EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is made and entered into as of
February 23, 2004, by and between Input/Output, Inc., a Delaware corporation
("I/O" or the "Company"), and the persons and entities listed on Annex A
attached hereto ("Stockholders"). I/O and each Stockholder is each a "party" and
together the "parties" to this Agreement.
RECITALS
Sensor Nederland B.V., a company organized and existing under the laws of the
Netherlands and wholly-owned subsidiary of I/O ("Sensor"), and certain
stockholders of Concept Systems Holdings Limited, a private limited company
incorporated in Scotland ("Concept"), have entered into a Share Acquisition
Agreement dated as of February 23, 2004 ("Acquisition Agreement"), pursuant to
which Sensor has acquired the entire share capital of Concept.
As a result of the consummation of the transactions contemplated by the
Acquisition Agreement, the Stockholders currently own the number of shares (the
"Shares") of Common Stock (defined below) of the Company set forth on Annex A
attached hereto
I/O wishes to grant the Stockholders certain registration rights in the
Shares.
NOW, THEREFORE, in consideration of the mutual promises and covenants
that follow, the parties agree as follows:
1. CERTAIN DEFINITIONS. Terms used in this Agreement shall have the following
meanings:
"COMMISSION" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"COMMON STOCK" means I/O's common stock, par value $0.01 per
share.
"REGISTRABLE SECURITIES" means (i) the Shares; and (ii) any
shares of Common Stock issued or issuable at any time or from time to
time in respect of the Shares upon a stock split, stock dividend,
recapitalization or other similar event involving I/O; PROVIDED,
HOWEVER, that shares of Common Stock which are Registrable Securities
shall cease to be Registrable Securities upon any sale pursuant to a
registration statement under the Securities Act, Section 4(1) of the
Securities Act or Rule 144 under the Securities Act, or any sale in any
manner to a person or entity which, by virtue of Section 3.2 of this
Agreement, is not entitled to the rights provided by this Agreement.
The terms "REGISTER," "REGISTERED", and "REGISTRATION" refer
to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration or
ordering by the Commission of the effectiveness of such registration
statement.
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"REGISTRATION EXPENSES" means all (a) expenses, other than
Selling Expenses (as defined below), incurred by I/O in complying with
Section 2 of this Agreement, but excluding the compensation of regular
employees of I/O which shall be paid in any event by I/O and (b) fees,
disbursements and expenses (limited to an aggregate amount of up to
$25,000 in legal fees for any one registration) of no more than one
counsel for all of the Stockholders retained in connection with such
registration.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar federal statute and the rules and regulations
promulgated by the Commission, all as in effect at the time.
"SELLING EXPENSES" means only the underwriting discounts,
selling commissions and stock transfer taxes applicable to the
securities registered by the Stockholder and all fees and disbursements
of counsel for the Stockholders, except as described in the definition
of "Registration Expenses" above.
"STOCKHOLDERS" means those persons and entities listed in
Annex A attached hereto and any transferee pursuant to the terms of
Section 3.2; "STOCKHOLDER" means any such person, entity or transferee;
provided, however, that any person, entity or transferee who does not
hold Registrable Securities shall not be considered a "STOCKHOLDER" or
one of the "STOCKHOLDERS" for the purposes of this Agreement.
"UNDERWRITTEN PUBLIC OFFERING" means a public offering in
which the Common Stock is offered and sold on a firm commitment basis
through one or more underwriters, all pursuant to an underwriting
agreement to which I/O and the underwriters, among others, are parties.
2. REGISTRATION RIGHTS.
2.1 PIGGYBACK REGISTRATION.
(a) NOTICE OF REGISTRATION. If at any time during the term of
this Agreement, I/O proposes to register any of its Common Stock for
its own account or for the account of any other stockholders (including
any Stockholder) relating to an Underwritten Public Offering, I/O
shall:
(i) promptly, but in any event at least twenty (20)
days before I/O files a registration statement pursuant to an
Underwritten Public Offering, give to each Stockholder written
notice. Such notice shall specify, at a minimum, the number of
shares of Common Stock so proposed to be registered, the
proposed date of filing the registration statement, any
proposed means of distribution of the shares, and any proposed
managing underwriter of the shares; and
(ii) subject to Section 2.9 hereof, include in up to
two of such registrations (and any related blue sky laws
qualification) the Registrable Securities as the Stockholders
request in a writing or writings delivered to I/O
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within (ten) 10 days after receipt of I/O's written notice
delivered pursuant to Section 2.1(a)(i) above. I/O shall have
no obligation to include in the registration any Registrable
Securities of the Stockholders from whom a written request was
not timely received. Notwithstanding the forgoing to the
contrary, in the event that the Stockholders request inclusion
of Registrable Securities in an Underwritten Public Offering
prepared by I/O for the account of another stockholder, I/O
shall only have the obligation to include such Registrable
Securities, if any, as I/O shall have the right (contractual
or otherwise) to include in such Underwritten Public Offering.
