REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of
______________, 2000, between the investor or investors signatory
hereto (each an "Investor" and together the "Investors"), and MW
Medical, Inc., a Nevada corporation (the "Company").
WHEREAS, the Investors have committed to purchase from the
Company, pursuant to a Subscription Agreement dated the date hereof,
an aggregate of 1,000,000 shares of the Company's Common Stock; and
WHEREAS, the Company desires to grant to the Investors the
registration rights set forth herein with respect to the Common Stock
purchased pursuant to the Subscription Agreement (hereinafter
referred to as the "Stock" or "Securities" of the Company).
NOW, THEREFORE, the parties hereto mutually agree as
follows:
Section 1. Registrable Securities. As used herein the
term "Registrable Security" means the Securities until: (i) the
Registration Statement has been declared effective by the Commission,
and all Securities have been disposed of pursuant to the Registration
Statement, (ii) all Securities have been sold under circumstances
under which all of the applicable conditions of Rule 144 (or any
similar provision then in force) under the Securities Act ("Rule
144") are met, (iii) all Securities have been otherwise transferred
to holders who may trade such Securities without restriction under
the Securities Act, and the Company has delivered a new certificate
or other evidence of ownership for such Securities not bearing a
restrictive legend or (iv) such time as, in the opinion of counsel to
the Company, all Securities may be sold without any time, volume or
manner limitations pursuant to Rule 144(k) (or any similar provision
then in effect) under the Securities Act. The term "Registrable
Securities" means any and/or all of the securities falling within the
foregoing definition of a "Registrable Security." In the event of
any merger, reorganization, consolidation, recapitalization or other
change in corporate structure affecting the Common Stock, such
adjustment shall be deemed to be made in the definition of
"Registrable Security" as is appropriate in order to prevent any
dilution or enlargement of the rights granted pursuant to this
Agreement.
Section 2. Restrictions on Transfer. Each Investor
acknowledges and understands that prior to the registration of the
Securities as provided herein, the Securities are "restricted
securities" as defined in Rule 144 promulgated under the Act. Each
Investor understands that no disposition or transfer of the
Securities may be made by Investor in the absence of: (i) an opinion
of counsel to the Investor, in form and substance reasonably
satisfactory to the Company, that such transfer may be made without
registration under the Securities Act, or (ii) such registration.
With a view to making available to the Investors the
benefits of Rule 144 under the Securities Act or any other similar
rule or regulation of the Commission that may at any time permit the
Investors to sell securities of the Company to the public without
registration ("Rule 144"), the Company agrees to:
(a) comply with the provisions of paragraph (c)(1) of
Rule 144 following the filing of the Registration Statement; and
(b) file with the Commission in a timely manner all
reports and other documents required to be filed with the Commission
pursuant to Section 13 or 15(d) under the Exchange Act by companies
subject to either of such sections, irrespective of whether the
Company is then subject to such reporting requirements.
Section 3. Registration Rights With Respect to the Securities.
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(a) The Company agrees that it will prepare and file
with the Securities and Exchange Commission ("Commission"), within
three months hereof a registration statement (on Form SB-2 or S-1)
under the Securities Act (the "Registration Statement"), at the sole
expense of the Company (except as provided in Section 3(c) hereof),
in respect of the Investors, so as to permit a public offering and
resale of the Securities under the Act by the Investors as selling
stockholders and not as underwriters.
The Company shall use its best efforts to cause such
Registration Statement to become effective within a reasonable time
thereafter. The number of shares designated in the Registration
Statement to be registered shall include all the Common Stock sold,
and shall include appropriate language regarding reliance upon Rule
416 to the extent permitted by the Commission. The Company will
notify the Investors of the effectiveness of the Registration
Statement within one Trading Day of such event.
(b) The Company will maintain the Registration
Statement or post-effective amendment filed under this Section 3
effective under the Securities Act until the earlier of: (i) the date
that none of the Securities covered by such Registration Statement
are or may become issued and outstanding, (ii) the date that all of
the Securities have been sold pursuant to such Registration
Statement, (iii) the date the Investors receive an opinion of counsel
to the Company that the Securities may be sold under the provisions
of Rule 144 without limitation as to volume, (iv) all Securities have
been otherwise transferred to persons who may trade such shares
without restriction under the Securities Act, and the Company has
delivered a new certificate or other evidence of ownership for such
securities not bearing a restrictive legend, or (v) all Securities
may be sold without any time, volume or manner limitations pursuant
to Rule 144(k) or any similar provision then in effect under the
Securities Act in the opinion of counsel to the Company (the
"Effectiveness Period").
(c) All fees, disbursements and out-of-pocket
expenses and costs incurred by the Company in connection with the
preparation and filing of the Registration Statement under
subparagraph 3(a) and in complying with applicable securities and
Blue Sky laws (including, without limitation, all attorneys' fees of
the Company) shall be borne by the Company. The Investors shall bear
the cost of underwriting and/or brokerage discounts, fees and
commissions, if any, applicable to the Securities being registered
and the fees and expenses of their counsel. The Company, at its
expense, will supply the Investors with copies of the applicable
Registration Statement and the prospectus included therein and other
related documents in such quantities as may be reasonably requested
by the Investors.
(d) The Company shall not be required by this Section
3 to include an Investor's Securities in any Registration Statement
which is to be filed if, in the opinion of counsel for the Company,
the proposed offering or other transfer as to which such registration
is requested is exempt from applicable federal and state securities
laws and would result in all purchasers or
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transferees obtaining securities which are not "restricted
securities", as defined in Rule 144 under the Securities Act.
(e) No provision contained herein shall preclude the
Company from selling securities pursuant to any Registration
Statement in which it is required to include Securities pursuant to
this Section 3.
(f) If at any time or from time to time after the
effective date of any Registration Statement, the Company notifies
the Investors in writing of the existence of a Potential Material
Event (as defined in Section 3(g) below), the Investors shall not
offer or sell any Securities or engage in any other transaction
involving or relating to Securities, from the time of the giving of
notice with respect to a Potential Material Event until the Investors
receive written notice from the Company that such Potential Material
Event either has been disclosed to the public or no longer
constitutes a Potential Material Event. The Company must, if lawful,
give the Investors notice in writing at least two (2) Trading Days
prior to the first day of the blackout period.
(g) "Potential Material Event" means any of the
following: (a) the possession by the Company of material information
not ripe for disclosure in a registration statement, as determined in
good faith by the Chief Executive Officer or the Board of Directors
of the Company that disclosure of such information in a Registration
Statement would be detrimental to the business and affairs of the
Company; or (b) any material engagement or activity by the Company
which would, in the good faith determination of the Chief Executive
Officer or the Board of Directors of the Company, be adversely
affected by disclosure in a registration statement at such time,
which determination shall be accompanied by a good faith
determination by the Chief Executive Officer or the Board of
Directors of the Company that the applicable Registration Statement
would be materially misleading absent the inclusion of such
information.
Section 4. Cooperation with the Company. The Investors
will cooperate with the Company in all respects in connection with
this Agreement, including timely supplying all information reasonably
requested by the Company (which shall include all information
regarding the Investors and proposed manner of sale of the
Registrable Securities required to be disclosed in any Registration
Statement) and executing and returning all documents reasonably
requested in connection with the registration and sale of the
Registrable Securities and entering into and performing their
obligations under any underwriting agreement, if the offering is an
underwritten offering, in usual and customary form, with the managing
underwriter or underwriters of such underwritten offering. Nothing
in this Agreement shall obligate any Investor to consent to be named
as an underwriter in any Registration Statement. The obligation of
the Company to register the Registrable Securities shall be absolute
and unconditional as to those Securities which the Commission will
permit to be registered without naming the Investors as underwriters,
and with the consent of the Investor to be named as an underwriter,
to all of the Registrable Securities.
Section 5. Registration Procedures. If and whenever
the Company is required by any of the provisions of this Agreement to
effect the registration of any of the Registrable Securities under
the Act, the Company shall (except as otherwise provided in this
Agreement), as expeditiously as possible, subject to the Investors'
assistance and cooperation as reasonably required with respect to
each Registration Statement:
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(a) (i) prepare and file with the Commission such
amendments and supplements to the Registration Statement and the
prospectus used in connection therewith as may be necessary to keep
such Registration Statement effective and to comply with the
provisions of the Act with respect to the sale or other disposition
of all securities covered by such registration statement (including
prospectus supplements with respect to the sales of securities from
time to time in connection with a registration statement pursuant to
Rule 415 promulgated under the Act), and (ii) take all lawful action
such that each of: (A) the Registration Statement and any amendment
thereto does not, when it becomes effective, contain 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, in light of the circumstances under which they were made,
not misleading, and (B) the prospectus forming part of the
Registration Statement, and any amendment or supplement thereto, does
not at any time during the Registration Period 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, in light of the circumstances under which they were made,
not misleading;
(b) list such Registrable Securities on the Principal
Market, if the listing of such Registrable Securities is then
permitted under the rules of such Principal Market;
(c) notify each Investor at any time when a
prospectus relating thereto covered by the Registration Statement is
required to be delivered under the Act, of the happening of any event
of which it has knowledge as a result of which the prospectus
included in the 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 in the light of the circumstances
then existing, and the Company shall prepare and file a curative
amendment under Section 5(a) as quickly as commercially possible;
(d) as promptly as practicable after becoming aware
of such event, notify each Investor who holds Registrable Securities
being sold (or, in the event of an underwritten offering, the
managing underwriters) of the issuance by the Commission of any stop
order or other suspension of the effectiveness of the Registration
Statement at the earliest possible time and take all lawful action to
effect the withdrawal, recession or removal of such stop order or
other suspension;
(e) cooperate with the Investors to facilitate the
timely preparation and delivery of certificates for the Registrable
Securities to be offered pursuant to the Registration Statement and
enable such certificates for the Registrable Securities to be in such
denominations or amounts, as the case may be, as the Investors
reasonably may request and registered in such names as the Investors
may request;
(f) take all such other lawful actions reasonably
necessary to expedite and facilitate the disposition by the Investors
of their Registrable Securities in accordance with the intended
methods therefor provided in the prospectus which are customary for
issuers to perform under the circumstances;
(g) in the event of an underwritten offering,
promptly include or incorporate in a prospectus supplement or post-
effective amendment to the Registration Statement such information as
the managers reasonably agree should be included therein and to which
the Company does not reasonably object and make all required filings
of such prospectus supplement or post-
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effective amendment as soon as practicable after it is notified of
the matters to be included or incorporated in such Prospectus supplement
or post-effective amendment; and
(h) maintain a transfer agent and registrar for its
Common Stock.
Section 6. Indemnification.
(a) To the maximum extent permitted by law, the
Company agrees to indemnify and hold harmless the Investors and each
person, if any, who controls an Investor within the meaning of the
Securities Act (each a "Distributing Investor") against any losses,
claims, damages or liabilities, joint or several (which shall, for
all purposes of this Agreement, include, but not be limited to, all
reasonable costs of defense and investigation and all reasonable
attorneys' fees and expenses), to which the Distributing Investor may
become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any
Registration Statement, or any related final prospectus or amendment
or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided, however, that the Company will not be liable in
any such case to the extent, and only to the extent, that any such
loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such Registration Statement, preliminary
prospectus, final prospectus or amendment or supplement thereto in
reliance upon, and in conformity with, written information furnished
to the Company by the Distributing Investor, its counsel, affiliates
or any underwriter, specifically for use in the preparation thereof.
This indemnity agreement will be in addition to any liability which
the Company may otherwise have.
(b) To the maximum extent permitted by law, each
Distributing Investor agrees that it will indemnify and hold harmless
the Company, and each officer and director of the Company or person,
if any, who controls the Company within the meaning of the Securities
Act, against any losses, claims, damages or liabilities (which shall,
for all purposes of this Agreement, include, but not be limited to,
all reasonable costs of defense and investigation and all reasonable
attorneys' fees and expenses) to which the Company or any such
officer, director or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, or any related
final prospectus or amendment or supplement thereto, or arise out of
or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, but in each case only to
the extent that such untrue statement or alleged untrue statement or
omission or alleged omission was made in such Registration Statement,
final prospectus or amendment or supplement thereto in reliance upon,
and in conformity with, written information furnished to the Company
by such Distributing Investor, its counsel, affiliates or any
underwriter, specifically for use in the preparation thereof. This
indemnity agreement will be in addition to any liability which the
Distributing Investor may otherwise have.
(c) Promptly after receipt by an indemnified party
under this Section 6 of notice of the commencement of any action
against such indemnified party, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party
under this Section 6, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the
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indemnifying party will not relieve the indemnifying party from any
liability which it may have to any indemnified party except to the extent
the failure of the indemnified party to provide such written notification
actually prejudices the ability of the indemnifying party to defend
such action. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, assume the defense
thereof, subject to the provisions herein stated 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 under this Section 6 for any legal
or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, unless the indemnifying party shall not pursue the
action to its final conclusion. The indemnified parties as a group
shall have the right to employ one separate counsel in any such
action and to participate in the defense thereof, but the fees and
expenses of such counsel shall not be at the expense of the
indemnifying party if the indemnifying party has assumed the defense
of the action. No settlement of any action against an indemnified
party shall be made without the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld
so long as such settlement includes a full release of claims against
the indemnified party.
Section 7. Contribution. In order to provide for just and
equitable contribution under the Securities Act in any case in which:
(i) the indemnified party makes a claim for indemnification pursuant
to Section 6 hereof but is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of
appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 6
hereof provide for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any
indemnified party, then the Company and the applicable Distributing
Investor shall contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (which shall, for all
purposes of this Agreement, include, but not be limited to, all
reasonable costs of defense and investigation and all reasonable
attorneys' fees and expenses), in either such case (after
contribution from others) on the basis of relative fault as well as
any other relevant equitable considerations. 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 Company on the one hand or the applicable
Distributing Investor on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Company and the
Distributing Investor agree that it would not be just and equitable
if contribution pursuant to this Section 7 were determined by pro
rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to in this
Section 7. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any
such action or claim. 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.
Notwithstanding any other provision of this Section 7, in no event
shall any: (i) Investor be required to undertake liability to any
person under this Section 7 for any amounts in excess of the dollar
amount of the proceeds received by such Investor from the sale of
such Investor's Registrable Securities (after deducting any fees,
discounts and commissions applicable thereto) pursuant to any
Registration
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Statement under which such Registrable Securities are
registered under the Securities Act and (ii) underwriter be required
to undertake liability to any person hereunder for any amounts in
excess of the aggregate discount, commission or other compensation
payable to such underwriter with respect to the Registrable
Securities underwritten by it and distributed pursuant to such
Registration Statement.
Section 8. Notices. All notices, demands, requests,
consents, approvals, and other communications required or permitted
hereunder shall be in writing and, unless otherwise specified herein,
shall be (i) hand delivered, (ii) deposited in the mail, registered
or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or
(iv) transmitted by facsimile, addressed as set forth in the
Subscription Agreement or to such other address as such party shall
have specified most recently by written notice. Any notice or other
communication required or permitted to be given hereunder shall be
deemed effective (a) upon hand delivery or delivery by facsimile,
with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a
business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the first business day
following the date of sending by reputable courier service, fully
prepaid, addressed to such address, or (c) upon actual receipt of
such mailing, if mailed. Either party hereto may from time to time
change its address or facsimile number for notices under this Section
8 by giving at least ten (10) days' prior written notice of such
changed address or facsimile number to the other party hereto.
Section 9. Assignment. This Agreement is binding upon and
inures to the benefit of the parties hereto and their respective
heirs, successors and permitted assigns. The rights granted the
Investors under this Agreement may be assigned to any purchaser of
substantially all of the Registrable Securities (or the rights
thereto) from an Investor, as otherwise permitted by the Subscription
Agreement.
Section 10. Additional Covenants of the Company. The
Company agrees that at such time as it otherwise meets the
requirements for the use of Securities Act Registration Statement on
Form S-3 for the purpose of registering the Registrable Securities,
it shall file all reports and information required to be filed by it
with the Commission in a timely manner and take all such other action
so as to maintain such eligibility for the use of such form.
Section 11. Counterparts/Facsimile. This Agreement may be
executed in two or more counterparts, each of which shall constitute
an original, but all of which, when together shall constitute but one
and the same instrument, and shall become effective when one or more
counterparts have been signed by each party hereto and delivered to
the other parties. In lieu of the original, a facsimile transmission
or copy of the original shall be as effective and enforceable as the
original.
Section 12. Remedies. The remedies provided in this
Agreement are cumulative and not exclusive of any remedies provided
by law. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term,
provision, covenant or restriction.
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Section 13. Conflicting Agreements. The Company shall not
enter into any agreement with respect to its securities that is
inconsistent with the rights granted to the holders of Registrable
Securities in this Agreement or otherwise prevents the Company from
complying with all of its obligations hereunder.
Section 14. Headings. The headings in this Agreement are
for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 15. Governing Law, Arbitration. This Agreement
shall be governed by and construed in accordance with the laws of the
State of Nevada applicable to contracts made in Nevada by persons
domiciled in Las Vegas and without regard to its principles of
conflicts of laws. Any dispute under this Agreement shall be
submitted to arbitration under the American Arbitration Association
(the "AAA") in Las Vegas, and shall be finally and conclusively
determined by the decision of a board of arbitration consisting of
three (3) members (hereinafter referred to as the "Board of
Arbitration") selected as according to the rules governing the AAA.
The Board of Arbitration shall cause its written decision to be
delivered to all parties involved in the dispute. Any decision made
by the Board of Arbitration (either prior to or after the expiration
of such thirty (30) calendar day period) shall be final, binding and
conclusive on the parties to the dispute, and entitled to be enforced
to the fullest extent permitted by law and entered in any court of
competent jurisdiction. The Board of Arbitration shall be authorized
and is hereby directed to enter a default judgment against any party
failing to participate in any proceeding hereunder within the time
periods set forth in the AAA rules. The non-prevailing party to any
arbitration (as determined by the Board of Arbitration) shall pay the
expenses of the prevailing party, including reasonable attorneys'
fees, in connection with such arbitration. Any party shall be entitled
to obtain injunctive relief from a court in any case where such relief
is available.
IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be duly executed, on the day and
year first above written.
MW Medical, Inc.
By: _____________________________
Xxx Xxxxxxx, President
By: _____________________________
Investor
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