Exhibit 10.1(e)
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of September 25,
1996, by and among The Mentus Group, Inc., a Delaware corporation (the
"Company"), 21st Century Communications Partners, L.P., a Delaware limited
partnership, 21st Century Communications T-E Partners, L.P., a Delaware limited
partnership, 21st Century Communications Foreign Partners, L.P., a Delaware
limited partnership (collectively, the "Initial Investors") and certain other
holders of shares of the Company's Series B Senior Cumulative Compounding
Convertible Redeemable Preferred Stock, par value $1.00 per share, (the "Series
B Preferred Stock") and certain other shareholders of the Company who are
parties to this Agreement by virtue of their execution and delivery of the
agreement attached hereto as Exhibit A (collectively, the "Initial
Shareholders").
WHEREAS, the Company and the Initial Investors have entered into a certain
Stock Purchase Agreement (the "Purchase Agreement"), dated as of the date
hereof, pursuant to which each of the Initial Investors is purchasing from the
Company, simultaneously with the execution and delivery of this Agreement on the
date hereof, certain newly issued securities of the Company; and
WHEREAS, the Company's Board of Directors has determined that such
purchase is in the Company's best interests, and each Initial Investor has
concluded that such purchase is in its best interests;
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants and agreements herein contained, in order to induce the Initial
Investors to enter into the Purchase Agreement and consummate the transactions
contemplated thereby, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the Initial Shareholders and
the Company agree with the Initial Investors as follows:
ARTICLE I
DEFINITIONS
Section 1.1 As used in this Agreement, the following terms have the
meanings indicated:
"Agreement" means this Registration Rights Agreement, dated as of
September 25, 1996, as amended from time to time in accordance with the terms
hereof.
"Affiliate" shall mean, with respect to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person. For the purposes of this definition "control" (including the
terms "controlled by" and "under common control with"), as used with respect to
any Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through ownership of voting securities, by contract or otherwise.
"Business Day" shall mean any day other than a Saturday, Sunday or other
day on which commercial banking institutions in New York, New York are required
or authorized by law to be closed.
"Commencement Date" means the date hereof.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Common Stock, $.01 par value per share, of the
Company and any capital stock into which such Common Stock may thereafter be
reclassified or otherwise changed; and such term shall also include all
securities of the Company or any other issuer issued to the holders of shares of
Common Stock as a dividend or other distribution or, in exchange for, in
replacement of or upon the exercise of any conversion, purchase or subscription
right associated with any shares of Common Stock.
"Company" means The Mentus Group, Inc., a Delaware corporation, and its
successors.
"Company Indemnified Parties" has the meaning set forth in Section 5.2.
"Company Notice" has the meaning set forth in Section 2.2(a).
"Contract" means any agreement, contract, commitment, indenture, lease,
license, instrument, note, bond, security, agreement in principle, letter of
intent, undertaking, promise, covenant, arrangement or understanding, whether
written or oral.
"Demand Notice" has the meaning set forth in Section 2.2(a).
"Demand Registration" has the meaning set forth in Section 2.1.
"Disadvantageous Effect" has the meaning set forth in Section 2.4.
"Exchange Act" means the Securities and Exchange Act of 1934, as amended,
or any successor federal statute, and (unless the context otherwise indicates)
the rules and regulations of the Commission promulgated thereunder, as they each
may, from time to time, be in effect.
"Indemnified Party" has the meaning set forth in Section 6.3.
"Indemnifying Party" has the meaning set forth in Section 6.3.
"Initial Investors" has the meaning set forth in the introductory
paragraph.
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"Initiating Investor" has the meaning set forth in Section 2.2(a).
"Initial Shareholders" has the meaning set forth in the introductory
paragraph.
"Investors" means the Initial Investors and each other Person, other than
the Company or an Affiliate of the Company who (i) at any time acquires any
Registrable Shares directly or indirectly from any Initial Investor in a
transaction or chain of transactions not involving a public offering within the
meaning of and registered under the Securities Act and (ii) was assigned by the
Investor from whom such Registrable Shares were acquired, the registration
rights of an Investor hereunder with respect to such Registrable Shares,
together with the successors of each of the foregoing in each case for so long
as any such person continues to hold any Registrable Shares.
"Issue Date" has the meaning set forth in the Purchase Agreement.
"Losses" has the meaning set forth in Section 6.1.
"Majority Investors" means any one or more Investors who hold a total
number of Registrable Shares equal to at least a majority of the aggregate
number of Registrable Shares then held by all Investors.
"Majority Participating Investors" has the meaning set forth in Section
2.2(d).
"Majority Selling Stockholders" means with respect to any Demand
Registration or Piggyback Registration, any one or more Selling Stockholders who
hold a total number of Registrable Shares equal to at least a majority of the
aggregate number of Registrable Shares which are held by all Selling
Stockholders and which are or are to be included in such Demand Registration or
Piggyback Registration.
"Majority Shareholders" means any one or more Shareholders who hold a
total number of Registrable Shares equal to at least a majority of the aggregate
number of Registrable Shares then held by all Shareholders.
"Majority Stockholders" means any one or more Stockholders who hold a
total number of Registrable Shares equal to at least a majority of the aggregate
number of Registrable Shares then held by all Stockholders.
"Other Investor" has the meaning set forth in Section 2.2(a).
"Participating Investor" has the meaning set forth in Section 2.3.
"Person" mean an individual, partnership, corporation, trust,
unincorporated organization or government or political department or agency
thereof or other entity, whether acting in an individual, fiduciary or other
capacity.
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"Piggyback Registration" has the meaning set forth in Section 3.1.
"Preemptive Rights Agreement" shall mean that Preemptive Rights Agreement
dated the date hereof among the Company and the Initial Investors and the
Initial Shareholders, as amended from time to time.
"Purchase Agreement" shall have the meaning assigned to it in the
introductory paragraphs.
"Registrable Shares means as of any time of determination:
(i) in the case of any Investor, all shares of Common Stock
held by such Investor as of such time, including, without
limitation, (A) shares of Common Stock issued or issuable upon
conversion of any share or shares of the Series B Preferred Stock
then or formerly held by such Investor which originally were issued
to an Initial Investor, (B) shares of Common Stock or other
securities of any issuer issued or issuable to such Investor as a
dividend or other distribution, in exchange for or in replacement of
or otherwise in respect of any Registrable Shares then or formerly
held by such Investor and (C) in the case of any Investor which is
within the definition of "Investors" in the Stockholders Agreement,
shares of Common Stock otherwise acquired by such Investor, whether
in private or open market purchases, pursuant to the Preemptive
Rights Agreement upon exercise of any Rights therein or formerly
acquired by such Investor or otherwise.
(ii) in the case of any Initial Shareholder, all shares of
Common Stock held by such Initial Shareholder as of such time and
which (A) were issued or are issuable upon conversion of any share
or shares of Series B Preferred Stock then or formerly held by such
Investor, or upon exercise of any other Rights then or formerly
beneficially owned by such Investor, (B) were acquired by such
Initial Shareholder pursuant to the Preemptive Rights Agreement to
the extent that the right to acquire such shares was directly
attributable to the ownership by such Initial Shareholder of
Registrable Shares then held by such Initial Shareholder and (C)
shares of Common Stock or other securities of any issuer issued or
issuable to such Initial Shareholder as a dividend or other
distribution on, in exchange for or in replacement of or otherwise
in respect of any Registrable Shares then or formerly held by such
Shareholder; and
(iii) in the case of any Shareholder other than an Initial
Shareholder, all shares of Common Stock held by such Shareholder as
of such time and which (A) were acquired by such Shareholder, in a
transaction not involving a public offering within the meaning of
the Securities Act, from a transferor who was, at the time of the
transfer, a Shareholder and were Registrable Shares in the hands of
such transferor immediately prior to the transfer, (B) were acquired
by such Shareholder, after the date such Shareholder first became a
Shareholder, pursuant to the
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Preemptive Rights Agreement to the extent that the right to acquire
such shares was directly attributable to the ownership by such
Shareholder of Registrable Shares then held by such Initial
Shareholder and (C) shares of Common Stock or other securities of
any issuer issued or issuable to such as a dividend or other
distribution on, in exchange for or in replacement of or otherwise
in respect of any Registrable Shares then or formerly held by such
Initial Shareholder.
For purposes of this Agreement, any Person shall be deemed to hold, as of any
time, (i) all issued and outstanding shares of Common Stock, Registrable Shares
or other securities then held or deemed to be held by such Person, (ii) all
additional shares of Common Stock, Registrable Shares or other securities which
would then be held by such Person if it were assumed that all shares of Series B
Preferred Stock, if any, then held or deemed to be held by such Person had been
duly and effectively converted in full at and effective as of such time, (iii)
all additional shares of Common Stock, Registrable Shares or other securities
which would then be held by such Person if it were assumed that all Rights, if
any, then held or deemed to be held by such Person had been duly and effectively
exercised in full at and effective as of such time and (iv) all additional
shares of Common Stock, Registrable Shares or other securities, if any, which
such Person then has a right to purchase pursuant to the Preemptive Rights
Agreement or any other preemptive rights agreement in existence on the Issue
Date by virtue of any prior exercise of preemptive rights under such agreement,
assuming, in the case of each of clauses (ii) and (iii), that all adjustments to
the kind, number and amount of shares of capital stock or other securities
issuable upon exercise, exchange or conversion of any of the shares of Series B
Preferred Stock or other Rights referred to in such clause required by reason of
any event or transaction occurring at or prior to such time had been duly and
effectively made as and when required by the terms thereof.
"Registration Expenses" shall mean, with respect to any Demand
Registration or Piggyback Registration all (i) registration, qualification and
filing fees, (ii) fees and expenses of compliance with securities or blue sky
laws (including the reasonable fees and disbursements of counsel for any
underwriters, dealers or placement agents in connection therewith), (iii)
printing expenses (or comparable duplication expenses) and escrow fees, (iv)
internal expenses of the Company (including, without limitation, all salaries
and expenses of officers and employees performing legal or accounting duties),
(v) fees and disbursements of counsel for the Company, (vi) fees and expenses
for independent certified public accountants retained by the Company (including
all fees and expenses associated with the delivery by independent certified
public accountants of a "cold comfort" letter or letters), (vii) fees and
expenses of any special experts retained by the Company in connection with such
registration, (viii) fees and expenses of listing the Registrable Shares on a
securities exchange or otherwise in connection with clause (r) of Section 4.1,
(ix) the reasonable fees and expenses of a single firm of legal counsel for the
Investors participating in such Demand Registration or Piggyback Registration,
(x) the reasonable fees and expenses of a single firm of legal counsel for the
Shareholders participating in such Demand Registration or Piggyback Registration
and (xi) all other reasonable fees, costs, expenses and disbursements incurred
in connection with or incident to the Company's compliance with Article IV;
provided, however, that all such fees, costs, expenses and disbursements shall
be customary. The Company shall not be responsible for and the
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Selling Stockholders shall pay any stock transfer taxes, if any, and or
underwriting discounts or commissions relating to the distribution of the
Registrable Shares of any Stockholder.
