EXHIBIT 4.5
REGISTRATION RIGHTS AGREEMENT
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REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of July 13,
1998 by and among Paragon Health Network, Inc., a Delaware corporation (the
"Company") and Xxxxxxx X. Xxxxx and Xxxxxxx X. Xxxxxxxxxx (collectively, the
"Holders" and individually, a "Holder").
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. The following terms shall have the meanings
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ascribed to them below:
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Commission" means the Securities and Exchange Commission.
"Demand Registration" means a registration of Registrable Securities
under the Securities Act pursuant to a request made under Section 2.1.
"Demanding Holder" means any Holder who has initiated a registration
request in compliance with Section 2.1(a).
"Effective Date" means the date of the closing under the Merger
Agreement, dated as of June 4, 1998, among the Company, SMH Acquisition, Inc.,
the Holders and Summit Medical Holdings, Ltd.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Person" means any individual or a corporation, partnership, joint
venture, association, trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a
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prospectus filed as part of an effective registration statement in reliance on
Rule 430A under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Securities covered by such Registration Statement and all
other amendments and supplements to the Prospectus, including post-effective
amendments, and all materials incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
"Registrable Security" means each Share held by a Holder received in
consideration of the Merger until (i) it has been effectively registered under
the Securities Act and disposed of pursuant to an effective registration
statement, (ii) it is sold under circumstances in which all of the applicable
conditions of Rule 144 (or any similar provisions then in force) under the
Securities Act are met, including a sale pursuant to the provisions of Rule
144(k) or (iii) it has been otherwise transferred in accordance with the terms
of this Agreement and it may be resold by the Person receiving such Shares
without registration under the Securities Act.
"Registration Statement" means any registration statement of the
Company that covers any of the Registrable Securities pursuant to the provisions
of this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Selling Holder" means a Holder who sells or proposes to sell Shares
pursuant to a registration statement under the Securities Act.
"Shares" means the shares of common stock, par value $.01 per share of
the Company.
"Underwriter" means a securities dealer who purchases any Registrable
Securities as principal in an underwritten offering and not as part of such
dealer's market-making activities.
ARTICLE II
REGISTRATION RIGHTS
Section 2.1 Demand Registration.
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(a) Request for Registration. During the period commencing on the
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Closing Date and ending on the later of (a) 24 months thereafter or (b) such
longer period as a Holder(s) remains an Affiliate(s) of the Company or would be
deemed an underwriter(s) (under Section 2(11) of the Securities Act) with
respect to the Registrable Securities (the "Demand Period"),
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each Holder may make one written request for a Demand Registration of not less
than (i) 25% of the Registrable Securities held by the Holders collectively or
(ii) all of the Registrable Securities then held by the Holder making such
request; provided that the Company shall not be obligated to effect a second
Demand Registration until 90 days following the effectiveness of an earlier
requested Demand Registration. Each such request will specify the number of
Registrable Securities proposed to be sold and will also specify the intended
method of disposition thereof. The Holder making a demand may, with the written
consent of the other Holder, include in his written request to the Company that
shares of such other Holder be included as part of the Demand Registration and
such other Holder shall not be deemed to have exercised his right to make one
written request for Demand Registration but shall otherwise be deemed a
"Demanding Holder."
If a Holder requests that such Demand Registration be a "shelf"
registration pursuant to Rule 415 under the Securities Act, the Company shall
file such Demand Registration under Rule 415 and shall keep the Registration
Statement filed in respect thereof effective for a period which shall terminate
on the earlier of (i) six months from the date on which the Commission declares
such Registration Statement effective, (ii) the date on which all Registrable
Securities covered by such Registration Statement have been sold pursuant to
such Registration Statement or (iii) the expiration of the Demand Period.
(b) Effective Registration. A registration will not be deemed to have
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been effected as a Demand Registration unless it has been declared effective by
the Commission and the Company has complied in all material respects with its
obligations under this Agreement with respect thereto; provided that if after
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such Demand Registration has become effective, the offering of Registrable
Securities pursuant to such registration is or becomes the subject of any stop
order, injunction or other order or requirement of the Commission or any other
governmental or administrative agency, or if any court prevents or otherwise
limits the sale of Registrable Securities pursuant to the registration (for any
reason other than the acts or omissions of the Holders), such registration will
be deemed not to have been effected. If (i) a registration requested pursuant
to this Section 2.1 is deemed not to have been effected or (ii) the registration
requested pursuant to this Section 2.1 does not remain effective for a period of
at least 120 days, or six months with respect to a "shelf" registration, beyond
the effective date thereof, then such registration statement shall not count as
the Demand Registration(s) that may be requested by the Holder(s).
The Demanding Holder(s) may withdraw all or any part of the
Registrable Securities from a Demand Registration at any time (whether before or
after the filing or effective date of such Demand Registration), and if all such
Registrable Securities are withdrawn, to withdraw the demand related thereto.
If at any time a Registration Statement is filed pursuant to a Demand
Registration, and subsequently a sufficient number of Registrable Securities are
withdrawn from the Demand Registration so that such Registration Statement does
not cover at least the required amounts specified by Section 2.1(a), and an
additional number of Registrable Securities is not so included, the Company may
(or shall, if requested by the Demanding
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Holder(s)) withdraw the Registration Statement, provided that if the Demanding
Holder(s) bear the expenses associated with such withdrawn Registration
Statement, such Registration Statement will not count as a Demand
Registration(s) and the Company shall continue to be obligated to effect a
registration(s) pursuant to this Section 2.1. If the Demanding Holder(s)
determine to bear such expenses, such expenses shall be borne by the Demanding
Holder whose withdrawal of Registrable Securities resulted in such Registration
Statement not covering the specified required amounts.
