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STOCKHOLDER'S AGREEMENT
By and Between
HEMASURE INC.
and
COBE LABORATORIES, INC.
Dated May 3, 1999
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.....................................................1
ARTICLE II
GOVERNANCE
SECTION 2.01. Board Representation............................................3
SECTION 2.02. Resignations and Replacements...................................4
SECTION 2.03. Committees......................................................4
ARTICLE III
VOTING OBLIGATIONS
SECTION 3.01. Voting Obligations..............................................4
ARTICLE IV
STANDSTILL AND TRANSFER PROVISIONS
SECTION 4.01. Standstill Period...............................................5
SECTION 4.02. Transfer Restrictions...........................................5
SECTION 4.03. Acquisition of Additional Shares; Other Restrictions............6
SECTION 4.04. Company Rights of First Negotiation; Permitted Sales............7
SECTION 4.05. Stockholder Rights of First Notice..............................8
SECTION 4.06. Anti-Dilutive Rights............................................8
ARTICLE V
REGISTRATION RIGHTS
SECTION 5.01. Restrictive Legend.............................................10
SECTION 5.02. Notice of Proposed Transfer....................................10
SECTION 5.03. Required Registrations.........................................11
SECTION 5.04. Incidental Registration........................................13
SECTION 5.05. Shelf Registration.............................................13
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SECTION 5.06. Obligations of the Company.....................................14
SECTION 5.07. Furnish Information............................................17
SECTION 5.08. Expenses of Registration.......................................17
SECTION 5.09. Underwriting Requirements......................................17
SECTION 5.10. Indemnification................................................17
SECTION 5.11. Transfer of Registration Rights................................20
SECTION 5.12. Rule 144 Information...........................................20
SECTION 5.13. Limitations on Registration Rights.............................21
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.01. Waiver.........................................................21
SECTION 6.02. Expenses.......................................................21
SECTION 6.03. Notices........................................................22
SECTION 6.04. Headings.......................................................23
SECTION 6.05. Severability...................................................23
SECTION 6.06. Entire Agreement...............................................23
SECTION 6.07. Assignment.....................................................23
SECTION 6.08. No Third Party Beneficiaries...................................24
SECTION 6.09. Amendment......................................................24
SECTION 6.10. Governing Law..................................................24
SECTION 6.11. Arbitration....................................................24
SECTION 6.12. Counterparts...................................................25
SECTION 6.13. Specific Performance...........................................25
ANNEX A - GENERAL FORM OF STANDSTILL AND VOTING AGREEMENT FOR
PERMITTED TRANSFEREES
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STOCKHOLDER'S AGREEMENT
STOCKHOLDER'S AGREEMENT, dated May 3, 1999 (this
"Agreement"), by and between HEMASURE INC., a Delaware corporation (the
"Company"), and COBE LABORATORIES, INC., a Colorado corporation ("COBE" or the
"Stockholder").
WHEREAS, the Company and COBE have entered into the Stock
Subscription Agreement, dated the date hereof (the "Stock Subscription
Agreement"), pursuant to which the Company is issuing to the Stockholder, and
the Stockholder is purchasing from the Company, common stock, par value $ .01
per share, of the Company ("Common Stock"), upon the terms set forth in the
Stock Subscription Agreement; and
WHEREAS, the Company and the Stockholder wish to enter into
this Agreement to set forth their agreement as to the matters set forth herein
with respect to, among other things, representation on the Company's Board of
Directors (the "Board"), the sale of securities by the Company and the holding,
acquisition and Transfer (as defined below) of the Common Stock by the
Stockholder;
NOW, THEREFORE, in consideration of these premises, the
mutual agreements and covenants hereinafter set forth, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and the Stockholder hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. (a) Unless otherwise defined in
this Agreement, capitalized terms are used herein as defined in the Stock
Subscription Agreement.
(b) As used in this Agreement, the following terms shall have
the following meanings:
"Beneficially Own" has the meaning set forth in Rule 13d-3,
as in effect on the date hereof, under the Exchange Act.
"Director" means a member of the Board.
"Fully Diluted Basis" means, in respect of the Common Stock,
the method of calculating the number of shares of Common Stock issued
and outstanding on an applicable measurement date, pursuant to which
the number of shares of Common Stock issued and outstanding on any
such date are aggregated with the number of shares of
Common Stock issuable on such date upon exercise or conversion of any other
security of the Company outstanding on such date (including employee stock
options issued pursuant to Company Benefit Plans).
"Register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement
or similar document with the SEC in compliance with the Securities Act
and the declaration or ordering of effectiveness by the SEC of such
registration statement or document.
"Registrable Stock" shall mean any Shares purchased by the
Stockholder pursuant to the Stock Subscription Agreement or Section
4.06(a) of this Agreement. For purposes of this Agreement, any
Registrable Stock shall cease to be Registrable Stock when (w) a
registration statement covering such Registrable Stock has been
declared effective and such Registrable Stock has been disposed of
pursuant to such effective registration statement, (x) such Registrable
Stock is sold by a Person in a transaction in which the rights under
the provisions of Article V are not assigned, (y) such Registrable
Stock may be sold pursuant to Rule 144(k) (or any similar provision
then in force, but not Rule 144(A)) or in a single transaction pursuant
to Rule 144(e) (or its successor) under the Securities Act without
registration under the Securities Act or (z) such Registrable Stock is
sold, transferred or otherwise disposed of in any manner to any Person
or entity which, by virtue of this Agreement, is not entitled to the
registration rights provided by this Agreement.
"Stockholder Director" means a Director designated by the
Stockholder pursuant to this Agreement.
(c) The following terms have the meanings set forth in the
Sections set forth below:
Term Location
---- --------
Agreement.......................................................Preamble
Anti-Dilutive Rights............................................ss. 4.06(a)
Board...........................................................Recitals
COBE............................................................Preamble
Common Stock....................................................Recitals
Company.........................................................Preamble
Departing Stockholder Director..................................ss. 2.02(a)
Maintenance Shares..............................................ss. 4.06(a)
Permitted Transferee............................................ss. 4.02(a)
Proposed Transferee.............................................ss. 4.04(a)(ii)
Shelf Registration..............................................ss. 5.05(a)
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Term Location
---- --------
Standstill Period...............................................ss. 4.01
Stock Subscription Agreement....................................Recitals
Stockholder.....................................................Preamble
Transfer........................................................ss. 4.02(a)
(d) References in this Agreement to articles, sections,
paragraphs, clauses, schedules and exhibits are to articles, sections,
paragraphs, clauses, schedules and exhibits in or to this Agreement unless
otherwise indicated. Whenever the context may require, any pronoun includes the
corresponding masculine, feminine and neuter forms. Any term defined by
reference to any agreement, instrument or document has the meaning assigned to
it whether or not such agreement, instrument or document is in effect. The words
"include", "includes" and "including" are deemed to be followed by the phrase
"without limitation". Unless the context otherwise requires, any agreement,
instrument or other document defined or referred to herein refers to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified from time to time. Unless the context
otherwise requires, references herein to any Person include its successors and
assigns. The words "shall" and "will" have the same meaning and effect.
