1
REGISTRATION RIGHTS AGREEMENT EXHIBIT 4.2
This Agreement made as of the 8th day of October, 1999.
BETWEEN:
IPC ADVISORS S.A.R.L., a corporation governed by the
laws of Luxembourg (the "Purchaser")
OF THE FIRST PART;
- and -
BALANCED CARE CORPORATION, a corporation governed by
the laws of the State of Delaware (the "Corporation")
OF THE SECOND PART.
WHEREAS
A. subject to the terms and conditions of that certain
subscription agreement (the "Subscription Agreement") dated
the date hereof between the Purchaser and the Corporation, the
Purchaser has subscribed for and the Corporation has issued
and sold to the Purchaser shares, and will issue and sell
additional shares, of capital stock of the Corporation; and
B. pursuant to the terms and conditions of the Subscription
Agreement the Corporation and the Purchaser have agreed to
enter into this Registration Rights Agreement.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement and such other good and valuable consideration (the
receipt and sufficiency of which is hereby acknowledged), the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS IN SUBSCRIPTION AGREEMENT.
Unless otherwise defined herein, defined terms used in this
Agreement shall have the meanings set forth in the Subscription Agreement.
1.2 DEFINITIONS.
The following capitalized terms, when used in this Agreement, have the
respective meanings set forth below:
"BLACK-OUT NOTICE" has the meaning set forth in Section 2.7.
2
-2-
"CORPORATION" means Balanced Care Corporation, a corporation governed
by the laws of the State of Delaware.
"DEMAND REGISTRATION" has the meaning set forth in Section 2.1.
"HOLDERS" means the Purchaser and such of its successors and affiliate
transferees who acquire Registrable Securities.
"PIGGYBACK HOLDERS" has the meaning set forth in Section 3.1.
"PIGGYBACK REGISTRATION" has the meaning set forth in Section 3.1.
"PURCHASER" means IPC Advisors S.A.R.L.
"REGISTER", "REGISTERED" and "REGISTRATION" means a registration of
Registrable Securities effected by preparing and filing a Registration
Statement in compliance with the applicable Securities Laws and the
declaration or ordering of the effectiveness of such Registration
Statement by the appropriate Securities Regulators.
"REGISTRABLE SECURITIES" means shares of common stock of the
Corporation acquired, directly or indirectly, pursuant to the
Subscription Agreement, or pursuant to any subdivision,
reclassification or other similar change in respect thereof, including
upon the conversion of the Series C Preferred Shares, owned or held by
a Holder.
"REGISTRATION EXPENSES" means any and all expenses incidental to the
performance of or compliance with this Agreement by the Corporation,
including without limitation: (i) all registration and filing fees of
the Securities Regulators, the National Association of Securities
Dealers, Inc. and other similar Persons, (ii) all fees and expenses
incurred in connection with compliance with provincial and state
securities or "blue sky" laws (including reasonable fees and
disbursements of counsel in connection with the "blue sky"
qualification of any of the Registrable Securities), (iii) all expenses
incurred by the Corporation in preparing, printing and distributing any
Registration Statement, any prospectus, any amendments or supplements
thereto, and other documents relating to the performance of and
compliance with this Agreement by the Corporation, (iv) all fees and
expenses incurred by the Corporation in connection with the listing, if
any, of the Registrable Securities on any securities exchange or
quotation system, (v) the fees and disbursements of counsel for the
Corporation and of the independent public accountants of the
Corporation, including the expenses of any special audits or "cold
comfort" letters required by or incidental to such performance and
compliance, and (vi) the fees and expenses of one United States and one
Canadian counsel to the Holders, which counsel shall be selected by the
Selling Holders; provided that underwriting discounts and selling
commissions, fees and expenses and any transfer taxes in respect of any
Selling Holder's Registrable Securities incurred in connection with any
registration and sale of Registrable Securities shall not be
Registration Expenses.
"REGISTRATION STATEMENTS" means a registration statement of the
Corporation on the appropriate form, and all amendments and supplements
to such document (including post-effective amendments), in each case
including all exhibits thereto and all materials incorporated by
reference therein.
"SECURITIES LAWS" means U.S. Securities Laws.
"SECURITIES REGULATORS" means any U.S. Securities Regulator.
3
-3-
"SELLING HOLDERS" means each Holder participating in a registration
effected pursuant to the provisions of the Agreement such that all or
part of the Registrable Securities owned by the Holder are included
among the securities offered by the Registration Statement.
"U.S. SECURITIES LAWS" means the Securities Act of 1933, as amended,
and the rules and regulations thereunder, and the Exchange Act of 1934,
as amended, and the rules and regulations thereunder.
"U.S. SECURITIES REGULATOR" means the Securities and Exchange
Commission, and any other Person performing similar functions under the
U.S. Securities Laws.
1.3 CONSTRUCTION.
In this Agreement:
(a) words denoting the singular include the plural and vice versa
and words denoting any gender include all genders;
(b) the words "including", "include", and "includes" shall mean
"including without limitation", "include, without limitation"
and "includes, without limitation", respectively;
(c) any reference to a statute shall mean the statute in force as
at the date hereof and any regulation in force thereunder,
unless otherwise expressly provided;
(d) the use of headings is for convenience of reference only and
shall not affect the construction of this Agreement;
(e) when calculating the period of time within which or filing
which any act is to be done or step taken, the date which is
the reference day in calculating such period shall be
excluded. If the last day of such period is not a Business
Day, the period shall end on the next Business Day;
(f) all dollar amounts are expressed in United States funds;
(g) whenever reference is made to "generally accepted accounting
principles", such reference shall be deemed to be the United
States generally accepted accounting principles; and
any tender of documents or money under this Agreement may be
made upon the parties or the respective counsel and money may
be tendered by wire transfer, by bank draft drawn upon a bank
or by negotiable cheque payable in United States funds and
certified by a bank.
1.4 ACTIONS BY SELLING HOLDERS.
Any action to be taken, and any decision or selection to be
made, by the Selling Holders in connection with a registration effected pursuant
to the provisions of this Agreement shall be determined by the affirmative vote
or consent of those Selling Holders owning a majority of the Registrable
Securities offered by the Registration Statement.
4
-4-
ARTICLE II
DEMAND REGISTRATIONS
2.1 REQUESTS FOR REGISTRATION.
(a) At any time after the date of the Special Meeting, each of the
Holders (the "Requesting Holder") may request registration of
all or part of their Registrable Securities under the
Securities Laws. Within ten (10) days after receipt of any
such request, the Corporation will give written notice of such
request to all remaining Holders. Thereafter, the Corporation
will use all reasonable efforts to effect the registration
under the Securities Laws, including in such registration all
Registrable Securities with respect to which the Corporation
has received written requests for inclusion therein by Holders
within thirty (30) days after the receipt of the Corporation's
notice, subject to the provisions of Section 2.4. (All
registrations requested pursuant to this Section 2.1 are
referred to herein as "Demand Registrations".)
(b) A Requesting Holder which requests a Demand Registration under
this Article II may, at any time prior to the effective date
of the Registration Statement relating to such registration,
revoke such request by providing written notice to the
Corporation; provided, however, that notwithstanding such
revocation, such Demand Registration shall be deemed a request
for purposes of Section 2.2 unless, after consultation with
the Corporation and any proposed underwriter, the Requesting
Holder in good faith determines that the Registrable
Securities which it has requested to be registered would not
be sold pursuant to such Demand Registration within a
reasonable period of time or at a price acceptable to such
Requesting Holder.
(c) Any request for a Demand Registration pursuant to this Article
II shall specify the number of Registrable Securities proposed
to be sold by the Requesting Holder and the intended method of
disposition thereof.
(d) Notwithstanding any of the foregoing provisions, the
Corporation shall not be required to effect a Demand
Registration if the Registrable Securities which the
Requesting Holder has requested to be registered have ceased
to be "restricted securities" pursuant to Rule 144 of the
Securities Act and have become freely tradeable upon the
expiration of any otherwise applicable hold period under the
Securities Laws.
2.2 REGISTRATIONS.
The Holders will be entitled to request pursuant to this
Article II up to three (3) Demand Registrations. The Corporation will pay all
Registration Expenses in connection with any such Demand Registrations and/or
any Piggyback Registrations.
2.3 EFFECTIVE REGISTRATION STATEMENT.
No Demand Registration shall be deemed to have been effected
for purposes of Section 2.2:
(i) unless a Registration Statement with respect thereto
has become effective;
(ii) if, after it has become effective, any stop order,
injunction or other order or requirement of a
Securities Regulator or other governmental agency or
court for any reason, affecting any of the securities
offered by such Registration
5
-5-
Statement, is issued or threatened by a Securities
Regulator or other governmental agency or court;
(iii) if the Corporation delivers a Black-Out Notice with
respect to such Demand Registration;
(iv) if the conditions to closing specified in the
purchase agreement or underwriting agreement entered
into in connection with such registration are not
satisfied by reason of a failure by or inability of
the Corporation to satisfy any of such conditions, or
the occurrence of an event outside the reasonable
control of the Requesting Holder;
(v) the revocation notice described in the proviso to
Section 2.1(b) has been delivered by the Requesting
Holder; or
(vi) if the Requesting Holder is not able to register and
sell at least fifty percent (50%) of the Registrable
Securities which were requested to be included in
such registration,
and the Corporation will pay all Registration Expenses in connection with any
registration if the registration is deemed not to have been effected pursuant to
this Section 3.
2.4 PRIORITY ON DEMAND REGISTRATIONS.
(a) The Corporation will not include in any Demand Registration
any securities which are not Registrable Securities without
the written consent of the Selling Holders; provided, that the
foregoing shall not restrict the obligations of the
Corporation pursuant to its registration or similar agreements
with Persons (other than the Purchaser) existing as at the
date hereof.
(b) If the Requesting Holder and the remaining Selling Holders
request Registrable Securities to be included in a Demand
Registration which is an underwritten offering and the
managing underwriters advise the Corporation in writing that
in their opinion the number of Registrable Securities
requested to be included exceeds the number of Registrable
Securities which can be sold in such offering within a price
range acceptable to the Selling Holders, the Corporation will
include any securities to be sold in such Demand Registration
in the following order (i) FIRST, the Registrable Securities
owned by the Requesting Holder; (ii) SECOND, the Registrable
Securities requested to be included in such registration by
the remaining Selling Holders, provided, that if the managing
underwriters determine in good faith that a lower number of
Registrable Securities should be included, then only that
lower number of Registrable Securities requested to be
included by the remaining Selling Holders shall be included in
such registration, and the remaining Selling Holders shall
participate in the registration pro rata based upon their
total ownership, on a fully diluted basis, of Registrable
Securities; (iii) THIRD, the securities the Corporation
proposes to sell; and (iv) FOURTH, any securities other than
Registrable Securities to be sold by Persons other than the
Corporation included pursuant to Section 2.4(a) hereof.
(c) Any Person other than Holders including any securities in a
registration effected pursuant to this Article II must pay its
share of the Registration Expenses incurred in connection
therewith.
6
-6-
2.5 SELECTION OF UNDERWRITERS.
The Requesting Holder will have the right to select the
underwriters and the managing underwriter to administer any Demand Registration
(which underwriters and managing underwriter shall be reasonably acceptable to
the Corporation).
2.6 BLACK-OUT RIGHTS AND POSTPONEMENT.
(a) The Corporation shall not be required to effect a Demand
Registration if the Corporation, within the ninety (90) day
period preceding the date of a request for a Demand
Registration, has effected a registration of securities in
which the Requesting Holder was entitled to participate to the
fullest extent pursuant to the Demand Registration rights
afforded to Holders by this Article II or the Piggyback
Registration rights afforded to Holders by Article III.
(b) The Corporation may, upon written notice (a "Black-Out
Notice") to the Requesting Holder requesting a Demand
Registration, require the Requesting Holder to withdraw such
Demand Registration upon the good faith determination by the
Board of Directors of the Corporation that such postponement
is necessary (i) to avoid disclosure of material non-public
information; or (ii) as a result of a pending material
financing (including a public offering of shares in the
capital of the Corporation) or acquisition transaction, and in
each case, none of the Holders may request another Demand
Registration for a period of up to ninety (90) days, as
specified by the Corporation in such Black-Out Notice. The
Corporation may only give a Black-Out Notice where the giving
of such notice has been specifically approved by the
Corporation's Board of Directors. Upon receipt of a Black-Out
Notice, the Demand Registration shall be deemed to be
rescinded and retracted and shall not be counted as a Demand
Registration for any purpose. The Corporation may not deliver
more than one (1) Black-Out Notice in any twelve (12) month
period.
ARTICLE III
PIGGYBACK REGISTRATIONS
3.1 RIGHT TO PIGGYBACK.
Whenever the Corporation proposes (other than pursuant to a
Demand Registration) to register any of its equity securities under the
Securities Laws (whether for the Corporation's own account or for the account of
any other Person) (a "Piggyback Registration"), the Corporation will give prompt
written notice to all Holders of its intention to effect such a registration,
and such notice shall offer each Holder the opportunity to, subject to the terms
of similar agreements with Persons (other than the Purchaser) existing as at the
date hereof, register on the same terms and conditions such number of
Registrable Securities as the Holder may request. The Corporation will include
in such registration all Registrable Securities with respect to which the
Corporation has received written requests for the inclusion therein within
thirty (30) days after the receipt of the Corporation's notice, subject to the
provisions of Sections 3.3 and 3.4.
3.2 PIGGYBACK EXPENSES.
The Registration Expenses of the Selling Holders will be paid
by the Corporation in connection with all Piggyback Registrations.
7
-7-
3.3 PRIORITY ON PRIMARY REGISTRATIONS.
If a Piggyback Registration is an underwritten primary
registration on behalf of the Corporation and the managing underwriters advise
the Corporation in writing that in their opinion the number of securities
requested to be included in such registration are such that the success of the
offering would be materially and adversely affected, the Corporation will
include any securities to be sold in such registration in the following order:
(i) FIRST, the securities the Corporation proposes to sell; (ii) SECOND, the
Registrable Securities requested to be included in such registration by the
Holders pursuant to Section 3.1 hereof, provided, that, subject to the terms of
similar agreements with Persons (other than the Purchaser) existing as at the
date hereof, if the managing underwriters in good faith determine that a lower
number of Registrable Securities should be included, then the Corporation shall
be required to include in such registration only that lower number of
Registrable Securities, and the Holders shall participate in the registration
pro rata based upon their total ownership, on a fully diluted basis, of
Registrable Securities; and (iii) THIRD, other securities requested to be
included in such registration.
3.4 PRIORITY ON SECONDARY REGISTRATIONS.
If a Piggyback Registration is an underwritten secondary
registration on behalf of holders of the Corporation's securities and the
managing underwriters advise the Corporation in writing that in their opinion
the number of securities requested to be included in such registration are such
that the success of the offering would be materially and adversely affected, the
Corporation will include any securities to be sold in such registration in the
following order: (i) FIRST, the securities of such holders; (ii) SECOND, the
Registrable Securities requested to be included in such registration by the
Holders pursuant to Section 3.1 hereof, provided, that if the managing
underwriters in good faith determine that a lower number of Registrable
Securities should be included, then the Corporation shall be required to include
in such registration only that lower number of Registrable Securities, and the
Holders shall participate in the registration pro rata based upon their total
ownership, on a fully diluted basis, of Registrable Securities; and (iii) THIRD,
other securities requested to be included in such registration.
ARTICLE IV
HOLDBACK AGREEMENTS
4.1 HOLDBACK.
Each Holder agrees not to effect any public sale or
distribution of Registrable Securities, or any securities convertible,
exchangeable or exercisable for or into such securities, during the seven (7)
days prior to, and the ninety (90) day period beginning on the effective date
of, any underwritten Demand Registration or any underwritten Piggyback
Registration in which such Holder had an opportunity to participate without
cutback under Article II or Article III (in each case except as part of such
underwritten registration), unless the managing underwriters of the registered
public offering otherwise agree.
4.2 COMPANY HOLDBACK.
The Corporation agrees not to effect any public sale or
distribution of its equity securities, or any securities convertible,
exchangeable or exercisable for or into such securities, during the fourteen
(14) days prior to, and during the ninety (90) day period beginning on, the
effective date of any underwritten Demand Registration or any underwritten
Piggyback Registration in which Holders participate unless the managing
underwriters of such underwritten Demand Registration or underwritten Piggyback
Registration otherwise agree.
8
-8-
ARTICLE V
REGISTRATION PROCEDURES
5.1 REGISTRATION PROCEDURES.
Whenever the Holders have requested that any Registrable
Securities be registered pursuant to this Agreement, the Corporation will use
all reasonable efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of disposition
thereof, and pursuant thereto the Corporation will as expeditiously as possible
(or, in the case of Section 5.1(n) below, will not):
(a) prepare and file with the Securities Regulators a Registration
Statement with respect to such Registrable Securities (such
Registration Statement to include all information which the
Selling Holders shall reasonably request) and use all
reasonable efforts to cause such Registration Statement to
become effective; provided, that as promptly as practicable
before filing such Registration Statement, the Corporation
will: (i) furnish to counsel selected by the Selling Holders
copies of all such documents proposed to be filed, and the
Corporation shall not file any such documents to which such
counsel shall have reasonably objected on the grounds that
such document does not comply in all material respects with
the requirements of the Securities Laws; and (ii) notify each
Selling Holder of (x) any request by the Securities Regulators
to amend such Registration Statement or (y) any stop order
issued or threatened by the Securities Regulators, and take
all reasonable actions required to prevent the entry of such
stop order or to remove it if entered;
(b) (i) prepare and file with the Securities Regulators such
amendments and supplements to such Registration Statement as
may be necessary to keep such Registration Statement effective
until all Registrable Securities offered by such Registration
Statement are sold in accordance with the intended plan of
distribution set forth in such Registration Statement; and
(ii) comply with the provisions of the Securities Laws with
respect to the disposition of all securities offered by such
Registration Statement during such period in accordance with
the intended methods of disposition set forth in such
Registration Statement;
(c) furnish to each Selling Holder, each underwriter of any
underwritten offering and each broker through whom Registrable
Securities are to be sold, without charge, as many conformed
copies of such Registration Statement, each amendment and
supplement thereto, the prospectus included in such
Registration Statement (including each preliminary prospectus
and, in each case, including all exhibits thereto and
documents incorporated by reference therein) and such other
documents as the Selling Holder, underwriter or broker may
reasonably request in order to facilitate the disposition of
such Registrable Securities;
(d) use its best efforts to register or qualify such Registrable
Securities under provincial and state securities or blue sky
laws of such jurisdictions as any Selling Holder shall
reasonably request, to keep such registration or qualification
in effect for so long as such Registration Statement remains
in effect and do any and all other acts and things which may
be reasonably necessary or advisable to enable the Selling
Holder to consummate the disposition of the Holder's
Registrable Securities in such jurisdictions, provided,
however, that the Corporation will not be required to: (i)
qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this
9
-9-
Section 5.1(d); (ii) subject itself to Taxation in any such
jurisdiction; or (iii) consent to general service of process
in any such jurisdiction;
(e) furnish to each Selling Holder a signed copy, addressed to the
Selling Holder (and the underwriters, if any), of an opinion
of counsel for the Corporation (and/or special counsel to the
selling securityholders in the case of a secondary
registration), dated the effective date of such Registration
Statement (and, if such Registration Statement includes an
underwritten public offering, dated the date of the closing
under the underwriting agreement), reasonably satisfactory in
form and substance to the Selling Holder, covering
substantially the same matters with respect to such
Registration Statement (and the prospectus included therein)
as are customarily covered in opinions of issuer's counsel
delivered to the underwriters in underwritten public
offerings;
(f) notify each Selling Holder, at a time when a prospectus
relating to the offering is required to be delivered to
purchasers or prospective purchasers under the Securities
Laws, of the occurrence of any event known to the Corporation
as a result of which the prospectus included in such
Registration Statement, as then in effect, contains an untrue
statement of a material fact or omits to state any fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances under which they were made, and, at the request
of the Selling Holders, the Corporation will prepare and
furnish to each Selling Holder, each underwriter (if any) and
each broker through whom Registrable Securities are to be
sold, without charge, as many conformed copies of a supplement
to or an amendment of such prospectus as the Selling Holder,
underwriter or broker may reasonably request so that, as
thereafter delivered to the purchasers of the Registrable
Securities offered thereby, such prospectus shall not include
an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances under which they were made and, in the event the
Corporation shall give such notice, the Corporation shall
extend the period during which such Registration Statement
shall be maintained effective by the number of days during the
period from and including the date of the giving of such
notice to the Selling Holders to the date when the Corporation
made available to the Selling Holders, the underwriters (if
any) and the brokers through whom Registrable Securities are
to be sold conformed copies of an appropriately amended or
supplemented prospectus;
(g) enter into such customary arrangements and take all such other
customary actions as the Selling Holders or the underwriters
(if any) reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities;
(h) make available for inspection by any Selling Holder, any
underwriter and any attorney, accountant or other agent
retained by any Selling Holder or underwriter, upon reasonable
notice and during normal business hours, all financial and
other records, pertinent corporate documents and properties of
the Corporation, and cause the Corporation's officers,
directors, employees and independent accountants to supply all
information reasonably requested by the Selling Holder,
underwriter, attorney, accountant or agent in connection with
such Registration Statement;
(i) subject to other provisions hereof, use all reasonable efforts
to cause the Registrable Securities offered by such
Registration Statement to be registered with or approved by
such other governmental agencies or authorities or
self-regulatory organizations as may be necessary to enable
the Selling Holders to consummate the disposition of such
Registrable Securities;
10
-10-
(j) use all reasonable efforts to obtain a "comfort" letter, dated
the effective date of such Registration Statement (and, if
such registration includes an underwritten offering, dated the
date of the closing under the underwriting agreement), signed
by the independent public accountants who have certified the
Corporation's financial statements, addressed to each Selling
Holder and to the underwriters (if any) covering substantially
the same matters with respect to such Registration Statement
(and the prospectus included therein) and with respect to
events subsequent to the date of such financial statements, as
are customarily covered in accountants' letters delivered to
the underwriters in underwritten public offerings of
securities and such other financial matters as the Selling
Holders (and the underwriters, if any) may reasonably request;
(k) otherwise use all reasonable efforts to comply with all
applicable rules and regulations of the Securities Regulators;
(l) permit any Selling Holder (which Selling Holder, in its sole
judgment, exercised in good faith, might be deemed to be a
controlling Person of the Corporation with the meaning of the
U.S. Securities Laws) to participate in the preparation of
such Registration Statement and to include therein material,
furnished to the Corporation in writing, which in the
reasonable judgment of the Selling Holder should be included
and which is reasonably acceptable to the Corporation and not
in violation of applicable Law;
(m) use all reasonable efforts to obtain the lifting at the
earliest possible time of any stop order suspending the
effectiveness of such Registration Statement or of any order
preventing or suspending the use of any prospectus;
(n) at any time file or make any amendment to such Registration
Statement, or any amendment of or supplement to the prospectus
contained therein (including amendments of the documents
incorporated by reference in the prospectus), of which each
Selling Holder or the managing underwriters shall not have
previously been advised and furnished a copy or to which the
Selling Holders, the managing underwriters, or counsel for the
Selling Holders or for the underwriters shall reasonably
object;
(o) make such representations and warranties (subject to
appropriate disclosure schedule exceptions) to Selling Holders
and the underwriters (if any) in form, substance and scope as
are customarily made by issuers to underwriters and selling
securityholders, as the case may be, in underwritten public
offerings of substantially the same type; and
(p) if any proposed Registration Statement refers to a Holder by
name or otherwise as the holder of any securities of the
Corporation then: (i) the Corporation shall be required at the
request of such Holder to insert therein language, in form and
substance reasonably satisfactory to such Holder, the
Corporation and the managing underwriters, to the effect that
the ownership by such Holder of such securities is not to be
construed as a recommendation by such Holder as to the
investment quality of the Corporation's securities offered
thereby and that such ownership does not imply that such
Holder will assist in meeting any future financial
requirements of the Corporation; or (ii) in the event that
such reference to such Holder by name or otherwise is not
required by the Securities Laws, any similar federal,
provincial or state statute, or any rule or regulation of any
other regulatory body having jurisdiction over the offering,
then in force, the Corporation shall be required at the
request of such Holder to delete the reference to such Holder.
11
-11-
ARTICLE VI
REGISTRATION EXPENSES
6.1 FEES.
(a) The Corporation shall pay all Registration Expenses in
connection with any registration of Registrable Securities
effected pursuant to the provisions of this Agreement.
(b) Upon any sale of Registrable Securities by a Selling Holder,
such Selling Holder shall pay all brokerage commissions,
underwriting discounts and commissions, transfer taxes (if
any), and fees and expenses relating to the sale or
disposition of such Registrable Securities.
ARTICLE VII
UNDERWRITTEN OFFERINGS
7.1 DEMAND UNDERWRITTEN OFFERINGS.
If requested by the underwriters for any underwritten offering
of Registrable Securities pursuant to a Demand Registration, the Corporation
will enter into an underwriting agreement with such underwriters for such
offering, such agreement to be satisfactory in substance and form to the
Corporation, the Requesting Holder and the underwriters, and to contain such
representations and warranties by the Corporation and such other terms as are
customarily included in agreements of this type, including without limitation
indemnities customarily included in such agreements. The Selling Holders will
cooperate in good faith with the Corporation in the negotiation of the
underwriting agreement. The Selling Holders may be parties to such underwriting
agreement and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Corporation to and for the benefit of such underwriters shall also be made to
and for the benefit of the Selling Holders and that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement be conditions precedent to the obligations of the Selling Holders. The
Corporation shall cooperate with any Selling Holder in order to limit any
representations or warranties to, or agreements with the Corporation or the
underwriters to be made by the Selling Holder only to those representations,
warranties or agreements regarding the Selling Holder, the Selling Holder's
Registrable Securities and the Selling Holder's intended method of distribution
and any other representation required by the Securities Laws.
7.2 INCIDENTAL UNDERWRITTEN OFFERINGS.
If requested by the underwriters for any underwritten offering
of Registrable Securities pursuant to a Piggyback Registration, the Selling
Holders shall be parties to the underwriting agreement between the Corporation
and such underwriters, and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Corporation to and for the benefit of such underwriters shall also be made to
and for the benefit of the Selling Holders and that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement be conditions precedent to the obligations of the Selling Holders. The
Corporation shall cooperate with any Selling Holder in order to limit any
representations and warranties to, or agreements with, the Corporation or the
underwriters to be made by the Selling Holder only to those representations,
warranties or agreements regarding the Selling Holder, the Selling Holder's
Registrable Securities, the Selling Holder's intended method of distribution and
any other representation required by the Securities Laws.
12
-12-
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY THE CORPORATION.
The Corporation agrees to indemnify and hold harmless, to the
fullest extent permitted by law, each of the Selling Holders, each other Person,
if any, who controls each of the Selling Holders within the meaning of the U.S.
Securities Laws and each of their respective directors, general partners and
officers, as follows:
(i) against any and all loss, liability, claim, damage or
expense arising out of or based upon an untrue
statement or alleged untrue statement of a material
fact contained in any Registration Statement by which
Registrable Securities are offered (or any amendment
or supplement thereto), including all documents
incorporated therein by reference, or in any
preliminary prospectus or prospectus (or any
amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact
required to be stated therein or necessary to make
the statements therein, in light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense to the extent of the aggregate amount
paid in settlement of any litigation, investigation
or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission or
any such alleged untrue statement or omission, if
such settlement is effected with the written consent
of the Corporation; and
(iii) against any and all expense incurred by them in
connection with investigating, preparing or defending
against any litigation, or investigation or
proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever
based upon any such untrue statement or omission or
any such alleged untrue statement or omission, to the
extent that any such expense is not paid under clause
(i) or (ii) above;
provided, that this indemnity does not apply to any loss, liability, claim,
damage or expense to the extent arising out of an untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Corporation by or on behalf
of the Selling Holder expressly for use in the preparation of any Registration
Statement (or any amendment or supplement thereto), including all documents
incorporated therein by reference, or in any preliminary prospectus or
prospectus (or any amendment or supplement thereto) contained therein; and
provided further, that the Corporation will not be liable under the indemnity
agreement in this Section 8.1 with respect to any preliminary prospectus or the
final prospectus or the final prospectus as amended or supplemented, as the case
may be, to the extent that any such loss, liability, claim, damage or expense
results from the fact that the Selling Holder or underwriter (if any) sold
Registrable Securities to a Person to whom there was not sent or given, at or
prior to the written confirmation of such sale, a copy of the final prospectus
or of the final prospectus as then amended or supplemented, whichever is most
recent, if the Corporation previously furnished, in a timely fashion, sufficient
copies thereof to the Selling Holder, the underwriter (if any) or the broker
through whom the Registrable Securities were sold. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
the Selling Holder, any controlling Person of the Selling Holder or any of their
respective directors, officers or general partners, and shall survive the
closing of the offering.
13
-13-
8.2 INDEMNIFICATION BY A HOLDER.
Each Selling Holder agrees to indemnify and hold harmless (in
the same manner and to the same extent as set forth in Section 8.1 of this
Agreement), to the extent permitted by law, the Corporation and its directors,
officers and controlling Persons, and their respective directors, officers and
general partners, with respect to any statement or alleged statement in or
omission or alleged omission contained in any Registration Statement by which
Registrable Securities are offered (or any amendment or supplement thereto),
including all documents incorporated therein by reference or in any preliminary
prospectus or prospectus (or any amendment or supplement thereto), if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information that relates only to
the Selling Holder that is expressly furnished to the Corporation by or on
behalf of the Selling Holder for use in the preparation of such Registration
Statement, preliminary prospectus, prospectus or amendment or supplement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Corporation, or its directors, officers or
controlling Persons or their respective directors, officers or general partners
and shall survive the closing of the offering. With respect to each claim
pursuant to this Section 8.2, each Selling Holder's maximum liability under this
Section shall be limited to an amount equal to the net proceeds actually
received by the Selling Holder (after deducting any underwriting discount and
expenses) from the sale of the Selling Holder's Registrable Securities offered
by such Registration Statement.
8.3 INDEMNIFICATION PROCEDURE.
Promptly after receipt by an indemnified party hereunder of
written notice of the commencement of any action or proceeding involving a claim
referred to in Section 8.1 or Section 8.2 of this Agreement, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action;
provided that the failure of any indemnified party to give notice as provided
herein shall not release the indemnifying party of its obligations under Section
8.1 or Section 8.2 except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, the indemnifying party will be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal fees and expenses subsequently incurred by the
latter in connection with the defense thereof, unless in such indemnified
party's reasonable judgment an actual or potential conflict of interest between
such indemnified and indemnifying parties may exist in respect of such claim, in
which case the indemnifying party shall not be liable for the fees and expenses
of: (i) more than one counsel (in addition to any local counsel) for all Selling
Holders selected by the Selling Holders; or (ii) more than one counsel (in
addition to any local counsel) for the Corporation selected by the Corporation
in connection with any one action or separate but similar or related actions. An
indemnifying party who is not entitled to (pursuant to an immediately preceding
sentence), or elects not to, assume the defense of a claim will not be obligated
to pay the fees and expenses of more than one counsel (in addition to any local
counsel) for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party an actual
or potential conflict of interest may exist 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 the fees and expenses of such
additional counsel or counsels. The indemnifying party will not, without the
prior consent of each indemnified party, settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not such indemnified party or any Person who controls such indemnified party
is a party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of such indemnified
party from all liability arising out of such claim,
14
-14-
action, suit or proceeding. Notwithstanding anything to the contrary set forth
herein, and without limiting any of the rights set forth above, in any event any
party will have the right to retain, at its own expense, counsel with respect to
the defense of a claim.
8.4 UNDERWRITING AGREEMENT.
The Corporation and each Selling Holder shall provide for the
foregoing indemnity (with appropriate modifications) in any underwriting
agreement with respect to any registration of Registrable Securities.
8.5 CONTRIBUTION.
If the indemnification provided for in Sections 8.1 and 8.2 of
this Agreement is unavailable to hold harmless an indemnified party under such
Sections, then each indemnifying party shall agree to contribute to the amount
paid or payable by such indemnifying party on the one hand, and the indemnified
party on the other, in connection with statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations, including without limitation the relative
benefits received by each party from the sale of the securities offered by the
Registration Statement, the parties' relative knowledge and access to
information concerning the matter with respect to which the claim was asserted
and the opportunity to correct and prevent any statement or omission. The
relative fault 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 and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statements or omission. The parties hereto agree that it would not be
just and equitable if contributions pursuant to this Section 8.5 were to be
determined by pro rata or per capita allocation (even if the underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the
first and second sentences of this Section 8.5. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this Section 8.5 shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any action or claim (which shall be
limited as provided in Section 8.3 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 8.5. Promptly after receipt by an indemnified party
under this Section 8.5 of notice of the commencement of any action against such
party in respect of which a claim for contribution may be made against an
indemnifying party under this Section 8.5, such indemnified party shall notify
the indemnifying party in writing of the commencement thereof if the notice
specified in Section 8.3 has not been given with respect to such action;
provided that the omission to so notify the indemnifying party shall not relieve
the indemnifying party from any liability which it may otherwise have to any
indemnified party under this Section 8.5, except to the extent that the
indemnifying party is actually prejudiced by such failure to give notice. The
Corporation and each Selling Holder shall agree with each other and the
underwriters of the Registrable Securities, if requested by such underwriters,
that: (i) the underwriters' portion of such contribution shall not exceed the
underwriting fee or discount and (ii) that the Selling Holder's portion of such
contribution shall not exceed an amount equal to the net proceeds actually
received by the Selling Holder from the sale of the Selling Holder's Registrable
Securities in the offering to which the losses, liabilities, claims, damages or
expenses of the indemnified parties relate. 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.
15
-15-
8.6 PERIODIC PAYMENTS.
The indemnification required by this Article VIII shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
ARTICLE IX
RULE 144
9.1 RULE 144
The Corporation covenants that it will file the reports
required to be filed by it under the U.S. Securities Laws in a timely fashion,
and will take such further action as any Holder may reasonably request, all to
the extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act in compliance with: (i)
Rule 144 under the Securities Act, as such Rule may be amended from time to
time; or (ii) any similar rule or regulation hereafter adopted by the U.S.
Securities Regulator. Upon the request of any Holder, the Corporation will
deliver to such Holder a written statement as to whether it has complied with
such requirements.
