EXHIBIT 10.8
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT, dated as of December 31, 1998, is among
XXX-XXXX.xxx, INC., a Delaware corporation (the "Company"), Xxxxxx X. Xxxxxxxx,
a director, officer, and shareholder of the Company ("Borislow"), Xxxx Xxxxx, as
Trustee of that certain D&K Grantor Retained Annuity Trust dated June 15, 1998
(the "Trust"), and _______, as Trustee of that certain D&K Grantor Retained
Annuity Trust II dated ______, 1998 ("Trust II"). Borislow, the Trust, Trust II,
and Affiliates of Borislow may sometimes be referred to herein individually as a
"Purchaser" and two or more of them may sometimes be referred to herein as the
"Purchasers."
RECITALS:
X. Xxxxxxxx is the owner beneficially and of record of certain
securities;
B. Contemporaneously herewith, Borislow and the Company are entering into
that certain Severance Agreement and related agreements, and desire to
enter into this Registration Rights Agreement in connection therewith.
NOW THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
1. Definitions
"Affiliate" shall have the meaning defined for that term in the rules and
regulations promulgated under the Exchange Act.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means Common Stock, par value $.01 per share, of Holdings.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Prospectus" means the prospectus included in any Registration Statement,
as amended or supplemented by any prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities covered by
the Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
"Registrable Securities" means as of any date the shares of Common Stock of
the Company owned of record and beneficially by Borislow or the Trust or Trust
II or any Affiliate of Borislow at the date hereof and any Common Stock issued
or issuable with respect to any other securities held on the date hereof by any
such parties (w) by conversion, (x) by way of stock split, stock dividend or
other distribution, (y) in connection with a combination of shares,
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recapitalization, merger, consolidation or other reorganization or (z) in any
other way. Any Registrable Security will cease to be a Registrable Security when
a Registration Statement covering such Registrable Security has been declared
effective by the Commission and such Registrable Securities have been disposed
of pursuant to such effective Registration Statement, (ii) it is sold under
circumstances in which all of the applicable conditions of Rule 144 (or any
similar provisions then in force) under the Securities Act are met or it may be
sold pursuant to Rule 144(k) under the Securities Act or (iii) it has been
otherwise transferred, and the Company has delivered a new certificate or other
evidence of ownership for it not bearing a legend and it may be resold without
subsequent registration under the Securities Act.
"Registration Statement" means any registration statement of the Company,
including the prospectus, amendments and supplements to such Registration
Statement, including post-effective amendments, and all exhibits and all
material incorporated by reference in such Registration Statement, which relates
to Registrable Securities.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Shareholder" shall have the meaning set forth in Section 3(a).
"Underwriter" means a securities dealer that purchases any Registrable
Securities as principal and not as part of such dealer's market-making
activities.
2. Purchaser Understandings and Agreements
Each of the Purchasers agrees that it will not sell, pledge, assign,
transfer or otherwise dispose (collectively, "Transfer") of any of such
restricted Registrable Securities unless the Transfer will be made pursuant to
an exemption from the registration requirements of the Securities Act or
pursuant to an effective registration statement under the Securities Act and
pursuant to an exemption from any applicable state securities laws or an
effective registration or other qualification under any applicable state
securities laws. Exemptions from such registration requirements are limited and
the Company understands that each of the Purchasers has obtained advice from its
own counsel as to the nature and conditions of such exemptions. The Company is
under no obligation to register the Registrable Securities except as provided in
Section 3. The Company shall not incur any liability for any delay in
recognizing any Transfer of any restricted Registrable Security if the Company
reasonably believes that such Transfer may have been or would be in violation of
the provisions of applicable law or of this Agreement.
3. Registration Procedures
(a) As soon as practicable after the date hereof, the Company shall file,
at its sole election, either (A) a Registration Statement on Form S-3 (or its
then equivalent) to permit resale of all of the Registrable Securities held by
the Purchasers or (B) a "shelf" Registration Statement on Form S-3 (or its then
equivalent) with respect to the resale of all of the Registrable Securities held
by the Purchasers pursuant to Rule 415 (or any similar provision that may be
adopted by the Commission) under the Securities Act; provided that the Company,
at its election, may delay such filing or the effectiveness of the Registration
Statement, but not beyond the date of filing of its next quarterly or annual
report with the Commission under the Exchange Act, whichever is earlier, if the
Board of Directors of the Company shall have determined in good faith that such
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filing or effectiveness would be detrimental to the Company's business
interests. The Company shall give twenty (20) days notice to each of the
Purchasers of such registration. In its capacity as a holder of Registrable
Securities that are to be included in the Registration Statement, each of the
Purchasers is sometimes referred to as the "Selling Shareholder".
