1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT dated as of July 30, 1996 between
SWISHER INTERNATIONAL, INC., a Nevada corporation ("Swisher"), and Professional
Carpet Systems, Inc., a Georgia corporation ("PCS").
The parties agree as follows:
Section 1. Definitions. For purposes of this Agreement:
(a) "Common Stock" means Swisher's Common Stock, $.01 par
value;
(b) "Holder" means PCS and any of its successors or
assigns which hold Registrable Securities;
(c) "Registrable Securities" means (i) 70,000 shares of
Common Stock issued by Swisher to PCS pursuant to the Asset Purchase Agreement
effective July 1, 1996 by and between PCS and Swisher (the "Purchase
Agreement") and (ii) any Common Stock of Swisher issued as (or issuable upon
the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, the 70,000 shares of Common Stock described above;
(d) "register," "registered," and "registration" refer to
a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended (the
"Act"), and the declaration or ordering of effectiveness of such registration
statement or document; and
(e) The number of shares of "Registrable Securities then
outstanding" shall be equal to the number of shares of Common Stock of Swisher
outstanding which are, and the number of shares of Common Stock of Swisher
issuable pursuant to then exercisable or convertible securities which upon
issuance would be, Registrable Securities.
Section 2. Demand Registration.
(a) If at any time on and after July 31, 1996, Swisher
receives a written request from Holders of at least 75% of the Registrable
Securities then outstanding that Swisher file a registration statement under
the Act covering the registration of Registrable Securities held by them, then
Swisher shall, subject to the limitations of this Section 2, use its best
efforts to effect within 45 days of such request or as soon as practicable
thereafter, the registration under the Act of all Registrable Securities which
such Holders have requested be registered and will keep such registration
statement effective for a minimum of six months. Swisher shall be obligated to
effect only one (1) registration pursuant to this Section 2(a).
(b) If the Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise Swisher as a part of their request made pursuant to this Section 2. The
Holders shall (together with Swisher as provided in Section 3) enter into an
underwriting agreement in customary form with a mutually acceptable underwriter
or underwriters. Notwithstanding any other provision of this Section 2, if the
managing underwriter advises the Holders in writing that marketing factors
require a limitation of the number of shares to
2
be underwritten, then the number of shares of Registrable Securities of the
Holders that may be included in the underwriting shall be so limited pro rata.
Section 3. "Piggyback" Rights. If (but without any obligation
to do so) during the period of three years from the date hereof, Swisher
proposes to register any Common Stock under the Act in connection with a public
offering for cash proceeds payable in whole or in part to Swisher (other than
with respect to a Registration Statement filed on Form S-8 or Form S-4 or such
other similar form then in effect under the Act), Swisher shall, at such time,
subject to the provisions of Section 6 and 7 hereof and upon request of the
Holders who wish to participate, cause to be registered under the Act all of
the Registrable Securities which the Holders have requested be registered;
provided, however, if the managing underwriter of the public offering of shares
proposed to be registered by Swisher advises the Holder in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the number of shares of Registrable Securities of the
Holders that may be included in the underwriting shall be so limited pro rata.
Section 4. Registration Procedure. Whenever required under this
Agreement to effect the registration of any Registrable Securities, Swisher
shall, as expeditiously as is reasonably possible:
(a) Furnish to the Holders of the Registrable Securities
covered by such registration statement such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by them.
(b) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such offering. Each
selling Holder participating in such underwriting shall also enter into and
perform its obligations under such an agreement.
(c) Notify each holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under the
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 in the light
of the circumstances then existing.
Section 5. Furnish Information. The Holders shall promptly
furnish to Swisher in writing such reasonable information regarding themselves,
the Registrable Securities held by them, and the intended method of disposition
of such securities as shall be required to effect the registration of their
Registrable Securities.