(c) Selection of Underwriter. During the period commencing on the
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Closing Date and ending 24 months thereafter, if a Holder so elects, the
offering of Registrable Securities pursuant to a Demand Registration shall be in
the form of an underwritten offering. The Company shall select one or more
nationally recognized investment banking firms to act as the book-running
managing Underwriter or Underwriters in connection with such offering and shall
select any additional investment bankers and managers to be used in connection
with the offering, subject to the approval of the Demanding Holder.
Section 2.2 Piggy-Back Registration. If at any time the Company
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proposes to file a Registration Statement under the Securities Act with respect
to an offering of equity securities by the Company for its own account or for
the account of any security holders of any class of its equity securities (other
than (i) a registration statement on Form S-4 or S-8 (or any substitute form
that may be adopted by the Commission) or (ii) a registration statement filed in
connection with an exchange offer or offering of securities solely to the
Company's existing securityholders), including a Registration Statement
relating to a Demand Registration, then the Company shall give written notice of
such proposed filing to the Holder(s) as soon as practicable (but in no event
less than 20 days before the anticipated filing date), and such notice shall
offer the Holder(s) the opportunity to register such number of shares of
Registrable Securities as the Holder(s) may request (which request shall specify
the Registrable Securities intended to be disposed of by such Holder and the
intended method of distribution thereof) (a "Piggy-Back Registration").
The Company shall use its best efforts to cause the managing
Underwriter or Underwriters of a proposed underwritten offering to permit the
Registrable Securities requested by the Holder(s) thereof to be included in a
Piggy-Back Registration (the "Piggy-Back Holders") to be included on the same
terms and conditions as any similar securities of the Company or any other
securityholder included therein and to permit the sale or other disposition of
such Registrable Securities in accordance with the intended method of
distribution thereof. Any Holder shall have the right to withdraw its request
for inclusion of its Registrable Securities in any registration statement
pursuant to this Section 2.2 by giving written notice to the Company of its
request to withdraw. Subject to the provisions of Section 2.1, the Company may
withdraw a Registration Statement for its own account at any time prior to the
time it becomes effective, provided that the Company shall reimburse the Piggy
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Back Holders for all reasonable out-of-pocket expenses (including counsel fees
and expenses) incurred prior to such withdrawal.
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No registration effected under this Section 2.2, and no failure to
effect a registration under this Section 2.2, shall relieve the Company of its
obligations pursuant to Section 2.1, and no failure to effect a registration
under this Section 2.2 and to complete the sale of Shares in connection
therewith shall relieve the Company of any other obligation under this Agreement
(including, without limitation, the Company's obligations under Sections 3.2 and
5.1).
Section 2.3 Reduction of Offering.
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(a) Demand Registration. The Company may include in a Demand
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Registration Shares for the account of the Company and Shares for the account of
other holders thereof exercising contractual piggyback rights, on the same terms
and conditions as the Registrable Securities to be included therein for the
account of the Demanding Holder(s); provided, however, that (i) if the managing
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Underwriter or Underwriters of any underwritten offering described in Section
2.1 have informed the Company in writing that it is their opinion that the total
number of Shares which the Demanding Holder(s), the Company, and any such other
holders intend to include in such offering is such as to materially and
adversely affect the success of such offering, then (x) the number of Shares to
be offered for the account of such other holders shall be reduced (to zero, if
necessary), in the case of this clause (x) pro rata in proportion to the
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respective number of Shares requested to be registered and (y) thereafter, if
necessary, the number of Shares to be offered for the account of the Company (if
any) shall be reduced (to zero, if necessary), to the extent necessary to reduce
the total number of Shares requested to be included in such offering to the
number of Shares, if any, recommended by such managing Underwriters (and if the
number of Shares to be offered for the account of each such Person has been
reduced to zero, and the number of Shares requested to be registered by the
Demanding Holder(s) exceeds the number of Shares recommended by such managing
Underwriters, then the number of Shares to be offered for the account of the
Demanding Holder(s) shall be reduced to the extent necessary to reduce the total
number of Shares requested to be included in such offering to the number of
Shares, if any, recommended by such managing Underwriters, and in the case of a
reduction where both Demand Registrations have been exercised, such reduction
shall be pro rata in proportion to the respective number of Shares requested to
be registered by the Demanding Holders), and (ii) if the offering is not
underwritten, no other party (other than Piggy-Back Holders and any other
holders exercising contractual piggyback rights), including the Company, shall
be permitted to offer securities under any such Demand Registration unless a
majority of the Shares held by the Demanding Holder(s) consent to the inclusion
of such shares therein.
(b) Piggy-Back Registration.
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(i) Notwithstanding anything contained herein, if the managing
Underwriter or Underwriters of any underwritten offering described in Section
2.2 have informed, in writing, the Piggy-Back Holders that it is their opinion
that the total number of Shares that the Company and any other Persons desiring
to participate in such registration intend
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to include in such offering is such as to materially and adversely affect the
success of such offering, then the number of Shares to be offered for the
account of the Piggy-Back Holders and all such other Persons (other than the
Company) participating in such registration shall be reduced (to zero, if
necessary) or limited pro rata in proportion to the respective number of Shares
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requested to be registered to the extent necessary to reduce the total number of
Shares requested to be included in such offering to the number of Shares, if
any, recommended by such managing Underwriters; provided, however, that (A) if
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such offering is effected for the account of an Apollo Holder (as defined in the
Registration Rights Agreement dated November 4, 1997 between Paragon and the
signatories thereto (the "Apollo Registration Rights Agreement")) or transferee
of an Apollo Holder, then (x) the number of Shares to be offered for the account
of all holders other than parties to the Apollo Registration Rights Agreement
shall be reduced (to zero, if necessary), in the case of this clause (x) pro
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rata in proportion to the respective number of Shares requested to be
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registered, (y) thereafter, if necessary, the number of Shares to be offered for
the account of the Company (if any) shall be reduced (to zero, if necessary), to
the extent necessary to reduce the total number of Shares requested to be
included in such offering to the number of Shares, if any, recommended by such
managing Underwriters and (z) thereafter, if necessary, the shares to be offered
for the accounts of the parties to the Apollo Registration Rights Agreement
shall be cut back as provided in such agreement; (B) if such offering is
effected for the account of any other security holder of the Company, pursuant
to the demand registration rights of such securityholder, then (x) the number of
Shares to be offered for the account of a Holder and any other holders that have
requested to include Shares in such registration (but not such securityholders
who have exercised their demand registration rights) shall be reduced (to zero,
if necessary), in the case of this clause (x) pro rata in proportion to the
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respective number of Shares requested to be registered and (y) thereafter, if
necessary, the number of Shares to be offered for the account of the Company (if
any) shall be reduced (to zero, if necessary), to the extent necessary to reduce
the total number of Shares requested to be included in such offering to the
number of Shares, if any, recommended by such managing Underwriters.
