Exhibit 10.11
WARRANT AGREEMENT (this
“Agreement”), dated as of April 1, 2008 among
Thornburg Mortgage, Inc., a Delaware corporation (the
“Company”), the warrantholders listed on the signature
pages hereto (the “Initial Holders”) and each other
Person (as defined in paragraph 7(a)) who subsequently becomes a
party hereto.
NOW, THEREFORE, the parties hereto
hereby agree as follows:
1. Grant . The Company hereby
grants to the Initial Holders warrants designated as Class A
warrants (“Warrants”) which shall entitle the
registered holder thereof to purchase from the Company, at any time
or from time to time after April 11, 2008 until 5:00 P.M., New
York time, on April 1, 2013 (the “Expiration
Date”), 46,960,000 shares (the “Warrant Shares”)
of Common Stock, par value $0.01 per share, of the Company
(“Common Stock”), at the exercise price of $0.01 per
share (the “Exercise Price”), all subject to the terms
set forth herein. Each registered holder of Warrants agrees to
exercise the Warrants as promptly as practicable after
April 11, 2008 and from time to time thereafter to the extent
permitted by applicable federal, state and foreign laws and
regulations.
2. Warrant Certificates . The
Warrants shall be evidenced by certificates issued pursuant to this
Agreement (the “Warrant Certificates”) in the form set
forth in Exhibit A hereto, with such appropriate insertions,
omissions, substitutions, and other variations as are required or
permitted by this Agreement.
3. Exercise of Warrant
.
(a) General . Subject to the
provisions of this Agreement, upon surrender to the Company at its
principal office of a Warrant Certificate with the annexed Form of
Election to Purchase duly executed, together with payment in
accordance with paragraph 3(b) of the Exercise Price, and upon
compliance with the requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (“HSR”) if
applicable, the Company shall issue and deliver promptly to the
registered holder of such Warrant Certificate, a certificate or
certificates for the Warrant Shares or other securities or property
to which the registered holder is entitled, registered in the name
of such registered holder or, upon the written order of such
registered holder, in such name or names as such registered holder
may designate. In the case of an exercise of Warrants, any
certificate or certificates representing Warrant Shares shall be
deemed to have been issued to and any Person so designated to be
named therein shall be deemed to have become the holder of record
of the Warrant Shares as of the date of the surrender of such
Warrant Certificate (together with such duly executed Form of
Election to Purchase) and payment of the Exercise Price. Each
Warrant not exercised or deemed exercised on or prior to the
Expiration Date shall become invalid and all rights thereunder, and
all rights in respect thereof under this Agreement, shall cease as
of that time.
(b) Payment . Payment of the
Exercise Price shall be made, at the option of the registered
holder of the Warrants, (i) in cash, by certified check or
wire transfer payable to the order of the Company, (ii) on a
net basis, such that without the exchange of any funds, such holder
receives that number of Warrant Shares that would otherwise be
issuable upon a cash exercise of such Warrants less that number of
Warrant Shares having a current market price (as defined in
paragraph 6(d)) equal to the aggregate Exercise Price that would
otherwise have been
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paid by such holder for the number of Warrant
Shares with respect to which such Warrant is being exercised in
which case, such exchange shall be treated as a recapitalization
under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the “Code”), or (iii) by any combination
of the foregoing.
(c) Exercise in Whole or in
Part . The purchase rights evidenced by a Warrant Certificate
shall be exercisable, at the election of the registered holder
thereof, in whole or in part, but only for lots of 100 Warrant
Shares or integral multiples thereof if less than all the Warrants
then held by such registered holder are being exercised. If less
than all of the Warrant Shares purchasable under any Warrant
Certificate are purchased, the Company shall cancel such Warrant
Certificate upon the surrender thereof and shall execute and
deliver a new Warrant Certificate of like tenor for the remaining
number of Warrant Shares purchasable thereunder.
(d) Fractional Shares . No
fractional shares of Common Stock shall be issued upon exercise of
any Warrants. Instead the Company shall round the results of an
exercise up to the nearest full share of Common Stock.
(e) Reservation of Shares .
The Company will at all times reserve and keep available out of its
authorized Common Stock solely for the purpose of issuance upon
exercise of the Warrants as herein provided, such number of shares
of Common Stock as shall from time to time be issuable upon the
exercise of all outstanding Warrants. All shares of Common Stock
that may be issued upon exercise of the Warrants will, upon
issuance, be validly issued, fully paid and nonassessable and not
subject to preemptive rights of any shareholder.