ARTICLE II
GOVERNANCE
SECTION 2.01. Board Representation. From and after the date
hereof,
(a) for as long as the Stockholder and any Permitted
Transferees, in the aggregate, Beneficially Own any combination of
Company securities consisting of, or convertible into, in the
aggregate, at least 20% of the issued and outstanding shares of Common
Stock, the parties hereto shall use best efforts and exercise all
authority under applicable law to (i) cause the Board to consist of
seven Directors and (ii) cause any slate of Directors presented to the
stockholders of the Company for election to the Board to consist of
such nominees that, if elected, would result in a Board that included
two Stockholder Directors as designated by the Stockholder (which
designees shall be subject to the reasonable satisfaction of the
Company).
(b) for as long as the Stockholder and any Permitted
Transferees, in the aggregate, Beneficially Own any combination of
Company securities consisting of, or convertible into, in the
aggregate, at least 15% but less than 20% of the issued and
outstanding shares of Common Stock, the parties hereto shall use best
efforts and exercise all authority under applicable law to cause any
slate of Directors presented to the
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stockholders of the Company for election to the Board to consist of
such nominee that, if elected, would result in a Board that included
one Stockholder Director as designated by the Stockholder (which
designee shall be subject to the reasonable satisfaction of the
Company).
(c) If the Stockholder and any Permitted Transferees, in the
aggregate, Beneficially Own any combination of Company securities
consisting of, or convertible into, in the aggregate, less than 15% of
the issued and outstanding shares of Common Stock, the Company shall
have no obligation pursuant to this Agreement to cause any slate of
Directors presented to the stockholders of the Company for election to
the Board to include any designee of the Stockholder.
SECTION 2.02. Resignations and Replacements. (a) If a
Stockholder Director ceases to serve as a Director for any reason (a "Departing
Stockholder Director"), the Company shall take all action necessary to ensure
that the vacancy created by such Departing Stockholder Director shall be filled
by an individual designated by the Stockholder (which designee shall be to the
reasonable satisfaction of the Company), which individual shall serve out the
remaining term of the Departing Stockholder Director as a Stockholder Director.
(b) In the event that at any time the Stockholder shall no
longer be entitled to designate Directors pursuant to Section 2.01, then the
Stockholder Directors shall be deemed to have resigned immediately upon the
occurrence of such event and the Company and the Stockholder shall take all
action promptly to effect the resignation or removal of such Directors.
SECTION 2.03. Committees. For so long as there are two
Stockholder Directors, the Company will take all actions necessary to cause the
appointment of at least one Stockholder Director to serve on each committee of
the Board. If there is only one Stockholder Director, the Company will not be
obligated to take any such actions; provided that, if the Company forms an
executive committee or a committee by any such other name that performs
functions similar to those typically performed by an executive committee, the
Company will take all actions necessary to cause the appointment of such
Stockholder Director to serve on such committee.
ARTICLE III
VOTING OBLIGATIONS
SECTION 3.01. Voting Obligations. The Stockholder and any
Permitted Transferees agree to vote, and shall vote, at all times all of the
Shares Beneficially Owned by them for the election of the entire slate of Board
nominees established by the Board and submitted to the stockholders of the
Company for approval if, and to the extent that, all of the Stockholder's
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designated Stockholder Directors are included with such nominees; provided that
if the Company is in breach of any of its material obligations under the
Alliance Agreements as finally determined pursuant to the arbitration procedures
set forth in the relevant Alliance Agreement, the Stockholder and any Permitted
Transferees may refrain from voting any shares of Common Stock Beneficially
Owned by them in favor of, but may not vote against, the election of the entire
slate of Board nominees established by the Board; provided further that if such
abstention would have the same effect as a vote against the matter or would act
to make it impossible to obtain a quorum, the Stockholder and any Permitted
Transferees shall vote (and shall be deemed to have voted) all shares of Common
Stock Beneficially Owned by them in the same proportion of the votes cast by the
other stockholders of the Company of the applicable class of Company securities.
ARTICLE IV
STANDSTILL AND TRANSFER PROVISIONS
SECTION 4.01. Standstill Period. The "Standstill Period"
shall mean any period beginning on or after the date hereof during which the
Stockholder and any Permitted Transferees, in the aggregate, Beneficially Own
any combination of Company securities consisting of, or convertible into, in the
aggregate, 5% or more of the issued and outstanding shares of Common Stock. The
Stockholder represents and warrants to the Company that the Stockholder,
together with its "Affiliates" and "associates" (as such term is defined under
Rule 12b-2 of the Exchange Act, or any successor thereto), Beneficially Own an
aggregate, as of the date hereof, of 4,500,000 shares of Common Stock, and no
other securities of the Company whatsoever other than the Option.
SECTION 4.02. Transfer Restrictions. (a) For as long as both
(i) the Standstill Period is in effect and (ii) the Distribution Agreement shall
not have expired and shall not have been terminated in its entirety or with
respect to the United States of America portion of the Territory (as defined in
the Distribution Agreement), the Stockholder shall not, and shall cause any
Permitted Transferees not to, directly or indirectly, sell, transfer, assign,
pledge, hypothecate or otherwise dispose of ("Transfer") any shares of Common
Stock except to any wholly owned subsidiary of the Stockholder that expressly
assumes the Stockholder's obligations under this Agreement relating to such
shares of Common Stock (a "Permitted Transferee").
(b) During any period when either of the conditions described
in clause 4.02(a)(i) or (ii) are absent, the Stockholder or its Permitted
Transferees shall be permitted to Transfer shares of Common Stock only in
accordance with the provisions of Section 4.04.
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(c) The Stockholder agrees that it will not, directly or
indirectly, Transfer its interests in any Permitted Transferee unless prior
thereto the shares of Common Stock held by such entity are transferred to the
Stockholder or to one or more other Permitted Transferees.
(d) Any attempted Transfer in violation of this Section 4.02
shall be null, void and of no force and effect.
