EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is dated as of
April 22, 2002, and made by and among Xxxx Communications Systems, Inc., a
Georgia corporation (the "Company"), and each of the other persons set forth on
the signature pages hereto (each, a "Purchaser" and, collectively, the
"Purchasers"). Capitalized terms used but not otherwise defined herein shall
have the meaning set forth in Section 7 hereof.
WHEREAS, each of the Purchasers has acquired shares of the Company's
Series C Preferred Stock pursuant to that certain Preferred Stock Purchase
Agreement, dated as of the date hereof, by and among the Company and certain of
the Purchasers (as amended, restated or modified from time to time, the
"Purchase Agreement") or that certain Exchange Agreement, dated as of the date
hereof, by and among the Company and certain of the other Purchasers (as
amended, restated or modified from time to time, the "Exchange Agreement");
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. Shelf Registration by the Company.
(a) Shelf Registration. The Company shall file with the Securities
and Exchange Commission (the "Commission"), no later than 45 days after the date
hereof, a registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to resales of the Registrable Securities.
The registration provided by this Section shall be effected by the filing of a
registration statement on Form S-3 (or, if such form is unavailable, such other
form as the Company determines to be available and appropriate and selects with
the consent of the holders of a majority of the Registrable Securities), which
shall provide for sales of Registrable Securities to be made on a continuous
basis pursuant to Rule 415 under the Securities Act (or any similar rule that
may be adopted by the Commission) in accordance with the intended method or
methods of disposition by the holders of the Registrable Securities, which may,
as provided in Section 1(b), include an underwritten offering (the "Shelf
Registration Statement"). The Company shall use its reasonable best efforts to
cause the Shelf Registration Statement to be declared effective under the
Securities Act as soon as practicable after filing (but in no event later than
the earlier to occur of (x) 200 days after the date hereof and (y) 180 days
after the date of filing (such earlier date, "the Outside Effective Date")) and,
once effective, the Company shall cause such Shelf Registration Statement to
remain effective until the earlier to occur of (i) the date that is two years
following the date of initial issuance of the Series C Preferred Stock and (ii)
the date as of which there are no longer any Registrable Securities in
existence.
(b) Underwritten Offering. If at any time or from time to time
during the effectiveness of the Shelf Registration Statement the holders of a
majority of Registrable Securities propose to sell 25% or more of the
Registrable Securities held by such holders, such holders may, by notice to the
Company, require that such sale occur through a firm commitment
underwritten offering (or any other type of underwritten offering specified by
such holders) and, in such event, (i) the Company will promptly give written
notice of such planned underwritten offering to all other holders of Registrable
Securities and will include in such registration (subject to any cutbacks
demanded by the managing underwriter, which shall be imposed pro rata among the
holders of such Registrable Securities on the basis of the number of Registrable
Securities owned by each such holder and subject to the other provisions of this
Agreement) all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within ten (10) business days
after the receipt of the Company's notice, (ii) the Company shall have the right
to select the managing underwriter, subject to the approval (which may not be
unreasonably withheld or denied) of the holders of a majority of the Registrable
Securities to be included in such offering, and (iii) the Company shall promptly
amend the Shelf Registration Statement to include any information reasonably
requested to be included therein by the underwriters or holders of Registrable
Securities. Holders of Registrable Securities may request an underwritten
offering pursuant to this Section 1(b) on not more than four occasions in the
aggregate (provided that no more than two requests may be made in any one
calendar year and a minimum of 90 days must elapse between the making of any
such requests) and the minimum amount of any such underwritten offering shall be
$4,000,000, it being understood that (x) the foregoing limitations applicable to
underwritten offerings shall not be deemed to limit the obligations of the
Company under Section 1(a) to keep the Shelf Registration Statement effective
for the time period specified therein for use in connection with
non-underwritten offerings and (y) the holders of Registrable Securities
requesting such underwritten offering will be entitled to withdraw such request
(such withdrawal to be effective only if (A) made within 40 days of the
Company's delivery of the notice to holders contemplated by clause (i) of this
Section 1(b), (B) made upon the failure to sell at least 50% of the Registrable
Securities requested to be included in such underwritten offering or (C) made
upon the failure to sell at least 75% of the Registrable Securities requested to
be included in such underwritten offering, provided that, notwithstanding
anything in this Agreement to the contrary, the holders requesting such
underwritten offering will bear any Registration Expenses arising prior to such
withdrawal under this clause (C)) and such withdrawn request will not count as
one of the four permitted underwritten offerings under this Section 1(b). Any
underwritten offering with respect to any securities covered by the Shelf
Registration Statement other than an underwritten offering of the type described
in this Section 1(b) shall be subject to the provisions of Section 2 of this
Agreement.
(c) Eligibility. The Company represents and warrants that it is,
and covenants that it will use its reasonable best efforts to remain, at all
times while there are any Registrable Securities outstanding, eligible to use
Form S-3 under the Securities Act.
