REGISTRATION RIGHTS AGREEMENT
Dated as of September 29, 2023
by and between
STONEFIELD LOGISTICS GROUP INC.
and
RIDGELINE MEZZANINE CAPITAL FUND III, LP
Right-click to update Table of Contents
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered into as of September 29, 2023, by and between:
STONEFIELD LOGISTICS GROUP INC., a Delaware corporation (the "Company"), with its principal offices at 4800 Commerce Parkway, Suite 1200, Fort Worth, Texas 76107; and
RIDGELINE MEZZANINE CAPITAL FUND III, LP, a Delaware limited partnership (the "Holder" or "Investor"), with its principal offices at 767 Lexington Avenue, 22nd Floor, New York, New York 10065.
The Company and the Holder are sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, the Company and the Holder are parties to that certain Mezzanine Credit Agreement, dated as of September 14, 2023 (the "Mezzanine Credit Agreement"), among the Company, the Holder as Mezzanine Lender, and the guarantors party thereto, pursuant to which the Holder has extended to the Company a mezzanine term loan in the aggregate principal amount of One Hundred Twenty Million Dollars ($120,000,000);
WHEREAS, in connection with the Mezzanine Credit Agreement, the Company and the Holder have entered into that certain Warrant Agreement, dated as of the date hereof (the "Warrant Agreement"), pursuant to which the Company has issued to the Holder warrants (the "Warrants") to purchase shares of common stock of the Company representing 3.0% of the fully-diluted equity of the Company on a post-exercise basis, at an exercise price of $0.01 per share;
WHEREAS, as a condition to the consummation of the transactions contemplated by the Mezzanine Credit Agreement and the Warrant Agreement, the Company has agreed to provide the Holder with certain registration rights with respect to the Registrable Securities (as defined herein) upon the terms and conditions set forth herein;
WHEREAS, the Company is a portfolio company of Cascade Ridge Capital Partners, LLC, through its intermediate holding company, Cascade Ridge SLG Holdings, LLC, which holds 78.4% of the outstanding equity interests in the Company; and
WHEREAS, the Company desires to enter into this Agreement in order to grant the Holder certain registration rights as set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Definitions.
As used in this Agreement, the following terms shall have the meanings set forth below:
"Affiliate" shall have the meaning ascribed to such term in the Mezzanine Credit Agreement.
"Agreement" shall mean this Registration Rights Agreement, as it may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Blackout Period" shall have the meaning ascribed to such term in Section 2.4.
"Board" shall mean the board of directors of the Company.
"Business Day" shall mean any day other than a Saturday, a Sunday, or a day on which banking institutions in New York, New York are authorized or required by law, regulation, or executive order to close.
"Commission" or "SEC" shall mean the United States Securities and Exchange Commission or any successor agency or governmental body performing similar functions.
"Company" shall mean Stonefield Logistics Group Inc., a Delaware corporation, and any successor entity thereto.
"Demand Registration" shall have the meaning ascribed to such term in Section 2.1.
"Demand Registration Statement" shall have the meaning ascribed to such term in Section 2.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder.
"Form S-1" shall mean a registration statement on Form S-1 under the Securities Act, or any successor form thereto that may be adopted by the Commission.
"Form S-3" shall mean a registration statement on Form S-3 under the Securities Act, or any successor form thereto that may be adopted by the Commission.
"Holder" shall mean Ridgeline Mezzanine Capital Fund III, LP, a Delaware limited partnership, and its Permitted Transferees who become parties hereto in accordance with Section 6.1.
"IPO" shall mean the Company's initial underwritten public offering of its common stock pursuant to an effective registration statement under the Securities Act filed with the Commission.
"Mezzanine Credit Agreement" shall mean that certain Mezzanine Credit Agreement, dated as of September 14, 2023, among the Company, the Holder as Mezzanine Lender, and the guarantors party thereto, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Permitted Transferee" shall mean (a) any Affiliate of the Holder, (b) any successor fund or parallel fund managed by Ridgeline Capital Management, LLC, or any of its Affiliates, or (c) any other transferee who acquires Registrable Securities in compliance with applicable securities laws and who agrees in writing to be bound by the terms and conditions of this Agreement by executing a joinder agreement substantially in the form attached hereto as Exhibit A.
"Person" shall mean an individual, corporation, partnership, limited partnership, limited liability company, joint venture, trust, unincorporated organization, governmental authority, or any other entity or body.
"Piggyback Registration" shall have the meaning ascribed to such term in Section 2.2.
"Registrable Securities" shall mean (i) the shares of common stock of the Company issuable upon exercise of the Warrants, and (ii) any shares of common stock of the Company issued or issuable with respect to the securities referred to in clause (i) above by way of stock dividend, stock split, combination of shares, recapitalization, reclassification, merger, consolidation, reorganization, or similar event; provided, however, that securities shall cease to be Registrable Securities when (A) a registration statement covering such securities has been declared effective by the Commission and such securities have been disposed of by the Holder in accordance with such effective registration statement, (B) such securities have been sold by the Holder pursuant to Rule 144 (or any successor provision), or (C) such securities are eligible for resale by the Holder pursuant to Rule 144 (or any successor provision) without volume or manner-of-sale restrictions and without the requirement for the Company to be in compliance with the current public information requirements of Rule 144(c)(1) (or any successor provision).
"Registration Expenses" shall have the meaning ascribed to such term in Section 2.6.
"Rule 144" shall mean Rule 144 promulgated by the Commission under the Securities Act, or any successor provision thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.
