REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
July 23, 1997, by and among NATURAL HEALTH TRENDS CORP., a Florida corporation
(the "Company"), GLOBAL HEALTH ALTERNATIVES, INC., a Delaware corporation
("GHA"), and the stockholders of GHA listed on Schedule "A" hereto, as such
schedule may be amended from time to time, each a "Holder" and collectively the
"Holders" acting through their duly appointed attorney-in-fact (the "Attorney").
As used in this Agreement, the term "Holder" means an original Holder and any
transferee thereof (including any successive transferee) who at the time of
determination holds any Registrable Securities (as defined below).
WHEREAS, pursuant to an Amended and Restated Agreement and Plan
of Reorganization, dated as of July 23, 1997, by and among the Company, GHA, and
the Holders (the "Acquisition Agreement"), up to 5,800,000 shares (the "Firm
Shares") of common stock, par value $.001 per share, of the Company ("Common
Stock"), have been, or, upon the occurrence of one or more Additional Closings,
will be distributed to the Holders;
WHEREAS, pursuant to the Acquisition Agreement, the Company may
be obligated to distribute certain additional shares in two tranches (the "First
Contingent Shares" and "Second Contingent Shares," respectively, and
collectively the "Contingent Shares") of Common Stock to the Holders; and
WHEREAS, as a condition to the closing of the transactions
contemplated by the Acquisition Agreement, the Firm Shares and any Contingent
Shares distributed to the Holders shall be subject to this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
Section 1. Defined Terms; Effectiveness of Registration Rights.
1.1 Defined Terms. Capitalized terms used and not defined herein
shall have the respective meanings ascribed to them in the Acquisition
Agreement. In addition, the following terms shall have the following meanings:
"Affiliate" has the meaning attributed thereto under Rule 405 of
the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Governmental Body" means any federal, state, municipal or other
governmental body, department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
"Initiating Holders" means any Holders who in the aggregate, are
holders of at least 50% of the outstanding Registrable Securities then owned in
the aggregate by the Holders.
"Inspectors" has the meaning attributed thereto in Section 5.
"Other Holders" means all Holders other than the Initiating
Holders.
"Other Securities" has the meaning attributed thereto in Section
3.1.
"Person" means any individual, corporation, sole proprietorship,
partnership, joint venture, association, trust, unincorporated organization,
association, institution, public benefit corporation, business, Governmental
Body or other legal entity.
"Records" has the meaning attributed thereto in Section 5.
"Registrable Securities" means (i) the Firm Shares and any
Contingent Shares issued pursuant to the terms of the Acquisition Agreement and
(ii) any securities of the Company distributed with respect to the aforesaid
shares of its Common Stock; provided, that any such shares shall cease to be
Registrable Securities when sold or otherwise transferred by any Holder pursuant
to (a) an effective registration statement filed by the Company under the
Securities Act or (b) Rule 144 (or any similar provision then in force) under
the Securities Act.
"Registration Expenses" means all expenses incident to the
Company's performance of or compliance with the registration and other
requirements set forth in this Registration Rights Agreement including, without
limitation, the following: (i) the fees, disbursements and expenses of all
counsel to the Company and all accountants in connection with the registration
statement, any preliminary prospectus or final prospectus, any other offering
documents and amendments and supplements thereto and the mailing and delivery of
copies thereof to underwriters and dealers; (ii) all expenses in connection with
the preparation, printing and filing of the registration statement, any
preliminary prospectus or final prospectus, any other offering document and
amendments and supplements thereto and the mailing and delivery of copies
thereof to underwriters and dealers; (iii) the cost of printing or producing any
agreement(s) among underwriters, underwriting agreement(s) and blue sky or legal
investment memoranda, any selling agreements and any other documents in
connection with the offering, sale or delivery of the Registrable Securities to
be disposed of; (iv) all expenses in connection with the qualification of the
Registrable Securities to be disposed of for offering and sale under state
securities laws, including the fees and disbursements of counsel for the
underwriters in connection with such qualification and in connection with any
blue sky and legal investment surveys; (v) the filing fees incident to securing
any required review by the National Association of Securities Dealers, Inc. of
the terms of the sale of the Registrable Securities to be disposed of; (vi) the
cost and charges of any transfer agent or registrar in connection with the
registration of exchange or transfer of the Registrable Securities to be
disposed of; and (vii) all stock exchange listing fees.
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"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Total Number of Includible Securities" has the meaning
attributed thereto in Section 3.1(b).
