Exhibit 10(e)
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of March __, 1996 by and between INTER(bullet)ACT SYSTEMS,
INCORPORATED, a North Carolina corporation (the "Company"), and TORONTO DOMINION
INVESTMENTS, INC., a Delaware corporation (together with its successors and
permitted assigns, the "Investor");
WHEREAS, the Company and the Investor have entered into an agreement
(the "Subscription Agreement") relating to the purchase by the Investor of
certain shares of the Company's common stock, no par value per share ("Common
Stock"), and a warrant to purchase additional shares of Common Stock (the
"Warrant"); and
WHEREAS, as a further condition to the Investor's purchase of the
shares of Common Stock and Warrant pursuant to the Subscription Agreement, the
Company has agreed to provide certain rights to Investor as hereinafter set
forth to have the Common Stock acquired by Investor pursuant to the Subscription
Agreement and the Warrant or otherwise, registered under the Securities Act of
1933, as amended (the "Securities Act"), and the securities laws of certain
other jurisdictions;
NOW, THEREFORE, in consideration of the foregoing, the Company and the
Investor hereby agree as follows:
SECTION 1. Definitions. Capitalized terms appearing herein and not
otherwise defined herein shall have the meanings ascribed thereto in the
Subscription Agreement. Additionally, the following terms shall have the
following meanings for the purpose of this Agreement:
(a) "Blackout Period" has the meaning assigned to such term in
Section 2(a) hereof.
(b) "Closing" and "Closing Date" are defined as the sale and
issuance of the shares and Warrant and the date of sale and issuance of
the shares and Warrant, respectively, pursuant to the Subscription
Agreement.
(c) "Common Stock" is defined in the preamble to this
Agreement.
(d) "Decline Notice" has the meaning assigned to that term in
Section 2(b) hereof.
(e) "Demand Registration" has the meaning assigned to that
term in Section 2(a) hereof.
(f) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(g) "Person" means any individual, corporation, limited
liability company, partnership, association, trust or other entity or
organization.
(h) "Piggyback Registration" has the meaning assigned to that
term in Section 3 hereof.
(i) 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, or the
securities laws of any jurisdiction other than the United States, and
the declaration or ordering of effectiveness of such registration
statement or document, or similar action in such other jurisdiction.
(j) "Registrable Securities" means (i) the shares of Common
Stock issued or issuable pursuant to the Subscription Agreement or the
Warrant or issued as a dividend or other distribution with respect to,
or in exchange for or in replacement of such Common Stock (whether
through stock dividends, stock splits, reclassifications, mergers,
consolidations, recapitalizations or otherwise) and (ii) any other
shares of Common Stock acquired by the Investor including shares issued
as a dividend or other distribution with respect to, or in exchange for
and in replacement of such acquired Common Stock (whether through stock
dividends, stock splits, reclassifications, mergers, consolidations,
recapitalizations or otherwise).
(k) "Registration Expenses" has the meaning assigned to that
term in Section 6(a) hereof.
(1) "Registration Rights" means the rights to Demand
Registration and Piggyback Registration of Investor pursuant to this
Agreement and any other similar rights of any other Person that are in
existence as of the date hereof.
(m) "SEC" means the Securities and Exchange Commission.
(n) "Secondary Securities" has the meaning assigned to that
term in Section 7 hereof.
(o) "Securities Act" is defined in the preamble to this
Agreement.
(p) "Subscription Agreement" is defined in the preamble to
this Agreement.
(q) "Warrant" is defined in the preamble to this Agreement.
(r) "Violation" has the meaning assigned to that term in
Section 9(a) hereof.
SECTION 2. Registration Upon Demand. (a) At any time during the term of
this Agreement and after six months from the date that the first registration
statement filed by the Company under the Securities Act becomes effective, upon
the written request of the Investor requesting that the Company
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effect the registration under the Securities Act of its Registrable Securities
(which request shall specify the intended method of distribution thereof), the
Company shall use its best efforts to register under the Securities Act (a
"Demand Registration"), as expeditiously as may be practicable, the Registrable
Securities that the Company has been requested to register; provided, however,
that the Investor shall not be entitled to request any Demand Registration
within the twelve-month period immediately following the date of any previous
request for a Demand Registration hereunder.
(b) The Company may, at any one time during the term of this Agreement,
decline a Demand Registration request of the Investor by notifying Investor in
writing within fifteen (15) days of the receipt of such request (a "Decline
Notice") if, in the Company's judgment, such Demand Registration would not be in
the Company's best interest. The Decline Notice shall be effective for a
three-month period commencing on the date thereof (the "Blackout Period") and
shall operate as a bar to any additional Demand Registration requests of
Investor for the remainder of the Blackout Period.
