EXHIBIT 10.10
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of May 9, 2000, among HomeGold Financial, Inc., a corporation
organized under the laws of the State of South Carolina (the "Company"), and the
individuals identified on Schedule 1 of this Agreement (collectively, the
"Purchasers").
WHEREAS, the Company and HomeSense Financial Corp. are parties to that
certain Reorganization Agreement dated February 29, 2000, as amended (the
"Reorganization Agreement"), pursuant to which the Purchasers, among other
things, will be issued shares of the Company's Common Stock (as defined below).
WHEREAS, included as an appendix to the Reorganization Agreement is an
Employment Agreement between the Company and Xxxxxx X. Xxxxxxxx ("Xxxxxxxx")
pursuant to which Xxxxxxxx is granted options for the purchase of Common Stock
(the "Options"); and
WHEREAS, the Company desires to grant to the Purchasers registration
rights as set forth herein with respect to the shares of Common Stock being
issued under the Reorganization Agreement and to grant to Xxxxxxxx registration
rights as set forth herein with respect to the shares of Common Stock issuable
upon exercise of the Options.
The Company and the Purchasers hereby agree as follows:
1. Definitions.
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Capitalized terms used and not otherwise defined herein shall
have the meanings given to such terms in the Reorganization
Agreement. As used in this Agreement, the following terms
shall have the following meanings:
"Advice" shall have the meaning set forth in Section 6(b).
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly controls or is controlled
by or under common control with such Person. For the purposes
of this definition, "control," when used with respect to any
Person, means the possession, direct or indirect, of the power
to direct or cause the direction of the management and
policies of such Person, whether through the ownership of
voting securities, by contract or otherwise; and the terms of
"affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
"Blackout Period" shall have the meaning set forth in Section
2(b).
"Board" shall have the meaning set forth in Section 2(b).
"Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking
institutions in the state of New York generally are authorized
or required by law or other government actions to close.
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"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's Common Stock, par value
$0.05 per share.
"Effectiveness Date" means with respect to the Registration
Statement the earlier of the 180th day following the Closing
Date and the date which is within five (5) days of the date on
which the Commission informs the Company that the Commission
(i) will not review the Registration Statement or (ii) that
the Company may request the acceleration of the effectiveness
of the Registration Statement.
"Effectiveness Period" shall have the meaning set forth in
Section 2(a).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Filing Date" means the date the Registration Statement is
filed, which Filing Date shall be 60 days from the earliest
date on which any Holder is entitled to transfer at least one
share of Common Stock without restriction pursuant to that
certain Stock Restriction Agreement between certain
shareholders of the Company, a form of which Stock Purchase
Agreement is set forth as Appendix B to the Reorganization
Agreement.
"Holder" or "Holders" means the holder or holders, as the case
may be, from time to time of Registrable Securities, including
without limitation, the Purchasers and their assignees.
"Indemnified Party" shall have the meaning set forth in
Section 7(c).
"Indemnifying Party" shall have the meaning set forth in
Section 7(c).
"Losses" shall have the meaning set forth in Section 7(a).
"OTC Bulletin Board" means the over-the-counter electronic
bulletin board.
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint
venture, limited liability company, joint stock company,
government (or an agency or political subdivision thereof) or
other entity of any kind.
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or
partial proceeding, such as a deposition), whether commenced
or threatened.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that
includes any information previously omitted from a prospectus
filed as part of an effective registration statement in
reliance upon Rule 430A promulgated under the Securities Act),
as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the
Registrable Securities covered by the Registration Statement,
and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material
incorporated by reference in such Prospectus.
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"Registrable Securities" means (i) the shares of Common Stock
(A) issued pursuant to the Reorganization Agreement (the
"Common Shares") and (B) issuable upon exercise of the Options
(the "Option Shares"), and upon any stock split, stock
dividend, recapitalization or similar event with respect to
such Common Shares and Option Shares, and (ii) any other
dividend or other distribution with respect to, conversion or
exchange of, or in replacement of, Registrable Securities;
provided, however, that Registrable Securities shall include
(but not be limited to) a number of shares of Common Stock
equal to no less than 100% of the maximum number of shares of
Common Stock which would be issuable pursuant to the
Reorganization Agreement and upon exercise of the Options,
assuming such exercise occurred on the Closing Date or the
Filing Date, whichever date would result in the greater number
of Registrable Securities. Notwithstanding anything herein
contained to the contrary, such registered shares of Common
Stock shall be allocated among the Holders pro rata based on
the total number of Registrable Securities issued or issuable
as of each date that a Registration Statement, as amended,
relating to the resale of the Registrable Securities is
declared effective by the Commission.
