REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") made as
of this 10th day of September, 1997 by and among HLM DESIGN, INC., a Delaware
corporation (the ACompany@) and XXXXXXX XXXXXX & COMPANY LEASING, INC., an Iowa
corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, simultaneously with the execution and delivery of
this Agreement, the Purchaser has 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 Purchaser 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.
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 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
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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 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
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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.
(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
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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 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
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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;
(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
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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;
(i) Furnish to each selling Holder a signed counterpart,
addressed to the selling Holder, of
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(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)
9
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 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
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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.
(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
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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:
(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
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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 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
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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:
Xxxxxxx Xxxxxx & Company Leasing, Inc.
000 Xxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxx 00000
(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.
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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.
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.
IN WITNESS WHEREOF, the parties hereto have executed this
Registration Rights Agreement as of the date first above written.
HLM DESIGN, INC.
By:_________________________________________
Name:_______________________________________
Title:________________________________________
XXXXXXX XXXXXX & COMPANY LEASING, INC.
By:_________________________________________
Name:_______________________________________
Title:________________________________________
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