1.2 Effectiveness of Registration Rights. The registration rights
pursuant to Sections 2 and 3 hereof shall become effective on the date upon
which shares of Common Stock are distributed to the Original Holder pursuant to
the Acquisition Agreement and continue so long as any Holder shall hold
Registrable Securities.
1.3 Registration Not Required. Notwithstanding anything herein to
the contrary, the Company shall not be obligated to effect any registration
pursuant to Section 2.1 or Section 3.1 hereof or to keep effective any
registration statement prepared and filed pursuant to Section 2.1 or Section 3.1
hereof, if, in the written opinion of counsel to the Company who shall be
reasonably satisfactory to the Holder or Holders intending to participate in
such registration and which opinion shall be concurred in by counsel to such
Holder or Holders, the intended method or methods of disposition of any
Registrable Securities by such Holder or Holders may be effected without
registration under the Securities Act and without restriction as to subsequent
trading.
1.4 Consents and Approvals. Whenever any consent or approval is
required under this Agreement by the Holders or a group of Holders, such consent
or approval will be deemed given if rendered by the Holders of a majority of the
Registrable Securities requested to be included in the registration relating to
such consent or approval.
Section 2. Shelf Registration
2.1 Shelf Registration. The Company shall cause to be filed with
the Commission no later than nine (9) months after the Closing Date, a shelf
registration statement pursuant to Rule 415 under the Securities Act relating to
the Firm Shares, and no later than three (3) months after the issuance of any
Contingent Shares (each a "Shelf Registration Statement"), and shall use its
best efforts to cause such Shelf Registration Statement to become effective as
soon thereafter as practicable. The Company shall use its best efforts to keep
such Shelf Registration Statement continuously effective, supplemented and
amended to the extent necessary to ensure that it is available for resales of
the Registered Securities and to ensure that it conforms with the requirements
of this Agreement, the Securities Act and the policies, rules and regulations of
the Commission as announced from time to time, until the earlier of (i) the sale
by the Holders of all shares of Registrable Securities relating to such Shelf
Registration Statement or (ii) two years after the Closing Date or the date of
issuance of any Contingent Shares, as the case may be.
2.2 Registration Expenses. The Company shall pay or cause to be
paid all Registration Expenses in connection with the shelf registration
pursuant to this Section 2;
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provided that with respect to any such registration, each Holder shall bear any
transfer taxes applicable to its Registrable Securities registered thereunder
and its pro rata share of all underwriting fees, commissions, discounts or other
compensation in respect of such Registrable Securities and provided further that
in no event shall any Holder be required to pay any internal costs of the
Company.
Section 3. Piggyback Registration.
3.1 Notice and Registration. If the Company proposes, for its own
account or for the account of others, to register any of its voting securities
("Other Securities") for public sale under the Securities Act, on a form and in
a manner which would permit registration of Registrable Securities for sale to
the public under the Securities Act, it will give prompt written notice to each
Holder of its intention to do so, and upon the written request of any Holder,
delivered to the Company within 15 business days after the giving of any such
notice (which request shall specify the Registrable Securities intended to be
disposed of by each Holder, and the intended method of disposition thereof), the
Company will use its best efforts to effect, in connection with the registration
of the Other Securities, the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register by
each Holder, to the extent required to permit the disposition (in accordance
with the intended method or methods thereof as aforesaid) of the Registrable
Securities so to be registered, provided that:
(a) if, at any time after giving such written notice of
its intention to register any Other Securities and prior to the
effective date of the registration statement filed in connection
with such registration, the Company shall determine for any
reason not to register the Other Securities, the Company may, at
its election, give written notice of such determination to each
Holder, and thereupon the Company shall be relieved of its
obligations to register such Registrable Securities in connection
with the registration of such Other Securities (but not from its
obligation to pay Registration Expenses to the extent incurred in
connection therewith as provided in Section 3.2), without
prejudice, however, to the rights, if any, of the Holders
immediately to request that such registration be effected as a
registration under Section 2;
(b) the Company will not be required to effect any
registration of Registrable Securities under this Section 3 if,
and to the extent that, the underwriters (or any managing
underwriter) or the placement agent in connection with a private
placement of the Company's securities, shall advise the Company
in writing that, in their reasonable opinion, inclusion of such
number of shares of Registrable Securities will adversely affect
the price or distribution of the securities to be offered
pursuant to such registration. Such advice shall include a
statement as to such
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person's opinion as to the number of shares which may be included
without adversely affecting the price or distribution of the
securities (such total number of shares which such advice states
may be so included being the "Total Number of Includible
Securities"). The Company shall promptly furnish each Holder with
a copy of such written advice, and in such event the number of
shares which such person believes may be sold shall first be
allocated to the Company, next to any shares proposed to be
included in the registration for the account of Xxxx X. Xxxxxx,
Xxxxxxxxx X. Xxxxxx or any of their Affiliates, and then the
remaining number of shares shall then be allocated among the
Holders in proportion to the number of shares of Registrable
Securities each first proposed for inclusion in the registration.
