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STOCK RESTRICTION AND REGISTRATION RIGHTS AGREEMENT
THIS STOCK RESTRICTION AND REGISTRATION RIGHTS AGREEMENT (the
"Agreement") is made as of December 16, 1997, between XXXXXXX X. XXXXXX, M.D., a
citizen and resident of Ohio ("Stockholder") and OMEGA HEALTH SYSTEMS, INC, a
Delaware corporation (the "Company").
R E C I T A L S
A. Stockholder, the Company, and Omega Ohio have executed that certain
Stock Purchase Agreement dated as of December 16, 1997 (the "Stock Purchase
Agreement"), pursuant to which the Omega Ohio will purchase from Stockholder all
of the Stockholder's stock in Central Ohio Eye Institute, Inc., an Ohio
corporation.
B. As partial consideration for the Acquisition (as defined in Section
1 herein below), the Company will issue to Stockholder shares of Common Stock
(as defined in Section 1 hereinbelow) of the Company, which will be subject to
certain restrictions under the Securities Act of 1933 and this Agreement.
C. In connection with the issuance of the Common Stock in the
Acquisition, the Company desires to provide to Stockholder the right to register
the shares of Common Stock issued at Closing (the "Shares") under the Securities
Act of 1933, as amended, according to the terms of this Agreement.
In consideration of the recitals made above and the mutual covenants
and agreements stated herein, the parties agree as follows:
1. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
(a) "Acquisition" shall mean the acquisition of all of the
Stockholder's stock in Central Ohio Eye Institute, Inc. by Omega Ohio. In
respect of the Acquisition, the term "Closing" shall mean the closing of the
Acquisition held in accordance with the Stock Purchase Agreement, pursuant to
which the Acquisition shall be consummated.
(b) "Best Efforts" means the taking of all commercially
reasonable steps to cause or prevent any event or condition which would have
been taken in similar circumstances by a reasonably prudent business person
engaged in a similar business for the advancement or protection of his own
economic interest in light of the consequences of failure to cause or prevent
the occurrence of such event or condition.
(c) "Closing Date" shall mean the date of the closing of the
Acquisition held in accordance with the Stock Purchase Agreement.
(d) "Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
(e) "Common Stock" shall mean the common stock of the Company,
or such classes of the Company's capital stock that may be substituted therefor
in the event of any recapitalization or reorganization of the Company.
(f) "Company" shall mean Omega Health Systems, Inc., a
Delaware corporation.
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(g) "Form S-3" shall mean Form S-3 adopted by the Commission
under the Securities Act or any substantially similar form from time to time in
effect.
(h) "Material Adverse Event" shall mean an occurrence having a
consequence that either (a) is materially adverse as to the business,
properties, prospects or financial condition or the market for the securities of
the Company or (b) is reasonably foreseeable, has a reasonable likelihood of
occurring, and if it were to occur might materially adversely affect the
business, properties, prospects or financial condition of the Company.
(i) "Omega Ohio" shall mean Omega Health Systems of Ohio,
Inc., an Ohio corporation.
(j) The terms "Register", "Registered" and "Registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act ("Registration Statement"), and
the declaration or ordering of the effectiveness of such Registration Statement.
(k) "Registrable Securities" shall mean Shares issued to
Stockholder in connection with the Acquisition, including Shares issued pursuant
to stock splits, stock dividends and other distributions with respect to or in
exchange for or in replacement of said Shares.
(l) "Registration Expenses" shall mean all expenses incurred
in effecting any registration pursuant to this Agreement and in complying with
Section 3 and Section 4 of this Agreement, including, without limitation, all
federal and state registration, qualification and filing fees, printing
expenses, fees, escrow fees and disbursements of counsel for the Company and of
special counsel for the Stockholder (if different from the Company), blue sky
fees and expenses, and the expense of any regular or special audits incident to
or required by any such registration.
(m) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
(n) "Selling Expenses" shall mean all underwriting discounts
and selling commissions applicable to the sale of Registrable Securities
pursuant to this Agreement.
(o) "Shares" shall mean the shares of Common Stock issued to
Stockholder as consideration for the Acquisition.
(p) "Stockholder" shall mean Xxxxxxx X. Xxxxxx, M.D.
(q) "Underwritten Offering" shall mean a registered public
offering of Registrable Securities pursuant to a firm commitment underwriting
agreement with an investment banking firm reasonably acceptable to the Company.
(r) "1998 Rights" mean registration rights in respect of
securities of the Company granted by the Company after December 16, 1998, and
shall include the registration rights granted herein.