"Registration Statement" means the registration statement and
any additional registration statements contemplated by this
Agreement, including (in each case) the Prospectus, amendments
and supplements to such registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits
thereto, and all material incorporated by reference in such
registration statement.
"Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended
from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect
as such Rule.
"Rule 158" means Rule 158 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended
from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect
as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended
from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect
as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Special Counsel" means any special counsel to the Holders,
for which the Holders will be reimbursed by the Company
pursuant to Section 5.
2. Registration.
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(a) On or prior to the Filing Date the Company shall prepare
and file with the Commission a "shelf" Registration Statement
covering all Registrable Securities for an offering to be made
on a continuous basis pursuant to Rule 415; provided, however,
that the Company shall not be required to register any
Registrable Securities pursuant to this Section 2(a) that are
eligible for sale pursuant to Rule 144 of the Securities Act.
The Registration Statement shall be on Form S-3 (or on another
form appropriate for such registration in accordance
herewith). The Company shall (i) not permit any securities
other than the Registrable Securities to be included in the
Registration Statement and (ii)
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use its best efforts to cause the Registration Statement to be
declared effective under the Securities Act (including filing
with the Commission a request for acceleration of
effectiveness in accordance with Rule 461 promulgated under
the Securities Act within five (5) Business Days of the date
that the Company is notified (orally or in writing, whichever
is earlier) by the Commission that a Registration Statement
will not be "reviewed," or not be subject to further review)
within sixty (60) days from the Filing Date, and to keep such
Registration Statement continuously effective under the
Securities Act until such date as is the earlier of (x) the
date when all Registrable Securities covered by such
Registration Statement have been sold or (y) the date on which
the Registrable Securities may be sold without any restriction
pursuant to Rule 144(k) as determined by the counsel to the
Company pursuant to a written opinion letter, addressed to the
Company's transfer agent to such effect (the "Effectiveness
Period"). If an additional Registration Statement is required,
for any reason, to be filed because the actual number of
shares of Common Shares and Option Shares exceeds the number
of shares of Common Stock initially registered in respect of
the Common Shares and the Option Shares based upon the
computation on the Closing Date, the Company shall have 20
Business Days to file such additional Registration Statement,
and the Company shall use its best efforts to cause such
additional Registration Statement to be declared effective by
the Commission as soon as possible, but in no event later than
30 days after filing.
(b) If (i) there is material non-public information regarding
the Company which the Company's Board of Directors (the
"Board") reasonably determines not to be in the Company's best
interest to disclose and which the Company is not otherwise
required to disclose, or (ii) there is a significant business
opportunity (including, but not limited to, the acquisition or
disposition of assets (other than in the ordinary course of
business) or any merger, consolidation, tender offer or other
similar transaction) available to the Company which the Board
reasonably determines not to be in the Company's best interest
to disclose and which the Company would be required to
disclose under the Registration Statement, then the Company
may postpone or suspend filing or effectiveness of a
registration statement for a period not to exceed 90
consecutive days, provided that the Company may not postpone
or suspend its obligation under this Section 2(b) for more
than 120 days in the aggregate during any 12 month period
(each, a "Blackout Period").
(c) In connection with the Company's registration
obligations under this Section 2, the Company shall
(i) Prepare and file with the Commission on or prior
to the Filing Date, a Registration Statement on Form
S-3 (or on another form appropriate for such
registration in accordance herewith) in accordance
with the method or methods of distribution thereof as
specified by the Holders (except if otherwise
directed by the Holders), and cause the Registration
Statement to become effective and remain effective as
provided herein; provided, however, that not less
than five (5) Business Days prior to the filing of
the Registration Statement or any related Prospectus
or any amendment or supplement thereto (including any
document that would be incorporated therein by
reference), the Company shall (x) furnish to the
Holders and any Special Counsel, copies of all such
documents proposed to be filed, which documents
(other than those incorporated by reference) will be
subject to the review of such Holders and such
Special Counsel, and (y) the
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Company shall not file the Registration Statement or
any such Prospectus or any amendments or supplements
thereto to which the Holders of a majority of the
Registrable Securities or any Special Counsel shall
reasonably object in writing within three (3)
Business Days of their receipt thereof;
(ii) Prepare and file with the Commission such
amendments, including post-effective amendments, to
the Registration Statement as may be necessary to
keep the Registration Statement continuously
effective as to the applicable Registrable Securities
for the Effectiveness Period and prepare and file
with the Commission such additional Registration
Statements in order to register for resale under the
Securities Act all of the Registrable Securities;
(iii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed
pursuant to Rule 424 (or any similar provisions then
in force) promulgated under the Securities Act;
(iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act
with respect to the disposition of all Registrable
Securities covered by the Registration Statement
during the applicable period in accordance with the
intended methods of disposition by the Holders
thereof set forth in the Registration Statement as so
amended or in such Prospectus as so supplemented; and
(v) Prior to any public offering of Registrable
Securities, use its best efforts to register or
qualify or cooperate with the selling Holders and any
Special Counsel in connection with the registration
or qualification (or exemption from such registration
or qualification) of such Registrable Securities for
offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any
Holder requests in writing, to keep each such
registration or qualification (or exemption
therefrom) effective during the Effectiveness Period
and to do any and all other acts or things necessary
or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered
by a Registration Statement; provided, however, that
the Company shall not be required to qualify
generally to do business in any jurisdiction where it
is not then so qualified or to take any action that
would subject it to general service of process in any
such jurisdiction where it is not then so subject or
subject the Company to any material tax in any such
jurisdiction where it is not then so subject.
