Document:

eh1100363_ex1002.htm

EXHIBIT 10.2

 

EXECUTION COPY

 

 

 

 

 

 

REGISTRATION RIGHTS AGREEMENT

 

by and among

 

 

HARBINGER GROUP INC.

 

and the HOLDERS party hereto

 

 

Dated:  May 12, 2011

 

 

 

 

  

  

  

TABLE OF CONTENTS

 

Page

	
1.

	
(a)

	
Definitions

	
1

	  	
(b)

	
Interpretation

	
6

	  	  	  	  
	
2.

	
General; Securities Subject to this Agreement

	
6

	  	
(a)

	
Grant of Rights

	
6

	  	
(b)

	
Transfer of Registration Rights

	
6

	  	  	  
	
3.

	
Shelf Registrations

	
6

	  	
(a)

	
Filings

	
6

	  	
(b)

	
Additional Electing Holders

	
7

	  	
(c)

	
Suspension Periods

	
8

	  	
(d)

	
Holder Underwritten Offering

	
8

	  	  	  
	
4.

	
Piggyback Takedowns

	
9

	  	
(a)

	
Right to Piggyback

	
9

	  	
(b)

	
Priority on Piggyback Takedowns

	
9

	  	
(c)

	
Selection of Underwriters

	
10

	  	  	  
	
5.

	
Holdback in Connection with a Piggyback Takedown

	
10

	  	  	  
	
6.

	
Registration Procedures

	
11

	  	
(a)

	
Obligations of the Company

	
11

	  	
(b)

	
Additional Obligations of the Company

	
12

	  	
(c)

	
Seller Requirements

	
16

	  	  	  
	
7.

	
Registration Expenses

	
17

	  	  	  
	
8.

	
Indemnification; Contribution

	
17

	  	
(a)

	
Indemnification by the Company

	
17

	  	
(b)

	
Indemnification by Holders

	
18

	  	
(c)

	
Conduct of Indemnification Proceedings

	
18

	  	
(d)

	
Contribution

	
19

	  	  	  
	
9.

	
Participation in Underwritten Offering/Sale of Registrable Securities

	
20

	  	  	  
	
10.

	
Rule 144

	
20

	  	  	  
	
11.

	
Subsequent Registration Rights

	
21

	  	  	  
	
12.

	
Miscellaneous

	
21

	  	
(a)

	
Stock Splits, etc.

	
21

	  	
(b)

	
No Inconsistent Agreements

	
21

	  	
(c)

	
Amendments and Waivers

	
21

	  	
(d)

	
Notices

	
22

 

 

  

i

  

Page

 

	  	
(e)

	
Successors and Assigns: Third Party Beneficiaries

	
22

	  	
(f)

	
Headings

	
23

	  	
(g)

	
GOVERNING LAW

	
23

	  	
(h)

	
Jurisdiction

	
23

	  	
(i)

	
WAIVER OF JURY TRIAL

	
23

	  	
(j)

	
Remedies

	
24

	  	
(k)

	
Severability

	
24

	  	
(l)

	
Rules of Construction

	
24

	  	
(m)

	
Entire Agreement

	
24

	  	
(n)

	
Further Assurances

	
24

	  	
(o)

	
Other Agreements

	
24

	
Annex A

	
Notice and Questionnaire

	
A-1

	
Annex B

	
Form of Joinder

	
B-1

 

 

 

 

ii

 

 

 

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of May 12, 2011, by and among Harbinger Group Inc., a Delaware corporation (the ”Company”), and any parties purchasing Series A Shares (as defined below) pursuant to the Purchase Agreement (as defined below) and such other persons as may become parties hereto from time to time in accordance with the terms hereof.

 

WHEREAS, the Company has issued 280,000 shares of Series A Convertible Preferred Stock (the “Series A Shares”) pursuant to the Securities Purchase Agreement, dated the date hereof, by and between the Company and CF Turul LLC, Providence TMT Debt Opportunity Fund II, L.P., PECM Strategic Funding L.P., and Wilton Re Holdings Limited (the “Purchase Agreement”).  The Series A Shares are convertible into shares of Common Stock of the Company in accordance with the terms set forth in the certificate of designation of the terms of the Series A Shares, dated May 15, 2011 (the “Certificate of  Designation”).  Under the terms of the Certificate of Designation the Company may issue additional Series A Shares from time to time to additional investors (“Additional Purchasers”).

 

WHEREAS, the parties hereto desire to provide for, among other things, the grant of registration rights with respect to the Registrable Securities (as defined below).

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

 

1.           (a)           Definitions.  As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated:

 

“Affiliate” means, with respect to a Person, any other Person which directly or indirectly controls or is controlled by, or is under direct or indirect common control with, the referent Person.

 

“Automatic Shelf Registration Statement” means an “automatic shelf registration statement” as defined in Rule 405 promulgated under the Securities Act.

 

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, without regard to whether such right is currently exercisable, is exercisable only after the passage of time or is exercisable only upon the satisfaction of certain conditions.  The terms “beneficially owns” and beneficially owned” have a corresponding meaning.

 

 

  

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“Board of  Directors” means the board of directors of the Company (or any duly authorized committee thereof).

 

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in the State of New York are authorized or required by law or executive order to close.

 

“Certificate of  Designation” has the meaning set forth in the recitals to this Agreement.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Stock” means (i) the common stock, par value $0.01 per share, of the Company, (ii) any securities of the Company or any successor or assign of the Company into which such stock is reclassified or reconstituted or into which such stock is converted or otherwise exchanged in connection with a combination of shares, recapitalization, merger, sale of assets, consolidation or other reorganization or otherwise or (iii) any securities received as a dividend or distribution in respect of the securities described in clauses (i) and (ii) above.

 

“Company” has the meaning set forth in the preamble to this Agreement.

 

“control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”) means, unless otherwise noted, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

“Conversion Price” has the meaning set forth in the Certificate of Designation.

 

“Counsel to the Holders” means, with respect to any Piggyback Takedown, one (1) counsel selected by the Holders of a majority of the Registrable Securities requested to be included in such Piggyback Takedown.

 

“Disclosure Package” means the following, collectively, with respect to any offering of Registrable Securities, (i) the preliminary Prospectus, in the form provided to the Holders for delivery to purchasers of Registrable Securities, (ii) each Free Writing Prospectus, in the form provided to the Holders for delivery to purchasers of Registrable Securities and (iii) all other information, in each case, that is deemed, under Rule 159 promulgated under the Securities Act, to have been conveyed to purchasers of securities at the time of sale of such securities (including, without limitation, a contract of sale).

 

“Electing Holder” means a Holder of Registrable Securities who has provided the Company with a Notice and Questionnaire.

 

 

  

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“Exchange Act” means the Securities Exchange Act of 1934 and the rules and regulations of the Commission thereunder.

 

“FINRA” means the Financial Industry Regulatory Authority.

 

“Free Writing Prospectus” means any “free writing prospectus” as defined in Rule 405 promulgated under the Securities Act.

 

“Harbinger Holders” means the persons entitled to piggyback registration rights under the terms of the Registration Rights Agreement, dated as of September 10, 2010, among the Company, Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Special Situations Fund, L.P. and Global Opportunities Breakaway, Ltd., as in effect from time to time.

 

“Hedging Counterparty” means a broker-dealer registered under Section 15(b) of the Exchange Act or an Affiliate thereof.

 

“Hedging Transaction” means any transaction involving a security linked to the Registrable Securities or any security that would be deemed to be a “derivative security” (as defined in Rule 16a-1(c) promulgated under the Exchange Act) with respect to the Registrable Securities or transaction (even if not a security) which would (were it a security) be considered such a derivative security, or which transfers some or all of the economic risk of ownership of the Registrable Securities, including, without limitation, any forward contract, equity swap, put or call, put or call equivalent position, collar, non-recourse loan, sale of an exchangeable security or similar transaction.  For the avoidance of doubt, the following transactions shall be deemed to be Hedging Transactions:

 

(i)           transactions by a Holder in which a Hedging Counterparty engages in short sales of Registrable Securities pursuant to a Prospectus and may use Registrable Securities to close out its short position;

 

(ii)           transactions pursuant to which a Holder engages in a short sale of Registrable Securities pursuant to a Prospectus and delivers Registrable Securities to close out its short position;

 

(iii)           transactions by a Holder in which the Holder delivers, in a transaction exempt from registration under the Securities Act, Registrable Securities to the Hedging Counterparty who will then publicly resell or otherwise transfer such Registrable Securities pursuant to a Prospectus or an exemption from registration under the Securities Act; and

 

(iv)           a loan or pledge of Registrable Securities to a Hedging Counterparty who may then become a selling stockholder and sell the loaned securities or, in an event of default in the case of a pledge, sell the pledged securities, in each case, in a public transaction pursuant to a Prospectus.

 

“Holdback Period” has the meaning set forth in Section 5 hereof.

 

 

  

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“Holder” (collectively, the “Holders”) shall mean each Person who is a purchaser of Series A Shares pursuant to the Purchase Agreement or an Additional Purchaser who executes a Joinder to this Agreement in the form of Annex B hereto for so long as it holds any Registrable Securities and each of its successors and assigns and direct and indirect transferees who Beneficially Own Registrable Securities.

 

“Holder Underwritten Offering” means an underwritten offering takedown to be conducted by one or more Electing Holders in accordance with Section 3(d).

 

“Indemnified Party” has the meaning set forth in Section 8(c) hereof.

 

“Indemnifying Party” has the meaning set forth in Section 8(c) hereof.

 

“Liability” has the meaning set forth in Section 8(a) hereof.

 

“Notice and Questionnaire” means a written notice delivered to the Company in the form attached as Annex A hereto.

 

“Person” means any individual, firm, corporation, partnership, limited liability company, trust, incorporated or unincorporated association, joint venture, joint stock company, government (or an agency or political subdivision thereof) or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity.

 

“Piggyback Takedown” has the meaning set forth in Section 4(a) hereof.

 

“Prospectus” means the prospectus related to any Registration Statement (whether preliminary or final or any prospectus supplement, including, without limitation, a prospectus or prospectus supplement that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance on Rule 415, 424, 430A, 430B or 430C under the Securities Act, as amended or supplemented by any amendment or prospectus supplement), including post-effective amendments, and all materials incorporated by reference in such prospectus.

 

“Purchase Agreement” has the meaning set forth in the recitals to this Agreement.

 

“Registrable Securities” means:  (i) any and all shares of Common Stock issuable or issued upon conversion of the Series A Shares; (ii) any and all other securities issuable or issued upon conversion of the Series A Shares; and (iii) any and all other Common Stock of the Company beneficially owned by a Holder or its Affiliates at any time when such beneficial owner is or has been within the preceding ninety (90) days an “affiliate” of the Company for purposes of Rule 144 of the Securities Act; provided, that Registrable Securities held by any Holder will cease to be Registrable Securities, when (A) a Registration Statement covering such Registrable Securities has been declared effective under the Securities Act by the Commission and such Registrable Securities have been disposed of pursuant to such effective Registration Statement, (B) such securities have been disposed of pursuant to Rule 144 promulgated under the Securities 

 

  

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Act, (C) the entire amount of the Registrable Securities held by any Holder may be sold by such Holder in a single sale without, in the opinion of counsel reasonably satisfactory to the Company, any limitation as to volume or manner of sale requirements pursuant to Rule 144 promulgated under the Securities Act and the Company removes any restrictive legend borne by the Registrable Securities or (D) such securities have ceased to be outstanding.

 

“Registration Expenses” means all expenses (other than Selling Expenses) arising from or incident to the registration of the sale of Registrable Securities in compliance with this Agreement, including, without limitation, (i) Commission, stock exchanges, FINRA (including, without limitation, fees, charges and disbursements of counsel in connection with FINRA registration) and other registration and filing fees, (ii) all fees and expenses incurred in connection with complying with any securities or blue sky laws (including, without limitation, fees, charges and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities), (iii) all printing, messenger and delivery expenses, (iv) the fees, charges and disbursements of counsel to the Company and of its independent public accountants and any other accounting and legal fees, charges and expenses incurred by the Company (including, without limitation, any expenses arising from any special audits or “comfort letters” required in connection with or incident to any registration), (v) with respect to Registrable Securities that are listed on a national securities exchange, the fees and expenses incurred in connection with the listing of such Registrable Securities, and (vi) reasonable fees, charges and disbursements of Counsel to the Holders not to exceed $25,000 in connection with the Shelf Registration Statement called for by Section 3(a), and $50,000 in connection with any Piggyback Takedown or any Holder Underwritten Offering.

 

“Registration Statement” means any registration statement filed pursuant to the Securities Act.

 

“Requesting Holders” has the meaning set forth in Section 4(a) hereof.

 

“Securities Act” means the Securities Act of 1933 and the rules and regulations of the Commission promulgated thereunder.

 

“Selling Expenses” means underwriting fees, discounts, selling commissions, underwriter expenses and stock transfer taxes relating to the registration and sale of a Holder’s Registrable Securities and, subject to clause (vi) of the definition of Registration Expenses, the fees and expenses of Holder’s own counsel.

 

“Series A Shares” has the meaning set forth in the recitals to this Agreement.

 

“Shelf Registration” means a registration of securities pursuant to a Registration Statement filed with the Commission in accordance with and pursuant to Rule 415 promulgated under the Securities Act.

 

 

  

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“Shelf Registration Statement” has the meaning set forth in Section 3 hereof.

 

“Suspension Period” has the meaning set forth in Section 3(c) hereof.

 

“underwriter” means the underwriter, placement agent or other similar intermediary participating in an underwritten offering.

 

“underwritten offering” of securities means a public offering of securities registered under the Securities Act in which an underwriter, placement agent or other similar intermediary participates in the distribution of such securities.

 

(b)           Interpretation.  Unless otherwise noted:

 

(i)           All references to laws, rules, regulations and forms in this Agreement shall be deemed to be references to such laws, rules, regulations and forms, as amended from time to time or, to the extent replaced, the comparable successor laws, rules, regulations and forms thereto in effect at the time.

 

(ii)           All references to agencies, self-regulatory organizations or governmental entities in this Agreement shall be deemed to be references to the comparable successor thereto.

 

(iii)           All references to agreements and other contractual instruments shall be deemed to be references to such agreements or other instruments as they may be amended, waived, supplemented or modified from time to time.

 

2.           General; Securities Subject to this Agreement.

 

(a)           Grant of Rights.  The Company hereby grants registration rights with respect to the Registrable Securities to the Holders upon the terms and conditions set forth in this Agreement.

 

(b)           Transfer of Registration Rights.  Any Registrable Securities that are pledged or made the subject of a Hedging Transaction, which Registrable Securities are not ultimately disposed of by the Holder pursuant to such pledge or Hedging Transaction shall be deemed to remain “Registrable Securities,” notwithstanding the release of such pledge or the completion of such Hedging Transaction.