(c) The Company shall not be required to effect any
registration of Registrable Securities under this Section 3
incidental to the registration of any of its securities in
connection with mergers, acquisitions, exchange offers, dividend
reinvestment plans, stock option or other employee benefit plans,
any registration of its securities which are being registered in
connection with a private offering of $2 million or less or the
registration of its securities in connection with a private
offering of $2,200,000 of convertible preferred stock in June
1997.
No registration of Registrable Securities effected under this Section 3 shall
relieve the Company of its obligation, if any, effect the registration of
Registrable Securities pursuant to Section 2.
3.2 Registration Expenses. The Company will pay all Registration
Expenses in connection with any registration pursuant to this Section 3;
provided that with respect to any such registration each Holder shall bear any
transfer taxes applicable to its Registrable Securities registered thereunder,
its pro rata share of all underwriting fees, commissions, discounts or other
compensation in respect of such Registrable Securities; and provided, further,
that in no event shall any Holder be required to pay any internal costs of the
Company.
Section 4. Registration Procedures.
4.1 Registration and Qualification.
(a) If and whenever the Company is required to use its best
efforts to effect the registration of any Registrable Securities under the
Securities Act as provided in Sections 2 and 3, the Company will promptly as is
practicable:
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(i) prepare, file and use its best efforts to cause to
become effective a registration statement under the Securities
Act regarding the Registrable Securities to be offered;
(ii) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the
provisions of the Securities Act with respect to the disposition
of all Registrable Securities until the earlier of (a) the
expiration of two years from the effective date thereof or (b)
until such time as all of such Registrable Securities have been
disposed of in accordance with the intended methods of
disposition by the Holders, as set forth in such registration
statement;
(iii) shall, prior to filing any registration statement or
prospectus or any amendments or supplements thereto (including
any documents incorporated by reference in any registration
statement after the initial filing of such registration
statement) in which Registrable Securities are included pursuant
to this Agreement, furnish to counsel for any managing
underwriter for any underwritten public offering of Registrable
Securities and to counsel engaged by the Holders of a majority in
interest of the Registrable Securities included in such
registration statement, copies of all such documents proposed to
be filed with the SEC, which documents shall be subject to the
reasonable review of such counsel, and, if requested by such
counsel, the insertion of material which in their judgment should
be included therein (subject, however, to the approval of counsel
to the Company). Notwithstanding the foregoing, in the case of
periodic reports of the Company which are incorporated by
reference into any registration statement in which Registrable
Securities are included pursuant to this Agreement after the
effective date of such registration statement, the Company shall
only be required to furnish such periodic reports to counsel
engaged by the Holders of a majority in interest of the
Registrable Securities included in such registration statement,
if any, concurrently with the filing of such periodic reports;
(iv) furnish to the Holders participating in the
registration and to any underwriter of such Registrable
Securities such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in
the case of the Holder or any managing underwriter, including all
exhibits), such number
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of copies of the prospectus included in such registration
statement (including each preliminary prospectus and any summary
prospectus) or filed under the Securities Act, in conformity with
the requirements of the Securities Act, such documents as may be
incorporated by reference in such registration statement, or
prospectus, and such other documents, as the Holders or such
underwriter may reasonably request;
(v) use its best efforts to register or qualify all
Registrable Securities covered by such registration statement
under such other securities or blue sky laws of such
jurisdictions as the Holders participating in the registration or
any underwriter of such Registrable Securities shall reasonably
request in writing, and do any and all other acts and things
which may be necessary or advisable to enable the Holders
participating in the registration or any underwriter to
consummate the disposition in such jurisdictions of its
Registrable Securities covered by such registration statement,
except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified,
or to subject itself to taxation in any such jurisdiction, or to
consent to general service of process in any such jurisdiction;
(vi) in the case of any underwritten offering, furnish to
the Holders participating in the registration and the
underwriters, if any, addressed to them, (A) an opinion of
counsel for the Company dated the date of the closing under the
underwriting agreement relating to any underwritten offering, in
form and substance satisfactory to such Holders, to the effect
that (a) a registration statement covering the Registrable
Securities has been filed with the Commission under the
Securities Act and has been made effective by order of the
Commission, (b) such registration statement and the prospectus
