EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement"), dated as of November 20,
2000, is made by and between XXXXXX HEALTHCARE, INC., a Texas corporation
("Company"), and each entity named on a signature page hereto (each, a
"Subscriber")(each agreement with a Subscriber being deemed a separate and
independent agreement between the Company and such Subscriber, except that each
Subscriber acknowledges and consents to the rights granted to each other
Subscriber under such Agreement).
Recitals
WHEREAS, upon the terms and subject to the conditions of the Securities
Purchase Agreement, dated November 20, 2000, between the Subscriber and the
Company,(the "Securities Purchase Agreement"; terms not otherwise defined herein
shall have the meaning ascribed to them in the Securities Purchase Agreement),
the Company has agreed to issue and sell to the Subscriber shares of Series E
Convertible Preferred Stock of the Company having an aggregate stated value of
Two Million Five Hundred Dollars ($2,500,000), (the "Subscribed Shares"),
convertible into shares of common stock, par value $.01 per share, (the "common
stock"); and
WHEREAS, pursuant to the terms of the Securities Purchase Agreement, the
Company has agreed to issue to the Subscriber warrants to purchase shares of
Common Stock ("Warrants") in connection with the issuance of the Preferred
Stock.
WHEREAS, to induce the Subscriber to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively,
"Securities Act"), and applicable state securities laws with respect to the
Subscribed Shares;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Subscriber
hereby agree as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the following terms shall have the
following meaning:
(i) "Business Day" means any date other than Saturday, Sunday or a holiday
in which national banking associations in the State of Texas or the State of New
York are closed.
(ii) "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, which shall be evidenced by determinations in good faith
by the Board of Directors of the Company that disclosure of such information in
the 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 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
Board of Directors of the Company that the Registration Statement would be
materially misleading absent the inclusion of such information.
(iii) "Subscription Date" means the date of this Agreement.
(iv) "Subscriber", has the meaning set forth in the preamble to this
Agreement.
(v) "Register", "registered" and "registration" refer to a registration
effected by preparing and filing a Registration Statement or Statements in
compliance with the Securities Act and pursuant to Rule 415 under the Securities
Act or any successor rule providing for offering securities on a delayed or
continuous basis ("Rule 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(vi) "Registrable Securities" means the shares of Common Stock issued on
conversion of or as dividends on the Subscribed Shares, the Periodic Amount
Shares and the shares of Common Stock issued on exercise of the Warrants and the
other securities set forth in Exhibit I hereto.
(vii) "Registration Statement" means a registration statement of the
Company under the Securities Act.
(b) Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Purchase Agreement.
2. REGISTRATION.
(A) MANDATORY REGISTRATION. The Company shall prepare and file with the
SEC, no later than thirty (30) business days after the Subscription Date
("Required Filing Date"), a Registration Statement on Form S-3 (or such other
form of Registration Statement as the Company shall be eligible to utilize)
("Registration Statement"), in either event registering the resale by the
Subscriber of a sufficient number of shares of Common Stock for the Subscribers
to sell the Registrable Securities, and in any event not less than two hundred
percent (200%) of the Registrable Securities (the "Initial Registrable
Securities")on the Subscription Date. Such Registration Statement shall state
that, in accordance with the Securities Act, it also covers such indeterminate
number of additional shares of Subscribed Shares as may become issuable to
prevent
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dilution resulting from stock splits, or stock dividends. If at any time (i) the
number of Subscribed Shares and (ii) the number of shares of Common Stock
issuable upon exercise of the Warrants exceeds seventy-five (75%) percent of the
aggregate number of shares of Common Stock then registered, the Company shall,
within ten (10) business days (such event the ,"Additional Registration Date")
file with the SEC an additional Registration Statement on Form [____] or any
other applicable registration statement, to register two hundred (200%) percent
of the Registrable Securities that exceed the aggregate number of shares of
Common Stock already registered.
