REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made as of
February 28, 2003, by and among CRITICAL HOME CARE, INC. (the "Company") and
CLEVELAND OVERSEAS LTD. (the "Initial Investor").
WHEREAS, in connection with a loan of $150,000 to be made by the
Initial Investor to the Company concurrently herewith, the Company has agreed,
upon the terms and subject to the conditions contained therein, to issue and
sell to the Initial Investor a warrant (the "Warrant") to purchase shares of the
Company's common stock (the "Common Stock"); and
WHEREAS, to induce the Initial Investor to make the aforementioned
loan, the Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended, and the rules and regulations thereunder, or
any similar successor statute as each may be in effect from time to time
(collectively, the "Securities Act"), and applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investor agree as follows:
ARTICLE 1-DEFINITIONS
1.1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
(a) "Agreement" has the meaning set forth in the preamble
hereto.
(b) "Business Day" means any day other than a Saturday, Sunday
or holiday on which banking institutions in New York, New York are closed.
(c) "Company" has the meaning set forth in the preamble
hereto.
(d) "Common Stock" has the meaning set forth in the first
recital hereof
(e) "Exchange Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder, or any similar
successor statute, as each may be in effect from time to time.
(f) "Initial Investor" has the meaning set forth in the
preamble hereto.
(g) "Investors" means, collectively, the Initial Investor and
any of its transferees or assignees who agree to become bound by the provisions
of this Agreement in accordance with Article 10 hereof or who otherwise take
rights under this Agreement in accordance with the terms hereof "Investor" means
any such persons, individually.
(h) "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and the declaration or ordering
of effectiveness of such Registration Statement or Statements by the SEC.
(i) "Registrable Securities" means (i) the Warrant Shares,
(ii) any Common Stock or other securities of the Company issued or issuable in
respect of the Warrant Shares or other securities issued or issuable in respect
of the Warrant Shares upon any stock split, stock dividend, recapitalization, or
similar event; and (iii) any capital stock or other securities otherwise issued
or issuable with respect to the Warrant Shares or such other securities;
provided, however, that shares of Common Stock or other securities shall only be
treated as Registrable Securities if and for so long as they have not been (A)
sold to or through a broker or dealer or underwriter in a public distribution,
or (B) sold in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act under Section 4(1) thereof, in the
case of either clause (A) or clause (B) in such a manner that, upon the
consummation of such sale, all transfer restrictions and restrictive legends
with respect to such shares are removed upon the consummation of such sale. For
the avoidance of doubt, "Registrable Securities" does not include any
unexercised option(s) or warrant(s) for the purchase of any capital stock of the
Company.
(j) "Registration Statement" means any registration statement
of the Company under the Securities Act subject to or pursuant to Article 2 or
another provision of this Agreement, as applicable.
(k) "SEC" means the United States Securities and Exchange
Commission.
(1) "Selling Securityholder" means any Investor participating
in any registration of Registrable Securities pursuant to this Agreement.
(m) "Warrant" has the meaning set forth in the first recital
hereof
(n) "Warrant Shares" means the shares of Common Stock issued
or issuable upon exercise or conversion of the Warrant.
1.2. Capitalized Terms. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in the Purchase
Agreement.
ARTICLE 2-REGISTRATION
2.1. "Piggyback" Registration. If, at any time after the date
hereof, the Company intends to file with the SEC a registration statement (other
than a registration statement on Form S-4 or S-8 or any successor form thereto)
relating to an offering of any of the Company's equity securities, for its own
account or the account of others (a "Company Registration Statement"), the
Company shall send to each investor written notice of such intention (a
"Piggyback Notice"). The Piggyback Notice shall be delivered to each investor at
least 30 days prior to the date on which the Company intends to file such
Company Registration Statement with the SEC and, if any such investor so
requests in writing within 15 days following delivery of such Piggyback Notice,
the Company shall, subject to Section 2.2(b), include all Registrable Securities
requested by any such Investor to be registered in
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such Company Registration Statement. Failure of any Investor to respond to the
Company Notice within the 15-day period specified above shall be deemed an
election by such Investor not to have any of such Investor's Registrable
Securities included in such Company Registration Statement. In the event that
the Company shall, for any reason, elect not to file or to delay the filing of
such Company Registration Statement, then the Company shall give prompt written
notice thereof to all Investors who had requested registration of any
Registrable Securities in such Company Registration Statement..
