GRANDE COMMUNICATIONS HOLDINGS, INC. FIFTH AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

Exhibit 10.4

GRANDE COMMUNICATIONS HOLDINGS, INC.

FIFTH AMENDED AND RESTATED

INVESTOR RIGHTS AGREEMENT

This Fifth Amended and Restated Investor Rights Agreement (the “Agreement”) is entered into as of this      day of November, 2005 by and among Grande Communications Holdings, Inc., a Delaware corporation (the “Company”), each existing holder of Preferred Stock and Warrants of the Company set forth on Schedule 1 attached hereto (each an “Current Investor” and collectively the “Current Investors”), each existing holder of Common Stock of the Company set forth on Schedule 2 attached hereto (each a “Founder” and collectively the “Founders”). The Current Investors and any holder of any shares of the newly created series of Series H Preferred Stock (“Series H Holder”) or other person or entity that becomes a party to this Agreement pursuant to Section 8.13 hereof are referred to collectively as the “Investors,” and the Investors and the Founders are referred to collectively as the “Stockholders.”

RECITALS

A. The Company, the Current Investors and the Founders are parties to that certain Fourth Amended and Restated Investor Rights Agreement dated October 27, 2003 (the “Investor Rights Agreement”).

C. The Company and the Current Investor and Founder signatories hereto desire to hereby amend and restate the Investor Rights Agreement to, among other things, provide for the future issuance of shares of the newly created series of Series H Preferred Stock. The holders of Series H Preferred Stock will become parties to this Agreement from time to time upon the execution by such holder of a joinder to this Agreement in accordance with Section 8.13 hereof and will have the rights and obligations of an “Investor” and a “Stockholder” hereunder.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth and set forth in the Series A Purchase Agreements, the Series B Purchase Agreement, the Series C Purchase Agreement the Merger Agreement, the Series F Purchase Agreement and the Series G Purchase Agreement, the parties hereto agree as follows:

SECTION 1. GENERAL.

1.1 Definitions. As used in this Agreement, the following terms shall have the following respective meanings:

“COMMON STOCK” means the Company’s Common Stock, $0.001 par value per share.

“EQUITY SECURITIES” means (i) any shares of Common Stock, Preferred Stock or other security of the Company, (ii) any security or instrument convertible into or exercisable or exchangeable for, with or without consideration, any shares of Common Stock, Preferred Stock

or other security of the Company (including the Warrants and any option, warrant or right to subscribe for or purchase such a security or instrument), (iii) any security or instrument carrying any option, warrant or right to subscribe for or purchase any shares of Common Stock, Preferred Stock or other security of the Company, or (iv) any such option, warrant or right.

“EXCHANGE ACT” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the SEC thereunder.

“FEBRUARY SERIES A PURCHASE AGREEMENT” means Series A Preferred Stock Purchase Agreement dated as of February 24, 2000 by and between the Company and the other parties thereto.

“FORM S-3” means such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.

“HOLDER” means any Investor who holds Registrable Securities and any holder of Registrable Securities to whom the registration rights conferred by this Agreement have been transferred in compliance with Section 2.11 below.

“INITIAL OFFERING” means the Company’s first firm commitment underwritten public offering of its Common Stock registered under the Securities Act.

“MERGER AGREEMENT” means that certain Agreement and Plan of Merger dated April 25, 2002 by and between the Company and the other parties thereto.