4. Transfer .
(a) Warrant Register . The
Company shall maintain at its principal office a Warrant Register
for registration of Warrant Certificates and transfers thereof. The
Company shall initially register the outstanding Warrants in the
name of each Initial Holder. The Company may deem and treat the
registered holder(s) of the Warrant Certificates as the absolute
owner(s) thereof and of the Warrants represented thereby
(notwithstanding any notation of ownership or other writing on the
Warrant Certificates made by any Person) for the purpose of any
exercise thereof or any distribution to the holder(s) thereof, and
for all other purposes, and the Company shall not be affected by
any notice to the contrary. For the purpose of this Agreement, all
references to a holder herein shall refer to a registered holder of
Warrants.
(b) Warrants and Warrant Shares
Not Registered . Each registered holder of the Warrants, by
acceptance thereof, represents and acknowledges that the Warrants
and the Warrant Shares which may be purchased upon exercise of a
Warrant are not registered under the Securities Act of 1933, as
amended (the “Securities Act”), that the issuance of
the Warrants and the offering and sale of such Warrant Shares are
being made in reliance on the exemption from registration under
Section 4(2) of the Securities Act as not involving any public
offering and that the Company’s reliance on such exemption is
predicated in part on the representations made by each Initial
Holder of the Warrants to and with the Company that such holder
(1) is acquiring the Warrants for investment for its own
account, with no present intention of reselling or otherwise
distributing the same, (2) is an “accredited
investor” as defined in Regulation D under the Securities
Act, and (3) has such knowledge and experience in financial
and business matters that
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it is capable of evaluating the merits and risks
of the investments made or to be made in connection with the
acquisition and exercise of the Warrants. Neither the Warrants nor
the related Warrant Shares may be transferred except
(i) pursuant to an effective registration statement under the
Securities Act, (ii) pursuant to Rule 144 under the Securities
Act if the transferor delivers a certificate, in form and substance
reasonably satisfactory to the Company, that such transfer complies
with the requirements of Rule 144, or (iii) pursuant to any
other available exemption from registration if such transferee
makes the representations set forth in the preceding sentence in
writing to the Company. The Company reserves the right to restrict
any offer, sale or other transfer of Warrants or Warrant Shares
pursuant to clause (iii) above and to require the completion,
execution and delivery of (x) a letter from the transferee
substantially in the form of the Transferee’s Letter attached
hereto as Exhibit B and (y) an opinion of counsel satisfactory
to the Company that the proposed transfer does not require
registration under the Securities Act, which opinion shall be at
the expense of the Company.
(c) Notice and Registration of
Transfer . Each registered holder of the Warrants, by
acceptance thereof, agrees that prior to any disposition by such
holder of the Warrants or of any Warrant Shares, such holder will
give written notice to the Company expressing such holder’s
intention to effect such disposition and describing briefly such
holder’s intention as to the manner in which the Warrants or
the Warrant Shares theretofore issued or thereafter issuable upon
exercise hereof, are to be disposed of, whereupon, but only if such
transfer is permitted pursuant to paragraph 4(b) above, such
transferring holder shall be entitled to dispose of the Warrants
and/or the Warrant Shares theretofore issued upon the exercise
thereof, all in accordance with the terms of the notice delivered
by such holder to the Company. In the event of such transfer, the
Company shall register the transfer of any outstanding Warrants in
the Warrant Register upon surrender of the Warrant Certificate(s)
evidencing such Warrants to the Company at its principal office,
accompanied by a written instrument of transfer in form reasonably
satisfactory to it, duly executed by the registered holder thereof.
Upon any such registration or transfer, new Warrant Certificate(s)
evidencing such transferred Warrants shall be issued to the
transferee(s) and the surrendered Warrant Certificate(s) shall be
canceled.
5. Special Agreements of the
Company . The Company covenants and agrees as
follows:
(a) Listing on Securities
Exchanges . If the Common Stock is listed on a stock exchange,
the Company will use its best efforts to procure at its sole
expense the listing of all Warrant Shares (subject to issuance or
notice of issuance) on all stock exchanges on which the Common
Stock is then listed, and maintain the listing or quotation of such
shares and other securities after issuance.
(b) Actions in Avoidance .
