EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
CHI ENERGY, INC.
THE STOCKHOLDERS LISTED ON SCHEDULE 1,
THE WARRANTHOLDERS LISTED ON SCHEDULE 2
AND
THE OPTIONHOLDERS LISTED ON SCHEDULE 3
DATED AS OF NOVEMBER 6, 1997
TABLE OF CONTENTS
ARTICLE I.
DEFINITIONS AND USAGE
Section 1.1. Definitions............................................ 1
Section 1.2. Usage.................................................. 6
ARTICLE II.
DEMAND REGISTRATION RIGHTS
Section 2.1. Demand Registration Rights............................. 7
Section 2.2. Limitation on Demand Registrations..................... 8
Section 2.3. Right to Include Common Stock.......................... 9
Section 2.4. Underwriters and Agents................................ 9
Section 2.5. Priority in Demand Registrations....................... 9
Section 2.6. Withdrawal.............................................10
ARTICLE III.
PIGGYBACK REGISTRATION RIGHTS
Section 3.1. Piggyback Registration Rights..........................10
Section 3.2. Priority in Piggyback Registrations....................11
Section 3.3. Limitation on Registrations............................11
Section 3.4. Survival...............................................11
ARTICLE IV.
REGISTRATION PROCEDURES AND EXPENSES
Section 4.1. Registration Procedures................................12
Section 4.2. Holders' Obligations...................................15
Section 4.3. Registration Expenses..................................16
ARTICLE V.
INDEMNIFICATION AND CONTRIBUTION
Section 5.1. Indemnification by the Company.........................17
Section 5.2. Indemnification by the Selling Holders.................18
(i)
Section 5.3. Notice of Claims, Etc..................................18
Section 5.4. Contribution...........................................19
Section 5.5. Survival...............................................20
ARTICLE VI.
RULE 144 AND RULE 144A
Section 6.1. Reports, Etc...........................................20
Section 6.2. Rule 144 Information...................................20
Section 6.3. Rule 144A Information..................................21
ARTICLE VII.
MISCELLANEOUS......................21
Section 7.1. Amendment Modification and Waivers: Further Assurances.21
Section 7.2. Assignment.............................................21
Section 7.3. Invalid Provisions.....................................22
Section 7.4. Nominees for Beneficial Owners.........................22
Section 7.5. Governing Law..........................................22
Section 7.6. Notices................................................22
Section 7.7. Entire Agreement; Integration..........................23
Section 7.8. Injunctive Relief......................................24
Section 7.9. Section Headings.......................................24
Section 7.10. Counterparts...........................................24
Section 7.11. Filing.................................................24
Section 7.12. Termination............................................24
Section 7.13. Attorneys' Fees........................................24
Section 7.14. No Third Party Beneficiaries...........................24
Section 7.15. Requisite Holders......................................24
Schedule 1 List of Stockholders
Schedule 2 List of Warrantholders
Schedule 3 List of Optionholders
(ii)
REGISTRATION RIGHTS AGREEMENT
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This Registration Rights Agreement dated as of November 6, 1997, by and
among CHI Energy, Inc., a Delaware corporation formerly known as Consolidated
Hydro, Inc., (the "Company"), the Stockholders listed on Schedule 1 hereto, as
such Schedule may be amended from time to time, the Warrantholders listed on
Schedule 2 hereto, as such Schedule may be amended from time to time, and the
Optionholders listed on Schedule 3 hereto, as such Schedule may be amended from
time to time.
W I T N E S S E T H :
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WHEREAS, in connection with the reorganization of the Company
pursuant to chapter 11, title 11 of the United States Code (the "Bankruptcy
Code"), certain creditors and preferred stockholders of the Company will receive
in exchange for their prepetition claims against, and interests in, the Company,
shares of Common Stock and Warrants, and certain members of management of the
Company will be granted certain Options; and
WHEREAS, pursuant to the Plan, the Company has undertaken to
provide certain rights to the Holders to facilitate the resale by such Holders
of their Registrable Securities under certain circumstances; and
WHEREAS, it is intended by the Company and the Holders that
this Agreement shall become effective as of the Effective Date;
NOW, THEREFORE, in consideration of good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I.
DEFINITIONS AND USAGE
Section 1.1. Definitions. As used in this Agreement:
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Affiliate. "Affiliate" shall mean when, used with reference to
any Person, any other Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with,
such Person. As used in the preceding sentence, (i) the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of the Person referred to
whether through the ownership of voting securities, by contract, or otherwise,
and (ii) the term "controlling" and "controls" shall have meanings correlative
to the foregoing.
Agent. "Agent" shall mean the principal placement agent on an
agented placement of Registrable Securities.
Agreement. "Agreement" shall mean this Registration Rights
Agreement, as the same may be amended from time to time.
Bankruptcy Court. "Bankruptcy Court" shall mean the United
States Bankruptcy Court, District of Delaware, which Court has entered an Order
confirming the Plan.
Commission. "Commission" shall mean the United States
Securities and Exchange Commission, or any successor governmental agency or
authority thereto.
Common Stock. "Common Stock" shall mean (a) collectively, the
Class A Common Stock, $.01 par value, and the Class B Common Stock, $.01 par
value, of the Company (including shares of Common Stock issued by the Company
upon the proper exercise of the Warrants and the Options), and (b) shares of
capital stock of the Company issued by the Company in respect of or in exchange
for shares of such common stock in connection with any stock dividend or
distribution, stock split-up, recapitalization, reclassification, subdivision,
recombination or exchange by the Company generally of shares of such common
stock.
Continuously Effective. "Continuously Effective," with respect
to a Demand Registration Statement, shall mean that it shall not cease to be
effective and available for Transfers of Registrable Securities thereunder for
longer than either (a) any 15 consecutive business days, or (b) an aggregate of
20 business days during the period specified in the relevant provision of this
Agreement.
Demand Registration Request. "Demand Registration Request"
shall have the meaning set forth in Section 2.1(a).
Demand Registration Statement. "Demand Registration Statement"
shall have the meaning set forth in Section 2.1(a).
Demanding Holders. "Demanding Holders" shall have the meaning
set forth in Section 2.1(a).
Effective Date. "Effective Date" shall have the meaning set
forth in Section 1.28 of the Plan.
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Exchange Act. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission promulgated thereunder.
Holders. "Holders" shall mean the Stockholders, Optionholders
and Warrantholders, collectively.
Options. "Options" shall mean the options to purchase Common
Stock issued by the Company to Optionholders on the Effective Date pursuant to
the Company's 1997 Management Stock Option Plan.
Option Shares. "Option Shares" shall mean the shares of Common
Stock issued by the Company to Optionholders upon exercise of an Option.
Optionholders. "Optionholders" shall mean the holders of the
Options and/or Option Shares listed on Schedule 2, as such Schedule may be
amended from time to time.
Person. "Person" shall mean any individual, corporation,
partnership, joint venture, association, joint-stock company, limited liability
company, trust, unincorporated organization or government or other agency or
political subdivision thereof.
Piggyback Registration Statement. "Piggyback Registration
Statement" shall have the meaning set forth in Section 3.1.
Plan. "Plan" shall mean the Plan of Reorganization of
Consolidated Hydro, Inc. under chapter 11 of the Bankruptcy Code, which was
confirmed by order of the Bankruptcy Court on October 23, 1997.
