1
EXHIBIT 4.5
EXECUTION COPY
--------------
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT is made as of September 20, 1996 by
and among Balanced Care Corporation, a Delaware corporation (the "Company"),
the investors listed in Schedule 1.1 to that certain Series B Stock Purchase
Agreement (the "Purchase Agreement") between such investors and the Company
dated the date hereof (including any Additional Investor (as defined therein)
and who executes a counterpart to this Agreement) (each an "Investor" and,
collectively the "Investors"), the holder of Convertible Series A Preferred
Stock, $.001 par value, of the Company (the "Series A Holder") and certain
holders of shares, or rights to purchase shares, of Common Stock, $.001 par
value, of the Company (the "Common Stockholders"), each as set forth in the
signature pages hereto.
1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Affiliate" shall mean any person controlled by, controlling
or under common control with any other person.
"Commission" shall mean the Securities and Exchange
Commission, or any other federal agency at the time administering the
Securities Act.
"Common Shares" shall mean (i) the aggregate 3,100,000 shares
of Common Stock held by the Common Stockholders other than the Series A Holder;
(ii) the aggregate 528,444 shares of Common Stock held by, or issuable upon the
exercise of certain capital stock purchase warrants of the Company held by, the
Series A Holder (subject to adjustment pursuant to the terms of such warrants);
(iii) the Series A Conversion Shares; and (iv) in the event that Meditrust
Mortgage Investments, Inc. ("Meditrust") is an Investor, up to 1,006,490 shares
of Common Stock issuable to Meditrust upon the exercise of capital stock
purchase warrants outstanding on the date hereof or to be issued hereafter by
the Company (subject to adjustment pursuant to the terms of such warrants),
plus any additional shares of Common Stock issued in respect of the above
shares, excluding Common Shares which have been (a) registered under the
Securities Act pursuant to an effective registration statement filed thereunder
and disposed of in accordance with such registration statement or (b) publicly
sold pursuant to Rule 144 under the Securities Act.
"Common Stock" shall mean the Common Stock, $.001 par value,
of the Company, as constituted as of the date of this Agreement.
"Conversion Shares" shall mean shares of Common Stock issued
upon conversion of the Preferred Shares.
2
- 2 -
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the time.
"Preferred Shares" shall mean the shares of Series B
Convertible Preferred Stock, par value $.001, of the Company, issued pursuant
to the Purchase Agreement (whether as Purchased Shares or Option Shares (as
such terms are defined in the Purchase Agreement)).
"Registration Expenses" shall mean the expenses so described
in Section 8.
"Restricted Stock" shall mean the issued or issuable
Conversion Shares, excluding Conversion Shares which have been (a) registered
under the Securities Act pursuant to an effective registration statement filed
thereunder and disposed of in accordance with the registration statement
covering them or (b) publicly sold pursuant to Rule 144 under the Securities
Act.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Series A Conversion Shares" shall mean shares of Common
Stock issued or issuable on conversion of the 1,150,958 shares of Series A
Stock outstanding on the date hereof, excluding Series A Conversion Shares
which have been (a) registered under the Securities Act pursuant to an
effective registration statement filed thereunder and disposed of in accordance
with such registration statement or (b) publicly sold pursuant to Rule 144
under the Securities Act.
"Series A Stock" shall mean the Convertible Series A
Preferred Stock, $.001 par value, of the Company.
"Series B Stock" shall mean the Series B Convertible
Preferred Stock, $.001 par value, of the Company.
"Selling Expenses" shall mean the expenses so described in
Section 8.
2. Restrictive Legend. Each certificate representing Preferred
Shares, Conversion Shares, Series A Conversion Shares or Common Shares shall,
except as otherwise provided in this Section 2 or in Section 3 be stamped or
otherwise imprinted with a legend substantially in the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER SUCH ACT AND ALL SUCH APPLICABLE LAWS OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE."
3
- 3 -
A certificate shall not bear such legend if in the opinion of counsel
satisfactory to the Company (it being agreed that Xxxxx, Xxxxxxx & Xxxxxxxxx
shall be satisfactory) the securities represented thereby may be publicly sold
without registration under the Securities Act and any applicable state
securities laws.