(B) DEFAULT BY THE COMPANY. If the Registration Statement covering the
Registrable Securities required to be filed by the Company pursuant to Section
2(a) hereof is not declared effective within ninety (90) days from the
Subscription Date ("Required Effective Date"), or ten (10) days after the
Additional Registration Date ("Additional Required Effective Date") or a
Registration Default as defined in Section 3(g) hereof occurs; or the
Registration Statement is suspended for more than ten (10) days as set forth in
Section 3(i) hereof, or the Common Stock is delisted from trading on the OTC
Bulletin Board or an automated securities exchange as defined in Rule 144 under
the Securities Act (collectively "Default Events"), then (i) the commitment to
purchase the Series F Convertible Preferred Stock contained in the Private
Equity Credit Agreement dated November 20, 2000 (the "Commitment") shall
terminate and (ii) the Company will make payments to Subscriber in terms of
SECTION 2(C) below.
(C) PAYMENTS BY THE COMPANY.
(i) If the Registration Statement covering the Registrable
Securities is not filed in proper form with the SEC by the Required Filing Date,
the Company will make payment to Subscriber in such amounts and at such times as
shall be determined pursuant to this SECTION 2(C);
(ii) If the Registration Statement covering the Registrable
Securities with respect to the Registrable Shares is not effective by the
relevant Required Effective Date or by the Additional Required Effective Date,
as the case may be, or if Subscriber is restricted from making sales of
Registrable Securities covered by a previously effective Registration Statement
at any time (the date such restriction commences, a "RESTRICTED SALE DATE")
after the Effective Date other than during a Suspension Period (as defined
below), then the Company will make payments to Subscriber in such amounts and at
such times as shall be determined pursuant to this SECTION 2(C);
(iii) The amount (each a "PERIODIC AMOUNT") to be paid by the
Company to Subscriber shall be determined as of each Computation Date (as
defined below) and the Periodic Amount shall be equal to the Periodic Amount
Percentage (as defined below) of the Purchase Price for all of the Series E
Convertible Preferred Stock then held by the Investor for the period from the
date following the relevant Required Filing Date, Required Effective Date,
Additional Required Effective Date or Restricted Sale Date, as the case may be,
to the first relevant Computation Date, and thereafter to each subsequent
Computation Date. The "PERIODIC AMOUNT PERCENTAGE" means (A)
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two percent (2%) of the Purchase Price for the period from the date following
the relevant Required Filing Date, Required Effective Date, Additional Required
Effective Date or Restricted Sale Date, as the case may be, to the second
relevant Computation Date, and (B) three percent (3%) of the Purchase Price to
each Computation Date thereafter (prorated on a daily basis if such period is
less than thirty (30) days). By way of illustration and not in limitation of the
foregoing, if the Registration Statement for the Registrable Securities relating
to the Common Stock and Warrants issued on the Initial Closing Date is timely
filed but is not declared effective until one hundred sixty-five (165) days
after the date of the Initial Closing, the Periodic Amount will aggregate five
and one-half percent (5 1/2%) of the Purchase Price (2% for days 91-20, 2% for
days 121-150, and 1 1/2% for days 151-165). The Registration Statement will
include shares of Common Stock to pay the Periodic Amount due, if any.
(iv) Each Periodic Amount will be payable by the Company, at
the option of the Subscriber, in cash or other immediately available funds,
shares of Common Stock which have been included in a Registration Statement on
Form S-3 or Subscribed Shares (the "Periodic Amount Shares") to Subscriber at
the end of each Computation Period, without requiring demand therefor by
Subscriber;
(v) The parties acknowledge that the damages which may be
incurred by Subscriber if the Registration Statement is not filed by the
Required Filing Date or if the Registration Statement has not been declared
effective by a Required Effective Date, including if the right to sell
Registrable Securities under a previously effective Registration Statement is
suspended, may be difficult to ascertain. The parties agree that the Periodic
Amount represents a reasonable estimate on the part of the parties, as of the
date of this Agreement, of the amount of such damages;
(vi) Notwithstanding the foregoing, the amounts payable by the
Company pursuant to this SECTION 2(C) shall not be payable to the extent any
delay in the effectiveness of the Registration Statement occurs because of an
act of, or a failure to act or to act timely by Subscriber or its counsel, or in
the event all of the Registrable Securities may be sold pursuant to Rule 144 or
another available exemption under the Securities Act; and
(vii) "COMPUTATION DATE" means (A) the date which is the
earlier of (1) thirty (30) days after the Required Filing Date, any relevant
Required Effective Date or a Restricted Sale Date, as the case may be, or (2)
the date after the Required Filing Date, such Required Effective Date or
Restricted Sale Date on which the Registration Statement is filed (with respect
to payments due as contemplated by SECTION 2(C)(I) hereof) or is declared
effective or has its restrictions removed (with respect to payments due as
contemplated by SECTION 2(C)(II) hereof), as the case may be, and (B) each date
which is the earlier of (1) thirty (30) days after the previous Computation Date
or (2) the date after the previous Computation Date on which the Registration
Statement is filed (with respect to payments due as contemplated by SECTION
2(C)(I) hereof) or is declared effective or has its restrictions removed (with
respect to payments due as contemplated by SECTION 2(C)(II) hereof), as
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the case may be.
