Exhibit 4.26
REGISTRATION RIGHTS AGREEMENT
Agreement made as of this 21st day of February, 2001 between ▇▇▇▇▇
COMMUNICATIONS, INC., a Delaware corporation (the "Company"), WATERSIDE CAPITAL
CORPORATION, a Virginia corporation ("WSCC") and CAPITALSOUTH PARTNERS FUND I,
L.P., a Delaware limited partnership ("CapitalSouth" and collectively with WSCC,
the "Investors").
R E C I T A L:
A. The Company and the Investors desire to enter into this Registration
Rights Agreement to provide for registration rights with respect to the common
stock of the Company into which the Series H Preferred Stock of the Company held
by the Investors is convertible.
1. CERTAIN DEFINITIONS.
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Section 1. As used in this Agreement, the following terms shall have
the following meanings:
1.1. Commission means the Securities and Exchange Commission, or any
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other federal agency at the time administering the Securities Act and the
Exchange Act.
1.2. Common Stock means (i) the Company's Common Stock, $0.01 par
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value, as authorized on the date of this Agreement, (ii) any other capital stock
of any class or classes (however designated) of the Company, authorized on or
after the date hereof, the holders of which shall have the right, without
limitation as to amount, either to all or to a share of the balance of current
dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference, and the holders of which
shall ordinarily, in the absence of contingencies or in the absence of any
provision to the contrary in the Company's Articles of Incorporation, be
entitled to vote for the election of a majority of directors of the Company
(even though the right so to vote has been suspended by the happening of such a
contingency or provision), and (iii) any other securities into which or for
which any of the securities described in (i) or (ii) may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger, sale
of assets or otherwise.
1.3. Exchange Act means the Securities Exchange Act of 1934, or any
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similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
1.4. Holders has the meaning set forth in Section 2.1.
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1.5. Person means an individual, corporation, partnership, limited
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liability company, joint venture, trust or unincorporated organization or a
government or any agency or political subdivision thereof.
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1.6. Preferred Shares means the shares of the Company's Preferred
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Stock (as defined in the Purchase Agreement) purchased by the Investors pursuant
to the Purchase Agreement.
1.7. Purchase Agreement means the Series H Preferred Stock Purchase
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Agreement dated the date hereof among the Company, the Investors and the
principal shareholder of the Company.
1.8. Registrable Securities means the Common Stock into which the
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Preferred Shares are convertible excluding (i) Registrable Securities for which
a Registration Statement relating to the sale thereof shall have become
effective under the Securities Act and which have been sold or otherwise
distributed under such Registration Statement or (ii) Registrable Securities
which the Holder thereof may sell in any one three month period pursuant to Rule
144 under the Securities Act (or such successor rule as may be adopted).
1.9. Securities Act means the Securities Act of 1933, or any similar
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federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
2. REGISTRATION RIGHTS.
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Section 2.1. Piggyback Registration. If at any time or times after the
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date hereof until the fifth anniversary of this Agreement, the Company shall
determine to register any of its Common Stock or securities convertible into or
exchangeable for Common Stock under the Securities Act whether in connection
with a public offering of securities by the Company (a "primary offering"), a
public offering thereof by stockholders (a "secondary offering"), or both (but
not in connection with a registration effected solely to implement an employee
benefit plan or a transaction to which Rule 145 or any other similar rule of the
Commission under the Securities Act is applicable), the Company will promptly
give written notice thereof to the holders of Registrable Securities (the
"Holders") then outstanding, and will use its best efforts to effect the
registration under the Securities Act of all Registrable Securities which the
Holders may request in a writing delivered to the Company within 15 days after
the notice given by the Company; provided, however that in the case of the
registration of Common Stock by the Company in connection with an underwritten
public offering, the Company shall not be required to register Registrable
Securities of the Holders in excess of the amount, if any, of Registrable
Securities which the principal underwriter of an underwritten offering shall
reasonably and in good faith agree can be included without jeopardizing the
success of the offering by the Company, and provided, further, that if any
Registrable Securities are not included for this reason, the Company will permit
the Holders of Registrable Securities who have requested participation and all
other holders of securities of the Company having a right to include securities
in such registration who have requested participation in the offering to
participate in the offering proportionately in accordance with the number of
shares of Registrable Securities (in the case of the Investors) or shares of
Common Stock subject to such registration right (in the
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case of such other holders) owned or obtainable by them, except that the Company
shall first exclude from such registration, in the following order, all shares
of Common Stock sought to be included therein by (i) any holder thereof not
having any such contractual, incidental registration rights (which the Holders
acknowledge may from time to time be granted by the Board of Directors of the
Company to directors and officers of the Company) and (ii) any holder thereof
having contractual, incidental registration rights subordinate and junior to the
rights of the Holders of Registrable Securities. Without in any way limiting the
types of registrations to which this Section 2.1 shall apply, in the event that
the Company shall effect a "shelf registration" under Rule 415 under the
Securities Act, or any other similar rule or regulation, the Company shall take
all necessary action, including, without limitation, the filing of post-
effective amendments, to permit the Investors to include its Registrable
Securities in such registration in accordance with the terms of this Section
2.1. In connection with any offering under this Section 2.1 involving an
underwriting, the Company shall not be required to include any Registrable
Securities in such underwriting unless the Holders thereof accept the terms of
the underwriting as agreed on between the Company and the underwriter selected
by the Company. The Company shall have the right to postpone or withdraw any
registration effective pursuant to the Section 2.1 without obligation to any
Holder.
