REGISTRATION RIGHTS AGREEMENT
by and among
COMPLETE WELLNESS CENTERS, INC.
and
THE INITIAL HOLDERS SPECIFIED ON
THE SIGNATURE PAGE HEREOF
Dated as of January 12, 1998
TABLE OF CONTENTS
Page
1. DEFINITIONS................................................... 1
2. REGISTRATION UNDER THE SECURITIES ACT......................... 6
2.1. Demand Registration.................................. 6
2.2. Incidental Registration.............................. 10
2.3. Shelf Registration................................... 12
2.4. Expenses............................................. 13
2.5. Underwritten Offerings............................... 13
2.6. Conversions; Exercises............................... 14
2.7. Postponements........................................ 14
3. HOLDBACK ARRANGEMENTS......................................... 15
3.1. Restrictions on Sale by Holders of Registrable
Securities........................................... 15
3.2. Restrictions on Sale by the Company and Others....... 16
4. REGISTRATION PROCEDURES....................................... 16
4.1. Obligations of the Company........................... 16
4.2. Seller Information................................... 22
4.3. Notice to Discontinue................................ 23
5. INDEMNIFICATION; CONTRIBUTION................................. 23
5.1. Indemnification by the Company....................... 23
5.2. Indemnification by Holders........................... 24
5.3. Conduct of Indemnification Proceedings............... 25
5.4. Contribution......................................... 26
5.5. Other Indemnification................................ 27
5.6. Indemnification Payments............................. 27
6. GENERAL....................................................... 27
6.1. Adjustments Affecting Registrable Securities......... 27
6.2. Registration Rights to Others........................ 27
6.3. Availability of Information; Rule 144; Rule
144A; Other Exemptions............................... 27
6.4. Amendments and Waivers............................... 28
6.5. Notices.............................................. 29
6.6. Successors and Assigns............................... 30
6.7. Counterparts......................................... 30
6.8. Descriptive Headings, Etc............................ 30
6.9. Severability......................................... 31
6.10. Governing Law........................................ 31
6.11. Remedies; Specific Performance....................... 31
6.12. Entire Agreement..................................... 31
6.13. Nominees for Beneficial Owners....................... 32
6.14. Consent to Jurisdiction; Waiver of Jury.............. 32
6.15. Further Assurances................................... 32
6.16. No Inconsistent Agreements........................... 33
6.17. Construction......................................... 33
REGISTRATION RIGHTS AGREEMENT (this or the "Agreement")
dated as of January 12, 1998, by and among Complete Wellness Centers,
Inc., a Delaware corporation (the "Company"), and the Initial Holders
specified on the signature pages to this Agreement.
W I T N E S S E T H:
WHEREAS, simultaneously herewith and pursuant to an
Investment Agreement, dated as of December 19, 1997 and as supplemented
as of January 12, 1998 (the "Investment Agreement"), among the Company
and the Initial Holders, the Company is issuing to the Initial Holders
Common Stock Purchase Warrants (together with any additional warrants
issued in accordance with the terms thereof, the "Warrants") to purchase
common stock, par value $.0001665, of the Company (the "Common Stock"),
and shares of Senior Redeemable Preferred Stock of the Company (the
"Preferred Stock"); and
WHEREAS, in order to induce the Initial Holders to enter
into the Investment Agreement and to subscribe for and purchase the
Warrants and the Preferred Stock, the Company has agreed to provide
certain registration rights on the terms and subject to the conditions
set forth herein;
NOW, THEREFORE, in consideration of the premises and of
the mutual agreements contained herein, and for other good and valuable
consideration the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings:
"Affiliate" shall mean (i) with respect to any Person, any
other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such Person, and (ii) with respect
to any individual, shall also mean the spouse, sibling, child,
step-child, grandchild, niece, nephew or parent of such Person, or the
spouse thereof.
"Blackout Period" shall have the meaning set forth in
Section 2.7.
"Common Shares" shall mean shares of Common Stock.
"Common Stock" shall have the meaning set forth in the
preamble.
"Company" shall have the meaning set forth in the
preamble.
"Demand Registration" shall mean a registration required
to be effected by the Company pursuant to Section 2.1.
"Demand Registration Statement" shall mean a registration
statement of the Company which covers the Registrable Securities
requested to be included therein pursuant to the provisions of Section
2.1 and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference (or deemed to be incorporated by reference)
therein.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time, and the rules and regulations
thereunder, or any similar or successor statute.
"Holders" shall mean the Initial Holders for so long as
they own any Registrable Securities and such of its respective heirs,
successors and permitted assigns (including any permitted transferees of
Registrable Securities) who acquire or are otherwise the transferee of
Registrable Securities, directly or indirectly, from such Initial Holders
(or any subsequent Holder), for so long as such heirs, successors and
permitted assigns own any Registrable Securities. For purposes of this
Agreement, a Person will be deemed to be a Holder whenever such Person
holds an option to purchase, or a security convertible into or
exercisable or exchangeable for, Registrable Securities, whether or not
such purchase, conversion, exercise or exchange has actually been
effected and disregarding any legal restrictions upon the exercise of
such rights. Registrable Securities issuable upon exercise of an option
or upon conversion, exchange or exercise of another security shall be
deemed outstanding for the purposes of this Agreement.
"Holders' Counsel" shall mean one firm of counsel (per
registration) to the Holders of Registrable Securities participating in
such registration, which counsel shall be selected (i) in the case of a
Demand Registration, by the Initiating Holders holding a majority of the
Registrable Securities for which registration was requested in the
Request, and (ii) in all other cases, by the Majority Holders
participating in the Registration.
"Incidental Registration" shall mean a registration
required to be effected by the Company pursuant to Section 2.2.
"Incidental Registration Statement" shall mean a
registration statement of the Company which covers the Registrable
Securities requested to be included therein pursuant to the provisions of
Section 2.2 and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including
the Prospectus contained therein, all exhibits thereto and all material
incorporated by reference (or deemed to be incorporated by reference)
therein.
"Initial Holders" shall mean the Persons specified as such
on the signature pages to this Agreement on the date hereof.
"Initiating Holders" shall mean, with respect to a
particular registration, the Holders who initiated the Request for such
registration.
"Inspectors" shall have the meaning set forth in Section
4.1(g).
"Investment Agreement" shall have the meaning set forth in
the preamble.
"Majority Holders" shall mean one or more Holders of
Registrable Securities who at such time hold a majority of the
Registrable Securities then outstanding.
"Majority Holders of the Registration" shall mean, with
respect to a particular registration, one or more Holders of Registrable
Securities who would hold a majority of the Registrable Securities to be
included in such registration.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Person" shall mean any individual, firm, partnership,
corporation, trust, joint venture, association, joint stock company,
limited liability company, unincorporated organization or any other
entity or organization, including a government or agency or political
subdivision thereof, and shall include any successor (by merger or
otherwise) of such entity.
"Preferred Stock" shall have the meaning set forth in the
preamble.
"Prospectus" shall mean the prospectus included in a
Registration Statement (including, without limitation, any preliminary
prospectus and any prospectus that includes any information previously
omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities
Act), and any such Prospectus as amended or supplemented by any
prospectus supplement, and all other amendments and supplements to such
Prospectus, including post-effective amendments, and in each case
including all material incorporated by reference (or deemed to be
incorporated by reference) therein.
"Registrable Securities" shall mean (i) any Warrant Shares
issued or issuable upon exercise of the Warrants, (ii) securities of the
Company acquired by the Initial Holders or their assignees in any
transaction contemplated by the Warrants, and (iii) any other securities
of the Company (or any successor or assign of the Company, whether by
merger, consolidation, sale of assets or otherwise) which may be issued
or issuable with respect to, in exchange for, or in substitution of,
Registrable Securities referenced in clauses (i) or (ii) above by reason
of any dividend or stock split, combination of shares, merger,
consolidation, recapitalization, reclassification, reorganization, sale
of assets or similar transaction. As to any particular Registrable
Securities, such securities shall cease to be Registrable Securities when
(A) a registration statement with respect to the sale of such securities
shall have been declared effective under the Securities Act and such
securities shall have been disposed of in accordance with such
registration statement, (B) such securities are sold pursuant to Rule 144
(or any similar provisions then in force) under the Securities Act, (C)
such securities have been otherwise transferred, a new certificate or
other evidence of ownership for them not bearing the legend restricting
further transfer shall have been delivered by the Company and subsequent
public distribution of them shall not require registration under the
Securities Act, or (D) such securities shall have ceased to be
outstanding; provided, however, that clauses (A) and (C) shall not apply
if the Holder may be deemed to be an affiliate of the Company.