SECTION 3. "Piggyback" Registrations. If, at any time during the term
of this Agreement, the Company proposes to register any securities under the
Securities Act in connection with any offering of its securities, whether or not
for its own account (other than a registration statement filed with respect to
the issuance of Common Stock, or securities convertible into or exchangeable for
Common Stock, or rights to acquire Common Stock, on Form S-4 or otherwise in
connection with an acquisition, merger or other transaction or on Form S-8 with
respect to shares issuable pursuant to options granted or to be granted to
employees of the Company), the Company shall furnish prompt written notice to
the Investor of its intention to effect such registration and the intended
method of distribution in connection therewith. On each such occasion, upon the
written request of the Investor made to the Company within 30 days after the
receipt of such a notice by the Company, the Company shall include in such
registration such amount of the Registrable Securities as the Investor shall
notify to the Company in writing (a "Piggyback Registration"), subject to
Section 7 hereof.
SECTION 4. Obligations of the Company. Whenever the Company is required
under this Agreement to effect the registration of any Registrable Securities,
the Company shall, as expeditiously as may be practicable:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to
cause such registration statement to become effective, and keep such
registration statement effective for up to 60 days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to
comply with the provisions of applicable law with respect to the
disposition of all securities covered by such registration statement.
(c) Furnish to the Investor such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of applicable law, and such other documents as it may
reasonably request in order to facilitate the disposition of
Registrable Securities owned by it.
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(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other
securities laws of such jurisdictions in which the securities are being
registered as shall be reasonably requested by the Investor; provided,
however, that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such jurisdictions.
(e) 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. The Investor shall also enter into and perform its
obligations under such an agreement.
(f) Notify the Investor, at any time when a prospectus
relating thereto is required to be delivered under applicable law, 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 light of circumstances then existing.
SECTION 5. Furnish Information. It shall be a condition precedent to
the obligation of the Company to take any action pursuant to this Agreement that
the Investor shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of such
securities as shall be reasonably required to effect the registration of the
Registrable Securities.
SECTION 6. Expenses of Registration. (a) With respect to a Demand
Registration, the Company shall bear and pay all out-of-pocket expenses incurred
in connection with the registrations, filings or qualifications of Registrable
Securities, with respect to the registrations made pursuant to Sections 2 and 4,
including, without limitation, all registration, filing, and qualification fees,
printers' and accounting fees, fees and disbursements of counsel for the Company
and counsel for the Investor (the "Registration Expenses"), but excluding
underwriting discounts and commissions relating to Registrable Securities.
(b) With respect to a Piggyback Registration, the Investor shall pay a
portion of the Registration Expenses incurred by or on behalf of the Investor
for its benefit pro rata based on the percentage of the aggregate number of
shares registered pursuant to such registration which are represented by the
Registrable Securities of Investor; provided, however, the Investor may elect to
be responsible for the payment of only those expenses it would bear had it
exercised its right to its Demand Registration at the Company's expense if not
previously exercised (in which case, the Investor would be obligated to pay a
portion of the Registration Expenses incurred by or on behalf of the Investor
for its benefit in connection with any Demand Registration); and provided,
further, that if the Company should agree to bear the Registration Expenses of
any other stockholder in any Piggyback Registration for any other stockholder of
Company on terms more favorable than those applicable to the Investor, the
Company will bear the expenses of the Investor in the Piggyback Registration
without requiring the payment of such expenses in connection with a Demand
Registration available to the
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Investor or provide the more favorable terms to the Investor, as the case may
be.
SECTION 7. Underwriting Requirements. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 3 to include any of the Registrable
Securities of the Investor in the registration of the securities to be included
in such underwriting, or in such underwriting itself, unless the Investor
accepts the terms of the underwriting as agreed upon between the Company and the
underwriters selected by it, and then only in such quantity as the underwriters
determine in their sole discretion will not jeopardize the success of the
offering by the Company. If the total amount of securities, including
Registrable Securities, requested by shareholders to be included in such
offering, whether upon exercise of Registration Rights or otherwise
(collectively, "Secondary Securities"), exceeds the number of Secondary
Securities that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only such number of Secondary Securities, including
Registrable Securities, as the underwriters determine in their sole discretion
will not jeopardize the success of the offering. The Secondary Securities so
included shall be apportioned first among the Investor and such other selling
shareholders having exercised Registration Rights, pro rata in proportion to the
total number of Secondary Securities, including Registrable Securities, owned by
the Investor and such other selling shareholders, respectively, before any
Secondary Shares shall be included on behalf of any other shareholder, or in
such other proportion as may be agreed to by all such shareholders and the
Investor.
SECTION 8. Delay of Registration. The Investor shall not have any right
to obtain or seek an injunction restraining or otherwise delaying any
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Agreement.
