants who have
certified the Company's financial statements included or incorporated by
reference in such Registration Statement, in each case dated the effective date
of such Registration Statement (and if such registration involves an
Underwritten Offering, dated the date of the closing under the underwriting
agreement), in customary form and covering such matters as are customarily
covered by such opinions and "cold comfort" letters delivered to underwriters in
underwritten public offerings, which opinion and letter shall be reasonably
satisfactory to the sole or lead managing Underwriter, if any, and to the
Majority Holders of the Registration, and furnish to each Holder participating
in the offering and to each Underwriter, if any, a copy of such opinion and
letter addressed to such Holder (in the case of the opinion) and Underwriter (in
the case of the opinion and the "cold comfort" letter);
(i) provide a CUSIP number for all Registrable Securities and
provide and cause to be maintained a transfer agent and registrar for all such
Registrable Securities covered by such Registration Statement not later than the
effectiveness of such Registration Statement;
(j) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC and any other governmental agency or authority
having jurisdiction over the offering, and make available to its security
holders, as soon as reasonably practicable but no later than 90 days after the
end of any 12-month period, an earnings statement (i) commencing at the end of
any month in which Registrable Securities are sold to Underwriters in an
Underwritten Offering and (ii) commencing with the first day of the Company's
calendar month next succeeding each sale of Registrable
-16-
19
Securities after the effective date of a Registration Statement, which statement
shall cover such 12-month periods, in a manner which satisfies the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) use its best efforts to cause all such Registrable Securities to
be listed (i) on each national securities exchange on which the Company's
securities are then listed or (ii) if securities of the Company are not at the
time listed on any national securities exchange (or if the listing of
Registrable Securities is not permitted under the rules of each national
securities exchange on which the Company's securities are then listed), on a
national securities exchange designated by the Majority Holders of the
Registration;
(l) keep each selling Holder of Registrable Securities advised in
writing as to the initiation and progress of any registration under Section 2
hereunder;
(m) enter into and perform customary agreements (including, if
applicable, an underwriting agreement in customary form) and provide officers'
certificates and other customary closing documents;
(n) cooperate with each selling Holder of Registrable Securities 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 NASD and make reasonably available its employees and personnel and
otherwise provide reasonable assistance to the Underwriters (taking into account
the needs of the Company's businesses and the requirements of the marketing
process) in the marketing of Registrable Securities in any Underwritten
Offering;
(o) furnish to each Holder participating in the offering and the
sole or lead managing Underwriter, if any, without charge, at least one
manually-signed copy of the Registration Statement and any post-effective
amendments thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those deemed to be
incorporated by reference);
(p) cooperate with the selling Holders of Registrable Securities and
the sole or lead managing Underwriter, if any, to facilitate the timely
preparation and delivery of certificates not bearing any restrictive legends
representing the Registrable Securities to be sold, and cause such Registrable
Securities to be issued in such denominations and registered in such names in
accordance with the underwriting agreement prior to any sale of Registrable
Securities to the Underwriters or, if not an Underwritten Offering, in
accordance with the instructions of the selling Holders of Registrable
Securities at least three business days prior to any sale of Registrable
Securities;
(q) if requested by the sole or lead managing Underwriter or any
selling Holder of Registrable Securities, immediately incorporate in a
prospectus supplement or post-effective amendment such information concerning
such Holder of Registrable Securities, the Underwriters or the intended method
of distribution as the sole
-17-
20
or lead managing Underwriter or the selling Holder of Registrable Securities
reasonably requests to be included therein and as is appropriate in the
reasonable judgment of the Company, including, without limitation, information
with respect to the number of shares of the Registrable Securities being sold to
the Underwriters, the purchase price being paid therefor by such Underwriters
and with respect to any other terms of the Underwritten Offering of the
Registrable Securities to be sold in such offering; make all required filings of
such Prospectus supplement or post-effective amendment as soon as notified of
the matters to be incorporated in such Prospectus supplement or post-effective
amendment; and supplement or make amendments to any Registration Statement if
requested by the sole or lead managing Underwriter of such Registrable
Securities; and
(r) use its reasonable best efforts to take all other steps
necessary to expedite or facilitate the registration and disposition of the
Registrable Securities contemplated hereby.
4.2 Seller Information. The Company may require each selling Holder of
Registrable Securities as to which any registration is being effected to furnish
to the Company such information regarding such Holder, such Holder's Registrable
Securities and such Holder's intended method of disposition as the Company may
from time to time reasonably request in writing; provided, that such information
shall be used only in connection with such registration.
