Contract
THIS
AGREEMENT (the “Agreement”) is dated as of December __,
2003,
and is by HEALTH-CHEM CORPORATION, a Delaware corporation (the “Company”), for
the benefit of XXXXX & COMPANY, a New York [sole proprietorship] (the
“Holder”).
WITNESSETH:
WHEREAS,
the Holder has been granted a warrant (the “Warrant”) to purchase 1,000,000
shares of common stock, par value $.01 per share (the “Common Stock”), of the
Company; and
WHEREAS,
the Company has agreed to grant the Holder certain registration rights with
respect to the Common Stock issuable upon the exercise of the
Warrant;
NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the parties hereto hereby agree as
follows.
1.
Registrable
Securities.
As
used
herein, the term “Registrable Securities” shall mean without duplication, any
shares of Common Stock issued pursuant to an exercise of the Warrant or issued
in respect thereof as a result of a stock dividend or stock split or a
recapitalization, merger or other reorganization of the Company in which
the
Company is the surviving entity.
2. Demand
Registration.
(a) At
any
one time (and not more than one time) after the Company has filed its Annual
Report on Form 10-K for the year ended December 31, 2003, upon the written
request of the Holder (the “Demand Registration Request”) requesting that the
Company effect the registration under the Securities Act of 1933, as amended
(the “Securities Act”), of at least 50% of the Registrable Securities then held
by or available for issuance to the Holder or any transferees directly from
the
Holder of the Warrant or the shares of Common Stock issuable upon exercise
thereof and having a value of at least $5 million, the Company shall, as
expeditiously as may be practicable, use reasonable efforts to effect such
registration under the Securities Act (a “Demand Registration”).
(b)
(i)
The
Company may postpone for up to six months the filing or the effectiveness
of a
registration statement for a Demand Registration if the Company and the Holder
agree that such Demand Registration would reasonably be expected to have
an
adverse effect on any proposal or plan by the Company or any of its subsidiaries
to engage in any acquisition of assets (other than in the ordinary course
of
business) or any merger, consolidation, tender offer or similar transaction;
provided that in each such event, the Holder will be entitled to withdraw
any
request and, if such request is withdrawn, such Demand Registration will
not
count as the one permitted Demand Registration hereunder and the Company
will
pay all expenses incurred by the Holder in connection with such
registration.
(ii)
If
the
Holder makes a Demand Registration Request within three months of the Company’s
fiscal year end, the Company may postpone for up to six months the filing
or the
effectiveness of a registration statement for a Demand
Registration.
3. Piggyback
Registrations.
(a) Right
to Piggyback. Whenever
the Company proposes to either (i) register any share of Common Stock under
the
Securities Act on its own behalf (other than any registration on Form S-4
or S-8
or any successor form thereto or a form of registration statement not available
for the general registration of securities) (a “Company Registration”), or (ii)
register any Registrable Securities pursuant to a Demand Registration (other
than any registration on a form of registration statement not available for
general registration of securities) and the registration form to be used
may be
used for the registration of Registrable Securities (a “Piggyback
Registration”), the Company will, not less than 30 days prior to the filing of
the registration statement to be used for such Piggyback Registration, give
written notice (the “Registration Notice”) to the Holder of its intention to
effect such a registration and will, subject to the provisions set forth
below,
include in such registration all Registrable Securities with respect to which
the Company has received, within 15 days after the date on which the Holder
has
received the Registration Notice, a written request from the Holder for
inclusion therein (which request shall specify the Registrable Securities
intended to be included therein and the holders thereof).
(b) Priority
on Company Registrations.
