013026.0000 DALLAS 337336 v4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT"), dated as of
April 14, 2000 by and among Grace Development Inc., a Colorado
corporation (the "COMPANY"), and the purchasers named on the
signature pages hereto (the "PURCHASERS").
PRELIMINARY STATEMENT
Pursuant to the Securities Purchase Agreement (as defined
below), the Purchasers have agreed to purchase the Notes, the
Sale Shares and the Warrants (as each is defined in the
Securities Purchase Agreement) on the condition, among others,
that the Company grant the registration rights set forth in this
Agreement.
ACCORDINGLY, to induce the Purchasers to purchase the Notes,
the Sale Shares and the Warrants and in consideration of the
mutual representations and agreements set forth in this
Agreement, the Company and the Purchasers, intending to be
legally bound, now agree as follows:
STATEMENT OF AGREEMENT
SECTION 1. DEFINITIONS.
1.1 CERTAIN DEFINITIONS. As used in this Agreement, the
following terms shall have the following meanings:
"AFFILIATE" means any entity controlling, controlled by or
under common control with a designated Person. For the purposes
of this definition, "control" shall have the meaning specified as
of the date of this Agreement for that word in Rule 405
promulgated by the Securities and Exchange Commission (the "SEC")
under the Securities Act.
"EQUITY SECURITY" shall mean any stock or similar security,
including without limitation securities containing equity
features and securities containing profit participation features,
or any security convertible or exchangeable, with or without
consideration, into or for any stock or similar security, or any
security carrying any warrant or right to subscribe to or
purchase any stock or similar security, or any such warrant or
right.
"REGISTRABLE SECURITIES" shall mean (i) the Sale Shares,
(ii) the Common Stock issuable upon conversion of the Notes,
(iii) the Common Stock issuable upon exercise of the Warrants,
and (iv) any Common Stock issued with respect to the Common Stock
described in (i), (ii) or (iii) above by way of a stock dividend
or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization
or in connection with any anti-dilution provisions relating to
the Notes or the Warrants, until the earliest to occur of (a) the
date on which such security has been effectively registered under
the Securities Act and disposed of in accordance with a
registration statement and (b) the date on which all of the
Registrable Securities may be sold pursuant to Rule 144 (without
any volume limitations thereunder) or may be sold without
compliance with such rule. The Holder hereby acknowledges and
agrees that the Notes and the Warrants shall not be deemed to be
Registrable Securities.
"RULE 144" means Rule 144 promulgated by the SEC under the
Exchange Act, as such rule may be amended from time to time, or
any successor rule thereto.
"SECURITIES PURCHASE AGREEMENT" shall mean the Securities
Purchase Agreement dated as of April 14, 2000 among the Company
and the Purchasers.
1.2 INCORPORATED DEFINITIONS. Capitalized terms used in
this Agreement and not otherwise defined herein shall have the
meanings set forth in the Securities Purchase Agreement.
SECTION 2. REGISTRATION.
2.1 MANDATORY REGISTRATION. Within 30 days following the
date on which the Company becomes eligible to use Form S-3 (or
any similar successor form that permits incorporation by
reference of filings made by the Company under the Exchange Act,
the Company shall file with the SEC a registration statement with
respect to the offering and sale or other disposition of all of
the Registrable Securities. The Company agrees to use its
reasonable best efforts to cause such registration statement to
become effective as soon as practicable following its filing with
the SEC. The Company shall file such additional registration
statements on Form S-3 (or any similar successor form) as the
Holders of Registrable Securities may reasonably request to
effect the registration of Registrable Securities.