(d) Liquidated Damages. The parties hereto agree that the holders
of the Registrable Securities will suffer damages if the Shelf Registration
Statement is not declared effective under the Securities Act by the Outside
Effective Date (a "Registration Default"), and that it would not be feasible to
ascertain the extent of such damages. Accordingly, in such event, damages
("Liquidated Damages") will accrue with respect to each share of Series C
Preferred Stock owned by a holder with respect to the first 90-day period
immediately following the occurrence of such Registration Default in an amount
equal to 0.5% of the Liquidation Preference (as such term is defined in the
Articles of Amendment, dated April 15, 2002, to the Articles of Incorporation of
the Company (the "Articles")) of such share of Series C Preferred Stock and will
increase by an additional 0.5% for each subsequent 90-day period until such
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Registration Default has been cured, up to an aggregate maximum amount of
Liquidated Damages of 2.0% of such Liquidation Preference. All accruals of
Liquidated Damages under the preceding sentence will be prorated for any partial
90-day period. Following the cure of a Registration Default, the accrual of
Liquidated Damages with respect to such Registration Default will cease. Such
Liquidated Damages shall be payable in cash on each dividend payment date for
the Series C Preferred Stock to the holders of record entitled to receive such
dividends on such date, regardless of whether such dividends are paid on such
date and regardless of whether Liquidated Damages have ceased to accrue as of
such date. The parties hereto agree that the Liquidated Damages provided for in
this Section 1(d) constitute a reasonable estimate of the damages that will be
suffered by the holders of the Registrable Securities by reason of the happening
of a Registration Default.
2. Piggyback Registration.
(a) Right to Piggyback. If the Company shall propose the
registration under the Securities Act of an offering of any of its Class B
Common Stock, whether or not for its own account (other than pursuant to a
registration on Form S-4 or S-8 or any successor form), the Company, on each
such occasion, shall as promptly as practicable give written notice (the
"Notice") to all holders of Registrable Securities of its intention to effect
such registration, and such holders shall be entitled, on each such occasion, to
request to have all or a portion of their Registrable Securities included in
such registration statement (a "Piggyback Registration"). Upon the written
request of any holder of Registrable Securities that the Company include any
Registrable Securities in such registration statement (which request shall state
the number of the Registrable Securities for which registration is sought),
given within twenty (20) days after the giving of the Company's Notice, the
Company shall cause such Registrable Securities to be so included in the
offering covered by such registration statement, subject to the limitations
hereinafter set forth. Subject to Section 2(b) and 2(c), holders of Registrable
Securities may request registration pursuant to this Section 2(a) on not more
than six occasions in the aggregate, provided that any such request shall not
count as one of the six permitted registrations under this Section 2(a) if the
only Registrable Securities included in such registration were originally
acquired pursuant to the Exchange Agreement.
(b) Priority on Primary Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of the Company,
the Company will include in such registration all securities requested to be
included in such registration; provided, that if 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 in such offering without adversely affecting the marketability of the
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 pro rata among the holders of such
Registrable Securities on the basis of the number of shares of Registrable
Securities owned by each such holder, and (iii) third, other securities, if any,
requested to be included in such registration.
(c) Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the Company's securities other than Registrable Securities, and the managing
underwriters advise the Company in writing that in
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their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
adversely affecting the marketability of the offering, the Company will include
in such registration (i) first, the securities requested to be included therein
by the holders requesting such registration, (ii) second, the Registrable
Securities requested to be included in such registration, pro rata among the
holders of such Registrable Securities on the basis of the number of shares of
Registrable Securities owned by each such holder, and (iii) third, other
securities requested to be included in such registration not covered by clause
(i) or (ii) above.
3. Registration Procedures and Obligations.
(a) Obligations of the Company. If and whenever the
Company is obligated by the provisions of this Agreement to effect the
registration of any Registrable Securities under the Securities Act, the Company
will use its reasonable best efforts to effect the registration and the sale of
such Registrable Securities in accordance with the intended method of
disposition thereof, and pursuant thereto the Company will as expeditiously as
possible (or within such specific time period as may otherwise be specified):
(i) Prepare and file with the Commission a
registration statement with respect to such securities on such
form as the Company deems appropriate and is permitted or
qualified to use (subject to Section 1(a)) and shall use all
reasonable best efforts to cause such registration statement
to become and remain effective as provided herein; provided,
that in the case of any registration pursuant to Section 2,
such preparation and filing may be delayed in the sole
discretion of the Company;
(ii) Furnish to counsel to the holders of a
majority of the Registrable Securities to be included under
any registration statement and to counsel for the underwriters
in any underwritten offering copies of all documents proposed
to be filed with the Commission in connection with such
registration, and to reflect in each such document, when so
filed with the Commission, such comments as such counsel
reasonably may propose (it being understood that (A) the
Company shall allow such counsel a reasonable period of time,
in light of all circumstances, to review the document to be
filed and (B) such counsel shall provide any comments to the
Company as soon as practicable following such review).