The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets,
consolidation, merger, issue or sale of securities or otherwise,
avoid or take any action which would have the effect of avoiding
the observance or performance of any of the terms to be observed or
performed hereunder by the Company but will at all times in good
faith assist in carrying out all of the provisions of the Warrants
and in taking all of such action as may be necessary or appropriate
in order to protect the rights of the registered holders of the
Warrants against impairment. Without limiting the generality of the
foregoing, the Company will (i) take all such
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action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares upon the exercise of the Warrants, and
(ii) use its reasonable best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory
body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Agreement.
6. Adjustment of Number of
Warrant Shares Issuable . The number and kind of shares
purchasable upon the exercise of Warrants shall be subject to
adjustment from time to time as follows:
(a) In case the Company shall, while
this Agreement remains in effect, (i) declare a dividend or
make a distribution on its Common Stock payable in shares of its
capital stock (whether shares of Common Stock or of capital stock
of any other class), (ii) subdivide shares of its Common Stock
into a greater number of shares, (iii) combine its outstanding
Common Stock into a smaller number of shares, or (iv) issue
any shares of its capital stock by reclassification of its Common
Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing
corporation), the holder of each Warrant shall be entitled to
purchase the aggregate number and kind of Warrant Shares which, if
such Warrant had been exercised immediately prior to such event,
such Holder would have owned upon such exercise and been entitled
to receive by virtue of such dividend, distribution, subdivision,
combination or reclassification. Such adjustment shall be made
successively whenever any event listed above shall
occur.
(b) In case the Company shall, while
this Agreement remains in effect, (i) issue any Common Stock
(excluding issuances upon exercise of Warrants, upon exercise of
the Class B Warrants to purchase 197,929,427 shares of Common Stock
issued to the investors identified on that certain warrant
agreement dated March 28, 2008 among the Company and the
investors listed on the signature page thereto (the “Investor
Warrant Agreement”), upon exercise of any other Class B
Warrants issued pursuant to the Investor Warrant Agreement (the
“Additional Warrants”) or upon exercise of the warrants
or alternative consideration to be issued to the holders of shares
of preferred stock of the Company in the self-tenders contemplated
by the Term Sheet, dated March 24, 2008, among Thornburg
Mortgage, Inc., MatlinPatterson Global Opportunities Partners III
L.P., MatlinPatterson Global Opportunities Partners (Cayman) III
L.P. and Thornburg Mortgage Advisory Corporation (collectively,
including consent solicitations to delete restrictive covenants,
including without limitation voting and dividend blocker provisions
in the Articles Supplementary for such series of preferred stock,
the “Tender Offer”)) at a price per share less than
current market price per share of Common Stock on the date of such
issuance or (ii) issue any rights, warrants (other than in
connection with this Agreement or the Tender Offer), options or
other securities exercisable or exchangeable for or convertible
into Common Stock at an equivalent price per share less than the
current market price per share of Common Stock on the date of such
issuance, the number of Warrant Shares that are purchasable
hereunder after such issuance shall be determined by multiplying
the number of Warrant Shares purchasable hereunder immediately
prior to the date of issuance by a fraction, the denominator of
which shall be the number of shares of Common Stock outstanding on
such date plus the number of shares of Common Stock that the
aggregate price of the total number of shares so issued or offered
for subscription or purchase would purchase at such current market
price, and the numerator of which shall be the number of shares of
Common
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Stock outstanding on such date plus the number
of additional shares of Common Stock or rights to acquire Common
Stock issued or offered for subscription or purchase (or into which
the convertible securities so offered are convertible). Shares of
Common Stock owned by or held for the account of the Company or any
subsidiary on such date shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall become
effective immediately after such issuance. Such adjustment shall be
made successively whenever any such event shall occur. No further
adjustment shall be made upon the conversion, exercise or exchange
of such security if any adjustment shall have been made upon the
issuance of such security.