"Selling Expenses" shall have the meaning ascribed to such term in Section 2.6.
"Shelf Registration Statement" shall have the meaning ascribed to such term in Section 2.3.
"Sponsor" shall mean Cascade Ridge Capital Partners, LLC, a Delaware limited liability company, together with its Affiliates, including Cascade Ridge SLG Holdings, LLC.
"Underwriter" shall mean any underwriter of securities in connection with an offering thereof under a registration statement.
"Warrant Agreement" shall mean that certain Warrant Agreement, dated as of September 29, 2023, between the Company and the Holder, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Warrants" shall mean the warrants issued to the Holder pursuant to the Warrant Agreement, representing the right to purchase shares of common stock of the Company equal to 3.0% of the fully-diluted equity of the Company on a post-exercise basis, at an exercise price of $0.01 per share, subject to adjustment as provided in the Warrant Agreement.
Section 1.2 — Interpretive Provisions.
Unless the context otherwise requires, for purposes of this Agreement:
(a) References to "Articles," "Sections," "Exhibits," and "Schedules" are references to articles, sections, exhibits, and schedules of and to this Agreement.
(b) The headings and captions contained in this Agreement are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Agreement.
(c) The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation" and shall not be construed to limit any general statement that they follow to the specific or similar items or matters immediately following them.
(d) Words in the singular shall be deemed to include the plural, and words in the plural shall be deemed to include the singular. Words importing any gender shall include each other gender.
(e) References to any statute, rule, or regulation shall include all amendments thereto and all successor statutes, rules, and regulations, and all rules and regulations promulgated thereunder.
(f) References to any agreement, document, or instrument shall mean such agreement, document, or instrument as amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
(g) Any undefined terms used herein that are defined in the laws of the State of New York shall be construed and interpreted in accordance with the meaning ascribed to such terms under the laws of the State of New York.
(h) References to "days" shall mean calendar days unless otherwise specified as "Business Days."
(i) The word "or" is not exclusive, and the word "will" shall be construed to have the same meaning and effect as the word "shall."
(j) The Parties have participated jointly in the negotiation and drafting of this Agreement, and in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement.
ARTICLE II — REGISTRATION RIGHTS
Section 2.1 — Demand Registration Rights.
(a) Number of Demands. Subject to the terms and conditions of this Agreement, the Holder shall be entitled to request that the Company effect a total of two (2) registrations of all or any portion of the Registrable Securities held by the Holder under the Securities Act on Form S-1 or, if available, Form S-3 (each, a "Demand Registration," and the registration statement filed in connection therewith, a "Demand Registration Statement").
(b) Trigger. The Holder's right to request a Demand Registration shall become exercisable upon the earlier to occur of (i) the closing of an IPO, and (ii) five (5) years after the date of this Agreement (i.e., September 29, 2028). Prior to such time, the Holder shall not be entitled to request a Demand Registration pursuant to this Section 2.1 (without prejudice to the Holder's rights under Section 2.2 and Section 2.3).
(c) Minimum Amount. Each Demand Registration must cover Registrable Securities with an anticipated aggregate offering price (net of underwriting discounts and commissions) of at least Ten Million Dollars ($10,000,000), based on the then-current market price of the Company's common stock at the time of the demand request. If the Holder holds Registrable Securities with an aggregate offering price of less than $10,000,000 at the time of a demand request, the Holder may nonetheless request a Demand Registration covering all remaining Registrable Securities held by the Holder, and such request shall be deemed to satisfy the minimum amount requirement set forth in this Section 2.1(c).
(d) Request Process. The Holder shall initiate a Demand Registration by delivering a written demand notice (a "Demand Notice") to the Company specifying (i) the number of Registrable Securities proposed to be registered, (ii) the intended method or methods of distribution thereof (including whether the offering is proposed to be an underwritten offering), and (iii) any other information reasonably required by the Company for the preparation and filing of the applicable registration statement.
(e) Company Obligation. Within thirty (30) days of receipt of a Demand Notice, the Company shall prepare and file with the Commission a Demand Registration Statement on the appropriate form (Form S-1 or, if the Company is then eligible, Form S-3) covering the Registrable Securities specified in the Demand Notice, and shall use its commercially reasonable efforts to cause such Demand Registration Statement to become effective under the Securities Act as promptly as practicable after such filing. The Company shall include in such Demand Registration Statement all information that is required under the Securities Act and the rules and regulations promulgated thereunder for the type of offering contemplated by the Demand Notice.
(f) Effectiveness Period. The Company shall use commercially reasonable efforts to maintain the effectiveness of each Demand Registration Statement for a period of not less than one hundred eighty (180) days following the date on which such Demand Registration Statement is declared effective by the Commission (or such shorter period as may be necessary for the Holder to complete the distribution of all Registrable Securities covered thereby). If the Holder completes the distribution of all Registrable Securities covered by a Demand Registration Statement prior to the expiration of such one hundred eighty (180) day period, the Company's obligation to maintain the effectiveness of such Demand Registration Statement shall terminate upon completion of such distribution.
(g) Selection of Underwriter. In connection with any underwritten Demand Registration, the Holder shall have the right to select the managing underwriter or underwriters for such offering, subject to the Company's reasonable approval, which approval shall not be unreasonably withheld, conditioned, or delayed. The Company shall enter into an underwriting agreement in customary form with the managing underwriter or underwriters so selected, containing customary representations, warranties, covenants, indemnification provisions, and other terms and conditions reasonably acceptable to the Company.