2. RESALE RESTRICTIONS.
Stockholder agrees that, for a period of two (2) years from
the Closing Date, Stockholder will not sell, assign, pledge, encumber or
transfer (collectively, a "Transfer") in any manner whatsoever any of the
Shares, and Stockholder further agrees that, for a period of five (5) years from
the Closing Date, Stockholder will not Transfer 100,000 of the Shares; provided,
however, that notwithstanding the foregoing, (i) Stockholder shall be permitted
to Transfer (A) up to 100,000 of the Shares at anytime after one year from the
Closing Date provided that such Transfers are effected in compliance with the
requirements of Securities and Exchange Commission Rule 144 or (B) such number
of Shares as may be permitted to be included in a Registration of the Common
Stock of the
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Company pursuant to the terms of this Agreement, and (ii) Stockholder shall not
be permitted to Transfer any shares pledged to the Company or Omega Ohio
pursuant to the terms of the Stock Pledge and Escrow Agreement by and between
Stockholder, Omega Ohio, the Company and Union Planters National Bank dated
December 16, 1997 until the expiration or termination of that Agreement.
3. PIGGYBACK REGISTRATION.
3.1. NOTICE OF PIGGYBACK REGISTRATION AND INCLUSION OF REGISTRABLE
SECURITIES.
Subject to the terms of this Agreement, if the Company decides
to Register any of its securities during the period December 16, 1998 through
December 16, 2002, either for its own account or the account of a security
holder or holders, (other than a registration on Securities Act Form X-0, Xxxx
X-0, any successor form or such other form that does not permit secondary sales)
the Company will: (i) promptly give Stockholder written notice thereof (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable Blue Sky or other state
securities laws) and (ii) include in such Registration (and any related
registration and/or qualification under Blue Sky laws or other compliance), and
in any underwriting involved therein, all the Registrable Securities specified
in a written request delivered to the Company by Stockholder within twenty (20)
days after delivery of such written notice from the Company.
3.2. UNDERWRITING IN PIGGYBACK REGISTRATION.
3.2.1 NOTICE OF UNDERWRITING IN PIGGYBACK REGISTRATION.
If the Registration of which the Company gives notice is for a
Registered public offering involving an underwriting, the Company shall so
advise the Stockholder as a part of the written notice given pursuant to Section
3.1. In such event, the right of the Stockholder to Registration shall be
conditioned upon such underwriting and the inclusion of the Stockholder's
Registrable Securities in such underwriting to the extent provided in this
Section 3. If the Stockholder proposes to distribute his securities through such
underwriting, he shall (together with the Company and any other holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the representative of the
Underwriter ("Underwriter's Representative") for such offering. The Stockholder
shall have no right to participate in the selection of underwriters for an
offering pursuant to this Section.
3.2.2 MARKETING LIMITATION IN PIGGYBACK REGISTRATION.
In the event the Underwriter's Representative advises the
Stockholder seeking Registration of Registrable Securities pursuant to Section 3
in writing that market factors (including, without limitation, the aggregate
number of shares of Common Stock requested to be Registered, the general
condition of the market, and the status of the persons proposing to sell
securities pursuant to the Registration) require a limitation of the number of
shares to be underwritten, the Underwriter's Representative (subject to the
allocation priority set forth in Section 3.2.3) may limit (or reduce to zero)
the number of shares of Registrable Securities to be included in such
Registration and underwriting; provided however, that any Registrable Securities
so excluded shall retain any and all Registration rights set forth in Section 3
hereof.
3.2.3 ALLOCATION OF SHARES IN PIGGYBACK REGISTRATION.
In the event that the Underwriter's Representative limits the
number of shares to be included in a Registration pursuant to Section 3.2.2, the
number of shares to be excluded from such Registration shall be allocated in the
following order of priority: (i) Common Stock held by persons who are not
contractually entitled to include shares in such Registration; (ii) Common Stock
held by persons who possess the 1998 Rights; and (iii) Common Stock held by
persons who possess registration rights granted prior to the 1998 Rights. If
Registrable
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Securities and other securities possessing the 1998 Rights shall be only
partially excluded from such Registration and underwriting (and assuming that
all securities bearing registration rights prior to the 1998 Rights that are
requested to be registered are so registered and included in the underwriting),
then the number of shares of Common Stock that may be included in the
Registration and underwriting by all holders of the 1998 Rights (including the
Registrable Securities) shall be allocated among the Stockholder and other such
holders in proportion, as nearly as practicable, to the respective amounts of
securities (including Registrable Securities) which such Stockholder and such
other holders would otherwise be entitled to include in such Registration. No
Registrable Securities or other securities excluded from the underwriting by
reason of this Section 3.2.3 shall be included in the Registration Statement.
3.3. WITHDRAWAL IN PIGGYBACK REGISTRATION.
If the Stockholder disapproves of the terms of any such underwriting,
he may elect to withdraw therefrom by written notice to the Company and the
underwriter delivered at least seven days prior to the effective date of the
Registration Statement. Any Registrable Securities or other securities excluded
or withdrawn from such underwriting shall be withdrawn from such Registration.
3.4. BLUE SKY IN PIGGYBACK REGISTRATION.
In the event of any Registration of Registrable Securities pursuant to
Section 3, the Company will use its best efforts to register and/or qualify the
securities covered by the Registration Statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably appropriate for the
distribution of such securities; provided, however, that notwithstanding
anything in this Agreement to the contrary, in the event any jurisdiction in
which the securities shall be qualified imposes a non-waivable requirement that
expenses incurred in connection with the qualification of the securities be
borne by selling shareholders, the Stockholder shall pay his pro rata share of
such expenses.
4. EXPENSES OF REGISTRATION.
All Registration Expenses incurred in connection with Registration
pursuant to Section 3 and any related registration qualification or compliance,
shall be borne by the Company. Selling Expenses in a piggyback registration
pursuant to Section 3 shall be allocated pro rata between the Company, the
Stockholder and other selling shareholders based on the number of shares of
Common Stock included in such Registration.
5. REGISTRATION PROCEDURES.
If Stockholder's Registrable Securities are included in any
Registration pursuant to this Agreement, the Company will keep the Stockholder
advised in writing as to the initiation and completion of such Registration. At
its expense, the Company shall: (a) furnish such number of prospectuses
(including preliminary prospectuses) and other documents as the Stockholder from
time to time reasonably may request; (b) prepare and file with the Commission
such amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration statement; (c)
notify the Stockholder at any time when a prospectus relating to the sale of
Registrable Securities is required to be delivered under the Securities Act of
the happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or incomplete in the
light of the circumstances then existing, and at the request of the Stockholder,
prepare and furnish to the Stockholder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such shares, 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 or incomplete in the light of the circumstances then existing; (d)
cause all such Registrable Securities registered pursuant hereunder
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to be listed on each securities exchange or automated quotation service
(including the National Market of The Nasdaq Stock Market) on which similar
securities issued by the Company are then listed; (e) provide a transfer agent
and registrar for all Registrable Securities registered pursuant to such
registration statement and a CUSIP number for all such Registrable Securities,
in each case not later than the effective date of such registration; and (f)
otherwise use its best efforts to comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen months, beginning with the first
month after the effective date of the Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act.
6. INFORMATION FURNISHED BY THE STOCKHOLDER.
It shall be a condition precedent to the Company's obligations under
this Agreement if the Stockholder has Registrable Securities included in any
Registration, that he furnish to the Company such information regarding such
Stockholder and the distribution proposed by such Stockholder as the Company may
reasonably request in writing and as shall be reasonably required.
7. INDEMNIFICATION.
7.1. COMPANY'S INDEMNIFICATION OF THE STOCKHOLDER.
The Company shall indemnify and hold harmless the Stockholder, and each
underwriter, with respect to which Registration, qualification or compliance of
Registrable Securities has been effected pursuant to this Agreement against all
claims, losses, damages, expenses or liabilities (or actions in respect thereof)
to the extent such claims, losses, damages, expenses or liabilities (or actions,
proceedings or settlements in respect thereto) arise out of or are based upon
any untrue statement (or alleged untrue statement) of a material fact contained
in any prospectus or other document (including any related Registration
Statement notification or the like) incident to any such Registration,
qualification or compliance, or are based on any omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, or any violation by the Company of
the Securities Act or any rule or regulation promulgated under the Securities
Act applicable to the Company and relating to action or inaction required of the
Company in connection with any such Registration, qualification or compliance;
and the Company will reimburse each such indemnified party and each Controlling
Person, for any legal and any other expenses reasonably incurred in connection
with investigating, defending or settling any such claim, loss, damage,
liability or action; provided, however, that the indemnity contained in this
Section 7.1 shall not apply to amounts paid in settlement of any such claim,
loss, damage, liability or action if settlement is effected without the consent
of the Company; and provided, further, that the Company will not be liable in
any such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based upon any untrue statement or omission based
upon written information furnished to the Company by such Stockholder, and
stated to be specifically for use therein.
7.2. INDEMNIFICATION PROCEDURE.
Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section 7, notify the indemnifying party in writing of the commencement thereof
and generally summarize such action. The indemnifying party shall have the right
to participate in and to assume the defense of such claim; provided, however,
that the indemnifying party shall be entitled to select counsel for the defense
of such claim with the approval of any parties entitled to indemnification,
which approval shall not be unreasonably withheld; provided further, however,
that if either party reasonably determines that there may be a conflict between
the position of the Company and the Stockholder in conducting the defense of
such action, suit or proceeding by reason of recognized claims for indemnity
under this Section 7, then counsel for such party shall be entitled to conduct
the defense to the extent reasonably determined by such counsel to be necessary
to protect the interest of such party. The failure to
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notify an indemnifying party promptly of the commencement of any such action, if
prejudicial to the ability of the indemnifying party to defend such action,
shall relieve such indemnifying party, to the extent so prejudiced, of any
liability to the indemnified party under this Section 7, but the omission so to
notify the indemnifying party will not relieve such party of any liability that
such party may have to any indemnified party otherwise other than under this
Section 7.
