Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement, dated as of May 13, 1999, by
and between Transit Group, Inc., a Florida corporation ("Company"), and GE
Capital Equity Investments, Inc. ("GE Capital" or "Purchaser").
W I T N E S S E T H :
WHEREAS, Company and Purchaser have entered into that certain
Purchase Agreement, dated as of May 13, 1999 (the "Purchase Agreement"),
pursuant to which Company has agreed to issue and sell to Purchaser, and
Purchaser has agreed to purchase from Company, shares of Series A Convertible
Preferred Stock, no par value per share ("Convertible Preferred Stock"); and
WHEREAS, in order to induce Purchaser to enter into the
Purchase Agreement and to purchase such shares of Convertible Preferred Stock,
Company has agreed to provide registration rights with respect thereto;
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, it is agreed as follows:
1. Definitions. Unless otherwise defined herein, terms defined in the Purchase
Agreement are used herein as therein defined, and the following shall have
(unless otherwise provided elsewhere in this Registration Rights Agreement) the
following respective meanings (such meanings being equally applicable to both
the singular and plural form of the terms defined):
"Agreement" shall mean this Registration Rights Agreement,
including all amendments, modifications and supplements and any exhibits or
schedules to any of the foregoing, and shall refer to the Agreement as the same
may be in effect at the time such reference becomes operative.
"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in the
State of New York.
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency then administering the Securities Act
and other federal securities laws.
"Conversion Shares" shall mean shares of Common Stock issued
upon conversion of shares of Convertible Preferred Stock.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect from time to
time.
"Holder" shall mean the holder of Conversion Shares or shares
of Convertible Preferred Stock.
"Majority Holders" shall mean Holders holding at the time,
shares of Convertible Preferred Stock or Conversion Shares representing more
than 50% of the sum of (x) all then outstanding Conversion Shares and (y) all
shares of Common Stock issuable to the holders of then-outstanding Convertible
Preferred Stock upon the conversion thereof.
"NASD" shall mean the National Association of Securities
Dealers, Inc., or any successor corporation thereto.
"Registrable Securities" shall mean the shares of Common
Stock from time to time issued or issuable to the holders of the Convertible
Preferred Stock (i) upon the conversion thereof or (ii) hereafter acquired by
Purchaser as a dividend or other distribution with respect to, or in exchange
or replacement of, the securities referred to in subsection (i) or which it
hereafter obtains the right to acquire pursuant to the terms of the
Stockholders Agreement or otherwise.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
2. Required Registration. After receipt at any time after the date hereof of a
written request from the Holders of Registrable Securities requesting that
Company effect a registration under the Securities Act covering at least 30% of
the Registrable Securities initially outstanding, and specifying the intended
method or methods of disposition thereof, Company shall promptly notify all
Holders in writing of the receipt of such request and each such Holder, in lieu
of exercising its rights under Section 3 may elect (by written notice sent to
Company within 10 Business Days from the date of such Holder's receipt of the
aforementioned Company's notice) to have Registrable Securities included in
such registration thereof pursuant to this Section 2. Thereupon Company shall,
as expeditiously as is possible, use its best efforts to effect the
registration under the Securities Act of all shares of Registrable Securities
which Company has been so requested to register by such Holders for sale, all
to the extent required to permit the disposition (in accordance with the
intended method or methods thereof, as aforesaid) of the Registrable Securities
so registered; provided, however, that Company shall not be required to effect
more than three (3) registrations of any Registrable Securities pursuant to
this Section 2 unless Company shall be eligible at any time to file a
registration statement on Form S-3 (or other comparable short form) under the
Securities Act, in which event there shall be no limit on the number of such
registrations pursuant to this Section 2.
3. Incidental Registration. If Company at any time proposes to file on its
behalf and/or on behalf of any of its security holders (the "demanding security
holders") a Registration Statement under the Securities Act on any form (other
than a Registration Statement on Form S-4 or S-8 or any successor form for
securities to be offered in a transaction of the type referred to in Rule 145
under the Securities Act or to employees of Company pursuant to any employee
benefit plan, respectively, or to register debt securities) for the general
registration of securities, it will give written notice to all Holders at least
30 days before the initial filing with the Commission of such Registration
Statement, which notice shall set forth the intended method of disposition of
the securities proposed to be registered by Company. The notice shall offer to
include in such filing the aggregate number of shares of Registrable Securities
as such Holders may request.