(b) RIGHT TO TERMINATE REGISTRATION. I/O shall have the right
to terminate or withdraw any registration initiated by I/O under this
Section 2.1 prior to the effectiveness of the registration whether the
Stockholder has elected to include its Registrable Securities in the
registration; PROVIDED, HOWEVER, that in such event, I/O shall promptly
pay all reasonable out-of-pocket costs and expenses of the Stockholder
incurred in connection with the terminated registration.
(c) AGREEMENT WITH UNDERWRITER. The right of a Stockholder to
have its Registrable Securities included in an Underwritten Public
Offering pursuant to this section 2.1 shall be conditioned upon the
Stockholder's entering into an underwriting agreement (containing
customary representations, warranties, indemnities and agreements) with
the underwriter or underwriters selected for underwriting by the
Company, to the extent such underwriter or underwriters require that
participants in the Underwritten Public Offering enter into such
underwriting agreement. If a Stockholder disapproves of the terms of
any such underwriting agreement, it may elect to withdraw therefrom by
delivering written notice to the Company. Any Registrable Securities so
withdrawn shall be entitled to such registration rights granted to such
Registrable Securities pursuant to Section 2.1 (or 2.2, as the case may
be) as may thereafter remain in effect.
2.2 DEMAND REGISTRATIONS. At any time during the term of this Agreement
after the earlier of (i) 60 days after the date hereof and (ii) the
effectiveness of the Company's registration statement on Form S-3 filed with the
Securities and Exchange Commission on January 27, 2004, the Stockholders may
make up to two written requests for registration under the Securities Act,
pursuant to this Section 2.2 of all or part of their Registrable Securities
(each a "Demand Registration"). Each such request will specify the number of
shares of Registrable Securities proposed to be sold and will also specify the
intended method of disposition thereof. Within five (5) days following receipt
of such request, the Company shall give written notice of such request to each
Stockholder. Any Stockholder may elect, by giving written notice thereof to the
Company within twenty (20) days following the receipt of such notice, to include
all or part of such Stockholder's Registrable Securities in the registration
statement for such Demand Registration. The Company shall not be required to
effect more than two Demand Registrations pursuant to this Section 2.2, and each
such Demand Registration shall not be made for less than 420,000 shares of
Registrable Securities; provided, however, that one of such Demand Registrations
may be made for less than 420,000 shares of Registrable Securities in the event
that there are less than 420,000 shares of Registrable Securities outstanding.
The Stockholders agree and acknowledge that I/O will only be obligated to
accommodate two Demand Registrations
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under the terms of this Agreement, regardless of how many Stockholders
participate in one or both Demand Registrations. If a registration has become
effective but is withdrawn before completion of the offering contemplated
thereby, or if a registration statement has been withdrawn prior to becoming
effective, then such registration shall not count as either of the Demand
Registrations contemplated by this Section 2.2; provided, however, that if any
such withdrawal (including, without limitation, withdrawals pursuant to Section
2.6 hereof) is made at the request of Stockholders holding a majority of the
Registrable Securities requested to be included in the registration, then such
withdrawn registration shall count as a Demand Registration, unless the Holders
of Registrable Securities to be included in such registration reimburse the
Company for its Registration Expenses relating to the preparation and filing of
such Demand Registration; and provided, further, that if such withdrawal by the
Stockholders was due to a material adverse change in the business or financial
condition of the Company which the Stockholders became aware of after the
commencement of the Demand Registration, the Stockholders shall not be required
to reimburse the Company for its Registration Expenses relating to the
preparation and filing of such Demand Registration, and such registration shall
not count as either of the Demand Registrations contemplated by this Section
2.2. If the Company withdraws a registration statement under this Section 2.2
(other than at the request of the Stockholders holding a majority of the
Registrable Securities requested to be included in the registration), the
Company shall not, until after the registration of the Registrable Securities
that were included in such withdrawn Demand Registration and after the
expiration of the time periods set forth in Section 2.2(a), register any Common
Stock, other than on a registration statement on Form S-4 or Form S-8 (or any
equivalent registration form then in effect).
(a) UNDERWRITTEN PUBLIC OFFERING. If a Demand Registration is
in the form of an underwritten offering, the Stockholders (pursuant to
the election of Stockholders then holding a majority of the Registrable
Securities) shall select the underwriter for such offering subject to
the approval of the Company (which approval shall not be unreasonably
withheld), and the Company shall enter into an underwriting agreement
with such underwriter containing representations, warranties,
indemnities and agreements then customarily included by an issuer in
underwriting agreements with respect to secondary distributions.