(c) In case the Company shall, while
this Agreement remains in effect, fix a record date for the making
of a distribution to all holders of its Common Stock (including any
such distribution to be made in connection with a consolidation or
merger in which the Company is to be the continuing corporation) of
evidences of its indebtedness or shares of any class of capital
stock, cash or other property or assets (excluding dividends paid
in or distributions of the Company’s capital stock for which
the number of Warrant Shares purchasable hereunder shall have been
adjusted pursuant to paragraph 6(a)) or subscription rights or
warrants (excluding those referred to in paragraph 6(b)) the number
of Warrant Shares that are purchasable hereunder after such record
date shall be determined by multiplying the number of Warrant
Shares that are purchasable hereunder immediately prior to such
record date by a fraction, of which the denominator shall be the
current market price per share of Common Stock on such record date,
less the fair market value (which for the avoidance of doubt when
calculating fair market value shall take into consideration the
consideration, if any, paid or to be paid by the holders of Common
Stock for such distribution) as determined in good faith by the
Board of Directors of the Company (the “Board”),
consistent with Section 6(d) and Section 6(e) below, of
the portion of the assets or evidences of indebtedness so to be
distributed to a holder of one share of Common Stock or of such
subscription rights or warrants applicable to one share of Common
Stock, and the numerator shall be such current market price per
share of Common Stock on such record date. Such adjustment shall
become effective immediately after such record date. Such
adjustment shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made,
the number of Warrant Shares that are Common Stock purchasable
hereunder shall again be adjusted to be the number that was in
effect immediately prior to such record date.
(d) For the purpose of any
computation under this Agreement, the current market price per
share of Common Stock on any day shall be:
(A) if the Common Stock is listed or
admitted to trading on a principal national securities exchange in
the United States or in the over-the-counter market, the current
market price per share shall be deemed to be the average of the
Closing Prices of the Common Stock for the 10 consecutive trading
days immediately preceding the trading day before the earlier of
(x) the day in question and (y) the date on which the
relevant adjustment event is publicly announced; provided
that, in the case of paragraph 6(c), if the period between the date
of the public announcement of the dividend or distribution and the
date for the determination of holders of Common Stock entitled to
receive such dividend or distribution
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shall be less than 10 trading days,
the period shall be such lesser number of trading days but, in any
event, not less than five trading days;
(B) if the Common Stock is not
quoted or listed by any such organization, exchange or market, the
current market price per share shall be the fair market value
thereof as determined in good faith by the Board. If a registered
holder of a Warrant Certificate shall object to any determination
by the Board of such current market price per share, the current
market price per share shall be the fair market value per share of
the Common Stock as determined by an independent appraiser retained
by the Company at its expense and reasonably acceptable to such
registered holder.
(e) For purposes of any computation
respecting consideration received pursuant to paragraph 6(c) above,
the following shall apply:
(A) in the case of the issuance of
shares of Common Stock for cash, the consideration shall be the
gross proceeds to the Company from such issuance, which shall not
include any deductions for any commissions, discounts or other
expenses incurred by the Company in connection
therewith;
(B) in the case of the issuance of
shares of Common Stock for a consideration in whole or in part
other than cash or, subject to clause (C), securities, the
consideration other than cash shall be deemed to be the fair market
value thereof as determined in good faith by the Board
(irrespective of the accounting treatment thereof). If a registered
holder of a Warrant Certificate shall object to any determination
by the Board of the fair market value of such consideration other
than cash, the consideration shall be deemed to be the fair market
value of such consideration as determined by an independent
appraiser retained by the Company at its expense and reasonably
acceptable to such registered holder;
(C) in the case of the issuance of
shares of Common Stock for a consideration in whole or in part
consisting of securities, the value of any securities shall be
deemed to be: (x) if traded on a securities exchange, the
average of the closing prices of the securities on such securities
exchange or quotation system over the 10 trading day period ending
on the trading day immediately preceding the day in question,
(y) if actively traded over-the-counter, the average of the
closing bid or sale prices (whichever is applicable) over the 10
day period ending on the trading day immediately preceding the day
in question and (z) if there is no active public market, the
fair market value thereof, determined as provided in clause
(B) above; and
(D) in the case of the issuance of
securities convertible into, exercisable for or exchangeable for
shares of Common Stock, the
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aggregate consideration received
therefor shall be deemed to be the consideration received by the
Company for the issuance of such securities plus the additional
consideration, if any, to be received by the Company upon the
conversion, exercise or exchange thereof (the consideration in each
case to be determined in the same manner as provided in clauses
(A) through (C) of this paragraph 6(i)).
(f) No adjustment in the number of
Warrant Shares need be made until all cumulative adjustments amount
to an increase or decrease of at least one whole share. All
calculations under this paragraph 6 shall be made to the nearest
1/1,000th of a share.
