EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered
into as of __________________, 1997, among TRIAD Medical, Inc., a Delaware
corporation ("TMI"), and each person listed on the signature pages of this
Agreement under the caption "Stockholders" (each a "Stockholder" and,
collectively, the "Stockholders").
WHEREAS, pursuant to various acquisition agreements entered into with TMI
(collectively, the "Acquisition Agreements"), each of the Stockholders has
received on the date hereof shares of common stock, par value $.001 per share,
of TMI ("Common Stock");
WHEREAS, certain of the Stockholders are the holders of Warrants for the
purchase of an aggregate 125,000 shares of Common Stock (the "Warrants"); and
WHEREAS, in order to induce the Stockholders to enter into their
respective Acquisition Agreements, TMI has agreed to provide registration rights
on the terms set forth in this Agreement for the benefit of the Stockholders;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
1. DEFINITIONS. The following capitalized terms shall have the meanings
assigned to them in this Section 1 or in the parts of this Agreement referred to
below:
ANNUAL DEMAND PERIOD: the period in any year while this Agreement is in
effect which follows the date that is 91 days after the end of TMI's immediately
preceding fiscal year.
CODE: the Internal Revenue Code of 1986, as amended, and any successor
thereto.
COMMISSION: the Securities and Exchange Commission, and any successor
thereto.
DEMAND REGISTRATION: as defined in Section 3.
EFFECTIVE TIME: as defined in Section 3.
EXCHANGE ACT: the Securities Exchange Act of 1934, as amended, and any
successor thereto, and the rules and regulations thereunder.
EXEMPT OFFERING: as defined in Section 2.
INSTITUTIONAL STOCKHOLDER: either of Equus II Incorporated or XXXXXX
Private Equity and Mezzanine Fund, L.P.
1
REGISTRABLE COMMON: shares of Common Stock that were issued to the
Stockholders pursuant to the Acquisition Agreements or that were issued, or are
issuable, upon any exercise of any of the Warrants, and any additional shares of
Common Stock issued or distributed in respect of any other shares of Registrable
Common by way of a stock dividend or distribution or stock split or in
connection with a combination of shares, recapitalization, reorganization,
merger, consolidation or otherwise. For purposes of this Agreement, shares of
Registrable Common will cease to be Registrable Common when and to the extent
that (i) a registration statement covering such shares has been declared
effective under the Securities Act and such shares have been disposed of
pursuant to such effective registration statement, (ii) such shares are sold
pursuant to Rule 144 or become saleable under Rule 144(k), or (iii) such shares
have been otherwise transferred to a person or entity that is not a Stockholder,
other than pursuant to Section 11.
REGISTRATION NOTICE: as defined in Section 2.
REQUESTING HOLDERS: as defined in Section 3.
RESTRICTED PERIOD: as defined in Section 3.
RULE 144: Securities Act Rule 144 (or any similar or successor provision
under the Securities Act).
SECURITIES ACT: the Securities Act of 1933, as amended, and any successor
thereto, and the rules and regulations thereunder.
SELLING STOCKHOLDER: as defined in Section 12.
2. PIGGYBACK REGISTRATION RIGHTS. At any time after the second anniversary
of the date of this Agreement and before December 31, 2010, whenever TMI
proposes to register any Common Stock for its own account (or for the account of
a holder or holders of shares of Common Stock) under the Securities Act for a
public offering for cash, other than a registration relating to the offering or
issuance of shares in connection with (i) employee compensation or benefit plans
or (ii) one or more acquisition transactions under a Registration Statement on
Form S-4 under the Securities Act (or a successor to Form S-4) (any such
offering or issuance being an "Exempt Offering"), TMI will give each Stockholder
written notice of its intent to do so (a "Registration Notice") at least 30 days
prior to the filing of the related registration statement with the Commission.
