Exhibit 3.03
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as of this
31st day of December, 1997 by and between CARDGUARD INTERNATIONAL, INC., a North
Carolina corporation maintaining its principal office in Xxxxxx County, North
Carolina (the "Company"), and XXXXXXXXX & XXXXX PLLC, a North Carolina
professional limited liability company (the "Investor").
WHEREAS, the Company has executed a Warrant of even date herewith in
favor of the Investor which may be executed to purchase shares of the Common
Stock of the Company; and
WHEREAS, the Company and the Investor have agreed to provide the
Investor with certain rights relating to the registration and sale of the
capital stock of the Company, together with rights to certain reports of the
Company; and
NOW, THEREFORE, in consideration of the investments being made by the
Investors and of the covenants and promises contained herein, the parties agree
as follows:
1. Definitions. For purposes of this Article 1, the following terms
shall have the following respective meanings:
(a) "Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute enacted hereafter, and the rules and
regulations of the Commission thereunder, all as the same shall be in
effect from time to time.
(b) "Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the
Act.
(c) The terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Act and the declaration or ordering of
effectiveness of such registration statement by the Commission.
(d) "Registrable Securities" shall mean (i) securities
received by the Investor upon the conversion of Convertible Debenture
(the "Securities"), and (ii) securities issued as a dividend or other
distribution with respect to, or in exchange or in replacement of, any
such Securities (securities shall be deemed to be owned for this
purpose if an agreement for their purchase has been executed).
2. Piggyback Registration. Subject to Section 8 of this Agreement, if
at any time the Company proposes to register any of its securities under the
Act, either for its own account or for the account of others, in connection with
the public offering of such securities solely for cash, on a registration form
that would also allow the registration of Registrable Securities, the Company
shall, each such time, promptly give the Investor written notice of such
proposal. This provision shall not apply to a registration solely of securities
issued or issuable in connection with any stock option plan or other employee
benefit plan or in connection with a merger or acquisition. Upon receipt by the
Company of the written request of the Investor given within ten (10) days
after mailing of any such notice by the Company, the Company shall use its best
efforts to cause to be included in such registration under the Act all the
Registrable Securities that the Investor has requested be registered.
3. Obligations of the Company. Whenever required under this Agreement
to use its best efforts to effect the registration of any Registrable
Securities, the Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the Commission a registration
statement covering such Registrable Securities and use its best efforts
to cause such registration statement to be declared effective by the
Commission as expeditiously as possible and to keep such registration
effective until the earlier of (i) the date when all Registrable
Securities covered by the registration statement have been sold or (ii)
180 days from the effective date of the registration statement.
(b) Prepare and file with the Commission such amendments and
post-effective amendments to such registration statement as may be
necessary to keep such registration statement effective during the
period referred to in Section 3(a) and to comply with the provisions of
the Act with respect to the disposition of all securities covered by
such registration statement, and cause the prospectus to be
supplemented by any required prospectus supplement, and as so
supplemented to be filed with the Commission pursuant to Rule 424 under
the Act.
(c) Furnish to the selling Investor such numbers of copies of
such registration statement, each amendment thereto, the prospectus
included in such registration statement (including each preliminary
prospectus), and each supplement thereto as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned
by it.
(d) Use its best efforts to register and qualify the
Registrable Securities under the securities laws of such jurisdictions
in which the Company shall register securities to be sold by the
Company pursuant to the same registration under the Act.
(e) Promptly notify the selling Investor of such Registrable
Securities at any time when a prospectus relating thereto is required
to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement
contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading and, at the
request of the Investor, the Company will prepare promptly a supplement
or amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus will not
contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading.
(f) Provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such
registration statement.
(g) Enter into underwriting agreements and related agreements
in customary form for a primary offering.
(h) Make available for inspection by the selling Investor of
Registrable Securities, any underwriter participating in any
disposition pursuant to such registration statement and any attorney,
accountant or other agent retained by any such selling Investor or
underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the officers,
directors, employees and independent accountants of the Company to
supply all information reasonably requested by the selling Investor,
underwriter, attorney, accountant or agent in connection with such
registration statement.
(i) Promptly notify the selling Investor of Registrable
Securities and the underwriters, if any, of the following events and
(if requested by any such person) confirm such notification in writing:
(1) the filing of the prospectus or any prospectus supplement and the
registration statement and any amendment or post-effective amendment
thereto and, with respect to the registration statement or any
post-effective amendment thereto, the declaration of the effectiveness
of such documents, (2) any requests by the Commission for amendments or
supplements to the registration statement or the prospectus or for
additional information, (3) the issuance of any stop order suspending
the effectiveness of the registration statement, and (4) 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.
