REGISTRATION RIGHTS AGREEMENT
This
REGISTRATION RIGHTS AGREEMENT, dated as of June 24, 2010, is entered into by and
among Patient Safety Technologies, Inc., a Delaware corporation (the “Company”), and the persons
identified as Holders on the signature pages hereto (individually, a “Holder” and collectively, the
“Holders”).
RECITALS:
A. The Company,
on the one hand, and Catalysis Partners, A Plus International, Inc. and JMR
Capital Limited, on the other hand, are parties to a Convertible
Preferred Stock Purchase Agreement dated as of June 24, 2010 (the “Purchase Agreement”), pursuant
to which the Company will sell, and the Holders will buy, Preferred Shares (as
defined in the Purchase Agreement).
B. The
Company and Xxxxxxx Xxxxx are parties to a Consulting Agreement dated as of May
19, 2010 (the “Consulting
Agreement”), pursuant to which Xxxxxxx Xxxxx is providing certain
consulting services to the Company.
C. It
is a condition precedent to the consummation of the transactions contemplated by
the Purchase Agreement that the Company provide for the rights set forth in this
Agreement.
AGREEMENT
NOW,
THEREFORE, in consideration of the foregoing premises and the mutual covenants
and agreements hereinafter contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
intending to be legally bound, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1
“Affiliate” means any Person
that directly or indirectly controls, or is under control with, or is controlled
by such Person. As used in this definition, “control” (including with its
correlative meanings, “controlled by” and “under common control with”) shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person (whether through ownership
of securities or partnership or other ownership interests, by contract or
otherwise).
1.2 “Business Day” means any day
other than Saturday, Sunday or other day on which commercial banks in The City
of New York are authorized or required by law to remain closed.
1.3 “Closing Date” means the date
hereof.
1.4 “Common Stock” means the common
stock, par value $0.33 per share, of the Company.
1.5 “Company” has the meaning set
forth in the preamble.
1.6 “Consulting Agreement” has the
meaning set forth in the preamble.
1.7 “Consulting Shares” means the
shares of Common Stock issued to Xxxxxxx Xxxxx in connection with the Consulting
Agreement.
1.8 “Conversion Shares” has the
meaning set forth in the Purchase Agreement.
1.9 “Designated Holder” means a
holder of Registrable Securities.
1.10 “Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the SEC promulgated thereunder.
1.11 “Holder(s)” has the meaning set
forth in the preamble.
1.12
“Indemnified Party” has the
meaning set forth in Section
2.9.
1.13 “Losses” has the meaning set
forth in Section
2.9.
1.14 “Majority Holders” means
holders of a majority (by number of shares) of the Registrable
Securities.
1.15 “Person” means any individual,
company, partnership, firm, joint venture, association, joint-stock company,
trust, unincorporated organization, governmental body or other
entity.
1.16 “Piggyback Registration” has
the meaning set forth in Section
2.4.
1.17 “Purchase Agreement” has the
meaning set forth in the recitals.
1.18 “Registration Period” means the
three (3) years, plus any additional periods required by the second paragraph of
Section 2.1,
during which the Registration Statement contemplated by Section 2.1 is
required to remain effective.
1.19 “Registrable Securities”
means:
(a) the
Conversion Shares, the Consulting Shares and any other shares of Common Stock
held by a Holder as of the date of this Agreement;
(b) any
shares of Common Stock or other securities issued or issuable, directly or
indirectly in respect of the Conversion Shares or Common Stock referenced in
clause (a) above by way of a spin-off, split-off, dividend, distribution or
stock split or in connection with a combination of shares, reclassification,
merger, consolidation or reorganization; and
(c) any
securities issued in replacement of or exchange for any securities described in
clause (a) or (b) above.
As to any
particular Registrable Securities, such securities shall cease to be Registrable
Securities (w) when sold pursuant to an effective registration statement under
the Securities Act, (x) when such securities may be sold pursuant to Rule 144
(or any similar provision then in force) under the Securities Act without
limitation thereunder on volume or manner of sale, (y) sold in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act under Section 4(1) thereof so that all transfer restrictions and
restrictive legends with respect to such securities are removed upon the
consummation of such sale and the seller and purchaser of such securities
receive an opinion of counsel for the Company, which shall be in form and
content reasonably satisfactory to the seller and purchaser and their respective
counsel, to the effect that such securities in the hands of the purchaser are
freely transferable without restriction or registration under the Securities Act
in any public or private transaction, or (z) when such securities cease to be
outstanding.
1.20 “Registration Statement” means
a registration statement on Form S-1 (or such other form as the Company is then
eligible to use) filed by the Company under the Securities Act 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 in such registration statement, which shall permit the
Designated Holders to offer and sell, on a delayed or continuous basis pursuant
to Rule 415 under the Securities Act, the Registrable Securities.
1.21 “Representatives” has the
meaning set forth in Section
2.9.
1.22 “Required Filing Date” has the
meaning set forth in Section
2.1.
1.23 “Required Registration
Statement” has the meaning set forth in Section
2.1.
1.24 “SEC” means the United States
Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act.
1.25 “Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations of the SEC
promulgated thereunder.
