Registration Rights Agreement - Master Graphics Inc. and GECFS Inc.
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, (the "Agreement"), dated as of March 30,
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1998 between MASTER GRAPHICS, INC., a Tennessee corporation (the "Company"), and
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GECFS, INC., a Nevada corporation ("GECFS"). All capitalized terms used herein
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and not otherwise defined have the meaning specified in Section 7 hereof.
1. Background. The Company is a party to a certain Exchange
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Agreement, which governs certain rights and obligations of the Company and
GECFS. The Company and GECFS desire to provide for registration rights relating
to securities acquired pursuant to the Exchange Agreement.
2. Registration Rights.
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2.1. Incidental (Piggyback) Registration. If at any time, the
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Company proposes to register any of its securities under the Securities Act of
1933, as amended (the "Securities Act"), for public offering and sale (other
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than registrations with regard to acquisitions of employee stock options,
employee purchase plans or other employee benefit plans on Form S-8 under the
Securities Act or any successor form or registration on Form S-4), the Company
shall give written notice to GECFS of its intention to effect such a
registration at least sixty days prior to the filing with the Securities and
Exchange Commission (the "SEC") of such registration statement. Upon written
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request of GECFS the Company shall use its best efforts to cause the number of
GECFS's Registrable Securities then held by GECFS and referred to in such
request to be included in such registration statement; provided, however, that
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in the event that the offering pursuant to such registration statement shall be
underwritten and the underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in such registration
pursuant to this Section 2.1 exceeds the number of securities that can be sold
in the offering without adversely affecting the offering price or the marketing
of the Company's securities, the Company may first include in such registration
all securities the Company proposes to sell, and GECFS shall accept a reduction
(pro rata with any other holders of the Company's equity securities entitled to
register such securities on such registration statement whose registration
rights are not subordinate to GECFS), on the basis of the proportion that the
market value (based upon the proposed offering price of such securities or the
mid-point of the range of the proposed offering prices if any of such
securities) (the "Market Value") of each security holder's aggregate securities
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requested to be registered bears to the Market Value of the aggregate amount of
all equity securities (other than those to be sold for the Company's account) as
to which registration is sought) in the number of securities to be included in
such registration, which reduction may, if necessary, be total. The Company
shall keep such registration statement current for a period of nine months from
effective date of such registration statement or until such earlier date as all
of GECFS's registered Registrable Securities have been sold. In connection with
such registration, the holders will execute
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and deliver such customary underwriting documents as are requested by the
managing underwriter as a condition to the inclusion of GECFS's Registrable
Securities in the registration statement.
2.2. Demand Registration. (a) Except as provided in Section
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2.2(b) below, after the completion by the Company of an initial public offering
under the Securities Act of any of its securities pursuant to a registration
statement filed with the SEC, upon the written request of GECFS that the Company
effect pursuant to this Agreement the registration of Registrable Securities
under the Securities Act (which request shall specify the Registrable Securities
so requested to be registered, the Proposed Amounts thereof and the intended
method of disposition by GECFS), the Company will, as expeditiously as
reasonably possible, but not later than ninety days after the date of receipt of
such request, use its best efforts to effect the registration under the
Securities Act of the Proposed Amount of Registrable Securities, for disposition
in accordance with the intended method of disposition stated in such request.