“PERMITTED TRANSFEREE” means (i) an affiliate of a Stockholder, (ii) a Stockholder’s family members or a trust for the benefit of an individual Stockholder and/or his family members, (iii) a Stockholder’s affiliated or related venture capital funds (if the Stockholder is a venture capital fund investor), (iv) a Stockholder’s partners or retired partners in accordance with partnership interests (if the Stockholder is a partnership), (v) a Stockholder’s members or former members in accordance with their interest in the limited liability company (if the Stockholder is a limited liability company), (vi) a Stockholder’s shareholders in accordance with their interest in the corporation (if the Stockholder is a corporation), (vii) any distribution in connection with the dissolution, winding-up or liquidation of a Stockholder, (viii) a transferee of a Stockholder by will or the laws of intestate succession, and (ix) the Company for acquisitions from holders of Common Stock by the Company pursuant to agreements which permit the Company to repurchase such shares upon termination of services to the Company at such holders’ cost, including, without limitation, an acquisition of Common Stock in accordance with Section 2.4(d) of the Prior Management Agreement.

 

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“PREFERRED STOCK” means the Company’s Preferred Stock, $.001 par value per share, and any series thereof.

“PRIOR MANAGEMENT AGREEMENT” means that certain Amended and Restated Stockholders Agreement entered into by the Company and members of the Company’s management dated as of February 11, 2000, and as amended February 22, 2000.

“PRIOR EXISTING STOCKHOLDERS AGREEMENT” means that certain Stockholders Agreement entered into by the Company, KNOLOGY, Inc., and ClearSource, Inc., dated as of February 11, 2000.

“QUALIFIED HOLDER” means an Investor (including any group of affiliated or related funds, in the case of an Investor that is a venture capital fund investor) who or which holds at least fifteen million (15,000,000) Shares (as adjusted for stock splits, stock dividends, recapitalizations and similar events).

“QUALIFIED PUBLIC OFFERING” means a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act covering the offer and sale of Common Stock for the account of the Company in which the per share sales price of such Common Stock to the public is at least $1.30 (as adjusted for any stock dividends, combinations, splits, recapitalizations and similar events) and the gross proceeds to the Company (prior to deduction of underwriting discounts, commissions and fees) are at least $150,000,000.

“REGISTER,” “REGISTERED,” and “REGISTRATION” mean a registration effected by preparing and filing a registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of the effectiveness of such registration statement.

“REGISTRABLE SECURITIES” means (i) any Common Stock of the Company held by the Investors, (ii) any Common Stock of the Company issued or issuable upon the conversion, exercise or exchange of any Equity Securities held by the Investors, and (iii) any Common Stock of the Company issued as (or issuable upon the conversion, exercise or exchange of any warrant, right or other security which is issued as) or by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation, or other reorganization or other distribution with respect to, or in exchange for or in replacement of, any Equity Securities held by the Investors. Notwithstanding the foregoing, Registrable Securities shall cease to be Registrable Securities when such securities are sold to the public either pursuant to a registration statement or Rule 144.

“REGISTRATION EXPENSES” means all expenses incurred by the Company in complying with Sections 2.2, 2.3, 2.4 and 2.5 below, including, but not limited to, all registration and filing fees (exclusive of underwriting discounts and commissions), printing expenses, fees and disbursements of counsel for the Company, blue sky fees and expenses, the expense of any

 

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special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company), and the reasonable fees and disbursements of a single special counsel for the Holders (not to exceed $15,000).

“RESTATED CERTIFICATE” means the Company’s Certificate of Incorporation, as amended and/or restated from time to time.

“SECURITIES ACT” means the Securities Act of 1933, as amended, and the rules and regulations promulgated by the SEC thereunder.

“SELLING EXPENSES” means all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities and fees and disbursements of counsel for any Holder (other than the fees and disbursements of counsel to the selling Holders included in the Registration Expenses).

“SERIES A PREFERRED STOCK” means Series A preferred stock, $0.001 par value per share, of the Company.

“SERIES A PURCHASE AGREEMENTS” means the February Series A Purchase Agreement and the Series A Preferred Stock Purchase Agreement dated as of June 22, 2000 by and between the Company and the other parties thereto.

“SERIES B PREFERRED STOCK” means Series B preferred stock, $0.001 par value per share, of the Company.

“SERIES B PURCHASE AGREEMENT” means the Series B Preferred Stock Purchase Agreement dated as of September 19, 2000 by and between the Company and the other parties thereto.