"Registration Statement" means a registration statement of the Company
under the Securities Act on any form for which the Company then qualifies and
which permits the sale thereunder of the number of Registrable Shares (and any
other securities of the Company) to be included therein in accordance with this
Agreement by the sellers and, in the case of the Registrable Shares, according
to the method(s) of distribution determined in accordance with this Agreement
and in the case of any other securities covered thereby, according to the
plan(s) of distribution described therein, including all exhibits and schedules
to, all financial statements included in or otherwise filed with, and all
documents incorporated by reference in any such registration statement, in each
case as amended or supplemented as of any reference date.
"Restriction Period" has the meaning set forth in Section 4.6.
"Requesting Investor" has the meaning set forth in Section 2.2(a).
"Rights" means any options, warrants, convertible or exchangeable
securities or other rights, however denominated, to subscribe for, purchase or
otherwise acquire any equity interest or other security of any class or series,
with or without payment of additional consideration in cash or property, either
immediately or upon the occurrence of a specified date or a specified event or
the satisfaction or happening of any other condition or contingency.
"Second Company Notice" has the meaning set forth in Section 2.2(b).
"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and (unless the context otherwise indicates) the
rules and regulations of the Commission promulgated thereunder, as they each
may, from time to time, be in effect.
"Selling Stockholders" means, with respect to any Demand Registration or
Piggyback Registration, any Stockholder, holding any Registrable Shares which
are or are to be included in such Demand Registration or Piggyback Registration
in accordance with this Agreement.
"Shareholders" means the Initial Shareholders, each Person, if any, who
becomes a party to and a "Shareholder" under this Agreement pursuant to Section
7.17, and each other Person, other than the Company, who (i) at any time
acquires any Registrable Shares directly or indirectly from an Initial
Shareholders in transaction or chain of transactions not involving a public
offering within the meaning of the Securities Act and (ii) was assigned by an
Initial Shareholder from whom such Registrable Shares were acquired, the
registration rights of a Shareholder under this Agreement with respect to such
Registrable Shares, together with the successors of each of the foregoing, in
each case for so long as any such Person continues to hold Registrable Shares.
"Shelf Registration" has the meaning set forth in Section 2.8.
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"Stockholder Indemnified Parties" has the meaning set forth in Section
6.1.
"Stockholders" means the Investors and the Shareholders.
"Stockholders' Agreement" means the Stockholders Agreement dated the date
hereof, among the Company and certain stockholders of the Company as the same
may be amended from time to time in accordance with its terms.
All other capitalized terms used herein and not otherwise defined have the
meanings ascribed thereto in the Purchase Agreement.
ARTICLE II
DEMAND REGISTRATION
Section 2.1 Right to Demand Registration. The Investors shall have the
right to require the Company to register Registrable Shares under the Securities
Act (a "Demand Registration"), which right shall be exercisable in the manner
set forth in this Article II at any time or from time to time on or after the
Commencement Date.
Section 2.2 Demand Procedure.
(a) Any one or more Investors (each an "Initiating Investor") may at
any time and from time to time on or after the Commencement Date furnish the
Company with a written request (a "Demand Notice") which sets forth the number
of Registrable Shares requested to be registered in a Demand Registration and
such Initiating Investor's preferred method(s) of distribution of such
Registrable Shares permitted by Section 2.3(a). Upon receipt by the Company of a
Demand Notice, the Company shall promptly notify each of the other Investors
(the "Other Investors") in writing of such request for registration and such
notice shall name each Initiating Investor and set forth the other information
contained in each Demand Notice. Upon receipt of such notice from the Company
(the "Company Notice"), each Other Investor may give the Company a written
request to register any or all of such Other Investor's Registrable Shares in
the Demand Registration described in the Company Notice; provided, that such
written request is given within ten (10) Business Days after the date on which
the Company Notice is given. Any such request made by any Other Investor shall
state (A) the number of Registrable Shares to be so registered in such Demand
Registration by such Other Investor, (B) such Other Investor's preferred
method(s) of distribution of such Registrable Shares permitted by Section 2.3(a)
hereof, and (C) any other information that the Company Notice reasonably
requests be included in such notice from such Other Investor. As used herein,
the term "Requesting Investor(s)" means the Initiating Investor(s) and all Other
Investor(s), if any, requesting the registration of Registrable Shares pursuant
to a Demand Registration in accordance with this Section 2.2(a) following the
giving of the Company Notice.
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(b) If any Initiating Investor commences the procedures set forth in
Section 2.2(a) on any occasion, then the Company shall be obligated, upon
completion of such procedures, to promptly proceed to effect the requested
Demand Registration in accordance with this Agreement if either the Requesting
Investor(s) with respect to such Demand Registration include one or more
Investors who (A) hold in the aggregate at least a majority of the aggregate
number of Registrable Shares then held by all of the Investors and (B) have
requested the registration in such Demand Registration of a number of
Registrable Shares (whether or not such Registrable Shares requested to be
registered are issued shares) equal to at least 25% of the aggregate number of
Registrable Shares then held by all of the Investors.
Unless the Majority Investors otherwise agree, if the condition
stated immediately preceding sentence is not satisfied in the case of any
request for a Demand Registration, then the Company shall not be required to
undertake such required registration and such requested registration shall not
in any event be deemed to be a "Demand Registration," even if the Company elects
to undertake such requested registration although not obligated to do so. If
either such condition is satisfied, the Company shall promptly give each
Investor who is not a Requesting Investor a written notice (the "Second Company
Notice") which shall (A) contain, with respect to each Requesting Investor, all
of the information which was required to be included in the Company Notice with
respect to each Initiating Investor and (B) contain a statement of rights of
each such Investor's rights under the next two sentences of this Section 2.2(b).
Upon receipt of the Second Company Notice, each such Investor may give the
Company a written request to register any or all of such Investor's Registrable
Shares in the Demand Registration described in the Company Notice; provided,
that such written request is given within ten (10) Business Days after the date
on which the Second Company Notice is given. Any such request made by any such
Investor shall state (A) the number of Registrable Shares to be so registered in
such Demand Registration by such Investor, (B) such Investor's preferred
method(s) of distribution of such Registrable Shares permitted by Section
2.3(a), and (C) any other information that the Second Company Notice reasonably
requests be included in such notice from such Investor. As used herein, the term
"Participating Investors" means the Requesting Investor(s) and all Other
Investor(s), if any, requesting the registration of Registrable Shares pursuant
to a Demand Registration following the giving of the Second Company Notice.
(c) Subject to Section 2.3, if the condition stated in Section
2.2(b) is satisfied with respect for a Demand Registration, the Company shall,
as soon as practicable after the date on which the Second Company Notice is
given, file with the Commission and use its best efforts to cause to become
effective a Registration Statement which shall cover the Registrable Shares
requested to be registered by the Participating Investors and shall take all
other actions (including those required by Article IV) as may be necessary or
advisable to permit the Participating Investors to dispose of all such
Registrable Shares requested to be included in such Demand Registration in
accordance with the intended method(s) of distribution and in compliance with
the Securities Act and state "blue sky" and securities laws.
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(d) The Participating Investors may, at any time and from time to
time reasonably in advance of the planned date of consummation of the sale or
other distribution of Registrable Shares pursuant to any Demand Registration,
(i) permit any Participating Investor to withdraw, in whole or in part, from
participation in such Demand Registration, (ii) permit any Investor who was not
originally a Participating Investor to become a Participating Investor and
include in such Demand Registration any or all of such Investor's Registrable
Shares or (iii) otherwise increase or decrease the number of Registrable Shares
to be included in such Demand Registration, in each case at the sole discretion
of the holders of the majority of the Registrable Shares which are held by the
Participating Investors and which are or are to be included in such Demand
Registration (the "Majority Participating Investors"); provided, however, that
if any such decrease would result in the reduction of the number of Registrable
Shares to be registered in such Demand Registration to a number that would not
be sufficient to satisfy the condition stated in the first sentence of Section
2.2(a), then such decrease shall not be effective unless approved by the
Majority Investors and, if so approved, the Participating Investor(s) shall be
deemed to have abandoned and terminated such Demand Registration. The Majority
Participating Investors may terminate or abandon such Demand Registration upon
written notice to the Company to that effect.
Section 2.3 Methods of Distribution; Reduction in Shares to be Registered.
(a) Subject to the last sentence of this Section 2.3(a) and to the
provisions of Section 2.3(b), the Registrable Shares of any Participating
Investor included in a Demand Registration may be registered for sale by such
Participating Investor directly or through sale or placement agents or to or
through one or more underwriters or broker-dealers designated from time to time
by such Participating Investor and for resale by any such underwriter or
broker-dealer, in one or more transactions and at a fixed price or prices, which
may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, at prices determined on a negotiated
or competitive bid basis or at a price or prices otherwise determined by such
Participating Investor. Notwithstanding the preference of any Participating
Investor in any Demand Registration, if the Majority Participating Investors, in
their sole discretion, determine that the offering and sale of Registrable
Shares pursuant to such Demand Registration should be pursuant to an
underwriting or through a selling or placement agent or syndicate, then such
Majority Participating Investors shall have the right to select the underwriters
or managing underwriter, selling or placement agent or managing selling or
placement agent or syndicate manager for such offering and sale and to
establish, by agreement with such underwriters, managing underwriter, selling or
placement agents, managing selling or placement agent or syndicate manager or
otherwise the price or prices and other terms of such underwriting, offering and
sale, and in such event no Participating Investor who otherwise would be
entitled to include Registrable Shares in such Demand Registration shall be
entitled to have such Registrable Shares so included unless they are included in
such underwritten offering or through such selling or placement agent or
syndicate at such price or prices and on such terms. The Participating Investors
shall offer the Company the opportunity to participate in negotiations with any
of the foregoing Persons regarding the terms of such underwriting, offering or
sale relating to expenses required to be paid by the Company pursuant to this
Agreement.
