EXECUTION COPY
EXHIBIT 4.2
QUADRANT INTERNATIONAL, INC.
_____________________
REGISTRATION RIGHTS AGREEMENT
_____________________
TABLE OF CONTENTS
1. Registration Rights..................................... 2
1.1. Definitions....................................... 2
1.2. Request for Registration.......................... 3
1.3. Company Registration.............................. 5
1.4. Obligations of the Company........................ 5
1.5. Furnish Information............................... 7
1.6. Expenses of Demand Registration................... 7
1.7. Expenses of Company Registration.................. 7
1.8. Underwriting Requirements......................... 8
1.9. Delay of Registration............................. 8
1.10. Indemnification................................... 8
1.11. 1934 Act..........................................11
1.12. Form S-3 Registration.............................11
1.13. Assignment of Registration Rights.................12
1.14. Limitations on Subsequent Registration Rights.....12
1.15. "Market Stand-Off" Agreement......................13
1.16. 1934 Act..........................................13
2. Miscellaneous...........................................14
2.1. Successors and Assigns............................14
2.2. Prior Agreement...................................14
2.3. Governing Law.....................................14
2.4. Counterparts......................................14
2.5. Titles and Subtitles..............................14
2.6. Notices...........................................14
2.7. Expenses..........................................14
2.8. Amendments and Waivers............................14
2.9. Severability......................................15
2.10. Aggregation of Stock..............................15
2.11. Entire Agreement..................................15
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of the _____ day of
April, 1998, by and among Quadrant International, Inc., a Pennsylvania
corporation (the "Company"), and the parties listed on Schedule A hereto
(collectively, the "Investors").
RECITALS
WHEREAS, certain of the Investors hold securities of the Company and
possess certain registration rights with respect to such securities (the
"Existing Investors"); and
WHEREAS, the Existing Investors desire to terminate the registration
rights previously granted to them and to accept the rights created pursuant
hereto in lieu of such previously granted rights; and
WHEREAS, the Investors are parties to the Class B Preferred Stock and
Warrant Purchase Agreement dated as of even date herewith among the Company and
the Investors (the "Purchase Agreement"), and certain of the Company's and such
Investors' obligations under the Purchase Agreement are conditioned upon the
execution of this Agreement by such Investors, the Existing Investors and by the
Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the Existing Investors hereby agree that any and all
registration rights previously granted to them shall be superseded and replaced
in its entirety by this Agreement, and the parties hereto hereby further agree
as follows:
1. Registration Rights.
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The Company covenants and agrees as follows:
1.1. Definitions. For purposes of this Section 1:
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(a) The term "Act" means the Securities Act of 1933, as
amended.
(b) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.
(c) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 1.13 hereof.
(d) The term "1934 Act" shall mean the Securities Exchange
Act of 1934, as amended.
(e) The term "register," "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in
compliance with the Act, and the declaration or ordering of effectiveness of
such registration statement or document.
(f) The term "Registrable Securities" means (i) Common
Stock issuable or issued upon conversion of the Class A Convertible Preferred
Stock of the Company, (ii) Common Stock issuable or issued upon conversion of
the Class B Convertible Preferred Stock of the Company and upon exercise of
warrants issued to the holders of Class B Convertible Preferred Stock of the
Company, (iii) Common Stock issuable or issued upon conversion of the Company's
6% Convertible Subordinated Debentures and upon exercise of warrants issued to
the holders of such debentures, (iv) for purposes of Section 1.3 only, up to
6,017,810 shares of Common Stock held by ▇▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"), (v) for
purposes of Section 1.3 only, up to 250,000 shares of Common Stock held by each
of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (collectively, the "▇▇▇▇▇
Employees"), and (vi) any Common Stock of the Company issued as (or issuable
upon the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of the shares referenced in (i), (ii), (iii) (iv) and (v)
above, excluding in all cases, however, any Registrable Securities sold pursuant
to one or more registration statements under the Act, or which are saleable
pursuant to Rule 144(k) under the Act, or which have been sold by a person in a
transaction in which such person's rights under this Section 1 are not assigned.
(g) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities.
(h) The term "SEC" shall mean the Securities and Exchange
Commission.