(h) Failed Demand. A Demand Registration shall not be counted as one of the two (2) permitted Demand Registrations under this Section 2.1 if:
(i) the applicable Demand Registration Statement is not declared effective by the Commission within ninety (90) days after the date of filing thereof (other than by reason of any act or omission by the Holder);
(ii) the applicable Demand Registration Statement, after being declared effective, is subject to a stop order, injunction, or other order or requirement of the Commission suspending the effectiveness thereof (other than by reason of any act or omission by the Holder), and such stop order, injunction, or other order or requirement is not withdrawn, reversed, or otherwise resolved within thirty (30) days;
(iii) the conditions to closing specified in any underwriting agreement entered into in connection with such Demand Registration are not satisfied or waived (other than by reason of a failure by the Holder to perform its obligations thereunder); or
(iv) the Holder withdraws its Demand Notice prior to the effectiveness of the Demand Registration Statement, provided that the Holder shall reimburse the Company for all Registration Expenses incurred in connection with such withdrawn Demand Registration unless such withdrawal is a result of a material adverse change in the business, condition (financial or otherwise), results of operations, or prospects of the Company occurring after the date of the Demand Notice.
Section 2.2 — Piggyback Registration Rights.
(a) Notice of Registration. If at any time after the date hereof the Company proposes to file a registration statement under the Securities Act with respect to a public offering of its equity securities (whether for the Company's own account or for the account of any other securityholder of the Company, including the Sponsor or any of its Affiliates) on any form that would permit the registration and sale of Registrable Securities, the Company shall give the Holder written notice of such proposed filing (a "Piggyback Notice") at least twenty (20) days prior to the anticipated filing date of such registration statement. The Piggyback Notice shall describe in reasonable detail the proposed offering, including the type and number of securities proposed to be registered, the proposed form of registration statement, the anticipated filing date, the proposed method or methods of distribution, and the identity of any proposed managing underwriter or underwriters.
(b) Holder's Right to Include. The Holder shall have the right to include all or any portion of its Registrable Securities in such registration (each, a "Piggyback Registration") by delivering written notice to the Company (a "Piggyback Request") within ten (10) days after receipt of the Piggyback Notice, specifying the number of Registrable Securities the Holder wishes to include in such registration. If the Holder does not deliver a Piggyback Request within such ten (10) day period, the Holder shall be deemed to have waived its rights under this Section 2.2 with respect to such particular registration (but not with respect to any subsequent registration).
(c) Exclusions from Piggyback Registration. The Holder's piggyback registration rights under this Section 2.2 shall not apply to:
(i) a registration statement on Form S-4 (or any successor form) relating to a transaction pursuant to Rule 145 under the Securities Act or relating to a merger, acquisition, or business combination;
(ii) a registration statement on Form S-8 (or any successor form) relating solely to the issuance of securities pursuant to an employee benefit plan, stock option plan, stock purchase plan, or similar plan;
(iii) a registration statement relating solely to the offer and sale of debt securities of the Company; or
(iv) a registration statement filed in connection with an exchange offer or an offering of securities solely to the Company's existing securityholders.
(d) Cutback — Company-Initiated Offerings. If the managing underwriter or underwriters of a proposed underwritten offering in which the Company is offering securities for its own account advise the Company in writing that, in their reasonable opinion, the total number of securities proposed to be included in such offering (including all Registrable Securities requested by the Holder and all other securities requested by other securityholders of the Company) exceeds the number of securities that can be sold in such offering without materially and adversely affecting the price, timing, or distribution of the offering or the market for the securities offered (a "Maximum Offering Size"), then the securities to be included in such registration shall be allocated in the following order of priority:
(i) first, all securities that the Company proposes to sell for its own account;
(ii) second, on a pro rata basis among (A) all Registrable Securities requested to be included by the Holder pursuant to this Section 2.2 and (B) all securities requested to be included by any other selling securityholders who have contractual piggyback registration rights, with such pro rata allocation based on the number of securities each such Person has requested to be included in such registration relative to the total number of securities requested by all such Persons; and
(iii) third, any other securities that have been requested to be included in such registration.
(e) Cutback — Securityholder-Initiated Offerings (Including Sponsor-Initiated Offerings). If the managing underwriter or underwriters of a proposed underwritten offering that is initiated by a securityholder of the Company (including the Sponsor or any of its Affiliates) advise the Company in writing that the total number of securities proposed to be included in such offering exceeds the Maximum Offering Size, then the securities to be included in such registration shall be allocated in the following order of priority:
(i) first, all securities requested to be included by the securityholder or securityholders who initiated such registration;
(ii) second, on a pro rata basis among (A) all Registrable Securities requested to be included by the Holder pursuant to this Section 2.2 and (B) all securities requested to be included by any other selling securityholders who have contractual piggyback registration rights, with such pro rata allocation based on the number of securities each such Person has requested to be included in such registration relative to the total number of securities requested by all such Persons; and
(iii) third, any securities the Company proposes to sell for its own account.
(f) Withdrawal Right. The Holder may withdraw all or any portion of its Registrable Securities from a Piggyback Registration at any time prior to the effective date of the applicable registration statement by delivering written notice of withdrawal to the Company, and such withdrawal shall not affect the Holder's rights under this Section 2.2 with respect to any subsequent registration. No Piggyback Registration shall be deemed to constitute a Demand Registration for purposes of Section 2.1, regardless of whether the Holder includes Registrable Securities in such Piggyback Registration.