(g) For purposes of this paragraph
6, “Common Stock” includes any stock of any class of
the Company which has no preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Company and which is
not subject to redemption by the Company. However, subject to the
provisions of paragraph 6(j) below, shares issuable on exercise of
the Warrants shall include only shares of the class designated as
Common Stock of the Company on the date hereof or shares of any
class or classes resulting from any reclassification thereof and
which have no preferences in respect of dividends or amounts
payable in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Company and which are not subject
to redemption by the Company and which retain all the voting rights
of the Common Stock of the Company on the date hereof (but not
necessarily the percentage of such voting rights in the total
Common Stock); provided that, if at any time there shall be
more than one such resulting class, the shares of each such class
then so issuable shall be substantially in the proportion which the
total number of shares of such class resulting from all such
reclassifications bears to the total number of shares of all such
classes resulting from all such reclassifications.
(h) The Company hereby agrees with
each holder of Warrants that it shall not increase the par value of
the Common Stock above its current par value of $0.01 per share. No
adjustment in the number of Warrant Shares need be made under
paragraphs 6(a), 6(b) or 6(c) above if the Company issues or
distributes to each registered holder of Warrants the shares of
Common Stock, evidences of indebtedness, assets or other property,
rights or securities referred to in those paragraphs which each
such registered holder would have been entitled to receive had the
Warrants been exercised prior to the happening of such event or the
record date with respect thereto.
(i) Whenever the number of Warrant
Shares purchasable upon exercise of any Warrant shall be adjusted,
the Company shall promptly mail to registered holders of Warrants,
first class, postage prepaid, a notice of the adjustment together
with a certificate from the Company’s chief financial officer
briefly stating the facts requiring the adjustment and the manner
of computing it. The certificate shall be conclusive evidence that
the adjustment is correct.
(j) If:
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(A) the Company takes any action
which would require an adjustment in the number of Warrant Shares
purchasable upon exercise of any Warrant pursuant to this paragraph
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(B) the Company consolidates or
merges with, or transfers all or substantially all of its assets
to, another corporation, and shareholders of the Company must
approve the transaction; or
(C) there is a dissolution or
liquidation of the Company;
the Company shall mail to registered
holders of the Warrants, first class, postage prepaid, a notice
stating the proposed record or effective date, as the case may be.
The Company shall mail the notice at least 5 days before such
proposed record or effective date. However, failure to mail the
notice or any defect in it shall not affect the validity of any
transaction referred to in clause (A), (B) or (C) of this
paragraph 6(i).
(k) In the case of any consolidation
of the Company or the merger of the Company with or into any other
entity or the sale or transfer of all or substantially all the
assets of the Company pursuant to which the Company’s Common
Stock is converted into other securities, cash or assets or other
property, upon consummation of such transaction, each Warrant shall
automatically thereafter become exercisable for the kind and amount
of securities, cash or other assets or other property receivable
upon the consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock into which such Warrant might have
been converted immediately prior to such consolidation, merger,
transfer or sale (assuming such holder of Common Stock failed to
exercise any rights of election and received per share the kind and
amount of consideration receivable per share by a plurality of
non-electing shares). Appropriate adjustment (as determined by the
Board) shall be made in the application of the provisions herein
set forth with respect to the rights and interests thereafter of
the holders of Warrants, to the end that the provisions set forth
herein (including provisions with respect to changes in and other
adjustment of the number of shares of Common Stock issuable upon
the exercise of the Warrants) shall thereafter be applicable, as
nearly as reasonably may be, in relation to any shares of stock or
other securities or assets or property thereafter deliverable upon
the exercise of Warrants. If this paragraph 6(k) applies to any
transaction, paragraph 6(a) does not apply to such
transaction.
(l) In any case in which this
paragraph 6 shall require that an adjustment as a result of any
event becoming effective from and after a record date, the Company
may elect to defer until after the occurrence of such event the
issuance to the holder of any Warrants exercised after such record
date and before the occurrence of such event of the additional
shares of Common Stock issuable upon such conversion over and above
the shares issuable on the basis of the number of Warrant Shares in
effect immediately prior to adjustment; provided ,
however , that if such event shall not have occurred and
authorization of such event shall be rescinded by the Company, the
number of Warrant Shares shall be recomputed immediately upon such
recession, to the price that would have been in effect had such
event not been authorized, provided that such recission is
permitted by and effective under applicable laws; provided
further , that if such Event has not occurred within 60 days
following the exercise of the Warrants, the issuance of such
additional shares shall in any event be made not later than on
the
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61
st
day following
exercise of the Warrant as if such event occurred on the 60
th
day. For the
avoidance of doubt, such distribution on the 61
st
day shall not
prejudice the holder of any Warrant against receiving any
additional shares of Common Stock (above the shares that they
received on such 61 st day) that they would be entitled
to if they had not received any shares on the 61
st
day and the event
occurs on or after such 61 st day.