(b) The Company agrees to use commercially reasonable efforts to have the
Registration Statement described in Section 3(a) declared effective as soon as
practicable after the date of filing thereof, but in any event, within sixty
(60) days after such filing, and to keep such Registration Statement effective
for a period of not less than two (2) years after effectiveness, except that
such Date shall be extended by one day for each day beyond thirty (30) days that
the filing of the Registration statement is delayed pursuant to the provisions
of Section 4(b).
(c) Nothing in this Section 3 shall require the Company to file a
registration statement for an underwritten offering or to participate therein.
4. Registration
In connection with the Registration Statement filed pursuant to Section 3
hereof:
(a) The Company may require the Selling Shareholders to furnish to the
Company such information regarding the distribution of such securities as the
Company may from time to time reasonably request in writing as being necessary
or appropriate for completion of the Registration Statement, and each Selling
Shareholder agrees to cooperate with the Company in all reasonable respects in
connection with the preparation and filing of any Registration Statements
hereunder in which such Registrable Securities are included or expected to be
included.
(b) The Selling Shareholders agree that, at any time when any Registration
Statement is effective, upon receipt of any written notice from the Company of
the happening of any of the following events: (i) any request by the Commission
for amendments or supplements to the Registration Statement or the Prospectus or
for additional information, (ii) the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, (iii) the receipt by the Company
of any notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, and (iv) the existence of any
fact (including, without limitation, any fact the disclosure of which at such
time the Board of Directors of the Company shall have determined in good faith
would be detrimental to the Company's business interests) that results in the
Registration Statement, the Prospectus or any document incorporated therein by
reference containing an untrue statement of material fact or omitting to state a
material fact required to be stated therein or necessary to make the
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statements therein (in light of the circumstances under which they were made, in
the case of the Prospectus) not misleading (provided that the Company may not
exercise this right for more than ninety (90) days in any twelve month period),
the Selling Shareholders will forthwith discontinue disposition of Registrable
Securities pursuant to the Registration Statement until such Selling
Shareholder's receipt of copies of a supplemented or amended Prospectus that
does not contain an untrue statement of a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, or until it is advised
in writing by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings that are incorporated
by reference in the Prospectus and, if so directed by the Company , such Selling
Shareholder will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies then in such Selling Shareholder's possession,
of the Prospectus covering such Registrable Securities current at the time of
receipt of such notice.
(c) The Company shall pay the costs and expenses of preparation and filing
of: any Registration Statement filed in accordance with Section 3(a), including
the costs of printing and distributing the Registration Statement and any
preliminary and final Prospectus, the fees and disbursements of counsel to the
Company (including fees and disbursements incurred for "blue sky" matters), the
costs and expenses of its accountants, any registration or other fees payable to
the Commission, any stock exchange, the National Association of Securities
Dealers, Inc., and underwriting or brokerage fees, discounts or commissions and
any transfer taxes. All other costs shall be paid by the Selling Shareholder,
including fees and disbursements of its counsel. In connection with any such
Registration Statement, the Selling Shareholder shall furnish the Company with
such information as may be required for inclusion in the Registration Statement
or for submission to the Commission concerning the Selling Shareholder, the
Shares and any plan of distribution.
(d) (i) The Selling Shareholders shall indemnify and hold harmless the
Company, its directors, its officers who sign the Registration Statement and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act against any and all losses, claims, damages and
liabilities (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit,
proceeding or asserted claim) insofar as such losses, claims, damages and
liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
any amendments thereto or any Prospectus or preliminary prospectus forming a
part thereof or any supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, if and to the extent such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished by such
Selling Shareholder expressly for inclusion in such Registration Statement,
Prospectus, preliminary prospectus, amendment or supplement. In connection with
an underwritten offering of the Registrable Securities, the Underwriter will
enter into an agreement under which such Underwriter will indemnify the Company
to the extent that any untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished by such Underwriter specifically for inclusion in the
Registration Statement, Prospectus, preliminary prospectus, amendment or
supplement.