(g) Company's Right to Withdraw. The Company shall have the right, in its sole discretion, to withdraw or abandon any registration statement it has filed or proposes to file in which the Holder has been given piggyback rights hereunder, at any time prior to the effectiveness thereof, without thereby incurring any liability to the Holder. In the event of any such withdrawal or abandonment, the Company shall promptly notify the Holder in writing.
Section 2.3 — Shelf Registration (Form S-3).
(a) Availability. At any time after the Company becomes eligible to use Form S-3 (or any successor short-form registration statement) for the registration of securities for resale, the Holder may deliver a written request (a "Shelf Request") to the Company requesting that the Company file a registration statement on Form S-3 (a "Shelf Registration Statement") covering the resale of all Registrable Securities then held by the Holder.
(b) Company Obligation. Within thirty (30) days after receipt of a Shelf Request, the Company shall prepare and file with the Commission a Shelf Registration Statement on Form S-3 covering the resale of all Registrable Securities identified in the Shelf Request and shall use its commercially reasonable efforts to cause such Shelf Registration Statement to become effective under the Securities Act as soon as practicable after such filing.
(c) Continuous Effectiveness. The Company shall use its commercially reasonable efforts to keep the Shelf Registration Statement continuously effective and usable for the resale of Registrable Securities until the earlier to occur of (i) the date on which all Registrable Securities covered by the Shelf Registration Statement have been sold by the Holder in accordance therewith, and (ii) the date on which all securities covered by the Shelf Registration Statement cease to be Registrable Securities (as defined in Section 1.1). Without limiting the foregoing, the Company shall prepare and file with the Commission such amendments and post-effective amendments to the Shelf Registration Statement, and such supplements to the prospectus contained therein, as may be necessary to keep the Shelf Registration Statement effective and the prospectus current and usable for the periods described above.
(d) Shelf Takedowns. At any time while the Shelf Registration Statement is effective, the Holder shall be entitled to initiate underwritten offerings of Registrable Securities off the Shelf Registration Statement (each, an "Underwritten Shelf Takedown"), subject to the following conditions:
(i) the Registrable Securities to be sold in any Underwritten Shelf Takedown shall have a minimum anticipated aggregate offering price (net of underwriting discounts and commissions) of at least Five Million Dollars ($5,000,000);
(ii) the Company shall not be required to effect more than two (2) Underwritten Shelf Takedowns in any twelve (12) month period;
(iii) the Holder shall deliver written notice to the Company specifying the number of Registrable Securities to be sold, the anticipated timing of the offering, and the identity of the proposed managing underwriter or underwriters (subject to the Company's reasonable approval, not to be unreasonably withheld, conditioned, or delayed); and
(iv) the Company shall use commercially reasonable efforts to cooperate with the Holder and the managing underwriter or underwriters in connection with each Underwritten Shelf Takedown, including by preparing and filing any necessary prospectus supplements or amendments to the Shelf Registration Statement.
(e) No Effect on Demand Registrations. A Shelf Registration Statement filed pursuant to this Section 2.3 shall not count as one of the two (2) Demand Registrations available to the Holder under Section 2.1.
Section 2.4 — Postponement and Suspension Rights.
(a) Blackout Period. Notwithstanding any other provision of this Agreement, the Company may postpone the filing or the effectiveness of, or suspend the Holder's use of, any registration statement filed or to be filed pursuant to this Agreement for a period not to exceed sixty (60) days (each such period, a "Blackout Period") if the Board determines in good faith, by resolution duly adopted by a majority of the directors then in office, that:
(i) such registration, offering, or continued use of the registration statement or the prospectus contained therein would require the disclosure of material non-public information that has not been, and is not otherwise required to be, disclosed to the public at such time, and such premature disclosure would be materially detrimental to the Company or its securityholders; or
(ii) such registration, offering, or continued use of the registration statement would materially interfere with any bona fide financing, acquisition, disposition, recapitalization, reorganization, or other material transaction involving the Company or any of its subsidiaries that is then being actively pursued by the Company.
(b) Limitations on Blackout. The Company shall not exercise its postponement and suspension rights under this Section 2.4 more than two (2) times in any twelve (12) month period. In addition, the aggregate number of days of all Blackout Periods in any twelve (12) month period shall not exceed one hundred twenty (120) days. If the Company exercises its postponement and suspension rights under this Section 2.4, the time periods for maintaining effectiveness of any registration statement under this Agreement shall be extended by the number of days during which the Blackout Period was in effect.
(c) Notice and Confidentiality. The Company shall promptly notify the Holder in writing of (i) the commencement of any Blackout Period (including the date on which such Blackout Period begins), and (ii) the termination of any Blackout Period (including the date on which such Blackout Period ends). The Company shall not be required to disclose to the Holder the specific nature of the events or circumstances giving rise to the Blackout Period. Upon receipt of notice of the commencement of a Blackout Period, the Holder shall (A) keep the existence and contents of such notice strictly confidential (except to the extent disclosure is required by law, regulation, or legal process), (B) immediately discontinue any offers and sales of Registrable Securities pursuant to the applicable registration statement until the Holder receives notice from the Company that the Blackout Period has ended and the registration statement may again be used for the sale of Registrable Securities, and (C) not effect any offers or sales of Registrable Securities in any manner that would violate the Securities Act.
Section 2.5 — Registration Procedures.