"Registration Expenses" shall mean any and all expenses
incident to performance of or compliance with this Agreement by the
Company and its subsidiaries, including, without limitation (i) all SEC,
stock exchange, NASD and other registration, listing and filing fees,
(ii) all fees and expenses incurred in connection with compliance with
state securities or blue sky laws and compliance with the rules of any
stock exchange (including fees and disbursements of counsel in connection
with such compliance and the preparation of a blue sky memorandum and
legal investment survey), (iii) all expenses of any Persons in preparing
or assisting in preparing, word processing, printing, distributing,
mailing and delivering any Registration Statement, any Prospectus, any
underwriting agreements, transmittal letters, securities sales
agreements, securities certificates and other documents relating to the
performance of or compliance with this Agreement, (iv) the fees and
disbursements of counsel for the Company, (v) the fees and disbursements
of Holders' Counsel, (vi) the fees and disbursements of all independent
public accountants (including the expenses of any audit and/or "cold
comfort" letters) and the fees and expenses of other Persons, including
experts, retained by the Company, (vii) the expenses incurred in
connection with making road show presentations and holding meetings with
potential investors to facilitate the distribution and sale of
Registrable Securities which are customarily borne by the issuer, (viii)
any fees and disbursements of underwriters customarily paid by issuers or
sellers of securities, and (ix) premiums and other costs of policies of
insurance against liabilities arising out of the public offering of the
Registrable Securities being registered; provided, however, Registration
Expenses shall not include discounts and commissions payable to
underwriters, selling brokers, dealer managers or other similar Persons
engaged in the distribution of any of the Registrable Securities; and
provided further, that in any case where Registration Expenses are not to
be borne by the Company, such expenses shall not include salaries of
Company personnel or general overhead expenses of the Company, auditing
fees, premiums or other expenses relating to liability insurance required
by underwriters of the Company or other expenses for the preparation of
financial statements or other data normally prepared by the Company in
the ordinary course of its business or which the Company would have
incurred in any event; and provided, further, that in the event the
Company shall, in accordance with Section 2.2 or Section 2.6 hereof, not
register any securities with respect to which it had given written notice
of its intention to register to Holders, notwithstanding anything to the
contrary in the foregoing, all of the costs incurred by the Holders in
connection with such registration shall be deemed to be Registration
Expenses.
"Registration Statement" shall mean any registration
statement of the Company which covers any Registrable Securities and all
amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference (or deemed to be incorporated by reference) therein.
"Request" shall have the meaning set forth in Section
2.1(a).
"SEC" shall mean the Securities and Exchange Commission,
or any successor agency having jurisdiction to enforce the Securities
Act.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time, and the rules and regulations thereunder, or
any similar or successor statute.
"Shelf Registration" shall have the meaning set forth in
Section 2.1(a).
"Underwriters" shall mean the underwriters, if any, of the
offering being registered under the Securities Act.
"Underwritten Offering" shall mean a sale of securities of
the Company to an Underwriter or Underwriters for reoffering to the
public.
"Warrants" shall have the meaning set forth in the
preamble.
"Warrant Shares" shall mean the Common Shares or other
equity securities issued or issuable upon the exercise of the Warrants.
"Withdrawn Demand Registration" shall have the meaning set
forth in Section 2.1(a).
"Withdrawn Request" shall have the meaning set forth in
Section 2.1(a).
2. REGISTRATION UNDER THE SECURITIES ACT.
2.1. Demand Registration.
(a) Right to Demand Registration. Subject to
Section 2.1(c), at any time or from time to time the Majority
Holders shall have the right to request in writing that the
Company register all or part of such Holders' Registrable
Securities (a "Request") (which Request shall specify the
amount of Registrable Securities intended to be disposed of by
such Holders and the intended method of disposition thereof)
by filing with the SEC a Demand Registration Statement. As
promptly as practicable, but no later than 10 days after
receipt of a Request, the Company shall give written notice of
such requested registration to all Holders of Registrable
Securities. Subject to Section 2.1(b), the Company shall
include in a Demand Registration (i) the Registrable
Securities intended to be disposed of by the Initiating
Holders and (ii) the Registrable Securities intended to be
disposed of by any other Holder which shall have made a
written request (which request shall specify the amount of
Registrable Securities to be registered and the intended
method of disposition thereof) to the Company for inclusion
thereof in such registration within 20 days after the receipt
of such written notice from the Company. The Company shall, as
expeditiously as possible following a Request, use its best
efforts to cause to be filed with the SEC a Demand
Registration Statement providing for the registration under
the Securities Act of the Registrable Securities which the
Company has been so requested to register by all such Holders,
to the extent necessary to permit the disposition of such
Registrable Securities so to be registered in accordance with
the intended methods of disposition thereof specified in such
Request or further requests (including, without limitation, by
means of a shelf registration pursuant to Rule 415 under the
Securities Act (a "Shelf Registration") if so requested and if
the Company is then eligible to use such a registration). The
Company shall use its best efforts to have such Demand
Registration Statement declared effective by the SEC as soon
as practicable thereafter and to keep such Demand Registration
Statement continuously effective for the period specified in
Section 4.1(b).
A Request may be withdrawn prior to the filing of
the Demand Registration Statement by the Majority Holders of
the Registration (a "Withdrawn Request") and a Demand
Registration Statement may be withdrawn prior to the
effectiveness thereof by the Majority Holders of the
Registration (a "Withdrawn Demand Registration"), and such
withdrawals shall be treated as a Demand Registration which
shall have been effected pursuant to this Section 2.1, unless
the Holders of Registrable Securities to be included in such
Registration Statement reimburse the Company for its
reasonable out-of-pocket Registration Expenses relating to the
preparation and filing of such Demand Registration Statement
(to the extent actually incurred); provided; however, that if
a Withdrawn Request or Withdrawn Registration Statement is
made (A) because of a material adverse change in the business,
financial condition or prospects of the Company, or (B)
because the sole or lead managing Underwriter advises that the
amount of Registrable Securities to be sold in such offering
be reduced pursuant to Section 2.1(b) by more than 10% of the
Registrable Securities to be included in such Registration
Statement, or (C) because of a postponement of such
registration pursuant to Section 2.7, then such withdrawal
shall not be treated as a Demand Registration effected
pursuant to this Section 2.1 (and shall not be counted toward
the number of Demand Registrations), and the Company shall pay
all Registration Expenses in connection therewith. Any Holder
requesting inclusion in a Demand Registration may, at any time
prior to the effective date of the Demand Registration
Statement (and for any reason) revoke such request by
delivering written notice to the Company revoking such
requested inclusion.
The registration rights granted pursuant to the
provisions of this Section 2.1 shall be in addition to the
registration rights granted pursuant to the other provisions
of Section 2 hereof.
(b) Priority in Demand Registrations. If a Demand
Registration involves an Underwritten Offering, and the sole
or lead managing Underwriter, as the case may be, of such
Underwritten Offering shall advise the Company in writing
(with a copy to each Holder requesting registration) on or
before the date five days prior to the date then scheduled for
such offering that, in its opinion, the amount of Registrable
Securities requested to be included in such Demand
Registration exceeds the number which can be sold in such
offering within a price range acceptable to the Majority
Holders of the Registration (such writing to state the basis
of such opinion and the approximate number of Registrable
Securities which may be included in such offering), the
Company shall include in such Demand Registration, to the
extent of the number which the Company is so advised may be
included in such offering, the Registrable Securities
requested to be included in the Demand Registration by the
Holders allocated pro rata in proportion to the number of
Registrable Securities requested to be included in such Demand
Registration by each of them. In the event the Company shall
not, by virtue of this Section 2.1(b), include in any Demand
Registration all of the Registrable Securities of any Holder
requesting to be included in such Demand Registration, such
Holder may, upon written notice to the Company given within
five days of the time such Holder first is notified of such
matter, reduce the amount of Registrable Securities it desires
to have included in such Demand Registration, whereupon only
the Registrable Securities, if any, it desires to have
included will be so included and the Holders not so reducing
shall be entitled to a corresponding increase in the amount of
Registrable Securities to be included in such Demand
Registration.
