CRITICAL HOME CARE, INC.
REGISTRATION RIGHTS AGREEMENT
This Agreement dated as of March 11, 2004 is entered into by and among
Critical Home Care, Inc., a Nevada corporation (the "Company"), and Xxxx Master
Fund, Ltd. (the "Purchaser").
Recitals
WHEREAS, the Purchaser has been issued a warrant (the "Warrant") to
purchase 250,000 shares of Common Stock of the Company as of the date hereof;
WHEREAS, the Purchaser was issued a 12% Subordinated Promissory Note
(the "Note") as of the date hereof which if not paid on or before the Maturity
Date (as defined) will enable the Purchaser to obtain 51% of the Common Stock of
the Company on a fully diluted basis;
WHEREAS, the shares of Common Stock issuable upon exercise of the
Warrant and the conversion of the Note are referred to herein as the "Shares";
WHEREAS, the Company and the Purchaser desire to provide for certain
arrangements with respect to the registration of shares of capital stock of the
Company under the Securities Act of 1933;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the following
respective meanings:
"Commission" means the Securities and Exchange Commission, or any other
federal agency at the time administering the Securities Act.
"Common Stock" means the Common Stock of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
"Other Holders" shall mean holders of securities of the Company (other
than the Stockholders) who are entitled, by contract with the Company, to have
securities included in a Registration Statement.
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by an amendment or prospectus supplement,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.
"Registration Statement" means a registration statement filed by the
Company with the Commission for a public offering and sale of securities of the
Company (other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a similar limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).
"Registration Expenses" means the expenses described in Section 2.3.
"Registrable Shares" means the Shares; provided, however, that shares
of Common Stock which are Registrable Shares shall cease to be Registrable
Shares upon (i) any sale pursuant to a Registration Statement or Rule 144 under
the Securities Act or (ii) any sale in any manner to a person or entity which,
by virtue of Section 3 of this Agreement, is not entitled to the rights provided
by this Agreement.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
"Selling Stockholder" means any Stockholder owning Registrable Shares
included in a Registration Statement.
"Stockholders" means the Purchaser and any persons or entities to whom
the rights granted under this Agreement are transferred by the Purchaser, his
successors or assigns pursuant to Section 3 hereof
2. Registration Rights
2.1 Incidental Registration.
(a) Whenever the Company proposes to file a Registration
Statement at any time and from time to time, it will, prior to such filing, give
written notice to all Stockholders of its intention to do so; provided, that no
such notice need be given if no Registrable Shares are to be included therein as
a result of a determination of the managing underwriter pursuant to Section
2.1(b). Upon the written request of a Stockholder or Stockholders given within
20 days after the Company provides such notice (which request shall state the
intended method of disposition of such Registrable Shares), the Company shall
use its best efforts to cause all Registrable Shares which the Company has been
requested by such Stockholder or Stockholders to register to be registered under
the Securities Act to the extent necessary to permit their sale or other
disposition in accordance with the intended methods of distribution specified in
the request of such Stockholder or Stockholders; provided that the
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Company shall have the right to postpone or withdraw any registration effected
pursuant to this
Section 2.1 without obligation to any Stockholder.
(b) If the registration for which the Company gives
notice pursuant to Section 2.1(a) is a registered public offering involving an
underwriting, the Company shall so advise the Stockholders as a part of the
written notice given pursuant to Section 2.1(a). In such event, the right of any
Stockholder to include its Registrable Shares in such registration pursuant to
Section 2.1 shall be conditioned upon such Stockholder's participation in such
underwriting on the terms set forth herein, All Stockholders proposing to
distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for the underwriting by the Company, provided that such underwriting
agreement shall not provide for indemnification or contribution obligations on
the part of Stockholders materially greater than the obligations of the
Stockholders pursuant to Section 2.4. Notwithstanding any other provision of
this Section 2.1, if the managing underwriter determines that the inclusion of
all shares requested to be registered would adversely affect the offering, the
Company may limit the number of Registrable Shares to be included in the
registration and underwriting. The Company shall so advise all holders of
Registrable Shares requesting registration, and the number of shares that are
entitled to be included in the registration and underwriting shall be allocated
in the following manner. The securities of the Company held by holders other
than Stockholders and Other Holders shall be excluded from such registration and
underwriting to the extent deemed advisable by the managing underwriter, and, if
a further limitation on the number of shares is required, the number of shares
that may be included in such registration and underwriting shall be allocated
among all Stockholders and Other Holders requesting registration in proportion,
as nearly as practicable, to the respective number of shares of Common Stock (on
an as-converted basis) which they held at the time the Company gives the notice
specified in Section 2.1(a). If any Stockholder or Other Holder would thus be
entitled to include more securities than such holder requested to be registered,
the excess shall be allocated among other requesting Stockholders and Other
Holders pro rata in the manner described in the preceding sentence. If any
holder of Registrable Shares or any officer, director or Other Holder
disapproves of the terms of any such underwriting, such person may elect to
withdraw-there from by written notice to the Company, and any Registrable Shares
or other securities excluded or withdrawn from such underwriting shall be
withdrawn from such registration.
2.2 Registration Procedures.
(a) If and whenever the Company is required by the
provisions of this Agreement to use its best efforts to effect the registration
of any Registrable Shares under the Securities Act, the Company shall:
(i) file with the Commission a Registration
Statement with respect to such Registrable Shares and use its best efforts to
cause that Registration Statement to become effective as soon as possible;
(ii) as expeditiously as possible prepare and
file with the Commission any amendments and supplements to the Registration
Statement and the prospectus
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included in the Registration Statement as may be necessary to comply with the
provisions of the Securities Act (including the anti-fraud provisions thereof)
and to keep the Registration Statement effective for six months from the
effective date or such lesser period until all such Registrable Shares are sold;
(iii) as expeditiously as possible furnish to
each Selling Stockholder such reasonable numbers of copies of the Prospectus,
including any preliminary Prospectus, in conformity with the requirements of the
Securities Act, and such other documents as such Selling Stockholder may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Shares owned by such Selling Stockholder;
(iv) as expeditiously as possible use its best
efforts to register or qualify the Registrable Shares covered by the
Registration Statement under the securities or Blue Sky laws of such states as
the Selling Stockholders shall reasonably request, and do any and all other acts
and things that may be necessary or desirable to enable the Selling Stockholders
to consummate the public sale or other disposition in such states of the
Registrable Shares owned by the Selling Stockholder; provided, however, that the
Company shall not be required in connection with this paragraph (iv) to qualify
as a foreign corporation or execute a general consent to service of process in
any jurisdiction;
(v) as expeditiously as possible, cause all such
Registrable Shares to be listed on each securities exchange or automated
quotation system on which similar securities issued by the Company are then
listed;
(vi) promptly provide a transfer agent and
registrar for all such Registrable Shares not later than the effective date of
such registration statement;
(vii) promptly make available for inspection by
the Selling Stockholders, any managing underwriter participating in any
disposition pursuant to such Registration Statement, and any attorney or
accountant or other agent retained by any such underwriter or selected by the
Selling Stockholders, all financial and other records, pertinent corporate
documents and properties of the Company and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such Registration Statement;
(viii) as expeditiously as possible, notify each
Selling Stockholder, promptly after it shall receive notice thereof, of the time
when such Registration Statement has become effective or a supplement to any
Prospectus forming a part of such Registration Statement has been filed; and
(ix) as expeditiously as possible following the
effectiveness of such Registration Statement, notify each seller of such
Registrable Shares of any request by the Commission for the amending or
supplementing of such Registration Statement or Prospectus.
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(b) If the Company has delivered a Prospectus to the
Selling Stockholders and after having done so the Prospectus is amended to
comply with the requirements of the Securities Act, the Company shall promptly
notify the Selling Stockholders and, if requested, the Selling Stockholders
shall immediately cease making offers of Registrable Shares and return all
Prospectuses to the Company. The Company shall promptly provide the Selling
Stockholders with revised Prospectuses and, following receipt of the revised
Prospectuses, the Selling Stockholders shall be free to resume making offers of
the Registrable Shares.
(c) In the event that, in the judgment of the Company,
it is advisable to suspend use of a Prospectus included in a Registration
Statement due to pending material developments or other events that have not yet
been publicly disclosed and as to which the Company believes public disclosure
would be detrimental to the Company, the Company shall notify all Selling
Stockholders to such effect, and, upon receipt of such notice, each such Selling
Stockholder shall immediately discontinue any sales of Registrable Shares
pursuant to such Registration Statement until such Selling Stockholder has
received copies of a supplemented or amended Prospectus or until such Selling
Stockholder is advised in writing by the Company that the then current
Prospectus may be used and has received copies of any additional or supplemental
filings that are incorporated or deemed incorporated by reference in such
Prospectus.
2.3 Allocation of Expenses. The Company will pay all
Registration Expenses for all registrations under this Agreement. For purposes
of this Section, the term "Registration Expenses" shall mean all expenses
incurred by the Company in complying with this Agreement, including, without
limitation, all registration and filing fees, exchange listing fees, printing
expenses, fees and expenses of counsel for the Company and the fees and expenses
of one counsel selected by the Selling Stockholders to represent the Selling
Stockholders, state Blue Sky fees and expenses, and the expense of any special
audits incident to or required by any such registration, but excluding
underwriting discounts, selling commissions and the fees and expenses of Selling
Stockholders' own counsel (other than the counsel selected to represent all
Selling Stockholders).
2.4 Indemnification and Contribution.
(a) In the event of any registration of any of the
Registrable Shares under the Securities Act pursuant to this Agreement, the
Company will indemnify and hold harmless each Selling Stockholder, each
underwriter of such Registrable Shares, and each other person, if any, who
controls such Selling Stockholder or underwriter within the meaning of the
Securities Act or the Exchange Act against any losses, claims, damages or
liabilities, joint or several, to which such Selling Stockholder, underwriter or
controlling person may become subject under the Securities Act, the Exchange
Act, state securities or Blue Sky laws 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 Registrable Shares
were registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, or
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arise out of or are based upon the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Company will reimburse such Selling Stockholder,
underwriter and each such controlling person for any legal or any other expenses
reasonably incurred by such Selling Stockholder, underwriter or controlling
person 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 to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or omission made
in such Registration Statement, preliminary prospectus or prospectus, or any
such amendment or supplement, in reliance upon and in conformity with
information furnished to the Company, in writing, by or on behalf of such
Selling Stockholder, underwriter or controlling person specifically for use in
the preparation thereof
(b) In the event of any registration of any of the
Registrable Shares under the Securities Act pursuant to this Agreement, each
Selling Stockholder, severally and not jointly, will indemnify and hold harmless
the Company, each of its directors and officers and each underwriter (if any)
and each person, if any, who controls the Company or any such underwriter within
the meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages or liabilities, joint or several, to which the Company, such
directors and officers, underwriter or controlling person may become subject
under the Securities Act, Exchange Act, state securities or Blue Sky laws 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 a material fact contained in any Registration Statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information relating to such Selling Stockholder
furnished in writing to the Company by or on behalf of such Selling Stockholder
specifically for use in connection with the preparation of such Registration
Statement, prospectus, amendment or supplement; provided, however, that the
obligations of a Selling Stockholder hereunder shall be limited to an amount
equal to the net proceeds to such Selling Stockholder of Registrable Shares sold
in connection with such registration.
(c) Each party entitled to indemnification under this
Section (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting there from; provided, that counsel for
the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall not
be unreasonably withheld); and, provided, further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section except to the extent
that the Indemnifying Party is adversely affected by such failure. The
Indemnified Party may participate in such defense at such party's expense;
provided, however, that the Indemnifying Party shall pay such expense if
representation of such Indemnified Party by the counsel retained by the
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Indemnifying Party would be inappropriate due to actual or potential differing
interests between the Indemnified Party and any other party represented by such
counsel in such proceeding; provided further that in no event shall the
Indemnifying Party be required to pay the expenses of more than one law firm per
jurisdiction as counsel for the Indemnified Party. The Indemnifying Party also
shall be responsible for the expenses of such defense if the Indemnifying Party
does not elect to assume such defense. No Indemnifying Party, in the defense of
any such claim or litigation shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
of such claim or litigation, and no Indemnified Party shall consent to entry of
any judgment or settle such claim or litigation without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld.
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in this
Section 2.4 is due in accordance with its terms but for any reason is held to be
unavailable to an Indemnified Party in respect to any losses, claims, damages
and liabilities referred to herein, then the Indemnifying Party shall, in lieu
of indemnifying such Indemnified Party, contribute to the amount paid or payable
by such Indemnified Party as a result of such losses, claims, damages or
liabilities to which such party may be subject in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and the
Selling Stockholders on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative fault of the Company and
the Selling Stockholders shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of material fact related
to information supplied by the Company or the Selling Stockholders and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Selling
Stockholders agree that it would not be just and equitable if contribution
pursuant to this Section 2.4 were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph of Section 2.4, (a) in no case shall any one Selling Stockholder be
liable or responsible for any amount in excess of the net proceeds received by
such Selling Stockholder from the offering of Registrable Shares and (b) the
Company shall be liable and responsible for any amount in excess of such
proceeds; provided, however, that 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. Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect of which a claim for contribution may be made
against another party or parties under this Section, notify such party or
parties from whom contribution may be sought, but the omission so to notify such
party or parties from whom contribution may be sought shall not relieve such
party from any other obligation it or they may have thereunder or otherwise
under this Section. No party shall be liable for contribution with respect to
any action, suit, proceeding or claim settled without its prior written consent,
which consent shall not be unreasonably withheld.
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2.5 Information by Holder. Each holder of Registrable
Shares included in any registration shall furnish to the Company such
information regarding such holder and the distribution proposed by such holder
as the Company may reasonably request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
this Agreement.