(iii) Furnish to each holder of Registrable
Securities, without charge, such number of conformed copies of
such registration statement, the prospectus included in such
registration statement (including each preliminary prospectus)
and of each amendment and supplement thereto (in each case,
including all exhibits and documents filed therewith) and such
other documents as such holder may reasonably request in order
to facilitate the disposition of the Registrable Securities
owned by such holder.
(iv) Use its reasonable best efforts to register
and qualify such Registrable Securities under such other
securities laws of such jurisdictions as shall be reasonably
requested by any holder of Registrable Securities and do any
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and all other acts and things which may be reasonably
necessary or advisable to enable such holder to consummate the
disposition of the Registrable Securities owned by such holder
in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a
condition thereto to qualify to transact business or to file a
general consent to service of process in any such states or
jurisdictions, or to maintain the effectiveness of any such
registration or qualification for any period during which it
is not required to maintain the effectiveness of the related
registration statement under the Securities Act.
(v) Promptly notify each holder of Registrable
Securities 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 any such holder, and subject to the
provisions of Section 3(b)(ii), the Company will prepare 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.
(vi) Enter into such customary agreements and
take all such other actions as the holders of a majority of
the Registrable Securities being sold or the underwriters, if
any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities.
(vii) Make reasonably available for inspection by
any holder 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 holder 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 any such holder,
underwriter, attorney, accountant or agent in connection with
such registration statement, in each case as and to the extent
necessary to permit the holders to conduct a reasonable
investigation within the meaning of the Securities Act. To
minimize disruption and expense to the Company during the
course of the registration process, the holders and any
transferee(s) of the holders hereunder shall, to the extent
practicable, coordinate investigation and due diligence
efforts hereunder and will enter into confidentiality
agreements with the Company in form and substance reasonably
satisfactory to the Company and the holders of the Registrable
Securities prior to the disclosure of any confidential or
proprietary information of the Company.
(viii) Promptly notify each holder of Registrable
Securities of the following events and confirm such
notification in writing: (w) 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, (x) any requests by the Commission for
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amendments or supplements to the registration statement or the
prospectus or for additional information, (y) the issuance or
threat of issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or
the initiation of any proceedings for that purpose, and (z)
the receipt by the Company of any notification with respect to
the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or
threat of initiation of any proceeding for such purpose.
(ix) In the event of the issuance of any stop
order suspending the effectiveness of a registration
statement, or of any order suspending or preventing the use of
any related prospectus or suspending the qualification of any
Registrable Securities included in such registration statement
for sale in any jurisdiction, the Company will use its
reasonable best efforts promptly to obtain the withdrawal of
such order;
(x) Cooperate with the holders of Registrable
Securities to facilitate the timely preparation and delivery
of certificates representing the Registrable Securities to be
sold and not bearing any restrictive legends, and enable such
Registrable Securities to be in such lots and registered in
such names as the holders of Registrable Securities may
request at least two (2) business days prior to any delivery
of the Registrable Securities to the purchaser thereof,
provided that such holders shall have established to the
satisfaction of the Company that any transfer taxes and other
similar expenses of the sale of the Registrable Securities
have been paid or are not payable.
(xi) Prior to the effectiveness of the
registration statement and any post-effective amendment
thereto, (A) make such representations and warranties to the
holders of Registrable Securities and the underwriters, if
any, with respect to the Registrable Securities and the
registration statement as are customarily made by issuers in
similar underwritten offerings; (B) deliver such documents and
certificates as may be reasonably requested (1) by the holders
of Registrable Securities, and (2) by the underwriters, if
any, to evidence compliance with clause (A) above and with any
customary conditions contained in the underwriting agreement
or other agreement entered into by the Company; and (C) obtain
and furnish to each holder of Registrable Securities included
in the registration signed counterparts, addressed to such
holders and the underwriters (if any) of: "a cold comfort"
letter from the Company's independent public accountants and
opinions of counsel to the Company (which counsel and which
opinions shall be reasonably satisfactory to such holders and
the underwriters, if any), in each case covering the matters
customarily covered in opinions requested in public offerings.
(xii) Pay all Registration Expenses.
(xiii) use its reasonable best efforts, to the
extent applicable, (i) (A) to list such Registrable Securities
on any securities exchange on which the equity securities of
the Company are then listed and (ii) to provide a transfer
agent and
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registrar for such Registrable Securities not later than the
effective date of such registration statement and to instruct
such transfer agent.
(xiv) Otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the
Commission, and make generally available to its security
holders, as soon as reasonably practicable, an earnings
statement satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder, which
statement shall cover the period of at least twelve months
beginning with the first day of the Company's first full
calendar quarter after the effective date of the registration
statement.