(ii) The Company shall indemnify and hold harmless and Selling
Shareholder and any of its trustees, directors, officers and partners and each
person, if any, who controls the Selling Shareholder within the meaning of
Section 15 of the Securities Act against any and all losses, claims, damages and
liabilities, joint or several (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action,
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suit, proceeding or asserted claim) insofar as such losses, claims, damages and
liabilities arise out of or are based upon. any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement and
any amendments thereto or any Prospectus or preliminary prospectus forming a
part thereof or any supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except any such untrue statement or
alleged untrue statement or omission or alleged omission that is made in
reliance upon and in conformity with information furnished by any Selling
Shareholder in writing specifically for inclusion in such Registration
Statement, Prospectus, preliminary prospectus, amendment or supplement;
provided, that the Company shall not be liable in any such case to or in respect
of a Selling Shareholder to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any preliminary
prospectus if such Selling Shareholder failed to send or deliver a copy of the
Prospectus with or prior to the delivery of written confirmation of the sale of
Registrable Securities and (ii) the Prospectus would have completely corrected
such untrue statement or omission; and provided, further, that the Company shall
not be liable in any such case to or in respect of the Selling Shareholder to
the extent that any such loss, claim, damage, liability or expense arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission in the Prospectus, if such untrue statement or alleged untrue
statement, omission or alleged omission is completely corrected in an amendment
or supplement to the Prospectus and if, having previously been furnished by or
on behalf of the Company with copies of the Prospectus as so amended. or
supplemented, such Selling Shareholder thereafter fails to deliver (if and to
the extent required by the Securities Act) such Prospectus as so amended or
supplemented, prior to or concurrently with the sale of a Registrable Security
to the person asserting such loss, claim, damage, liability or expense who
purchased such Registrable Security that is the subject thereof from such
Selling Shareholder. In connection with any underwritten offering of Registrable
Securities, the Company will enter into an agreement under which the Company
will agree to indemnify the Underwriters to the same extent as it indemnifies
the Selling Shareholders.
(iii) Any party that proposes to assert the right to be indemnified
under this Section 4(d) will promptly after receipt of notice of commencement of
any action, suit or proceeding against such party in respect of which a claim is
to be made against an indemnifying party under this Section 4(d), notify each
such indemnifying party of the commencement of such action, suit or proceeding,
enclosing a copy of all papers served, but the omission so to notify such
indemnifying party or any such action, suit or proceeding shall not relieve it
from any liability that it may have to any indemnified party otherwise than
under this Section 4(d). In case any such action, suit or proceeding shall be
brought against any indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel 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, other than reasonable costs of
investigation subsequently incurred by such indemnified party in connection with
the defense thereof. The indemnified party shall have the right to employ its
counsel in any such action, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the
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employment of counsel by such indemnified party has been authorized by the
indemnifying parties, (ii) the indemnified party shall have reasonably concluded
that there may be a conflict of interest between the indemnifying parties and
the indemnified party in the conduct of the defense of such action (in which
case the indemnifying parties shall not have the right to direct the defense of
such action on behalf of the indemnified party) or (iii) the indemnifying
parties shall not in fact have employed counsel to assume the defense of such
action. An indemnifying party shall not be liable for any settlement of any
action or claim effected without its consent.
(e) The Company, obligation to effect registration of Registrable
Securities hereunder shall include such qualification under applicable blue sky
or other state securities laws as may be necessary to enable the Selling
Shareholders to offer and sell the Registrable Securities.
(f) The Company shall furnish as soon as available to each Purchaser such
number of copies of (i) preliminary and final versions of such registration
statement and of each amendment, post-effective amendment and supplement thereto
(in each case including exhibits), (ii) preliminary and final versions 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, in conformity with the requirements of the
Securities Act, and (iii) such other documents relating to such registration
statement, all as each Purchaser may reasonably request
(g) The Company shall prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such Registration Statement
effective and to comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities.
(h) The Company shall use its best efforts to register or qualify such
Registrable Securities under such securities or blue sky laws of such
jurisdictions as the Purchasers shall reasonably request, and do any and all
other acts and things that may be necessary or advisable to enable each
Purchaser to consummate the disposition in such jurisdictions of its Registrable
Securities covered by such Registration Statement; provided, however, that
Holdings shall not be obligated to file any general consent to service of
process or to qualify as a foreign corporation or subject itself to taxation in
any jurisdiction in which it is not so qualified.