SECTION 4.03. Acquisition of Additional Shares; Other
Restrictions. Subject to the provisions of Sections 4.05 and 4.06 and subject to
the Stockholder's right to exercise the Option under the Stock Subscription
Agreement, during a Standstill Period, except with the prior approval of the
Board, the Stockholder shall not, directly or indirectly, and shall cause its
Permitted Transferees not to, directly or indirectly:
(a) acquire, offer to acquire, or agree to acquire beneficial
ownership of any additional equity or debt securities of the Company;
(b) make, or in any way participate in, directly or
indirectly, any "solicitation" of "proxies" or become a "participant"
in any "election contest" with respect to the Company, or execute any
written consent in lieu of a meeting of stockholders of the Company;
(c) initiate, propose or otherwise solicit stockholders for
the approval of one or more stockholder proposals with respect to the
Company or induce or attempt to induce any other Person to initiate
any stockholder proposal;
(d) seek nomination or election to the Board, serve on the
Board if elected, seek to place a representative on the Board or seek
the removal of any member of the Board (except with respect to the
Stockholder's rights to designate Stockholder Directors);
(e) subject to the Stockholder's rights to consult with the
Stockholder Directors, call or seek to have called any meeting of the
stockholders of the Company;
(f) otherwise act, directly or indirectly, alone or in
concert with others, to (i) subject to the Stockholder's rights to
consult with the Stockholder Directors, seek to control the management
of the Company or the Board or the policies or affairs of the Company,
(ii) subject to the Stockholder's rights to consult with the
Stockholder Directors, solicit, propose, seek to effect or negotiate
with any other Person with respect to any form of business combination
transaction with the Company or any Subsidiary thereof, or any
restructuring, recapitalization or similar transaction with respect to
the Company or any Subsidiary thereof, (iii) solicit, make or propose
or encourage, or negotiate with any other Person with respect to, or
announce an intention to make, any
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tender offer or exchange offer for any debt or equity securities of
the Company, (iv) disclose an intention, purpose, plan or proposal
with respect to the Company or any debt or equity securities of the
Company, or (v) subject to the Stockholder's rights to consult with
the Stockholder Directors, assist, participate in, facilitate,
encourage or solicit any effort or attempt by any Person to do or seek
to do any of the foregoing; provided, however, that nothing in this
Section 4.03(f) shall apply to discussions between or among officers,
employees or agents of the Stockholder, the Permitted Transferees and
the Stockholder Directors;
(g) request the Company (or its Directors, officers,
employees or agents), directly or indirectly, to amend or waive any
material provisions set forth herein; or
(h) encourage or render advice to or make any recommendation
or proposal to any Person to engage in any of the actions covered
hereby.
Nothing contained in this Section 4.03 shall be deemed or
construed to limit any Stockholder Director from casting any vote in his or her
capacity as a member of the Board (or otherwise acting at the direction of the
Board, in such capacity) or the exercise by the Stockholder or any Permitted
Transferee of its voting rights with respect to any shares of Common Stock it
Beneficially Owns.
SECTION 4.04. Company Rights of First Negotiation; Permitted
Sales. (a) During any period that the condition described in clause (ii) of
Section 4.02(a) shall no longer exist but there shall be a Standstill Period, if
the Stockholder or any Permitted Transferee shall desire to Transfer any shares
of Common Stock owned by it other than to a Permitted Transferee, then the
Company and the Stockholder shall negotiate in good faith in order to reach a
mutually agreeable disposition of all shares of Common Stock owned by the
Stockholder and any Permitted Transferees to one or more third parties or for
the repurchase by the Company of all of such shares of Common Stock; provided
that neither the Company nor the Stockholder (nor any Permitted Transferee)
shall be obligated to effect any such disposition or repurchase, and neither
party shall be obligated to so negotiate for a period in excess of six months.
If after such six-month period the parties are unable to reach a definitive
agreement with respect to a mutually agreeable disposition or repurchase of the
Shares, then the Stockholder and any such Permitted Transferee may sell its
shares of Common Stock as follows:
(i) in unsolicited broker transactions as contemplated by
Rule 144 under the Securities Act;
(ii) in one or more private transactions to any third party
("Proposed Transferee"), but only if such Proposed Transferee executes
and delivers to the Company the standstill, voting and transfer
limitation agreement in the form of Annex A hereto; and
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(iii) in a widely disbursed underwritten public offering of
such shares of Common Stock pursuant to which no Person or entity
acquires more than 5% of the number of shares of Common Stock issued
and outstanding at the time of such offering.
To the extent the Stockholder and any Permitted Transferees are permitted to
Transfer any shares of Common Stock pursuant to this Section 4.04(a), the
Company shall cause to be issued to the Stockholder and such Permitted
Transferees, at their written request, new stock certificates representing such
shares without a restrictive legend regarding this Agreement (and the old stock
certificates shall be surrendered in order to receive the new stock
certificates). Notwithstanding anything herein to the contrary, no shares of
Common Stock may be sold, transferred, assigned or otherwise disposed of unless
registered by the Company pursuant to the Securities Act and any applicable
state laws, or unless an exemption therefrom is available.
(b) During any period in which the conditions described in
both clauses (i) and (ii) of Section 4.02(a) shall no longer exist, the
Stockholder and any Permitted Transferees shall be permitted to freely Transfer
any and all shares of Common Stock without restriction and the Company shall
cause to be issued to the Stockholder and any Permitted Transferees, at their
written request, new stock certificates representing shares of Common Stock
without a restrictive legend regarding this Agreement (and the old stock
certificates shall be surrendered in order to receive the new stock
certificates). Notwithstanding anything herein to the contrary, no shares of
Common Stock may be sold, transferred, assigned or otherwise disposed of unless
registered by the Company pursuant to the Securities Act and any applicable
state laws, or unless an exemption therefrom is available.
SECTION 4.05. Stockholder Rights of First Notice. Following
the Option Closing, if any, in the event the Company determines to issue and
sell to a third party any Company securities (other than Company securities
issued and sold by the Company in a widely disbursed public offering, Company
securities issued pursuant to a registration statement on Securities Act Form
S-4 or S-8, or its successors, or options issued pursuant to the Company Benefit
Plans or similar plans), the Company shall deliver to the Stockholder not less
than 30 days' prior written notice of its intention to do so. Following the
delivery of such notice to the Stockholder, the Company shall negotiate with the
Stockholder for such thirty-day period for the purpose of permitting the
Stockholder to make, in its sole discretion, one or more proposals to the
Company regarding the Stockholder's desire to acquire the Company securities.
Following the expiration of such thirty-day period, the Company may effect the
issuance and sale of the Company securities to any such third party, without
limitation or further obligation to the Stockholder. Notwithstanding anything
herein to the contrary, in no event shall the Company be obligated, for any
reason, to issue and sell to the Stockholder any Company securities.