The Company has the right to defer the filing of any such registration statement
or any amendment to such registration statement (a) in order to enable the
Company to prepare necessary financial statements for inclusion in such
registration statement, including any financial statements of any corporation or
other entity which has been or is expected to be acquired, (b) in order that the
Company not be required to disclose material nonpublic information, provided
that delays of the type referred to in this clause (b) do not exceed ninety days
in the aggregate, or (c) in order that a filing not be made earlier than two
hundred seventy days after the effective date of any other registration
statement filed by the Company. If the Company is able to register GECFS's
Registrable Securities on a Form S-3, or subsequent similar form, in a manner
which does not require inclusion in any information concerning the Company other
than to incorporate by reference its filing under the Exchange Act, the period
referred to in clause (c) is one hundred thirty-five days. The Company shall
keep any registration statement filed pursuant to this Section 2.2 current and
effective until the earlier of (i) nine months from the effective date of the
registration statement or (ii) such date as GECFS shall have sold all the
registered shares or shall have advised the Company that it no longer desires to
sell such shares pursuant to such registration statement. GECFS is entitled to
two demand registration rights pursuant to this Section 2.2. The Company shall
be entitled to include in any registration statement filed pursuant to this
Section 2.2: (A) securities of the Company held by any other security holder of
the Company, and (B) in an underwritten public offering, securities of the
Company to be sold by the Company for its own account, except as and to the
extent that (X) in the opinion of the managing underwriter (if such method of
disposition shall be an underwritten public offering), such inclusion would
adversely affect the marketing of the Registrable Securities to be sold by GECFS
and General Electric Capital Corporation or its affiliates or (Y) in GECFS's
reasonable opinion (if such method of disposition is not an underwritten public
offering), such inclusion would adversely affect the price at which the
Registrable Securities may be sold pursuant
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to the plan of distribution; provided, however, that if, after such registration
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statement has been filed, the managing underwriter believes that the inclusion
of all securities requested to be included in the proposed underwritten public
offering would adversely affect the marketing of the Registrable Securities or,
in the case of a distribution that is not an underwritten public offering, GECFS
reasonably believes that the inclusion of all securities requested to be
included in such registration statement would adversely affect the price at
which the Registrable Securities may be sold pursuant to the plan of
distribution, then the aggregate amount of securities to be offered by the
Company and such other security holders of the Company shall be reduced so as to
permit the offering of all Registrable Securities requested by GECFS without
such adverse effects.
(b) The Company shall not be obligated to take any action to effect
any registration requested by GECFS pursuant to Section 2.2(a) hereof after the
Company has effected two (2) such registrations pursuant to Section 2.2(a) and
each such registration has been declared or ordered effective.
(c) Notwithstanding any other provision of this Agreement to the
contrary, a registration requested pursuant to this Section 2.2 shall not be
deemed to have been effected (i) unless it has become effective, provided that a
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registration that does not become effective after the Company has filed a
registration statement with respect thereto solely by reason of the refusal of
GECFS to proceed shall be deemed to have been effected by the Company at the
request of GECFS unless GECFS shall have elected to pay all Company Registration
Expenses in connection with such registration, (ii) if after it has become
effective such registration is interfered with by any stop order, injunction or
other order or requirement of the SEC or other governmental agency or court for
any reason other than a misrepresentation or an omission by GECFS, or (iii) if
the conditions to closing specified in the purchase agreement or underwriting
agreement entered into in connection with such registration are not satisfied
other than by reason of some wrongful act or omission, or act or omission in bad
faith, by GECFS.
2.3. Registration Procedures. Subject to the limitations set forth
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elsewhere herein, if and whenever the Company is required by the provisions of
this Agreement to use its best efforts to effect or cause the registration of
any Registrable Securities under the Securities Act as provided in this
Agreement, the Company will, as expeditiously as possible:
(a) in the case of a registration under Section 2.2 hereof, prepare
and file with the SEC (such filing to be made within ninety days after the
initial request by GECFS) a registration statement with respect to such
Registrable Securities on a form appropriate to permit GECFS to sell
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the Proposed Amount in accordance with GECFS's intended method of distribution
and use its best efforts to cause such registration statement to become and
remain effective;
(b) prepare and file with the SEC 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 for such period
as shall be requested by GECFS, which period shall not exceed nine (9) months
and to comply with the provisions of the Securities Act with respect to the sale
or other disposition of all securities covered by such registration statement
during such period;
(c) furnish to counsel for GECFS and each underwriter of the
securities being sold by GECFS, at least 5 days prior to the filing thereof,
such number of copies of such registration statement and of each such amendment