Section 2.2. Registration Expenses. On a registration described in Section
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2.1, all reasonable expenses of registration and offering of the Company and the
Holders participating in the offering including, without limitation, printing
expenses, fees and disbursements of counsel and independent public accountants,
fees and expenses (including counsel fees of not more than one counsel selected
by the selling Holders to represent the selling Holders) incurred in connection
with complying with state securities or "blue sky" laws, fees of the National
Association of Securities Dealers, Inc. or any stock exchange and fees of
transfer agents and registrars, shall be borne by the Company, except that the
Holders shall bear (i) underwriting commissions and discounts attributable to
their Registrable Securities being registered, (ii) selling commissions and
(iii) the fees and expenses of a selling Holders' own counsel (other than the
counsel selected to represent all selling Holders).
Section 2.3. Further Obligations of the Company. Whenever under the
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preceding sections of this Agreement the Company is required to register
Registrable Securities, it shall also do the following:
2.3.1 Use its best efforts to diligently prepare for filing
with the Commission a registration statement and such amendments and supplements
to such registration statement and the related prospectus as necessary to keep
such registration statement effective and to comply with the provisions of the
Securities Act with respect to the sale of securities covered by such
registration statement for the period necessary to complete the proposed public
offering,
2.3.2 Furnish to each selling Holder such copies of each
preliminary and final prospectus and such other documents as such holder may
reasonably request to facilitate the public offering of his Registrable
Securities;
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2.3.3 Enter into any underwriting agreement with provisions
reasonably required by the proposed underwriter for the selling Holders, if any;
2.3.4 Use its best efforts to register or qualify the
Registrable Securities covered by such registration statement under the
securities or "blue-sky" laws of such jurisdictions as any selling Holder of
Registrable Securities may reasonably request, provided that the Company shall
not be required to register in any states which shall require it to qualify to
do business or subject itself to general service of process as a condition of
such registration;
2.3.5 Notify the selling Holders (i) when a registration
statement has become effective and when any post-effective amendments and
supplements thereto become effective, (ii) of any requests by the Commission or
any state securities authority for amendments and supplements to a registration
statement and prospectus or for additional information after the registration
statement has become effective, (iii) of the issuance by the Commission or any
state securities authority of any stop order suspending the effectiveness of a
registration statement or the initiation of any proceedings for that purpose,
(iv) if, between the effective date of a registration statement and the closing
of any sale of Registrable Securities covered thereby, the Company receives any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of any
proceeding for such purpose, and (v) of the happening of any event during the
period the registration statement is effective which makes any statement made in
such registration statement or the related prospectus untrue in any material
respect or which requires the making of any changes in such registration
statement or prospectus in order to make the statements therein not misleading;
2.3.6 Make reasonable efforts to obtain the withdrawal of
any order suspending the effectiveness of a registration statement;
2.3.7 Cooperate with the selling Holders to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be sold pursuant to such registration statement and not bearing
any restrictive legends and registered in such names as the selling Holders may
reasonably request at least five days before the closing of any sale of
Registrable Securities;
2.3.8 On the occurrence of any event contemplated by
Section 2.3.5(v) above, use reasonable efforts to prepare a supplement or post-
effective amendment to a registration statement or the related prospectus or any
document incorporated therein by reference or file any other required documents
so that, as thereafter delivered to the purchasers of the Registrable
Securities, such prospectus will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
Company shall notify the selling Holders to suspend use of the prospectus as
soon as reasonably practicable and the selling Holders shall suspend use of the
prospectus until the Company has amended or supplemented the prospectus to
correct such mistake or omission. At such time as such public disclosure is
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otherwise made or the Company determines in good faith that such disclosure is
not necessary the Company shall promptly to notify the selling Holders of such
determination, amend or supplement the prospectus if necessary to correct any
untrue statement or omission therein and furnish the selling Holders such
numbers of copies of the prospectus as so amended or supplemented as the selling
Holders may reasonably request; and
2.3.9 Use best efforts to cause the Registrable Securities
to be listed on any stock exchange or quotation system on which the Common Stock
has been listed.
