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EXHIBIT 4.6
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THE GNI GROUP, INC.
REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
THE GNI GROUP, INC.
AND
ITS STOCKHOLDERS
JULY 28, 1998
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Registration Rights Agreement
TABLE OF CONTENTS
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms in the Stockholders' Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
DEMAND REGISTRATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Requests for Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Long-Form Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Short-Form Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Effective Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Priority on Demand Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.6 Selection of Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.7 Black-Out Rights and Postponement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
PIGGYBACK REGISTRATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Right to Piggyback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 Piggyback Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Priority on Primary Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.4 Priority on Secondary Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
HOLDBACK AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.1 Holdback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.2 Company Holdback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
REGISTRATION PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
REGISTRATION EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.1 Fees Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.2 Counsel Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ▇▇
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ARTICLE VII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
UNDERWRITTEN OFFERINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.1 Demand Underwritten Offerings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.2 Incidental Underwritten Offerings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.1 Indemnification by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.2 Indemnification by a Selling Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.3 Indemnification Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.4 Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.5 Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.6 Periodic Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
RULE 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE XI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.1 No Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.2 Adjustments Affecting Registrable Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.3 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.4 Actions Taken; Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.7 Headings; Certain Conventions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.8 Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.9 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.11 Consent to Jurisdiction and Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.12 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Exhibit A-1 -- Form of Registration Rights Joinder Agreement for Permitted Transferees
Exhibit A-2 -- Form of Registration Rights Joinder Agreement for Additional Stockholders
Exhibit A-3 -- Form of Registration Rights Joinder Agreement for Transferees under Section 2.5 of the
Stockholders' Agreement
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REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of
July 28, 1998, among The GNI Group, Inc., a Delaware corporation (the
"Company"), 399 Venture Partners, Inc., a Delaware corporation ("399"), each
individual whose name appears on the signature pages hereto under the heading
"Management Member" (individually, a "Management Member" and collectively, the
"Management Members") and any other Person who executes a Joinder Agreement and
thereby becomes a party to this Agreement. Capitalized terms are used as
defined in Article I hereto.
RECITALS
WHEREAS, the Company and Green I Acquisition Corp. ("Green")
have entered into that certain Agreement and Plan of Merger dated as of
February 12, 1998 (as the same may be amended, supplemented or otherwise
modified from time to time, the "Merger Agreement"), pursuant to which, among
other things, Green is being merged with and into the Company with the Company
as the surviving corporation;
WHEREAS, the Merger Agreement contemplates the execution and
delivery of a stockholders agreement and a registration rights agreement at
the closing thereunder;
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, the parties hereto are executing and delivering a
Stockholders' Agreement among the parties hereto and dated the date hereof (as
the same may be amended, supplemented or otherwise modified from time to time,
the "Stockholders' Agreement").
NOW, THEREFORE, in connection with the Merger Agreement, the
Stockholders' Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS IN THE STOCKHOLDERS' AGREEMENT.
Unless otherwise defined herein, capitalized terms used in
this Agreement shall have the respective meanings assigned to them in the
Stockholders' Agreement.
1.2 DEFINITIONS.
The following defined terms, when used in this Agreement,
shall have the respective meanings set forth below (such definitions to be
equally applicable to both singular and plural forms of the terms defined):
"Additional Stockholder" has the meaning assigned to such term
in the Stockholders' Agreement, but only to the extent that (i) the Company has
granted the relevant Person registration
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Registration Rights Agreement
rights as a Stockholder hereunder and (ii) such Person has executed a
Registration Rights Joinder Agreement.
"Black-Out Notice" has the meaning assigned to it in Section 2.7(b).
"Demand Registration" means (i) any Qualifying Offering requested
in accordance with Section 2.1(a), or (ii) any Long-Form Registration or
Short-Form Registration requested in accordance with Section 2.1(b).
"Initial Public Offering" or "IPO" means the first time a
registration statement filed under the Securities Act with the Commission
respecting an offering, whether primary or secondary, of Common Stock (or
securities convertible, exercisable or exchangeable for or into Common Stock or
rights to acquire Common Stock or such securities), which is underwritten on a
firmly committed basis, is declared effective and the securities so registered
are issued and sold.
"Long-Form Registration" has the meaning assigned to it in
Section 2.1(b).
"Merger Agreement" has the meaning assigned to it in the recitals
hereto.
"Piggyback Holders" has the meaning assigned to it in Section 3.1.
"Piggyback Registration" has the meaning assigned to it in
Section 3.l.
"Registration Expenses" has the meaning assigned to it in
Section 6.l.
"Registrable Securities" means, at any time, (i) the shares of
Common Stock then issued and outstanding or which are issuable upon the
conversion, exercise or exchange of any Equity Equivalents or capital stock
(ii) any then outstanding securities into which shares of Common Stock shall
have been changed and (iii) any then outstanding securities resulting from any
reclassification or recapitalization of Common Stock; provided, however, that
"Registrable Securities" shall not include any shares of Common Stock or other
securities obtained or transferred pursuant to an effective registration
statement under the Securities Act or in a Rule 144 Transaction; and provided
further, however, that "Registrable Securities" shall not include any shares of
Common Stock or other securities which are held by a Person who is not a
Stockholder.
"Registration Rights Joinder Agreement" means a Registration Rights
Joinder Agreement in the form attached hereto as Exhibits A-1 to A-3.
"Required 399 Stockholders" means, as of the date of any
determination thereof, 399 Stockholders which then hold Registrable Securities
representing at least a majority (by number of shares) of the Registrable
Securities, on a Diluted Basis, then held by all 399 Stockholders.
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"Short-Form Registration" has the meaning assigned to it in
Section 2.1(b).
ARTICLE II
DEMAND REGISTRATIONS
2.1 REQUESTS FOR REGISTRATION.
(a) If the Company has not theretofore effected an
Initial Public Offering, then, at any time from and after the date hereof the
Required 399 Stockholders may request that the Company effect a Qualifying
Offering. Such a request shall specify the number of Registrable Securities
proposed to be sold by the Required 399 Stockholders. The Company shall use
all reasonable efforts to effect the Qualifying Offering within 120 days after
its receipt of such request. Within 10 days after its receipt of such request,
the Company will give written notice of such request to all other holders of
Registrable Securities. Subject to the provisions of Section 2.5, the Company
will use all reasonable efforts to include in the Qualifying Offering (i) all
Registrable Securities which the Required 399 Stockholders have requested to be
included therein and (ii) all other Registrable Securities which the
Stockholders have requested in writing, within 20 days after receipt of the
Company's notice, to be included therein. The Company will pay all
Registration Expenses in connection with a Qualifying Offering requested in
accordance with this Section.
(b) Subject to Sections 2.2, 2.3 and 2.7, at any time
from and after the date which is 91 days after the closing of an Initial Public
Offering, the Required 399 Stockholders may request registration under the
Securities Act of all or part of their Registrable Securities (i) on Form S-1
or S-2 or any similar long-form registration statement (any such registration,
a "Long-Form Registration"), or (ii) on Form S-3 or any similar short- form
registration statement (any such registration, a "Short-Form Registration"),
if the Company qualifies to use such short form. Such a request shall specify
the number of Registrable Securities proposed to be sold by the Required 399
Stockholders and shall specify the intended method of disposition thereof.
Within 10 days after its receipt of any such request, the Company will give
written notice of such request to all other holders of Registrable Securities.
Subject to the provisions of Section 2.5, the Company will use all reasonable
efforts to effect the registration under the Securities Act on the form
requested by the Required 399 Stockholders and to include in such registration,
(i) all Registrable Securities which the Required 399 Stockholders have so
requested to be included therein and (ii) all other Registrable Securities
which the Stockholders have requested in writing, within 30 days after receipt
of the Company's notice, to be included therein.
(c) If the Required 399 Stockholders request a Demand
Registration pursuant to Section 2.1(a) or 2.1(b), they may, at any time prior
to the effective date of the registration statement relating to such Demand
Registration, revoke such request by providing written notice to the
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Company; provided, however, that notwithstanding such revocation notice, such
Demand Registration shall be counted as a request for purposes of Section 2.2
unless, after consultation with the Company and any proposed underwriter, the
Required 399 Stockholders in good faith determine that the Registrable
Securities which they have requested to be registered would not be sold
pursuant to such Demand Registration within a reasonable amount of time or at a
price acceptable to such Required 399 Stockholder.
2.2 LONG-FORM REGISTRATIONS.
In addition to their right to request a Qualifying Offering,
the Required 399 Stockholders will be entitled to request up to three Long-Form
Registrations. The Company will pay all Registration Expenses in connection
with any such Long-Form Registration. All Long-Form Registrations (unless
otherwise requested by the Required 399 Stockholders) shall be underwritten
registrations.
2.3 SHORT-FORM REGISTRATIONS.
In addition to their right to request Long-Form Registrations,
the Required 399 Stockholders will be entitled to request an unlimited number
of Short-Form Registrations. The Company will pay all Registration Expenses in
connection with any such Short-Form Registration. Demand Registrations will be
Short-Form Registrations whenever the Company is qualified to use Form S-3 or
any similar short-form registration statement. Once the Company has become
subject to the reporting requirements of the Exchange Act, the Company will use
its reasonable best efforts to make Short-Form Registrations available for the
sale of Registrable Securities.
2.4 EFFECTIVE REGISTRATION STATEMENT.
No Demand Registration shall be deemed to have been requested
or effected for purposes of Sections 2.1(a) and 2.2:
(i) unless a registration statement with respect thereto
has become effective;
(ii) if, after it has become effective, any stop order,
injunction or other order or requirement of the
Commission or any other governmental agency or court
for any reason, affecting any of the Registrable
Securities covered by such registration statement, is
threatened in writing or issued by the Commission or
other governmental agency or court;
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(iii) if the Company declines to effect such Demand
Registration pursuant to Section 2.7(a) or delivers
a Black-Out Notice with respect to such requested
Demand Registration;
(iv) if the conditions to closing specified in the
purchase agreement or underwriting agreement entered
into in connection with such requested Demand
Registration are not satisfied by reason of a
failure by or inability of the Company to satisfy
any of such conditions, or the occurrence of an
event outside the reasonable control of the Required
399 Stockholders;
(v) if the Required 399 Stockholders have delivered to
the Company the revocation notice contemplated by
Section 2.1(c); or
(vi) other than in the case of a Qualifying Offering, if
the Required 399 Stockholders are not able to
register and sell at least 70% of the amount of
Registrable Securities requested to be included in
the Demand Registration;
provided that the Company will pay all Registration Expenses in connection with
any Demand Registration if pursuant to this Section 2.4 the registration is
deemed not to have been requested or effected.
2.5 PRIORITY ON DEMAND REGISTRATIONS.
(a) Without the written consent of the Required 399
Stockholders, the Company (i) will not include in any Long-Form Registrations
and Short-Form Registrations requested pursuant to Section 2.1(b), any
securities which are not Registrable Securities and (ii) will not include in
any Qualifying Offering any securities, other than Registrable Securities or
shares of Common Stock to be sold by the Company.
(b) If the Required 399 Stockholders and other
Stockholders request Registrable Securities to be included in a Demand
Registration which is an underwritten offering and the managing underwriter
advises the Company in writing that in its opinion the number of Registrable
Securities requested to be included exceeds the number of Registrable
Securities which can be sold in such offering within a price range acceptable
to the Required 399 Stockholders, the Company will include any securities to be
sold in such Demand Registration in the following order:
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(i) in the case of a Qualifying Offering, (x) first,
subject to Section 2.5(a), the securities the
Company proposes to sell; (y) second, the
Registrable Securities requested to be included in
such registration by the Stockholders, provided,
that if the managing underwriter determines in good
faith that a lower number of Registrable Securities
requested to be included by the Stockholders should
be included, then only that lower number of
Registrable Securities requested to be included by
the Stockholders shall be included in such
registration, and the Stockholders shall participate
in the registration on a pro rata basis in
accordance with the number of Registrable Securities
requested to be included in such registration by
each such Stockholder, provided, further, that if
the managing underwriter determines in good faith
that a lower number of Registrable Securities held
by Management Stockholders and Additional Management
Stockholders than such pro rata portion should be
included, then such lower number shall be included
and, as a result thereof, a greater number of
Registrable Securities owned by the other
Stockholders may be sold; and (z) third, any
securities other than Registrable Securities to be
sold by persons other than the Company included
pursuant to Section 2.5(a) hereof.
(ii) in the case of any Demand Registration other than a
Qualifying Offering, (w) first, the Registrable
Securities owned by the Required 399 Stockholders;
(x) second, the Registrable Securities requested to
be included in such registration by other
Stockholders, provided, that if the managing
underwriter determines in good faith that a lower
number of Registrable Securities requested to be
included by such other Stockholders should be
included, then only that lower number of Registrable
Securities requested to be included by such other
Stockholders shall be included in such registration,
and such other Stockholders shall participate in the
registration on a pro rata basis in accordance with
the number of Registrable Securities requested to be
included in such registration by each such
Stockholder, provided, further, that if the managing
underwriter determines in good faith that a lower
number of Registrable Securities held by Management
Stockholders and Additional Management Stockholders
than such pro rata portion should be included, then
such lower number shall be included and, as a result
thereof, a greater number of Registrable Securities
owned by the other Stockholders may be sold; (y)
third, subject to Section 2.5(a), the securities the
Company proposes to sell; and (z) fourth, any
securities other than Registrable Securities to be
sold by persons other than the Company included
pursuant to Section 2.5(a) hereof.