(c) Limitations on Registrations. The rights of
Holders of Registrable Securities to request Demand
Registrations pursuant to Section 2.1(a) are subject to the
following limitations: (i) in no event shall the Company be
required to effect a Demand Registration before May 31, 1998,
and (ii) in no event shall the Company be required to pay
Registration Expenses of more than two Demand Registrations;
provided, however, that such number shall be increased to the
extent the Company does not include in what would otherwise be
the final registration for which the Company is required to
pay Registration Expenses the number of Registrable Securities
requested to be registered by the Holders by reason of Section
2.1(b); and provided, further, that the Registration Expenses
in connection with each other Demand Registration shall be
allocated pro rata among all Persons on whose behalf
securities of the Company are included in such registration,
on the basis of the respective amounts of the securities then
being registered on their behalf. The Holders may request one
Demand Registration in addition to those provided for above,
but the Holders must pay the Registration Expenses for such
additional Demand Registration.
(d) Underwriting; Selection of Underwriters.
Notwithstanding anything to the contrary contained in Section
2.1(a), if the Initiating Holders holding a majority of the
Registrable Securities for which registration was requested in
the Request so elect, the Company shall use its best efforts
to ensure that the offering of such Registrable Securities
pursuant to such Demand Registration shall be in the form of a
firm commitment Underwritten Offering; and such Initiating
Holders may require that all Persons (including other Holders)
participating in such registration sell their Registrable
Securities to the Underwriters at the same price and on the
same terms of underwriting applicable to the Initiating
Holders. If any Demand Registration involves an Underwritten
Offering, the sole or managing Underwriters and any additional
investment bankers and managers to be used in connection with
such registration shall be selected by the Initiating Holders
holding a majority of the Registrable Securities for which
registration was requested in the Request, subject to the
approval of the Company (such approval not to be unreasonably
withheld).
(e) Registration of Other Securities. Whenever the
Company shall effect a Demand Registration, no securities
other than the Registrable Securities shall be covered by such
registration unless the Majority Holders of the Registration
shall have consented in writing to the inclusion of such other
securities, such consent not to be unreasonably withheld.
(f) Effective Registration Statement; Suspension. A
Demand Registration Statement shall not be deemed to have
become effective (and the related registration will not be
deemed to have been effected)(i) unless it has been declared
effective by the SEC and remains effective in compliance with
the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such
Demand Registration Statement for the time period specified in
Section 4.1(b), (ii) if the offering of any Registrable
Securities pursuant to such Demand Registration Statement is
interfered with by any stop order, injunction or other order
or requirement of the SEC or any other governmental agency or
court, or (iii) if, in the case of an Underwritten Offering,
the conditions to closing specified in an underwriting
agreement to which the Company is a party are not satisfied
other than by the sole reason of any breach or failure by the
Holders of Registrable Securities or are not otherwise waived.
(g) Other Registrations. During the period (i)
beginning on the date of a Request and (ii) ending on the date
that is 60 days after the date that a Demand Registration
Statement filed pursuant to such Request has been declared
effective by the SEC or, if the Holders shall withdraw such
Request or such Demand Registration Statement, on the date of
such Withdrawn Request or such Withdrawn Registration
Statement, the Company shall not, without the consent of the
Majority Holders of the Registration, file a registration
statement pertaining to any other securities of the Company.
(h) Registration Statement Form. Registrations
under this Section 2.1 shall be on such appropriate
registration form of the SEC (i) as shall be selected by the
Initiating Holders holding a majority of the Registrable
Securities for which registration was requested in the
Request, and (ii) which shall be available for the sale of
Registrable Securities in accordance with the intended method
or methods of disposition specified in the requests for
registration; provided, however, that the Company shall not be
required to use a long-form registration statement if the
Company is legally permitted to use a short-form registration
statement for the requested purpose. The Company agrees to
include in any such Registration Statement all information
which any selling Holder, upon advice of counsel, shall
reasonably request.
2.2. Incidental Registration.
(a) Right to Include Registrable Securities. If the
Company at any time or from time to time proposes to register
any of its securities under the Securities Act (other than in
a registration on Form S-4 or S-8 or any successor form to
such forms and other than pursuant to Section 2.1 or 2.3)
whether or not pursuant to registration rights granted to
other holders of its securities and whether or not for sale
for its own account, the Company shall deliver prompt written
notice (which notice shall be given at least 30 days prior to
such proposed registration) to all Holders of Registrable
Securities of its intention to undertake such registration,
describing in reasonable detail the proposed registration and
distribution (including the anticipated range of the proposed
offering price, the class and number of securities proposed to
be registered and the distribution arrangements) and of such
Holders' right to participate in such registration under this
Section 2.2 as hereinafter provided. Subject to the other
provisions of this paragraph (a) and Section 2.2(b), upon the
written request of any Holder made within 20 days after the
receipt of such written notice (which request shall specify
the amount of Registrable Securities to be registered and the
intended method of disposition thereof), the Company shall
effect the registration under the Securities Act of all
Registrable Securities requested by Holders to be so
registered (an "Incidental Registration"), to the extent
requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable
Securities so to be registered, by inclusion of such
Registrable Securities in the Registration Statement which
covers the securities which the Company proposes to register
and shall cause such Registration Statement to become and
remain effective with respect to such Registrable Securities
in accordance with the registration procedures set forth in
Section 4. If an Incidental Registration involves an
Underwritten Offering, immediately upon notification to the
Company from the Underwriter of the price at which such
securities are to be sold, the Company shall so advise each
participating Holder. The Holders requesting inclusion in an
Incidental Registration may, at any time prior to the
effective date of the Incidental Registration Statement (and
for any reason), revoke such request by delivering written
notice to the Company revoking such requested inclusion.
If at any time after giving written notice of its
intention to register any securities and prior to the
effective date of the Incidental Registration Statement filed
in connection with such registration, the Company shall
determine for any reason not to register or to delay
registration of such securities, the Company may, at its
election, give written notice of such determination to each
Holder of Registrable Securities and, thereupon, (A) in the
case of a determination not to register, the Company shall be
relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from
its obligation to pay the Registration Expenses incurred in
connection therewith), without prejudice, however, to the
rights of Holders to cause such registration to be effected as
a registration under Section 2.1, and (B) in the case of a
determination to delay such registration, the Company shall be
permitted to delay the registration of such Registrable
Securities for the same period as the delay in registering
such other securities; provided, however, that if such delay
shall extend beyond 120 days from the date the Company
received a request to include Registrable Securities in such
Incidental Registration, then the Company shall again give all
Holders the opportunity to participate therein and shall
follow the notification procedures set forth in the preceding
paragraph. There is no limitation on the number of such
Incidental Registrations pursuant to this Section 2.2 which
the Company is obligated to effect.
The registration rights granted pursuant to the
provisions of this Section 2.2 shall be in addition to the
registration rights granted pursuant to the other provisions
of Section 2 hereof.
(b) Priority in Incidental Registration. If an
Incidental Registration involves an Underwritten Offering (on
a firm commitment basis), and the sole or the lead managing
Underwriter, as the case may be, of such Underwritten Offering
shall advise the Company in writing (with a copy to each
Holder requesting registration) on or before the date five
days prior to the date then scheduled for such offering that,
in its opinion, the amount of securities (including
Registrable Securities) requested to be included in such
registration exceeds the amount which can be sold in such
offering without materially interfering with the successful
marketing of the securities being offered (such writing to
state the basis of such opinion and the approximate number of
such securities which may be included in such offering without
such effect), the Company shall include in such registration,
to the extent of the number which the Company is so advised
may be included in such offering without such effect, (i) in
the case of a registration initiated by the Company, (A)
first, the securities that the Company proposes to register
for its own account, (B) second, the Registrable Securities
requested to be included in such registration by the Holders
and the securities requested to be included in such
registration pursuant to an agreement set forth on Schedule
6.2 hereto, allocated pro rata in proportion to the number of
securities requested to be included in such registration by
each of them, and (C) third, other securities of the Company
to be registered on behalf of any other Person, and (ii) in
the case of a registration initiated by a Person other than
the Company, (A) first, securities of the Company requested to
be included by such Persons initiating such registration, (B)
second, the Registrable Securities requested to be included in
such registration by the Holders and any securities requested
to be included in such registration pursuant to an agreement
set forth on Schedule 6.2 hereto, allocated pro rata in
proportion to the number of securities requested to be
included in such registration by each of them, (C) third, the
securities that the Company proposes to register for its own
account, and (D) fourth, other securities of the Company to be
registered on behalf of any other Person; provided, however,
that in the event the Company will not, by virtue of this
Section 2.2(b), include in any such registration all of the
Registrable Securities of any Holder requested to be included
in such registration, such Holder may, upon written notice to
the Company given within three days of the time such Holder
first is notified of such matter, reduce the amount of
Registrable Securities it desires to have included in such
registration, whereupon only the Registrable Securities, if
any, it desires to have included will be so included and the
Holders not so reducing shall be entitled to a corresponding
increase in the amount of Registrable Securities to be
included in such registration.
2.3. Shelf Registration. If a request made pursuant to
Section 2.1 is for a Shelf Registration, the Company shall use its best
efforts to keep the Shelf Registration continuously effective through the
date on which all of the Registrable Securities covered by such Shelf
Registration may be sold pursuant to Rule 144(k) under the Securities Act
(or any successor provision having similar effect); provided, however,
that prior to the termination of such Shelf Registration, the Company
shall first furnish to each Holder of Registrable Securities
participating in such Shelf Registration (i) an opinion, in form and
substance reasonably satisfactory to the Majority Holders of the
Registration, of counsel for the Company reasonably satisfactory to the
Majority Holders of the Registration stating that such Registrable
Securities are freely saleable pursuant to Rule 144(k) under the
Securities Act (or any successor provision having similar effect) or (ii)
a "No-Action Letter" from the staff of the SEC stating that the SEC would
not recommend enforcement action if the Registrable Securities included
in such Shelf Registration were sold in a public sale other than pursuant
to an effective registration statement.
2.4. Expenses. The Company shall pay all Registration
Expenses in connection with any Demand Registration, Incidental
Registration or Shelf Registration, whether or not such registration
shall become effective and whether or not all Registrable Securities
originally requested to be included in such registration are withdrawn or
otherwise ultimately not included in such registration, except as
otherwise provided with respect to a Withdrawn Request and a Withdrawn
Demand Registration in Section 2.1(a). Each Holder shall pay all
discounts, commissions and expense allowances payable to underwriters,
selling brokers, managers or other similar Persons engaged in the
distribution of such Holder's Registrable Securities pursuant to any
registration pursuant to this Section 2.
2.5. Underwritten Offerings.
(a) Demand Underwritten Offerings. If requested by
the sole or lead managing Underwriter for any Underwritten
Offering effected pursuant to a Demand Registration, the
Company shall enter into a customary underwriting agreement
with the Underwriters for such offering, such agreement to be
reasonably satisfactory in substance and form to each Holder
of Registrable Securities participating in such offering and
to contain such representations and warranties by the Company
and such other terms as are generally prevailing in agreements
of that type, including, without limitation, indemnification
and contribution to the effect and to the extent provided in
Section 5.
(b) Holders of Registrable Securities to be Parties
to Underwriting Agreement. The Holders of Registrable
Securities to be distributed by Underwriters in an
Underwritten Offering contemplated by Section 2 shall be
parties to the underwriting agreement between the Company and
such Underwriters and may, at such Holders' option, require
that any or all of the representations and warranties by, and
the other agreements on the part of, the Company to and for
the benefit of such Underwriters shall also be made to and for
the benefit of such Holders of Registrable Securities and that
any or all of the conditions precedent to the obligations of
such Underwriters under such underwriting agreement be
conditions precedent to the obligations of such Holders of
Registrable Securities; provided, however, that the Company
shall not be required to make any representations or
warranties with respect to written information specifically
provided by a selling Holder for inclusion in the Registration
Statement. No Holder shall be required to make any
representations or warranties to, or agreements with, the
Company or the Underwriters other than representations,
warranties or agreements regarding such Holder, such Holder's
Registrable Securities and such Holder's intended method of
disposition.
(c) Participation in Underwritten Registration.
Notwithstanding anything herein to the contrary, no Person may
participate in any underwritten registration hereunder unless
such Person (i) agrees to sell its securities on the same
terms and conditions provided in any underwritten arrangements
approved by the Persons entitled hereunder to approve such
arrangement and (ii) accurately completes and executes in a
timely manner all questionnaires, powers of attorney,
indemnities, custody agreements, underwriting agreements and
other documents reasonably required under the terms of such
underwriting arrangements.
2.6. Conversions; Exercises. Notwithstanding anything to the
contrary herein, in order for any Registrable Securities that are
issuable upon the exercise of conversion rights, options or warrants to
be included in any registration pursuant to Section 2 hereof, the
exercise of such conversion rights, options or warrants must be effected
no later than immediately prior to the closing of any sales under the
Registration Statement pursuant to which such Registrable Securities are
to be sold.
2.7. Postponements. The Company shall be entitled to postpone
a Demand Registration and to require the Holders of Registrable
Securities to discontinue the disposition of their securities covered by
a Shelf Registration during any Blackout Period (as defined below) (i) if
the Board of Directors of the Company determines in good faith that
effecting such a registration or continuing such disposition at such time
would have a material adverse effect upon a proposed sale of all (or
substantially all) of the assets of the Company or a merger,
reorganization, recapitalization or similar current transaction
materially affecting the capital structure or equity ownership of the
Company, or (ii) if the Company has delivered a notice pursuant to
Section 2.2 that it is undertaking an underwritten offering in which the
Holders will be entitled to exercise their incidental registration
rights; provided, however, that the Company may only delay a Demand
Registration pursuant to this Section 2.7 by delivery of a Blackout
Notice (as defined below) within 30 days of delivery of the request for
such Registration under Section 2.1, as applicable, and may delay a
Demand Registration and require the Holders of Registrable Securities to
discontinue the disposition of their securities covered by a Shelf
Registration only for a reasonable period of time not to exceed 60 days
(or such earlier time as such transaction is consummated or no longer
proposed or the material information has been made public) (the "Blackout
Period"). There shall not be more than one Blackout Period in any 12
month period. The Company shall promptly notify the Holders in writing (a
"Blackout Notice") of any decision to postpone a Demand Registration or
to discontinue sales of Registrable Securities covered by a Shelf
Registration pursuant to this Section 2.7 and shall include a general
statement of the reason for such postponement, an approximation of the
anticipated delay and an undertaking by the Company promptly to notify
the Holders as soon as a Demand Registration may be effected or sales of
Registrable Securities covered by a Shelf Registration may resume. In
making any such determination to initiate or terminate a Blackout Period,
the Company shall not be required to consult with or obtain the consent
of any Holder, and any such determination shall be the Company's sole
responsibility. Each Holder shall treat all notices received from the
Company pursuant to this Section 2.7 in the strictest confidence and
shall not disseminate such information. If the Company shall postpone the
filing of a Demand Registration Statement, the Majority Holders of
Registrable Securities who were to participate therein shall have the
right to withdraw the request for registration. Any such withdrawal shall
be made by giving written notice to the Company within 30 days after
receipt of the Blackout Notice. Such withdrawn registration request shall
not be treated as a Demand Registration effected pursuant to Section 2.1
(and shall not be counted towards the number of Demand Registrations
effected), and the Company shall pay all Registration Expenses in
connection therewith.
3. HOLDBACK ARRANGEMENTS.
3.1. Restrictions on Sale by Holders of Registrable
Securities. Each Holder of Registrable Securities agrees, by acquisition
of such Registrable Securities, if timely requested in writing by the
sole or lead managing Underwriter in an Underwritten Offering of any
Registrable Securities, not to make any short sale of, loan, grant any
option for the purchase of or effect any public sale or distribution,
including a sale pursuant to Rule 144 (or any successor provision having
similar effect) under the Securities Act of any Registrable Securities or
any other security of the Company (or any security convertible into or
exchangeable or exercisable for any security of the Company) (except as
part of such underwritten registration), during the nine business days
(as such term is used in Rule 10b-6 under the Exchange Act) prior to, and
during the time period reasonably requested by the sole or lead managing
Underwriter not to exceed 90 days, beginning on the effective date of the
applicable Registration Statement.