1.2. Request for Registration.
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(a) If the Company shall receive at any time after the
effective date of the first registration statement for a public offering of
securities of the Company and after the Company qualifies for registering
securities on a Form S-3 (other than a registration statement relating either to
the sale of securities to employees of the Company pursuant to a stock option,
stock purchase or similar plan or a SEC Rule 145 transaction), a written request
from the Holders of at least (i) sixty-seven percent (67%) of the Registrable
Securities then outstanding or (ii) a majority in interest of the Class B
Preferred Stock, that the Company file a registration statement under the Act
covering the registration of at least twenty percent (20%) of the Registrable
Securities then held by such Holders then the Company shall:
(i) within ten (10) days of the receipt thereof, give
written notice of such request to all Holders; and
(ii) file such registration within 30 days of the
mailing of such notice by the Company in accordance hereof and cause such
registration to be effective as soon
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as practicable under the Act of all Registrable Securities which the Holders
request to be registered, subject to the limitations of subsection 1.2(b).
(b) If the Holders initiating the registration request
hereunder ("Initiating Holders") intend to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall so advise the
Company as a part of their request made pursuant to subsection 1.2(a) and the
Company shall include such information in the written notice referred to in
subsection 1.2(a). The underwriter will be selected by the Company and shall be
reasonably acceptable to a majority in interest of the Initiating Holders. In
such event, the right of any Holder to include such Holder's Registrable
Securities in such registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder) to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall (together with the Company as provided in subsection
1.4(e)) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting. Notwithstanding any
other provision of this Section 1.2, if the underwriter advises the Initiating
Holders in writing that marketing factors require a limitation of the number of
shares to be underwritten, then the Initiating Holders shall so advise all
Holders of Registrable Securities which would otherwise be underwritten pursuant
hereto, and the number of shares of Registrable Securities that may be included
in the underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; provided, however,
that the number of shares of Registrable Securities issued or issuable upon
conversion of the Class A Preferred Stock and the Class B Preferred Stock of the
Company to be included in such underwriting shall not be reduced unless all
other securities are first entirely excluded from the underwriting.
(c) The Company may include in a registration requested
under Section 1.2(a) any additional authorized shares of the Common Stock of the
Company, whether or not issued, for sale by the Company; provided, however, that
such shares shall not be included to the extent that the Holders of a majority
of the shares of Registrable Securities held by the Investors included therein
determine in good faith that the inclusion of such shares will interfere with
the successful marketing of the shares of Registrable Securities to be included
therein; and provided, further, that if the number of shares to be so included
equals or exceeds the number of shares of Registrable Securities included
therein by the holders of Registrable Securities, such registration shall be
deemed to be a registration pursuant to Section 1.3 hereof.
(d) Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting a registration statement pursuant to this Section
1.2 or Section 1.12, a certificate of the Company signed by the Chief Executive
Officer of the Company stating that in the good faith judgment of the Board of
Directors of the Company, the filing of such registration statement would (A)
interfere with or affect the negotiation or completion of any material
transaction that is being contemplated by the Company or (B) involve initial or
continuing disclosure obligations materially adverse to the best interests of
the Company's shareholders, and it is therefore essential to defer the filing of
such registration statement, the Company shall have the right to defer taking
action with respect to such filing for a period of not more than sixty (60) days
after receipt of the request of the Initiating Holders; provided, however, that
the Company
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may not utilize this right more than once in any twelve-month period, and the
time periods referred to in this Section 1.2 or Section 1.12 shall be extended
for an additional number of business days during which the rights to sell shares
were suspended.
(e) In addition, the Company shall not be obligated to
effect, or to take any action to effect, any registration pursuant to this
Section 1.2:
(i) After the Company has effected two registrations
pursuant to this Section 1.2 and such registrations have been declared or
ordered effective; or
(ii) During the period ending on a date six (6) months
after the effective date of a registration subject to Sections 1.2 or 1.3
hereof.
1.3. Company Registration. If (but without any obligation to do
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so) the Company proposes to register (including for this purpose a registration
effected by the Company for shareholders other than the Holders) any of its
stock or other securities under the Act in connection with the public offering
of such securities solely for cash (other than a registration relating solely to
the sale of securities to participants in a Company stock plan, a registration
on any form which does not include substantially the same information as would
be required to be included in a registration statement covering the sale of the
Registrable Securities or a registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt securities which are
also being registered or covering only securities proposed to be issued in
exchange for securities or assets of another corporation or an SEC Rule 145
transaction), the Company shall, at such time, promptly give each Holder written
notice of such registration. Upon the written request of each Holder given
within twenty (20) days after mailing of such notice by the Company in
accordance with Section 2.6, the Company shall, subject to the provisions of
Section 1.8, use its best efforts to cause to be registered under the Act all of
the Registrable Securities that each such Holder has requested to be registered.