3. Notice of Proposed Transfer. Prior to any proposed transfer of
any Preferred Shares, Conversion Shares, Series A Stock or Common Shares (other
than under the circumstances described in Sections 4, 5 or 6), the holder
thereof shall give written notice to the Company of its intention to effect such
transfer. Each such notice shall describe the manner of the proposed transfer
and, if requested by the Company, shall be accompanied by an opinion of counsel
satisfactory to the Company (it being agreed that Xxxxx, Xxxxxxx & Xxxxxxxxx,
LLP shall be satisfactory) to the effect that the proposed transfer may be
effected without registration under the Securities Act and any applicable state
securities laws, whereupon the holder of such STOCK shall be entitled to
transfer such stock in accordance with the terms of its notice; provided,
however, that no such opinion of counsel shall be required for a transfer to one
or more partners of or to an Affiliate of the transferor. Each certificate for
Preferred Shares, Conversion Shares, Series A Stock or Common Shares transferred
as above provided shall bear the legend set forth in Section 2, except that such
certificate shall not bear such legend if (i) such transfer is in accordance
with the provisions of Rule 144 (or any other rule permitting public sale
without registration under the Securities Act) or (ii) the opinion of counsel
referred to above is to the further effect that the transferee and any
subsequent transferee (other than an affiliate of the Company) would be entitled
to transfer such securities in a public sale without registration under the
Securities Act. The restrictions provided for in this Section 3 shall not apply
to securities which are not required to bear the legend prescribed by Section 2
in accordance with the provisions of that Section.
4. Required Registration.
(a) At any time after the earliest of (i) six months after
any registration statement covering a public offering of securities of the
Company under the Securities Act shall have become effective, (ii) six months
after the Company shall have become a reporting company under Section 12 of the
Exchange Act, and (iii) the third anniversary of the date of this Agreement,
the holders of Restricted Stock constituting at least 40% of the total shares
of Restricted Stock then outstanding may request the Company to register under
the Securities Act all or any portion of the shares of Restricted Stock held by
such requesting holder or holders for sale in the manner specified in such
notice, provided that the reasonably anticipated aggregate price to the public
of such shares of Restricted Stock shall be at least $5,000,000. The only
securities which the Company shall be required to register pursuant hereto
shall be shares of Common Stock, provided, however, that, in any underwritten
public offering contemplated by this Section 4 or Sections 5 and 6, the holders
of Preferred Shares shall be entitled to sell such Preferred Shares to the
underwriters for conversion and sale of the shares of Common Stock issued upon
conversion thereof. Notwithstanding anything to the contrary contained herein,
no request may be made under this Section 4 within 120 days after the effective
date of a registration statement filed by the Company covering a firm
commitment underwritten public offering in which the holders of Restricted
Stock shall have been entitled to join pursuant to
4
- 4 -
Sections 5 or 6 and in which there shall have been effectively registered all
shares of Restricted Stock as to which registration shall have been requested.
(b) Following receipt of any notice under this Section 4, the
Company shall (in addition to any other notices required to be made by the
Company hereunder or otherwise) immediately notify all holders of Restricted
Stock from whom notice has not been received and shall use its best efforts to
register under the Securities Act, for public sale in accordance with the
method of disposition specified in such notice from requesting holders, the
number of shares of Restricted Stock specified in such notice (and in all
notices received by the Company from other holders within 30 days after the
giving of such notice by the Company). If such method of disposition shall be
an underwritten public offering, the holders of a majority of the shares of
Restricted Stock to be sold in such offering may designate the managing
underwriter of such offering, subject to the approval of the Company, which
approval shall not be unreasonably withheld or delayed. The Company shall be
obligated to register Restricted Stock pursuant to this Section 4 on two
occasions only, provided, however, that such obligation shall be deemed
satisfied only when a registration statement covering at least 80% of the
shares of Restricted Stock specified in notices received as aforesaid, for sale
in accordance with the method of disposition specified by the requesting
holders, shall have become effective and, if such method of disposition is a
firm commitment underwritten public offering, all such shares shall have been
sold pursuant thereto.
(c) The Company shall be entitled to include in any
registration statement referred to in this Section 4, for sale in accordance
with the method of disposition specified by the requesting holders, shares of
Common Stock to be sold by the Company for its own account, and shares of
Common Stock to be sold for other securityholders of the Company (including
Common Shares) except as and to the extent that, in the opinion of the managing
underwriter (if such method of disposition shall be an underwritten public
offering), such inclusion would adversely affect the marketing of the
Restricted Stock to be sold, provided that if, after all shares of Common Stock
to be sold by the Company and by security holders of the Company other than (i)
the holders of Restricted Stock and (ii) the holders of Common Shares have been
excluded from the registration statement, an additional reduction of the number
of shares is required by the managing underwriter, 80% of such reduction shall
be made out of the Common Shares and 20% of such reduction shall be made out of
the Restricted Stock requested to be included in such offering. Any reductions
in shares of Restricted Stock or Common Shares shall be made pro rata among the
holders of Restricted Stock and/or Common Shares requesting registration
hereunder, as the case may be, based upon such holder's percentage of the total
number of shares of Restricted Stock or Common Shares (as the case may be) held
by all requesting holders. Except for registration statements on Form X-0, X-0
or any successor thereto, the Company will not file with the Commission any
other registration statement with respect to its Common Stock, whether for its
own account or that of other stockholders, from the date of receipt of a notice
from requesting holders pursuant to this Section 4 until the completion of the
period of distribution of the registration as determined pursuant to Section
7(b) hereof.