2.2. Underwritten Offerings.
(a) In the event that a registration of Registrable Securities
under this Article 2 is an underwritten offering, then each Selling
Securityholder participating in the offering shall, unless otherwise agreed by
the Company, offer and sell such Registrable Securities using the same
underwriter or underwriters and on the same terms and conditions as other
securities included in such underwritten offering. In all underwritten offerings
of Registrable Securities, the Company shall (together with all Selling
Securityholders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter or underwriters containing conventional representations,
warranties, allocation of expenses, and customary closing conditions, including,
but not limited to opinions of counsel and accountants' cold comfort letters,
with any underwriter who acquires any Registrable Securities.
(b) Notwithstanding any other provision of this Article 2, in
the event that (i) Registrable Securities are to be included in a Registration
Statement pursuant to Section 2.1, (ii) such Registration Statement relates to
an underwritten offering, and (iii) the managing underwriter(s) advises the
Selling Securityholders in writing that marketing factors require a limitation
of the number of shares to be underwritten, then the number of Registrable
Securities that maybe included in the registration and underwriting shall be
reduced pro rata among all Selling Securityholders thereof in proportion, as
nearly as practicable, to the respective amounts of Registrable Securities held
by all such Selling Securityholders opting to participate in the offering;
provided, however, that no Registrable Securities shall be excluded from an
underwritten offering unless any exclusion of Registrable Securities is only
after the exclusion or reduction of the securities to be included in such
registration on behalf of all other securityholders that have registration
rights.
2.3. Withdrawal from Registration Statement. Each Selling
Securityholder may, before any underwriting agreement relating to such Selling
Securityholder's Registrable Securities is signed or before any Registration
Statement becomes effective, withdraw his, her or its Registrable Securities
from inclusion therein, should the terms of sale not be satisfactory to such
Selling Securityholder.
2.4. Termination of Registration Rights. No Investor shall be
entitled to exercise any right provided for in this Article 2:
(a) during any period during which such Investor can lawfully
sell all of his, her or Registrable Securities under Rule 144(k) of the
Securities Act; or
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(b) after the seventh anniversary of the effective date of the
first registration statement filed by the Company for an offering of its
securities to the general public.
ARTICLE 3-OBLIGATIONS OF THE COMPANY
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
3.1. Availability of Registration Statement. The Company shall
prepare promptly and file with the SEC any Registration Statement required by
Article 2, and use commercially reasonable efforts to cause such Registration
Statement relating to Registrable Securities to become effective as soon as
practicable after such filing, and keep the Registration Statement continuously
effective and available for use at all times, except as set forth herein, until
such date as all of the Registrable Securities have been sold pursuant to such
Registration Statement (the "Registration Period").
3.2. Amendments to Registration Statement. The Company shall
prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to a Registration Statement and the prospectus used
in connection with the Registration Statement as may be necessary to keep the
Registration Statement effective and such prospectus available for use at all
times during the Registration Period (including, without limitation, amendments
and supplements necessary in connection with a change in the "Plan of
Distribution" section in any Registration Statement or prospectus) and, during
such period, comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities covered by the Registration
Statement until the termination of the Registration Period. The Company shall
cause any such amendment and/or new Registration Statement to become effective
as soon as practicable following the filing thereof
3.3. Information. Upon written request, the Company shall furnish
to any Selling Securityholder and its legal counsel, promptly after the same is
prepared and publicly distributed, filed with the SEC, or received by the
Company, one copy of the Registration Statement and any amendment thereto, and
such number of copies of each prospectus, including each preliminary prospectus,
and all amendments and supplements thereto, and such other documents as such
Selling Securityholder may reasonably request in order to facilitate the
disposition of the Registrable Securities. The Company shall promptly notify all
Selling Securityholders of the effectiveness of any Registration Statement or
post-effective amendments thereto.
3.4. Blue Sky. The Company shall (a) register and qualify the
Registrable Securities covered by any Registration Statement under the
securities laws of such jurisdictions in the United States as each Selling
Securityholder who holds any such Registrable Securities reasonably requests,
(b) prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof and
availability for use during the Registration Period, (c) take such other actions
as may be reasonably necessary to maintain such registrations and qualifications
in effect at all times during the Registration Period, and (d) 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
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do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3.4, (ii) subject itself to general taxation in any
such jurisdiction, or (iii) file a general consent to service of process in any
such jurisdiction.