(b) Obligations of the Holders of Registrable Securities.
In consideration of the Company's obligations with respect to and compliance
with the registration statement provisions set forth herein, each holder of
Registrable Securities, severally and not jointly, agrees that (and, in the case
of clause (i) below, with respect to any given holder for any given
registration, such obligations of and compliance by the Company shall be
expressly conditioned upon such holder's compliance with the provisions of such
clause (i)):
(i) Unless such holder has notified the Company
in writing of such holder's election to exclude all of such
holder's Registrable Securities from such registration, each
holder of Registrable Securities shall cooperate with the
Company in connection with the preparation of any registration
statement hereunder and shall provide to the Company, in
writing, for use in the Shelf Registration Statement or other
registration statement hereunder, all such information
regarding such holder, its ownership of Registrable Securities
and the plan(s) of distribution of the Registrable Securities
as the Company reasonably requests to prepare the registration
statement and prospectus covering the Registrable Securities
in accordance with applicable requirements of law, to maintain
the currency and effectiveness thereof and otherwise to comply
with all applicable requirements of law in connection
therewith.
(ii) In the event that the Company informs the
holders of Registrable Securities of the happening of an event
described in Section 3(a)(v) or Section 3(a)(viii), the
holders of Registrable Securities shall refrain from selling
Registrable Securities until the earlier to occur of the date
(x) the Company notifies the holders of Registrable Securities
that it has filed with the Commission an amendment or
supplement to the prospectus included in the registration
statement, or (y) the Company notifies the holders of
Registrable Securities that the potentially disclosable event
no longer exists and that the prospectus included in the
registration statement does not contain an untrue statement of
material fact or omit to state any fact necessary to make the
statements therein not misleading.
4. Holdback Agreement. Notwithstanding anything set forth herein
to the contrary, the Company may suspend the use or effectiveness of the Shelf
Registration Statement (a "Suspension Period") if the Company reasonably
believes that the Company may, in the absence of such suspension, be required
under state or federal securities laws to disclose any bona fide financing,
acquisition or other plans of the Company or other matters, the premature
disclosure
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of any of which would reasonably be expected to have a material adverse effect
upon the Company, provided that (i) such Suspension Period may not be for longer
than 30 consecutive days and the total number of days in all Suspension Periods
during any given calendar year shall not be more than 120 days, (ii) the Company
shall notify all holders of Registrable Securities in writing prior to the
commencement of any Suspension Period (without disclosing the facts and
circumstances that underlie such Suspension Period) and will immediately notify
them in writing of the end of the Suspension Period, (iii) the Company will use
reasonable best efforts to ensure that the Suspension Period is kept to a
minimum number of days and (iv) no other holder of registration rights granted
by the Company will be permitted to sell equity securities pursuant to the
exercise of such rights during any Suspension Period.
5. Underwriting Agreements. If requested by the underwriters for
any underwritten offering pursuant to a registration contemplated by Section
1(b) or Section 2, the Company shall enter into a customary underwriting
agreement with the underwriters for such offering. Any such underwriting
agreement shall contain such representations and warranties by the Company and
such other terms and provisions as are customarily contained in agreements of
this type, including, without limitation, indemnities to the effect and to the
extent provided in Section 6. In the case of an underwritten offering under
Section 1(b) or 2, the holders of the Registrable Securities to be included in
such offering shall be parties to such underwriting agreement and the Company's
obligations under such Sections shall be expressly conditioned upon such
holders' participation in any such underwriting and the inclusion of their
Registrable Securities in any such underwriting to the extent provided herein.
If any holder does not agree to the terms of any such underwriting, such
holder's Registrable Securities shall be excluded therefrom. In the case of an
underwritten offering under Section 1(b) or 2, the holders of a majority of the
Registrable Securities to be included in such offering may, at their option,
require that any or all of the representations and warranties by, and the
agreements on the part of, the Company to and for the benefit of the
underwriters for such offering be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under the underwriting agreement shall also be
conditions precedent to the obligations of such holders of Registrable
Securities. No underwriting agreement (or other agreement in connection with any
offering of Registrable Securities hereunder) shall require any holder of
Registrable Securities, in their respective capacities as stockholders and/or
controlling persons, to make any representations or warranties to or agreements
with the Company or the underwriters other than representations, warranties or
agreements regarding such holder, the ownership of such holder's Registrable
Securities and such holder's intended method or methods of disposition and any
other representation required by law or to furnish any indemnity to any Person
which is broader than the indemnity furnished by such holder pursuant to Section
6(b). In connection with any underwritten offering under Section 1(b), the
Company, to the extent requested by the managing underwriter for such offering,
shall agree not to effect any public sale or distribution of its equity
securities or securities convertible into or exchangeable or exercisable for any
of such equity securities (except for any securities other than the Registrable
Securities covered by the Shelf Registration Statement) within seven days prior
to and 90 days following the pricing of such underwritten offering.