In no event, however, shall any holder of registration rights be granted
registration rights under this Section 1.3 that are superior to the registration
rights of the Holders without the written consent of the holders of at least 50%
of the Registrable Securities.
1.4. Obligations of the Company. Whenever required under this
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Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder with
respect to a registration under Sections 1.2 and 1.12, keep such registration
statement effective for the period necessary (but, other than as provided below,
in no event more than nine (9) months) to complete the proposed public offering;
provided, however, that (i) such nine (9)-month period shall be extended for a
period of time equal to the period the Holder refrains from selling any
securities included in such registration at the request of an underwriter of
Common Stock (or other securities) of the Company; and (ii) in the case of any
registration of Registrable Securities on Form S-3 which are intended to be
offered on a continuous or delayed basis, such 120-day period shall be extended,
if necessary, but for not
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more than a period of two (2) years, to keep the registration statement
effective until all such Registrable Securities are sold, provided that Rule
415, or any successor rule under the Act, permits an offering on a continuous or
delayed basis, and provided further that applicable rules under the Act
governing the obligation to file a post-effective amendment permit, in lieu of
filing a post-effective amendment which (i) includes any prospectus required by
Section 10(a)(3) of the Act or (ii) reflects facts or events representing a
material or fundamental change in the information set forth in the registration
statement, the incorporation by reference of information required to be included
in (i) and (ii) above to be contained in periodic reports filed pursuant to
Section 13 or 15(d) of the 1934 Act in the registration statement.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided that the Company shall not be required in connection therewith
or as a condition thereto to (i) qualify to do business as a foreign corporation
or (ii) to file a general consent to service of process in any such states or
jurisdictions, unless the Company is already subject to service in such
jurisdiction, or (iii) register in any state requiring, as a condition to
registration, escrow or surrender of any Company securities.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing. If, in
such event, the Company advises the Holders of the Registrable Securities
covered by such registration statement that the Company considers it appropriate
for the registration statement to be amended, the Holders of such securities
shall suspend any further sales of their registered shares until the Company
advises them that the registration statement has been amended and the Company
has delivered revised prospectuses to the selling Holders (the selling Holders
shall promptly return to the Company all prior prospectuses). The time periods
referred to in this Section 1 shall be extended for an additional number of
business days during which the rights to sell shares was suspended.
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(g) Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.
(i) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Section 1, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 1, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
1.5. Furnish Information. It shall be a condition precedent to
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the obligations of the Company to take any action pursuant to this Section 1
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities.
1.6. Expenses of Demand Registration. All expenses, other than
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underwriting discounts and commissions, incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, and fees and disbursements of one counsel for the Holders
shall be borne by the Company; provided, however, that if a registration is
withdrawn at the request of the Holders requesting such registration (other than
as a result of information concerning a material adverse change to the business
or financial condition of the Company which is made known to the Holders after
the date on which such registration was requested) and if the requesting Holders
elect not to have such registration counted as a registration requested under
Section 1.2, the requesting Holders shall pay all of the expenses referred to
above of such registration pro rata in accordance with the number of their
Registrable Securities included in such registration in relation to the number
of shares of the Company and of others which were included in the registration.
1.7. Expenses of Company Registration. The Company shall bear and
--------------------------------
pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
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pursuant to Section 1.3 for each Holder (which right may be assigned as provided
in Section 1.13), including (without limitation) all registration, filing and
qualification fees, printers and accounting fees and fees and disbursements of
one counsel for the Holders relating or apportionable thereto selected by them,
but excluding solely underwriting discounts and commissions relating to
Registrable Securities.