(j) Whenever any provision of this Agreement requires the
Company to furnish any information to the Investor or the agents or
representatives of the Investor, the Company may require any such
person or entity to execute and deliver a reasonable confidentiality
agreement, agreement to refrain from trading or any other agreement
necessary or prudent to protect the Company or its officers, directors
and employees against xxxxxxx xxxxxxx liabilities and may restrict
access to confidential trade secret information.
4. Furnish Information. In the event of any registration by the Company
(whether or not the Registrable Securities of the Investor are included
therein), the Investor shall furnish to the Company such information regarding
them, the Registrable Securities and other securities of the Company held by it,
and the intended method of disposition of such Registrable Securities as the
Company shall reasonably request and as shall be required in connection with the
action to be taken by the Company. It shall be a condition precedent to the
obligation of the Company to cause any registration pursuant to this Agreement
to have become effective for the Investor to have exercised its rights of
conversion with respect to any Registrable Securities proposed to be registered.
5. Suspension of Disposition of Registrable Securities. The Investor of
Registrable Securities agrees 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(e) or (i) (2), (3) or (4) hereof, the
Investor will forthwith discontinue disposition of Registrable Securities until
such Investor's receipt of copies of a supplemented or amended prospectus
contemplated by Section 3(e) hereof, 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 which are incorporated by reference in
the prospectus, or in the case of Section 3(i) (2), (3) or
(4), until the Company notifies the Investor in writing that sales of
Registrable Securities may continue. If so directed by the Company, the Investor
will deliver to the Company (at the expense of the Company) all copies, other
than permanent file copies then in the Investor's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
6. Expenses of Registration. The Investor shall bear the fees and
disbursements of its own counsel and shall bear any additional registration and
qualification fees and expenses (including underwriters' discounts and
commissions), and any additional costs and disbursements of counsel for the
Company that result solely from the inclusion of Registrable Securities held by
the Investor in such registration.
7. Underwriting Requirements; Priorities.
(a) The Company will have the right to select the investment
banker(s) and manager(s) to administer any offering to which this
Agreement is applicable. If a registration is an underwritten primary
registration on behalf of the Company (without regard to registration
rights arising hereunder or under any other agreement), and the
managing underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in such
registration exceeds the number which can be sold at the desired price
in such offering, the Company will include in such registration (i)
first, the securities the Company proposes to sell, (ii) second, the
Registrable Securities requested to be included in such registration,
and (iii) third, other securities requested to be included in such
registration, pro rata among the holders thereof on the basis of the
number of shares requested to be registered. If a registration is an
underwritten secondary registration on behalf of holders of securities
of the Company, or a combined primary and secondary offering, and the
managing underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in such
registration exceeds the number which can be sold at the desired price
in such offering, the Company will include in such registration (i)
first, securities the Company proposes to sell, (ii) second, the
securities requested to be included therein by holders with contractual
registration rights other than the Investor, (iii) third, the
securities requested to be included therein by Investor of Registrable
Securities, and (iv) fourth, other securities requested to be included
in such registration, including securities to be sold by holders
without contractual registration rights.
(b) No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's
securities on the basis provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements
and (ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under
the terms of such underwriting arrangements.
8. Limitation of the Company's Obligations.
(a) The Company may, in its sole discretion, (i) not comply
with this Agreement in the case of its initial public offering
registered under the Act, and (ii)
terminate this Agreement after sale or other transfer, whether by
registration, under Rule 144 or otherwise, by the Investor of at least
Fifty (50%) Percent of the aggregate number of Registrable Securities
held by Investor at the time of the Company's initial public offering.
(b) The Company shall not be obligated under this Agreement to
register or include in any registration Registrable Securities that the
Investor has requested to be registered if the Company shall furnish
such Investor with a written opinion of counsel reasonably satisfactory
to such Investor, that all Registrable Securities that the Investor
holds may be publicly offered, sold and distributed without
registration under the Act pursuant to Rule 144 promulgated by the
Commission under the Act without restriction as to the amount of
securities that can be sold.
9. Lockup Agreement. For so long as the Investor has the right to have
Registrable Securities included in any registration pursuant to this Agreement,
the Investor agrees in connection with any registration of the Company's
securities upon the request of the underwriters managing any underwritten
offering of the Company's securities, not to sell, make any short sale of,
pledge, grant any option for the purchase of or otherwise dispose of any
Registrable Securities (other than those included in the registration) without
the prior written consent of the Company or such underwriters, as the case may
be, during the seven days prior to and during the 180-day period beginning on
the effective date of such registration as the Company or the underwriters may
specify. This provision shall apply whether or not any Registrable Securities of
the Investor are included in the offering.