If any Registration Statement or comparable statement under blue sky
laws refers to any Holder by name or otherwise as the Holder of any securities
of the Company, then such Holder shall have the right to require (i) the
insertion therein of language, in form and substance satisfactory to such Holder
and the Company, to the effect that the holding by such Holder of such
securities is not to be construed as a recommendation by such Holder of the
investment quality of the Company's securities covered thereby and that such
holding does not imply that such Holder will assist in meeting any future
financial requirements of the Company, and (ii) in the event that such reference
to such Holder by name or otherwise is not in the judgment of the Company, as
advised by counsel, required by the Securities Act or any similar federal
statute or any state blue sky or securities law then in force, the deletion of
the reference to such Holder.
4.3 Notice to Discontinue. Each Holder of Registrable Securities
agrees by acquisition of such Registrable Securities that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 4.1(f)(ii) through (vii), such Holder shall forthwith discontinue
disposition of Registrable Securities pursuant to the Registration Statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 4.1(f) and, if
so directed by the Company, such Holder shall deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in such
Holder's possession of the Prospectus covering such Registrable Securities which
is current at the time of receipt of such notice. If the Company shall give any
such notice, the Company shall extend the period during which such Registration
Statement shall be maintained effective pursuant to this Agreement (including,
without limitation, the period
-18-
21
referred to in Section 4.1(b)) by the number of days during the period from and
including the date of the giving of such notice pursuant to Section 4.1(f) to
and including the date when the Holder shall have received the copies of the
supplemented or amended Prospectus contemplated by and meeting the requirements
of Section 4.1(f).
5. INDEMNIFICATION; CONTRIBUTION.
5.1 Indemnification by the Company. The Company agrees to indemnify and
hold harmless, to the fullest extent permitted by law, each Holder of
Registrable Securities, its officers, directors, partners, members,
shareholders, employees, Affiliates and agents (collectively, "Agents") and each
Person who controls such Holder (within the meaning of the Securities Act) and
its Agents with respect to each registration which has been effected pursuant to
this Agreement, against any and all losses, claims, damages or liabilities,
joint or several, actions or proceedings (whether commenced or threatened) in
respect thereof, and expenses (as incurred or suffered and including, but not
limited to, any and all expenses incurred in investigating, preparing or
defending any litigation or proceeding, whether commenced or threatened, and the
reasonable fees, disbursements and other charges of legal counsel) in respect
thereof (collectively, "Claims"), insofar as such Claims arise out of or are
based upon any untrue or alleged untrue statement of a material fact contained
in any Registration Statement or Prospectus (including any preliminary, final or
summary prospectus and any amendment or supplement thereto) related to any such
registration or any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act or any rule or
regulation thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration, or
any qualification or compliance incident thereto; provided, however, that the
Company will not be liable in any such case to the extent that any such Claims
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact or omission or alleged omission of a material fact so made in
reliance upon and in conformity with written information furnished to the
Company in an instrument duly executed by such Holder specifically stating that
it was expressly for use therein. The Company shall also indemnify any
Underwriters of the Registrable Securities, their Agents and each Person who
controls any such Underwriter (within the meaning of the Securities Act) to the
same extent as provided above with respect to the indemnification of the Holders
of Registrable Securities. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of any Person who may be
entitled to indemnification pursuant to this Section 5 and shall survive the
transfer of securities by such Holder or Underwriter.
5.2 Indemnification by Holders. Each Holder, if Registrable Securities
held by it are included in the securities as to which a registration is being
effected, agrees to, severally and not jointly, indemnify and hold harmless, to
the fullest extent permitted by law, the Company, its directors and officers,
each other Person who participates as an Underwriter in the offering or sale of
such securities and its Agents and each Person who controls the Company or any
such Underwriter (within the meaning of the Securities Act)
-19-
22
and its Agents against any and all Claims, insofar as such Claims arise out of
or are based upon any untrue or alleged untrue statement of a material fact
contained in any Registration Statement or Prospectus (including any
preliminary, final or summary prospectus and any amendment or supplement
thereto) related to any such registration, or 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, to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company in an instrument duly executed by such
Holder specifically stating that it was expressly for use therein; provided,
however, that the aggregate amount which any such Holder shall be required to
pay pursuant to this Section 5.2 shall in no event be greater than the amount of
the net proceeds received by such Holder upon the sale of the Registrable
Securities pursuant to the Registration Statement giving rise to such Claims
less all amounts previously paid by such Holder with respect to any such Claims.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such indemnified party and shall survive
the transfer of such securities by such Holder or Underwriter.