5. Incidental Registration. If the Company at any time (other
than pursuant to Section 6) proposes to register any of its securities under the
Securities Act for sale to the public, whether for its own account or for the
account of other security holders or both (except with
5
- 5 -
respect to registration statements on Forms X-0, X-0 or another form not
available for registering the Restricted Stock for sale to the public), each
such time it will give written notice to all holders of outstanding Restricted
Stock and Common Shares of its intention so to do. Upon the written request of
any such holder, received by the Company within 30 days after the giving of any
such notice by the Company, to register any of its Restricted Stock and Common
Shares, the Company will use its best efforts to cause the Restricted Stock and
Common Shares as to which registration shall have been so requested to be
included in the securities to be covered by the registration statement proposed
to be filed by the Company, all to the extent requisite to permit the sale or
other disposition by the holder of such Restricted Stock and/or Common Shares so
registered. In the event that any registration pursuant to this Section 5 shall
be, in whole or in part, an underwritten public offering of Common Stock, the
number of shares of Restricted Stock and/or Common Shares to be included in such
an underwriting may be reduced if and to the extent that the managing
underwriter shall be of the opinion that such inclusion would adversely affect
the marketing of the securities to be sold by the Company therein, with 80% of
such reduction to be made out of the Common Shares and 20% to be made out of the
shares of Restricted Stock to be included in such offering, provided that no
such reductions shall be made if any shares are to be included in such
underwriting for the account of any person other than the Company or requesting
holders of Restricted Stock and/or Common Shares. Any reductions in shares of
Restricted Stock or Common Shares shall be made pro rata among the holders of
Restricted Stock and/or Common Shares requesting registration hereunder, as the
case may be, based upon such holder's percentage of the total number of shares
of Restricted Stock or Common Shares (as the case may be) held by all requesting
holders. In the event that Meditrust is not an Investor under the Purchase
Agreement, and there is proposed a reduction in the shares of Restricted Stock
or Common Shares to be made in order for Meditrust to include shares of capital
stock in a registration statement hereunder pursuant to other contractual
registration rights of Meditrust, such reduction shall be made entirely out of
the Common Shares held by the Common Stockholders other than the Series A Holder
on a pro rata basis or as otherwise agreed among such Common Stockholders.
Notwithstanding the foregoing provisions, the Company may withdraw any
registration statement referred to in this Section 5 without thereby incurring
any liability to the holders of Restricted Stock or Common Shares.
6. Registration on Form S-3. If at any time (i) a holder or
holders of Restricted Stock request that the Company file a registration
statement on Form S-3 or any successor thereto for a public offering of all or
any portion of the shares of Restricted Stock held by such requesting holder or
holders, the reasonably anticipated aggregate price to the public of which would
exceed $1,000,000, and (ii) the Company is a registrant entitled to use Form S-3
or any successor thereto to register such shares, then the Company shall use its
best efforts to register under the Securities Act on Form S-3 or any successor
thereto, for public sale in accordance with the method of disposition specified
in such notice, the number of shares of Restricted Stock specified in such
notice. Whenever the Company is required by this Section 6 to use its best
efforts to effect the registration of Restricted Stock, each of the procedures
and requirements of Section 4 (including but not limited to the requirement that
the Company notify all holders of Restricted Stock from whom notice has not been
received and provide them with the opportunity to participate in the offering)
shall apply to such registration, provided, however, that there shall be no
limitation on the number of registrations on Form S-3 which may be requested and
obtained under this Section 6, and provided, further, however, that the
requirements contained in
6
- 6 -
the first sentence of Section 4(a) shall not apply to any registration on Form
S-3 which may be requested and obtained under this Section 6.