Such notice shall specify the approximate date on which TMI proposes to file
such registration statement and shall contain a statement that the Stockholders
are entitled to participate in such offering and shall set forth the number of
shares of Registrable Common that represents the best estimate of the lead
managing underwriter (or if not known or applicable, TMI) that will be available
for sale by the holders of Registrable Common in the proposed offering. Each
Stockholder shall be entitled to participate on the same terms and conditions as
TMI in the public offering to which the Registration Notice relates and to offer
and sell shares of Registrable Common therein only to the extent provided in
this Section 2. Each Stockholder desiring to participate in such offering shall
2
notify TMI no later than 20 days following receipt of the Registration Notice of
the aggregate number of shares of Registrable Common that such Stockholder then
desires to sell in the offering. Each Stockholder desiring to participate in
such public offering may include shares of Registrable Common in the
registration statement relating to the offering, to the extent that the
inclusion of such shares shall not reduce the number of shares of Common Stock
to be offered and sold by TMI to be included therein. If the lead managing
underwriter selected by TMI for a public offering determines and notifies TMI in
writing that, in view of marketing factors, the inclusion of all shares of
Registrable Common requested to be included in the offering would adversely
affect the offering and therefore require a limitation on the number of shares
of Registrable Common to be offered and sold in such offering, there shall be
included in the offering only that number of shares of Registrable Common, if
any, that such lead managing underwriter reasonably and in good faith believes
will not jeopardize the success of the offering, in which case (i) the number of
shares of Registrable Common to be offered and sold by holders desiring to
participate in the offering, shall be allocated among such holders on a PRO RATA
basis based on their holdings of Registrable Common assuming full exercise of
all then outstanding Warrants, and (ii) if the registration statement relating
to the offering has been filed by the Company in response to a demand for
registration by a holder or holders of Common Stock (whether pursuant to this
Agreement or any other agreement), then the holder or holders of Common Stock so
demanding registration shall be entitled to priority over the holders of
Registrable Common exercising their registration rights pursuant to this Section
2, and the number of shares of Registrable Common requested to be included in
such registration pursuant to this Section 2 shall be reduced or eliminated
before any such other holder of Common Stock demanding registration shall be
required to exclude any shares from such registration. TMI shall also have the
right at any time to reduce the number of shares requested by any Stockholder to
be included in such registration to the extent that TMI reasonably concludes
that inclusion of such shares is likely to jeopardize the non-recognition status
under the Code of any acquisition transaction consummated pursuant to any of the
Acquisition Agreements; PROVIDED, HOWEVER, that any determination to exclude
shares from any such registration pursuant to this provision shall be based on
written advice of tax counsel to TMI or its independent accountants.
3. DEMAND REGISTRATION RIGHTS. At any time after the period ending on the
second anniversary of the date of this Agreement (the "Restricted Period") and
before December 31, 2003, the holders of at least 51% of the shares of
Registrable Common outstanding at the date of this Agreement (including the
shares issuable upon exercise of the Warrants) (such number of outstanding
shares to be appropriately adjusted from time to time in the case of
subdivisions and combinations which increase or decrease the number of
outstanding shares of Common Stock) may request (the Stockholders making such
request are herein referred to as the "Requesting Holders") in writing that TMI
file a registration statement under the Securities Act covering the registration
of all, or, if less than all, of at least one million, shares of Registrable
Common then held by such Stockholders or then issuable upon the exercise of then
outstanding Warrants held by such Stockholder (a "Demand Registration"). Within
ten days of the receipt of such request, TMI shall give written notice of such
request to all other Stockholders and shall use its best efforts to effect as
soon as practicable the registration under the Securities Act in accordance with
Section 4 hereof (including without limitation, the execution of an undertaking
to file post-effective amendments) of
3
all shares of Registrable Common which the Stockholders request be registered
within 30 days after the mailing of such notice, PROVIDED, HOWEVER, that (i) TMI
shall not be obligated to cause a registration statement respecting a Demand
Registration to (a) be initially filed sooner than ten days prior to the
beginning of an Annual Demand Period, or (b) initially become effective under
the Securities Act as of any time that is not within an Annual Demand Period,