5.3 Conduct of Indemnification Proceedings. Promptly after receipt by an
indemnified party of notice of any Claim or the commencement of any action or
proceeding involving a Claim under this Section 5, such indemnified party shall,
if a claim in respect thereof is to be made against the indemnifying party
pursuant to Section 5, (i) notify the indemnifying party in writing of the Claim
or the commencement of such action or proceeding; provided, that the failure of
any indemnified party to provide such notice shall not relieve the indemnifying
party of its obligations under this Section 5, except to the extent the
indemnifying party is materially and actually prejudiced thereby and shall not
relieve the indemnifying party from any liability which it may have to any
indemnified party otherwise than under this Section 5, 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 indemnified
party 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 indemnified party unless (A) the indemnifying party has agreed
in writing to pay such fees and expenses, (B) the indemnifying party shall have
failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such indemnified party within 10 days after receiving notice
from such indemnified party that the indemnified party believes it has failed to
do so, (C) in the reasonable judgment of any such indemnified party, based upon
advice of counsel, a conflict of interest may exist between such indemnified
party and the indemnifying party with respect to such claims (in which case, if
the indemnified party notifies the indemnifying party in writing that it elects
to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such claim
on behalf of such indemnified party) or (D) such indemnified party is a
defendant in an action or proceeding which is also brought against the
indemnifying party and reasonably shall have concluded that there may be one or
more legal defenses available to such indemnified party which are not available
to the
-20-
23
indemnifying party. No indemnifying party shall be liable for any settlement of
any such claim or action effected without its written consent, which consent
shall not be unreasonably withheld. In addition, without the consent of the
indemnified party (which consent shall not be unreasonably withheld), no
indemnifying party shall be permitted to consent to entry of any judgment with
respect to, or to effect the settlement or compromise of any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim), unless such settlement, compromise or
judgment (1) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim, (2) does not include a statement
as to or an admission of fault, culpability or a failure to act, by or on behalf
of any indemnified party, and (3) does not provide for any action on the part of
any party other than the payment of money damages which is to be paid in full by
the indemnifying party.
5.4 Contribution. If the indemnification provided for in Section 5.1 or
5.2 from the indemnifying party for any reason is unavailable to (other than by
reason of exceptions provided therein), or is insufficient to hold harmless, an
indemnified party hereunder in respect of any Claim, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such Claim in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party, on the one hand, and the indemnified party, on the other
hand, in connection with the actions which resulted in such Claim, as well as
any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. If, however, the foregoing allocation is not permitted by applicable
law, then each indemnifying party shall contribute to the amount paid or payable
by such indemnified party in such proportion as is appropriate to reflect not
only such relative faults but also the relative benefits of the indemnifying
party and the indemnified party as well as any other relevant equitable
considerations.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5.4 were determined by pro rata allocation
or by any other method of allocation which does not take into account the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by a party as a result of any Claim referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth in Section 5.3, any legal or other fees, costs or expenses
reasonably incurred by such party in connection with any investigation or
proceeding. Notwithstanding anything in this Section 5.4 to the contrary, no
indemnifying party (other than the Company) shall be required pursuant to this
Section 5.4 to contribute any amount in excess of the net proceeds received by
such indemnifying party from the sale of the Registrable Securities pursuant to
the Registration Statement giving rise to such Claims, less all amounts
previously paid by such indemnifying party
-21-
24
with respect to such Claims. 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.
5.5 Other Indemnification. Indemnification similar to that specified in
the preceding Sections 5.1 and 5.2 (with appropriate modifications) shall be
given by the Company and each selling Holder of Registrable Securities with
respect to any required registration or other qualification of securities under
any federal or state law or regulation of any governmental authority, other than
the Securities Act. The indemnity agreements contained herein shall be in
addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract.
5.6 Indemnification Payments. The indemnification and contribution
required by this Section 5 shall be made by periodic payments of the amount
thereof during the course of any investigation or defense, as and when bills are
received or any expense, loss, damage or liability is incurred.
6. GENERAL.
6.1 Registration Rights to Others. The Company has not previously entered
into an agreement with respect to its securities granting any registration
rights to any Person. If the Company shall at any time hereafter provide to any
holder of any securities of the Company rights with respect to the registration
of such securities under the Securities Act, (i) such rights shall not be in
conflict with or adversely affect any of the rights provided in this Agreement
to the Holders and (ii) if such rights are provided on terms or conditions more
favorable to such holder than the terms and conditions provided in this
Agreement, then this Agreement shall automatically be deemed amended or
supplemented to the extent necessary to provide to the Holders such more
favorable terms or conditions and the Company shall provide such documentation
(including an amendment to this Agreement or other writing) as any Holder shall
at any time reasonably request to evidence such amendment.