3. Piggy Back Registrations; Underwritten Offerings.
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(a) If at any time when there is not an effective Registration
Statement covering Common Shares or Option Shares, the Company
shall determine to prepare and file with the Commission a
registration statement relating to an offering for its own
account or the account of others under the Securities Act of
any of its equity securities, other than on Form S-4 or Form
S-8 (each as promulgated under the Securities Act) or its then
equivalents relating to equity securities to be issued solely
in connection with any acquisition of any entity or business
or equity securities issuable in connection with stock option
or other employee benefit plans, the Company shall promptly
send to each
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holder of Registrable Securities written notice of such
determination and, if within 30 days after receipt of such
notice, any such holder shall so request in writing (which
request shall specify the Registrable Securities intended to
be disposed of by the Holders), the Company will cause the
registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register
by the holder, to the extent requisite to permit the
disposition of the Registrable Securities so to be registered.
If at any time after giving written notice of its intention to
register any securities and prior to the effective date of the
registration statement filed in connection with such
registration, the Company shall determine for any reason not
to register or to delay registration of such securities, the
Company may, at its election, give written notice of such
determination to such holder and, thereupon, (i) in the case
of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in
connection with such registration (but not from its obligation
to pay expenses in accordance with Section 5 hereof), and (ii)
in the case of a determination to delay registering, shall be
permitted to delay registering any Registrable Securities
being registered pursuant to this Section 3(a) for the same
period as the delay in registering such other securities. The
Company shall include in such registration statement all or
any part of such Registrable Securities such holder requests
to be registered; provided, however, that the Company shall
not be required to register any Registrable Securities
pursuant to this Section 3(a) that are eligible for sale
pursuant to Rule 144 of the Securities Act.
(b) In the case of an underwritten public offering, if the
managing underwriter(s) or underwriter(s) should reasonably
object to the inclusion of the Registrable Securities in such
registration statement, then if the Company after consultation
with the managing underwriter should reasonably determine that
the inclusion of such Registrable Securities, would materially
adversely affect the offering contemplated in such
registration statement, and based on such determination
recommends inclusion in such registration statement of fewer
or none of the Registrable Securities of the Holders, then (i)
the number of Registrable Securities of the Holders included
in such registration statement shall be reduced pro rata among
such Holders (based upon the number of Registrable Securities
requested to be included in the registration), if the Company
after consultation with the underwriter(s) recommends the
inclusion of fewer Registrable Securities, or (ii) none of the
Registrable Securities of the Holders shall be included in
such registration statement, if the Company after consultation
with the underwriter(s) recommends the inclusion of none of
such Registrable Securities; provided, however, that if
securities are being offered for the account of other persons
or entities as well as the Company, such reduction shall not
represent a greater fraction of the number of Registrable
Securities intended to be offered by the Holders than the
fraction of similar reductions imposed on such other persons
or entities (other than the Company).
(c) In any registration undertaken pursuant to this Section 3,
the Company shall register or qualify or seek one or more
exemptions from such registration or qualification of such
Registrable Securities for offer and sale under the securities
or Blue Sky laws of such jurisdictions within the United
States as the Company shall determine, and do any and all
other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable
Securities covered by a Registration Statement.