5. Reporting Requirements
(a) With a view to making available the benefits of certain rules and
regulations of the Commission that may at any time permit the sale of Shares to
the public without registration or a registration on SEC Form S-3, the Company
agrees to use its best efforts to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(ii) file with the Commission in a timely manner all reports and other
documents required of Holdings under the Securities Act and the Exchange Act;
and
(iii) so long as any of the Purchasers own Registrable Securities, to
furnish to the Purchasers forthwith upon request (1) a written statement by the
Company as to whether it
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complies with the reporting requirements of said Rule 144, the Securities Act
and the Exchange Act, or whether it qualifies as a registrant whose securities
may be resold pursuant to SEC Form S-3, (2) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (3) such other information as may be reasonably requested in
availing the Selling Shareholders of any rule or regulation of the Commission
that would permit the selling of the Registrable Securities without
registration.
6. Opinion of Counsel
Notwithstanding the other provisions of this Agreement, the condition set
forth in the first sentence of Section 2(b) as to each of the Purchasers shall
be deemed satisfied upon submission to the Company of an opinion, in form and
substance satisfactory to the Company and its counsel, of counsel reasonably
satisfactory to the Company and its counsel to the effect that a proposed sale,
Transfer or other disposition of the Shares held by such Purchaser may be made
without registration under the Act. Upon receipt of such an opinion, the Company
will issue a new certificate without the foregoing legend in substitution for
any such certificate bearing such legend.
7. Other Covenants of the Company.
(a) The Company agrees that in the event that it makes a public or private
offering of its debt securities in exchange for cash, to the extent
permitted by law the Company will, at the option of Borislow, utilize:
(i) up to twenty percent (20%) of the net cash proceeds of that
offering to the Company after payment of the expenses relating to the
offering that are to be borne by the Company (the "Net Cash Proceeds")
to repurchase at their then fair market value any convertible
subordinated notes of the Company then owned of record and
beneficially by Borislow, Trust II, or the Trust; and (ii) up to forty
percent (40%) of the Net Cash Proceeds to repurchase at their then
fair market value any convertible subordinated notes of the Company
then owned of record and beneficially by Borislow, Trust II, or the
Trust. Any repurchase under this Section 7(a) shall be made in the
following order: first, from Borislow; second, from Trust II; and
third, from the Trust. Notwithstanding the foregoing, this Section
7(a) shall not apply to any debt offering by the Company to a bank or
financial institution or in a commercial context.
(b) Without the prior written consent of Borislow, which consent shall not
be unreasonably withheld, the Company will not sell or agree to sell
all or substantially all its assets or, except in the ordinary course
of its business in a financing transaction, encumber all or
substantially all of its assets, in one transaction or in a series of
related transactions.
(c) Without the prior written consent of Borislow, which consent shall not
be unreasonably withheld, the Company will not merge or consolidate
with any other corporation, or agree to do so, will not acquire or
agree to acquire any corporation or other business entity, or
substantially all of the capital securities of any entity, or
substantially all of the assets of any entity, in each case if the
consideration
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paid therefor by the Company is material in nature. For this purpose,
materiality shall be determined as provided in the rules and
regulations promulgated under the Securities Act of 1933, as amended.
(d) For a period of eighteen (18) months commencing on the date hereof,
the Company shall not make any offer or sale of its Common Stock
unless and until Borislow has sold or otherwise disposed of all shares
of Common Stock now held by him; provided, however, that this Section
8(d) shall not prohibit the Company from offering or selling shares of
its Common Stock in connection with any employee benefit plans or
stockholder rights distribution; and, provided further, that up to the
entire net proceeds from the sale of shares in connection with such
employee benefit plans or stockholder rights distributions during the
eighteen (18) month period referred to above in this Section shall be
used, at Borislow's option and if permitted by applicable law, to
purchase Common Stock then owned by Borislow.