If a
Piggyback Registration is an underwritten primary Company Registration, and
the
managing underwriters advise the Company in writing that in their opinion
the
aggregate of the number of securities proposed to be sold by the Company
and the
number of Registrable Securities and other securities held by persons with
piggyback registration rights requested to be included in such registration
exceeds the number which can be sold in such offering without adversely
affecting the marketability of the offering, the Company will include in
such
registration the following securities in the following order of priority:
(i)
first, all of the securities the Company proposes to sell and (ii) second,
the
Registrable Securities and all other securities held by persons with piggyback
registration rights requested to be included in such registration, pro rata
among the holders of such Registrable Securities and other securities on
the
basis of the number of shares of Registrable Securities or other securities
owned by each such holder. Notwithstanding the foregoing or any other provision
contained herein, the Company shall have the right, at any time prior to
the
effective date thereof, to postpone, withdraw or abandon any Company
Registration without any obligation to any holder of Registrable
Securities.
(c) Priority
on Demand Registrations.
If a
Piggyback Registration is an underwritten primary Demand Registration, and
the
managing underwriters advise the Company in writing that in their opinion
the
aggregate of the number of securities proposed to be sold pursuant to the
Demand
Registration Request and the number of other Registrable Securities and other
securities held by persons with piggyback registration rights requested to
be
included in such registration exceed the number which can be sold in such
offering without adversely effecting the marketability of the offering, the
Company will include in such registration the following securities in the
following order of priority: (i) first, all of the securities requested to
be
included in such registration pursuant to a Demand Registration Request,
pro
rata among the holders of such securities on the basis of the number of shares
of Registrable Securities or other securities owned by each such holder,
and
(ii) any other securities requested to be included in such registration by
any
other person having a right thereto. Notwithstanding the foregoing or any
other
provision contained herein, the party who delivered the Demand Registration
Request shall have the right, at any time prior to the effective date thereof,
to direct the Company to postpone, withdraw or abandon any Demand Registration
without any obligation to any holder of Registrable Securities.
4. Registration
Procedures.
Whenever
the holders of Registrable Securities have requested that any Registrable
Securities be registered pursuant to this Agreement, the Company will, subject
to the provisions set forth above, including without limitation, the right
of
the Company to postpone, withdraw or abandon any Company Registration and
the
right of the Holder to postpone, withdraw or abandon any Demand Registration,
use its reasonable efforts to effect the registration of such Registrable
Securities in accordance with the intended method of disposition thereof,
and
pursuant thereto the Company will as expeditiously as possible:
(a) prepare
and file with the Securities and Exchange Commission a registration statement
with respect to such Registrable Securities and use its reasonable efforts
to
cause such registration statement to become effective; provided that before
filing a registration statement or prospectus or any amendments or supplements
thereto, the Company will furnish to counsel selected by the reasonable
opportunity to review and comment on such documents;
(b) prepare
and file with the Securities and Exchange Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
for
a period of not less than 90 days (without taking into account any period
during
which a stop order may be in effect) and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered
by such
registration statement during such period in accordance with the tended methods
of disposition by the sellers thereof set forth in such registration
statement;
(c) furnish
to each seller of Registrable Securities such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary prospectus)
and such other documents as such seller may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
seller;
(d) use
its
best efforts to register or qualify such Registrable Securities under such
other
securities or blue sky laws of such U.S. jurisdictions as any seller reasonably
requests and do any and all other acts and things which may be reasonably
necessary or advisable to enable such seller to consummate the disposition
in
such jurisdictions of the Registrable Securities owned by such seller, provided
that the Company 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 subparagraph, (ii) subject itself to taxation in any such jurisdiction
or
(iii) consent to general service of process in any such
jurisdiction;
(e) notify
each seller of such Registrable Securities, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of
the
happening any event which causes the prospectus included in such registration
statement to contain an true statement of a material fact or omits any fact
necessary to make the statements therein not misleading, and, at the request
of
any such seller, the Company will prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue statement
of
a material fact or omit to state any fact necessary to make the statements
therein not misleading, it being hereby acknowledged and agreed that each
holder
of Registrable Securities shall be deemed to have agreed by acquisition of
such
Registrable Securities that upon the receipt of any notice from the Company
of
the occurrence of any event of the kind described in this paragraph, such
holder
shall thereupon discontinue such holder’s offer and disposition of Registrable
Securities until such holder’s receipt of the copies of the “stickered,”
supplemented or amended prospectus and/or registration statement contemplated
hereby and, if so directed by the Company, shall deliver to the Company (at
the
Company’s expense) all copies, other than permanent file copies, of the
prospectus covering such Registrable Securities then in such holder’s
possession;
(f) cause
all
such Registrable Securities to be listed on each securities exchange on which
similar securities issued by the Company are then listed and, if not so listed,
use its best efforts in connection with any Company Registration (but not
any
Demand Registration) to cause all such Registrable Securities to be listed
on
the NASD automated quotation system;
(g) provide
a
transfer agent and registrar for all such Registrable Securities not later
than
the effective date of such registration statement;
(h) make
available for inspection by any seller of Registrable Securities or any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company’s officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant
or
agent in connection with such registration statement;
(i) otherwise
use its reasonable efforts to comply with all applicable rules and regulations
of the Securities and Exchange 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 day of the Company’s first full fiscal quarter after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;
(j) permit
any holder of Registrable Securities, which holder, in its sole and exclusive
judgment, might be deemed to be an underwriter or a controlling person of
the
Company, to participate in the preparation of such registration statement
and to
require the insertion therein of material, furnished to the Company in writing,
which in the reasonable judgment of such holder and its counsel should be
included (subject to the consent of the Company which shall not be unreasonably
withheld);
(k) in
the
event of the issuance of any stop order suspending the effectiveness of a
registration statement, or of any order suspending or preventing the use
of any
related prospectus or suspending the qualification of any Common Stock included
in such registration statement for sale in any jurisdiction, the Company
will
notify each holder of Registrable Securities and use its reasonable efforts
promptly to obtain the withdrawal of such order;
(1) use
its
reasonable efforts to cause such Registrable Securities covered by such
registration statement to be registered with or approved by such other United
States (or any state or territory thereof) governmental agencies or authorities
as may be necessary to enable the sellers thereof to consummate the disposition
of such Registrable Securities; and
(m) obtain
a
cold comfort letter from the Company’s independent public accountants in
customary form and covering such matters of the type customarily covered
by cold
comfort letters as the Holders may reasonably request.
5.
Registration
Expenses.
All
expenses incident to the Company’s performance of or compliance with the
foregoing, including without limitation all registration and filing fees,
fees
and expenses compliance with securities or blue sky laws, printing expenses,
messenger and delivery expenses and fees and disbursements of counsel for
the
Company and all independent certified public accountants (excluding discounts
and commissions) and other persons retained by the Company shall be borne
by the
Company. All fees and expenses incurred by the holders of Registrable Securities
requesting registration, including fees and disbursements of counsel, shall
be
borne by auch holders, pro rata, based upon the number of shares of Registrable
Securities held by each such holder.
6.
Indemnification.
(a) The
Company agrees to indemnify, to the extent permitted by law, each holder
of
Registrable Securities, its officers and directors and each person who controls
such holder (within the meaning of the Securities Act) against all losses,
claims, damages, liabilities and expenses caused by any untrue or alleged
untrue
statement of material fact contained in any registration statement, prospectus
or preliminary prospectus or any amendment thereof or supplement thereto
or any
omission or alleged omission of a material fact required to be stated therein
or
necessary to make the statements therein not misleading, except insofar as
the
same is caused by or contained in any information furnished in writing to
the
Company by such holder expressly for use therein or by such holder’s failure to
deliver a copy of the registration statement or prospectus or any amendments
or
supplements thereto after the Company has furnished such holder with a
sufficient number of copies of the same in a timely manner. In connection
with
an underwritten offering, the Company will indemnify such underwriters, their
officers and directors and each person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the holders of Registrable
Securities.
