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REGISTRATION RIGHTS AGREEMENT
by and among
HEALTHCORE MEDICAL SOLUTIONS, INC.
and
XXXX X. XXXXX, individually and
as custodian for XXXXXXX XXXXX
October 12, 1999
REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT, dated as of October 12, 1999, is entered into by and
among HealthCore Medical Solutions, Inc., a corporation organized under the laws
of Delaware (the "Company") and Xxxx X. Xxxxx, individually and as custodian for
Xxxxxxx Xxxxx and residing at 00 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000
(collectively, the "Shareholder").
W I T N E S S E T H:
WHEREAS, on the date hereof, the Company is consummating a merger with
Adatom, Inc., a California corporation; and
WHEREAS, as a condition to the closing of the merger, the Company has
agreed to grant to the Shareholder the registration rights provided for herein.
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements herein contained and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto hereby
agree as follows:
Article I. Certain Definitions.
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For the purposes of this Agreement, the following terms shall have the
respective meanings set forth below:
"Advice" is as defined in Section 2.05.
"Agreement" means this Agreement, as from time to time assigned,
supplemented, amended or modified in accordance with the terms hereof.
"Company" is as defined in the preamble.
"Demand Registration" is as defined in Section 2.01.
"Demand Request" is as defined in Section 2.01.
"Exchange Act" means the United States Securities Exchange Act of 1934,
as amended, or any similar federal law then in force.
"Indemnified Person" is as defined in Section 2.09(a).
"Material Adverse Effect" is as defined in Section 2.03(a).
"NASD" is as defined in Section 2.04(p).
"Xxxxx Shares" means (i) the 165,000 shares of Class A Common Stock $.01
par value, of the Company issued to Shareholder on September 10, 1999; (ii) the
shares issued or issuable upon exercise of the warrant to purchase 142,000
shares of Class A Common Stock $.01 par value of the Company, which warrant is
currently exercisable in full at an exercise price of $1.00 per share and was
issued to Shareholder in September 1997 and expires on September 2007; (iii)
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the 28,400 shares of Class A Common Stock, $.01 par value, of the Company
issuable upon exchange of a separate warrant to purchase 142,000 shares of Class
A Common Stock $.01 par value, of the Company, at $1.00 per share, which warrant
is not currently exercisable and was issued to Shareholder in September, 1997;
(iv) 25,200 shares of Class B Common Stock, $.01 par value, owned by Shareholder
, which shares are being released from escrow pursuant to an escrow termination
agreement dated July 1, 1999 between the Company and Shareholder; and (v) 7,200
shares of Class B Common Stock, $.01 par value, owned by Shareholder as
custodian for Xxxxxxx Xxxxx, which shares also are being released from escrow
pursuant to such escrow termination agreement (together with any Shares or other
securities into which such shares or other securities may be changed, converted
or exchanged).
"Proposed Registration" is as defined in Section 2.02(a).
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the United States Securities Act of 1933, as
amended, or any similar federal law then in force.
"Shareholder" is as defined in the preamble.
"Shares" means common stock of the Company, par value $.01 per share
issued or issuable upon exercise of convertible securities, warrants or options.
"Suspension Notice" is as defined in Section 2.05.
Article II. Registration Rights.
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Section 2.01 Demand Registration.