(ii) If the managing Underwriter or Underwriters of any underwritten
offering described in Section 2.2 notify the Piggy-Back Holders or other Persons
requesting inclusion in such offering that the kind of securities that the
Piggy-Back Holders, the Company or any other Persons desiring to participate in
such registration intend to include in such offering is such as to materially
and adversely affect the success of such offering, then the Shares to be
included in such offering by the Piggy-Back Holders shall be reduced as
described in clause (i) above or if such reduction would, in the judgment of the
managing Underwriter or Underwriters, be insufficient to substantially eliminate
the adverse effect that inclusion of the Shares requested to be included would
have on such offering, such Shares will be excluded from such offering.
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ARTICLE III
REGISTRATION PROCEDURES
Section 3.1 Filings; Information. Whenever the Company is required
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to effect or cause the registration of Registrable Securities pursuant to
Section 2.1, the Company will use its best efforts to effect the registration
and the sale of such Registrable Securities in accordance with the intended
method of disposition thereof as quickly as practicable, and in connection with
any such request:
(a) The Company will as expeditiously as possible prepare and file
with the Commission a Registration Statement on any form for which the Company
then qualifies or which counsel for the Company shall deem appropriate and which
form shall be available for the sale of the Registrable Securities to be
registered thereunder in accordance with the intended method of distribution
thereof, and use its best efforts to cause such filed Registration Statement to
become and remain effective for a period of not less than 120 days, or six
months with respect to a "shelf" registration (or such shorter period as is
required to complete the distribution of the shares); provided that the Company
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may postpone the filing of a Registration Statement for a period of not more
than 90 days from the date of receipt of the request in accordance with Section
2.1 if the Company reasonably determines that such a filing would adversely
affect any proposed financing or acquisition by the Company and furnishes to the
Demanding Holder a certificate signed by an executive officer of the Company to
such effect; provided that the Company shall only be entitled to postpone any
such filing one time in any twelve-month period. If the Company postpones the
filing of a Registration Statement, it shall promptly notify the Demanding
Holder in writing when the events or circumstances permitting such postponement
have ended.
(b) The Company will as expeditiously as possible 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 continuously effective (subject to the second
to last paragraph of this Section 3.1) for a period of not less than 120 days,
or six months with respect to a "shelf" registration, or such shorter period
which will terminate when all securities covered by such Registration Statement
have been sold (but not before the expiration of the 90-day period referred to
in Section 4(3) of the Securities Act and Rule 174 thereunder, if applicable)
and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement during such
period in accordance with the intended methods of disposition by each Selling
Holder thereof set forth in such Registration Statement.
(c) The Company will, prior to filing a Registration Statement or
Prospectus or any amendment or supplement thereto (including documents that
would be incorporated or deemed to be incorporated therein by reference),
furnish to each Selling Holder, counsel representing such Selling Holder, and
each Underwriter, if any, of the Registrable
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Securities covered by such Registration Statement copies of such Registration
Statement as proposed to be filed, together with exhibits thereto, which
documents will be subject to review and comment by the foregoing within five
days after delivery, and thereafter furnish to such Selling Holder, counsel and
Underwriter, if any, for their review and comment such number of copies of such
Registration Statement, each amendment and supplement thereto (in each case
including all exhibits thereto and documents incorporated by reference therein),
the Prospectus included in such Registration Statement and such other documents
or information as such Selling Holder, counsel or Underwriter may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Selling Holder.
(d) After the filing of the Registration Statement, the Company will
promptly notify each Selling Holder, (i) when a Prospectus or any supplement
thereto or post-effective amendment has been filed and, with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective, (ii) of any request by the Commission or any other federal or state
governmental authority for amendments or supplements to a Registration Statement
or related Prospectus or for additional information, (iii) of the issuance by
the Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of a Registration Statement or the initiation
of any proceedings for that purpose, (iv) if at any time when a Prospectus is
required by the Securities Act to be delivered in connection with sales of the
Registrable Securities, the representations and warranties of the Company
contained in any agreement contemplated by Section 3.1(h) (including any
underwriting agreement) cease to be true and correct in all material respects,
(v) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (vi) of the happening of any
event which makes any statement made in such Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or which requires the making of any
changes in a Registration Statement, Prospectus or documents incorporated
therein by reference so that, in the case of the Registration Statement, it will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the Prospectus, it will not
contain any untrue statement of a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (vii) of the Company's reasonable
determination that a post-effective amendment to a Registration Statement would
be necessary.
(e) The Company will use its best efforts to (i) register or qualify
the Registrable Securities under such other securities or blue sky laws of such
jurisdictions in the United States as the Selling Holders reasonably (in light
of the Selling Holder's intended plan of distribution) request, and (ii) cause
such Registrable Securities to be registered with or approved by such other
governmental agencies or authorities in the United States as may be necessary by
virtue of the business and operations of the Company and do any and all other
acts and things
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that may be reasonably necessary or advisable to enable the Selling Holders to
consummate the disposition of the Registrable Securities owned by such Selling
Holders; provided that the Company will not be required to (A) qualify generally
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to do business in any jurisdiction where it would not otherwise be required to
qualify but for this paragraph (e), (B) subject itself to taxation in any such
jurisdiction or (C) consent to general service of process in any such
jurisdiction.