(c) Any Person other than Stockholders including any
securities in such registration pursuant to Article II hereof must pay its
share of the Registration Expenses as provided in Article VI hereof.
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2.6 SELECTION OF UNDERWRITERS.
The Required 399 Stockholders will have the right to select
the underwriters and the managing underwriter to administer any Demand
Registration (which underwriters and managing underwriter shall be reasonably
acceptable to the Company).
2.7 BLACK-OUT RIGHTS AND POSTPONEMENT.
(a) The Company shall not be required to effect a Demand
Registration if the Company, within the 90-day period preceding the date of a
request for a Demand Registration, has effected a registration of securities in
which the Required 399 Stockholders were entitled to participate to the fullest
extent pursuant to Demand Registration rights under Article II or Piggyback
Registration rights under Article III.
(b) The Company may, upon written notice (a "Black-Out
Notice") to the Required 399 Stockholders requesting a Demand Registration,
require the Required 399 Stockholders to withdraw such Demand Registration upon
the good faith determination by the Company that such postponement is necessary
(i) to avoid disclosure of material non- public information or (ii) as a result
of a pending material financing or acquisition transaction, and, in each case,
the 399 Stockholders may not request another Demand Registration for a period
of up to 60 days, as specified by the Company in such Black-Out Notice. The
Company may only give a Black-Out Notice where the giving of such notice has
been specifically approved by the Board which for so long as the 399
Stockholders shall exercise their right to designate directors, shall require
Affirmative Board Vote. Upon receipt of a Black-Out Notice, the related
Demand Registration shall be deemed to be rescinded and retracted and shall not
be counted as a Demand Registration for any purpose. The Company may not
deliver more than two Black-Out Notices in any 12-month period.
ARTICLE III
PIGGYBACK REGISTRATIONS
3.1 RIGHT TO PIGGYBACK.
Whenever the Company proposes (other than pursuant to a Demand
Registration or an Initial Public Offering (unless otherwise agreed by the
Company)) to register (whether for the Company's own account or for the account
of any other Person) any of its equity securities under the Securities Act
(other than on Forms S-4 or S-8 or any successor forms) (a "Piggyback
Registration"), the Company will give prompt written notice to all 399
Stockholders, Management Stockholders and Additional Stockholders (the
"Piggyback Holders") of its intention to effect such a registration. Such
notice shall offer each Piggyback Holder the opportunity to register, on the
same terms and conditions available to the Company, such number of such
Piggyback Holder's Registrable Securities as such Piggyback Holder may request.
The Company will include in such registration all Registrable Securities with
respect to which the Company has received written requests for
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inclusion therein by the Piggyback Holders within 30 days after their receipt
of the Company's notice, subject to the provisions of Sections 3.3 and 3.4.
3.2 PIGGYBACK EXPENSES.
The Registration Expenses of the holders of Registrable
Securities will be paid by the Company in all Piggyback Registrations.
3.3 PRIORITY ON PRIMARY REGISTRATIONS.
If a Piggyback Registration is an underwritten primary
registration on behalf of the Company, and the managing underwriter advises the
Company in writing that in its opinion the number of securities requested to be
included in such registration is such that the success of the offering would be
materially and adversely affected, the Company will include any securities to
be sold in such Piggyback Registration in the following order: (i) first, the
securities which the Company proposes to sell, (ii) second, the Registrable
Securities requested to be included in such registration by the Piggyback
Holders, provided that if the managing underwriter determines in good faith
that a lower number of Registrable Securities should be included, then the
Company shall be required to include in such registration only that lower
number of Registrable Securities, and the Piggyback Holders shall participate
in such registration on a pro rata basis in accordance with the number of
Registrable Securities requested to be included in such registration by each
Piggyback Holder, provided, further, that if the managing underwriter
determines in good faith that a lower number of Registrable Securities held by
Management Stockholders and Additional Management Stockholders than such pro
rata portion should be included, then such lower number shall be included and,
as a result thereof, a greater number of Registrable Securities owned by the
other Stockholders may be sold, and (iii) third, any other securities proposed
to be included in such registration.
3.4 PRIORITY ON SECONDARY REGISTRATIONS.
If a Piggyback Registration is an underwritten secondary
registration on behalf of holders of the Company's securities, and the managing
underwriter advises the Company in writing that in its opinion the number of
securities requested to be included in such registration is such that the
success of the offering would be materially and adversely affected, the Company
will include any securities to be sold in such registration in the following
order: (i) first, the securities which such holders propose to sell, (ii)
second, the Registrable Securities requested to be included in such
registration by the Piggyback Holders, provided that if the managing
underwriter determines in good faith that a lower number of Registrable
Securities should be included, then the Company shall be required to include in
such registration only that lower number of Registrable Securities, and the
Piggyback Holders shall participate in such registration on a pro rata basis in
accordance with the number of Registrable Securities requested to be included
in such registration by each Piggyback
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Holder, provided, further, that if the managing underwriter determines in good
faith that a lower number of Registrable Securities held by Management
Stockholders and Additional Management Stockholders than such pro rata portion
should be included, then such lower number shall be included and, as a result
thereof, a greater number of Registrable Securities owned by the other
Stockholders may be sold, and (iii) third, any other securities proposed to be
included in such registration.
ARTICLE IV
HOLDBACK AGREEMENTS
4.1 HOLDBACK.
Each holder of Registrable Securities agrees not to effect any
public sale or distribution of Registrable Securities, or any securities
convertible, exchangeable or exercisable for or into Registrable Securities,
during the seven days prior to, and the 90-day period beginning on, the
effective date of (a) an Initial Public Offering, (b) any underwritten Demand
Registration or (c) any underwritten Piggyback Registration in which such
holder had an opportunity to participate without cutback under Article III
hereof (in each case except as part of such Initial Public Offering or
underwritten registration), unless the managing underwriter of such Initial
Public Offering or underwritten registration otherwise agrees.
4.2 COMPANY HOLDBACK.
The Company agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible,
exchangeable or exercisable for or into such securities, during the 14 days
prior to, and during the 90-day period beginning on, the effective date of any
underwritten Demand Registration or any underwritten Piggyback Registration in
which holders of Registrable Securities are selling stockholders (except as
part of such underwritten registration or pursuant to registration on Form S-4
or S-8 or any similar successor form), unless the managing underwriter of such
underwritten Demand Registration or underwritten Piggyback Registration
otherwise agrees, and (ii) to use all reasonable efforts to cause each holder
of at least 5% (on a Diluted Basis) of its equity securities to agree not to
effect any public sale or distribution of any such equity securities or any
securities convertible, exchangeable or exercisable for or into such equity
securities during such period (except as part of such underwritten
registration, if otherwise permitted), unless the managing underwriter of such
underwritten Demand Registration or underwritten Piggyback Registration
otherwise agrees.