4. Additional Registration Obligations. In connection with the
Company's registration obligations under Sections 2 and 3, the
Company shall:
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(a) Respond as promptly as possible to any comments received
from the Commission with respect to the Registration Statement
or any amendment thereto and as promptly as possible provide
the Holders true and complete copies of all correspondence
from and to the Commission relating to the Registration
Statement;
(b) Within two (2) business days after the Registration
Statement which includes the Registrable Securities is ordered
effective by the Commission, the Company shall deliver, and
shall cause legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to
the Holders whose Registrable Securities are included in such
Registration Statement) confirmation that the Registration
Statement has been declared effective by the Commission in the
form attached hereto as Exhibit A.
(c) Notify the Holders of Registrable Securities to be sold
and any Special Counsel as promptly as possible (and, in the
case of (i)(A) below, not less than five (5) Business Days
prior to such filing) and (if requested by any such Person)
confirm such notice in writing no later than one (1) Business
Day following the day
(i)(A) when a Prospectus or any Prospectus supplement
or post-effective amendment to the Registration
Statement is proposed to be filed; (B) when the
Commission notifies the Company whether there will be
a "review" of such Registration Statement and
whenever the Commission comments in writing on such
Registration Statement and (C) with respect to the
Registration Statement or any post-effective
amendment, when the same has become effective;
(ii) of any request by the Commission or any other
Federal or state governmental authority for
amendments or supplements to the Registration
Statement or Prospectus or for additional
information;
(iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the
Registration Statement covering any or all of the
Registrable Securities or the initiation of any
Proceedings for that purpose;
(iv) if at any time any of the representations and
warranties of the Company contained in any agreement
contemplated hereby ceases to be true and correct in
all material respects;
(v) of the receipt by the Company of any notification
with respect to the suspension of the qualification
or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction,
or the initiation or threatening of any Proceeding
for such purpose; and
(vi) of the occurrence of any event that makes any
statement made in the Registration Statement or
Prospectus or any document incorporated or deemed to
be incorporated therein by reference untrue in any
material respect or that requires any revisions to
the Registration Statement, Prospectus or other
documents so that, in the case of the Registration
Statement or the Prospectus, as the case may be, it
will not contain any untrue statement of a material
fact or omit to state any material fact required to
be stated therein or necessary to make
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the statements therein, in the light of the
circumstances under which they were made, not
misleading.
(d) Use its best efforts to avoid the issuance of, or, if
issued, obtain as soon as practicable the withdrawal of, (i)
any order suspending the effectiveness of the Registration
Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction.
(e) If requested by the Holders of a majority in interest of
the Registrable Securities, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment to the
Registration Statement such information as the Company
reasonably agrees should be included therein and (ii) make all
required filings of such Prospectus supplement or such
post-effective amendment as soon as practicable after the
Company has received notification of the matters to be
incorporated in such Prospectus supplement or post-effective
amendment.
(f) Promptly deliver to each Holder and any Special Counsel,
without charge, as many copies of the Registration Statement,
Prospectus or Prospectuses (including each form of prospectus)
and each amendment or supplement thereto as such Persons may
reasonably request; and the Company hereby consents to the use
of such Prospectus and each amendment or supplement thereto by
each of the selling Holders in connection with the offering
and sale of the Registrable Securities covered by such
Prospectus and any amendment or supplement thereto.
(g) Cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing
Registrable Securities to be sold pursuant to a Registration
Statement, which certificates shall be free of all restrictive
legends, and to enable such Registrable Securities to be in
such denominations and registered in such names as any Holder
may request at least two (2) Business Days prior to any sale
of Registrable Securities.
(h) Upon the occurrence of any event contemplated by Section
4(c)(vi), as promptly as possible, prepare a supplement or
amendment, including a post-effective amendment, to the
Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be
incorporated therein by reference, and file any other required
document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain 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, in the light of the circumstances
under which they were made, not misleading.
(i) Use its best efforts to cause all Registrable Securities
relating to such Registration Statement to be listed on the
Nasdaq Stock Market or on any other stock exchange on which
similar securities issued by the Company are then listed.
(j) Comply in all material respects with all applicable rules
and regulations of the Commission and make generally available
to is security holders earning statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158
not later than 45 days after the end of any 12 month period
(or 90 days after the end of any 12 month period if such
period is a fiscal year) commencing on the first day of the
first
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fiscal quarter of the Company after the effective date of the
Registration Statement, which statement shall conform to the
requirements of Rule 158.
(k) Require each selling Holder to furnish to the Company
information regarding such Holder and the distribution of such
Registrable Securities as is required by law to be disclosed
in the Registration Statement, and the Company may exclude
from such registration the Registrable Securities of any such
Holder who fails to furnish such information within a
reasonable time prior to the filing of each Registration
Statement, supplemented Prospectus and/or amended Registration
Statement.