2.2 PIGGYBACK REGISTRATION.
(a) Except as set forth in Section 2.2 (b), as, if and
when the Company proposes to register any Common Stock under
the Securities Act for sale to the public, whether for its
own account or for the account of other security holders or
both on a form that would also permit the registration of
the Registrable Securities (other than registrations on Form
S-8, or any successor form, or Form S-4, or any successor
form) (an "Eligible Registration), each such time it will
give written notice to the holders of Registrable Securities
(the "Holders") of its intention so to do. Upon the written
request of a Holder received by the Company within 20 days
after the giving of any such notice by the Company, to
register such number of shares of Registrable Securities
held by such Holder specified in such written request, the
Company will cause the Registrable Securities as to which
registration shall have been so requested to be included in
the securities to be covered by the registration statement
proposed to be filed by the Company with respect to such
Eligible Registration, all to the extent requisite to permit
the sale or other disposition by such Holder (in accordance
with its written request) of such Registrable Securities so
registered. In the event that any Eligible Registration
pursuant to this Section 2.2 shall be, in whole or in part
an underwritten offering of Common Stock (an "UNDERWRITTEN
OFFERING"), the number of shares of Registrable Securities
to be included in such an underwriting may be reduced if and
to the extent that the managing underwriter shall be of the
opinion that such inclusion would materially adversely
affect the marketing of the securities to be sold by the
Company therein. In the event such a reduction is necessary,
the reduction shall be borne first by holders of securities
that are not Registrable Securities pursuant to this
Agreement, and if a further reduction is necessary in the
judgment of the managing underwriter, then holders proposing
to sell Registrable Securities in the Underwritten Offering
shall bear the reduction on a PRO-RATA basis, based on the
aggregate number of shares of Registrable Securities that
each holder proposed to offer for sale in the Underwritten
Offering. Notwithstanding the foregoing provisions, the
Company may for any reason and without the consent of the
Holders in good faith withdraw any registration statement
referred to in this Section 2.2 without thereby incurring
any liability to the Holders.
(b) Notwithstanding the foregoing, in connection with
the first underwritten Offering for the account of the
Company after the date of this Agreement, the Company will
not have any obligation to register in excess of 50% of the
Registrable Securities as long as the price per share
offered in the Offering is equal to or greater than $3.00
per share in the event of Offerings on or before December
31, 2000 and $5.00 per share thereafter (as such per share
amounts are appropriately adjusted for stock splits, stock
dividends and other recapitalizations after the date of this
Agreement).
2.3 METHOD OF DISTRIBUTION. The Purchasers shall determine
the method of distribution of the Registrable Securities
registered pursuant to Section 2.1.
2.4 REGISTRATION STATEMENT FORM. Registrations pursuant to
Section 2.1 shall be on such appropriate registration form of the
SEC (i) as shall be selected by the Company and as shall be
reasonably acceptable to the Purchasers, and (ii) as shall permit
the disposition of such Registrable Securities in accordance with
the method or methods of disposition selected pursuant to Section
2.3 hereof.
2.5 EXPENSES. Except as otherwise provided in this Section
2.6, all expenses incurred in connection with the effective
registration pursuant to this Section 2.1 and each registration
pursuant to Section 2.2 hereof (excluding in each case
underwriting discounts and commissions applicable to Registrable
Securities), including, without limitation, in each case, all
registration, filing and NASD fees; all fees and expenses of
complying with securities or blue sky laws; all word processing,
duplicating and printing expenses, messenger, delivery and
shipping expenses; fees and disbursements of the accountants and
counsel for the Company including the expenses of any special
audits or "cold comfort" letters or opinions required by or
incident to such registrations; fees and disbursements of one
firm of counsel selected by the Holders, and any fees and
disbursements of underwriters customarily paid by issuers or
sellers of securities, but excluding underwriting discounts and
commissions, if any, shall be borne by the Company. In all cases,
the Purchasers shall pay the underwriting discounts and
commissions applicable to the securities sold by the Purchasers.