 

3.           Shelf Registrations.

 

(a)           Filings.  For so long as there are Registrable Securities outstanding, the Company shall use its commercially reasonable efforts to ensure that from and after January 25, 2012 the Company shall at all times have and maintain an effective Registration Statement for a Shelf Registration covering the resale of all of the Registrable Securities requested to be included by the Electing Holders, on a delayed or continuous basis (the “Shelf Registration Statement”).  In furtherance of such obligation, the Company shall use its commercially reasonable efforts to file on or prior to October 

 

 

  

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10, 2011 an initial Shelf Registration Statement.  The Company shall give written notice of the filing of any Shelf Registration Statement at least fifteen (15) days prior to filing such Shelf Registration Statement to all Holders of Registrable Securities and shall include in such Shelf Registration Statement all Registrable Securities of Electing Holders.  The Company shall use its commercially reasonable efforts to cause the initial Shelf Registration Statement to become effective on or prior to January 25, 2012 and shall use its commercially reasonable efforts to maintain the effectiveness of such Shelf Registration Statement in accordance with the terms hereof.

 

(b)           Additional Electing Holders.  From and after the date that the Shelf Registration Statement is initially effective, as promptly as is practicable after receipt of a proper Notice and Questionnaire, and in any event within (x) ten (10) Business Days after the date such Notice and Questionnaire is received by the Company or (y) if a Notice and Questionnaire is so received during a Suspension Period, five (5) Business Days after the expiration of such Suspension Period, the Company shall take all necessary action to cause the Electing Holder to be named as a selling securityholder in the Shelf Registration Statement and the related Prospectus in such a manner as to permit such Holder to deliver such Prospectus in connection with sales of such Registrable Securities to the purchasers thereof in accordance with applicable law, which action may include:  (i) if required by applicable law, filing with the Commission a post-effective amendment to the Shelf Registration Statement; (ii) preparing and, if required by applicable law, filing a supplement or supplements to the related Prospectus or a supplement or amendment to any document incorporated therein by reference; (iii) filing any other required document; or (iv)   with respect to a post-effective amendment to the Shelf Registration Statement that is not automatically effective, using its commercially reasonable efforts to cause such post-effective amendment to be declared or to otherwise become effective under the Securities Act as promptly as is practicable; provided that:

 

(i)           the Company may delay such filing until the date that is twenty (20) Business Days after any prior such filing;

 

(ii)           if the Shelf Registration Statement is not an Automatic Shelf Registration Statement and the Company has already made such a filing during the calendar quarter in which such filing would otherwise be required to be made, the Company may delay such filing until the tenth (10th) Business Day of the following calendar quarter; and

 

(iii)           if such Notice and Questionnaire is delivered during a Suspension Period, the Company shall so inform the Holder delivering such Notice and Questionnaire and shall take the actions set forth above upon expiration of the Suspension Period in accordance with Section 3(c).

 

Notwithstanding anything contained herein to the contrary, the Company shall be under no obligation to name any Holder as a selling securityholder in any Shelf Registration Statement or related Prospectus until such Holder has returned a duly completed and signed Notice and Questionnaire to the Company.

 

 

  

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(c)           Suspension Periods.  Upon written notice to the Holders of Registrable Securities, (x) the Company shall be entitled to suspend, for a period of time, the use of any Registration Statement or Prospectus if the Board of Directors determines in its good faith judgment, after consultation with counsel, that the Registration Statement or any Prospectus may contain an untrue statement of a material fact or omits any fact necessary to make the statements in the Registration Statement or Prospectus not misleading and (y) the Company shall not be required to amend or supplement the Registration Statement, any related Prospectus or any document incorporated therein by reference if the Board of Directors determines in its good faith judgment, after consultation with counsel, that such amendment would reasonably be expected to have a material adverse effect on any proposal or plan of the Company to effect a merger, acquisition, disposition, financing, reorganization, recapitalization or similar transaction, in each case that is material to the Company (in case of each clause (x) and (y), a “Suspension Period”); provided that (A) the duration of all Suspension Periods may not exceed one hundred and twenty (120) days in the aggregate in any 12-month period and (B) the Company shall use its commercially reasonable efforts to amend the Registration Statement and/or Prospectus to correct such untrue statement or omission as soon as reasonably practicable.

 

(d)           Holder Underwritten Offering.

 

(i)           At any time after the first anniversary of this Agreement one or more Electing Holders holding at least 25% of the outstanding Registrable Securities may request that the Company effect an underwritten takedown under the Shelf Registration Statement of at least $50 million in Registrable Securities, based on the closing market price on the trading day immediately prior to the initial request of the Electing Holders.  Within five (5) business days of receipt of such request, the Company shall notify all other Holders of such request and shall (except as provided in clause (iii) below) include in such Holder Underwritten Offering all Registrable Securities requested to be included therein by Holders who respond within five (5) Business Days of the Company’s notification described above (such Holders who are not Electing Holders shall participate in the Holder Underwritten Offering only if they also become Electing Holders).

 

(ii)           For any Holder Underwritten Offering, the managing underwriter or underwriters shall be selected by Electing Holders participating in such offering holding a majority of the Registrable Securities to be disposed of pursuant to such offering and shall be reasonably acceptable to the Company.

 

(iii)           If the managing underwriter or underwriters for the Holder Underwritten Offering advise the Company that in their reasonable opinion the number of securities requested to be included in such underwritten offering takedown exceeds the number which can be sold in an orderly manner in such offering within a price range acceptable to the Company, the Company shall include in such Holder Underwritten Offering the number which can be so sold in the following order of priority: (A) first, the securities requested to be included by the Electing Holders (pro rata among the holders of such securities on the basis of the number of securities requested to be included therein by each such holder), (B) second, the securities requested to be 

 

 

  

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included in such Holder Underwritten Offering by holders exercising piggyback registration rights (pro rata among the holders of such securities on the basis of the number of securities requested to be included therein by each such holder), (C)  third, the securities the Company proposes to sell, (D) fourth, other securities requesting to be included in such Holder Underwritten Offering (pro rata among the holders of such securities on the basis of the number of securities requested to be included therein by each such holder).

 

(iv)           The company shall not be required to effect a Holder Underwritten Offering: (A) more than once in any twelve (12) month period or (B) if it shall have already made three (3) Holder Underwritten Offerings pursuant to this Agreement.

 

4.           Piggyback Takedowns.

 

(a)           Right to Piggyback.  If the Company proposes to undertake the marketing of a registered underwritten offering of its Common Stock for its own account (other than a Registration Statement on Form S-4 or S-8 or a Registration Statement connection with a rights offering) or for the account of any other stockholder or stockholders of the Company not party hereto (the “Requesting Holders”), the Company shall give prompt written notice of its intention to effect such offering (a “Piggyback Takedown”) to all Holders of Registrable Securities.  In the case of a Piggyback Takedown that is an offering under a Shelf Registration, such notice shall be given not less than five (5) Business Days prior to the expected date of commencement of marketing efforts for such Piggyback Takedown.  In the case of a Piggyback Takedown that is an offering under a Registration Statement that is not a Shelf Registration, such notice shall be given not less than five (5) Business Days prior to the expected date of filing of such Registration Statement.  The Company shall, subject to the provisions of Section 0 below, include in such Piggyback Takedown, as applicable, all Registrable Securities with respect to which the Company has received written requests for inclusion therein on or before the date that is three (3) Business Days prior to the expected date of commencement of marketing efforts or the filing of the Registration Statement, as applicable.  Notwithstanding anything to the contrary contained herein, the Company may determine not to proceed with any Piggyback Takedown upon written notice to the Holders of Registrable Securities requesting to include their Registrable Securities in such Piggyback Takedown.

 

(b)           Priority on Piggyback Takedowns.

 

(i)  If a Piggyback Takedown is an underwritten primary registration on behalf of the Company, and the managing underwriters for a Piggyback Takedown advise the Company that in their reasonable opinion the number of securities requested to be included in such Piggyback Takedown exceeds the number which can be sold in an orderly manner in such offering within a price range acceptable to the Company, the Company shall include in such Piggyback Takedown the number which can be so sold in the following order of priority: (A) first, the securities the Company proposes to sell, (B) second, securities requested to be included in such Piggyback Takedown by Holders 

 

 

  

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exercising piggyback registration rights in accordance with this Agreement and Harbinger Holders exercising piggyback registration rights, in accordance with any agreement among such holders and the Company (pro rata among the holders of such securities on the basis of the number of securities requested to be included therein by each such holder), (C) third, securities requested to be included in such Piggyback Takedown by any other security holders exercising piggyback registration rights (pro rata among the holders of such securities on the basis of the number of securities requested to be included therein by each such holder) and (D) fourth, other securities requested to be included in such Piggyback Takedown (pro rata among the holders of such securities on the basis of the number of securities requested to be included therein by each such holder).

 

(ii)  If a Piggyback Takedown is an underwritten registration on behalf of one or more Requesting Holders, and the managing underwriters for a Piggyback Takedown advise the Company that in their reasonable opinion the number of securities requested to be included in such Piggyback Takedown exceeds the number which can be sold in an orderly manner in such offering within a price range acceptable to the Company, the Company shall include in such Piggyback Takedown the number which can be so sold in the following order of priority: (A) first, the securities requested to be included by the Requesting Holders, (B) second, securities requested to be included in such Piggyback Takedown by Holders exercising piggyback registration rights in accordance with this Agreement (pro rata among the holders of such securities on the basis of the number of securities requested to be included therein by each such holder), (C)  third, securities requested to be included in such Piggyback Takedown by any other security holders exercising piggyback registration rights (pro rata among the holders of such securities on the basis of the number of securities requested to be included therein by each such holder), (D) fourth, the securities the Company proposes to sell, and (E) fifth, other securities requested to be included in such Piggyback Takedown (pro rata among the holders of such securities on the basis of the number of securities requested to be included therein by each such holder).

 

(c)           Selection of Underwriters.  Except as otherwise provided in any agreement between the Company and Requesting Holders, the Company will have the sole right to select the investment banker(s) and manager(s) for any Piggyback Takedown.

 

5.           Holdback in Connection with a Piggyback Takedown.

 

In connection with any Piggyback Takedown or Holder Underwritten Offering, no Holder who Beneficially Owns five percent (5%) or more of the outstanding shares of Common Stock on as converted basis who was provided with the notice called for by Section 4(a) hereof, shall, except as part of the Piggyback Takedown and subject to reasonable and customary exceptions, effect any sale or distribution of equity securities of the Company, as applicable, or any securities convertible into or exchangeable or exercisable for such securities, during the seven (7) days prior to and the 90-day period beginning on the date of pricing of such Piggyback 

 

 

  

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Takedown (the “Holdback Period”), (i) unless the Company and the underwriters managing the Piggyback Takedown otherwise agree, and (ii) only if such Holdback Period is applicable on substantially similar terms to the Company and the executive officers and directors of the Company.  If (x) the Company issues an earnings release or other material news or a material event relating to the Company and its subsidiaries occurs during the last 17 days of the Holdback Period or (y) prior to the expiration of the Holdback Period, the Company announces that it will release earnings results during the 16-day period beginning upon the expiration of the Holdback Period, then to the extent necessary for a managing or co-managing underwriter of an underwritten offering required hereunder to comply with FINRA Rule 2711(f)(4), the Holdback Period shall be extended until 18 days after the earnings release or the occurrence of the material news or event, as the case may be (such period the “Holdback Extension”).  The Company may impose stop-transfer instructions with respect to its securities that are subject to the forgoing restriction until the end of such period, including any period of Holdback Extension.  Each Holder who was offered the opportunity to sell Registrable Securities in connection with such Piggyback Takedown or Holder Underwritten Offering agrees to execute a lock-up agreement in favor of the Company’s underwriters to such effect, subject to reasonable and customary exceptions, and other exceptions as may be agreed by the Holders and the underwriters that are reasonably acceptable to the Company, and, in any event, that the Company’s underwriters in any relevant Piggyback Takedown or Holder Underwritten Offering shall be third party beneficiaries of this Section 5.

 

6.           Registration Procedures.

 

(a)           Obligations of the Company.  Whenever registration of Registrable Securities has been requested pursuant to Section 3 or Section 4 hereof, the Company shall use its commercially reasonable efforts to effect the registration and sale of such Registrable Securities in accordance with the intended method of distribution thereof and the following provisions shall apply in connection therewith:

 

(i)           No Holder shall be entitled to be named as a selling securityholder in the Registration Statement as of the time of its initial effectiveness or at any time thereafter, and no Holder shall be entitled to use the Prospectus for resales of Registrable Securities at any time, unless such Holder has become an “Electing Holder” by returning a duly completed and signed Notice and Questionnaire to the Company by the deadline for response set forth therein (or the Holder has delivered a Notice and Questionnaire after the deadline for response and the Company has named such Holder as a selling securityholder in the Registration Statement) and has provided any other information reasonably requested in writing by the Company.

 

(ii)           Each Electing Holder agrees to notify the Company as promptly as practicable of any inaccuracy or change in information previously furnished by such Electing Holder to the Company or of the occurrence of any event in either case as a result of which any Prospectus relating to such registration contains or would contain an untrue statement of a material fact regarding such Electing Holder or such Electing Holder’s intended method of disposition of such Registrable Securities or 

 

 

  

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omits to state any material fact regarding such Electing Holder or such Electing Holder’s intended method of disposition of such Registrable Securities required to be stated therein or necessary to make the statements therein not misleading, and promptly to furnish to the Company (i) any additional information required to correct and update any previously furnished information or required so that such Prospectus shall not contain, with respect to such Electing Holder or the disposition of such Registrable Securities, an 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 and (ii) any other information regarding such Electing Holder and the distribution of such Registrable Securities as may be required to be disclosed in any Registration Statement under applicable law, pursuant to Commission comments or as the Company may request from time to time in writing.

