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EXHIBIT 99.9
REGISTRATION RIGHTS AGREEMENT
among
AMERICA SERVICE GROUP INC.,
HEALTH CARE CAPITAL PARTNERS L.P.
and
Health Care Executive Partners L.P.
Dated as of January 26, 1999
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REGISTRATION RIGHTS AGREEMENT, dated as of January 26, 1999
among America Service Group Inc., a Delaware corporation (the "Company"), Health
Care Capital Partners L.P. ("HCCP") and Health Care Executive Partners L.P.
("HCEP").
1. Background. Pursuant to a Securities Purchase Agreement, dated
as of January 26, 1999 (the "Purchase Agreement"), among the Company, HCCP and
HCEP, HCCP and HCEP have purchased from the Company (a) $15,000,000 aggregate
principal amount of the Company's 12% Subordinated Convertible Bridge Notes due
January 26, 2000 (the "Notes") with detachable warrants (the "Warrants") to
purchase shares of the Company's Common Stock, par value $.01 per share ("Common
Stock") and (b) 50,000 shares of the Company's Series A Convertible Preferred
Stock, par value $.01 per share (the "Series A Preferred Stock"). Subject to the
terms and conditions set forth in the Purchase Agreement, the Certificate of
Designation of the Series A Preferred Stock (the "Certificate of Designation")
and certain related documents, (a) the Notes are convertible into shares of
Series A Preferred Stock and (b) the shares of the Series A Preferred Stock are
convertible into, and the Warrants are exercisable for, shares of Common Stock.
The shares of Common Stock issued or issuable upon (a) the conversion of shares
of the Series A Preferred Stock, (b) the conversion of shares of the Series A
Preferred Stock issuable upon conversion of the Notes or otherwise issuable in
accordance with the Certificate of Designation, or (c) the exercise of the
Warrants are collectively referred to herein as the "Investor Registrable
Securities." "Registrable Securities" are referred to herein as (i) Investor
Registrable Securities owned by HCCP, HCEP, or any of their Affiliates or the
Affiliates of the general partner of HCCP or HCEP (the "Investor Group"), (ii)
shares of Common Stock acquired by any Person after the date hereof pursuant to
rights granted to the Investor Group, and that are transferable by the Investor
Group, under the Purchase Agreement, (iii) Investor Registrable Securities
acquired by any Person after the date hereof pursuant to rights granted to the
Investor Group under the Purchase Agreement and (iv) shares of Common Stock
issued or issuable, directly or indirectly, with respect to the Common Stock
referenced in clauses (ii) and (iii) above or any Series A Preferred Stock or
Investor Registrable Securities owned by the Investor Group, whether acquired on
the date hereof or hereafter acquired by way of stock dividend, stock split or
combination of shares. The Notes, Series A Preferred Stock and Warrants are
referred to herein as the "Convertible Securities."
2. Registration Under Securities Act, etc.
2.1. Demand Registrations.
(a) Request. Subject to Section 2.6 hereof, at any time
and from time to time, upon the written request of holders (the "Initiating
Holders") of Registrable Securities representing not less than 25% of the
Investor Registrable Securities that the Company effect the registration under
the Securities Act of all or part of such Initiating Holders' Registrable
Securities ("Demand Registration"); provided that in no event shall
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the Company be obligated to register shares of Common Stock pursuant to such
request having a Current Market Value on the date of such request less than
$5,000,000, the Company will promptly, and in any event within ten days, give
written notice of such requested registration to all registered holders of
Registrable Securities, and thereupon the Company will use its best efforts to
effect the registration under the Securities Act of
(i) the Registrable Securities which the Company
has been so requested to register by such Initiating Holders, and
(ii) all other Registrable Securities which the
Company has been requested to register by the holders thereof (such
holders together with the Initiating Holders are hereinafter referred
to as the "Selling Holders") by written request given to the Company
within ten days after the giving of such written notice by the Company,
all to the extent requisite to permit the disposition of the
Registrable Securities so to be registered.