“SERIES C PREFERRED STOCK” means Series C preferred stock, $0.001 par value per share, of the Company.

“SERIES C PURCHASE AGREEMENT” means the Series C Preferred Stock Purchase Agreement dated as of October 29, 2001 by and between the Company and the other parties thereto.

“SERIES D PREFERRED STOCK” means Series D preferred stock, $0.001 par value per share, of the Company.

“SERIES E PREFERRED STOCK” means Series E preferred stock, $0.001 par value per share, of the Company.

 

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“SERIES F PREFERRED STOCK” means Series F preferred stock, $0.001 par value per share, of the Company.

“SERIES F PURCHASE AGREEMENT” means the Series F Preferred Stock Purchase Agreement dated as of November 18, 2002 by and between the Company and the other parties thereto.

“SERIES G PREFERRED STOCK” means Series G Preferred Stock, $0.001 par value per share, of the Company.

“SERIES G PREFERRED STOCK HOLDER” means the certain Current Investors and the New Investors that are party to the Series G Purchase Agreement.

“SERIES G PURCHASE AGREEMENT” means the Series G Preferred Stock Purchase Agreement dated as of October 27, 2003 by and between the Company and the other parties thereto.

“SERIES H PREFERRED STOCK” means Series H Preferred Stock, $0.001 par value per share, of the Company.

“SHARES” means (i) shares of Series A Preferred Stock, shares of Series B Preferred Stock, shares of Series C Preferred Stock, shares of Series D Preferred Stock, shares of Series E Preferred Stock, shares of Series F Preferred Stock, shares of Series G Preferred Stock and shares of Series H Preferred Stock, and (ii) any other shares of Preferred Stock into which such shares are converted pursuant to the “Pay to Play Anti-Dilution Adjustment” provisions of the Restated Certificate.

“SEC” or “COMMISSION” means the Securities and Exchange Commission.

“WARRANTS” means the warrants to acquire shares of Common Stock in the Company issued pursuant to the Series G Purchase Agreement.

1.2 Methodology for Calculations. Except as otherwise provided in this Agreement, for purposes of calculating (i) the number of shares of Registrable Securities, Preferred Stock, Shares, Common Stock or Equity Securities outstanding as of any date, (ii) the number of shares of Registrable Securities, Preferred Stock, Shares, Common Stock or Equity Securities held by a party, and (iii) all related percentages and ratios, all such securities shall be treated as having been converted into, or exercised or exchanged for, Common Stock (i.e., all such calculations shall be made on a fully diluted, converted, exercised and exchanged basis). Whenever reference is made in this Agreement to a specific number of shares of Registrable Securities, Preferred Stock, Shares, Common Stock or Equity Securities, such number shall be proportionally adjusted in the event of any stock dividends, combinations, splits, recapitalizations and similar events.

 

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SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER.

2.1 Restrictions on Transfer.

(a) Each Holder agrees not to make any disposition of any Shares, Warrants or Registrable Securities unless and until:

(i) There is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or

(ii) (A) The transferee has agreed in writing to be bound by the terms of this Agreement, (B) such Holder shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (C) if reasonably requested by the Company, such Holder shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of such shares under the Securities Act. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances.

Notwithstanding the provisions of paragraphs (i) and (ii) above, no such registration statement or opinion of counsel shall be necessary for a transfer by a Holder (i) to its partners or retired partners in accordance with partnership interests (if the Holder is a partnership), (ii) to an affiliate of such Holder, (iii) to its members or former members in accordance with their interest in the limited liability company (if the Holder is a limited liability company), (iv) to its shareholders in accordance their percentage ownership interest in the corporation (if the Holder is a corporation), (v) to its affiliated or related venture capital funds (if the Holder is a venture capital fund investor), or (vi) to such Holder’s family members or to a trust for the benefit of an individual Holder and/or his or her family members; provided, however, that, subject to the provisions of Section 2.11 below, the transferee shall be subject to the terms of this Agreement to the same extent as if such transferee were an original Holder hereunder.