(ii) TMI shall not be obligated to effect a Demand Registration if it is not
eligible to use Form S-3 under the Securities Act, and (iii) TMI shall be
obligated to effect only one Demand Registration pursuant to this Section 3. In
connection with a Demand Registration, the holders of a majority of shares of
Registrable Common included in such Demand Registration, in their sole
discretion, shall determine whether (a) to proceed with, withdraw from or
terminate such offering, (b) to select, subject to the approval of TMI (which
approval shall not be unreasonably withheld), a managing underwriter or
underwriters to administer such offering, (c) to enter into an underwriting
agreement for such offering, and (d) to take such actions as may be necessary to
close the sale of Registrable Common contemplated by such offering, including
waiving any conditions to closing such sale that may not have been fulfilled. If
such holders exercise their discretion under this paragraph to terminate a
proposed Demand Registration, the terminated Demand Registration shall not
constitute the Demand Registration under this Section 3, if the determination to
terminate such Demand Registration (i) follows the exercise by TMI of any of its
rights provided by the last two paragraphs of this Section 3 or (ii) results
from a material adverse change in the condition (financial or other), results of
operations, prospects or properties of the Company. Notwithstanding the
foregoing, a registration will not count as the Demand Registration under this
Section 3 until such registration has become effective and unless either (i) the
Requesting Holders are able to register and sell all of the shares of
Registrable Common requested by them to be included in such registration or (ii)
such registration statement has remained effective for at least 90 days.
Notwithstanding the preceding paragraph, if TMI shall furnish to the
Requesting Holders a certificate signed by the President of TMI stating that, in
the good faith judgment of the Board of Directors of TMI, it would have a
material adverse effect on TMI's plans to issue debt or equity securities or
consummate a transaction if such registration statement were to be filed and it
is therefore beneficial to defer the filing of such registration statement, TMI
shall have the right to defer such filing for a period of not more than 90 days
after receipt of the request of the Requesting Holders. TMI shall promptly give
notice to the holders of Registrable Common at the end of any delay period under
this paragraph.
Notwithstanding the preceding two paragraphs, if at the time of any
request by the Requesting Holders for a Demand Registration, TMI has fixed plans
to file within 90 days after such request for the sale of any of its securities
in a public offering under the Securities Act (other than an Exempt Offering),
no Demand Registration shall be initiated under this Section 3 until 90 days
after the effective date of such registration unless TMI is no longer proceeding
diligently to effect such registration; PROVIDED that TMI shall provide the
holders of Registrable Common the right to participate in such public offering
pursuant and subject to Section 2.
4
4. REGISTRATION PROCEDURES. In connection with registrations under
Sections 2 and 3, and subject to the terms and conditions contained therein, TMI
shall (a) prepare and file with the Commission as soon as reasonably
practicable, a registration statement with respect to the Registrable Common and
use its best efforts to cause such registration to promptly become and remain
effective for a period of at least 120 days (or such shorter period during which
holders shall have sold all Registrable Common which they requested to be
registered); PROVIDED, HOWEVER, that such 120-day period shall be extended for a
period equal to the period that a Stockholder agrees to refrain from selling any
securities included in such registration in accordance with Section 8 during
which the Stockholders may not make sales under such registration statement, (b)
prepare and file with the Commission such amendments (including post-effective
amendments) to such registration statement and supplements to the related
prospectus to reflect appropriately the plan of distribution of the securities
registered thereunder until the completion of the distribution contemplated by
such registration statement or for so long thereafter as a dealer is required by
law to deliver a prospectus in connection with the offer and sale of the shares
of Registrable Common covered by such registration statement and/or as shall be
necessary so that neither such registration statement nor the related prospectus
shall 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 not misleading and so that such registration statement and the related
prospectus will otherwise comply with applicable legal requirements; (c) provide
to any Stockholder requesting to include shares of Registrable Common in such
registration statement and a single counsel for all holders of Registrable
Common requesting to include shares of Registrable Common in such registration
statement, which counsel shall be selected by the holders of a majority of
shares of Registrable Common requested to be included in such registration
statement and shall be reasonably satisfactory to TMI, an opportunity to review