7. Registration Procedures. (a) If and whenever the Company is
required by the provisions of Sections 4, 5 or 6 to use its best efforts to
effect the registration of any shares of Restricted Stock and/or Common Shares
under the Securities Act, the Company will, as expeditiously as possible:
(i) prepare and file with the Commission a registration
statement (which, in the case of an underwritten public offering pursuant to
Section 4, shall be on Form S-1 or other form of general applicability
satisfactory to the managing underwriter selected as therein provided) with
respect to such securities and use its best efforts to cause such registration
statement to become and remain effective for the period of the distribution
contemplated thereby (determined as hereinafter provided);
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for the period specified in paragraph (a) above and comply with the
provisions of the Securities Act with respect to the disposition of all
Restricted Stock and/or Common Shares covered by such registration statement in
accordance with the sellers' intended method of disposition set forth in such
registration statement for such period;
(iii) furnish to each seller of Restricted Stock and/or
Common Shares, as the case may be, and to each underwriter such number of
copies of the registration statement and the prospectus included therein
(including each preliminary prospectus) as such persons reasonably may request
in order to facilitate the public sale or other disposition of such Restricted
Stock and/or Common Shares covered by such registration statement;
(iv) use its best efforts to register or qualify the
Restricted Stock and/or Common Shares covered by such registration statement
under the securities or "blue sky" laws of such jurisdictions as the sellers of
Restricted Stock and/or Common Shares or, in the case of an underwritten public
offering, the managing underwriter reasonably shall request, provided, however,
that the Company shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any jurisdiction
where it is not so qualified or to consent to general service of process in any
such jurisdiction;
(v) use its best efforts to list the Restricted Stock and/or
Common Shares covered by such registration statement with any securities
exchange on which the Common Stock of the Company is then listed;
(vi) immediately notify each seller of Restricted Stock
and/or Common Shares, as the case may be, and each underwriter under such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any
event of which the Company has knowledge as a result of which the prospectus
contained in such registration statement, as then in effect, includes an untrue
statement of a material fact or
7
- 7 -
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing;
(vii) if the offering is underwritten and at the request of
any seller of Restricted Stock and/or Common Shares, as the case may be, use
its best efforts to furnish on the date that Restricted Stock and/or Common
Shares, as the case may be, is delivered to the underwriters for sale pursuant
to such registration: (i) an opinion dated such date of counsel representing
the Company for the purposes of such registration, addressed to the
underwriters to such seller, stating that such registration statement has
become effective under the Securities Act and that (A) to the best knowledge of
such counsel, no stop order suspending the effectiveness thereof has been
issued and no proceedings for that purpose have been instituted or are pending
or contemplated under the Securities Act, (B) the registration statement, the
related prospectus and each amendment or supplement thereof comply as to form
in all material respects with the requirements of the Securities Act (except
that such counsel need not express any opinion as to financial statements
contained therein) and (C) to such other effects as reasonably may be requested
by counsel for the underwriters or by such seller or its counsel and (ii) a
letter dated such date from the independent public accountants retained by the
Company, addressed to the underwriters and to such seller, stating that they
are independent public accountants within the meaning of the Securities Act and
that, in the opinion of such accountants, the financial statements of the
Company included in the registration statement or the prospectus, or any
amendment or supplement thereof, comply as to form in all material respects
with the applicable accounting requirements of the Securities Act, and such
letter shall additionally cover such other financial matters (including
information as to the period ending no more than five business days prior to
the date of such letter) with respect to such registration as such underwriters
reasonably may request; and
(viii) make available for inspection by each seller of
Restricted Stock and/or Common Shares, as the case may be, any underwriter
participating in any distribution pursuant to such registration statement, and
any attorney, accountant or other agent retained by such seller or underwriter,
all financial and other records, pertinent corporate documents and properties
of the Company, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration statement.
(b) For purposes of Section 7(a)(i) and (ii) and of Section 6, the
period of distribution of Restricted Stock in a firm commitment underwritten
public offering shall be deemed to extend until each underwriter has completed
the distribution of all securities purchased by it, and the period of
distribution of Restricted Stock and/or Common Shares, as the case may be, in
any other registration shall be deemed to extend until the earlier of the sale
of all Restricted Stock covered thereby and 120 days after the effective date
thereof.
(c) In connection with each registration hereunder, the sellers of
Restricted Stock and/or Common Shares, as the case may be, will furnish to the
Company in writing such information with respect to themselves and the proposed
distribution by them as reasonably shall be necessary in order to assure
compliance with federal and applicable state securities laws.
8
- 8 -
(d) In connection with each registration pursuant to Sections 4, 5 or
6 covering an underwritten public offering, the Company and each seller agree
to enter into a written agreement with the managing underwriter selected in the
manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
underwriter and companies of the Company's size and investment stature.