(m) If any event occurs as to which
the foregoing provisions of this paragraph 6 are not strictly
applicable or, if strictly applicable, would not, in the good faith
judgment of the Board, fairly and adequately protect the purchase
rights of the Warrants in accordance with the essential intent and
principles of such provisions, then the Board shall make such
adjustments in the application of such provisions, in accordance
with such essential intent and principles, as shall be reasonably
necessary, in the good faith opinion of the Board, to protect such
purchase rights as aforesaid.
7. Registration Rights
.
(a) Definitions . As used in
this Agreement:
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(i)
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“
Affiliate ” means , with respect to any specified
Person, a Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common
control with, the Person specified. For the purposes of this
definition, the term “control” and its corollaries
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a
Person.
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(ii)
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“
Other Holders ” means Persons other than registered
holders of Registerable Securities who, by virtue of agreements
with the Company, are entitled to include their securities in
certain registrations hereunder.
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(iii)
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“
Other Securities ” means securities of the Company,
other than Registrable Securities, which, by virtue of agreements
between Other Holders and the Company, are entitled to be included
in certain registrations hereunder.
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(iv)
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“
Person ” means any individual, corporation, limited
liability company, limited or general partnership, joint venture,
association, joint-stock company, trust, unincorporated
organization or other entity, including but not limited to any
government, agency or political subdivision thereof, or any group
comprised of two or more of the foregoing.
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(v)
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“ Registrable
Securities ” means all shares of Common Stock of the
Company issuable upon conversion of the Warrants or all other
securities issued or distributed by the Company with respect to, or
in exchange for, Registrable Securities, or pursuant to a stock
dividend or distribution, stock split, merger,
consolidation,
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reorganization, recapitalization,
reclassification, conversion right or otherwise. As to any
particular Registrable Securities, once issued, such Registrable
Securities shall cease to be Registrable Securities when:
(i) a registration statement with respect to the sale by the
registered holder of such securities shall have become effective
under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement,
(ii) such securities shall have been distributed to the public
pursuant to Rule 144 (or any successor provision) under the
Securities Act such that they may be freely resold without being
subject to any further holding period or volume limitations
thereunder, or (iii) such securities cease to be outstanding.
For purposes of this Agreement, any required calculation of the
amount or percentage of Registrable Securities shall be based on
the number of shares of Common Stock which are Registrable
Securities, including shares issuable upon the conversion, exchange
or exercise of the Warrants or any other security convertible,
exchangeable or exercisable into Common Stock.
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(vi)
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“
Registration Expenses ” means any and all expenses
incident to performance of or compliance with this paragraph 7,
including (a) all SEC and securities exchange or quotation
service registration and filing fees, (b) all fees and
expenses of complying with securities or blue sky laws (including
fees and disbursements of counsel for the underwriters in
connection with blue sky qualifications of the Registrable
Securities), (c) all printing, messenger and delivery
expenses, (d) all fees and expenses incurred in connection
with the listing of the Registrable Securities on any securities
exchange or quotation service and all rating agency fees,
(e) the fees and disbursements of counsel for the Company and
of its independent public accountants, including the expenses of
any special audits or “cold comfort” letters (or both)
required by or incident to such performance and compliance,
(f) the fees and disbursements of one firm of attorneys in
each registration to be effected pursuant to this paragraph 7
chosen by registered holders holding a majority of the Registrable
Securities to be registered in such public offering, (g) any
fees and disbursements of underwriters customarily paid by the
issuers or sellers of securities, including liability insurance if
the Company so desires or if the underwriters so require, and the
reasonable fees and expenses of any special experts retained in
connection with the requested registration, but excluding
underwriting discounts and commissions and transfer taxes, if any,
and (h) all expenses incurred in connection with any road show
(including but not limited to the reasonable out-of-pocket expenses
of the registered holders of Registerable Securities).
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(b) Incidental Registration .