Subject to the second proviso set forth in Section 2.4(a) hereof, the
Company shall not cause the registration under the Securities Act of
any other shares of its Common Stock to become effective (other than
registration of an employee stock plan, or registration in connection
with any Rule 145 or similar transaction) after the Company receives a
request for a Demand Registration and during the effectiveness of a
registration requested hereunder for an underwritten public offering.
(b) INCLUSION OF ADDITIONAL SHARES. The Company may include in
a registration pursuant to this Section 2.2 securities for its own
account or for the account of other third parties (including officers
and employees of the Company), in amounts as determined by the
Company's Board of Directors ("Additional Shares") so long as the
inclusion thereof does not in any way exclude or otherwise impair the
rights of the Stockholders who have requested registration pursuant to
Section 2.2 above to include in such registration all Registrable
Securities so requested. Notwithstanding any other provision of this
Agreement to the contrary, if the underwriter managing the offering
determines that, because of marketing factors, all of the Registrable
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Securities and Additional Shares requested to be registered may not be
included in the offering, then all or a portion of the Additional
Shares shall be excluded to the extent so required by such limitation,
prior to the exclusion, if any, of Registrable Securities of the
Stockholders. To facilitate the allocation of shares in accordance with
the above provisions, the Company or the underwriters may round the
number of shares allocated to any person to the nearest 100 shares.
(c) LIMIT IN ANY TWELVE MONTH PERIOD. I/O shall not be
required to effect any registration of Registrable Securities within 12
months of the effectiveness of a prior registration of Registrable
Securities effected pursuant to this Section 2.2 in which all
Registrable Securities requested to be included therein in compliance
with the terms of this Agreement were included and sold thereunder.
2.3 EXPENSES OF REGISTRATION. Except as otherwise set forth in Section
2.2, all Registration Expenses incurred in connection with registrations
pursuant to Section 2.1 piggyback registrations or Section 2.2 demand
registrations shall be borne by I/O. All Selling Expenses relating to securities
registered on behalf of the Stockholders pursuant to Sections 2.1 and 2.2 shall
be borne by the Stockholders.
2.4 I/O'S OBLIGATIONS IN REGISTRATION. Whenever the Stockholder has
requested that any Registrable Securities be registered pursuant to this
Agreement, the Company will use its reasonable best efforts to effect the
registration of such Registrable Securities under the Securities Act, as
provided herein, and as expeditiously as possible:
(a) prepare and file with the Commission as soon as
practicable but in no event later than thirty (30) days after receipt
of a request to file a registration statement (unless the Securities
Act, the Commission, or rules promulgated by the Commission under the
Securities Act require that the Company include information in a
registration statement that is not then available, in which case the
Company will file such registration statement when such requirements
may be satisfied) with respect to Registrable Securities, a
registration statement on any form for which the Company then qualifies
or which counsel for the Company shall deem appropriate and which form
shall be available for the sale of such issue of Registrable Securities
in accordance with the intended method of distribution thereof, and use
its reasonable best efforts to cause such registration statement to
become effective as promptly as practicable thereafter; PROVIDED, that
if the Company shall furnish to the Stockholders a certificate signed
by the Chief Executive Officer of the Company stating that in the good
faith reasonable judgment of the Board of Directors it would be
significantly disadvantageous to the Company and its stockholders for
such a registration statement to be filed on or before the date filing
would be required or to become effective, the Company shall have an
additional period of not more than sixty (60) days within which to file
(or before which it requests the effectiveness of) such registration
statement; and PROVIDED FURTHER, that if the Company postpones the
filing of a registration statement, the Company shall not, during the
period of postponement, register any Common Stock (other than on a
registration statement on Form S-4 or Form S-8 or any equivalent
registration form then in effect) unless the Stockholders are allowed
to include their Registrable Securities in such registration of Common
Stock (subject to the limitations imposed by Section 2.9
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hereof); and PROVIDED, FURTHER, that before filing a registration
statement or prospectus or any amendments or supplements thereto, the
Company will (i) furnish to counsel selected by each seller of
Registrable Securities copies of all such documents proposed to be
filed and (ii) notify each seller of Registrable Securities of any stop
order issued or threatened by the Commission and take all actions
required to prevent the entry of such stop order or to remove it if
entered at the earliest practicable date;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective (and such prospectus current as required by the
Securities Act) for a period of not less than 90 days after the date of
effectiveness or such shorter period which will terminate when all
Registrable Securities covered by such registration statement have been
sold (but not before the expiration of the applicable period referred
to in Section 4(3) of the Securities Act and Rule 174 thereunder, if
applicable), and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such