(e) Each holder of Restricted Stock and Common Shares agrees that, at
any time when a prospectus relating to the sale of Restricted Stock and/or
Common Shares is required to be delivered by such holder under the Securities
Act, upon receipt of written notice from the Company of the occurrence of any
event described in Section 7(a)(vi) hereof (the "Notice"), such holder shall
forthwith discontinue disposition of such Restricted Stock and/or Common Shares
until such holder has received (at the Company's expense) copies of a
supplemented or amended prospectus, or until such holder is advised in writing
(the "Advice") by the Company that use of the prospectus may be resumed. Each
such holder shall, at the Company's request and expense, return to the Company
all copies then in the holder's possession (other than permanent file copies)
of the prospectus covering such Restricted Stock and/or Common Shares current
at the time of receipt of the Notice. In the event that the Company shall give
any such Notice, the period of distribution with respect to the registration
statement (as determined pursuant to this Section 7) shall be extended by the
number of days during the period from and including the date of the Notice and
including the date on which each holder of Restricted Stock and/or Common
Shares being sold pursuant to the prospectus shall have received either (a) the
number of copies of the supplemented or amended prospectus as is reasonably
requested by the holder or (b) the Advice.
8. Expenses. All expenses incurred by the Company in complying
with Sections 4, 5 and 6, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses (including
counsel fees) incurred in connection with complying with state securities or
"blue sky" laws, fees of the National Association of Securities Dealers, Inc.,
transfer taxes, fees of transfer agents and registrars, costs of insurance and
fees and disbursements of one counsel for the sellers of Restricted Stock, but
excluding any Selling Expenses, are called "Registration Expenses". All
underwriting discounts and selling commissions applicable to the sale of
Restricted Stock are called "Selling Expenses".
The Company will pay all Registration Expenses in connection
with each registration statement under Sections 4, 5 or 6. All Selling Expenses
in connection with each registration statement under Sections 4, 5 or 6 shall
be borne by the participating sellers in proportion to the number of shares
sold by each, or by such participating sellers other than the Company (except
to the extent the Company shall be a seller) as they may agree.
9. Indemnification and Contribution.
(a) In the event of a registration of any of the Restricted
Stock and/or Common Shares, as the case may be, under the Securities Act
pursuant to Sections 4, 5 or 6, the Company will indemnify and hold harmless
each seller of such securities thereunder, each underwriter of such securities
thereunder and each other person, if any, who controls such seller
9
- 9 -
or underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such seller,
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act pursuant to
Sections 4, 5 or 6, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon 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,
and will reimburse each such seller, each such underwriter and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that the Company will not be liable in
any such case if and to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished by any such seller, any such underwriter or any such controlling
person in writing specifically for use in such registration statement or
prospectus.
(b) In the event of a registration of any of the Restricted
Stock and/or Common Shares, as the case may be, under the Securities Act
pursuant to Sections 4, 5 or 6, each seller of such securities thereunder,
severally and not jointly, will indemnify and hold harmless the Company, each
person, if any, who controls the Company within the meaning of the Securities
Act, each officer of the Company who signs the registration statement, each
director of the Company, each underwriter and each person who controls any
underwriter within the meaning of the Securities Act, against all losses,
claims, damages or liabilities, joint or several, to which the Company or such
officer, director, underwriter or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the registration statement under which such Restricted Stock and/or Common
Shares were registered under the Securities Act pursuant to Sections 4, 5 or 6,
any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon 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, and will
reimburse the Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that such seller will be liable
hereunder in any such case if and only to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with information pertaining to such seller, as such,
furnished in writing to the Company by such seller specifically for use in such
registration statement or prospectus, and provided, further, however, that the
liability of each seller hereunder shall be limited to the pro-rata portion of
any such loss, claim, damage, liability or expense which is equal to the
proportion that the public offering price of the shares sold by such seller
under such registration statement bears to the total public offering price of
all securities sold thereunder, but not in any
10
- 10 -
event to exceed the proceeds received by such seller from the sale of Restricted
Stock and/or Common Shares, as the case may be, covered by such registration
statement.