1.8. Underwriting Requirements. In connection with any offering
-------------------------
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by shareholders to be
included in such offering exceeds the amount of securities sold that the
underwriters determine in their sole discretion is compatible with the success
of the offering, then the Company shall be required to include in the offering
only that number of such securities, including Registrable Securities, which the
underwriters determine in their sole discretion will not jeopardize the success
of the offering (the securities so included to be reduced, first, pro rata among
the holders of capital stock in their entirety, if necessary other than the
Holders; second, if necessary, the shares held by ▇▇▇▇▇▇▇ and the ▇▇▇▇▇
Employees pro rata; third, if necessary, among any other of the Holders other
than the holders of Class A Preferred Stock and Class B Preferred Stock; fourth,
if necessary, pro rata among the Holders of the Class A Preferred Stock and the
Class B Preferred Stock of the Company; next and lastly, if necessary, among the
Company's shares requested by the Company to be registered). For purposes of the
preceding parenthetical concerning apportionment, for any selling shareholder
which is a holder of Registrable Securities and which is a partnership or
corporation, the partners, retired partners and shareholders of such holder, or
the estates and family members of any such partners and retired partners and any
trusts for the benefit of any of the foregoing persons shall be deemed to be a
single "selling shareholder", and any pro-rata reduction with respect to such
"selling shareholder" shall be based upon the aggregate amount of shares
carrying registration rights owned by all entities and individuals included in
such "selling shareholder," as defined in this sentence.
1.9. Delay of Registration. No Holder shall have any right to
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obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 1.
1.10. Indemnification. In the event any Registrable Securities
---------------
are included in a registration statement under this Section 1:
(a) The Company will indemnify and hold harmless each
Holder, any underwriter (as defined in the Act) for such Holder and each person,
if any, who controls such Holder or underwriter within the meaning of the Act or
the 1934 Act, against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any of the
following statements,
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omissions or violations (collectively a "Violation"): (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any violation
or alleged violation by the Company of the Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the Act, the 1934 Act
or any state securities law; and the Company will pay to each such Holder,
underwriter or controlling person, as incurred, any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity obligations of the Company contained in this subsection 1.10(a) shall
not apply (x) to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), (y) in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person,
and (z) with respect to a Violation contained in or with respect to a
preliminary prospectus if a copy of the amended or supplemental preliminary
prospectus, or the final prospectus, shall have been delivered or sent to such
person within the time required by the Act, and the Violation was corrected in
such amended or supplemental preliminary prospectus or final prospectus.
(b) Each selling Holder will indemnify and hold harmless
the Company, each of its directors, each of its officers, each person, if any,
who controls the Company within the meaning of the Act or the 1934 Act, any
underwriter, any other Holder selling securities in such registration statement
and any controlling person of any such underwriter or other Holder, against any
losses, claims, damages, or liabilities (joint or several) to which any of the
foregoing persons may become subject, under the Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and each such
Holder will pay any legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this subsection 1.10(b), in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement of the Company contained
in this subsection 1.10(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably
withheld; and provided further, the total amount for which any Holder shall be
liable shall not in any event exceed the lesser of (A) aggregate net proceeds
received by such Holder from the sale of Registrable Securities held by such
Holder in such registration and (B) in the event that the underwriter shall
require joint and several liability of the selling Holders, that portion of
aggregate losses, claims, damages, liabilities or expenses indemnified against
as is equal to the proportion of the total number of Registrable Securities
being sold by such Holder to the total number of shares of Common Stock being
sold by the Company and all persons for which shares are registered in such
offering; and provided further, however, that no Holder shall be required to
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enter into an Underwriting Agreement that provides for any greater potential
liability than as set forth herein.
(c) Promptly after receipt by an indemnified party under
this Section 1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties (the consent of the indemnified party to such
counsel not to be unreasonably withheld); provided, however, that an indemnified
party (together with all other indemnified parties which may be represented
without conflict by one counsel) shall have the right to retain one separate
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.10, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.10.