and provide comments with respect to such registration statement (and any
post-effective amendment thereto) prior to such registration statement (or
post-effective amendment) becoming effective; (d) use its best efforts to
register and qualify the Registrable Common covered by such registration
statement under applicable securities or "Blue Sky" laws of such jurisdictions
as the holders shall reasonably request for the distribution of the Registrable
Common; (e) take such other actions as are reasonable and necessary to comply
with the requirements of the Securities Act; (f) furnish such number of
prospectuses (including preliminary prospectuses) and documents incident thereto
as a Stockholder from time to time may reasonably request; (g) provide to any
Stockholder requesting to include Registrable Common in such registration
statement and any managing underwriter participating in any distribution
thereof, and to any attorney, accountant or other agent retained by such
Stockholder or managing underwriter, reasonable access to appropriate officers
and directors of TMI to ask questions and to obtain information reasonably
requested by any such Stockholder, managing underwriter, attorney, accountant or
other agent in connection with such registration statement or any amendment
thereto; PROVIDED, HOWEVER, that (i) in connection with any such access or
request, any such requesting persons shall cooperate to the extent reasonably
practicable to minimize any disruption to the operation by TMI of its business
and (ii) any records, information or documents shall be kept confidential by
such requesting persons, unless (A) such records, information or documents are
in the public domain or otherwise publicly available or (B) disclosure of such
records, information or documents is required by court or administrative order
or by applicable law (including, without limitation, the Securities Act); (h)
notify each Stockholder and
5
the managing underwriters participating in the distribution pursuant to such
registration statement promptly (i) when TMI is informed that such registration
statement or any post-effective amendment to such registration statement becomes
effective, (ii) of any request by the Commission for an amendment or any
supplement to such registration statement or any related prospectus, (iii) of
the issuance by the Commission of any stop order suspending the effectiveness of
such registration statement or of any order preventing or suspending the use of
any related prospectus or the initiation or threat of any proceeding for that
purpose, (iv) of the suspension of the qualification of any shares of
Registrable Common included in such registration statement for sale in any
jurisdiction or the initiation or threat of a proceeding for that purpose, (v)
of any determination by TMI that any event has occurred which makes untrue any
statement of a material fact made in such registration statement or any related
prospectus or which requires the making of a change in such registration
statement or any, related prospectus in order that the same will 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 not misleading,
and (vi) of the completion of the distribution contemplated by such registration
statement if it relates to an offering by TMI; (i) in the event of the issuance
of any stop order suspending the effectiveness of such registration statement or
of any order suspending or preventing the use of any related prospectus or
suspending the qualification of any shares of Registrable Common included in
such registration statement for sale in any jurisdiction, use its best efforts
to obtain its withdrawal; (j) otherwise comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable, but not later than fifteen months after the
effective date of such registration statement, an earnings statement covering
the period of at least twelve months beginning with the first full fiscal
quarter after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11 (a) of the Securities Act;
(k) use its best efforts to cause all shares of Registrable Common included in
such registration statement to be listed on any securities exchange (including,
for this purpose, the Nasdaq National Market) on which the Common Stock is then
listed at the initiation of TMI; (l) use its best efforts to obtain an opinion
from legal counsel (which may include the General Counsel of TMI) in customary
form and covering such matters of the type customarily covered by opinions as
the underwriters, if any, may reasonably request; (m) provide a transfer agent
and registrar for all such Registrable Common not later than the effective date
of such registration statement; (n) enter into such customary agreements
(including an underwriting agreement in customary form) as the underwriters, if
any, may reasonably request in order to expedite or facilitate the disposition
of such shares of Registrable Common; and (o) use its best efforts to obtain a
"comfort letter" from TMI's independent public accountants in customary form and
covering such matters of the type customarily covered by comfort letters as the
underwriters, if any, may reasonably request. As used in this Section 4 and
elsewhere herein, the term "underwriters" does not include any Stockholder.
5. UNDERWRITING AGREEMENT. In connection with each registration pursuant
to Section 2 or 3 covering an underwritten registered public offering, TMI and
each participating Stockholder agree to enter into a written agreement with the
managing underwriter in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
6
underwriter and companies of TMI's size and investment stature, including
provisions for indemnification by TMI and each Selling Stockholder as more fully
described in Section 12.
6. AVAILABILITY OF RULE 144. Notwithstanding anything contained herein to
the contrary, (including Sections 2 and 3), TMI shall not be obligated to
register shares of Registrable Common held by any Stockholder when the resale
provisions of Rule 144(k) are available to such Stockholder or such Stockholder
is otherwise entitled to sell the shares of Registrable Common held by him or
her in a brokerage transaction without registration under the Securities Act and
without limitation as to volume or manner of sale or both.
7. RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of the
shares of Registrable Common held by the Stockholders to the public without
registration, TMI agrees to:
(a) make and keep public information available (as those terms are
understood and defined in Rule 144) at all times from and after 90 days
following the effective date of the registration statement;
(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of TMI under the
Securities Act and the Exchange Act at any time that it is subject to such
reporting requirements;
(c) so long as a Stockholder owns any Warrants or shares of
Registrable Common, furnish to the Stockholder forthwith upon request a
written statement by TMI as to its compliance with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act (at any
time that it is subject to such reporting requirements), a copy of the
most recent annual or quarterly report of TMI, and such other reports and
documents filed in accordance with such reporting requirements as a
Stockholder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Stockholder to sell any such
securities without registration; and
(d) if required by the transfer agent and registrar for the Common
Stock, use reasonable diligence to obtain an opinion from legal counsel
(which may include the General Counsel of TMI) addressed to such transfer
agent and registrar, with respect to any sale of shares of Registerable
Common pursuant to Rule 144 (or, at the option of TMI, pay the reasonable
fees and expenses of legal counsel retained by a Stockholder to provide
such an opinion).
8. MARKET STANDOFF.
(a) In consideration of the granting to Stockholders of the
registration rights pursuant to this Agreement, each Stockholder agrees
that, for so long as such Stockholder holds shares of Registrable Common,
except as permitted by Sections 2 and 3, such
7
Stockholder will not sell, transfer or otherwise dispose of, including
without limitation through put or short sale arrangements, shares of
Common Stock in the ten days prior to the effectiveness of any
registration (other than relating to an Exempt Offering) of Common Stock
for sale to the public and for up to 90 days following the effectiveness
of such registration.
(b) Except for Exempt Offerings or in connection with the
acquisition by TMI of another company or business, TMI shall not offer to
sell or sell any shares of capital stock of TMI during the 90-day period
immediately following the commencement of an underwritten public offering
of shares of Registrable Common pursuant to a Demand Registration.
9. REGISTRATION EXPENSES. All expenses incurred in connection with any
registration, qualification and compliance under this Agreement (including,
without limitation, all registration, filing, qualification, legal, printing and
accounting fees, and including all reasonable fees of one counsel acting on
behalf of all holders of the securities being registered in such registration)
shall be borne by TMI. All underwriting commissions and discounts applicable to
shares of Registrable Common included in the registrations under this Agreement
shall be borne by the holders of the securities so registered PRO RATA on the
basis of the number of shares so registered. Subject to the foregoing, all
expenses incident to TMI's performance of or compliance with this Agreement,
including, without limitation, all filing fees, fees and expenses of compliance
with securities or Blue Sky laws (including, without limitation, fees and
disbursements of counsel in connection with Blue Sky qualifications of the
Registrable Common), printing expenses, messenger and delivery expenses,
internal expenses (including, without limitation, all salaries and expenses of
TMI's officers and employees performing legal or accounting duties), the fees
and expenses applicable to shares of Registrable Common included in connection
with the listing of the securities to be registered on each securities exchange
(including, for this purpose, the Nasdaq National Market) on which similar
securities issued by TMI are then listed at the initiation of TMI, registrar and
transfer agents' fees and fees and disbursements of counsel for TMI and its
independent certified public accountants, securities act liability insurance of
TMI and its officers and directors (if TMI elects to obtain such insurance), the
fees and expenses of any special experts retained by TMI in connection with such
registration and fees and expenses of other persons retained by TMI and incurred
in connection with each registration hereunder (but not including, without
limitation, any underwriting fees, discounts or commissions attributable to the
sale of Registrable Common, and transfer taxes, if any), will be borne by TMI.
10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No holder of Registrable
Common may participate in any underwritten registration hereunder unless such
holder (a) agrees to sell such holder's securities on the basis provided in any
underwriting arrangements approved by the persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, custody agreements, indemnities, underwriting agreements and other
documents reasonably required under the terms of such underwriting arrangements.
8
11. TRANSFER OF REGISTRATION RIGHTS; ADDITIONAL GRANTS OF REGISTRATION
RIGHTS. The registration rights provided to the holders of Registrable Common
under Sections 2 and 3 hereof may not be transferred to any other person or
entity, except that (i) a Stockholder may transfer his or its rights hereunder
to another Stockholder or pursuant to the laws of descent and distribution and
(ii) either Institutional Stockholder may transfer its rights under this
Agreement to its partners or stockholders (who may in turn transfer their
respective rights under this Agreement to their respective partners or
stockholders) in connection with any liquidating distribution or other
distribution in kind by an Institutional Stockholder (or its partners or
stockholders) to its partners or its stockholders of shares of Registerable
Common or Warrants; PROVIDED, HOWEVER, that, in any such case, such transferees
are bound by and subject to the terms and conditions contained herein. The
Company may, without the prior consent of the Stockholders, extend the
registration rights provided for in this Agreement to additional persons or
entities who become holders of Common Stock subsequent to the date of this
Agreement by entering into one or more addenda to this Agreement with any such
stockholders, and, upon execution of any such addenda, any stockholder that is a
party thereto shall thereafter be a "Stockholder" for purposes of this Agreement
and any shares of Common Stock referred to therein as such shall be shares of
"Registrable Common" for purposes of this Agreement. Nothing herein shall limit
the ability of TMI to grant to any person or entity any registration or similar
rights in the future with respect to Common Stock or other securities of TMI
(whether pursuant to the foregoing provision or otherwise), provided that if any
such person or entity has the right to include any of its shares of Common Stock
in a demand registration made pursuant to Section 3 of this Agreement, the
holders of Registrable Common shall have priority over any such person or entity
with respect to the latter's shares of Common Stock sought to be included in
such demand registration (and the agreement between TMI and any such person or
entity will provide for such priority cutback).