 

(b)           Additional Obligations of the Company.  The Company shall:

 

(i)           before filing a Registration Statement or a Prospectus or any amendments or supplements thereto in connection with any Piggyback Takedown, at the Company’s expense, furnish to the Electing Holders upon written request from such Electing Holder whose securities are covered by the Registration Statement, copies of all such documents, other than documents that are incorporated by reference and that are publicly available through the Commission’s EDGAR system, proposed to be filed, and provide Counsel to such Holders a reasonable opportunity to review and comment on such documents;

 

(ii)           notify each Electing Holder of Registrable Securities whose securities are covered by the Registration Statement of the filing and effectiveness of the Registration Statement and prepare and file with the Commission such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for a period ending on the date on which all Registrable Securities have been sold under the Registration Statement applicable to such Shelf Registration or have otherwise ceased to be Registrable Securities and notify each Electing Holder of the filing and effectiveness of such amendments and supplements, and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement;

 

(iii)           furnish to each Electing Holder selling Registrable Securities without charge, such number of copies of the applicable Registration Statement, each amendment and supplement thereto, each Prospectus prepared in connection with such Registration Statement (including each preliminary Prospectus, final Prospectus, and any other Prospectus (including any Prospectus filed under Rule 424, Rule 430A or Rule 430B promulgated under the Securities Act and any “issuer free writing prospectus” as such term is defined under Rule 433 promulgated under the Securities Act)), all exhibits and other documents filed therewith and such other documents as such seller may reasonably request including in order to facilitate the disposition of the Registrable Securities owned by such Holder, and upon request, a copy 

 

 

  

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of any and all transmittal letters or other correspondence to or received from, the Commission or any other governmental authority relating to such offer;

 

(iv)           use its commercially reasonable efforts to:  (A)  register or qualify, or obtain exemption from registration or qualification for, such Registrable Securities under such other securities or “blue sky” laws of such jurisdictions as any seller reasonably requests, (B)  keep such registration, qualification or exemption in effect for so long as such Registration Statement remains in effect and (C)  do any and all other acts and things which may be reasonably necessary or advisable to enable such Electing Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Electing Holder (provided that the Company shall not be required to (x) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subsection, (y) subject itself to taxation in any such jurisdiction or (z) consent to general service of process in any such jurisdiction);

 

(v)           notify each Electing Holder selling Registrable Securities at any time when a Prospectus relating to the applicable Registration Statement is required to be delivered under the Securities Act:

 

(A)           as promptly as practicable upon discovery that, or upon the happening of any event as a result of which, such Registration Statement, or the Prospectus or Free Writing Prospectus relating to such Registration Statement, or any document incorporated or deemed to be incorporated therein by reference contains an untrue statement of a material fact or omits any fact necessary to make the statements in the Registration Statement, the Prospectus or Free Writing Prospectus relating thereto not misleading or otherwise requires the making of any changes in such Registration Statement, Prospectus, Free Writing Prospectus or document, and, at the request of any such Electing Holder and subject to the Company’s ability to declare Suspension Periods pursuant to Section 0, the Company shall promptly prepare a supplement or amendment to such Prospectus or Free Writing Prospectus, furnish a reasonable number of copies of such supplement or amendment to each such seller of such Registrable Securities, and file such supplement or amendment with the Commission so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus or Free Writing Prospectus as so amended or supplemented shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading,

 

(B)           as promptly as practicable after the Company becomes aware of any request by the Commission or any Federal or state governmental authority for amendments or supplements to a Registration Statement or related Prospectus or Free Writing Prospectus covering Registrable Securities or for additional information relating thereto,

 

 

  

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(C)           as promptly as practicable after the Company becomes aware of the issuance or threatened issuance by the Commission of any stop order suspending or threatening to suspend the effectiveness of a Registration Statement covering the Registrable Securities or

 

(D)           as promptly as practicable after the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any Registrable Security for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose;

 

(vi)           use its commercially reasonable efforts to cause all Registrable Securities to be listed on The New York Stock Exchange or such other securities exchange on which the Company’s Common Stock is then listed so listed;

 

(vii)           provide and cause to be maintained a transfer agent and registrar for all such Registrable Securities from and after the effective date of the applicable Registration Statement;

 

(viii)           provide Counsel to the Holders a reasonable opportunity to review and comment upon any Registration Statement and any Prospectus supplements;

 

(ix)           in the event of the issuance or threatened issuance of any stop order suspending the effectiveness of a Registration Statement, or of any order suspending or preventing the use of any related Prospectus or suspending the qualification of any Registrable Securities included in such Registration Statement for sale in any jurisdiction, use its commercially reasonable efforts promptly to (A) prevent the issuance of any such stop order, and in the event of such issuance, to obtain the withdrawal of such order and (B) obtain, at the earliest practicable date, the withdrawal of any order suspending or preventing the use of any related Prospectus or Free Writing Prospectus or suspending qualification of any Registrable Securities included in such Registration Statement for sale in any jurisdiction;

 

(x)           if requested by any participating Electing Holder promptly include in a Prospectus supplement or amendment such information as the Holder may reasonably request, including in order to permit the intended method of distribution of such securities, and make all required filings of such Prospectus supplement or such amendment as soon as reasonably practicable after the Company has received such request;

 

(xi)           in the case of certificated Registrable Securities, cooperate with the participating Holders of Registrable Securities and the managing underwriters to facilitate the timely preparation and delivery of certificates (not bearing any legends) representing Registrable Securities sold pursuant to a Shelf Registration Statement;

 

 

  

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(xii)           cause the Registrable Securities covered by such Registration Statement to be registered with or approved by such other governmental agencies or authorities, as may be reasonably necessary by virtue of the business and operations of the Company to enable the seller or sellers of Registrable Securities to consummate the disposition of such Registrable Securities;

 

(xiii)           in the case of a Holder Underwritten Offering, enter into an underwriting agreement in customary form and reasonably satisfactory to the Company and perform its obligations thereunder and take such other commercially reasonable actions as are required in order to expedite or facilitate each disposition of Registrable Securities included in such Holder Underwritten Offering (including causing appropriate officers to attend and participate in “road shows” and other informational meetings organize by the underwriters), and causing counsel to the Company to deliver customary legal opinions in connection with any such underwriting agreements;

 

(xiv)           provide a CUSIP number for all Registrable Securities not later than the effective date of the Shelf Registration Statement;

 

(xv)           make available at reasonable times for inspection by any seller of Registrable Securities, any managing underwriter participating in any disposition of such Registrable Securities pursuant to the Shelf Registration Statement, Counsel to the Holders and any attorney, accountant or other agent retained by the selling Holder or any managing underwriters (collectively, the “Inspectors”), all financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries (collectively, the “Records”) as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company’s and its subsidiaries’ officers, directors and employees, and the independent public accountants of the Company, to supply all information reasonably requested by any such Inspector in connection with such Registration Statement.  Records that the Company determines, in good faith, to be confidential and which it notifies the Inspectors are confidential shall not be disclosed by the Inspectors (and the Inspectors shall confirm their agreement in writing in advance to the Company if the Company shall so request) unless (A) the disclosure of such Records is necessary, in the Inspector’s judgment and with the concurrence of counsel to the Company, to avoid or correct a misstatement or omission in the Registration Statement, (B) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction after exhaustion of all appeals therefrom or (C) the information in such Records was known to the Inspectors on a non-confidential basis prior to its disclosure by the Company or has been made generally available to the public.  Each seller of Registrable Securities agrees that it shall, upon learning that disclosure of such Records is sought in a court of competent jurisdiction or by any other person, give notice to the Company and allow the Company, at the Company’s expense, to undertake appropriate action to prevent disclosure of the Records deemed confidential;

 

(xvi)           in the case of a Holder Underwritten Offering, use its commercially reasonable efforts to obtain a “comfort” letter or letters, dated as of such date or dates as the Counsel to the Holders or the managing underwriters reasonably 

 

 

  

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requests, from the Company’s independent public accountants in customary form and covering such matters of the type customarily covered by “comfort” letters as Counsel to the Holders or any managing underwriter reasonably requests;

 

(xvii)           in the case of a Holder Underwritten Offering, furnish, at the request of any managing underwriter for such offering an opinion with respect to legal matters and a negative assurance letter with respect to disclosure matters, dated as of each closing date of such offering of counsel representing the Company for the purposes of such registration, addressed to the underwriters, covering such matters with respect to the registration in respect of which such opinion and letter are being delivered as the underwriters, may reasonably request and are customarily included in such opinions and negative assurance letters;

 

(xviii)           in the case of a Holder Underwritten Offering, use its commercially reasonable efforts to cooperate and assist in any filings required to be made with FINRA and in the performance of any due diligence investigation by any underwriter and its counsel (including any “qualified independent underwriter,” if applicable) that is (A) required or requested by FINRA in order to obtain written confirmation from FINRA that FINRA does not object to the fairness and reasonableness of the underwriting terms and arrangements (or any deemed underwriting terms and arrangements) relating to the resale of Registrable Securities pursuant to the Shelf Registration Statement, including, without limitation, information provided to FINRA through its COBRADesk system or (B) required to be retained in accordance with the rules and regulations of FINRA;

 

(xix)           if requested by the managing underwriters, if any, or by any Holder of Registrable Securities being sold in a Holder Underwritten Offering, promptly incorporate in a Prospectus supplement or post-effective amendment to the Shelf Registration Statement such information as the managing underwriters, if any, or such Holders indicate relates to them or that they reasonably request be included therein;

 

(xx)           within the deadlines specified by the Securities Act and the rules promulgated thereunder, make all required filings of all Prospectuses and Free Writing Prospectuses with the Commission; and

 

(xxi)           within the deadlines specified by the Securities Act and the rules promulgated thereunder, make all required filing fee payments in respect of any Registration Statement or Prospectus used under this Agreement (and any offering covered thereby).

 

(c)           Seller Requirements.  In connection with any offering under any Registration Statement under this Agreement, each Electing Holder (i) shall promptly furnish to the Company in writing such information with respect to such Holder and the intended method of disposition of its Registrable Securities as the Company may reasonably request or as may be required by law or regulations for use in connection with any related Registration Statement or Prospectus (or amendment or supplement thereto) and all information required to be disclosed in order to make the information previously 

 

 

  

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furnished to the Company by such Holder not contain a material misstatement of fact or necessary to cause such Registration Statement or Prospectus (or amendment or supplement thereto) not to omit a material fact with respect to such Holder necessary in order to make the statements therein not misleading; (ii) shall comply with the Securities Act and the Exchange Act and all applicable state securities laws and comply with all applicable regulations in connection with the registration and the disposition of the Registrable Securities; and (iii) shall not use any Free Writing Prospectus without the prior written consent of the Company.  If any Electing Holder of Registrable Securities fails to provide such information required to be included in such Registration Statement by applicable securities laws or otherwise necessary or desirable in connection with the disposition of such Registrable Securities in a timely manner after written request therefor, the Company may exclude such Electing Holder’s Registrable Securities from a registration under Sections 3 or 4 hereof.

 

Each Person that has securities registered for resale on a Registration Statement filed hereunder agrees that, prior to each disposition of securities pursuant to a Registration Statement filed hereunder, it shall give the Company three (3) Business Day’s notice of its intention to make such disposition and that upon receipt of any notice contemplated in Section 3(c), such Person will forthwith discontinue the disposition of its Registrable Securities pursuant to the applicable Registration Statement.

 

7.           Registration Expenses.  All Registration Expenses shall be borne by the Company.  All Selling Expenses relating to Registrable Securities registered shall be borne by the Holders of such Registrable Securities pro rata on the basis of the number of Registrable Securities sold.

 

8.           Indemnification; Contribution.

 

(a)           Indemnification by the Company.  The Company agrees to indemnify and hold harmless each Holder, its partners, directors, officers, employees, agents, trustees and each Person who controls such Holder from and against any and all losses, claims, damages, liabilities and expenses, or any action or proceeding in respect thereof (including any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action, whether or not the indemnified party is a party to any proceeding) (each, a “Liability” and collectively, “Liabilities”), arising out of or based upon (a) any untrue, or allegedly untrue, statement of a material fact contained in any Disclosure Package, any Registration Statement, any Prospectus, or in any amendment or supplement thereto, and (b) the omission or alleged omission to state in any Disclosure Package, any Registration Statement, any Prospectus, or in any amendment or supplement thereto any material fact required to be stated therein or necessary to make the statements therein not misleading under the circumstances in which such statements were made; provided, however, that the Company shall not be held liable in any such case to the extent that any such Liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission contained in such Disclosure Package, Registration Statement, Prospectus, or such amendment or supplement thereto in reliance upon and in conformity 

 

 

  

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with information concerning such Holder furnished in writing to the Company by or on behalf of such Holder expressly for inclusion therein, including, without limitation, the information furnished to the Company pursuant to Sections 6(a) and 6(c) hereof.  The Company shall also provide customary indemnities to any underwriters of the Registrable Securities, their officers, directors and employees and each Person who controls such underwriters (within the meaning of Section 15 of the Securities Act) to the same extent as provided above with respect to the indemnification of the Holders of Registrable Securities.

 

(b)           Indemnification by Holders.  In connection with any offering in which a Holder is participating pursuant to Section 3 or 4 hereof, such Holder agrees severally (and not jointly) to indemnify and hold harmless the Company and each other Holder and their respective partners, directors, officers, managers, employees, agents, trustees, the other Holders, any underwriter retained by the Company and each Person who controls the Company, the other Holders or such underwriter (within the meaning of Section 15 of the Securities Act) to the same extent as the foregoing indemnity from the Company to the Holders (including indemnification of their respective partners, directors, officers, Affiliates, stockholders, members, employees, trustees and controlling Persons), but only to the extent that Liabilities arise out of or are based upon a statement or alleged statement or an omission or alleged omission that was made in reliance upon and in conformity with information with respect to such Holder furnished in writing to the Company by or on behalf of such Holder expressly for use in such Disclosure Package, Registration Statement, Prospectus, or such amendment or supplement thereto, including, without limitation, the information furnished to the Company pursuant to Sections 6(a) and (6(c) hereof; provided, however, that the aggregate amount to be indemnified by any Holder pursuant to this Section 8(b) and contributed by any Holder pursuant to Section 8(d) shall be limited to the net proceeds (after deducting underwriters’ discounts and commissions) received by such Holder in the offering to which such Disclosure Package, Registration Statement, Prospectus or such amendment or supplement thereto relates.