ARTICLE II
REGISTRATION
RIGHTS
2.1
Required
Registration. (a) The Company shall use its
reasonable best efforts to prepare and as promptly as possible after the date
hereof, but in any event, not later than ninety (90) days from the Closing Date
(or, if such 90th day is
not a Business Day, by the first Business Day thereafter) (the “Required Filing Date”) file a
Registration Statement with the SEC (the “Required Registration
Statement”) and cause the Required Registration Statement to be declared
effective under the Securities Act within 150 days after the Closing Date (or,
if such 150th day is
not a Business Day, by the first Business Day thereafter). If the
Required Registration Statement is not declared effective under the Securities
Act within 150 days after the Closing Date (or, if such 150th day is not a
Business Day, by the first Business Day thereafter), other than due to failure
by a Designated Holder to furnish information or consents required (as provided
in Section 2.7
hereof or as reasonably determined necessary by the Company after consultation
with counsel) to be included in such Required Registration Statement, the
Company shall pay each Designated Holder in cash an amount per month equal to
one and one-half percent (1.5%) of the amount paid by such Designated Holder for
the Registrable Securities pursuant to the Purchase Agreement, which amount
shall be payable by the tenth (10th) day after the end of each such month and
shall be the Designated Holders’ sole remedy for such failure (other than any
equitable remedies available to such Holder, such as specific performance). The
amounts payable to each Designated Holder pursuant to this Section shall bear
interest at a rate of the lesser of twelve percent (12%) per annum, compounded
annually, or the maximum rate then permitted by applicable law.
(b) The
Company shall use its reasonable best efforts to keep the Required Registration
Statement continuously effective for a period of three years after the
Registration Statement first becomes effective, plus the number of days during
which such Registration Statement was not effective or usable pursuant to Sections 2.5(b),
2.6(e) or 2.6(i) hereof, or
such shorter period as will terminate when all of the Registrable Securities
covered by the Required Registration Statement have been disposed of in
accordance with the Required Registration Statement or have otherwise ceased to
be Registrable Securities. In the event the Company shall give any notice
pursuant to Sections
2.6(e) or 2.6(i) hereof, the
additional time period mentioned in this Section 2.1 during
which the Required Registration Statement is to remain effective shall be
extended by the number of days during the period from and including the date of
the giving of such notice pursuant to Sections 2.6(e) or
2.6 (i) to and
including the date when each seller of a Registrable Security covered by the
Registration Statement shall have received the copies of the supplemented or
amended prospectus contemplated by Sections
2.6(e).
(c) The
Company may include in any registration filed pursuant to this Section 2.1, such
additional securities as it may be obligated to include pursuant to any
contractual obligations entered into by the Company, and, subject to any
restrictions contained elsewhere in this Agreement, such securities as the
Company may elect to register for its own account.
2.2
Current Public
Information. The Company covenants that it will
use its reasonable best efforts to (a) make and keep public information
available, as those terms are understood and defined in Rule 144(c)(1) under the
Securities Act or any similar or analogous rule promulgated under the Securities
Act, (b) file with the SEC, in a timely manner, all reports and other documents
required to be filed by it under the Exchange Act and the rules and regulations
adopted by the SEC thereunder, and (c) take such further action as the
Designated Holders may reasonably request, in each case to the extent required
to enable the holders of Registrable Securities to sell Registrable Securities
pursuant to Rule 144 or Rule 144A adopted by the SEC under the Securities Act or
any similar rule or regulation hereafter adopted by the SEC.
2.3
Demand
Registration.
(a)
Subject to Section
2.3(g), upon the written request of the Majority Holders requesting that
the Company effect the registration under the Securities Act of all or part of
such Designated Holders’ Registrable Securities and specifying the intended
method of disposition thereof, the Company will promptly give written notice of
such requested registration to all Designated Holders, and thereafter the
Company will use its reasonable best efforts to effect as expeditiously as
possible the registration under the Securities Act of the
following:
(i) the
Registrable Securities that the Company has been so requested to be registered
by such Designated Holders for disposition in accordance with the intended
method of disposition stated in such request;
(ii) all
other Registrable Securities the holders of which shall have made a written
request to the Company for registration thereof within 30 days after the giving
of such written notice by the Company (which request shall specify the intended
method of disposition of such Registrable Securities); and
(iii)
all
shares of Common Stock that the Company or Persons entitled to exercise
“piggy-back” registration rights pursuant to contractual commitments of the
Company may elect to register in connection with the offering of Registrable
Securities pursuant to this Section 2.3 or
otherwise;
all to
the extent requisite to permit the disposition (in accordance with the intended
methods thereof as aforesaid) of the Registrable Securities and the additional
shares of Common Stock, if any, so to be registered; provided, that, the
provisions of this Section 2.3 shall not
require the Company to effect more than two registrations of Registrable
Securities in addition to the Required Registration Statement contemplated by
Section
2.1.
(b) The
registrations under this Section 2.3 shall be
on an appropriate form for a Registration Statement that permits the disposition
of such Registrable Securities in accordance with the intended methods of
distribution specified by the Majority Holders in their request for
registration. The Company agrees to include in any such Registration Statement
all information that Designated Holders of Registrable Securities being
registered therein shall reasonably request so as to allow them to sell their
Registrable Securities by the method of distribution selected by
them.
