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EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), made as of this
31st day of May, 1998, by and among the shareholders listed on the signature
page hereto (collectively referred to hereinafter as the "Investors") and
Childcare Network, Inc., a Georgia corporation (the "Company");
W I T N E S E T H:
WHEREAS, the Investors own the outstanding shares of the Company's
common stock;
WHEREAS, the Investors are parties to that certain Cross-Purchase
Agreement dated October 17, 1988 (the "Cross-Purchase Agreement");
WHEREAS, the Investors desire to terminate the Cross-Purchase
Agreement and to enter into an agreement providing certain registration rights
and providing for certain lock-up provisions in the event of a public offering
of the Company's common stock; and
WHEREAS, the Company desires to enter into an agreement regulating the
relative rights of the Investors and the Company in the event of a public
offering of the Company's common stock;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do agree to enter into the agreements
contained hereinbelow as follows:
1. REGISTRATION RIGHTS.
1.1 Certain Definitions. As used in this Agreement, in addition to
the terms defined above, the following terms shall have the following
respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean common stock, no par value per share, of the
Company.
"Holders" shall mean the Investors and any other person holding
Registrable Securities to whom these registration rights have been transferred
pursuant to Section 1.9 hereof.
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"Initial Public Offering" shall mean the effectiveness of the filing
of the first registration statement under the Securities Act that covers the
offer and sale to the public of Common Stock by the Company.
"Other Shareholders" shall mean persons other than Holders who, by
virtue of agreements with the Company, are entitled to include their securities
in a registration effected pursuant to this Agreement.
The terms "register," "registered" and "registration" refer to the
effectiveness of a registration statement prepared and filed in compliance with
the Securities Act.
"Registrable Securities" shall mean all shares of Common Stock held by
the Holders, together with any shares of Common Stock issued with respect
thereto upon any stock split, stock dividend, recapitalization or similar
event;
"Registration Expenses" shall mean all expenses incurred by the
Company in complying with Section 1.2 hereof, including, without limitation,
all registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, reasonable fees and expenses of a single counsel for
the selling Holders, state "blue sky" fees and expenses, and accountants'
expenses, including without limitation any special audits incident to or
required by any such registration (but excluding the compensation of regular
employees of the Company, which shall be paid in any event by the Company and
any additional disbursements of counsel for the selling Holders, which shall be
paid by such selling Holders).
"Securities Act" shall mean the federal Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Securities Exchange Act" shall mean the federal Securities Exchange
Act of 1934, as amended, or any similar federal statute and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and any other
securities of the Company being sold in the same registration as the
Registrable Securities by the Company or Other Shareholders.
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1.2 Company Registration.
1.2.1 If the Company shall determine to register any of its
securities in connection with the public offering of such securities solely for
cash on a form that would permit the registration of the Registrable Securities
other than on Form ▇-▇, ▇▇▇▇ ▇-▇ or another form not available for registering
the Registrable Securities for sale to the public, the Company shall promptly
give to each Holder written notice of such registration (a "Piggyback
Registration"), which shall include a list of the jurisdictions in which the
Company intends to attempt to qualify such securities under the applicable blue
sky or other state securities laws; and include in such registration (and any
related qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made by any Holder or Holders within fifteen (15)
days after receipt of such written notice from the Company, subject to the
underwriter limitations, if any, described in Subsection 1.2.3 hereof. The
Company shall have the right to withdraw or cease to prepare or file any
registration statement for any offering referred to in this Subsection 1.2.1
without any obligation or liability to any Holder.
1.2.2 Number of Piggyback Registrations. Subject to the
underwriter limitations, if any, described in Subsection 1.2.3 below, each
Holder shall be entitled to have its Registrable Securities included in (i) the
Initial Public Offering and (ii) in an unlimited number of Piggyback
Registrations pursuant to this Section 1.2 until such time as the number of
Registrable Securities held by any such Holder does not exceed three percent
(3%) of the shares outstanding of the Company as shown by the most recent
report or statement published by the Company and filed with the Commission.
1.2.3 Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Subsection 1.2.1 hereof. In such event the right of any Holder to
registration pursuant to Subsection 1.2.1 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting
shall (together with the Company and Other Shareholders distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for underwriting
by the Company. Notwithstanding any other provision of this Section 1.2, if the
underwriter reasonably determines that marketing factors require a limitation
on the number of shares to be underwritten, the number of shares that may be
included in the registration shall be allocated among the Holders and Other
Shareholders requesting registration of securities in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities and other
securities that such Holders had requested to be included in such registration.
The Company shall advise all holders of securities requesting registration as
to the number of shares or securities that may be included in the registration
and underwriting as allocated in the foregoing manner. No such reduction shall
be made with respect to securities offered by the Company for its own account.
If any Holder or Other Shareholder disapproves of the terms of any such
underwriting, such person may elect to withdraw therefrom by written notice to
the Company and the underwriter. Any Registrable Securities or other
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securities excluded or withdrawn from such underwriting shall also be withdrawn
from such registration.
1.3 Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to this
Agreement shall be borne by the Company; and all Selling Expenses shall be
borne by the Holders, the Other Shareholders of the securities so registered
and the Company, to the extent of securities registered on its behalf, pro rata
on the basis of the number of their shares so registered; provided, however,
that if any jurisdiction in which the securities shall be qualified shall
require that expenses incurred in connection with the qualification of the
securities in that jurisdiction be borne by the selling shareholders, then such
expenses shall be payable by the selling shareholders pro rata to the extent
required by such jurisdiction.
1.4 Registration Procedures. In the case of each registration
effected by the Company pursuant to this Agreement, the Company shall keep each
Holder advised in writing as to the initiation of each registration and as to
the completion thereof. At its expense the Company shall use its best efforts
to:
1.4.1 keep such registration effective for a period of one
hundred eighty (180) days or until the distribution described in the
registration statement relating thereto has been completed, whichever first
occurs; and
1.4.2 furnish such number of prospectuses and other documents
incident thereto as a Holder from time to time may reasonably request.
1.5 Indemnification.
1.5.1 With respect to each Holder whose securities have been
registered pursuant to this Agreement, the Company shall indemnify such Holder,
each of such Holder's officers, directors and partners, and each person
controlling (as defined in Subsection 1.5.4 below) such Holder and each of such
controlling person's officers, directors and partners, and shall also indemnify
each underwriter, if any, and each person who controls any underwriter, against
all claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement)
of a material fact contained in any prospectus, offering circular or other
document (including any related registration statement, notification or the
like) incident to any such registration, qualification or compliance, or based
on any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration, qualification or compliance, and shall reimburse each such Holder
and each person controlling such Holder, and each of such controlling person's
officers, directors and partners, each of its officers, directors and partners,
each such underwriter, and each person who controls such underwriter, for any
legal and other expenses reasonably incurred in connection with investigating
or defending any such claim, loss, damage, liability or action; provided,
however, that the Company shall not be liable in any such case to the extent
that any such claim, loss, damage, liability or expense arises out of
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or is based upon written information furnished to the Company by the Holder or
on behalf of the Holder by the officers, directors or partners of the Holder
seeking to be indemnified, where such information is stated to be specifically
for use in such prospectus, offering circular or related document.
1.5.2 Each Holder and Other Shareholder shall, if securities
held by him or it are included among the securities as to which such
registration, qualification or compliance is being effected, indemnify the
Company, each of its directors and officers, each underwriter, if any, of the
Company's securities covered by such a registration statement, each person who
controls (as defined in Subsection 1.5.4 below) the Company or such
underwriter, and each other such Holder and Other Shareholder and each of such
controlling person's officers, directors and partners, and each person
controlling such Holder or Other Shareholder and each of such controlling
person's officers, directors and partners, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and shall reimburse the Company and such Holders, Other
Shareholders, directors, officers, partners, persons, underwriters and control
persons for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to the Company by such Holder or Other Shareholder specifically for use
therein; provided, however, that the obligations of such Holder or Other
Shareholder hereunder shall be limited to an amount equal to the proceeds to
such Holder or Other Shareholder of securities sold as contemplated herein.
1.5.3 Each party entitled to indemnification under this
Section 1.5 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be withheld unreasonably), and the Indemnified Party
may participate in such defense at such Indemnified Party's expense. The
failure of any Indemnified Party to give notice as provided herein shall
relieve the Indemnifying Party of its obligations under this Section 1.5 only
if such failure is prejudicial to the ability of the Indemnifying Party to
defend such action, and such failure shall in no event relieve the Indemnifying
Party of any liability that he or it may have to any Indemnified Party
otherwise than under this Section 1.5. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability with respect to such claim or litigation, provided that such
unconditional release may
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be subject to a parallel release of a claimant or plaintiff by such Indemnified
Party from all liability in respect of claims or counterclaims asserted by such
Indemnified Party.
1.5.4 For purposes of this Section 1.5, the term "control" shall
have the meaning assigned thereto under the Securities Act.
1.6 Information by Holders and Other Shareholders. Each Holder or
Other Shareholder of securities included in any registration shall furnish to
the Company such information regarding such Holder or Other Shareholder and the
distribution proposed by such Holder or Other Shareholder as the Company may
request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Agreement.
1.7 Limitations on Registration of Issues of Securities. From and
after the date of this Agreement, without the consent of the holders of a
majority of the Registrable Securities then issued and outstanding, the Company
shall not enter into any agreements with any holder or prospective holder of
any securities of the Company that, upon any registration of any of its
securities, the Company will include among the securities that it then
registers securities owned by such holder or prospective holder except to the
extent such agreement could give such holder or prospective holder rights no
greater than those of an Other Shareholder under this Article 1 with respect to
a Piggyback Registration. In any event, any registration rights given by the
Company to any holder or prospective holder of its securities shall be
consistent with the registration and other rights provided in this Agreement.
Notwithstanding the foregoing, the Company may enter into an agreement with any
holder or prospective holder of any securities of the Company giving such
holder or prospective holder the right to require the Company to initiate
registration of any securities of the Company, in which case the rights of such
holder would be superior to the rights of the holders of Registrable
Securities.
1.8 Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission that may permit the sale of
the Common Stock to the public without registration, the Company shall:
1.8.1 make and keep public information available as those terms
are understood and defined in Rule 144 promulgated by the Commission under the
Securities Act ("Rule 144"), at all times after ninety (90) days following the
Initial Public Offering;
1.8.2 file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Securities Exchange Act at any time after it has become subject to the
reporting requirements thereunder; and
1.8.3 so long as any Holder owns any securities constituting or
representing Registrable Securities, furnish to such Holder forthwith upon
request a written statement by the Company as to its compliance with the
reporting requirements of Rule 144 (at any time after ninety (90) days
following the Initial Public Offering), and of the Securities Act and the
Securities Exchange Act (at any time after it has become subject to the
reporting requirements thereunder), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so filed
by the Company as such Holder may reasonably request in availing itself of
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any rule or regulation of the Commission allowing such Holder to sell any such
securities without registration.
1.9 Transfer of Registration Rights. The rights to cause the Company
to register securities of the Company under Section 1.2 hereof may be assigned
by any Holder to any transferee of Registrable Securities together with the
securities being transferred, provided that in each case the Company is given
written notice, at the time or within a reasonable time after said transfer,
stating the name and address of said transferee and identifying the securities
with respect to which such registration rights are being assigned. No such
assignment shall be effective unless the transferee shall be required, as a
condition to such transfer, to agree in writing that he or it will receive and
hold such securities subject to the provisions of this Article 1.
1.10 "Market Stand-Off" Agreement. If requested by the Company upon
the recommendation of the Board of Directors of the Company and an underwriter
of Common Stock of the Company, the Holders shall not sell or otherwise
transfer or dispose of any Common Stock of the Company held by them during the
one hundred eighty (180)-day period following the effective date of a
registration statement of the Company filed under the Securities Act, provided
that:
(i) Such agreement shall apply only with respect to an
underwritten Initial Public Offering; and
(ii) Other Shareholders selling securities pursuant to such
registration statement and all officers and directors of the Company enter into
similar agreements.
Such agreement shall be in writing in form satisfactory to the Company
and such underwriter. The Company may impose stop-transfer instructions with
respect to the shares (or securities) subject to the foregoing restriction
until the end of said one hundred eighty (180)-day period.
2. MISCELLANEOUS.
2.1 Governing Law. This Agreement shall be governed and construed
under the laws of the State of Georgia, notwithstanding the fact that one or
more parties to this Agreement may be a resident of a different state.
2.2 Successors and Assigns. The rights and obligations set forth in
this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective legal representatives, successors and assigns.
2.3 Captions. The captions of the several sections and paragraphs of
this Agreement are included for reference only and shall not limit or otherwise
affect the meaning thereof.
2.4 Amendments. Neither this Agreement nor any term of provision
hereof may be amended, waived, discharged or terminated except in writing
signed by all parties to this Agreement.
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2.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute but one and the same instrument.
[SIGNATURES APPEAR ON SUCCEEDING PAGES]
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IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement on the date first written above.
THE COMPANY:
CHILDCARE NETWORK, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: CEO
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INVESTORS:
/s/ Estate of ▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇
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by ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ (Executix)
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EXECUTOR OF THE ESTATE OF
▇▇▇▇ VAN CLEAVE
/s/ ▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇.
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/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ Harp
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/s/ Sundari Raju
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SUNDARI RAJU
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by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ P.O.A
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by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ P.O.A.
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