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6. Indemnification and Contribution.
(a) By the Company. In connection with the registration
of Registrable Securities under this Agreement, the Company shall indemnify and
hold harmless each holder of Registrable Securities, its officers, directors,
members, stockholders, partners, employees, agents and Affiliates and each other
person, if any, who controls such holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act ("controlling persons"),
against any and all expenses, losses, claims, damages, liabilities or costs
(including without limitation court costs and attorneys' fees), joint or several
(or actions in respect thereof) ("Losses"), to which each such indemnified party
may become subject, under the Securities Act or otherwise, but only to the
extent such Losses arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained, on the effective date
thereof, in any registration statement under which the Registrable Securities
were registered under the Securities Act, in any preliminary prospectus (if used
prior to the effective date of such registration statement) or in any final
prospectus or summary prospectus contained therein or used in connection with
the offering of securities covered thereby, or in any post-effective amendment
or supplement thereto (if used during the period the Company is required to keep
the registration statement effective) (the "Disclosure Documents"), or (ii) any
omission or alleged omission to state in any of the Disclosure Documents a
material fact required to be stated therein or necessary to make the statements
made therein not misleading, or (iii) any violation of any federal or state
securities laws or rules or regulations thereunder committed by the Company in
connection with the performance of its obligations under this Agreement; and the
Company will reimburse each such indemnified party for all legal and other
expenses reasonably incurred by such party in connection with enforcing its
rights hereunder or under the underwriting agreement entered into in connection
with such offering, including investigating, preparing, pursuing or defending
against any such Losses, whether or not resulting in any liability, or in
connection with any investigation or proceeding by any governmental agency or
instrumentality relating to any such Losses with respect to any offering of
securities pursuant to this Agreement; provided, however, that the Company shall
not be liable to an indemnified party in any such case to the extent that any
such Losses arise out of or are based upon (i) an untrue statement or alleged
untrue statement or omission or alleged omission made in any such Disclosure
Documents in reliance upon and in conformity with written information furnished
to the Company by such indemnified party expressly for use therein or (ii) the
use of any prospectus after such time as the Company has advised such
indemnified party in writing that the filing of a post-effective amendment or
supplement thereto is required, except the prospectus as so amended or
supplemented, or the use of any prospectus after such time as the obligation of
the Company to keep the same current and effective has expired.
(b) By the Holder(s). In connection with the registration
of Registrable Securities under this Agreement, each holder of Registrable
Securities shall, severally, and not jointly, indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed such
registration statement, its employees, agents and Affiliates and each other
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and each other holder(s) and
each controlling person of such holder(s), against any and all Losses to which
each such indemnified party may become subject under the Securities Act or
otherwise, but only to the extent such Losses arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in any of
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the Disclosure Documents 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, if the statement or omission was made in reliance upon
and in conformity with written information furnished to the Company by such
indemnifying party expressly for use therein, or (ii) the use of any prospectus
after such time as the Company has advised such indemnifying party in writing
that the filing of a post-effective amendment or supplement thereto is required,
except the prospectus as so amended or supplemented, or the use of any
prospectus after such time as the obligation of the Company to keep the same
current and effective has expired; provided, that the obligation to indemnify
will be limited to the net amount of proceeds received by such holder from the
sale of Registrable Securities pursuant to such registration statement; and such
indemnifying party shall reimburse each such indemnified party for all legal and
other expenses reasonably incurred by such party in connection with enforcing
its rights hereunder or under the underwriting agreement entered into in
connection with such offering, including investigating, preparing, pursuing or
defending against any such Losses, whether or not resulting in any liability, or
in connection with any investigation or proceeding by any governmental agency or
instrumentality relating to any such Losses with respect to any offering of
securities pursuant to this Agreement.
(c) Actions Commenced. If a third party commences any
action or proceeding against an indemnified party related to any of the matters
subject to indemnification under subsection (a) or (b) hereof, such indemnified
party shall promptly give notice to the indemnifying party in writing of the
commencement thereof, but failure so to give notice shall not relieve the
indemnifying party from any liability which it may have hereunder unless the
indemnifying party is prejudiced thereby.