(i) If the Company at any time after the date hereof proposes
to register equity securities under the Securities Act (other than
a registration on Form S-4 or S-8, or any successor or other forms
promulgated for similar purposes), whether or not for sale for its
own account, it will, at each such time, give prompt written notice
to all registered holders of the Warrants of its intention to do so
and of such registered holders’ rights under this paragraph
7. Upon the written request of any such registered holder made
within fifteen (15) days after the receipt of any such notice
(which request shall specify the Registrable Securities intended to
be disposed of by such registered holder), the Company will use its
best efforts to effect the registration under the Securities Act of
all Registrable Securities that the Company has been so requested
to register by the registered holders thereof; provided
that:
(A) if, at any time after giving
written notice of its intention to register any securities, the
Company shall determine for any reason not to proceed with the
proposed registration of the securities to be sold by it, the
Company may, at its election, give written notice of such
determination to each registered holder of Registerable Securities
and, thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration (but
not from its obligation to pay the registration expenses already
incurred in connection therewith), and
(B) if such registration involves an
underwritten offering, all registered holders of Registerable
Securities requesting to be included in the Company’s
registration must sell their Registrable Securities to the
underwriters selected by the Company on the same terms and
conditions as apply to the Company, with such differences,
including any with respect to indemnification and liability
insurance, as may be customary or appropriate in combined primary
and secondary offerings.
(ii) If a registration requested
pursuant to this paragraph 7 involves an underwritten public
offering, any registered holder of Registerable Securities
requesting to be included in such registration may elect, in
writing prior to the effective date of the registration statement
filed in connection with such registration, not to register all or
any part of such securities in connection with such registration.
Nothing in this paragraph 7 shall operate to limit the right of any
registered holder of Registerable Securities to request the
registration of Common Stock issuable upon the conversion, exchange
or exercise of the Warrants or any other securities held by such
registered holder notwithstanding the fact that at the time of
request such registered holder does not hold the Common Stock
underlying such securities. The registrations provided for in this
paragraph 7(b) are in addition to, and not in lieu of,
registrations made upon the request of the registered holders of
Registerable Securities in accordance with paragraph 7(c) and
paragraph 7(d).
(iii) The Company will pay all
Registration Expenses in connection with each registration of
Registrable Securities requested pursuant to this paragraph
7(b).
(iv) If a registration pursuant to
this paragraph 7(b) involves an underwritten offering and the
managing underwriter advises the Company in writing
that,
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in its opinion, the number of
Registrable Securities requested to be included in such
registration would be likely to have an adverse effect on the
price, timing or distribution of the securities to be offered in
such offering as contemplated by the Company (other than the
Registrable Securities), then the Company shall include in such
registration (i) first, 100% of the securities the Company
proposes to sell for its own account, and (ii) second, to the
extent of the amount of Registrable Securities requested to be
included in such registration which, in the opinion of such
managing underwriter, can be sold without having the adverse effect
referred to above, the amount of Registrable Securities which the
registered holders of Registerable Securities have requested to be
included in such registration, such amount to be allocated pro rata
among all requesting registered holders of Registerable Securities
on the basis of the relative amount of Registrable Securities then
held by each such registered holder ( provided that any such
amount thereby allocated to any such registered holder that exceeds
such registered holder’s request shall be reallocated among
the remaining requesting registered holders of Registerable
Securities in like manner).
(c) Registration on Request .
(i) At any time or from time to time following the date
hereof, upon the written request of any registered holder or
holders of Registerable Securities (such holder or holders, the
“ Demand Party ”), requesting that the Company
effect the registration under the Securities Act of all or part of
such Demand Party’s Registrable Securities and specifying the
amount and intended method of disposition thereof, the Company will
promptly give written notice of such requested registration to all
registered holders of Registerable Securities other than the Demand
Party, and thereupon will, as expeditiously as possible, use its
best efforts to effect the registration under the Securities Act of
(A) the Registrable Securities which the Company has been so
requested to register by the Demand Party and (B) all other
Registrable Securities of the same class or series as are to be
registered at the request of the Demand Party and which the Company
has been requested to register by any other registered holder
thereof by written request given to the Company within fifteen
(15) days after the giving of such written notice by the
Company (which request shall specify the amount and intended method
of disposition of such Registrable Securities), all to the extent
necessary to permit the disposition (in accordance with the
intended method thereof as aforesaid) of the Registrable Securities
so to be registered; provided that the Company shall not be
required to effect any registration to be effected pursuant to this
paragraph 7(c) unless at least 10% of the Registrable Securities
outstanding at the time of such request is to be included in such
registration; and provided , further , that if the
Company shall have previously effected a registration pursuant to
this paragraph 7(c) or paragraph 7(d) (with respect to all such
Registrable Securities) or shall have previously effected a
registration of which notice has been given to the Holders pursuant
to paragraph 7(b) hereof, the Company shall not be required to
effect any registration pursuant to this paragraph 7(c) until a
period of 180 days shall have elapsed from the date on which the
previous such registration ceased to be effective.