 

(c)           Conduct of Indemnification Proceedings.  Any Person entitled to indemnification or contribution hereunder (the “Indemnified Party”) agrees to give prompt written notice to the indemnifying party (the “Indemnifying Party”) after the receipt by the Indemnified Party of any written notice of the commencement of any action, suit, proceeding or investigation or threat thereof made in writing for which the Indemnified Party intends to claim indemnification or contribution pursuant to this Agreement; provided, however, that the failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party of any Liability that it may have to the Indemnified Party hereunder (except to the extent that the Indemnifying Party is materially prejudiced or otherwise forfeits substantive rights or defenses by reason of such failure).  If notice of commencement of any such action is given to the Indemnifying Party as above provided, the Indemnifying Party shall be entitled to participate in and, to the extent it may wish, jointly with any other Indemnifying Party similarly notified, to assume the defense of such action at its own expense, with counsel chosen by it and reasonably satisfactory to such Indemnified Party.  Each Indemnified Party shall have the right to employ separate 

 

 

  

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counsel in any such action and participate in the defense thereof, but the reasonable and documented out-of-pocket fees and expenses of such counsel shall be paid by the Indemnified Party unless (i) the Indemnifying Party agrees to pay such fees and expenses, (ii) the Indemnifying Party fails to assume the defense of such action with counsel reasonably satisfactory to the Indemnified Party or (iii) the named parties to any such action (including any impleaded parties) include both the Indemnifying Party and the Indemnified Party and such parties have been advised by such counsel that either (x) representation of such Indemnified Party and the Indemnifying Party by the same counsel would be inappropriate under applicable standards of professional conduct or (y) there may be one or more legal defenses available to the Indemnified Party which are different from or additional to those available to the Indemnifying Party.  In any of such cases, the Indemnifying Party shall not have the right to assume the defense of such action on behalf of such Indemnified Party, it being understood, however, that the Indemnifying Party shall not be liable for the reasonably incurred and documented out-of-pocket fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all Indemnified Parties and all such reasonably incurred and documented out-of-pocket fees and expenses shall be reimbursed as incurred.  No Indemnifying Party shall be liable for any settlement entered into without its written consent, which consent shall not be unreasonably withheld.  No Indemnifying Party shall, without the consent of such Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which such Indemnified Party is or may be a party and indemnity has been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability for claims that are the subject matter of such proceeding.

 

(d)           Contribution.  If the indemnification provided for in this Section 8 from the Indemnifying Party is unavailable to an Indemnified Party hereunder or insufficient to hold harmless an Indemnified Party in respect of any Liabilities referred to herein, then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Liabilities in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions which resulted in such Liabilities, as well as any other relevant equitable considerations.  The relative faults of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action.  The amount paid or payable by a party as a result of the Liabilities referred to above shall be deemed to include, subject to the limitations set forth in Sections 8(a), 8(b) and 8(c) hereof, any documented out-of-pocket legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding; provided, that the aggregate amount to be contributed by any Holder pursuant to this Section 8(d) and indemnified by such Holder pursuant to Section 8(b) shall be limited to the net proceeds (after deducting the underwriters’ discounts and commissions) received by such Holder in the offering.

 

 

  

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The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph.  No Person guilty of fraudulent misrepresentation (within the meaning of Section 11 of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

 

9.           Participation in Underwritten Offering/Sale of Registrable Securities.  No Person may participate in any underwritten offering hereunder unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements in customary form entered into pursuant to this Agreement and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements; provided, that the Holders included in any underwritten registration shall make only those representations and warranties to the Company or the underwriters as are customary for similar transactions and such other representations and warranties that the underwriters may reasonably request that are agreed by any such Holder.

 

10.           Rule 144.  With a view to making available to the Holders of Registrable Securities the benefits of Rule 144 promulgated under the Securities Act the Company covenants that for so long as the Company is subject to the reporting requirements of the Exchange Act it will use its commercially reasonable efforts to (i) file all reports and other documents required, if any, to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted thereunder, (ii) make available information necessary to comply with Rule 144 at all times, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitations of the exemption provided by Rule 144 and (iii) deliver, upon the reasonable request of any Holder of Registrable Securities, a written certification to such Holder as to whether the Company has complied with the information requirements of Rule 144.  If at any time the Company is not subject to the reporting requirements of the Exchange Act, it will make available other information as required by, and so long as necessary to permit sales of Registrable Securities pursuant to, Rule 144 or Rule 144A.

 

 

 

  

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11.           Subsequent Registration Rights.  From and after the date of this Agreement, the Company shall not, without the prior written consent of Holders beneficially owning not less than a majority of the then outstanding Registrable Securities, enter into any agreement with any holder or prospective holder of any securities of the Company that would allow such holder or prospective holder to include such securities in the Shelf Registration Statement unless, under the terms of such agreement, such holder or prospective holder may include such securities in any such Shelf Registration Statement only to the extent that the inclusion of its securities will not reduce the amount of Registrable Securities of the Holders that are included on such Shelf Registration Statement.

 

12.           Miscellaneous.

 

(a)           Stock Splits, etc.   The provisions of this Agreement shall be appropriately adjusted for any stock dividends, splits, reverse splits, combinations recapitalizations and the like occurring after the date hereof.

 

(b)           No Inconsistent Agreements.  The Company shall not enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement and shall take all commercially reasonable efforts to amend any agreements existing as of the date hereof so that such agreements shall not be inconsistent with the rights granted to the Holders in this Agreement.

 

(c)           Amendments and Waivers.  This Agreement may be amended with the consent of the Company and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company shall have obtained a written consent to such amendment, action or omission to act of the Holders of at least a majority of the Registrable Securities then outstanding, provided however, that any modification, alteration, waiver or change that has a disproportionate and adverse effect on any right of any Holder under this Agreement shall not be effective against such Holder without the prior written consent of such Holder.

 

No waiver of any terms or conditions of this Agreement shall operate as a waiver of any other breach of such terms and conditions or any other term or condition, nor shall any failure to enforce any provision hereof operate as a waiver of such provision or of any other provision hereof. No written waiver hereunder, unless it by its own terms explicitly provides to the contrary, shall be construed to effect a continuing waiver of the provisions being waived and no such waiver in any instance shall constitute a waiver in any other instance or for any other purpose or impair the right of the party against whom such waiver is claimed in all other instances or for all other purposes to require full compliance with such provision.  The failure of any party to enforce any provision of this Agreement shall not be construed as a waiver of such provision and shall not affect the right of such party thereafter to enforce each provision of this Agreement in accordance with its terms.

 

  

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(d)           Notices.  All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be made by registered or certified first-class mail, return receipt requested, telecopy, electronic transmission, courier service or personal delivery:

 

(i)             If to the Company:

 

450 Park Avenue, 27th Floor

New York, NY 10022

Telecopy: (212) 906-8559

Attention: Chief Financial Officer

 

With a copy to (which shall not constitute notice hereunder):

 

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, NY 10019-6064

Telecopy: (212) 757-3990

Attention:   Jeffery D. Marell

                     Kelley D. Parker

                     Raphael M. Russo

 

	
  

	
(ii)

	
If to any Holder, at its address as it appears in the Notice and Questionnaire of such Holder delivered to the Company or, prior to the delivery of a Notice and Questionnaire, at the Holder’s address as it appears in the records of the Company.

 

All such notices, demands and other communications shall be deemed to have been duly given when delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial courier service; five (5) Business Days after being deposited in the mail, postage prepaid, if mailed; and when receipt is acknowledged, if telecopied or electronically transmitted.  Any party may by notice given in accordance with this Section 12(d) designate another address or Person for receipt of notices hereunder.

 

(e)           Successors and Assigns: Third Party Beneficiaries.  This Agreement shall inure, as hereinafter provided, to the benefit of and be binding upon the successors and permitted assigns of each of the parties, including each Holder of any Registrable Securities, who executes a Joinder in the form attached as Annex B hereto, provided that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms of the Certificate of Designation, applicable law and any applicable agreement.  If any transferee of any Holder shall acquire Registrable Securities, in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to and benefit from all of the terms of this Agreement, and by taking and holding such Registrable Securities, such 

 

 

  

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person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement and such person shall be entitled to receive the benefits hereof.

 

(f)           Headings.  The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

 

(g)           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.

 

(h)           Jurisdiction.  Any action or proceeding against any party hereto relating in any way to this Agreement or the transactions contemplated hereby may be brought and enforced in any United States federal court or New York State Court located in the Borough of Manhattan in The City of New York, and each party, on behalf of itself and its respective successors and assigns, irrevocably consents to the jurisdiction of each such court in respect of any such action or proceeding.  Each party, on behalf of itself and its respective successors and assigns, irrevocably consents to the service of process in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, return receipt requested, to such person or entity at the address for such person or entity set forth in Section 12(d) hereof of this Agreement or such other address such person or entity shall notify the other in writing.  The foregoing shall not limit the right of any person or entity to serve process in any other manner permitted by law or to bring any action or proceeding, or to obtain execution of any judgment, in any other jurisdiction.

 

Each party, on behalf of itself and its respective successors and assigns, hereby irrevocably waives any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising under or relating to this Agreement or the transactions contemplated hereby in any court located in the Borough of Manhattan in The City of New York.  Each party, on behalf of itself and its respective successors and assigns, hereby irrevocably waives any claim that a court located in the State of New York is not a convenient forum for any such action or proceeding.

 

Each party, on behalf of itself and its respective successors and assigns, hereby irrevocably waives, to the fullest extent permitted by applicable United States federal and state law, all immunity from jurisdiction, service of process, attachment (both before and after judgment) and execution to which he might otherwise be entitled in any action or proceeding relating in any way to this Agreement or the transactions contemplated hereby in the courts of the State of New York, of the United States or of any other country or jurisdiction, and hereby waives any right he might otherwise have to raise or claim or cause to be pleaded any such immunity at or in respect of any such action or proceeding.

 

(i)           WAIVER OF JURY TRIAL.  EACH PARTY, ON BEHALF OF ITSELF AND ITS RESPECTIVE SUCCESSORS AND ASSIGNS, HEREBY IRREVOCABLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL 

 

 

  

23

  

BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BY CONTRACT, TORT OR OTHERWISE) BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(j)           Remedies.  The Company acknowledges that the obligations imposed on it in this Agreement are special, unique and of an extraordinary character, and irreparable damages, for which money damages, even if available, would be an inadequate remedy, would occur in the event that the Company does not perform the provisions of this Agreement in accordance with its specified terms or otherwise breaches such provisions.  Therefore, the Holders shall be entitled to seek an injunction, specific performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which they are entitled, at law or in equity, including without limitation money damages.

 

(k)           Severability.  If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired.

 

(l)           Rules of Construction.  Unless the context otherwise requires, references to sections or subsections refer to sections or subsections of this Agreement.  Terms defined in the singular have a comparable meaning when used in the plural, and vice versa.

 

(m)           Entire Agreement.  This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto with respect to the subject matter contained herein.  There are no restrictions, promises, representations, warranties or undertakings with respect to the subject matter contained herein, other than those set forth or referred to herein.  This Agreement supersedes all prior agreements and understandings among the parties with respect to such subject matter.

 

(n)           Further Assurances.  Each of the parties shall execute such documents and perform such further acts as may be reasonably required or desirable to carry out or to perform the provisions of this Agreement.

 

(o)           Other Agreements.  Nothing contained in this Agreement shall be deemed to be a waiver of, or release from, any obligations any party hereto may have under, or any restrictions on the transfer of Registrable Securities or other securities of the Company imposed by, any other agreement.

 

(p)           Termination.  This Agreement shall terminate when all shares that were Registrable Securities cease to be Registrable Securities, provided that 

 

  

24

  

 

the indemnification and contribution provisions of Section 8 shall survive such termination.

 

[Remainder of page intentionally left blank]

 

 

 

 

 

 

 

 

 

 

  

25

  

IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Registration Rights Agreement on the date first written above.

 

	 	 COMPANY:	 
	 	 	 
	 	
HARBINGER GROUP INC.

 

	 
	 	 	 	 
	
 

	
By: 

	/s/ Francis T. McCarron	 
	 	 	Name:  Francis T. McCarron	 
	 	 	Title:    Executive Vice President	 
	 	 	 	 

 

 

 

Signature Page to the Registration Rights Agreement

 

 

 

	 	
CF TURUL LLC

 

	 
	 	 	 	 
	
 

	
By: 

	/s/ Constantine M. Dakolias	 
	 	 	Name: Constantine M. Dakolias	 
	 	 	Title:   President	 
	 	 	 	 

 

	 	

PROVIDENCE TMT DEBT OPPORTUNITY FUND II, L.P.

 

	 
	 	 	 	 
	
 

	
By: 

	/s/ John Woods	 
	 	 	Name: John Woods	 
	 	 	Title:   CFO and Authorized Signatory	 
	 	 	 	 

 

	 	

PECM STRATEGIC FUNDING L.P.

 

	 
	 	 	 	 
	
 

	
By: 

	/s/ John Woods	 
	 	 	Name: John Woods	 
	 	 	Title:   CFO and Authorized Signatory	 
	 	 	 	 

 

	 	

WILTON RE HOLDINGS LIMITED

 

	 
	 	 	 	 
	
 

	
By: 

	/s/ Chris C. Stroup	 
	 	 	Name: Chris C. Stroup	 
	 	 	Title:   CEO	 
	 	 	 	 

 

 

 

 

Signature Page to the Registration Rights Agreement

 

 

 

Annex A

 

 

Notice and Questionnaire

 

The undersigned beneficial holder of Series A Convertible Preferred Stock (the “Series A Shares”) of Harbinger Group Inc. (the “Company”) and/or common stock, par value $0.01 per share, of the Company (including common stock issuable upon the conversion of the Series A Shares) which are Registrable Securities understands that the Company intends to file or has filed with the Securities and Exchange Commission (the “Commission”) a registration statement (the “Shelf Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities, in accordance with the terms of the registration rights agreement (the “Registration Rights Agreement”), among the Company and the Holders named therein. A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in the Registration Rights Agreement.

 

Each beneficial holder of Registrable Securities (each a “beneficial owner”) is entitled to the benefits of the Registration Rights Agreement. In order to sell, or otherwise dispose of, any Registrable Securities pursuant to the Shelf Registration Statement, a beneficial owner of Registrable Securities generally will be required to be named as a selling securityholder in the related prospectus, deliver a prospectus to purchasers of Registrable Securities and be bound by those provisions of the Registration Rights Agreement applicable to such beneficial owner (including certain indemnification provisions as described below).  Beneficial owners that do not complete this Notice and Questionnaire and deliver it to the Company as provided below will not be named as selling securityholders in the prospectus and, therefore, will not be permitted to sell any Registrable Securities pursuant to the Shelf Registration Statement.

 

Certain legal consequences arise from being named as a selling securityholder in the Shelf Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities legal counsel regarding the consequences of being named or not being named as a selling securityholder in the Shelf Registration Statement and the related prospectus.

 

NOTICE

 

The undersigned beneficial owner (the “Selling Securityholder”) of Registrable Securities hereby gives notice to the Company of its intention to sell or otherwise dispose of Registrable Securities beneficially owned by it and listed below in Item 3 (unless otherwise specified under such Item 3) pursuant to the Shelf Registration Statement. The undersigned, by signing and returning this Notice and Questionnaire, understands that it will be bound by the terms and conditions of this Notice and Questionnaire and the Registration Rights Agreement.

 

 

  

A-1

  

 

Pursuant to the Registration Rights Agreement, the undersigned has agreed to indemnify and hold harmless the Company’s directors and officers and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), from and against certain losses arising in connection with statements concerning the undersigned that are made in the Shelf Registration Statement or the related prospectus in reliance upon the information provided in this Notice and Questionnaire.