3.2. Restrictions on Sale by the Company and Others. The
Company agrees that (i) if timely requested in writing by the sole or
lead managing Underwriter in an Underwritten Offering of any Registrable
Securities, not to make any short sale of, loan, grant any option for the
purchase of or effect any public sale or distribution of any of the
Company's securities (or any security convertible into or exchangeable or
exercisable for any of the Company's securities) during the nine business
days (as such term is used in Rule 10b-6 under the Exchange Act) prior
to, and during the time period reasonably requested by the sole or lead
managing Underwriter not to exceed 90 days (or such longer period to the
extent such sole or lead managing Underwriter shall so reasonably
request), beginning on the effective date of the applicable Registration
Statement (except as part of such underwritten registration or pursuant
to registrations on Forms S-4 or S-8 or any successor form to such
forms), and (ii) it will cause each holder of securities (or any security
convertible into or exchangeable or exercisable for any of its
securities) of the Company purchased from the Company at any time after
the date of this Agreement (other than in a registered public offering)
to so agree.
4. REGISTRATION PROCEDURES.
4.1. Obligations of the Company. Whenever the Company is
required to effect the registration of Registrable Securities under the
Securities Act pursuant to Section 2 of this Agreement, the Company
shall, as expeditiously as possible:
(a) prepare and file with the SEC (promptly, and in
any event within 45 days after receipt of a request to
register Registrable Securities) the requisite Registration
Statement to effect such registration, which Registration
Statement shall comply as to form in all material respects
with the requirements of the applicable form and include all
financial statements required by the SEC to be filed
therewith, and the Company shall use its best efforts to cause
such Registration Statement to become effective (provided,
that the Company may discontinue any registration of its
securities that are not Registrable Securities, and, under the
circumstances specified in Section 2.2, its securities that
are Registrable Securities); provided, however, that before
filing a Registration Statement or Prospectus or any
amendments or supplements thereto, or comparable statements
under securities or blue sky laws of any jurisdiction, the
Company shall (i) provide Holders' Counsel and any other
Inspector with an adequate and appropriate opportunity to
participate in the preparation of such Registration Statement
and each Prospectus included therein (and each amendment or
supplement thereto or comparable statement) to be filed with
the SEC, which documents shall be subject to the review and
comment of Holders' Counsel, and (ii) not file any such
Registration Statement or Prospectus (or amendment or
supplement thereto or comparable statement) with the SEC to
which Holder's Counsel, any selling Holder or any other
Inspector shall have reasonably objected on the grounds that
such filing does not comply in all material respects with the
requirements of the Securities Act or of the rules or
regulations thereunder;
(b) prepare and file with the SEC such amendments
and supplements to such Registration Statement and the
Prospectus used in connection therewith as may be necessary
(i) to keep such Registration Statement effective, and (ii) to
comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities covered by
such Registration Statement, in each case until such time as
all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the
seller(s) thereof set forth in such Registration Statement;
provided, that except with respect to any Shelf Registration,
such period need not extend beyond nine months after the
effective date of the Registration Statement; and provided
further, that with respect to any Shelf Registration, such
period need not extend beyond the time period provided in
Section 2.3, and which periods, in any event, shall terminate
when all Registrable Securities covered by such Registration
Statement have been sold (but not before the expiration of the
90 day period referred to in Section 4(3) of the Securities
Act and Rule 174 thereunder, if applicable);
(c) furnish, without charge, to each selling Holder
of such Registrable Securities and each Underwriter, if any,
of the securities covered by such Registration Statement, such
number of copies of such Registration Statement, each
amendment and supplement thereto (in each case including all
exhibits), and the Prospectus included in such Registration
Statement (including each preliminary Prospectus) in
conformity with the requirements of the Securities Act, and
other documents, as such selling Holder and Underwriter may
reasonably request in order to facilitate the public sale or
other disposition of the Registrable Securities owned by such
selling Holder (the Company hereby consenting to the use in
accordance with applicable law of each such Registration
Statement (or amendment or post-effective amendment thereto)
and each such Prospectus (or preliminary prospectus or
supplement thereto) by each such selling Holder of Registrable
Securities and the Underwriters, if any, in connection with
the offering and sale of the Registrable Securities covered by
such Registration Statement or Prospectus);
(d) prior to any public offering of Registrable
Securities, use its best efforts to register or qualify all
Registrable Securities and other securities covered by such
Registration Statement under such other securities or blue sky
laws of such jurisdictions as any selling Holder of
Registrable Securities covered by such Registration Statement
or the sole or lead managing Underwriter, if any, may
reasonably request to enable such selling Holder to consummate
the disposition in such jurisdictions of the Registrable
Securities owned by such selling Holder and to continue such
registration or qualification in effect in each such
jurisdiction for as long as such Registration Statement
remains in effect (including through new filings or amendments
or renewals), and do any and all other acts and things which
may be necessary or advisable to enable any such selling
Holder to consummate the disposition in such jurisdictions of
the Registrable Securities owned by such selling Holder;
provided, however, that the Company shall not be required to
(i) qualify generally to do business in any jurisdiction where
it would not otherwise be required to qualify but for this
Section 4.1(d), (ii) subject itself to taxation in any such
jurisdiction, or (iii) consent to general service of process
in any such jurisdiction;
(e) use its best efforts to obtain all other
approvals, consents, exemptions or authorizations from such
governmental agencies or authorities as may be necessary to
enable the selling Holders of such Registrable Securities to
consummate the disposition of such Registrable Securities;
(f) promptly notify Holders' Counsel, each Holder
of Registrable Securities covered by such Registration
Statement and the sole or lead managing Underwriter, if any:
(i) when the Registration Statement, any pre-effective
amendment, the Prospectus or any prospectus supplement related
thereto or post-effective amendment to the Registration
Statement has been filed and, 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 state
securities or blue sky authority for amendments or supplements
to the Registration Statement or the Prospectus related
thereto or for additional information, (iii) of the issuance
by the SEC of any stop order suspending the effectiveness of
the Registration Statement or the initiation or threat of any
proceedings for that purpose, (iv) of the receipt by the
Company of any notification with respect to the suspension of
the qualification of any Registrable Securities for sale under
the securities or blue sky laws of any jurisdiction or the
initiation of any proceeding for such purpose, (v) of the
existence of any fact of which the Company becomes aware or
the happening of any event which results in (A) the
Registration Statement containing an untrue statement of a
material fact or omitting to state a material fact required to
be stated therein or necessary to make any statements therein
not misleading, or (B) the Prospectus included in such
Registration Statement containing an untrue statement of a
material fact or omitting to state a material fact required to
be stated therein or necessary to make any statements therein,
in the light of the circumstances under which they were made,
not misleading, (vi) if at any time the representations and
warranties contemplated by Section 2.5(b) cease to be true and
correct in all material respects, and (vii) of the Company's
reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate or that there
exists circumstances not yet disclosed to the public which
make further sales under such Registration Statement
inadvisable pending such disclosure and post-effective
amendment; and, if the notification relates to an event
described in any of the clauses (ii) through (vii) of this
Section 4.1(f), the Company shall promptly prepare a
supplement or post-effective amendment to such Registration
Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so
that (1) such Registration Statement 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 not misleading, and (2) as
thereafter delivered to the purchasers of the Registrable
Securities being sold thereunder, such Prospectus shall not
include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein in the light of the
circumstances under which they were made not misleading (and
shall furnish to each such Holder and each Underwriter, if
any, a reasonable number of copies of such Prospectus so
supplemented or amended); and if the notification relates to
an event described in clause (iii) of this Section 4.1(f), the
Company shall take all reasonable action required to prevent
the entry of such stop order or to remove it if entered;
(g) make available for inspection by any selling
Holder of Registrable Securities, any sole or lead managing
Underwriter participating in any disposition pursuant to such
Registration Statement, Holders' Counsel and any attorney,
accountant or other agent retained by any such seller or any
Underwriter (each, an "Inspector" and, collectively, the
"Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company and any
subsidiaries thereof as may be in existence at such time
(collectively, the "Records") as shall be necessary, in the
opinion of such Holders' and such Underwriters' respective
counsel, to enable them to exercise their due diligence
responsibility and to conduct a reasonable investigation
within the meaning of the Securities Act, and cause the
Company's and any subsidiaries' officers, directors and
employees, and the independent public accountants of the
Company, to supply all information reasonably requested by any
such Inspectors in connection with such Registration
Statement;
(h) obtain an opinion from the Company's counsel
and a "cold comfort" letter from the Company's independent
public accountants who have certified the Company's financial
statements included or incorporated by reference in such
Registration Statement, in each case dated the effective date
of such Registration Statement (and if such registration
involves an Underwritten Offering, dated the date of the
closing under the underwriting agreement), in customary form
and covering such matters as are customarily covered by such
opinions and "cold comfort" letters delivered to underwriters
in underwritten public offerings, which opinion and letter
shall be reasonably satisfactory to the sole or lead managing
Underwriter, if any, and to the Majority Holders of the
Registration, and furnish to each Holder participating in the
offering and to each Underwriter, if any, a copy of such
opinion and letter addressed to such Holder (in the case of
the opinion) and Underwriter (in the case of the opinion and
the "cold comfort" letter);
(i) provide a CUSIP number for all Registrable
Securities and provide and cause to be maintained a transfer
agent and registrar for all such Registrable Securities
covered by such Registration Statement not later than the
effectiveness of such Registration Statement;
(j) otherwise use its best efforts to comply with
all applicable rules and regulations of the SEC and any other
governmental agency or authority having jurisdiction over the
offering, and make available to its security holders, as soon
as reasonably practicable but no later than 90 days after the
end of any 12-month period, an earnings statement (i)
commencing at the end of any month in which Registrable
Securities are sold to Underwriters in an Underwritten
Offering and (ii) commencing with the first day of the
Company's calendar month next succeeding each sale of
Registrable Securities after the effective date of a
Registration Statement, which statement shall cover such
12-month periods, in a manner which satisfies the provisions
of Section 11(a) of the Securities Act and Rule 158
thereunder;
(k) if so requested by the Majority Holders of the
Registration, use its best efforts to cause all such
Registrable Securities to be listed (i) on each national
securities exchange on which the Company's securities are then
listed or (ii) if securities of the Company are not at the
time listed on any national securities exchange (or if the
listing of Registrable Securities is not permitted under the
rules of each national securities exchange on which the
Company's securities are then listed), on a national
securities exchange designated by the Majority Holders of the
Registration;
(l) keep each selling Holder of Registrable
Securities advised in writing as to the initiation and
progress of any registration under Section 2 hereunder;
(m) enter into and perform customary agreements
(including, if applicable, an underwriting agreement in
customary form) and provide officers' certificates and other
customary closing documents;
(n) cooperate with each selling Holder of
Registrable Securities and each Underwriter participating in
the disposition of such Registrable Securities and their
respective counsel in connection with any filings required to
be made with the NASD and make reasonably available its
employees and personnel and otherwise provide reasonable
assistance to the Underwriters (taking into account the needs
of the Company's businesses and the requirements of the
marketing process) in the marketing of Registrable Securities
in any Underwritten Offering;
(o) furnish to each Holder participating in the
offering and the sole or lead managing Underwriter, if any,
without charge, at least one manually-signed copy of the
Registration Statement and any post-effective amendments
thereto, including financial statements and schedules, all
documents incorporated therein by reference and all exhibits
(including those deemed to be incorporated by reference);
(p) cooperate with the selling Holders of
Registrable Securities and the sole or lead managing
Underwriter, if any, to facilitate the timely preparation and
delivery of certificates not bearing any restrictive legends
representing the Registrable Securities to be sold, and cause
such Registrable Securities to be issued in such denominations
and registered in such names in accordance with the
underwriting agreement prior to any sale of Registrable
Securities to the Underwriters or, if not an Underwritten
Offering, in accordance with the instructions of the selling
Holders of Registrable Securities at least three business days
prior to any sale of Registrable Securities;
(q) if requested by the sole or lead managing
Underwriter or any selling Holder of Registrable Securities,
immediately incorporate in a prospectus supplement or
post-effective amendment such information concerning such
Holder of Registrable Securities, the Underwriters or the
intended method of distribution as the sole or lead managing
Underwriter or the selling Holder of Registrable Securities
reasonably requests to be included therein and as is
appropriate in the reasonable judgment of the Company,
including, without limitation, information with respect to the
number of shares of the Registrable Securities being sold to
the Underwriters, the purchase price being paid therefor by
such Underwriters and with respect to any other terms of the
Underwritten Offering of the Registrable Securities to be sold
in such offering; make all required filings of such Prospectus
supplement or post-effective amendment as soon as notified of
the matters to be incorporated in such Prospectus supplement
or post-effective amendment; and supplement or make amendments
to any Registration Statement if requested by the sole or lead
managing Underwriter of such Registrable Securities; and
(r) use its best efforts to take all other steps
necessary to expedite or facilitate the registration and
disposition of the Registrable Securities contemplated hereby.
4.2. Seller Information. The Company may require each selling
Holder of Registrable Securities as to which any registration is being
effected to furnish to the Company such information regarding such
Holder, such Holder's Registrable Securities and such Holder's intended
method of disposition as the Company may from time to time reasonably
request in writing; provided that such information shall be used only in
connection with such registration.
If any Registration Statement or comparable statement under
"blue sky" laws refers to any Holder by name or otherwise as the Holder
of any securities of the Company, then such Holder shall have the right
to require (i) the insertion therein of language, in form and substance
satisfactory to such Holder and the Company, to the effect that the
holding by such Holder of such securities is not to be construed as a
recommendation by such Holder of the investment quality of the Company's
securities covered thereby and that such holding does not imply that such
Holder will assist in meeting any future financial requirements of the
Company, and (ii) in the event that such reference to such Holder by name
or otherwise is not in the judgment of the Company, as advised by
counsel, required by the Securities Act or any similar federal statute or
any state "blue sky" or securities law then in force, the deletion of the
reference to such Holder.
4.3. Notice to Discontinue. Each Holder of Registrable
Securities agrees by acquisition of such Registrable Securities that,
upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 4.1(f)(ii) through (vii), such Holder
shall forthwith discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable
Securities until such Holder's receipt of the copies of the supplemented
or amended prospectus contemplated by Section 4.1(f) and, if so directed
by the Company, such Holder shall deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in
such Holder's possession of the Prospectus covering such Registrable
Securities which is current at the time of receipt of such notice. If the
Company shall give any such notice, the Company shall extend the period
during which such Registration Statement shall be maintained effective
pursuant to this Agreement (including, without limitation, the period
referred to in Section 4.1(b)) by the number of days during the period
from and including the date of the giving of such notice pursuant to
Section 4.1(f) to and including the date when the Holder shall have
received the copies of the supplemented or amended prospectus
contemplated by and meeting the requirements of Section 4.1(f).
5. INDEMNIFICATION; CONTRIBUTION.
5.1. Indemnification by the Company. The Company agrees to
indemnify and hold harmless, to the fullest extent permitted by law, each
Holder of Registrable Securities, its officers, directors, partners,
members, shareholders, employees, Affiliates and agents (collectively,
"Agents") and each Person who controls such Holder (within the meaning of
the Securities Act) and its Agents with respect to each registration
which has been effected pursuant to this Agreement, against any and all
losses, claims, damages or liabilities, joint or several, actions or
proceedings (whether commenced or threatened) in respect thereof, and
expenses (as incurred or suffered and including, but not limited to, any
and all expenses incurred in investigating, preparing or defending any
litigation or proceeding, whether commenced or threatened, and the
reasonable fees, disbursements and other charges of legal counsel) in
respect thereof (collectively, "Claims"), insofar as such Claims arise
out of or are based upon any untrue or alleged untrue statement of a
material fact contained in any Registration Statement or Prospectus
(including any preliminary, final or summary prospectus and any amendment
or supplement thereto) related to any such registration or any omission
or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or
any violation by the Company of the Securities Act or any rule or
regulation thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any such
registration, or any qualification or compliance incident thereto;
provided, however, that the Company will not be liable in any such case
to the extent that any such Claims arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact or
omission or alleged omission of a material fact so made in reliance upon
and in conformity with written information furnished to the Company
specifically for use therein. The Company shall also indemnify any
Underwriters of the Registrable Securities, their Agents and each Person
who controls any such Underwriter (within the meaning of the Securities
Act) to the same extent as provided above with respect to the
indemnification of the Holders of Registrable Securities. Such indemnity
shall remain in full force and effect regardless of any investigation
made by or on behalf of any Person who may be entitled to indemnification
pursuant to this Section 5 and shall survive the transfer of securities
by such Holder or Underwriter.
5.2. Indemnification by Holders. Each Holder, if Registrable
Securities held by it are included in the securities as to which a
registration is being effected, agrees to, severally and not jointly,
indemnify and hold harmless, to the fullest extent permitted by law, the
Company, its directors and officers, each other Person who participates
as an Underwriter in the offering or sale of such securities and its
Agents and each Person who controls the Company or any such Underwriter
(within the meaning of the Securities Act) and its Agents against any and
all Claims, insofar as such Claims arise out of or are based upon any
untrue or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus (including any preliminary, final or
summary prospectus and any amendment or supplement thereto) related to
such registration, or 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, to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company specifically for use therein;
provided, however, that the aggregate amount which any such Holder shall
be required to pay pursuant to this Section 5.2 shall in no event be
greater than the amount of the net proceeds received by such Holder upon
the sale of the Registrable Securities pursuant to the Registration
Statement giving rise to such Claims less all amounts previously paid by
such Holder with respect to any such Claims. 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 such
securities by such Holder or Underwriter.
5.3. Conduct of Indemnification Proceedings. Promptly after
receipt by an indemnified party of notice of any Claim or the
commencement of any action or proceeding involving a Claim under this
Section 5, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party pursuant to Section 5, (i)
notify the indemnifying party in writing of the Claim or the commencement
of such action or proceeding; provided, that the failure of any
indemnified party to provide such notice shall not relieve the
indemnifying party of its obligations under this Section 5, except to the
extent the indemnifying party is materially and actually prejudiced
thereby and shall not relieve the indemnifying party from any liability
which it may have to any indemnified party otherwise than under this
Section 5, and (ii) permit such indemnifying party to assume the defense
of such claim with counsel reasonably satisfactory to the indemnified
party; provided, however, that any indemnified party shall have the right
to employ separate counsel and to participate in the defense of such
claim, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (A) the indemnifying party has agreed in
writing to pay such fees and expenses, (B) the indemnifying party shall
have failed to assume the defense of such claim and employ counsel
reasonably satisfactory to such indemnified party within 10 days after
receiving notice from such indemnified party that the indemnified party
believes it has failed to do so, (C) in the reasonable judgment of any
such indemnified party, based upon advice of counsel, a conflict of
interest may exist between such indemnified party and the indemnifying
party with respect to such claims (in which case, if the indemnified
party notifies the indemnifying party in writing that it elects to employ
separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such
claim on behalf of such indemnified party) or (D) such indemnified party
is a defendant in an action or proceeding which is also brought against
the indemnifying party and reasonably shall have concluded that there may
be one or more legal defenses available to such indemnified party which
are not available to the indemnifying party. No indemnifying party shall
be liable for any settlement of any such claim or action effected without
its written consent, which consent shall not be unreasonably withheld. In
addition, without the consent of the indemnified party (which consent
shall not be unreasonably withheld), no indemnifying party shall be
permitted to consent to entry of any judgment with respect to, or to
effect the settlement or compromise of any pending or threatened action
or claim in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim), unless such settlement,
compromise or judgment (1) includes an unconditional release of the
indemnified party from all liability arising out of such action or claim,
(2) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified
party, and (3) does not provide for any action on the part of any party
other than the payment of money damages which is to be paid in full by
the indemnifying party.
5.4. Contribution. If the indemnification provided for in
Section 5.1 or 5.2 from the indemnifying party for any reason is
unavailable to (other than by reason of exceptions provided therein), or
is insufficient to hold harmless, an indemnified party hereunder in
respect of any Claim, then the 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 Claim in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party, on the one hand, and the indemnified party, on the
other hand, in connection with the actions which resulted in such Claim,
as well as any other relevant equitable considerations. The relative
fault of such indemnifying party and indemnified party 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, has been
made by, or relates to information supplied by, such indemnifying party
or indemnified party, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such action. If,
however, the foregoing allocation is not permitted by applicable law,
then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative faults but also the relative benefits of
the indemnifying party and the indemnified party as well as any other
relevant equitable considerations.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5.4 were determined by
pro rata allocation or by any other method of allocation which does not
take into account the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by a party as
a result of any Claim referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth in
Section 5.3, any legal or other fees, costs or expenses reasonably
incurred by such party in connection with any investigation or
proceeding. Notwithstanding anything in this Section 5.4 to the contrary,
no indemnifying party (other than the Company) shall be required pursuant
to this Section 5.4 to contribute any amount in excess of the net
proceeds received by such indemnifying party from the sale of the
Registrable Securities pursuant to the Registration Statement giving rise
to such Claims, less all amounts previously paid by such indemnifying
party with respect to such Claims. 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.
5.5. Other Indemnification. Indemnification similar to that
specified in the preceding Sections 5.1 and 5.2 (with appropriate
modifications) shall be given by the Company and each selling Holder of
Registrable Securities with respect to any required registration or other
qualification of securities under any Federal or state law or regulation
of any governmental authority, other than the Securities Act. The
indemnity agreements contained herein shall be in addition to any other
rights to indemnification or contribution which any indemnified party may
have pursuant to law or contract.
5.6. Indemnification Payments. The indemnification and
contribution required by this Section 5 shall be made by periodic
payments of the amount thereof during the course of any investigation or
defense, as and when bills are received or any expense, loss, damage or
liability is incurred.
6. GENERAL.
6.1. Adjustments Affecting Registrable Securities. The Company
agrees that it shall not effect or permit to occur any combination or
subdivision of shares which would adversely affect the ability of the
Holder of any Registrable Securities to include such Registrable
Securities in any registration contemplated by this Agreement or the
marketability of such Registrable Securities in any such registration.
6.2. Registration Rights to Others. Other than pursuant to the
Subscription Agreements listed on Schedule 6.2 hereto, the Company has
not previously entered into an agreement with respect to its securities
granting any registration rights to any Person. If the Company shall at
any time hereafter provide to any holder of any securities of the Company
rights with respect to the registration of such securities under the
Securities Act, (i) such rights shall not be in conflict with or
adversely affect any of the rights provided in this Agreement to the
Holders and (ii) if such rights are provided on terms or conditions more
favorable to such holder than the terms and conditions provided in this
Agreement, the Company shall provide (by way of amendment to this
Agreement or otherwise) such more favorable terms or conditions to the
Holders.
6.3. Availability of Information; Rule 144; Rule 144A; Other
Exemptions. Quarterly Information. Except during any period when the
Company either (i) is subject to and is in compliance with the reporting
requirements of Section 15(d) of the Exchange Act or (ii) has securities
registered under Section 12(b) or 12(g) of the Exchange Act and is in
compliance with the reporting requirements mandated thereby (such status
being referred to as being a "Public Company"), the Company covenants
that it shall timely file any reports required to be filed by it under
the Securities Act or the Exchange Act (including, but not limited to,
the reports under Sections 13 and 15(d) of the Exchange Act referred to
in subparagraph (c) of Rule 144 under the Securities Act), and that it
shall take such further action as any Holder of Registrable Securities
may reasonably request, all to the extent required from time to time to
enable such Holder to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided
by (i) Rule 144 and Rule 144A under the Securities Act, as such rules may
be amended from time to time, or (ii) any other rule or regulation now
existing or hereafter adopted by the SEC. Upon the request of any Holder
of Registrable Securities, the Company shall deliver to such Holder a
written statement as to whether it has complied with such requirements.
If the Company is no longer a Public Company, the Company shall, at any
time and from time to time, upon the request of any Holder of Registrable
Securities and upon the request of any Person designated by such Holder
as a prospective purchaser of any Registrable Securities, furnish in
writing to such Holder or such prospective purchaser, as the case may be,
a statement as of a date not earlier than 12 months prior to the date of
such request of the nature of the business of the Company and the
products and services it offers and copies of the Company's most recent
balance sheet and profit and loss and retained earnings statements,
together with similar financial statements for such part of the two
preceding fiscal years as the Company shall have been in operation, all
such financial statements to be audited to the extent audited statements
are reasonable available, provided that, in any event the most recent
financial statements so furnished shall include a balance sheet as of a
date less than 16 months prior to the date of such request, statements of
profit and loss and retained earnings for the 12 months preceding the
date of such balance sheet, and, if such balance sheet is not as of a
date less than 6 months prior to the date of such request, additional
statements of profit and loss and retained earnings for the period from
the date of such balance sheet to a date less than 6 months prior to the
date of such request.