(c) Promptly after receipt by an indemnified party hereunder
of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party
hereunder, notify the indemnifying party in writing thereof, but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to such indemnified party other than under this Section 9 and
shall only relieve it from any liability which it may have to such indemnified
party under this Section 9 if and to the extent the indemnifying party is
prejudiced by such omission. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in and, to the extent it shall wish, to assume and undertake the defense
thereof with counsel satisfactory to such indemnified party, and, after notice
from the indemnifying party to such indemnified party of its election so to
assume and undertake the defense thereof, the indemnifying party shall not be
liable to such indemnified party under this Section 9 for any legal expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with
counsel so selected, provided, however, that, if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to the indemnifying party or if the interests of the indemnified
party reasonably may be deemed to conflict with the interests of the
indemnifying party, the indemnified party shall have the right to select a
separate counsel and to assume such legal defenses and otherwise to participate
in the defense of such action, with the expenses and fees of such separate
counsel and other expenses related to such participation to be reimbursed by
the indemnifying party as incurred.
(d) In order to provide for just and equitable contribution
to joint liability under the Securities Act in any case in which either (i) any
holder of Restricted Stock and/or Common Shares exercising rights under this
Agreement, or any controlling person of any such holder, makes a claim for
indemnification pursuant to this Section 9 but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case notwithstanding the
fact that this Section 9 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of any such
selling holder or any such controlling person in circumstances for which
indemnification is provided under this Section 9; then, and in each such case,
the Company and such holder will contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (after contribution from
others) in such proportion so that such holder is responsible for the portion
represented by the percentage that the public offering price of its securities
offered by the registration statement bears to the public offering price of all
securities offered by such registration statement, and the Company is
responsible for the remaining portion; provided, however, that, in any such
case, (A) no such holder will be required to contribute any amount in excess of
the public offering price of all such securities offered by it pursuant to such
registration statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within
11
- 11 -
the meaning of Section 11 (f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.
10. Changes in Common Stock or Preferred Stock. If, and as often
as, there is any change in the Common Stock, Series A Stock or Series B Stock by
way of a stock split, stock dividend, combination or reclassification, or
through a merger, consolidation, reorganization or recapitalization, or by any
other means, appropriate adjustment shall be made in the provisions hereof so
that the rights and privileges granted hereby shall continue with respect to the
Common Stock, Series A Stock or Series B Stock as so changed.
11. Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Stock and Common Shares to the public
without registration, at all times after 90 days after any registration
statement covering a public offering of securities of the Company under the
Securities Act shall have become effective, 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;
(b) use its best efforts to 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; and
(c) furnish to each holder of Restricted Stock and Common
Shares forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of such Rule 144 and of the
Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so filed
by the Company as such holder may reasonably request in availing itself of any
rule or regulation of the Commission allowing such holder to sell any
Restricted Stock and Common Shares without registration.
12 Representations and Warranties of the Company. The Company
represents and warrants as follows:
(a) The execution, delivery and performance of this Agreement
by the Company have been duly authorized by all requisite corporate action and
will not violate any provision of law, any order of any court or other agency
of government, the Charter or By-laws of the Company or any provision of any
indenture, agreement or other instrument to which it or any or its properties
or assets is bound, conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any such indenture,
agreement or other instrument or result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of the properties
or assets of the Company.
(b) This Agreement has been duly executed and delivered by
the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms.
12
- 12 -
13. Miscellaneous.
(a) All covenants and agreements contained in this Agreement
by or on behalf of any of the parties hereto shall bind and inure to the
benefit of the respective successors and assigns of the parties hereto, whether
so expressed or not, provided, however, that registration rights conferred
herein shall only inure to the benefit of a transferee of Restricted Stock or
Common Shares if (i) there is transferred to such transferee at least 20% of
(x) the total shares of Restricted Stock originally issued pursuant to the
Purchase Agreement to the direct or indirect transferor of such transferee, in
the case of Restricted Stock, and (y) of the total number of the Common Shares,
in the case of a holder of Common Shares, or (ii) such transferee is a partner,
shareholder or Affiliate of a party hereto.
(b) All notices, requests, consents and other communications
hereunder shall be in writing and shall be delivered in person, mailed by
certified or registered mail, return receipt requested, or sent by telecopier
or telex, addressed as follows:
if to the Company or any Investor, at the address of such
party set forth in the Purchase Agreement;
if to the Series A Holder or any Common Stockholder, at the
address of such party set forth in the signature pages hereto;
if to any subsequent holder of Preferred Shares, Restricted
Stock or Common Shares, to it at such address as may have been furnished to the
Company in writing by such holder;
or, in any case, at such other address or addresses as shall have been
furnished in writing to the Company (in the case of a holder of Restricted
Stock or Common Shares) or to the holders of Restricted Stock or Common Shares
(in the case of the Company) in accordance with the provisions of this
paragraph.