Register, Registered and Registration. "Register",
"registered", and "registration" shall refer to a registration effected by
preparing and filing with the Commission a registration statement or similar
document in compliance with the Securities Act, and the declaration or ordering
by the Commission of effectiveness of such registration statement or document.
Registrable Securities. "Registrable Securities" shall mean,
on any date of determination, (a) the Shares owned by the Stockholders; (b) the
Option Shares owned by the Optionholders; (c) the Warrants owned by the
Warrantholders; (d) the Warrant Shares owned by the Warrantholders; (e) any
shares of Common Stock or other securities issued (or issuable upon the
conversion, exchange or exercise of any warrant, option, right or other security
which is issued) as a dividend or other distribution with respect to, in
exchange by the Company generally for, or in replacement by the Company
generally of, such Shares, Warrants, Warrant Shares or Option Shares; and (f)
any securities issued in exchange for such Shares, Warrants, Warrant Shares or
Option Shares pursuant to any merger,
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recapitalization, reorganization or business combination transaction of or
involving the Company; provided, however, that (i) if, on any date of
determination, the shares of Common Stock or any securities in respect thereof
are listed on any national securities exchange or included in any U.S.
interdealer quotation system of a registered national securities association,
then only such securities held by Persons who are deemed to be "underwriters" or
"affiliates" of the Company for purposes of the Securities Act, or
Warrantholders or Optionholders otherwise ineligible to sell the Warrants,
Warrant Shares or Option Shares, as the case may be, pursuant to Rule 144(k),
shall be deemed to be Registrable Securities; and (ii) with respect to any
permitted transferee of such securities, only such securities held by permitted
transferees that have complied with the assignment requirements of Section 7.2
shall be deemed to be Registrable Securities to the extent set forth in clause
(i) above; and provided, further, however, as to any particular Registrable
Securities, such securities shall cease to constitute Registrable Securities for
all purposes of this Agreement (a) when a registration statement with respect to
the sale of such securities has been declared effective by order of the
Commission under the Securities Act and such securities have been transferred or
disposed of in accordance with the intended method(s) of distribution set forth
in the prospectus included in such registration statement, (b) when such
securities have been sold in compliance with the resale provisions of Rule 144
or any similar rule promulgated by the Commission under the Securities Act, or
(c) when such securities shall have been transferred or disposed of to any
Person who, at the time of such transfer or disposition, is not an Affiliate of
the Company, and the Holders shall have received an opinion of Company counsel
(who may be the Company's general counsel) stating that, in the opinion of such
counsel, subsequent public distribution of such securities shall neither require
registration under the Securities Act or qualification (or any similar filing)
under any state securities or blue sky laws then in effect nor the use of an
applicable exemption therefrom.
Registration Expenses. "Registration Expenses" shall mean all
expenses incident to the Company's performance of or compliance with this
Agreement, including, without limitation, (a) all registration, filing,
securities exchange listing, rating agency and National Association of
Securities Dealers, Inc. fees, (b) all registration, filing, qualification and
other fees and expenses of complying with state securities or "blue sky" laws of
all jurisdictions in which the securities are to be registered and the
reasonable legal fees and expenses incurred in connection with the "blue sky"
qualifications of the Registrable Securities, (c) all word processing,
duplicating, printing, messenger and delivery expenses incurred by the Company,
(d) the fees and disbursements of counsel for the Company and of its independent
public accountants, including, without limitation, the expenses of any special
audits or "cold comfort" letters required by or incident to such performance and
compliance, (e) the reasonable fees and disbursements incurred for one counsel
or firm of counsel selected by the Requisite Holders of the Registrable
Securities, (f) reasonable fees and disbursements of underwriters customarily
paid by issuers or sellers of securities (but excluding underwriting discounts
and commissions, broker-dealer concessions, allowances,
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and marketing expenses, and transfer taxes relating to the Registrable
Securities being registered), (g) premiums and other costs to maintain in force
directors' and officers' policies of insurance to the extent the Company elects
to obtain such insurance, and (h) fees and expenses of other Persons retained or
employed by the Company.
Requisite Holders. "Requisite Holders" shall mean any Holder
or Holders of a majority in interest of the relevant class of Registrable
Securities requested to be included in a registration or other relevant action,
as the case may be.
Rule 144. "Rule 144" shall mean Rule 144 promulgated by the
Commission under the Securities Act, and any successor provision thereto.
Rule 144A. "Rule 144A" shall mean Rule 144A promulgated by the
Commission under the Securities Act, and any successor provision thereto.
Securities Act. "Securities Act" shall mean the Securities Act
of 1933, as amended, and the rules and regulations of the Commission promulgated
thereunder.
Selling Holders. "Selling Holders" shall mean, with respect to
a specified registration pursuant to this Agreement, Holders whose Registrable
Securities are included in such registration.
Shares. "Shares" shall mean the shares of Common Stock
distributed on the Effective Date to creditors of the Company pursuant to the
Plan.
Stockholders. "Stockholders" shall mean the holders of the
Shares listed on Schedule 1, as such Schedule may be amended from time to time.
Transfer. "Transfer" shall mean and include the act of
selling, giving, transferring, creating a trust (voting or otherwise), assigning
or otherwise disposing of (other than pledging, hypothecating or otherwise
transferring as collateral security for an underlying obligation) (and
correlative words shall have correlative meanings); provided however, that any
transfer or other disposition upon foreclosure or other exercise of remedies of
a secured creditor after an event of default under or with respect to a pledge,
hypothecation or other transfer as collateral security shall constitute a
"Transfer."
Underwriters' Representative. "Underwriters' Representative"
shall mean the managing underwriter, or, in the case of a co-managed
underwriting, the lead manager, within the meaning of Rule 12b-2 under the
Exchange Act.
Violation. "Violation" shall have the meaning set forth in
Section 5.1.
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Warrants. "Warrants" shall mean, collectively, the Series B
Warrants and the Series C Warrants issued by the Company on the Effective Date
pursuant to the Plan to holders, prior to the Effective Date, of the Company's
Series F 8% Convertible Preferred Stock, Series G 9.85% Junior Convertible
Preferred Stock and Series H 13.5% Cumulative Redeemable Exchangeable Preferred
Stock.
Warrantholders. "Warrantholders" shall mean the holders of the
Warrants listed on Schedule 3, as such Schedule may be amended from time to
time.
Warrant Shares. "Warrant Shares" shall mean the shares of
Common Stock issued by the Company to Warrantholders upon exercise of the
Warrants.
Section 1.2. Usage. (a) References to a Person are also
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references to its assigns and successors in interest (by any means whatever,
including merger, consolidation or sale of all or substantially all the assets
of such Person or otherwise, as the case may be).
(b) References to Registrable Securities "owned" by a Holder
shall include Registrable Securities beneficially owned by such Person but which
are held of record in the name of a nominee, trustee, custodian, or other agent,
but shall exclude shares of Common Stock held by a Holder in a fiduciary
capacity for customers of such Person.
(c) References to a document are to it as amended, waived and
otherwise modified from time to time and references to a statute or other
governmental rule are to it as amended and otherwise modified from time to time
(and references to any provision thereof shall include references to any
successor provision).
(d) References to Sections, Articles or Schedules are to
sections or articles hereof or schedules hereto, unless the context otherwise
requires.