8. LIMITED TRANSFER OF RIGHTS.
The rights to cause the Company to register the Registrable Securities
granted to Stockholder hereunder may not be transferred or assigned by the
Stockholder or one or more of the members of Stockholder's immediate family;
provided that Stockholder may transfer such rights solely for estate planning
purposes in connection with a transfer of the Shares in whole, or in part, to a
trust established for Stockholder's benefit or the benefit of one or more of the
members of the Stockholder's immediate family, to a family partnership (general
or limited) established by Stockholder or one or more of the members of
Stockholder's immediate family, or to any other entity that is owned by
Stockholder.
9. MARKET STAND-OFF.
In consideration of the granting to the Stockholder of the registration
rights pursuant to this Agreement, the Stockholder agrees that, for so long as
the Stockholder holds Shares, except as permitted by Section 3 hereof, such
Stockholder will not sell, transfer or otherwise dispose of, including, without
limitation, through the use of any put or call option, short sale or other
derivative arrangement, shares of Common Stock in the ten days prior to the
effectiveness of any registration statement (other than a registration statement
on Form S-8 or Form S-4, or any successor form) with respect to shares of Common
Stock pursuant to which such Common Stock will be offered for sale to the
public, and for up to one hundred-eighty (180) days (or such greater period as
may be requested by the underwriter) following the effectiveness of such
registration statement, provided that the underwriters of any such offering
shall reasonably request that the Stockholder be bound by such restrictions.
10. MISCELLANEOUS.
10.1. WAIVER.
Waiver of any term or condition contained in this Agreement shall not
be construed as a waiver of a subsequent breach or failure of the same term or
condition or a waiver of any other term or condition contained in this
Agreement. Delay or failure to exercise any right or remedy hereunder shall not
impair such right, power or remedy or be construed as a waiver thereof or as
acquiescence to a default.
10.2. ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS.
This Agreement constitutes the entire contract between the Company and
the Stockholder relative to the subject matter hereof. Any previous agreement
between or among any of the parties concerning registration rights is superseded
by this Agreement. Subject to the exceptions specifically set forth in this
Agreement, the terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective executors, administrators, heirs,
successors and assigns of the parties.
Neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated, except by a written instrument signed by the Company
and the Stockholder.
10.3. NOTICES.
Any notice or other communication required or permitted hereunder shall
be in writing and shall be deemed to have been duly given on the date of service
if served personally, by express courier or by facsimile, or five (5) days after
the date of mailing if mailed by first class mail, registered or certified,
postage prepaid. Notices shall be addressed to the Stockholder at the address
set forth in the Stock Purchase Agreement, with a copy to Xxxxxxx X. Xxxxx, Esq.
at the address set forth in the Stock Purchase Agreement, and to the Company and
its counsel
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at the addresses set forth in the Stock Purchase Agreement or to such other
address as a party has designated by notice in writing to the other party in the
manner provided by this Section.
10.4. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
10.5. SEVERABILITY.
If any provision of this Agreement is held to be unenforceable for any
reason, it shall be adjusted rather than voided, if possible, in order to
achieve the intent of the parties to the extent possible. In any event, all
other provisions of this Agreement shall be deemed valid and enforceable to the
fullest extent possible.
10.6. RULE 144 REPORTING.
With a view to making available the benefits of certain rules and
regulations of the Commission that may permit the sale of the Restricted
Securities to the public without registration, the Company agrees to use its
best efforts to:
(a) Make and keep public information regarding the Company
available as those terms are understood and defined in Rule 144 under the
Securities Act, at all times after the Closing;
(b) File with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(c) So long as the Stockholder owns any Restricted Securities,
furnish to the Stockholder forthwith upon written request 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, a copy of the most recent annual
or quarterly report of the Company, and such other reports and documents so
filed as the Stockholder may reasonably request in availing itself of any rule
or regulation of the Commission allowing the Stockholder to sell any such
securities without registration.
10.7. HEADINGS.
The headings appearing at the beginning of several sections contained
herein have been inserted for the convenience of the parties, and shall not be
used to determine the construction or interpretation of this Agreement.
10.8. COUNTERPARTS.
This Agreement has been prepared and may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Stock Restriction
and Registration Rights Agreement as of the day and year first above written.
COMPANY:
OMEGA HEALTH SYSTEMS, INC.
/s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
Executive Vice President
STOCKHOLDER:
/s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx, M.D.
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