(d) If the indemnification provided for in this Section
1.10 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage, or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Holders under this
Section 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
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1.11. 1934 Act. With a view to making available to the Holders the
--------
benefits of Rule 144 promulgated under the Act and any other rule or regulation
of the SEC that may at any time permit a Holder to sell securities of the
Company to the public without registration or pursuant to a registration on Form
S-3, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) take such action, including the voluntary registration of
its Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at any
time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
1.12. Form S-3 Registration. In case the Company shall receive from
---------------------
any Holder or Holders holding at least fifty percent (50%) of the Registrable
Securities then outstanding a written request or requests that the Company
effect a registration on Form S-3 and any related qualification or compliance
with respect to all or a part of the Registrable Securities owned by such Holder
or Holders but in no event less than 25% of the originally issued Class B
Preferred Stock, the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) effect, as soon as practicable, such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written request given
within fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance,
11
pursuant to this Section 1.12: (1) if Form S-3 is not available for such
offering by the Holders; (2) if the Company shall furnish to the Holders a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company, the filing of such Form
S-3 Registration would (A) interfere with or affect the negotiation or
completion of any material transaction that is being contemplated by the Company
or (B) involve initial or continuing disclosure obligations materially adverse
to the best interests of the Company's shareholders, and it is therefore
essential to defer the filing of such registration statement, in which event the
Company shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than sixty (60) days after receipt of the
request of the Holder or Holders under this Section 1.12; provided, however,
that the Company shall not utilize this right more than once in any twelve (12)
month period; or (3) in any particular jurisdiction in which the Company would
be required to qualify to do business or to execute a general consent to service
of process in effecting such registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. All expenses incurred in connection with a
registration requested pursuant to Section 1.12, including (without limitation)
all registration, filing, qualification, printer's and accounting fees and the
fees and disbursements of one counsel for the Holders, but excluding solely any
underwriters' discounts or commissions, shall be borne by the Company.
Registrations effected pursuant to this Section 1.12 shall not be counted as
demands for registration or registrations effected pursuant to Sections 1.2 or
1.3.
(d) The Company shall not be obligated to effect any
registration pursuant to this Section 1.12 if the Company delivers to the
Holders requesting registration under this Section 1.12 an opinion, in form and
substance acceptable to such Holders, of counsel satisfactory to such Holders,
that the Registrable Securities so requested to be registered may be sold or
transferred pursuant to Rule 144(k) under the Act.
1.13. Assignment of Registration Rights. The rights to cause the
---------------------------------
Company to register Registrable Securities pursuant to this Section 1 may be
assigned by a Holder to a transferee or assignee of such securities provided
that the Company is given a written notice at the time of or within a reasonable
time after such transfer or assignment, stating the name and address of the
transferee or assignee and identifying the securities with respect to which such
registration rights are being transferred or assigned, and, provided further,
that the transferee or assignee of such rights assumes the obligations of such
Holder under this Section 1.
1.14. Limitations on Subsequent Registration Rights. From and after
---------------------------------------------
the date of this Agreement, the Company shall not, without the prior written
consent of the Holders of a majority of the outstanding Registrable Securities,
enter into any agreement with any holder or prospective holder of any securities
of the Company which would allow such holder or prospective holder (a) to
include such securities in any registration filed under Section 1.2 hereof,
unless under the terms of such agreement, such holder or prospective holder may
include such securities in any such registration only to the extent that the
inclusion of such holder's securities will not reduce the amount of the
Registrable Securities of the Holders which is included or (b) to make a demand
registration which could result in such registration statement
12
being declared effective prior to the earlier of either of the dates set forth
in subsection 1.2(a) or within one hundred twenty (120) days of the effective
date of any registration effected pursuant to Section 1.2.
1.15. "Market Stand-Off" Agreement. Each Investor and Existing
----------------------------
Investor hereby agrees that, during the period of duration specified by the
Company and an underwriter of Common Stock or other securities of the Company,
following the effective date of a registration statement of the Company filed
under the Act, it shall not, to the extent requested by the Company and such
underwriter, directly or indirectly sell, offer to sell, contract to sell
(including, without limitation, any short sale), grant any option to purchase or
otherwise transfer or dispose of (other than to donees who agree to be similarly
bound) any securities of the Company held by it at any time during such period
except Common Stock included in such registration; provided, however, that:
(a) such agreement shall be applicable as to the period
immediately following the first such registration statement of the Company which
covers Common Stock to be sold on its behalf to the public in an underwritten
offering;
(b) all officers, directors and founders of the Company, all
then existing two percent or greater shareholders of the Company and all other
persons with registration rights (whether or not pursuant to this Agreement)
enter into similar agreements; and
(c) such market stand-off time period shall not exceed one
hundred eighty (180) days.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Investor and Existing Investor (and the shares or securities of every other
person subject to the foregoing restriction) until the end of such period.
Notwithstanding the foregoing, the obligations described in this
Section 1.15 shall not apply to a registration relating solely to employee
benefit plans on Form S-l or Form S-8 or similar forms which may be promulgated
in the future, or a registration relating solely to a Commission Rule 145
transaction on Form S-4 or similar forms which may be promulgated in the future.