(a) At any time after February 9, 2000, provided the Company shall not
prior to such date have caused a registration statement to have been declared
effective by the SEC pursuant to Section 2.02 covering all of the Xxxxx Shares,
the Shareholder may require the Company (pursuant to a written notice to the
Company) to effect the registration under the Securities Act of Xxxxx Shares of
the Company other than pursuant to a registration statement on Form S-1 (a
"Demand Registration"). Such request (a "Demand Request") by the Shareholder
shall (i) specify the class and number of Xxxxx Shares which the Shareholder
intends to sell or dispose of, and (ii) state the intended method or methods by
which the Shareholder intends to sell or dispose of such Xxxxx Shares. In
connection with any underwritten public offering, the underwriter thereof shall
be selected by the Shareholder, subject to the consent of the Company, which
shall not be unreasonably withheld. Upon receipt of a Demand Request, the
Company shall (as requested) cause to be filed, within thirty (30) calendar days
of the date of delivery to the Company of the request, a registration statement
covering such Xxxxx Shares which the Company has been so requested to register,
providing for the registration under the Securities Act of such Xxxxx Shares to
the extent necessary to permit the disposition of such Xxxxx Shares to be
registered in accordance with the intended method of distribution specified in
such request. The Shareholder shall have the right to exercise only one such
Demand Registration; provided, however, if the Shareholder shall not be entitled
to include all of its Xxxxx Shares in a Demand Registration, the Shareholder may
be entitled to make an additional Demand Request,
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notwithstanding the registration of certain of the Polan Shares pursuant to the
then pending Demand Registration.
(b) Notwithstanding the foregoing, the Company shall not be required to
effect any registration statement pursuant to this Section 2.01 (i) within 90
days after the effective date of any other registration statement of the
Company's securities or (ii) during the pendency of any Demand Blackout Period.
(c) If any of the Company's investment banker or any underwriter
determines in good faith that the registration statement and distribution of the
Xxxxx Shares (or the use of the registration statement or related prospectus)
would materially interfere with any pending financing, merger, acquisition or
corporate reorganization involving the Company (or would require premature
disclosure thereof), and promptly gives the Shareholder written notice of such
determination following its Demand Request, the Company shall be entitled to
postpone the filing of the registration statement otherwise required to be
prepared and filed by the Company pursuant to Section 2.01 for a reasonable
period of time, not to exceed 90 days (a "Demand Blackout Period"). The Company
shall promptly notify the Shareholder of the expiration or earlier termination
of any Demand Blackout Period, and upon such expiration or termination the
Company shall immediately file the registration statement pursuant to Section
2.01. The rights under this Section 2.01 shall be separate and distinct from any
other rights the Shareholder may have under Section 2.02.
Section 2.02 Piggyback Rights.
(a) Each time that the Company proposes for any reason to register any
of its securities under the Securities Act (a "Proposed Registration"), other
than pursuant to a registration statement on Form S-4 or similar or successor
form, the Company shall promptly give written notice of such Proposed
Registration to the Shareholder (which notice shall be given not less than
thirty (30) calendar days prior to the effective date of the Company's
registration statement) and the Shareholder shall have the right to request
inclusion of any of the Polan Shares in the Proposed Registration, unless, in
the case of a Proposed Registration on Form S-8, the Xxxxx Shares are ineligible
for registration on Form S-8. No registration pursuant to this Section 2.02
shall relieve the Company of its obligation to register Xxxxx Shares pursuant to
Section 2.01.
(b) The Shareholder shall have twenty-five (25) calendar days from the
receipt of such notice to deliver to the Company a written request specifying
the number of Xxxxx Shares the Shareholder intends to sell and the Shareholder's
intended method of disposition. The Shareholder shall have the right to withdraw
its request for inclusion of all or a portion of such Xxxxx Shares in any
registration statement pursuant to this Section 2.02 by giving written notice to
the Company of such withdrawal. Subject to Section 2.03 below, the Company shall
include in such registration statement all such Xxxxx Shares so requested to be
included therein; provided, however, that the Company may at any time withdraw
or cease proceeding with any such piggyback registration if it shall at the same
time withdraw or cease proceeding with the registration of all other equity
securities originally proposed to be registered.
(c) In the event that the Proposed Registration by the Company is, in
whole or in part, an underwritten public offering of securities of the Company,
any request under Section 2.02(b) hereof must specify that the Xxxxx Shares be
included in the underwriting on the same
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terms and conditions as the shares otherwise being sold through underwriters
under such registration.
Section 2.03 Priority on Registrations.
