REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of ______,
2004, by and among Critical Home Care, Inc., a Nevada corporation (the
"Company"), and the persons listed on Schedule A (the "Holders") annexed hereto.
Preliminary Statement
The Company and the Holders have each entered into a Subscription
Agreement (the "Subscription Agreement") on the date hereof. The Subscription
Agreement is being issued in connection with a private placement (the
"Offering") by the Company of a minimum of $8 million and a maximum of $11
million issuable in shares of common stock, $.25 par value of the Company (the
"Shares"), being sold only to accredited investors. For every ten Shares issued,
the Company will also issue one Class A Warrant (the Class A Warrants and Shares
are sometimes collectively referred to herein as the "Offered Securities").
Pursuant to the terms and conditions of the Confidential Private Placement
Memorandum (the "Memorandum"), the Subscription Agreement, the Shares and the
Class A Warrants, the Company has agreed to register the shares of common stock
of the Company owned, or that may be acquired by, the Holders, for resale under
the Securities Act of 1933 (the "Act") and applicable state securities laws, on
the terms and subject to the conditions set forth in this Agreement. All terms
not hereinafter defined shall have the meanings as set forth in the Memorandum.
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
Holders hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
a. "Holder" means the persons listed on Schedule A annexed
hereto, and any transferee or assignee to whom they assign rights under this
Agreement and who agrees to become bound by the provisions of this Agreement in
accordance with Section 9.
b. "Person" means a corporation, a limited liability company,
an association, a partnership, an organization, a business, an individual, a
governmental or political subdivision thereof.
c. "Register," "registered," and "registration" refer to a
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("Rule 415"), and the declaration or ordering of effectiveness
of such Registration Statement(s) by the United States Securities and Exchange
Commission.
1
d. "Registrable Securities" means the Shares and the shares of
Common Stock issuable upon exercise of the Class A Warrants (the "Warrant
Shares"), as well as any shares of Common Stock underlying the Late Registration
Warrants (as hereinafter defined) and the Class A Warrants.
e. "Registration Statement" means a registration statement or
registration statements of the Company filed under the Securities Act on Form
S-1 or SB-2 (or any other appropriate form prescribed by the SEC) for the resale
of the Registrable Securities.
2. REGISTRATION.
a. Mandatory Registration. The Company shall file with the
Securities and Exchange Commission (the "SEC"), within 90 days following the
final Closing Date (the "Scheduled Filing Date"), a registration statement
registering for resale all of the Registrable Securities held by each Holder;
provided that such Holder completes, dates, signs and returns a questionnaire (a
"Selling Securityholder Questionnaire") providing information concerning, among
other matters, such Holder, such Holder's equity ownership in the Company and
such Holder's plan of distribution of the Holder's Registrable Securities no
later than ten (10) business days following the delivery of a Selling
Securityholder Questionnaire to such Holder. In the event the Selling
Securityholder Questionnaire is not completed and returned within such 10-day
period, the Holder's Registrable Securities shall not be included in the
Registration Statement. The Company shall use its best efforts to cause such
registration statement to be declared effective by the SEC as promptly following
the filing of such registration statement as is commercially reasonable (the
"Effective Date"). The Company shall provide the Selling Securityholder
Questionnaire to each Holder promptly following the Closing Date.
b. In addition, if the Registration Statement required to be
filed by the Company pursuant to Section 2(a) is either (i) not filed on or
before the Scheduled Filing Date or (ii) is not declared effective with a
current prospectus available 150 days after the Scheduled Filing Date, then the
Company shall issue to each Holder a number of Warrants equal to the number of
shares underlying the Class A Warrants ("Late Registration Warrants") multiplied
by one percent (1.0%), multiplied by the number of months after the Closing Date
and/or 150 days after the Scheduled Filing Date, but prior to the Effective Date
up to a maximum of 6% Late Registration Warrants; provided, however, the failure
of the Holders to provide information for the Registration Statement concerning
such Holder within fifteen (15) days from receipt of such request from the
Company, shall cause the Company to remove the Holder's Registrable Securities
from the Registration Statement. The Company shall issue any required Late
Registration Warrants to each Holder on the last business day of each month or
part thereof until the Registration Statement is filed or declared effective by
the SEC with a current prospectus available. The Common Shares underlying Late
Registration Warrants ("Late Registration Warrant Shares") shall be registered
in the Registration Statement.