(c) A
registration requested pursuant to this Section 2.3 shall not
be deemed to have been effected (i) unless a Registration Statement with respect
thereto has become effective; provided, that a
Registration Statement that does not become effective after the Company has
filed a Registration Statement with respect thereto solely by reason of the
refusal to proceed of the Majority Holders (other than a refusal to proceed
based upon the advice of counsel relating to a matter with respect to the
Company) shall be deemed to have been effected by the Company at the request of
the Majority Holders unless the Designated Holders electing to have Registrable
Securities registered pursuant to such Registration Statement shall have elected
to pay all fees and expenses otherwise payable by the Company in connection with
such registration pursuant to Section 2.8, (ii) if,
after it has become effective, such registration is withdrawn by the Company
(other than at the request of the Majority Holders) or interfered with by any
stop order, injunction or other order or requirement of the SEC or other
governmental agency or court for any reason prior to the expiration of a 180 day
period following such Registration Statement’s effectiveness, or (iii) if the
conditions to closing specified in any purchase agreement or underwriting
agreement entered into in connection with such registration are not satisfied,
other than due solely to some act or omission by the Designated Holders electing
to have Registrable Securities registered pursuant to such Registration
Statement.
(d) If
a requested registration pursuant to this Section 2.3 involves
an underwritten offering, the underwriter or underwriters thereof shall be
selected by the holders of a majority (by number of shares) of the Registrable
Securities requested to be included in such Registration Statement and shall be
reasonably acceptable to the Company.
(e) If
(i) a requested registration pursuant to this Section 2.3 involves
an underwritten offering, and the managing underwriter shall advise the Company
that, in its opinion, the number of securities requested to be included in such
registration (including securities of the Company or any other Person that are
not Registrable Securities) exceeds the number that can be sold in such offering
in an orderly manner within a price range reasonably acceptable to the Company
and to the holders of a majority (by number of shares) of the Registrable
Securities requested to be included in such Registration Statement or (ii) if
any requirement of the form on which the Registration Statement is filed or rule
promulgated by the SEC or if any written interpretation or written guidance of
the Staff of the SEC sets forth a limitation on the number of securities
permitted to be registered on a particular Registration Statement (and
notwithstanding that the Company used diligent efforts to advocate with the SEC
for the registration of all or a greater portion of the securities), the Company
will include in such registration, to the extent of the number that the Company
is so advised can be sold in such offering, (i) first, any shares of Common
Stock or other securities as to which the Company has granted registration
rights prior to the date of this Agreement that by their terms require priority
over the rights granted under this Section 2.3, (ii)
second, the Registrable Securities that have been requested to be included in
such registration by the Designated Holders pursuant to this Agreement (pro rata
based on the amount of Registrable Securities sought to be registered by such
persons), (iii) third, provided that no securities sought to be included by the
Designated Holders have been excluded from such registration, the securities of
other persons entitled to exercise “piggy-back” registration rights pursuant to
other contractual commitments of the Company (pro rata based on the amount of
securities sought to be registered by such persons) and (iv) fourth, securities
the Company proposes to register for its own account.
(f) The
Company shall use its reasonable best efforts to keep any Registration Statement
filed pursuant to this Section 2.3
continuously effective (i) for a period of three (3) years after the
Registration Statement first becomes effective, plus the number of days during
which such Registration Statement was not effective or usable pursuant to Sections 2.5(b),
2.6(e) or 2.6(i); (ii) if such
Registration Statement related to an underwritten offering, for such period as
in the opinion of counsel for the underwriters a prospectus is required by law
to be delivered in connection with sales of Registrable Securities by an
underwriter or dealer, or (iii) for such shorter period as will terminate when
all of the Registrable Securities covered by such Registration Statement have
been disposed of in accordance with such Registration Statement or have
otherwise ceased to be Registrable Securities. In the event the Company shall
give any notice pursuant to Sections 2.6(e) or
2.6(i), the
additional time period mentioned in Section 2.3(f)(i)
during which the Required Registration Statement is to remain effective shall be
extended by the number of days during the period from and including the date of
the giving of such notice pursuant to Sections 2.6(e) or
2.6(i) to and
including the date when each seller of a Registrable Security covered by the
Registration Statement shall have received the copies of the supplemented or
amended prospectus contemplated by Sections
2.6(e).
(g) The
right of Designated Holders to have Registrable Securities registered pursuant
to this Section
2.3 is only exercisable following the expiration of the Registration
Period or, if, prior to the expiration of the Registration Period, the Company
becomes ineligible to register the Registrable Securities on the Registration
Statement contemplated by Section 2.1 or such
Registration Statement otherwise becomes unusable or ineffective and the Company
is not able to correct the misstatements, have the applicable stop order
rescinded or otherwise restore the effectiveness of the Registration Statement
as contemplated by this Agreement.
2.4
Piggyback
Registration.