(b) Each certificate representing Shares, Warrants and Registrable Securities shall (unless otherwise permitted by the provisions of the Agreement) be stamped or otherwise imprinted with a legend substantially similar to the following (in addition to any other legend required under applicable state securities laws or as provided elsewhere in this Agreement):

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION AND MAY NOT BE OFFERED, SOLD OR OTHERWISE

 

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TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED OR QUALIFIED UNDER THE ACT AND THE SECURITIES LAWS OF ANY OTHER APPLICABLE JURISDICTION OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

(c) The Company shall be obligated to reissue promptly unlegended certificates at the request of any holder thereof if the holder shall have obtained an opinion of counsel (which counsel may be counsel to the Company) reasonably acceptable to the Company to the effect that the securities proposed to be disposed of may lawfully be so disposed of without registration, qualification or legend.

(d) Any legend endorsed on an instrument pursuant to applicable state securities laws and the stop-transfer instructions with respect to such securities shall be removed upon receipt by the Company of an order of the appropriate Blue Sky authority authorizing such removal.

2.2 Demand Registration.

(a) Subject to the conditions of this Section 2.2, other than from a Series H Holder, if the Company shall receive a written request from Holders (one of whom must be either Centennial or Whitney & Co., each as defined below) holding twenty-five percent (25%) or more of the Registrable Securities then held by all Holders (the “Initiating Holders”) that the Company file a registration statement under the Securities Act, and under the securities or Blue Sky laws of any jurisdiction designated by such Holders, covering Registrable Securities having an aggregate offering price to the public of not less than $5,000,000, then the Company shall, within fifteen (15) days of the receipt thereof, give written notice of such request to all Holders, and subject to the limitations of this Section 2.2, use its best efforts to effect the registration under the Securities Act of all Registrable Securities that the Holders request to be registered.

(b) If the Initiating Holders holding a majority of the Registrable Securities held by such Holders to which the request made pursuant to Section 2.2(a) relates intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to this Section 2.2, and the Company shall include such information in the written notice referred to in Section 2.2(a). In such event, the right of any Holder to include its Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders) to the extent provided herein. All Holders, other than from a Series H Holder, proposing to distribute their securities through such underwriting

 

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shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by a majority in interest of the Initiating Holders (which underwriter or underwriters shall be an investment banking firm(s) of national reputation and shall be reasonably acceptable to the Board of Directors of the Company). Notwithstanding any other provision of this Section 2.2, if the underwriter advises the Company in writing that, in its opinion, marketing factors require a limitation of the number of securities to be underwritten (including Registrable Securities), then the Company shall so advise all Holders other than from a Series H Holder who or which hold Registrable Securities which would otherwise be underwritten pursuant hereto, and the number of shares that may be included in the underwriting, without jeopardizing the success of such underwriting, shall be allocated first to the Series G Preferred Stock Holders to the extent of (i) the number of shares of Common Stock issuable upon conversion of the Series G Preferred Stock plus (ii) two shares of Common Stock issued or issuable upon exercise of the Warrants held by such Series G Preferred Stock Holders (as adjusted for adjustments to the number of shares of Common Stock issuable thereunder pursuant to Section 5 of the form of Warrant), and then to the remaining Holders (including the Initiating Holders and the Series G Preferred Stock Holders, to the extent not already allocated) on a pro rata basis based on the number of Registrable Securities held by each such Holder, provided, however, that the number of shares of Registrable Securities to be included in such underwriting and registration shall not be reduced unless all other securities of the Company are first entirely excluded from the underwriting and registration. Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from the registration. To be clear, the holders of Series H Preferred Stock shall not have any of the rights articulated in this Section.