and supplement thereto (in each case including all exhibits), such number of
copies of the prospectus included in such registration statement (including each
preliminary prospectus), in conformity with the requirements of the Securities
Act, and such other documents, as such counsel may reasonably request, in
substantially the form in which they are proposed to be filed with the SEC, in
order to facilitate the public sale or other disposition of the Registrable
Securities owned by GECFS;
(d) use its best efforts to register or qualify such Registrable
Securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as GECFS or any underwriter of the
securities being sold by GECFS shall reasonably request, and do any and all
other acts and things which may be necessary or advisable to enable GECFS and
such underwriter to consummate the disposition in such jurisdictions of such
Registrable Securities owned by GECFS, except that the Company shall not for any
purpose be required to qualify generally to do business as a foreign corporation
in any jurisdiction where, but for the requirements of this clause (d), it would
not be obligated to be so qualified, or subject itself to taxation in any such
jurisdiction;
(e) use its best efforts to cause such Registrable Securities covered
by such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable GECFS to
consummate the disposition of such Registrable Securities;
(f) notify GECFS, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the Company's becoming
aware that the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or
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omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing, and promptly prepare and furnish to GECFS and each underwriter a
reasonable amount of copies of a prospectus supplement or amendment so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not include an untrue statement of a material fact or omit 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;
(g) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to GECFS, as soon as
reasonably practicable, an earnings statement covering the period of at least
twelve months, beginning with the first day of the Company's first calendar
quarter after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act;
(h) enter into such agreements (including an underwriting agreement
in customary form) and take such other actions as GECFS shall reasonably request
in order to expedite or facilitate the disposition of such Registrable
Securities;
(i) to use its best efforts to furnish to GECFS an opinion from the
Company's counsel and a "cold comfort" letter from the Company's independent
public accountant (in accordance with SAS 72), addressed to GECFS, in customary
form and covering such matters of the type customarily covered by such opinions
and "cold comfort" letters as GECFS shall reasonably request;
(j) make available for inspection by GECFS, by any other underwriter
participating in any disposition to be effected pursuant to such registration
statement, and by any attorney, accountant or other agent retained by GECFS or
any such underwriter, all reasonably pertinent financial and other records,
reasonably pertinent corporate documents and properties of the Company, and
cause all of the Company's officers, directors, employees and the independent
public accountants who have audited its financial statements to supply all
information reasonably requested by GECFS or any such underwriter, attorney,
accountant or agent in connection with such registration statement; provided,
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however, that GECFS and each such representative of GECFS, underwriter,
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attorney, accountant or agent must execute and deliver to the Company a
confidentiality agreement in form and substance reasonably acceptable to the
Company agreeing to keep any such information and records concerning the Company
confidential;
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(k) permit GECFS to participate in the preparation of such
registration or comparable statement;
(l) at or prior to the effective date of the registration use
commercially reasonable efforts to (i) secure a CUSIP number for all Registrable
Securities, and (ii) cause the Registrable Securities to be listed or included
for reporting on the NASDAQ Stock Market, or cause the Registrable Securities to
be listed on each other national securities exchange, if any, on which any other
class of the Company's securities are then listed; and
(m) in the case of an underwritten offering, enable the Registrable
Securities to be in such denominations or such number of shares and registered
in such names as the underwriters may request at least two business days prior
to the sale of the Registrable Securities.
In the case of an underwritten offering, the underwriters shall be
selected by the Company and reasonably acceptable to GECFS.
GECFS shall, upon receipt of any notice from the Company of the
happening of any event of the kind described in subdivision (f) above, forthwith
discontinue its disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until GECFS's
receipt of the copies of the supplemented or amended prospectus contemplated by
said subdivision and, if so directed by the Company, will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies,
then in GECFS's possession of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the period mentioned in subdivision (b)
above shall be extended by the number of days during the period from and
including the date of the giving of such notice to and including the date when
GECFS shall have received the copies of the supplemented or amended prospectus
contemplated by subdivision (f) above.
GECFS shall enter into such customary agreements as requested by the
Company in connection with the registration of securities as contemplated by
this Agreement.
GECFS shall furnish to the Company in writing such information and
documents regarding GECFS and the distribution of such securities as may be
required to be disclosed in the registration statement in question by the rules
and regulations under the Securities Act or under any other applicable
securities or blue sky laws of the jurisdictions referred to in Section 2.3(d)
hereof.
