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EXHIBIT 10.40
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REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
October 1, 1996, is by and among ▇▇▇▇▇▇ AND ▇▇▇▇▇ HOLDING, INC., ▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. NORTH, ▇▇▇ ▇.
▇▇▇▇▇▇▇, AND ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. (each, a "Holder," and collectively, the
"Holders"), and CROWN NORTHCORP, INC., a Delaware corporation (the "Company").
WITNESSETH:
WHEREAS, each of the Holders will receive the number of shares of
Preferred Stock set forth opposite his name on Exhibit A attached hereto and
hereby made a part hereof as consideration for of all of the Equity Interests
upon the consummation of the Acquisition pursuant to the Purchase Agreement; and
WHEREAS, the Preferred Stock is convertible into shares of the Common
Stock upon the terms and conditions set forth in the Certificate of Designation;
and
WHEREAS, in order to induce the Holders to consummate the Acquisition
pursuant to the Purchase Agreement, the Company desires to grant the Holders
certain registration rights as more fully provided for herein;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS. The following terms shall have the following
meanings:
"CERTIFICATE OF DESIGNATION" means the Certificate of Designation of
Series A Preferred Stock, Par Value $.01 Per Share, of the Company relating to
the Preferred Stock, as filed with the Secretary of State of the State of
Delaware on October 1, 1996.
"CERTIFICATE OF INCORPORATION" means the Certificate of Incorporation
of the Company, as amended and as in effect on the date hereof.
"COMMON STOCK" means the Common Stock, par value $.01 per share, of the
Company.
"COMMISSION" means the Securities and Exchange Commission or any
similar federal agency then having jurisdiction to enforce the Securities Act
and other federal securities laws.
"NASD" means the National Association of Securities Dealers, Inc. or
any successor corporation thereto.
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"PERSON" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or any agency or political subdivision thereof), or other entity of
any kind.
"PREFERRED STOCK" means the Company's Series A Convertible Preferred
Stock, par value $.01 per share.
"PURCHASE AGREEMENT" means that certain Stock Purchase Agreement, dated
as of the date of this Agreement, between and among the Company, CNC Holding
Corp., the Holders, Eastern Realty Corporation, Eastern Baltimore, Inc., and
Eastern Realty L.L.C.
"REGISTRABLE SECURITIES," collectively, means (i) the Shares, (ii) any
shares of Common Stock hereafter distributed to the holders of the Registrable
Securities by the Company as a stock dividend with respect to the Shares or
otherwise thereon, and (iii) any equity securities of the Company convertible
into, or exercisable or exchangeable for, any of the shares of Common Stock
identified in the foregoing clauses (i) through (ii); provided, however, that
any such securities shall cease to be Registrable Securities when (i) such
securities shall have been registered under the Securities Act, the Registration
Statement with respect to the sale of such securities shall have become
effective under the Securities Act, and such securities shall have been disposed
of pursuant to such effective registration statement, (ii) such securities shall
have been otherwise transferred, if new certificates or other evidences of
ownership for them not bearing a legend restricting further transfer and not
subject to any stop transfer order or other restrictions on transfer shall have
been delivered by the Company and subsequent disposition of such securities
shall not require registration or qualification of such securities under the
Securities Act or any state securities law then in force, or (iii) such
securities shall cease to be outstanding.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rule and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"SHARES" means the shares of Common Stock or other equity securities
issued to each of the Holders upon conversion of all of the Preferred Stock
issued to them pursuant to the Purchase Agreement (as set forth on Exhibit A
attached hereto).
"TERM" shall have the meaning ascribed thereto in the Certificate of
Designation.
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SECTION 2. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION. On one occasion during the Term, all (and
not less than all) of the Holders may request in writing that the Company
register all (and not less than all) of the Registrable Securities for resale
under this Section 2(a). The Company shall thereupon use commercially reasonable
efforts to effect the registration of the Registrable Securities under the
Securities Act. No registration hereunder shall count as a registration under
this Section 2(a) unless it shall have been declared effective, and each holder
must convert his Preferred Stock issued to him pursuant to the Purchase
Agreement (as set forth on Exhibit A hereto) into Shares prior to the effective
date of the registration.
(b) INCIDENTAL REGISTRATION.
(i) If the Company at any time proposes to file on its behalf
and/or on behalf of any of its security holders (the "registering
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
related small business form 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 the Company pursuant to any employee
benefit plan, respectively) for the general registration of securities
to be sold for cash with respect to its Common Stock or any other class
of equity security of the Company, it will give written notice to all
Holders at least 45 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 the Company. The notice shall offer to include in such
filing the aggregate number of shares of Registrable Securities as such
Holder may request.
(ii) Each Holder desiring to have Registrable Securities
registered under this Section 2(b) must advise the Company in writing
within 10 days after the date of receipt of such offer from the
Company, setting forth the amount of such Registrable Securities for
which registration is requested. The 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 commercially reasonable efforts to effect registration under the
Securities Act of such shares. If the managing underwriter of a
proposed public offering shall advise the Company in writing that, in
its opinion, the distribution of the Registrable Securities so
requested to be included in the registration concurrently with the
securities being registered by the Company or such registering security
holder would materially and adversely affect the distribution of such
securities by the Company or such registering security holder, then all
selling security holders (other than the Company) shall reduce the
amount of securities each intended to distribute through such offering
on a pro rata basis (such event is hereinafter referred to as a
"Reduction Event").
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(iii) Notwithstanding any provision of this Agreement to the
contrary, each Holder may include shares of Registrable Securities in
any registration of stock under this Agreement on a maximum of two
occasions.
(c) REGISTRATION PROCEDURES. If the Company is required by the
provisions of Section 2 to use its reasonable commercial efforts to effect the
registration of any of its securities under the Securities Act, the Company
will, as expeditiously as possible:
(i) prepare and file with the Commission a Registration
Statement with respect to such securities and use its commercially
reasonable 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;
(ii) 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 any 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;
(iii) furnish to such 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 Holders may reasonably request;
(iv) use its commercially reasonable 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 the 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 of 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;
(v) 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 the Registrable Securities owned by such Holder and covered by such
Registration Statement;
(vi) otherwise use its reasonable commercial 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 less than 18 months after the effective
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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
statements shall satisfy the provisions of Section 11(a) of the
Securities Act; and
(vii) permit counsel to the Holders to inspect and copy such
public corporate documents as reasonably requested.
It shall be a condition precedent to the obligation of the Company to
take any action pursuant to this Section 2 in respect of the securities which
are to be registered at the request of any holder of Registrable Securities that
such holder shall furnish to the Company such information regarding the
securities held by such holder and the intended method of disposition thereof as
the Company shall reasonably request and as shall be required under the
Securities Act in connection with the action taken by the Company and that such
holder shall execute such agreements, instruments, and other documents in
connection with such registration (including, without limitation, an escrow
agreement relating to such securities) as the Company may reasonably request.
SECTION 3. REGISTRATION EXPENSES. All expenses incurred in complying
with Section 2 of 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 the Company,
expense of any special audits incident to or required by such registration, time
charges of Company personnel, and expenses of complying with the securities or
blue sky laws of any jurisdictions pursuant to Section 2(c), shall be paid by
the Company, except that:
(a) all such expenses in connection with any amendment or supplement to
the Registration Statement or prospectus filed more than 120 days after the
effective date of such Registration Statement because any holder of Registrable
Securities has not effected the disposition of the securities requested to be
registered shall be paid by such holder;
(b) the Company shall not be liable for any fees, discounts, or
commissions to any underwriter in respect of the securities sold by such holder
of Registrable Securities; and
(c) the Company shall not be liable for any fees or expenses of counsel
to holders.
SECTION 4. INDEMNIFICATION AND CONTRIBUTION. (a) In the event of any
registration of any Registrable Securities under the Securities Act pursuant to
this Agreement, the Company shall indemnify and hold harmless the Holder of such
Registrable Securities against any losses, claims, damages, or liabilities,
joint or several, to which such Holder 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
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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 for any legal or any other expenses reasonably
incurred by such Holder in connection with investigating or defending any such
loss, claim, damage, or liability; provided, however, that the 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 alleged untrue statement or alleged
omission made (x) in such Registration Statement, preliminary prospectus,
prospectus, or amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by such holder or underwriter
specifically for use therein, or (y) in such Registration Statement, preliminary
prospectus, or amendment or supplement but corrected in such final prospectus if
such final prospectus was not delivered to the Person alleging such loss, claim,
damage, or liability. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such holder, and shall
survive the transfer of such securities by such Holder.