(c) The Company shall not be required to effect a registration pursuant to this Section 2.2:

(i) before the Initial Offering; or

(ii) after the Company has effected four (4) registrations pursuant to this Section 2.2, and such registrations have been declared or ordered effective; or

(iii) during the period starting with the date of filing of, and ending on the date one hundred eighty (180) days following the effective date of a registration statement pertaining to any public offering of the Company’s stock, provided that the Company makes reasonable good faith efforts to cause such registration statement to become effective; or

(iv) if, within thirty (30) days of receipt of a written request from Initiating Holders pursuant to Section 2.2(a), the Company gives notice to the Holders of the Company’s intention to make a public offering within ninety (90) days; or

(v) if the Company shall furnish to Holders requesting a registration statement pursuant to this Section 2.2, a certificate signed by the Chairman of the Board stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously

 

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detrimental to the Company and its shareholders for such registration statement to be effected at such time, in which event the Company shall have the right to defer such filing for a period of not more than one hundred eighty (180) days after receipt of the request of the Initiating Holders; provided that such right to delay a request shall be exercised by the Company only once; or

(vi) if the Initiating Holders propose to dispose of shares of Registrable Securities that may be immediately registered on Form S-3 pursuant to a request made pursuant to Section 2.4 below.

2.3 Piggyback Registrations.

(a) The Company shall notify all Holders other than from a Series H Holder in writing at least thirty (30) days prior to the filing of any registration statement under the Securities Act with respect to a public offering of securities of the Company (including, but not limited to, registration statements relating to secondary offerings of securities of the Company, but excluding any Series G Shelf Registration pursuant to Section 2.5 hereof and registration statements relating to employee benefit plans or with respect to corporate reorganizations or other transactions under Rule 145 of the Securities Act) and will afford each such Holder other than from a Series H Holder an opportunity to include in such registration statement all or some of the Registrable Securities held by such Holder. Each Holder other than from a Series H Holder desiring to include in any such registration statement any of the Registrable Securities held by it shall, within fifteen (15) days after the receipt of the above-described notice from the Company, so notify the Company in writing. Such notice shall state the intended method of disposition of the Registrable Securities held by such Holder. If a Holder other than from a Series H Holder decides not to include all of its Registrable Securities in any registration statement thereafter filed by the Company, such Holder shall nevertheless continue to have the right to include any of its Registrable Securities in any subsequent registration statement or registration statements as may be filed by the Company, all upon the terms and conditions set forth herein.

(b) If the registration statement as to which the Company gives notice under this Section 2.3 is for an underwritten offering, the Company shall so advise the Holders other than from a Series H Holder. In such event, the right of any such Holder other than from a Series H Holder to include any of its Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders other than from a Series H Holder proposing to distribute Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company (which underwriter or underwriters shall be an investment banking firm(s) of national reputation and shall be reasonably acceptable to the Holders other than from a Series H Holder holding a majority of the Registrable Securities requested to be registered pursuant to this Section 2.3). Notwithstanding any other provision of this Agreement, if the managing underwriter determines in good faith, and so advises the

 

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Company in writing, that, in its opinion, marketing factors require a limitation of the number of shares to be underwritten, the number of shares that the underwriter believes may be included in the underwriting without jeopardizing the success of such underwriting shall be allocated, first, to the Company; second, to the Series G Preferred Stock Holders to the extent of (i) the number of shares of Common Stock issuable upon conversion of the Series G Preferred Stock plus (ii) two shares of Common Stock issued or issuable upon exercise of the Warrants held by such Series G Preferred Stock Holders (as adjusted for adjustments to the number of shares of Common Stock issuable thereunder pursuant to Section 5 of the form of Warrant); third, to the remaining Holders other than from a Series H Holder (including the Series G Preferred Stock Holders, to the extent not already allocated) on a pro rata basis based on the number of Registrable Securities held by each such Holder; and fourth, to any shareholder of the Company (other than a Holder) on a pro rata basis. In no event will shares of any other selling shareholder be included in any registration which would reduce the number of shares which may be included by the Holders other than from a Series H Holder without the written consent of at least sixty-six percent (66%) of the Registrable Securities to be included in such registration.