(e) The Company agrees to make available to Borislow upon reasonable
notice from Borislow, in connection with one (1) securities offering
to be made by Borislow within the next eighteen (18) months, the
following Company employees to participate in a standard securities
offering "road show" of not longer than five days' duration regarding
that offering: the Chief Executive Officer of the Company; and certain
other appropriate employees of the Company as designated by such Chief
Executive Officer. The Company may delay such participation if the
time of such participation requested by Borislow would cause undue
hardship on the Company.
8. Representation and Warranty by the Company. The Company represents and
warrants to the Purchasers that the execution, delivery, and performance of this
Agreement have been duly authorized by the Board of Directors of the Company.
9. Conditions to the Obligations of the Company. Each of the obligations of
the Company hereunder is subject to the fulfillment of the following conditions:
(a) Borislow holds and owns, of record and beneficially, not less than two
percent (2%) of the outstanding Common Stock, calculated on a
fully-diluted basis.
(b) There shall not exist a material default or breach by any party other
than the Company under this Agreement or any of the following
agreements, each of which is being entered into contemporaneously
herewith: (a) Severance Agreement between Borislow and the Company;
(b) Purchase Agreement Regarding the Stock of Emergency Transportation
Corporation between Jimlew Capital, L.L.C. and the Company; (c)
Exchange Agreement between the Trust and the Company; (d) Agreement of
Purchase and Sale of Real Property between Borislow and the Company;
and (e) Lease between Borislow and the Company.
10. Notices
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All notices or other communications under this Agreement shall be in
writing and shall be deemed to have been given on the date of delivery if
delivered by hand or on the fifth date after mailing it by certified mail,
postage prepaid, return receipt requested, or on the date of transmission if
delivered by facsimile transmission (which shall be followed by delivery of an
original copy), addressed as follows:
If to the Company:
Xxx-Xxxx.xxx, Inc.
0000 Xxxxx 000
Xxx Xxxx, XX 00000
Facsimile No.: 000-000-0000
With a copy to:
Xxxxxxxx X. Lawn, IV, Esquire
General Counsel and Secretary
Tel-Save Holdings, Inc.
0000 Xxxxx 000
Xxx Xxxx, XX 00000
Facsimile No.: 000-000-0000
If to the Purchasers at their respective addresses
as set forth opposite their respective signatures
below.
Any of the Company and the Purchasers may from time to time change the
address or facsimile number to which notices to it are to be mailed hereunder by
notice in accordance with the provisions of this Section.
11. Amendment
Except as otherwise provided herein, this Agreement and any term hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought.
12. Severability
If for any reason any provision, paragraph or term of this Agreement is
held to be invalid or unenforceable, all other valid provisions herein shall
remain in full force and effect and all terms, provisions and paragraphs of this
Agreement shall be deemed to be severable.
13. Governing Law
This Agreement shall be deemed to be a contract made under the laws of the
State of New York and for all purposes shall be governed by and construed in
accordance with the laws of said State.
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14. Entire Agreement
This Agreement consists of all the terms and conditions contained herein
and all documents incorporated herein specifically by reference and constitutes
the complete and exclusive statement of the understandings between the parties
and supersedes all proposals and prior agreements (oral or written) between the
parties relating to the rights and obligations provided hereunder.
15. Construction
Section headings used herein are included herein for conveniences of
reference only and shall not affect the construction of this Agreement nor
constitute a part of this Agreement for any other purpose. The words "herein,"
"hereof," "hereby," "hereto" "hereunder" and words of similar import refer to
this Agreement as a whole and not to a paragraph, subparagraph or other
subdivision of this Agreement. Defined terms shall include the plural and the
singular as the context shall require.
16. Successors and Assigns
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, successors and assigns.
17. Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall constitute an original, but together shall be deemed to be one and the
same document.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.
Xxx-Xxxx.xxx, Inc.
Witness
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------------------------------ By:
Xxxxxxxx X. Lawn, Secretary --------------------------------------
Name:
Title:
Address: Borislow
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------------------------------
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Address: The Trust
------------------------------
------------------------------
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Xxxx Xxxxx, as Trustee of that certain D&K
Grantor Retained Annuity Trust dated June
15, 1998
Address: Trust II
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------------------------------
------------------------------ ------------------------------------------
__________________, as Trustee of that
certain D&K Grantor Retained Annuity Trust
II dated ____________, 1998
Xxx-Xxxx.xxx, Inc.
Witness
-------
By
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Xxxxxxxx X. Lawn, Secretary Name:
Title:
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