(b) Each holder of any Registrable Securities, by acceptance thereof,
agrees to indemnify and hold harmless the Company, its directors and officers,
and each other Person, if any, who controls the Company within the meaning of
the Securities Act against any losses, claims, damages, or liabilities, joint or
several, to which the 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 any untrue statement (or alleged
untrue statement) of material fact or any omission (or alleged omission) to
state a material fact required to be stated or necessary to make statements
therein not misleading provided to the Company in writing by such holder of such
Registrable Securities 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 (collectively, "Disclosure Documents"). If a
holder provides a notice to the Company of its intent to review the Disclosure
Documents along with a facsimile number to receive such Disclosure Documents,
the Company shall provide via facsimile to each holder copies of the Disclosure
Documents. Each holder, at his own expense, shall have 24 hours from the time
that the Company transmits such Disclosure Documents to provide written comments
to the Company regarding the Disclosure Documents.
(c) (i) If the indemnification provided for in this Section 4 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
the indemnified parties in connection with the actions which resulted
in such losses, claims, damages, liabilities, or expenses, as well as
any other relevant equitable
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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, as well as
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.
(ii) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 4(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 Section
4(c)(i). 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 also guilty of such fraudulent
misrepresentation.
SECTION 5. CERTAIN LIMITATIONS ON REGISTRATION RIGHTS. Notwithstanding
the other provisions of this Agreement, the Company shall not be obligated to
register the Registerable Securities of any holder if, in the opinion of Powell,
Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ or such other counsel to the 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.
SECTION 6. RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may permit the
sale of restricted securities (as that term is used in Rule 144 under the
Securities Act) to the public without registration, the Company agrees to:
(a) make and keep public information available pursuant to Rule 144(c)
under the Securities Act;
(b) use its best efforts to file with the Commission in a timely manner
all reports and other documents required of the Company under the Securities Act
and the Securities Exchange Act at any time after it has become subject to such
reporting requirements; and
(c) so long as any Holder owns any restricted securities, furnish to
the Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of Rule 144, and of the Securities
Act and Securities Exchange Act, a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents so
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filed by the Company as a Holder may reasonably request in availing itself of
any rule or regulation of the Commission allowing a Holder to sell any such
securities without registration.
SECTION 7. MISCELLANEOUS
(a) 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 thereof may not be
given, without the prior written consent of the parties hereto.
(b) NOTICES. Any notice, demand, request, consent, approval,
declaration, 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, addressed as
follows:
(i) If to the Holders, to the address specified on the
signature page of this Agreement.
(ii) If to the Company:
Crown NorthCorp, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Secretary
With a copy to:
Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(iii) If to any holder of Registrable Securities other than
the Holders, at its last known address appearing on the books of the
Company maintained for such purpose, 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, or three (3) business days after the same
shall have been deposited in the United States mail.
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(c) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties hereto. This Agreement may be assigned by the Company to any successor
to the Company without the consent of any Holder. This Agreement may not
otherwise be assigned by the Company without the prior written consent of a
majority of the Holders, which consent shall not be unreasonably delayed or
withheld. A Holder may assign all or any part of his rights hereunder in
accordance with the terms of this Agreement and applicable securities laws. If a
Holder transfers less than all of his Registerable Securities, the transferee
holders must reimburse the Company for any additional expense incurred by the
Company (as reasonably determined by the Company) in connection with the
Company's registration of the transferee holder's Registerable Securities
pursuant to Section 2(b) of this Agreement.
(d) HEADINGS. The headings in this Agreement are for convenience of
reference only, and shall not limit or otherwise affect the meaning thereof.
(e) GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Delaware, without regard to the provisions thereof relating to conflict
of laws.
(f) SEVERABILITY. Whenever 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.
(g) ENTIRE AGREEMENT. This Agreement represents the complete agreement
and understanding of the parties 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.
(h) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, and all of which, when
taken together, shall constitute one and the same Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
▇▇▇▇▇▇ AND ▇▇▇▇▇ HOLDING, INC.
By:
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Name:
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Title:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Address:
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▇▇▇▇▇ ▇. ▇▇▇▇
Address:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address:
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▇▇▇▇▇▇▇ ▇. NORTH
Address:
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▇▇▇ ▇. ▇▇▇▇▇▇▇
Address:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Address:
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CROWN NORTHCORP, INC.
By:
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Name:
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Title:
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EXHIBIT A
NAME OF HOLDER NUMBER OF SHARES OF PREFERRED STOCK
▇▇▇▇▇▇ AND ▇▇▇▇▇ HOLDING, INC. 207.72
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 112.61
▇▇▇▇▇ ▇. ▇▇▇▇ 17.35
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 17.35
▇▇▇▇▇▇▇ ▇. NORTH 17.35
▇▇▇ ▇. ▇▇▇▇▇▇▇ 68.77
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. 8.85
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