(c) Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.3 prior to the effectiveness of such registration whether or not any Holder has elected to include Registrable Securities in such registration. In such an event, the Registration Expenses of such withdrawn registration shall be borne by the Company in accordance with Section 2.6 hereof.

2.4 Form S-3 Registration. In case the Company shall receive from Holders (one of whom must be either Centennial or Whitney & Co.) other than from a Series H Holder holding twenty-five percent (25%) or more of the Registrable Securities then held by all Holders other than from a Series H Holder a written request or requests that the Company effect a registration on Form S-3 (or any successor to Form S-3) or any similar short-form registration statement and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holders, the Company will:

(a) promptly give written notice of the proposed registration, and any related qualification or compliance, to all other Holders other than from a Series H Holder; and

(b) as soon as practicable, to effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holders’ Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holder joining in such request as are specified in a written request given to the Company within fifteen (15) days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 2.4:

(i) if Form S-3 (or any successor or similar form) is not available for such offering by the Holders; or

 

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(ii) if the Holders other than from a Series H Holder, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public of less than $500,000; or

(iii) if the Company, within the twelve (12) month period preceding the date of such request, has already effected two (2) registrations on Form S-3 pursuant to this Section 2.4; or

(iv) during the period starting with the date of filing of, and ending on the date one hundred eighty (180) days following the effective date of, a registration statement pertaining to any public offering of the Company’s stock, provided that the Company makes reasonable good faith efforts to cause such registration statement to become effective; or

(v) if, within thirty (30) days of receipt of a written request from Holders other than from a Series H Holder pursuant to this Section 2.4, the Company gives notice to the Holders and Founders of the Company’s intention to make a public offering within ninety (90) days; or

(vi) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance, excluding any consent to service of process required by Blue Sky laws.

(c) Subject to the foregoing, the Company shall file a Form S-3 registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable after receipt of the request or requests of the Holders therefor. In no event shall a request for registration on a Form S-3 count as demand for registration pursuant to Section 2.2.

2.5 Series G Shelf Registration.

(a) The Company shall use its best efforts to prepare and file with the Commission, as soon as practicable following expiration or waiver of all lock-up arrangements entered into by the Series G Preferred Stock Holders in connection with the Initial Offering, a registration statement (the “Series G Shelf Registration”) for an offering to be made on a delayed or a continuous basis pursuant to Rule 415 (or any appropriate similar rule that may be adopted by the Commission) under the Securities Act. The Series G Shelf Registration shall cover all shares of Common Stock, if any, into which the Series G Preferred Stock is converted pursuant to Article IV, Section 3(b)(ii) of the Restated Certificate (the “Series G Special Conversion

 

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Shares”). The Series G Shelf Registration shall be on a Form S-1, Form S-3 or another appropriate form permitting registration of such Series G Special Conversion Shares for resale by the Series G Preferred Stock Holders in the manner or manners reasonably designated by them (including, without limitation, an underwritten offering).

(b) Subject to the requirements of the Securities Act, including, without limitation, requirements relating to updating prospectuses through post-effective amendments or otherwise, the Company shall use reasonable best efforts to keep the Series G Shelf Registration continuously effective under the Securities Act until the date on which all of the Series G Special Conversion Shares are sold to the public either pursuant to a registration statement or Rule 144.