contained therein comply with all material respects with the
requirements of the Securities Act, and nothing has come to said
counsel's attention which would cause it to believe that either
such registration statement or the prospectus contains any untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein in light of the circumstances under which they were made
not misleading, (c) a prospectus meeting the requirements of the
Securities Act is available for delivery, (d) no stop order has
been issued by the Commission suspending the effectiveness of
such registration statement and, to the best of counsel's
knowledge, no proceedings for the issuance of such a
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stop order are threatened or contemplated, and (e) there has been
compliance with the applicable provisions of the securities or
blue sky laws of each jurisdiction in which the Company shall be
required pursuant to clause (v) of this sentence to register or
qualify such Registrable Securities, assuming the accuracy and
completeness of the information furnished to such counsel with
respect to each filing relating to such laws, and (B) a comfort
letter signed by the independent public accountants who have
certified the Company's financial statements included in such
registration statement, with respect to events subsequent to the
date of such financial statement, as are customarily covered in
accountants' letters, delivered to underwriters in underwritten
public offerings of securities and such other matters as the
Holders may reasonably request;
(vii) notify the Holders participating in the registration
at any time when a prospectus relating to a registration pursuant
to Section 2 or 3 is or was required to be delivered under the
Securities Act, of the happening of any event as a result of
which the prospectus included in such registration statement, as
then in effect, includes or included an untrue statement of a
material fact or omits or omitted to state any material fact
required to be stated therein or necessary, in the light of the
circumstances then existing, to make the statements therein not
misleading, and, if necessary in the reasonable judgment of
counsel for the Company, the Company will prepare and furnish to
such Holder a reasonable number of copies of a supplement of or
an amendment of such prospectus as may be necessary 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, [in light of the circumstances
then existing, to make the statements therein not misleading; and
(viii) notify each Holder of the Registrable Securities
included in any registration statement pursuant to this Agreement
of any stop order issued or, to the knowledge of the Company,
threatened by the Commission in connection with such registration
statement and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered;
(ix) if requested by the managing underwriter or
underwriters or by any Holder of the Registrable Securities
included in any Registration Statement, subject to the approval
of
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counsel to the Company in its reasonable judgment, promptly
incorporate in a prospectus supplement or post-effective
amendment such information as the managing underwriter or
underwriters or such Holder or Holders reasonably shall furnish
to the Company in writing and request to be included therein,
including, without limitation, with respect to the number of
Registrable Securities being sold by such Holder or Holders to
such underwriter or underwriters, the purchase price being paid
therefor by such underwriter or underwriters and with respect to
any other terms of the underwritten offering of the Registrable
Securities to be sold in such offering; and make all required
filings of such prospectus supplement or post-effective amendment
as soon as possible after being notified of the matters to be
incorporated in such prospectus supplement or post-effective
amendment;
(x) cooperate with the Holders of the Registrable
Securities covered by any registration statement pursuant to this
Agreement and the managing underwriter or underwriters, if any,
to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold under such
registration statement, in such denominations and registered in
such names as the managing underwriter or underwriters, if any,
or such Holders may request; and
(xi) use reasonable efforts to do any and all other
customary acts the Holders participating in the registration may
reasonably request and which are customary for a registration of
equity securities.
The Company may require each Holder participating in a registration to furnish
such information regarding such Holder and the distribution of such securities
as the Company may from time to time reasonably request in writing and as shall
be required by law or by the Commission in connection with any registration.
(b) Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section
4.1(a)(vi) hereof, each Holder shall use its best efforts to discontinue
forthwith disposition of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until the Holder's receipt of the
copies of the supplemented or amended prospectus contemplated by Section
4.1(a)(vi) hereof.
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4.2 Listing of Common Stock. Upon the request of the Holders
participating in a registration in connection with any public offering of the
Common Stock, the Company shall use its best efforts to effect, as promptly as
is practicable, the listing of the Common Stock on any national securities
exchange or the inclusion of the Common Stock in any automated quotations system
on or in which the Company's Common Stock shall then be listed or quoted, if the
listing of such Common Stock is then permitted under the rules of such exchange
or automated quotations system.