2.6 EFFECTIVE REGISTRATION STATEMENT. Registrations
pursuant to this Section 2 shall not be deemed to have been
effected (i) unless a registration statement with respect thereto
has become effective (unless a substantial cause of the failure
of such registration statement to become effective shall be
attributable to the Purchasers), (ii) if after it has become
effective, such registration is interfered with by any stop
order, injunction or other order or requirement of the SEC or
other governmental agency or court for any reason, resulting in a
failure to consummate the offering of Registrable Securities
offered thereby, (iii) if after a registration statement with
respect thereto has become effective, the offering of Registrable
Securities offered thereby is not consummated due to factors
beyond the control of the Purchasers, other than the fact that
the underwriters have advised the Purchasers that the Registrable
Securities cannot be sold at a net price equal to or above the
net price anticipated at the time of filing of the preliminary
prospectus, or (iv) if the conditions to closing specified in the
Securities Purchase Agreement or underwriting agreement entered
into in connection with such registration are not satisfied
(unless a substantial cause of such conditions to closing not
being satisfied shall be attributable to the Purchasers).
2.7 SELECTION OF UNDERWRITERS. If a registration pursuant
to Section 2.2 hereof involves an underwritten offering, the
underwriter or underwriters thereof shall be selected by the
Company.
SECTION 3. REGISTRATION PROCEDURES.
3.1 PROCEDURES. The Company will, subject to the
limitations provided herein, as expeditiously as possible:
(a) prepare and file with the SEC the requisite
registration statement to effect such registration, and
thereafter, use reasonable efforts to cause such
registration statement to become effective; provided that
before filing a registration statement or prospectus or any
amendments or supplements thereto, including documents
incorporated by reference, the Company will furnish to
counsel to the holders of the Registrable Securities covered
by such registration statement and the managing underwriter
or underwriters, if any, draft copies of all such documents
proposed to be filed (other than exhibits, unless so
requested) a reasonable time prior thereto, which documents
will be subject to the reasonable review of such counsel and
such holders and underwriters, and will notify each holder
of the Registrable Securities of any stop order issued or
threatened by the SEC in connection therewith and take all
reasonable actions required to prevent the entry of such
stop order or to remove it if entered;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the
prospectus used in connection therewith as may be necessary
to keep such registration statement effective and to comply
with the provisions of the Securities Act with respect to
the disposition of all securities covered by such
registration statement until such time as all of such
securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers
thereof set forth in such registration statement; provided,
however, that the Company shall not in any event be required
to keep (i) the registration statement filed pursuant to
Section 2.1 effective for a period of more than two years
after such registration statement becomes effective and (ii)
a registration statement filed pursuant to Section 2.2
effective for a period of more than nine months after such
registration statement becomes effective; and provided
further that the Company may, at any time, delay the filing
or suspend the effectiveness of any registration under this
Agreement, or without suspending such effectiveness,
instruct the Purchasers not to sell any Registrable
Securities included in any such registration, (i) if the
Company shall have determined upon the advice of counsel
that the Company would be required to disclose any actions
taken or proposed to be taken by the Company in good faith
and for valid business reasons, including without
limitation, the acquisition or divestiture of assets, which
disclosure would have a material adverse effect on the
Company or on such actions, or (ii) if required by law, to
update the prospectus relating to any such registration to
include updated financial statements (a "SUSPENSION PERIOD")
by providing the Purchasers with written notice of such
Suspension Period and the reasons therefor; PROVIDED,
HOWEVER, that the Company will not be required to disclose
such reasons with particularity if an authorized executive
officer of the Company certifies that the Company believes
it is required by law to delay the filing or suspend the
effectiveness of any such registration. In addition, the
Company shall not be required to keep any registration
effective, or may without suspending such effectiveness,
instruct the Purchasers if it has Registrable Securities
included in such registration not to sell such securities,
during any period which the Company is instructed, directed,
ordered or otherwise requested by any governmental agency or
self-regulatory organization to stop or suspend such trading
or sales ("SUPPLEMENTAL EXTENSION PERIOD"). In the event of
a Suspension Period or Supplemental Extension Period, the
period during which any registration under this Agreement is
to remain effective pursuant to this Section 3.1(b) shall be
tolled until the end of any such Suspension Period or
Supplemental Extension Period. The Company will use
reasonable efforts to restrict any Suspension Period or
Supplemental Extension Period to less than 30 days;
(c) furnish to the Purchasers such number of conformed
copies of such registration statement and of each such
amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus contained
in such registration statement (including each preliminary
prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act,
and such other documents, as the Purchasers may reasonably
request;
(d) use its reasonable efforts to register or qualify
all Registrable Securities and other securities covered by
such registration statement under such other securities or
blue sky laws of such jurisdictions as each seller thereof
shall reasonably request and to keep such registration or
qualification in effect for so long as such registration
statement remains in effect, and take any other action which
may be reasonably necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions
of the securities owned by such seller, except that the
Company shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not but for the
requirements of this Section 3.1(d) be obligated to be so
qualified or to consent to general service of process in any
such jurisdiction.