(b) Registration of Other Securities. Whenever the
Company shall effect a registration pursuant to this Section 2.1 in connection
with an underwritten offering by one or more Selling Holders of Registrable
Securities, no securities other than Registrable Securities shall be included
among the securities covered by such registration unless the Selling Holders of
not less than a majority of all Investor Registrable Securities to be covered by
such registration shall have consented in writing to the inclusion of such other
securities.
(c) Registration Statement Form. Registrations under this
Section 2.1 shall be on such appropriate registration form of the Commission as
shall be selected by the Company.
(d) Effective Registration Statement. A registration
requested pursuant to this Section 2.1 shall not be deemed to have been effected
(i) unless a registration statement with respect thereto has been declared
effective by the Commission, (ii) if after it has become effective, such
registration is interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court for any
reason other than an act or omission of the Selling Holders and has not
thereafter become effective, or (iii) if the conditions to closing specified in
the underwriting agreement, if any, entered into in connection with such
registration are not satisfied or waived, other than by reason of a failure on
the part of the Selling Holders.
(e) Selection of Underwriters. The underwriter or
underwriters of each underwritten offering of the Registrable Securities so to
be registered shall be selected by the Company; provided, however, that such
underwriter shall be reasonably satisfactory to the Selling Holders who hold
more than 50% of the Registrable Securities so to be registered.
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(f) Priority in Demand Registrations. If the managing
underwriter of any underwritten offering shall advise the Company in writing
(with a copy to each Selling Holder of Registrable Securities requesting
registration) that, in its opinion, the number of securities requested to be
included in such registration exceeds the number which can be sold in such
offering within a price range reasonably related to the then current market
value of the securities, the Company will include in such registration, to the
extent of the number which the Company is so advised can be sold in such
offering, Registrable Securities requested to be included in such registration,
pro rata among the Selling Holders requesting such registration on the basis of
the percentage of the Registrable Securities then held by, or issuable upon
exercise or conversion of Convertible Securities then held by, such Selling
Holders. In connection with any such registration to which this Section 2.1(f)
is applicable, no securities other than Registrable Securities shall be covered
by such registration unless the written consent of Selling Holders holding at
least a majority of the Investor Registrable Securities included in such
registration shall have been obtained.
(g) Limitations on Demand Registrations. Notwithstanding
anything in this Section 2.1 to the contrary, (i) if the Company has issued
shares of Series A Preferred Stock having an aggregate Face Value of $14 million
or more, the holders of the Registrable Securities shall be limited to a maximum
of three Demand Registrations, and (ii) if the Company has issued shares of
Series A Preferred Stock having an aggregate Face Value of less than $14
million, the holders of the Registrable Securities shall be limited to a maximum
of two Demand Registrations.
2.2. Piggyback Registrations.
(a) Right to Include Registrable Securities. If the
Company proposes to register any of its securities under the Securities Act by
registration on Forms ▇-▇, ▇-▇ or S-3 or any successor or similar form(s)
(except registrations on such Forms or similar form(s) solely for registration
of securities in connection with an employee benefit plan or dividend
reinvestment plan or a merger or consolidation of the Company), whether or not
for sale for its own account, it will, subject to Section 2.8 hereof, each such
time give prompt written notice to all registered holders of Registrable
Securities of its intention to do so and of such holders' rights under this
Section 2.2. Upon the written request of any such holder (a "Requesting Holder")
made as promptly as practicable and in any event within 20 days after the
receipt of any such notice (which request shall specify the Registrable
Securities intended to be disposed of by such Requesting Holder), the Company
will, subject to Section 2.8 hereof, use its best efforts to effect the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by the Requesting Holders thereof;
provided, however, that if, at any time after giving written notice of its
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
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securities, the Company may, at its election, give written notice of such
determination to each Requesting Holder of Registrable Securities and (i) in the
case of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from any obligation of the Company to pay the Registration Expenses in
connection therewith), without prejudice, however, to the rights of any holder
or holders of Registrable Securities entitled to do so to request that such
registration be effected as a registration under Section 2.1 and (ii) in the
case of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities, for the same period as the delay in
registering such other securities. No registration effected under this Section
2.2 shall relieve the Company of its obligation to effect any registration upon
request under Section 2.1. The Company will pay all Registration Expenses in
connection with registration of Registrable Securities requested pursuant to
this Section 2.2.