 

If the Selling Securityholder transfers all or any portion of the Registrable Securities listed in Item 3 below after the date on which such information is provided to the Company, the Selling Securityholder agrees to notify the transferee(s) at the time of the transfer of its rights and obligations under this Notice and Questionnaire and the Registration Rights Agreement.

 

QUESTIONNAIRE

 

Please respond to every item, even if your response is “none.” If you need more space for any response, please attach additional sheets of paper. Please be sure to indicate your name and the number of the item being responded to on each such additional sheet of paper, and to sign each such additional sheet of paper before attaching it to this Questionnaire. Please note that you may be asked to answer additional questions depending on your responses to the following questions.

 

If you have any questions about the contents of this Questionnaire or as to who should complete this Questionnaire, please contact the Chief Financial Officer of the Company at telephone number:  (212) 906-8555.

 

The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate and complete:

 

	
1.

	
Your Identity and Background as the Beneficial Owner of the Registrable Securities.

 

(a)           Your full legal name:

 

	
  

	
(b)

	
Your business address (including street address) (or residence if no business address), telephone number and facsimile number:

 

Address:

 

Telephone No.:

 

Fax No.:

 

 

  

A-2

  

 

	
  

	
(c)

	
Are you a broker-dealer registered pursuant to Section 15 of the Exchange Act?

 

	
  

	
 ̈

	
Yes.

 

	
  

	
 ̈

	
No.

 

	
  

	
(d)

	
If your response to Item 1(c) above is no, are you an “affiliate” of a broker-dealer registered pursuant to Section 15 of the Exchange Act?

 

	
  

	
 ̈

	
Yes.

 

	
  

	
 ̈

	
No.

 

For the purposes of this Item 1(d), an “affiliate” of a registered broker-dealer includes any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such broker-dealer, and does not include any individuals employed by such broker-dealer or its affiliates.

 

	
  

	
(e)

	
Full legal name of the person, if any, through which you hold the Registrable Securities (i.e., name of your broker or the DTC participant, if applicable, through which your Registrable Securities are held):

 

Name of Broker:

 

DTC No.:

 

Contact person:

 

Telephone No.:

 

	
2.

	
Your Relationship with the Company.

 

	
  

	
(a)

	
Have you or any of your affiliates, officers, directors or principal equity holders (owners of 5% or more of the equity securities of the undersigned) held any position or office or have you had any other material relationship with the Company (or its predecessors or affiliates) within the past three years?

 

	
  

	
 ̈

	
Yes.

 

	
  

	
 ̈

	
No.

 

 

  

A-3

  

 

	
  

	
(b)

	
If your response to Item 2(a) above is yes, please state the nature and duration of your relationship with the Company:

 

 

 

 

 

 

	
3.

	
Your Interest in the Registrable Securities.

 

	
  

	
(a)

	
State the type and amount of Registrable Securities beneficially owned by you:

 

 

 

 

 

 

	
  

	
(b)

	
Other than as set forth in your response to Item 3(a) above, do you beneficially own any other securities of the Company?

 

	
  

	
 ̈

	
Yes.

 

	
  

	
 ̈

	
No.

 

	
  

	
(c)

	
If your answer to Item 3(b) above is yes, state the type and the aggregate amount of such other securities of the Company beneficially owned by you:

 

Type:

 

Aggregate amount:

 

	
  

	
(d)

	
Did you acquire the securities listed in Item 3(a) above in the ordinary course of business?

 

	
  

	
 ̈

	
Yes.

 

	
  

	
 ̈

	
No.

 

	
  

	
(e)

	
At the time of your purchase of the securities listed in Item 3(a) above, did you have any agreements or understandings, direct or indirect, with any person to distribute the securities?

 

	
  

	
 ̈

	
Yes.

 

	
  

	
 ̈

	
No.

 

 

 

  

A-4

  

 

	
  

	
(f)

	
If your response to Item 3(e) above is yes, please describe such agreements or understandings:

 

	
4.

	
Nature of your Beneficial Ownership.

 

	
  

	
(a)

	
Check if the beneficial owner set forth in your response to Item 1(a) is any of the below:

 

	
  

	
(i)

	
A reporting company under the Exchange Act.  ̈

 

	
  

	
(ii)

	
A majority-owned subsidiary of a reporting company under the Exchange Act.  ̈

 

	
  

	
(iii)

	
A registered investment fund under the 1940 Act.  ̈

 

	
  

	
(b)

	
If the beneficial owner of the Registrable Securities set forth in your response to Item 1 (a) above is a limited partnership, state the names of the general partner(s) of such limited partnership:

 

	
  

	
(i)

	
With respect to each general partner listed in Item 4(b) above who is not a natural person and is not publicly-held, name each shareholder (or holder of partnership interests, if applicable) of such general partner. If any of these named shareholders are not natural persons or publicly-held entities, please provide the same information. This process should be repeated until you reach natural persons or a publicly-held entity.

 

	
  

	
(c)

	
Name your controlling shareholder(s) (the “Controlling Entity”). If the Controlling Entity is not a natural person and is not a publicly-held entity, name each shareholder of such Controlling Entity. If any of these named shareholders are not natural persons or publicly-held entities, please provide the same information. This process should be repeated until you reach natural persons or a publicly-held entity.

 

	
  

	
(i)

	
(A)   Full legal name of Controlling Entity(ies) or natural person(s) who has/have sole or shared voting or dispositive power over the Registrable Securities:

 

(B)   Business address (including street address) (or residence if no business address), telephone number and facsimile number of such person(s):

 

    Address:

 

    Telephone No.:

 

    Fax No.:

 

 

  

A-5

  

             (C)    Name of shareholders:

 

	
  

	
(ii)

	
(A)   Full legal name of Controlling Entity(ies):

 

(B)     Business address (including street address) (or residence if no business address), telephone number and facsimile number of such person(s):

 

          Address:

 

          Telephone No.:

 

          Fax No.:

 

	
  

	
(iii)

	
Name of shareholders:

 

	
5.

	
Plan of Distribution.

 

Except as set forth below, the undersigned Selling Securityholder intends to distribute the Registrable Securities listed above in Item (3) only as follows (if at all):  All or any portion of such Registrable Securities may be sold from time to time directly by the undersigned Selling Securityholder or, alternatively, through one or more underwriters, broker-dealers or agents.  Such Registrable Securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices.  Such sales may be effected in transactions (which may involve crosses or block transactions) (i) on any national securities exchange or quotation service on which the Registrable Securities may be listed or quoted at the time of sale, (ii) in the over-the-counter market, (iii) in transactions otherwise than on such exchanges or services or in the over-the-counter market, (iv) through the writing of options, whether such options are listed on an options exchange or otherwise, (v) ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers, (vi) block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction, (vii) purchases by a broker-dealer as principal and resale by the broker-dealer for its account, (viii) an exchange distribution in accordance with the rules of the applicable exchange, (ix) privately negotiated transactions, (x) short sales, (xi) sales pursuant to Rule 144, (xii) with broker-dealers who may agree with the selling securityholder to sell a specified number of shares at a stipulated price per share, (xiii) in an underwritten offering, (xiv) a combination of any such methods of sale and (xv) any other method permitted pursuant to applicable law.  In connection with sales of the Registrable Securities or otherwise, the Selling Securityholder may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the Registrable Securities in the course of hedging the positions they assume.  The Selling Securityholder may also sell Registrable Securities short and deliver Registrable Securities to close out such short positions, or loan or pledge Registrable Securities to broker-dealers that in turn may sell such Registrable Securities.

 

 

 

  

A-6

  

 

State any exceptions here:

 

Note: In no event will such method(s) of distribution take the form of an underwritten offering of the Registrable Securities except in accordance with the terms of the Registration Rights Agreement.

 

The undersigned acknowledges its obligation to comply with the provisions of the Exchange Act and the rules thereunder relating to stock manipulation, particularly Regulation M thereunder (or any successor rules or regulations), in connection with any offering of Registrable Securities pursuant to the Registration Rights Agreement. The undersigned agrees that neither it nor any person acting on its behalf will engage in any transaction in violation of such provisions.

 

The undersigned beneficial owner and selling securityholder hereby acknowledges its obligations under the Registration Rights Agreement to indemnify and hold harmless certain persons as set forth therein. Pursuant to the Registration Rights Agreement, the Company has agreed under certain circumstances to indemnify the undersigned beneficial owner and selling securityholder against certain liabilities.

 

In accordance with the undersigned’s obligation under the Registration Rights Agreement to provide such information as may be required by law for inclusion in the Shelf Registration Statement, the undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Shelf Registration Statement remains effective.

 

All notices to the beneficial owner hereunder and pursuant to the Registration Rights Agreement shall be made in writing to the undersigned at the address set forth in Item 1(b) of this Notice and Questionnaire.

 

By signing below, the undersigned acknowledges that it is the beneficial owner of the Registrable Securities set forth herein, represents that the information provided herein is accurate, consents to the disclosure of the information contained in this Notice and Questionnaire and the inclusion of such information in the Shelf Registration Statement and the related prospectus. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Shelf Registration Statement and the related prospectus.

 

Once this Notice and Questionnaire is executed by the undersigned beneficial owner and received by the Company, the terms of this Notice and Questionnaire, and the representations and warranties contained herein, shall be binding on, shall inure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives and assigns of the Company and the undersigned beneficial owner. This Notice and Questionnaire shall be governed, adjudicated and enforced in accordance with terms of the Registration Rights Agreement.

 

 

 

 

  

A-7

  

 

IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

 

	  	  	
NAME OF BENEFICIAL OWNER:

	 	 	 
	  	  	  
	  	  	  
	  	  	
(Please Print)

	  	  	  
	  	  	
Signature:

	  
	  	  	  	  
	  	  	
Date:

	  

 

 

PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO HARBINGER GROUP INC. AS FOLLOWS: 

 

Harbinger Group Inc.

450 Park Avenue, 27th Floor

New York, NY 10022

Telecopy: 212-906-8559

Attention:  Chief Financial Officer

 

This Notice and Questionnaire must be returned in the manner and within the time period set forth in the Registration Rights Agreement in order to include Registrable Securities in such Shelf Registration Statement.

 

 

 

  

A-8

  

Annex B

 

 

FORM OF JOINDER

 

THIS JOINDER is made on the                           day of

 

BETWEEN

 

 (1)            [  ] of [  ] (the “New Party”);

 

AND

 

 (2) THE PERSONS WHOSE NAMES ARE SET OUT IN ANNEX A HERETO

 

(collectively, the “Current Parties” and individually, a “Current Party”);

 

AND

 

 (3) HARBINGER GROUP INC., (the “Company”).

 

WHEREAS a Registration Rights Agreement was entered into on May [ ], 2011 by and among, inter alia, certain of the Current Parties and the Company (the “Registration Rights Agreement”), a copy of which the New Party hereby confirms that it has been supplied with and acknowledges the terms therein.

 

NOW IT IS AGREED as follows:

 

1. In this Joinder, unless the context otherwise requires, words and expressions respectively defined or construed in the Registration Rights Agreement shall have the same meanings when used or referred to herein.

 

2. The New Party hereby accedes to and ratifies the Registration Rights Agreement and covenants and agrees with the Current Parties and the Company to be bound by the terms of the Registration Rights Agreement as a “Holder” and to duly and punctually perform and discharge all liabilities and obligations whatsoever from time to time to be performed or discharged by it under or by virtue of the Registration Rights Agreement in all respects as if named as a party therein.

 

3. The Company covenants and agrees that the New Party shall be entitled to all the benefits of the terms and conditions of the Registration Rights Agreement to the intent and effect that the New Party shall be deemed, with effect from the date on which the New Party executes this Joinder, to be a party to the Registration Rights Agreement as a “Holder.”

 

4. This Joinder shall hereafter be read and construed in conjunction and as one document with the Registration Rights Agreement and references in the Registration

 

 

 

 

B-1

 

 Rights Agreement to “the Agreement” or “this Agreement,” and references in all other instruments and documents executed thereunder or pursuant thereto to the Registration Rights Agreement, shall for all purposes refer to the Registration Rights Agreement incorporating and as supplemented by this Joinder.

 

5. THIS JOINDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.

 

6.  Any action or proceeding against any party hereto relating in any way to this Joinder or the transactions contemplated hereby may be brought and enforced in any United States federal court or New York State Court located in the Borough of Manhattan in The City of New York, and each party, on behalf of itself and its respective successors and assigns, irrevocably consents to the jurisdiction of each such court in respect of any such action or proceeding.  Each party, on behalf of itself and its respective successors and assigns, irrevocably consents to the service of process in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, return receipt requested, to such person or entity at the address for such person or entity set forth in Section 120 of the Registration Rights Agreement or such other address such person or entity shall notify the other in writing.  The foregoing shall not limit the right of any person or entity to serve process in any other manner permitted by law or to bring any action or proceeding, or to obtain execution of any judgment, in any other jurisdiction.

 

Each party, on behalf of itself and its respective successors and assigns, hereby irrevocably waives any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising under or relating to this Joinder or the transactions contemplated hereby in any court located in the Borough of Manhattan in The City of New York.  Each party, on behalf of itself and its respective successors and assigns, hereby irrevocably waives any claim that a court located in the State of New York is not a convenient forum for any such action or proceeding.

 

Each party, on behalf of itself and its respective successors and assigns, hereby irrevocably waives, to the fullest extent permitted by applicable United States federal and state law, all immunity from jurisdiction, service of process, attachment (both before and after judgment) and execution to which he might otherwise be entitled in any action or proceeding relating in any way to this Joinder or the transactions contemplated hereby in the courts of the State of New York, of the United States or of any other country or jurisdiction, and hereby waives any right he might otherwise have to raise or claim or cause to be pleaded any such immunity at or in respect of any such action or proceeding.

 

7. Section 12(i) of the Registration Rights Agreement shall apply to this Joinder and shall be incorporated herein by reference.

 

8. The address of the undersigned for purposes of all notices under the Registration Rights Agreement is: [               ].

 

 

 

  

B-2

  

 

 

	 	
[NEW PARTY]

 

 

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Name:	 
	 	 	Title: 	 
	 	 	 	 

 

 

 

 

 

 

 

B-3Exhibit 10.1

 

Exhibit 10.1

 

 

PLUG POWER INC.

 

2011 STOCK OPTION AND INCENTIVE PLAN

 

 

1.             GENERAL
PURPOSE OF THE PLAN; DEFINITIONS

 

The
name of the plan is the Plug Power Inc. 2011 Stock Option and Incentive Plan
(the “Plan”).  The purpose of the Plan is to encourage and enable the officers,
employees, Non-Employee Directors and other key persons (including consultants
and prospective employees) of Plug Power Inc. (the “Company”) and its
Subsidiaries upon whose judgment, initiative and efforts the Company largely
depends for the successful conduct of its business to acquire a proprietary
interest in the Company.  It is anticipated that providing such persons with a
direct stake in the Company’s welfare will assure a closer identification of
their interests with those of the Company and its stockholders, thereby
stimulating their efforts on the Company’s behalf and strengthening their
desire to remain with the Company.