Section 2.4 Company's Right to Delay Registration. If at the time of any
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request to register Registrable Securities under Section 2.1 the Company is
engaged or has fixed plans to engage within 90 days of the time of the request
in a registered public offering as to which the Holders of Registrable
Securities may include Registrable Securities pursuant to Section 2.1, or is
engaged in any other activity which, in the good faith determination of the
Company's Board of Directors, would be adversely effected by the requested
registration to the material detriment of the Company, then the Company may, at
its option, direct that such requests be delayed for a period not in excess of
four months from the effective date of such offering or the date of commencement
of such other material activity, as the case may be or, if earlier, such time as
any such material detriment would not occur.
3. INDEMNIFICATION. Incident to any registration referred to in this
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Agreement, and subject to applicable law, the Company will indemnify each
underwriter, each Holder of Registrable Securities so registered, and each
person controlling any of them within the meaning of the Securities Act or the
Exchange Act against all claims, losses, damages and liabilities, including
legal and other expenses reasonably incurred in investigating or defending
against the same, arising out of any untrue statement of a material fact
contained in any prospectus or other document (including any related
registration statement) or any omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or arising out of any violation by the Company of the Securities
Act, any state securities or "blue-sky" laws or any rule or regulation
thereunder in connection with such registration; provided, however, that the
Company will not be liable in any case to the extent that any such claim, loss,
damage or liability may have been caused by an untrue statement or omission
based on information furnished in writing to the Company by such Holder
expressly for use therein. Upon any registration of any of the Registrable
Securities under the Securities Act pursuant to this Agreement, each seller of
Registrable Securities, jointly and severally, will indemnify and hold harmless
the Company, each of its directors and officers and each underwriter (if any)
and each person, if any, who controls the Company or any such underwriter within
the meaning of the Securities Act or the Exchange Act against any claim, losses,
damages and liabilities, including legal and other expenses reasonably incurred
in investigating or defending it against the same, arising out of any untrue
statement of a material fact contained in any prospectus or other document
(including any related registration statement) or any omission to state therein
a material fact required to be stated therein or necessary to make the statement
therein not misleading, if the statement or omission was made in reliance on and
in conformity with information furnished in writing to the Company by or on
behalf of such selling Holder,
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specifically for use in connection with the preparation of such registration
statement, prospectus amendment of supplement; provided, however, that the
obligations of such selling Holders hereunder shall be limited to an amount
equal to the proceeds to each Holder of Registrable Securities sold as
contemplated herein.
4. RULE 144 REQUIREMENTS. The Company shall use its best efforts to take all
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action as may be required as a condition to the availability of Rule 144 under
the Securities Act (or any successor exemptive rule afterwards in effect).
5. TRANSFER OF REGISTRATION RIGHTS. The registration rights of the Holders
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under this Agreement may be transferred to any transferee of any Preferred Share
or any Registrable Securities who (i) is a Holder of Registrable Securities,
(ii) is an affiliate, as that term is defined in regulations promulgated by the
Commission under the Exchange Act, of a Holder of Registrable Securities
(including a partner of such Holder) or (iii) acquires Registrable Securities or
Preferred Shares. Each such transferee shall be deemed to be a "Holder" for
purposes of this Agreement; provided that no transfer of registration rights by
a Holder under this Section 5 shall create any additional rights in the
transferee beyond those rights granted to Holders in this Agreement.
6. COVENANTS OF HOLDERS. Each Holder of Registrable Securities that plans to
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participate in a distribution pursuant to a Registration Statement shall furnish
to the Company such information regarding such Person and its affiliates and the
distribution of such Registrable Securities as the Company may from time to time
reasonably require for inclusion in such Registration Statement. Such
information at the time any Registration Statement and any amendment thereto
becomes effective, and at the time any Prospectus or supplement thereto forming
a part of any Registration Statement is delivered in any offering of Registrable
Securities, shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary (in the case of
the Prospectus, in light of the circumstances which they were made) to make the
statements therein not misleading. The Holders shall advise the Company and, if
requested by the Company, confirm such advice in writing in the event that the
Holders become aware of the happening of any event that requires the making of
any changes in a Registration Statement or Prospectus so that as of such dates
the statements therein provided by the Holders specifically for inclusion
therein are not misleading and do not omit to state a material fact required to
be stated therein or necessary to make the statements therein (in the case of
the Prospectus, in light of the circumstances under which they were made) not
misleading.