(f) The Company will take all reasonable actions required to prevent
the entry, or obtain the withdrawal, of any order suspending the effectiveness
of a Registration Statement, or the lifting of any suspension of the
qualification (or exemption from qualification) of any Registrable Securities
for sale in any jurisdiction, at the earliest moment.
(g) Upon the occurrence of any event contemplated by paragraph
3.1(d)(vi) or 3.1(d)(vii) above, the Company will (i) prepare a supplement or
post-effective amendment to such Registration Statement or a supplement to the
related Prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Securities being sold thereunder, such Prospectus will not
contain 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, in
light of the circumstances under which they were made, not misleading, and (ii)
promptly make available to each Selling Holder any such supplement or amendment.
(h) The Company will enter into customary agreements (including, if
applicable, an underwriting agreement in customary form and which is reasonably
satisfactory to the Company) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of such Registrable
Securities (the Selling Holders may, at their option, require that any or all of
the representations, warranties and covenants of the Company to or for the
benefit of such Underwriters also be made to and for the benefit of such Selling
Holders).
(i) The Company will make available to each Selling Holder (and will
deliver to his counsel) and each Underwriter, if any, subject to restrictions
imposed by the United States federal government or any agency or instrumentality
thereof, copies of all correspondence between the Commission and the Company,
its counsel or auditors and will also make available for inspection by any
Selling Holder, any Underwriter participating in any disposition pursuant to
such Registration Statement and any attorney, accountant or other professional
retained by any such Selling Holder or Underwriter, all financial and other
records, pertinent corporate documents and properties of the Company
(collectively, the "Records") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Company's officers
and employees to supply all information reasonably requested by any inspectors
in connection with such Registration Statement. Each Selling Holder agrees that
information obtained by it solely as a result of such inspections (not including
any information obtained from a third party who, insofar as is known to the
Investor after reasonable inquiry, is not prohibited from providing such
information by a contractual, legal or fiduciary obligation to the Company)
shall be deemed confidential and shall not be used by it as the basis for any
market transactions in
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the securities of the Company or its Affiliates unless and until such
information is made generally available to the public. Each Selling Holder
further agrees that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the Company and
allow the Company, to the extent permitted by such court, at the Company's
expense, to undertake appropriate action to prevent disclosure of the Records
deemed confidential.
(j) The Company will furnish to each Selling Holder and to each
Underwriter, (i) an opinion or opinions of counsel to the Company, and (ii) a
comfort letter or comfort letters from the Company's independent public
accountants, each in customary form and covering such matters of the type
customarily covered by opinions or comfort letters, as the case may be, as the
Selling Holders or the managing Underwriter therefor reasonably requests.
(k) In connection with an underwritten offering, the Company will
participate, to the extent reasonably requested by the managing Underwriter for
the offering or the Selling Holders, in customary efforts to sell the securities
under the offering, including, without limitation, participating in "road
shows."
The Company may require each Selling Holder to promptly furnish in
writing to the Company such information regarding the distribution of the
Registrable Securities by the Selling Holder as the Company may from time to
time reasonably request and such other information as may be legally required in
connection with such registration including, without limitation, all such
information as may be requested by the Commission or the NASD. The Company may
exclude from such registration any Holder who fails, after twenty (20) days'
written notice of this requirement, to provide such information.
Each Selling Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Sections
3.1(d)(iii), (v), (vi) and (vii) hereof, such Selling Holder will forthwith
discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities until such Selling Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 3.1(g) hereof, and, if so directed by the Company, such Selling Holder
will deliver to the Company all copies, other than permanent file copies, then
in such Selling Holder's possession of the most recent Prospectus covering such
Registrable Securities at the time of receipt of such notice. In the event the
Company shall give such notice, the Company shall extend the period during which
such Registration Statement shall be maintained effective (including the period
referred to in Section 3.1(a) hereof) by the number of days during the period
from and including the date of the giving of notice pursuant to Section
3.1(d)(iii), (v), (vi) or (vii) hereof to the date when the Company shall make
available to the Selling Holders a Prospectus supplemented or amended to conform
with the requirements of Section 3.1(g) hereof.
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In connection with any registration of Registrable Securities pursuant
to Section 2.2, the Company will take the actions contemplated by paragraphs
(c), (d), (e), (i) and (j) above.
Section 3.2 Registration Expenses. In connection with the Demand
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Registrations pursuant to Section 2.1 hereof, and any Registration Statement
filed pursuant to Section 2.2 hereof, the Company shall pay the following
registration expenses incurred in connection with the registration hereunder
(the "Registration Expenses"): (i) all registration and filing fees, (ii) fees
and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), (iii) printing expenses, (iv) the
Company's internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties)
and all fees and expenses incident to the performance of or compliance with this
Agreement by the Company, (v) the fees and expenses incurred in connection with
the listing of the Registrable Securities, (vi) reasonable fees and
disbursements of counsel for the Company and customary fees and expenses for
independent certified public accountants retained by the Company (including the
expenses of any comfort letters or costs associated with the delivery by
independent certified public accountants of a comfort letter or comfort
letters), (vii) the reasonable fees and expenses of any special experts retained
by the Company in connection with such registration, and (viii) reasonable fees
and expenses of one firm of counsel for the Holder(s), (together with necessary
local counsel fees and expenses), which counsel shall be chosen by the
Holder(s). The Company shall have no obligation to pay any underwriting fees,
discounts or commissions attributable to the sale of Registrable Securities.
Section 3.3 Financial Statements. Anything in this Article III to the
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contrary notwithstanding, the Company shall not be obligated to effect any
registration pursuant to Section 2.1 if such registration would require the
Company (i) to furnish any financial statements other than as of the end of a
fiscal quarter or (ii) to furnish any certified financial statements other than
as of the end of a fiscal year unless the Demanding Holder agrees to bear the
expenses of furnishing such financial statements.