(e) use its reasonable efforts to cause all
Registrable Securities covered by such registration
statement to be registered with or approved by such other
United States Federal or state governmental agencies or
authorities as may be necessary to enable the Purchasers to
consummate the disposition of such Registrable Securities;
(f) notify in writing the Purchasers, if Registrable
Securities are covered by such registration statement, at
any time when a prospectus relating thereto is required to
be delivered under the Securities Act, upon discovery that,
or upon the happening of any event as a result of which the
prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact
or omits to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading in the light of the circumstances under which
they were made, and at the request of the Purchasers prepare
and furnish to the Purchasers a reasonable number of copies
of a supplement to or an amendment of such prospectus as may
be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not
include 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 in
the light of the circumstances under which they were made.
(g) otherwise use reasonable efforts to comply with
all applicable rules and regulations of the SEC and make
available to its securityholders, as soon as reasonably
practicable, an earnings statement covering the period of at
least twelve months beginning with the first full calendar
month after the effective date of such registration
statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act;
(h) provide and cause to be maintained a transfer
agent for all Registrable Securities covered by such
registration statement from and after a date not later than
the effective date of such registration statement; and
(i) use its reasonable efforts to list all Registrable
Securities covered by such registration statement on any
securities exchange on which any of the Company's Common
Stock is then listed.
3.2 INFORMATION REQUIREMENTS. It shall be a condition
precedent to the obligations of the Company to take any action
with respect to registering the Purchasers' Registrable
Securities pursuant to this Section 3 that the Purchasers furnish
the Company in writing such information regarding the Purchasers,
the Registrable Securities and other securities of the Company
held by the Purchasers, and the distribution of such securities
as the Company may from time to time reasonably request in
writing. If a Purchaser refuses to provide the Company with any
of such information on the grounds that it is not necessary to
include such information in the registration statement, the
Company may exclude the Purchaser's Registrable Securities from
the registration statement unless such Purchaser provides the
Company with an opinion of counsel, which opinion and counsel
shall be reasonably satisfactory to the Company and its counsel,
to the effect that such information need not be included in the
registration statement.
The Purchasers agree by acquisition of such Registrable
Securities that upon receipt of any notice from the Company of
the happening of any event of the kind described in Section
3.1(f), the Purchasers will forthwith discontinue the Purchasers'
disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities
until the Purchasers' receipt of the copies of the supplemented
or amended prospectus contemplated by Section 3.1(f) and, if so
directed by the Company, will deliver to the Company copies,
other than permanent file copies then in the Purchasers'
possession, of the current prospectus relating to such
Registrable Securities at the time of receipt of such notice.
SECTION 4. UNDERWRITTEN OFFERINGS.