c. Piggy-Back Registration. If at any time prior to the
expiration of the Registration Period (as hereinafter defined) the Company
proposes to file with the SEC a Registration Statement relating to an offering
for its own account or the account of others under the 1933 Act of any of its
securities (other than a Registration Statement on Form S-4 or Form S-8 (or
their equivalents at such time) relating to securities to be issued solely in
connection with
2
any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans) the Company shall
promptly send to each Holder written notice of the Company's intention to file a
Registration Statement and of such Holder's rights under this Section 2(c) and,
if within five (10) business days after receipt of such notice, such Holder
shall so request in writing, the Company shall include in such Registration
Statement all or any part of the Registrable Securities such Holder requests to
be registered, subject to the priorities set forth in this Section 2(c) below.
No right to registration of Registrable Securities under this Section 2(c) shall
be construed to limit any registration required under Sections 2(a) or (b). If
an offering in connection with which a Holder is entitled to registration under
this Section 2(c) is an underwritten offering, then each Holder whose
Registrable Securities are included in such Registration Statement shall, unless
otherwise agreed to by the Company, offer and sell such Registrable Securities
in an underwritten offering using the same underwriter or underwriters and,
subject to the provisions of this Agreement, on the same terms and conditions as
other shares of Common Stock included in such underwritten offering. If a
registration pursuant to this Section 2(c) is to be an underwritten public
offering and the managing underwriter(s) advise the Company in writing that, in
their reasonable good faith opinion, marketing or other factors dictate that a
limitation on the number of shares of Common Stock which may be included in the
Registration Statement is necessary to facilitate and not adversely affect the
proposed offering, then the Company shall include in such registration: (1)
first, all securities the Company proposes to sell for its own account, (2)
second, up to the full number of securities proposed to be registered for the
account of the holders of securities entitled to inclusion of their securities
in the Registration Statement by reason of demand registration rights, and (3)
third, the securities requested to be registered by the Holders and other
holders of securities entitled to participate in the registration, as of the
date hereof, drawn from them pro rata based on the number each has requested to
be included in such registration.
d. Allocation of Registrable Securities. The initial number of
Registrable Securities included in any Registration Statement and each increase
in the number of Registrable Securities included therein shall be allocated pro
rata among the Holders based on the number of Registrable Securities held by
each Holder at the time the Registration Statement covering such initial number
of Registrable Securities or increase thereof is declared effective by the SEC.
In the event that a Holder sells or otherwise transfers any of such Holder's
Registrable Securities, each transferee shall be allocated a pro rata portion of
the then remaining number of Registrable Securities included in such
Registration Statement for such transferor. Any shares of Common Stock included
in a Registration Statement and which remain allocated to any Person which
ceases to hold any Registrable Securities shall be allocated to the remaining
Holders, pro rata based on the number of Registrable Securities then held by
such Holders.
3. RELATED OBLIGATIONS.
The Company will use its best efforts to effect the registration of the
Registrable Securities contemplated by Section 2 in accordance with the intended
method of disposition thereof and, pursuant thereto, the Company shall have the
following obligations:
a. The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities (on or prior
to the Scheduled Filing Date) for the registration of Registrable Securities
pursuant to Section 2 and use its best efforts to cause
3
such Registration Statements relating to the Registrable Securities to become
effective as soon as possible after such filing. The Company shall not file any
other Registration Statement with respect to any of its securities between the
date hereof and the filing date of such Registration Statement (other than a
Registration Statement on Form S-8 (or its equivalent at such time)). The
Company shall keep the Registration Statement required to be filed hereunder
effective pursuant to Rule 415 at all times until the expiration of the Warrants
(the "Registration Period"). The 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
light of the circumstances in which they were made, not misleading. The term
"best efforts" shall mean, among other things, that the Company shall submit to
the SEC, within five business days after the Company learns that no review of a
particular Registration Statement will be made by the staff of the SEC or that
the staff has no further comments on the Registration Statement, as the case may
be, a request for acceleration of effectiveness of such Registration Statement
to a time and date not later than 48 hours after the submission of such request.
b. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to a
Registration Statement and the prospectus used in connection with such
Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the Securities Act, as may be necessary to keep such
Registration Statement effective at all times during the Registration Period,
and, during such period, comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities of the Company covered
by such Registration Statement until such time as all of such Registrable
Securities shall have been disposed of in accordance with the intended methods
of disposition by the seller or sellers thereof as set forth in such
Registration Statement. In the case of amendments and supplements to a
Registration Statement that are required to be filed pursuant to this Agreement
(including pursuant to this Section 3(b)) by reason of the Company filing a
report on Form 10-KSB, Form 10-QSB or Form 8-K or any analogous report under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Company
shall file such amendments or supplements with the SEC on the same day or as
soon as practicably thereafter on which the Exchange Act report is filed that
created the requirement for the Company to amend or supplement the Registration
Statement.
c. The Company shall furnish to each Holder whose Registrable
Securities are included in any Registration Statement, without charge, upon the
effectiveness of any Registration Statement, one copy of the prospectus included
in such Registration Statement and all amendments and supplements thereto as
such Holder may reasonably request and such other documents, including copies of
any preliminary or final prospectus, as such Holder may reasonably request from
time to time in order to facilitate the disposition of the Registrable
Securities owned by such Holder.
d. The Company shall use reasonable efforts to (i) register
and qualify the Registrable Securities covered by a Registration Statement under
such other securities or "blue sky" laws of such jurisdictions in the United
States as any Holder reasonably requests, (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 during the Registration Period, (iii) take
such other actions as may be
4
necessary to maintain such registrations and qualifications 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 (x) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this Section 3(d), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify each Holder who holds
Registrable Securities of the receipt by the Company of any notification with
respect to the suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or "blue sky" laws of any
jurisdiction in the United States or its receipt of actual notice of the
initiation or threatening of any proceeding for such purpose.
e. As promptly as practicable after becoming aware of such
event, the Company shall notify each Holder in writing of the happening of any
event as a result of which the prospectus included in a Registration Statement,
as then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and deliver
one copy of such supplement or amendment to each Holder (or such other number of
copies as such Holder may reasonably request). The Company shall also promptly
notify each Holder in writing (i) when a prospectus or any prospectus supplement
or post-effective amendment has been filed, and when a Registration Statement or
any post-effective amendment has become effective (notification of such
effectiveness shall be delivered to each Holder by facsimile on the same day of
such effectiveness and by overnight mail), (ii) of any request by the SEC for
amendments or supplements to a Registration Statement or related prospectus or
related information, and (iii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.
f. The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify each Holder who holds Registrable
Securities being sold of the issuance of such order and the resolution thereof
or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.
g. The Company shall hold in confidence and not make any
disclosure of information concerning a Holder provided to the Company unless (i)
disclosure of such information is necessary to comply with Federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning an Holder is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt written
notice to such
5
Holder and allow such Holder, at the Holder's expense, to undertake appropriate
action to prevent disclosure of, or to obtain a protective order for, such
information.
h. The Company shall use its best efforts to (i) cause all the
Registrable Securities covered by a Registration Statement to be listed on each
securities exchange on which securities of the same class or series issued by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or, if not, (ii)
secure the designation and quotation of all the Registrable Securities covered
by the Registration Statement on the Nasdaq National Market or the Nasdaq
SmallCap Market if the Company then satisfies the applicable eligibility
criteria of the Nasdaq Stock Market. The Company shall pay all fees and expenses
in connection with satisfying its obligation under this Section 3(h).
i. The Company shall provide a transfer agent and registrar of
all such Registrable Securities not later than the effective date of such
Registration Statement.
j. The Company shall use its best efforts to cause the
Registrable Securities covered by the applicable Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to consummate the disposition of such Registrable
Securities.
k. The Company shall otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC in connection with any
registration hereunder.
l. Within three (3) business days after a Registration
Statement that covers applicable Registrable Securities is ordered effective by
the SEC, the Company shall deliver to the transfer agent for such Registrable
Securities (with copies to the Holders whose Registrable Securities are included
in such Registration Statement) confirmation that such Registration Statement
has been declared effective by the SEC.
m. The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by the Holders of Registrable
Securities pursuant to a Registration Statement.
4. OBLIGATIONS OF THE HOLDERS.
a. At least fifteen (15) calendar days prior to the first
anticipated filing date of a Registration Statement, the Company shall notify
each Holder in writing of the information the Company requires from each such
Holder if such Holder elects to have any of such Holder's Registrable Securities
included in such Registration Statement. 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 a particular Holder that
such Holder shall 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 execute such documents in
connection with such registration as the Company may reasonably request.
b. Each Holder by such Holder's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection
6
with the preparation and filing of any Registration Statement hereunder, unless
such Holder has notified the Company in writing of such Holder's election to
exclude all of such Holder's Registrable Securities from such Registration
Statement.