In connection with each registration of Registrable Securities effected pursuant to this Agreement (whether a Demand Registration, a Piggyback Registration, or a registration pursuant to a Shelf Registration Statement), the Company shall:
(a) Prepare and file with the Commission the applicable registration statement and prospectus (and all exhibits, financial statements, and other documents required to be filed therewith), including all financial statements of the Company audited by Braddock & Saylor LLP (or such other independent registered public accounting firm as may then be engaged by the Company), and use commercially reasonable efforts to cause such registration statement to comply with the requirements of the Securities Act and the rules and regulations promulgated thereunder. The Company shall prepare and file with the Commission such pre-effective and post-effective amendments to the registration statement, and such supplements to the prospectus, as may be necessary to keep the registration statement effective and the prospectus current and in compliance with the provisions of the Securities Act for the applicable period required under this Agreement.
(b) Use commercially reasonable efforts to cause the registration statement to become effective under the Securities Act as promptly as practicable after filing and to remain effective for the period required under this Agreement, and to obtain all consents, approvals, or authorizations of any governmental authority required in connection therewith.
(c) Furnish to the Holder, to counsel designated by the Holder, and to each Underwriter participating in the offering, if any, at least five (5) Business Days prior to the filing thereof, reasonable advance copies of the registration statement, the prospectus, and each amendment and supplement thereto (including all documents incorporated by reference therein), and afford the Holder and its counsel a reasonable opportunity to review and comment on such documents prior to filing. The Company shall give reasonable consideration in good faith to any comments received from the Holder and its counsel on such documents.
(d) Promptly notify the Holder (and each Underwriter participating in the offering, if any) of:
(i) the effectiveness of the registration statement or any post-effective amendment thereto;
(ii) the issuance by the Commission of any stop order suspending the effectiveness of the registration statement or the initiation or threat of any proceedings for that purpose, in which event the Company shall use commercially reasonable efforts to obtain the withdrawal of any such stop order at the earliest practicable date;
(iii) the receipt by the Company of any written comments from the Commission or any request by the Commission for amendments or supplements to the registration statement or the prospectus or for additional information;
(iv) the occurrence of any event or passage of time that makes the financial statements included or incorporated by reference in the registration statement ineligible for inclusion therein or any statement made in the registration statement or prospectus untrue in any material respect or that requires the making of any changes in the registration statement or prospectus so that, in the case of the registration statement, it will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and in the case of the prospectus, it will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and
(v) the Company's reasonable determination that a post-effective amendment to the registration statement would be advisable.
(e) Use commercially reasonable efforts to register or qualify the Registrable Securities under the securities or "blue sky" laws of such jurisdictions within the United States as the Holder or any Underwriter may reasonably request in writing, and to take all other actions as may be reasonably necessary or advisable to enable the sale of Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required to (i) qualify generally to do business as a foreign corporation in any jurisdiction in which it is not then so qualified, (ii) consent to general service of process in any jurisdiction in which it has not previously consented to such service, or (iii) subject itself to taxation in any such jurisdiction where it is not then so subject.
(f) Cooperate with the Holder and any Underwriter to facilitate the timely preparation and delivery of certificates (or electronic book-entry positions through The Depository Trust Company or its nominee) representing Registrable Securities to be sold pursuant to any registration statement, which certificates or book-entry positions shall be free of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as the Holder or any Underwriter may reasonably request at least two (2) Business Days prior to the closing of any sale of Registrable Securities.
(g) Use commercially reasonable efforts to cause all Registrable Securities covered by a registration statement to be listed on each securities exchange or automated quotation system (including the New York Stock Exchange or the Nasdaq Stock Market, as applicable) on which securities of the same class or series issued by the Company are then listed or proposed to be listed, and to comply with all requirements of such exchange or quotation system as are necessary to maintain such listing.
(h) Provide and maintain a transfer agent and registrar for the Registrable Securities, which transfer agent and registrar shall be reasonably acceptable to the Holder.
(i) Enter into and perform under such customary agreements (including underwriting agreements in customary form containing customary representations, warranties, covenants, indemnification provisions, and contribution provisions) and take such other actions as the Holder or any Underwriter may reasonably request in order to expedite or facilitate the registration and disposition of Registrable Securities, including:
(i) making such representations and warranties to the Holder, any selling securityholders, and any Underwriter as are customarily made by issuers to underwriters in underwritten public offerings and confirming the same if and when requested;
(ii) obtaining and delivering to any Underwriter one or more "comfort letters" from the Company's independent registered public accounting firm (currently Braddock & Saylor LLP) in customary form and covering such matters of the type customarily covered by comfort letters as the Holder or the managing Underwriter may reasonably request;
(iii) obtaining and delivering to any Underwriter one or more opinions and negative assurance letters from counsel for the Company in customary form and covering such matters of the type customarily covered by such opinions and negative assurance letters as the Holder or the managing Underwriter may reasonably request; and
(iv) delivering such documents and certificates as the Holder or the managing Underwriter may reasonably request in connection with the closing of any underwritten offering.
(j) Use commercially reasonable efforts to cause the Company's officers (including Marcus W. Ellison, Chief Executive Officer, and Janet R. Prescott, Chief Financial Officer, or their respective successors) to cooperate fully in the marketing of the Registrable Securities covered by any registration statement, including by making themselves available for and participating in "road show" presentations, one-on-one meetings with prospective investors, analyst presentations, and other customary selling efforts, at such times and places as the Holder or the managing Underwriter may reasonably request.
(k) Make available to the Holder and any Underwriter such financial and other information concerning the Company, its business, operations, financial condition, and prospects as is customarily made available in connection with offerings of securities, including all periodic and current reports filed under the Exchange Act, and such other information as the Holder, any Underwriter, or their respective counsel may reasonably request.