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(b) If a Demand Registration is for or includes an underwritten
offering or an offering through a sales or placement agent or syndicate, and the
managing underwriter, such sales or placement agent, or the managing sales agent
or the syndicate manager determines in good faith that inclusion in such
registration of all Registrable Shares and other securities, if any, requested
or proposed to be included in such offering exceeds the number that could be
sold without having an adverse effect on such offering, including the price at
which the Majority Participating Investors propose to sell their Registrable
Shares included in such offering, then the number of Registrable Shares to be
offered for the accounts of the Participating Investors shall be reduced or
limited on such basis in proportion to the respective numbers of Registrable
Shares requested to be included in such offering by such Participating
Investors, to the extent necessary to reduce the total number of shares to be
included in such offering to the amount recommended by such managing
underwriter, agent, managing sales agent or syndicate manager, provided, that
if, without violation of Section 2.7, in connection with such Demand
Registration securities other than Registrable Shares held by Participating
Investors are being offered (whether for the account of the Company or any
Person other than an Investor, such reduction shall be made (i) first, from any
shares proposed to be sold for the account of the Company and/or other Persons
who are not Investors allocated in such manner as may be acceptable to the
Company) and (ii) second, from the Registrable Shares requested to be included
in such registration by the Investors (allocated, if necessary, pro rata among
all such Investors on the basis of the relative numbers of Registrable Shares
each such Investor has requested to be included in such registration), it being
understood and agreed that the securities referred to in clause (i) above shall
not be included in any such offering unless or until all the Registrable Shares
requested to be included in such offering by the Investors are so included. In
the event that any Participating Investor proposes to distribute or sell any of
such Participating Investor's Registrable Shares included in a Demand
Registration by any method permitted by Section 2.3(a) or at any price which is
materially different from the method or price proposed by the Majority
Participating Investors for the distribution of the Registrable Shares to be
distributed or sold for the accounts of the Participating Investors and if the
Majority Participating Investors shall reasonably determine, and shall notify
each Participating Investor in writing of such determination, after consultation
with the managing underwriter, sales or placement agent, managing sales or
placement agent or syndicate manager, if any, selected by the Majority
Participating Investors or an independent investment banking firm of nationally
recognized standing if there is no underwriter, agent or manager, that the
proposed distribution or sale of Registrable Shares by such Participating
Investor by such method or at such price would materially adversely affect the
success of the sale of Registrable Shares to be sold for the accounts of the
Majority Participating Investors, then such Participating Investor shall not be
entitled to include such Registrable Shares in such Demand Registration unless
such Participating Investor selects, by written notice to the Participating
Investors and the Company within ten (10) days after such notice of such
determination is given, another method of distribution permitted by Section
2.3(a) or another price (as the case may be) which in the reasonable judgment of
such underwriter, agent or manager or such investment banking firm (as the case
may be) will not have such an effect.
Section 2.4 Right of the Company to Suspend Registration. The Company
shall be entitled to suspend, for a reasonable period of time not in excess of
ninety (90) days after its receipt
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of a Demand Notice, the filing of any Registration Statement which it otherwise
would be required to file pursuant to this Article II, if (i) at any time prior
to the filing of such Registration Statement the Board of Directors of the
Company determines, in good faith and in the exercise of reasonable business
judgment, that such filing would materially interfere with or otherwise
adversely affect in any material respect any material planned financing,
acquisition, corporate reorganization or other transaction involving the Company
(a "Disadvantageous Effect") and (ii) the Company gives all Selling Stockholders
written notice of such suspension; provided, however, that a suspension pursuant
to this Section 2.4 or pursuant to Section 4.2 by reason of the existence of one
or more Disadvantageous Effects shall be authorized only once during any
twelve-month period. In the event of any suspension pursuant to this Section
2.4, then unless the request for the Demand Registration is withdrawn pursuant
to the last sentence of this Section 2.4, the Company shall file such
Registration Statement as soon as practicable after the first to occur of (i)
the consummation of the transaction which is the asserted basis for such
Disadvantageous Effect, (ii) the abandonment or termination of such transaction
prior to consummation, (iii) the determination by the Board of Directors of the
Company that such filing would not or would no longer result in such
Disadvantageous Effect and (iv) the ninety-first (91st) day after the receipt of
the applicable Demand Notice. If the Company shall suspend the filing of any
Registration Statement pursuant to this Section 2.4, the Majority Participating
Investors shall have the right to withdraw the Demand Notice for such
registration by giving written notice to the Company prior to expiration of such
suspension period.
Section 2.5 Certain Limitations on Requesting or Participating in a Demand
Registration.
(a) Unless the Majority Investors otherwise determine, no Investor
shall be entitled to give a Demand Notice if all of the Registrable Shares
requested in such Demand Notice to be registered in a Demand Registration then
may be publicly offered and sold by such Investor without registration or
qualification under the Securities Act or state securities laws, without
limitation as to volume or manner of sale and without any other material
limitation, restriction or condition. Unless the Majority Investors otherwise
determine, no Investor shall be entitled to participate in any Demand
Registration if all of the Registrable Shares requested to be registered in such
Demand Registration then may be publicly offered and sold by such Investor
without registration or qualification under the Securities Act or state
securities laws, without limitation as to volume or manner of sale and without
any other material limitation, restriction or condition. If any dispute between
the Company and any of the Investors regarding the application of this Section
2.5 in a particular instance shall arise, then such dispute shall promptly
thereafter be submitted for resolution by an independent law firm of recognized
national standing selected by the Company and reasonably acceptable to the other
parties to such dispute, and the written opinion of such law firm with respect
to that particular dispute shall be final and conclusive. The Company shall
endeavor to cause such law firm to render its opinion as promptly as reasonably
practicable. In the event such law firm concurs with the Company in its opinion,
the fees and expenses of such law firm shall be paid by the Investors and in the
event such law firm concurs with the Investors in its opinion, the fees and
expenses of such law firm shall be paid by the Company.
11
(b) Any provision herein to the contrary notwithstanding, the
Company will not be obligated to take any action to effect any Demand
Registration pursuant to this Article II if the Demand Notice is delivered to
the Company within one hundred eighty (180) days, of the date that a Letter of
Intent, or any equivalent agreement, is executed and delivered by the Company
and any underwriter or, if no such Letter of Intent is executed in connection
with such registration, within one hundred eighty (180) days of the effective
date of a prior registered offering of the Company's securities with respect to
which the Investors were eligible to exercise their Piggyback Registration
rights described in Article III. The foregoing shall not, however, affect any of
the Company's obligations with respect to any Shelf Registration effected prior
to such effective date.
Section 2.6 Form of Registration Statement. If in connection with a Demand
Registration, the Company proposes to effect such registration through the
filing of a Registration Statement on a particular registration form available
for such registration under the Securities Act and either the Majority
Participating Investors, the underwriters or managing underwriter, selling or
placement agent or managing selling or placement agent or syndicate manager, if
any, in connection with such Demand Registration shall advise the Company in
writing of its or their reasonable and good faith opinion that the use of
another available form is of material importance to the success of the proposed
offering or sale or other distribution contemplated, then such Demand
Registration shall be effected on such other form.
Section 2.7 No Other Participants in Demand Registration.
(a) Unless otherwise agreed by the Majority Investors, and except as
otherwise expressly provided in Section 2.7(b) neither the Company nor any other
Person except an Investor shall be permitted to include any shares of Common
Stock, Rights or other securities for registration, offering, sale or
distribution in any Demand Registration.
(b) If any Demand Registration is for an underwritten offering of
Common Stock, and is not for Shelf Registration then no later than ten (10)
Business Days prior to the anticipated filing date of the applicable
Registration Statement, the Company shall give each Shareholder written notice
to such effect; provided, however, that if none of the Shareholders own
Registrable Shares such Shareholders need not be given such notice nor shall he
be entitled to any rights under this Section 2.7(b). Upon the terms and subject
to the conditions and limitations set forth in this Section 2.7(b), any such
Shareholder may elect to request to participate in such registration by giving
the Company, within ten (10) Business Days after such notice has been given by
the Company, a written request to register any or all of such Shareholder's
Registrable Shares in connection with such registration. Any such request by a
Shareholder shall state (i) the kind and number of Registrable Shares to be
included in such registration by such Shareholder and (ii) any other information
that the Company reasonably requests in such notice given by it to such
Shareholder. Such Shareholder shall not be entitled to include in any Demand
Registration any Registrable Shares unless such Shareholder delivers to the
Majority Participating Investors a written opinion of legal counsel, reasonably
satisfactory to the Majority Participating Investors, to the effect that the
number of Registrable Shares requested by such Shareholder to be included in
such registration
12
could not then be sold by such Shareholder under Rule 144 (or any successor
provision then in force) under the Securities Act or any other available
exemption from registration under the Securities Act. If the managing
underwriter shall advise the Majority Participating Investors in writing that,
in its opinion in its sole discretion, the number of Registrable Shares
requested to be included in such registration exceeds the number which would
have an adverse effect on such offering, including the price at which such
securities can be sold or the timing of such offering or sale, such Shareholder
will be permitted to include in such registration only such number of
Registrable Shares, if any, requested to be included therein pursuant to this
Section 2.7 which in the opinion of such managing underwriter may be included
therein without having any such adverse effect (allocated, if necessary, pro
rata among all such Shareholders on the basis of the relative numbers of
Registerable Shares each such shareholder has requested to be included in such
registration). Such Shareholder's right to participate in any Demand
Registration pursuant to this Section 2.7(b) shall be subject to his compliance
in all material respects with all obligations to which such Shareholder would be
subject under this Agreement if such Demand Registration were a Piggyback
Registration in which such Shareholder was participating as a Selling
Stockholder under Article III, including all obligations under Article IV
including Section 4.5 and Article VI. If, in the opinion of the managing
underwriter, the inclusion in such registration of Registrable Shares of such
Shareholder which such Shareholder otherwise would be entitled to include would
have any adverse effect referred to above by reason of the failure of such
Shareholder to comply on a timely basis with Section 4.5, to provide information
necessary or desirable or otherwise to cooperate on a timely basis in connection
with such registration, then such Shareholder may be excluded from participation
in such registration. In no event shall such Shareholder be considered as, or
have any of the rights of, an Investor or Participating Investor for any
purpose; without limiting the generality of the foregoing, such Shareholder
shall be entitled to a vote or any other right with respect to any decision or
action which any provision of this Agreement requires or permits on the part of
the Investors, the Participating Investors, the Majority Investors or the
Majority Participating Investors, or any of them, or on the part of the Majority
Selling Stockholders.
Section 2.8 Shelf Registration.