(a) Whenever
the Company proposes to register any of its common stock under the Securities
Act (other than pursuant to a registration pursuant to Section 2.1, Section 2.3 or a
registration on Form S-4 or S-8 or any successor or similar forms or a
registration of shares in connection with an acquisition) and the registration
form to be used may be used for the registration of Registrable Securities,
whether or not for sale for its own account, the Company will give prompt
written notice to all Designated Holders, and such notice shall describe the
proposed registration and distribution and offer to all Designated Holders the
opportunity to register the number of Registrable Securities as each such
Designated Holder may request. The Company will include in such registration
statement all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 15 days after the
Designated Holders’ receipt of the Company’s notice (a “Piggyback
Registration”).
(b) The
Company shall use its reasonable efforts to cause the managing underwriter or
underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggyback Registration to be included
on the same terms and conditions as any similar securities of the Company or any
other security holder included therein and to permit the sale or other
disposition of such Registrable Securities in accordance with the intended
method of distribution thereof.
(c) Any
Designated Holder shall have the right to withdraw its request for inclusion of
its Registrable Securities in any Registration Statement pursuant to this Section 2.4 by giving
written notice to the Company of its request to withdraw; provided, that in the
event of such withdrawal (other than pursuant to Section 2.4(e)
hereof), the Company shall not be required to reimburse such holder for the fees
and expenses referred to in Section 2.8 hereof
incurred by such Designated Holder prior to such withdrawal, unless such
withdrawal was due to a material adverse change to the Company. The Company may
withdraw a Piggyback Registration at any time prior to the time it becomes
effective.
(d) If
(i) a Piggyback Registration involves an underwritten offering of the securities
being registered, whether or not for sale for the account of the Company, to be
distributed (on a firm commitment basis) by or through one or more underwriters
of recognized standing under underwriting terms appropriate for such a
transaction, and the managing underwriter of such underwritten offering shall
advise the Company that, in its opinion, the number of securities requested to
be included in such offering (including securities of the Company or any other
Person which are not Registrable Securities) exceeds the number which can be
sold in such offering in an orderly manner within a price range reasonably
acceptable to the Company and, if registration of such offering is pursuant to a
contractual commitment of the Company to holders of its securities, holders of a
majority (by number of shares) of such securities, or (ii) if any requirement of
the form on which the Registration Statement is filed or rule promulgated by the
SEC or if any written interpretation or written guidance of the Staff of the SEC
sets forth a limitation on the number of securities permitted to be registered
on a particular Registration Statement (and notwithstanding that the Company
used diligent efforts to advocate with the SEC for the registration of all or a
greater portion of the securities), then the Company will be required to include
in such registration only the amount of securities that it is so advised should
be included in such registration. In such event: (x) in cases initially
involving the registration for sale of securities for the Company’s own account,
securities shall be registered in such offering in the following order of
priority: (i) first, the securities that the Company proposes to register, (ii)
second, any shares of Common Stock or other securities as to which the Company
has granted registration rights prior to the date of this Agreement that by
their terms require priority over the rights granted under this Section 2.4, (iii)
third, Registrable Securities and securities that have been requested to be
included in such registration by other Persons entitled to exercise “piggy-back”
registration rights pursuant to contractual commitments of the Company (pro rata
based on the amount of securities sought to be registered by Designated Holders
and such other Persons); and (y) in cases not initially involving the
registration for sale of securities for the Company’s own account, securities
shall be registered in such offering in the following order of priority: (i)
first, the securities of any Person whose exercise of a “demand” registration
right pursuant to a contractual commitment of the Company is the basis for the
registration, (ii) second, Registrable Securities and securities that have been
requested to be included in such registration by Persons entitled to exercise
“piggy-back” registration rights pursuant to contractual commitments of the
Company (pro rata based on the amount of securities sought to be registered by
Designated Holders and such other Persons), and (iii) third, the securities that
the Company proposes to register for its own account.
(e) If,
as a result of the proration provisions of this Section 2.4, any
Designated Holders shall not be entitled to include all Registrable Securities
in a Piggyback Registration that such Designated Holders has requested to be
included, such holder may elect to withdraw its request to include Registrable
Securities in such registration.
(f) The
right of the Designated Holders to register Registrable Securities pursuant to
this Section
2.4 is only exercisable with respect to Registrable Securities not then
covered by an effective Registration Statement contemplated by Section 2.1 or Section 2.3. The
rights of the Designated Holders under this Section 2.4 shall
survive the expiration of the Registration Period.
2.5
Holdback
Agreements.
(a) To
the extent not inconsistent with applicable law, in connection with a public
offering of securities of the Company, upon the request of the Company or the
underwriter, in the case of an underwritten public offering of the Company’s
securities, each Designated Holder will not effect any public sale or
distribution (other than those included in the registration statement being
filed with respect to such public offering) of any securities of the Company, or
any securities, options or rights convertible into or exchangeable or
exercisable for such securities during the 14 days prior to and the 90-day
period beginning on such effective date, unless (in the case of an underwritten
public offering) the managing underwriters otherwise agree to a shorter period
of time. Notwithstanding the foregoing, no Designated Holder shall be required
to enter into any such “lock up” agreement unless and until all of the Company’s
executive officers and directors execute substantially similar “lock up”
agreements. Neither the Company nor the underwriter shall amend, terminate or
waive a “lock up” agreement unless each “lock up” agreement with a Designated
Holder is also amended or waived in a similar manner or terminated, as the case
may be.