10. Transfer of Registration Rights. Provided that the Company is given
written notice by the Investor at the time of such transfer stating the name and
address of the transferee and identifying the securities with respect to which
the rights under this Agreement are being assigned, the registration rights
under this Agreement may be transferred in whole or in part at any time to any
transferee of Registrable Securities.
11. Indemnification and Contribution. In the event any Registrable
Securities are included in a registration statement under this Agreement:
(a) To the full extent permitted by law, the Company will, and
hereby does, indemnify and hold harmless the Investor whose Registrable
Securities are included in a registration, each director, officer,
partner, employee, or agent for the Investor, any underwriter (as
defined in the Act) for such Investor, and each person, if any, who
controls the Investor or underwriter within the meaning of the Act,
against any losses, claims, damages or liabilities, joint or several,
to which they may become subject under the Act and applicable state
securities laws insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based on any untrue
or alleged untrue statement of any material fact contained in such
registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto,
or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein in light of
the circumstances under which they were made or necessary to make the
statements therein not misleading or arise out of any violation by the
Company of any rule or regulation promulgated under
the Act applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration; and
will reimburse each such person or entity for any legal or other
expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability, or action if
such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld) nor shall the Company be
liable in any such case for any such loss, claim, damage, liability or
action to the extent that it arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission
made in connection with such registration statement, preliminary
prospectus, final prospectus, or amendments or supplements thereto, in
reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by or on behalf
of the Investor, underwriter or controlling person.
(b) To the full extent permitted by law, the Investor whose
Registrable Securities are included in a registration under this
Agreement, severally and not jointly, will indemnify and hold harmless
the Company, each of its directors, each of its officers who have
signed the registration statement, each person, if any, who controls
the Company within the meaning of the Act, and any underwriter for the
Company (within the meaning of the Act), and each person, if any, who
controls any underwriter within the meaning of the Act against any
losses, claims, damages or liabilities, joint or several, to which the
Company or any such director, officer, controlling person or
underwriter may become subject, under the Act and applicable state
securities laws, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, or arise out of or are based upon 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 in
light of the circumstances, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in such registration statement,
preliminary or final prospectus, or amendments or supplements thereto,
in reliance upon and in conformity with written information furnished
by the Investor expressly for use in connection with such registration;
and the Investor will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling
person or underwriter in connection with investigating or defending any
such loss, claim, damage, liability of action; provided, however, that
the indemnity shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected
without the consent of the Investor (which consent shall not be
unreasonably withheld).
In no event shall the liability by reason of this contractual
indemnity of the selling Investor of Registrable Securities hereunder
be greater than the dollar amount of the proceeds received by such
Investor upon the sale of the Registrable Securities giving rise to
such indemnification obligation. If the Investor required to indemnify
the Company as
provided above, the Investor shall cease to have the right to
participate in any other registration pursuant to this Agreement.
12. Remedies. In addition to being entitled to exercise all rights
provided in this Article as well as all rights granted by law, including
recovery of damages, the Company and the Investor will be entitled to specific
performance of its rights under this Agreement. The Company and the Investor
agree that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Agreement and
hereby agrees not to raise the defense in any action for specific performance
that a remedy at law would be adequate.
13. Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may be given, by
written consent of the Company and the Investor.
14. Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
15. Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
16. Notices. All notices required or permitted to be sent shall be sent
to the addresses of the parties set forth on their respective signature pages,
or to such other address as any party shall provide to the other parties in a
notice sent in accordance with this Agreement. Any notice sent by registered or
certified mail, return receipt requested, or by Federal Express, shall be deemed
to have been received by the party to whom it was sent one day following the
date it was sent. Any notice sent by any other means shall be deemed to have
been received when it is actually received at the address provided above.
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina.
18. Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
19. Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the Registrable Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter. Nothing
in this Agreement shall preclude the
Company from entering into any other agreement having the same or different
terms with the Investor or any third party with respect to registration rights
or related matters.
20. Parties Benefited. Nothing in this Agreement, express or implied,
is intended to confer upon any third party any rights, remedies, obligations or
liabilities.
IN WITNESS WHEREOF, the undersigned, through its duly authorized
representative, has executed this Registration Rights Agreement under seal as of
the date provided below:
CARDGUARD INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxx
---------------------------------
Xxxxxxx X. Xxxx
President
XXXXXXXXX & XXXXX PLLC
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
Vice President