The indemnifying party shall be entitled to control the defense or
prosecution of such claim or demand in the name of the indemnified party, with
counsel reasonably satisfactory to the indemnified party, if it notifies the
indemnified party in writing of its intention to do so within 20 days of its
receipt of the notice from the indemnified party without prejudice, however, to
the right of the indemnified party to participate therein through counsel of its
own choosing, which participation shall be at the indemnified party's expense
unless (i) the indemnified party shall have been advised by its counsel that use
of the same counsel to represent both the indemnifying party and the indemnified
party would represent a conflict of interest (which shall be deemed to include
any case where there may be a legal defense or claim available to the
indemnified party which is different from or additional to those available to
the indemnifying party), in which case the indemnifying party shall not have the
right to direct the defense of such action on behalf of the indemnified party,
or (ii) the indemnifying party shall fail to defend or prosecute vigorously such
claim or demand within a reasonable time. Whether or not the indemnifying party
chooses to defend or prosecute such claim, the parties hereto shall cooperate in
the prosecution or defense of such claim and shall furnish such records,
information and testimony and attend such conferences, discovery proceedings,
hearings, trials and appeals as may be requested in connection therewith. The
indemnifying party shall not, in the defense of such claim or any litigation
resulting therefrom, consent to entry of any judgment against the indemnified
party (or settle any claim involving an admission of fault on the part of the
indemnified party), except with the consent of the indemnified party (which
consent shall not be unreasonably withheld).
10
(d) The indemnification provided for under this Agreement
will remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified party or any officer, director or controlling
Person of such indemnified party and will survive the transfer of securities.
(e) Contribution. If the indemnification provided for in
subsection (a) or (b) is unavailable to or insufficient to hold the indemnified
party harmless under subsection (a) or (b) above in respect of any Losses
referred to therein for any reason other than as specified therein, then the
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and such indemnified party on the other in connection with the statements
or omissions which resulted in such Losses, as well as any other relevant
equitable considerations. The relative fault 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 (or omitted to be supplied by) the Company or
the holders of Registrable Securities and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by an indemnified party as a
result of the Losses referred to above in this subsection (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. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
7. Definitions. As used herein, the following terms shall have
the following meanings.
"Affiliate" shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"Class A Common Stock" shall mean the Class A Common Stock, no par
value, of the Company.
"Class B Common Stock" means the Class B Common Stock, no par value, of
the Company and any other securities issuable with respect thereto by way of
stock split, stock dividend or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.
"Conversion Shares" has the meaning set forth in the Purchase
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
11
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a limited liability company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Piggyback Registration" has the meaning set forth in Section 2(a) of
this Agreement.
"Registrable Securities" means (i) the Conversion Shares issued or
issuable upon conversion of the Series C Preferred Stock issued pursuant to the
Purchase Agreement or the Exchange Agreement, (ii) any shares of capital stock
issued or issuable with respect to the Conversion Shares as a result of any
stock split, stock dividend, recapitalization, exchange, conversion or other
event, without regard to any limitations on conversions of the Series C
Preferred Stock. As to any particular Registrable Securities, once issued such
securities shall cease to be Registrable Securities when (A) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (B) such securities shall
have been distributed to the public in reliance upon Rule 144 or other
applicable exemption, (C) such securities held by a given holder are eligible
for sale under Rule 144(k) without volume or manner of sale limitations, (D)
such securities shall have been otherwise transferred, new certificates for such
securities not bearing a legend restricting further transfer shall have been
delivered by the Company and subsequent disposition of such securities shall not
require registration or qualification of such securities under the Securities
Act or any similar state law then in force, or(E) such securities shall have
ceased to be outstanding.
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with any registration pursuant to this Agreement,
including, without limitation, (i) registration, filing and National Association
of Securities Dealers, Inc. fees, (ii) fees and expenses of complying with
securities or blue sky laws, (iii) fees and expenses associated with listing
securities on an exchange or NASDAQ, (iv) word processing, duplicating and
printing expenses, (v) messenger and delivery expenses, (vi) transfer agents',
trustees', depositories', registrars' and fiscal agents' fees, (vii) fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits or "cold comfort"
letters, (viii) reasonable fees and disbursements of any one counsel retained by
the holders of Registrable Securities and chosen by the holders of a majority of
Registrable Securities, (ix) all costs of preparing, filing, amending and
maintaining the Shelf Registration Statement and any other registration
statement hereunder and (x) any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities; provided, however, that
with respect to any registration, the holders of the Registrable Securities
included in such registration shall be responsible for all underwriting
discounts or brokerage fees or commissions relating to the sale of the
Registrable Securities, and all transfer taxes and other similar expenses of the
sale of the Registrable Securities.
"Rule 144" means Rule 144 under the Securities Act (or any similar or
successor rule then in force).
"Series C Preferred Stock" has the meaning set forth in the Purchase
Agreement.
"Shelf Registration Statement" is defined in Section 1(a).
12
8. Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be personally delivered,
mailed by registered or certified mail, postage prepaid, return receipt
requested, delivered by a nationally recognized overnight courier or sent by
facsimile transmission with receipt confirmed, addressed to the applicable party
at its address set forth next to its name on the signature page hereto (or such
other address as such party shall hereafter specify by written notice in writing
to the other parties hereto). Any such notice or communication shall be deemed
to have been received (A) in the case of personal delivery or facsimile
transmission, on the date of such delivery or transmission, (B) in the case of a
nationally recognized overnight courier, on the next business day after the date
when sent, and (C) in the case of mailing, on the third business day following
that on which the piece of mail containing such communication is posted.