SECTION 9. Indemnification. In the event any Registrable Securities are
included in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless the Investor, any underwriter (as defined in the
Securities Act or other applicable law) for the Investor and each
Person, if any, who controls the Investor or underwriter within the
meaning of the Securities Act, the Exchange Act or other applicable
law, against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Securities Act or
other applicable law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based
upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) 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, (ii) 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, or (iii) any violation or alleged violation by the Company
of the Securities Act or other applicable law, or any rule or
regulation promulgated under the Securities Act or other applicable
law; and the Company will pay to the Investor, underwriter or
controlling Person any reasonable legal or other expenses incurred by
it in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the
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indemnity agreement contained in this Section 9(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 the
Company (which consent shall not be unreasonably withheld), nor shall
the Company 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 a Violation which occurs in reliance upon and in conformity
with written information furnished expressly for use in connection with
such registration by the Investor or such underwriter or controlling
Person.
(b) To the extent permitted by law, the Investor will
indemnify and hold harmless the Company, each of its directors, each of
its officers who has signed the registration statement, each Person, if
any, who controls the Company within the meaning of the Securities Act
or other applicable law, any underwriter, and any controlling Person of
any such underwriter, against any losses, claims, damages, or
liabilities (joint or several) to which any of the foregoing Persons
may become subject, under the Securities Act or other applicable law,
insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each
case to the extent (and only to the extent) that such Violation occurs
in reliance upon and in conformity with written information furnished
by the Investor expressly for use in connection with such registration;
and the Investor will pay any reasonable legal or other expenses
incurred by any Person to be indemnified pursuant to this Section 9(b),
in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 9(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 Investor,
which consent shall not be unreasonably withheld; and provided further,
however, that in no event shall any indemnity under this Section 9(b)
exceed the gross proceeds from the offering received by the Investor.
(c) Promptly after receipt by an indemnified party under this
Section 9 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 9, 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, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified
party (together with all other indemnified parties which may be
represented without conflict by one counsel) shall have the right to
retain one separate counsel, with the fees and expenses to be paid by
the indemnifying party, if representation of such indemnified party by
the counsel retained by the indemnifying party would be inappropriate
due to actual or potential differing interests between such indemnified
party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action,
if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
Section 9, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may
have to any indemnified party otherwise than
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under this Section 9.
(d) The obligations of the Company and Investor under this
Section 9 shall survive the completion of any offering of Registrable
Securities under a registration statement pursuant to this Agreement,
and otherwise.
SECTION 10. Reports. With a view to making available to the Investor
the benefits of Rules 144 and 144A under the Securities Act and any other
applicable rule or regulation in each other jurisdiction where the Company's
securities are registered that may at any time permit the Investor to sell
securities of the Company to the public without registration, the Company agrees
to do the following from the date of effectiveness of the Company's first
registration statement filed under the Securities Act until the end of the term
of this Agreement pursuant to Section 12 hereof:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 or other applicable law, at all
times;
(b) file with the SEC and the applicable authority in each
other jurisdiction where the Company's securities are registered in a
timely manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act, and the similar laws of
each such other jurisdiction; and
(c) furnish to the Investor forthwith upon request, (i) a copy
of the most recent annual or quarterly report of the Company and such
other reports and documents filed by the Company with governmental
authorities (including the SEC), and (it) such other information as may
be reasonably requested in availing the Investor of any rule or
regulation of the SEC or similar authorities in any jurisdiction where
the Company's securities are registered, which permits the selling of
any such securities without registration.
SECTION 11. "Market Stand-Off" Agreement. The Investor hereby agrees
that, during the duration of the period specified by the Company and an
underwriter of Common Stock or other securities of the Company following the
effective date of a registration statement of the Company under the Securities
Act (but no longer than six months), it shall not, to the extent requested by
the Company and such underwriter, directly or indirectly sell, offer to sell,
contract to sell (including, without limitation, any short sale), grant any
option to purchase or otherwise transfer or dispose of any securities of the
Company held by the Investor at any time during such period except Common Stock
included in such registration and except in a private transaction in which the
transferee of Investor agrees to abide by the agreement of Investor pursuant to
this Section 11 for the remaining duration of the period specified to the
Investor by the Company and the underwriter. In order to enforce the foregoing
covenant, the Company may impose stop-transfer instructions, consistent with the
provisions of this Section 11, with respect to the Registrable Securities of the
Investor (and the shares or securities of every other Person subject to the
foregoing restriction) until the end of such period.
SECTION 12. Termination. Except for the right to indemnification
provided herein, the Investor shall not be entitled to exercise any right
provided for in this Agreement after the earlier of (i) five years following the
date of effectiveness of the Company's first registration statement
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filed under the Securities Act or (ii) the date all of the Registrable
Securities then owned by Investor may be immediately resold pursuant to Rule
144.