registration statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in
such registration statement;
(c) provide (i) the Stockholders to be included in the
registration statement and (ii ) not more than one counsel for all the
Stockholders, the opportunity to review any drafts of the registration
statement, each prospectus included therein or filed with the
Commission, and each amendment or supplement thereto, and comment
thereon;
(d) furnish to each seller of Registrable Securities to be
included in a registration statement copies of such registration
statement as filed and each amendment and supplement thereto (in each
case including all exhibits thereto), the prospectus included in such
registration statement (including each preliminary prospectus) and each
amendment and supplement thereto and such other documents as such
seller may reasonably request in order to facilitate the disposition of
the Registrable Securities owned by such seller;
(e) use its reasonable best efforts to register or qualify
such Registrable Securities under such other securities or blue sky
laws of such jurisdictions as any seller reasonably requests and do any
and all other acts and things which may be necessary or advisable to
enable such seller to consummate the disposition in such jurisdictions
of the Registrable Securities owned by such seller; PROVIDED, that the
Company will not be required to (i) qualify generally to do business in
any jurisdiction where it would not otherwise be required to qualify
but for this Section 2.4(d), (ii) subject itself to taxation in any
such jurisdiction or (iii) consent to general service of process in any
such jurisdiction, but the Company will be required to consent to
service of process in actions arising out of or in connection with the
sale of the Registrable Securities or any violation of state securities
laws;
(f) use its reasonable best efforts to cause the Registrable
Securities covered by such registration statement to be registered with
or approved by any other governmental agencies or authorities as may be
necessary by virtue of the business and
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operations of the Company to enable the seller or sellers thereof to
consummate the disposition of such Registrable Securities;
(g) enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are
required in order to expedite or facilitate the disposition of such
Registrable Securities;
(h) use its reasonable best efforts to cause all such
Registrable Securities to be listed on each securities exchange on
which similar securities issued by the Company are then listed;
(i) cooperate with the Stockholders and the managing
underwriter, if any, to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold, which
certificates shall not bear any restrictive legends after the date on
which the applicable registration statement becomes effective; and, in
the case of an underwritten offering, enable the Registrable Securities
to be in the denominations and registered in such names as the managing
underwriter may request at least two (2) days prior to any sale of the
Registrable Securities; and
(j) provide a transfer agent and registrar for all Registrable
Securities covered by such registration statement not later than the
effective date of such registration statement.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish to the Company such information
regarding matters relating to such seller's Registrable Securities as are
customary and as the Company may from time to time reasonably request in writing
in order to comply with Securities Act, the rules promulgate thereunder by the
Commission and state securities laws.
2.5 INDEMNIFICATION.
(a) To the extent permitted by law, I/O will indemnify and
hold harmless each Stockholder, each of its directors and officers and
each person who controls each Stockholder within the meaning of Section
15 of the Securities Act, with respect to registration, qualification
or compliance which has been effected pursuant to this Agreement,
against all expenses, claims, losses, actions, damages or liabilities
to the extent to which each such person is subject, including any of
the foregoing incurred in settlement of any litigation, commenced or
threatened, to the extent such expenses, claims, losses, damages or
liabilities (or proceedings in respect thereof) arise out of or are
based on any untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement, prospectus,
offering circular or other document incident to any such registration,
qualification or compliance, or any amendment or supplement thereto,
incident to any such registration, qualification or compliance, or
arise out of or are based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
in which they were made, not misleading, or any violation by I/O of the
Securities Act or any state securities laws or any rule or regulation
promulgated under the
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Securities Act or such laws applicable to I/O in connection with any
such registration, qualification or compliance, and I/O will reimburse
the indemnified persons, for any legal and any other expenses
reasonably incurred in connection with investigating, preparing or
defending any such claim, loss, damage, liability or action, PROVIDED,
HOWEVER, that the indemnity contained herein shall not apply to amounts
paid in settlement of any claim, loss, damage, liability or expense if
settlement is effected without the consent of I/O (which consent shall
not unreasonably be withheld or delayed); PROVIDED, FURTHER, that I/O
will not be liable to a Stockholder or its related indemnified person
in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement
or omission or alleged untrue statement or omission, made in reliance
upon and in conformity with information furnished in writing to I/O by
such Stockholder expressly for inclusion in such registration.