9. Miscellaneous.
(a) Grant of Future Registration Rights. During the term
of this Agreement, the Company shall not grant to any third party demand
registration rights that would not permit the holders of Registrable Securities
to exercise their piggyback registration rights under Section 2 hereof, subject
to the limitations contained in Section 2 hereof.
(b) Remedies. Any Person having rights under any
provision of this Agreement will be entitled to enforce such rights specifically
to recover damages caused by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law. The parties hereto
agree and acknowledge that money damages may not be an adequate remedy for any
breach of the provisions of this Agreement and that any party may in its sole
discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or other security) for specific performance and for
other injunctive relief in order to enforce or prevent violation of the
provisions of this Agreement.
(c) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may be amended or waived only upon the
prior written consent of the Company and the holders of 66 2/3% or more of the
Registrable Securities. The obligations of the holders of Registrable Securities
hereunder are several and no such holder will be responsible for the action or
inaction of any other holder.
(d) Successors and Assigns. Subject to the following
sentence, all covenants and agreements in this Agreement by or on behalf of any
of the parties hereto will bind and inure to the benefit of the respective
successors and permitted assigns of the parties hereto whether so expressed or
not. In addition, whether or not any express assignment has been made, the
provisions of this Agreement which are for the benefit of holders of Registrable
Securities are also for the benefit of, and enforceable by, any transferee of
(x) 50% or more of a holder's Registrable Securities beneficially owned (as
defined in Rule 13d-3 under the Exchange Act) by such holder on the date hereof
or (y) Registrable Securities of a holder having a Market Price (as such term is
defined in the Articles) of at least $2.5 million on the date of such transfer,
or any transferee that is an Affiliate of a Purchaser (for so long as such
Affiliate remains an Affiliate of such Purchaser), if: (i) such holder agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within ten days after such
assignment; (ii) the Company is, at least ten days prior to such transfer or
assignment, furnished
13
with written notice of (a) the name and address of such transferee or assignee,
and (b) the securities with respect to which such registration rights are being
transferred or assigned; (iii) at the time of such transfer or assignment, the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein; and (iv) such transfer shall have been made in
accordance with the applicable requirements of the Purchase Agreement. Any
transferring or assigning holder shall remain obligated under this Agreement.
For purposes of this Agreement, each of (x) the Gabelli Funds and (y) the
Capital Research and Management Company entities listed on the signature pages
hereto shall be treated as one holder or one Purchaser, as the case may be.
(e) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
regard to its conflict of law doctrines.
(f) Delays or Omissions. No delay or omission to exercise
any right, power or remedy accruing to any party hereto, upon any breach or
default of any other party hereto under this Agreement, shall impair any such
right, power or remedy of such party nor shall it be construed to be a waiver of
any such breach or default, or an acquiescence therein, or of or in any similar
breach or default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party hereto of any breach or default under this
Agreement, or any waiver on the part of any party hereto of any provisions or
conditions of this Agreement must be made in writing and shall be effective only
to the extent specifically set forth in such writing.
(g) Entire Agreement. This Agreement and the Purchase
Agreement contain the entire understanding of the parties with respect to their
subject matter and supersede all prior agreements and understandings among the
parties with respect to their subject matter.
(h) Severability. Each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited or invalid under
applicable law, such provision will be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of this Agreement.
(i) Headings. The section and other headings contained in
this Agreement are for convenience of reference only and shall not affect the
meaning or interpretation of this Agreement.
(j) Counterparts. This Agreement may be executed in two
or more counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which together shall be deemed to be one and
the same agreement.