SECTION 13. Limitation on Registration Rights. Except to the extent
that the Company is presently obligated to provide by written contract any of
the following rights, the Company shall not grant, without the prior written
consent of the Investor, to any Person the right to request the Company to
register, whether by demand or "piggy-back", any securities of the Company in
any Demand Registration filed pursuant to Section 2 hereof unless such rights
provide that, in connection with any such Demand Registration involving an
underwriting of any of the Investor's Registrable Securities, the securities of
the Company sought to be included in such Demand Registration by such Person or
in the underwriting thereunder, shall be excluded unless such Person accepts the
terms of the underwriting as agreed upon between the Investor and the
underwriters selected by it, and then only in such quantity as the underwriters
determine in their sole discretion will not jeopardize the success of the
offering by the Investor. If the total amount of securities requested by all
such Persons to be included in such offering upon exercise of registration
rights exceeds the number of securities that the underwriters determine in their
sole discretion is compatible with the success of the offering by Investor, then
the Investor shall be required to include in the offering only such number of
other securities as the underwriters determine in their sole discretion will not
jeopardize the success of the offering. The other securities so included shall
be apportioned among such other Persons pro rata in proportion to the total
number of securities owned by them, respectively, or in such other proportion as
may be agreed to by such Persons.
SECTION 14. Notices. All notices hereunder shall be in writing or by
telex or telecopy and shall be sufficiently given to the Investor and the
Company if addressed or delivered to them at the following addresses:
If to the Company: Inter(bullet)Act Systems, Incorporated
14 Westport Avenue
Norwalk, Connecticut 06851
Attn: President
with copies to: Schell Bray Aycock Abel & Livingston L.L.P.
Suite 1500 Renaissance Plaza
230 North Elm Street
Greensboro, North Carolina 27404
Attention: Doris R. Bray
If to TDI: Toronto Dominion Capital
31 West 52nd Street, 20th Floor
New York, New York 10019
Attn: Eric D. Rindahl
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Telecopier: 212/974-8429
with a copy to: Toronto Dominion Investments, Inc.
909 Fannin Street
Houston, Texas 77010
Attn: Martha Gariepy
Telecopier: 713/951-9921
or at such other address as any party may designate to any other party by
written notice.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; when received if
deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when transmission is verified, if telecopied; and on the next Business
Day, if timely delivered to an air courier guaranteeing overnight delivery.
SECTION 15. Successors and Assigns. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Investor shall bind
and inure to the benefit of their respective successors and assigns, including
those by operation of law, merger or consolidation. In the event the Registrable
Securities are assigned to more than one Person, a Demand Registration pursuant
to Section 2 may be requested only upon the written request of the holders of
50% or more of the Registrable Securities, a Piggyback Registration pursuant to
Section 3 may be requested only upon the written request of the holders of 25%
or more of the Registrable Securities and all other actions pursuant to this
Agreement, including without limitation amendments to this Agreement, may be
taken only upon the affirmative vote of the holders of 50% or more of the
Registrable Securities, which vote shall be binding upon all holders of
Registrable Securities.
SECTION 16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of North Carolina without
taking into account conflict of law provisions.
SECTION 17. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company and the Investor and
their respective successors and assigns any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company and the Investor and their respective
successors and assigns.
SECTION 18. Counterparts. This Agreement may be executed in any number
of counterparts and each such counterpart shall for all purposes be deemed to be
an original, and all such counterparts shall together constitute one and the
same instrument.
SECTION 19. Amendments: Waiver. No provision of this Agreement may be
amended or waived except by an instrument in writing signed by the party sought
to be bound. No failure or delay by any party in exercising any right or remedy
hereunder shall operate as a waiver thereof, nor shall a waiver of a particular
right or remedy on one occasion be deemed a waiver of any other right or remedy
or a waiver of the same right or remedy on any subsequent occasion.
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SECTION 20. Specific Performance. The Company recognizes that the
rights of the Investor under this Agreement are unique and, accordingly, the
Investor shall, in addition to such other remedies as may be available to it at
law or in equity, have the right to enforce its rights hereunder by actions for
injunctive relief and specific performance to the extent permitted by law,
except as otherwise provided in this Agreement. The 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 in
any action for specific performance the defense that a remedy at law would be
adequate. This Agreement is not intended to limit or abridge any rights of the
Investor which may exist apart from this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized and their
respective corporate seals affixed hereto as of the day and year first above
written.
INTER(bullet)ACT SYSTEMS, INCORPORATED
ATTEST: By:
Title:
Secretary
[Corporate Seal]
TORONTO DOMINION INVESTMENTS, INC.
ATTEST: By:
Title:
Secretary
[Corporate Seal]
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