6.2 Availability of Information; Rule 144; Rule 144A; Other Exemptions.
The Company covenants that it shall timely file any reports required to be filed
by it under the Securities Act or the Exchange Act (including, but not limited
to, the reports under Sections 13 and 15(d) of the Exchange Act referred to in
subparagraph (c) of Rule 144 under the Securities Act), and that it shall take
such further action as any Holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (i) Rule 144 and Rule 144A under
the Securities Act, as such rules may be amended from time to time, or (ii) any
other rule or regulation now existing or hereafter adopted by the SEC. Upon the
request of any Holder of Registrable Securities, the Company shall deliver to
such Holder a written statement as to whether it has complied with such
requirements.
-22-
25
6.3 Amendments and Waivers. The provisions of this Agreement may not be
amended, modified, supplemented or terminated, and waivers or consents to
departures from the provisions hereof may not be given, without the written
consent of the Company and the Holders of not less than 50% of the Registrable
Securities then outstanding; provided, however, that no such amendment,
modification, supplement, waiver or consent to departure shall reduce the
aforesaid percentage of Registrable Securities without the written consent of
all of the Holders of Registrable Securities; and provided further, that nothing
herein shall prohibit any amendment, modification, supplement, termination,
waiver or consent to departure the effect of which is limited only to those
Holders who have agreed to such amendment, modification, supplement,
termination, waiver or consent to departure.
6.4 Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, telecopier or
electronic mail, any courier guaranteeing overnight delivery or first class
registered or certified mail, return receipt requested, postage prepaid,
addressed to the applicable party at the address set forth below or such other
address as may hereafter be designated in writing by such party to the other
parties in accordance with the provisions of this Section:
(i) If to the Company, to:
The CIT Group, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Electronic Mail: ▇▇▇▇▇▇▇▇▇@▇▇▇.▇▇▇
(ii) If to the Initial Holder, to:
The Dai-Ichi Kangyo Bank, Limited
CIT Office-International Planning
and Coordination Division
▇-▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇-▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇
Attention: Senior Manager
Telephone: (▇▇▇) ▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇▇-▇▇▇▇
Electronic Mail: ▇▇▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇.▇▇.▇▇▇.▇▇.▇▇
(iii) If to any subsequent Holder, to the address
of such Person set forth in the records of the
Company.
-23-
26
(iv) In each case, with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Electronic Mail: ▇▇▇▇.▇▇▇▇@▇▇▇.▇▇▇
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; when receipt
is acknowledged, if telecopied or sent by electronic mail; the fourth business
day following the date delivered to a courier; and ten days after being
deposited in the mail, if sent first class or certified mail, return receipt
requested, postage prepaid.
6.5 Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, successors
and permitted assigns (including any Permitted Transferee of Registrable
Securities). Any Holder may assign its rights and obligations under this
Agreement to any transferee of its Registrable Securities representing at least
4% of the outstanding shares of Class A Common Stock in one transaction or a
series of transactions (other than a transferee that acquires such Registrable
Securities in a registered public offering or pursuant to a sale under Rule 144
of the Securities Act (or any successor rule)); provided, however, if any
transferee shall take and hold Registrable Securities, such transferee shall
promptly notify the Company and by taking and holding such Registrable
Securities such transferee shall automatically be entitled to receive the
benefits of and be conclusively deemed to have agreed to be bound by and to
perform all of the terms and provisions of this Agreement as if it were a party
hereto (and shall, for all purposes, be deemed a Holder under this Agreement).
If the Company shall so request, any successor or permitted assign (in
accordance with the foregoing) shall agree in writing to acquire and hold the
Registrable Securities subject to all of the terms hereof. For purposes of this
Agreement, "successor" for any entity other than a natural person shall mean a
successor to such entity as a result of such entity's merger, consolidation,
liquidation, dissolution, sale of substantially all of its assets, or similar
transaction. Except as provided above or otherwise permitted by this Agreement,
neither this Agreement nor any right, remedy, obligation or liability arising
hereunder or by reason hereof shall be assignable by any Holder or by the
Company without the consent of the other parties hereto.
6.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which, when so executed and delivered, shall be deemed to
be an original, but all of which counterparts, taken together, shall constitute
one and the same instrument.
