EXHIBIT 99.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as of January
28, 2002, between xxxxx.xxx, Inc., a Georgia corporation located at 0000 Xxxxx
Xxxxx Xxxx, Xxxxxxx, Xxxxxxx 00000 (the "Company"), and the undersigned investor
(the "Investor").
WHEREAS, the Company will issue and sell units to Investors consisting of
four shares of 8% cumulative convertible preferred stock and a warrant to
purchase two shares of common stock (the "Units") pursuant to Subscription
Agreements between the Company and each Investor (collectively, the
"Subscription Agreements"); and
WHEREAS, in connection with the execution of the Subscription Agreements,
the Investors have requested and the Company has agreed to grant to the
Investors certain registration rights on the terms set forth herein.
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS. As used herein, the following terms shall have the
following meanings:
1.1 Closing Date means the date of closing of the Private Placement.
-------------
1.2 Common Stock means the Common Stock, par value $.01 per share, of
-------------
the Company and any capital stock for or into which such Common Stock hereafter
is exchanged, converted, reclassified or recapitalized by the Company pursuant
to a business combination to which the Company is a party.
1.3 Exchange Act means the Securities Exchange Act of 1934.
-------------
1.4 Form SB-2 means such form under the Securities Act as in effect on
----------
the date hereof or any registration form under the Securities Act subsequently
adopted by the SEC.
1.5 Person means any individual, firm, corporation, or other entity,
------
and shall include any successor (by merger or otherwise) of such entity.
1.6 Preferred Stock means the Series A Preferred Stock of the Company.
----------------
1.7 Private Placement means the issuance of Units pursuant to the
------------------
Subscription Agreement.
1.8 Register, registered and registration refers to a registration
----------------------------------------
effected by preparing and filing a registration statement or similar document in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document.
1.9 Registrable Securities means (i) the shares of Common Stock
-----------------------
issuable or issued upon conversion of the Preferred Stock, and (ii) any other
shares of Common Stock issued as (or issuable upon the conversion or exercise of
any other security which is issued as) a dividend or other distribution with
respect to, or in exchange for or in replacement of, the shares listed in (i);
provided, however, that the foregoing definition shall exclude in all cases any
-------- -------
Registrable Security sold by a Person in a transaction in which his or her
rights under this Agreement are not assigned pursuant to Section 7.
Notwithstanding the foregoing, Common Stock shall only be treated as Registrable
Securities if and so long they have not been (a) sold to or through a broker
or Dealer or underwriter in a public distribution or a public securities
transaction, or (b) sold in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act under Section 4(1)
thereof so that all transfer restrictions, and restrictive legends with respect
thereto, if any, are removed upon the consummation of such sale.
1.10 SEC means the Securities and Exchange Commission.
---
1.11 Securities Act means the Securities Act of 1933 and the rules and
---------------
regulations thereunder.
2. REGISTRATION RIGHTS.
2.1 Form SB-2 Registration. Following the Closing Date, the Company
------------------------
shall use commercially reasonable efforts to include the Investor on the first
post-effective amendment to the Form SB-2 Registration Statement declared
effective by the SEC on December 6, 2001. The Company shall use commercially
reasonable efforts to keep such registration statement continuously effective
under the Securities Act until the earlier of (a) the date on which the Investor
no longer holds any Registrable Securities or (b) the date on which all of the
Registrable Securities held or subsequently held by the Investor may be resold
in a public transaction without registration under the Act, including, but not
limited to, pursuant to Rule 144 under the Act.
2.2 Limitations on Obligations to Register.
------------------------------------------
a. Subject to the provisions of this Section 2.2, the Company
shall be entitled to postpone or suspend the filing, effectiveness,
supplementing or amending of any registration statement otherwise required to be
amended and filed pursuant to this Section 2, if the Company has determined, in
good faith and in the exercise of reasonable judgment, that such action would
materially delay or interfere with any material financing, acquisition,
corporate reorganization, or other transaction involving the Company then
pending or contemplated. Investor agrees to promptly execute and deliver a
confidentiality agreement in form and substance reasonably acceptable to the
Company in connection with any disclosures the Company is required to make under
this paragraph.
b. If, after a registration statement becomes effective, the
Company advises the Investor that the Company considers it appropriate for the
registration statement to be amended, the Investor shall suspend any further
sales of its registered shares until the Company advises it that the
registration statement has been properly amended. The notice by the Company
will include the Company's estimate of the length of the suspension or
postponement. Upon receipt of such notice, the Investor agrees to cease such
Investor's disposition of Registrable Securities pursuant to such registration
statement during such suspension period. The Company will give prompt notice to
the Investor of the expiration or early termination of any suspension or
postponement pursuant to this Section 2.2.
2.3 Obligations of the Company. Whenever required under this Agreement
--------------------------
to effect the registration of any Registrable Securities (and except as
specifically provided otherwise elsewhere in this Agreement), the Company will
use commercially reasonable efforts to do the following:
a. Amend the active Form SB-2 registration statement with respect
to the Registrable Securities and use commercially reasonable efforts to keep
such registration effective as set forth in Section 2.1.
2
b. Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
c. Furnish to the Investor such numbers of copies of a prospectus
in conformity with the requirements of the Securities Act, and such other
documents as it may reasonably request in order to facilitate the disposition of
Registrable Securities owned by it.
d. In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Investor
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
e. Notify each Investor of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
that causes the prospectus included in such registration statement to contain an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances then existing, such obligation to continue
until the earlier of (i) the sale of all Registrable Securities registered
pursuant to the registration statement of which such prospectus forms a part or
(ii) withdrawal of such registration statement.
f. Promptly notify the Investor of Registrable Securities covered
by such registration statement (i) when any post-effective amendment to the
registration statement becomes effective and (ii) of any request by the SEC for
any amendment or supplement to the registration statement or prospectus or for
additional information.
g. Use commercially reasonable efforts to cause the transfer agent
to remove restrictive legends on certificates representing the Registrable
Securities, as appropriate.
h. Use commercially reasonable efforts to have the Registrable
Securities listed on the same quotation system or market as the Common Stock.
2.4 Termination of Registration Rights. Notwithstanding anything to
-------------------------------------
the contrary contained in this Agreement, no Investor shall have rights to a
registration under this Agreement after the time that such Investor could sell
all of its Registrable Securities pursuant to Rule 144 or another similar
exemption under the Securities Act.
2.5 Registration Rights of Company. The Company shall be entitled to
--------------------------------
include in any registration statement referred to in this Section 2 shares of
Common Stock to be sold by the Company for its own account or other existing
shareholders for their own account.
2.6 Delay of Registration. No Investor shall have any right to obtain
----------------------
or seek an injunction restraining or otherwise delaying any registration under
Section 2 as the result of any controversy that might arise with respect to the
interpretation or implementation of the provisions of this Agreement.
3. FURNISH INFORMATION. A condition precedent to the obligations of the
Company to take any action pursuant to this Agreement with respect to the
Registrable Securities of any selling Investor is that such Investor furnishes
to the Company such information regarding itself, the Registrable Securities
held by it, and the intended method of disposition of such securities as
3
is required to effect the registration of such Investor's Registrable
Securities. Any such information included in the draft of the registration
statement shall be provided to the Company within any reasonable time period
requested by the Company.
4. EXPENSES OF REGISTRATION. The Company will pay all expenses incurred in
connection with registrations, filings or qualifications pursuant to this
Agreement, including, but not limited to, all registration, filing and
qualification fees, printers' and accounting fees, and fees and disbursements of
counsel for the Company, except that the Company will not pay (a) underwriting
discounts and commissions relating to Registrable Securities (which the holders
of the securities so registered shall bear pro rata on the basis of the number
of shares so registered), and (b) fees and expenses of counsel to the Investor.
5. INDEMNIFICATION. In the event any Registrable Securities are included in
a registration statement under this Agreement:
5.1 Indemnification by the Company. To the extent permitted by law,
------------------------------
the Company will indemnify and hold harmless each Investor and each person, if
any, who controls such Investor within the meaning of the Securities Act and the
Exchange Act and their respective directors, officers, partners, employees and
affiliates (each, an "Indemnified Person"), against any losses, claims, damages,
or liabilities, joint or several, to which they may become subject insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any final prospectus contained therein or any amendments or supplements thereto
or (ii) 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, and the Company will pay to each Indemnified Person any reasonable
legal or other expenses incurred by it in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
-------- -------
that the indemnity agreement contained in this Section 5 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, 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 any untrue
statement or alleged untrue statement or omission or alleged omission which
occurs in reliance upon and in conformity with written information furnished by
an Investor expressly for use in connection with such registration or is caused
by any failure by the Investor to deliver a prospectus or preliminary prospectus
(or amendment or supplement thereto) as and when required under the Securities
Act after such prospectus has been timely furnished by the Company.
5.2 Indemnification by the Investor. To the extent permitted by law,
-------------------------------
each Investor will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration statement, and
each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act, against any losses, claims, damages or
liabilities (joint or several) to which any of the foregoing persons may become
subject, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon (x) any untrue statement or
alleged untrue statement contained in, or any omission or alleged omission from,
information furnished in writing to the Company by the Investor specifically and
expressly for use in any such registration statement or prospectus or (y) any
4
failure by the Investor to deliver a prospectus or preliminary prospectus (or
amendment or supplement thereto) as and when required under the Securities Act
after such prospectus has been timely furnished by the Company. Such Investor
will pay any reasonable legal or other expenses incurred by the Company, its
directors, officers, shareholders and affiliates pursuant to this Section 5.2 in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
-------- -------
in this Section 5.2 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.
5.3 Notice of Claim. Promptly after receipt by an indemnified party
---------------
under this Section 5 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 5, deliver to
the indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the indemnifying parties; provided, however, that an indemnified
-------- -------
party (together with all other indemnified parties that may be represented
without conflict by one counsel) shall have the right to retain one separate
counsel, with the reasonable fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate (in the opinion of counsel to the
indemnifying party) due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if prejudicial
to its ability to defend such action, shall relieve such indemnifying party of
any liability to the indemnified party under this Section 5, but the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 5.
5.4 Survival of Indemnification Provision. The obligations of the
-------------------------------------
Company and the Investors under this Section 5 shall survive the completion of
any offering of Registrable Securities under a registration statement pursuant
to this Agreement, and otherwise.
6. REPORTS UNDER THE EXCHANGE ACT. With a view to making available to the
Investors the benefits of Rule 144 under the Securities Act and any other rule
or regulation of the SEC that permits the Investor to sell the Registrable
Securities to the public without registration, the Company agrees to use
commercially reasonable efforts to:
6.1 Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act;
6.2 File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Securities Act and Exchange Act; and
6.3 Furnish to any Investor, so long as the Investor owns any
Registrable Securities, promptly upon request (i) a written statement by the
Company, if true, that it has complied with the reporting requirements of SEC
Rule 144, the Act and the 1934 Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed
5
by the Company, and (iii) such other information as may be reasonably requested
in availing any Investor of any rule or regulation of the SEC which permits the
selling of any such securities without registration.
7. ASSIGNMENT AND REGISTRATION RIGHTS. The rights to cause the Company to
register Registrable Securities pursuant to this Agreement may be assigned by an
Investor to a permitted transferee or assignee of Registrable Securities which
(a) is a subsidiary, parent, general partner, limited partner, retired partner,
affiliate, beneficial owner, member or retired member of an Investor, or (b) is
an Investor's family member or trust for the benefit of an individual Investor;
provided, however, (i) the transferor shall, within 10 days after such transfer,
-------- -------
furnish to the Company written notice of the name and address of such transferee
or assignee and the securities with respect to which such registration rights
are being assigned and (ii) such transferee shall agree to be subject to all
restrictions set forth in this Agreement.
8. "MARKET STAND-OFF" AGREEMENT.
8.1 Each Investor hereby agrees that, during the period of duration (up
to, but not exceeding, 180 days) specified by the Company and an underwriter of
Common Stock or other securities of the Company, following the effective date of
a registration statement of the Company filed under the Securities Act, it shall
not, to the extent requested by the Company and such underwriter, directly or
indirectly sell, offer to sell, contract to sell (including, without limitation,
any short sale), grant any option to purchase or otherwise transfer or dispose
of (other than to donees who agree to be similarly bound) any securities of the
Company held by it at any time during such period except Common Stock included
in such registration; provided, however, that:
-------- -------
a. Such agreement shall be applicable only during the two year
period following the date of the final prospectus distributed pursuant to the
first registration statement of the Company after the date of this Agreement
which covers Common Stock (or other securities) to be sold on its behalf to the
public in an underwritten offering; and
b. All officers and directors of the Company, all one percent
security holders, and all other persons with registration rights (whether or not
pursuant to this Agreement), including the holders of Series A preferred stock,
enter into a similar agreement.
8.2 In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period, and each Investor agrees
that, if so requested, such Investor will execute an agreement in the form
provided by the underwriter containing terms which are essentially consistent
with the provisions of this Section 8.
8.3 Notwithstanding the foregoing, the obligations described in this
Section 8 shall not apply to a registration relating solely to employee benefit
plans on Form S-8 or similar forms which may be promulgated in the future, or a
resignation relating solely to an SEC Rule 145 transaction on Form S-4 or
similar forms which may be promulgated in the future.
6
9. MISCELLANEOUS.
9.1 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Georgia without giving effect to
conflict of laws.
9.2 Consent to Jurisdiction; Exclusive Venue. The Company and the
----------------------------------------
Investor hereby irrevocably consent to the jurisdiction of the United States
District Court for the Northern District of Georgia and all Georgia state courts
sitting in Xxxxxx County, Georgia, for the purpose of any litigation to which
the Company or the Investor may be a party and that concerns this Agreement. It
is further agreed that venue for any action shall lie exclusively with courts
sitting in Xxxxxx County, Georgia, unless the Company agrees to the contrary in
writing.
9.3 Successors and Assigns. Except as otherwise provided in this
----------------------
Agreement, the provisions of this Agreement will inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties to this Agreement.
9.4 Waiver of Jury Trial. Each party hereto hereby waives its rights
--------------------
to a jury trial of any claim or cause of action based upon or arising out of
this Agreement. The scope of this waiver is intended to be all-encompassing of
any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including, without limitation, contract
claims, tort claims, breach of duty claims, and all other common law and
statutory claims. Each party hereto hereby further warrants and represents that
such party has reviewed this waiver with its legal counsel, and that such party
knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. This waiver is irrevocable, meaning that it may not be
modified either orally or in writing, and this waiver shall apply to any
subsequent amendments, supplements or modifications to (or assignments of) this
Agreement. In the event of litigation, this Agreement may be filed as a written
consent to a trial (without a jury) by the court.
9.5 Counterparts. This Agreement may be executed in counterparts, each
------------
of which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
9.6 Captions and Headings. The captions and headings used in this
---------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.7 Notices. Unless otherwise provided, any notice or other
-------
communication required or permitted to be given or effected under this Agreement
shall be in writing and shall be deemed effective upon personal or facsimile
delivery to the party to be notified or one business day after deposit with an
internationally recognized courier service, delivery fees prepaid, and addressed
to the party to be notified at the following respective addresses, or at such
other addresses as may be designated by written notice; provided, however, that
-------- -------
any notice of change of address shall be deemed effective only upon receipt.
If to the Company: xxxxx.xxx, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Box
7
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Xxxxxx Xxxxxxx Xxxxx & Scarborough, L.L.P.
First Union Plaza
Suite 1400
000 Xxxxxxxxx Xxxxxx, X.X.
X.X. Xxx 00000
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxxxxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
If to the Investors: Notice shall be sent to the person and address
indicated on the signature page hereof.
9.8 Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, without the written consent of the Company and the Investors.
9.9 Severability. If one or more provisions of this Agreement are held
------------
to be unenforceable under applicable law, such provisions shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
9.10 Entire Agreement. This Agreement contains the entire
----------------
understanding of the parties hereto with respect to the subject matter contained
herein, and supersedes and cancels all prior agreements, negotiations,
correspondence, undertakings and communications of the parties, oral or written,
respecting such subject matter. There are no restrictions, promises,
representations, warranties, agreements or undertakings of any party hereto with
respect to the matters contemplated hereby, other than those set forth herein or
made hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
xxxxx.xxx, Inc. INVESTOR:
BERLIN TRUST
By: /s/ Xxxxx X. Box /s/ Xxxxxx X. X. Xxxxxxxxx, as Trustee
------------------------------- ----------------------------------------
Name: Xxxxx X. Box Xxxxxx X. X. Xxxxxxxxx, Trustee
Title: Chief Executive Officer
Address
c/o 000 Xxxxxxxxx Xxxxx Xxxxxxx, Xxx 000
Xxxxxxxxxx, XX 00000
8