(a) If the managing underwriter advises the Company that the inclusion
of such Xxxxx Shares in a proposed Registration pursuant to Section 2.02 would
materially and adversely affect the price or success of the offering (a
"Material Adverse Effect "), the Company will be obligated to include in such
registration statement, as to the Shareholder (subject to the priority rules set
forth below), that portion of the Xxxxx Shares the Shareholder has requested to
be registered equal to the ratio which the Shareholder's requested Xxxxx Shares
bears to the total number of shares requested to be included in such
registration statement by all other persons (other than the Company, if such
registration has been initiated by the Company for securities to be offered by
the Company) who have requested that their shares be included in such
registration statement, provided, however, if in the judgement of the managing
underwriter no such reduction would eliminate such Material Adverse Effect, then
the Company shall have the right to exclude all such Xxxxx Shares from such
registration statement provided no other securities are included and offered for
the account of any other person in such registration statement.. It is
acknowledged by the Shareholder that pursuant to the foregoing provision, the
securities to be included in such registration shall be allocated, (1) first, to
the Company if it initiated the Proposed Registration or to such other third
party who is exercising demand registration rights, and (2) second, to the
Shareholder and to all other persons requesting securities to be included
therein (in accordance with the above-described ratio). If as a result of the
provisions of this Section 2.03(a) the Shareholder shall not be entitled to
include all of its Xxxxx Shares in a registration that the Shareholder has
requested to be so included, the Shareholder may withdraw the Shareholder's
request to include Xxxxx Shares in such registration statement.
(b) The Shareholder may not participate in any registration statement
hereunder unless the Shareholder completes, executes and delivers all
questionnaires, powers of attorney, indemnities, underwriting agreements, and
other documents reasonably required under the terms of such underwriting
arrangements, including an opinion of its counsel, as are required of any other
shareholders registering shares who are not affiliates of the Company, and shall
furnish such information regarding the Xxxxx Shares and the intended method of
distribution of the Polan Shares as shall be reasonably required to effect such
registration.
Section 2.04 Registration Procedures. Whenever the Shareholder has
requested that any Polan Shares be registered pursuant to the provisions of this
Article II, the Company will use its commercially reasonable efforts to effect
the registration and the sale of such Xxxxx Shares in accordance with the
intended method of disposition thereof as set forth in the written request, and
pursuant thereto the Company shall:
(a) prepare and file with the SEC a registration statement with respect
to such securities on the appropriate forms, and use commercially reasonable
efforts to cause such registration statement(s) to become and remain effective
in accordance with Section 2.04(b) hereof and in accordance with all laws, rules
and regulations applicable thereto;
(b) prepare and file with the SEC such amendments and supplements to
such registration statements and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective until the earlier
of (i) the sale of all Xxxxx Shares
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covered thereby or (ii) the expiration of twelve months from the effective date
of the registration statement, and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all Xxxxx Shares
covered by such registration statement;
(c) furnish to the Shareholder pursuant to Section 2.01 or Section 2.02
such number of copies of any summary prospectus or other prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as the Shareholder may reasonably request in order
to facilitate the public sale or other disposition of such Xxxxx Shares;
(d) use commercially reasonable efforts to register or qualify the
Shares covered by such registration statement under the securities or blue sky
laws of such jurisdictions as the Shareholder shall reasonably request;
provided, however, that the Company shall not be required to consent to general
service of process for all purposes in any jurisdiction where it is not then
subject to process, qualify to do business as a foreign company where it would
not be otherwise required to qualify or submit to liability for state or local
taxes where it is not otherwise liable for such taxes;
(e) at any time when a prospectus relating thereto covered by such
registration statement is required to be delivered under the Securities Act
within the appropriate period mentioned in Section 2.04(b) hereof, promptly
notify the Shareholder and each underwriter and (if requested by the
Shareholder) confirm such notice in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed and, with
respect to a registration statement or any post-effective amendment, when the
same has become effective, (ii) of the issuance by any state securities or other
regulatory authority of any order suspending the qualification or exemption from
qualification of any of the Xxxxx Shares under state securities or blue sky laws
or the initiation of any proceedings for that purpose, and (iii) of the
happening of any event as a result of which the prospectus included in such
registration, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing and, at the request of the Shareholder, prepare, file and furnish to
the Shareholder a reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such shares, 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 not misleading in the light