Notwithstanding the foregoing, insofar as the foregoing indemnity
relates to any such untrue statement (or alleged untrue statement) or
omission (or alleged omission) made in the preliminary prospectus but
eliminated or remedied in the amended prospectus on file with the
Commission at the time the registration statement becomes effective or
in the final prospectus filed with the Commission pursuant to the
applicable rules of the Commission or in any supplement or addendum
thereto, the indemnity agreement herein shall not inure to the benefit
of a Stockholder if a copy of the final prospectus filed pursuant to
such rules, together with all supplements and addenda thereto, was not
furnished to the person or entity asserting the loss, liability, claim
or damage at or prior to the time such furnishing is required by the
Securities Act and I/O furnished to such Stockholder a sufficient
number of copies of such final prospectus a reasonable period of time
prior to the time such furnishing is required by the Securities Act.
(b) To the extent permitted by law, each Stockholder will, if
securities held by such Stockholder are included in the securities as
to which the registration, qualification or compliance is being
effected pursuant to the terms of this Agreement, severally and not
jointly, indemnify and hold harmless I/O, each of its directors and
officers, each person who controls I/O within the meaning of Section 15
of the Securities Act, and each other person selling I/O's securities
covered by such registration statement, each of such person's officers
and directors and each person controlling such persons within the
meaning of Section 15 of the Securities Act, against all claims,
losses, damages and liabilities (or actions in respect thereof) to the
extent to which such person or entity is subject, arising out of or
based on any untrue
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statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document incident to any such registration, qualification or
compliance, or arising out of or based on any omission (or alleged
omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or any violation
by such Stockholder of the Securities Act or any state securities laws
or any rule or regulation promulgated under the Securities Act or such
laws applicable to such Stockholder and relating to action or inaction
required of such Stockholder in connection with any such registration,
qualification or compliance, and will reimburse I/O, such other
persons, such directors, officers, persons or control persons for any
legal or other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering
circular or other document in reliance upon and in conformity with
information furnished in writing to I/O by such Stockholder expressly
for inclusion in such registration; PROVIDED, HOWEVER, that the
indemnity contained herein shall not apply to amounts paid in
settlement of any claim, loss, damage, liability or expense if
settlement is effected without the consent of such Stockholder (which
consent shall not be unreasonably withheld or delayed). Notwithstanding
the foregoing, the liability of a Stockholder under this subsection (b)
shall in no event exceed the net proceeds received by such Stockholder
from the sale of the securities sold by the Stockholder in such
registration giving rise to such liability.
(c) Each party entitled to indemnification under this Section
2.5 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge of any action or proceeding
commenced against, or written demand made on any such party in respect
of which indemnity may be sought, and shall permit the Indemnifying
Party to assume the defense of any such claim or any litigation
resulting therefrom, provided that counsel for the Indemnifying Party,
who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not
unreasonably be withheld or delayed), and the Indemnified Party may
participate in such defense at such party's expense, and provided
further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its
obligations under this Agreement unless the failure to give such notice
is materially prejudicial to an Indemnifying Party's ability to defend
such action and provided further, that the Indemnifying Party shall not
assume the defense for matters as to which there is a conflict of
interest or as to which the Indemnifying Party is asserting separate or
different defenses, which defenses are inconsistent with the defenses
of the Indemnified Party, in which event the costs of the Indemnified
Parties' defense (which shall be limited to the costs of one firm, in
addition to one firm per applicable jurisdiction to serve as local
counsel) of such claim shall be borne by the Indemnifying Party. No
Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not
include as an unconditional term the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in
respect to such claim or litigation or which provides for other than
money damages. No Indemnified Party shall consent to entry of any
judgment or enter into any settlement without the consent of each
Indemnifying Party.
(d) If the indemnification provided for in this Section 2.5 is
unavailable to an Indemnified Party for any reason, then each
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 or liabilities in
such proportion as is appropriate to reflect the relative fault of I/O
on the one hand and the applicable Stockholder or Stockholders on the
other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations; provided, however, that in no event
will the aggregate liability of any Stockholder under this Section 2.5
exceed the net proceeds
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received by such Stockholder from the sale of the securities sold by
the Stockholder in the registration giving rise to such liability. The
relative fault of I/O on the one hand and the applicable Stockholder or
Stockholders on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of
material fact or the omission or alleged omission to state a material
fact relates to information supplied by I/O or by the applicable
Stockholder or Stockholders and the parties' relevant intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission. I/O and the Stockholders agree that it
would not be just and equitable if contribution pursuant to this
Section 2.5(d) were based solely upon the number of entities from whom
contribution was requested or by any other method of allocation which
does not take account of the equitable considerations referred to above
in this Section 2.5(d). The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages and liabilities
referred to above in this Section 2.5(d) shall be deemed to include any
legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim,
subject to the provisions of Section 2.5(c) hereof. 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 (within the
meaning of Section 11(f)of the Securities Act). The Stockholders'
obligations under this Section 2.5(d) shall not be joint, but shall be
several in proportion to the net proceeds received by each Stockholder
from the sale of the Registrable Securities by such Stockholder in the
registration giving rise to such liability.