7. SUSPENSION OF OFFERINGS IN CERTAIN CIRCUMSTANCES. The Company shall be
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entitled for the period referred to below to postpone the filing of any
Registration Statement or the taking of any other action otherwise required to
be prepared, filed or taken by it pursuant hereto and/or to direct the
suspension of any public offering, sale or distribution of Registrable
Securities if the Board of Directors of the Company determines in good faith
that any disclosure that would be required in connection therewith would have a
material adverse effect on the Company or any financing, acquisition,
disposition, merger, business combination,
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corporate reorganization, or other transaction or development involving the
Company or any subsidiary of the Company (a "Business Development
Determination"). Such postponement or direction shall continue until such time
as the Board of Directors of the Company determines that the preparation and/or
filing of such Registration Statement or the taking of any such action and/or
such public offering, sale or distribution would no longer have a material
adverse effect on the Company or any such transaction but shall not, in any
event, exceed 30 days for any particular Business Development Determination or
60 days for all Business Development Determinations during any twelve month
period. No Business Development Determination shall occur within 180 days of the
expiration of a postponement or suspension caused by another Business
Development Determination. The Board shall, as promptly as practicable, give the
Holders written notice of any Business Development Determination.
8. MISCELLANEOUS.
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Section 8.1. No Waiver; Cumulative Remedies. No failure or delay on the
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part of any party to this Agreement in exercising any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder.
These remedies are cumulative and not exclusive of any remedies provided by law.
Section 8.2. Amendments and Waivers. Except as provided below, amendments
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to this Agreement shall require and shall be effective on receipt of the written
consent of: (i) the Company and (ii) the holders of at least a majority in
interest of the Registrable Securities. Except as provided below, compliance
with any covenant or provision in this Agreement may be waived on written
consent by the party or parties whose rights are being waived; provided, that,
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if the rights of holders of Registrable Securities are being waived, only with
the written consent of the holders of at least a majority in interest of the
Registrable Securities. Notwithstanding the foregoing, no waivers or amendments
shall be effective to reduce the percentage in interest of the Registrable
Securities the consent of the holders of which is required under this Section.
Any waiver or amendments may be given subject to satisfaction of conditions
stated therein and any waiver or amendments shall be effective only in the
specific instance and for the specific purpose for which given.
Section 8.3. Addresses for Notices. All notices, requests demands and
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other communications required by this Agreement shall be in writing (including
telegraphic communication) and mailed, telegraphed or delivered to each
applicable party at the address set forth in the Purchase Agreement or at such
other address any party may inform the party in writing in compliance with this
Section.
All such notices, requests, demands and other communications shall, when
mailed (which mailing must be accomplished by first class mail, postage prepaid,
electronic facsimile transmission, express overnight courier service, or
registered mail, return receipt requested) or telegraphed, and shall be
considered to be delivered two days after dispatch.
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Section 8.4. Binding Effect; Assignment. This Agreement shall bind and
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inure to the benefit of the parties and their respective heirs, successors and
assigns, except that the Company shall not have the right to delegate its
obligations hereunder or to assign its rights hereunder or any interest herein
without the prior written consent of the holders of at least a majority in
interest of the Registrable Securities.
Section 8.5. Prior Agreements. This Agreement constitutes the entire
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agreement between the parties and supersedes any prior understandings or
agreements concerning the subject matter hereof, including without limitation
the Original Registration Rights Agreement.
Section 8.6. Severability. The provisions of this Agreement are severable
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and, in the event that any court of competent jurisdiction shall determine that
any one or more of the provisions or part of a provision contained in this
Agreement, for any reason, is invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision or part of a provision of this Agreement, but this Agreement shall be
reformed and construed as if such invalid or illegal or unenforceable provision,
or part of a provision, had never been contained herein, and such provisions or
part reformed so that it would be valid, legal and enforceable to the maximum
extent possible.
Section 8.7. Jurisdiction and Venue. The Company consents to the
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jurisdiction of the Circuit Court of the City of Norfolk, Virginia and the
United States District Court for the Eastern District of Virginia, Norfolk
Division, for the purpose of any suit, action or other proceeding arising out of
any of its obligations arising under this Agreement or with respect to the
transactions contemplated hereby, and expressly waives any and all objections it
may have as to venue in such court.
Section 8.8. Headings. Article, section and subsection headings in this
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Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
Section 8.9. Counterparts. This Agreement may be executed in any number
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of counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section 8.10. Further Assurances. From and after the date of this
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Agreement, on the request of any party, the other parties shall execute and
deliver such instruments documents and other writings as may be reasonably
necessary or desirable to confirm and carry out and to effectuate fully the
intent and purposes of this Agreement.
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IN WITNESS, the undersigned have executed this Registration Rights
Agreement as the day and year first above written.
▇▇▇▇▇ COMMUNICATIONS, INC.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇▇, VP, CFO, and Secretary
WATERSIDE CAPITAL CORPORATION
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title Vice President
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CAPITALSOUTH PARTNERS FUND I, L.P.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, III
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III, President
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