ARTICLE X
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
10.1 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Person may participate in any underwritten registration
hereunder unless such Person: (i) agrees to sell such Person's securities on the
basis provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements; and (ii) complete and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements, escrow agreements and other documents reasonably required under the
terms of such underwriting arrangements and consistent with the provisions of
this Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 TIME OF ESSENCE.
Time shall be of the essence in this Agreement.
11.2 JURISDICTION.
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York.
11.3 ENTIRE AGREEMENT.
This Agreement and the Subscription Agreement constitute the entire
agreement among the parties hereto relating to the subject matter hereof and
supersede all oral statements and prior writings with respect hereto.
16
-16-
11.4 NO INCONSISTENT AGREEMENTS.
The Corporation will not hereafter enter into any agreement which is
inconsistent with, or would otherwise restrict the performance by the
Corporation of its obligations hereunder.
11.5 ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES.
The Corporation will not take any action, or fail to take any action
which it may properly take, with respect to its securities which would adversely
affect the ability of the Holders to include Registrable Securities in a
registration effected pursuant to the provisions of this Agreement or which, to
the extent within its control, would adversely affect the marketability of such
Registrable Securities in any such registration (including without limitation
effecting a stock split or a combination of shares).
11.6 ACTIONS TAKEN; AMENDMENTS AND WAIVERS.
Except as otherwise provided herein, no modification, amendment or
waiver of any provision of this Agreement will be effective against the
Corporation or any Holder, unless such modification, amendment or waiver is
approved in writing by the Corporation and the Holders. The failure of any party
to enforce any of the provisions of this Agreement will in no way be construed
as a waiver of such provisions and will not affect the right of such party
thereafter to enforce each and every provision of this Agreement in accordance
with its terms.
11.7 SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Agreement by or on behalf of any
of the parties hereto will bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or not; in
addition, whether or not any express assignment has been made, the provisions of
this Agreement which are for the benefit of Holders are also for the benefit of,
and enforceable by, any subsequent Holder, except to the extent reserved to or
by the transferor in connection with any such transfer; provided that the
benefits of this Agreement shall inure to and be enforceable by any transferee
of Registrable Securities so long as such transferee shall have executed an
agreement agreeing to be bound by the provisions of this Agreement and assuming
and agreeing to fulfil and perform all of the obligations of a Holder hereunder.
11.8 NOTICE.
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be given by prepaid first-class mail, by
facsimile or other means of electronic communication or by hand-delivery as
hereinafter provided. Any such notice or other communication, if mailed by
prepaid first-class mail at any time other than during a general discontinuance
of postal service due to strike, lock-out or otherwise shall be deemed to have
been received on the fourth (4th) Business Day after the post-marked date
thereof, or if sent by facsimile or other means of electronic communication,
shall be deemed to have been received on the Business Day following the sending,
or if delivery by hand shall be deemed to have been received at the time it is
delivered to the applicable address noted below either to the individual
designated below or to an individual at such address having apparent authority
to accept deliveries on behalf of the addressee. Notice of change of address
shall also be governed by this section. In the event of a general discontinuance
of postal service due to strike, lockout or otherwise, notices or other
communications shall be delivered by hand or sent by facsimile or other means of
electronic communication and shall be deemed to have been received in accordance
with this section. Notices and other communications shall be addressed as
follows:
17
-17-
(a) if to the Corporation
Balanced Care Corporation
0000 Xxxxx Xxxxx
Xxxxxxxxxxxxx, Xxxxxxxxxxxx
00000
Attention: Xxxx X. Xxxxxxxxx
Telecopier No: (000) 000-0000
with a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
00000-0000
Attention: Xxxxxxx Xxxxxxx
Telecopier No.: (000) 000-0000
(b) if to the Purchaser:
IPC Advisors S.A.R.L.
c/o Unsworth & Associates
Xxxxxxxxxx 000
0000 XX
Xxxxxxxxx
Attention: Xxxx Xxxxxxxx
Telecopier No.: 011-31-20-623-2285
with a copy to:
Xxxxxxx X. Xxxx
x/x Xxxxxxx Xxxx Xxxxxx
000 Xxxxx Xxxxxx Xxxx
Xxxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxx X. Xxxx
Telecopier No.: (000) 000-0000
18
-18-
with a further copy to:
Xxxxxxx Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxx Xxxxxx
Telecopier No.: (000) 000-0000
11.9 SEVERABILITY.
If any provision, or portion thereof, of this Agreement, or of the
application thereof to any Person or circumstance, shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such provision or portion thereof, to any other Person or circumstance shall not
be affected thereby and each provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
11.10 EXECUTION AND COUNTERPARTS.
For the convenience of the parties, this Agreement may be executed by
facsimile or otherwise in several counterparts, each of which when so executed
shall be, and be deemed to be, an original instrument and such counterparts
together shall constitute one in the same instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereof on the date first indicated above.
BALANCED CARE CORPORATION
Per:
-------------------------------------
Per:
-------------------------------------
IPC ADVISORS S.A.R.L.
Per:
-------------------------------------