2.6 WITHDRAWAL. Any Stockholder who has notified or requested the
Company to include any or all of such Stockholder's Registrable Securities in a
registration statement pursuant to Section 2.1 or Section 2.2 hereof shall have
the right to withdraw such notice or request with respect to any or all of the
Registrable Securities designated for registration thereby by giving written
notice to the Company at least fifteen (15) days prior to (i) the proposed
filing date of such registration statement, as contained in the notice given by
the Company, in the case of a registration under Section 2.1, or (ii) the actual
filing date of such registration statement, in the case of a registration under
Section 2.2. In the event of any such withdrawal, the Company shall not include
such Registrable Securities in the applicable registration, and such Registrable
Securities shall continue to be Registrable Securities in accordance with this
Agreement and shall be entitled to such registration rights granted to such
Registrable Securities pursuant to Section 2.1 or 2.2, as the case may be, as
may thereafter remain in effect.
2.7 CERTAIN INFORMATION. Each Stockholders agrees, severally and not
jointly, with respect to any Registrable Securities included in any registration
on behalf of such Stockholder, to furnish to I/O that information regarding such
Stockholder, such Stockholder's Registrable Securities and the distribution
proposed by such Stockholder as I/O may reasonably request in writing and as
shall be required in connection with any registration, qualification or
compliance.
2.8 RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities ("Restricted Securities" is defined for
purposes of this Agreement as defined in Rule
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144 under the Securities Act) to the public without registration, I/O agrees,
during the term of this Agreement, to use its best lawful efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all
times during which I/O is subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(b) File with the Commission in a timely manner all reports
and other documents required of I/O under the Securities Act and the
Exchange Act (at all times during which I/O is subject to such
reporting requirements); and
(c) So long as any Stockholder owns any Restricted Securities,
to furnish to the Stockholders upon request a written statement by I/O
as to its compliance with the reporting requirements of Rule 144 and
with regard to the Securities Exchange Act of 1934 (at all times during
which I/O is subject to such reporting requirements), a copy of the
most recent annual or quarterly report of I/O, and such other reports
and documents of I/O and other information in the possession of or
reasonably obtainable by I/O as the Stockholders may reasonably request
in availing itself of any rule or regulation of the Commission allowing
the Stockholders to sell securities without registration.
2.9 UNDERWRITING. The right of each Stockholder to registration under
this Agreement under Section 2.1 shall be conditioned upon such Stockholder's
participation in the underwriting. Each of the Stockholders shall (together with
I/O and the other holders distributing their securities through the
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter(s) selected for the underwriting by I/O. If the managing
underwriter(s) in a registration under Section 2.1 determines that marketing
factors require a limitation of the number of shares to be underwritten, the
Company may limit some or all of the Registrable Securities that may be included
in the registration and underwriting and, in such case, the Company shall only
include in such registration and underwriting: (i) first, all of I/O's
securities being registered for sale for I/O's own account, (ii) second,
securities held by persons and entities having registration rights pursuant to
agreements whose terms require that such securities have priority over
securities held by others, or whose terms prohibit the registration of
securities held by others, and (iii) third, securities held by persons and
entities, including the Stockholders, having registration rights pursuant to any
other agreements. The number of Registrable Securities that may be included
pursuant to clause (iii) above shall be determined by multiplying the number of
Registrable Securities sought to be registered by the Stockholders times a
fraction, the numerator of which is the number of Registrable Securities
requested to be included in the registration and underwriting by the
Stockholders, and the denominator of which is the total number of such
securities which all persons and entities described in clause (iii) above have
requested to have included in the registration and underwriting. I/O may round
the number of shares allocable to any such person to the nearest 100 shares.
11
3. MISCELLANEOUS.
3.1 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY
THE INTERNAL LAWS OF THE STATE OF DELAWARE.