(a) Any request by any Investor for a Demand Registration pursuant
to this Article II may, at the election of the Initiating Investor by
specification in the applicable Demand Notice, include a request that all or any
of the Registrable Shares requested to be included in such Demand Registration
be registered under the Securities Act for offering and sale on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act (a "Shelf
Registration"). In the event of any such request for a Shelf Registration, the
Company Notice shall state that such request was for or included a Shelf
Registration. To the extent that a Demand Notice is for or includes a Shelf
Registration, neither the Investor requesting such Shelf Registration nor any
other Participating Investor participating in such Shelf Registration shall be
required to include in the applicable Demand Notice or any other request for
inclusion in such Shelf Registration made in accordance with this Article II or
otherwise provide information with respect to the desired price range for the
Registrable Shares requested to be included therein by any Participating
Investor or the intended method(s) of disposition or distribution thereof except
to the extent and at the time or times required
13
in order to satisfy the requirements of Items 508 and 512(a)(1)(iii) of
Regulation S-K promulgated by the Commission. The method(s) of distribution of
the Registrable Shares of any Participating Investor included in any Shelf
Registration may be any method or methods permitted by Rule 415 of the
Securities Act and any such Participating Investor may change such method or
methods of distribution at any time and from time to time while the Registration
Statement relating to such Shelf Registration is required to remain effective in
accordance with the terms of Section 2.8(b) hereof, provided that such
Participating Investor provides to the Company the information reasonably
required to permit compliance with Items 508 and 512(a)(1)(iii) of Regulation
S-K promulgated by the Commission.
(b) The Company shall use all reasonable efforts to keep each
Registration Statement filed with respect to any Shelf Registration continuously
effective for a period of two years from the date on which the Commission
declares such Registration Statement effective. Such period shall be
automatically extended by the aggregate number of days, if any, during which any
delay, deferral, postponement or suspension is in effect with respect to such
Registration Statement.
(c) The Company shall effect any Shelf Registration requested
pursuant to this Agreement on a Registration Statement of the Company under the
Securities Act on any form for which the Company then qualifies and which
permits the offering and distribution thereunder of the number of Registrable
Shares to be included therein in accordance with the method(s) of distribution
determined in accordance with this Agreement. If, in connection with any
existing Demand Registration (whether or not for or including a Shelf
Registration), the Company proposes to effect such registration through the
filing of a Registration Statement on a particular registration form available
for such registration under the Securities Act and the Majority Investors with
respect to such registration under the Securities Act and the Majority
Participating Investors with respect to such Demand Registration shall advise
the Company in writing of its or their reasonable and good faith opinion that
the use of another available form is of material importance to the success of
the proposed offering or sale or other distribution contemplated, then such
Demand Registration shall be effected on such other form.
(d) The fact that a Registration Statement with regard to a Shelf
Registration is effective as of a particular time shall not prejudice or
otherwise affect the rights of the Participating Investors or any other Investor
to request a Demand Registration pursuant to this Article II, to participate in
any such Demand Registration requested by any other Investors or to participate
in any Piggyback Registration.
ARTICLE III
PIGGYBACK REGISTRATION
14
Section 3.1 Right to Require Piggyback Registration. If, on or at any time
after the Issue Date, the Company proposes to register under the Securities Act
(otherwise than on Form S-8 or Form S-4 and other than a Demand Registration)
any shares of Common Stock, any Common Stock Rights or any other equity
interests of the Company of any class, series, issue or other type included in
the Registrable Shares (whether for sale in an underwritten public offering or
otherwise and whether for the account of the Company or any other Person) and if
the registration form to be used may be used for the registration of Registrable
Shares for distribution by any method permitted by Section 3.2(a), then upon
each and every such occasion the Company shall give prior written notice of such
proposed registration to each Stockholder of its intention to do so promptly and
in any event not later than twenty (20) Business Days before the anticipated
filing date of the applicable Registration Statement. Such notice shall specify
whether the proposed registration is for the account of the Company, for the
account of one or more other Persons or both and also specify the kind and
number or amount of securities proposed to be registered on behalf of each
thereof and the proposed offering price or prices and distribution methods and
arrangements. Upon the terms and subject to the conditions and limitations set
forth in this Article III, each Stockholder may elect to participate in such
registration by giving the Company, within ten (10) Business Days after such
notice has been given by the Company, a written request to register any or all
of such Stockholder's Registrable Shares in connection with such registration
(any such registration as to which any such request is made being sometimes
referred to as an "Piggyback Registration"). Any such request by a Stockholder
shall state (i) the kind and number of Registrable Shares to be included in such
registration by such Stockholder, (ii) such Stockholder's preferred method of
distribution of such Registrable Shares permitted by Section 3.2(a) and (iii)
any other information that the Company reasonably requests in such notice given
by it to the Stockholders. Upon receipt of one or more of such requests, the
Company shall, as soon as practicable, file with the Commission and use its best
efforts to cause to become effective, a Registration Statement which shall cover
the Registrable Shares requested to be registered by the requesting Stockholders
and shall take all such other actions (including those required by Article IV)
as may be necessary or advisable to permit the requesting Stockholders to
dispose of all such Registrable Shares requested to be included in such
Piggyback Registration in accordance with the permitted intended method or
methods of distribution in compliance with the Securities Act and state "blue
sky" and securities laws.
Section 3.2 Methods of Distribution; Reduction in Number of Shares to be
Registered.
(a) Subject to Section 3.2(b) and Section 3.2(c), the Registrable
Shares of any Stockholder included in an Piggyback Registration may be
registered for sale by such Stockholder directly or through sales or placement
agents designated from time to time or to or through one or more underwriters or
broker-dealers designated from time to time by such Stockholder and for resale
by any such underwriter or broker-dealer, in one or more transactions and at a
fixed price, which may be changed, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices, at prices determined
on a negotiated or competitive bid basis or at a price otherwise determined by
such Stockholder.
15
(b) In the case of any Piggyback Registration that is for (or
includes) an underwritten public offering of securities to be sold for the
account of the Company, if any Stockholder who has elected to participate
therein has selected any other permitted method of distribution for any of its
Registrable Shares elected to be included therein or proposes to offer or sell
such Registrable Shares at a price different from the price determined or to be
determined for such offering for the Company's account and if the managing
underwriter determines reasonably and in good faith (and so notifies such
Stockholder in writing) that the distribution of such Registrable Shares by such
method or at such price will materially adversely affect the success of such
offering of the securities to be sold for the account of the Company, and if no
other Person will be permitted to participate in such Piggyback Registration
using such method of distribution or at such price, then such Stockholder shall
not be entitled to include in such Piggyback Registration such number of such
Registrable Shares which the managing underwriter determines will materially
adversely affect the success of such offering, except to the extent that such
Stockholder elects, by written notice to the Company within ten (10) days after
receipt of such written advice, to include, subject to Section 3.2(c), such
Registrable Shares in such underwritten public offering. In the event that any
Stockholder has selected any permitted method of distribution of any Registrable
Shares included in an Piggyback Registration which is materially different from
the method selected by the Majority Selling Stockholders for the distribution of
the Registrable Shares to be sold for the accounts of the Majority Selling
Stockholders or proposes to offer or sell such Registrable Shares at a price
different from the price determined or to be determined for such offering and
sale for the accounts of the Majority Selling Stockholders, and if the managing
underwriters, if any, or an independent investment banking firm of nationally
recognized standing if there is no managing underwriter shall reasonably and in
good faith determine that the proposed distribution of Registrable Shares by
such Stockholder participating in such Piggyback Registration by such method or
at such price or prices would adversely affect the success of the sale of
Registrable Shares to be sold for the accounts of the Majority Selling
Stockholders, then the Majority Selling Stockholders shall notify each
Stockholder participating in such piggyback registration of such determination
and such Stockholder participating in such Incidental Registration shall not be
entitled to include such Registrable Shares in such Piggyback Registration
unless such Stockholder, by written notice to the Majority Selling Stockholders
and the Company within ten (10) days after such notice of such determination is
given, proposes any other method of distribution at a price (as the case may be)
which in the reasonable judgement of such managing underwriters or such
investment banking firm (as the case may be) will not have such an effect.
(c) Subject to Section 4.5, if any Piggyback Registration is for (or
includes) an underwritten offering, the Company will permit each Stockholder who
elects to include any of his Registrable Shares in such Piggyback Registration
to elect to include any or all of such Registrable Shares in such underwritten
offering on the same terms and conditions as any similar securities included
therein. If, in the case of any Piggyback Registration which is for (or which
includes) an underwritten public offering which consists primarily of securities
to be registered and sold for the account of the Company, the managing
underwriter determines, reasonably and in good faith, that inclusion in such
offering of the Registrable Shares so requested to be included and of the
securities, if any, to be included (without violation of Section 3.4) in such
offering for the accounts of any
16
Persons other than the Company and the Stockholders ("Other Securities") would
materially adversely affect the success of such offering of the securities
proposed to be distributed for the account of the Company, then written notice
of such determination shall be given by the managing underwriter to each
Stockholder who requested Registrable Shares to be included in such offering and
the Registrable Shares and Other Securities to be included in such offering
shall be reduced to the extent necessary to reduce the total number or amount of
securities to be included in such offering to the amount recommended by the
managing underwriter, with such reduction to be made in the following order: (i)
first, by excluding from such Piggyback Registration securities proposed to be
included therein by all Persons other than the Company, the Stockholders, and
the other stockholder of the Company having registration rights existing at the
time of this Agreement and (ii) next, if, after excluding from such Piggyback
Registration pursuant to clause (i) of this sentence all securities proposed to
be included therein by all Persons other than the Company, the Stockholders and
the stockholders listed in Schedule 3.4, the managing underwriter continues to
be of such opinion, by reducing the securities intended to be offered by the
Stockholders and the stockholders listed on Schedule 3.4 on such basis as the
Stockholders and such other holders may agree or, absent such agreement, on a
pro rata basis in proportion to the respective numbers of Registrable Shares
which each of the Stockholders and such other holders intended to include in
such offering, it being understood that no reduction pursuant to clause (ii) of
this proviso shall be made unless or until all securities proposed to be offered
for the accounts of any Persons other than the Company and the Stockholders have
been excluded from such offering.
Section 3.3 Withdrawal of Registration. The Company may, without the
consent of any Stockholder, delay, suspend, abandon or withdraw any Piggyback
Registration and any related proposed offering or other distribution in which
any Stockholder has requested inclusion of Registrable Shares pursuant to this
Article III.
Section 3.4 No Other Participants in Piggyback Registration; Certain
Limitations on Participating in a Piggyback Registration.
(a) Except for the stockholders of the Company who have piggy-back
registration rights and who are listed on Schedule 3.4 hereto and unless
otherwise agreed by the Majority Selling Stockholders, no Person except the
Company or the Stockholders shall be permitted to include any shares of Common
Stock or Common Stock Rights for registration, offering, sale or distribution in
any Piggyback Registration.