 

The
following terms shall be defined as set forth below:

 

“Act”
means the Securities Act of 1933, as amended, and the rules and regulations
thereunder.

 

“Administrator”
means either the Board or the compensation committee of the Board or a similar
committee performing the functions of the compensation committee and which is
comprised of not less than two Non‐Employee Directors who are
independent.

 

“Award”
or “Awards,” except where referring to a particular category of grant under the
Plan, shall include Incentive Stock Options, Non-Qualified Stock Options, Stock
Appreciation Rights, Deferred Stock Awards, Restricted Stock Awards,
Unrestricted Stock Awards, Cash-Based Awards and Performance Share Awards.

 

“Award
Agreement” means a written or electronic agreement setting forth the terms and
provisions applicable to an Award granted under the Plan.  Each Award Agreement
is subject to the terms and conditions of the Plan.

 

“Board”
means the Board of Directors of the Company.

 

“Cash-Based
Award” means an Award entitling the recipient to receive a cash-denominated
payment.

 

“Code”
means the Internal Revenue Code of 1986, as amended, and any successor Code,
and related rules, regulations and interpretations.

 

“Covered
Employee” means an employee who is a “Covered Employee” within the meaning of
Section 162(m) of the Code.

 

“Deferred
Stock Award” means an Award of phantom stock units to a grantee.

 

“Effective
Date” means the date on which the Plan is approved by stockholders as set forth
in Section 20.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder.

 

“Fair
Market Value” of the Stock on any given date means the fair market value of the
Stock determined in good faith by the Administrator; provided, however, that if
the Stock is admitted to quotation on the National Association of Securities
Dealers Automated Quotation System (“NASDAQ”), NASDAQ Capital Market or another
national securities exchange, the “Fair Market Value” of the Stock shall be the
closing price of the Stock on such exchange on such date.  If there are no
market quotations for such date, the determination shall be made by reference
to the last date preceding such date for which there are market quotations.

 

 

 

 

“Incentive
Stock Option” means any Stock Option designated and qualified as an “incentive
stock option” as defined in Section 422 of the Code.

 

“Non-Employee
Director” means a member of the Board who is not also an employee of the
Company or any Subsidiary.

 

“Non-Qualified
Stock Option” means any Stock Option that is not an Incentive Stock Option.

 

“Option”
or “Stock Option” means any option to purchase shares of Stock granted pursuant
to Section 5.

 

“Performance-Based
Award” means any Restricted Stock Award, Deferred Stock Award, Performance
Share Award or Cash-Based Award granted to a Covered Employee that is intended
to qualify as “performance-based compensation” under Section 162(m) of the Code
and the regulations promulgated thereunder.

 

“Performance
Criteria” means the criteria that the Administrator selects for purposes of
establishing the Performance Goal or Performance Goals for an individual for a
Performance Cycle.  The Performance Criteria (which shall be applicable to the
organizational level specified by the Administrator, including, but not limited
to, the Company or a unit, division, group, or Subsidiary of the Company) that
will be used to establish Performance Goals are limited to the following:
earnings before interest, taxes, depreciation and amortization, net income
(loss) (either before or after interest, taxes, depreciation and/or
amortization), changes in the market price of the Stock, economic value-added,
sales or revenue, acquisitions or strategic transactions, achievement of
project development milestones, operating income (loss), cash flow (including,
but not limited to, operating cash flow and free cash flow), return on capital,
assets, equity, or investment, total stockholder returns, return on sales,
gross or net profit levels, productivity, expense, margins, operating
efficiency, capital raising transactions, debt transactions, working capital,
earnings (loss) per share of Stock, sales or market shares and number of
customers, any of which may be measured either in absolute terms or as compared
to any incremental increase or as compared to results of a peer group. 

 

“Performance
Cycle” means a calendar year period over which the attainment of one or more
Performance Criteria will be measured for the purpose of determining a
grantee’s right to and the payment of a Restricted Stock Award, Deferred Stock
Award, Performance Share Award or Cash-Based Award.

 

“Performance
Goals” means, for a Performance Cycle, the specific goals established in
writing by the Administrator for a Performance Cycle based upon the Performance
Criteria.  

 

“Performance
Share Award” means an Award entitling the recipient to acquire shares of Stock
upon the attainment of specified Performance Goals.

 

“Restricted
Stock Award” means an Award entitling the recipient to acquire, at such
purchase price (which may be zero) as determined by the Administrator, shares
of Stock subject to such restrictions and conditions as the Administrator may
determine at the time of grant.

 

“Sale
Event” shall mean (i) the sale of all or substantially all of the assets of the
Company on a consolidated basis to an unrelated person or entity, (ii) a
merger, reorganization or consolidation in which the outstanding shares of
Stock are converted into or exchanged for securities of the successor entity
and the holders of the Company’s outstanding voting power immediately prior to
such transaction do not own a majority of the outstanding voting power of the
successor entity immediately upon completion of such transaction, or (iii) the
sale of all of the Stock of the Company to an unrelated person or entity.

 

“Sale
Price” means the value as determined by the Administrator of the consideration
payable, or otherwise to be received by stockholders, per share of Stock
pursuant to a Sale Event.

 

“Section
409A” means Section 409A of the Code and the regulations and other guidance
promulgated thereunder.

 

“Stock”
means the Common Stock, par value $0.01 per share, of the Company, subject to
adjustments pursuant to Section 3.

 

“Stock
Appreciation Right” means an Award entitling the recipient to receive shares of
Stock having a value equal to the excess of the Fair Market Value of the Stock
on the date of exercise over the exercise price of the Stock Appreciation Right
multiplied by the number of shares of Stock with respect to which the Stock
Appreciation Right shall have been exercised.

 

“Subsidiary”
means any corporation or other entity (other than the Company) in which the
Company has at least a 50 percent interest, either directly or indirectly.

 

 

1

 

“Ten
Percent Owner” means an employee who owns or is deemed to own (by reason of the
attribution rules of Section 424(d) of the Code) more than 10 percent of the
combined voting power of all classes of stock of the Company or any parent or
subsidiary corporation. 

 

“Unrestricted
Stock Award” means an Award of shares of Stock free of any restrictions.

 

2.             ADMINISTRATION OF PLAN; ADMINISTRATOR
AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS

 

(a)           Administration
of Plan.  The Plan shall be administered by the Administrator.

 

(b)           Powers
of Administrator.  The Administrator shall have the power and authority to
grant Awards consistent with the terms of the Plan, including the power and
authority:

 

(i)            to select the individuals to whom Awards
may from time to time be granted;

 

(ii)           to determine the time or times of
grant, and the extent, if any, of Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock Awards, Deferred Stock
Awards, Unrestricted Stock Awards, Cash-Based Awards and Performance Share
Awards, or any combination of the foregoing, granted to any one or more
grantees;

 

(iii)          to determine the number of shares of
Stock to be covered by any Award;

 

(iv)          to determine and modify from time to
time the terms and conditions, including restrictions, not inconsistent with
the terms of the Plan, of any Award, which terms and conditions may differ
among individual Awards and grantees, and to approve the form of written
instruments evidencing the Awards;

 

(v)           to accelerate at any time the
exercisability or vesting of all or any portion of any Award, including but not
limited to termination of employment or a Sale Event;

 

(vi)          subject to the provisions of
Section 5(c), to extend at any time the period in which Stock Options may
be exercised; and

 

(viii)        at any time to adopt, alter and repeal
such rules, guidelines and practices for administration of the Plan and for its
own acts and proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award (including related written instruments);
to make all determinations it deems advisable for the administration of the
Plan; to decide all disputes arising in connection with the Plan; and to
otherwise supervise the administration of the Plan.

 

All
decisions and interpretations of the Administrator shall be binding on all
persons, including the Company and Plan grantees.

 

(c)           Delegation
of Authority to Grant Options.  Subject to applicable law, the Administrator,
in its discretion, may delegate to the Chief Executive Officer of the Company
all or part of the Administrator’s authority and duties with respect to the
granting of Options, to individuals who are (i) not subject to the reporting
and other provisions of Section 16 of the Exchange Act and (ii) not
Covered Employees.  Any such delegation by the Administrator shall include a
limitation as to the amount of Options that may be granted during the period of
the delegation and shall contain guidelines as to the determination of the
exercise price and the vesting criteria.  The Administrator may revoke or amend
the terms of a delegation at any time but such action shall not invalidate any
prior actions of the Administrator’s delegate or delegates that were consistent
with the terms of the Plan.

 

(d)           Award
Agreement.  Awards under the Plan shall be evidenced by Award Agreements that
set forth the terms, conditions and limitations for each Award which may
include, without limitation, the term of an Award and the provisions applicable
in the event employment or service terminates.

 

(e)           Indemnification. 
Neither the Board nor the Administrator, nor any member of either or any
delegate thereof, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with the Plan,
and the members of the Board and the Administrator (and any delegate thereof)
shall be entitled in all cases to indemnification and reimbursement by the
Company in respect of any claim, loss, damage or expense (including, without
limitation, reasonable attorneys’ fees) arising or resulting therefrom to the
fullest extent permitted by law and/or under the Company’s articles or bylaws
or any directors’ and officers’ liability insurance coverage which may be in
effect from time to time and/or any indemnification agreement between such
individual and the Company.

 

2

 

 

(f)            Foreign
Award Recipients.  Notwithstanding any provision of the Plan to the contrary,
in order to comply with the laws in other countries in which the Company and
its Subsidiaries operate or have employees or other individuals eligible for
Awards, the Administrator, in its sole discretion, shall have the power and
authority to: (i) determine which Subsidiaries shall be covered by the Plan;
(ii) determine which individuals outside the United States are eligible to
participate in the Plan; (iii) modify the terms and conditions of any Award
granted to individuals outside the United States to comply with applicable
foreign laws; (iv) establish subplans and modify exercise procedures and other
terms and procedures, to the extent the Administrator determines such actions
to be necessary or advisable (and such subplans and/or modifications shall be
attached to this Plan as appendices); provided, however, that no such subplans
and/or modifications shall increase the share limitations contained in Section
3(a) hereof; and (v) take any action, before or after an Award is made, that
the Administrator determines to be necessary or advisable to obtain approval or
comply with any local governmental regulatory exemptions or approvals. 
Notwithstanding the foregoing, the Administrator may not take any actions
hereunder, and no Awards shall be granted, that would violate the Exchange Act
or any other applicable United States securities law, the Code, or any other
applicable United States governing statute or law.

 

3.             STOCK ISSUABLE
UNDER THE PLAN; MERGERS; SUBSTITUTION

 

(a)           Stock
Issuable.  The maximum number of shares of Stock reserved and available for
issuance under the Plan shall be equal to the
sum of (i) 10,000,000, plus (ii) the number of shares of Stock underlying any
grants pursuant to this Plan or the Plug Power Inc. 1999 Stock Option and
Incentive Plan that are forfeited, canceled, repurchased or are terminated
(other than by exercise).  Shares tendered or held back upon exercise
of an Option or settlement of an Award to cover the exercise price or tax
withholding shall not be available for future issuance under the Plan.  In
addition, upon exercise of Stock Appreciation Rights, the gross number of
shares exercised shall be deducted from the total number of shares remaining
available for issuance under the Plan.  Subject to such overall limitations,
shares of Stock may be issued up to such maximum number pursuant to any type or
types of Award; provided, however, that Stock Options or Stock Appreciation
Rights with respect to no more than 2,000,000
shares of Stock may be granted to any one individual grantee during any one
calendar year period and no more than 10,000,000
shares of Stock shall be issued in the form of Incentive Stock Options.  The
shares available for issuance under the Plan may be authorized but unissued
shares of Stock or shares of Stock reacquired by the Company.

 

(b)          
Effect of Awards.  The grant of any full value Award (i.e., an Award other
than an Option or a Stock Appreciation Right) shall be deemed, solely for
purposes of determining the number of shares of Stock available for issuance
under Section 3(a) and not for any purpose outside of the Plan, as an Award of
1.5 shares of Stock for each such share of
Stock actually subject to the Award.  The grant of an Option or a Stock
Appreciation Right shall be deemed, for purposes of determining the number of
shares of Stock available for issuance under Section 3(a), as an Award for one
share of Stock for each such share actually subject to the Award.

 

(c)           Changes
in Stock.  Subject to Section 3(d) hereof, if, as a result of any
reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar change in the Company’s capital
stock, the outstanding shares of Stock are increased or decreased or are
exchanged for a different number or kind of shares or other securities of the
Company, or additional shares or new or different shares or other securities of
the Company or other non-cash assets are distributed with respect to such
shares of Stock or other securities, or, if, as a result of any merger or
consolidation, sale of all or substantially all of the assets of the Company,
the outstanding shares of Stock are converted into or exchanged for securities
of the Company or any successor entity (or a parent or subsidiary thereof), the
Administrator shall make an appropriate or proportionate adjustment in (i) the
maximum number of shares reserved for issuance under the Plan, including the
maximum number of shares that may be issued in the form of Incentive Stock
Options, (ii) the number of Stock Options or Stock Appreciation Rights that can
be granted to any one individual grantee and the maximum number of shares that
may be granted under a Performance-Based Award, (iii) the number and kind of
shares or other securities subject to any then outstanding Awards under the
Plan, (iv) the repurchase price, if any, per share subject to each outstanding
Restricted Stock Award, and (v) the price for each share subject to any
then outstanding Stock Options and Stock Appreciation Rights under the Plan,
without changing the aggregate exercise price (i.e., the exercise price
multiplied by the number of Stock Options and Stock Appreciation Rights) as to
which such Stock Options and Stock Appreciation Rights remain exercisable.  The
Administrator shall also make equitable or proportionate adjustments in the
number of shares subject to outstanding Awards and the exercise price and the
terms of outstanding Awards to take into consideration cash dividends paid
other than in the ordinary course or any other extraordinary corporate event. 
The adjustment by the Administrator shall be final, binding and conclusive.  No
fractional shares of Stock shall be issued under the Plan resulting from any
such adjustment, but the Administrator in its discretion may make a cash
payment in lieu of fractional shares.