of the circumstances then existing;
(f) if the Company has delivered preliminary or final prospectuses to
the Shareholder and after having done so the prospectus is amended to comply
with the requirements of the Securities Act, the Company shall promptly notify
the Shareholder and, if requested, the Shareholder shall immediately cease
making offers of Xxxxx Shares and return all prospectuses to the Company. The
Company shall promptly provide the Shareholder with revised prospectuses and,
following receipt of the revised prospectuses, the Shareholder shall be free to
resume making offers of the Polan Shares;
(g) if any proposed registration effected pursuant to Section 2.01 or
Section 2.02 involves an underwritten public offering cause all Shares to be
listed for trading on the principal national securities exchange (if any) where
the Company's common stock is listed for trading;
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(h) before filing a registration statement or amendment thereto,
furnish to each Shareholder and its counsel and other representatives and the
underwriters, if any, copies of each such registration statement or amendment
proposed to be filed, which documents shall be made available on a timely basis
for review and comment by the Shareholder, the underwriters (if any) and their
respective representatives;
(i) cooperate with the Shareholder and the managing underwriter to
facilitate the timely preparation and delivery of certificates (which shall not
bear any restrictive legends unless required under applicable law) representing
securities sold under any registration statement (if any), and enable such
securities to be in such denominations and registered in such names as the
managing underwriter or such sellers may request and keep available and make
available to the Company's transfer agent prior to the effectiveness of such
registration statement a supply of such certificates;
(j) in the event that the Shareholder may be considered to be a
"control person," promptly make available for inspection by the Shareholder, any
underwriter participating in any disposition pursuant to any registration
statement, and any attorney, accountant or other agent or representative
retained by any the Shareholder or underwriter (collectively, the "Inspectors"),
all financial and other records, pertinent corporate documents and properties of
the Company (collectively, the "Records"), as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause the
Company's officers, directors and employees to supply all information reasonably
requested by any such Inspector in connection with such registration statement;
provided, that, unless the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in the registration statement or the release
of such Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, the Company shall not be required to provide any
information under this subparagraph (n) if (i) the Company believes, after
consultation with counsel for the Company, that to do so would cause the Company
to forfeit an attorney-client privilege that was applicable to such information
or (ii) if either (A) the Company has requested and been granted from the SEC
confidential treatment of such information contained in any filing with the SEC
of documents provided supplementally or otherwise or (B) the Company reasonably
determines in good faith that such Records are confidential and so notifies the
Inspectors in writing unless prior to furnishing any such information with
respect to (i) or (ii) the Shareholder requesting such information agrees to
enter into a confidentiality agreement in customary form and subject to
customary exceptions; and provided, further, that the Shareholder agrees that it
will, upon learning that disclosure of such Records is sought in a court of
competent jurisdiction, give notice to the Company and allow the Company at its
expense, to undertake appropriate action and to prevent disclosure of the
Records deemed confidential;
(k) provide, if required, a CUSIP number for the Shares included in any
registration statement not later than the effective date of such registration
statement;
(l) cooperate with the Shareholder and each underwriter participating
in the disposition of such Shares and their respective counsel in connection
with any filings required to be made with the National Association of Securities
Dealers, Inc. ("NASD");
(m) during the period when the prospectus is required to be delivered
under the Securities Act, promptly file all documents required to be filed with
the SEC pursuant to Sections 13(a), 13(c) or 14 of the Exchange Act;
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(n) notify the Shareholder promptly of any request by the SEC for the
amending or supplementing of such registration statement or prospectus or for
additional information;
(o) prepare and file with the SEC promptly any amendments or
supplements to such registration statement or prospectus which, in the opinion
of counsel for the Company is required in connection with the distribution of
the Shares;
(p) advise the Shareholder, promptly after it shall have received
notice or obtain knowledge thereof, of the issuance of any stop order by the SEC
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for such purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal at the
earliest possible moment if such stop order should be issued; and
(q) in the case of a Demand Request pursuant to Section 2.01 if the
Shareholder so requests, to request acceleration of effectiveness of the
registration statement from the SEC, provided at the time of such request the
Company does not, in good faith, believe it is necessary to amend further the
registration statement in order to comply with the provisions of Section 2.04.