(e) The definitions set forth herein are equally applicable
both to the singular and plural forms and the feminine, masculine and neuter
forms of the terms defined.
(f) The term "including" and correlative terms shall be deemed
to be followed by "without limitation" whether or not followed by such words or
words of like import.
(g) The term "hereof" and similar terms refer to this
Agreement as a whole.
(h) The "date of" any notice or request given pursuant to this
Agreement shall be determined in accordance with Section 7.6.
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ARTICLE II.
DEMAND REGISTRATION RIGHTS
Section 2.1. Demand Registration Rights. (a) At any time
--------------------------
during the period commencing on the (x) day next following the first anniversary
of the Effective Date and ending on the third anniversary of the Effective Date,
one or more Stockholders (the "Demanding Stockholders") and (y) day next
following the third anniversary of the Effective Date and ending on the sixth
anniversary of the Effective Date, one or more Warrantholders (the "Demanding
Warrantholders" and, together with the Demanding Stockholders, the "Demanding
Holders"), shall be entitled to deliver a written notice (a "Demand Registration
Request") to the Company requesting that the Company prepare and file with the
Commission a registration statement on an appropriate registration form (a
"Demand Registration Statement") providing, subject to Section 2.6, for the
registration under the Securities Act of the offer and sale of all or such
number of such Demanding Holder's Registrable Securities as the Demanding Holder
requests in writing; provided, however, that no request made pursuant to this
Section 2.1(a) if (i) within 12 months prior to the date of such request a
Demand Registration Statement pursuant to this Section 2.1(a) covering any
Registrable Securities shall have been declared effective by the Commission or
(ii) the Registrable Securities that the Demanding Holders seek to have included
in the Demand Registration Statement do not, in the aggregate, constitute at
least 15% of the applicable class of Registrable Securities then outstanding (it
being hereby understood for purposes of this Section 2.1 that the phrase
"applicable class of Registrable Securities" is intended to distinguish, on a
class-by-class basis, among the Common Stock, the Series B Warrants and the
Series C Warrants). Notwithstanding the foregoing sentence, in no event shall
(i) a Demand Registration Request be deemed effective pursuant to this Section
2.1 unless and until the Registrable Securities that the Demanding Holders seek
to have included in the Demand Registration Statement, when aggregated with the
Registrable Securities that other Stockholders or Warrantholders, as applicable,
seek to have included in the Demand Registration Statement pursuant to Section
2.1(c) hereof, constitute at least 33% of the applicable class of Registrable
Securities then outstanding and (ii) any Optionholder have any right to deliver
a Demand Registration Request pursuant to this Section 2.1(a). Subject to
Section 2.1(b), after an effective Demand Registration Request is made pursuant
to this Section 2.1(a), the Company shall prepare and file the Demand
Registration Statement with the Commission as promptly as practicable. Each
Demand Registration Statement shall provide for an underwritten offering
(whether on a "firm," "best efforts" or "reasonable efforts" basis, or
otherwise) or an agented placement. Each Demand Registration Request made
pursuant to this Section 2.1(a) shall be addressed to the attention of the
Secretary of the Company, contain (with respect to each Demanding Holder making
such request) the information prescribed by Items 404 (if applicable) and 507 of
Regulation S-K under the Securities Act and General Instruction C to Schedule
13D under the Exchange Act, specify the number and class of Registrable
Securities to be registered and the intended methods of
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disposition thereof, and state that the request for a Demand Registration
Statement is being made pursuant to this Section 2.1.
(b) The Company shall be entitled to postpone for up to 120
days the filing of any Demand Registration Statement otherwise required to be
prepared and filed with the Commission pursuant to this Section 2.1 if (i) the
Board of Directors of the Company determines, in its good faith reasonable
judgment, that such registration and the Transfer of Registrable Securities
contemplated thereby would materially interfere with, or require the premature
disclosure of, any financing, acquisition, material asset transaction, business
combination transaction, reorganization or recapitalization of or involving the
Company or any of its subsidiaries or would otherwise require the premature
disclosure of any other material nonpublic information as to which the Company
has a bona fide business purpose for maintaining confidential, and (ii) the
Company promptly provides the Demanding Holders with notice of such
determination (which notice need not disclose the fact, event or information);
provided, however, that the Company shall not, within the preceding 12 months,
have postponed the filing of any other Demand Registration Statement that
subsequently was abandoned because the Demand Registration Request relating
thereto was withdrawn.
(c) Whenever the Company receives a Demand Registration
Request to effect the filing of a Demand Registration Statement of any
Registrable Securities, the Company promptly shall provide written notice of
such proposed demand registration to all other Stockholders or Warrantholders,
as applicable, holding Registrable Securities. Any such Stockholder or
Warrantholder, as applicable, may within 30 days after receipt of such notice
request in writing that all of such holder's Registrable Securities, or any
portion thereof designated by such holder, be included in the Demand
Registration Statement.
Section 2.2. Limitation on Demand Registrations. The Company
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shall not be obligated to prepare and file with the Commission more than three
Demand Registration Statements pursuant to Demand Registration Requests
delivered by Stockholders pursuant to Section 2.1(a)(x) and shall not be
obligated to prepare and file with the Commission more than two Demand
Registration Statements pursuant to Demand Registration Requests delivered by
Warrantholders pursuant to Section 2.1(a)(y). For purposes of the preceding
sentence, a Demand Registration Statement shall not be deemed to have been
effected (a) unless and until a registration statement with respect thereto has
been declared effective by order of the Commission, (b) if after such
registration statement has become effective, such registration or the related
offer, sale or distribution of Registrable Securities thereunder is suspended by
any stop order, injunction or other order or requirement of the Commission or
other governmental agency or court for any reason not attributable to any of the
Selling Holders and such suspension is not thereafter eliminated, or (c) if the
conditions to closing specified in any underwriting agreement containing usual
and customary terms entered into in connection with such registration are not
satisfied or waived, other than by reason of a
8
failure on the part of any of the Selling Holders. The Company's obligation to
effect a given demand registration pursuant to Section 2.1 shall be deemed to
have been satisfied upon the earlier of (i) the date as of which all of the
Registrable Securities included therein shall have been disposed of pursuant to
the Demand Registration Statement, and (ii) the date as of which such Demand
Registration Statement shall have been Continuously Effective for a period of 90
days.
Section 2.3. Right to Include Common Stock. Whenever the
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Company receives a request for a Demand Registration Statement covering
Registrable Securities pursuant to Section 2.1, the Company shall have the right
to register in any such Demand Registration Statement (and to include in any
related offering) shares of authorized but unissued shares of Common Stock to be
sold by the Company on a primary basis. The Company may exercise the foregoing
option to include additional primary shares by delivering written notice of such
fact to each of the Selling Holders not later than the 20th day next following
the Company's receipt of the request for a Demand Registration Statement
pursuant to Section 2.1(a).
Section 2.4. Underwriters and Agents. In any Demand
-----------------------
Registration Statement, the "managing underwriter(s)" within the meaning of Rule
12b-2 under the Exchange Act or the lead agent (for an agented placement), shall
be a nationally recognized firm selected by the Company with the approval of the
Majority Holders, which approval shall not unreasonably be withheld.