(b) No Stockholder shall be entitled to participate in any Piggyback
Registration if all of the Registrable Shares requested to be registered in such
Piggyback Registration then may be publicly offered and sold by such Stockholder
without registration or qualification under the Securities Act or state
securities laws, without limitation as to volume or manner of sale and without
any limitation, restriction or condition. If any dispute regarding the
application of this Section 3.4(b) in a particular instance shall arise, then
such dispute shall promptly thereafter be submitted for resolution by an
independent law firm of recognized national standing selected by the Company and
reasonably acceptable to the other parties to such dispute, and the written
opinion of such law firm
17
with respect to that particular dispute shall be final and conclusive. The
Company shall endeavor to cause such law firm to render its opinion as promptly
as reasonably practicable. In the event such law firm concurs with the Company
in its opinion, the fees and expenses of such law firm shall be paid by the
Investors and in the event such law firm concurs with the Investors in its
opinion, the fees and expenses of such law firm shall be paid by the Company.
ARTICLE IV
OBLIGATIONS WITH RESPECT TO REGISTRATION
Section 4.1 In General. Whenever the Company is obligated by the
provisions of Article II or Article III to effect the registration of any
Registrable Shares under the Securities Act, the Company shall use its best
efforts to effect the registration of all Registrable Shares which any
Stockholder has requested to be included therein for offering, sale and
distribution in accordance with the permitted intended methods of distribution
thereof as quickly as practicable, and in connection therewith the Company will
do the following as expeditiously as possible:
(a) (A) subject to Section 2.6, if applicable, prepare and file with
the Commission a Registration Statement on any form for which the Company then
qualifies and which is available for the registration of the Registrable Shares
requested to be registered in accordance with the intended methods of
distribution thereof, (B) include (subject to Section 2.3, Section 3.2(b),
Section 3.2(c) and Section 3.4(b), if applicable) in the Registration Statement
all Registrable Shares requested to be included pursuant to Article II or
Article III (as the case may be), and (C) use its best efforts to cause such
Registration Statement to become effective;
(b) prepare and file with the Commission such amendments and
post-effective amendments and supplements to the Registration Statement or any
prospectus as may be necessary to keep the Registration Statement effective,
current and in compliance with the provisions of the Securities Act, until the
last to occur of (A) the sale or other distribution of all of the Registrable
Shares covered by such Registration Statement in accordance with the intended
methods of distribution thereof, (B) the one hundred twentieth (120th) day
following the effective date of such Registration Statement, (C) the expiration
of all periods during which transactions in Registrable Shares by a dealer are
not exempt from the provisions of Section 5 of the Securities Act by virtue of
Section 4(3) of the Securities Act or during which any dealer is obligated under
Rule 174 under the Securities Act to deliver a prospectus in connection with
transactions involving Registrable Shares and (D) the expiration of all other
periods, if any, during which the Registration Statement is required to remain
effective in order to avoid a violation of applicable law by any Stockholder or
the Company related to the sale or other distribution of all of the Registrable
Shares covered by such Registration Statement in accordance with the intended
methods of distribution thereof;
18
(c) at least three (3) Business Days prior to filing any
Registration Statement or prospectus or any amendment or supplement thereto,
furnish to each Stockholder and each underwriter, if any, of the Registrable
Shares covered by such Registration Statement copies of such Registration
Statement or prospectus as proposed to be filed (including documents to be
incorporated by reference therein), which documents will be subject to the
reasonable review and comments of such Stockholders (and their respective
counsel) during such three-Business-Day period, and if any Stockholder objects
to any statements in any such documents with respect to such Stockholder or the
distribution of the Registrable Shares to be included by him in such
Registration Statement, the Company shall promptly revise such statements to
such Stockholder's reasonable satisfaction;
(d) promptly notify each Stockholder of the effectiveness of the
Registration Statement;
(e) furnish to each Stockholder without charge and as soon as such
documents become available to the Company, at least one copy of the Registration
Statement and each amendment thereto, and such number of conformed copies
thereof, copies of the prospectus (including each preliminary prospectus and
each amendment or supplement thereto), in each case together with all exhibits
thereto and all documents incorporated by reference in any of such documents as
such Stockholder may reasonably (in light of such Stockholder's intended method
of distribution) request in order to facilitate the disposition of the
Registrable Shares being sold by such Stockholder (it being understood that the
Company consents to the use, in compliance with the Securities Act, of each
preliminary prospectus and prospectus and each amendment or supplement thereto
by each Stockholder, each underwriter, broker, dealer, placement agent and other
securities industry professional and each agent of each Stockholder in
connection with the offering, sale and distribution of the Registrable Shares
covered thereby);
(f) promptly notify each Stockholder, at any time when a prospectus
relating to Registrable Shares of such Stockholder covered by the Registration
Statement is required to be delivered under the Securities Act, of the happening
of any event as a result of which the preliminary prospectus or prospectus
included in such Registration Statement or any prospectus supplement contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and the Company will, as promptly as
practicable thereafter, prepare and file with the Commission and furnish to each
Stockholder a supplement or amendment to such preliminary prospectus, prospectus
or prospectus supplement so that, as thereafter delivered to the prospective
purchasers of the Registrable Shares being distributed by such Stockholder, such
preliminary prospectus, prospectus or prospectus supplement will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(g) enter into customary agreements (including, in the case of an
underwritten offering, an underwriting agreement in customary form); make such
representations and warranties, to any underwriters, brokers, dealers, placement
agents and other Persons involved in the distribution
19
of the Registrable Shares included in such Registration Statement as in form,
substance and scope are customarily made by issuers in similar circumstances or
which may be reasonably requested;
(h) furnish to each underwriter, broker, dealer or placement agent
participating in any offering or sale or other distribution pursuant to such
Registration Statement a signed counterpart of (A) an opinion of counsel to the
Company addressed to such underwriter, broker, dealer or placement agent (as the
case may be) and (B) a "cold comfort" letter or letters from the Company's
independent certified public accountants, each in customary form and covering
such matters of the type customarily covered by legal opinions or "cold comfort"
letters (as the case may be) in similar offerings, sales or distributions of
securities of similarly situated issuers and such other matters as the Majority
Selling Stockholders may reasonably request;
(i) prepare and file with the Commission promptly upon the request
of any such Stockholder, any amendments or supplements to such Registration
Statement or the applicable prospectus which, in the reasonable opinion of
counsel for such Stockholder, is required under the Securities Act in connection
with the distribution of Registrable Securities by such Stockholder;
(j) effective on or prior to the date the Registration Statement
becomes effective, use its best efforts to register or qualify the Registrable
Shares covered by a Registration Statement under the securities or blue sky laws
of such jurisdictions in the United States as the Selling Stockholders or any
underwriter, broker, dealer or placement agent participating in the offering or
sale or other distribution of the Registrable Shares covered thereby shall
reasonably request, and do any and all other acts and things which may be
reasonably necessary to enable each Selling Stockholder to consummate the
offering and disposition of such Registrable Shares in such jurisdictions of
such Registrable Shares in accordance with the permitted methods of distribution
described in such Registration Statement; provided, however, that the Company
shall in no event be required to qualify generally to do business as a foreign
corporation or as a dealer in any jurisdiction where it is not otherwise
required to be so qualified or, to conform its capitalization or the composition
of its assets at the time to the securities or blue sky laws of such
jurisdiction;
(k) make generally available to the Company's security-holders
earnings statements satisfying the provisions of the last sentence of Section
11(a) of the Securities Act no later than forty-five (45) days after the end of
the twelve-month period beginning with the first month of the first fiscal
quarter commencing after the effective date of the Registration Statement, which
earnings statements shall cover said twelve-month period;
(l) promptly notify each Selling Stockholder and each underwriter,
broker, dealer and placement agent participating in any offering or sale or
other distribution of securities covered by such Registration Statement of the
issuance or threatened issuance of any stop order or other order suspending the
effectiveness of the Registration Statement or preventing or suspending the use
of any preliminary prospectus, prospectus or prospectus supplement; use
reasonable efforts to prevent the issuance of any such threatened stop order or
other order, and; if any such order is issued, use its best efforts to obtain
the lifting or withdrawal of such order at the earliest possible moment
20
and promptly notify each Selling Stockholder and each such underwriter, broker,
dealer and placement agent of any such lifting or withdrawal;
(m) as promptly as practicable after filing with the Commission of
any document which is incorporated by reference into a Registration Statement,
notify each Selling Stockholder of such filing and deliver a copy of such
document to each Selling Stockholder;
(n) cooperate with each Selling Stockholder and the underwriters,
brokers, dealers and placement agents participating in any offering or sale or
other distribution of securities covered by such Registration Statement to
facilitate the timely preparation and delivery of certificates, not bearing any
restrictive legends, unless otherwise required by such Stockholder, representing
the securities covered by such Registration Statement, and enable all
Registrable Shares of such Selling Stockholder covered thereby to be in such
denominations and registered in such names as such Selling Stockholder may
request;
(o) use its best efforts to cause the Registrable Shares covered by
the Registration Statement to be registered with or approved by such other
governmental authorities within the United States and its territories as may be
necessary to enable the Selling Stockholders to consummate the disposition of
such securities in accordance with the intended methods of disposition;
(p) cooperate with the Selling Stockholders and the underwriters,
brokers, dealers and placement agents participating in any offering or sale or
other distribution of securities covered by such Registration Statement in
making any filings or submissions required to be made, and in furnishing all
appropriate information in connection therewith, with the National Association
of Securities Dealers, Inc., any national securities exchange, any other
"self-regulatory organization" (as defined in the Exchange Act) or with any
governmental authority;
(q) promptly notify each Selling Stockholder and each underwriter,
broker, dealer and placement agent participating in any offering or sale or
other distribution of securities covered by such Registration Statement of the
issuance or threatened issuance of any order suspending the registration or
qualification of any Registrable Shares covered by such Registration Statement
for disposition in any jurisdiction; use its reasonable efforts to prevent the
issuance of any such threatened order and; if any such order is issued, use its
best efforts to obtain the lifting or withdrawal of such order at the earliest
possible moment and promptly notify each Selling Stockholder and each such
underwriter, broker, dealer and placement agent of any such lifting or
withdrawal;
(r) if any shares of Common Stock or any other capital stock or
securities of the same class, series, issue or other type as any Registrable
Shares covered by such Registration Statement are or upon consummation of all
sales and other distributions covered by such Registration Statement will be
listed, qualified or otherwise eligible for trading or quotation on a national
securities exchange or the Nasdaq National Market, the National Association of
Securities
21
Dealers, Inc. Automated Quotation System or any similar quotation system, use
its best efforts to cause, by the date of the first sale of any Registrable
Shares pursuant to such Registration Statement, all Registrable Shares covered
by such Registration Statement to be listed, qualified or eligible for trading
or quotation on each such exchange or quotation system;
(s) cause each of the Company, and use its best efforts to cause
each of the respective Affiliates of the Company, to take all action necessary
to effect each registration, offering, sale and distribution of the Registrable
Shares contemplated hereby, including preparing and filing any required
financial or other information;
(t) make available to each registrar, transfer agent, trustee or
similar agent or fiduciary for each class, series, issue or other type of
Registrable Shares a supply of certificates or other instruments evidencing or
constituting such Registrable Shares which shall be in a form complying with the
requirements of such registrar, transfer agent, trustee or similar agent or
fiduciary promptly after the registration of such Registrable Shares; and
(u) take all other actions which are reasonably necessary or which
may be reasonably requested by the Majority Investors or the Majority
Stockholders or any underwriter, broker, dealer or placement agent participating
in any offering or sale or other distribution of securities covered by such
Registration Statement to effect the registration and qualification of the
Registrable Shares covered by such Registration Statement and to facilitate the
disposition thereof in accordance with the respective plans of distribution of
the Selling Stockholders.