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If any such registration or comparable statement refers to GECFS by
name or otherwise as the holder of any securities of the Company then GECFS
shall have the right to require (i) the insertion therein of language, in form
and substance satisfactory to GECFS and presented to the Company in writing, to
the effect that the holding by GECFS of such securities is not to be construed
as a recommendation by GECFS of the investment quality of the Company's
securities covered thereby and that such holding does not imply that GECFS will
assist in meeting any future financial requirements of the Company, or (ii) in
the event that such reference to GECFS by name or otherwise is not required by
the Securities Act or any similar federal statute then in force, the deletion of
the reference to GECFS.
3. Registration Expenses. In connection with any registration of
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Registrable Securities pursuant to this Agreement the Company will, whether or
not any registration pursuant to this Agreement shall become effective, from
time to time promptly upon receipt of bills or invoices relating thereto, pay
all expenses (other than Selling Expenses) incident to its performance of or
compliance with this Agreement (the "Company Registration Expenses"), including
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without limitation all registration, filing and NASD fees, fees and expenses of
compliance with securities or blue sky laws, word processing, duplicating and
printing expenses, messenger and delivery expenses, and fees and disbursements
of counsel for the Company and all independent public accountants (including the
expenses of any audit and/or "cold comfort" letter) and other Persons retained
by the Company; provided, however, that in all events, GECFS shall be
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responsible for the fees and expenses of its counsel and its accountants. GECFS
shall also be responsible for all Selling Expenses.
4. Indemnification. (a) The Company will, and hereby does,
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indemnify, to the extent permitted by law, GECFS, its officers and directors, if
any, and each Person, if any, who controls GECFS within the meaning of Section
15 of the Securities Act, against all losses, claims, damages, liabilities (or
proceedings in respect thereof) and expenses under the Securities Act, joint or
several, caused by any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or prospectus (and as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities (or proceedings in respect thereof) or
expenses are caused by any untrue statement or alleged untrue statement made in
reliance on or in conformity with any information furnished in writing to the
Company by GECFS or any participating underwriter expressly for use therein. If
the offering pursuant to any registration statement provided for under this
Agreement is made through underwriters, the Company agrees to enter into an
underwriting agreement in
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customary form with such underwriters and to indemnify such underwriters, their
officers and directors, if any, and each Person, if any, who controls such
underwriters within the meaning of Section 15 of the Securities Act to the same
extent as hereinbefore provided with respect to the indemnification of GECFS,
its officers and directors, if any, and each Person, if any, who controls GECFS
within the meaning of Section 15 of the Securities Act.
(b) If for any reason the indemnity under Section 4(a) is
unavailable, then the Company shall contribute to the amount paid or payable by
the indemnified party as a result of such losses, claims, damages, liabilities
or expenses (i) in such proportion as is appropriate to reflect the relative
fault of the Company on the one hand and of the indemnified party on the other
or (ii) if the allocation provided by subdivision (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative fault of by the Company on the one hand and the indemnified party on
the other but also the relative benefits received by the Company and the
indemnified party as well as any other relevant equitable considerations. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
(c) The Company shall make payments of all amounts required to be
made pursuant to the foregoing provisions of this Section 4 to or for the
account of the indemnified party from time to time promptly upon receipt of
bills or invoices relating thereto or when otherwise due and payable.
5. Limitations on Sale or Distribution of Securities. If a
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registration under this Agreement shall be in connection with an underwritten
public offering of securities for the Company's or any other security holder's
account (other than GECFS), GECFS shall be deemed to have agreed by acquisition
of such Registrable Securities not to effect any public sale or distribution,
including any sale pursuant to Rule 144 under the Securities Act, of any
Registrable Securities, during such period prior and subsequent to the
commencement of the offering of securities pursuant to such registration
statement as may be reasonably requested by the underwriters thereof, and in all
cases to otherwise comply with all applicable rules under the Securities Act and
the Exchange Act, including, without limitation, Rules 10b-6 and 10b-7
thereunder.
6. Registration Rights to Others. If the Company shall at any time
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hereafter provide to any holder of any securities of the Company rights with
respect to the registration of such securities under the Securities Act, such
rights shall be subordinate to and shall not be in conflict with or adversely
affect any of the rights provided in this Agreement to GECFS.