Section 6. Expenses of Registration. All of the foregoing
expenses relating to the Registrable Securities incurred in connection with
registration, filing or qualification pursuant to Section 2 of this Agreement,
including (without limitation) all registration, filing and qualification fees,
printers' bills, mailing and delivery expenses, accounting fees, and the fees
and disbursements of counsel for Swisher and the Holders shall be borne by
Swisher. All expenses, other than underwriting discounts, relating to
Registrable Securities incurred in connection with registration, filing or
qualification pursuant to Section 3 of this Agreement, including (without
limitation) all
-2-
3
registration, filing and qualification fees, printers' bills, mailing and
delivery expenses, accounting fees, and the fees and disbursements of counsel
for Swisher and the Holder shall be borne pro rata by Swisher and the Holder.
Section 7. Indemnification and Contribution. In the event any
Registrable Securities are included in a registration statement under this
Agreement:
(a) To the extent permitted by law, Swisher will
indemnify and hold harmless each Holder, the officers and directors of each
Holder, any underwriter (as defined in the Act) for such holder, and each
person, if any, who controls such Holder or underwriter within the meaning of
the Act or the Securities Exchange Act of 1934 (the "Exchange Act"), against
any losses, claims, damages, or liabilities (joint or several) to which they
may become subject under the Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
Swisher will reimburse each such Holder, officer or director, underwriter or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this Section 7(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability, or action if such settlement is effected
without the consent of Swisher (which consent shall not be unreasonably
withheld), nor shall Swisher be liable in any such case for any such loss,
claim, damage, liability, or action to the extent that it arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, preliminary prospectus or
final prospectus or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person;
provided, further, however, that if any losses, claims, damages or liabilities
arise out of or are based upon any untrue statement, alleged untrue statement,
omission or alleged omission contained in any preliminary prospectus, and made
in reliance upon and in conformity with written information furnished by such
Holder expressly for use therein, which did not appear in the final prospectus,
Swisher shall not have any such liability with respect thereto to such Holder,
any person who controls such Holder within the meaning of the Act, or any
director of such Holder, if such Holder delivered a copy of the preliminary
prospectus to the person alleging such losses, claims, damages or liabilities
and failed to deliver a copy of the final prospectus, as amended or
supplemented if it has been amended or supplemented, to such person at or prior
to the written confirmation of the sale to such person, provided that such
Holder had an obligation to deliver a copy of the final prospectus to such
person; and
(b) To the extent permitted by law, each selling Holder
will indemnify and hold harmless Swisher, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls Swisher within the meaning of the Act, any underwriter and any other
Holder selling securities in such registration statement or any of its
directors or officers or any person who controls such Holder or underwriter,
against any losses, claims, damages or liabilities (joint or several) to which
Swisher or any such director, officers, controlling person, or underwriter or
controlling person, or other such Holder or director, officer or controlling
person may become
-3-
4
subject, under the Act, the Exchange Act or other federal or state law, insofar
as such losses, claims, damages or liabilities (or actions in respect thereto)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, if the untrue
statement or omission or alleged untrue statement or omission in respect of
which such loss, claim, damage or liability is asserted was made in reliance
upon and in conformity with written information furnished by such Holder
expressly for use in connection with such registration; and each such Holder
will reimburse any legal or other expenses reasonably incurred by Swisher or
any such director, officer, controlling person, underwriter or controlling
person, or other Holder, officer, director, or controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
Section 7(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action, if such settlement is effected without the
consent of the Holder (which consent shall not be unreasonably withheld);
provided, further that the maximum liability of any selling Holder under this
Section 7(b) in regard to any registration statement shall in no event exceed
the amount of the proceeds received by such selling Holder from the sale of
securities under such registration statement; provided, further, however, that
if any losses, claims, damages or liabilities arise out of or are based upon an
untrue statement, alleged untrue statement, omission or alleged omission
contained in any preliminary prospectus which did not appear in the final
prospectus, such seller shall not have any such liability with respect thereto
to Swisher, any person who controls Swisher within the meaning of the Act, any
officer of Swisher who signed the registration statement or any director of
Swisher, if Swisher delivered a copy of the preliminary prospectus to the
person alleging such losses, claims, damages or liabilities and failed to
deliver a copy of the final prospectus, as amended or supplemented if it has
been amended or supplemented, to such person at or prior to the written
confirmation of the sale to such person, provided that Swisher had an
obligation to deliver a copy of the final prospectus to such person.