SECTION 4.06. Anti-Dilutive Rights. (a) Except as provided in
Section 4.06(c) below, the Company shall not issue, sell or Transfer, whether in
private issuances or sales or in a registered public offering, any Common Stock
or securities convertible into Common Stock to
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any Person unless the Stockholder and any Permitted Transferees are offered in
writing the right to purchase, at the same price and on the same terms proposed
to be issued and sold, an amount of such Common Stock or other securities (the
"Maintenance Shares") as is necessary for the Stockholder and any Permitted
Transferees to maintain, individually, the level of their respective percentage
Beneficial Ownership of Common Stock (on a Fully Diluted Basis) as it owned
immediately prior to such issuance ("Anti-Dilutive Rights"). In the case of a
public offering, the Company shall, as part of its offer, provide a copy of any
preliminary prospectus and other information concerning the offering reasonably
requested by the Stockholder or any Permitted Transferees. The Stockholder and
any Permitted Transferee shall have the right, during the period specified in
Section 4.06(b), to accept the offer for any or all of the Maintenance Shares
offered to each of them.
(b) If the Stockholder or any Permitted Transferee does not
deliver to the Company written notice of acceptance of any offer made pursuant
to Section 4.06(a) within 10 Business Days after the Stockholder's or any such
Permitted Transferee's receipt of such offer, the Stockholder or such Permitted
Transferee, as the case may be, shall be deemed to have waived its right to
purchase all or any part of its Maintenance Shares as set forth in such offer,
but the Stockholder or any such Permitted Transferee shall retain its rights
under this Section 4.06 with respect to future offers; provided, however, that
the applicable number of Maintenance Shares shall be reduced and recalculated
immediately prior to any such future issuance.
(c) The Anti-Dilutive Rights set forth in this Section 4.06
shall not apply to (i) the grant or exercise of options to purchase Common Stock
to employees or Directors of the Company or any of its Subsidiaries or otherwise
pursuant to a Company Benefit Plan or similar plan in existence on the date
hereof or otherwise adopted by the Board hereafter (whether or not such options
were issued prior to the date hereof, or are hereafter issued), (ii) the
issuance of shares of Common Stock issuable upon exercise of any option,
warrant, convertible security or other rights to purchase or subscribe for
Common Stock which, in each case, had been issued by the Company prior to the
date of this Agreement or (iii) securities issued pursuant to any stock split,
stock dividend or other similar stock recapitalization.
(d) A closing for the purchase of shares of Common Stock
pursuant to this Section 4.06 shall occur on the later of (i) the date on which
such public or private issuance occurs and (ii) such date as may be mutually
agreed to by the Company and the Stockholder or the Permitted Transferee, as the
case may be, and shall take place at the offices of the Company or at such other
reasonable location as the Company may otherwise notify the Stockholder and/or a
Permitted Transferee, as the case may be, at the time specified by the Company
in such notice provided to the Stockholder or the Permitted Transferee, as the
case may be, at least five days prior to such closing date. In connection with
such closing, the Company and the Stockholder or Permitted Transferee, as the
case may be, shall provide such closing certificates and other closing
deliveries provided in the transaction giving rise to the rights specified in
Section 4.06.
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(e) Solely to the extent that the Stockholder suffers
dilution as a result of the exercise of employee stock options, then,
notwithstanding the provisions of Section 4.03, the Stockholder at any time
thereafter may purchase shares of Common Stock from a third party or through one
or more open market purchases for the purposes of maintaining its percentage
level of Beneficial Ownership of Common Stock. The Company and the Stockholder
shall use all commercially reasonable efforts to cooperate with each other so as
to permit the Stockholder to exercise its rights under this Section 4.06(e) in
an accurate, orderly and non-disruptive manner (provided that in no event shall
any purchase be affected more than once in any fiscal quarter).
ARTICLE V
REGISTRATION RIGHTS
SECTION 5.01. Restrictive Legend. Each certificate
representing shares of Common Stock held by Stockholder shall, except as
otherwise provided in this Article V, be stamped or otherwise imprinted with a
legend substantially in the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE ACT OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE.
THE SECURITY REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND CERTAIN RESTRICTIONS ON VOTING CONTAINED
IN THE STOCKHOLDER'S AGREEMENT, DATED AS OF MAY 3, 1999, BY AND
BETWEEN THE COMPANY AND COBE LABORATORIES, INC.
A certificate shall not bear the Securities Act legend or the legend regarding
this Agreement, as the case may be, if in the opinion of counsel satisfactory to
the Company (it being agreed that Shearman & Sterling shall be satisfactory),
the shares being sold thereby may be publicly sold without registration under
the Securities Act or may be sold without being subject to the restrictions on
sale specified in Article IV.
SECTION 5.02. Notice of Proposed Transfer. Prior to any
proposed Transfer of any shares of Registrable Stock (other than under the
circumstances described in Section 5.03, 5.04 or 5.05), the Stockholder shall
give written notice to the Company of its intention to effect such Transfer.
Each such notice shall describe the manner of the proposed Transfer whereupon
the Stockholder shall be entitled to Transfer such stock in accordance with the
terms of its notice, except as may be precluded hereunder and subject in any
event to the restrictions set forth in this
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Agreement. Each certificate representing shares of Common Stock transferred as
above provided shall bear the legends set forth in Section 5.01, except that
such certificate (a) shall not bear the Securities Act legend if (i) such
Transfer is in accordance with the provisions of Rule 144 of the Securities Act
(or any other rule permitting public sale without registration under the
Securities Act, but not Rule 144A of the Securities Act) or (ii) the opinion of
counsel referred to above is to the further effect that the transferee and any
subsequent transferee (other than an Affiliate of the Company) would be entitled
to Transfer such securities in a public sale without registration under the
Securities Act and (b) shall not bear the legend related to this Agreement if
such Transfer is to a third party in accordance with the provisions of Article
IV and such transferee is not subject to the restrictions on Transfer set forth
in this Agreement. The restrictions provided for in this Section 5.02 shall not
apply to securities that are not required to bear the legends prescribed by
Section 5.01 in accordance with the provisions of Section 5.01.
SECTION 5.03. Required Registrations. (a) Commencing at any
time after September 15, 1999, for as long as the Stockholder holds five percent
or more of the outstanding shares of Common Stock of the Company, the
Stockholder may request in a written notice (which request shall state the
number of Registrable Shares to be so registered, the intended method of
distribution and a certification as to the market value of such shares, as
described below), that the Company file a registration statement under the
Securities Act (or a similar document pursuant to any other statute then in
effect corresponding to the Securities Act) covering the registration of any or
all Registrable Stock owned by the Stockholder and any Permitted Transferee,
provided that either (i) such Registrable Stock has an aggregate offering price
of at least $3,000,000 (based on the last reported sale price for the Common
Stock on the Business Day preceding the date of such written request, as
reported by the OTC Bulletin Board or any other exchange or market on which the
Common Stock is then listed or included for quotation) or (ii) such Registrable
Stock represents 100% of any combination of Company securities consisting of, or
convertible into, shares of Common Stock Beneficially Owned by the Stockholder
and its Permitted Transferees. Following receipt of any notice under this
Section 5.03, the Company shall use its best efforts to cause to be registered
under the Securities Act all Registrable Stock that the Stockholder requested be
registered in accordance with the manner of disposition specified in such
notice.