ARTICLE IV
TRANSFER
Section 4.1 Transfer of Registrable Securities and Legend.
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(a) Each Holder acknowledges that the Registrable Securities will not
be, except as otherwise provided herein, registered under the Securities Act,
and each Holder agrees, until such Registrable Securities are registered, not to
offer, sell, pledge or otherwise dispose of any Registrable Securities or any
interest therein, unless done pursuant to the terms contained in this Article
IV.
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(b) Each Holder acknowledges that each certificate representing
Registrable Securities shall bear the following legend:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE BLUE SKY LAWS OF ANY STATE AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO A REGISTRATION
STATEMENT UNDER SAID ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
THEREUNDER. TRANSFER OF THIS SECURITY IS ALSO SUBJECT TO RESTRICTIONS
CONTAINED IN THAT CERTAIN REGISTRATION RIGHTS AGREEMENT DATED AS OF
____________, 1998, AMONG THE ISSUER HEREOF AND A SHAREHOLDER OF THE
ISSUER."
In the event any of the Registrable Securities are registered under the
Securities Act, the legends set forth in this subsection (b) shall be removed
from the certificates representing such Registrable Securities, and the Company
shall promptly, after presentation by the Holder of any certificates held by it,
cause its transfer agent to issue new certificates without such legends;
provided, however, that if such Registrable Securities are not sold or otherwise
-------- -------
transferred by the Holder holding such certificates substantially in accordance
with the plan of distribution set forth in the registration statement and during
the time period that the registration statement with respect thereto is
effective under the Securities Act, the Holder shall surrender the certificates
without such legend to the Company and shall receive in exchange therefor
replacement certificates containing the legend set forth above. In addition, if
any Registrable Securities shall be saleable at any time without restriction
under the Securities Act, and the Company receives an opinion of the Holder's
counsel to such effect, with which the Company's counsel reasonably agrees, the
Company shall promptly, after presentation of certificates for such Registrable
Securities by the Holder, issue new certificates without the legend required by
this Section 4.1; provided, however, that no such opinion shall be required with
-------- -------
respect to Registrable Securities that are eligible for sale under paragraph (k)
of Rule 144 or any similar or successor rule.
Section 4.2 Transfer Procedure. Each of the Holders will not sell,
------------------
pledge, transfer or otherwise dispose of any Registrable Securities, other than
a transfer pursuant to Rule 144, until the same shall have been registered under
the Securities Act pursuant to Article II or the Company shall have received the
following: (i) written notice describing in reasonable detail the proposed sale,
pledge, transfer or other disposition, (ii) a legal opinion in form and
substance reasonably satisfactory to the Company, to the effect that the
proposed sale, pledge, transfer or other disposition may be legally effected
without registration under the Securities Act; and (iii) such supporting
documents and supplementary assurances, if any, as the Company reasonably and
promptly may request in order to assure compliance with the Securities Act.
Upon receipt by the Company of any such notice and opinion, and any information
reasonably requested in connection therewith, the Holder shall
-12-
thereupon be entitled to transfer such Registrable Securities in accordance with
the terms of the notice delivered by the Holder to the Company, subject to the
requirements of Section 4.3. Each certificate evidencing the Registrable
Securities issued upon the transfer of any such Registrable Securities (and each
certificate evidencing any untransferred balance of such Registrable Securities)
shall bear the legend set forth in Section 4.1(b) unless in the opinion of the
Company's counsel such legend is not necessary.
Section 4.3 Standstill Provisions. For a period of two (2) years
---------------------
from the date hereof, without the prior written consent of the Company, each
Holder, singly or as part of a "partnership, limited partnership, syndicate or
other group" (within the meaning of Section 13(d)(3) of the Exchange Act),
directly or indirectly, through one or more intermediaries or otherwise, will
not, and will cause each of its Affiliates and Associates (as defined in Rule
12b-2 of the General Rules and Regulations under the Exchange Act) not to:
(a) purchase, acquire or own (of record or beneficially), or offer or
agree to purchase, acquire or own (of record or beneficially), any Shares if,
after giving effect to such purchase or acquisition, the Holder, together with
its Affiliates and Associates, would own (of record or beneficially) more than
5% of the outstanding Shares.
(b) (i) make, or in any way participate in, encourage, or support
directly or indirectly, any "solicitation" of "proxies" (as such terms are
defined or used in Regulation 14A promulgated pursuant to the Exchange Act) or
become a "participant" or "participant in a solicitation" (as such terms are
defined or used in Rule 14a-11 promulgated pursuant to the Exchange Act) with
respect to the Company, (ii) seek to advise or influence any third person
(within the meaning of Section 13(d)(3) of the Exchange Act) with respect to the
voting of any Shares, (iii) call or seek to call, directly or indirectly, any
special meeting of stockholders of the Company for any reason whatsoever, (iv)
seek, request, or take any action to obtain or retain, directly or indirectly,
any list of holders of any Shares, or (v) assist or encourage any attempt by any
other person to do or seek any of the foregoing; provided, however, that nothing
-------- -------
herein shall restrict the ability of the Holder to vote the Registrable
Securities in its discretion, subject at all time to compliance with the
provisions of this Agreement.
(c) initiate, propose or otherwise solicit holders of Shares for the
approval of one or more stockholder proposals with respect to the Company as
described in Rule 14a-8 promulgated pursuant to the Exchange Act; or
(d) directly or indirectly participate in or encourage the formation
of any "group" (within the meaning of Section 13(d)(3) of the Exchange Act)
which owns or seeks to acquire beneficial ownership of Shares.