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
(d) This Agreement may not be amended or modified, and no
provision hereof may be waived, without the written of the Company and the
holders of a majority of the outstanding shares of Restricted Stock and, with
respect to Sections 5, 7, 8, 9 and 13, holders of a majority of the aggregate
number of outstanding Common Shares.
(e) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(f) The obligations of the Company to register securities
under Sections 4, 5 or 6 shall terminate on the fifteenth anniversary of the
date of this Agreement.
13
- 13 -
(g) If requested in writing by the underwriters for the
initial underwritten public offering of securities of the Company, each holder
of Restricted Stock and Common Shares who is a party to this Agreement shall
agree not to sell publicly any shares of Restricted Stock or any other shares
of Common Stock (other than shares of Restricted Stock, Common Shares or other
shares of Common Stock being registered in such offering), without the consent
of such underwriters, within the fifteen (15) days prior to and for a period of
not more than 180 days following the effective date of the registration
statement relating to such offering; provided, however, that all persons
entitled to registration rights with respect to shares of Common Stock who are
not parties to this Agreement, all other persons selling shares of Common Stock
in such offering, all persons holding in excess of 1% of the capital stock of
the Company on a fully diluted basis and all executive officers and directors
of the Company shall also have agreed not to sell publicly their Common Stock
under the circumstances and pursuant to the terms set forth in this Section
13(g).
(h) Notwithstanding the provisions of Section 7(a)(i), the
Company's obligation to file a registration statement, or cause such
registration statement to become and remain effective, shall be suspended for a
period not to exceed 90 days in any 18-month period if there exists at the time
material non-public information relating to the Company which, in the
reasonable opinion of the Company, should not be disclosed.
(i) The Company shall not grant to any third party any
registration rights more favorable than or inconsistent with any of those
contained herein, so long as any of the registration rights under this
Agreement remains in effect.
(j) If any provision of this Agreement shall be held to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any
manner affect or render illegal, invalid or unenforceable any other provision
of this Agreement, and this Agreement shall be carried out as if any such
illegal, invalid or unenforceable provision were not contained herein.
(k) In the event that Meditrust is an Investor, by its
execution of a counterpart signature page to this Agreement, Meditrust hereby
agrees that all registration rights held by it on the date of execution shall
be terminated and superseded by its registration rights as described hereunder.
In the event that Meditrust is an Investor, Meditrust further agrees to execute
any other documents and take all necessary actions reasonably requested by the
Company in connection with the termination of such rights.
[Signature pages follow immediately.]
14
- 14 -
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
COMPANY:
BALANCED CARE CORPORATION
By: /s/ Xxxxxxx X. XxXxxxxx
---------------------------------
Name: Xxxxxxx X. XxXxxxxx
Title: Vice President
INVESTORS:
OMEGA VENTURES II, L.P.
By: Omega Ventures II Management, L.L.C.
Its General Partner
By: /s/ Xxxxxxx X. Xxxxx
------------------------------
Authorized Signatory
OMEGA VENTURES II CAYMAN, L.P.
By: Omega Ventures II Management, L.L.C.
Its Administrative General Partner
By: /s/ Xxxxxxx X. Xxxxx
------------------------------
Authorized Signatory
CROSSOVER FUND II, L.P.
By: Crossover Investment Management, L.L.C.
Its General Partner
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Authorized Signatory
CROSSOVER FUND IIA, L.P.
By: Crossover Investment Management, L.L.C.
Its General Partner
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Authorized Signatory
15
- 16 -
BAYVIEW INVESTORS, LTD.
By: Xxxxxxxxx, Xxxxxxxx & Company
Private Equity Group, L.L.C.,
Its General Partners
By: /s/ Xxxxxxx X. Xxxxx
---------------------------
Its Authorized Signatory
XXXXX X. XXXXXXXXX AND XXXXX
X. XXXXXXXXX, TRUSTEES, XXXXXXXXX
FAMILY TRUST 3/29/85
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Xxxxx X. Xxxxxxxxx, Trustee
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Xxxxx X. Xxxxxxxxx, Trustee
BOSTON SAFE DEPOSIT AND TRUST
COMPANY AS TRUSTEE FOR U S WEST
PENSION TRUST
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Trust Officer
BOSTON SAFE DEPOSIT AND TRUST
COMPANY'S TRUSTEE FOR U S WEST
BENEFIT ASSURANCE TRUST
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Trust Officer
16
- 17 -
BAYVIEW INVESTORS, LTD.