(b) Priority in Piggyback Registrations. If the managing
underwriter of any underwritten offering shall inform the Company by letter of
its belief that the number or type of Registrable Securities requested to be
included in such registration would materially adversely affect such offering,
then the Company will include in such registration, to the extent of the number
and type which the Company is so advised can be sold in (or during the time of)
such offering, (i) first, all securities proposed by the Company to be sold for
its own account or which the Company is required to register on behalf of any
third party exercising rights similar to those granted in section 2.1(a), (ii)
second, such Investor Registrable Securities requested to be included in such
registration pro rata among such holders on the basis of the estimated gross
proceeds of the securities of such holders requested to be so included, (iii)
third, such Registrable Securities and all other securities of the Company
requested to be included in such registration by third parties exercising rights
similar to those granted in Section 2.2(a) pro rata among such holders on the
basis of the estimated gross proceeds of the securities of such holders
requested to be so included, and (iv) fourth, any other securities of the
Company requested to be included in such registration.
2.3. Registration Procedures. (a) If and whenever the
Company is required to use its best efforts to effect the registration of any
Registrable Securities under the Securities Act as provided in Section 2.1 and
2.2, the Company will as expeditiously as possible:
(i) prepare and (as soon as practicable, and in
any event within 60 days after (x) receipt by the Company of a request
under Section 2.1 or (y) the end of the period within which requests
for registration may be given to the Company under Section 2.2) file
with the Commission the requisite registration statement to effect such
registration and thereafter use its best efforts to cause such
registration statement to become effective; provided, however, that the
Company may discontinue any registration of its securities which are
not Registrable
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Securities (and, under the circumstances specified in Section 2.2(a),
its securities which are Registrable Securities) at any time prior to
the effective date of the registration statement relating thereto;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective and to comply with the provisions
of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement for such
period as shall be required for the disposition of all of such
Registrable Securities; provided, that such period need not exceed 120
days in the case of registration required by Sections 2.1 or 2.2;
(iii) furnish to each seller of Registrable
Securities covered by such registration statement and the managing
underwriter, if any, such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of
the prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in conformity
with the requirements of the Securities Act, and such other documents,
as such seller may reasonably request;
(iv) use its best efforts (x) to register or
qualify all Registrable Securities and other securities covered by such
registration statement under such other securities or blue sky laws of
such states of the United States of America where an exemption is not
available and as the sellers of Registrable Securities covered by such
registration statement shall reasonably request, (y) to keep such
registration or qualification in effect for so long as such
registration statement remains in effect, and (z) to take any other
action which may be reasonably necessary or advisable to enable such
sellers to consummate the disposition in such jurisdictions of the
securities to be sold by such sellers; provided, however, that the
Company shall not for any such purpose be required to qualify generally
to do business as a foreign corporation in any jurisdiction wherein it
would not but for the requirements of this subdivision (iv) be
obligated to be so qualified or to consent to general service of
process in any such jurisdiction;
(v) use its best efforts to cause all
Registrable Securities covered by such registration statement to be
registered with or approved by such other federal or state governmental
agencies or authorities as may be necessary in the opinion of counsel
to the Company and counsel to the seller or sellers thereof to
consummate the disposition of such Registrable Securities;
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(vi) furnish to each seller of Registrable
Securities a signed counterpart of
(x) an opinion of counsel for the
Company, and
(y) a "cold comfort" letter signed by
the independent public accountants who have certified the
Company's financial statements included or incorporated by
reference in such registration statement
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in
the case of the accountant's cold comfort letter, with respect to
events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in accountant's
comfort letters delivered to the underwriters in underwritten public
offerings of securities (and dated the dates such opinions and comfort
letters are customarily dated);
(vii) notify each seller of Registrable Securities
covered by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Securities Act,
upon discovery that, or upon the happening of any event as a result of
which, in the judgment of the Company, 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 the light of the circumstances under which they were
made, and at the request of any such seller promptly prepare and
furnish to it a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, in the
judgment of the Company, 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 the light of the circumstances under which they were
made;
(viii) otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable,
an earnings statement covering the period of at least twelve months,
but not more than eighteen months, beginning with the first full
calendar month after the effective date of such registration statement,
which earnings statement shall satisfy the provisions of Section 11(a)
of the Securities Act and Rule 158 promulgated thereunder;
(ix) provide and cause to be maintained a
transfer agent and registrar (which, in each case, may be the Company)
for all Registrable Securities
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covered by such registration statement from and after a date not later
than the effective date of such registration; and
(x) use its best efforts to list all Registrable
Securities covered by such registration statement on any national
securities exchange on which Registrable Securities of the same class
and, if applicable, series, covered by such registration statement are
then listed.