(c) Notwithstanding anything contrary in this Agreement, commencing ninety (90) days after the effectiveness of the Series G Shelf Registration, the Company may, not more than once in any 12-month period, and one additional time during the term of this Agreement (but not within ninety (90) days after termination of any other Suspension Event), direct the Series G Preferred Stock Holders to suspend sales of Series G Special Conversion Shares registered thereunder, if one or more of the following events (a “Suspension Event”) occurs pending negotiations relating to, or consummation of, a material corporate transaction (i) that would require additional disclosure of material information by the Company in the Series G Shelf Registration, (ii) as to which the Company has a bona fide business purpose for preserving confidentiality and (iii) which renders the Company unable to comply with Commission requirements, in each case under circumstances that would make it impractical or inadvisable to cause the Series G Shelf Registration to become effective or to promptly amend or supplement the Series G Shelf Registration on a post-effective basis, as applicable.

2.6 Expenses of Registration. Except as specifically provided herein, all Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to the first two registration requests made pursuant to Section 2.2 above and all Registration Expenses incurred in connection with any registration, qualification, or compliance pursuant to Sections 2.3, 2.4 or 2.5 above shall be borne by the Company. All Selling Expenses incurred in connection with any registrations pursuant to Sections 2.2, 2.3, 2.4 or 2.5 above shall be borne by the holders of the securities so registered pro rata on the basis of the number of shares so registered. The Company shall not, however, be required to pay the Registration Expenses of any registration proceeding begun but not declared effective pursuant to Section 2.2 or 2.4, the request of which has been subsequently withdrawn by the initiating Holders, unless (a) the withdrawal is based upon material adverse information concerning the Company of which the initiating Holders were not aware at the time of such request, or (b) the Holders of at least seventy-five percent (75%) of the Registrable Securities then held by all Holders agree to forfeit their right to one requested registration pursuant to Section 2.2 in which event such right shall be forfeited by all Holders. If the Company is not required to pay such Registration Expenses, such expenses shall be borne by the Holders requesting such registration in proportion to the number of shares of Registrable Securities for which registration was requested. If the Company is required to pay the Registration Expenses of a withdrawn offering pursuant to clause (a) above, then the Holders shall not forfeit their rights pursuant to Section 2.2 to a demand registration.

 

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2.7 Obligations of the Company. Whenever required to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

(a) Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for up to one hundred eighty (180) days or such longer period as is provided under Section 2.5 hereto or, if earlier, until the Holder or Holders have completed the distribution related thereto; provided, however, that such one hundred eighty (180) day period shall be extended for a period of time equal to the period the Holder refrains from selling any securities included in such registration at the request of the Company and an underwriter of Common Stock (or other securities) of the Company.

(b) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement for the period set forth in paragraph (a) above.

(c) Furnish to the Holders such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them.

(d) Use its best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business where it would not otherwise be required to qualify but for this Section 2.7(d) or to file a general consent to service of process in any such states or jurisdictions, excluding any consent to service of process required by Blue Sky laws.

(e) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement.

(f) Notify each Holder who or which holds Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be

 

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delivered under the Securities Act upon the discovery that, or upon of the happening of any event as a result of which, the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. The Company will use its best efforts to amend or supplement such prospectus in order to cause such prospectus not to include 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 not misleading in the light of the circumstances then existing.

(g) Use its best efforts to cause all such Registrable Securities registered pursuant to this Section 2 to be listed on each securities exchange on which similar securities issued by the Company are then listed.

(h) Provide a transfer agent and registrar for all Registrable Securities registered pursuant to this Section 2 and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration.

(i) Furnish, if such securities are being sold through underwriters, at the request of the Holders of a majority of the Registrable Securities registered thereunder, on the date that such Registrable Securities are delivered to the underwriters for sale, (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering and reasonably satisfactory to the Holders of a majority of the Registrable Securities registered thereunder, addressed to the underwriters, if any, and (ii) a “comfort” letter dated as of such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering addressed to the underwriters.

(j) The holders of Series H Preferred Stock shall not have any of the rights articulated in this Section 2.7.