 

3

 

 

(d)           Mergers
and Other Transactions.  Except as the Administrator may otherwise specify with
respect to particular Awards in the relevant Award documentation, in the case
of and subject to the consummation of a Sale Event, all Options and Stock
Appreciation Rights that are not exercisable immediately prior to the effective
time of the Sale Event shall become fully exercisable as of the effective time
of the Sale Event, all other Awards with time-based vesting, conditions or
restrictions shall become fully vested and nonforfeitable as of the effective
time of the Sale Event and all Awards with conditions and restrictions relating
to the attainment of performance goals may become vested and nonforfeitable in
connection with a Sale Event in the Administrator’s discretion, unless, in any
case, the parties to the Sale Event agree that Awards will be assumed or
continued by the successor entity.  Upon the effective time of the Sale Event, 
the Plan and all outstanding Awards granted hereunder shall terminate, unless
provision is made in connection with the Sale Event in the sole discretion of
the parties thereto for the assumption or continuation of Awards theretofore
granted by the successor entity, or the substitution of such Awards with new
Awards of the successor entity or parent thereof, with appropriate adjustment
as to the number and kind of shares and, if appropriate, the per share exercise
prices, as such parties shall agree (after taking into account any acceleration
hereunder).   In the event of such termination, (i) the Company shall have the
option (in its sole discretion) to make or provide for a cash payment to the
grantees holding Options and Stock Appreciation Rights, in exchange for the
cancellation thereof, in an amount equal to the difference between (A) the Sale
Price multiplied by the number of shares of Stock subject to outstanding
Options and Stock Appreciation Rights (to the extent then exercisable (after
taking into account any acceleration hereunder) at prices not in excess of the
Sale Price) and (B) the aggregate exercise price of all such outstanding
Options and Stock Appreciation Rights; or (ii) each grantee shall be permitted,
within a specified period of time prior to the consummation of the Sale Event
as determined by the Administrator, to exercise all outstanding Options and
Stock Appreciation Rights held by such grantee.

 

(e)           Substitute
Awards.  The Administrator may grant Awards under the Plan in substitution for
stock and stock based awards held by employees, directors or other key persons
of another corporation in connection with the merger or consolidation of the
employing corporation with the Company or a Subsidiary or the acquisition by
the Company or a Subsidiary of property or stock of the employing corporation. 
The Administrator may direct that the substitute awards be granted on such
terms and conditions as the Administrator considers appropriate in the
circumstances.  Any substitute Awards granted under the Plan shall not count
against the share limitation set forth in Section 3(a).

 

4.             ELIGIBILITY

 

Grantees
under the Plan will be such full or part-time officers and other employees,
Non-Employee Directors and key persons (including consultants and prospective
employees) of the Company and its Subsidiaries as are selected from time to
time by the Administrator in its sole discretion.

 

5.             STOCK OPTIONS

 

(a)           Grants
of Stock Options.  Any Stock Option granted under the Plan shall be in such
form as the Administrator may from time to time approve.

 

Stock
Options granted under the Plan may be either Incentive Stock Options or
Non-Qualified Stock Options.  Incentive Stock Options may be granted only to
employees of the Company or any Subsidiary that is a “subsidiary corporation”
within the meaning of Section 424(f) of the Code.  To the extent that any
Option does not qualify as an Incentive Stock Option, it shall be deemed a
Non-Qualified Stock Option.

 

The
Administrator in its discretion may grant Stock Options to eligible employees
and key persons of the Company or any Subsidiary.  Stock Options granted
pursuant to this Section 5(a) shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Administrator shall deem
desirable.  If the Administrator so determines, Stock Options may be granted in
lieu of cash compensation at the optionee’s election, subject to such terms and
conditions as the Administrator may establish.

 

(b)           Exercise
Price.  The exercise price per share for the Stock covered by a Stock Option
granted pursuant to this Section 5(a) shall be determined by the
Administrator at the time of grant but shall not be less than 100 percent of
the Fair Market Value on the date of grant.  In the case of an Incentive Stock
Option that is granted to a Ten Percent Owner, the option price of such
Incentive Stock Option shall be not less than 110 percent of the Fair Market
Value on the grant date.

 

4

 

 

(c)           Option
Term.  The term of each Stock Option shall be fixed by the Administrator, but
no Stock Option shall be exercisable more than ten years after the date the
Stock Option is granted.  In the case of an Incentive Stock Option that is
granted to a Ten Percent Owner, the term of such Stock Option shall be no more
than five years from the date of grant.

 

(d)           Exercisability;
Rights of a Stockholder.  Stock Options shall become exercisable at such time
or times, whether or not in installments, as shall be determined by the
Administrator at or after the grant date.  The Administrator may at any time
accelerate the exercisability of all or any portion of any Stock Option.  An
optionee shall have the rights of a stockholder only as to shares acquired upon
the exercise of a Stock Option and not as to unexercised Stock Options.

 

(e)           Method
of Exercise.  Stock Options may be exercised in whole or in part, by giving
written or electronic notice of exercise to the Company, specifying the number
of shares to be purchased.  Payment of the purchase price may be made by one or
more of the following methods to the extent provided in the Option Award
Agreement:

(i)            In cash, by certified or bank check or
other instrument acceptable to the Administrator;

 

(ii)           Through the delivery (or attestation to
the ownership) of shares of Stock that have been purchased by the optionee on
the open market or that have been beneficially owned by the optionee for at
least six months and are not then subject to restrictions under any Company
plan.  Such surrendered shares shall be valued at Fair Market Value on the
exercise date; or

 

(iii)          By the optionee delivering to the
Company a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company cash or a check
payable and acceptable to the Company for the purchase price; provided that in
the event the optionee chooses to pay the purchase price as so provided, the
optionee and the broker shall comply with such procedures and enter into such
agreements of indemnity and other agreements as the Administrator shall
prescribe as a condition of such payment procedure.

 

Payment instruments will be
received subject to collection.  The transfer to the optionee on the records of
the Company or of the transfer agent of the shares of Stock to be purchased
pursuant to the exercise of a Stock Option will be contingent upon receipt from
the optionee (or a purchaser acting in his stead in accordance with the
provisions of the Stock Option) by the Company of the full purchase price for
such shares and the fulfillment of any other requirements contained in the
Option Award Agreement or applicable provisions of laws (including the
satisfaction of any withholding taxes that the Company is obligated to withhold
with respect to the optionee).  In the event an optionee chooses to pay the
purchase price by previously-owned shares of Stock through the attestation
method, the number of shares of Stock transferred to the optionee upon the
exercise of the Stock Option shall be net of the number of attested shares.  In
the event that the Company establishes, for itself or using the services of a
third party, an automated system for the exercise of Stock Options, such as a
system using an internet website or interactive voice response, then the
paperless exercise of Stock Options may be permitted through the use of such an
automated system.

 

(f)            Annual
Limit on Incentive Stock Options.  To the extent required for “incentive stock
option” treatment under Section 422 of the Code, the aggregate Fair Market
Value (determined as of the time of grant) of the shares of Stock with respect
to which Incentive Stock Options granted under this Plan and any other plan of
the Company or its parent and subsidiary corporations become exercisable for
the first time by an optionee during any calendar year shall not exceed
$100,000.  To the extent that any Stock Option exceeds this limit, it shall
constitute a Non-Qualified Stock Option.

 

6.             STOCK
APPRECIATION RIGHTS

 

(a)           Exercise
Price of Stock Appreciation Rights.  The exercise price of a Stock Appreciation
Right shall not be less than 100 percent of the Fair Market Value of the Stock
on the date of grant.

 

(b)           Grant
and Exercise of Stock Appreciation Rights.  Stock Appreciation Rights may be
granted by the Administrator independently of any Stock Option granted pursuant
to Section 5 of the Plan.

 

(c)           Terms
and Conditions of Stock Appreciation Rights.  Stock Appreciation Rights shall
be subject to such terms and conditions as shall be determined from time to
time by the Administrator.  The term of a Stock Appreciation Right may not
exceed ten years.

 

7.             RESTRICTED STOCK
AWARDS

 

(a)           Nature
of Restricted Stock Awards.  The Administrator shall determine the restrictions
and conditions applicable to each Restricted Stock Award at the time of grant. 
Conditions may be based on continuing employment (or other service relationship)
and/or achievement of pre-established performance goals and objectives.  The
grant of a Restricted Stock Award is contingent on the grantee executing the
Restricted Stock Award Agreement.  The terms and conditions of each such Award
Agreement shall be determined by the Administrator, and such terms and
conditions may differ among individual Awards and grantees.

 

5

 

 

(b)           Rights
as a Stockholder.  Upon execution of the Restricted Stock Award Agreement and
payment of any applicable purchase price, a grantee shall have the rights of a
stockholder with respect to the voting of the Restricted Stock, subject to such
conditions contained in the Restricted Stock Award Agreement.  Unless the
Administrator shall otherwise determine, (i) uncertificated Restricted Stock
shall be accompanied by a notation on the records of the Company or the
transfer agent to the effect that they are subject to forfeiture until such
Restricted Stock are vested as provided in Section 7(d) below, and (ii)
certificated Restricted Stock shall remain in the possession of the Company
until such Restricted Stock is vested as provided in Section 7(d) below,
and the grantee shall be required, as a condition of the grant, to deliver to
the Company such instruments of transfer as the Administrator may prescribe.

 

(c)           Restrictions. 
Restricted Stock may not be sold, assigned, transferred, pledged or otherwise
encumbered or disposed of except as specifically provided herein or in the
Restricted Stock Award Agreement.  Except as may otherwise be provided by the
Administrator either in the Award Agreement or, subject to Section 17 below, in
writing after the Award Agreement is issued if a grantee’s employment (or other
service relationship) with the Company and its Subsidiaries terminates for any
reason, any Restricted Stock that has not vested at the time of termination
shall automatically and without any requirement of notice to such grantee from
or other action by or on behalf of, the Company be deemed to have been
reacquired by the Company at its original purchase price (if any) from such
grantee or such grantee’s legal representative simultaneously with such
termination of employment (or other service relationship), and thereafter shall
cease to represent any ownership of the Company by the grantee or rights of the
grantee as a stockholder.  Following such deemed reacquisition of unvested
Restricted Stock that are represented by physical certificates, a grantee shall
surrender such certificates to the Company upon request without consideration.

 

(d)           Vesting
of Restricted Stock.  The Administrator at the time of grant shall specify the
date or dates and/or the attainment of pre-established performance goals,
objectives and other conditions on which the non-transferability of the
Restricted Stock and the Company’s right of repurchase or forfeiture shall
lapse.  Notwithstanding the foregoing, in the event that any such Restricted
Stock granted to employees shall have a performance-based goal, the restriction
period with respect to such shares shall not be less than one year, and in the
event any such Restricted Stock granted to employees shall have a time-based
restriction, the total restriction period with respect to such shares shall not
be less than three years; provided, however, that Restricted Stock with a
time-based restriction may become vested incrementally over such three-year
period.  Subsequent to such date or dates and/or the attainment of such
pre-established performance goals, objectives and other conditions, the shares
on which all restrictions have lapsed shall no longer be Restricted Stock and
shall be deemed “vested.”  Except as may otherwise be provided by the
Administrator either in the Award Agreement or, subject to Section 17
below, in writing after the Award Agreement is issued, a grantee’s rights in
any shares of Restricted Stock that have not vested shall automatically
terminate upon the grantee’s termination of employment (or other service
relationship) with the Company and its Subsidiaries and such shares shall be
subject to the provisions of Section 7(c) above.

 

8.             DEFERRED STOCK
AWARDS

 

(a)           Nature
of Deferred Stock Awards.   The Administrator shall determine the restrictions
and conditions applicable to each Deferred Stock Award at the time of grant. 
Conditions may be based on continuing employment (or other service
relationship) and/or achievement of pre-established performance goals and
objectives.  The grant of a Deferred Stock Award is contingent on the grantee
executing the Deferred Stock Award Agreement.  The terms and conditions of each
such Award Agreement shall be determined by the Administrator, and such terms
and conditions may differ among individual Awards and grantees. 
Notwithstanding the foregoing, in the event that any such Deferred Stock Award
granted to employees shall have a performance-based goal, the restriction
period with respect to such Award shall not be less than one year, and in the
event any such Deferred Stock Award granted to employees shall have a
time-based restriction, the total restriction period with respect to such Award
shall not be less than three years; provided, however, that any Deferred Stock
Award with a time-based restriction may become vested incrementally over such
three-year period.  At the end of the deferral period, the Deferred Stock
Award, to the extent vested, shall be settled in the form of shares of Stock. 
To the extent that a Deferred Stock Award is subject to Section 409A, it may
contain such additional terms and conditions as the Administrator shall
determine in its sole discretion in order for such Award to comply with the
requirements of Section 409A.

 

(b)           Election
to Receive Deferred Stock Awards in Lieu of Compensation.  The Administrator
may, in its sole discretion, permit a grantee to elect to receive a portion of
future cash compensation otherwise due to such grantee in the form of a
Deferred Stock Award.  Any such election shall be made in writing and shall be
delivered to the Company no later than the date specified by the Administrator
and in accordance with Section 409A and such other rules and procedures
established by the Administrator.  Any such future cash compensation that the
grantee elects to defer shall be converted to a fixed number of phantom stock
units based on the Fair Market Value of Stock on the date the compensation
would otherwise have been paid to the grantee if such payment had not been
deferred as provided herein.  The Administrator shall have the sole right to
determine whether and under what circumstances to permit such elections and to
impose such limitations and other terms and conditions thereon as the
Administrator deems appropriate.  

 

6

 

 

(c)           Rights
as a Stockholder.  A grantee shall have the rights as a stockholder only as to
shares of Stock acquired by the grantee upon settlement of a Deferred Stock
Award.  

 

(d)           Termination. 
Except as may otherwise be provided by the Administrator either in the Award
Agreement or, subject to Section 17 below, in writing after the Award
Agreement is issued, a grantee’s right in all Deferred Stock Awards that have
not vested shall automatically terminate upon the grantee’s termination of
employment (or cessation of service relationship) with the Company and its
Subsidiaries for any reason.

 

9.             UNRESTRICTED
STOCK AWARDS

 

Grant
or Sale of Unrestricted Stock.  The Administrator may, in its sole discretion,
grant (or sell at par value or such higher purchase price determined by the
Administrator) an Unrestricted Stock Award under the Plan.  Unrestricted Stock
Awards may be granted in respect of past services or other valid consideration,
or in lieu of cash compensation due to such grantee.

 

10.          CASH-BASED
AWARDS

 

Grant
of Cash-Based Awards.  The Administrator may, in its sole discretion, grant
Cash-Based Awards to any grantee in such number or amount and upon such terms,
and subject to such conditions, as the Administrator shall determine at the
time of grant.  The Administrator shall determine the maximum duration of the
Cash-Based Award, the amount of cash to which the Cash-Based Award pertains,
the conditions upon which the Cash-Based Award shall become vested or payable,
and such other provisions as the Administrator shall determine.  Each
Cash-Based Award shall specify a cash-denominated payment amount, formula or
payment ranges as determined by the Administrator.  Payment, if any, with
respect to a Cash-Based Award shall be made in accordance with the terms of the
Award and may be made in cash or in shares of Stock, as the Administrator
determines.  