2.6 "Stand-Off" Agreement; Confidentiality of Notices. Each
Stockholder, if requested by the Company and the managing underwriter of an
underwritten public offering by the Company of Common Stock, shall not sell or
otherwise transfer or dispose of any Registrable Shares or other securities of
the Company held by such Stockholder for a period of 90 days following the
effective date of a Registration Statement; provided, that all stockholders of
the Company then holding at least 5% of the outstanding Common Stock (on an
as-converted basis) and all officers and directors of the Company enter into
similar agreements. The Company may impose stop-transfer instructions with
respect to the Registrable Shares or other securities subject to the foregoing
restriction until the end of such 90-day period. Any Stockholder receiving any
written notice from the Company regarding the Company's plans to file a
Registration Statement shall treat such notice confidentially and shall not
disclose such information to any person other than as necessary to exercise its
rights under this Agreement.
2.7 Rule 144 Requirements. The Company agrees to:
(a) make and keep current public information about the
Company available, as those terms are understood and defined in Rule 144;
(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 (at any time after it has become subject
to such reporting requirements); and
(c) furnish to any holder of Registrable Shares upon
request (i) a written statement by the Company as to its compliance with the
reporting requirements of Rule 144 and of the Securities Act and the Exchange
Act (at any time after it has become subject to such reporting requirements),
(ii) a copy of the most recent annual or quarterly report of the Company, and
(iii) such other reports and documents of the Company as such holder may
reasonably request to avail itself of any similar rule or regulation of the
Commission allowing it to sell any such securities without registration.
2.8 Termination. All of the Company's obligations to
register Registrable Shares under Section 2.1 of this Agreement shall terminate
three years after the date of this Agreement.
3. Transfers of Rights. This Agreement, and the rights and obligations of the
Purchaser hereunder, may be assigned by such Purchaser to any partner, member,
stockholder or affiliate of such Purchaser, or any person or entity for which
Purchaser acts as trustee, and such transferee shall be deemed a "Purchaser" for
purposes of this Agreement; provided that the transferee provides written notice
of such assignment to the Company and agrees in writing to be bound hereby.
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4. General.
(a) Severability. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
(b) Specific Performance. In addition to any and all
other remedies that may be available at law in the event of any breach of this
Agreement, the Purchaser shall be entitled to specific performance of the
agreements and obligations of the Company hereunder and to such other injunctive
or other equitable relief as may be granted by a court of competent
jurisdiction.
(c) Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York
(without reference to the conflicts of law provisions thereof).
(d) Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be deemed
delivered (i) two business days after being sent by registered or certified
mail, return receipt requested, postage prepaid or (ii) one business day after
being sent via a reputable nationwide overnight courier service guaranteeing
next business day delivery, in each case to the intended recipient as set forth
below:
If to the Company, at 000 Xxxxx Xxxxxx, Xxxxxxxx, XX 00000,
Attention: President, or at such other address or addresses as may have been
furnished in writing by the Company to the Purchasers, with a copy to Snow
Xxxxxx Xxxxxx P.C., 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000; Attention:
Xxxxxx X. Xxxxxxx; or
If to the Purchaser, at 000 Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx,
XX 00000; Attention: Xxxx Xxxxxxx, or at such other address or addresses as may
have been furnished to the Company in writing by such Purchaser.
Any party may give any notice, request, consent or other
communication under this Agreement using any other means (including, without
limitation, personal delivery, messenger service, telecopy, first class mail or
electronic mail), but no such notice, request, consent or other communication
shall be deemed to have been duly given unless and until it is actually received
by the party for whom it is intended. Any party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in this
Section.
(e) Complete Agreement. This Agreement constitutes the
entire agreement and understanding of the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
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(f) Amendments and Waivers. Any term of this Agreement
may be amended or terminated and the observance of any term of this Agreement
may be waived with respect to all parties to this Agreement (either generally or
in a particular instance and either retroactively or prospectively), with the
written consent of the Company and the holders of at least 51% of the
Registrable Shares held by all of the Stockholders. Notwithstanding the
foregoing, this Agreement may be amended or terminated, and any right hereunder
may be waived with respect to all parties to this Agreement with the consent of
the holders of less than all Registrable Shares only in a manner which applies
to all such holders in the same fashion. Any such amendment, termination or
waiver effected in accordance with this Section 4(f) shall be binding on all
parties hereto, even if they do not execute such consent and the Company. No
waivers of or exceptions to any term, condition or provision of this Agreement,
in any one or more instances, shall be deemed to be, or construed as, a further
or continuing waiver of any such term, condition or provision.
(g) Pronouns. Whenever the context may require, any
pronouns used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural, and vice versa.
(h) Counterparts; Facsimile Signatures. This Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original, and all of which together shall constitute one and the same
document. This Agreement may be executed by facsimile signatures.
(i) Section Headings. The section headings are for the
convenience of the parties and in no way alter, modify, amend, limit or restrict
the contractual obligations of the parties.
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EXECUTED as of the date first written above.
COMPANY:
CRITICAL HOME CARE, INC.
By: /s/
-------------------------------
Name: Xxxxx Xxxxxx
Title: Chairman and CEO
PURCHASER:
XXXX MASTER FUND, LTD.
By: /s/
-------------------------------
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