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ARTICLE V
REGISTRATION PROCEDURES
Whenever the Stockholders have requested that any Registrable
Securities be registered in accordance with Article II or III, the Company will
use all reasonable efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of disposition
thereof, and pursuant thereto the Company as expeditiously as possible will
(or, in the case of clause (p) below, will not):
(a) prepare and file with the Commission a registration
statement with respect to such Qualifying Offering or such Registrable
Securities, as the case may be (such registration statement to include in each
case all information which the holders of the Registrable Securities to be
registered thereby, if any, shall reasonably request) and use all reasonable
efforts to cause such registration statement to become effective, provided that
as promptly as practicable before filing a registration statement or prospectus
or any amendments or supplements thereto, the Company will (i) furnish copies
of all such documents proposed to be filed to one counsel selected by the
Required 399 Stockholders, and the Company shall not file any such documents to
which any such relevant counsel shall have reasonably objected on the grounds
that such document does not comply in all material respects with the
requirements of the Securities Act, and (ii) notify each 399 Stockholder, in
the case of a Qualifying Offering requested pursuant Section 2.1(a), and each
holder of Registrable Securities covered by such registration statement, in all
other cases, of (x) any request by the Commission to amend such registration
statement or amend or supplement any prospectus, or (y) any stop order issued
or threatened by the Commission, and take all reasonable actions required to
prevent the entry of such stop order or to remove it if entered;
(b) (i) prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective at all times during the period commencing on the effective
date of such registration statement and ending on the first date as of which
all Registrable Securities (and all shares of Common Stock to be sold by the
Company, in the case of a Qualifying Offering requested pursuant to Section
2.1(a)) covered by such registration statement are sold in accordance with the
intended plan of distribution set forth in such registration statement and (ii)
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during
such period in accordance with the intended methods of disposition by the
sellers thereof set forth in such registration statement;
(c) furnish, without charge, (i) in the case of a
Qualifying Offering requested pursuant to Section 2.1(a), to each 399
Stockholder, five conformed copies of such registration statement, each
amendment and supplement thereto and the prospectus included in such
registration statement (including each preliminary prospectus and, in the case
of two of such copies, including all exhibits thereto and documents
incorporated by reference therein), and (ii) in all other cases, to
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Registration Rights Agreement
each seller of Registrable Securities covered by such registration statement,
such number of conformed copies of such registration statement, each amendment
and supplement thereto, the prospectus included in such registration statement
(including each preliminary prospectus and, in each case, including all
exhibits thereto and documents incorporated by reference therein) and such
other documents as such seller may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such seller;
(d) use its best efforts to register or qualify the
Registrable Securities, if any, covered by such registration statement under
such other securities or blue sky laws of such jurisdictions as any seller
thereof shall reasonably request, to keep such registration or qualification in
effect for so long as such registration statement remains in effect and to do
any and all other acts and things which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of any such Registrable Securities owned by such seller;
provided, however, that the Company will 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 clause (d), (ii) subject itself to taxation in
any such jurisdiction or (iii) consent to general service of process in any
such jurisdiction;
(e) furnish to each seller of the Registrable
Securities, if any, covered by such registration statement a signed copy,
addressed to such seller (and the underwriters, if any) of an opinion of
counsel for the Company or special counsel to the selling stockholders, dated
the effective date of such registration statement (and, if such registration
statement includes an underwritten public offering, dated the date of the
closing under the underwriting agreement), reasonably satisfactory in form and
substance to such seller, covering substantially the same matters with respect
to such registration statement (and the prospectus included therein) as are
customarily covered in opinions of issuer's counsel delivered to the
underwriters in underwritten public offerings, and such other legal matters as
the seller (or the underwriters, if any) may reasonably request;
(f) notify each 399 Stockholder (in the case of a
Qualifying Offering requested pursuant to Section 2.1(a)) and each seller of
Registrable Securities covered by such registration statement (in all other
cases), at a time when a prospectus relating to such Qualifying Offering or
Registrable Securities (as the case may be) is required to be delivered under
the Securities Act, of the occurrence of any event known to the Company as a
result of which the prospectus included in such registration statement, as then
in effect, contains an untrue statement of a material fact or omits to state
any fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were
made; and, at the request of any seller of Registrable Securities covered by
such registration statement, (i) the Company will prepare and furnish such
seller a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, 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 not
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Registration Rights Agreement
misleading in the light of the circumstances under which they were made and
(ii) the Company shall extend the period during which such registration
statement shall be maintained effective by the number of days during the period
from and including the date of the giving of such notice to such seller to the
date when the Company made available to such seller an appropriately amended or
supplemented prospectus;
(g) cause the Registrable Securities, if any, covered by
such registration statement to be listed on each securities exchange on which
similar securities issued by the Company are then listed and to enter into such
customary agreements as may be required in furtherance thereof, including
without limitation listing applications and indemnification agreements in
customary form;
(h) provide a transfer agent and registrar for the
Registrable Securities, if any, covered by such registration statement not
later than the effective date of such registration statement;
(i) enter into such customary arrangements and take all
such other actions as the holders of a majority (by number of shares) of the
Registrable Securities, if any, covered by such registration statement or the
underwriters, if any, reasonably request in order to expedite or facilitate the
Qualifying Offering or the disposition of such Registrable Securities
(including using its best efforts to effect a stock split or a combination of
shares);
(j) make available for inspection by any seller of
Registrable Securities covered by such registration statement, any underwriter
participating in any disposition of securities pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement;
(k) subject to other provisions hereof, use all
reasonable efforts to cause the Registrable Securities, if any, covered by such
registration statement to be registered with or approved by such governmental
agencies or authorities or self-regulatory organizations as may be necessary to
enable the sellers thereof to consummate the disposition of such Registrable
Securities;
(l) use all reasonable efforts to obtain a "comfort"
letter, dated the effective date of such registration statement (and, if such
registration includes an underwritten offering, dated the date of the closing
under the underwriting agreement), signed by the independent public accountants
who have certified the Company's financial statements included in such
registration statement, addressed to the Company, to each seller of the
Registrable Securities (if any) covered by such registration statement, and to
the underwriters, if any, covering substantially the same matters with respect