3.2 NO TRANSFER; TERMINATION. These registration rights are not
transferable, except by operation of law, and shall not inure to the benefit of
any person other than the Stockholders; PROVIDED, HOWEVER, that a Stockholder
may transfer the registration rights granted hereunder or any portion thereof to
any transferee who (i) (a) holds 200,000 or more Registrable Securities after
giving effect to such transaction, or (b) is an affiliate, spouse or descendant
of such Stockholder or any entity or investment vehicle, including a
partnership, in which such Stockholder or any of its affiliates has a majority
economic interest or which is managed by such Stockholder or any of its
affiliates and (ii) agrees to be bound by the terms and conditions of this
Agreement and signs an addendum to this agreement to such effect. After such a
transfer, both the Stockholder and each such transferee shall be entitled to the
notice provided in Section 2.1 and the piggyback rights provided in Section 2,
including piggyback rights upon the registration of Registrable Securities as a
result of a Demand Registration pursuant to Section 2.2. This Agreement shall
terminate on the earlier to occur of (i) such time as the Stockholders can sell
all of their remaining Registrable Securities under Rule 144 within any three
(3) month period or (ii) such time as all of the Stockholders' Registrable
Securities may be sold pursuant to Rule 144(k) under the Securities Act.
3.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the full
and entire understanding and agreement between the parties with regard to the
Agreement's subject matter. Any provision of this Agreement may be amended,
waived, discharged or terminated only upon the written consent of I/O and all of
the Stockholders.
3.4 NOTICES. All notices or other communications which are required or
may be given under this Agreement shall be in writing and shall be deemed to
have been duly given when delivered in person, transmitted by telecopier and
confirmed, or mailed by registered or certified first class mail, postage
prepaid, return receipt requested to the parties hereto at the address set forth
below (as the same may be changed from time to time by notice similarly given)
or the last known business or residence address of such other person as may be
designated by either party hereto in writing.
If to the Stockholders:
If to I/O:
Input/Output, Inc.
12300 Parc Crest Drive
Stafford, Texas 77477
Attention:
3.5 DELAYS OR OMISSIONS. Except as expressly provided herein, no delay
or omission to exercise any right, power or remedy accruing to any party to this
Agreement shall
12
impair any such right, power or remedy of such party nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any party of any breach or
default under this Agreement, or any waiver on the part of any party of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies either under this Agreement or by law or otherwise afforded to any
party to this Agreement, shall be cumulative and not alternative.
3.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
3.7 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision.
3.8 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
3.9 NO THIRD PARTY RIGHTS. Except as otherwise provided in Sections 2.5
and 3.2, this Agreement shall not create benefits on behalf of any Person who is
not a party to this Agreement, and this Agreement shall be effective only as
between the parties hereto, their successors and permitted assigns.
3.10 NO REQUIRED SALE. Nothing in this Agreement shall be deemed to
create an independent obligation on the part of any Stockholder to sell any
Registrable Securities pursuant to any effective registration statement.
3.1 NOMINEES FOR BENEFICIAL OWNERS. If Registrable Securities are held
by a nominee for the beneficial owner thereof, the beneficial owner thereof may,
at its option, be treated as the holder of such Registrable Securities for
purposes of any request or other action by any holder of Registrable Securities
pursuant to this Agreement (or any determination of any number or percentage of
shares constituting Registrable Securities held by any Stockholder contemplated
by this Agreement); provided, that the Company shall have received written
notice thereof from both such beneficial owner and nominee.
3.2 SPECIFIC PERFORMANCE. The parties acknowledge that there may be no
adequate remedy at law if any party fails to perform any of its obligations
under this Agreement and that each party may be irreparably harmed by any such
failure. Accordingly, the parties agree that each party, in addition to any
other remedy to which it may be entitled at law or in equity, shall be entitled
to compel specific performance of the obligations of any other party under this
Agreement, in accordance with the terms and conditions of this Agreement, in any
court of the United States or any State thereof having jurisdiction.
3.3 GENDER. Within this Agreement, words of any gender shall be held
and construed to cover any other gender, unless the context otherwise requires
13
3.4 RECAPITALIZATION, EXCHANGES, ETC. AFFECTING THE COMMON STOCK. The
provisions of this Agreement shall apply to the full extent set forth herein
with respect to (i) the shares of Common Stock, and (ii) any and all shares of
capital stock of the Company or any successor or assignee of the Company
(whether by merger, consolidation, sale of assets or otherwise) which may be
issued in respect of, in exchange for, or in substitution for the shares of
Common Stock, by reason of any stock dividend, split, reverse split,
combination, recapitalization, reclassification, merger, consolidation or
otherwise. In the event of any change in capitalization of the Company, as a
result of any stock split, stock dividend or stock combination, the provisions
of this Agreement shall be appropriately adjusted.
[SIGNATURES FOLLOW]
14
IN WITNESS WHEREOF, the undersigned or each of their respective duly authorized
officers or representatives have executed this agreement effective upon the date
first set forth above.
INPUT/OUTPUT, INC.