(c) Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 7,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly notified, to assume the defense thereof with counsel mutually
satisfactory to the parties. An indemnified party shall have the right to
retain its own counsel, however, the fees and expenses of such counsel shall be
at the expense of the indemnified party, unless (i) the employment of such
counsel has been specifically authorized in writing by the indemnifying party,
(ii) the indemnifying party has failed to assume the defense and employ
counsel, or (iii) the named parties to any such action (including any impleaded
parties) include both the indemnified party and the indemnifying party, and the
indemnified party shall have been advised by such counsel that there may be one
or more legal defenses available to it which are different from or additional
to those available to the indemnifying party (in which case the indemnifying
party shall not have the right to assume the defense of such action on behalf
of such indemnified party, it being understood, however, that the indemnifying
party shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one
-4-
5
separate firm of attorneys for all indemnified parties). The failure to
deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party under this Agreement.
(d) If the indemnification provided for in this Section 7
is unavailable or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages or liabilities or actions in respect thereof
referred to therein, then each indemnifying party shall in lieu of indemnifying
such indemnified party contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
actions in such proportion as is appropriate to reflect the relative fault of
Swisher, on the one hand, and selling Holders, on the other, in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or actions as well as any other relevant equitable considerations,
including the failure to give any required notice. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by Swisher, on the one
hand, or by such selling Holders on the other, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto acknowledge and agree that it
would not be just and equitable if contribution pursuant to this subparagraph
(d) were determined by pro rata allocation (even if all of the selling Holders
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subparagraph (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities or
actions in respect thereof referred to above in this subparagraph (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. Notwithstanding the provisions of this subparagraph (d), the amount
the selling Holders shall be required to contribute shall not exceed the
amount, if any, by which the total price at which the securities sold by each
of them were offered to the public exceeds the amount of any damages which they
would have otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, or other violation of law.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of fraudulent misrepresentation.
Section 8. Miscellaneous.
(a) Binding Effect. This Agreement shall be binding upon
and shall inure to the benefit of the original parties hereto and each person
who becomes a party hereto, and their respective heirs, personal
representatives, successors and assigns.
(b) Notices. Except as otherwise provided herein, any
notice, consent or request to be given in connection with any term or provision
of this Agreement shall be deemed to have been given sufficiently if sent by
hand, registered or certified mail, postage prepaid, facsimile transmission or
courier (next day delivery), to Swisher or to PCS at their respective addresses
as designated in, or from time to time pursuant to the Purchase Agreement.
(c) Integration. This Agreement contains the entire
agreement between the parties with respect to the transactions contemplated
hereby and no party shall be bound by, nor shall any party be deemed to have
made, any covenants, representations, warranties, undertakings or agreements
-5-
6
except those contained in such entire Agreement. The section and paragraph
headings contained in this Agreement are for the reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
(d) Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same agreement.
(e) Amendment. This Agreement may be amended, changed,
waived or terminated only in writing by Swisher and PCS.
(f) Governing Law. This Agreement and the rights and
remedies of the parties hereto shall be governed by and construed in accordance
with the laws of the State of Georgia.
IN WITNESS WHEREOF, this Agreement has been executed effective as of
the date first above written.
SWISHER INTERNATIONAL, INC.
By: /S/ PATRICK L. SWISHER
-------------------------------------
PROFESSIONAL CARPET SYSTEMS, INC.
By: /S/ JOSEPH R. LUNSFORD
-------------------------------------
-6-