to such registration statement (and the prospectus included therein) and with
respect to events subsequent to the date of such financial statements, as are
customarily covered in accountants' letters
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Registration Rights Agreement
delivered to the underwriters in underwritten public offerings of securities
and such other financial matters as any such seller or the underwriters, if
any, may reasonably request;
(m) otherwise use all reasonable efforts to comply with
all applicable rules and regulations of the Commission and make available to
its security holders, in each case as soon as practicable, an earnings
statement covering a period of at least twelve months, beginning with the first
month after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act;
(n) permit any holder of Registrable Securities covered
by such registration statement, which holder, in the sole judgment, exercised
in good faith, of such holder might be deemed to be a controlling person of the
Company (within the meaning of the Securities Act or the Exchange Act) to
participate in the preparation of such registration statement and to include
therein material, furnished to the Company in writing, which in the reasonable
judgment of such holder should be included and which is reasonably acceptable
to the Company;
(o) use all reasonable efforts to obtain the lifting at
the earliest possible time of any stop order suspending the effectiveness of
such registration statement or of any order preventing or suspending the use of
any preliminary prospectus included therein;
(p) at any time file or make any amendment to such
registration statement, or any amendment of or supplement to the prospectus
included therein (including amendments of the documents incorporated by
reference into the prospectus), (i) of which each 399 Stockholder and the
managing underwriters (in the case of a Qualifying Offering requested pursuant
to Section 2.1(a)) or each seller of Registrable Securities covered by such
registration statement or the managing underwriters, if any (in all other
cases), shall not have previously been advised and furnished a copy or (ii) to
which the Required 399 Stockholders, the managing underwriters or counsel for
the Required 399 Stockholders or the managing underwriters (in the case of a
Qualifying Offering requested pursuant to Section 2.1(a)), or the sellers of a
majority (by number of shares) of the Registrable Securities covered by such
registration statement, the managing underwriters (if any) or counsel for such
sellers or any such managing underwriters (in all other cases), shall
reasonably object;
(q) make such representations and warranties (subject to
appropriate disclosure schedule exceptions) to the sellers of the Registrable
Securities, if any, covered by such registration statement and the
underwriters, if any, in form, substance and scope as are customarily made by
issuers to underwriters and selling holders, as the case may be, in
underwritten public offerings of substantially the same type; and
(r) if such registration statement refers to any seller
of Registrable Securities covered thereby by name or otherwise as the holder of
any securities of the Company then (whether
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Registration Rights Agreement
or not such seller is or might be deemed to be a controlling person of the
Company), (i) at the request of such seller, insert therein language, in form
and substance reasonably satisfactory to such seller, the Company and the
managing underwriters, if any, to the effect that the holding by such seller of
such securities is not to be construed as a recommendation by such seller of
the investment quality of the Registrable Securities or the Company's other
securities covered thereby and that such holding does not imply that such
seller will assist in meeting any future financial requirements of the Company,
or (ii) in the event that such reference to such seller by name or otherwise is
not required by the Securities Act, any similar Federal or state statute, or
any rule or regulation of any regulatory body having jurisdiction over the
offering, at the request of such seller, delete the reference to such seller.
ARTICLE VI
REGISTRATION EXPENSES
6.1 FEES GENERALLY.
All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation internal expenses
(including without limitation all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit or quarterly review, the expense of any liability insurance, the expenses
and fees for listing securities on one or more securities exchanges in
connection with a Qualifying Offering or pursuant to clause (g) of Article V,
all registration and filing fees, 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), printing expenses, messenger and delivery expenses, and fees and
disbursements of counsel for the Company and all independent certified public
accountants, underwriters (excluding underwriting fees, discounts and
commissions) and other Persons retained by the Company (all such expenses being
herein called "Registration Expenses") shall be borne by the Company, except
that each Stockholder shall pay any underwriting fees, discounts or commissions
attributable to the sale of its Registrable Securities.
6.2 COUNSEL FEES.
In connection with each Demand Registration, the Company will
reimburse the 399 Stockholders for the reasonable fees and disbursements of one
counsel selected by the Required 399 Stockholders.
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Registration Rights Agreement
ARTICLE VII
UNDERWRITTEN OFFERINGS
7.1 DEMAND UNDERWRITTEN OFFERINGS.
If requested by the underwriters for any underwritten offering
of Registrable Securities pursuant to a Demand Registration, the Company will
enter into an underwriting agreement with such underwriters for such offering,
such agreement to be satisfactory in substance and form to the Required 399
Stockholders requesting such Demand Registration (or, in the case of a
Qualifying Offering requested pursuant to Section 2.1(a), the holders of a
majority (by number of shares) of the Registrable Securities included in such
Demand Registration) and the underwriters, to contain such representations and
warranties by the Company and such other terms as are generally included in
agreements of this type, including indemnities customarily included in such
agreements, and to be otherwise reasonably satisfactory in form and substance
to the Company. The holders of the Registrable Securities to be distributed by
such underwriters will cooperate in good faith with the Company in the
negotiation of the underwriting agreement. The holders of the Registrable
Securities to be distributed by such underwriters shall be parties to such
underwriting agreement and may, at their 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 also be conditions precedent to the obligations of such
holders of Registrable Securities. The Company shall cooperate with any such
holder of Registrable Securities in order to limit any representations or
warranties to, or agreements with, the Company or the underwriters to be made
by such holder only to representations, warranties or agreements regarding such
holder, such holder's Registrable Securities, such holder's intended method of
distribution and any other representation required by applicable law.
7.2 INCIDENTAL UNDERWRITTEN OFFERINGS.
If the Company at any time proposes to register any of its
equity securities under the Securities Act as contemplated by Article III and
such equity securities are to be distributed by or through one or more
underwriters, the Company will, if requested by any Piggyback Holder as
provided in Article III, arrange for such underwriters to include all the
Registrable Securities to be offered and sold by such Piggyback Holder, subject
to the limitations set forth in Article III, among the securities to be
distributed by such underwriters. The holders of the Registrable Securities to
be distributed by such underwriters shall be parties to the underwriting
agreement between the Company and such underwriters, and may, at their 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
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Registration Rights Agreement
underwriters under such underwriting agreement also be conditions precedent to
the obligations of such holders of Registrable Securities. The Company shall
cooperate with any such holder of Registrable Securities in order to limit any
representations or warranties to, or agreements with, the Company or the
underwriters to be made by such holder only to representations, warranties or
agreements regarding such holder, such holder's Registrable Securities, such
holder's intended method of distribution and any other representation required
by applicable law.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY.
The Company agrees to indemnify and hold harmless, to the
fullest extent permitted by law, each of the holders of any Registrable
Securities covered by a registration statement that has been filed with the
Commission pursuant to this Agreement, each other Person, if any, who controls
such holder within the meaning of the Securities Act or the Exchange Act, and
each of their respective directors, general partners and officers, as follows:
(i) against any and all loss, liability, claim, damage
or expense (other than amounts paid in settlement)
incurred by such Person arising out of or based upon
an untrue statement or alleged untrue statement of a
material fact contained in such registration
statement (or any amendment or supplement thereto),
including all documents incorporated therein by
reference, or in any preliminary prospectus or
prospectus included therein (or any amendment or
supplement thereto) or the omission or alleged
omission therefrom of 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;
(ii) against any and all loss, liability, claim, damage
and expense incurred by such Person to the extent of
the aggregate amount paid in settlement of any
litigation, or any investigation or proceeding by
any governmental agency or body, in each case
whether commenced or threatened, or of any claim
whatsoever, that is based upon any such untrue
statement or omission or any such alleged untrue
statement or omission, if such settlement is
effected with the written consent of the
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Registration Rights Agreement
Company (which consent shall not be unreasonably
withheld or delayed); and
(iii) against any and all expense incurred by such Person
in connection with investigating, preparing or
defending against any litigation or any
investigation or proceeding by any governmental
agency or body, in each case whether commenced or
threatened in writing, or against any claim
whatsoever, that is based upon any such untrue
statement or omission or any such alleged untrue
statement or omission, to the extent that any such
expense is not paid under clause (i) or (ii) above;
provided, however, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of or based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such holder expressly for use in the preparation of
any registration statement (or any amendment or supplement thereto), including
all documents incorporated therein by reference, or in any preliminary
prospectus or prospectus included therein (or any amendment or supplement
thereto); and provided further, however, that the Company will not be liable to
any holder of Registrable Securities (or any other indemnified Person) under
the indemnity agreement in this Section 8.1, with respect to any preliminary
prospectus or the final prospectus or the final prospectus as amended or
supplemented, as the case may be, to the extent that any such loss, liability,
claim, damage or expense of such holder (or other indemnified Person) results
from the fact that such holder sold Registrable Securities to a Person to whom
there was not sent or given, at or prior to the written confirmation of such
sale, a copy of the final prospectus or of the final prospectus as then amended
or supplemented, whichever is most recent, if the Company has previously and
timely furnished copies thereof to such holder. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
such holder or any other Person eligible for indemnification under this Section
8.1, and shall survive the transfer of such securities by such seller.
8.2 INDEMNIFICATION BY A SELLING STOCKHOLDER.
In connection with any registration statement in which a
holder of Registrable Securities is participating, each such holder agrees to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 8.1 of this Agreement), to the extent permitted by law, the
Company and its directors, officers and controlling Persons, and their
respective directors, officers and general partners, with respect to any
statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary, final or summary prospectus included
therein, or any amendment or supplement thereto, or to any such prospectus, if
such statement or alleged statement or omission or alleged omission was made in
reliance upon and
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Registration Rights Agreement
in conformity with written information that relates only to such holder or the
plan of distribution that is expressly furnished to the Company by or on behalf
of such holder for use in the preparation of such registration statement,
preliminary, final or summary prospectus or amendment or supplement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company, or such holder, as the case may be, or any
of their respective directors, officers, controlling Persons or general
partners and shall survive the transfer of Registrable Securities by such
holder. With respect to each claim pursuant to this Section 8.2, each holder's
maximum liability under this Section 8.2 shall be limited to an amount equal to
the net proceeds actually received by such holder (after deducting any
underwriting fees, discount and expenses) from the sale of Registrable
Securities being sold pursuant to such registration statement or prospectus by
such holder.
8.3 INDEMNIFICATION PROCEDURE.
Within 10 days after receipt by an indemnified party hereunder
of written notice of the commencement of any action or proceeding involving a
claim referred to in Section 8.1 or Section 8.2, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action; provided,
however, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under
Section 8.1 or Section 8.2 except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such action or
proceeding is brought against an indemnified party, the indemnifying party will
be entitled to participate in and to assume the defense thereof, jointly with
any other indemnifying party similarly notified, to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to
such indemnified party for any legal fees and expenses subsequently incurred by
the latter in connection with the defense thereof, unless in such indemnified
party's reasonable judgment an actual or potential conflict of interest between
such indemnified and indemnifying parties may exist in respect of such claim,
in which case the indemnifying party shall not be liable for the fees and
expenses of (i) in the case of a claim referred to in Section 8.1, more than
one counsel (in addition to any local counsel) for all indemnified parties
selected by the holders of a majority (by number of shares) of the Registrable
Securities held by such indemnified parties, or (ii) in the case of a claim
referred to in Section 8.2, more than one counsel (in addition to any local
counsel) for the Company, in each case in connection with any one action or
separate but similar or related actions or proceedings. An indemnifying party
who is not entitled to (pursuant to the immediately preceding sentence), or
elects not to, assume the defense of a claim will not be obligated to pay the
fees and expenses of more than one counsel (in addition to any local counsel)
for all parties indemnified by such indemnifying party with respect to such
claim, unless in the reasonable judgment of any indemnified party an actual or
potential conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim, in which event
the indemnifying party shall be obligated to pay the fees and
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Registration Rights Agreement
expenses of such additional counsel or counsels as may be reasonable in light
of such conflict. The indemnifying party will not, without the prior written
consent of each indemnified party, settle or compromise or consent to the entry
of any judgment in any pending or threatened claim, action, suit, investigation
or proceeding in respect of which indemnification may be sought hereunder
(whether or not such indemnified party or any Person who controls such
indemnified party is a party to such claim, action, suit, investigation or
proceeding), unless such settlement, compromise or consent includes an
unconditional release of such indemnified party from all liability arising out
of such claim, action, suit, investigation or proceeding. Notwithstanding
anything to the contrary set forth herein, and without limiting any of the
rights set forth above, in any event any indemnified party will have the right
to retain, at its own expense, counsel with respect to the defense of a claim.
8.4 UNDERWRITING AGREEMENT.
The Company, and each holder of Registrable Securities
requesting registration of all or any part of such holder's Registrable
Securities pursuant to Article II or Article III, shall provide for the
foregoing indemnity (with appropriate modifications) in any underwriting
agreement entered into in connection with a Demand Registration or a Piggyback
Registration with respect to any required registration or other qualification
of Registrable Securities under any Federal or state law or regulation of any
governmental authority.