3. OBLIGATION OF THE COMPANY. In connection with the registration of
the Registrable Securities, the Company shall do each of the following:
(a) Prepare promptly, and file with the SEC within thirty (30)
Business Days of the Subscription Date, a Registration Statement with respect to
not less than the number of Registrable Securities provided in Section 2(a)
above, and, thereafter, use all diligent efforts to cause the Registration
Statement relating to the Registrable Securities to become effective the earlier
of (a) five (5) business days after notice (oral or written) from the Securities
and Exchange Commission that the Registration Statement may be declared
effective, or (b) ninety (90) days after the Subscription Date, or (c)twenty
(20) days after the Additional Registration Date, and keep the Registration
Statement current and effective at all times until the earliest of (i) the date
that is one year after the completion of the last Closing Date under the
Purchase Agreement, (ii) the date when the Subscriber may sell all Registrable
Securities under Rule 144 without volume limitations, or (iii) the date the
Subscriber no longer owns any of the Registrable Securities (collectively, the
"Registration Period"), which Registration Statement (including any amendments
or supplements, thereto and prospectuses contained therein) shall not contain
any 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
the light of the circumstances under which they were made, not misleading;
(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during the
Registration Period, and, during the Registration Period, and to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until the expiration of the Registration Period.
(c) Permit a single firm of counsel designated by Subscriber to review the
Registration Statement and all amendments and supplements thereto a reasonable
period of time (but not less than three (3) Business Days prior to their filing
with the SEC and not file any document in a form to which such counsel
reasonably objects.
(d) Notify Subscriber and Subscriber's legal counsel identified to the
Company (which, until further notice, shall be deemed to be Xxxxxxx & Prager,
LLP, ATTN: Xxxxxx Xxxxxxx, Esq.; "SUBSCRIBER'S COUNSEL") (and, in the case of
(i)(A) below, not less than three (3) Business Days prior to such filing) and
(if requested by any such person) confirm such notice in writing no later than
three (3) Business Days following the day (i): (A) when a prospectus or any
prospectus supplement or post-effective amendment to the Registration Statement
is proposed to be filed; (B) whenever the SEC notifies the Company whether there
will be a "review" of such Registration Statement; (C) whenever the Company
receives (or a representative of the Company receives on its behalf) any oral or
written comments from the SEC in respect of a Registration Statement (copies or,
in the case of
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oral comments, written or oral summaries of such comments shall be promptly
furnished by the Company to Subscriber's Counsel); and (D) with respect to the
Registration Statement or any post- effective amendment, when the same has
become effective; (ii) of any request by the SEC or any other Federal or state
governmental authority for amendments or supplements to the Registration
Statement or the prospectus or for additional information; (iii) of the issuance
by the SEC of any stop order suspending the effectiveness of the Registration
Statement covering any or all of the Registrable Securities or the initiation of
any proceedings for that purpose; (iv) if at any time any of the representations
or warranties of the Company contained in any agreement (including any
securities purchase agreement) contemplated hereby ceases to be true and correct
in all material respects; (v) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any jurisdiction,
or the initiation or threatening of any proceeding for such purpose; and (vi) of
the occurrence of any event that to the knowledge of the Company makes any
statement made in the Registration Statement or the prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to the Registration Statement,
the prospectus or other documents so that, in the case of the Registration
Statement or the prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. In addition, the
Company shall furnish Subscriber's Counsel with copies of all intended written
responses to the comments contemplated in clause (C) of this Section not later
than one (1) Business Day in advance of the filing of such responses with the
SEC so that Subscriber shall have the opportunity to comment thereon.