(b) If the Stockholder intends to have the Registrable Stock
distributed by means of an underwritten offering, the Stockholder and the
Company shall enter into an underwriting agreement in customary form with the
underwriter or underwriters which shall contain any customary provisions
(including customary provisions with respect to indemnification by the Company
of the underwriters) as the underwriters may reasonably request. Such
underwriter or underwriters shall be selected by the Stockholder and shall be
approved by the Company, which approval shall not be unreasonably withheld.
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(c) Notwithstanding any provision of this Agreement to the
contrary:
(i) the Company shall not be required to effect a
registration pursuant to this Section 5.03 during the period starting
with the date which is 30 days prior to the date of the initial public
filing by the Company of, and ending on a date 120 days following the
effective date of, a registration statement pertaining to a public
offering of securities for the account of the Company or on behalf of
the selling stockholders under any other registration rights agreement
which the Stockholder has been entitled to join pursuant to Section
5.04; provided that the Company shall actively employ in good faith
all reasonable efforts to cause such registration statement to become
effective as soon as possible;
(ii) if (A) (i) the Company is in possession of material
nonpublic information relating to the Company or any Subsidiary and
(ii) the Company determines in good faith that public disclosure of
such material nonpublic information would not be in the best interests
of the Company and its stockholders, (B) (i) the Company has made a
public announcement relating to an acquisition or business combination
transaction that includes the Company and/or one or more of its
Subsidiaries that is material to the Company and its Subsidiaries,
taken as a whole and (ii) the Company determines in good-faith that
(x) offers and sales of Registrable Stock pursuant to any registration
statement prior to the consummation of such transaction (or such
earlier date as the Company shall determine) is not in the best
interests of the Company and its stockholders or (y) it would be
impracticable at the time to obtain any financial statements relating
to such acquisition or business combination transaction that would be
required to be set forth in a registration statement or (C) the
Company shall furnish to the Stockholder a certificate signed by the
president of the Company stating that in the good faith opinion of the
Board such registration would interfere with any material transaction
or financing, confidential negotiations or business activities then
being pursued by the Company or any of its Subsidiaries, then, in any
such case, the Company's obligation to use all reasonable efforts to
file a registration statement shall be deferred, or the effectiveness
of any registration statement may be suspended, in each case for a
period not to exceed 120 days; provided that the Company may not delay
the filing or suspend the effectiveness of any registration statement
under this Section 5.03(ii) on more than one occasion in any
consecutive 12-month period;
(iii) the Company shall not be required to effect a
registration pursuant to this Section 5.03 if the Registrable Stock
requested by the Stockholder to be registered pursuant to such
registration are included in, and eligible for sale under, a Shelf
Registration (as defined below); and
(iv) the Company shall not be required to effect a
registration pursuant to this Section 5.03 within six months after the
effective date of any other registration statement registering shares
to be sold by the Company.
13
(d) The Company shall not be obligated to effect and pay for
more than two registrations pursuant to this Section 5.03 (both of which may be
Shelf Registrations requested pursuant to Section 5.05); provided that a
registration requested pursuant to this Section 5.03 shall not be deemed to have
been effected for purposes of this Section 5.03(d) unless (i) it has been
declared effective by the SEC, (ii) it has remained effective for the period set
forth in Section 5.06(a) and (iii) the offering of Registrable Stock pursuant to
such registration is not subject to any stop order, injunction or other order or
requirement of the SEC (other than any such stop order, injunction, or other
requirement of the SEC prompted by any act or omission of the Stockholder).
SECTION 5.04. Incidental Registration. (a) Subject to Section
5.09, if at any time the Company determines that it shall file a registration
statement under the Exchange Act for the registration of Common Stock (other
than a registration statement on a Form S-4 or S-8 or an offering of securities
solely to the Company's existing stockholders) on any form that would also
permit the registration of the Registrable Stock and such filing is to be on its
behalf or on behalf of selling holders of its securities for the general
registration of Common Stock to be sold for cash, the Company shall each such
time promptly give the Stockholder written notice of such determination setting
forth the date on which the Company proposes to file such registration
statement, which date shall be no earlier than 15 days from the date of such
notice, and advising the Stockholder of its right to have Registrable Stock
included in such registration. Upon the written request of the Stockholder
received by the Company no later than 10 days after the date of the Company's
notice (which request shall state the number of Registrable Shares to be so
registered and the intended method of distribution), the Company shall, subject
to Section 5.04(b) below, use all reasonable efforts to cause to be registered
under the Securities Act all of the Registrable Stock that the Stockholder has
so requested to be registered; provided that the Company shall have the right to
postpone or withdraw any registration effected pursuant to this Section 5.04
without obligation or liability to the Stockholder.
(b) If, in the opinion of the managing underwriter (or, in
the case of a non-underwritten offering, in the good faith reasonable opinion of
the Company), the total amount of such securities to be so registered, including
such Registrable Stock, will exceed the maximum amount of the Company's
securities which can be marketed (i) at a price reasonably related to the then
current market value of such securities or (ii) without otherwise materially and
adversely affecting the entire offering, then the Company shall be entitled to
reduce the number of shares of Registrable Stock to be sold in such offering by
the Stockholder and any other stockholder of the Company requesting to be
included in the registration in proportion (as nearly as practicable) to the
amount of shares of Common Stock requested to be included by the Stockholder and
each other stockholder at the time of filing the registration statement.
SECTION 5.05. Shelf Registration. (a) The Stockholder may use
its two request registration rights granted pursuant to Section 5.03, subject to
the limitations of Section 5.03(d), to request that the Company file a "shelf"
registration statement pursuant to Rule 415 under the
14
Securities Act or any successor rule (the "Shelf Registration") with respect to
the Registrable Stock. The Company shall (i) use all reasonable efforts to have
the Shelf Registration filed within 30 days of such request and declared
effective as soon as reasonably practicable following such request and (ii)
subject to Section 5.03(c)(iii), use all reasonable efforts to keep the Shelf
Registration continuously effective from the date such Shelf Registration is
declared effective until at least the earlier of such time as (A) all such
Registrable Stock has been sold thereunder or (B) the first anniversary of such
effective date in order to permit the prospectus forming a part thereof to be
usable by the Stockholder during such period.
(b) Subject to Section 5.03(c)(iii), the Company shall
supplement or amend the Shelf Registration (i) as required by the registration
form utilized by the Company or by the instructions applicable to such
registration form or by the Securities Act, (ii) to include in such Shelf
Registration any additional securities that become Registrable Stock by
operation of the definition thereof and (iii) following the written request of
the Stockholder pursuant to Section 5.05(c), to cover offers and sales of all or
a part of the Registrable Stock by means of an underwriting. The Company shall
furnish to the Stockholder copies of any such supplement or amendment
sufficiently in advance (but in no event less than five Business Days in
advance) of its use or filing with the SEC to allow the Stockholder a meaningful
opportunity to comment thereon.