8.5 CONTRIBUTION.
If the indemnification provided for in Section 8.1 or 8.2 is
unavailable to hold harmless an indemnified party under such Section, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages, liabilities and
expenses referred to in Section 8.1 or Section 8.2, as the case may be, in such
proportion as is appropriate to reflect the relative fault of such indemnifying
party, on the one hand, and such indemnified party, on the other hand, in
connection with statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations, including the relative benefits received by each
party from the offering of the securities covered by the relevant registration
statement, the parties' relative knowledge and access to information concerning
the matter with respect to which the relevant claim was asserted and the
parties' relative opportunities to correct and prevent any relevant statement
or omission. Without limiting the generality of the foregoing, the parties'
relative fault 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
the indemnifying party or the indemnified party and the parties' relative
intent, knowledge, access to relevant information and opportunity to correct or
prevent any such untrue statements or omission. The parties hereto agree that
it would not be just and equitable if contributions pursuant to this Section
8.5 were to be determined by pro rata or per capita allocation (even if the
underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take
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Registration Rights Agreement
account of the equitable considerations referred to in the first and second
sentences of this Section 8.5. The amount paid by an indemnified party as a
result of the losses, claims, damages, liabilities or expenses referred to in
the first sentence of this Section 8.5 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending the relevant action or proceeding and shall be
limited as provided in Section 8.3 if the indemnifying party has assumed the
defense of the relevant action or proceeding in accordance with the provisions
of Section 8.3. Promptly after receipt by an indemnified party under this
Section 8.5 of notice of the commencement of any action or proceeding against
such party in respect of which a claim for contribution may be made against an
indemnifying party under this Section 8.5, such indemnified party shall notify
the indemnifying party in writing of the commencement thereof if the notice
specified in Section 8.3 has not been given with respect to such action or
proceeding; provided, however, that the omission to so notify the indemnifying
party shall not relieve the indemnifying party from any liability which it may
otherwise have to any indemnified party under this Section 8.5, except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. The Company and each holder of Registrable Securities agrees with
each other and the underwriters of the Registrable Securities, if requested by
such underwriters, that (i) the underwriters' portion of the contribution paid
to such holders pursuant to this Section 8.5 shall not exceed the total
underwriting fees, discounts and commissions in connection with the relevant
offering and (ii) that the total amount of any such holder's contributions
under this Section 8.5 shall not exceed an amount equal to the net proceeds
actually received by such holder from the sale of Registrable Securities in the
offering to which the losses, liabilities, claims, damages or expenses of the
indemnified parties relate. 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.
8.6 PERIODIC PAYMENTS.
The indemnification required by this Article VIII shall be
made by periodic payments of the amount thereof during the course of the
relevant investigation or defense, as and when bills are received or expense,
loss, damage or liability is incurred.
ARTICLE IX
RULE 144
If the Company shall have filed a registration statement
pursuant to the requirements of Section 12 of the Exchange Act or a
registration statement pursuant to the requirements of the Securities Act, the
Company covenants that it will file the reports required to be filed by it
under the Securities Act and the Exchange Act (or, if the Company is not
required to file such reports, it will, upon the request of any holder of
Registrable Securities, make publicly available other information), and it will
take such further action as any holder of Registrable Securities may reasonably
request,
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Registration Rights Agreement
all to the extent required from time to time to enable such holder to sell
shares of Registrable Securities without registration under the Securities Act
in compliance with (i) Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or (ii) any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written statement as to
whether it has complied with such requirements.
ARTICLE X
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No holder of Registrable Securities may participate in any
underwritten registration hereunder unless such holder (i) agrees to sell such
holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the Person or Persons entitled hereunder to approve
such arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements, escrow agreements and other
documents reasonably required under the terms of such underwriting arrangements
and consistent with the provisions of this Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 NO INCONSISTENT AGREEMENTS.
The Company represents and warrants that it does not currently
have, and covenants that it will not hereafter enter into, any agreement which
is inconsistent with, or would otherwise restrict the performance by the
Company of, its obligations hereunder.
11.2 ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES.
The Company will use all reasonable efforts not to take any
action, and not to fail to take any action which it may properly take, with
respect to its securities if such action or failure to act would adversely
affect (a) the ability of the holders of Registrable Securities to include
Registrable Securities in a registration undertaken pursuant to this Agreement
or (b) to the extent within the Company's control, would adversely affect the
marketability of such Registrable Securities in any such registration (it being
understood that the actions referred to in this Section 11.2 include effecting
a stock split or a combination of shares).
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Registration Rights Agreement
11.3 SPECIFIC PERFORMANCE.
The parties hereto agree that irreparable damage would occur
in the event any provision of this Agreement was not performed in accordance
with the terms hereof and that the parties shall be entitled to specific
performance of the terms hereof, in addition to any other remedy that may be
available to any of them at law or equity; provided, however, that each of the
parties hereto agrees to provide the other parties with written notice at least
two business days prior to filing any motion or other pleading seeking a
temporary restraining order, a temporary or permanent injunction, specific
performance, or any other equitable remedy and to give the other parties and
their counsel a reasonable opportunity to attend and participate in any
judicial or administrative hearing or other proceeding held to adjudicate or
rule upon any such motion or pleading.
11.4 ACTIONS TAKEN; AMENDMENTS AND WAIVERS.
Except as otherwise provided herein, no modification,
amendment or waiver of any provision of this Agreement will be effective
against the Company or any holder of Registrable Securities, unless such
modification, amendment or waiver is approved in writing by the Company, the
Required 399 Stockholders and Stockholders (other than the 399 Stockholders)
which then hold in the aggregate more than 50% of the Registrable Securities
held by such Stockholders on a Diluted Basis. Each of the Stockholders and the
Company shall be bound by each modification, amendment or waiver authorized in
accordance with this Section 11.4, regardless of whether the certificates
evidencing the Registrable Securities shall have been marked to indicate such
modification, amendment or waiver. The failure of any party hereto to enforce
any of the provisions of this Agreement will in no way be construed as a waiver
of such provisions and will not affect the right of such party thereafter to
enforce each and every provision of this Agreement in accordance with its
terms.
11.5 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit
of and be enforceable by the parties hereto and their respective successors and
assigns. In addition, and whether or not any express assignment has been made,
the provisions of this Agreement which are for the benefit of purchasers or
holders of Registrable Securities are also for the benefit of, and enforceable
by, any subsequent holder of Registrable Securities, except to the extent
reserved to or by the transferor in connection with any such transfer;
provided, however, that the benefits of this Agreement shall inure to and be
enforceable by any transferee of Registrable Securities only if such transferee
shall have acquired such Registrable Securities in accordance with the terms of
the Stockholders' Agreement and shall have executed a Registration Rights
Joinder Agreement.
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Registration Rights Agreement
11.6 NOTICES.
(a) All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally against written receipt or by facsimile transmission or
mailed (by registered or certified mail, postage prepaid, return receipt
requested) or delivered by reputable overnight courier, fee prepaid, to the
parties at the following addresses or facsimile numbers:
If to any 399 Stockholder, to:
399 Venture Partners, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to the Company, to:
The GNI Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: President
with a copy to:
399 Venture Partners, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
If to any Management Stockholder or Additional
Stockholders, to the address on file with the Company.
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Registration Rights Agreement
(b) All such notices, requests and other communications
will be deemed delivered upon receipt. Any party hereto may from time to time
change its address, facsimile number or other information for the purpose of
notices to such party by giving notice specifying such change to the other
parties hereto in accordance with Section 11.6(a).