(b) The Company may require each seller of Registrable
Securities as to which any registration is being effected to furnish the Company
such information regarding such seller and the distribution of such securities
as the Company may from time to time reasonably request in writing.
(c) Each holder of Registrable Securities agrees by
acquisition of such Registrable Securities that upon receipt of any notice from
the Company of the happening of any event of the kind described in subdivision
(vii) of this Section 2.3, such holder will forthwith discontinue such holder's
disposition of Registrable Securities pursuant to the registration statement
relating to such Registrable Securities until such holder's receipt of the
copies of the supplemented or amended prospectus contemplated by subdivision
(vii) of this Section 2.3 and, if so directed by the Company, will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies, then in such holder's possession, of the prospectus relating to such
Registrable Securities current at the time of receipt of such notice; provided,
however, that any period during which a holder must discontinue disposition of
Registrable Securities shall not be included in determining whether such
registration has been effective for the period required by Section 2.3(a)(ii).
2.4. Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested by the
underwriters for any underwritten offering by holders of Registrable Securities
pursuant to a registration requested under Section 2.1, the Company will enter
into an underwriting agreement with such underwriters for such offering, such
agreement to be reasonably satisfactory in substance and form to the Company,
each such holder and the underwriters and to contain such representations and
warranties by the Company and such other terms as are generally prevailing in
agreements of that type, including, without limitation, indemnities to the
effect and to the extent provided in Section 2.7. The holders of the Registrable
Securities proposed to be distributed by such underwriters will cooperate with
the Company in the negotiation of the underwriting agreement and will give
consideration to the reasonable suggestions of the Company regarding the form
thereof. Any such holder of Registrable Securities shall not be required to make
any representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
holder, such holder's Registrable Securities, such holder's intended method of
distribution and any representations required by law.
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(b) Incidental Underwritten Offerings. If the Company
proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, subject to Sections 2.1(f),
2.2(b) and 2.8 hereof, if requested by any Requesting Holder of Registrable
Securities arrange for such underwriters to include all the Registrable
Securities to be offered and sold by such Requesting Holder among the securities
of the Company to be distributed by such underwriters. Any such Requesting
Holder of Registrable Securities shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
Requesting Holder, such Requesting Holder's Registrable Securities and such
Requesting Holder's intended method of distribution or any representations
required by law.
(c) Holdback Agreements. If any registration of
Registrable Securities shall be in connection with an underwritten public
offering, each holder of Registrable Securities agrees not to effect any public
sale or distribution, including any sale pursuant to Rule 144 under the
Securities Act, of any Registrable Securities, and not to effect any such public
sale or distribution of any other equity security of the Company or of any
security convertible into or exchangeable or exercisable for any equity security
of the Company (in each case, other than as part of such underwritten public
offering) for such customary period of time (not exceeding 120 days) as may be
reasonably requested by the underwriter of such offering beginning on the
effective date of such registration statement (except as part of such
registration) provided that each holder of Registrable Securities has received
written notice of such registration at least 15 days prior to such effective
date.
If any registration of Registrable Securities shall be in
connection with an underwritten public offering, the Company agrees (i) not to
effect any public sale or distribution of any of its equity securities or of any
security convertible into or exchangeable or exercisable for any equity security
of the Company (other than any such sale or distribution of such securities in
connection with any merger or consolidation by the Company or any subsidiary of
the Company of the capital stock or substantially all the assets of any other
person or in connection with an employee stock option or other benefit plan)
during the 15 days prior to, and during the 90-day period beginning on, the
effective date of such registration statement (except as part of such
registration) and (ii) that any agreement entered into after the date of this
Agreement pursuant to which the Company issues or agrees to issue any privately
placed equity securities shall contain a provision under which holders of such
securities agree not to effect any public sale or distribution of any such
securities during the period referred to in the foregoing clause (i), including
any sale pursuant to Rule 144 under the Securities Act (except as part of such
registration, if permitted).
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2.5. Preparation; Reasonable Investigation. In connection
with the preparation and filing of each registration statement under the
Securities Act pursuant to this Agreement, the Company will give the holders of
Registrable Securities registered under such registration statement, their
underwriters, if any, and their respective counsel and accountants the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and, to the
extent practicable, each amendment thereof or supplement thereto, and give each
of them such access to its books and records (to the extent customarily given to
underwriters of the Company's securities) and such opportunities to discuss the
business of the Company with its officers and the independent public accountants
who have certified its financial statements as shall be necessary, in the
opinion of such holders' and such underwriters' respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
2.6. Company Right to Postpone Registration. The Company
shall be entitled to postpone for a reasonable period of time (but not exceeding
120 days and no more than once in any twelve month period) the filing of any
registration statement otherwise required to be prepared and filed by it
pursuant to this Agreement if the Company determines, in its reasonable
judgment, that such registration and offering would interfere with any
financing, acquisition, corporate reorganization or other material transaction
involving the Company or any of its Affiliates or would require premature
disclosure thereof and gives the holders of Registrable Securities requesting
registration thereof pursuant to Section 2.1 written notice of such delay within
five Business Days of the receipt of a written request from Initiating Holders
as contemplated pursuant to Section 2.1(a). If the Company shall so postpone the
filing of a registration statement, such holders of Registrable Securities
requesting registration thereof pursuant to Section 2.1 shall have the right to
withdraw the request for registration by giving written notice to the Company
within 30 days after receipt of the notice of postponement and, in the event of
such withdrawal, such request shall not be counted for purposes of the requests
for registration to which holders of Registrable Securities are entitled
pursuant to Section 2.1 hereof.
2.7. Indemnification.
(a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities Act, the
Company will, and hereby does, indemnify and hold harmless, in the case of any
registration statement filed pursuant to Section 2.1 or 2.2, each seller of any
Registrable Securities covered by such registration statement, its directors,
officers, partners, agents and affiliates and each other Person who participates
as an underwriter in the offering or sale of such securities and
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each other Person, if any, who controls such seller or any such underwriter
within the meaning of the Securities Act, insofar as losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto (each, a "Registration
Document"), or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances in which they were made not misleading, and the
Company will reimburse such seller and each such director, officer, partner,
agent or affiliate, underwriter and controlling Person for any reasonable legal
or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided, that the Company shall not be liable in any such case to
the extent that any such loss, claim, damage, liability (or action or proceeding
in respect thereof) or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such Registration Document in reliance upon and in conformity with written
information furnished to the Company through an instrument executed by or on
behalf of such seller or underwriter, as the case may be, specifically stating
that it is for use in the preparation thereof, it being agreed that, upon
written request of the Company, the Purchasers shall provide to the Company a
letter (the "Purchaser Letter") specifying the information in any Registration
Document that is based on information furnished to the Company for use in such
Registration Document; and provided, further, that the Company shall not be
liable to any Person who participates as an underwriter in the offering or sale
of Registrable Securities or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such Person's failure to send or give
a copy of the final prospectus, as the same may be then supplemented or amended,
to the Person asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation of the sale
of Registrable Securities to such Person if such statement or omission was
corrected in such final prospectus so long as such final prospectus, and any
amendments or supplements thereto, have been furnished to such underwriter. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such seller or any such director, officer, partner,
agent or affiliate or controlling Person and shall survive the transfer of such
securities by such seller.
(b) Indemnification by the Sellers. As a condition to
including any Registrable Securities in any registration statement, the Company
shall have received an undertaking satisfactory to it from each holder joining
in such registration, severally and not jointly, to indemnify and hold harmless
and reimburse (in the same manner and to the same extent as set forth in
subdivision (a) of this Section 2.7) the Company, and each
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director of the Company, each officer of the Company and each other Person, if
any, who controls the Company within the meaning of the Securities Act, with
respect to any statement or alleged statement in or omission or alleged omission
from any such Registration Document, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through an instrument duly executed
by such seller specifically stating that it is for use in the preparation of
thereof, it being agreed that, upon written request of the Company, the
Purchasers shall provide to the Company the Purchaser Letter; provided, however,
that the liability of such indemnifying party under this Section 2.7(b) shall be
limited to the amount of proceeds received by such indemnifying party in the
offering giving rise to such liability. Such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling Person and shall survive
the transfer of such securities by such seller. The Company shall be entitled to
receive indemnification from underwriters of any underwritten public offering,
to the same extent as provided above with respect to information and with
respect to such persons so furnishing such information in any Registration
Document.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subdivisions of this Section 2.7,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding subdivisions of this Section 2.7, except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties is reasonably likely to exist
in respect of such claim, the indemnifying party shall 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 party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation unless in such indemnified party's reasonable judgment a conflict
of interest between such indemnified and indemnifying parties arises in respect
of such claim after the assumption of the defense thereof and the indemnified
party notifies the indemnifying party of such indemnified party's judgment and
the basis therefor. No indemnifying party shall be liable for any settlement of
any action or proceeding effected without its written consent, which consent
shall not be unreasonably withheld. No indemnifying party shall, without the
consent of the indemnified party, consent to entry of any judgment or enter into
any settlement
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which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect of such claim or litigation.
(d) Contribution. If the indemnification provided for in
this Section 2.7 shall for any reason be held by a court to be unavailable to an
indemnified party under subparagraph (a) or (b) hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under subparagraph (a) or (b) hereof, the indemnified
party and the indemnifying party under subparagraph (a) or (b) hereof shall
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating the
same), (i) in such proportion as is appropriate to reflect the relative fault of
the Company and the prospective sellers of Registrable Securities covered by the
registration statement which resulted in such loss, claims, damage or liability,
or action in respect thereof, with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as shall be appropriate to reflect the relative benefits received by
the Company and such prospective sellers from the offering of the securities
covered by such registration statement. 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. Such prospective sellers' obligations to
contribute as provided in this subparagraph (d) are several in proportion to the
relative value of their respective Registrable Securities covered by such
registration statement and not joint. In addition, no Person shall be obligated
to contribute hereunder any amounts in payment for any settlement of any action
or claim effected without such Person's consent, which consent shall not be
unreasonably withheld.
(e) Other Indemnification. Indemnification and
contribution similar to that specified in the preceding subdivisions of this
Section 2.7 (with appropriate modifications) shall be given by the Company and
each seller of Registrable Securities with respect to any required registration
or other qualification of securities under any federal or state law or
regulation of any governmental authority other than the Securities Act.
(f) Indemnification Payments. The indemnification and
contribution required by this Section 2.7 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred;
provided, however, that if an indemnified party is adjudged to not be entitled
to such payments in a final non-appealable judgement of a federal or state court
of competent jurisdiction, it shall promptly return such payments to the
indemnifying party.
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2.8. Limitations on Registrations of Registrable
Securities. The Company shall not be required to effect any registration of
Registrable Securities pursuant to Section 2.1 or 2.2 hereof if it shall deliver
to the holder or holders requesting such registration an opinion of counsel
(which opinion and counsel shall be reasonably satisfactory to such holder or
holders) to the effect that all Registrable Securities held by such holder may
be sold in the public market without registration under the Securities Act and
any applicable state securities laws.
2.9. Participation in Underwritten Registrations.
Notwithstanding anything in this Agreement to the contrary, no holder of
Registrable Securities may participate in any registration of any underwritten
public offering hereunder pursuant to Section 2.2 unless such holder of
Registrable Securities: (i) agrees to sell its Common Stock on the basis
provided in any underwriting arrangements approved by the Company; and (ii)
accurately completes in a timely manner and executes all questionnaires, powers
of attorney, the Purchaser Letter, underwriting agreements and all other
documents customarily required by the registrant or the underwriters, if any, in
similar stock offerings.
2.10. Expenses. The Company will pay the Registration
Expenses in connection with any registration requested pursuant to Section 2.1
or 2.2.
3. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"Commission" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time. Reference
to a particular section of the Securities Exchange Act of 1934, as amended,
shall include a reference to the comparable section, if any, of any such similar
Federal statute.
"Face Value" with respect to the Series A Preferred Stock
shall mean $100 per share.
"Person" means a corporation, an association, a partnership,
an organization, a business, an individual, a governmental or political
subdivision thereof or a governmental agency.
"Purchaser Letter" has the meaning set forth in Section
2.7(a).
"Registration Expenses" means all expenses incident to the
Company's performance of or compliance with Section 2, including, without
limitation, all
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registration, filing and fees of the National Association of Securities Dealers,
Inc. ("NASD"), all listing fees, all fees and expenses of complying with
securities or blue sky laws (including, without limitation, reasonable fees and
disbursements of counsel for the underwriters in connection with blue sky
qualifications of the Registrable Securities), all word processing, duplicating
and printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of "cold comfort" letters required by or
incident to such performance and compliance, any fees and disbursements of
underwriters customarily paid by issuers or sellers of securities and the
reasonable fees and expenses of one counsel to the Selling Holders (selected by
Selling Holders representing at least 50% of the Investor Registrable Securities
covered by such registration); provided, however, that Registration Expenses
shall exclude, and the sellers of the Registrable Securities being registered
shall pay, underwriters' fees and underwriting discounts and commissions,
expenses incurred in connection with promotional efforts or "roadshows" and
transfer taxes in respect of the Registrable Securities being registered.
"Registrable Securities" has the meaning set forth in Section
1 hereof. As to any particular Registrable Securities, once issued such
securities shall cease to be Registrable Securities when (a) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (b) they shall have been sold
as permitted by, and in compliance with, Rule 144 (or successor provision)
promulgated under the Securities Act, (c) they shall have been otherwise
transferred, new certificates for them not bearing a legend restricting further
transfer under the Securities Act shall have been delivered by the Company and
subsequent public distribution of them shall not require registration of them
under the Securities Act, or (d) they shall have ceased to be outstanding.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act of 1933 shall include a reference to
the comparable section, if any, of any such similar federal statute.
"Selling Holders" has the meaning set forth in Section
2.1(a)(ii).
4. Rule 144. The Company shall take all actions reasonably
necessary to enable holders of Registrable Securities to sell such securities
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission including, without limiting the generality of the
foregoing, using its best efforts to file on a timely basis all reports required
to be filed by the Exchange Act. Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written statement as to
whether it has complied with such requirements.
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5. Amendments and Waivers. This Agreement may be amended with the
consent of the Company and HCCP or its successors and assigns. The Company may
not take any action herein prohibited, or omit to perform any act herein
required to be performed by it, unless the Company has obtained the written
consent to such amendment, action or omission to act, of the beneficial owner or
owners of at least 66-2/3% of the Investor Registrable Securities. Each
beneficial owner of any Registrable Securities at the time or thereafter
outstanding shall be bound by any consent authorized by this Section 5, whether
or not such Registrable Securities shall have been marked to indicate such
consent.
6. Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election in writing delivered to the
Company, be treated as the holder of such Registrable Securities for purposes of
any request or other action by any holder or holders of Registrable Securities
pursuant to this Agreement or any determination of any number or percentage of
Registrable Securities held by any holder or holders of Registrable Securities
contemplated by this Agreement. If the beneficial owner of any Registrable
Securities so elects, the Company may require assurances reasonably satisfactory
to it of such owner's beneficial ownership of such Registrable Securities.
7. Notices. All communications provided for hereunder shall be
sent by courier or other overnight delivery service, shall be effective upon
receipt, and shall be addressed as follows:
(a) if to HCCP, addressed to it in the manner set forth
in the Purchase Agreement, or at such other address as HCCP shall have furnished
to the Company in writing;
(b) if to any other holder of Registrable Securities, at
the address that such holder shall have furnished to the Company in writing, or,
until any such other holder so furnishes to the Company an address, then to and
at the address of the last holder of such Registrable Securities who has
furnished an address to the Company; or
(c) if to the Company, addressed to it in the manner set
forth in the Purchase Agreement, or at such other address as the Company shall
have furnished to each holder of Registrable Securities at the time outstanding.
8. Assignment; Calculation of Percentage Interests in Registrable
Securities.
(a) This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and, with respect to the
Company, its respective
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successors and assigns and, with respect to HCCP, any beneficial owner of any
Registrable Securities, subject to the provisions respecting the minimum numbers
of percentages of shares of Registrable Securities required in order to be
entitled to certain rights, or take certain actions, contained herein. The HCCP
Group (and not any other holder of Registrable Securities or any other Person)
shall be permitted, in connection with a transfer or disposition of Registrable
Securities permitted by the Purchase Agreement, to impose conditions or
constraints on the ability of the transferee, as a holder of Registrable
Securities, to request a registration pursuant to Section 2.1 and shall provide
the Company with copies of such conditions or constraints and the identity of
such transferees.
(b) For purposes of this Agreement, all references to a
percentage of the Registrable Securities or Investor Registrable Securities
shall be calculated based upon the number of Registrable Securities or Investor
Registrable Securities, as the case may be, outstanding at the time such
calculation is made, assuming (i) the conversion of all Series A Preferred Stock
into, (ii) the conversion of the Series A Preferred Stock issuable upon
conversion of the Notes into, and (iii) the exercise of all Warrants for, shares
of Common Stock.
9. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
10. Governing Law. This Agreement shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the laws
of the State of New York.
11. No Inconsistent Agreements. The Company will not hereafter
enter into any agreement with respect to its securities which (a) is
inconsistent with the rights granted to the holders of Registrable Securities in
this Agreement or (b) grants registration rights to any security holder unless
at the time holders of the Registrable Securities have or are granted without
further consideration no less favorable registration rights.
12. Recapitalizations, etc. In the event that any capital stock or
other securities are issued in respect of, in exchange for, or in substitution
of, any Registrable Securities by reason of any reorganization,
recapitalization, reclassification, merger, consolidation, spin-off, partial or
complete liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the shares of Registrable Securities or any other
change in the Company's capital structure, appropriate adjustments shall be made
in this Agreement so as to fairly and equitably preserve, as far as practicable,
the original rights and obligations of the parties hereto under this Agreement.
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13. Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the prevailing party to such action or proceeding
shall be entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officers thereunto duly authorized
as of the date first above written.
AMERICA SERVICE GROUP INC.
By:
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
HEALTH CARE CAPITAL PARTNERS L.P.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & CO. LLC,
its General Partner
By:
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Member
HEALTH CARE EXECUTIVE PARTNERS L.P.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & CO. LLC,
its General Partner
By:
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Member
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