14
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
XXXX COMMUNICATIONS SYSTEMS, INC. 0000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxx
By: /s/ Xxxxx X. Xxxx
-------------------------------------
Name: X.X. Xxxx
Title: V.P. - CFO
15
TEACHERS INSURANCE AND ANNUITY Teachers Insurance and Annuity
ASSOCIATION OF AMERICA Association of America
Attn: Xxxx Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
By: /s/ Xxxx Xxxxxxxx Facsimile: (000) 000-0000
-------------------------------------
Name: Xxxx Xxxxxxxx
Title: Associate Director - Private
Placements
16
CONTINENTAL CASUALTY COMPANY Attn: Investments
000 Xxxxx Xxxxxx Xxxxxx
CNA Plaza - 00 Xxxxx
Xxxxxxx, XX 00000
By: /s/ Xxxxxxx X. XxXxxx Facsimile: (000) 000-0000
-------------------------------------
Name: Xxxxxxx X. XxXxxx
Title: Vice President
17
AMERICAN HIGH INCOME TRUST Capital Research and
Management Company
Attn: Xxxxxxx X. Xxxxxx
000 Xxxxx Xxxx Xxxxxx, 00xx Floor
By: CAPITAL RESEARCH AND Xxx Xxxxxxx, XX 00000-0000
MANAGEMENT COMPANY Facsimile: (000) 000-0000
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President and Secretary
AMERICAN FUNDS INSURANCE SERIES-- Capital Research and
HIGH YIELD BOND FUND Management Company
Attn: Xxxxxxx X. Xxxxxx
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000-0000
By: CAPITAL RESEARCH AND Facsimile: (000) 000-0000
MANAGEMENT COMPANY
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President and Secretary
18
THE GABELLI EQUITY INCOME FUND Gabelli Funds
Attn: Xxx XxXxx
0 Xxxxxxxxx Xxxxxx
Xxx, XX 00000
By: /s/ Xxxxx Xxxxxx Facsimile: (000) 000-0000
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
THE GABELLI SMALL CAP GROWTH FUND Gabelli Funds
Attn: Xxx XxXxx
0 Xxxxxxxxx Xxxxxx
Xxx, XX 00000
By: /s/ Xxxxx Xxxxxx Facsimile: (000) 000-0000
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
THE GABELLI GLOBAL MULTIMEDIA TRUST INC. Gabelli Funds
Attn: Xxx XxXxx
0 Xxxxxxxxx Xxxxxx
Xxx, XX 00000
By: /s/ Xxxxx Xxxxxx Facsimile: (000) 000-0000
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
THE GABELLI CONVERTIBLE SECURITIES Gabelli Funds
FUND, INC. Attn: Xxx XxXxx
0 Xxxxxxxxx Xxxxxx
Xxx, XX 00000
By: /s/ Xxxxx Xxxxxx Facsimile: (000) 000-0000
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
THE GABELLI EQUITY TRUST INC. Gabelli Funds
Attn: Xxx XxXxx
0 Xxxxxxxxx Xxxxxx
Xxx, XX 00000
By: /s/ Xxxxx Xxxxxx Facsimile: (000) 000-0000
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
19
c/o Gray Communications
/s/ J. Xxxx Xxxxxxxx Systems, Inc.
------------------------------------- 0000 Xxxxxxxxx Xxxx, XX
J. XXXX XXXXXXXX Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxx
c/o Gray Communications
/s/ Xxxxxxxx X. Xxxxxxxx Systems, Inc.
------------------------------------- 0000 Xxxxxxxxx Xxxx, XX
XXXXXXXX X. XXXXXXXX Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxx
XXXXXXXX X. XXXXXXXX TRUSTEE U\A 08-25-84
FBO XXXX X. XXXXXXXX
By: /s/ Xxxxxxxx X. Xxxxxxxx c/o Gray Communications
------------------------------------- Systems, Inc.
Name: Xxxxxxxx X. Xxxxxxxx 0000 Xxxxxxxxx Xxxx, XX
Title: Trustee Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxx
XXXXXXXX X. XXXXXXXX TRUSTEE U\A 08-25-84 c/o Gray Communications
FBO XXXXX X. XXXXXXXX Systems, Inc.
0000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
By: /s/ Xxxxxxxx X. Xxxxxxxx Attention: Xxxxx X. Xxxx
-------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Trustee
GEORGIA CASULATY AND SURETY CO. c/o Gray Communications
Systems, Inc.
0000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, XX 00000
By: /s/ Xxxxxx Xxxxxx Facsimile: (000) 000-0000
------------------------------------- Attention: Xxxxx X. Xxxx
Name: Hilton X. Xxxxxx, Xx.
Title: Vice Chairman
20
BANKERS FIDELITY LIFE INSURANCE CO. c/o Gray Communications
Systems, Inc.
0000 Xxxxxxxxx Xxxx, XX
By: /s/ Xxxxxx Xxxxxx Xxxxxxx, XX 00000
------------------------------------- Facsimile: (000) 000-0000
Name: Hilton X. Xxxxxx, Xx. Attention: Xxxxx X. Xxxx
Title: Vice Chairman
DELTA LIFE INSURANCE COMPANY c/o Gray Communications
Systems, Inc.
0000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, XX 00000
By: /s/ J. Xxxx Xxxxxxxx Facsimile: (000) 000-0000
------------------------------------- Attention: Xxxxx X. Xxxx
Name: J. Xxxx Xxxxxxxx
Title: President
DELTA FIRE & CASUALTY INSURANCE COMPANY c/o Gray Communications
Systems, Inc.
0000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, XX 00000
By: /s/ J. Xxxx Xxxxxxxx Facsimile: (000) 000-0000
------------------------------------- Attention: Xxxxx X. Xxxx
Name: J. Xxxx Xxxxxxxx
Title: President
21