Section 4.2 Suspension of Registration Proceedings. Notwithstanding
anything to the contrary contained herein, if at any time after the filing of a
Registration Statement but before it is declared effective by the Commission the
Company determines, in its reasonable business judgment, that such offering,
sale or other distribution covered thereby would result in a Disadvantageous
Effect, then the Company may suspend the offering, sale or distribution of any
of the Registrable Shares pursuant to such Registration Statement by giving
written notice to such effect to each Selling Stockholder; provided, however,
that (i) the Company may not require such suspension unless such suspension is
also required on the part of each and every Person (including the Company) who
proposes to offer, sell or otherwise distribute any securities pursuant to such
Registration Statement and (ii) a suspension pursuant to this Section 4.2 or
pursuant to Section 2.4 by reason of the existence of one or more
Disadvantageous Effects shall be authorized only once during any twelve-month
period. Any such suspension pursuant to this Section 4.2 shall terminate upon
the first to occur of (i) the consummation of the transaction which is the
asserted basis for such Disadvantageous Effect, (ii) the abandonment or
termination of such transaction prior to consummation, (iii) the determination
by the Board of Directors of the Company that such offering, sale or other
distribution would not or would no longer result in such Disadvantageous Effect
and (iv) the ninety-first (91st) day after the written notice of such suspension
is given in accordance with this Section.
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Section 4.3 Procedures if Stop Order Issued. Each Selling Stockholder,
upon receipt of any written notice from the Company of the happening of any
event of the kind described in Section 4.1(f), will forthwith discontinue
disposition of Registrable Shares pursuant to the applicable Registration
Statement until such Selling Stockholder's receipt of the copies of the
supplemented or amended preliminary prospectus, prospectus or prospectus
supplement contemplated by Section 4.1(f), and, if so directed by the Company,
such Selling Stockholder will deliver to the Company all copies in its
possession of the most recent preliminary prospectus, prospectus or prospectus
supplement covering such Registrable Shares at the time of receipt of such
notice. In the event the Company shall give any such notice after a Registration
Statement has become effective, the Company shall extend the period during which
the effectiveness of such Registration Statement shall be maintained pursuant to
Section 4.1(b) hereof by the number of days during the period from and including
the date of the giving of notice pursuant to Section 4.1(f) to the date when the
Company shall make available to each Selling Stockholder the copies of the
supplemented or amended preliminary prospectus, prospectus or prospectus
supplement contemplated by Section 4.1(f).
Section 4.4 Restriction on Other Sales. If any Demand Registration or
Piggyback Registration is for or includes any underwritten offering of or
including any Registrable Shares, neither the Company nor any Stockholder shall
effect any public sale or distribution of any of the Company's equity interests
or other securities of, or exercisable for, any class, series, issue or other
type as any included in such Demand Registration or Piggyback Registration,
other than as part of such Demand Registration or Piggyback Registration, for
such period prior to and for such period after the effective date of the related
Registration Statement covering such Registrable Shares as the managing
underwriter shall reasonably and in good faith specify and the Majority Selling
Stockholders shall approve in writing; provided that such period shall not
exceed one hundred eighty (180) days after the effective date of the
Registration Statement covering such Registrable Shares. In the case of any
Demand Registration which is for or includes any other method of distribution of
Registrable Shares, neither the Company nor any Stockholder shall effect any
public sale or distribution of any of the Company's equity interests or other
securities of, or exercisable for, any class, series, issue or other type as any
included in such Demand Registration, otherwise than as part of such Demand
Registration, during the period commencing on a date (specified at least ten
days in advance by written notice given to the Company and the other
Stockholders by the Majority Participating Stockholders) which is not more than
fourteen (14) days before the effective date of the registration statement
covering such Registrable Shares and ending on the one hundred eightieth (180th)
day after the effective date of the Registration Statement covering such
Registrable Shares, or for such shorter period as the Majority Stockholders may
approve in writing. Any Contract entered into after the Commencement Date
pursuant to which the Company issues any securities or becomes or may become
obligated to register or to permit the participation in the registration of any
securities of the Company shall contain a provision under which the holders of
such securities agree not to effect any public sale or distribution of any such
securities during the periods described in the first two sentences of this
Section 4.4, except as part of the relevant Demand Registration or Piggyback
Registration (if such holders are entitled to participate therein without
violation of this Agreement). The provisions of this Section 4.4 shall not
prevent the conversion, exchange or exercise of any securities pursuant to their
respective terms into or for other securities of the
23
Company or any public sale or other distribution by any of the Stockholders with
the prior consent of the Majority Stockholders, and are supplemental to any
similar requirements imposed by the Securities Act.
Section 4.5 Participation in Underwritten Offers. No Person who otherwise
has a right to participate in any underwritten offering in connection with a
Demand Registration or a Piggyback Registration shall be entitled to so
participate unless such Person (i) agrees to sell its securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and this Agreement.
ARTICLE V
EXPENSES OF REGISTRATION
Section 5.1 Expenses. Except as provided in the last sentence of this
Section 5.1, all Registration Expenses incurred in connection with or otherwise
incident to any Demand Registration or Piggyback Registration and the offering
or sale or other distribution of any Registrable Shares in connection therewith
shall be borne by the Company, whether or not any Registration Statement filed
in connection therewith ever becomes effective or any such sale or other
distribution ever is consummated.
ARTICLE VI
INDEMNIFICATION AND CONTRIBUTION
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Section 6.1 Indemnification by the Company. The Company shall indemnify
and hold harmless each Stockholder, each former Stockholder, each Person (if
any) who controls such Stockholder or former Stockholder within the meaning of
the Securities Act and each of their respective Affiliates, partners, directors,
officers, employees and agents (collectively, the "Stockholder Indemnified
Parties") from and against any liabilities, obligations, losses, damages,
assessments, fines and penalties of any kind or nature, including all amounts
paid or agreed to be paid in settlement of any claim, action, suit, hearing,
proceeding or investigation (collectively, "Losses"), whether direct, indirect,
joint or several, and subject to Section 6.3, also shall indemnify and reimburse
each Stockholder Indemnified Party for all reasonable fees, costs and expenses
(including reasonable fees and disbursements of counsel) in connection with
preparing for, defending against or settling, prosecuting any appeal of any
judgment entered in, or otherwise as a result of, any claim, action, suit,
hearing, proceeding or investigation, in each case which in any manner results
from, arises out of, or is based upon or related or attributable to (i) any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement as originally filed or in any amendment thereof, or
in any preliminary, final or summary prospectus, or in any amendment thereof or
supplement thereto, or any omission or alleged omission to state in any thereof
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) any violation by the Company of any
federal or state law, rule or regulation or common law applicable to the Company
and relating to action required of or inaction by the Company in connection with
any Demand Registration or Piggyback Registration; provided, however, that, in
the case of clause (i), the Company shall not be obligated to indemnify any
Stockholder or any of its controlling Persons, Affiliates, partners, directors,
officers, employees or agents for any Loss to the extent (and only to the
extent) that such Loss arises solely from any such untrue statement made in or
omission from the Registration Statement or any amendment thereof, or any
related preliminary, final or summary prospectus or any amendment thereof or
supplement thereto, which statement or omission related to information about
such Stockholder or its proposed plan of distribution of the Registrable Shares
of such Stockholder covered by such Registration Statement and was made or
omitted in reliance upon and in conformity with the latest information about
such Stockholder or its proposed plan of distribution of the Registrable Shares
of such Stockholder covered by such Registration Statement which was provided to
the Company by such Stockholder in writing for use in such Registration
Statement (or amendment thereto) or such prospectus (or amendment thereof or
supplement thereto). The Company will also indemnify each underwriter, selling
broker, dealer manager, placement agent and similar securities industry
professional participating in the distribution of Registrable Shares, its
officers and directors and each Person who controls such Person (within the
meaning of the Securities Act) to the extent required by such underwriter;
provided, however, that if the Company and any such underwriter, selling broker,
dealer manager or similar industry professional enters into an underwriting,
purchase or other agreement relating to such distribution which contains
provisions relating to indemnification and contribution between the Company and
such Person, such provisions shall be deemed to govern indemnification and
contribution as between the Company and such Person.
Section 6.2 Indemnification by Each Stockholder. Each Stockholder,
individually and not jointly, shall indemnify and hold harmless the Company and
each Person, if any, who controls
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the Company within the meaning of the Securities Act (the "Company Indemnified
Parties") and the Stockholder Indemnified Parties (other than such indemnifying
Stockholder and its controlling Persons, Affiliates, partners, directors,
officers, employees and agents) from and against any Loss to which such Company
Indemnified Parties and/or Stockholder Indemnified Parties may become subject,
and subject to Section 6.3, also shall indemnify and reimburse each Company
Indemnified Party for all reasonable fees, costs and expenses (including
reasonable fees and disbursements of counsel) in connection with preparing for,
defending against or settling, prosecuting any appeal of any Judgment entered
in, or otherwise as a result of any claim, action, suit, hearing, proceeding or
investigation, in each case insofar and only insofar as such Loss or such claim,
action, suit, hearing, proceeding or investigation arises solely out of or is
based solely upon any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement pursuant to which any Registrable
Shares of such Stockholder were offered and sold or in any related preliminary,
final or summary prospectus, or in any amendment thereof or supplement thereto,
or 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 under which they were made, not misleading, if the statement or
omission related to information about such Stockholder or its proposed plan of
distribution of the Registrable Shares of such Stockholder covered by such
Registration Statement and was made or omitted in reliance upon and in
conformity with the latest information about such Stockholder or its proposed
plan of distribution of the Registrable Shares of such Stockholder covered by
such Registration Statement which was provided by such Stockholder in writing
specified for inclusion therein; provided, however, that such Stockholder will
not indemnify or hold harmless any Company Indemnified Party and/or Stockholder
Indemnified Party from or against any such Loss, fee, cost or expense if the
untrue statement, omission or alleged untrue statement or omission upon which
such Losses or expenses are based was contained in or omitted from (as the case
may be) any preliminary prospectus, prospectus or summary prospectus, or any
amendment thereof or supplement thereto, used after such time as the Company was
advised by or on behalf of such Stockholder or the Company otherwise had
knowledge that the information about such Selling Stockholder contained therein
needs to be corrected, revised or supplemented.