(l) If the Registration Statement refers to any Holder by name
or otherwise as the holder of any securities of the Company,
then such Holder shall have the right to require (if such
reference to such Holder by name or otherwise is not required
by the Securities Act or any similar federal statute then in
force) the deletion of the reference to such Holder in any
amendment or supplement to the Registration Statement filed or
prepared subsequent to the time that such reference ceases to
be required.
5. Registration Expenses
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Except for any underwriting fees and discounts and selling commissions
applicable to the sale of Registrable Securities sold by the Holders, all of
which shall be paid by the Holders, all fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not the Registration Statement is filed or becomes
effective and whether or not any Registrable Securities are sold pursuant to the
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the Nasdaq Stock Market, the Over-the-Counter Bulletin
Board or any other securities exchange or market on which Registrable Securities
are required hereunder to be listed, (B) with respect to filings required to be
made with the Commission, and (C) in compliance with state securities or Blue
Sky laws (including, without limitation, fees and disbursements of counsel for
the Holders in connection with Blue Sky qualifications of the Registrable
Securities and determination of the eligibility of the Registrable Securities
for investment under the laws of such jurisdictions as the Holders of a majority
of Registrable Securities may designate)), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities
and of printing prospectuses if the printing of prospectuses is requested by the
holders of a majority of the Registrable Securities included in the Registration
Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company and Special Counsel for the Holders, in
the case of the Special Counsel, to a maximum amount of $15,000, (v) Securities
Act liability insurance, if the Company so desires such insurance, and (vi) fees
and expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement, including,
without limitation, the Company's independent public accountants (including the
expenses of any comfort letters or costs associated with the delivery by
independent public accountants of a comfort letter or comfort letters). In
addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, the fees and expenses incurred in connection with the listing
of the Registrable Securities on any securities exchange as required hereunder.
6. Obligations of Holders.
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(a) Each Holder covenants and agrees that (i) it will
not sell any Registrable Securities under the Registration
Statement filed pursuant to Section 2 until it has received
copies of the Prospectus as then amended or supplemented as
contemplated in Section 4(f) and notice from the Company that
such Registration Statement and any post-effective amendments
thereto have become effective as contemplated by Section 4(c)
and (ii) it and its officers, directors or Affiliates, if any,
will comply with the prospectus delivery requirements of the
Securities Act as applicable to them in connection with sales
of Registrable Securities pursuant to the Registration
Statement.
(b) Each Holder agrees by its acquisition of such Registrable
Securities that, upon receipt of a notice from the Company of
the occurrence of any event of the kind described in Section
4(c)(ii), 4(c)(iii), 4(c)(iv), 4(c)(v) or 4(c)(vi), such
Holder will forthwith discontinue disposition of such
Registrable Securities under the Registration Statement until
such Holder's receipt of the copies of the supplemented
Prospectus and/or amended Registration Statement contemplated
by Section 4(h), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received
copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such
Prospectus or Registration Statement.
7. Indemnification
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(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify
and hold harmless each Holder, the officers, directors,
agents, brokers (including brokers who offer and sell
Registrable Securities as principal as a result of a pledge or
any failure to perform under a margin call of Common Stock),
investment advisors and employees of each of them, each Person
who controls any such Holder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and
the officers, directors, agents and employees of each such
controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation,
costs of preparation and attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or
relating to any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any
Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or
arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary
to make the statements therein (in the case of any Prospectus
or form of prospectus or supplement thereto, in the light of
the circumstances under which they were made) not misleading,
except to the extent, but only to the extent, that such untrue
statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by
such Holder expressly for use therein, which information was
reasonably relied on by the Company for use therein or to the
extent that such information relates to such Holder or such
Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing
by such Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in
any amendment or supplement thereto. The Company shall notify
the Holders promptly of the institution, threat or assertion
of any Proceeding of which the Company is aware in connection
with the transactions contemplated by this Agreement. Such
indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of an Indemnified Party
(as defined in Section 7(c) to
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this Agreement) and shall survive the transfer of the
Registrable Securities by the Holders.