If the Company wishes to further amend the registration statement prior to
requesting acceleration, it shall have such time as is reasonable given the
nature of the amendment to so amend prior to requesting acceleration.
Section 2.05 Suspension of Dispositions. The Shareholder agrees that
upon receipt of any notice (a "Suspension Notice") from the Company of the
happening of any event of the kind described in Section 2.04(e)(iii), the
Shareholder will forthwith discontinue disposition of Xxxxx Shares that have
been registered under this Article 2 until the Shareholder's receipt of the
copies of the supplemented or amended prospectus, or until it is advised in
writing (the "Advice") by the Company that the use of the prospectus may be
resumed, and has received copies of any additional or supplemental filings which
are incorporated by reference in the prospectus, and, if so directed by the
Company, the Shareholder will deliver to the Company all copies, other than
permanent file copies then in the Shareholder's possession, of the prospectus
covering such Shares current at the time of receipt of such Suspension Notice.
In the event the Company shall give any such Suspension Notice, the time period
regarding the effectiveness of registration statements set forth in Section
2.04(b) hereof shall be extended by the number of days during the period from
and including the date of the giving of the Suspension Notice to and including
the date when each seller of Shares covered by such registration statement shall
have received the copies of the supplemented or amended prospectus or the
Advice. The Company shall use its commercially reasonable efforts and take such
actions as are reasonably necessary to render the Advice as promptly as
practicable.
Section 2.06 Cooperation upon a Registration. The Shareholder and the
Company agree that, in connection with any exercise of registration rights
pursuant to this Article 2, the Shareholder will authorize, and will authorize
and direct the Company to take, such actions as are necessary or appropriate to
effectuate such registration. In addition, the Shareholder agrees to cooperate
fully with the Company and the underwriters of any underwritten public offering
in the preparation of all documentation necessary or desirable to effectuate any
registration of any Polan Shares under the Securities Act pursuant to this
Article 2, or registration or qualification of any Xxxxx Shares pursuant to
Section 2.04(d) hereof.. In addition, the Shareholder shall notify the Company,
at any time when a prospectus is required to
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be delivered under applicable law, of the happening of any event as a result of
which the prospectus included in the applicable registration statement, as then
in effect, in each case with respect to the information provided by the
Shareholder, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing. The
Shareholder shall thereafter take the actions required by Section 2.05.
Section 2.07 Expenses. The Company shall pay all expenses incurred by
the Company in complying with Sections 2.01, 2.02 and 2.04 hereof, including,
without limitation, all registration and filing fees (including all expenses
incident to filing with the NASD), fees and expenses of complying with the
securities or blue sky laws of all such jurisdictions in which the Shares are
proposed to be offered and sold (including reasonable fees and disbursements of
counsel in connection with blue sky qualification of Shares), rating agency
fees, printing expenses, messenger and delivery expenses, the Company's internal
expenses (including without limitation all salaries and expenses of its officers
and employees performing legal or accounting duties), fees and expenses incurred
in connection with any listing of the Shares, fees and expenses of counsel for
the Company and its independent certified public accountants (including the
expenses of any special audit or cold comfort letters required by or incident to
such performance), securities act liability insurance (if the Company elects to
obtain such insurance) and fees and disbursements of underwriters (to the extent
the Company is liable therefor under the terms of any underwriting agreement),
whether or not any registration statement becomes effective; provided, however,
that all underwriting discounts and selling commissions applicable to the Shares
covered by registrations effected pursuant to Section 2.01 or Section 2.02
hereof shall be borne by the Shareholder, in proportion to the number of Shares
sold by the Shareholder, and except as expressly provided in this Section 2.07,
in no event shall the Company pay any fees or expenses of or attributable to the
Shareholder or any counsel, accountants or other persons retained or employed by
the Shareholder.
Section 2.08 Indemnification.
(a) In the event of any registration of any Shares under the Securities
Act pursuant to this Article 2 or registration or qualification of any Shares
pursuant to Section 2.04(d) hereof, the Company shall indemnify and hold
harmless the Shareholder, each director, officer, employee, trustee, and partner
of the Shareholder and each other person, if any, who controls any of the
foregoing persons, within the meaning of the Securities Act (each, an
"Indemnified Person"), against any losses, claims, damages, liabilities or
expenses, joint or several, to which any of the foregoing persons may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of, are related
to, result from or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any registration statement under which
such Shares were registered under the Securities Act, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereto,
or any document incident to registration or qualification of any Shares pursuant
to Section 2.04(d) hereof, or arise out of, are related to, result from or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading or, with respect to any prospectus, necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or any violation by the Company of the state securities or blue sky
laws applicable to the Company and relating to
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action or inaction required of the Company in connection with such registration
or qualification under such state securities or blue sky laws. The Company shall
reimburse on demand each Indemnified Person for any legal or any other costs and
expenses reasonably incurred by any of them in connection with investigating,
preparing for, defending or settling any such loss, claim, damage, liability or
action by any governmental agency or body; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in said
registration statement, preliminary or final prospectus or amendment or
supplement thereto or any document incident to registration or qualification of
any Shares pursuant to Section 2.04(d) hereof, in reliance upon and in
conformity with written information furnished to the Company by the Shareholder,
underwriter, broker, other person or controlling person specifically for use in
the preparation thereof or arises out of or is based upon the Indemnified
Person's failure to deliver a copy of the registration statement or prospectus
or any amendments or supplements thereto after the Company has furnished such
Indemnified Person with a sufficient number of copies of the same.
(b) Before Shares shall be included in any registration pursuant to
this Article II, the Shareholder will furnish to the Company in writing such
information and affidavits as the Company reasonably requests for use in
connection with any such registration statement and prospectus, and the
Shareholder shall have agreed to indemnify and hold harmless (in the same manner
and to the same extent as set forth in paragraph (a) above) the Company, each
member of the Board of Directors of the Company, each officer of the Company who
signs such registration statement, every other participating shareholder and any
person who controls the Company within the meaning of the Securities Act, with
respect to any untrue statement or omission from such registration statement,
any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto, if such untrue statement or omission was made
in reliance upon and in conformity with such written information furnished to
the Company by the Shareholder or such underwriter for use in the preparation of
such registration statement, preliminary prospectus, final prospectus or
amendment or supplement; provided, however, that the maximum amount of liability
in respect of such indemnification shall be limited to an amount equal to the
net proceeds actually received by the Shareholder from the sale of Shares
effected pursuant to such registration.
(c) Promptly after receipt by an Indemnified Person of notice of the
commencement of any action involving a claim referred to in Section 2.08(a) or
(b) hereof, such Indemnified Person will, if a claim in respect thereof is to be
made against the indemnifying party under this Section 2.08, give written notice
to the latter of the commencement of such action (provided that the failure to
give such notice shall not limit the rights of such Indemnified Person to the
extent that such failure or delay in notifying the indemnifying party does not
prevent the indemnifying party from presenting a proper defense against the
claim). In case any such action is brought against an Indemnified Person, the
indemnifying party will be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
Indemnified Person, and, after notice to such Indemnified Person from the
indemnifying party of its election to assume the defense thereof; provided,
however, that, if any Indemnified Person shall have reasonably concluded that
there may be one or more legal defenses available to such Indemnified Person
which are different from, in conflict with or additional to those available to
the indemnifying party, or that such claim or litigation involves or could have
an effect upon
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matters beyond the scope of the indemnity agreement provided in this Section
2.08, or if the indemnifying party fails to take diligent action to defend such
claim within twenty (20) calendar days following notice thereof from the
Indemnified Person, the indemnifying party shall not have the right to assume
the defense of such action on behalf of such Indemnified Person, and such
indemnifying party shall reimburse such Indemnified Person and any person
controlling such Indemnified Person for the fees and expenses of counsel
retained by the Indemnified Person which are reasonably related to the matters
covered by the indemnity agreement provided in this Section 2.08. If the
indemnifying party does assume its own defense as permitted hereunder, from such
time the Indemnified Person shall bear the expenses of its own separate counsel.
If such defense is not assumed by the indemnifying party as permitted hereunder,
the indemnifying party will not be subject to any liability for any settlement
made by the Indemnified Person without its written consent, which consent shall
not be unreasonably withheld. If such defense is assumed by the indemnifying
party pursuant to the provisions hereof, such indemnifying party shall not make
any settlement of the applicable claim indemnified against hereunder without the
written consent of the Indemnified Person or persons, which consent shall not be
unreasonably withheld. An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will 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 Person, a conflict of interest may exist between such
Indemnified Person and any other such Indemnified Person with respect to such
claim, in which event the indemnifying party shall be obligated to pay the
reasonable fees and disbursements of such additional counsel or counsels.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which an Indemnified Person
makes a claim for indemnification pursuant to this Section 2.08, but it is
judicially determined that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 2.08 provides for indemnification in
such case, then the Company and the Shareholder will contribute to the aggregate
losses, claims, damages or liabilities to which they may be subject as is
appropriate to reflect, as between the Company and the Shareholder, on the one
hand, and the underwriter on the other hand, the relative fault of the Company
and the Shareholder in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, it being understood
that the parties acknowledge that the overriding equitable consideration to be
given effect in connection with this provision is the ability of one party or
the other to correct the statement or omission which resulted in such losses,
claims, damages or liabilities, and that it would not be just and equitable if
contribution pursuant hereto were to be determined by pro rata allocation or by
any other method of allocation which does not take into consideration the
foregoing equitable considerations. Notwithstanding the foregoing, (i) the
Shareholder will not be required to contribute any amount in excess of the net
proceeds to it of all Shares sold by it pursuant to such registration statement,
and (ii) 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 is not guilty of such fraudulent misrepresentation. If
indemnification is available under this Section 2.08, the indemnifying parties
shall indemnify each Indemnified Person to the full extent provided in Section
2.08(a) and Section 2.08(b) without regard to the relative fault of said
indemnifying party or Indemnified Person or any other equitable consideration
provided for in this Section 2.08(d).
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(e) Notwithstanding any of the foregoing, if in connection with an
underwritten public offering of any Shares, the Company, the Shareholder and the
underwriters enter into an underwriting or purchase agreement relating to such
offering which contains provisions covering indemnification among the parties,
the indemnification provided thereunder shall be in lieu of the indemnification
provided to the Shareholders hereunder.
(f) The indemnification and contribution required by this Section 2.09
shall be made by periodic payment of the amount thereof during the course of the
investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred; provided, that the party receiving such
indemnification or contribution provides a bond or other form of security
reasonably acceptable to the indemnifying or contributing party and provided,
further, if a court of competent jurisdiction finally determines that any
Indemnified Person which has received payments hereunder does not have an
indemnification right under this Section 2.08 for any reason, then such
Indemnified Person shall within five (5) calendar days of such final
determination, refund all amounts received hereunder to the Company or the
Shareholder, as the case may be.
(g) The indemnification and contribution provided for hereunder will
remain in full force and effect regardless of any investigation made by or on
behalf of any Indemnified Person and will survive the transfer of Shares.
Article III. Miscellaneous.
--------------
Section 3.01 Notices. Any and all notices, consents, offers,
acceptances, or any other communication provided for herein shall be sufficient
if given in writing and deemed received when delivered by first class,
registered or certified mail, postage prepaid or overnight courier or hand
delivery, or when sent by facsimile transmission (confirmed by facsimile machine
report and with a confirmation letter sent by first class mail, postage prepaid)
which shall be addressed, or sent to the address or telecopier number of the
party set forth below its signature hereto or, in each case, such other address
or telecopier number, as the case may be, as such party may from time to time
designate in writing to the other parties.
Section 3.02 Amendment and Waiver. No change or modification of, or
waiver of compliance with, this Agreement shall be valid unless the same shall
be in writing and signed by all of the parties hereto.
Section 3.03 Termination. This Agreement will terminate at the earlier
of the date on which all the Polan Shares have been sold by the Shareholder (or
a permitted assignee hereunder) or the second anniversary of the date hereof.
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Section 3.04 No Waiver. No failure or delay on the part of the Company
or the Shareholder in exercising any right, between the Company and the
Shareholder shall operate as a waiver thereof nor shall any single or partial
exercise of any right, power or privilege hereunder preclude the simultaneous or
later exercise of any other right, power or privilege. The rights and remedies
herein expressly provided are cumulative and not exclusive of any rights or
remedies which the Company or the Shareholder would otherwise have. No notice to
or demand on the Company or the Shareholder, as the case may be, in any case
shall entitle the Company or the Shareholder, as the case may be, to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Company or the Shareholder to take any other or
further action in any circumstances without notice or demand.
Section 3.05 Specific Performance. Each party to this Agreement
acknowledges that the other parties will suffer irreparable injury in the event
of any breach of any provision of this Agreement and that therefore the remedy
at law for any breach or threatened breach of any such provision of this
Agreement will be inadequate. Accordingly, upon a breach or threatened breach of
any such provision of this Agreement by any party hereto, the other parties
shall, in addition and without prejudice to any of the rights and remedies they
may have, be entitled as a matter of right, without proof of actual damages, to
seek specific performance of such provisions of this Agreement and to such other
injunctive or equitable relief to enforce, or prevent any violations (whether
anticipatory, continuing or future) of, such provisions of this Agreement.
Section 3.06 Counterparts and Headings. This Agreement may be executed
in two or more counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one and the same instrument. All
headings and any cover page are inserted for convenience or reference only and
shall not affect its meaning or interpretation.
Section 3.07 Nouns and Pronouns. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice-versa.
Section 3.08 Expenses. Except as provided in Section 2.08 hereto, each
of the parties to this Agreement shall bear its own expenses, including, without
limitation, the fees and disbursements of its respective counsel, in connection
with the negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby.
Section 3.09 Governing Law. This Agreement will be governed by, and
construed and enforced in accordance with, the laws of the State of New York,
U.S.A., without regard to its conflict of law rules.
Section 3.10 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the Company and its successors, and the
Shareholder and its successors and assigns; provided that the rights and
obligations of the Shareholder hereunder shall inure to the benefit of and be
binding upon any transferee of the Shareholder only if such transferee (i) is a
spouse or child or a trust established for the benefit of the Shareholder's
spouse, child or children, or a limited liability company or limited
partnership, the members or partners of which are members of the Shareholder's
immediate family, and (ii) agrees in writing to be bound by the provisions of
this Agreement.
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Section 3.11 Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, invalid or unenforceable, the remaining provisions hereof shall
nevertheless continue in full force and effect as though the illegal, invalid or
unenforceable provisions were not a part hereof, and the parties shall exert
their best efforts to amend this Agreement to include a provision which is
legal, valid and enforceable, or to take such other action, which in either case
carries out the original intent of the parties.
Section 3.12 Complete Agreement. This Agreement contains the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous arrangements or understandings, whether
written or oral, between or among any of the parties hereto, with respect to the
subject matter hereof.
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Section 3.13 Further Assurances. Each of the parties to this Agreement
agrees to execute such other documents and take such other action as may be
reasonably necessary to implement and carry out the intent of this agreement.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the day and year first above written.
HEALTHCORE MEDICAL SOLUTIONS, INC.
By: /s/Xxxxx X. Xxxxxxxx
---------------------------
Name: Xxxxx X. Xxxxxxxx
Title:President
Notice Address:
00000 Xxxx Xxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Chairman
Telecopier:
with a copy to:
Xxxxxxx X. Xxxxxx
Adatom, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
XXXX X. XXXXX,
individually and as custodian
for Xxxxxxx Xxxxx
/s/Xxxx X.Xxxxx
-------------------------------------
Notice Address:
00 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
AGREED AND ACCEPTED
ADATOM, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
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