By: /s/ J. Michael Kirksey
-------------------------------
Name: J. Michael Kirksey
Title: Executive Vice President
and Chief Operating Officer
THE STOCKHOLDERS
Executed by ALASTAIR JAMES HAY /s/ A J Hay
at Edinburgh on 23 February 2004
in the presence of the following witness:
/s/ Rona Cameron Witness
Rona Cameron Name
16 Charlotte Sq Address
Edinburgh
Executed by ALAN KENNEDY FAICHNEY /s/ Alan Faichney
at Edinburgh on 23 February 2004
in the presence of the following witness:
/s/ Rona Cameron Witness
Rona Cameron Name
16 Charlotte Sq Address
Edinburgh
Executed by ROBERT GEORGE JOHNSON /s/ A J Hay
at Edinburgh on 23 February 2004 Attorney
in the presence of the following witness:
/s/ Rona Cameron Witness
Rona Cameron Name
16 Charlotte Sq Address
Edinburgh
Executed for and on behalf of /s/ M. Pacitti
3i PLC
at Edinburgh on 23 February 2004
by M. Pacitti
its duly authorised attorney in the
presence of the following witness:
/s/ Rona Cameron Witness
Rona Cameron Name
16 Charlotte Sq Address
Edinburgh
Executed for and on behalf of /s/ M. Pacitti
3i GROUP PLC
at Edinburgh on 23 February 2004
by M. Pacitti
its duly authorised attorney in the
presence of the following witness:
/s/ Rona Cameron Witness
Rona Cameron Name
16 Charlotte Sq Address
Edinburgh
Executed for and on behalf of /s/ M. Pacitti
3i PARALLEL VENTURES LP
at Edinburgh on 23 February 2004
by M. Pacitti
its duly authorised attorney in the
presence of the following witness:
/s/ Rona Cameron Witness
Rona Cameron Name
16 Charlotte Sq Address
Edinburgh
Executed on behalf of /s/ M. Pacitti
PARALLEL VENTURES MANAGERS LIMITED
as Administrators of and attorney for
the Members of Parallel Ventures (No. 2)
Co-Investment Plan acting by its
attorney 3i Investments plc by
M. Pacitti as duly authorised
attorney for 3i Investments plc
at Edinburgh on 23 February 2004
in the presence
of the following witness:
/s/ Rona Cameron Witness
Rona Cameron Name
16 Charlotte Sq Address
Edinburgh
Executed for and on behalf of /s/ M. Pacitti
3i UKIP II LP by
its manager 3i Investments plc
at Edinburgh on 23 February 2004
by M. Pacitti
its duly authorised attorney in the
presence of the following witness:
/s/ Rona Cameron Witness
Rona Cameron Name
16 Charlotte Sq Address
Edinburgh
Executed on behalf of ANNETTA PHILLIP /s/ A J Hay
by her duly authorised attorney
at Edinburgh on 23 February 2004
in the presence of the following witness:
/s/ Rona Cameron Witness
Rona Cameron Name
16 Charlotte Sq Address
Edinburgh
Executed by IAIN MACRITCHIE /s/ Ian Macritchie
at Edinburgh on 23 February 2004
in the presence of the following witness:
/s/ Rona Cameron Witness
Rona Cameron Name
16 Charlotte Sq Address
Edinburgh
Executed by NICK WALTERS /s/ Nick Walters
at Edinburgh on 23 February 2004
in the presence of the following witness:
/s/ Rona Cameron Witness
Rona Cameron Name
16 Charlotte Sq Address
Edinburgh
EXECUTED by /s/ N J Graham
RBS MEZZANINE LIMITED Duly Authorised Signatory
(for itself and as Agent and Trustee)
acting by N. Graham
in the presence of
/s/ Rona Cameron Witness
Rona Cameron Name
16 Charlotte Sq Address
Edinburgh
15
ANNEX A
STOCKHOLDERS
3I GROUP PLC
3I PARALLEL VENTURES LP
3I UKIP II LP
91 Waterloo Road, London SE1 8XP, UK
ANNETTA PHILLIP
7/36 Portland Gardens, Edinburgh EH6 6NQ, UK
ALAN FAICHNEY
Swanston Old Farmhouse, Swanston, Edinburgh EH10 7DS, UK
ALASTAIR HAY
3 Spylaw Avenue, Edinburgh EH13 9LW, UK
ROBERT JOHNSON
12 Crescent Grove, London SW4 7AH, UK
RBS MEZZANINE LIMITED
42 St Andrew Square, Edinburgh, UK
IAIN MACRITCHIE
C/o MCR Holdings, Caldcoats House, Stewarton, Glasgow, UK
NICK WALTERS
C/o MCR Holdings, Caldcoats House, Stewarton, Glasgow, UK
16