4.3 Underwriting.
(a) If requested by the managing underwriter for any underwritten
offering of Registrable Securities pursuant to a registration requested
hereunder, the Company will enter into an underwriting agreement with the
underwriters for such offering, such agreement to contain such representations
and warranties by the Company and such other terms and provisions as are
customarily contained in underwriting agreements with respect to secondary
distributions, including, without limitation, indemnities and contribution to
the effect provided in Section 6 hereof and the provision of opinions of counsel
and accountants' letters to the effect provided in Section 4.1(a)(v) hereof.
Each Holder participating in the registration, as appropriate, shall be a party
to any such underwriting agreement and the representations and warranties by,
and the other agreements on the part of, the Company to and for the benefit of
such underwriters, shall also be made to and for the benefit of such Holders.
(b) In the event that any registration pursuant to Section 3
shall involve, in whole or in part, an underwritten offering, the Company may
require the Registrable Securities requested to be registered pursuant to
Section 3 by any Holder to be included in such underwriting on the same terms
and conditions as shall be applicable to the Other Securities being sold through
underwriters under such registration. In any such case, each Holder
participating in the registration shall be party to any such underwriting
agreement. Such agreements shall contain such representations, warranties and
covenants by such Holder, as appropriate, and such other terms and provisions as
are customarily contained in underwriting agreements with respect to secondary
distributions, including, without limitation, indemnities and contribution to
the effect provided in Section 6 hereof. The representations and warranties in
such underwriting agreement by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters, shall also be made and for
the benefit of such Holders.
Section 5. Preparation: Reasonable Investigation.
In connection with the preparation and filing of each
registration statement registering Registrable Securities under the Securities
Act, the Company will give each Holder participating in the registration and the
underwriters, if any, and their respective counsel and accountants
(collectively, the "Inspectors"), such reasonable and customary access to its
books and records (collectively, the "Records") and such opportunities to
discuss the business of the Company with its officers and the independent public
accountants who have certified its financial
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statements as shall be necessary, in the opinion of the Holder and such
underwriters or their respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act. Records which the Company reasonably
determines to be confidential and which it notifies the Inspectors in writing
are confidential shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is necessary or appropriate to avoid or correct a
misstatement or omission in the registration statement, (ii) the portion of the
Records to be disclosed has otherwise become publicly known, (iii) the
information in such Records is to be used in connection with any litigation or
governmental investigation or hearing relating to any registration statement or
(iv) the release of such Records is ordered pursuant to a subpoena or other
order. Each Holder agrees that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice to the
Company.
Section 6. Indemnification and Contribution.
6.1 Indemnification By the Company. The Company agrees to
indemnify and hold harmless each Person who participates as an underwriter, each
Holder participating in a registration pursuant to this Agreement, each of their
respective officers and directors and each Person, if any, who controls any such
underwriter or such Holder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act as follows:
(a) against any and all loss, claim, damage and expense
whatsoever, as incurred, arising out of or caused by any untrue
statement or alleged untrue statement of a material fact
contained in any registration statement (or any amendment
thereto) pursuant to which Registrable Securities were registered
under the Securities Act, including all documents incorporated
therein by reference, or the omission or alleged omission
therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement
of a material fact contained in any preliminary or final
prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
(b) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or investigation or
proceeding by any Governmental Body commenced or threatened, or
of any claim whatsoever based upon any such untrue statement or
omission, if such settlement is effected with the written consent
of the Company; and
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(c) against any and all expense whatsoever, as incurred
(including fees and disbursements of counsel chosen by the
Holders or any underwriter), reasonably incurred in
investigating, preparing or defending against any litigation, or
investigation or proceeding by any Governmental Body, commenced
or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under
clause (a) or (b) above;
provided, however, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent arising out of or caused by
any untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by any such Holder (or any such "control" Person) expressly for use in a
registration statement (or any amendment thereto) or any prospectus (or any
amendment or supplement thereto); and further provided that this indemnity
agreement does not apply to any loss, liability, claim, damage or expense
arising out of or caused by any such Holder's continued circulation, subsequent
to such Holder's receipt of the notice described in Section 4.1(a)(vi) hereof,
of a prospectus including the untrue statement of a material fact or omission of
a material fact as to which such notice was provided.