(b) In
connection with any registration statement in which a holder of Registrable
Securities is participating, each such holder will furnish to the Company
in
writing such information and affidavits as the Company reasonably requests
for
use in connection with any such registration statement or prospectus and,
to the
extent permitted by law, will indemnify the Company, its directors and officers
and each person who controls the Company (within the meaning of the Securities
Act) against any losses, claims, damages, liabilities and expenses resulting
from any untrue or alleged untrue statement of material fact contained in
the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement or omission
is
contained in, or omitted from, any information or affidavit so furnished
in
writing by such holder; provided that the obligation to indemnify will be
limited to the net amount of proceeds received by such holder from the sale
of
Registrable Securities pursuant to such registration statement.
(c) Any
person entitled to indemnification hereunder will (i) give prompt written
notice
to the indemnifying party of any claim with respect to which it seeks
indemnification, provided that the failure to give such notice shall relieve
the
indemnifying party hereunder of liability hereunder only if and to the extent
that the indemnifying party has been prejudiced in any material respect by
such
failure, and (ii) unless in such indemnified party’s reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may
exist
with respect to such claim, permit such indemnifying party to assume the
defense
of such claim with counsel reasonably satisfactory to the indemnified party.
If
such defense is assumed, the indemnifying party will not be subject to any
liability for any settlement made by the indemnified party without its consent
(but such consent will not be unreasonably withheld). An indemnifying party
who
is not entitled to, 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 for all parties
indemnified by such indemnifying party with respect to such claim, unless
in the
reasonable judgment of an indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties
with
respect to such claim.
7. Participation
in Underwritten Registrations.
No
holder
of Registrable Securities may participate in any registration hereunder which
is
underwritten unless such person (i) agrees to sell such Registrable Securities
on the basis provided in any underwriting arrangements to be executed in
connection with such offering and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements
and
other document required under the terms of such underwriting arrangements;
provided that no holder of Registrable Securities included in any underwritten
registration shall be required to make any representations or warranties
to the
Company or the underwriters other than representations and warranties regarding
such holder and such holder’s intended method of distribution, ownership of
securities or other information required under federal or state securities
laws.
8. Termination
of Registrable Securities.
As
to any
particular Registrable Securitres, such securities will cease to be Registrable
Securities when they have been distributed to the public pursuant to a public
offering registered under the Securities Act or sold to the public through
a
broker, dealer or market maker in compliance with Rule 144 under the Securities
Act (or any similar rule then in force) or if the Registrable Securities
may, in
the opinion of counsel reasonably acceptable to the holder of such Registrable
Securities, be freely sold to the public without registration under the
Securities Act.
9. Amendments
and Waivers
Except
as
otherwise provided herein, the provisions of this Agreement may be amended
or
waived only upon the prior written consent of the Company and the
Holder.
10.
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 (including, with respect to all Registrable
Securities, all subsequent registered holders of such Registrable
Securities).
11. Severability.
Whenever
possible, each provision of this Agreement will be interpreted in such manner
as
to be effective and valid under applicable law, but if any provision of this
Agreement is held to be prohibited by or invalid under applicable law, such
provision will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.
12 Counterparts.
This
Agreement may be executed in one or more cousnterparts, and all such
counterparts taken together will constitute one and the same
Agreement.
13. Notices.
All
notices, demands or other communications to be given or delivered under or
by
reason of the provisions of this Agreement shall be in writing and shall
be
delivered personally to the recipient, sent to the recipient by reputable
express courier service (charges prepaid) or mailed to the recipient by
certified or registered mail, return receipt requested and postage prepaid
and
shall be deemed given when received. Such notices, demands and other
communications may be sent to each party hereto (other than the Company)
at the
address set forth in the Company’s records for such party, and to the Company at
the address of its chief executive office, or to such other address as the
recipient party has specified by prior written notice to the sending
party.
14. Governing
Law.
This
Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable
to
contracts made and to be wholly performed within such State.
IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the day and year first above written.
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HEALTH-CHEM
CORPORATION
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By:
___________________________________
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Name:
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Title:
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XXXXX
& COMPANY
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By:
___________________________________
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Name:
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Title:
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