(e) Furnish to Subscriber, (i) promptly after the same is prepared and
publicly distributed, filed with the SEC, or received by the Company, one (1)
copy of the Registration Statement, each preliminary prospectus and the
prospectus, and each amendment or supplement thereto, and (ii) such number of
copies of a prospectus, including a preliminary prospectus, and all amendments
and supplements thereto and such other documents, as the Subscriber may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by the Subscriber;
(f) Use all diligent efforts to (i) register and/or qualify the
Registrable Securities covered by the Registration Statement under such other
securities or blue sky laws of such jurisdictions as the Subscriber may
reasonably request and in which significant volumes of shares of Common Stock
are traded, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof at all
times during the Registration Period, (iii) take such other actions as may be
necessary to maintain such registrations and qualification in effect at all
times during the Registration Period, and (iv) take all other actions reasonably
necessary or advisable to qualify the Registrable Securities for sale in such
jurisdictions: PROVIDED, HOWEVER, that the Company shall not be required in
connection therewith or as a condition thereto to (A) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this Section 3(f), (B)
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subject itself to general taxation in any such jurisdiction, (C) file a general
consent to service of process in any such jurisdiction, (D) provide any
undertakings that cause more than nominal expense or burden to the Company or
(E) make any change in its charter or by-laws or any then existing contracts,
which in each case the Board of Directors of the Company determines to be
contrary to the best interests of the Company and its stockholders;
(g) As promptly as practicable after becoming aware of such event, notify
the Subscriber of the happening of any event of which the Company has knowledge,
as a result of which the prospectus included in the Registration Statement, as
then in effect, includes any 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, in the light of the circumstances under which they were
made, not misleading, or the Registration Statement is not otherwise effective
(each a"Registration Default"), and uses all diligent efforts to promptly
prepare a supplement or amendment to the Registration Statement or other
appropriate filing with the SEC to correct such untrue statement or omission,
and any other necessary steps to cure the Registration Default, and deliver a
number of copies of such supplement or amendment to the Subscriber as the
Subscriber may reasonably request. Failure to cure the Registration Default
within ten (10) business days shall result in the Company incurring a liquidated
damage penalty of $1,000 per day for so long as more than 10,000 shares of
Common Stock are held by the Subscriber;
(h) As promptly as practicable after becoming aware of such event, notify
the Subscriber (or, in the event of an underwritten offering, the managing
underwriters) of the issuance by the SEC of any notice of effectiveness or any
stop order or other suspension of the effectiveness of the Registration
Statement at the earliest possible time;
(i) Notwithstanding the foregoing, if at any time or from time to time
after the date of effectiveness of the Registration Statement, the Company
notifies Subscriber in writing of the existence of a Potential Material Event
("Blackout Notice"), Subscriber shall not offer or sell any Registrable
Securities, or engage in any other transaction involving or relating to the
Registrable Securities, from the time of the giving of notice with respect to a
Potential Material Event until Subscriber receives 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; PROVIDED, HOWEVER,
that (a) the Company may not so suspend the right to such holders of Registrable
Securities for more than two five (5) day periods in the aggregate during any
12-month period ("Blackout Period") with at least a ten (10) Business Day
interval between such periods, during the periods the Registration Statement is
required to be in effect, or (b) that if such Blackout Period exceeds the
permitted five (5) day periods, the Company shall pay damages of 2% of the cost
of all common stock then held by the Subscriber for each fifteen (15) day period
or portion thereof, beginning on the date of the suspension.
(j) Use its commercially reasonable efforts, if eligible, either to (i)
cause all the Registrable Securities covered by the Registration Statement to be
listed on a national securities exchange and on each additional national
securities exchange on which securities of the same class or series issued by
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the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) secure
designation of all the Registrable Securities covered by the Registration
Statement as a National Association of Securities Dealers Automated Quotations
System ("Nasdaq) "Small Capitalization" within the meaning of Rule 11Aa2-1 of
the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the quotation of the Registrable Securities on the Nasdaq Small Cap
Market; or if, despite the Company's commercially reasonable efforts to satisfy
the preceding clause (i) or (ii), the Company is unsuccessful in doing so, to
secure NASD authorization and quotation for such Registrable Securities on the
over-the-counter bulletin board and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. ("NASD") as such with respect
to such registrable securities.