If requested by the underwriters for any underwritten
offering of Registrable Securities pursuant to a registration
under Section 2 hereof, the Company will enter into an
underwriting agreement with such underwriters for such offering,
such agreement to be satisfactory in substance and form to the
Purchasers and the underwriters and to contain such
representations and warranties by the Company and such other
terms as are generally prevailing in agreements of this type,
including, without limitation, indemnities to the effect and to
the extent provided in Section 6 hereof. The Purchasers will
cooperate with the Company in the negotiation of the underwriting
agreement and will give consideration to the reasonable requests
of the Company regarding the form thereof, PROVIDED that nothing
herein contained shall diminish the foregoing obligations of the
Company. If requested by the underwriters of any underwritten
offering pursuant to a registration under Section 2 hereof, the
Purchasers agree to enter into an agreement with such
underwriters not to sell their shares of stock in the Company for
a period of time (not to exceed 180 days) after the effectiveness
of a registration statement equal to the period of time which the
sellers of securities in such registration have agreed not to
sell their shares after the effectiveness of such registration
statement. The Purchasers shall be a party to such underwriting
agreement. The Purchasers shall not be required to make any
representations, warranties or agreements with the Company other
than representations, warranties or agreements regarding the
Purchasers, Purchasers' Registrable Securities and other
securities of the Company, the Purchasers' intended method of
distribution, and any representations, warranties or agreements
required by law.
SECTION 5. PREPARATION; REASONABLE INVESTIGATION.
In connection with the preparation and filing of each
registration statement under the Securities Act pursuant to this
Agreement, the Company will give the Purchasers and their
respective agents and advisors and the underwriters, if any, the
reasonable opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed
with the SEC, and each amendment thereof or supplement thereto,
and will give each of them such access to its books and records
and such opportunities to discuss the business of the Company
with its officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the
option of the Purchasers' counsel, to conduct a reasonable
investigation within the meaning of the Securities Act. Subject
to the rights and obligations of the Company under the Securities
Act and other applicable laws, the Purchasers shall have the
right to review and approve those portions of such registration
statement that directly pertain to the Purchasers.
SECTION 6. INDEMNIFICATION.
6.1 INDEMNIFICATION BY THE COMPANY. In the event any
Registrable Securities are included in a registration statement
under this Agreement, to the extent permitted by law, the Company
will, and hereby does, indemnify and hold harmless each
Purchaser, its directors and officers, each other Person who
participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls each
Purchaser or any such underwriter within the meaning of the
Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which each Purchaser or any
such director or officer or underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any
registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, and the Company will reimburse the Purchasers and
each such director, officer, underwriter and controlling person
for any legal or any other expenses reasonably incurred by them
in connection with investigating or defending any such loss,
claim, liability, action or proceeding; PROVIDED that the Company
shall not be liable in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by the Purchasers,
and PROVIDED FURTHER that the Company shall not be liable to any
Person who participates as an underwriter in the offering or sale
of Registrable Securities or any other Person, if any, who
controls such underwriter within the meaning of the Securities
Act, in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or
expense arises out of such Person's failure to send or give a
copy of the final prospectus, as the same may be then
supplemented or amended to the Person asserting an untrue
statement or alleged untrue statement or omission or alleged
omission at or prior to the written confirmation of the sale of
Registrable Securities to such Person if such statement or
omission was corrected in such final prospectus and such delivery
would have mitigated liability. Such indemnity shall remain in
full force and effect regardless of any investigation made by or
on behalf of the Purchasers or any such director, officer,
underwriter or controlling person and shall survive the transfer
of such securities by such seller.