12. INDEMNIFICATION AND CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. TMI agrees to indemnify and hold
harmless each Stockholder who sells shares of Registrable Common in a
registered offering pursuant to either Section 2 or Section 3 (a "Selling
Stockholder"), from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable legal expenses) arising out
of or based upon any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or prospectus
relating to the Registrable Common or in any amendment or supplement
thereto or in any related preliminary prospectus, or arising out of or
based upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or expenses arise out of, or are based upon, any such untrue
statement or omission or allegation thereof based upon information
furnished in writing to TMI by such Selling Stockholder or on such Selling
Stockholder's behalf expressly for use therein. In connection with an
underwritten offering of shares of Registrable Common, TMI will indemnify
any underwriters of the Registrable Common, their partners, officers and
directors and each person who controls such underwriters (within the
meaning of either Section 15 of the Securities Act or Section 20 of
9
the Exchange Act) on substantially the same basis as that of the
indemnification of the Selling Stockholders provided in this Section
12(a). Notwithstanding the foregoing, TMI's indemnification obligations
with respect to any preliminary prospectus shall not inure to the benefit
of any Selling Stockholder or underwriter with respect to any loss, claim,
damage, liability (or actions in respect thereof) or expense arising out
of or based on any untrue statement or alleged untrue statement or
omission or alleged omission to state a material fact in such preliminary
prospectus, in any case where (i) a copy of the prospectus used to confirm
sales of shares of Registrable Common was not sent or given to the person
asserting such loss, claim, damage or liability at or prior to the written
confirmation of the sale to such person and (ii) such untrue statement or
alleged untrue statement or omission or alleged omission was corrected in
such prospectus.
(b) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after receipt
by a Selling Stockholder of notice of any claim or the commencement of any
action or proceeding brought or asserted against such Selling Stockholder
in respect of which indemnity may be sought from TMI, such Selling
Stockholder shall notify TMI in writing of the claim or the commencement
of that action or proceeding; PROVIDED, HOWEVER, that the failure to so
notify TMI shall not relieve TMI from any liability that it may have to
the Selling Stockholder otherwise than pursuant to the indemnification
provisions of this Agreement. If any such claim or action or proceeding
shall be brought against a Selling Stockholder and such Selling
Stockholder shall have duly notified TMI thereof, TMI shall have the right
to assume the defense thereof, including the employment of counsel. Such
Selling Stockholder shall have the right to employ separate counsel in any
such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Selling
Stockholder unless (i) TMI has agreed to pay such fees and expenses or
(ii) the named parties to any such action or proceeding include both such
Selling Stockholder and TMI, and such Selling Stockholder shall have been
advised by counsel that there may be one or more legal defenses available
to such Selling Stockholder which are different from or additional to
those available to TMI, in which case, if such Selling Stockholder
notifies TMI in writing that it elects to employ separate counsel at the
expense of TMI, TMI shall not have the right to assume the defense of such
action or proceeding on behalf of such Selling Stockholder; it being
understood, however, that TMI shall not, in connection with any one such
action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses
of more than one separate firm of attorneys (together with appropriate
local counsel) at any time for all Selling Stockholders. TMI shall not be
liable for any settlement of any such action or proceeding effected
without TMI's written consent (which consent shall not be unreasonably
withheld).
(c) INDEMNIFICATION BY HOLDERS OF REGISTRABLE COMMON. In connection
with any registration in which a Selling Stockholder is participating,
such Selling Stockholder will furnish to TMI in writing such information
and affidavits as TMI reasonably requests for use in connection with any
related registration statement or prospectus. Each Selling
10
Stockholder agrees to indemnify and hold harmless TMI, its directors and
officers who sign the registration statement relating to shares of
Registrable Common offered by such Selling Stockholder and each person, if
any, who controls TMI within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from TMI to such Selling Stockholder, but only with
respect to information concerning such Selling Stockholder furnished in
writing by such Selling Stockholder or on such Selling Stockholder's
behalf, in such person's capacity as a stockholder of the Company or his
designee, expressly for use in any registration statement or prospectus
relating to shares of Registrable Common offered by such Selling
Stockholder, or any amendment or supplement thereto, or any related
preliminary prospectus. In case any action or proceeding shall be brought
against TMI or its directors or officers, or any such controlling person,
in respect of which indemnity may be sought against such Selling
Stockholder, such Selling Stockholder shall have the rights and duties
given to TMI, and TMI or its directors or officers or such controlling
persons shall have the rights and duties given to such Selling
Stockholder, by the preceding paragraph. Each Selling Stockholder also
agrees to indemnify and hold harmless any underwriters of the Registrable
Common, their partners, officers and directors and each person who
controls such underwriters (within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act) on substantially the
same basis as that of the indemnification of TMI provided in this Section
12(c). Notwithstanding anything to the contrary herein, in no event shall
the amount paid or payable by any Selling Stockholder under this Section
12(c) exceed the amount of proceeds received by such Selling Stockholder
from the offering of the Registrable Common.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 12 is unavailable to any indemnified party in respect of any
losses, claims, damages, liabilities or expenses referred to herein, then
each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities and expenses in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified parties in connection with the
actions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by such indemnified party or indemnified parties and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. TMI and the Selling
Stockholders agree that it would not be just and equitable if contribution
pursuant to this Section 12(d) were determined by PRO RATA allocation or
by any other method of allocation that does not take account of the
equitable considerations referred to in this Section 12(d). 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. If
indemnification is available under this Section 12, the indemnifying
parties shall indemnify each indemnified party to the full extent
11
provided in Sections 12(a) and (c) without regard to the relative fault of
said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 12(d).