 

11.          PERFORMANCE
SHARE AWARDS

 

(a)           Nature
of Performance Share Awards.  The Administrator may, in its sole discretion,
grant Performance Share Awards independent of, or in connection with, the
granting of any other Award under the Plan.  The Administrator shall determine
whether and to whom Performance Share Awards shall be granted, the Performance
Goals, the periods during which performance is to be measured, which may not be
less than one year, and such other limitations and conditions as the
Administrator shall determine.

 

(b)           Rights
as a Stockholder.  A grantee receiving a Performance Share Award shall have the
rights of a stockholder only as to shares actually received by the grantee
under the Plan and not with respect to shares subject to the Award but not
actually received by the grantee.  A grantee shall be entitled to receive
shares of Stock under a Performance Share Award only upon satisfaction of all
conditions specified in the Performance Share Award agreement (or in a
performance plan adopted by the Administrator).

 

(c)           Termination. 
Except as may otherwise be provided by the Administrator either in the Award
agreement or, subject to Section 17 below, in writing after the Award
agreement is issued, a grantee’s rights in all Performance Share Awards shall
automatically terminate upon the grantee’s termination of employment (or
cessation of service relationship) with the Company and its Subsidiaries for
any reason.

 

12.          PERFORMANCE-BASED
AWARDS TO COVERED EMPLOYEES

 

(a)           Performance-Based
Awards.  Any employee or other key person providing services to the Company and
who is selected by the Administrator may be granted one or more
Performance-Based Awards in the form of a Restricted Stock Award, Deferred
Stock Award, Performance Share Awards or Cash-Based Award payable upon the
attainment of Performance Goals that are established by the Administrator and
relate to one or more of the Performance Criteria, in each case on a specified
date or dates or over any period or periods determined by the Administrator. 
The Administrator shall define in an objective fashion the manner of
calculating the Performance Criteria it selects to use for any Performance
Cycle.  Depending on the Performance Criteria used to establish such
Performance Goals, the Performance Goals may be expressed in terms of overall
Company performance or the performance of a division, business unit, or an
individual.  The Administrator, in its discretion, may adjust or modify the
calculation of Performance Goals for such Performance Cycle in order to prevent
the dilution or enlargement of the rights of an individual (i) in the event of,
or in anticipation of, any unusual or extraordinary corporate item,
transaction, event or development, (ii) in recognition of, or in anticipation
of, any other unusual or nonrecurring events affecting the Company, or the
financial statements of the Company, or (iii) in response to, or in
anticipation of, changes in applicable laws, regulations, accounting
principles, or business conditions provided however, that the Administrator may
not exercise such discretion in a manner that would increase the
Performance-Based Award granted to a Covered Employee.  Each Performance-Based
Award shall comply with the provisions set forth below.

 

 

7

 

(b)           Grant
of Performance-Based Awards.  With respect to each Performance-Based Award
granted to a Covered Employee, the Administrator shall select, within the first
90 days of a Performance Cycle (or, if shorter, within the maximum period
allowed under Section 162(m) of the Code) the Performance Criteria for
such grant, and the Performance Goals with respect to each Performance
Criterion (including a threshold level of performance below which no amount
will become payable with respect to such Award).  Each Performance-Based Award
will specify the amount payable, or the formula for determining the amount payable,
upon achievement of the various applicable performance targets.  The
Performance Criteria established by the Administrator may be (but need not be)
different for each Performance Cycle and different Performance Goals may be
applicable to Performance-Based Awards to different Covered Employees.

Payment of Performance-Based
Awards.  Following the completion of a Performance Cycle, the Administrator
shall meet to review and certify in writing whether, and to what extent, the
Performance Goals for the Performance Cycle have been achieved and, if so, to
also calculate and certify in writing the amount of the Performance-Based
Awards earned for the Performance Cycle.  The Administrator shall then
determine the actual size of each Covered Employee’s Performance-Based Award,
and, in doing so, may reduce or eliminate the amount of the Performance-Based
Award for a Covered Employee if, in its sole judgment, such reduction or
elimination is appropriate.

 

(c)           Maximum
Award Payable.  The maximum Performance-Based Award payable to any one Covered
Employee under the Plan for any Performance Cycle is 2,500,000 Shares (subject to adjustment as provided in
Section 3(c) hereof) or $1,850,000
in the case of a Performance-Based Award that is a Cash-Based Award.

 

13.          TRANSFERABILITY
OF AWARDS

 

(a)           Transferability. 
Except as provided in Section 13(b) below, during a grantee’s lifetime,
his or her Awards shall be exercisable only by the grantee, or by the grantee’s
legal representative or guardian in the event of the grantee’s incapacity.  No
Awards shall be sold, assigned, transferred or otherwise encumbered or disposed
of by a grantee other than by will or by the laws of descent and distribution
or pursuant to a domestic relations order.  No Awards shall be subject, in
whole or in part, to attachment, execution, or levy of any kind, and any
purported transfer in violation hereof shall be null and void.

 

(b)           Administrator
Action.  Notwithstanding Section 13(a), the Administrator, in its
discretion, may provide either in the Award Agreement regarding a given Award
or by subsequent written approval that the grantee (who is an employee or
director) may transfer his or her Awards (other than any Incentive Stock
Options or Deferred Stock Awards) to his or her immediate family members, to
trusts for the benefit of such family members, or to partnerships in which such
family members are the only partners, provided that the transferee agrees in
writing with the Company to be bound by all of the terms and conditions of this
Plan and the applicable Award. 

 

(c)           Family
Member.  For purposes of Section 13(b), “family member” shall mean a
grantee’s child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, any person sharing the grantee’s household (other than
a tenant of the grantee), a trust in which these persons (or the grantee) have
more than 50 percent of the beneficial interest, a foundation in which these
persons (or the grantee) control the management of assets, and any other entity
in which these persons (or the grantee) own more than 50 percent of the voting
interests.

 

(d)           Designation
of Beneficiary.  Each grantee to whom an Award has been made under the Plan may
designate a beneficiary or beneficiaries to exercise any Award or receive any
payment under any Award payable on or after the grantee’s death.  Any such
designation shall be on a form provided for that purpose by the Administrator
and shall not be effective until received by the Administrator.  If no
beneficiary has been designated by a deceased grantee, or if the designated
beneficiaries have predeceased the grantee, the beneficiary shall be the
grantee’s estate.

 

 

8

 

14.          TAX WITHHOLDING

 

(a)           Payment
by Grantee.  Each grantee shall, no later than the date as of which the value
of an Award or of any Stock or other amounts received thereunder first becomes
includable in the gross income of the grantee for Federal income tax purposes,
pay to the Company, or make arrangements satisfactory to the Administrator
regarding payment of, any Federal, state, or local taxes of any kind required
by law to be withheld by the Company with respect to such income.  The Company
and its Subsidiaries shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment of any kind otherwise due to the
grantee.  The Company’s obligation to deliver evidence of book entry (or stock
certificates) to any grantee is subject to and conditioned on tax withholding
obligations being satisfied by the grantee.

 

(b)           Payment
in Stock.  Subject to approval by the Administrator, a grantee may elect to
have the Company’s minimum required tax withholding obligation satisfied, in
whole or in part, by authorizing the Company to withhold from shares of Stock
to be issued pursuant to any Award a number of shares with an aggregate Fair
Market Value (as of the date the withholding is effected) that would satisfy the
withholding amount due.

 

15.          SECTION 409A
AWARDS

  

To
the extent that any Award is determined to constitute “nonqualified deferred
compensation” within the meaning of Section 409A (a “409A Award”), the Award
shall be subject to such additional rules and requirements as specified by the
Administrator from time to time in order to comply with Section 409A.  In this
regard, if any amount under a 409A Award is payable upon a “separation from
service” (within the meaning of Section 409A) to a grantee who is then
considered a “specified employee” (within the meaning of Section 409A), then no
such payment shall be made prior to the date that is the earlier of (i) six
months and one day after the grantee’s separation from service, or (ii) the
grantee’s death, but only to the extent such delay is necessary to prevent such
payment from being subject to interest, penalties and/or additional tax imposed
pursuant to Section 409A.  Further, the settlement of any such Award may not be
accelerated except to the extent permitted by Section 409A.

 

16.          TRANSFER, LEAVE
OF ABSENCE, ETC.

 

For
purposes of the Plan, the following events shall not be deemed a termination of
employment:

 

(a)           a
transfer to the employment of the Company from a Subsidiary or from the Company
to a Subsidiary, or from one Subsidiary to another; or

 

(b)           an
approved leave of absence for military service or sickness, or for any other
purpose approved by the Company, if the employee’s right to re-employment is
guaranteed either by a statute or by contract or under the policy pursuant to
which the leave of absence was granted or if the Administrator otherwise so
provides in writing.

 

17.          AMENDMENTS AND
TERMINATION

 

The
Board may, at any time, amend or discontinue the Plan and the Administrator
may, at any time, amend or cancel any outstanding Award for the purpose of
satisfying changes in law or for any other lawful purpose, but no such action
shall adversely affect rights under any outstanding Award without the holder’s
consent.  Except as provided in Section 3(c) or 3(d), without prior stockholder
approval, in no event may the Administrator exercise its discretion to reduce
the exercise price of outstanding Stock Options or Stock Appreciation Rights or
effect repricing through cancellation and re-grants.  To the extent required
under the rules of any securities exchange or market system on which the Stock
is listed, to the extent determined by the Administrator to be required by the
Code to ensure that Incentive Stock Options granted under the Plan are
qualified under Section 422 of the Code, or to ensure that compensation
earned under Awards qualifies as performance-based compensation under
Section 162(m) of the Code, Plan amendments shall be subject to approval
by the Company stockholders entitled to vote at a meeting of stockholders. 
Nothing in this Section 17 shall limit the Administrator’s authority to
take any action permitted pursuant to Section 3(d).

 

18.          STATUS OF PLAN

 

With
respect to the portion of any Award that has not been exercised and any
payments in cash, Stock or other consideration not received by a grantee, a
grantee shall have no rights greater than those of a general creditor of the
Company unless the Administrator shall otherwise expressly determine in
connection with any Award or Awards.  In its sole discretion, the Administrator
may authorize the creation of trusts or other arrangements to meet the
Company’s obligations to deliver Stock or make payments with respect to Awards
hereunder, provided that the existence of such trusts or other arrangements is
consistent with the foregoing sentence.

 

 

9

 

19.          GENERAL
PROVISIONS

 

(a)           No
Distribution.  The Administrator may require each person acquiring Stock
pursuant to an Award to represent to and agree with the Company in writing that
such person is acquiring the shares without a view to distribution thereof.

 

(b)           Delivery
of Stock Certificates.  Stock certificates to grantees under this Plan shall be
deemed delivered for all purposes when the Company or a stock transfer agent of
the Company shall have mailed such certificates in the United States mail,
addressed to the grantee, at the grantee’s last known address on file with the
Company.  Uncertificated Stock shall be deemed delivered for all purposes when
the Company or a Stock transfer agent of the Company shall have given to the
grantee by electronic mail (with proof of receipt) or by United States mail,
addressed to the grantee, at the grantee’s last known address on file with the
Company, notice of issuance and recorded the issuance in its records (which may
include electronic “book entry” records).  Notwithstanding anything herein to
the contrary, the Company shall not be required to issue or deliver any
certificates evidencing shares of Stock pursuant to the exercise of any Award,
unless and until the Administrator has determined, with advice of counsel (to
the extent the Administrator deems such advice necessary or advisable), that
the issuance and delivery of such certificates is in compliance with all
applicable laws, regulations of governmental authorities and, if applicable,
the requirements of any exchange on which the shares of Stock are listed,
quoted or traded.  All Stock certificates delivered pursuant to the Plan shall
be subject to any stop-transfer orders and other restrictions as the
Administrator deems necessary or advisable to comply with federal, state or
foreign jurisdiction, securities or other laws, rules and quotation system on
which the Stock is listed, quoted or traded.  The Administrator may place
legends on any Stock certificate to reference restrictions applicable to the
Stock.  In addition to the terms and conditions provided herein, the
Administrator may require that an individual make such reasonable covenants,
agreements, and representations as the Administrator, in its discretion, deems
necessary or advisable in order to comply with any such laws, regulations, or
requirements.  The Administrator shall have the right to require any individual
to comply with any timing or other restrictions with respect to the settlement
or exercise of any Award, including a window-period limitation, as may be
imposed in the discretion of the Administrator.  

 

(c)           Stockholder
Rights.  Until Stock is deemed delivered in accordance with Section 19(b), no
right to vote or receive dividends or any other rights of a stockholder will
exist with respect to shares of Stock to be issued in connection with an Award,
notwithstanding the exercise of a Stock Option or any other action by the
grantee with respect to an Award.

 

(d)           Other
Compensation Arrangements; No Employment Rights.  Nothing contained in this
Plan shall prevent the Board from adopting other or additional compensation
arrangements, including trusts, and such arrangements may be either generally
applicable or applicable only in specific cases.  The adoption of this Plan and
the grant of Awards do not confer upon any employee any right to continued
employment with the Company or any Subsidiary.

 

(e)           Trading
Policy Restrictions.  Option exercises and other Awards under the Plan shall be
subject to the Company’s insider trading policies and procedures, as in effect
from time to time.

 

(f)            Forfeiture
of Awards under Sarbanes-Oxley Act.  If the Company is required to prepare an
accounting restatement due to the material noncompliance of the Company, as a
result of misconduct, with any financial reporting requirement under the
securities laws, then any grantee who is one of the individuals subject to
automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 shall
reimburse the Company for the amount of any Award received by such individual
under the Plan during the 12-month period following the first public issuance
or filing with the United States Securities and Exchange Commission, as the
case may be, of the financial document embodying such financial reporting
requirement.

 

20.          EFFECTIVE DATE
OF PLAN

 

This
Plan shall become effective upon approval by the holders of a majority of the
votes cast at a meeting of stockholders at which a quorum is present.  No
grants of Stock Options and other Awards may be made hereunder after the tenth
anniversary of the Effective Date and no grants of Incentive Stock Options may
be made hereunder after the tenth anniversary of the date the Plan is approved
by the Board.

 

 

10

 

21.          GOVERNING LAW

 

 

This
Plan and all Awards and actions taken thereunder shall be governed by, and
construed in accordance with, the laws of the State of Delaware, applied
without regard to conflict of law principles.

 

 

 

DATE APPROVED BY BOARD OF
DIRECTORS:

 

 

DATE APPROVED BY STOCKHOLDERS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11

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