6.7 Descriptive Headings, Etc. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms
-24-
27
contained herein. Unless the context of this Agreement otherwise requires: (1)
words of any gender shall be deemed to include each other gender; (2) words
using the singular or plural number shall also include the plural or singular
number, respectively; (3) the words "hereof", "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section and
paragraph references are to the Sections and paragraphs of this Agreement unless
otherwise specified; (4) the word "including" and words of similar import when
used in this Agreement shall mean "including, without limitation," unless
otherwise specified; (5) "or" is not exclusive; and (6) provisions apply to
successive events and transactions.
6.8 Severability. In the event that any one or more of the provisions,
paragraphs, words, clauses, phrases or sentences contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the other remaining provisions,
paragraphs, words, clauses, phrases or sentences hereof shall not be in any way
impaired, it being intended that all rights, powers and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
6.09 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York (without giving effect to the
conflict of laws principles thereof).
6.10 Remedies; Specific Performance. The parties hereto acknowledge that
money damages would not be an adequate remedy at law if any party fails to
perform in any material respect any of its obligations hereunder, and
accordingly agree that each party, in addition to any other remedy to which it
may be entitled at law or in equity, shall be entitled to seek to compel
specific performance of the obligations of any other party under this Agreement,
without the posting of any bond, in accordance with the terms and conditions of
this Agreement in any court of the United States or any State thereof having
jurisdiction, and if any action should be brought in equity to enforce any of
the provisions of this Agreement, none of the parties hereto shall raise the
defense that there is an adequate remedy at law. Except as otherwise provided by
law, a delay or omission by a party hereto in exercising any right or remedy
accruing upon any such breach shall not impair the right or remedy or constitute
a waiver of or acquiescence in any such breach. No remedy shall be exclusive of
any other remedy. All available remedies shall be cumulative. The failure to
file a Demand Registration Statement within 60 days of a Request under Section
2.1 or 2.3 shall constitute, in the absence of an injunction, a stop order or a
Blackout Period having been imposed or a Withdrawn Request, a breach of this
Agreement entitling the Holders to remedies hereunder.
6.11 Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises or
undertakings, other than those set
-25-
28
forth or referred to herein. This Agreement supersedes all prior agreements and
understandings between the Company and the other parties to this Agreement with
respect to such subject matter.
6.12 Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election in writing delivered to the
Company, be treated as the holder of such Registrable Securities for purposes of
any request or other action by any holder or holders of Registrable Securities
pursuant to this Agreement or any determination of any number or percentage of
shares of Registrable Securities held by any holder or holders of Registrable
Securities contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
-26-
29
6.13 Consent to Jurisdiction. Each party to this Agreement hereby
irrevocably and unconditionally agrees that any legal action, suit or proceeding
arising out of or relating to this Agreement or any agreements or transactions
contemplated hereby may be brought in any federal court of the Southern District
of New York or any state court located in New York County, State of New York,
and hereby irrevocably and unconditionally expressly submits to the personal
jurisdiction and venue of such courts for the purposes thereof and hereby
irrevocably and unconditionally waives any claim (by way of motion, as a defense
or otherwise) of improper venue, that it is not subject personally to the
jurisdiction of such court, that such courts are an inconvenient forum or that
this Agreement or the subject matter may not be enforced in or by such court.
Each party hereby irrevocably and unconditionally consents to the service of
process of any of the aforementioned courts in any such action, suit or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the address set forth or provided for in Section 6.4 of this
Agreement, such service to become effective 10 days after such mailing. Nothing
herein contained shall be deemed to affect the right of any party to serve
process in any manner permitted by law or commence legal proceedings or
otherwise proceed against any other party in any other jurisdiction to enforce
judgments obtained in any action, suit or proceeding brought pursuant to this
Section.
6.14 Further Assurances. Each party hereto shall do and perform or cause
to be done and performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments and documents as
any other party hereto reasonably may request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
6.15 No Inconsistent Agreements. The Company will not hereafter enter into
any agreement which is inconsistent with the rights granted to the Holders in
this Agreement.
6.16 Construction. The Company and the Initial Holder acknowledge that
each of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement with its legal counsel and that
this Agreement shall be construed as if jointly drafted by the Company and the
Initial Holder.
-27-
30
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
THE CIT GROUP, INC. THE DAI-ICHI KANGYO BANK, LIMITED
By: By:
---------------------------- -------------------------------
Name: Name:
Title: Title:
-28-