EXHIBIT 10.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT"), is entered into as
of July 27, 1999, by and among Informational Medical Systems, Inc., a
Minnesota corporation ("IMS"), Xxxxx Xxxxx, Xxxxxx Xxxxx and Xxxxx Xxxxx
representing the holders of all the outstanding shares of Seller (each, a
"SHAREHOLDER," and collectively, the "SHAREHOLDERS"), and X.X.X.X. Software,
Inc. d/b/a xxxx.xxx a Georgia corporation (the "COMPANY").
WHEREAS:
A. Pursuant to the terms of the Asset Purchase Agreement, dated as of
July 27, 1999 (the "PURCHASE AGREEMENT"), by and among IMS, the Shareholders
and the Company, the Company is purchasing from IMS substantially all the
assets that have been associated with the business carried out by IMS (the
"PURCHASE") in exchange for shares of Common Stock of the Company (the
"SHARES") upon the terms and subject to the conditions of the Purchase
Agreement.
B. The Purchase Agreement provides for the execution and delivery of
this Agreement at the closing of the transactions contemplated thereby which
grants IMS certain rights to have its Shares registered under the Securities
Act of 1933, as amended (the "SECURITIES ACT").
NOW, THEREFORE, in consideration of the promises and mutual covenants
set forth in this Agreement, IMS, the Shareholders and the Company agree as
follows:
1. DEFINITIONS.
a. As used in this Agreement, the following terms shall have the
following meanings:
(i) "REGISTER", "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a Registration Statement or
Registration Statements in compliance with the Securities Act and the
declaration or ordering the effectiveness of such Registration Statement by
the United States Securities and Exchange Commission (the "SEC").
(ii) "REGISTRABLE SECURITIES" means the Shares (including
without limitation any Contingent Shares (as defined in the Purchase
Agreement)) and any shares of capital stock issued or issuable as a dividend
on or in exchange for or otherwise with respect to the Shares, PROVIDED,
HOWEVER, that such securities shall only be treated as Registrable Securities
if and so long as they have not been (i) sold to or through a broker or
dealer or underwriter in a public distribution or a public securities
transaction, or (ii) sold or are, in the opinion of counsel for the Company,
available for sale in a single transaction exempt from the registration and
prospectus delivery requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto are removed upon
the consummation such sale.
(iii) "REGISTRATION STATEMENT" means a registration statement
of the Company under the Securities Act.
b. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Purchase Agreement.
2. REGISTRATION.
a. Prior to December 31, 1999, the Company shall prepare and file
with the SEC a Registration Statement on Form S-3 (or another appropriate
form in the discretion in the discretion of the Company as is then available
to effect a registration of the Registrable Securities) covering the resale
of the Registrable Securities.
3. OBLIGATIONS OF PARENT.
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
a. The Company shall prepare and file with the SEC a Registration
Statement with respect to the Registrable Securities as provided in Section
2(a), and thereafter use its reasonable commercial efforts to cause such
Registration Statement relating to Registrable Securities to become effective.
b. The Company shall furnish to IMS (i) promptly after the
Registration Statement is prepared and publicly distributed, filed with the
SEC, or received by the Company, one copy of the Registration Statement and
any amendment thereto, each preliminary prospectus and prospectus and each
amendment or supplement thereto and (ii) such number of copies of a
prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and such other documents as IMS may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by
IMS. The Company will promptly notify IMS by facsimile of the effectiveness
of the Registration Statement or any post-effective amendment.
c. The Company shall use reasonable efforts to (i) register and
qualify the Registrable Securities covered by the Registration Statement
under such other securities or "blue sky" laws of such jurisdictions in the
United States as the Shareholders reasonably requests, and (ii) take all other
actions reasonably necessary or advisable to qualify the Registrable
Securities for sale in such jurisdictions; PROVIDED, HOWEVER, that the
Company shall not be required in connection therewith or as a condition
thereto to (i) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(c),(ii) subject
itself to general taxation in any such jurisdiction, (iii) file a general
consent to service of process in any such jurisdiction, (iv) provide any
undertakings that cause the Company undue expense or burden, or (v) make any
change in its charter or bylaws.
d. The Company shall notify IMS as promptly as practicable of (i) the
issuance by the SEC of a stop order suspending the effectiveness of the
Registration Statement, and (ii) the
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happening of any event, of which the Company has knowledge, as a result of
which the prospectus included in the Registration Statement, as then in
effect, includes an untrue statement of a material fact or omission to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading. In the case of an event in clause (ii)
above, the Company will use its reasonable efforts promptly to prepare a
supplement or amendment to the Registration Statement to correct such untrue
statement or omission, and deliver such number of copies of such supplement
or amendment to IMS, as IMS may reasonably request.
e. The Company shall use its reasonable efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest possible moment and to notify IMS of
the issuance of such order and the resolution thereof.
f. The sections of the Registration Statement covering information
with respect to IMS, IMS's beneficial ownership of securities of the Company
or IMS's intended method of disposition of Registrable Securities shall
conform to the information provided to the Company by IMS.
g. The Company shall (i) cause all the Registrable Securities covered
by the Registration Statement to be listed on each national securities
exchange on which securities of the same class or series issued by the
Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) secure
the designation and quotation, of all the Registrable Securities covered by
the Registration Statement on the Nasdaq National Market or, if not eligible
for the Nasdaq National Market on the Nasdaq SmallCap.
4. OBLIGATIONS OF IMS.
In connection with the registration of the Registrable Securities, IMS
shall have the following obligations:
a. It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities that IMS shall furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as
shall be reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.
b. IMS, by its acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of the Registration Statement
hereunder, unless IMS has notified the Company in writing of IMS's election
to exclude all of its Registrable Securities from the Registration Statement.
c. IMS agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 3(d) or 3(e), IMS
will immediately discontinue disposition of Registrable Securities pursuant
to the Registration Statement covering
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such Registrable Securities until IMS's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(f) or 3(g) and,
if so directed by the Company, IMS shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate
of destruction) all copies in IMS's possession, of the prospectus covering
such Registrable Securities at the time of receipt of such notice.
d. IMS may not participate in any underwritten registration hereunder
unless it (i) agrees to sell its Registrable Securities on the basis provided
in any underwriting arrangements in usual and customary form entered into by
the Company and (ii) complete and execute all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitations,
all reasonable registration, listing and qualification fees, printers and
accounting fees, the fees and disbursements of counsel for the Company (but
excluding any fees or expenses of counsel to IMS) shall be borne by the
Company.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the extend permitted by law, the Company will indemnify, hold
harmless and defend (i) IMS and (ii) the directors, officers, partners,
employees, agents and each person who controls IMS within the meaning of the
Securities Act or the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), if any, (each, an "INDEMNIFIED PERSON"), against any joint
or several losses, claims, damages, liabilities or expenses (collectively,
together with actions, proceedings or inquiries by any regulatory or
self-regulatory organization, whether commenced or threatened, in respect
thereof, "CLAIMS") to which any of them may become subject insofar as such
Claims arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact in a Registration Statement or the
omission or alleged omission to state therein a material fact required to be
stated or necessary to make the statements therein not misleading; (ii) any
untrue statement or alleged untrue statement of a material fact contained in
the final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission or
alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading; or (iii) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act, any
other law, including, without limitation, any state securities law, or any
rule or regulation thereunder relating to the offer or sale of the
Registrable Securities (the matters in the foregoing clauses (i) through
(iii) being, collectively, "VIOLATIONS"). Subject to the restrictions set
forth in Section 6(c) with respect to the number of legal counsel, the
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Company shall reimburse the Indemnified Person, promptly as such expenses are
incurred and are due and payable, for any reasonable legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (i) shall not apply
to a Claim arising out of or based upon a Violation which occurs in reliance
upon and in conformity with information furnished in writing to the Company
by any Indemnified Person or underwriter for such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3(c)
hereof and (ii) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf
of the Indemnified Person.