1.16. ▇▇▇▇ ▇▇▇. As promptly as possible following receipt of a
--------
written request therefor from the holders of 50% of the outstanding Registrable
Securities at any time while the Company either (a) is subject to periodic
reporting pursuant to Section 15(d) of the Exchange Act or (b) has 500 or more
shareholders of record, the Company shall register its Common Stock under
Section 12 of the 1934 Act, arrange for its Common Stock to be listed on a
national stock exchange or included for quotation on the Nasdaq National Market,
as requested, and shall keep effective such registration and maintain such
listing or inclusion, and shall use its best efforts timely to file such
information, documents and reports as the Securities and Exchange Commission may
require or prescribe that the Company file in connection therewith. The Company
will, at the request of any holder of Registrable Securities, advise such holder
in writing as to whether all reports required to be filed by the Company under
Section 13 of the
13
1934 Act during the 12 months preceding such request (or for such shorter period
as the Company was required to file such reports) have been filed, and any other
information which the holder may reasonably require in order to comply with Rule
144, or any other comparable rule, as then in effect.
2. Miscellaneous.
-------------
2.1. Successors and Assigns. Except as otherwise provided herein,
----------------------
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any shares of Registrable Securities). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
2.2. Prior Agreement. Effective upon the execution and delivery of
---------------
this Agreement by all parties hereto, any and all registration rights granted to
the Existing Investors prior to the date hereof shall be terminated and shall be
of no further force and effect and shall be superseded and replaced by this
Agreement.
2.3. Governing Law. This Agreement shall be governed by and
-------------
construed under the laws of the Commonwealth of Pennsylvania .
2.4. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
2.5. Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
2.6. Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by ten (10) days' advance written notice to the
other parties.
2.7. Expenses. If any action at law or in equity is necessary to
--------
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
2.8. Amendments and Waivers. Any term of this Agreement may be
----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Registrable Securities then outstanding; provided however that
no amendment or waiver that materially adversely affects the rights of the
holders
14
of the Class A Preferred Stock or Class B Preferred Stock shall be made without
the consent of a majority of the class of securities so affected. Any amendment
or waiver effected in accordance with this paragraph shall be binding upon each
holder of any Registrable Securities then outstanding, each future holder of all
such Registrable Securities, and the Company.
2.9. Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
2.10. Aggregation of Stock. All shares of Registrable Securities held
--------------------
or acquired by affiliated entities or persons shall be aggregated together for
the purpose of determining the availability of any rights under this Agreement.
2.11. Entire Agreement. This Agreement constitutes the full and
----------------
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof.
[Remainder of this page intentionally left blank]
15
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
QUADRANT INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Chief Executive Officer
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
NEPA VENTURE FUND, L.P.
By: NEPA II Management
Partners, L.P.,
its General Partner
By: NEPA Management Corporation,
its General Partner
/s/ ▇▇▇▇ ▇▇▇▇▇
------------------------------------
▇▇▇▇ ▇▇▇▇▇, President
ATLANTIC COASTAL VENTURES, L.P.
By: Atlantic Coastal, L.P.,
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Name:
Title: General Partner
▇▇▇▇▇▇▇, ▇.▇.
By: Mercantile Trust Company N.A.,
as agent
By: /s/ C. ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
C. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Senior Vice President
16
ATI TECHNOLOGIES INC.
By: ____________________________________
Name:
Title:
/s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
APA EXCELSIOR IV, L.P.
By: APA Excelsior IV Partners, L.P., its
General Partner
By: Patricof & Co. Managers, Inc.,
its General Partners
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
17
Vice President
▇▇▇▇▇▇ & CO. (CAYMAN) LTD. Custodian for
APA Excelsior IV/Offshore
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Managing Director
THE P/A FUND III, L.P.
By: APA Pennsylvania Parnters, L.P., its
General Partner
By: Patricof & Co. Managers, Inc., its
General Partners
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Vice President
APAX GERMANY II, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Director
EXETER CAPITAL PARTNERS IV, L.P.
By: Exeter IV Advisor, L.P.
By: Exeter IV Advisor, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇
---------------------------------------
Name:
Title:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
18
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
PATRICOF PRIVATE INVESTMENT CLUB, L.P.
By: APA Excelsior IV Partners, L.P., its
General Partner
By: Patricof & Co. Managers, Inc., its
General Partners
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Vice President
19