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7. Definitions. The following terms have the following respective
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meanings for the purpose of this Agreement:
"Affiliate" shall have the meaning ascribed to such term in the
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Exchange Agreement.
"Common Stock" means the Company's common stock, par value $0.01 per
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share.
"Exchange Act" means the Securities Exchange Act of 1934 or any
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similar federal statute as at the time in effect, and any reference to a
particular Section of such Act shall include a reference to the comparable
Section, if any, of any such similar federal statute.
"Exchange Agreement" means the Exchange Agreement, dated as of March
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30, 1998, between the Company and GECFS.
"Person" shall have the meaning ascribed to such term in the Exchange
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Agreement.
"Proposed Amount" means, with respect to the Registrable Securities,
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the aggregate amount of Shares thereof that GECFS shall request the Company to
register pursuant to Section 2.
"Registrable Securities" means (i) the shares of Common Stock of the
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Company underlying or issued pursuant to the conversion of the Series A
Preferred Stock, including any additional securities of the Company issued in
respect of such securities by way of a stock split, dividend or other
recapitalization or exchange of securities with or by the Company and (ii) any
shares held by General Electric Capital Corporation or its affiliates issuable
upon exercise of any stock purchase warrant between the Company and General
Electric Capital Corporation. Once issued, such securities shall cease to be
Registrable Securities when (i) a 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 in accordance with such registration
statement, (ii) they shall have been distributed to the public pursuant to Rule
144 (or any successor provision) under the Securities Act, (iii) they shall have
been otherwise transferred and new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company, or (iv)
they shall have ceased to be outstanding.
"Securities Act" means the Securities Act of 1933 or any similar
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Federal statute as at the time in effect, and any reference to a particular
Section of such Act shall include a reference to the comparable Section, if any,
of any such similar Federal statute.
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"Selling Expenses" means all underwriting discounts, selling
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commissions, stock transfer taxes, and fees and disbursements of counsel for,
and any other Person retained by, GECFS, applicable to the securities registered
by GECFS.
"Series A Preferred Stock" means the Series A Cumulative Convertible
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Redeemable Preferred Stock of the Company, issued by the Company to GECFS
pursuant to the Exchange Agreement.
8. Amendments and Waivers. This Agreement may be amended, and any
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provision of this Agreement may be waived, by a writing signed by both GECFS and
the Company. GECFS shall be bound by any consent given pursuant to this Section
8, whether or not any affected Registrable Securities shall have been marked to
indicate such consent.
9. Notices. All notices, demands and other communications given or
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delivered under this Agreement will be in writing and shall be made by hand
delivery, overnight courier, first-class mail, or telecopier and will be deemed
to have been given when personally delivered, four business days after being
mailed by first class mail, return receipt requested, or delivered by express
courier service or telecopied (subject to receipt of written confirmation).
Notices, demands and communications to the Company and the Purchaser will,
unless another address is specified in writing, be sent to the addresses set
forth in the Exchange Agreement.
10. Specific Performance. The parties hereto recognize and agree
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that money damages may be insufficient to compensate GECFS for breaches by the
Company of the terms hereof and, consequently, that the equitable remedy of
specific performance of the terms hereof will be available in the event of any
such breach.
11. Severability. In the event that any one or more of the
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provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
12. Miscellaneous. This Agreement shall be binding upon and inure to
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the benefit of and be enforceable by the respective successors and assigns of
the parties hereto, whether so expressed or not. GECFS may freely assign all or
a portion of its rights under this agreement. This Agreement embodies the entire
agreement and understanding between the Company and
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GECFS and supersedes all prior agreements and understandings relating to the
subject matter hereof. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF TENNESSEE. The headings
in this Agreement are for purposes of reference only and shall not limit or
otherwise affect the meaning hereof. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
MASTER GRAPHICS, INC.
By: /s/ Lance T. Fair
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Name: Lance T. Fair
Title: Chief Financial Officer
GECFS, INC.
By: /s/ Kim A. Tanner
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Kim Tanner
Operations Manager
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