(c) The Stockholder may, at its election and upon written
notice by the Stockholder to the Company, subject to the limitations set forth
in Section 5.03(c)(iii), effect offers and sales under the Shelf Registration by
means of one or more underwritten offerings, in which case the provisions of
Section 5.03(b) shall apply to any such underwritten distribution of securities
under the Shelf Registration and such underwriting shall, if sales of
Registrable Stock pursuant thereto shall have closed, be regarded as the
exercise of one of the registration rights contemplated by Section 5.03.
SECTION 5.06. Obligations of the Company. Whenever required
under Sections 5.03 and 5.05 to effect the registration of any Registrable Stock
under the Securities Act, the Company shall:
(a) in a reasonably timely manner, file with the SEC a
registration statement with respect to such Registrable Stock, and use
best efforts to cause such registration statement to become and remain
effective for the period of the distribution contemplated thereby
determined as provided hereafter; provided that the Company shall not
be required to keep any Registration Statement (other than the Shelf
Registration) effective more than 90 days;
(b) as expeditiously as possible, 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
comply with the provisions of the Securities
15
Act with respect to the disposition of all Registrable Stock covered
by such registration statement;
(c) as expeditiously as possible, furnish to the Stockholder
such reasonable numbers of copies of the registration statement and
the prospectus included therein (including each preliminary prospectus
and any amendments or supplements thereto) in conformity with the
requirements of the Securities Act, any exhibits filed therewith and
such other documents and information as they may reasonably request;
(d) as expeditiously as possible, use best efforts to
register or qualify the Registrable Stock covered by such registration
statement under such other securities or "blue sky" laws of such
states as shall be reasonably requested by the Stockholder for the
distribution of the Registrable Stock covered by the registration
statement; provided, however, that the Company shall not be required
in connection therewith or as a condition thereto to qualify to do
business in or to file a general consent to service of process in any
jurisdiction wherein it would not but for the requirements of this
paragraph (except that the Company will use its best efforts to
register or qualify Registrable Stock in such additional jurisdiction
as the Stockholder may request subject to the foregoing proviso and at
the Stockholder's own expense) be obligated to do so; and provided
further that the Company shall not for any purpose be required to
qualify such Registrable Stock in any jurisdiction in which the
securities regulatory authority requires that the Stockholder submit
any shares of Registrable Stock to the terms, provisions and
restrictions of any escrow, lockup or similar agreement(s) for consent
to sell Registrable Stock in such jurisdiction unless the Stockholder
agrees to do so;
(e) promptly notify the Stockholder, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under
which they were made, and at the request of the Stockholder promptly
prepare and furnish to the Stockholder 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
securities, 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
light of the circumstances under which they were made. In the event
the Company shall give such notice, the Company shall extend the
period during which such Registration Statement shall be maintained
effective as provided in Section 5.06(a) (or, in the case of the Shelf
Registration, Section 5.05(a)) by the number of days during the period
from and including the date of the giving of such notice to the date
when the Company shall make available to the Stockholder such
supplemented or amended prospectus;
16
(f) furnish, at the request of the Stockholder, if the method
of distribution is by means of an underwriting, on the date that the
shares of Registrable Stock are delivered to the underwriters for sale
pursuant to such registration or, if such Registrable Stock is not
being sold through underwriters, on the date that the registration
statement with respect to such shares of Registrable Stock becomes
effective, (1) a signed opinion, dated on or about such date, of the
independent legal counsel representing the Company for the purpose of
such registration, addressed to the underwriters, if any, and if such
Registrable Stock is not being sold through underwriters, then to the
Stockholder, as to such matters as such underwriters or the
Stockholder, as the case may be, may reasonably request and as would
be customary in such a transaction, and (2) letters dated on or about
such date and the date the offering is priced from the independent
certified public accountants of the Company, addressed to the
underwriters, if any, and if such Registrable Stock is not being sold
through underwriters, then to the Stockholder, if such accountants
refuse to deliver such letters to the Stockholder, then to the Company
(i) stating that they are independent certified public accountants
within the meaning of the Securities Act and that, in the opinion of
such accountants, the financial statements and other financial data of
the Company included in the registration statement or the prospectus,
or any amendment or supplement thereto, comply as to form in all
material respects with the applicable accounting requirements of the
Securities Act and (ii) covering such other financial matters
(including information as to the period ending not more than five
Business Days prior to the date of such letters) with respect to the
registration in respect of which such letter is being given as such
underwriters or the Stockholder, as the case may be, may reasonably
request and as would be customary in such a transaction;
(g) enter into customary agreements (including, if the method
of distribution is by means of an underwriting, an underwriting
agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of the Registrable Stock to be so included in the registration
statement;
(h) otherwise use best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its
securityholders, as soon as reasonably practicable, but not later than
18 months after the effective date of the registration statement, an
earnings statement covering the period of at least 12 months beginning
with the first full month after the effective date of such
registration statement, which earnings statements shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder; and
(i) use all reasonable efforts to list the Registrable Stock
covered by such registration statement with any U.S. nationally
recognized securities exchange on which the Company Common Stock is
then listed.
17
For purposes of Sections 5.06(a) and 5.06(b), the period of distribution of
Registrable Stock in a firm commitment underwritten public offering shall be
deemed to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Registrable Stock
in any other registration shall be deemed to extend until the earlier of the
sale of all Registrable Stock covered thereby and six months after the effective
date thereof.
SECTION 5.07. Furnish Information. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to
Article V of this Agreement that the Stockholder shall furnish to the Company
such information regarding the Stockholder, the Registrable Stock held by it,
and the intended method of disposition of such securities as the Company shall
reasonably request and as shall be required in connection with the action to be
taken by the Company.
SECTION 5.08. Expenses of Registration. All expenses incurred
in connection with each registration pursuant to Sections 5.03, 5.04 and 5.05 of
this Agreement, excluding underwriters' discounts and commissions, but
including, without limitation, all registration, filing and qualification fees,
word processing, duplicating, printers' and accounting fees (including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance), fees of the National Association of
Securities Dealers, Inc. or listing fees, messenger and delivery expenses, all
fees and expenses of complying with state securities or "blue sky" laws, and the
fees and disbursements of counsel for the Company, and the reasonable fees and
disbursements of counsel for the Stockholder (which counsel shall be selected by
the Stockholder), shall be paid by the Company; provided, however, that if a
registration request pursuant to Section 5.03 or 5.05 is subsequently withdrawn
by the Stockholder, the Company shall not be required to pay any expenses of
such registration proceeding and the Stockholder shall bear such expenses. The
Stockholder shall bear and pay the underwriting commissions and discounts
applicable to securities offered for its account and the fees and disbursements
of its counsel in connection with any registrations, filings and qualifications
made pursuant to this Agreement.
SECTION 5.09. Underwriting Requirements. In connection with
any underwritten offering, the Company shall not be required under Section 5.04
to include shares of Registrable Stock in such underwritten offering unless the
Stockholder accepts the terms of the underwriting of such offering that have
been reasonably agreed upon between the Company and the underwriters selected by
the Stockholder.
SECTION 5.10. Indemnification. In the event any Registrable
Stock is included in a registration statement under this Agreement:
(a) The Company shall indemnify and hold harmless the
Stockholder, the Stockholder's directors and officers, each Person who
participates in the offering of such Registrable Stock, and each
Person, if any, who controls the Stockholder or participating
18
Person within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which they may
become subject under the Securities Act, the Exchange Act, state
securities or "blue sky" laws or otherwise, insofar as such losses,
claims, damages or liabilities (or proceedings in respect thereof)
arise out of or are based on any untrue or alleged untrue statement of
any material fact contained in such registration statement on the
effective date thereof (including any preliminary prospectus or
prospectus filed under Rule 424 under the Securities Act or any
amendments or supplements thereto) or arise out of 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, and shall reimburse the Stockholder, the
Stockholder's directors and officers, such participating Person or
controlling Person for any legal or other expenses reasonably incurred
by them (but not in excess of expenses incurred in respect of one
counsel for all of them unless there is an actual conflict of interest
between any indemnified parties, which indemnified parties may be
represented by separate counsel) in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this Section
5.10(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is
effected without the consent of the Company; provided further that the
Company shall not be liable to the Stockholder, the Stockholder's
directors and officers, participating Person or controlling Person in
any such case for any such loss, claim, damage, liability or action to
the extent that it arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in
connection with such registration statement, preliminary prospectus,
final prospectus or amendments or supplements thereto, in reliance
upon and in conformity with written information furnished expressly
for use in connection with such registration by the Stockholder, the
Stockholder's directors and officers, participating Person or
controlling Person. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the
Stockholder, the Stockholder's directors and officers, participating
Person or controlling Person, and shall survive the Transfer of such
securities by the Stockholder.
(b) The Stockholder shall indemnify and hold harmless the
Company, each of its directors and officers, each Person, if any, who
controls the Company within the meaning of the Securities Act, and
each agent and any underwriter for the Company (within the meaning of
the Securities Act) against any losses, claims, damages or
liabilities, joint or several, to which the Company or any such
director, officer, controlling Person, agent or underwriter may become
subject, under the Securities Act, the Exchange Act, state securities
or "blue sky" laws or otherwise, insofar as such losses, claims,
damages or liabilities (or proceedings in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in such registration statement on the
effective date thereof (including any preliminary prospectus or
prospectus filed under Rule 424 under the Securities Act or any
amendments or
19
supplements thereto) or arise out of 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, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or
alleged omission was made in such registration statement, preliminary
or final prospectus, or amendments or supplements thereto, in reliance
upon and in conformity with written information furnished by or on
behalf of the Stockholder expressly for use in connection with such
registration; and the Stockholder shall reimburse any legal or other
expenses reasonably incurred by the Company or any such director,
officer, controlling Person, agent or underwriter (but not in excess
of expenses incurred in respect of one counsel for all of them unless
there is an actual conflict of interest between any indemnified
parties which indemnified parties may be represented by separate
counsel) in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 5.10(b) shall not apply
to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent
of the Stockholder, which consent shall not be unreasonably withheld
or delayed, and provided further that the liability of the Stockholder
hereunder shall be limited to the proportion of any such loss, claim,
damage, liability or expense which is equal to the proportion that the
net proceeds from the sale of the shares of Common Stock sold by the
Stockholder under such registration statement bears to the total net
proceeds from the sale of all securities sold thereunder, but not in
any event to exceed the net proceeds received by the Stockholder from
the sale of Registrable Stock covered by such registration statement.
(c) Promptly after receipt by an indemnified party under this
Section 5.10 of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against any indemnifying party under this Section 5.10, notify the
indemnifying party in writing of the commencement thereof and the
indemnifying party shall have the right to participate in and assume
the defense thereof with counsel selected by the indemnifying party
and reasonably satisfactory to the indemnified party; provided,
however, that an indemnified party shall have the right to retain its
own counsel, with all fees and expenses thereof to be paid by such
indemnified party, and to be apprised of all progress in any
proceeding the defense of which has been assumed by the indemnifying
party. The failure to notify an indemnifying party promptly of the
commencement of any such action shall not relieve the indemnifying
party from any liability in respect of such action which it may have
to such indemnified party on account of the indemnity contained in
this Section 5.10, unless (and only to the extent) the indemnifying
party was prejudiced by such failure, and in no event shall such
failure relieve the indemnifying party from any other liability which
it may have to such indemnified party. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any claim or pending or threatened proceeding in respect
of which the indemnified party is or could have been a party and
indemnity could have been
20
sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all
liability arising out of such claim or proceeding.
(d) To the extent any indemnification by an indemnifying
party is prohibited or limited by applicable law, 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 losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified party in connection with the
actions which resulted in such losses, claims, damages or liabilities
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 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. The amount paid or payable by a party as a result of the
losses, claims, damages or liabilities referred to above shall be
deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or
proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5.10(d) were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. 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.
SECTION 5.11. Transfer of Registration Rights. Subject to
Article IV, the registration rights of the Stockholder under this Agreement with
respect to any Registrable Stock may be transferred to any Permitted Transferee
of such Registrable Stock; provided, however, that (i) the Stockholder shall
give the Company written notice at or prior to the time of such Transfer stating
the name and address of the Permitted Transferee and identifying the securities
with respect to which the rights under this Agreement are being transferred;
(ii) such Permitted Transferee shall agree in writing, in form and substance
reasonable satisfactory to the Company, to be bound by the provisions of this
Agreement as if it were a stockholder of the Company; and (iii) immediately
following such Transfer, the further disposition of such securities by such
transferee is restricted under the Securities Act.
SECTION 5.12. Rule 144 Information. Subject to Article IV,
and with a view to making available the benefits of certain rules and
regulations of the SEC which may at any time
21
permit the sale of the Registrable Stock to the public without registration, at
all times after ninety (90) days after any Shelf Registration Statement covering
a public offering of securities of the Company under the Securities Act shall
have become effective, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act; and
(c) furnish to the Stockholder forthwith upon request a
written statement by the Company as to its compliance with the
reporting requirements of such Rule 144 and of the Securities Act and
the Exchange Act, a copy of the most recent annual or quarterly report
of the Company, and such other reports and documents so filed by the
Company as the Stockholder may reasonably request in availing itself
of any rule or regulation of the SEC allowing the Stockholder to sell
any Registrable Stock without registration.