c. Each Holder agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 3(e)
or the first sentence of Section 3(f), such Holder will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3(e) or the
first sentence of Section 3(f).
d. Each Holder agrees not to take any action to cause such
Holder to become a registered broker-dealer, as defined under the Exchange Act.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees, and
fees and disbursements of counsel for the Company, shall be paid by the Company;
provided, however, that Holders whose Registrable Securities are included in the
second Registration Statement filed under Section 2(b) shall bear all of the
foregoing expenses.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a
Registration Statement under this Agreement:
a. To the fullest extent permitted by law, the Company will,
and hereby does, indemnify, hold harmless and defend each Holder who holds such
Registrable Securities, the directors, officers, partners, and each Person, if
any, who controls, any Holder within the meaning of the Securities Act or the
Exchange Act, and any underwriter (as defined in the Securities Act) for the
Holders, and the directors and officers of, and each Person, if any, who
controls, any underwriter within the meaning of the Securities Act or the
Exchange Act (each, an "Indemnified Person"), against any losses, claims,
damages, liabilities, judgments, fines, penalties, charges, costs, attorneys'
fees, amounts paid in settlement or expenses, joint or several (collectively,
"Claims"), incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory agency
or body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("Indemnified Damages"), to which any of them
may become subject 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 in a
Registration Statement or any post-effective amendment thereto or in any filing
made in connection with the qualification of the offering under the securities
or other "blue sky" laws of any jurisdiction in which Registrable Securities are
offered ("Blue Sky Filing"), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
7
therein not misleading, (ii) any untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus if used prior to the
effective 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 light of the circumstances under which the statements therein were
made, not misleading, (iii) any violation or alleged violation by the Company of
the Securities Act, the Exchange Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities pursuant to a
Registration Statement or (iv) any material violation of this Agreement (the
matters in the foregoing clauses (i) through (iv) being, collectively,
"Violations"). The Company shall reimburse the Holders promptly as such expenses
are incurred and are due and payable, for any 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): (i) shall not apply to
a Claim by an Indemnified Person arising out of or based upon a Violation that
occurs in reliance upon and in conformity with information furnished in writing
to the Company by such Indemnified Person or underwriter for such 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(c);
(ii) with respect to any preliminary prospectus, shall not 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(c), and the Indemnified Person was promptly
advised in writing not to use the incorrect prospectus prior to the use giving
rise to a violation and such Indemnified Person, notwithstanding such advice,
used it; (iii) shall not be available to the extent such Claim is based on a
failure of the Holder to deliver or to cause to be delivered the prospectus made
available by the Company, if such prospectus was timely made available by the
Company pursuant to Section 3(c); and (iv) shall not 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. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer of
the Registrable Securities by the Holders pursuant to Section 9.
b. In connection with any Registration Statement in which a
Holder is participating, each such Holder agrees to severally and not jointly
indemnify, hold harmless and defend, to the same extent and in the same manner
as is set forth in Section 6(a), the Company, each of its directors and
officers, each Person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act (collectively and together with an
Indemnified Person, an "Indemnified Party"), against any Claim or Indemnified
Damages to which any of them may become subject, under the Securities Act, the
Exchange Act or otherwise, insofar as such Claim or Indemnified Damages arise
out of or are based upon any Violation, in each case to the extent, and only to
the extent, that such Violation occurs in reliance upon and in conformity with
written information furnished to the Company by such Holder expressly for use in
connection with such Registration Statement; and, subject to Section 6(d),
8
such Holder will reimburse any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 6(b) and the
agreement with respect to contribution contained in Section 7 shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of such Holder, which consent shall not be
unreasonably withheld; provided, further, however, that the Holder shall be
liable under this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to such Holder as a result of the
sale of Registrable Securities pursuant to such Registration Statement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the transfer of
the Registrable Securities by the Holders pursuant to Section 9. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(b) with respect to any preliminary prospectus shall
not inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus and such prospectus was provided to Holders
as required, as then amended or supplemented.
c. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in any distribution, to the same extent as provided
above, with respect to information such persons so furnished in writing
expressly for inclusion in the Registration Statement.
d. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of any
action or proceeding (including any governmental action or proceeding) involving
a Claim, such Indemnified Person or Indemnified Party 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, assume control of the defense thereof with
counsel mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying party, if, in
the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. The Company shall
pay reasonable fees for only one separate legal counsel for the Holders, and
such legal counsel shall be selected by the Holders holding a majority of the
issued or issuable Registrable Securities included in the Registration Statement
to which the Claim relates. The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person that relates to such action or claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person
fully apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. No indemnifying party shall be liable for any
settlement of any action,
9
claim or proceeding effected without its written consent; provided, however,
that the indemnifying party shall not unreasonably withhold, delay or condition
its consent. No indemnifying party shall, without the consent of the Indemnified
Party or Indemnified Person, consent to entry of any judgment or enter into any
settlement or other compromise that does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party or
Indemnified Person of a release from all liability in respect to such claim or
litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party or
Indemnified Person with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. 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 or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action.
e. 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 and when bills are received or Indemnified Damages
are incurred.
f. The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.
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:
(i) 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
fraudulent misrepresentation; and (ii) 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 THE EXCHANGE ACT.
With a view to making available to the Holders 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 Holders to sell securities
of the Company to the public without registration ("Rule 144") during the
Registration Period, the Company agrees 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 Securities Act and the Exchange Act
so long as the Company
10
remains subject to such requirements and the filing of such reports and other
documents as required for the applicable provisions of Rule 144; and
c. furnish to each Holder so long as such Holder 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 Holders to sell such securities pursuant to Rule 144 without
registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights under this Agreement shall be automatically
assignable by the Holders to any transferee of all or any portion of Registrable
Securities if: (i) the Holder 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; (ii) the Company is, within a
reasonable time after such transfer or assignment, furnished with written notice
of (a) the name and address of such transferee or assignee, and (b) the
securities with respect to which such registration rights are being transferred
or assigned; (iii) immediately following such transfer or assignment the further
disposition of such securities by the transferee or assignee is restricted under
the Securities Act and applicable state securities laws; (iv) at or before the
time the Company receives the written notice contemplated by clause (ii) of this
sentence the transferee or assignee agrees in writing with the Company to be
bound by all of the provisions contained herein; and (v) such transfer shall
have been made in accordance with the applicable requirements of the Class A
Warrant.
10. MISCELLANEOUS.
a. A Person is deemed to be a Holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more Persons 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. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one business day after deposit with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
If to the Company: Critical Home Care, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
11
If to a Holder, to his or its address and facsimile number on Schedule A hereto,
or to such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party five days prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically generated by the sender's
facsimile machine containing the time, date, recipient facsimile number and an
image of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, transmission by
facsimile or overnight or courier delivery in accordance with clause (A), (B) or
(C) above, respectively.
c. Except as otherwise provided in this Agreement, the failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof.
d. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of Nevada, without giving effect to any choice of law
or conflict of law provision or rule (whether of the State of Nevada or any
other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of Nevada. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
e. Subject to the requirements of Section 9, this Agreement
shall inure to the benefit of and be binding upon the heirs, legal
representatives, permitted successors and assigns of each of the parties hereto.
f. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
g. This Agreement may be executed in identical 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 facsimile transmission of a copy of this
Agreement bearing the signature of the party so delivering this Agreement.
h. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
i. The language used in this Agreement will be deemed to be
the language chosen by the parties to express their mutual intent and no rules
of strict construction will be applied against any party.
12
j. This Agreement is intended for the benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.
[The remainder of this page has been intentionally left blank]
13
IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement
to be duly executed as of the day and year first above written.
CRITICAL HOME CARE, INC. Holders:
By:__________________________________ ________________________________
Name: Xxxxx Xxxxxx
Title: Chairman, President and
Chief Executive Officer ________________________________
________________________________
________________________________
14
Schedule A
Name and Number of
-------- ---------
Address Shares
------- ------
[Letterhead of
Critical Home Care, Inc.]
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[Name of Holder]
----------------
[Address of Holder]
-------------------
Attn:______________
______________, 2004
Ladies and Gentlemen:
Please be advised that on __________, 2004 we filed a Registration
Statement on Form SB-2 (File No. 333-__________________) (the "Registration
Statement") with the Securities and Exchange Commission (the "SEC") for the
resale of shares of our common stock (the "Shares") by the selling stockholders
named therein in accordance with the Registration Rights Agreement dated as of
______________, 2004.
In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the Securities Act of 1933
at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no
knowledge, after telephonic inquiry of a member of the SEC's staff, that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the Shares
are available for resale under the Securities Act of 1933 pursuant to the
Registration Statement.
Very truly yours,
CRITICAL HOME CARE, INC.
By:___________________________________________
Name:
Title:
