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REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT is made as of August 29, 1997, between
Sabratek Corporation, a Delaware corporation (the "Company"), and the holders of
common stock of GDS Technology, Inc., an Indiana corporation ("GDS"), who are
signatories hereto (the "GDS Shareholders").
The Company, GDS and the GDS Shareholders are parties to a
Stock Option Agreement of even date herewith (the "Option Agreement"). Pursuant
to the Option Agreement, Sabratek has the right to purchase all of the common
stock of GDS held by the GDS Shareholders in exchange for the issuance to the
GDS Shareholders of shares of common stock of Sabratek (the "Call Option"), and
the GDS Shareholders have the right, assuming no exercise of the Call Option, to
require Sabratek to purchase all of the common stock of GDS held by the GDS
Shareholders in exchange for the issuance to the GDS Shareholders of shares of
common stock of Sabratek (the "Put Option"). The issuance of Sabratek common
stock to the GDS Shareholders pursuant to the Option Agreement will not be
registered under the Securities Act of 1933, as amended (the "Securities Act")
in reliance upon the exemption provided by Section 4(2) thereof. In order to
induce the GDS Shareholders to enter into the Option Agreement, the Company has
agreed to provide the registration rights set forth in this Agreement. Unless
otherwise provided in this Agreement, capitalized terms used herein shall have
the meanings set forth in the Option Agreement. Certain terms are defined in
Paragraph 8.
The parties hereto agree as follows:
1. Shelf Registration.
(a) Upon the exercise of the Call Option or the Put Option
pursuant to the Option Agreement, the Company will use its best efforts to
register under the Securities Act the resale by the GDS Shareholders of any or
all Registrable Securities in a delayed or continuous offering to the extent
permitted by Rule 415 (or any successor rule thereto) promulgated under the
Securities Act (the "Shelf Registration"), subject to Paragraph 2. Such a
Registration Statement shall be on Form S-3 or another appropriate form
permitting registration of such Registrable Securities for resale by the GDS
Shareholders in the manner or manners designated in writing to the Company by
them (including, without limitation, one or more underwritten Offerings). IN the
event the registration of a delayed or continuous offering is not permitted
under the Securities Act, the Company will provide alternative registration
rights under the Securities Act to the holders of Registrable Securities.
(b) The Company shall use its best efforts to keep the Shelf
Registration continuously effective under the Securities Act from the initial
effectiveness thereof until the
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earliest to occur of (A) the date when all Registrable Securities registered
under the Shelf Registration have been sold in the manner set forth and as
contemplated in the Shelf Registration or (B) the date when counsel to the
Company shall render an opinion addressed to the GDS Shareholders, to the effect
that all remaining Registrable Securities are freely transferable in the open
market without limitations as to volume and without being required to file any
forms or reports with the Securities and Exchange Commission ("SEC") under the
Securities Act or the rules and regulations thereunder by persons other than
affiliates of the Company or (C) the date which is three years (or such shorter
period specified by Rule 144(k) promulgated under the Securities Act or any
successor rule thereto) after the Closing Date (such period being referred to
herein as the "Effectiveness Period").
(c) If the registration statement relating to the Shelf
Registration ceases to be effective for any reason at any time during the
Effectiveness Period, the Company shall use its best efforts to obtain the
prompt withdrawal of any order suspending the effectiveness thereof, and in any
event shall within 30 days of such cessation of effectiveness amend such
registration statement in a manner reasonably expected to obtain the withdrawal
of the order suspending the effectiveness thereof, or file an additional
registration statement covering all of the Registrable Securities for an
Offering to be made by the holders on a delayed or continuous basis as permitted
by the rules and regulations under the Securities Act. In the event the
registration of a delayed or continuos offering is not permitted under the
Securities Act, the Company will provide alternative registration rights under
the Securities Act to the holders of Registrable Securities. If an additional
registration statement is filed, the Company shall use its best efforts to cause
such registration statement to be declared effective as soon as practicable
after such filing and to keep such registration statement continuously effective
for the remainder of the Effectiveness Period.
(d) The Company shall pay for all Registration Expenses
associated with a Shelf Registration as set forth in paragraph 5 hereof.
(e) The holders of a majority of the Registrable Securities
initially included in the Shelf Registration shall have the right to select the
investment banker(s) and manager(s), if any, to administer any underwritten
offering pursuant to the Shelf Registration, subject to the Company's approval
of such person(s).