(b) Indemnification by Holders. Each Holder shall, severally
and not jointly, indemnify and hold harmless the Company, the
directors, officers, agents and employees, each Person who
controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling
Persons, to the fullest extent permitted by applicable law,
from and against all Losses, as incurred, arising solely out
of or based solely upon any untrue statement of a material
fact contained in the Registration Statement, any Prospectus,
or any form of prospectus, or arising solely out of or based
solely upon any omission of a material fact required to be
stated therein or necessary to make the statements therein (in
the case of any Prospectus or form of prospectus or supplement
thereto, in the light of the circumstances under which they
were made) not misleading, to the extent, but only to the
extent, that such untrue statement or omission is contained in
or omitted from any information so furnished in writing by
such Holder to the Company specifically for inclusion in the
Registration Statement or such Prospectus and that such
information was reasonably relied upon by the Company for use
in the Registration Statement, such Prospectus or such form of
prospectus or to the extent that such information relates to
such Holder or such Holder's proposed method of distribution
of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in the
Registration Statement, such Prospectus or such form of
Prospectus Supplement. Notwithstanding anything to the
contrary contained herein, the Holder shall be liable under
this Section 7(b) for only that amount as does not exceed the
net proceeds to such Holder as a result of the sale of
Registrable Securities pursuant to such Registration
Statement.
(c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to
indemnity hereunder (an "Indemnified Party"), such Indemnified
Party promptly shall notify the Person from whom indemnity is
sought (the "Indemnifying Party) in writing, and the
Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses
incurred in connection with defense thereof; provided, that
the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to
the extent that it shall be finally determined by a court of
competent jurisdiction (which determination is not subject to
appeal or further review) that such failure shall have
proximately and materially adversely prejudiced the
Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to
pay such fees and expenses; or (2) the Indemnifying Party
shall have failed promptly to assume the defense of such
Proceeding and to employ counsel reasonably satisfactory to
such Indemnified Party in any such Proceeding; or (3) the
named parties to any such Proceeding (including any impleaded
parties) include both such Indemnified Party and the
Indemnifying Party, and such Indemnified Party shall have been
advised by counsel that a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified
Party and the
11
Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing
that it elects to employ separate counsel at the expense of
the Indemnifying Party, the Indemnifying Party shall not have
the right to assume the defense thereof and such counsel shall
be at the expense of the Indemnifying Party). The Indemnifying
Party shall not be liable for any settlement of any such
Proceeding effected without its written consent, which consent
shall not be unreasonably withheld. No Indemnifying Party
shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending Proceeding in
respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.
All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in
connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section)
shall be paid to the Indemnified Party, as incurred, within
ten (10) Business Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying
Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).
(d) Contribution. If a claim for indemnification under Section
7(a) or 7(b) is unavailable to an Indemnified Party because of
a failure or refusal of a governmental authority to enforce
such indemnification in accordance with its terms (by reason
of public policy or otherwise), 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, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well
as any other relevant equitable considerations. The relative
fault of such Indemnifying Party and Indemnified Party shall
be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission
of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or
Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed
to include, subject to the limitations set forth in Section
7(c), any reasonable attorneys' or other reasonable fees or
expenses incurred by such party in connection with any
Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification
provided for in this Section was available to such party in
accordance with its terms. Notwithstanding anything to the
contrary contained herein, the Holder shall be liable or
required to contribute under this Section 7(c) for only that
amount as does not exceed the net proceeds to such Holder as a
result of the sale of Registrable Securities pursuant to such
Registration Statement.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined
by pro rata allocation or by any other method of allocation that does
not take into account the equitable considerations referred to in the
immediately preceding paragraph. No Person guilty of fraudulent
misrepresentation (within the meaning of Section
12
11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties
may have to the Indemnified Parties.
8. Rule 144.
---------
As long as any Holder owns Common Shares, Options or Option Shares, the
Company covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
Act and to promptly furnish the Holders with true and complete copies of all
such filings. As long as any Holder owns Common Shares, Options or Option
Shares, if the Company is not required to file reports pursuant to Section 13(a)
or 15(d) of the Exchange Act, it will prepare and furnish to the Holders and
make publicly available in accordance with Rule 144(c) promulgated under the
Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and substance
substantially similar to those that would otherwise be required to be included
in reports required by Section 13(a) or 15(d) of the Exchange Act, as well as
any other information required thereby, in the time period that such filings
would have been required to have been made under the Exchange Act. The Company
further covenants that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable such
Person to sell Common Shares and Option Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act, including compliance with the provisions
of the Reorganization Agreement relating to the transfer of the Common Shares
and Option Shares. Upon the request of any Holder, the Company shall deliver to
such Holder a written certification of a duly authorized officer as to whether
it has complied with such requirements.
9. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a
Holder, of any of their obligations under this Agreement, each
Holder or the Company, as the case may be, in addition to
being entitled to exercise all rights granted by law and under
this Agreement, including recovery of damages, will be
entitled to specific performance of its rights under this
Agreement. The Company and each Holder agree that monetary
damages would not provide adequate compensation for any losses
incurred by reason of a breach by it of any of the provisions
of this Agreement and hereby further agrees that, in the event
of any action for specific performance in respect of such
breach, it shall waive the defense that a remedy at law would
be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any of
its subsidiaries has, as of the date hereof entered into and
currently in effect, nor shall the Company or any of its
subsidiaries, on or after the date of this Agreement, enter
into any agreement with respect to its securities that is
inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof.
Neither the Company nor any of its subsidiaries has previously
entered into any agreement currently in effect granting any
registration rights with respect to any of its securities to
any Person. Without limiting the generality of the foregoing,
without the written consent of the Holders of a majority of
the then outstanding Registrable Securities, the Company shall
not grant to any Person the right to request the Company to
register any securities of the Company under the Securities
Act unless the rights so granted are subject in all respects
13
to the prior rights in full of the Holders set forth herein,
and are not otherwise in conflict with the provisions of this
Agreement.
(c) No Piggyback on Registrations. Neither the Company nor any
of its security holders (other than the Holders in such
capacity pursuant hereto) may include securities of the
Company in the Registration Statement, and the Company shall
not after the date hereof enter into any agreement providing
such right to any of its security holders, unless the right so
granted is subject in all respects to the prior rights in full
of the Holders set forth herein, and is not otherwise in
conflict with the provisions of this Agreement.
(d) Specific Enforcement, Consent to Jurisdiction.
(i) The Company and the Holders acknowledge and agree
that irreparable damage would occur in the event that
any of the provisions of this Agreement were not
performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction
or injunctions to prevent or cure breaches of the
provisions of this Agreement and to enforce
specifically the terms and provisions hereof or
thereof, this being in addition to any other remedy
to which any of them may be entitled by law or
equity.
(ii) Each of the Company and the Holders (i) hereby
irrevocably submits to the jurisdiction of the United
States District Court sitting in the District of
South Carolina for the purposes of any suit, action
or proceeding arising out of or relating to this
Agreement and (ii) hereby waives, and agrees not to
assert in any such suit, action or proceeding, any
claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or
that the venue of the suit, action or proceeding is
improper. Each of the Company and the Holders
consents to process being served in any such suit,
action or proceeding by mailing a copy thereof to
such party at the address in effect for notices to it
under this Agreement and agrees that such service
shall constitute good and sufficient service of
process and notice thereof. Nothing in this Section
9(d) shall affect or limit any right to serve process
in any other manner permitted by law.
(e) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, unless
the same shall be in writing and signed by the Company and
each of the Holders. Notwithstanding the foregoing, a waiver
or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders
and that does not directly or indirectly affect the rights of
other Holders may be given by Holders of at least a majority
of the Registrable Securities to which such waiver or consent
relates; provided, however, that the provisions of this
sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding
sentence.
(f) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder
shall be in writing and shall be deemed given and effective on
the earlier of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile
telephone number specified for notice prior to
14
5:00 p.m., eastern standard time, on a Business Day, (ii) the
Business Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile
telephone number specified for notice later than 5:00 p.m.,
eastern standard time, on any date and earlier than 11:59
p.m., eastern standard time, on such date, (iii) the Business
Day following the date of mailing, if sent by nationally
recognized overnight courier service or (iv) actual receipt by
the party to whom such notice is required to be given. The
addresses for such communications shall be with respect to
each Holder at its address set forth under its name on
Schedule 1 attached hereto, or with respect to the Company,
addressed to:
HomeGold Financial, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn.: Xxxx X. Xxxxxxxx, Xx.
or to such other address or addresses or facsimile number or
numbers as any such party may most recently have designated in
writing to the other parties hereto by such notice. Copies of
notices to the Company shall be sent to Xxxx X. Xxxx, Xx.,
Esq., Wyche, Burgess, Xxxxxxx & Xxxxxx, P.A., 00 Xxxx
Xxxxxxxxxx Xxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, Facsimile
No.: 000-000-0000. Copies of notices to the Purchasers shall
be sent to Xxxx Xxxxxx, Esq., Xxxxxx Xxxxx Xxxxxx and Xxxxxxx,
LLP, Suite 1500, X.X. Xxxxxx 0000, Xxxxxxxx, Xxxxx Xxxxxxxx
00000 Facsimile No.:000-000-0000.
(g) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their
successors and permitted assigns and shall inure to the
benefit of each Holder and its successors and assigns. The
Company may not assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of
each Holder. Each Holder may assign its rights hereunder in
the manner and to the Persons as permitted under the
Reorganization Agreement.