(l) Otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission and all reporting requirements under the Securities Act and the Exchange Act, and make generally available to its securityholders earning statements satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder as soon as practicable after the effective date of each registration statement.
Section 2.6 — Registration Expenses.
(a) Definition of Registration Expenses. As used in this Agreement, "Registration Expenses" shall mean all fees, costs, and expenses incurred by the Company in connection with or related to any Demand Registration, Piggyback Registration, or Shelf Registration effected pursuant to this Agreement, including: (i) all SEC registration and filing fees; (ii) all fees and expenses associated with filings required to be made with the Financial Industry Regulatory Authority, Inc. ("FINRA"); (iii) all fees and expenses of compliance with federal and state securities or blue sky laws (including fees and disbursements of counsel for the Company in connection with blue sky qualifications of the Registrable Securities); (iv) all fees and expenses in connection with the listing of the Registrable Securities on any securities exchange or automated quotation system; (v) all printing, duplicating, and distribution expenses (including expenses of printing certificates for the Registrable Securities in a form eligible for deposit with The Depository Trust Company and of printing prospectuses and prospectus supplements); (vi) all fees and expenses of counsel for the Company (including Calderwood & Harkness LLP or any successor firm); (vii) all fees and expenses of the Company's independent registered public accounting firm (currently Braddock & Saylor LLP), including fees incurred in connection with the preparation and delivery of comfort letters; (viii) all road show expenses of the Company (including travel, lodging, and meals for officers and other representatives of the Company); (ix) all fees and expenses of any transfer agent or registrar; and (x) all other customary expenses incidental to the registration, qualification, and disposition of Registrable Securities. Registration Expenses shall not include Selling Expenses.
(b) Definition of Selling Expenses. As used in this Agreement, "Selling Expenses" shall mean all (i) underwriting discounts and selling commissions applicable to the sale of Registrable Securities by the Holder, (ii) stock transfer taxes applicable to the sale of Registrable Securities by the Holder, and (iii) fees and disbursements of the Holder's own counsel incurred in connection with any registration (subject to the reimbursement provision set forth in Section 2.6(d) below).
(c) Allocation. The Company shall bear and pay all Registration Expenses in connection with all Demand Registrations, Piggyback Registrations, and Shelf Registrations effected pursuant to this Agreement. The Holder shall bear and pay all Selling Expenses attributable to the sale of Registrable Securities by the Holder.
(d) Holder's Counsel Fees. For the avoidance of doubt, the fees and disbursements of Archer Blackwell & Moss LLP (or any successor counsel to the Holder) incurred in connection with any registration shall be borne by the Holder and shall constitute Selling Expenses; provided, however, that the Company shall reimburse the Holder for the reasonable fees and disbursements of one (1) counsel to the Holder in connection with each registration in an amount not to exceed Seventy-Five Thousand Dollars ($75,000) per registration. Such reimbursement shall be paid by the Company within thirty (30) days after receipt of reasonable documentation of such fees and disbursements.
Section 2.7 — Lock-Up Agreements.
(a) Holder Lock-Up. In connection with any underwritten offering of the Company's equity securities pursuant to this Agreement or otherwise, the Holder shall, if requested by the managing Underwriter or Underwriters for such offering, agree not to (i) sell, offer to sell, contract to sell, pledge, grant any option, right, or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any Registrable Securities (other than those Registrable Securities included in such registration and offering) or any securities convertible into or exercisable or exchangeable for Registrable Securities, or (ii) enter into any swap or other agreement, arrangement, hedge, or transaction that transfers to another, in whole or in part, directly or indirectly, the economic consequence of ownership of any Registrable Securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Registrable Securities, in cash, or otherwise, in each case, for a period not to exceed ninety (90) days following the effective date of the applicable registration statement (or such shorter period as the managing Underwriter or Underwriters may agree to in writing) (the "Lock-Up Period"). The foregoing restrictions shall not apply to (A) Registrable Securities included in the applicable registration statement, or (B) transfers of Registrable Securities to a Permitted Transferee who agrees to be bound by the restrictions set forth in this Section 2.7(a) for the remainder of the Lock-Up Period.
(b) Company's Obligation to Cause Lock-Up by Others. The Company shall use commercially reasonable efforts to cause each of its officers, directors, and holders of five percent (5%) or more of its outstanding equity securities (including, without limitation, Cascade Ridge SLG Holdings, LLC and Cascade Ridge Capital Partners, LLC) to enter into lock-up agreements on terms substantially similar to the terms set forth in Section 2.7(a) above in connection with any underwritten offering in which the Holder is subject to a lock-up restriction.
(c) Stop Transfer Instructions. In furtherance of the foregoing, the Company and its transfer agent and registrar are hereby authorized to decline to make any transfer of securities if such transfer would constitute a violation or breach of the lock-up restrictions described in this Section 2.7.
ARTICLE III — INDEMNIFICATION
Section 3.1 — Indemnification by the Company.