(b) The
Company shall have the right at any time, to suspend the filing of a
Registration Statement under Section 2.3 or
require that the Designated Holders of Registrable Securities suspend further
open market offers and sales of Registrable Securities pursuant to a
Registration Statement filed hereunder for a period not to exceed an aggregate
of 45 days in any six consecutive month period or an aggregate of 90 days in any
twelve consecutive month period for valid business reasons (not including
avoidance of their obligations hereunder) (i) to avoid premature public
disclosure of a pending corporate transaction, including pending acquisitions or
divestitures of assets, mergers and combinations and similar events; and (ii)
upon the occurrence of any of the events specified in Sections 2.6(e) or
2.6
(i).
2.6
Registration
Procedures. The Company will use its reasonable
best efforts to effect the registration of Registrable Securities pursuant to
this Agreement in accordance with the intended methods of disposition thereof,
and pursuant thereto the Company will as expeditiously as possible:
(a) at
least three (3) Business Days before filing the Registration Statement, the
Company will furnish to counsel of any seller of Registrable Securities included
in the Registration Statement (assuming the Company has been timely notified as
to the identity and contact information for such counsel), a copy of such
Registration Statement, and will provide such counsel with all correspondence
with the SEC regarding the Registration Statement;
(b) prepare
and file with the SEC such amendments and supplements to such Registration
Statement and the prospectus used in connection therewith as may be necessary to
keep such Registration Statement effective for the period provided for in Section 2.1 or Section 2.3, or the
periods contemplated by the Company or the Persons requesting any Registration
Statement filed pursuant to Section
2.4;
(c) furnish
to each seller of Registrable Securities included in the Registration Statement
such number of copies of such Registration Statement, each amendment and
supplement thereto, the prospectus included in the Registration Statement
(including each preliminary prospectus) and such other documents as such seller
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such seller;
(d) use
its reasonable best efforts to register or qualify such Registrable Securities
under such state securities or blue sky laws as any Designated Holder reasonably
requests, and do any and all other acts and things that may be reasonably
necessary or advisable to enable such seller to consummate the disposition in
such jurisdictions of the Registrable Securities owned by such seller and to
keep each such registration or qualification (or exemption therefrom) effective
during the period that the Registration Statement is required to be kept
effective (provided, that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this subparagraph, (ii) subject itself to taxation
in any such jurisdiction, or (iii) consent to general service of process in any
such jurisdiction;
(e) notify
each seller of such Registrable Securities, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in the
Registration Statement contains an untrue statement of a material fact or omits
any fact necessary to make the statements therein not misleading in the light of
the circumstances under which they were made, and, at the request of any such
seller, the Company will as soon as possible prepare and furnish to such seller
a reasonable number of copies of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus will not contain an untrue statement of a material fact or omit
to state any fact necessary to make the statements therein not misleading in the
light of the circumstances under which they were made;
(f) cause
all such Registrable Securities to be listed on each national securities
exchange on which similar securities issued by the Company are then listed and,
if not so listed, to be approved for trading on any automated quotation system
of a national securities association on which similar securities of the Company
are then quoted and shall use reasonable best efforts to maintain such listing
or quotation;
(g) provide
a transfer agent and registrar for all Registrable Securities included in the
Registration Statement not later than the effective date of such Registration
Statement;
(h) enter
into such customary agreements (including underwriting agreements) and take all
other customary and appropriate actions as the holders of a majority of the
Registrable Securities being registered or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities;
(i) notify
each seller of Registrable Securities of any stop order issued or threatened by
the SEC;
(j) in
the event of the issuance of any stop order suspending the effectiveness of a
Registration Statement, or of any order suspending or preventing the use of any
related prospectus or suspending the qualification of any securities included in
such Registration Statement for sale in any jurisdiction, the Company will use
its reasonable efforts to promptly obtain the withdrawal of such
order;
(k) if
requested by the holders of a majority of the Registrable Securities being
registered, obtain one or more comfort letters, dated the effective date of the
Registration Statement (and, if such registration includes an underwritten
offering, dated the date of the closing under the underwriting agreement),
signed by the Company’s independent public accountants in customary form and
covering such matter of the type customarily covered by such accountant comfort
letters;
(l) if
requested by the holders of a majority of the Registrable Securities being
registered, provide a legal opinion of the Company’s outside counsel, dated the
effective date of such Registration Statement (and, if such registration
includes an underwritten offering, dated the date of the closing under the
underwriting agreement), with respect to the Registration Statement, each
amendment and supplement thereto, the prospectus included therein (including the
preliminary prospectus) and such other documents relating thereto in customary
form and covering such matters of the type customarily covered by legal opinions
of such nature;
(m) subject to
execution and delivery of mutually satisfactory confidentiality agreements, make
available at reasonable times for inspection by any seller of Registrable
Securities, any managing underwriter participating in any disposition of such
Registrable Securities pursuant to the Registration Statement, and any attorney,
accountant or other agent retained by such seller or any managing underwriter,
during normal business hours of the Company at the Company’s corporate office
and without unreasonable disruption of the Company’s business or unreasonable
expense to the Company and solely for the purpose of due diligence with respect
to the Registration Statement, legally disclosable, financial and other records
and pertinent corporate documents of the Company and its subsidiaries reasonably
requested by such persons, and cause the Company’s employees and independent
accountants to supply all similar information reasonably requested by any such
seller, managing underwriter, attorney, accountant or agent in connection with
the Registration Statement, as shall be reasonably necessary to enable them to
exercise their due diligence responsibility under applicable securities
laws;
(n) cooperate
with each seller of Registrable Securities and each underwriter participating in
the disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the National Association of
Securities Dealers; and
(o) take
all other steps reasonably necessary to effect the registration of the
Registrable Securities contemplated hereby.