Section 2.5. Priority in Demand Registrations. Whenever the
--------------------------------
Company effects a demand registration pursuant to Section 2.1, if the
Underwriters' Representative or Agent advises the Company in writing (with a
copy to each Selling Holder) that, in its opinion, the amount of securities
requested (whether by the Company or the Selling Holders) to be registered
pursuant to the Demand Registration Statement and included in the offering
contemplated thereby exceeds the amount which can be offered and sold in such
offering within a price range acceptable to the Requisite Holders, the
securities to be included in such offering and the size of the related demand
registration shall be reduced to the amount which can be offered and sold within
such price range. In the case of any such reduction, the Company shall include
in such demand registration only that amount of Registrable Securities that the
Company is so advised can be sold in the offering, determined as follows: (i)
first, Registrable Securities of those Selling Holders that are "underwriters"
or are "affiliates" of the Company (such determination to be made by such
Selling Holders upon the advice of counsel communicated in writing to the
Company) in an amount sufficient to include all the Registrable Securities being
offered for sale by such Selling Holders or in an amount sufficient to reduce
the amount of each such Selling Holder's Registrable Securities held by it after
the offering to a level that would cause such Selling Holder to no longer be an
"underwriter" or an "affiliate" of the Company, whichever amount is less; (ii)
second, all Registrable Securities (that have not theretofore been included in
the Demand Registration
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Statement pursuant to clause (i) of this Section 2.5) requested pursuant to
Section 2.1 to be included in such Demand Registration Statement by the Selling
Holders, pro rata on the basis of the amount of such securities held by such
holders; and (iii) third, all other securities of the Company requested to be
included in such Demand Registration Statement (including for purposes of this
clause (iii) Registrable Securities duly requested to be included in such Demand
Registration Statement pursuant to the exercise by any Holder of its rights
under Section 3.1.), pro rata on the basis of the amount of such Securities
requested to be included.
Section 2.6. Withdrawal. Any Holder participating in a
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registration pursuant to this Agreement shall be permitted to withdraw all or
part of its Registrable Securities from such registration at any time (but not
later than five business days) prior to the effective date of the registration
statement covering such securities; provided that, in the event of a withdrawal
from a registration effected pursuant to Section 2.1 hereof, such registration
shall be deemed to have been effected for purposes of the first sentence of
Section 2.2 hereof except as otherwise provided in such Section; and provided
further, that such withdrawing Holder promptly shall reimburse the Company for
all Registration Expenses theretofore paid by the Company in respect of the
registration of Registrable Securities on behalf of the withdrawing Holder.
ARTICLE III.
PIGGYBACK REGISTRATION RIGHTS
Section 3.1. Piggyback Registration Rights. (a) If at any time
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the Company proposes to register equity securities or securities convertible or
exchangeable into or exercisable for equity securities (whether or not for its
own account) under the Securities Act in connection with a public offering
solely for cash (other than by a registration on Form S-4 or S-8 or any
successor or similar forms or filed in connection with an exchange offer,
business combination transaction or any offering of securities solely to the
Company's existing stockholders or otherwise pursuant to a dividend reinvestment
plan or a dividend reinvestment and stock purchase plan, and other than pursuant
to Article II), the Company shall promptly give each Holder of Registrable
Securities written notice of such proposed registration (a "Piggyback
Registration Statement"). Upon the written request of each Holder receiving such
Company notice delivered within 15 days following the date of such Holder's
receipt of the Company notice (which Holder notice shall identify such Holder,
the amount of Registrable Securities sought to be included in the Piggyback
Registration Statement, and the intended methods of disposition thereof), the
Company shall cause to be included in such Piggyback Registration Statement and
use commercially reasonable efforts to be registered under the Securities Act
all the Registrable Securities that each such Holder shall have requested to be
registered; provided, however, that such right of inclusion shall not apply to
any registration statement covering an underwritten offering of convertible,
exercisable or
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exchangeable securities or equity securities other than the Common Stock if the
Underwriters' Representative or Agent shall advise the Company in writing (with
a copy to each Selling Holder) that in its opinion, the nature of the
Registrable Securities requested to be included in the Piggyback Registration
Statement would adversely affect the offering of the convertible, exercisable or
exchangeable securities or equity securities or would adversely affect the
timing thereof. The Company shall have the absolute right at any time to
withdraw or cease to prepare or file any registration statement for any offering
referred to in this Article III without any obligation or liability to any
Holder.
(b) For a period of six years from the date of this Agreement,
each Holder shall be entitled to have its Registrable Securities included in an
unlimited number of Piggyback Registration Statements pursuant to this Section
3.1.
Section 3.2. Priority in Piggyback Registrations. If the
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Underwriters' Representative or Agent shall advise the Company in writing (with
a copy to each Selling Holder) that, in its opinion, the amount of securities
requested to be included in such offering (whether by the Company, the Selling
Holders or other holders of securities) exceeds the amount which can be offered
and sold in such offering within a price range acceptable to the Company, then
the Company shall include in such registration only that amount of securities
which the Company is so advised can be offered and sold in the offering as
follows: (i) first, all securities proposed by the Company to be sold for its
own account; (ii) second, Registrable Securities of each Selling Holder that has
properly requested that its Registrable Securities be included in such
registration and that is an "underwriter" or an "affiliate" of the Company (such
determination to be made by such Selling Holders upon the advice of counsel
communicated in writing to the Company) in an amount sufficient to include all
the Registrable Securities being offered for sale by such Selling Holder or an
amount sufficient to reduce the amount of such Selling Holder's Registrable
Securities held by it after the offering to a level that would cause such
Selling Holder to no longer be an "underwriter" or an "affiliate" of the
Company, whichever amount is less; (iii) third, such Registrable Securities
(that have not theretofore been included in such registration statement pursuant
to clause (ii) of this Section 3.2) requested to be included in such
registration statement by each Selling Holder, pro rata on the basis of the
amount of such securities held by each such Selling Holder; and (iv) fourth, all
other securities of the Company duly requested to be included in such
registration statement.
Section 3.3. Limitation on Registrations. If the Company has
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previously filed a registration statement with respect to Registrable Securities
pursuant to Section 2.1 or this Article III, and if such previous registration
statement has not been withdrawn or abandoned, the Company shall not file or
cause to be effected any other registration of any of its equity securities or
securities convertible, exercisable or exchangeable into or for its equity
securities under the Securities Act (except on Form S-8 or any successor form),
whether on
11
its own behalf or at the request of any holder or holders of such securities,
until a period of 180 days has elapsed from the effective date of such a
previous registration statement.
Section 3.4. Survival. The obligations of the Company and the
--------
Selling Holders of Registrable Securities under this Article III shall survive
until the third anniversary of the date of this Agreement.
ARTICLE IV.
REGISTRATION PROCEDURES AND EXPENSES
Section 4.1. Registration Procedures. Whenever required
-----------------------
under Article II or Article III to effect the registration of any Registrable
Securities, the Company shall, as expeditiously as practicable:
(a) Prepare and file with the Commission a registration
statement with respect to such Registrable Securities, subject to Section 2.2,
and use commercially reasonable efforts to cause such registration statement to
become effective, in each instance giving due regard to the need to prepare
current financial statements, conduct due diligence and complete other actions
that are reasonably necessary to effect a registered public offering; provided,
however, that before filing a registration statement or prospectus or any
amendments or supplements thereto, including documents incorporated by reference
after the initial filing of the registration statement and prior to
effectiveness thereof, the Company shall use commercially reasonable efforts to
furnish to one firm of legal counsel for the Selling Holders (selected by the
Requisite Holders) copies of all such documents in the form substantially as
proposed to be filed with the Commission at least five business days prior to
filing for review and comment by such counsel.