Each Holder desiring to have Registrable Securities
registered under this Section 3 shall advise Company in writing within 10
Business Days after the date of receipt of such offer from Company, setting
forth the amount of such Registrable Securities for which registration is
requested. Company shall thereupon include in such filing the number of shares
of Registrable Securities for which registration is so requested, subject to
the next sentence, and shall use its best efforts to effect registration under
the Securities Act of such shares. If the managing underwriter of a proposed
public offering shall advise Company in writing that, in its opinion, the
distribution of the Registrable Securities requested to be included in the
registration concurrently with the securities being registered by Company or
such demanding security holder would materially and adversely affect the
distribution of such securities by Company or such demanding security holder,
then all selling security holders (including the demanding security holder who
initially requested such registration, but excluding Company) shall reduce the
amount of securities each intended to distribute through such offering on a pro
rata basis. Except as otherwise provided in Section 5, all expenses of such
registration shall be borne by Company.
4. Registration Procedures. If Company is required by the provisions of Section
2 or 3 to use its best efforts to effect the registration of any of its
securities under the Securities Act, Company will, as expeditiously as
possible:
(a) prepare and file with the Commission a Registration Statement with respect
to such securities and use its best efforts to cause such Registration
Statement to become and remain effective for a period of time required for the
disposition of such securities by the holders thereof, but not to exceed 180
days;
(b) prepare and file with the Commission such amendments and supplements to
such Registration Statement and the prospectus used in connection therewith as
may be necessary to keep such Registration Statement effective and to comply
with the provisions of the Securities Act with respect to the sale or other
disposition of all securities covered by such Registration Statement until the
earlier of such time as all of such securities have been disposed of in a
public offering or the expiration of 180 days; (c) furnish to such selling
security holders such number of copies of a summary prospectus or other
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as such selling
security holders may reasonably request; (d) use its best efforts to register
or qualify the securities covered by such Registration Statement under such
other securities or blue sky laws of such jurisdictions within the United
States and Puerto Rico as each holder of such securities shall request
(provided, however, that Company shall not be obligated to qualify as a foreign
corporation to do business under the laws of any jurisdiction in which it is
not then qualified or to file any general consent to service or process), and
do such other reasonable acts and things as may be required of it to enable
such holder to consummate the disposition in such jurisdiction of the
securities covered by such Registration Statement; (e) furnish, at the request
of any Holder requesting registration of Registrable Securities pursuant to
Section 2, on the date that such shares of Registrable Securities are delivered
to the underwriters for sale pursuant to such registration or, if such
Registrable Securities are not being sold through underwriters, on the date
that the Registration Statement with respect to such shares of Registrable
Securities becomes effective, (1) an opinion, dated such date, of the
independent counsel representing Company for the purposes of such registration,
addressed to the underwriters, if any, and if such Registrable Securities are
not being sold through underwriters, then to the Holders making such request,
in customary form and covering matters of the type customarily covered in such
legal opinions; and (2) a comfort letter dated such date, from the independent
certified public accountants of Company, addressed to the underwriters, if any,
and if such Registrable Securities are not being sold through underwriters,
then to the Holder making such request and, if such accountants refuse to
deliver such letter to such Holder, then to Company, in a customary form and
covering matters of the type customarily covered by such comfort letters and as
the underwriters or such Holder shall reasonably request. Such opinion of
counsel shall additionally cover such other legal matters with respect to the
registration in respect of which such opinion is being given as such Holders
may reasonably request. Such letter from the independent certified public
accountants shall additionally cover such other financial matters (including
information as to the period ending not more than five Business Days prior to
the date of such letter) with respect to the registration in respect of which
such letter is being given as the Holders of a majority of the Registrable
Securities being so registered may reasonably request; (f) enter into customary
agreements (including an underwriting agreement in customary form) and take
such other actions as are reasonably required in order to expedite or
facilitate the disposition of such Registrable Securities; and (g) 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, but not later than 18 months after the effective date of the
Registration Statement, an earnings statement covering the period of at least
12 months beginning with the first full month after the effective date of such
Registration Statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act.
It shall be a condition precedent to the obligation of
Company to take any action pursuant to this Agreement in respect of the
securities which are to be registered at the request of any Holder that such
Holder shall furnish to Company such information regarding the securities held
by such Holder and the intended method of disposition thereof as Company shall
reasonably request and as shall be required in connection with the action taken
by Company. The participation of a Holder in any registration hereunder which
is underwritten shall be contingent upon (a) the agreement of such Holder to
sell its Common Stock on the basis provided in any underwriting arrangements
approved by the Holders of a majority of the Registrable Securities in the case
of an underwritten offering under Section 2 hereof, or by Company in the case
of an underwritten offering under Section 3 hereof; and (b) the completion and
execution by such Holder of all customary questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements; provided, however, that (x)
any representations and warranties of a Holder in any such documents shall be
applicable solely to such Holder and (y) any indemnification of the
underwriters by a Holder under any underwriting arrangements shall be only to
the extent of the indemnification provided by such Holder to Company in this
Agreement.