3.5. Limitations on Subsequent Registration Rights. From and after
the date of this Agreement, the Company shall not enter into any agreement
granting any holder or prospective holder of any securities of the Company
registration rights with respect to such securities without the prior written
consent of more than 50% of the number of Registrable Securities then
outstanding, unless such new registration rights, including standoff
obligations, are subordinate to the rights of the Investors hereunder.
3.6. Correction of Statements or Omissions, As soon as practicable
after becoming aware of such event, the Company shall publicly announce or
notify all Selling Securityholders of the happening of any event, of which the
Company has actual knowledge, as a result of which the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement of a
material fact or fails to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and use commercially
reasonable efforts as soon as possible to (but in any event it shall within five
Business Days or three Business Days of the receipt by the Company from its
accountants of financial information required to correct such untrue statement
or omission, as applicable) prepare a supplement or amendment to the
Registration Statement (and make all required filings with the SEC and all
applicable state securities or blue sky commissions) to correct such untrue
statement or omission if not otherwise satisfied through the filing of a report
to the SEC or otherwise pursuant to applicable securities laws (but such a
supplement or amendment or other filing shall not be required if,
notwithstanding the Company's commercially reasonable efforts to so prepare and
file such supplement, amendment or other filing, such a supplement, amendment or
other filing is no longer required by applicable law to correct such untrue
statement or omission because such untrue statement or omission no longer
exists) and the Company shall simultaneously (and thereafter as requested)
deliver such number of copies of such supplement or amendment to each Investor
(or other applicable document) as such Investor may request in writing.
3.7. Stop Orders, The Company shall use commercially 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 practicable time, and the
Company shall immediately notify all Selling Securityholders and, in the event
of an underwritten offering, the managing underwriter(s), of the issuance of
such order and the resolution thereof.
3.8. Inspection of Records. The Company shall provide each Selling
Securityholder, and any underwriter who may participate in the distribution of
Registrable Securities, and their respective representatives, the opportunity to
conduct a reasonable inquiry of the Company's financial and other records during
normal business hours and make available its officers, directors and employees
for questions regarding information which the Selling Securityholders and any
such underwriter may reasonably request in connection with the Registration
Statement; provided, however, the Selling Securityholders and any such
underwriter shall hold in confidence and shall not make any disclosure of any
record or other information which the Company determines in good faith to be
confidential, and of which determination the inspectors are so notified in
writing, unless (a) the disclosure of such records is necessary to avoid or
correct a misstatement or omission in any Registration Statement, (b)
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the release of such records is ordered pursuant to a subpoena or other order
from a court or government body of competent jurisdiction, or is otherwise
required by applicable law or legal process, or (c) the information in such
records has been made generally available to the public other than by disclosure
in violation of this or any other agreement (to the knowledge of the relevant
inspector).
3.9. Investor Information. The Company shall hold in confidence and
not make any disclosure of non-public information concerning any Investor
provided to the Company by such Investor unless (a) disclosure of such
information is necessary to comply with federal or state securities laws, rules,
statutes or regulations, (b) the disclosure of such information is necessary to
avoid or correct a misstatement or omission in any Registration Statement or
other public filing by the Company, (c) the release of such information is
ordered pursuant to a subpoena or other order from a court or governmental body
of competent jurisdiction or is otherwise required by applicable law or legal
process, (d) such information has been made generally available to the public
other than by disclosure in violation of this or any other agreement, or (e)
such Investor consents to the form and content of any such disclosure. The
Company agrees that it shall, upon learning that disclosure of such information
concerning any Investor is sought in or by a court or governmental body of
competent jurisdiction in or through other means, give prompt notice to such
Investor prior to making such disclosure, and allow such Investor, at its
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
3.10. Listing. The Company shall use commercially reasonable efforts
to cause the listing and the continuation of listing of all the Registrable
Securities covered by any Registration Statement on each securities exchange or
quotation system upon which any other securities of the Company is then listed
or quoted.