(h) Assignment of Registration Rights. The rights of each
Holder hereunder, including the right to have the Company
register for resale Registrable Securities in accordance with
the terms of this Agreement, shall be automatically assignable
by each Holder to any transferee of such Holder of all or a
portion of the shares of the Registrable Securities if: (i)
the 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 a reasonable time after such
assignment, (ii) the Company is, within a reasonable time
after such transfer or assignment, furnished 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)
following such transfer or assignment the further disposition
of such securities by the transferee or assignees is
restricted under the Securities Act and applicable provincial
and state securities laws, (iv) at or before the time the
Company receives the written notice contemplated by clause
(ii) of this Section 9(h), the transferee or assignee agrees
in writing with the Company to be bound by all of the
provisions of this Agreement, (v) such transfer shall
have been made in accordance with the applicable requirements
of the Reorganization Agreement, and (vi) the number of shares
of the Registrable Securities transferred to such transferee
is equal to or greater than one percent (1%) of the number of
the then outstanding shares of Common Stock of the Company. In
addition, each Holder shall
15
have the right to assign its rights hereunder to any other
Person with the prior written consent of the Company, which
consent shall not be unreasonably withheld. The rights to
assignment shall apply to the Holders (and to subsequent)
successors and assigns.
(i) Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be
deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that
any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party
executing (or on whose behalf such signature is executed) the
same with the same force and effect as if such facsimile
signature were the original thereof.
(j) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of South
Carolina, without regard to principles of conflicts of law
thereof.
(k) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(l) Severability. If any term, provision, covenant or
restriction of this Agreement is held to be invalid, illegal,
void or unenforceable in any respect, the remainder of the
terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be
affected, impaired or invalidated, and the parties hereto
shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(m) Headings. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be
deemed to limit or affect any of the provisions hereof.
(n) Shares Held by the Company and its Affiliates. Whenever
the consent or approval of Holders of a specified percentage
of Registrable Securities is required hereunder, Registrable
Securities held by the Company or its Affiliates (other than
any Holder or transferees or successors or assigns thereof if
such Holder is deemed to be an Affiliate solely by reason of
its holdings of such Registrable Securities) shall not be
counted in determining whether such consent or approval was
given by the Holders of such required percentage.
[Remainder of Page Intentionally Left Blank]
16
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed by their respective authorized persons as
of the date first indicated above.
HOMEGOLD FINANCIAL, INC.
By:
---------------------------------
Name:
Title:
------------------------
PURCHASERS
------------------------------------
Xxxxxx X. Xxxxxxxx
------------------------------------
R. Xxx Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxx
------------------------------------
Xxxx X. Xxxx
------------------------------------
Xxxxxxx X. Xxxxx, Xx.
------------------------------------
Xxxxxxx X. Xxxxxx
17
SCHEDULE 1
HOLDERS
Xxxxxx X. Xxxxxxxx
R. Xxx Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxxx
Xxxx X. Xxxx
Xxxxxxx X. Xxxxx, Xx.
Xxxxxxx X. Xxxxxx
18
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[TRANSFER AGENT]
ATTN: ________________________
RE: HOMEGOLD FINANCIAL, INC.
------------------------
Ladies and Gentlemen:
We are counsel to HomeGold Financial, Inc., a company organized under
the laws of the State of South Carolina (the "COMPANY"), and have represented
the Company in connection with that certain Reorganization Agreement, as amended
(the "REORGANIZATION AGREEMENT") entered into by and among the Company and the
buyers named therein (collectively, the "HOLDERS") pursuant to which the Company
issued to the Holders (i) shares of its common stock, par value $0.05 per share
(the "COMMON SHARES") and (ii) options to purchase shares of the Common Stock
(the "OPTIONS"). Pursuant to the Reorganization Agreement, the Company has also
entered into a Registration Rights Agreement with the Holders (the "REGISTRATION
RIGHTS AGREEMENT") pursuant to which the Company agreed, among other things, to
register the Registrable Securities (as defined in the Registration Rights
Agreement), including Common Shares and the shares of Common Stock issuable upon
exercise of the Options, under the Securities Act of 1933, as amended (the "1933
ACT"). In connection with the Company's obligations under the Registration
Rights Agreement, on ________________[date], the Company filed a Registration
Statement on Form [S-3] (File No. 333-_____________) (the "REGISTRATION
STATEMENT") with the Securities and Exchange Commission (the "SEC") relating to
the Registrable Securities which names each of the Holders as a selling
stockholder thereunder.
In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,
after telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
[COMPANY'S COUNSEL]
By:
-------------------------------
cc: [LIST NAMES OF HOLDERS]
19