(k) Provide a transfer agent for the Registrable Securities not later than
the Subscription Date of the Registration Statement;
(l) Cooperate with the Subscriber 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
Subscriber may reasonably request and registration in such names as the
Subscriber may request; and, within five (5) business days after a Registration
Statement which includes Registrable Securities is ordered effective by the SEC,
the Company shall deliver, and shall cause legal counsel selected by the Company
to deliver, to the transfer agent for the Registrable Securities (with copies to
the Subscriber) an appropriate instruction and opinion of such counsel, if so
required by the Company's transfer agent; and
(m) Take all other reasonable actions necessary to expedite and facilitate
distribution to the Subscriber of the Registrable Securities pursuant to the
Registration Statement.
4. OBLIGATIONS OF THE SUBSCRIBER. In connection with the registration of
the Registrable Securities, the Subscriber shall have the following obligations;
(a) It shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect to the
Registrable Securities of the Subscriber that the Subscriber shall timely
furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect the
registration of such Registrable Securities and shall timely execute such
documents in connection with such registration as the Company may reasonably
request At least ten (10) days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify each Subscriber of the
information the Company requires from each such Subscriber (the "Requested
Information") if such Subscriber has any Registrable Securities included in the
Registration Statement. If at least two (2) business days prior to the filing
date the Company
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has not received the Requested Information from an Subscriber (a "Non-Responsive
Subscriber"), then the Company may file the Registration Statement without
including Registrable Securities of such Non-Responsive Subscriber. Once the
Company has received the Requested Information it shall within ten (10) days
file either an amendment to the Registration Statement or a new Registration
Statement. All reasonable expenses incurred in connection with the filing of the
amendment to the Registration Statement or a new Registration Statement in terms
of this SECTION 4(A) shall be borne by the Non-responsive Subscriber.
(b) The Subscriber by such Subscriber's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder; and
(c) The Subscriber agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(g) or
3(h) above, the Subscriber will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until the Subscriber receives the copies of the
supplemented or amended prospectus contemplated by Section 3(g) or 3(h) and, if
so directed by the Company, the Subscriber shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in the Subscriber's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
5. EXPENSES OF REGISTRATION(a) All reasonable expenses other than
underwriting discounts and commissions incurred in connection with
Registrations, filings or qualifications pursuant to SECTION 3, including,
without limitation, all Registration, listing, and qualifications fees, printers
and accounting fees, the fees and disbursements of counsel for the Company and a
fee for a single counsel for Subscriber of $3,500 for the initial Registration
Statement and $2,000 for each Amendment or Additional Registration Statement
covering the Registrable Securities shall be borne by the Company.
6. INDEMNIFICATION. After Registrable Securities are included in a
Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless, the Subscriber, the directors, if any, of such Subscriber, the
officers, if any, of such Subscriber, each person, if any, who controls the
Subscriber within the meaning of the Securities Act or the Exchange Act (each,
an "Indemnified Person"), against any losses, claims, damages, liabilities or
expenses (joint or several) incurred (collectively, "Claims") to which any of
them may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any post-effective amendment thereof or 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, (ii) any
untrue
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statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the Subscription Date of such
Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in the light of the
circumstances under which the statements therein were made, not misleading or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation under the
Securities Act, the Exchange Act or any state securities law (the matters in the
foregoing clauses (i) through (iii) being collectively referred to as
"Violations"). The Company shall reimburse the Subscriber, promptly as such
expenses are incurred and are due and payable, for any reasonable legal fees or
other reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a) shall not
(i) apply to any Claims arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of any Indemnified Person expressly for use in
connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus was timely made
available by the Company pursuant to Section 3(b) hereof; (ii) with respect to
any preliminary prospectus, inure to the benefit of any such person from whom
the person asserting any such Claim purchased the Registrable Securities that
are the subject thereof (or to the benefit of any person controlling such
person) if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected in the prospectus, as then amended or
supplemented, if such prospectus was timely made available by the Company
pursuant to Section 3(b) hereof; (iii) be available to the extent such Claim is
based on a failure of the Subscriber to deliver or cause to be delivered the
prospectus made available by the Company; or (iv) apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld. The
Subscriber will indemnify the Company, its officers, directors and agents
(including legal counsel) against any claims arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company, by or on behalf of such Subscriber,
expressly for use in connection with the preparation of the Registration
Statement, subject to such limitations and conditions set forth in the previous
sentence. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person or Indemnified
Party.
(b) Promptly after receipt by an Indemnified Person under this Section 6
of notice of the commencement of any action (including any governmental action),
such Indemnified Person shall, if a Claim in respect thereof is to be made
against any indemnifying party under this Section 6, deliver to the indemnifying
party a written notice of the commencement thereof and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed,
to assume control of the defense thereof with counsel mutually satisfactory to
the indemnifying party and the Indemnified Person, as the case may be; PROVIDED,
HOWEVER, that an Indemnified Person shall have the right to retain its own
counsel with the reasonable fees and expenses to be paid by the indemnifying
party, if, in the reasonable opinion of
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counsel retained by the indemnifying party, the representation by such counsel
of the Indemnified Person and the indemnifying party would be inappropriate due
to actual or potential differing interests between such Indemnified Person and
any other party represented by such counsel in such proceeding. In such event,
the Company shall pay for only one separate legal counsel for the Subscriber
selected by the Subscriber. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person under this Section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action. The
indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as such
expense, loss, damage or liability is incurred and is due and payable.
7. CONTRIBUTION. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; PROVIDED,
HOWEVER, that (a) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 6; (b) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of such fraudulent misrepresentation; and (c)
contribution by any seller of Registrable Securities shall be limited in amount
to the net amount of proceeds received by such seller from the sale of such
Registrable Securities.
8. REPORTS UNDER EXCHANGE ACT. With a view to making available to the
Subscriber the benefits of Rule 144 promulgated under the Securities Act or any
other similar rule or regulation of the SEC that may at any time permit the
Subscriber to sell securities of the Company to the public without registration
("Rule 144"), the Company agrees to use its reasonable best efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Exchange Act; and
(c) furnish to the Subscriber so long as the Subscriber owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company and
(iii) such other information as may be reasonably requested to permit the
Subscribers to sell such securities pursuant to Rule 144 without registration.
9. MISCELLANEOUS.
11
(A) REGISTERED OWNERS. A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
(B) RIGHTS CUMULATIVE; WAIVERS. The rights of each of the parties under
this Agreement are cumulative. Any provision of this Agreement may be amended
and the observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and Subscribers who hold a sixty-seven (67%) percent
interest of the Registrable Securities (as calculated by the stated value of the
Preferred Stock without any reference to the Warrant Shares). Any amendment or
waiver effected in accordance with this Section 9(b) shall be binding upon each
Subscriber and the Company. Any failure to exercise or any delay in exercising
any of such rights shall not operate as a waiver or variation of that or any
other such right. Any defective or partial exercise of any of such rights shall
not preclude any other or further exercise of that or any other such right. No
act or course of conduct or negotiation on the part of any party shall in any
way preclude such party from exercising any such right or constitute a
suspension or any variation of any such right.
(C) BENEFIT; SUCCESSORS BOUND. This Agreement and the terms, covenants,
conditions, provisions, obligations, undertakings, rights, and benefits hereof,
shall be binding upon, and shall inure to the benefit of, the undersigned
parties and their heirs, executors, administrators, representatives, successors,
and permitted assigns.
(D) ENTIRE AGREEMENT. This Agreement contains the entire agreement between
the parties with respect to the subject matter hereof. There are no promises,
agreements, conditions, undertakings, understandings, warranties, covenants or
representations, oral or written, express or implied, between them with respect
to this Agreement or the matters described in this Agreement, except as set
forth in this Agreement and in the other documentation relating to the
transactions contemplated by this Agreement. Any such negotiations, promises, or
understandings shall not be used to interpret or constitute this Agreement.
(E) ASSIGNMENT OF THE REGISTRATION RIGHTS. The rights to have the Company
register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Subscribers to any transferee of the Registrable
Securities (or all or any portion of any unconverted Preferred Stock or
unexercised Warrant) only if: (a) the Subscriber agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment, (b) the
Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (i) the name and address of such transferee or
assignee and (ii) the securities with respect to which such registration rights
are being transferred or assigned, (c) immediately following such transfer or
assignment the further disposition of such securities by the
12
transferee or assignee is restricted under the Securities Act and applicable
state securities laws, (d) at or before the time the Company received the
written notice contemplated by clause (b) of this sentence the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
contained herein, and (e) such transfer of Registrable Securities is completed
and disclosed to the Company prior to the initial Effective Date or involves the
transfer of Registrable Securities resulting from the conversion of Preferred
Stock having a stated value of at least $200,000. In the event of any delay in
filing or effectiveness of the Registration Statement as a result of such
assignment, the Company shall not be liable for any damages arising from such
delay, or the payments set forth in Section 2(b) hereof arising from such delay.
(F) SEVERABILITY. Each part of this Agreement is intended to be severable.
In the event that any provision of this Agreement is found by any court or other
authority of competent jurisdiction to be illegal or unenforceable, such
provision shall be severed or modified to the extent necessary to render it
enforceable and as so severed or modified, this Agreement shall continue in full
force and effect.
(G) Notices required or permitted to be given hereunder shall be given in
the manner contemplated by the Securities Purchase Agreement, (i) if to the
Company or to the Initial Subscriber, to their respective address contemplated
by the Securities Purchase Agreement, and (ii) if to any other Subscriber, at
such address as such Subscriber shall have provided in writing to the Company,
or at such other address as each such party furnishes by notice given in
accordance with this Section 9(h).
(H) GOVERNING LAW. This Agreement shall be governed by the interpreted in
accordance with the laws of the State of New York without reference to its
conflicts of laws rules or principles. Each of the parties consents to the
exclusive jurisdiction of the federal courts of the State of Delaware in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based on FORUM NON COVENIENS, to the bringing of any such proceeding in such
jurisdictions.
(I) CONSENTS. The person signing this Agreement on behalf of each party
hereby represents and warrants that he has the necessary power, consent and
authority to execute and deliver this Agreement on behalf of that party.
(J) FURTHER ASSURANCES. In addition to the instruments and documents to be
made, executed and delivered pursuant to this Agreement, the parties hereto
agree to make, execute and deliver or cause to be made, executed and delivered,
to the requesting party such other instruments and to take such other actions as
the requesting party may reasonably require to carry out the terms of this
Agreement and the transactions contemplated hereby.
(K) SECTION HEADINGS. The Section headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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(L) CONSTRUCTION. Unless the context otherwise requires, when used herein,
the singular shall be deemed to include the plural, the plural shall be deemed
to include each of the singular, and pronouns of one or no gender shall be
deemed to include the equivalent pronoun of the other or no gender.
(M) EXECUTION IN COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same agreement. This Agreement, once executed by a
party, may be delivered to the other party hereto by telephone line facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement. A facsimile transmission of this signed Agreement
shall be legal and binding on all parties hereto.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
COMPANY:
XXXXXX HEALTHCARE, INC.
By: /s/ XXXXX X. XXXXXXXX
Name: Xxxxx X. Xxxxxxxx
Title: Chief Financial Officer
SUBSCRIBER:
THE ENDEAVOUR CAPITAL INVESTMENT
FUND S.A.
By: /s/ XXXXXX XXXXXXXXX
Name: Xxxxxx Xxxxxxxxx
Title: Director
15
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
COMPANY:
XXXXXX HEALTHCARE, INC.
By: /s/ XXXXX X. XXXXXXXX
Name: Xxxxx X. Xxxxxxxx
Title: Chief Financial Officer
SUBSCRIBER:
ESQUIRE TRADE & FINANCE INC.
By: /s/ XXXXXXX KINDLE
Name: Xxxxxxx Kindle
Title: Director
16
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
COMPANY:
XXXXXX HEALTHCARE, INC.
By: /s/ XXXXX X. XXXXXXXX
Name: Xxxxx X. Xxxxxxxx
Title: Chief Financial Officer
SUBSCRIBER:
XXXXXXX TRUST REG.
By: /s/ XXXXXX XXXXX
Name: Xxxxxx Xxxxx
Title:
17
EXHIBIT I TO REGISTRATION RIGHTS AGREEMENT
HOLDER MAXIMUM SHARES TO BE REGISTERED
------ -------------------------------
RSL Communications 75,000
XX Xxxxxxxx 189,000
Forza 380,000
Cybex 472,000
Lasermedics Sales Corp 35,000
Taglich 15,000
-------------------------------
1,166,000
===============================
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