(b) (i) Use commercially reasonable efforts to keep each
Demand Registration Statement Continuously Effective for up to 90 days or until
such earlier date as of which all the Registrable Securities under the Demand
Registration Statement shall have been disposed of in the manner described in
the Demand Registration Statement. As soon as reasonably practicable after the
occurrence of any fact or event that makes untrue any statement of a material
fact made in a registration statement or that requires the making of any
additions to or changes in a registration statement in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading, the Company shall prepare and file a supplement or amendment to such
registration statement or related prospectus, or a document incorporated therein
by reference, so that such registration statement and related prospectus shall
not contain any such untrue statement of a material fact or any such omission of
a material fact; provided, however, that if the Board of Directors of the
Company determines, in its good faith reasonable judgment, that the Transfer of
Registrable
12
Securities pursuant to the registration statement would materially interfere
with, or require the premature disclosure of, any financing, business
combination transaction, acquisition or reorganization involving the Company or
any of its subsidiaries or otherwise would require premature disclosure of any
other material nonpublic information as to which the Company has a bona fide
business purpose for maintaining confidential, then for so long as such
circumstances or such business purpose continues to exist (provided that the
number of days of any such suspension may not exceed an aggregate of 120 days in
any 360-day period), the Company shall not be required to prepare or file any
such supplement amendment or document.
(ii) Notify each Holder whose Registrable Securities have been
included in a registration statement as soon as practicable after the Company
discovers or otherwise becomes or is made aware of the existence of any fact or
event of the kind described in Section 2.1(b) or 4.1(b)(i), and each Holder
agrees by its receipt of a Registrable Security pursuant to the Plan that, upon
receipt of any such notice from the Company of the existence of any fact or
event of the kind described in Section 2.1(b) or 4.1(b)(i) (which notice need
not disclose the fact, event or information), such Holder will forthwith
discontinue the disposition of any Registrable Securities pursuant to the
registration statement until such Holder's receipt of the copies of a
supplemented or amended prospectus as contemplated by Section 4.1(b)(i), or
until it is advised in writing by the Company that the use of the prospectus
related to the registration statement may be resumed, and has received copies of
any additional or supplemental filings that are incorporated by reference in
such prospectus. If so directed by the Company, each Holder will deliver to the
Company all copies, other than permanent file copies then in such Holder's
possession, of the prospectus covering such Registrable Securities that was
current at the time of receipt of such notice.
(iii) Notwithstanding the foregoing, if, in the case of a
Demand Registration Statement, the filing thereof with the Commission is
postponed due to circumstances of the type described in the proviso to Section
2.1(b)(i), the period for filing a Demand Registration Statement shall be
extended by the aggregate number of days of such postponement.
(c) Subject to Section 4.1(b)(i), prepare and file with the
Commission such amendments, supplements or incorporated documents 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
Securities Act with respect to the disposition of all securities covered by such
registration statement. If the registration statement provides for an
underwritten offering, the Company shall amend the registration statement or
supplement the prospectus whenever required by the terms of the underwriting
agreement entered into pursuant to Section 4.1(f). In the event that any
Registrable Securities included in a registration statement subject to or
required by this Agreement remain unsold at the end of the period during which
the Company is obligated to use commercially reasonable efforts to maintain the
effectiveness of such registration statement, the Company may file a post-
13
effective amendment to the registration statement for the purpose of removing
such securities from registered status.
(d) Furnish to each Selling Holder of Registrable Securities
copies of the registration statement, any pre-effective or post-effective
amendment thereto, the prospectus, including each preliminary prospectus and any
amendments or supplements thereto, in each case in conformity with the
requirements of the Securities Act.
(e) Use commercially reasonable efforts (i) to register and
qualify the securities covered by such registration statement under the
securities or blue sky laws of such states or jurisdictions as shall be
reasonably requested by the Underwriters' Representative or Agent (as
applicable, or if inapplicable the Requisite Holders), and (ii) to obtain the
withdrawal of any order suspending the effectiveness of a registration
statement, or the lifting of any suspension of the qualification (or exemption
from qualification) of the offer and transfer of any of the Registrable
Securities in any jurisdiction, at the earliest practicable moment; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business, subject itself to taxation or to
file a general consent to service of process in any states or jurisdictions
where it is not now so subject.
(f) In the event of Demand Registration Statement, enter into
and perform the Company's obligations under an underwriting or agency agreement
(including indemnification and contribution obligations of underwriters or
agents), in usual and customary form, with the managing underwriter or
underwriters of or agents for such offering. The Company shall also cooperate
with the Requisite Holders and the Underwriters' Representative or Agent for
such offering in the marketing of the Registrable Securities, including making
reasonably available the Company's officers, accounts, counsel, premises, and
books and records for such purpose.
(g) Promptly notify each Selling Holder of any stop order
issued or threatened to be issued by the Commission in connection therewith (and
take all reasonable actions required to prevent the entry of such stop order or
to remove it if entered).
(h) Make generally available to the Company's security holders
an earnings statement satisfying the provisions of Section 11(a) of the
Securities Act no later than 90 days following the end of the 12-month period
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of each registration statement filed pursuant to this
Agreement.
(i) Make reasonably available for inspection by any
underwriter participating in such offering and not more than one firm of legal
counsel to all underwriters and one firm of legal counsel to all Selling
Holders, all financial and other information as
14
shall be reasonably requested by them, and provide the foregoing Persons the
opportunity to discuss the business affairs of the Company with its principal
executives and independent public accountants who have certified the audited
financial statements included in such registration statement, in each case to
the extent necessary to enable them to exercise their due diligence
responsibility under the Securities Act; provided, however, that information
that the Company determines, in good faith, to be confidential and which the
Company advises such Person in writing, is confidential shall not be disclosed
unless such Person signs a confidentiality agreement reasonably satisfactory to
the Company.
(j) In the event of a Demand Registration Statement, use
commercially reasonable efforts to obtain a "comfort letter" from its
independent public accountants and legal opinions of counsel to the Company
addressed to each underwriter or agent and each Holder who is a Selling Holder,
in customary form and covering such matters of the type customarily covered by
such letters and in a form that shall be reasonably satisfactory to the
Requisite Holders and the Underwriters' Representative or Agent. The Company
shall furnish to each underwriter or agent a signed counterpart of any such
comfort letter or legal opinion. Delivery of any comfort letter shall be subject
to the recipient furnishing such written representations or acknowledgments as
are customarily provided under SAS No. 72. Nothing in the immediately preceding
sentence shall be deemed to require an underwriter or agent to make
representations and warranties if the underwriter or agent is willing to receive
a letter in the form to be provided to underwriters or agents not making
representations and warranties under SAS No. 76.
(k) Provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such registration
statement.
(l) Use commercially reasonable efforts to cause the
Registrable Securities covered by such registration statement, if then listed on
a national securities exchange or included for quotation in a U.S. inter-dealer
quotation system of a registered national securitied association, to continue to
be so listed or included for a reasonable period of time after the offering.