2. Piggyback Registration.
(a) In the event that the Company intends to register at any
time an underwritten offering of Common Stock by the Company and/or Stockholders
of the Company and the Company desires to exercise the rights set forth in
paragraph 3(a), the Company shall offer the GDS Shareholders the right to
include any or all of their Registrable Securities in such registered offering
(a "Piggyback Notice"). The Company shall include in such registration (a
"Piggyback Registration") all Registrable Securities with respect to which the
Company has received written requests for inclusion therein within 20 days after
delivery of the Piggyback Notice. In the event of a Piggyback Registration, the
Company shall process to effectiveness
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such registration as promptly as practicable, subject to the provisions of
Paragraph 2(g).
(b) In any underwritten Piggyback Registration, each holder of
Registrable Securities who has elected to participate pursuant to Paragraph 2(a)
must agree to sell such holder's Registrable Securities on the same basis
provided in the underwriting arrangements approved by the Company and to timely
complete and execute all questionnaires, powers of attorney, indemnities,
holdback agreements, underwriting agreements and other documents required under
the terms of such underwriting arrangements or by the SEC.
(c) If the managing underwriter(s) for a Piggyback
Registration advise the Company in writing that in their opinion the number of
Registrable Securities and other securities, if any, requested to be included in
such offering exceeds the number of Registrable Securities and other securities,
if any, which can be sold in an orderly manner in such offering without
adversely affecting the marketability of the offering, the number of shares the
Company desires to sell and the number of Registrable Securities and other
securities, if any, requested to be included in such offering shall be reduced,
on a pro rata basis, on the basis of the aggregate number of shares desired to
be included by the Company and each such holder.
(d) The Company shall have the right to select the investment
banker(s) and manager(s) to administer any Piggyback Registration.
(e) The Company shall pay for all Registration Expenses
associated with a Piggyback Registration as set forth in paragraph 5 hereof.
(f) A holder who has given notice to the Company under
Paragraph 2(a) requesting inclusion of any Registrable Securities shall have the
right to withdraw its Registrable Securities from the Piggyback Registration,
but only during the time period and on terms agreed upon among the underwriters
for such underwritten offering and the other holders who wish to continue to
register securities under such Piggyback Registration.
(g) Notwithstanding the foregoing, the Company shall, on
written notice to the holders who have given notice to the Company under
Paragraph 2(a), have the right to withdraw any registration statement filed
pursuant to this Paragraph 2 for a Piggyback Registration at any time prior to
the effective date thereof.
3. Holdback Agreements.
(a) The Company shall have the right to require that each
holder of Registrable Securities shall not effect any public sale or
distribution (including sales pursuant to the Shelf Registration or pursuant to
Rule 144) of common stock of the Company during the ten business days prior to,
and the 90-day period beginning on, the effective date of the registration under
the Securities Act of any underwritten offering of Common Stock by the Company
and/or
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stockholders of the Company, unless the managing underwriter(s) for the public
offering otherwise agree. In order to exercise its rights under this Paragraph
3(a), the Company shall provide holders of Registrable Securities (i) the right
to participate in such underwritten offering as provided in paragraph 2 and (ii)
written notice of the estimated effective date of any such registration at least
ten business days prior to such effectiveness. The restrictions of the this
paragraph 3(a) shall apply whether or not a holder of Registrable Securities
elects to participate on a Piggyback Registration or is able to include in such
Piggyback Registration all Registrable Securities desired to be so included. The
Company shall be entitled to exercise its rights under this Paragraph 3(a) not
more than twice during any calendar year.
(b) The Company shall not effect any public sale or
distribution of its common stock, or any securities convertible into or
exchangeable or exercisable for such securities, during the ten business days
prior to and during the 90-day period beginning on the effective date of any
underwritten Piggyback Registration (except as part of such underwritten
registration or an Exempt Registration), unless the managing underwriter(s) for
the Piggyback Registration otherwise agree.
(c) Each holder of Registrable Securities shall not effect any
public sale or distribution (including sales pursuant to the Shelf Registration
or pursuant to Rule 144) of common stock of the Company during the 30-day period
beginning on the date a notice of the type contemplated by Paragraph 4(e) is
delivered to such holder (or such shorter period specified by the Company).