2.7
Conditions Precedent to
Company’s Obligations Pursuant to this
Agreement. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Agreement
that each of the Designated Holders whose Registrable Securities are to be
registered pursuant to this Agreement shall furnish such Designated Holder’s
written agreement to be bound by the terms and conditions of this Agreement
prior to performance by the Company of its obligations under this Agreement. By
executing and delivering this Agreement, each Designated Holder represents and
warrants that the information concerning, and representations and warranties by,
such Designated Holder, including information concerning the securities of the
Company held, beneficially or of record, by such Designated Holder, furnished to
the Company pursuant to the Purchase Agreement or otherwise, are true and
correct as if the same were represented and warranted on the date any
Registration Statement required pursuant to this Agreement is filed with the SEC
or the date of filing with the SEC of any amendment thereto, and each Designated
Holder covenants to immediately notify the Company in writing of any change in
any such information, representation or warranty and to refrain from offering or
disposing of any securities pursuant to any Registration Statement until the
Company has reflected such change in such Registration Statement. By executing
and delivering this Agreement, each Designated Holder further agrees to furnish
any additional information or consents as the Company may reasonably request in
connection with any action to be taken by the Company pursuant to this
Agreement, and to pay such Designated Holder’s expenses that are not required to
be paid by the Company pursuant to this Agreement.
2.8
Fees and
Expenses. All expenses incident to the Company’s
performance of or compliance with this Agreement including, without limitation,
all registration and filing fees payable by the Company, fees and expenses of
compliance by the Company with securities or blue sky laws, printing expenses of
the Company, messenger and delivery expenses of the Company, and fees and
disbursements of counsel for the Company and all independent certified public
accountants of the Company, and other Persons retained by the Company will be
borne by the Company, and the Company will pay its internal expenses (including,
without limitation, all salaries and expenses of the Company’s employees
performing legal or accounting duties), the expense of any annual audit or
quarterly review, the expense of any liability insurance of the Company and the
expenses and fees for listing or approval for trading of the securities to be
registered on each securities exchange on which similar securities issued by the
Company are then listed or on any automated quotation system of a national
securities association on which similar securities of the Company are quoted. In
connection with any Registration Statement filed hereunder, the Company will pay
the reasonable fees and expenses of a single counsel retained by the Designated
Holders of a majority (by number of shares) of the Registrable Securities
requested to be included in such Registration Statement. The Company shall have
no obligation to pay any underwriting discounts or commissions attributable to
the sale of Registrable Securities and any of the expenses incurred by any
Designated Holder that are not specifically payable by the Company as described
above, such costs to be borne by such Designated Holder or Holders, including,
without limitation, the following: underwriting fees, discounts and expenses, if
any, applicable to any Designated Holder’s Registrable Securities; fees and
disbursements of counsel or other professionals that any Designated Holder may
choose to retain in connection with a Registration Statement filed pursuant to
this Agreement (except as otherwise provided herein); selling commissions or
stock transfer taxes applicable to the Registrable Securities registered on
behalf of any Designated Holder; any other expenses incurred by or on behalf of
such Designated Holder in connection with the offer and sale of such Designated
Holder’s Registrable Securities other than expenses that the Company is
expressly obligated to pay pursuant to this Agreement.
2.9
Indemnification.
(a) The
Company agrees to indemnify and hold harmless, to the fullest extent permitted
by law, each Designated Holder and its general or limited partners, officers,
directors, members, managers, employees, advisors, representatives, agents and
Affiliates (collectively, the “Representatives”) from and
against any loss, claim, damage, liability, attorney’s fees, cost or expense and
costs and expenses of investigating and defending any such claim (collectively,
the “Losses”), joint or
several, and any action in respect thereof to which such Designated Holder or
its Representatives may become subject under the Securities Act or otherwise,
insofar as such Losses (or actions or proceedings, whether commenced or
threatened, in respect thereto) arise out of or are based upon or caused by (i)
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement, prospectus or preliminary or summary prospectus or
any amendment or supplement thereto or (ii) 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, and the Company will reimburse such
Designated Holder and its Representatives for any legal or any other expenses
incurred by them in connection with investigating or defending or preparing to
defend against any such Loss, action or proceeding; provided, however, that the Company shall not be
liable to any such Designated Holder or other indemnitee in any such case to the
extent, and only to the extent, that any such Loss (or action or proceeding,
whether commenced or threatened, in respect thereof) arises out of or is based
upon (x) an untrue statement or alleged untrue statement or omission or alleged
omission, made in such Registration Statement, any such prospectus or
preliminary or summary prospectus or any amendment or supplement thereto, in
reliance upon, and in conformity with, written information prepared and
furnished to the Company by such Designated Holder or its Affiliates or
Representatives expressly for use therein or (y) use of a Registration Statement
or the related prospectus during a period when a stop order has been issued in
respect of such Registration Statement or any proceedings for that purpose have
been initiated or use of a prospectus when use of such prospectus has been
suspended pursuant to Sections 2.5(b),
2.6(e);
provided that in each case, that such Holder was given prior written notice in
accordance with Section 3.6 hereof of
such stop order, initiation of proceedings or suspension from the Company. In no
event, however, shall the Company be liable for indirect, incidental or
consequential or special damages of any kind, even if the Company was aware of
or specifically advised as to the possibility of such damages. In connection
with an underwritten offering, the Company will indemnify such underwriters,
their officers and directors and each Person who controls such underwriters
(within the meaning of the Securities Act) to the same extent as provided above
with respect to the indemnification of the Designated Holders if requested in
connection with any Registration Statement.