(m) Provide a CUSIP number for all Registrable Securities
covered by such registration statement not later than the effective date of such
registration statement.
(n) In the event of a Demand Registration Statement, if any
broker-dealer registered under the Exchange Act shall be an "Affiliate" (as
defined in Rule 2729(b)(1) of the rules and regulations of the National
Association of Securities Dealers, Inc., (the "NASD Rules"), or any successor
provisions thereto) of the Company or has a "conflict of interest" (as such term
is defined in Rule 2720(b)(7) of the NASD Rules, or any successor provisions
thereto) and such broker-dealer shall underwrite, participate as a member of an
underwriting
15
syndicate or selling group or assist in the distribution of any Registrable
Securities covered by a registration statement, whether as a holder of such
Registrable Securities or as an underwriter, a placement or sales agent or a
broker or dealer in respect thereof, or otherwise, the Company shall assist such
broker-dealer in complying with the requirements of the NASD Rules, including,
without limitation, by (A) engaging a "qualified independent underwriter" (as
such term is defined in Rule 2720(b)(15) of the NASD Rules or any successor
provision(s) thereto) to participate in the preparation of the registration
statement relating to such Registrable Securities, to exercise usual and
customary standards of due diligence in respect thereof and to recommend the
public offering price of such Registrable Securities and the related
underwriting discounts and commissions and broker or dealer selling concessions
and allowances, (B) indemnifying such qualified independent underwriter to the
extent set forth in Article V hereof, and (C) providing all such information as
reasonably may be necessary to ensure compliance by such broker-dealer with the
requirements of the NASD Rules.
Section 4.2. Holders' Obligations. (a) It shall be a
--------------------
condition precedent to the obligations of the Company to take any action
pursuant to this Agreement with respect to the Registrable Securities of any
Selling Holder that such Selling Holder shall:
(i) furnish to the Company such information regarding such
Selling Holder and its affiliates, the number of Registrable Securities
owned and proposed to be sold by it, the intended method of disposition
of such securities and any other information as shall be required to
effect the registration of such Selling Holder's Registrable Securities
and cooperate with the Company in preparing such registration statement
and in complying with the requirements of the Securities Act;
(ii) agree to sell its Registrable Securities to the
underwriters at the same price and on substantially the same terms and
conditions as the Company or the other Persons on whose behalf the
registration statement was filed have agreed to sell their securities,
and execute the underwriting agreement agreed to by the Company and the
Requisite Holders together with all customary custody arrangements,
lock-up letters, indemnities questionnaires and other documents
reasonably required by the underwriters or agents and agreed to by the
Requisite Holders.
(b) In the event that a Demand Registration Statement or a
Piggyback Registration Statement becomes effective, if and to the extent
requested by the managing underwriter or lead agent for the offering relating
thereto, no Holder shall offer, sell or agree to sell or otherwise dispose of or
transfer, in the case of a Demand Registration Statement or Piggyback
Registration Statement covering Registrable Securities or securities convertible
into or exchangeable or exercisable for any Registrable Securities (other than,
in the case of the Selling Holders under the Demand Registration Statement or
Piggyback Registration Statement, pursuant to such Demand Registration Statement
or Piggyback Registration
16
Statement, as the case may be), or exercise any right to register any such
securities, during the period commencing 10 days prior to the anticipated
effective date of such registration statement and ending 90 days from the
effective date of such registration statement. In order to enforce the foregoing
agreement, the Company shall be entitled to impose stop-transfer instructions
with respect to the Registrable Securities of each Holder until the end of such
period.
Section 4.3. Registration Expenses. Expenses in connection
---------------------
with registrations pursuant to this Agreement shall be allocated and paid as
follows:
(a) With respect to not more than two demand registrations
effected on behalf of Stockholders pursuant to Section 2.1(a)(x) and not more
than one demand registration effected on behalf of Warrantholders pursuant to
Section 2.1(a)(y), the Company shall bear and pay all of the Registration
Expenses incurred in connection with the registration and offering of
Registrable Securities with respect thereto; provided, however, that, the
Selling Holders shall pay (i) underwriting discounts and commissions relating to
the Registrable Securities sold by them pursuant to any such registration
statement and (ii) all fees and disbursements of any additional counsel not
required to be paid by the Company and any other advisors to the Selling
Holders.
(b) The Company shall bear and pay all Registration Expenses
incurred in connection with any Piggyback Registration Statements pursuant to
Article III, and with respect to the third demand registration, if any, effected
on behalf of Stockholders pursuant to Section 2.1(a)(x) and the second demand
registration, if any, effected on behalf of Warrantholders pursuant to Section
2.1(a)(y), other than (i) underwriting discounts and commissions relating to
Registrable Securities, (ii) the portion of any filing fees allocable to the
Registrable Securities included in such registration by the Selling Holders and
(iii) the fees and disbursements of any additional counsel not required to be
paid by the Company and other advisors to the Selling Holders (each of which
expenses in clauses (i) and (ii) shall be paid on a pro rata basis by the
Selling Holders of Registrable Securities included in such Piggyback
Registration Statement and which expenses in clause (iii) shall be paid on a pro
rata basis by the Selling Holders for which the expenses are incurred).
ARTICLE V.
INDEMNIFICATION AND CONTRIBUTION
Section 5.1. Indemnification by the Company. If any
------------------------------
Registrable Securities are included in an effective registration statement under
this Agreement, to the extent permitted by applicable law, the Company shall
indemnify and hold harmless each Selling Holder, its directors, officers,
shareholders, employees, investment advisors, agents and
17
Affiliates, and each other Person, if any, who controls such Selling Holder
within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act, from and against any and all losses, claims, damages, liabilities
and expenses, including attorneys' fees and disbursements and expenses of
investigation ("Losses"), incurred by such party pursuant to any actual or
threatened action, suit, proceeding or investigation, to which any of the
foregoing Persons may become subject under the Securities Act, the Exchange Act
or other federal or state laws, insofar as such Losses arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in such effective registration statement, preliminary prospectus if
used prior to the effective date of the registration statement in which such
preliminary prospectus is included (unless such statement is corrected in the
final prospectus and the Company previously furnished copies thereof to the
Selling Holders or such other Persons) or final prospectus (as supplemented, if
the Company shall have filed with the Commission any supplement thereto) if used
during the period in which the Company is required to keep the registration
statement to which such prospectus relates current and otherwise in compliance
with Section 10(a) of the Securities Act, or 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 (collectively, a "Violation");
provided, however, that the indemnification required by this Section 5.1 shall
not apply to amounts paid in settlement of any such Loss, if such settlement is
effected without the consent of the Company (such consent not to unreasonably be
withheld), nor shall the Company be liable in any such case for any such Loss if
it arises out of or is based upon a Violation which occurs in reliance upon and
in conformity with written information furnished to the Company by the
indemnified party expressly for use in connection with such registration; and
provided, further, that the Company shall have no obligation to provide any
indemnification hereunder if any such Losses arise out of or are based upon an
untrue statement or alleged untrue statement or omission or alleged omission in
or from the final prospectus, if such untrue statement or alleged untrue
statement or omission or alleged untrue omission shall have been corrected in a
supplement to the final prospectus and the Selling Holder or any other Person
seeking indemnification hereunder shall have failed to deliver (or cause to be
delivered) such final prospectus as so supplemented prior to or
contemporaneously with the sale of the Registrable Securities covered by a
registration statement to the Person asserting such Losses after the Company
shall have furnished the Selling Holder or other Persons seeking indemnification
hereunder with a sufficient number of copies thereof in a manner and a time
sufficient to permit delivery of the same.