4. Registration Procedures. Whenever any Registrable
Securities are required to be registered pursuant to this Agreement, the Company
shall use its reasonable best efforts to effect the registration and the sale of
such Registrable Securities in accordance with the intended method of
disposition thereof, and pursuant thereto the Company shall as expeditiously as
possible:
(a) prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its reasonable best efforts
to cause such registration statement to become effective (provided that before
filing a registration statement or prospectus or any amendments or supplements
thereto, the Company shall furnish to the counsel selected by the holders of a
majority of the Registrable Securities covered by such registration statement
copies of all such documents proposed to be filed);
(b) notify each holder of Registrable Securities of the
effectiveness of each registration statement filed hereunder and 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 to keep such
registration statement effective for the period of time set forth in Paragraph
1, as applicable, and to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such
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registration statement;
(c) furnish to each seller of Registrable Securities such
number of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use its reasonable best efforts to register or qualify
such Registrable Securities under the securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller (provided that the Company 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 subparagraph, (ii) subject itself
to taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction);
(e) promptly notify each seller of such Registrable
Securities, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the existence of facts or the happening
of any event (without necessarily identifying such facts or event to such
sellers) as a result of which the prospectus included in such registration
statement contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading, and, at the request of
any such seller, the Company shall prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not contain an untrue statement of
a material fact or omit to state any fact necessary to make the statements
therein not misleading;
(f) cause all such Registrable Securities to be listed or
quoted for trading on each securities exchange on which similar securities
issued by the Company are then listed;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the holders of a majority of the Registrable Securities being sold or the
underwriters reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities in any underwritten offering of
Registrable Securities;
(i) make available for reasonable inspection by any seller of
Registrable Securities, any underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant or other
agent retained by any such seller or underwriter, such financial and other
records, corporate documents and properties of the Company as are customarily
made available to such persons on a confidential basis by the issuer in
connection with
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a registered public offering of securities similar to the Registrable
Securities, and cause the Company's officers, directors, employees and
independent accountants to supply all information reasonably requested by any
such seller, underwriter, attorney, accountant or agent in connection with such
registration statement;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve months beginning with the first day of the Company's
first full calendar quarter after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder.
5. Registration Expenses.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, printing expenses, messenger and delivery expenses, fees and disbursements
of custodians, and fees and disbursements of counsel for the Company and all
independent certified public accountants, underwriters (excluding discounts and
commissions) and other persons retained by the Company (all such expenses being
herein called "Registration Expenses"), shall be borne as provided in this
Agreement, except that the Company shall, in any event, pay its internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit or quarterly review, the expense of any liability insurance and
the expenses and fees for listing the securities to be registered on each
securities exchange on which similar securities issued by the Company are then
listed or quoted for trading.
(b) In connection with the Shelf Registration or the Piggyback
Registration, the Company shall reimburse the holders of Registrable Securities
included in such registration for the reasonable fees (not exceeding $25,000 for
each registration) and disbursements of one counsel chosen by the holders of a
majority of the Registrable Securities included in such registration.
6. Indemnification.
(a) The Company agrees to indemnify each holder of Registrable
Securities, its officers and directors and each Person who controls such holder
(within the meaning of the Securities Act) against all losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue statement of
material fact contained in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as the same are
caused by or contained in any information furnished in writing to the Company by
such holder expressly for use therein or by
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such holder's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such holder with a sufficient number of copies of the same. In
connection with an underwritten offering, the Company shall indemnify such
underwriters, their officers and directors and each Person who controls such
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the holders of Registrable
Securities.
(b) In connection with any registration statement in which a
holder of Registrable Securities is participating, each such holder shall
furnish to the Company in writing such information and affidavits as the
reasonably Company requests for use in connection with any such registration
statement or prospectus and shall indemnify the Company, its directors and
officers and each Person who controls the Company (within the meaning of the
Securities Act) against any losses, claims, damages, liabilities and expenses
resulting from any untrue or alleged untrue statement of fact contained in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent the same are caused by or contained in any
information furnished in writing to the Company by such holder expressly for use
therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of copies of the
same.
(c) Any Person entitled to indemnification hereunder shall (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided that any such failure shall not
relieve the indemnifying party from any other liability which it may have to any
other person. If the indemnifying party gives notice to such indemnified party
of its election to assume and control the defense of such claim, the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses subsequently incurred by the indemnified party in connection with
the defense or investigation of the action unless the indemnified party shall
have given the indemnifying party notice of a conflict of interest between the
indemnified party and indemnifying party with respect to such claim. The failure
of an indemnifying party to give notice to the indemnified party of its election
to assume and control the defense of any action for which notice has been given
to the indemnifying party in accordance with this Paragraph within 30 days after
receipt of such notice shall constitute an election by the indemnifying party
not to assume and control the defense of such action. An indemnifying party who
is not entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim, in which event the indemnifying party shall be obligated
to pay the fees and expenses of one separate
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counsel for such indemnified parties. No indemnified party shall consent to the
entry of any judgment or enter into any settlement with respect to a claim for
which indemnification may be sought without the prior written consent of the
indemnifying party.
(d) The indemnification provided for under this Agreement
shall remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified party or any officer, director or controlling
Person of such indemnified party and shall survive the transfer of securities.
The Company also agrees to make such provisions, as are reasonably requested by
any indemnified party, for contribution to such party in the event the Company's
indemnification is unavailable for any reason.