Section 6.3 Procedures. Each party claiming a right to indemnification
under this Article VI (the "Indemnified Party") shall give notice to the party
from whom such indemnification is or may be sought (the "Indemnifying Party")
promptly after such Indemnified Party has actual knowledge of any claim as to
which indemnification may be sought, and the Indemnifying Party may participate
at its own expense in the defense, or if it so elects, assume the defense of any
such claim and any action or proceeding resulting therefrom, including the
employment of counsel and the payment of all expenses. The failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party from its obligations to indemnify such Indemnified Party,
except to the extent the Indemnified Party's failure to so notify actually and
materially prejudices the Indemnifying Party's ability to defend against such
claim, action or proceeding. In the event that the Indemnifying Party elects to
assume the defense in any action or proceeding, an Indemnified Party shall have
the right to employ separate counsel in any such action or proceeding and to
participate in the defense thereof, but such Indemnified Party shall pay the
fees and expenses of such separate counsel unless (i) the Indemnifying Party has
agreed to pay such fees and expenses, (ii) any relief
26
other than the payment of money is sought against the Indemnified Party or (iii)
the named parties to any such action or proceeding (including any impleaded
parties) include such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that there is a conflict of
interest between such Indemnified Party and the Indemnifying Party in the
conduct of the defense of such action (in which 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 assume the defense of such action or proceeding on such Indemnified Party's
behalf, it being understood, however, that the Indemnifying Party shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings 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 at any time for all Indemnified
Parties, which firm shall be designated in writing by the applicable Indemnified
Parties). If the Indemnifying Party elects not to defend, or if, after
commencing or undertaking any such defense, the Indemnifying Party fails to
prosecute or withdraws from such defense or fails to appeal any Judgment adverse
or unfavorable to the Indemnified Party, the Indemnified Party shall have the
right to undertake the defense, settlement or appeal thereof (as the case may
be), at the Indemnifying Party's expense. If the Indemnified Party assumes the
defense of any such claim, investigation, action, suit, hearing or proceeding
pursuant to this Section 6.3 and proposes to settle the same prior to a final
judgment thereon or to forgo or abandon any appeal available after final
judgment thereon, then the Indemnified Party shall give the Indemnifying Party
prompt written notice thereof and the Indemnifying Party shall have the right to
participate in the settlement, assume or reassume the defense thereof or
prosecute such appeal, in each case at the Indemnifying Party's expense. The
Indemnifying Party shall not, without written consent of such Indemnified Party,
settle or compromise or consent to entry of any judgment with respect to any
such claim, investigation, action, suit, hearing or proceeding (i) in which any
relief other than the payment of money damages is or may be sought against such
Indemnified Party or (ii) which does not include as an unconditional term
thereof the giving by the claimant, Person conducting such investigation or
initiating such hearing, plaintiff or petitioner to such Indemnified Party of a
release from all liability with respect to such claim, investigation, action,
suit or proceeding and all other claims or causes of action (known or unknown)
arising or which might arise out of the same facts.
Section 6.4 Contribution. In order to provide for just and equitable
contribution if a claim for indemnification pursuant to the indemnification
provisions of this Article VI is made but it is found in a final judgment by a
court of competent jurisdiction (not subject to further appeal) that such
indemnification may not been enforced in such case, even though the express
provisions hereof provide for indemnification in such case or the
indemnification provided for under this Article VI, even though so provided for,
otherwise is unavailable to or insufficient to hold any Indemnified Party
harmless to the full extent provided herein with respect to any Loss (or any
fees, costs or expenses) for which such indemnification is provided for, then
the Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses (i) in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party, on the one
hand, and such Indemnified Party, on the other, in connection with the
statements or omissions which resulted in such Losses or (ii) if the allocation
provided by clause (i) above is not permitted
27
by applicable law, in such proportion as is appropriate to reflect not only the
relative fault referred to in clause (i) above but also the relative benefits
received by the Indemnifying Party, on the one hand, and such Indemnified Party,
on the other, from the subject offering or distribution, as well as any other
relevant equitable considerations. Relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by (or omitted to be supplied by) the
Indemnifying Party or the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The relative benefits received by the Indemnifying Party,
on the one hand, and the Indemnified Party, on the other, shall be deemed to be
in the same proportion as the net proceeds of the offering or other distribution
received by the Indemnifying Party bears to the net proceeds of the offering or
other distribution received by the Indemnified Party. 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. The Company and the Investors agree
that it would not be just and equitable if contributions pursuant to this
Section 6.4 were to be determined by pro rata allocation (even if all
Stockholders were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above in this Section 6.4.
Section 6.5 Limit on Liability of Stockholders. The parties agree, to the
maximum extent permitted by law, that the obligations and liability of each
Selling Stockholder with respect to any Demand Registration or Piggyback
Registration, whether for indemnification pursuant to Section 6.2, contribution
pursuant to Section 6.4 or otherwise, shall not in any event exceed in the
aggregate the amount of net proceeds received by such Selling Stockholder from
the sale of the Registrable Shares sold by such Selling Stockholder in such
Demand Registration or Piggyback Registration.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Rules 144 and 144A. The Company covenants that following the
registration of any Registrable Shares it will file any reports required to be
filed by it under the Securities Act and the Exchange Act so as to enable
Investors who continue to hold any Registrable Shares to sell such Registrable
Shares without registration under the Securities Act within the limitation of
the exemptions provided by (i) Rules 144 and 144A under the Securities Act, as
each such Rule may be amended from time to time, or (ii) any similar rule or
rules hereafter adopted by the Commission. Upon the request of any Stockholder,
the Company will promptly deliver to such Stockholder a written statement as to
whether it has complied with such requirements.
Section 7.2 Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers of or consents to departures from the provisions
hereof may not be given, unless approved in writing by
28
the Company and by the Majority Investors and the Majority Shareholders (if
adversely affected thereby). Notwithstanding the foregoing, any waiver or
departure with respect to any matter which relates exclusively to the rights and
obligations of Stockholders in a specific Piggyback Registration or Demand
Registration, which relates only to the Registrable Shares being registered
pursuant to that Piggyback Registration or Demand Registration, which applies
only to such specific Piggyback Registration or Demand Registration, and which
does not directly or indirectly adversely affect the rights of any other
Stockholder with respect to any Registrable Shares not being so registered,
shall be authorized and effective if approved in writing by the Company and the
Majority Investors and any Shareholder adversely affected thereby.
Section 7.3 Termination. The provisions of this Agreement shall terminate
as to each Shareholder, other than the provisions of Article VI, which shall
survive any such termination indefinitely, at the first time as of which all
Registrable Shares held by such Shareholder may be publicly sold by such
Shareholder without registration or qualification under the Securities Act or
state securities laws, without limitations as to volume or manner of sale and
without any limitation, restriction or condition; provided, however, that any
obligations of the Company pursuant to Article V or any other provision of this
Registration Rights Agreement with respect to any pending or completed Demand
Registration or Piggyback Registration which have not been fully performed shall
survive until fully performed. In the case of any dispute concerning whether the
condition stated in the immediately preceding sentence has been satisfied as of
any time, the opinion of an independent law firm of nationally recognized
standing selected by the Majority Stockholders reasonably satisfactory to the
Company shall be final and conclusive. The Company will pay the fees and expense
of such law firm.
Section 7.4 Certain Mergers and Other Events. If the Company proposes to
consummate any consolidation, merger, binding share exchange or reorganization
in which the Company is not the continuing corporation or any sale, conveyance,
transfer or lease to another Person of the properties and assets of the Company
as an entirety or substantially as an entirety and if, as a result of or in
connection with such transaction, the Stockholders would receive or would be
entitled to receive, in exchange for or otherwise with respect to the
Registrable Shares held by them, any common stock, other capital stock or other
securities of the successor or acquiring corporation or any Affiliate thereof or
any Rights for any such common stock, capital stock or other securities, then
the Company shall not consummate such transaction unless the successor or
acquiring Person (as the case may be) shall, in a manner reasonably satisfactory
to the Majority Investors, grant to the Stockholders registration rights which
shall be no less favorable to the Stockholders than the provisions of this
Agreement. In the event of (i) any reclassification, reorganization or change of
the outstanding shares of Common Stock or other capital stock of the Company,
(ii) any consolidation, merger, binding share exchange or reorganization to
which the Company is party (other than a consolidation, merger, share exchange
or reorganization in which the Company is the continuing corporation and which
does not result in any reclassification of or change in the Registrable Shares
of any class, series or type), (iii) any event which results in the securities
deliverable upon exercise or conversion of any Common Stock Rights referred to
in the definitions of Registrable Shares in Section 1.1 consisting of or
including any securities other than shares of
29
Common Stock, or (iv) any other event of any kind occurs which results in a
change in the securities constituting or included in the Registrable Shares
immediately before such event, then the Stockholders shall be entitled to
registration rights with respect to all such securities issued or issuable to
them by reason thereof which are comparable in all material respects to those
provided for herein with respect to Registrable Shares. In the event any dispute
relating to this Section 7.4 shall arise, then such dispute shall promptly
thereafter be submitted for resolution by an independent law firm of recognized
national standing selected by the Company and reasonably acceptable to the
Majority Investors (acting as provided above in this Section), whose decision
(with the advice of an independent investment banking firm of recognized
national standing selected by such law firm, if such law firm believes it
advisable to seek such advice) shall be final and conclusive. The reasonable
fees and expenses of such law firm (and of any such investment banking firm)
shall be paid by the Company.