13. MISCELLANEOUS
(a) AMENDMENTS AND WAIVERS. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not
be given, unless TMI has obtained the written consent of holders of at
least 51% of the shares of Registrable Common then outstanding.
(b) NOTICES. All notices and other communications provided for or
permitted hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally or sent by telex or telecopy, or
registered or certified mail (return receipt requested), postage prepaid,
or courier to the parties at the following addresses (or at such other
address for any party as shall be specified by like notice), PROVIDED that
notices of a change of address shall be effective only upon receipt
thereof. Notices sent by mail shall be effective when answered back,
notices sent by telecopier shall be effective when receipt is
acknowledged, and notices sent by courier guaranteeing next day delivery
shall be effective on the next business day after timely delivery by the
courier. Notices shall be sent to the following addresses:
(i) if to a Stockholder, at the most current address given by
such Stockholder to TMI in a writing making specific reference to
this Agreement (and, if the Stockholder is XXXXXX Private Equity and
Mezzanine Fund, L.P., with a copy to Xxxxx Xxxxx, Esq., Altheimer &
Xxxx, 00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx
60606-7482); and
(ii) if to TMI, at the following address:
TRIAD Medical Inc.
00000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
Att.: Xxxxxxx X. Xxxxxxxxxx, Xx.
Telecopy: (000) 000-0000
with a copy to: Xxxxxx & Xxxxxx, L.L.P.
000 Xxxxxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000-0000
Att.: Xxxxx X. Xxxxxxxx, Xx.
Telecopy: (000) 000-0000
12
(c) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the heirs, executors, administrators,
successors and assigns of each of the parties.
(d) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(e) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) SECTION REFERENCES. Unless the context requires otherwise,
references in this Agreement to "Sections" are to Sections of this
Agreement.
(g) 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 PERFORMED
WHOLLY WITHIN THAT STATE.
(h) SEVERABILITY. If any one or more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect
and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all the rights and privileges of
the Stockholders shall be enforceable to the fullest extent permitted by
law.
(i) ENTIRE AGREEMENT; TERMINATION. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter. This Agreement, except the
provisions of Section 12 (which shall survive until the expiration of the
applicable statutes of limitations) and this Section 13, shall terminate
and be of no further force or effect on December 31, 2010.
13
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
TMI:TRIAD MEDICAL INC.
By:
Xxxxxxx X. Xxxxxxxxxx, Xx.
Chief Executive Officer
STOCKHOLDERS:
____________________________________________
____________________________________________
____________________________________________
____________________________________________
____________________________________________
14
EQUUS II INCORPORATED
By:________________________________________
Name:______________________________________
Title:_____________________________________
15
XXXXXX PRIVATE EQUITY AND
MEZZANINE FUND, L.P.
By:________________________________________
Name:______________________________________
Title:_____________________________________
16