7. Participation in Underwritten Registrations; Sale
Information. No GDS Shareholder may participate in any registration hereunder
which is underwritten unless such person (i) agrees to sell such person's
securities on the basis provided in any underwriting arrangements approved by
the person or persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements. Promptly following any sale or other transfer
of any Registrable Securities covered by the Shelf Registration, the person
selling or transferring such securities shall promptly notify the Company in
writing thereof, which notice shall specify the amount of securities involved
and the market, if any, on which such sale or transfer occurred.
8. Definitions.
(a) "Exempt Registration" means any registration of securities
by the Company under the Securities Act pursuant to a (i) Registration Statement
on a Form S-8 (or any successor thereto), (ii) Registration Statement on Form
S-4 covering solely securities issued in connection with a business combination
or other transaction specified in Rule 145(a) under the Securities Act, or (iii)
Registration Statement on Form S-3 covering solely securities issued under a
dividend reinvestment program.
(b) "Registrable Securities" means (i) any Sabratek common
stock issued upon exercise of the Call Option or the Put Option pursuant to the
Option Agreement, (ii) any Sabratek common stock issued in connection with a
merger of consolidation of GDS and Sabratek (or a wholly owned subsidiary of
Sabratek) in which the outstanding common stock of GDS is converted into common
stock of Sabratek, or (iii) any Sabratek common stock issued or issuable with
respect to the outstanding Sabratek common stock by way of a stock dividend or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. As to any particular Registrable
Securities, such securities shall cease to be Registrable Securities when (A)
they have been distributed to the public pursuant to a offering registered under
the Securities Act; (B) sold to the public through a broker, dealer or market
maker in compliance with Rule 144 under the Securities Act (or any similar rule
then in force); or (C) repurchased by the Company or any subsidiary of the
Company.
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9. Miscellaneous.
(a) No Inconsistent Agreements. The Company shall not
hereafter enter into any agreement with respect to its securities which is
inconsistent with or violates the rights granted to the holders of Registrable
Securities in this Agreement.
(b) Adjustments Affecting Registrable Securities. The Company
shall not take any action, or permit any change to occur, with respect to its
securities which would materially and adversely affect the ability of the
holders of Registrable Securities to include such Registrable Securities in a
registration undertaken pursuant to this Agreement or which would materially and
adversely affect the marketability of such Registrable Securities in any such
registration (including, without limitation, effecting a stock split or a
combination of shares).
(c) Remedies. Any Person having rights under any provision of
this Agreement shall be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
(d) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may be amended or waived only upon the
prior written consent of the Company and holders of at least 50% of the
Registrable Securities.
(e) Successors and Assigns. All covenants and agreements in
this Agreement by or on behalf of any of the parties hereto shall bind and inure
to the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities; provided that
prior to any transfer of Registrable Securities the holder thereof shall obtain
the written acknowledgment and agreement of the transferee to be bound by the
terms of this Agreement..
(f) Severability. If any provision of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction or as a
result of legislative or administrative action, such holding or action shall be
strictly construed and shall not affect the validity of or affect any other
provision of this Agreement.
(g) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same
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instrument.
(h) Notices. All notices and other communications must be in
writing and shall be deemed given on the date delivered if delivered in person
or by overnight courier, or on the third (3rd) business day after mailing if
mailed by registered or certified mail, postage prepaid, return receipt
requested, to the persons at the addresses set forth below (or such other
address for a party as shall be specified by like notice):
If to the Company: Sabratek Corporation
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
with a copy to: Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Berkshire
If to the GDS Shareholders: To the address set forth on the
signature page affixed hereto for
each such GDS Shareholder.
with a copy to: GDS Technology, Inc.
00000 Xxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx
and
Xxxxxx & Xxxxxxxxx
600 1st Source Bank Center
000 Xxxxx Xxxxxxxx
Xxxxx Xxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Xx.
(i) Governing Law. This Agreement shall be governed in all
respects, including validity, interpretation and effect, by the internal laws of
the State of Indiana without regard to principles of conflicts of law.
(j) Interpretation. The captions in this Agreement are for
convenience of reference only and shall not limit or otherwise affect any of the
terms or provisions hereof. Terms such as "herein", "hereof", and "hereinafter"
refer to this Agreement as a whole and not to the particular sentence or
paragraph where they appear, unless the context otherwise requires.
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Whenever the context requires, references in this Agreement to the singular
number shall include the plural, the plural number shall include the singular
and words denoting gender shall include the masculine, feminine and neuter.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
SABRATEK CORPORATION
By: /s/ Xxxxxxx Xxxxxx
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Its: Senior Vice President & Chief Financial Officer
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GDS SHAREHOLDER
Name:__________________________________
Signature:_____________________________
Title (if applicable):_________________
Address:_______________________________
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