By: Xxxxxxxxx, Xxxxxxxx & Company
Private Equity Group, L.L.C,
Its General Partner
By: /s/ Xxxxxxx X. Xxxxx
---------------------------
Its Authorized Signatory
XXXXX X. XXXXXXXXX AND XXXXX
X. XXXXXXXXX, TRUSTEES, XXXXXXXXX
FAMILY TRUST 3/29/85
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------
Xxxxx X. Xxxxxxxxx, Trustee
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------
Xxxxx X. Xxxxxxxxx, Trustee
BOSTON SAFE DEPOSIT AND TRUST
COMPANY AS TRUSTEE FOR U S WEST
PENSION TRUST
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Trust Officer
BOSTON SAFE DEPOSIT AND TRUST
COMPANY S TRUSTEE FOR U S WEST
BENEFIT ASSURANCE TRUST
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Trust Officer
17
- 18 -
HCO PARTNERS IV-BCC
By: /s/ F. Xxxxx Xxxx
-------------------------------
F. Xxxxx Xxxx
Managing Partner
JULIET CHALLENGER, INC.
By: /s/ Xxxxxxx Xxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
XXXXX X. XXXXXXX, XXXXX XXXXXXXX
XXXXXXX AND X.X. XXXXXXXXXXXX,
TRUSTEES OF THE XXXXX X. XXXXXXX
TRUST U/A DATED NOVEMBER 18, 1985
By: /s/ X.X. Xxxxxxxxxxxx
--------------------------------
Trustee
XXXXXX X. XXXXXX AND
X.X. XXXXXXXXXXXX, TRUSTEES UNDER
AGREEMENT OF TRUST DATED 12/30/76 FOR
THE CHILDREN OF JULIET XXX XXXXXXX
XXXXXXX
By: /s/ X.X. Xxxxxx
--------------------------------
Trustee
By: /s/ X.X. Xxxxxxxxxxxx
--------------------------------
Trustee
00
- 00 -
XXX XXX XX, X.X.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Managing General Partner
SERIES A HOLDER AND COMMON
STOCKHOLDER:
/s/ Xxxx Xxxxxxx
_______________________________
Xxxx Xxxxxxx
Address:___________________________
___________________________
___________________________
COMMON STOCKHOLDERS:
/s/ Xxxx X. Xxxxxxxxx
______________________________
Xxxx X. Xxxxxxxxx
Address:___________________________
___________________________
___________________________
/s/ Xxxxxx Xxxxxx
_______________________________
Xxxxxx Xxxxxx
Address:___________________________
___________________________
___________________________
/s/ Xxxxx Xxxxx
_______________________________
Xxxxx Xxxxx
Address:___________________________
___________________________
___________________________
K.D INVESTMENT
19
- 20 -
By: /s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx Xxxxxx
Title: Managing Partner
Address: 000 Xxxxxxx Xxxx
Xxxxxxxxxxxxx, XX 00000
SAE PARTNERS
By: /s/ F. Xxxxx Xxxx
-------------------------------
Name: F. Xxxxx Xxxx
Title: Managing Director
Address: 000 Xxxxxxxx Xxxx
Xxx Xxxxx, XX 00000
20
Counterpart Signature Page to that certain Registration Rights
Agreement dated as of September 20, 1996 by and among Balanced Care
Corporation, the Investors (as defined therein), the Series A Holder (as
defined therein) and the Common Stockholders (as defined therein).
**
MEDITRUST MORTGAGE INVESTMENTS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx, Esq.
Title: Senior Vice President
**The Declaration of Trust establishing Meditrust, the sole
shareholder of Meditrust Mortgage Investments, Inc. dated August 6, 1985, as
amended (the "Declaration of Trust"), a copy of which, together with all
amendments thereto, is duly filed in the office of the Secretary of State of
the Commonwealth of Massachusetts, provides that the name "Meditrust" refers to
the Trustees under the Declaration of Trust collectively as Trustees, but not
individually or personally; and that no trustee, officer, shareholder, employee
or agent of Meditrust or any of its subsidiaries shall be held to any personal
liability, jointly or severally, for any obligation of, or claim against
Meditrust or any of its subsidiaries. All persons dealing with Meditrust or any
of its subsidiaries, including without limitation Meditrust Mortgage
Investments, Inc., in any way, shall look only to the respective assets of
Meditrust or any of its subsidiaries, including without limitation, Meditrust
Mortgage Investments, Inc., for the payment of any sum or the performance of
any obligations. All parties hereto specifically acknowledge and agree that
Meditrust is neither a party to this agreement nor shall Meditrust assume or
have any liability hereunder of any kind or nature whatsoever.