5. Expenses. All expenses incurred in complying with this Agreement, including,
without limitation, all registration and filing fees (including all expenses
incident to filing with the NASD), printing expenses, fees and disbursements of
counsel for Company, the reasonable fees and expenses of one counsel for the
selling security holders (selected by those holding a majority of the shares
being registered), expenses of any special audits incident to or required by
any such registration and expenses of complying with the securities or blue sky
laws of any jurisdiction pursuant to Section 4(d), shall be paid by Company,
except that:
(a) all such expenses in connection with any amendment or supplement to the
Registration Statement or prospectus filed more than 180 days after the
effective date of such Registration Statement because any Holder has not
effected the disposition of the securities requested to be registered shall be
paid by such Holder; and
(b) Company shall not be liable for any fees, discounts or commissions to any
underwriter or any fees or disbursements of counsel for any underwriter in
respect of the securities sold by such Holder.
6. Indemnification and Contribution.
(a) In the event of any registration of any Registrable Securities under the
Securities Act pursuant to this Agreement, Company shall indemnify and hold
harmless the holder of such Registrable Securities, such holder's directors and
officers, and each other person (including each underwriter) who participated
in the offering of such Registrable Securities and each other person, if any,
who controls such holder or such participating person within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such holder or any such director or officer or participating
person or controlling person may become subject under the Securities Act or any
other statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any alleged untrue statement of any material fact contained, on the effective
date thereof, in any Registration Statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or (ii)
any alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and shall
reimburse such holder or such director, officer or participating person or
controlling person for any legal or any other expenses reasonably incurred by
such holder or such director, officer or participating person or controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that Company shall not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any actual or alleged untrue statement
or actual or alleged omission made in such Registration Statement, preliminary
prospectus, prospectus or amendment or supplement in reliance upon and in
conformity with written information furnished to Company by such holder
specifically for use therein or (in the case of any registration pursuant to
Section 2) so furnished for such purposes by any underwriter. Such indemnity
shall remain in full force and effect regardless of any investigation made by
or on behalf of such holder or such director, officer or participating person
or controlling person, and shall survive the transfer of such securities by
such holder.
(b) Each Holder, by acceptance hereof, agrees to indemnify and hold harmless
Company, its directors and officers and each other person, if any, who controls
Company within the meaning of the Securities Act against any losses, claims,
damages or liabilities, joint or several, to which Company or any such director
or officer or any such person may become subject under the Securities Act or
any other statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
information in writing provided to Company by such Holder specifically for use
in the following documents and contained, on the effective date thereof, in any
Registration Statement under which securities were registered under the
Securities Act at the request of such holder, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereto.
Notwithstanding the provisions of this paragraph (b) or paragraph (c) below, no
Holder shall be required to indemnify any person pursuant to this Section 6 or
to contribute pursuant to paragraph (c) below in an amount in excess of the
amount of the aggregate net proceeds received by such Holder in connection with
any such registration under the Securities Act. (c) If the indemnification
provided for in this Section 6 from the indemnifying party is unavailable to an
indemnified party hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then the 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, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified parties in
connection with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
parties 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 to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6(c) were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
Any person entitled to indemnification hereunder will (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification; and (ii) permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. An indemnifying party will not be subject to any liability
for any settlement made by the indemnified party without its consent, such
consent to be not unreasonably withheld. Any indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless
counsel to the indemnified parties shall have reasonably concluded that there
may be defenses available to such indemnified party that are different from or
additional to those available to one or more of the other indemnified parties
and that separate counsel for such party is prudent under the circumstances.