6.4. Amendments and Waivers. The provisions of this Agreement
may not be amended, modified, supplemented or terminated, and waivers or
consents to departures from the provisions hereof may not be given,
without the written consent of the Company and the Holders of not less
than 50% of the Registrable Securities then outstanding; provided,
however, that no such amendment, modification, supplement, waiver or
consent to departure shall reduce the aforesaid percentage of Registrable
Securities without the written consent of all of the Holders of
Registrable Securities; and provided further, that nothing herein shall
prohibit any amendment, modification, supplement, termination, waiver or
consent to departure the effect of which is limited only to those Holders
who have agreed to such amendment, modification, supplement, termination,
waiver or consent to departure.
6.5. Notices. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand delivery,
telecopier, any courier guaranteeing overnight delivery or first class
registered or certified mail, return receipt requested, postage prepaid,
addressed to the applicable party at the address set forth below or such
other address as may hereafter be designated in writing by such party to
the other parties in accordance with the provisions of this Section:
(i) If to the Company, to:
Complete Wellness Centers, Inc.
000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: President
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxx & Green, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
(ii) If to the Initial Holders, to:
Wexford Management LLC
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxx, Esq.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
(iii) If to any subsequent Holder, to the address of
such Person set forth in the records of the Company.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; when
receipt is acknowledged, if telecopied; on the next business day, if
timely delivered to a courier guaranteeing overnight delivery; and five
days after being deposited in the mail, if sent first class or certified
mail, return receipt requested, postage prepaid.
6.6. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
heirs, successors and permitted assigns (including any permitted
transferee of Registrable Securities). Any Holder may assign to any
permitted (as determined under the Warrants) transferee of its
Registrable Securities (other than a transferee that acquires such
Registrable Securities in a registered public offering or pursuant to a
sale under Rule 144 of the Securities Act (or any successor rule)), its
rights and obligations under this Agreement; provided, however, if any
permitted transferee shall take and hold Registrable Securities, such
transferee shall promptly notify the Company and by taking and holding
such Registrable Securities such permitted transferee shall automatically
be entitled to receive the benefits of and be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of
this Agreement as if it were a party hereto (and shall, for all purposes,
be deemed a Holder under this Agreement). If the Company shall so
request, any heir, successor or permitted assign (including any permitted
transferee) shall agree in writing to acquire and hold the Registrable
Securities subject to all of the terms hereof. For purposes of this
Agreement, "successor" for any entity other than a natural person shall
mean a successor to such entity as a result of such entity's merger,
consolidation, liquidation, dissolution, sale of substantially all of its
assets, or similar transaction. Except as provided above or otherwise
permitted by this Agreement, neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof
shall be assignable by any Holder or by the Company without the consent
of the other parties hereto.
6.7. Counterparts. This Agreement may be executed in two or
more counterparts, each of which, when so executed and delivered, shall
be deemed to be an original, but all of which counterparts, taken
together, shall constitute one and the same instrument.
6.8. Descriptive Headings, Etc. The headings in this Agreement
are for convenience of reference only and shall not limit or otherwise
affect the meaning of terms contained herein. Unless the context of this
Agreement otherwise requires: (1) words of any gender shall be deemed to
include each other gender; (2) words using the singular or plural number
shall also include the plural or singular number, respectively; (3) the
words "hereof", "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not
to any particular provision of this Agreement, and Section and paragraph
references are to the Sections and paragraphs of this Agreement unless
otherwise specified; (4) the word "including" and words of similar import
when used in this Agreement shall mean "including, without limitation,"
unless otherwise specified; (5) "or" is not exclusive; and (6) provisions
apply to successive events and transactions.
6.9. Severability. In the event that any one or more of the
provisions, paragraphs, words, clauses, phrases or sentences 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, paragraph, word,
clause, phrase or sentence in every other respect and of the other
remaining provisions, paragraphs, words, clauses, phrases or sentences
hereof shall not be in any way impaired, it being intended that all
rights, powers and privileges of the parties hereto shall be enforceable
to the fullest extent permitted by law.
6.10. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware (without
giving effect to the conflict of laws principles thereof).
6.11. Remedies; Specific Performance. The parties hereto
acknowledge that money damages would not be an adequate remedy at law if
any party fails to perform in any material respect any of its obligations
hereunder, and accordingly agree that each party, in addition to any
other remedy to which it may be entitled at law or in equity, shall be
entitled to seek to compel specific performance of the obligations of any
other party under this Agreement, without the posting of any bond, in
accordance with the terms and conditions of this Agreement in any court
of the United States or any State thereof having jurisdiction, and if any
action should be brought in equity to enforce any of the provisions of
this Agreement, none of the parties hereto shall raise the defense that
there is an adequate remedy at law. Except as otherwise provided by law,
a delay or omission by a party hereto in exercising any right or remedy
accruing upon any such breach shall not impair the right or remedy or
constitute a waiver of or acquiescence in any such breach. No remedy
shall be exclusive of any other remedy, including those provided for in
the Warrants. All available remedies shall be cumulative.
6.12. Entire Agreement. 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.
There are no restrictions, promises or undertakings, other than those set
forth or referred to herein. This Agreement supersedes all prior
agreements and understandings between the Company and the other parties
to this Agreement with respect to such subject matter.
6.13. Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial owner
thereof, the beneficial owner thereof may, at its election in writing
delivered to the Company, be treated as the holder of such Registrable
Securities for purposes of any request or other action by any holder or
holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of shares of Registrable
Securities held by any holder or holders of Registrable Securities
contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances
reasonably satisfactory to it of such owner's beneficial ownership of
such Registrable Securities.
6.14. Consent to Jurisdiction; Waiver of Jury. Each party to
this Agreement hereby irrevocably and unconditionally agrees that any
legal action, suit or proceeding arising out of or relating to this
Agreement or any agreements or transactions contemplated hereby may be
brought in any federal court of the Southern District of New York or any
state court located in New York County, State of New York, and hereby
irrevocably and unconditionally expressly submits to the personal
jurisdiction and venue of such courts for the purposes thereof and hereby
irrevocably and unconditionally waives any claim (by way of motion, as a
defense or otherwise) of improper venue, that it is not subject
personally to the jurisdiction of such court, that such courts are an
inconvenient forum or that this Agreement or the subject matter may not
be enforced in or by such court. Each party hereby irrevocably and
unconditionally consents to the service of process of any of the
aforementioned courts in any such action, suit or proceeding by the
mailing of copies thereof by registered or certified mail, postage
prepaid, to the address set forth or provided for in Section 6.5 of this
Agreement, such service to become effective 10 days after such mailing.
Nothing herein contained shall be deemed to affect the right of any party
to serve process in any manner permitted by law or commence legal
proceedings or otherwise proceed against any other party in any other
jurisdiction to enforce judgments obtained in any action, suit or
proceeding brought pursuant to this Section. EACH OF THE PARTIES HEREBY
IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING,
WHETHER AT LAW OR EQUITY, BROUGHT BY ANY OF THEM IN CONNECTION WITH THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
6.15. Further Assurances. Each party hereto 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 any other party hereto
reasonably may request in order to carry out the intent and accomplish
the purposes of this Agreement and the consummation of the transactions
contemplated hereby.
6.16. No Inconsistent Agreements. The Company will not
hereafter enter into any agreement which is inconsistent with the rights
granted to the Holders in this Agreement.
6.17. Construction. The Company and the Initial Holders
acknowledge that each of them has had the benefit of legal counsel of its
own choice and has been afforded an opportunity to review this Agreement
with its legal counsel and that this Agreement shall be construed as if
jointly drafted by the Company and the Holders.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
COMPLETE WELLNESS CENTERS, INC.
BY /s/ E. Xxxxxx Xxxxxx
Name:
Title:
INITIAL HOLDERS:
IMPRIMIS INVESTORS LLC
BY /s/ Xxxxx Xxxxxxxx
Name:
Title:
WEXFORD SPECTRUM INVESTORS LLC
BY /s/ Xxxxx Xxxxxxxx
Name:
Title:
