Exhibit 10(g)
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of May
27, 1999 is made and entered into by and among GHS, Inc., a Delaware corporation
(the "Company"), and the holders of Registrable Securities (as defined herein)
whose names appear on the signature pages of this Agreement.
The parties to this Agreement, intending to be legally bound hereby,
agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:
"Affiliate" has the meaning ascribed to that term in Rule 12b-2 of the
General Rules and Regulations promulgated under the Exchange Act.
"Common Stock" means the voting common stock, par value $.01 per share,
of the Company.
"Common Equity Securities" shall mean Common Stock, any option, warrant
or right to subscribe for, acquire or purchase Common Stock (whether or not
currently exercisable), and any security convertible into or exchangeable for
Common Stock (whether or not currently convertible or exchangeable).
"Demand Request" has the meaning ascribed to that term in Section 3.1.
"Demand Registration" has the meaning ascribed to that term in
Section 3.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Initiating Holder" means CYL Development Holdings, LLC.
"Person" means an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Piggyback Registration" has the meaning ascribed to that term in
Section 3.2.
"Prospectus" means the prospectus included in any registration
statement, as amended or supplemented by any prospectus supplement and by all
other amendments, and supplements to such prospectus, including post-effective
amendments, and all information incorporated by reference in such prospectus.
"Registrable Securities" means any shares of Common Stock (i) acquired
by a party to this Agreement upon conversion of the Series A Preferred Stock or
upon exercise of the warrants of the Company acquired pursuant to the terms of
the Contribution and Exchange
Agreement among the Company and the holders of Registrable Securities dated as
of May 20, 1999 or (ii) acquired thereafter by a party to this Agreement by
virtue of any stock split or combination, stock dividend or similar event in
respect of any of the shares referred to in clause (i) of this definition;
PROVIDED, HOWEVER, that shares of Common Stock that are Registrable Securities
shall cease to be Registrable Securities upon the sale thereof pursuant to an
effective registration statement or pursuant to Rule 144 (or successor rule)
under the Securities Act or upon, in the case of any holder thereof, shares of
Common Stock becoming saleable pursuant to Rule 144 without volume or other
restrictions; and PROVIDED, FURTHER that shares of Common Stock that are
Registrable Securities shall continue to be Registrable Securities upon their
transfer in a private transaction exempt from the registration requirements of
the Securities Act to a person who is already a party to this Agreement (or an
affiliate of any party to this Agreement) or a transfer of Registrable
Securities in accordance with Section 11 who becomes a party to this Agreement
by agreeing in writing to be bound by the terms of this Agreement, such
agreement to be in form and substance reasonably satisfactory to the Company.
"Registration Expenses" means all registration and filing fees, fees
with respect to filings required to be made with the National Association of
Securities Dealers, Inc. (the "NASD"), fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of one
counsel for the underwriters or sellers of Registrable Securities in connection
with blue sky qualifications of the Registrable Securities under the laws of
such jurisdictions as the managing underwriters or holders of a majority of the
Registrable Securities being sold may reasonably designate), printing expenses
and distribution expenses associated with the preparation and distribution of
any registration statement, any prospectus, and amendments or supplements
thereto, all fees and expenses associated with the listing of any Registrable
Securities on any securities exchange or exchanges, and fees and disbursements
of counsel for the Company and its independent certified public accountants,
out-of-pocket expenses of underwriters customarily paid by the issuer to the
extent provided for in any underwriting agreement (but specifically excluding
any Selling Expenses).
"Registration Statement" means any registration statement of the
Company filed under the Securities Act, including the prospectus forming a part
thereof, amendments and supplements to such registration statement, including
post-effective amendments, and all exhibits to and all information incorporated
by reference in such registration statement.
"Requisite Amount" shall mean, for the purposes of Section 3.1, an
amount of Registrable Securities proposed to be registered under Section 3.1
pursuant to a Demand Registration which is reasonably expected to have an
aggregate offering price of at least $1,000,000.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute and the rules and regulations thereunder, all as the
same shall be in effect at the time.
"Selling Expenses" means, with respect to any holder of Registrable
Securities, all underwriting discounts, selling commissions and stock transfer
or documentary stamp taxes, if
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any, applicable to any Registrable Securities registered and sold by such
holder, and all fees and disbursements of any counsel for such holder (other
than any counsel fees expressly constituting a Registration Expense as
defined in this Agreement).
"Selling Holders" has the meaning ascribed to that term in Section 3.1.
"Underwritten Offering" means an offering registered under the
Securities Act in which securities are sold to an underwriter, whether on a
"firm commitment", "best efforts" or other basis, for reoffering to the public.
2. SECURITIES SUBJECT TO THIS AGREEMENT. The only securities entitled
to the benefits of this Agreement are the Registrable Securities.
3. REGISTRATION OF REGISTRABLE SECURITIES.
3.1. DEMAND REGISTRATION.
(a) DEMAND. At any time beginning on the second anniversary of the date
of this Agreement and subject to the other provisions of this Agreement, the
Initiating Holder shall have the right, exercisable by making a written request
(a "Demand Request") to the Company (which request shall specify the aggregate
number of shares of Registrable Securities requested to be registered), to
require that the Company effect the registration in accordance with the
provisions of the Securities Act of the Underwritten Offering and sale of any of
the Registrable Securities held by such holder. The Registrable Securities
requested in the Demand Request to be included in the Underwritten Offering
shall have an aggregate offering price of at least the Requisite Amount. Upon
receipt of the Demand Request, the Company shall promptly give written notice of
the Demand to all other holders of Registrable Securities, and the Company shall
use all reasonable efforts to effect, at the earliest practicable date, the
registration (a "Demand Registration") under the Securities Act of (i) the
Underwritten Offering and sale of the Registrable Securities that the Company
has been so required to register by such Initiating Holder, and (ii) the
Underwritten Offering and sale of all other Registrable Securities that the
Company has been requested to register by the holders thereof (such holders
together with the Initiating Holder being hereinafter referred to as the
"Selling Holders") by written request given to the Company within 15 days after
the receipt of such written notice by the Company.
(b) FORM; EFFECTIVE REGISTRATION STATEMENT. A Demand Registration shall
only be on Form S-3 (or any successor "short-form" registration statement). A
registration requested pursuant to this Section 3.1 shall not be deemed to have
been effected unless a registration statement with respect thereto has become
effective; PROVIDED, HOWEVER, that if, after a Demand Registration has become
effective, the offering of Registrable Securities pursuant thereto is
permanently suspended, blocked by any stop order, injunction or other order of
the SEC or any governmental agency or court, or withdrawn (except a Demand
Registration withdrawn under Section 6(a)), such Demand Registration will be
deemed not to have been effected.
(c) SELECTION OF UNDERWRITERS. The Company shall have the sole right to
select, after consultation with the Selling Holders, the underwriter or
underwriters of the Underwritten Offering of the Registrable Securities so to be
registered.
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(d) PRIORITY IN REQUESTED REGISTRATION. If the managing underwriter of
the Demand Registration advises the Company in writing that, in its opinion, the
number of shares of Registrable Securities and other securities of the Company
requested to be included in such offering exceeds the number that can be sold in
such offering without materially affecting the offering price of any such
securities, the Company shall include in such registration (1) first, the
Registrable Securities requested by the Selling Holders to be included in the
Demand Registration pursuant to Section 3.1(a) and any other securities of the
Company proposed to be sold by any holders of securities of the Company having
preferential registration rights to participate with such Selling Holders in
such Demand Registration, pro rata among such Selling Holders and such other
holders on the basis of the total number of shares of securities of the Company,
including Registrable Securities, requested to be included in such Demand
Registration; and (2) second, to the extent that such securities of the Company
may be included without materially affecting the offering price of the
Registrable Securities and securities of the Company referred to in clause (1),
in the opinion of such managing underwriter, any other securities of the Company
held by persons having rights to participate in such Demand Registration that
are non-preferential to the Selling Holders and such other holders and
securities of the Company to be issued or sold by the Company, in accordance
with their agreements with respect thereto.
(e) LIMITATIONS ON DEMAND REGISTRATION. Notwithstanding the foregoing,
the Company shall not be required to file a registration statement for a Demand
Registration under any of the following circumstances:
(i) within 60 days prior to the estimated date of filing of and 180
days after the effectiveness (within the meaning of Section 3.1(b)) of a
registration statement filed in connection with an underwritten public offering
of securities of the Company;
(ii) the Company has effected two Demand Registrations pursuant to this
Section 3.1;
(iii) the Company determines, in good faith and after consultation with
the Initiating Holder, that the Registrable Securities proposed to be registered
in the Demand Request are not expected to have an aggregate offering price of at
least the Requisite Amount;
(iv) the Company promptly delivers written notice ("Prior Registration
Notice") to the Initiating Holder making the Demand Request that it has filed
and is using reasonable efforts to have declared effective, or at the time of
receipt of the Demand Request is required to file, or has delivered a Piggyback
Notice (as defined in Section 3.2) with respect to, a registration statement
pursuant to (1) demand registration rights granted to any person or entity
(other than pursuant to this Section 3.1) or (2) Section 3.2 ("Prior
Registration Rights"); PROVIDED, HOWEVER, that the Company may postpone the
filing of a registration statement pursuant to a Demand Request for a period of
no longer than (1) 180 days after the effective date of the registration
statement filed pursuant to the Prior Registration Rights, if such registration
statement was filed before the date of delivery of the Prior Registration Notice
or within 60 days thereafter and, in either case, becomes effective within 120
days after the date of delivery of the Prior Registration Notice; (2) 120 days
after the date of delivery of the Prior Registration Notice, if such
registration statement was filed before the date of delivery of the Prior
Registration
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Notice or within 60 days thereafter but, in either case, does not become
effective within such 120-day period; or (3) 60 days after the date of delivery
of the Prior Registration Notice, if such registration statement was not filed
before the date of delivery of the Prior Registration Notice and is not filed
within 60 days thereafter;
(v) if there exists at the time, material non-public information
relating to the Company, which, in the reasonable opinion of the Board of
Directors, should not be disclosed, any other provisions of this Agreement to
the contrary notwithstanding, or if it would be severely detrimental to the
Company to file a registration statement in the near future in the reasonable
opinion of the Board of Directors, the Company's obligation to file a
registration statement, or cause such registration statement to become and
remain effective (whether under this Section 3.1 or under any other provision of
this Agreement), shall be suspended for a period not to exceed 90 days (and for
a period not exceeding, in the aggregate, 180 days in any 24-month period);
(vi) if the Company shall not then qualify for registration on Form S-3
(or any successor "short-form" registration statement); or
(vii) if the Company shall be unable, after consultation with the
Selling Holders, to select an underwriter or underwriters to underwrite the
Demand Registration which is reasonable acceptable to the Company.
3.2. PIGGYBACK REGISTRATION.
(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If the Company at any time
beginning on the second anniversary of the date of this Agreement proposes
(other than pursuant to Section 3.1) to register the offering and sale of shares
of Common Stock under the Securities Act by registration on any form other than
Forms S-4 or S-8 (or any successor forms thereto) whether or not for sale for
its own account, it shall each such time give prompt written notice ("Piggyback
Notice") to all holders of Registrable Securities of its intention to do so and
of such holders' rights under this Section 3.2. Upon the written request of any
such holder (a "Requesting Holder") received by the Company within 15 days after
the giving of any Piggyback Notice (which request shall specify the Registrable
Securities intended to be disposed of by such Requesting Holder and the intended
method of such disposition), the Company shall use all reasonable efforts to
include in such registration ("Piggyback Registration") all Registrable
Securities that the Requesting Holders have so requested be included in such
Piggyback Registration to permit the disposition by such Requesting Holders of
such Registrable Securities; provided that (i) if such registration involves an
underwritten public offering, all holders of Registrable Securities requesting
to be included in the Company's registration must sell their Registrable
Securities to the underwriters selected by the Company on the same terms and
conditions as apply to the Company; and (ii) if, at any time after giving notice
of its intention to register any securities pursuant to this Section 3.2(a) 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 securities, the Company shall give written notice to all holders
of Registrable Securities and, thereupon, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration. No
registration effected under this Section 3.2 shall relieve the Company of its
obligations to effect registrations upon request under
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Section 3.1. The Company shall not, without the prior written consent of the
holders of a majority of the Registrable Securities, grant future piggyback
registration rights to other persons which, as a whole, are superior to the
Piggyback Registration rights provided by this Section 3.2.
(b) PRIORITY IN PIGGYBACK REGISTRATIONS. If a Piggyback Registration is
an Underwritten Offering and the managing underwriter thereof advises the
Company in writing that, in its opinion, the number of shares of Registrable
Securities requested or proposed to be included in such offering exceeds the
number that can be sold in such offering without materially affecting the
offering price of any such securities, the Company shall include in such
registration (1) first, to the extent that such securities of the Company may be
included in such registration without materially affecting the offering price
thereof, in the opinion of such managing underwriter, (A) if such registration
is initiated by the Company proposing to register any of its Common Stock, such
Common Stock proposed to be sold by the Company and (B) the securities of the
Company held by persons (other than the holders of Registrable Securities with
respect to Registrable Securities) who otherwise have preferential registration
rights to include such securities in such Piggyback Registration in preference
to such holders and which have been duly requested to be included in such
Piggyback Registration in accordance with the agreements with respect to such
registration rights between the Company and such holders; and (2) second, to the
extent that such Registrable Securities may be included in such registration
without materially affecting the offering price of the securities referred to in
clause (1), in the opinion of such managing underwriter, the Registrable
Securities requested by the holders to be included in such Piggyback
Registration pursuant to Section 3.2 (a) and any other securities of the Company
held by persons other than the holders having rights to participate in such
Piggyback Registration that are non-preferential to the holders of Registrable
Securities, pro rata among all such holders on the basis of the total number of
securities of the Company, including Registrable Securities, requested by each
such holder to be included therein.
4. HOLD-BACK AGREEMENTS. During the term of this Agreement, each holder
of Registrable Securities shall, if requested by the managing underwriter or
underwriters in an Underwritten Offering and provided the Company is then in
compliance with the terms of this Agreement, agree not to effect any public sale
or distribution of securities of the Company of the same class as the securities
included in such registration statement, including a sale pursuant to Rule 144
under the Securities Act, except as part of such underwritten registration,
during the 30-day period prior to, and during a period of up to 180 days
beginning on, the closing date of each Underwritten Offering made pursuant to
such registration statement, to the extent timely notified in writing by the
Company or the managing underwriter or underwriters.
5. REGISTRATION PROCEDURES.
In connection with the Company's obligations under Section 3, the
Company shall use all reasonable efforts to effect such registration to permit
the sale of such Registrable Securities in accordance with the intended method
or methods of distribution thereof, and pursuant thereto the Company shall as
expeditiously as practicable:
(a) prepare and file with the SEC under the Securities Act a
registration statement with respect to such Registrable Securities which shall
state that the Registrable Securities are covered thereby, and use all
reasonable efforts to cause such registration statement
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to become effective and to remain effective; PROVIDED, HOWEVER, that the Company
may discontinue any registration of Registrable Securities being effected
pursuant to Section 3.2 at any time before the effective date of the
registration statement relating thereto;
(b) prepare and file with the SEC such amendments and supplements, if
any, to such registration statement and the prospectus used in connection
therewith as may be necessary to (1) keep such registration statement effective
until the earlier of (a) 90 days after the effectiveness thereof or (b) the
completion of the distribution under such registration statement, and (2) comply
with the provisions of the Securities Act applicable to it with respect to the
disposition of all securities covered by such registration statement during such
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement;
(c) furnish to each seller of such Registrable Securities and each
underwriter (if any) such number of copies of such registration statement
(including exhibits), each amendment and supplement thereto, the prospectus
included in such registration statement or filed with the SEC (including each
preliminary prospectus), and each amendment and supplement thereto as such
seller and underwriter may reasonably request to facilitate the disposition of
the Registrable Securities owned by such seller and covered by such registration
statement;
(d) use all reasonable efforts to (1) register or qualify such
Registrable Securities under the securities or "blue sky" laws of such
jurisdictions as any seller of such Registrable Securities or the managing
underwriter (if any) may reasonably request; (2) keep such registrations or
qualifications in effect for so long as such registration statement is in
effect; and (3) take any and all other reasonable actions that may be necessary
or appropriate to enable each seller of Registrable Securities or other
securities of the Company covered by such registration statement and each
underwriter (if any) to consummate the disposition in such jurisdictions of the
relevant Registrable Securities and other securities of the Company; PROVIDED,
HOWEVER, that the Company shall not be required to (a) qualify generally to
transact business as a foreign corporation in any jurisdiction where it would
not otherwise be required to qualify but for the requirements of this Section 5,
(b) subject itself to taxation in any such jurisdiction; (c) consent to general
service of process in any jurisdiction; or (d) register or qualify Registrable
Securities or take any other action under the securities or blue sky laws of any
jurisdiction if, in the judgment of the Board of Directors of the Company, the
consequences of such registration, qualification or other action would be unduly
burdensome to the Company;
(e) (1) at any time when a prospectus relating thereto is required to
be delivered under the Securities Act, notify each seller of Registrable
Securities covered by a registration statement when it becomes aware of the
occurrence of any event as a result of which the prospectus (as then amended or
supplemented) contains any untrue statement of a material fact or omits any fact
necessary to make the statements therein, in the light of circumstances under
which they were made, not misleading; and (2) at the request of any such seller,
as promptly as practicable thereafter, prepare in sufficient quantities and
furnish to such seller and each underwriter (if any) a reasonable number of
copies of a prospectus supplemented or amended so that, as thereafter delivered
to the offerees or purchasers of such Registrable Securities, such prospectus
will not contain any untrue statement of a material fact or omit to
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state any fact necessary to make the statements therein, in the light of the
circumstances then existing, not misleading;
(f) use all reasonable efforts to cause all such Registrable Securities
covered by such registration statement to be listed on any securities exchange,
if any, on which similar securities of the Company are then listed, if the
listing of such Registrable Securities is then permitted under the rules of such
exchange;
(g) enter into and perform its obligations under customary agreements
relating to the registration, including an underwriting agreement in customary
form;
(h) subject to the execution of confidentiality agreements customary
for transactions of this type, in form and substance satisfactory to the
Company, (1) make reasonably available for inspection by any seller of such
Registrable Securities, any underwriter (if any) and any legal counsel,
accountant or other agent retained by any such underwriter, all financial and
other records, relevant corporate documents, and properties of the Company, and
(2) cause the Company's directors, officers, employees, counsel and independent
public accountants to supply all information reasonably requested by, and to
respond to inquiries from, any such seller, underwriter, legal counsel,
attorney, accountant or agent in connection with such registration statement, in
each instance to the extent that such information is reasonably necessary to
satisfy any of its obligations under applicable law;
(i) with respect to Underwritten Offerings, use all reasonable efforts
to obtain an appropriate opinion from counsel for the Company and a "cold
comfort" letter from then Company's independent public accountants, each in
customary form and covering such matters of the type customarily covered by
opinions of counsel and cold comfort letters in similar registrations;
(j) promptly notify each selling holder of Registrable Securities and
each managing underwriter (if any) and, upon request by any such person, confirm
such advance in writing, (1) when such registration statement, the prospectus or
any prospectus supplement or post-effective amendment has been filed, and, with
respect to such registration statement or any post-effective amendment thereto,
when the same has become effective, (2) of the issuance by the SEC of any stop
order suspending the effectiveness of such registration statement or the
initiation of any proceeding for such purpose, or (3) of the receipt by the
Company of any notification with respect to the suspension of the registration
or qualification of such Registrable Securities for sale in any jurisdiction or
the initiation of any proceeding for such purpose; and
(k) use all reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of such registration statement or any
post-effective amendment thereto.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such securities as the Company may
from time to time reasonably request in writing; PROVIDED, HOWEVER, that such
information shall be used by the Company only to the extent necessary for, and
in connection with, such registration.
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Each holder of Registrable Securities agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 5(e)(1) hereof, such holder shall forthwith discontinue disposition of
such Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 5(e)(2), or until it
is advised in writing (the "Advice") by the Company that the use of the
prospectus may be resumed, and has received copies of any additional or
supplemental filings which are incorporated by reference in the prospectus, and,
if so directed by the Company, such holder shall deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
holder's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the time periods regarding the maintenance of the
registration statement in Section 3 shall be extended by the number of days
during the period from and including the date of the giving of such notice
pursuant to Section 5(e)(1) to and including the date when each seller of
Registrable Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
Section 5(e)(2) or the Advice.
6. WITHDRAWAL.
(a) If any holder participating in a registration hereunder disapproves
of the terms of any offering, the sole remedy of such holder shall be, in its
discretion, to withdraw such holder's Registrable Securities and other
securities of the Company therefrom by giving written notice to the Company and
any managing underwriter (if any). The holder's Registrable Securities and other
securities of the Company so withdrawn from the offering also shall be withdrawn
from registration. If the holders participating in such registration withdraw
all Registrable Securities from the offering, the Company may withdraw the
registration, and if such registration was commenced pursuant to a Demand
Request, such registration shall nevertheless be counted as a Demand
Registration effected hereunder; PROVIDED, HOWEVER, that such registration shall
not be so counted if the withdrawal was based on the Company's failure to comply
in any material respect with its obligations hereunder.
(b) If as a result of the proration provisions of Sections 3.1(d) and
3.2(b), any holder of Registrable Securities is not entitled to include all of
such holder's Registrable Securities in a registration that such holder has
requested to be included, then after the delivery to such holder of notice
thereof from the Company, such holder may elect to withdraw his request to
include such holder's Registrable Securities in such registration ("Withdrawal
Election"); PROVIDED, HOWEVER, that a Withdrawal Election shall be irrevocable
and, after making a Withdrawal Election, a holder shall no longer have any right
to include such holder's Registrable Securities in the registration as to which
such Withdrawal Election was made. If as a result of Withdrawal Elections (but
after the Company has included in such registration in place of such withdrawn
Registrable Securities such additional Registrable Securities or other
securities of the Company to be sold by the Company or held by other holders or
other sellers whose Registrable Securities or other securities of the Company
were excluded as a result of the proration provisions of Sections 3.1(d) and
3.2(b)), less than the Requisite Amount of Registrable Securities and other
securities of the Company are requested to be included in a registration, the
Company, in its sole discretion, may give written notice to all holders of
Registrable Securities who have requested that such holders' Registrable
Securities be included in a registration and who have not made a Withdrawal
Election that the Company has determined
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not to proceed with such registration and, thereupon, shall be relieved of its
obligation to register any Registrable Securities in connection with such
abandoned registration (without prejudice, however, to the holders' rights to
have Registrable Securities registered pursuant to Section 3.2 and the holders'
rights to have Registrable Securities registered pursuant to Section 3.1 in the
future). Any such abandoned registration shall not be counted as a Demand
Registration for purposes of Section 3.1(e)(iii).
7. EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration in accordance with Section 3 shall be borne by
the Company. All Selling Expenses relating to Registrable Shares registered on
behalf of any person shall be borne by such person.
8. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company shall indemnify and
hold harmless, with respect to any registration statement filed by it, to the
fullest extent permitted by law, each holder who is a seller of Registrable
Securities covered by such registration statement, its officers, directors,
employees, agents and general or limited partners, and each other person, if
any, who controls such holder within the meaning of the Securities Act
(collectively, "Holder Indemnified Parties") against all losses, claims,
damages, liabilities and expenses, joint or several, (including reasonable fees
of counsel and any amounts paid in settlement effected with the Company's
consent, which consent shall not be unreasonably withheld) to which any such
Holder Indemnified Party may become subject under the Securities Act, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions or proceedings in respect thereof) are caused by (1) any
untrue statement or alleged untrue statement of a material fact contained in any
registration statement in which such Registrable Securities were included as
contemplated hereby or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (2) any untrue statement or alleged untrue statement of
a material fact contained in any preliminary, final or summary prospectus,
together with the documents incorporated by reference therein (as amended or
supplemented if the Company shall have filed with the SEC any amendment thereof
or supplement thereto), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or (3) any violation by the Company of any federal or
state law, rule or regulation applicable to the Company relating to action of or
inaction by the Company in connection with any such registration; and in each
such case, the Company shall reimburse each such Holder Indemnified Party for
any reasonable legal or any other expenses incurred by any of them in connection
with investigating or defending any such loss, claim, damage, liability,
expense, action or proceeding; PROVIDED, HOWEVER, that the Company shall not be
liable to any such Holder Indemnified Party in any such case to the extent that
any such loss, claim, damage, liability or expense (or action or proceeding,
whether commenced or threatened, in respect thereof) arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement or amendment thereof or supplement
thereto or in any such preliminary, final or summary prospectus in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any such Holder Indemnified Party relating to such Holder Indemnified
Party expressly for use in the preparation thereof; and PROVIDED, FURTHER, that
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the Company shall not be liable to any such Holder Indemnified Party with
respect to any preliminary prospectus to the extent that any such loss, claim,
damage, liability or expense of such Holder Indemnified Party results from the
fact that such Holder Indemnified Party sold Registrable Securities to a person
to whom there was not sent or given, at or before the written confirmation of
such sale, a copy of the prospectus (excluding documents incorporated by
reference) or of the prospectus as then amended or supplemented (excluding
documents incorporated by reference) if the Company has previously furnished
copies thereof to such Holder Indemnified Party in compliance with Section 5 and
the loss, claim, damage, liability or expense of such Holder Indemnified Party
results from an untrue statement or omission of a material fact contained in
such preliminary prospectus which was corrected in the prospectus (or the
prospectus as amended or supplemented). Such indemnity and reimbursement of
expenses obligations shall remain in full force and effect regardless of any
investigation made by or on behalf of the Holder Indemnified Parties and shall
survive the transfer of such securities by such holder.
(b) INDEMNIFICATION BY HOLDERS. Each holder of Registrable Securities
participating in any registration hereunder shall severally and not jointly
indemnify and hold harmless, to the fullest extent permitted by law, the
Company, its directors, officers, employees and agents, and each person who
controls the Company (within the meaning of the Securities Act) (collectively,
"Company Indemnified Parties") against all losses, claims, damages, liabilities
and expenses, joint or several (including reasonable fees of counsel and any
amounts paid in settlement effected with such holder's consent, which consent
shall not be unreasonably withheld) to which any Company Indemnified Party may
become subject under the Securities Act, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions or proceedings
in respect thereof) are caused by (1) any untrue statement or alleged untrue
statement of a material fact contained in any registration statement in which
such holder's Registrable Securities were included or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (2) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary, final or summary prospectus, together with the documents
incorporated by reference therein (as amended or supplemented if the Company
shall have filed with the Commission any amendment thereof or supplement
thereto), or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading to the extent, but only to the extent, in the cases described in
clauses (1) and (2), that such untrue statement or omission is contained in any
information furnished in writing by such holder to the Company expressly for use
in the preparation thereof; PROVIDED, HOWEVER, that the aggregate amount which
any such holder shall be required to pay pursuant to this Section 8(b) shall be
limited to the dollar amount of proceeds received by such holder upon the sale
of the Registrable Securities and other securities of the Company pursuant to
the registration statement giving rise to such claim. Such indemnity obligation
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Company Indemnified Parties (except as provided above) and
shall survive the transfer of such securities by such holder.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after receipt by
an indemnified party under Section 8(a) or 8(b) of written notice of
commencement of any action, suit, proceeding, investigation or threat thereof
made in writing with respect to which a claim for
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indemnification may be made pursuant to this Section 8, such indemnified party
shall, if a claim in respect thereto is to be made against an indemnifying
party, give written notice to the indemnifying party of the threat or
commencement thereof; PROVIDED, HOWEVER, that the failure to so notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. If any such claim or action
referred to under Section 8(a) or 8(b) is brought against any indemnified party
and it then notifies the indemnifying party of the threat or commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it wishes, jointly with any other indemnifying party similarly
notified, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense of any such claim or
action, the indemnifying party shall not be liable to such indemnified party
under this Section 8 for any legal expenses of counsel or any other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation unless (i) the indemnifying
party has failed to assume the defense of such claim or action or to employ
counsel reasonably satisfactory to such indemnified party or (ii) in the
reasonable judgment of any indemnified party a conflict of interest is likely to
exist, based on the written opinion of counsel, between such indemnified party
and any other of such indemnified parties with respect to such claim, in which
event the indemnifying party shall be obligated to pay reasonable fees and
expenses of such additional counsel. The indemnifying party shall not be
required to indemnify the indemnified party with respect to any amounts paid in
settlement of any action, proceeding or investigation entered into without the
written consent of the indemnifying party, which consent shall not be
unreasonably withheld. No indemnifying party shall consent to the entry of any
judgment or enter into any settlement without the consent of the indemnified
party unless (1) such judgment or settlement does not impose any obligation or
liability upon the indemnified party other than the execution, delivery or
approval thereof, and (2) such judgment or settlement includes as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a full release and discharge from all liability in respect
of such claim for all persons that may be entitled to or obligated to provide
indemnification or contribution under this Section 8.
(d) CONTRIBUTION. If the indemnification provided for in this Section 8
is unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or 8(b), then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of the losses,
claims, damages, liabilities or expenses (or actions or proceedings in respect
thereof) referred to in Section 8(a) or 8(b) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and the indemnified party on the other in connection with the statements,
omissions, actions or inactions which resulted in such losses, claims, damages,
liabilities or expenses. The relative fault of the indemnifying party and the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or the indemnified party, any action or
inaction by any such party, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement, omission,
action or inaction. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or expenses (or actions or
proceedings in respect thereof) pursuant to this Section 8(d) shall be deemed to
include any reasonable legal or other expenses incurred by such indemnified
12
party in connection with investigating or defending any such action or claim
(which shall be limited as provided in Section 8(c) if the indemnifying party
has assumed the defense of any such action in accordance with the provisions
thereof) which is the subject of this Section 8(d). 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. Promptly after receipt by an
indemnified party under this Section 8(d) of written notice of the commencement
of any action, suit, proceeding, investigation or threat thereof made in writing
with respect to which a claim for contribution may be made against an
indemnifying party under this Section 8(d), such indemnified party shall, if a
claim for contribution in respect thereto is to be made against an indemnifying
party, give written notice to the indemnifying party in writing of the
commencement thereof (if the notice specified in Section 8(c) has not been given
with respect to such action); PROVIDED, HOWEVER, that the failure to so notify
the indemnifying party shall not relieve it from any obligation to provide
contribution which it may have to any indemnified party under this Section 8(d)
except to the extent that the indemnifying party is actually prejudiced by the
failure to give notice. Notwithstanding anything in this Section 8(d) to the
contrary, no holder of Registrable Securities participating in any registration
hereunder shall be required pursuant to this Section 8(d) to contribute any
amount which exceeds the dollar amount of the proceeds received by such holder
from the sale of Registrable Securities and other securities of the Company in
the offering to which the losses, claims, damages, liabilities or expenses of
the indemnified parties relate.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
If indemnification is available under this Section 8, the indemnifying
parties shall indemnify each indemnified party to the fullest extent provided in
Sections 8(a) and 8(b), without regard to the relative fault of said
indemnifying party or indemnified party or any other equitable consideration
provided for in this Section 8(d). The provisions of this Section 8(d) shall be
in addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract, shall remain in full
force and effect regardless of any investigation made by or on behalf of any
indemnified party, and shall survive the transfer of securities by any such
party.
(e) INDEMNIFICATION AND CONTRIBUTION OF UNDERWRITERS. In connection
with any Underwritten Offering contemplated by this Agreement which includes
Registrable Securities, the Company and all sellers of Registrable Securities
included in any registration statement shall agree to customary provisions for
indemnification and contribution (consistent with the other provisions of this
Section 8) in respect of losses, claims, damages, liabilities and expenses of
the underwriters of such offering.
9. CURRENT PUBLIC INFORMATION. With a view to making available the
benefits of certain rules and regulations of the SEC which may permit the sale
of Registrable Securities to the public without registration, the Company agrees
to use its best efforts to:
13
(a) file with the SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act after the Company
becomes subject to the reporting requirements of such act; and
(b) furnish to any holder of Registrable Securities, during the term of
this Agreement, forthwith upon request (i) if true, a written statement by the
Company that it has complied with the current public information and reporting
requirements of Rule 144 under the Securities Act and the Exchange Act to which
it is subject and (ii) a copy of the most recent annual or quarterly report of
the Company and such other reports and documents so filed by the Company.
10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. In the case of any
underwritten registration under Section 3.1, or in the case of a registration
under Section 3.2, if the Company determines to enter into an underwriting
agreement in connection therewith, (1) all shares of Registrable Securities or
other Securities of the Company to be included in such registration shall be
subject to such underwriting agreement, which shall be in customary form, and
(2) no person may participate in any such registration unless such person (a)
agrees to sell such person's securities on the basis provided in such
underwriting arrangement and (b) completes and executes all questionnaires,
powers-of-attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements.
11. TRANSFER OF REGISTRATION RIGHTS. Subject to the restrictions on the
transfer of Common Equity Securities of the Company under the terms of that
certain Stockholders' Agreement dated as of the date hereof by and between,
among others, the Company and the Holders, the rights to cause the Company to
register Registrable Securities of a Holder and keep information available
granted to a Holder by the Company hereunder may be assigned by a Holder (i) to
any partner or shareholder of such Holder, (ii) to any other Holder, or (iii) to
other transferees or assignees; PROVIDED, that the Company is given written
notice by the Holder at any time of or within a reasonable time after said
transfer, stating the name and address of said transferee or assignee and
identifying the securities with respect to which such registration rights are
being assigned and the transferee or assignee agrees in writing to be bound by
the terms of this Agreement, such agreement to be in form and substance
reasonably satisfactory to the Company.
12. MISCELLANEOUS.
(a) AMENDMENTS AND WAIVERS. Except as otherwise provided herein, no
alteration, modification, amendment, change or waiver of any provision of this
Agreement shall be effective or binding on any party hereto unless the same is
in writing and is executed by the Company and the holders of at least a majority
of the Registrable Securities then outstanding; PROVIDED, HOWEVER, that with
respect to a particular registration statement filed pursuant to Section 3, a
waiver or consent to departure from the provisions of this Agreement regarding
only such registration statement and the offering covered thereby may be given
by the holders of not less than a majority of the Registrable Securities covered
by such registration statement, except that no such waiver or consent shall
operate to affect adversely the rights hereunder of any other holder of
Registrable Securities.
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(b) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or courier guaranteeing overnight delivery:
(i) if to a holder of Registrable Securities, at the most current
address given by such holder to the Company; and
(ii) if to the Company, at 000 Xxxxxxxx, Xxx Xxxx, XX 00000, Attention:
Chief Executive Officer.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three days after
being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day if timely delivered to
a courier guaranteeing overnight delivery.
(c) TERM. This Agreement shall terminate and cease to be of any further
force or effect on the fifth anniversary of the date of this Agreement;
PROVIDED, HOWEVER, that the indemnification and contribution rights and
obligations shall not terminate and shall continue forever; and PROVIDED,
FURTHER, that with respect to any particular party to this Agreement, this
Agreement shall terminate and cease to be of any further force or effect on the
first date which that party ceases to hold any Registrable Securities.
(d) SUCCESSORS AND ASSIGNS. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors, permitted assigns, heirs,
executors and administrators of the parties hereto, provided that any such
successors, permitted assign, heirs, executors and administrators shall have
agreed in writing to be bound by the terms and conditions of this Agreement.
(e) REMEDIES. Each party hereto acknowledges that in the event of any
breach of this Agreement by such party, the other parties hereto (1) would be
irreparably and immediately harmed by such breach, (2) could not be made whole
by monetary damages, and (3) shall be entitled to temporary and permanent
injunctions (or their functional equivalents) to prevent any such breach and/or
to compel specific performance with this Agreement, in addition to all other
remedies to which such parties may be entitled at law or in equity.
(f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed in Delaware without regard to principles of conflicts of
laws.
(h) SEVERABILITY. Each provision of this Agreement shall be considered
severable, and if for any reason any provision that is not essential to the
effectuation of the basic purposes of the Agreement is determined by a court of
competent jurisdiction to be invalid or unenforceable under existing or future
applicable law, such invalidity shall not impair the
15
operation of or affect those provisions of this Agreement that are valid. In
that case, this Agreement shall be construed so as to limit any term or
provision so as to make it enforceable or valid within the requirements of any
applicable law, and in the event such term or provision cannot be so limited,
this Agreement shall be construed to omit such invalid or unenforceable
provisions.
(i) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no representations, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company hereby. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter and cannot be changed or terminated orally.
(j) CONSTRUCTION. As used in this Agreement, unless the context
otherwise requires (i) references to "Sections" are to sections of this
Agreement, (ii) "hereof", "herein", "hereunder" and comparable terms refer to
this Agreement in its entirety and not to any particular part of this Agreement,
(iii) the singular includes the plural and the masculine, feminine and neutral
gender includes the other, (iv) "including" or "includes" shall be deemed to be
followed by the phrase "without limitation", and (v) headings of the various
Sections and subsections are for convenience of reference only and shall not be
given any effect for purposes of interpreting this Agreement.
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This Agreement is executed and delivered by the parties hereto
to be effective as of the date first above written.
GHS, INC.
By: /s/ Xxxx Xxxx
------------------------------------
Name: Xxxx Xxxx
Title: President
CYL DEVELOPMENT HOLDINGS, LLC
By: /s/ Xxxxx Xxx
------------------------------------
Name: Xxxxx Xxx
Title: Manager
XXXXXXX RESEARCH INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman
/s/ Xxxxxxx X. Xxxxxxx
-------------------------------------------
Xxxxxxx X. Xxxxxxx
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