Section 7.5 Terms Generally; Certain Rules of Construction. The
definitions of terms contained in this Agreement shall apply equally to both the
singular and plural forms of the terms defined and words in the singular include
the plural and words in the plural include the singular. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation." The words "herein", "hereof" and
"hereunder" and words of similar import refer to this Agreement in its entirety
and not to any part hereof unless the context shall otherwise require. All
references herein to Sections shall be deemed references to Sections of this
Agreement unless the context shall otherwise require. Unless otherwise expressly
provided herein or unless the context shall otherwise require, any references as
of any time to any agreement or other Contract, instrument or document or to any
statute or regulation or any specific section or other provision thereof are to
it as amended and supplemented through such time (and, in the case of a statute
or regulation or specific section or other provision thereof, to any successor
of such statute, regulation, section or other provision). Any reference herein
to a "day" or number of "days" (without the explicit qualification of
"Business") shall be interpreted as a reference to a calendar day or number of
calendar days. If any action or notice is to be taken or given on or by a
particular calendar day, and such calendar day is not a Business Day, then such
action or notice shall be deferred until, or may be taken or given on, the next
Business Day. Unless otherwise expressly provided herein or unless the context
shall otherwise require, any provision of this Agreement using a defined term
(by way of example and without limitation, such as "Shareholders") which is
based on a specified characteristic, qualification, feature or status shall, as
of any time, refer only to such Persons who have the specified characteristic,
qualification, feature or status as of that particular time. For purposes of
this Agreement, (i) any acquisition or transfer of any Rights to subscribe for,
purchase or otherwise acquire any Registrable Shares shall also constitute an
acquisition or transfer or proposed transfer of the Registrable Shares issuable
upon the exercise, exchange or conversion thereof and (ii) any Person who holds
any Right to subscribe for, purchase or otherwise acquire any Common Stock,
Registrable Shares or other securities shall be deemed to hold all such Common
Stock, Registrable Shares or other securities which then would be issuable if it
were assumed that such Right were then duly exercised, exchanged or converted in
full. When used with reference to any Right, the term "exercise" shall mean to
exercise the right to exchange or convert such Right for
30
or into, subscribe for, purchase or otherwise acquire shares of Common Stock
represented by such Right, and variants of such word (including "exercised" and
"exercisable") shall have correlative meanings.
Section 7.6 Determinations Generally. Unless otherwise expressly provided
herein, all decisions and determinations required or permitted to be made
hereunder by any Stockholder, (including any decision as to whether to give any
consent or approval) shall be made by such Person in its sole discretion.
Section 7.7 Communications. All notices and other communications required
or permitted by this Agreement shall be in writing, and (i) if to the Company,
to The Mentus Group, Inc., 9531 West 78th Street, Minneapolis, MN 55344,
Attention: Chairman, or to such other address as the Company may designate in a
written notice to each Stockholder, (ii) if to any Investor, to such Investor at
such Investor's address appearing on Schedule 1 hereto or supplied by such
Investor in writing to the Company for the purpose of such notice or (iii) if to
any Shareholder's address appearing on Schedule 2 hereto or supplied by such
Shareholder in writing to the Company for purpose of such notice. All notices
and other communications required or permitted by this Agreement shall be deemed
to have been duly given if personally delivered to the intended recipient at the
proper address determined pursuant to this Section 7.7 or sent to such recipient
at such address by registered or certified mail, return receipt requested,
Express Mail, Federal Express or similar overnight delivery service for next
Business Day delivery or by telegram, telex or facsimile transmission and will
be deemed given, unless earlier received: (1) if sent by certified or registered
mail, return receipt requested, five calendar days after being deposited in the
United States mail, postage prepaid; (2) if sent by Express Mail, Federal
Express or similar overnight delivery service for next Business Day delivery,
the next Business Day after being entrusted to such service, with delivery
charges prepaid or charged to the sender's account; (3) if sent by telegram or
telex or facsimile transmission, on the date sent and (4) if delivered by hand,
on the date of delivery. The Company shall, promptly upon request of any Person
required or permitted to give any notice or other communication hereunder to any
holders of the Subject Shares supply to such Person the most recent addresses of
such holders as they appear in the Company's records.
Section 7.8 Binding Effect; Successors and Assigns; Entire Agreement.
Except as expressly provided in this Agreement, nothing in this Agreement,
express or implied, is intended or shall be construed to confer upon or give any
Person (including creditors, stockholders and Affiliates of the Company) other
than the parties and the Persons who from time to time are Stockholders any
remedy or claim under or by reason of this Agreement or any term, covenant or
condition hereof, all of which shall be for the sole and exclusive benefit of
the parties. This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the Company and the Persons who from time to
time are Stockholders and their respective successors. Except as otherwise
specifically permitted or contemplated by this Agreement, neither this Agreement
nor any of the rights, interests or obligations of the Company hereunder shall
be assigned or delegated without the prior written consent of the Majority
Investors. The provisions of Article VI shall inure to the benefit of, and be
enforceable by, each of the Stockholder Indemnified Parties and the Company
Indemnified Parties. This Agreement constitutes the entire agreement of the
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parties with respect to the subject matter herein and supersede all prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the specific subject matter hereof. Without limiting the
generality of the foregoing, each Stockholder which is or may be entitled, by
law or Contract or otherwise, to any registration rights (other than those
granted by this Agreement) with respect to any shares of Common Stock, Rights or
other securities at any time or from time to time issued by the Company hereby
agrees that all such rights are hereby terminated and this Agreement supersedes
each and every such Contract of which such Stockholder is presently a party or
beneficiary.
Section 7.9 Governing Law; Consent to Jurisdiction; Service of Process.
(a) This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York, regardless of the laws that
might be applicable under principles of conflicts of law except to the extent
that Delaware General Corporate Law mandatorily applies.
(b) To the fullest extent permitted by applicable law, each party
hereto hereby irrevocably and unconditionally (i) submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State or Federal
court sitting in New York City (and of any appellate court to which an appeal of
any judgment, order, decree or decision of any such court may be taken) in any
suit, action or proceeding arising out of or relating to this Agreement or for
recognition or enforcement of any judgment rendered in any such suit, action or
proceeding, (ii) waives any objection which it may now or hereafter have to the
laying of venue of any such suit, action or proceeding in any such court,
including any claim that any such suit, action or proceeding has been brought in
an inconvenient forum, (iii) waives all rights to a trial by jury in any such
suit, action or proceeding, and (iv) waives personal service of any summons,
complaint or other process by any means, manner or method other than in the
manner provided for the giving of notices to such party in Section 7.7 and
agrees that any process served upon such party in such manner provided for in
Section 7.7 shall have the same validity and legal force and effect as if served
upon such party personally within the State of New York. Nothing herein shall
affect the right of any party to serve process in any other manner permitted by
law.
Section 7.10 Interpretation. The headings of the articles and sections
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not affect the meaning or
interpretation of this Agreement.
Section 7.11 No Implied Waivers. No action taken pursuant to this
Agreement, including, without limitation, any investigation by or on behalf of
any party or beneficiary, shall be deemed to constitute a waiver by the party or
beneficiary taking such action of compliance with any agreements, covenants,
obligations or commitments contained herein or made pursuant hereto. The waiver
by any party of a breach or benefit of any provision of this Agreement shall not
operate or be construed as a waiver of any preceding or succeeding breach and no
failure by any party or
32
beneficiary to exercise any right, privilege or remedy hereunder shall be deemed
a waiver of such party's or beneficiary's rights, privileges or remedies
hereunder or shall be deemed a waiver of such party's or beneficiary's rights to
exercise the same at any subsequent time.
Section 7.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to constitute one and the same agreement.
Section 7.13 Further Assurances. Each party shall cooperate and take such
actions as may be reasonably requested by another party in order to carry out
the provisions and purposes of this Agreement and the transactions contemplated
hereby. The obligations of the Company with respect to the Registrable Shares of
any Stockholder included in any Demand Registration or Piggyback Registration
are subject to the compliance by such Stockholder with the immediately preceding
sentence, but the failure of any Stockholder to so comply shall not affect the
Company's obligations with respect to the Registrable Shares of any other
Stockholder included therein.
Section 7.14 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby; provided that, if any provision
hereof or the application thereof shall be so held to be invalid, void or
unenforceable by a final judgment of a court of competent jurisdiction, then
such court may substitute therefor a suitable and equitable provision in order
to carry out, so far as may be valid and enforceable, the intent and purpose of
the invalid, void or unenforceable provision and if such court shall fail or
decline to do so, the parties shall negotiate in good faith a suitable and
equitable substitute provision. To the extent that any provision shall be
judicially unenforceable in any one or more states, such provision shall not be
affected with respect to any other state, each provision with respect to each
state being construed as several and independent.
Section 7.15 Specific Performance. The parties agree that the provisions
of this Agreement shall be specifically enforceable, it being agreed by the
parties that the remedy at law, including monetary damages, for breach of such
provisions will be inadequate compensation for any loss and that any defense in
any action for specific performance that a remedy at law would be adequate is
waived.
Section 7.16 Facsimile Signatures. This Agreement may be executed and
delivered through facsimile signature.
Section 7.17 Additional Shareholders. Subject to the prior written consent
of the Majority Investors, but without the necessity of the consent or approval
of any other party to this Agreement or any other Person, any of the Persons
named on Schedule 3.4 hereto may become a party to this Agreement and a
"Shareholder" hereunder by executing and delivering to the Company and the
33
Investors a written instrument, in form and substance reasonably satisfactory of
the Majority Investors, by which such Person agrees to become a party to this
Agreement bound by all of the provisions hereof applicable to a Shareholder and
terminates all other rights, if any, which such Person may have with respect to
the registration or qualification under federal or state securities laws of
shares of Common Stock or other securities of the Company.
(Signatures continued on the next page)
34
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
THE MENTUS GROUP, INC.
By: ___________________________________
Name:
Title:
21ST CENTURY COMMUNICATIONS T-E
PARTNERS, L.P.
By: SANDLER INVESTMENT
PARTNERS, L.P., General Partner
By: SANDLER CAPITAL
MANAGEMENT, General Partner
By: MJM MEDIA CORP., a
General Partner
By: ___________________________________
Michael J. Marocco
President
21ST CENTURY COMMUNICATIONS
PARTNERS, L.P.
By: SANDLER INVESTMENT
PARTNERS, L.P., General Partner
By: SANDLER CAPITAL
MANAGEMENT, General Partner
By: MJM MEDIA CORP., a
General Partner
By: ___________________________________
Michael J. Marocco
President
35
21ST CENTURY COMMUNICATIONS
FOREIGN PARTNERS, L.P.
By: SANDLER INVESTMENT
PARTNERS, L.P., General Partner
By: SANDLER CAPITAL
MANAGEMENT, General Partner
By: MJM MEDIA CORP., a General Partner
By: ___________________________________
Michael J. Marocco
President
[Other parties to be inserted]
36