(b) In
connection with the filing of the Registration Statement by the Company pursuant
to this Agreement, the Designated Holders will furnish to the Company in writing
such information as the Company reasonably requests for use in connection with
such Registration Statement and the related prospectus and, to the fullest
extent permitted by law, each such Designated Holder will indemnify and hold
harmless the Company and its Representatives from and against any Losses,
severally but not jointly, and any action in respect thereof to which the
Company and its Representatives may become subject under the Securities Act or
otherwise, insofar as such Losses (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon (i) the
purchase or sale of Registrable Securities during a suspension as set forth in
Sections
2.5(b), 2.6(e) or 2.6(i) hereof, in
each case after written notice of such suspension was given to the Designated
Holder pursuant to the terms of Section 3.6 hereof,
(ii) any untrue or alleged untrue statement of a material fact contained in the
Registration Statement, prospectus or preliminary or summary prospectus or any
amendment or supplement thereto, or (iii) any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but, with respect to clauses (ii) and (iii) above, only
to the extent that such untrue statement or omission is made in such
Registration Statement, any such prospectus or preliminary or summary prospectus
or any amendment or supplement thereto, in reliance upon and in conformity with
written information prepared and furnished to the Company by such Designated
Holder expressly for use therein or by failure of such Designated Holder to
deliver a copy of the Registration Statement or prospectus or any amendments or
supplements thereto, and such Designated Holder will reimburse the Company and
each Representative for any legal or any other expenses incurred by them in
connection with investigating or defending or preparing to defend against any
such Loss, action or proceeding; provided, however, that such Designated Holder
shall not be liable in any such case to the extent that prior to the filing of
any such Registration Statement or prospectus or amendment or supplement
thereto, such Designated Holder has furnished in writing to the Company
information expressly for use in such Registration Statement or prospectus or
any amendment or supplement thereto that corrected or made not misleading
information previously furnished to the Company. In no event, however, shall any
Designated Holder be liable for indirect, incidental or consequential or special
damages of any kind, even if the Designated Holder was aware of or specifically
advised as to the possibility of such damages. In no event shall the liability
of any Designated Holder hereunder be greater than the dollar amount of the net
proceeds received by such Designated Holder upon the sale of the Registrable
Securities or other securities pursuant to the Registration
Statement.
(c) Promptly
after receipt by any Person in respect of which indemnity may be sought pursuant
to Section
2.9(a) or 2.9(b) (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”), promptly
notify the Indemnifying Party in writing of the claim or the commencement of
such action; provided, that the failure to so notify the Indemnifying Party
shall not relieve the Indemnifying Party from any liability that it may have to
an Indemnified Party under Section 2.9(a) or
2.9(b) except
to the extent of any actual 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. 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 Representatives 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 and shall be paid by 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 written opinion of counsel to 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 circumstances, 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. No Indemnifying Party shall,
without the prior written 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 other than the payment of monetary damages by
the Indemnifying Party on behalf of the Indemnified Party. 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.
(d) If
the indemnification provided for in this Section 2.9 is
unavailable to the Indemnified Parties in respect of any Losses 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 Losses in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Designated
Holders 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 the Designated Holders on the other in
connection with the statements or omissions that resulted in such Losses, as
well as any other relevant equitable considerations. The relative fault of the
Company on the one hand and of each Designated Holder on the other shall be
determined by reference to, among other things, whether any action taken,
including any 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 such party, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
The
Company and the Designated Holders agree that it would not be just and equitable
if contribution pursuant to this Section 2.9(d) were
determined by pro rata allocation or by any other method of allocation that 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
result of the Losses 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 2.9, no
Designated 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
Designated Holder were offered to the public. 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. Each Designated
Holder’s obligations to contribute pursuant to this Section 2.9 is
several in the proportion that the proceeds of the offering received by such
Designated Holder bears to the total proceeds of the offering received by all
the Designated Holders. The indemnification provided by this Section 2.9 shall be
a continuing right to indemnification with respect to sales of Registrable
Securities and shall survive the registration and sale of any Registrable
Securities by any Designated Holder and the expiration or termination of this
Agreement. The indemnity and contribution agreements contained herein are in
addition to any liability that any Indemnifying Party might have to any
Indemnified Party.