6.2 Indemnification by the Holders. Each Holder agrees with
respect to each registration pursuant to this Agreement in which such Holder
participates to indemnify and hold harmless the Company and any underwriter, and
each of their respective directors and officers (including each officer of the
Company who signed the registration statement), and each Person, if any, who
controls the Company or any underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act and each other Holder, against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in Section 6.1 hereof, as incurred, with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
registration statement (or any amendment thereto) or any preliminary or final
prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such the Holder
(or any such "control" Person) expressly for use in the registration statement
(or any amendment thereto) or such prospectus (or any amendment or supplement
thereto).
6.3 Indemnification by Underwriter. Anything in Section 6.1 to
the contrary notwithstanding, the Company's obligation to indemnify any
underwriter pursuant to Section 6.1 in an underwritten offering (or any Person
controlling such underwriter within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) shall be conditioned upon the
underwriting agreement with such underwriter containing an agreement by such
underwriter to indemnify and hold harmless the Company and the Holders and each
of their respective directors and officers (including each officer of the
Company who signed the registration statement) and each Person, if any, who
controls the Company and any Holder, within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any and
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all loss, liability claim, damage and expense described in the indemnity
contained in Section 6.1 hereof, as incurred, with respect to untrue statements
or omissions, or alleged untrue statements or omissions, made in the
registration statement (or any amendment thereto) or any preliminary or final
prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such underwriter
(or any such "control" Person) expressly for use in the registration statement
(or any amendment thereto) or such prospectus (or any amendment or supplement
thereto).
6.4 Conduct of Indemnification Proceedings. Each indemnified
party shall give prompt notice to each indemnifying party of any action
commenced against it in respect of which indemnity may be sought hereunder, but
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have otherwise than on account of this indemnity
agreement. An indemnifying party may, at its own expense, participate in and
direct the defense of such action.
Section 7. Transferability of Shares.
7.1 Legends. The shares of any Common Stock distributed to the
Holders pursuant to the Acquisition Agreement (the "Original Common Stock")
shall not be sold, assigned, transferred or pledged except upon the conditions
specified in this Section 7, which conditions are intended to ensure compliance
with the provisions of the Securities Act. Each certificate representing
Registrable Securities held by the Holder shall (unless otherwise permitted by
the provisions of Section 7.2 be stamped or otherwise imprinted with a legend in
substantially the following form (in addition to any legend required under
applicable state securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT
THE PROPOSED TRANSACTION WILL BE EXEMPT FROM REGISTRATION
and, in the case of those Holders listed on Schedule B hereto pursuant to
Section 9:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE PLEDGED, ASSIGNED
AND MAY NOT BE SOLD OR TRANSFERRED PRIOR TO JULY 23, 1999, EXCEPT IN
ACCORDANCE WITH SECTION 9 OF THE REGISTRATION RIGHTS AGREEMENT DATED
JULY 23, 1997.
7.2 "Stop Transfer" Orders. Each Holder understands that, so long
as the legend is required to be imprinted on a certificate representing
Registrable Securities, the Company may
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maintain appropriate "stop transfer" orders with respect to such Registrable
Securities on its books and records and with those to whom it may delegate
registrar and transfer functions.
7.3 Compliance with Resolutions. Each Holder agrees to comply in
all respects with the provisions of this Section 7.3. Prior to any proposed
sale, assignment, transfer or pledge (a "Transfer"), of any Registrable
Securities, unless there is in effect a Registration Statement covering the
proposed Transfer, a Holder shall give written notice to the Company of such
Holder's intention to effect such Transfer and the name of the proposed
transferee. Each such notice shall describe the manner and circumstances of the
proposed Transfer in sufficient detail, and, if requested by the Company, shall
be accompanied, at the Holder's expense, by either (i) an written opinion of
legal counsel who shall be, and whose legal opinion shall be, reasonably
satisfactory to the Company addressed to the Company, to the effect that the
proposed Transfer of the Registrable Securities may be effected without
registration under the Securities Act; provided that if the proposed Transfer
would, in the opinion of such counsel, require that the Company take action
and/or execute and file with the Commission and/or deliver to the Holder or any
other person any form or document in order to establish the entitlement of the
Holder to take advantage of such method of disposition, the Company agrees
promptly to take any such action and/or execute and file and/or deliver any such
form or document, or (ii) a "no action" letter from the Commission to the effect
that the Transfer of such securities without registration will not result in a
recommendation by the staff of the Commission that action be taken with respect
thereto, whereupon the Holder of such Registrable Securities shall be entitled
to effectuate a Transfer of such Registrable Securities in accordance with the
terms of the notice delivered by the Holder to the Company. Notwithstanding the
foregoing, it is agreed that the Company will not request an opinion of counsel
for the Holder with respect to Transfers made in reliance on Rule 144 under the
Act except in unusual circumstances, the existence of which shall be determined
in good faith by the Board of Directors of the Company; provided, however, the
Holder shall deliver to the Company (i) copies of all forms customarily
delivered or deliverable to brokers in connection with a Transfer of securities,
and (ii) a certificate of the Holder desiring to Transfer such Registrable
Securities containing such representations and warranties to the Company as are
customarily given to brokers in connection with the Transfer of securities.