-13-
ARTICLE V
INDEMNIFICATION AND CONTRIBUTION
Section 5.1 Indemnification by the Company. The Company agrees to
------------------------------
indemnify and hold harmless each Selling Holder, any Underwriter and each
Person, if any, who controls such Selling Holder or Underwriter within the
meaning of the Securities Act or the Exchange Act, from and against any loss,
claim, damage, liability, reasonable attorneys' fee, cost or expense and costs
and expenses of investigating and defending any such claim (collectively, the
"Damages"), joint or several, and any action in respect thereof to which any
such Selling Holder, Underwriter or control person may become subject under the
Securities Act, Exchange Act or otherwise, insofar as such Damages (or
proceedings in respect thereof) arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus relating to the Registrable Securities or
any preliminary Prospectus, or arises out of, or are based upon, 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
the same are based upon information furnished in writing to the Company by a
Selling Holder or Underwriter expressly for use therein, and shall reimburse
each Selling Holder for any legal and other expenses reasonably incurred by the
Selling Holder in investigating or defending or preparing to defend against any
such Damages or proceedings; provided, however, that the Company shall not be
-------- -------
liable to a Selling Holder to the extent that any such Damages arise out of or
are based upon an untrue statement or omission in any Prospectus if (x) such
untrue statement or omission is corrected in an amendment or supplement to such
Prospectus, and (y) having previously been furnished by or on behalf of the
Company with copies of such Prospectus as so amended or supplemented, the
Selling Holder thereafter fails to deliver such Prospectus as so amended or
supplemented prior to or concurrently with the sale of a Registrable Security to
the Person asserting the claim from which such Damages arise. The Company also
agrees to indemnify any Underwriters of the Registrable Securities, their
officers and directors and each Person who controls such Underwriters on
substantially the same basis as that of the indemnification provided to the
Selling Holder under Section 5.1.
Section 5.2 Indemnification by Selling Holder. Each Selling Holder
---------------------------------
agrees to indemnify and hold harmless the Company, its officers, directors,
employees and agents and each Person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, together with the
partners, officers, directors, employees and agents of such controlling Person,
from and against Damages, joint or several, in so far as such Damages (or
proceedings in respect thereof) arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus relating to the Registrable Securities or
any preliminary Prospectus, or arises out of, or are based upon, 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, if and only to the
extent that the same are based solely upon information furnished in writing to
the Company by the Selling Holder expressly for use therein. Each Selling
Holder also agrees to indemnify and hold harmless
-14-
each other Selling Holder and any Underwriters of the Registrable Securities,
and their respective officers and directors and each Person who controls each
such other Selling Holder or Underwriter on substantially the same basis as that
of the indemnification provided to the Company under this Section 5.2. The
Company shall be entitled to receive indemnities from Underwriters, selling
brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as provided above, with
respect to information so furnished in writing by such Persons specifically for
inclusion in any Prospectus or Registration Statement. In no event shall the
liability of each Selling Holder be greater in amount than the dollar amount of
the proceeds (net of payment of all expenses) received by each Selling Holder
upon the sale of the Registrable Securities giving rise to such indemnification
obligation.
Section 5.3 Conduct of Indemnification Proceedings. Promptly after
--------------------------------------
receipt by any Person in respect of which indemnity may be sought pursuant to
Section 5.1 or 5.2 (an "Indemnified Party") of notice of any claim or the
commencement of any action, the Indemnified Party shall, if a claim in respect
thereof is to be made against the Person against whom such indemnity may be
sought (an "Indemnifying Party") notify the Indemnifying Party in writing of the
claim or the commencement of such action, provided that the failure to notify
--------
the Indemnifying Party shall not relieve it from any liability except to the
extent of any material prejudice resulting therefrom. If any such claim or
action shall be brought against an Indemnified Party, and it shall notify the
Indemnifying Party thereof, the Indemnifying Party shall be entitled to
participate therein, and, to the extent that it wishes, jointly with any other
similarly notified Indemnifying Party, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party; provided, that the
--------
Indemnifying Party acknowledges, in a writing in form and substance reasonably
satisfactory to such Indemnified Party, such Indemnifying Party's liability for
all Damages of such Indemnified Party to the extent specified in, and in
accordance with, this Article V. After notice from the Indemnifying Party to
the Indemnified Party of its election to assume the defense of such claim or
action, the Indemnifying Party shall not be liable to the Indemnified Party for
any legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation; provided that the Indemnified Party shall have the right to
--------
employ separate counsel to represent the Indemnified Party and its controlling
Persons who may be subject to liability arising out of any claim in respect of
which indemnity may be sought by the Indemnified Party against the Indemnifying
Party, but the fees and expenses of such counsel shall be for the account of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) in the
reasonable judgment of such Indemnified Party, representation of both parties by
the same counsel would be inappropriate due to actual or potential conflicts of
interest between them, it being understood, however, that the Indemnifying Party
shall not, in connection with any one such claim or action or separate but
substantially similar or related claims or actions in the same jurisdiction
arising out of the same general allegations or claims, be liable for the fees
and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all Indemnified Parties, or for fees
and expenses that are not reasonable. No Indemnifying Party shall, without the
prior written
-15-
consent of the Indemnified Party, effect any settlement of any claim or pending
or threatened proceeding in respect of which the Indemnified Party is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability arising out of such claim or
proceeding. Whether or not the defense of any claim or action is assumed by the
Indemnifying Party, such Indemnifying Party will not be subject to any liability
for any settlement made without its consent, which consent will not be
unreasonably withheld.