11.7 HEADINGS; CERTAIN CONVENTIONS.
The headings used in this Agreement are for convenience of
reference only and shall not define, limit or otherwise affect any of the terms
or provisions hereof. Unless the context otherwise expressly requires, all
references herein to Articles, Sections and Exhibits are to Articles and
Sections of, and Exhibits to, this Agreement. The words "herein," "hereunder"
and "hereof" and words of similar import refer to this Agreement as a whole and
not to any particular Section or provision. The words "include", "includes"
and "including" shall be deemed to be followed by the phrase "without
limitation".
11.8 GENDER.
Whenever the pronouns "he" or "his" are used herein they shall
also be deemed to mean "she" or "hers" or "it" or "its" whenever applicable.
Words in the singular shall be read and construed as though in the plural and
words in the plural shall be construed as though in the singular in all cases
where they would so apply.
11.9 INVALID PROVISIONS.
If any provision of this Agreement is held to be illegal,
invalid or unenforceable under any present or future law, and if the rights or
obligations of any party hereto under this Agreement will not be materially and
adversely affected thereby, (i) such provision will be fully severable, (ii)
this Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (iii) the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid or unenforceable provision or by its
severance here from and (iv) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
11.10 GOVERNING LAW.
The corporate laws of the State of Delaware will govern all
questions concerning the relative rights of the Company and its stockholders
hereunder. All other questions concerning the construction, validity and
interpretation of this Agreement shall be governed and construed in accordance
with the domestic laws of the State of New York, without giving effect to any
choice of
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Registration Rights Agreement
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.
11.11 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
EACH OF THE PARTIES HERETO CONSENTS TO THE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW YORK
AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS
AGREEMENT MAY BE LITIGATED IN SUCH COURTS. EACH OF THE PARTIES HERETO ACCEPTS
FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH OF
THE PARTIES HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT
OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
THE PARTY AT THE ADDRESS SPECIFIED IN THIS AGREEMENT, SUCH SERVICE TO BECOME
EFFECTIVE 15 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL IN ANY WAY BE
DEEMED TO LIMIT THE ABILITY OF ANY PARTY HERETO TO SERVE ANY SUCH LEGAL
PROCESS, SUMMONS, NOTICES AND DOCUMENTS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER OR TO BRING ACTIONS, SUITS OR
PROCEEDINGS AGAINST ANY OF THE OTHER PARTIES HERETO IN SUCH OTHER
JURISDICTIONS, AND IN SUCH MANNER, AS MAY BE PERMITTED BY ANY APPLICABLE LAW.
11.12 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT. EACH OF THE PARTIES HERETO ALSO WAIVES ANY BOND OR SURETY OR
SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF SUCH
PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND
ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
EACH OF THE PARTIES HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED
THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS
WAIVER IS IRREVOCABLE, MEANING
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Registration Rights Agreement
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
11.13 COUNTERPARTS.
This Agreement may be executed in any number of counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
[SIGNATURE PAGE TO FOLLOW]
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Registration Rights Agreement
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
THE GNI GROUP, INC.
By:______________________________
Name: ▇▇▇▇ ▇ ▇▇▇▇, ▇▇.
Title: Chief Executive Officer
399 VENTURE PARTNERS, INC.
By:______________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
MANAGEMENT MEMBERS
_________________________________
▇▇▇▇ ▇ ▇▇▇▇, ▇▇.
_________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
_________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[Signature Page to Registration Rights Agreement]
31
Registration Rights Agreement
Exhibit A-1
Form of Registration Rights Joinder Agreement
For Permitted Transferees
The GNI Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Ladies & Gentlemen:
In consideration of the transfer to the undersigned of [DESCRIBE
SECURITY BEING TRANSFERRED] of The GNI Group, Inc., a Delaware corporation
(the "Company"), the undersigned represents that it is a Permitted Transferee
of [INSERT NAME OF TRANSFEROR] and agrees that, as of the date written below,
[HE][SHE][IT] shall become a party to, and a Permitted Transferee as defined
in, that certain Registration Rights Agreement dated as of ______ __, 1998, as
such agreement may have been amended from time to time (the "Agreement"), among
the Company and the persons named therein, and as a Permitted Transferee shall
be fully bound by, and subject to, all of the covenants, terms and conditions
of the Agreement that were applicable to the undersigned's transferor, as
though an original party thereto and shall be deemed a [MANAGEMENT STOCKHOLDER
AND/OR AN ADDITIONAL STOCKHOLDER] [399 STOCKHOLDER] for all purposes thereof.
Executed as of the day of , .
SIGNATORY:
------------------------
Address:
------------------------
------------------------
ACKNOWLEDGED AND ACCEPTED:
THE GNI GROUP, INC.
By
-----------------------------
Name:
Title:
32
Registration Rights Agreement
Exhibit A-2
Form of Registration Rights Joinder Agreement
For Additional Stockholders
(including Additional Management Stockholders)
The GNI Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Ladies & Gentlemen:
In consideration of the issuance to the undersigned of [DESCRIBE
SECURITY BEING ISSUED] of The GNI Group, Inc., a Delaware corporation (the
"Company"), the undersigned agrees that, as of the date written below,
[HE][SHE][IT] shall become a party to [AND A MANAGEMENT STOCKHOLDER UNDER] that
certain Registration Rights Agreement dated as of ______ __, 1998, as such
agreement may have been amended from time to time (the "Agreement"), among the
Company and the persons named therein, and shall be fully bound by, and subject
to, the covenants, terms and conditions of the Agreement as provided under
Section 11.5 of the Agreement as though an original party thereto.
Executed as of the day of , .
SIGNATORY:
----------------------------
Address:
----------------------------
----------------------------
ACKNOWLEDGED AND ACCEPTED:
THE GNI GROUP, INC.
By
--------------------------------
Name:
Title:
33
Registration Rights Agreement
Exhibit A-3
Form of Registration Rights Joinder Agreement
For Transferees under Section 2.4 of the Stockholders' Agreement
The GNI Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Ladies & Gentlemen:
In consideration of the transfer to the undersigned of [DESCRIBE
SECURITY BEING TRANSFERRED] of The GNI Group, Inc., a Delaware corporation
(the "Company"), the undersigned agrees that, as of the date written below,
[HE][SHE][IT] shall become a party to and an Additional Stockholder under that
certain Registration Rights Agreement dated as of _______ __, 1998, as such
agreement may have been amended from time to time (the "Agreement"), among the
Company and the persons named therein, and shall be fully bound by, and subject
to, the covenants, terms and conditions of the Agreement as provided under
Section 11.5 of the Agreement as though an original party thereto.
Executed as of the day of , .
SIGNATORY:
----------------------------
Address:
----------------------------
----------------------------
ACKNOWLEDGED AND ACCEPTED:
THE GNI GROUP, INC.
By
--------------------------------
Name:
Title: