REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") made as
of this 30th day of May, 1997 by and among HLM DESIGN, INC., a Delaware
corporation (the "Company") and EQUITAS, L.P., a Delaware limited partnership
("Equitas") and PACIFIC CAPITAL, L.P., a Delaware limited partnership
("Pacific") (collectively, the "Purchasers").
W I T N E S S E T H:
WHEREAS, simultaneously with the execution and delivery of
this Agreement, the Purchasers have purchased from the Company Common Stock
Purchase Warrants, of even date herewith (the "Warrants"); and
WHEREAS, the parties hereto wish to provide for certain
registration rights with respect to securities of the Company that may be
acquired by the Purchasers upon exercise of the Warrants.
NOW, THEREFORE, in consideration of the premises and mutual
covenants and agreements and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged herein contained, the
parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, 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.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Holder" shall mean the holder of the Registrable Securities
(including the Initiating Holders and the Non-Initiating Holders), either
individually or jointly, as the case may be.
"Initiating Holders" shall mean (i) for purposes of Section 3
hereof, Holders of more than fifty percent (50%) of the shares of the
Registrable Securities then outstanding who initiate a request for registration
pursuant to Section 3(a) hereof, and (ii) for purposes of Section 5 hereof,
Holders of more than twenty percent (20%) of the shares of the Registrable
Securities then outstanding who initiate a request for registration pursuant to
Section 5(a) hereof.
"Non-Initiating Holders" shall mean, with respect to any
request for registration pursuant to Sections 3 or 5 hereof, the Holders not
party to such request for registration.
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The terms "register," "registered" and "registration" shall
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of the effectiveness of
such registration statement.
"Registrable Securities" shall mean, at any time, shares of
the Company's securities described in Section 2 hereof which are required to
bear the restrictive legend set forth in such Section.
"Registration Expenses" shall mean all expenses incurred by
the Company in compliance with Sections 3, 4 and 5 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and expenses, the fees
and expenses of one counsel for all the selling Holders and other security
holders and the expense of any special audits incident to or required by any
such registration (but excluding the Selling Expenses and the compensation of
regular employees of the Company, which shall in any event be paid by the
Company).
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities and all
fees and disbursements of counsel, if any, separately retained by any Holder
(not including the fees and disbursements of one such counsel included in
Registration Expenses).
2. Restrictive Legend. Each certificate representing shares of
common stock issued upon exercise of the Warrant shall (unless otherwise
permitted or unless the securities evidenced by such certificate shall have been
registered under the Securities Act) be stamped or otherwise imprinted with a
legend in the following form (in addition to any legend required under
applicable state securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE
SOLD, PLEDGED, HYPOTHECATED OR OFFERED FOR SALE IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES
UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
Upon request of a holder of such a certificate, the Company
shall remove the foregoing legend from the certificate or issue to such holder a
new certificate therefor free of any transfer legend, if, (x) with such request,
the Company shall have received either an opinion of counsel satisfactory to the
Company to the effect that any transfer by such holder of the securities
evidenced by such certificate will not violate the Securities Act and applicable
state securities laws or (y) in accordance with paragraph (k) of Rule 144, such
holder is not and has not during the last three months been an affiliate of the
Company and such holder has held the securities represented by
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such certificate for a period of at least one year. The Company will use its
best efforts to assist any holder in complying with the provisions of this
Section 2 for removal of the legend set forth above.
3. Requested Registration.
(a) Request for Registration. If at any time after three (3)
years from the date of this Agreement, the Company shall receive from Initiating
Holders a written request that the Company effect any registration with respect
to all, or, if not all, at least 25%, of the Registrable Securities held by the
Initiating Holders, the Company shall do the following:
(i) within ten (10) days of receipt of such request
from the Initiating Holders, give written notice of the proposed registration to
the Non-Initiating Holders; and
(ii) as soon as practicable, but in any event no
later than ninety (90) days after receipt of such request from the Initiating
Holders, effect such registration and appropriate qualification under applicable
blue sky or other state securities laws and appropriate compliance with
applicable regulations issued under the Securities Act as may be so requested
and as would permit or facilitate the sale and distribution of all Registrable
Securities as are specified in such request, together with all Registrable
Securities of any Non-Initiating Holder(s) joining in such request as are
specified in a written request by the Non-Initiating Holders (subject to
limitation in accordance with Section 3(b) below) within thirty (30) days after
receipt of such written notice from the Company; provided, however, that the
Company shall not be obligated to effect, or to take any action to effect, any
such registration pursuant to this Section 3 after the Company has effected two
(2) registrations pursuant to this Section 3 and each such registration has been
declared or ordered effective by the Commission and the sale of such Registrable
Securities has closed or been effected.
(b) Underwriting.
(i) Any request for registration pursuant to Section
3(a) hereof may involve a registered underwritten public offering of the
Registrable Securities to be included in the registration. In such event, the
Company shall include any information that it shall have received as to the
nature of the underwriting in the written notice of the Company referred to in
Section 3(a)(i) above, including the name of the underwriter or representative
thereof selected for such underwriting. The right of any Non-Initiating Holder
to registration pursuant to this Section 3 shall be conditioned upon such
Non-Initiating Holder participating in such underwriting and the inclusion of
such Non-Initiating Holder's Registrable Securities in such underwriting to the
extent provided herein.
(ii) In the event of an underwritten requested
registration, the Company shall (together with all Holders proposing to
distribute their Registrable Securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or representative
thereof selected for such underwriting. Notwithstanding any other provision of
this Section 3, if the underwriter or representative thereof advises the
Initiating Holders in writing that, in its opinion, marketing factors require a
limitation on the number of shares to be underwritten, the Initiating Holders
shall so advise all Holders whose Registrable Securities would otherwise be
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underwritten pursuant hereto, and the number of shares of Registrable Securities
that are entitled to be included in the registration and underwriting shall be
allocated in the following manner:
(A) first, the securities of any stockholder
joining in the request for registration who
is not a Holder shall be excluded from such
registration; in the event that less than
all of such stockholders' securities are
required to be excluded, the remaining
number of shares shall be allocated as among
such stockholders in such proportion, as
nearly as practicable, to the relative
amount of securities then held by each such
stockholder;
(B) then, if a limitation on the number of
shares is still required, the Registrable
Securities held by the Non-Initiating
Holders joining in the request for
registration shall be excluded from such
registration to the extent required by such
limitation; in the event that less than all
of such Non-Initiating Holders' Registrable
Securities are required to be excluded, the
remaining number of shares shall be
allocated as among such Non-Initiating
Holders in proportion, as nearly as
practicable, to the relative amount of
Registrable Securities then held by each
such Non-Initiating Holder;
(C) then, if a limitation on the number of
shares is still required, the Registrable
Securities held by the Initiating Holders
joining in the request for registration
shall be excluded from such registration to
the extent required by such limitation; in
the event that less than all of such
Initiating Holders' Registrable Securities
are required to be excluded, the remaining
number of shares shall be allocated as among
such Initiating Holders in proportion, as
nearly as practicable, to the relative
amount of Registrable Securities then held
by each such Initiating Holder.
(iii) In the event that the number of shares of
Registrable Securities of any Holder included in any registration is reduced
below 75% of the shares requested to be included in such registration as a
result of allocations pursuant to this Section 3(b), then such registration
shall not be deemed a registration for purposes of Section 3 and shall not
diminish the number of registrations to which the Holders are entitled pursuant
to this Section 3.
(iv) If any Holder who has requested inclusion in
such registration as provided above disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the underwriter and the Initiating Holders. The securities so
withdrawn shall also be withdrawn from registration.
4. "Piggyback" Registration.
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(a) Company Registration. If at any time the Company shall
determine to register any of its securities either for its own account or the
account of security holder(s) exercising its or their respective demand
registration rights other than pursuant to Section 3 above on any registration
form suitable for inclusion of the Registrable Securities, the Company shall do
the following:
(i) promptly give to each Holder written notice
thereof (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
(ii) include in such registration, and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made by any Holder within thirty (30) days after
receipt of the written notice from the Company described in clause (i) above,
except as limited by the provisions of Section 4(b)(ii) below. Such Holder's
written request may specify all or a part of a Holder's Registrable Securities.
There shall be no limitation on the number of registrations which may be
requested and obtained under this Section 4.
(b) Underwriting.
(i) 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 part of the written notice given pursuant
to Section 4(a)(i). In such event, the right of any Holder to registration
pursuant to Section 4 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.
(ii) The Company shall (together with all Holders
proposing to distribute their securities through such underwriting) enter into
an underwriting agreement in customary form with the underwriter or
representative thereof selected by the Company. Notwithstanding any other
provision of this Section 4, if the Underwriter or representative thereof
advises the Company in writing that, in its opinion, marketing factors require a
limitation on the number of shares to be underwritten, the underwriter or
representative thereof may (subject to the allocation priority set forth below),
(A) if the registration of which the Company gives notice is for the first
registered public offering of securities of the Company, exclude all of the
Holders' Registrable Securities provided that no other selling shareholders'
shares are included in the offering, or (B) in any other event, limit the number
of the Holders' Registrable Securities and securities being registered by any
other selling shareholders to be included in the registration and underwriting
to an amount not less than thirty percent (30%) of the total number of shares
being registered in such registration and underwriting. If such limitation is
required, the Company shall so advise all holders of securities requesting
registration, and the number of shares of securities that are entitled to be
included in the registration and underwriting shall be allocated first to the
Company for its own account, and then in the following manner: the Registrable
Securities of the Holders joining in the request for registration and the
securities to be sold by other selling shareholders participating in the
registration shall be excluded from such registration in the ratio of eighty
(80) to twenty (20) so that 80% of the shares included
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in the registration (other than Company shares) are Registrable Securities of
the Holders and 20% are shares owned by other shareholders joining in the
registration.
(iii) If any Holder of Registrable Securities or any
other stockholder disapproves of the terms of any such underwriting, such
stockholder may elect to withdraw therefrom by written notice to the Company and
the underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
5. Registration on Form S-3.
(a) The Company shall use its best efforts to qualify for
registration on Form S-3 or any comparable or successor form. To that end the
Company shall register (whether or not required by law to do so) the Common
Stock under the Exchange Act in accordance with the provisions of the Exchange
Act following the effective date of the first registration of any securities of
the Company on Form S-1 or any comparable or successor form or forms.
(b) After the Company has qualified for the use of Form S-3,
in addition to the rights contained in the foregoing provisions of this
Agreement, the Holders shall have the right to request from time to time
registrations on Form S-3. Such requests shall be initiated by the Initiating
Holders, shall be in writing and shall state the number of shares of Registrable
Securities to be disposed of and the intended methods of disposition of such
shares by such Holders. Whenever the Company is required by this Section 5 to
effect the registration of the Registrable Securities, each of the procedures
and requirements of Section 3 (including, without limitation, the requirement
that the Company notify the Non-Initiating Holders in order to provide them with
the opportunity to participate in the offering) shall apply to such
registration; provided, however, that there shall be no limitation on the number
of registrations on Form S-3 which may be requested and obtained under this
Section 5, other than a limit of two (2) such registrations in any calendar
year.
6. Expenses of Registration. The Company shall bear all
Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to this Agreement. All Selling Expenses
shall be borne by the holders, including the Company, of the securities so
registered pro rata on the basis of the number of their shares so registered.
7. Registration Procedures. In the case of each registration
effected by the Company pursuant to Sections 3, 4 or 5, the Company will keep
each Holder advised in writing as to the initiation of each registration and as
to the completion thereof. At its expense, the Company will do the following:
(a) Keep such registration effective for a period of three
months or until the Holders have completed the distribution described in the
registration statement relating thereto, whichever first occurs, but in any
event not longer than six (6) months; provided, however, that in the case of any
registration of Registrable Securities on Form S-3 which are intended to be
offered on a continuous or delayed basis, such period shall be extended, if
necessary, to keep the registration statement effective until all such
Registrable Securities are sold;
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(b) Prepare and file with the Commission 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 securities
covered by such registration statement;
(c) Furnish such number of prospectuses and other documents
incident thereto, including any amendment of or supplement to the prospectus, as
a Holder from time to time may reasonably request;
(d) Notify each seller 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
as a result of which the prospectus included in such registration statement, as
then in effect, includes 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 or incomplete in the light of the
circumstances then existing, and at the request of any such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchaser of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing;
(e) If at the time of any request to register Registrable
Securities, the Company is engaged or has fixed plans to engage within 60 days
of the time of the request in a registered public offering as to which the
Holders may include Registrable Securities hereunder or is engaged in any other
activity which, in the good faith determination of the Company's Board of
Directors, would be adversely affected by the requested registration to the
material detriment of the Company, then the Company may at its option direct
that such request be delayed for a period not in excess of ninety (90) days from
the effective date of such offering or the date of commencement of such other
material activity, as the case may be, such right to delay a request to be
exercised by the Company not more than once in any twelve (12) month period.
(f) Cause all such Registrable Securities to be listed on each
securities exchange or trading market on which similar securities issued by the
Company are then listed or traded;
(g) Provide a transfer agent and registrar for all Registrable
Securities and a CUSIP number for all such Registrable Securities, in each case
not later than the effective date of such registration;
(h) Make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement, and any attorney or accountant retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers and
directors to supply all information reasonably requested by any such seller,
underwriter, attorney or accountant in connection with such registration
statement; provided, however, that such seller, underwriter, attorney or
accountant shall agree to hold in confidence and trust all information so
provided;
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(i) Furnish to each selling Holder a signed counterpart,
addressed to the selling Holder, of
(i) an opinion of counsel for the Company, dated the
effective date of the registration statement in usual and customary form for
registered public offerings, and
(ii) "comfort" letters signed by the Company's
independent public accountants who have examined and reported on the Company's
financial statements included in the registration statement, to the extent
permitted by the standards of the AICPA or other relevant authorities, covering
substantially the same matters with respect to the registration statement (and
the prospectus included therein) and (in the case of the accountants' "comfort"
letters) with respect to events subsequent to the date of the financial
statements, as are customarily covered in opinions of issuer's counsel and in
accountants' "comfort" letters delivered to the underwriters in underwritten
public offerings of securities;
(j) Furnish to each selling Holder a copy of all documents
filed with and all correspondence from or to the Commission in connection with
any such offering other than non- substantive cover letters and the like;
(k) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but not more than eighteen
months, beginning with the first month after the effective date of the
Registration Statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act; and
(l) In connection with any underwritten offering pursuant to a
registration statement filed pursuant to Section 3 hereof, the Company shall
enter into any underwriting agreement reasonably necessary to effect the offer
and sale of the Registrable Securities, provided such underwriting agreement
shall contain customary underwriting provisions.
8. Indemnification.
(a) The Company shall indemnify each Holder, each of its
officers, directors and partners, and each person controlling such Holder, with
respect to which registration, qualification or compliance has been effected
pursuant to Sections 3, 4 or 5 and each underwriter, if any, and each person who
controls any underwriter, against all claims, losses, damages and liabilities
(or actions, proceedings or settlements 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 incomplete, or any
violation by the Company of the Securities Act or any rule or regulation
thereunder applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, qualification or
compliance, and will reimburse
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each such Holder, each of its officers, directors and partners, and each person
controlling such Holder, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses as they are reasonably
incurred in connection with investigating and defending any such claim, loss,
damages, liability or action, provided that the Company will not be liable in
any such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or omission based upon
written information furnished to the Company by such Holder or underwriter.
(b) Each Holder shall, if Registrable Securities held by it
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers and each underwriter, if any, of the Company's securities covered by
such a registration statement, each person who controls the Company or such
underwriter within the meaning of the Securities Act and the rules and
regulations thereunder, each other Holder and each of their officers, directors
and partners, and each person controlling such Holder, 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 or incomplete, and will reimburse the Company and such
Holders, directors, officers, partners, persons, underwriters or 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 for the purpose of being included in such registration
statement, prospectus, offering circular or other document; provided, however,
that the obligations of such
Holders hereunder shall be limited to an amount equal to the net proceeds (after
Selling Expenses) to each such Holder of securities sold as contemplated herein.
(c) Each party entitled to indemnification under this Section 8
(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 unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 8. 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 which 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 in respect to such claim or litigation. Each Indemnified Party
shall furnish such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with defense of such claim and litigation resulting
therefrom.
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(d) If the indemnification provided for in this Section 8 is
unavailable to an Indemnified Party in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and all shareholders offering
securities in the offering (the "Selling Shareholders") on the other, or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and the Selling Shareholders on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Selling
Shareholders on the other hand shall be the net proceeds from the offering
(before deducting expenses) received by the Company on the one hand and the
Selling Shareholders on the other. The relative fault of the Company on the one
hand and the Selling Shareholders on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Selling Shareholders
and the parties' relevant intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Selling Shareholders agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were based solely upon the number of
entities from whom contribution was requested or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 8(d). The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages and liabilities referred to
above in this Section 8(d) shall be deemed to include any legal or other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim, subject to the provisions
of Section 8(d) hereof. Notwithstanding the provisions of this Section 8(d), no
Selling Shareholder shall be required to contribute any amount or make any other
payments under this Agreement which in the aggregate exceed the net proceeds
(after Selling Expenses) received by such Selling Shareholder. No person guilty
of fraudulent misrepresentation (within the meaning of the Securities Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
9. Information by Holder. Each Holder of Registrable
Securities shall furnish to the Company such information regarding such Holder
and the distribution proposed by such Holder as the Company may reasonably
request in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in Sections 3, 4 or 5.
10. "Stand-Off" Agreement. Each Holder, if requested by the
Company and the Managing Underwriter of an offering by the Company of Common
Stock or other securities of the Company pursuant to a Registration Statement,
shall agree not to sell publicly or otherwise transfer or dispose of any
Registrable Securities or other securities of the Company held by such Holder
for a specified period of time (not to exceed 180 days) following the effective
date of such Registration Statement; provided, that:
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(a) such agreement shall only apply to the first Registration
Statement covering Common Stock to be sold on its behalf to the public in an
underwritten offering; and
(b) all Holders holding not less than the number of shares of
Common Stock held by such Holder (including shares of Common Stock issuable upon
the conversion of Shares, or other convertible securities, or upon the exercise
of options, warrants or rights) and all officers and directors of the Company
enter into similar agreements.
11. Limitations on Registration of Issues of Securities. From
and after the date of this Agreement, the Company shall not enter into any
agreement with any holder or prospective holder of any securities of the Company
giving such holder or prospective holder a right to require the Company to
initiate any registration of any securities of the Company or to require the
Company, upon any registration of any of its securities, to include, among the
securities which the Company is then registering, securities owned by such
Holder which is on a parity with or superior to the rights given to the Holders
hereunder unless waived as provided in Section 15 below.
12. Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to:
(a) Use its best efforts to make and keep public information
available as those terms are understood and defined in Rule 144 under the
Securities Act at all times from and after ninety (90) days following the
effective date of the first registration under the Securities Act filed by the
Company for an offering of its securities to the general public;
(b) Use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act at any time after it has become subject to
such reporting requirements; and
(c) So long as the Holders own any Registrable Securities,
furnish to the Holders forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of Rule 144 (at any time
from and after ninety (90) days following the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public), and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents so filed as the Holders may reasonably request in availing itself of
any rule or regulation of the Commission allowing the Holder to sell any such
securities without registration.
13. Transfer or Assignment of Registration Rights. The rights
to cause the Company to register securities granted to the Holders by the
Company under Sections 3, 4 and 5 may be transferred or assigned by the
Purchaser, provided that the Company is given written notice at the time of or
within a reasonable time after said transfer or assignment, stating the name and
address of said transferee or assignee and identifying the Registrable
Securities with respect to which such
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registration rights are being transferred or assigned, and provided further that
the transferee or assignee of such rights assumes the obligations of the Holders
under this Agreement.
14. Termination. The provisions of this Section 3, 4 and 5 of
this Agreement shall terminate when there shall no longer be any Registrable
Securities.
15. Entire Agreement; Amendment; Waiver. This Agreement
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof. No amendment, alteration or modification of this
Agreement shall be valid unless in each instance such amendment, alteration or
modification is expressed in a written instrument executed by the parties
hereto. No waiver of any provision of this Agreement shall be valid unless it is
expressed in a written instrument duly executed by the party or parties making
such waiver. The failure of any party to insist, in any one or more instances,
on performance of any of the terms and conditions of this Agreement shall not be
construed as a waiver or relinquishment of any rights granted hereunder or of
the future performance of any such term, covenant or condition but the
obligation of any party with respect thereto shall continue in full force and
effect.
16. Specific Performance. The parties hereby declare that it
is impossible to measure in money the damages which will accrue to a party
hereto by reason of a failure to perform any of the obligations under this
Agreement. Therefore, all parties hereto shall have the right to specific
performance of the obligations of the other parties under this Agreement, and if
any party hereto shall institute an action or proceeding to enforce the
provisions hereof, any person (including the Company) against whom such action
or proceeding is brought hereby waives the claim or defense therein that such
party has an adequate remedy at law, and such person shall not urge in any such
action or proceeding the claim or defense that such remedy at law exists.
17. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be mailed first class
registered with postage prepaid as follows:
(a) If to a Purchaser, to the following:
Equitas, L.P.
Xxxxx 000
0000 Xxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx XxXxx
FAX: 000-000-0000
Pacific Capital, L.P.
Suite 1070
0000 Xxxx Xxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx III
FAX: 000-000-0000
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With a copy to:
Xxxx X. Xxxxx
Boult, Cummings, Xxxxxxx & Xxxxx, PLC
Suite 1600
000 Xxxxx Xxxxxx
P.O. Box 198062
Xxxxxxxxx, XX 00000
FAX: 000-000-0000
(b) If to the Company, to the following:
HLM Design, Inc.
Suite 2950
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
FAX: 000-000-0000
with a copy to:
Xxxxxxx X. Xxxx
Xxxxxxxxx Xxxxxx Xxxxxx & Xxxxxx, P.A.
0000 Xxxxxxxxx Xxxxx
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X. 00000-0000
FAX: 000-000-0000
Alternatively, to such other address as a party hereto
supplies to each other party in writing.
18. Successors and Assigns. All the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective transferees, successors and assigns of the parties
hereto, whether so expressed or not.
19. Governing Law. This Agreement is to be governed by and
interpreted under the laws of the State of Tennessee without giving effect to
the principles of conflicts of laws thereof.
20. Titles and Subtitles. The titles of the sections of this
Agreement are for the convenience of reference only and are not to be considered
in construing this Agreement.
21. Severability. The invalidity or unenforceability of any
provisions of this Agreement shall not be deemed to affect the validity or
enforceability of any other provision of this Agreement.
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22. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this
Registration Rights Agreement as of the date first above written.
HLM DESIGN, INC.
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
EQUITAS, L.P.
By: Tennessee Business Investments, Inc.
By: /s/ Xxxxxxx XxXxx
Name: Xxxxxxx XxXxx
Title: President
PACIFIC CAPITAL, L.P.
By: Pacific Capital Corporation
By: /s/ J. Xxxxx Xxxxxxxx
Name: J. Xxxxx Xxxxxxxx
Title: Secretary-Treasurer
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