Section 5.4 Contribution. If the indemnification provided for in
------------
this Article V is unavailable to the Indemnified Parties in respect of any
Damages referred to herein, then each 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 Damages (i) as between the
Company on the one hand and the Underwriters on the other, in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Registrable
Securities, or if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits but also
the relative fault of the Company on the one hand and of the Underwriters on the
other in connection with the statements or omissions which resulted in such
Damages, as well as any other relevant equitable considerations, (ii) as between
the Company on the one hand and the Selling Holders on the other, in such
proportion as is appropriate to reflect the relative fault of the Company and of
the Selling Holders in connection with such statements or omissions, as well as
any other relevant equitable considerations, and (iii) as between the
Underwriters on the one hand and the Selling Holders on the other, in such
proportion as is appropriate to reflect the relative fault of the Underwriters
on the one hand and the Selling Holders on the other in connection with the
statements or omissions which resulted in such Damages, as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total proceeds from the offering (net of
underwriting discounts and Commissions but before deducting expenses) received
by the Company or the Underwriters. The relative fault of the Company, the
Selling Holders and of the Underwriters shall be respectively determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by each and by the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Selling Holders shall be at fault with respect to an
untrue or alleged untrue statement of material fact or the omission or alleged
omission to state a material fact only to the extent the same are based solely
upon information furnished in writing to the Company expressly for use in the
Registration Statement.
The Company and the Selling Holders agree that it would not be just
and equitable if contribution pursuant to this Section 5.4 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a
-16-
result of the Damages referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 5.4, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the
Registrable Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, and no Selling Holder shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities of such Selling Holder were offered to
the public (less underwriting discounts and commissions) exceeds the amount of
any damages which the Selling Holders have otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. 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.
The indemnity, contribution and expense reimbursement obligations
contained in this Article V are in addition to any liability any Indemnifying
Party may otherwise have to an Indemnified Party or otherwise. The provisions
of this Article V shall survive, notwithstanding any termination of this
Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.1 Representations and Warranties of Investor. Each Holder
------------------------------------------
hereby represents and warrants to the Company as follows:
(a) The Holder understands that the Registrable Securities will be,
until registered, "restricted securities" as defined in Rule 144 promulgated
under the Securities Act ("Rule 144").
(b) This Agreement is made with the Holder in reliance upon the
Holder's representations and warranties to the Company that the Registrable
Securities received by the Holder will be acquired for investment for the
Holder's own account, and not with a view to the resale or distribution of any
part thereof, and that the Holder has no present intention of selling, granting
participations in, or otherwise distributing the same. By executing this
Agreement, the Investor further represents and warrants that the Holder does not
have presently any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to any such person, or to any
third person, with respect to any Registrable Securities.
(c) The Holder understands that the Registrable Securities will not
be registered under the Securities Act and will be exempt from registration
pursuant to Section 4(2) thereof, and that the Company's reliance on such
exemption is predicated in part on each of the Holder's
-17-
representations and warranties set forth herein.
(d) The Holder is experienced in evaluating and investing in
securities issued by companies such as the Company, is able to fend for itself
in the transactions contemplated by this Agreement, has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of the Holder's investment, and has the ability to bear the
economic risks of the Holder's investment. The Holder further represents and
warrants that the Holder has had, during the course of this transaction and
prior to the issuance of the Registrable Securities, the opportunity to ask
questions of, and receive answers from, the Company and its management and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to the Holder or
to which the Holder had access. Without limiting the generality of the
foregoing, the Holder acknowledges that it has received a copy of all of the SEC
Reports (as defined below).
Section 6.2 Representations and Warranties of the Company. The
---------------------------------------------
Company hereby represents and warrants to each Holder as follows:
(a) The Registrable Securities have been duly authorized and are
validly issued, fully paid, nonassessable and free of preemptive rights.
(b) Exhibit A hereto sets forth a list of each registration
---------
statement, report, proxy statement or other filings filed by the Company with
the Commission, accurate and complete copies of which have been delivered to the
Holders, other than registration statements on Form S-8. The Company has filed
all registration statements, proxy statements, reports and other filings and all
amendments thereto which it was required to file with the Commission. As of its
date, none of said filings contained any untrue statement of a material fact or
omitted any material fact necessary to make the statements therein not
misleading, except to the extent any such statement or omission has been
modified or superseded in a document subsequently filed with the appropriate
authority.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Participation in Underwritten Registrations. No Person
-------------------------------------------
may participate in any underwritten registration hereunder unless such Person
(a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements in form consistent with the rights granted to Holders, and (b)
completes and executes all questionnaires, indemnities, underwriting agreements
and other documents reasonably required under the terms of such underwriting
arrangements and these registration rights; provided that (i) no Selling Holder
--------
shall be required to make any representations or warranties except those which
relate solely to such Holder and its intended method of distribution, and (ii)
the liability of each such Holder to any Underwriter
-18-
under such underwriting agreement will be limited to liability arising from
misstatements or omissions regarding such Holder and its intended method of
distribution and any such liability shall not exceed an amount equal to the
amount of net proceeds any Holder derives from such registration.
Section 7.2 Rules 144 and 144A. The Company covenants that it will
------------------
file any reports required to be filed by it under the Securities Act and the
Exchange Act and that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable
Holders to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule 144 or Rule
144A under the Securities Act, as such Rules may be amended from time to time,
or (b) any similar rule or regulation hereafter adopted by the Commission. Upon
the request of any Holder, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
Section 7.3 Holdback Agreements.
-------------------
(a) Restrictions on Public Sale by Holder of Registrable Securities.
---------------------------------------------------------------
Provided each Holder has received adequate prior written notice thereof, each
such Holder agrees not to effect any public sale or distribution of the issue
being registered or of a similar security of the Company, or any securities
convertible into or exchangeable or exercisable for such securities, including a
sale pursuant to Rule 144 or Rule 144A under the Securities Act, during the 14
days prior to, and during the 90-day period beginning on, the effective date of
any registration statement (other than on Form S-4 or S-8) filed by the Company
(except as part of such registration), in the case of an underwritten public
offering, if, and to the extent, requested in writing by the managing
Underwriter or Underwriters.