(ii) The Company shall select the
registration statement form for any registration pursuant to this
paragraph 7(c); provided that if any registration requested
pursuant to this paragraph 7(c) that is proposed by the Company to
be effected by the filing of a registration statement on Form S-3
(or any successor or similar short-form registration statement) is
in connection with an underwritten public offering, and if the
managing underwriter advises the Company in writing that, in its
opinion, the use of
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another form of registration
statement is of material importance to the success of such proposed
offering, then such registration shall be effected on such other
form.
(iii) The Company will pay all
registration expenses in connection with registrations of each
class or series of Registrable Securities pursuant to this
paragraph 7(c).
(iv) A registration requested
pursuant to this paragraph 7(c) will not be deemed to have been
effected unless it has become effective and all of the Registrable
Securities registered thereunder have been sold.
(v) If a requested registration
pursuant to this paragraph 7(c) involves an underwritten offering,
the investment banker(s), underwriter(s) and manager(s) for such
registration shall be selected by the registered holders of a
majority of the Registrable Securities that the Company has been
requested to register; provided that if one or more Initial
Holders is a Demand Party, then such Initial Holder(s) shall select
the investment banker(s), underwriter(s) and manager(s) for such
registration; and provided further that such investment
banker(s), underwriter(s) and manager(s) shall in any case be
reasonably satisfactory to the Company.
(vi) If a requested registration
pursuant to this paragraph 7(c) involves an underwritten offering
and the managing underwriter advises the Company in writing that,
in its opinion, the number of securities to be included in such
registration (including securities of the Company which are not
Registrable Securities) would be likely to have an adverse effect
on the price, timing or distribution of the securities to be
offered in such offering as contemplated by the registered holders
of Registerable Securities (an “ Adverse Effect
”), then the Company shall include in such registration
(i) first, 100% of the Registrable Securities requested to be
included in such registration by the Demand Party and all other
registered holders of Registrable Securities pursuant to this
paragraph 7(c) (to the extent that the managing underwriter, if
applicable, believes that all such Registrable Securities can be
sold in such offering without having an Adverse Effect;
provided that if they cannot and the Demand Party does not
exercise its right set forth in the next sentence of this clause
(vi), such lesser number of Registrable Securities the managing
underwriter believes can be sold in the offering without having an
Adverse Effect allocated pro rata among the Demand Party and all
requesting other registered holders of Registerable Securities on
the basis of the amount of Registrable Securities requested to be
included in such registration ( provided that any such
amount thereby allocated to any such Demand Party or registered
holder of Registerable Securities that exceeds its request shall be
reallocated among the remaining Demand Party and requesting
registered holders of Registerable Securities in a like manner)),
(ii) second, to the extent the managing underwriter believes
additional securities can be sold in the offering without having an
Adverse Effect, the amount of equity securities of the Company that
the Company intends to sell for its own account, and
(iii) third, to the extent the managing underwriter believes
additional securities can be sold in the offering without having an
Adverse Effect, the amount of Other Securities requested to be
included by Other Holders in such registration, allocated pro rata
among all requesting Other Holders on the basis of the relative
amount of all Other Securities then held by
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each such Other Holder (
provided that any such amount thereby allocated to any such
Other Holder that exceeds such Other Holder’s request shall
be reallocated among the remaining requesting Other Holders in a
like manner). If the managing underwriter of any underwritten
offering shall advise the registered holders of Registerable
Securities participating in a registration pursuant to this
paragraph 7(c) that the Registrable Securities covered by the
registration statement cannot be sold in such offering within a
price range acceptable to the Demand Party, then the Demand Party
shall have the right to notify the Company that it has determined
that the registration statement be abandoned or withdrawn, in which
event the Company shall abandon or withdraw such registration
statement.
(vii) Notwithstanding paragraph
7(c)(vi), (x) if the Board determines, in its good faith
judgment, that the registration and offering otherwise required by
this paragraph 7(c) would have an Adverse Effect on a
then-contemplated public offering of the Comp