6.2 INDEMNIFICATION BY THE PURCHASERS. In the event any
Registrable Securities are included in a registration statement
under this Agreement, to the extent permitted by law, each
Purchaser whose Registrable Securities are registered pursuant to
such registration statement will, and hereby does indemnify and
hold harmless (in the same manner and to the same extent as set
forth in Section 6.1) each underwriter, each Person who controls
such underwriter within the meaning of the Securities Act, the
Company, each director of the Company, each officer of the
Company and each other Person, if any, who controls the Company
within the meaning of the Securities Act, with respect to any
statement or alleged statement in or omission or alleged omission
from such registration statement, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance
upon and in strict conformity with written information furnished
to the Company by the Purchasers expressly for use in the
preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or
supplement; PROVIDED that the Purchasers shall not be liable to
any Person who participates as an underwriter in the offering or
sale of Registrable Securities or any other Person, if any, who
controls such underwriter within the meaning of the Securities
Act, in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or
expense arises out of such Person's failure to send or give a
copy of the final prospectus, as the same may be then
supplemented or amended, to the Person asserting an untrue
statement or alleged untrue statement or omission or alleged
omission at or prior to the written confirmation of the sale of
Registrable Securities to such Person if such statement or
omission was corrected in such final prospectus. Such indemnity
shall remain in full force and effect regardless of any
investigation made by or on behalf of any underwriter, the
Company or any such director, officer or controlling Person and
shall survive the transfer of such securities by such seller.
6.3 NOTICES OF CLAIMS, ETC. Promptly after receipt by an
indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in Sections 6.1 and 6.2,
such indemnified party will, if a claim in respect thereof is to
be made against an indemnifying party, give written notice to the
latter of the commencement of such action; PROVIDED that the
failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its
obligations under the preceding subdivisions of this Section 6,
except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in
respect of such claim, the indemnifying party shall be entitled
to participate in and to assume the defense thereof, jointly with
any other indemnifying party similarly notified to the extent
that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party
to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses
subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the consent of the indemnified
party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to
such claim or litigation. No indemnified party shall consent to
entry of any judgment or enter into any settlement without the
consent of the indemnifying party.
6.4 OTHER INDEMNIFICATION. Indemnification similar to that
specified in the preceding subdivisions of this Section 6 (with
appropriate modifications) shall be given by the Company and the
Purchasers with respect to any required registration or other
qualification of securities under any Federal or state law or
regulation of any governmental authority other than the
Securities Act.
6.5 INDEMNIFICATION PAYMENTS. The indemnification required
by this Section 6 shall be made by periodic payments of the
amount thereof during the course of the investigation or defense,
as and when bills are received or expense, loss, damage or
liability is incurred.
6.6 CONTRIBUTION. If the indemnification provided for in
this Section 6 from the indemnifying party is unavailable to an
indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then the
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 loss, claims, damages,
liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which resulted
in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative
fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any
action in question, including any untrue statement of 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 parties, 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 losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 6.3 hereof, any
legal or other fees or expenses reasonably incurred by such party
in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6.6 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. Notwithstanding the provisions of this Section 6.6 no
underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which
such underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation.
If indemnification is available under this Section 6, the
indemnifying parties shall indemnify each indemnified party to
the full extent provided in Section 6.1 through Section 6.5
hereof without regard to the relative fault of said indemnifying
party or indemnified party or any other equitable consideration
provided for in this Section 6.6.
SECTION 7. REPORTING REQUIREMENTS UNDER EXCHANGE ACT.
The Company shall use its reasonable efforts to keep
effective the registration of its Common Stock under Section 12
of the Exchange Act and shall timely file such information,
documents and reports as the SEC may require or prescribe under
Section 13 of the Exchange Act. The Company shall timely file
such information, documents and reports which a corporation,
partnership or other entity subject to Section 13 or 15(d)
(whichever is applicable) of the Exchange Act is required to
file.
So long as the Company is subject to the reporting
requirements of either Section 13 or 15(d) of the Exchange Act,
the Company shall forthwith upon request furnish the Purchasers
(i) a written statement by the Company that it has complied with
such reporting requirements, (ii) a copy of the most recent
annual or quarterly report of the Company, and (iii) such other
reports and documents filed by the Company with the SEC as the
Purchasers may reasonably request in availing itself of an
exemption for the sale of Registrable Securities without
registration under the Securities Act. The Company acknowledges
and agrees that the purpose of the requirements contained in this
Section 7 are to enable the Purchasers to comply with the current
public information requirement contained in Paragraph (c) of Rule
144 under the Securities Act should the Purchasers ever wish to
dispose of any of the Securities of the Company acquired by it
without registration under the Securities Act in reliance upon
Rule 144 (or any other similar exemptive provision). In addition,
the Company shall take such other measures and file such other
information, documents and reports, as shall hereafter be
required by the SEC as a condition to the availability of Rule
144 under the Securities Act (or any similar exemptive provision
hereafter in effect).