Section 5.2. Indemnification by the Selling Holders. If any
--------------------------------------
Registrable Securities are included in a registration statement under this
Agreement, to the extent permitted by applicable law, each Selling Holder shall
indemnify and hold harmless the Company, its directors, officers, shareholders,
employees, investment advisors, agents and Affiliates, and each other Person, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act and Section 20 of the Exchange Act, any other Selling Holder and any
controlling Person of any such other Selling Holder from and against any and
18
all losses, claims, damages, liabilities and expenses, including attorneys' fees
and disbursements and expenses of investigation, incurred by such party pursuant
to any actual or threatened action, suit, proceeding or investigation, to which
any of the foregoing Persons may otherwise become subject under the Securities
Act, the Exchange Act or other federal or state laws, insofar as such losses,
claims, damages, liabilities and expenses 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 Selling Holder expressly for use in connection with such
registration statement; provided, however, that (a) the indemnification required
by this Section 5.2 shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or expense if settlement is effected without the
consent of the relevant Selling Holder of Registrable Securities, which consent
shall not be unreasonably withheld, (b) in no event shall the amount of any
indemnity under this Section 5.2 and of the contribution obligation of a Selling
Holder under Section 5.4 exceed the net proceeds from the applicable offering
received by such Selling Holder, and (c) the obligation to provide
indemnification hereunder shall be several, and not joint and several, among the
indemnifying parties.
Section 5.3. Notice of Claims, Etc. Promptly after receipt by
---------------------
an indemnified party under this Article V of notice of the commencement of any
action, suit, proceeding, investigation or threat thereof made in writing for
which such indemnified party may make a claim under this Article V, such
indemnified party shall deliver to the indemnifying party a written notice of
the commencement thereof. The failure to deliver written notice to the
indemnifying party within a reasonable time following the commencement of any
such action, if and to the extent materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Article V but shall not relieve the
indemnifying party of any liability that it may have to any indemnified party
otherwise than pursuant to this Article V. Any fees and expenses incurred by the
indemnified party (including any fees and expenses incurred in connection with
investigating or preparing to defend such action or proceeding) shall be paid to
the indemnified party, as incurred (as evidenced by reasonably itemized invoices
submitted to the indemnifying party), within 30 days of written notice thereof
to the indemnifying party. Any such indemnified party shall have the right to
employ separate counsel in any such action, claim or proceeding, and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be borne and paid for by such indemnified party unless (a) the
indemnifying party shall have failed promptly to assume the defense of such
action, claim or proceeding with counsel reasonably satisfactory to the
indemnified party, or (b) the named parties to any such action, claim or
proceeding (including any impleaded parties) include both such indemnified party
and the indemnifying party, and such indemnified party shall have been advised
by its counsel that there may be one or more legal defenses available to it
which are different from or in addition to those available to the indemnifying
party and that the assertion of such defenses would either be compromised or
create a conflict of interest such that counsel employed by the indemnifying
party could not represent the indemnified party (in which
19
case, if such indemnified party notifies the indemnifying party in writing that
it elects to employ separate counsel at the expense of the indemnifying party,
the indemnifying party shall not have the right to assume the defense of such
action, claim or proceeding on behalf of such indemnified party; it being
understood, however, that the indemnifying party shall not, in connection with
any one such action, claim or proceeding or separate but substantially similar
or related actions, claims or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all such indemnified parties, unless
the indemnified party shall have been advised by its counsel that a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such action, claim or proceeding such that
the counsel could not represent the indemnified party and any other of such
indemnified parties, in which event the indemnifying party shall be obligated to
pay the fees and expenses of such additional counsel or counsels). No
indemnifying party shall be liable to an indemnified party for any settlement of
any action, proceeding or claim without the prior written consent of the
indemnifying party, which consent shall not be unreasonably withheld.
Section 5.4. Contribution. If the indemnification required by
------------
this Article V from the indemnifying party is unavailable to an indemnified
party hereunder in respect of any losses, claims, damages liabilities or
expenses referred to in this Article V:
(a) The indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether any Violation has been committed by, or relates to
information supplied by, such indemnifying party or indemnified parties, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such Violation. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 5.1 and Section 5.2, any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
(b) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5.4 were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in Section 5.4(a). 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.
20
Section 5.5. Survival. The obligations of the Company and the
--------
Selling Holders of Registrable Securities under this Article V shall survive the
completion of any offering of Registrable Securities pursuant to a registration
statement under this Agreement.
ARTICLE VI.
RULE 144 AND RULE 144A
Section 6.1. Reports, Etc. The Company will file the reports
------------
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations promulgated by the Commission thereunder and will take
such further action as any Holder reasonably may request, to the extent required
from time to time to enable the Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144, (b) Rule 144A, or (c) any similar rule or regulation
hereafter adopted by the Commission. Upon the request of any Holder, the Company
will deliver to that Holder a written statement as to whether it has complied
with such requirements, a copy of the most recent annual or quarterly report of
the Company and such other reports or documents so filed as a Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing a Holder to sell any such securities without registration.
Section 6.2. Rule 144 Information. If at any time the Company
--------------------
is not required to file reports in compliance with either Section 13 or Section
15(d) of the Exchange Act, the Company at its expense will, forthwith upon the
request of any Holder, make available adequate current public information with
respect to the Company within the meaning of paragraph (c)(2) of Rule 144.
Section 6.3. Rule 144A Information. If at any time the Company
---------------------
is not required to file reports in compliance with either Section 13 or Section
15(d) of the Exchange Act, the Company at its expense will forthwith upon the
request of any Holder or prospective purchaser, provide to the Holder and any
prospective purchaser reasonably current information with respect to the Company
within the meaning of paragraph (d)(4) of Rule 144A.
ARTICLE VII.
MISCELLANEOUS
Section 7.1. Amendment Modification and Waivers: Further
-------------------------------------------
Assurances. (a) This Agreement may be amended with the consent of the Company,
- ----------
and the Company may
21
amend this Agreement or take any action herein prohibited, or omit to perform
any act herein required to be performed by it, only if the Company shall have
obtained the written consent to such amendment, action or omission to act of
Holders owning Registrable Securities possessing a majority in number of the
Registrable Securities then outstanding (based on the number of shares of Common
Stock representing, or issuable upon exercise for, the Registrable Securities)
and, in the case of any amendment, action of omission to act that adversely
affects any group of Holders differently from any other group of Holders, the
written consent of the Holders of a majority in number of the Registrable
Securities owned by such group of Holders.
(b) No waiver of any terms or conditions of this Agreement
shall operate as a waiver of any other breach of such terms and conditions or
any other term or condition, nor shall any failure to enforce any provision
hereof operate as a waiver of such provision or of any other provision hereof.
No written waiver hereunder, unless it by its own terms explicitly provides to
the contrary, shall be construed to effect a continuing waiver of the provisions
being waived and no such waiver in any instance shall constitute a waiver in any
other instance or for any other purpose or impair the right of the party against
whom such waiver is claimed in all other instances or for all other purposes to
require full compliance with such provision.