SECTION 5.13. Limitations on Registration Rights.
Notwithstanding anything herein to the contrary, neither the Stockholder nor any
Permitted Transferee shall be entitled to exercise any registration rights
specified in this Article V for so long as the Stockholder is in material breach
of any of its covenants, agreements or other obligations under the Distribution
Agreement.
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.01. Waiver. The Company and the Stockholder may (a)
extend the time for the performance of any of the obligations or other acts of
the other party or (b) waive compliance with any of the agreements or conditions
of the other party contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be bound
thereby. Any waiver of any term or condition shall not be construed as a waiver
of any subsequent breach or a subsequent waiver of the same term or condition,
or a waiver of any other term or condition, of this Agreement. The failure of
any party to assert any of its rights hereunder shall not constitute a waiver of
any of such rights.
SECTION 6.02. Expenses. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel and financial advisors, incurred in connection with
this Agreement shall be paid by the party incurring such costs and expenses.
22
SECTION 6.03. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by cable, by telecopy, by telegram, by
telex or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 6.03):
(a) if to the Company:
HemaSure Inc.
βββ βββββ βββββ
βββββββββββ, ββ βββββ
Fax: βββ-βββ-ββββ
Attention: President and Chief Executive Officer
with a copy to:
Battle ββββββ LLP
Park Avenue Tower
ββ ββββ ββββ ββββββ
βββ ββββ, ββ βββββ-ββββ
Fax: βββ-βββ-ββββ
Attention: ββββ β. ββββββ, III, Esq.
(b) if to COBE:
COBE Laboratories, Inc.
ββββ βββ ββββββ
ββββββββ, ββ βββββ-ββββ
Fax: βββ-βββ-ββββ
Attention: ββββββ β. ββββ
23
with a copy to:
Legal Department
COBE Laboratories, Inc.
ββββ βββ ββββββ
ββββββββ, ββ βββββ
Telecopy: βββ-βββ-ββββ
and
Shearman & Sterling
βββ βββββββββ ββββββ
βββ ββββ, ββ βββββ
Telecopy: 212-848-7179
Attention: βββββ β. βββββ, Esq. and
βββββββ β. ββββββββββββ, Esq.
SECTION 6.04. Headings. The descriptive headings contained in
this Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 6.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 6.06. Entire Agreement. This Agreement and the other
Alliance Agreements constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and thereof and supersedes all prior
agreements and undertakings, both written and oral, between the Company and COBE
with respect to the subject matter hereof and thereof.
SECTION 6.07. Assignment. This Agreement may not be assigned
without the express written consent of the Company and the Stockholder (which
consent shall not be unreasonably withheld or delayed by the Company or the
Stockholder, as the case may be); provided, however, that all covenants and
agreements contained in this Agreement by or on behalf of any parties hereto
will bind and inure to the benefit of their respective successors and assigns.
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SECTION 6.08. No Third Party Beneficiaries. Except for the
provisions of Section 5.10 relating to indemnified parties, this Agreement shall
be binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 6.09. Amendment. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of, the
Company and COBE or (b) by a waiver in accordance with Section 6.01.
SECTION 6.10. Governing Law. This Agreement shall be governed
by the laws of the State of New York, excluding (to the greatest extent
permissible by law) any rule of law that would cause the application of the laws
of any jurisdiction other than the State of New York.
SECTION 6.11. Arbitration. (a) If a dispute arises from or
relates to this Agreement or the breach thereof, whether of law or fact, of any
nature whatsoever, and such dispute cannot be settled through direct discussions
between the parties, the parties agree to endeavor first to settle the dispute
in an amicable manner by mediation administered by the American Arbitration
Association under its Commercial Mediation Rules before resorting to litigation.
Mediation shall take place in New York, New York. If the dispute cannot be
resolved within 60 days of the initiation thereof by such party, any party may
initiate arbitration in accordance with the provisions of Section 6.11(b) below.
(b) All disputes arising under this Agreement that cannot be
amicably resolved under Section 6.11(a) above, shall be settled by binding
arbitration. Judgment upon the award rendered may be entered in any court in the
New York, New York metropolitan area. Each party agrees to the following
arbitration procedures:
(i) Any party requesting arbitration shall serve a written
demand for arbitration on the other party. The demand shall set forth
in reasonable detail a statement of the nature of the dispute, the
amount involved and the remedies sought. No later than 20 calendar
days after a demand for arbitration is served, the parties shall
jointly select and appoint a retired judge of the Courts of the State
of New York to act as the arbitrator. In the event that the parties do
not agree on the selection of an arbitrator, the party seeking
arbitration shall apply to the United States District Court for the
Southern District of New York, as applicable, for appointment of a
retired judge to serve as arbitrator.
(ii) No later than 10 calendar days after appointment of an
arbitrator, the parties shall jointly prepare and submit to the
arbitrator a set of rules for the arbitration. In the event that the
parties cannot agree on the rules for the arbitration, the arbitrator
shall establish the rules. No later than 10 calendar days after the
arbitrator is appointed, such arbitrator shall arrange for a hearing
to commence on a mutually convenient date.
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The hearing shall commence no later than 120 calendar days after the
arbitrator is appointed and shall continue from day to day until
completed.
(iii) The arbitrator shall issue his or her award in writing
no later than 20 calendar days after the conclusion of the hearing.
The arbitration award shall be final and binding regardless of whether
any party fails or refuses to participate in the arbitration. The
arbitrator is empowered to hear and determine all disputes between the
parties hereto concerning the subject matter of this Agreement, and
the arbitrator may award money damages (but specifically not punitive
damages), injunctive relief, rescission, restitution, costs, and
attorneys' fees. The arbitrator shall not have the power to amend this
Agreement in any respect.
(iv) In the event that any party serves a proper demand for
arbitration under this Agreement, all parties may pursue discovery in
accordance with the Rules of Civil Procedure of the State of New York,
the provisions of which are incorporated herein by reference, with the
following exceptions: (A) the parties hereto may conduct all
discovery, including depositions for discovery purposes, without leave
of the arbitrator; and (B) all discovery shall be completed no later
than the commencement of the arbitration hearing or 120 calendar days
after the date that a proper demand for arbitration is served,
whichever occurs earlier, unless upon a showing of good cause the
arbitrator extends or shortens that period.
SECTION 6.12. Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 6.13. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or equity.
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IN WITNESS WHEREOF, the Company and the Stockholder have
caused this Agreement to be executed as of the date first above written by their
respective officers thereunto duly authorized.
HEMASURE INC.
By: /s/ ββββ β. βββββββ, III
--------------------------------------
Name: ββββ β. βββββββ, III
Title: President
COBE LABORATORIES, INC.
By: /s/ ββββββ β. ββββ, ββ.
--------------------------------------
Name: ββββββ β. ββββ, ββ.
Title: Vice President