SECTION 8. SHAREHOLDER INFORMATION.
The Company may require the Purchasers to furnish the
Company such information in writing with respect to the
Purchasers and the distribution of its Registrable Securities as
the Company may from time to time reasonably request in writing
and as shall be required by law or by the SEC in connection
therewith.
SECTION 9. FORMS.
All references in this Agreement to particular forms of
registration statements are intended to include, and shall be
deemed to include, references to all successor forms which are
intended to replace, or to apply to similar transactions as, the
forms herein referenced.
SECTION 10. TRANSFER OF REGISTRATION RIGHTS.
The registration rights granted to the Purchasers under this
Agreement may not be transferred without the prior written
consent of the Company, which shall not be unreasonably withheld.
SECTION 11. AMENDMENT.
This Agreement may be amended only by a written agreement
signed by the Company and the Purchasers.
SECTION 12. NOTICES.
All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be
delivered, or mailed first-class postage prepaid, registered or
certified mail,
(a) If to a Purchaser at its respective address as
shown on the books of the Company, or at such other address
as such Purchaser may specify by written notice to the
Company, or
(b) If to the Company at 0000 Xxxxxxxxx Xxxxx,
Xxxxxxx, Xxxxxxx 00000, Attention: President; or at such
other address as the Company may specify by written notice
to the Purchaser,
and such notices and other communications shall for all purposes
of this Agreement be treated as being effective or having been
given if delivered personally, or, if sent by mail, when
received.
SECTION 13. COUNTERPARTS.
This Agreement may be executed concurrently in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
SECTION 14. CHOICE OF LAW.
THIS AGREEMENT AND THE VALIDITY AND ENFORCEABILITY HEREOF
SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
CONFLICT OF LAWS RULES OR CHOICE OF LAWS RULES THEREOF EXCEPT
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
SECTION 15. SEVERABILITY.
Should any one or more of the provisions of this Agreement
or any agreement entered into pursuant to this Agreement be
determined to be illegal or unenforceable, all other provisions
of this Agreement and of each other agreement entered into
pursuant to this Agreement, shall be given effect separately from
the provision or provisions determined to be illegal or
unenforceable and shall not be affected thereby.
SECTION 16. WHOLE AGREEMENT.
This Agreement constitutes the complete agreement and
understanding by and among the parties hereto and shall supersede
any prior understanding, agreement or representation by or among
the parties, whether written or oral, related to the subject
matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives
effective the day and year first above written.
GRACE DEVELOPMENT INC.
By: /S/ XXXXX X. XXXXXXXXX
__________________________
Name: Xxxxx X. Xxxxxxxxx
________________________
Title: President
_______________________
PURCHASERS:
GREENLIGHT CAPITAL, L.P.
By: Greenlight Capital, L.L.C.,
its general partner
By: /S/ XXXXXXX X. XXXXXX
______________________
Name: Xxxxxxx X. Xxxxxx
____________________
Title: Managing Member
___________________
GREENLIGHT CAPITAL QUALIFIED,
L.P.
By: Greenlight Capital, L.L.C.,
its general partner
By: /S/ XXXXXXX X. XXXXXX
______________________
Name: Xxxxxxx X. Xxxxxx
____________________
Title: Managing Member
___________________
GREENLIGHT CAPITAL OFFSHORE,
LTD.
By: /S/ XXXXXXX X. XXXXXX
__________________________
Name: Xxxxxxx X. Xxxxxx
________________________
Title: Managing Member
_______________________