(b) Restrictions on Sale by the Company and Others. The Company
----------------------------------------------
agrees and shall use its commercially reasonable best efforts to cause its
Affiliates to agree (i) not to effect any public sale or distribution of any
securities similar to those being registered in accordance with Section 2.1
hereof, or any securities convertible into or exchangeable or exercisable for
such securities, during the 14 days prior to, and during the 90-day period
beginning on, the effective date of any Registration Statement (except as part
of such Registration Statement), in the case of an underwritten offering, if,
and to the extent, reasonably requested by the managing Underwriter or
Underwriters, and (ii) to use its best efforts to ensure that any agreement
entered into after the date hereof pursuant to which the Company issues or
agrees to issue any privately placed securities (other than to officers or
employees) shall contain a provision under which holders of such securities
agree not to effect any sale or distribution of any such securities during the
periods described in (i) above, in each case including a sale pursuant to Rule
144 or Rule 144A under the Securities Act (except as part of any such
registration, if permitted); provided, however, that the provisions of this
-------- -------
paragraph (b) shall not prevent (x) the conversion or exchange of any securities
pursuant to their terms into or for other securities or (y) the issuance of any
securities to employees of the Company or pursuant to any employee plan.
-19-
Section 7.4 Amendment and Modification. Any provision of this
--------------------------
Agreement may be waived, provided that such waiver is set forth in a writing
--------
executed by the party against whom the enforcement of such waiver is sought.
This Agreement may not be amended, modified or supplemented other than by a
written instrument signed by the parties hereto. No course of dealing between
or among any Persons having any interest in this Agreement will be deemed
effective to modify, amend or discharge any part of this Agreement or any rights
or obligations of any Person under or by reason of this Agreement.
Section 7.5 Successors and Assigns: Entire Agreement.
----------------------------------------
(a) This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns and executors, administrators and heirs; provided, that
except as otherwise specifically permitted pursuant to this Agreement, neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by the Company without the prior written consent of each Holder. In
the event that the Company engages in a merger or consolidation pursuant to
which the outstanding capital stock of the Company, including the Registrable
Securities, is converted into shares of another corporation, then in connection
with such merger or consolidation, the Company shall cause the issuer of such
shares to be bound by the terms of, and give substantive effect to the intent
of, this Agreement; thereafter, the terms "Registrable Securities" "Company"
and "Registration Statement" shall refer, respectively, to such shares received
by Holders in connection with such merger or consolidation, the issuer of such
shares, and a registration statement filed by such issuer (other provisions of
this Agreement and defined terms shall be given a meaning consistent with the
foregoing). The Holders shall be deemed to have consented to the assignment of
this Agreement upon assumption by the aforementioned issuer of this Agreement.
(b) This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter hereof and merges and supersedes
all prior discussions, agreements and understandings of any and every nature
among them.
Section 7.6 Separability. In the event that any provision of this
------------
Agreement or the application of any provision hereof is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall not be affected except to the extent necessary
to delete such illegal, invalid or unenforceable provision unless that provision
held invalid shall substantially impair the benefits of the remaining portions
of this Agreement.
Section 7.7 Notices. All notices, demands, requests, consents or
-------
approvals (collectively, "Notices") required or permitted to be given hereunder
or which are given with respect to this Agreement shall be in writing and shall
be personally delivered or delivered by a reputable overnight courier service
with charges prepaid, or transmitted by hand delivery,
-20-
telegram, telex or facsimile, addressed as set forth below, or such other
address as such party shall have specified most recently by written notice.
Notice shall be deemed given or delivered on the date of service or transmission
if personally served or transmitted by telegram, telex or facsimile. Notice
otherwise sent as provided herein shall be deemed given or delivered on the next
business day following delivery of such notice to a reputable overnight courier
service.
To the Company:
Paragon Health Network, Inc.
Xxx Xxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: General Counsel
Fax: (000) 000.0000
To the Holders:
Xxxxxxx X. Xxxxx
000 Xxxxx Xxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Xxxxxxx X. Xxxxxxxxxx
0000 Xxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Section 7.8 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal law of the State of Georgia, without
giving effect to principles of conflicts of law.
Section 7.9 Headings. The headings in this Agreement are for
--------
convenience of reference only and shall not constitute a part of this Agreement,
nor shall they affect their meaning, construction or effect.
Section 7.10 Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which shall be deemed to be an original
instrument and all of which together shall constitute one and the same
instrument.
Section 7.11 Further Assurances. Each party shall cooperate and take
------------------
such action as may be reasonably requested by another party in order to carry
out the provisions and purposes of this Agreement and the transactions
contemplated hereby.
Section 7.12 Termination. Unless sooner terminated in accordance
-----------
with its terms or as otherwise herein provided, this Agreement shall terminate
upon the earlier to occur
-21-
of (i) the mutual agreement by the parties hereto, (ii) the date on which the
Investor ceases to own any Registrable Securities or (iii) the termination of
the Demand Period, provided, however, that the indemnification provisions of
-------- -------
Article V and the expense provisions of Section 3.2 shall survive any such
termination and the provisions of Article IV shall terminate 24 months from the
date of this Agreement without regard to any earlier termination of this
Agreement.
Section 7.13 Remedies. In the event of a breach or a threatened
--------
breach by any party to this Agreement of its obligations under this Agreement,
any party injured or to be injured by such breach will be entitled to specific
performance of its rights under this Agreement or to injunctive relief, in
addition to being entitled to exercise all rights provided in this Agreement and
granted by law. The parties agree that the provisions of this Agreement shall
be specifically enforceable, it being agreed by the parties that the remedy at
law, including monetary damages, for breach of any such provision will be
inadequate compensation for any loss and that any defense or objection in any
action for specific performance or injunctive relief that a remedy at law would
be adequate is waived.
Section 7.14 Pronouns. Whenever the context may require, any
--------
pronouns used herein shall be deemed also to include the corresponding neuter,
masculine or feminine forms.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PARAGON HEALTH NETWORK, INC.
By: /s/ Xxxx Xxxxxx
---------------------------------
Name: R. Xxxxxxx Xxxxxx
Title: Senior Vice President
Holders
/s/ Xxxxxxx X. Xxxxx
---------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxxxx
-22-