(a) In connection with any registration of Registrable Securities pursuant to this Agreement, the Company shall indemnify, defend, and hold harmless, to the fullest extent permitted by applicable law, the Holder, its Affiliates (including Ridgeline Capital Management, LLC, in its capacity as the general partner of the Holder), and their respective officers, directors, partners, members, managers, employees, agents, and representatives, and each Person who controls any of the foregoing Persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), and each Underwriter, if any, and each Person who controls any Underwriter (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) (each, a "Holder Indemnified Person"), from and against any and all losses, claims, damages, liabilities, judgments, actions, proceedings, costs, and expenses (including reasonable attorneys' fees and expenses of investigation and litigation) (collectively, "Losses") arising out of, resulting from, or based upon:
(i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement, any prospectus (preliminary, final, or summary), or any amendment or supplement thereto, or any document incorporated by reference therein, or any free writing prospectus (as defined in Rule 405 under the Securities Act) filed or used in connection with such registration; or
(ii) any omission or alleged omission of a material fact required to be stated in any such registration statement, prospectus, amendment, supplement, incorporated document, or free writing prospectus, or necessary to make the statements therein (in the case of a prospectus or any supplement thereto, in the light of the circumstances under which they were made) not misleading.
(b) Exception. The Company shall not be liable under this Section 3.1 for any Loss to the extent that such Loss arises out of or is based upon any untrue statement or alleged untrue statement of a material fact, or any omission or alleged omission of a material fact, made in reliance upon and in conformity with written information furnished to the Company by the Holder or on the Holder's behalf specifically for use in the applicable registration statement, prospectus, amendment, supplement, or free writing prospectus.
(c) Procedure. Promptly after receipt by any Holder Indemnified Person of notice of the commencement of any claim, action, suit, or proceeding with respect to which indemnification may be sought under this Section 3.1, such Holder Indemnified Person shall notify the Company in writing of the commencement thereof; provided, however, that the failure to so notify the Company shall not relieve the Company from any obligation or liability that it may have under this Section 3.1, except to the extent that the Company is materially prejudiced by such failure. The Company shall have the right to assume the defense of any such claim, action, suit, or proceeding with counsel reasonably satisfactory to the Holder Indemnified Person, and after notice from the Company of its election to assume the defense thereof, the Company shall not be obligated to pay the fees and expenses of separate counsel to the Holder Indemnified Person unless (i) the Company has agreed in writing to pay such fees and expenses, (ii) the Company has failed to assume the defense of such claim, action, suit, or proceeding within a reasonable period of time, or (iii) the Holder Indemnified Person shall have been advised by counsel that a conflict of interest exists between the Company and the Holder Indemnified Person that makes representation by the same counsel inappropriate. No Holder Indemnified Person shall consent to entry of any judgment or enter into any settlement without the prior written consent of the Company, which consent shall not be unreasonably withheld, conditioned, or delayed. The Company shall not, without the prior written consent of the Holder Indemnified Person, consent to entry of any judgment or enter into any settlement that (A) does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Holder Indemnified Person of a release from all liability in respect of such claim, action, suit, or proceeding, or (B) includes any statement as to or any admission of fault, culpability, or a failure to act by or on behalf of the Holder Indemnified Person.
Section 3.2 — Indemnification by the Holder.
(a) In connection with any registration of Registrable Securities pursuant to this Agreement in which the Holder participates, the Holder shall indemnify, defend, and hold harmless, to the fullest extent permitted by applicable law, the Company, its officers (including, without limitation, Marcus W. Ellison, Janet R. Prescott, and Robert D. Nagamine), directors, employees, agents, and representatives, and each Person who controls the Company (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), and each Underwriter, if any, and each Person who controls any Underwriter (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) (each, a "Company Indemnified Person"), from and against any and all Losses arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any registration statement, prospectus (preliminary, final, or summary), amendment, supplement, or free writing prospectus, or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus or any supplement thereto, in the light of the circumstances under which they were made) not misleading, but only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by the Holder or on the Holder's behalf specifically for use in such registration statement, prospectus, amendment, supplement, or free writing prospectus.
(b) Liability Cap. Notwithstanding anything to the contrary in this Section 3.2, the Holder's aggregate indemnification obligations under this Section 3.2 shall in no event exceed the amount of net proceeds actually received by the Holder from the sale of Registrable Securities pursuant to the registration giving rise to such indemnification obligation.
(c) Procedure. The procedures for indemnification claims set forth in Section 3.1(c) shall apply mutatis mutandis to indemnification claims under this Section 3.2.
Section 3.3 — Contribution.
(a) If the indemnification provided for in Section 3.1 or Section 3.2 is unavailable to, or is insufficient to hold harmless, an indemnified Person in respect of any Losses for which such indemnified Person is entitled to indemnification hereunder, then each indemnifying Person shall contribute to the amount paid or payable by such indemnified Person as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the Holder on the other hand in connection with the statements or omissions which resulted in such Losses, as well as the relative benefits received by the Company on the one hand and the Holder on the other hand from the offering of securities, and any other relevant equitable considerations. The relative fault of the Company on the one hand and the Holder on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission of a material fact relates to information supplied by the Company or by the Holder, and each Person's relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission.
(b) Holder's Contribution Cap. Notwithstanding anything to the contrary in this Section 3.3, in no event shall the Holder's contribution obligation under this Section 3.3 exceed the amount of net proceeds actually received by the Holder from the sale of Registrable Securities giving rise to such contribution obligation.
(c) Fraudulent Misrepresentation. 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.
(d) Equitable Considerations. The Parties agree that it would not be just and equitable if contribution pursuant to this Section 3.3 were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in this Section 3.3.
Section 3.4 — Survival.
The indemnification and contribution obligations of the Company and the Holder under this Article III shall survive the termination of this Agreement and any transfer of Registrable Securities by the Holder, and shall remain in full force and effect regardless of any investigation made by or on behalf of any indemnified Person.
ARTICLE IV — HOLDER INFORMATION AND COOPERATION
Section 4.1 — Information from Holder.