3.11. Transfer Agent. The Company shall provide 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.
3.12. Delivery of Certificates; Opinions of Counsel. The Company
shall cooperate with any and all Selling Securityholders who hold Registrable
Securities being offered and the managing underwriter or underwriters, if any,
to facilitate the timely preparation and delivery of certificates (not bearing
any restrictive legends) representing Registrable Securities to be offered
pursuant to the Registration Statement and enable such certificates to be in
such denominations or amounts, as the case may be, as such Selling
Securityholders or the managing underwriter or underwriters, if any, may
reasonably request and registered in such names as such Selling Securityholders
or the managing underwriter or underwriters, if any, may request, and, upon the
written request of the transfer agent for the Company or the managing
underwriter or underwriters, as applicable, within two Business Days of such
request, the Company shall cause legal counsel selected by the Company to
deliver to the transfer agent or the managing underwriter or underwriters, as
applicable, and the Selling Securityholders an opinion (a "Transfer Opinion") of
such counsel in a form reasonably acceptable to the transfer agent or managing
underwriter or underwriters, as applicable, and the Selling Securityholders.
Such opinion shall include, without limitation, opinions to the effect that (i)
the Registration Statement has become effective under the Securities Act and no
order suspending the effectiveness of the Registration Statement, preventing or
suspending the use of the Registration
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Statement, any preliminary prospectus, any final prospectus, or any amendment or
supplement thereto has been issued, nor has the SEC or any securities or blue
sky authority of any jurisdiction instituted or threatened to institute any
proceedings with respect to such an order, (ii) all of the Registrable
Securities covered by such Registration Statement may be sold or otherwise
transferred pursuant to the Plan of Distribution set forth in the prospectus
forming a part of the Registration Statement, and (iii) the Registration
Statement and each prospectus forming a part thereof (including each preliminary
prospectus), and any amendment or supplement thereto, complies as to form with
the Securities Act. Such Transfer Opinion shall also state the jurisdictions in
which the Registrable Securities have been registered or qualified for sale.
3.13. Compliance with Laws. The Company shall comply with all
applicable laws related to a Registration Statement and offering and sale of
securities covered by the Registration Statement and all applicable rules and
regulations of governmental authorities in connection therewith (including,
without limitation, the Securities Act and the Exchange Act).
ARTICLE 4-OBLIGATIONS OF THE INVESTORS
4.1. Obligations of the Investors. Each Investor electing to
participate in any registration of Registrable Securities as a Selling
Securityholder generally agrees as follows:
(a) Information Concerning Investors; Cooperation. Each
Selling Securityholder agrees to cooperate with the Company in connection with
the preparation and filing of any Registration Statement hereunder, and for so
long as the Company is obligated to keep any such Registration Statement
effective, such Selling Securityholder will provide to the Company, in writing,
for use in the Registration Statement, all information regarding such Selling
Securityholder, the Registrable Securities held by him, her or it, the intended
method of distribution of such Registrable Securities and such other information
as may be necessary to enable the Company to prepare the Registration and
prospectus covering the Registrable Securities and to maintain the currency and
effectiveness thereof At least 30 days prior to the first anticipated filing
date of a Registration Statement, the Company shall notify each Selling
Securityholder of the information the Company so requires from each such Selling
Securityholder and each Selling Securityholder shall deliver to the Company such
requested information within 20 days of request therefore or shall be excluded
from such registration.
(b) SEC. Each Selling Securityholder agrees to use reasonable
efforts to cooperate with the Company (at the Company's expense) in responding
to comments of the staff of the SEC relating to such Investor.
(c) Suspension of Offering or Distribution. On notice from the
Company of the happening of any of the events specified in Sections 3.6 or 3.7,
the Company requires the suspension by such Selling Securityholder of the
distribution of any of the Registrable Securities, then such Selling
Securityholder shall cease offering or distributing the Registrable Securities
until such time as the Company notifies such Selling Securityholder that
offering and distribution of the Registrable Securities may recommence,
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ARTICLE 5-EXPENSES OF REGISTRATION
5.1. Expenses. With respect to each registration of Registrable
Securities hereunder, all expenses (other than underwriting discounts and
commissions and transfer taxes), including, without limitation, the reasonable
fees and disbursements of one counsel to the Selling Securityholders, all
registration, listing and qualification fees, printers and accounting fees, and
the fees and disbursements of counsel for the Company, shall be borne by the
Company.