2.10 Participation in
Registrations.
(a)
No Person may participate in any registration hereunder that is underwritten
unless such Person (i) agrees to sell such Person’s securities on the basis
provided in any underwriting arrangements approved by the Person or Persons
entitled hereunder to approve such arrangements and (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and this Agreement.
(b) Each
Person that is participating in any registration under this Agreement agrees
that, upon receipt of any notice in accordance with the terms of Section 3.6 hereof
from the Company of the happening of any event of the kind described in Section 2.6(e) or
2.6(i) above,
such Person will forthwith discontinue any further disposition of its
Registrable Securities pursuant to the Registration Statement and all use of the
Registration Statement or any prospectus or related document until such Person
receives copies of a supplemented or amended prospectus as contemplated by such
Section 2.6(e)
and, if so directed by the Company, will deliver to the Company (at the
Company’s expense) all copies, other than permanent file copies then in such
Designated Holder’s possession, of such documents at the time of receipt of such
notice. Furthermore, each Designated Holder agrees that it will comply with the
prospectus delivery requirements of the Securities Act applicable to it in
connection with any sale of Registrable Securities pursuant to a Registration
Statement and if such Designated Holder uses a prospectus in connection with the
offering and sale of any of the Registrable Securities, the Designated Holder
will use only the latest version of such prospectus provided to the Designated
Holder by the Company prior to the time at which a sale of Registrable
Securities has been made.
ARTICLE III
MISCELLANEOUS
3.1
[Reserved]
3.2
No Inconsistent
Agreements. Neither the Company nor any of its
subsidiaries has entered, as of the date hereof, nor shall the Company or any of
its subsidiaries, on or after the date of this Agreement, enter into any
agreement with respect to its securities, that would have the effect of
impairing the rights granted to the Holders in this Agreement or otherwise
conflicts with the provisions hereof. Except as set forth on Schedule 3.2, neither the Company nor
any of its subsidiaries has previously entered into any agreement granting any
registration rights with respect to any of its securities to any Person that
have not been satisfied in full.
3.3
Amendments and
Waivers. The provisions of this Agreement may be
amended and the Company may take action herein prohibited, or omit to perform
any act herein required to be performed by it, if, but only if, the Company has
obtained the written consent of the Majority Holders.
3.4
Severability. Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be held to be prohibited by or invalid wider applicable law,
such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
3.5
Counterparts. This
Agreement may be executed in one or more counterparts each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
3.6
Notices. Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be delivered as set forth in the Purchase
Agreement.
3.7
Governing
Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be determined
in accordance with the provisions of the Purchase Agreement.
3.8
Captions. The
captions, headings and arrangements used in this Agreement
are for convenience only and do not in any way limit or amplify the terms and
provisions hereof.
3.9
No
Prejudice. The terms of this Agreement shall not
be construed in favor of or against any party on account of its participation in
the preparation hereof.
3.10 Remedy for
Breach. The Company hereby acknowledges that in
the event of any breach or threatened breach by the Company of any of the
provisions of this Agreement, the Designated Holders would have no adequate
remedy at law and could suffer substantial and irreparable damage. Accordingly,
the Company hereby agrees that, in such event, the Designated Holders shall be
entitled, and notwithstanding any election by any Designated Holder to claim
damages, to obtain a temporary and/or permanent injunction to restrain any such
breach or threatened breach or to obtain specific performance of any such
provisions, all without prejudice to any and all other remedies that any
Designated Holders may have at law or in equity.
3.11 Successors and
Assigns. This Agreement shall inure to the benefit of and be binding upon
the successors and permitted assigns of each of the parties and shall inure to
the benefit of each Holder. The Company may not assign (except by merger) its
rights or obligations hereunder without the prior written consent of all of the
Holders of the then outstanding Registrable Securities. Each Holder may assign
their respective rights hereunder in the manner and to the Persons as permitted
under the Purchase Agreement.
3.12 Entire
Agreement. 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.
3.13 Confidentiality. Each
Designated Holder agrees to keep confidential and not to disclose to or use for
the benefit of any third party any information that at any time is communicated
by the Company or its Representatives as being confidential without the prior
written approval of the Company; provided, however, that this provision shall not
apply to information the Designated Holder proves is already part of the public
domain (except by breach of this Agreement) or is required to be disclosed by
law, provided that Designated Holder provides the Company with advance notice of
such disclosure and cooperates with the Company to prevent or limit the scope of
such disclosure.
3.14 Independent Nature of
Holders’ Obligations and Rights. The obligations of each Holder hereunder
are several and not joint with the obligations of any other Holder hereunder,
and no Holder shall be responsible in any way for the performance of the
obligations of any other Holder hereunder. Nothing contained herein or in any
other agreement or document delivered at any closing, and no action taken by any
Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as
a partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Holders are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Holder shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Holder to be joined as an additional party in any
proceeding for such purpose.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed as of the date and year first written
above.
PATIENT
SAFETY
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TECHNOLOGIES,
INC.
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By:
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Title:
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Name
of Holder: _________________________
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Signature of Authorized
Signatory of Holder: _________________________
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Name
of Authorized Signatory: _________________________
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Title
of Authorized Signatory:
_________________________
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