(a) In connection with any registration of Registrable Securities pursuant to this Agreement, the Holder shall furnish to the Company such written information regarding the Holder, the Registrable Securities held by the Holder, and the intended method or methods of disposition of such Registrable Securities as the Company or any Underwriter may reasonably request in connection with the preparation and filing of the applicable registration statement, prospectus, and any amendment or supplement thereto. Such information shall include, without limitation, the Holder's legal name, address, the number of Registrable Securities beneficially owned by the Holder, and any other information required by the Securities Act, the Exchange Act, or the rules and regulations promulgated thereunder, or reasonably requested by any Underwriter.
(b) The Holder shall promptly notify the Company in writing if, at any time prior to the completion of the distribution of Registrable Securities under any registration statement, any information previously furnished by the Holder to the Company for use in the registration statement, prospectus, or any amendment or supplement thereto becomes inaccurate or incomplete in any material respect, and shall provide the Company with such corrected or supplemental information as may be necessary to ensure that such registration statement or prospectus does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein (in the case of a prospectus, in the light of the circumstances under which they were made) not misleading.
Section 4.2 — Cooperation.
The Holder shall cooperate with the Company and any Underwriter as may be reasonably requested in connection with the preparation and filing of any registration statement hereunder, including by:
(a) timely executing and delivering all customary documents reasonably requested in connection with a registration, including selling stockholder questionnaires, powers of attorney, custody agreements, and underwriting agreements containing customary representations, warranties, and covenants;
(b) providing information regarding the Holder's ownership of Registrable Securities and any plans for the disposition thereof as may be required by the Commission, any state securities regulatory authority, any stock exchange, or any Underwriter;
(c) making available appropriate representatives of the Holder for participation in due diligence sessions as reasonably requested by the Company, any Underwriter, or their respective counsel; and
(d) taking all other actions as may be reasonably necessary to permit the consummation of any offering of Registrable Securities in accordance with the terms of this Agreement.
ARTICLE V — RULE 144 COMPLIANCE
Section 5.1 — Rule 144 Reporting.
(a) At such time as the Company becomes subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act, the Company shall use commercially reasonable efforts to:
(i) file with the Commission in a timely manner all reports, schedules, forms, statements, and other documents required to be filed by it under the Securities Act and the Exchange Act (including all reports on Forms 10-K, 10-Q, and 8-K, and all proxy statements and annual reports to stockholders) so as to enable the Holder to sell Registrable Securities without registration under the Securities Act within the limitations of the exemption provided by Rule 144, as such Rule may be amended from time to time;
(ii) so long as the Holder holds any Registrable Securities, make and keep available adequate current public information with respect to the Company, as such term is understood and defined in Rule 144(c) (or any successor provision);
(iii) furnish to the Holder, upon request, (A) a written statement by the Company as to whether the Company has complied with the reporting requirements of Rule 144(c) and Section 13 or Section 15(d) of the Exchange Act, (B) a copy of the most recent annual and quarterly reports of the Company, and (C) such other reports and documents of the Company as the Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing the Holder to sell Registrable Securities without registration; and
(iv) take such further action as the Holder may reasonably request, all to the extent required from time to time to enable the Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 (or any successor provision).
(b) Upon the request of the Holder, the Company shall deliver to the Holder a written statement as to whether it has complied with the reporting requirements of Section 13 or Section 15(d) of the Exchange Act and Rule 144 thereunder, and such other information as may be reasonably necessary for the Holder to determine whether Rule 144 is available with respect to any proposed sale of Registrable Securities.
ARTICLE VI — TRANSFERS OF REGISTRATION RIGHTS
Section 6.1 — Assignment.
(a) The rights of the Holder under this Agreement may be assigned, in whole or in part, by the Holder to any Permitted Transferee who acquires Registrable Securities from the Holder; provided that, as a condition precedent to the effectiveness of any such assignment:
(i) such Permitted Transferee shall have agreed in writing to be bound by all of the terms and conditions of this Agreement as if such Permitted Transferee were the "Holder" hereunder, by executing and delivering to the Company a joinder agreement substantially in the form attached hereto as Exhibit A (a "Joinder Agreement");
(ii) the Company shall have been given written notice of such assignment and transfer within ten (10) Business Days after the consummation thereof, which notice shall include the name and address of the Permitted Transferee and the number of Registrable Securities transferred; and
(iii) such transfer shall have been made in compliance with all applicable federal and state securities laws.
(b) For purposes of this Agreement, a "Permitted Transferee" includes (i) any Affiliate of the Holder, (ii) any successor fund or parallel fund managed by Ridgeline Capital Management, LLC, or any of its Affiliates, and (iii) any other transferee who acquires Registrable Securities and executes a Joinder Agreement in accordance with this Section 6.1.
(c) Upon the execution and delivery of a Joinder Agreement by a Permitted Transferee, such Permitted Transferee shall be deemed to be a "Holder" for all purposes of this Agreement with respect to the Registrable Securities acquired by such Permitted Transferee, and shall have all of the rights and obligations of the Holder hereunder with respect to such Registrable Securities.
Section 6.2 — No Transfer of Company Obligations.
This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns; provided, however, that the Company may not assign or delegate its obligations under this Agreement to any Person without the prior written consent of the Holder, and any purported assignment or delegation in violation of this Section 6.2 shall be null and void and of no force or effect. Notwithstanding the foregoing, in the event of a merger, consolidation, or other business combination in which the Company is not the surviving entity, or a sale of all or su