7.4 Certificates. Each certificate evidencing the Restricted
Securities with respect to which a Transfer as provided in this Section 7 has
been effected, shall bear, except if such Transfer is made pursuant to Rule 144
under the Act, the appropriate restrictive legend set forth above, except that
such certificate shall not bear such restrictive legend if in the opinion of
counsel for the Holder and the Company such legend is not required in order to
establish compliance with any provision of the Act.
7.5 Rule 144 Sales. At any time when the Holder desires to make
sales of any Registrable Securities in reliance on Rule 144 promulgated under
the Securities Act, the Company covenants and agrees that either there will be
available adequate current public information with respect to the Company as
required by paragraph (c) of said Rule 144 or the Company will use its best
efforts to make such information available without delay if such
-14-
information is not available. Without limiting the foregoing, the Company will
timely file with the Commission all reports required to be filed under Section
13 and 15(d) of the Exchange Act and will promptly furnish to Holder so
requesting a written statement that the Company has complied with all such
reporting requirements.
7.6 Assignment. Any Holder may assign his rights hereunder in
connection with any sale, assignment, transfer or pledge of Registrable
Securities provided that such assignee shall have agreed in writing,
satisfactory in form and substance to the Company and its counsel, to be bound
hereby. From and after any such assignment pursuant to this Section 7,
references herein to the Holder shall include such permitted assignee or
assignees.
Section 8. Other Registrable Rights and Registration Statements. The
Company shall not grant to any other person the right to request or demand that
the Company register under any registration statement filed under Section 2 and
3 hereof any of its equity securities unless such rights granted are subordinate
to the rights of the Holders under this Agreement.
Section 9. Restrictions on Transfer.
The Holders set forth on Schedule B hereby agree not to, directly
or indirectly, offer to sell, sell, grant any option for the sale of, assign,
transfer, pledge hypothecate or otherwise encumber or dispose of any shares of
Common Stock, including, but not limited to the Firm Shares and the Contingent
Shares, or dispose of any beneficial interest in the Company for a period of not
less than 24 months following the date hereof without the prior written consent
of at least a majority of the members of the Executive Committee or in the event
that there is no Executive Committee, at least a majority of the members of the
Board of Directors.
Section 10. Miscellaneous.
10.1 Severability. If any term, provision, covenant, restriction,
part or portion of this Agreement is held by a court of competent jurisdiction
to be invalid, void or unenforceable, or is otherwise legally impossible to
perform, the remainder of the terms, provisions, covenants, restrictions, parts
and portions of this Agreement shall remain in full force and effect.
10.2 Specific Enforcement. The parties hereto acknowledge and
agree that irreparable damage would occur event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement, this being in addition to any other remedy to
which they may be entitled by law or equity.
10.3 Entire Agreement. This Agreement and the Acquisition
Agreement contain the entire understanding of the parties with respect to the
matters covered hereby and this Agreement may be amended only by an agreement in
writing executed by the parties hereto.
-15-
10.4 Counterparts. This Agreement may be executed in one or more
counterparts by the parties hereto, each of which shall be deemed an original,
but all of which together constitute one and the same instrument.
10.5 Notices. All notices and other communications provided for
herein (including, without limitation, any waivers or consents under this
Agreement) shall be given or made by telecopy, telegraph, cable or otherwise in
writing (each communication given by any of such means to be deemed to be "in
writing" for purposes of this Agreement) and telecopied, telegraphed, cabled,
mailed or delivered to the intended recipient at the address for notices
specified below or, as to any party, at such other address as shall be
designated by such party in a notice to the other. Except as otherwise provided
in this Agreement, all such communications shall be deemed to have been duly
given (i) when delivered to the telegraph or cable office or personally
delivered or, (ii) in the case of transmission by telecopy, when telecopied
(with confirmation) and mailed (with same day post-xxxx) certified mail, return
receipt requested or (iii) in the case of a mailed notice, upon receipt, in each
case given or addressed as aforesaid.
if to the Company: Natural Health Trends Corp.
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxx
with a copy to: Lane & Xxxxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxx, Esq.
if to any Holder, to the address of such Holder as it appears in the Records of
the Company.
10.6 Waivers. Each party may waive in whole or in part any
benefit or right provided to it under this Agreement. No waiver by any party of
any default with respect to any provision, condition, requirement, or of any
benefit or right hereof shall be deemed to be a waiver of any other provision,
condition, requirement, benefit or right hereof; nor shall any delay or omission
of either party to exercise any right hereunder in any manner impair the
exercise of any such right accruing to it thereafter.
10.7 Submission to Jurisdiction; Consent to Service of Process.
Any action with respect to any claim arising out of or relating to this
Agreement including any claim for specific performance arising under Section 9.2
hereof shall be brought in the State, City and County of New York, and in
furtherance thereof (a) each of the Company and the Holders irrevocably consents
and submits to the exclusive jurisdiction of the Supreme Court of the State of
New York for the County of New York and the United State District Court for the
Southern District of New York and (b) each of the Company and the Holders
irrevocably waives any objection
-16-
which it may have at any time to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any such
court, irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum and further
irrevocably waives the right to object, with respect to such suit, action or
proceedings brought in any such court, that such court does not have
jurisdiction over such party. Each of the Company and the Holders consents that
service of process upon it in any such suit, action or proceeding may be made in
the manner set forth in Section 9.5 hereof (other than by telecopy).
10.8 Headings. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
10.9 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Company and the Holders, and their successors
and legal representatives. No rights to the benefit of any third parties are
intended to be created by any provision of this Agreement or any rights
hereunder except to the extent contemplated by Section 7 hereof.
10.10 Governing Law. This Agreement was negotiated and delivered
in the State of New York. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within such state.
-17-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officer as of the date set
forth at the head of this Registration Rights Agreement.
NATURAL HEALTH TRENDS CORP.
By: ____________________________________
Name: Xxxx X. Xxxxxx
Title: President
GLOBAL HEALTH ALTERNATIVES, INC.
By: ____________________________________
Name: Xxx Xxxxx Xxxxxxx
Title: Chairman
THE STOCKHOLDERS SET FORTH ON
SCHEDULE A
By: ____________________________________
Name: Xxxxxx X. Xxxxx
Attorney-in-Fact
SCHEDULE A
Azure Limited Partnership I
Capital Development S.A.
Cosmo Finance & Investments Services S.A.
Xxxxxxx Xxxxxx
Xx. Xxxx X. Xxxxxx
Xxx Xxx Xxxxxx
Xxxxxx X. Xxxx
Golden Union International S.A.
N.K. Verwaltungs Inc.
X. Xxxx & Co. A/S
Xxxxxxxx X. Xxxxxx Revocable Trust (u/a/d 7/20/79)
Xxxxxxxx X. Xxxxxx
Didgemere Consultants Limited
Z & M Capital Corporation
Xxxxxx X. Xxxxxx
International Marketing Group Ltd.
Xxxxxx X. Xxxxxxx, XX
Xxxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx
X. Xxxxxxx Xxxxxxxx
Xxxxxx X. Xxxxx
Xxxxxxxx X. Xxxx
Xxxxxxxx Xxxx
Xxxxxx X. Page
Xxxxxxx X. Xxxxxx and Xxxxxxxxx X. Xxxxxx (Jt Ten)
Xxxxxxx X. Xxxx
Westminster Associates
Sir Xxxxx Xxxxxxxx
Xx. Xxxxxx Xxxxx
Xx. Xxxxxxxx X. Xxxxx
Complimentary Medical Associates, Inc.
Xxxxxxx Xxxxxxxx
Xxxxx Xxxxxxxxx
Xxx Xxxxx
Xxxxx Xxxxx
H. Xxxxxx Xxxx
Xxxx Xxxxxx
Xxxxxxx Xxxxxx
Xxxxxxxxx X. Xxxxxxx
Xxxxx X.X. Xxx
Promenade Investments Limited
Xxxxx Kaslof
Xxxxxx Kaslof
Xxxxxx Xxxxxxxxxxx
As Amended August 5, 1997
SCHEDULE B
Azure Limited Partnership I
Capital Development S.A.
Xxxxxx X. Xxxxx
Xxxx X. Xxxxxxxx
Xxxxxxx Xxxxxxxx
Xxxxx Xxxxxxxxx
Xxx Xxxxx