ARTICLE 6-INDEMNIFICATION
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
6.1. Indemnification by the Company. The Company will indemnify,
hold harmless and defend (a) each Selling Securityholder, (b) each underwriter
of Registrable Securities, and (c) the directors, officers, partners, members,
employees, agents and persons who control each such Selling Securityholder and
any such underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, if any (each, a "Investor Indemnified Person"),
against any losses, claims, damages, liabilities or expenses (collectively,
together with actions, proceedings or inquiries whether or not in any court,
before any administrative body or 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 any preliminary prospectus if used
prior to the effective date of such Registration Statement, or 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"). The
Company shall reimburse each such Investor Indemnified Person, promptly as such
expenses are incurred and are due and payable, for any reasonable legal fees and
other reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the Company shall not be required to indemnify or hold harmless a
Investor Indemnified Person (A) with respect to a Claim arising out of or based
upon (1) any violation of federal or state securities laws, rules or regulations
committed by such Investor Indemnified Persons (or any person who controls any
of them or any agent, broker-dealer or underwriter engaged by them) or in the
case of a non-underwritten offering, any failure by such Investor Indemnified
Person to give any purchaser of Registrable Securities at or prior to the
written confirmation of such sale, a copy of the most recent prospectus, (2) an
untrue statement or omission contained in any Registration Statement or
prospectus which statement or omission was made in reliance upon and in
conformity with written information provided by or on behalf of such Investor
Indemnified Person specifically for use or inclusion in the Registration
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Statement or any prospectus, (3) any prospectus used after such time as the
Company advised such Investor Indemnified Person that the filing of a post
effective amendment or supplement thereto was required, except the prospectus as
so amended or supplemented, or (4) any prospectus used after such time as the
Company's obligation to keep the Registration Statement effective and current
has expired or been suspended hereunder, provided, that the Company has so
advised such Investor Indemnified Person; (B) 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; and
(C) with respect to any preliminary prospectus, shall not inure to the benefit
of a Investor Indemnified Person 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, if such corrected prospectus
was timely made available by the Company pursuant to Section 3.6 hereof, and
such Investor Indemnified Person was promptly advised in writing not to use the
incorrect prospectus prior to the use giving rise to a Claim and such Investor
Indemnified Person, notwithstanding such advice, used it. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Investor Indemnified Person and shall survive the transfer of the
Registrable Securities by a Investor pursuant to Article 10.
6.2. Indemnification by Investors. An Investor shall indemnify,
hold harmless and defend, to the same extent and in the same manner set forth in
Section 6.1, the Company, each of its directors, each of its officers who signs
the Registration Statement, its employees, agents and persons, if any, who
control the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, and any other securityholder selling securities
pursuant to the Registration Statement and any underwriter of securities covered
by such Registration Statement, together with its directors, officers and
members, and any person who controls such securityholder or underwriter within
the meaning of the Securities Act or the Exchange Act (each, a "Company
Indemnified Person"), 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, 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 such Investor
expressly for use in connection with such Registration Statement; and such
Investor 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 such Claim; provided, however, that the
indemnity agreement contained in this Section 6.2 shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of such Investor, which consent shall not be unreasonably
withheld; and provided, further, however, that such Investor shall be liable
under this Agreement (including this Section 6.2 and Article 7) for only that
amount as does not exceed the net proceeds actually received by such Investor as
a 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 Company Indemnified Person and
shall survive the transfer of the Registrable Securities by such Investor
pursuant to Article 10. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6.2 with respect
to any preliminary prospectus shall not inure to the benefit of any Company
Indemnified Person if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in the
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prospectus, as then amended or supplemented, and the Company Indemnified Person
failed to utilize such corrected prospectus.
6.3. Notices. Promptly after receipt by a Investor Indemnified
Person or Company Indemnified Person under this Article 6 of notice of the
commencement of any action (including any governmental action), such Investor
Indemnified Person or Company Indemnified Person shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Article 6,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right (at its expense) to participate
in, and, to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume and continue control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Investor Indemnified Person or the Company Indemnified Person, as the case
maybe; provided, however, that such indemnifying party shall diligently pursue
such defense and an indemnifying party shall not be entitled to assume (or
continue) such defense if the representation by such counsel of the Investor
Indemnified Person or Company indemnified Person and the indemnifying party
would be inappropriate due to actual or potential conflicts of interest between
such Investor Indemnified Person or Company Indemnified Person and any other
party represented by such counsel in such proceeding or the actual or potential
defendants in, or targets of, any such action include both the Investor
Indemnified Person or the Company Indemnified Person and the indemnifying party,
and any such Investor Indemnified Person or Company Indemnified Person
reasonably determines that there may be legal defenses available to such
Investor Indemnified Person or Company Indemnified Person which are different
from or in addition to those available to such indemnifying party.
Notwithstanding any assumption of such defense and without limiting any
indemnification obligation provided for in Section 6.1 or 6.2, the Company
Indemnified Person or Investor Indemnified Person, as the case may be, shall be
entitled to be represented by counsel (at its own expense if the indemnifying
party is permitted to assume and continue control of the defense and otherwise
at the expense of the indemnifying party) and such counsel shall be entitled to
participate in such defense. 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
Investor Indemnified Person or Company Indemnified Person under this Article VI,
except to the extent that the indemnifying party is actually materially
prejudiced in its ability to defend such action. The indemnification required by
this Article 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.
ARTICLE 7-CONTRIBUTION
7.1. To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 6.1 or
6.2 (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such case, or (ii) any indemnified or indemnifying party
seeks contribution under the Securities Act, the Exchange Act or otherwise, then
the Company (including for this purpose any contribution made by or on behalf of
any director of the Company, any officer of the Company who signed any such
registration statement, and any controlling person of the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act), as one entity, and the Selling
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Securityholders whose Registrable Securities are included in such registration
in the aggregate (including for this purpose any contribution by or on behalf of
an indemnified party), as a second entity, shall contribute to the losses,
liabilities, claims, damages, and expenses whatsoever to which any of them may
be subject, on the basis of relevant equitable considerations such as the
relative fault of the Company and such Selling Securityholders in connection
with the facts which resulted in such losses, liabilities, claims, damages, and
expenses. The relative fault, in the case of an untrue statement, alleged untrue
statement, omission, or alleged omission, shall be determined by, among other
things, whether such statement, alleged statement, omission, or alleged omission
relates to information supplied by the Company or by such Selling
Securityholders, and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement, alleged
statement, omission, or alleged omission. Subject to the following sentence, the
Company and Investors agree that it would be unjust and inequitable if the
respective obligations of the Company and the Selling Securityholders for
contribution were determined by pro rata or per capita allocation of the
aggregate losses, liabilities, claims, damages, and expenses (even if the
Selling Securityholders and the other indemnified parties were treated as one
entity for such purpose) or by any other method of allocation that does not
reflect the equitable considerations referred to in this Section 7.1. In no case
shall any Selling Securityholder be responsible for a portion of the
contribution obligation imposed on all Selling Securityholders in excess of the
net proceeds actually received by such Selling Securityholder as a result of the
sale of Registrable Securities pursuant to such Registration Statement. No
person guilty of a fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who is not guilty of such fraudulent misrepresentation. For purposes of this
Section 7.1, each person, if any, who controls any Selling Securityholder within
the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act and each officer, director, partner, employee, agent, and counsel of each
such Selling Securityholder or control person shall have the same rights to
contribution as such Selling Securityholder or control person and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, each officer of the Company
who signs the Registration Statement, each director of the Company, and its or
their respective counsel shall have the same rights to contribution as the
Company, subject in each case to the provisions of this Section 7.1. Anything in
this Section 7.1 to the contrary notwithstanding, no party shall be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This Section 7.1 is intended to supersede any right
to contribution under the Securities Act, the Exchange Act or otherwise.
ARTICLE 8-MARKET STAND-OFF
8.1. "Market Stand-Off". Each Investor hereby agrees that, during
the period specified by the Company and any underwriter of Common Stock or other
securities of the Company following the effective date of a Registration
Statement of the Company filed under the Securities Act, it shall not, to the
extent requested by the Company and such underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any securities of the Company
held by it at any time during such period except Common Stock included in such
registration; provided, that (i) such market stand-off time period shall not
exceed 180 days following the effective date of such registration if such
registration relates to the Company's initial public offering of securities, and
shall not exceed 90 days following the effective date of such registration in
11
all other cases; (ii) the directors, officers and holders of more than 2% of the
Company's then outstanding capital stock (each such director, officer and
stockholder, a "Lockup Party") shall have agreed to be at least as restricted
with respect to the offer, sale or other transfer of such persons' securities in
the Company (a "lockup"); and (iii) the Company shall promptly provide notice to
each Investor of any discretionary waiver or early termination by the Company or
its underwriter of the lockup of any Lockup Party, and cause each Investor to
receive, on a proportionate basis, the benefit of any such waiver or
termination.
ARTICLE 9-REPORTS UNDER THE EXCHANGE ACT
9.1. Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the SEC which may at any time
permit the sale of the Registrable Securities to the public without registration
after such time as a public market exists for the Common Stock of the Company,
the Company agrees to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the date that the Company becomes subject to the reporting requirements of
the Securities Act or the Exchange Act;
(b) File with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements); and
(c) So long as any Investor owns any Registrable Securities,
to furnish to such Investor forthwith upon written request a written statement
by the Company as to its compliance with the reporting requirements of said Rule
144 (at any time after 90 days after the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public), and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as any such Investor may reasonably request
in availing itself of any rule or regulation of the SEC allowing such Investor
to sell any such securities without registration.
ARTICLE 10-AMENDMENT AND ASSIGNMENT OF REGISTRATION RIGHTS
10.1. Assignment of Registration Rights. The rights of any Investor
hereunder as to Registrable Securities transferred by such Investor, including
the right to have the Company register Registrable Securities pursuant to this
Agreement, shall be automatically assigned by the Investor to any transferee of
all or any portion of the Registrable Securities, whether such transfer occurs
before or after the Registration Statement becomes effective, if: (a) the
transferring 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 10 days after such assignment, (b) the Company is, within 10 days 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) following
such transfer or assignment, the further disposition of such
12
securities by the transferee or assignee is restricted under the Securities Act
or applicable state securities laws, and (d) at or before the time the Company
receives the written notice contemplated by clause (b) of this sentence, the
transferee or assignee agrees in writing for the benefit of the Company to be
bound by all of the provisions contained herein. The rights of any Investor
hereunder with respect to any Registrable Securities retained by such Investor
shall not be assigned by virtue of the transfer of other Registrable Securities.
10.2. Amendment of Registration Rights. Except as expressly provided
in this Agreement, neither this Agreement nor any term hereof may be amended,
waived, discharged or terminated other than by a written instrument signed by
the party against whom enforcement of any such amendment, waiver, discharge or
termination is sought; provided, however, that holders of more than 50% of the
Registrable Securities may, with the written consent of the Company, waive,
modify or amend on behalf of all holders, any provisions hereof benefiting such
holders, so long as the effect thereof will be that all such holders will be
treated equally.
ARTICLE 11-MISCELLANEOUS
11.1. Registered Holders. A person or entity is deemed to be a
holder (or a holder in interest) 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.
11.2. Notices, etc. All notices and other communications required or
permitted under this Agreement shall be sent by registered or certified mail,
postage prepaid, overnight courier, confirmed facsimile or other electronic
transmission or otherwise delivered by hand or by messenger, addressed (a) if to
a Investor, at such Investor's address set forth on the signature page hereto or
at such other address as such Investor shall have furnished to the Company in
writing, (b) if to the Company at its offices to the attention of the President
or at such other address as the Company shall have furnished to the Investors in
writing, or (c) if any transferee or assignee of a Investor pursuant to Section
10.1, at such address as such transferee or assignee shall have furnished to the
Company in writing. Each such notice or other communication shall for all
purposes of this Agreement be treated as effective or having been received or
given, as applicable, (i) when delivered if delivered personally, (ii) if sent
by mail, at the earlier of its receipt or three Business Days after the
registration or certification thereof, (Hi) if sent by overnight courier, one
Business Day after the same has been deposited with a nationally recognized
courier service, or (iv) when sent by confirmed facsimile or other electronic
transmission, on the day sent (if a Business Day) if sent during normal business
hours of the recipient, and if not, then on the next Business Day (provided,
that such facsimile or other electronic transmission is followed by delivery via
another method permitted by this Section 11.2).
11.3. Delays or Omissions. Except as expressly provided in this
Agreement, no delay or omission to exercise any right, power or remedy accruing
to any Investor upon any breach or default of the Company under this Agreement
shall impair any such right, power or remedy of such Investor nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach
13
or default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind
or character on the part of any Investor of any breach or default under
this Agreement, or any waiver on the part of any Investor of any provisions
or conditions of this Agreement, must be in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies,
either under this Agreement or by law or otherwise afforded to any Investor
shall be cumulative and not alternative.
11.4. Governing Law; Jurisdiction. This Agreement shall be governed
in all respects by the laws of the State of New York without giving effect to
the conflicts of laws principles thereof All suits, actions or proceedings
arising out of, or in connection with, this Agreement or the transactions
contemplated by this Agreement shall be brought in any federal or state court of
competent subject matter jurisdiction sitting in Nassau County, New York. Each
of the parties hereto by execution and delivery of this Agreement, expressly and
irrevocably (i) consents and submits to the personal jurisdiction of any such
courts in any such action or proceeding; (ii) consents to the service of any
complaint, summons, notice or other process relating to any such action or
proceeding by delivery thereof to such party as set forth in Section 11.2
hereof; and (iii) waives any claim or defense in any such action or proceeding
based on any alleged lack of personal jurisdiction, improper venue, forum non
conveniens or any similar basis.
11.5. Entire Agreement; Amendment. This Agreement and the other
documents delivered pursuant to this Agreement at the Closing constitute the
full and entire understanding and agreement between the parties with regard to
the subject matter hereof and thereof and supersede all prior agreements and
merge all prior discussions, negotiations, proposals and offers (written or
oral) between them, and no party shall be liable or bound to any other party in
any manner by any representations, warranties, covenants or agreements except as
specifically set forth herein or therein. Except as expressly provided in this
Agreement, neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge or termination
is sought.
11.6. Successors and Assigns. Subject to Article 10 hereof, the
provisions of this Agreement shall inure to the benefit of, and be binding upon,
the permitted successors, assigns, heirs, executors and administrators of the
parties to this Agreement, except that the Company may not assign this Agreement
without the written consent of the Holders of at least 50% of the then
outstanding Registrable Securities.
11.7. Titles and Subtitles. The headings in this Agreement are used
for convenience of reference only and shall not be considered in construing or
interpreting this Agreement.
11.8. Counterparts. This Agreement maybe executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument. This Agreement may be delivered by facsimile, and facsimile
signatures shall be treated as original signatures for all applicable purposes.
11.9. Further Assurances. 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
14
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
11.10. Consents. Unless otherwise provided herein, all consents and
other determinations to be made pursuant to this Agreement shall be made on the
basis of a majority in interest (determined by number of securities) with
respect to the Registrable Securities.
11.11 . Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision.
11.12. No Third Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any person other than the parties hereto, their
permitted successors and assigns and parties eligible for indemnification under
Article 6, and only in accordance with the express terms of this Agreement.
11.13. Confidentiality of Agreement, Press Releases and Public
Announcements. Except as set forth below, the parties shall, and shall cause
their officers, employees and representatives to, treat and hold as confidential
the existence and terms of this Agreement at all times. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the Company and the holders
of at least 50% of the number of Registrable Securities; provided, however, that
any party may make any public disclosure it believes in good faith is required
by applicable law (including applicable securities laws) or any listing or
trading agreement concerning its publicly-traded securities to make such
disclosure (in which case the disclosing party will use its reasonable efforts
to advise the other parties in writing prior to making the disclosure).
11.14. Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder and any applicable common law, unless the
context requires otherwise. The word "including' shall mean including without
limitation and is used in an illustrative sense rather than a limiting sense.
Terms used with initial capital letters will have the meanings specified,
applicable to singular and plural forms, for all purposes of this Agreement.
Reference to any gender will be deemed to include all genders and the neutral
form.
11.15. Incorporation of Exhibits, Annexes and Schedules. The
Exhibits, Annexes and Schedules identified in this Agreement, if any, are
incorporated herein by reference and made a part hereof.
[Remainder of page left intentionally blank Signature page(s) to follow.]
15
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first above written.
COMPANY: CRITICAL HOME CARE, INC.
By:
------------------------------------
Name:
Title:
INITIAL INVESTOR: CLEVELAND OVERSEAS LTD.
By:
------------------------------------
Name:
Title:
Address for Notice Purposes:
Cleveland Overseas Ltd.
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