(c) Each of the parties hereto shall execute all such further
instruments and documents and take all such further action as any other party
hereto may reasonably require in order to effectuate the terms and purposes of
this Agreement.
Section 7.2. Assignment. This Agreement shall be binding upon
----------
and inure to the benefit of and be enforceable by the parties and their
respective successors and permitted assigns of Registrable Securities. Each
Holder may assign any of its rights hereunder (in whole or in part) to one or
more transferees of Registrable Securities; provided, however, that any such
transferees of Registrable Securities agrees in writing, in form and substance
satisfactory to the Company, to be bound by all of the terms and provisions
hereof and to join this Agreement as a party hereto; and provided, further, that
no such assignment of rights shall be effective with respect to Registrable
Securities that, as a result of such transfer, have ceased to be Registrable
Securities by reason of the second sentence of the definition of Registrable
Securities set forth in Section 1.1. Without limiting the foregoing, no such
assignment shall be binding upon or obligate the Company to any such assignee
unless and until the Company has received notice of the assignment as herein
provided, which notice (a) references this Agreement and (b) sets forth the
address of any assignee for the purpose of any notices hereunder. The Company
hereby agrees to amend from time to time Schedules 1, 2 and 3 to reflect the
transfers and assignments effected in accordance with this Section 7.2.
22
Section 7.3. Invalid Provisions. If any provision of this
------------------
Agreement is held to be illegal, invalid or unenforceable under any present or
future law, (a) such provision will be fully severable, (b) this Agreement will
be construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof, (c) 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 herefrom, and
(d) 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.
Section 7.4. Nominees for Beneficial Owners. In the event that
------------------------------
any Regis- trable Securities are held by a nominee for the beneficial owner
thereof, the beneficial owner thereof may, at its election, be treated as the
holder of such Registrable Securities for purposes of request or other action by
any Holder or Holders pursuant to this Agreement or any determination of any
amount of shares of Registrable Securities held by any Holder or Holders of
Registrable Securities contemplated by this Agreement. If the beneficial owner
of any Registrable Securities so elects, the Company may require assurances
reasonably satisfactory to it of such owner's beneficial ownership of such
Registrable Securities. For purposes of this Agreement, "beneficial ownership"
and "beneficial owner" refer to beneficial ownership as defined in Rule 13d-3
(without regard to the 60-day provision in paragraph (d)(1)(i) thereof) under
the Exchange Act.
Section 7.5. Governing Law. THIS AGREEMENT SHALL BE GOV-
-------------
ERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
Section 7.6. Notices. All notices and requests given pursuant
-------
to this Agreement shall be in writing and shall be made by hand-delivery,
first-class mail (registered or certified, return receipt requested), confirmed
facsimile or overnight air courier guaranteeing next business day:
(a) If to the Company, to:
CHI Energy, Inc.
680 Washington Boulevard,
Fifth Floor
Stamford, Connecticut 06901
Telephone: (203) 425-8850
Facsimile: (203) 425-8880
23
With a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, N.Y. 10153
Attention: Simeon Gold, Esq.
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
(b) If to a Stockholder, to the address for such
Stockholder set forth on Schedule 1.
(c) If to a Warrantholder, to the address for such
Optionholder set forth on Schedule 2.
(d) If to an Optionholder, to the address for such
Noteholder set forth on Schedule 3.
Except as otherwise provided in this Agreement, the date of each such notice and
request shall be deemed to be, and the date on which each such notice and
request shall be deemed given shall be: (i) at the time delivered, if personally
delivered or mailed; (ii) when receipt is acknowledged, if sent by facsimile;
and (iii) the next business day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next business day delivery.
Section 7.7. Entire Agreement; Integration. This Agreement
-----------------------------
supersedes all prior agreements between or among any of the parties hereto with
respect to the subject matter contained herein, and this agreement embodies the
entire understanding among the parties relating to such subject matter.
Section 7.8. Injunctive Relief. Each of the parties hereto
-----------------
acknowledges that in the event of a breach by any of them of any material
provision of this Agreement, the aggrieved party may be without an adequate
remedy at law. Each of the parties therefore agrees that in the event of such a
breach hereof the aggrieved party may elect to institute and prosecute
proceedings in any court of competent jurisdiction to enforce specific
performance or to enjoin the continuing breach hereof by seeking or obtaining
any such relief, the aggrieved party shall not be precluded from seeking or
obtaining any other relief to which it may be entitled.
Section 7.9. Section Headings. Section headings are for
----------------
convenience of reference only and shall not affect the meaning of any provision
of this Agreement.
24
Section 7.10. Counterparts. This Agreement may be executed
------------
in any number of counterparts, each of which shall be an original and all of
which shall together constitute one and the same instrument. All signatures need
not be on the same counterpart.
Section 7.11. Filing. A copy of this Agreement and of all
------
amendments thereto shall be filed at the principal executive office of the
Company with the Secretary of the Company.
Section 7.12. Termination. This Agreement may be terminated at
-----------
any time by a written instrument signed by the parties hereto. Unless sooner
terminated in accordance with the immediately preceding sentence or as otherwise
expressly provided in this Agreement, the parties' obligations under this
Agreement (other than Article V hereof) shall terminate in their entirety on the
sixth anniversary of the date hereof, except with respect to rights which have
vested and, in accordance with the terms and subject to the conditions of this
Agreement, have been properly exercised prior to such date.
Section 7.13. No Third-Party Beneficiaries. Nothing herein
----------------------------
expressed or implied is intended to confer upon any Person, other than the
parties hereto or their respective permitted assigns, successors, heirs and
legal representatives, or any indemnified party hereunder, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the date first written above.
CHI ENERGY, INC.
By: /s/ Edward M. Stern
-----------------------------
Name: Edward M. Stern
Title: President and Chief
Operating Officer
CHI ENERGY, INC., as attorney-in-fact
for the holders of Class A
Common Stock
By: /s/ Edward M. Stern
-----------------------------
Name: Edward M. Stern
Title: President and Chief
Operating Officer
25
CHI ENERGY, INC., as attorney-in-
fact for the holders of Class B
Common Stock
By: /s/ Edward M. Stern
---------------------------
Name: Edward M. Stern
Title: President and Chief
Operating Officer
CHI ENERGY, INC., as attorney-in-
fact for the holders of Series B
Warrants
By: /s/ Edward M. Stern
---------------------------
Name: Edward M. Stern
Title: President and Chief
Operating Officer
CHI ENERGY, INC., as attorney-in-
fact for the holders of Series C
Warrants
By: /s/ Edward M. Stern
---------------------------
Name: Edward M. Stern
Title: President and Chief
Operating Officer
CHI ENERGY, INC., as attorney-in-
fact for the holders of Options
By: /s/ Edward M. Stern
---------------------------
Name: Edward M. Stern
Title: President and Chief
Operating Officer
26
NYFS10...:\84\38684\0003\1924\AGR0227Y.430
SCHEDULE 1
LIST OF STOCKHOLDERS
1-I
SCHEDULE 2
LIST OF WARRANTHOLDERS
2-I
SCHEDULE 3
LIST OF OPTIONHOLDERS
3-I