7. Certain Limitations on Registration Rights. Notwithstanding the other
provisions of this Agreement:
(a) Company shall not be obligated to register the Registrable Securities of
any Holder if, in the opinion of counsel to Company reasonably satisfactory to
the Holder and its counsel (or, if the Holder has engaged an investment banking
firm, to such investment banking firm and its counsel), the sale or other
disposition of such Holder's Registrable Securities, in the manner proposed by
such Holder (or by such investment banking firm), may be effected without
registering such Registrable Securities under the Securities Act; and
(b) Company shall not be obligated to register the Registrable Securities of
any Holder pursuant to Section 2 if Company has had a registration statement,
under which such Holder had a right to have its Registrable Securities included
pursuant to Section 2 or 3, declared effective within six months prior to the
date of the request pursuant to Section 2. (c) Company shall have the right to
delay and/or suspend the filing or effectiveness of a registration statement
required pursuant to Section 2 hereof during one or more periods aggregating
not more than 90 days in any twelve-month period in the event that (i) Company
would, in accordance with the advice of its counsel, be required to disclose in
the prospectus information not otherwise then required by law to be publicly
disclosed and (ii) in the judgment of Company's Board of Directors, there is a
reasonable likelihood that such disclosure, or any other action to be taken in
connection with the prospectus, would materially and adversely affect any
existing or prospective material business situation, transaction or negotiation
or otherwise materially and adversely affect Company. 8. Selection of Managing
Underwriters. The managing underwriter or underwriters for any offering of
Registrable Securities to be registered pursuant to Section 2 shall be a
nationally recognized investment banking firm selected by the holders of a
majority of the shares being so registered and shall be reasonably acceptable
to Company.
9. Restrictions on Sale After Public Offering. Except for transfers made in
transactions exempt from the registration requirements under the Securities Act
(other than Rule 144 thereunder), Company and each Holder hereby agree not to
offer, sell, contract to sell or otherwise dispose of any of their Registrable
Securities within 180 days after the date of any final prospectus relating to
any underwritten public offering of Common Stock, whether by Company or by any
Holders, except pursuant to such prospectus or with the written consent of the
managing underwriter or underwriters for such offering. 10. Miscellaneous. (a)
No Inconsistent Agreements. Company will not hereafter enter into any agreement
with respect to its securities which is inconsistent with the rights granted to
the Holders in this Agreement. Company has not previously entered into any
agreement with respect to any of its securities granting any registration
rights to any person, but is not restricted from entering into any such
agreement or offering any other stockholder of Company the right to include
shares of Common Stock in any registration of shares by Company; provided,
however, that if a Holder requests a registration pursuant to Section 2 hereof,
any required reductions by an underwriter of the type set forth in Section 3
hereof in the aggregate amount of shares to be registered shall first reduce
only the shares requested to be registered by persons other than the Holders.
(b) Remedies. Each Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate. In any action or proceeding brought to enforce any provision of this
Agreement or where any provision hereof is validly asserted as a defense, the
successful party shall be entitled to recover reasonable attorneys' fees in
addition to any other available remedy. (c) Amendments and Waivers. Except as
otherwise provided herein, the provisions of this Agreement may not be amended,
modified or supplemented, and waivers or consents to departure from the
provisions hereof may not be given unless Company has obtained the written
consent of the Majority Holders. (d) Notice Generally. Any notice, demand,
request, consent, approval, declaration, delivery or other communication
hereunder to be made pursuant to the provisions of this Agreement shall be
sufficiently given or made if in writing and either delivered in person with
receipt acknowledged or sent by registered or certified mail, return receipt
requested, postage prepaid, or by telecopy and confirmed by telecopy
answerback, addressed as follows: (i) If to any Holder, at its last known
address appearing on the books of Company maintained for such purpose.
(ii) If to Company, at
2859 Paces Ferry Road
Suite 1740
Atlanta, GA 30339
Attention: President
Telecopy Number: (770) 444-0246
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback or three Business Days after the same shall have been deposited in
the United States mail.
(e) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties hereto including
any person to whom Registrable Securities are transferred.
(f) Headings. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof. (g) Governing
Law; Jurisdiction. This Agreement shall be governed by, construed and enforced
in accordance with the laws of the State of New York without giving effect to
the conflict of laws provisions thereof. Each of the parties hereby submits to
personal jurisdiction and waives any objection as to venue in the County of New
York, State of New York. Service of process on the parties in any action
arising out of or relating to this Agreement shall be effective if mailed to
the parties in accordance with Section 10(d) hereof. The parties hereto waive
all right to trial by jury in any action or proceeding to enforce or defend any
rights hereunder. (h) Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement. (i) Entire Agreement. This Agreement, together with the
Purchase Agreement, represents the complete agreement and understanding of the
parties hereto in respect of the subject matter contained herein and therein.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
TRANSIT GROUP, INC.
By:/s/Philip A. Belyew
Name:Philip A. belyew
Title:President
GE CAPITAL EQUITY INVESTMENTS, INC.
By:/s/ Patrick Dowling
Name:Patrick Dowling
Title: