EXHIBIT 4.10
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement dated as of December 29 2005 (this
"Agreement") by and between American HealthChoice, Inc., a New York
corporation, with principal executive offices located at 0000 Xxxxxx Xxxx,
Xxxxx 000-000, Xxxxxx Xxxxx, Xxxxx 00000 (the "Company"), and Golden Gate
Investors, Inc. (the "Holder").
WHEREAS, upon the terms and subject to the conditions of the
Securities Purchase Agreement dated as of even date herewith, by and between
the Holder and the Company (the "Securities Purchase Agreement"), the
Company has agreed to issue and sell to the Holder a Convertible Debenture
(the "Debenture") of the Company in the aggregate principal amount of
$30,000 which, upon the terms of and subject to the conditions contained
therein, is convertible into shares of the Company's Common Stock (the
"Common Stock") and a Warrant to purchase shares (the "Warrants") of the
Company's Common Stock (the "Warrant Shares"); and
WHEREAS, to induce the Holder to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide with
respect to the Common Stock issued upon conversion of the Debenture and the
Warrant Shares certain registration rights under the Securities Act;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto, intending to be legally
bound, hereby agree as follows:
Definitions
As used in this Agreement, the following terms shall have the
meanings:
"Affiliate" of any specified Person means any other Person
who directly, or indirectly through one or more intermediaries, is in
control of, is controlled by, or is under common control with, such
specified Person. For purposes of this definition, control of a Person
means the power, directly or indirectly, to direct or cause the direction of
the management and policies of such Person whether by contract, securities
ownership or otherwise; and the terms "controlling" and "controlled" have
the respective meanings correlative to the foregoing.
"Closing Date" means the date of this Agreement.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, or any
similar successor statute.
"Investor" means each of the Holder and any transferee or
assignee of Registrable Securities which agrees to become bound by all of
the terms and provisions of this Agreement in accordance with Section 8
hereof.
"Person" means any individual, partnership, corporation,
limited liability company, joint stock company, association, trust,
unincorporated organization, or a government or agency or political
subdivision thereof.
"Prospectus" means the prospectus (including, without
limitation, any preliminary prospectus and any final prospectus filed
pursuant to Rule 424(b) under the Securities Act, including any prospectus
that discloses information previously omitted from a prospectus filed as
part of an effective registration statement in reliance on Rule 430A under
the Securities Act) included in the Registration Statement, as amended or
supplemented by any prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities covered by the
Registration Statement and by all other amendments and supplements to such
prospectus, including all material incorporated by reference in such
prospectus and all documents filed after the date of such prospectus by the
Company under the Exchange Act and incorporated by reference therein.
"Public Offering" means an offer registered with the
Commission and the appropriate state securities commissions by the Company
of its Common Stock and made pursuant to the Securities Act.
"Registrable Securities" means the Common Stock issued or
issuable (i) upon conversion or redemption of the Debenture, (ii) exercise
of the Warrants (iii) pursuant to the terms and provisions of the Debenture
or the Securities Purchase Agreement, (iv) in connection with any
distribution, recapitalization, stock-split, stock adjustment or
reorganization of the Company; provided, however, a share of Common Stock
shall cease to be a Registrable Security for purposes of this Agreement when
it no longer is a Restricted Security.
"Registration Statement" means a registration statement of
the Company filed on an appropriate form under the Securities Act providing
for the registration of, and the sale on a continuous or delayed basis by
the holders of, all of the Registrable Securities pursuant to Rule 415 under
the Securities Act, including the Prospectus contained therein and forming a
part thereof, any amendments to such registration statement and supplements
to such Prospectus, and all exhibits to and other material incorporated by
reference in such registration statement and Prospectus.
"Restricted Security" means any share of Common Stock issued
upon conversion or redemption of the Debenture or Warrant except any such
share that (i) has been registered pursuant to an effective registration
statement under the Securities Act and sold in a manner contemplated by the
prospectus included in such registration statement, (ii) has been
transferred in compliance with the resale provisions of Rule 144 under the
Securities Act (or any successor provision thereto) or is transferable
pursuant to paragraph (k) of Rule 144 under the Securities Act (or any
successor provision thereto) or (iii) otherwise has been transferred and a
new share of Common Stock not subject to transfer restrictions under the
Securities Act has been delivered by or on behalf of the Company.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder, or any
similar successor statute.
All capitalized terms used and not defined herein have the
respective meaning assigned to them in the Securities Purchase Agreement or
the Debenture.
Registration
Filing and Effectiveness of Registration Statement. The Company
shall prepare and file with the Commission as soon as practicable a
Registration Statement relating to the offer and sale of the Registrable
Securities and shall use its best efforts to cause the Commission to declare
such Registration Statement effective under the Securities Act as promptly
as practicable but in no event later than the Deadline (as defined in the
Debenture). The Company shall promptly (and, in any event, no more than 24
hours after it receives comments from the Commission), notify the Holder
when and if it receives any comments from the Commission on the Registration
Statement and promptly forward a copy of such comments, if they are in
writing, to the Holder. At such time after the filing of the Registration
Statement pursuant to this Section 2(A) as the Commission indicates, either
orally or in writing, that it has no further comments with respect to such
Registration Statement or that it is willing to entertain appropriate
requests for acceleration of effectiveness of such Registration Statement,
the Company shall promptly, and in no event later than two (2) business days
after receipt of such indication from the Commission, request that the
effectiveness of such Registration Statement be accelerated within forty-
eight (48) hours of the Commission's receipt of such request. The Company
shall notify the Holder by written notice that such Registration Statement
has been declared effective by the Commission within 24 hours of such
declaration by the Commission.
Eligibility for Use of Form S-3 or an SB-2. The Company agrees
that at such time as it meets all the requirements for the use of Securities
Act Registration Statement on Form S-3 or SB-2 and it shall file all reports
and information required to be filed by it with the Commission in a timely
manner and take all such other action so as to maintain such eligibility for
the use of such form.
Additional Registration Statement. In the event the Current
Market Price declines to a price per share the result of which is that the
Company cannot satisfy its conversion obligations to Holder hereunder, the
Company shall, to the extent required by the Securities Act (because the
additional shares were not covered by the Registration Statement filed
pursuant to Section 2(a)), as reasonably determined by the Holder, file an
additional Registration Statement with the Commission for such additional
number of Registrable Securities as would be issuable upon conversion of the
Debenture (the "Additional Registrable Securities") in addition to those
previously registered. The Company shall use its best efforts to cause the
Commission to declare such Registration Statement effective under the
Securities Act as promptly as practicable but not later than the Deadline.
The Company shall not include any other securities in the Registration
Statement relating to the offer and sale of such Additional Registrable
Securities.
(i) If the Company proposes to register any of its warrants,
Common Stock or any other shares of common stock of the Company under the
Securities Act (other than a registration (A) on Form S-8 or S-4 or any
successor or similar forms, (B) relating to Common Stock or any other shares
of common stock of the Company issuable upon exercise of employee share
options or in connection with any employee benefit or similar plan of the
Company or (C) in connection with a direct or indirect acquisition by the
Company of another Person or any transaction with respect to which Rule 145
(or any successor provision) under the Securities Act applies), whether or
not for sale for its own account, it will each such time, give prompt
written notice at least 20 days prior to the anticipated filing date of the
registration statement relating to such registration to each Investor, which
notice shall set forth such Investor's rights under this Section 2(D) and
shall offer such Investor the opportunity to include in such registration
statement such number of Registrable Securities as such Investor may
request. Upon the written request of any Investor made within 10 days after
the receipt of notice from the Company (which request shall specify the
number of Registrable Securities intended to be disposed of by such
Investor), the Company will use its best efforts to effect the registration
under the Securities Act of all Registrable Securities that the Company has
been so requested to register by each Investor, to the extent requisite to
permit the disposition of the Registrable Securities so to be registered;
provided, however, that (A) if such registration involves a Public Offering,
each Investor must sell its Registrable Securities to any underwriters
selected by the Company with the consent of such Investor on the same terms
and conditions as apply to the Company and (B) if, at any time after giving
written notice of its intention to register any Registrable Securities
pursuant to this Section 2 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 such Registrable
Securities, the Company shall give written notice to each Investor and,
thereupon, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration. The Company's obligations
under this Section 2(D) shall terminate on the date that the registration
statement to be filed in accordance with Section 2(A) is declared effective
by the Commission.
If a registration pursuant to this Section 2(D) involves a Public Offering
and the managing underwriter thereof advises the Company that, in its view,
the number of shares of Common Stock that the Company and the Investors
intend to include in such registration exceeds the largest number of shares
of Common Stock that can be sold without having an adverse effect on such
Public Offering (the "Maximum Offering Size"), the Company will include in
such registration only such number of shares of Common Stock as does not
exceed the Maximum Offering Size, and the number of shares in the Maximum
Offering Size shall be allocated among the Company, the Investors and any
other sellers of Common Stock in such Public Offering ("Third-Party
Sellers"), first, pro rata among the Investors until all the shares of
Common Stock originally proposed to be offered for sale by the Investors
have been allocated, and second, pro rata among the Company and any Third-
Party Sellers, in each case on the basis of the relative number of shares of
Common Stock originally proposed to be offered for sale under such
registration by each of the Investors, the Company and the Third-Party
Sellers, as the case may be. If as a result of the proration provisions of
this Section 2(D)(ii), any Investor is not entitled to include all such
Registrable Securities in such registration, such Investor may elect to
withdraw its request to include any Registrable Securities in such
registration. With respect to registrations pursuant to this Section 2(D),
the number of securities required to satisfy any underwriters' over-
allotment option shall be allocated among the Company, the Investors
and any Third Party Seller pro rata on the basis of the relative number
of securities offered for sale under such registration by each of the
Investors, the Company and any such Third Party Sellers before the exercise
of such over-allotment option.
Obligations of the Company
In connection with the registration of the Registrable Securities,
the Company shall:
Promptly (i) prepare and file with the Commission such amendments
(including post-effective amendments) to the Registration Statement and
supplements to the Prospectus as may be necessary to keep the Registration
Statement continuously effective and in compliance with the provisions of
the Securities Act applicable thereto so as to permit the Prospectus forming
part thereof to be current and useable by Investors for resales of the
Registrable Securities for a period of five (5) years from the date on which
the Registration Statement is first declared effective by the Commission
(the "Effective Time") or such shorter period that will terminate when all
the Registrable Securities covered by the Registration Statement have been
sold pursuant thereto in accordance with the plan of distribution provided
in the Prospectus, transferred pursuant to Rule 144 under the Securities Act
or otherwise transferred in a manner that results in the delivery of new
securities not subject to transfer restrictions under the Securities Act
(the "Registration Period") and (ii) take all lawful action such that each
of (A) the Registration Statement and any amendment thereto does not, when
it becomes effective, contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein, not misleading and (B) the Prospectus forming part
of the Registration Statement, and any amendment or supplement thereto, does
not at any time during the Registration Period include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
During the Registration Period, comply with the provisions of the
Securities Act with respect to the Registrable Securities of the Company
covered by the Registration Statement until such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the Investors as set forth in the Prospectus
forming part of the Registration Statement;
(i) Prior to the filing with the Commission of any Registration
Statement (including any amendments thereto) and the distribution or
delivery of any Prospectus (including any supplements thereto), provide
(A) draft copies thereof to the Investors and reflect in such documents all
such comments as the Investors (and their counsel) reasonably may propose
and (B) to the Investors a copy of the accountant's consent letter to be
included in the filing and (ii) furnish to each Investor whose Registrable
Securities are included in the Registration Statement and its legal counsel
identified to the Company, (A) promptly after the same is prepared and
publicly distributed, filed with the Commission, or received by the Company,
one copy of the Registration Statement, each Prospectus, and each amendment
or supplement thereto and (B) such number of copies of the Prospectus and
all amendments and supplements thereto and such other documents, as such
Investor may reasonably request in order to facilitate the disposition of
the Registrable Securities owned by such Investor;
(i) Register or qualify the Registrable Securities covered by the
Registration Statement under such securities or "blue sky" laws of such
jurisdictions as the Investors who hold a majority-in-interest of the
Registrable Securities being offered reasonably request, (ii) prepare and
file in such jurisdictions such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may
be necessary to maintain the effectiveness thereof at all times during the
Registration Period, (iii) take all such other lawful actions as may be
necessary to maintain such registrations and qualifications in effect at all
times during the Registration Period and (iv) take all such other lawful
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 (A) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(D), (B) subject
itself to general taxation in any such jurisdiction or (C) file a general
consent to service of process in any such jurisdiction;
As promptly as practicable after becoming aware of such event,
notify each Investor of the occurrence of any event, 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 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, and promptly prepare an amendment to the Registration Statement
and supplement to the Prospectus to correct such untrue statement or
omission, and deliver a number of copies of such supplement and amendment to
each Investor as such Investor may reasonably request;
As promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold (or, in the
event of an underwritten offering, the managing underwriters) of the
issuance by the Commission of any stop order or other suspension of the
effectiveness of the Registration Statement at the earliest possible time
and take all lawful action to effect the withdrawal, rescission or removal
of such stop order or other suspension;
Cause all the Registrable Securities covered by the Registration
Statement to be listed on the principal national securities exchange, and
included in an inter-dealer quotation system of a registered national
securities association, on or in which securities of the same class or
series issued by the Company are then listed or included;
Maintain a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of
the Registration Statement;
Cooperate with the Investors who hold Registrable Securities being
offered to facilitate the timely preparation and delivery of certificates
for the Registrable Securities to be offered pursuant to the registration
statement and enable such certificates for the Registrable Securities to be
in such denominations or amounts, as the case may be, as the Investors
reasonably may request and registered in such names as the Investor may
request; and, within three (3) business days after a registration statement
which includes Registrable Securities is declared effective by the
Commission, deliver and cause legal counsel selected by the Company to
deliver to the transfer agent for the Registrable Securities (with copies to
the Investors whose Registrable Securities are included in such registration
statement) an appropriate instruction and, to the extent necessary, an
opinion of such counsel;
Take all such other lawful actions reasonably necessary to
expedite and facilitate the disposition by the Investors of their
Registrable Securities in accordance with the intended methods therefor
provided in the Prospectus which are customary under the circumstances;
Make generally available to its security holders as soon as
practicable, but in any event not later than three (3) months after (i) the
effective date (as defined in Rule 158(c) under the Securities Act) of the
Registration Statement and (ii) the effective date of each post-effective
amendment to the Registration Statement, as the case may be, an earnings
statement of the Company and its subsidiaries complying with Section 11 (a)
of the Securities Act and the rules and regulations of the Commission
thereunder (including, at the option of the Company, Rule 158);
In the event of an underwritten offering, promptly include or
incorporate in a Prospectus supplement or post-effective amendment to the
Registration Statement such information as the managers reasonably agree
should be included therein and to which the Company does not reasonably
object and make all required filings of such Prospectus supplement or post-
effective amendment as soon as practicable after it is notified of the
matters to be included or incorporated in such Prospectus supplement or
post-effective amendment;
(i) Make reasonably available for inspection by Investors, any
underwriter participating in any disposition pursuant to the Registration
Statement, and any attorney, accountant or other agent retained by such
Investors or any such underwriter all relevant financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries, and (ii) cause the Company's officers, directors and employees
to supply all information reasonably requested by such Investors or any such
underwriter, attorney, accountant or agent in connection with the
Registration Statement, in each case, as is customary for similar due
diligence examinations; provided, however, that all records, information and
documents that are designated in writing by the Company, in good faith, as
confidential, proprietary or containing any material nonpublic information
shall be kept confidential by such Investors and any such underwriter,
attorney, accountant or agent (pursuant to an appropriate confidentiality
agreement in the case of any such holder or agent), unless such disclosure
is made pursuant to judicial process in a court proceeding (after first
giving the Company an opportunity promptly to seek a protective order or
otherwise limit the scope of the information sought to be disclosed) or is
required by law, or such records, information or documents become available
to the public generally or through a third party not in violation of an
accompanying obligation of confidentiality; and provided, further, that, if
the foregoing inspection and information gathering would otherwise disrupt
the Company's conduct of its business, such inspection and information
gathering shall, to the maximum extent possible, be coordinated on behalf of
the Investors and the other parties entitled thereto by one firm of counsel
designated by and on behalf of the majority in interest of Investors and
other parties;
In connection with any underwritten offering, make such
representations and warranties to the Investors participating in such
underwritten offering and to the managers, in form, substance and scope as
are customarily made by the Company to underwriters in secondary
underwritten offerings;
In connection with any underwritten offering, obtain opinions of
counsel to the Company (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managers) addressed to
the underwriters, covering such matters as are customarily covered in
opinions requested in secondary underwritten offerings (it being agreed that
the matters to be covered by such opinions shall include, without
limitation, as of the date of the opinion and as of the Effective Time of
the Registration Statement or most recent post-effective amendment thereto,
as the case may be, the absence from the Registration Statement and the
Prospectus, including any documents incorporated by reference therein, of an
untrue statement of a material fact or the omission of a material fact
required to be stated therein or necessary to make the statements therein
(in the case of the Prospectus, in light of the circumstances under which
they were made) not misleading, subject to customary limitations);
In connection with any underwritten offering, obtain "cold
comfort" letters and updates thereof from the independent public accountants
of the Company (and, if necessary, from the independent public accountants
of any subsidiary of the Company or of any business acquired by the Company,
in each case for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to each
underwriter participating in such underwritten offering (if such underwriter
has provided such letter, representations or documentation, if any, required
for such cold comfort letter to be so addressed), in customary form and
covering matters of the type customarily covered in "cold comfort" letters
in connection with secondary underwritten offerings;
In connection with any underwritten offering, deliver such
documents and certificates as may be reasonably required by the managers, if
any, and
In the event that any broker-dealer registered under the Exchange
Act shall be an "Affiliate" (as defined in Rule 2729(b)(1) of the rules and
regulations of the National Association of Securities Dealers, Inc. (the
"NASD Rules") (or any successor provision thereto)) of the Company or has a
"conflict of interest" (as defined in Rule 2720(b)(7) of the NASD Rules (or
any successor provision thereto)) and such broker-dealer shall underwrite,
participate as a member of an underwriting syndicate or selling group or
assist in the distribution of any Registrable Securities covered by the
Registration Statement, whether as a holder of such Registrable Securities
or as an underwriter, a placement or sales agent or a broker or dealer in
respect thereof, or otherwise, the Company shall assist such broker-dealer
in complying with the requirements of the NASD Rules, including, without
limitation, by (A) engaging a "qualified independent underwriter" (as
defined in Rule 2720(b)(15) of the NASD Rules (or any successor provision
thereto)) to participate in the preparation of the Registration Statement
relating to such Registrable Securities, to exercise usual standards of due
diligence in respect thereof and to recommend the public offering price of
such Registrable Securities, (B) indemnifying such qualified independent
underwriter to the extent of the indemnification of underwriters provided in
Section 6 hereof and (C) providing such information to such broker-dealer as
may be required in order for such broker-dealer to comply with the
requirements of the NASD Rules.
Obligations of the Investors
In connection with the registration of the Registrable Securities,
the Investors shall have the following obligations:
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 of a particular Investor that such Investor
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;
Each Investor by its acceptance of the Registrable Securities
agrees to cooperate with the Company in connection with the preparation and
filing of the Registration Statement hereunder, unless such Investor has
notified the Company in writing of its election to exclude all of its
Registrable Securities from the Registration Statement; and
Each Investor agrees that, upon receipt of any notice from the
Company of the occurrence of any event of the kind described in Section 3(E)
or 3(F), it shall immediately discontinue its disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented
or amended Prospectus contemplated by Section 3(E) and, if so directed by
the Company, such Investor 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 such Investor's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
Expenses of Registration
------------------------
All expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications
pursuant to Section 3, but including, without limitation, all registration,
listing, and qualifications fees, printing and engraving fees, accounting
fees, and the fees and disbursements of counsel for the Company shall be
borne by the Company.
Indemnification and Contribution
--------------------------------
Indemnification by the Company. The Company shall indemnify and
hold harmless each Investor (each such person being sometimes hereinafter
referred to as an "Indemnified Person") from and against any losses, claims,
damages or liabilities, joint or several, to which such Indemnified Person
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon an untrue statement of a material fact contained in
any Registration Statement or an omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein, not misleading, or arise out of or are based upon an
untrue statement of a material fact contained in any Prospectus or an
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and the
Company hereby agrees to reimburse such Indemnified Person for all
reasonable legal and other expenses incurred by them in connection with
investigating or defending any such action or claim as and when such
expenses are incurred; provided, however, that the Company shall not be
liable to any such Indemnified Person in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon (i)
an untrue statement or alleged untrue statement made in, or an omission or
alleged omission from, such Registration Statement or Prospectus in reliance
upon and in conformity with written information furnished to the Company by
such Indemnified Person expressly for use therein or (ii) in the case of the
occurrence of an event of the type specified in Section 3(E), the use by the
Indemnified Person of an outdated or defective Prospectus after the Company
has provided to such Indemnified Person an updated Prospectus correcting the
untrue statement or alleged untrue statement or omission or alleged omission
giving rise to such loss, claim, damage or liability.
Notice of Claims, etc. Promptly after receipt by a party seeking
indemnification pursuant to this Section 6 (an "Indemnified Party") of
written notice of any investigation, claim, proceeding or other action in
respect of which indemnification is being sought (each, a "Claim"), the
Indemnified Party promptly shall notify the party against whom
indemnification pursuant to this Section 6 is being sought (the
"Indemnifying Party") of the commencement thereof; but the omission to so
notify the Indemnifying Party shall not relieve it from any liability that
it otherwise may have to the Indemnified Party, except to the extent that
the Indemnifying Party is materially prejudiced and forfeits substantive
rights and defenses by reason of such failure. In connection with any Claim
as to which both the Indemnifying Party and the Indemnified Party are
parties, the Indemnifying Party shall be entitled to assume the defense
thereof. Notwithstanding the assumption of the defense of any Claim by the
Indemnifying Party, the Indemnified Party shall have the right to employ
separate legal counsel and to participate in the defense of such Claim, and
the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs
and expenses of such separate legal counsel to the Indemnified Party if (and
only if): (x) the Indemnifying Party shall have agreed to pay such fees,
costs and expenses, (y) the Indemnified Party and the Indemnifying Party
shall reasonably have concluded that representation of the Indemnified Party
by the Indemnifying Party by the same legal counsel would not be appropriate
due to actual or, as reasonably determined by legal counsel to the
Indemnified Party, potentially differing interests between such parties in
the conduct of the defense of such Claim, or if there may be legal defenses
available to the Indemnified Party that are in addition to or disparate from
those available to the Indemnifying Party or (z) the Indemnifying Party
shall have failed to employ legal counsel reasonably satisfactory to the
Indemnified Party within a reasonable period of time after notice of the
commencement of such Claim. If the Indemnified Party employs separate legal
counsel in circumstances other than as described in clauses (x), (y) or (z)
above, the fees, costs and expenses of such legal counsel shall be borne
exclusively by the Indemnified Party. Except as provided above, the
Indemnifying Party shall not, in connection with any Claim in the same
jurisdiction, be liable for the fees and expenses of more than one firm of
counsel for the Indemnified Party (together with appropriate local counsel).
The Indemnified Party shall not, without the prior written consent of the
Indemnifying Party (which consent shall not unreasonably be withheld),
settle or compromise any Claim or consent to the entry of any judgment that
does not include an unconditional release of the Indemnifying Party from all
liabilities with respect to such Claim or judgment.
Contribution. If the indemnification provided for in this Section
6 is unavailable to or insufficient to hold harmless an Indemnified Person
under subsection (A) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party and the Indemnified
Party in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative fault of
such Indemnifying Party and Indemnified Party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by such Indemnifying Party or
by such Indemnified Party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission. The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6(D) were determined by
pro rata allocation (even if the Investors or any underwriters were treated
as one entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to in this
Section 6(D). The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such Indemnified Party in connection
with investigating or defending any such action or claim. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The obligations of the
Investors and any underwriters in this Section 6(D) to contribute shall be
several in proportion to the percentage of Registrable Securities registered
or underwritten, as the case may be, by them and not joint.
Notwithstanding any other provision of this Section 6, in no event
shall any (i) Investor be required to undertake liability to any person
under this Section 6 for any amounts in excess of the dollar amount of the
proceeds to be received by such Investor from the sale of such Investor's
Registrable Securities (after deducting any fees, discounts and commissions
applicable thereto) pursuant to any Registration Statement under which such
Registrable Securities are to be registered under the Securities Act and
(ii) underwriter be required to undertake liability to any Person hereunder
for any amounts in excess of the aggregate discount, commission or other
compensation payable to such underwriter with respect to the Registrable
Securities underwritten by it and distributed pursuant to the Registration
Statement.
The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have to any
Indemnified Person and the obligations of any Indemnified Person under this
Section 6 shall be in addition to any liability which such Indemnified
Person may otherwise have to the Company. The remedies provided in this
Section 6 are not exclusive and shall not limit any rights or remedies which
may otherwise be available to an indemnified party at law or in equity.
Rule 144
With a view to making available to the Investors the benefits of
Rule 144 under the Securities Act or any other similar rule or regulation of
the Commission that may at any time permit the Investors to sell securities
of the Company to the public without registration ("Rule 144"), the Company
agrees to use its best efforts to:
comply with the provisions of paragraph (c) (1) of Rule 144 and
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file with the Commission in a timely manner all reports and other documents
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required to be filed by the Company pursuant to Section 13 or 15(d) under
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the Exchange Act; and, if at any time it is not required to file such
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reports but in the past had been required to or did file such reports, it
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will, upon the request of any Investor, make available other information as
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required by, and so long as necessary to permit sales of, its Registrable
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Securities pursuant to Rule 144.
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Assignment
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The rights to have the Company register Registrable Securities
pursuant to this Agreement shall be automatically assigned by the Investors
to any permitted transferee of all or any portion of such Registrable
Securities (or all or any portion of the Debenture or Warrant of the Company
which is convertible into such securities) only if (a) the Investor agrees
in writing with the transferee or assignee to assign such rights, and a copy
of such agreement is furnished to the Company within a reasonable time after
such assignment, (b) the Company is, within a reasonable time after such
transfer or assignment, furnished with written notice of (i) the name and
address of such transferee or assignee and (ii) the securities with respect
to which such registration rights are being transferred or assigned, (c)
immediately following such transfer or assignment, the securities so
transferred or assigned to the transferee or assignee constitute Restricted
Securities and (d) at or before the time the Company received the written
notice contemplated by clause (b) of this sentence the transferee or
assignee agrees in writing with the Company to be bound by all of the
provisions contained herein.
Amendment and Waiver
--------------------
Any provision of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and
either retroactively or prospectively), only with the written consent of the
Company and Investors who hold a majority-in-interest of the Registrable
Securities. Any amendment or waiver effected in accordance with this
Section 9 shall be binding upon each Investor and the Company.
Changes in Common Stock
-----------------------
If, and as often as, there are any changes in the Common Stock by
way of stock split, stock dividend, reverse split, combination or
reclassification, or through merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be
made in the provisions hereof, as may be required, so that the rights and
privileges granted hereby shall continue with respect to the Common Stock as
so changed.
Miscellaneous
-------------
A person or entity shall be deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
If, after the date hereof and prior to the Commission declaring
the Registration Statement to be filed pursuant to Section 2(a) effective
under the Securities Act, the Company grants to any Person any registration
rights with respect to any Company securities which are more favorable to
such other Person than those provided in this Agreement, then the Company
forthwith shall grant (by means of an amendment to this Agreement or
otherwise) identical registration rights to all Investors hereunder.
Except as may be otherwise provided herein, any notice or other
communication or delivery required or permitted hereunder shall be in
writing and shall be delivered personally, or sent by telecopier machine or
by a nationally recognized overnight courier service, and shall be deemed
given when so delivered personally, or by telecopier machine or overnight
courier service as follows:
(1) If to the Company, to:
American HealthChoice, Inc.
0000 Xxxxxx Xxxx, Xxxxx 000-000
Xxxxxx Xxxxx, Xxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
(2) If to the Investor, to:
Golden Gate Investors, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
(3) If to any other Investor, at such address as such
Investor shall have provided in writing to the Company.
The Company, the Holder or any Investor may change the foregoing address by
notice given pursuant to this Section 11(C).
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.
This Agreement shall be governed by and interpreted in accordance
with the laws of the State of California. Each of the parties consents to
the jurisdiction of the federal courts whose districts encompass any part of
the City of San Diego or the state courts of the State of California sitting
in the City of San Diego in connection with any dispute arising under this
Agreement and hereby waives, to the maximum extent permitted by law, any
objection including any objection based on forum non conveniens, to the
bringing of any such proceeding in such jurisdictions.
Should any party hereto employ an attorney for the purpose of
enforcing or construing this Agreement, or any judgment based on this
Agreement, in any legal proceeding whatsoever, including insolvency,
bankruptcy, arbitration, declaratory relief or other litigation, the
prevailing party shall be entitled to receive from the other party or
parties thereto reimbursement for all reasonable attorneys' fees and all
reasonable costs, including but not limited to service of process, filing
fees, court and court reporter costs, investigative costs, expert witness
fees, and the cost of any bonds, whether taxable or not, and that such
reimbursement shall be included in any judgment or final order issued in
that proceeding. The "prevailing party" means the party determined by the
court to most nearly prevail and not necessarily the one in whose favor a
judgment is rendered.
The remedies provided in this Agreement are cumulative and not
exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their best efforts to find and
employ an alternative means to achieve the same or substantially the same
result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of
the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
The Company shall not enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The Company is not currently a party to any agreement
granting any registration rights with respect to any of its securities to
any person which conflicts with the Company's obligations hereunder or gives
any other party the right to include any securities in any Registration
Statement filed pursuant hereto, except for such rights and conflicts as
have been irrevocably waived. Without limiting the generality of the
foregoing, without the written consent of the holders of a majority in
interest of the Registrable Securities, the Company shall not grant to any
person the right to request it to register any of its securities under the
Securities Act unless the rights so granted are subject in all respect to
the prior rights of the holders of Registrable Securities set forth herein,
and are not otherwise in conflict or inconsistent with the provisions
of this Agreement. The restrictions on the Company's rights to grant
registration rights under this paragraph shall terminate on the date the
Registration Statement to be filed pursuant to Section 2(A) is declared
effective by the Commission.
This Agreement, the Securities Purchase Agreement, the Debenture
and the Conversion Warrants Agreement, of even date herewith among the
Company and the Holder constitute the entire agreement among the parties
hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein. These Agreements supersede all prior
agreements and undertakings among the parties hereto with respect to the
subject matter hereof.
Subject to the requirements of Section 8 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns
of each of the parties hereto.
All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning thereof.
The Company acknowledges that any failure by the Company to
perform its obligations under Section 3, or any delay in such performance,
could result in direct damages to the Investors and the Company agrees that,
in addition to any other liability the Company may have by reason of any
such failure or delay, the Company shall be liable for all direct damages
caused by such failure or delay.
This Agreement may be executed in counterparts, each of which
shall be deemed an original but both of which shall constitute one and the
same agreement. A facsimile transmission of this signed Agreement shall be
legal and binding on the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement
to be executed and delivered on the date first above written.
American HealthChoice, Inc.
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
Golden Gate Investors, Inc.
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