b. In connection with any Registration Statement in which IMS is
participating, IMS agrees to indemnify, hold harmless and defend, to the same
extent and in the same manner set forth in Section 6(a), the Company, each of
its directors, each of its officers who signs the Registration Statement,
each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act, any underwriter and any other stockholder
selling securities pursuant to the Registration Statement or any of its
directors or officers or any person who controls such stockholder or
underwriter within the meaning of the Securities Act or the Exchange Act
(collectively and together with an Indemnified Person, an "INDEMNIFIED
PARTY"), against any Claim to which any of them may become subject, under the
Securities Act, the Exchange Act or otherwise, insofar as such Claim arises
out of or is based upon any Violation by IMS, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by IMS for use
in connection with such Registration Statement. Subject to Section 6(c) IMS
will reimburse any legal or other expenses (promptly as such expenses are
incurred and are due and payable) reasonably incurred by them in connection
with investigating or defending any Claim; PROVIDED, HOWEVER, that the
indemnity agreement contained in this Section 6(b) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the
prior written consent of IMS, which consent shall not be unreasonably
withheld; PROVIDED, FURTHER, HOWEVER, that IMS shall be liable under this
Agreement (including this Section 6(b)) for only that amount as does not
exceed the net proceeds to IMS as result of the sale of Registrable
Securities pursuant to such Registration Statement. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of such Indemnified Party. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6(b)
with respect to any preliminary prospectus shall not inure to the benefit of
any Indemnified Party if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in
the prospectus, as then amended or supplemented.
c. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made
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against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; PROVIDED, HOWEVER, that an
Indemnified Person or Indemnified Party shall have the right to retain its
own counsel with the fees and expenses to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party,
the representation by such counsel of the Indemnified Person or Indemnified
Party and the indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person or Indemnified
Party and any other party represented by such counsel in such proceeding. The
indemnifying party shall pay for only one separate legal counsel for the
Indemnified Persons or the Indemnified Parties, as applicable, and such legal
counsel shall be selected by IMS, if IMS is entitled to indemnification
hereunder, or the Company, if the Company is entitled to indemnification
hereunder, as applicable. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Party under this Section 6, except to the extent that the
indemnifying party is actually prejudiced in its ability to defend such
action. The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is
incurred and is due and payable.
7. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived only by the mutual written consent of the Company and IMS, or
if IMS no longer exists, then the Shareholders holding a majority of the
Registrable Securities.
8. MISCELLANEOUS.
a. Any notices required or permitted to be given under the terms
hereof shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and shall be effective five days
after being placed in the mail, if mailed by regular U.S. mail, or upon
receipt, if delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile, in each case addressed to a
party. The addresses for such communications shall be:
If to the Company:
X.X.X.X. Software, Inc., d/b/a xxxx.xxx
0000 XxxxxXxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: 000-000-0000
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With copy to:
Xxxx.xxx
00 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: President
Facsimile: 000-000-0000
And a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Page Xxxxxxxxx
Facsimile: (000) 000-0000
If to IMS: to the address set forth immediately below IMS's name on the
signature page to this Agreement. Each party shall provide notice to the
other party of any change of its address.
b. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
c. This Agreement shall be enforced, governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements
made and to be performed entirely within such State. In the event that any
provision of this Agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to
the extent that it may conflict therewith and shall be deemed modified to
conform with such statute or rule of law. Any provision hereof which may
prove invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision hereof.
d. This Agreement supersedes all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof.
e. This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties hereto, PROVIDED, HOWEVER,
that the rights of IMS can only be assigned to the Shareholders.
f. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
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g. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute one
and the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this
Agreement.
h. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as the
other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
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IN WITNESS WHEREOF, the Company and IMS have caused this Agreement to be
duly executed as of the date first above written.
X.X.X.X. SOFTWARE, INC., D/B/A XXXX.XXX
By: /s/ Xxxxxx X. Xxxxxx, Xx.
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INFORMATION MEDICAL SYSTEMS, INC.
By: /s/ Xxxxx Xxxxx
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Name:
Title:
Address:
SHAREHOLDERS
/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
/s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx
/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
[Signature Page to Registration Rights Agreement]
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