2.8 Termination of Registration Rights. All registration rights granted under this Section 2 shall terminate and be of no further force and effect five (5) years after the date of the Company’s Initial Offering. In addition, a Holder’s registration rights shall expire if all Registrable Securities held by and issuable to such Holder may be sold under Rule 144 during any single ninety (90) day period; provided, however, such Holder shall not lose its registration rights hereunder if, (i) in the reasonable opinion of such Holder, provided in writing to the Company’s Board of Directors, the Holder’s ability to sell or otherwise transfer its securities would be materially adversely affected, or (ii) such Holder holds two percent (2%) or more of the then outstanding Registrable Securities.

 

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2.9 Delay of Registration; Furnishing Information.

(a) No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.

(b) In the event that a selling Holder does not furnish to the Company upon written request by the Company and within the periods specified in this Agreement such information regarding itself, the Registrable Securities held by them and the intended method of disposition of such securities as shall be reasonably required to effect the registration of its Registrable Securities, then no Registrable Securities of such Holder shall be included in such registration.

(c) The Company shall have no obligation with respect to any registration requested pursuant to Section 2.2 if, due to the operation of Section 2.2(b), the anticipated aggregate offering price of the Registrable Securities to be included in the registration does not equal or exceed the anticipated aggregate offering price required to originally trigger the Company’s obligation to initiate such registration as specified in Section 2.2; provided, however, that if the Company exercises its rights under this Section 2.9(c), (i) it shall be required to pay the Registration Expenses of such withdrawn offering, and (ii) the Holders shall not be deemed to have forfeited their right to a demand registration under Section 2.

2.10 Indemnification. In the event that any Registrable Securities are included in a registration statement under Sections 2.2, 2.3 or 2.4 above:

(a) To the extent permitted by law, the Company will indemnify and hold harmless and hereby does indemnify and hold harmless each Holder and Founder, the advisors, agents, partners, officers and directors of each Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act (collectively, the “Holder Indemnified Parties”), against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (each a “Violation”) by the Company: (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law in connection with the offering covered by such registration statement. The Company will pay as incurred the Holder Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 2.10(a) shall

 

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not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the written consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable to a particular Holder or Founder (nor to the advisors, agents, partners, officers and directors of such Holder, any underwriter (as defined in the Securities Act) for such Holder or any person who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act) in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished specifically for use in connection with such registration by such Holder or Founder.

(b) To the extent permitted by law, each Holder and Founder will, if Registrable Securities held by such Holder or Founder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify and hold harmless the Company, each of the Company’s directors and officers, each person, if any, who controls the Company (within the meaning of the Securities Act), any underwriter and any other Holder and Founder selling securities under such registration statement or any of such other Holder’s advisors, agents, partners, directors or officers or any person who controls such Holder (collectively, the “Company Indemnified Parties”), against any losses, claims, damages or liabilities (joint or several) to which the Company Indemnified Parties may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder or Founder specifically for use in connection with such registration under an instrument duly executed by such Holder or Founder (or its authorized agent). Each such Holder or Founder will pay as incurred any legal or other expenses reasonably incurred by the Company Indemnified Parties in connection with investigating or defending any such loss, claim, damage, liability or action if it is finally judicially determined that there was such a Violation; provided, however, that the indemnity agreement contained in this Section 2.10(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder or Founder, which consent shall not be unreasonably withheld; provided, further, that in no event shall any indemnity under this Section 2.10(b) exceed the net proceeds from the offering received by such Holder or Founder.

(c) Promptly after receipt by an indemnified party under this Section 2.10 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.10, deliver to the indemnifying party a written notice of the commencement thereof. The indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the

 

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counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if materially prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.10, but the omission to so deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.10.

(d) If the indemnification provided for in this Section 2.10 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any losses, claims, damages or liabilities referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party thereunder, shall to the extent permitted by applicable law contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the Violation(s) that resulted in such loss claim, damage or liability, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided, however, that in no event shall any contribution by a Holder or Founder hereunder exceed the net proceeds from the offering received by such Holder or Founder.