RIGHTS AGREEMENT
This Rights Agreement (this "AGREEMENT") is made and entered into as of
September 18, 2002 among Worldwide Medical Corporation, a Delaware corporation
(the "COMPANY"), ▇▇▇▇▇▇▇ Healthcare Fund I, LP, a Delaware limited partnership
("▇▇▇▇▇▇▇"), those persons or entities listed on Exhibit A hereof (collectively
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referred to as the "HOLDERS").
WHEREAS, the Company has entered into those certain Loan Agreement,
Promissory Note, Security Agreement, and Warrant and certain other related
documents and instruments referred to or in connection with such Loan Agreement
(collectively, the "TRANSACTION AGREEMENTS") with ▇▇▇▇▇▇▇, of even date
herewith, under which the Company borrowed certain funds from ▇▇▇▇▇▇▇ and in
exchange therefore, issued to ▇▇▇▇▇▇▇ a warrant for the purchase of 2,475,000
shares of the Common Stock of the Company, and also has agreed to provide
▇▇▇▇▇▇▇ with certain other rights set forth herein. The execution of this
Agreement is a simultaneous condition to the obligations of the Company and
▇▇▇▇▇▇▇ under the Transaction Agreements.
WHEREAS, capitalized terms used herein but not defined herein shall have
the meanings as set forth in the Transaction Agreements.
NOW THEREFORE, it is hereby agreed as follows:
ARTICLE 1
REGISTRATION RIGHTS
1.1 CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the following
respective meanings:
(a) "AFFILIATE" has the meaning ascribed thereto in Rule 405
promulgated under the Securities Act.
(b) "BUSINESS DAY" means any day, other than a Saturday, Sunday or
legal holiday, on which banks in the State of New York are open for business.
(c) "COMMISSION" means the Securities and Exchange Commission.
(d) "COMMON STOCK" means the Common Stock, par value $0.01 per share,
of the Company, as constituted on the date hereof, any shares into which such
Common Stock shall have been changed, or any shares resulting from any
reclassification of such Common Stock.
(e) "COMMON STOCK EQUIVALENTS" means (without duplication with any
Common Stock or other Common Stock Equivalents) rights, warrants, options,
convertible securities, or exchangeable securities or indebtedness, or other
rights, exercisable for or convertible or exchangeable into, directly or
indirectly, Common Stock or securities exercisable for or convertible or
exchangeable into Common Stock, whether at the time of issuance or upon the
passage of time or the occurrence of some future event.
(f) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any successor statute thereto, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect at the
time.
(g) "FULLY-DILUTED SHARES" means, as of any date of determination, the
shares of Common Stock outstanding and (without duplication) all shares of
Common Stock issuable, whether at such time or upon the passage of time or the
occurrence of future events, upon the exercise, conversion or exchange of all
then outstanding Common Stock Equivalents.
(h) "HOLDERS" means the Holders referred to in the Preamble and any
other Person holding Registrable Securities to whom these registration rights
have been assigned pursuant to Section 2.1 of this Agreement.
(i) "PERSON" shall mean an individual, partnership, corporation,
limited liability company, association, trust, estate, joint venture,
unincorporated organization and any government, governmental department or
agency or political subdivision thereof.
(j) "REGISTRABLE SECURITIES" means (i) any Common Stock issued and held
at any time by any Holder or ▇▇▇▇▇▇▇; (ii) any Common Stock held by any Holder
or ▇▇▇▇▇▇▇ issued or issuable pursuant to the exercise by such Holder or ▇▇▇▇▇▇▇
of his, her, or its option, warrant, or other right to acquire Common Stock; and
(iii) securities issued in replacement or exchange, or upon any stock split,
stock dividend, recapitalization or similar event, of any of the securities
issued in clauses (i) or (ii) above.
(k) "REGISTRATION EXPENSES" means all expenses incident to the
Company's performance of or compliance with this Agreement, including, without
limitation, all registration, filing, listing and National Association of
Securities Dealers, Inc. ("NASD") fees, all fees and expenses of complying with
securities or blue sky laws, all word processing, duplicating and printing
expenses, all messenger and delivery expenses, any transfer taxes, the fees and
expenses of the Company's legal counsel and independent public accountants,
including the expenses of any special audits or "cold comfort" letters required
by or incident to such performance and compliance, fees and disbursements of one
counsel for all of the Holders, and any fees and disbursements of underwriters
customarily paid by insurers or sellers of securities; provided, however, that
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Registration Expenses shall not include underwriting discounts and commissions.
(l) "REGISTRATION STATEMENT" means a registration statement filed by
the Company with the Commission for a public offering and sale of securities of
the Company.
(m) "SECURITIES ACT" means the Securities Act of 1933, as amended, or
any successor statute thereto, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect at the time.
1.2 DEMAND REGISTRATION
(a) Demand Registration. If the Company shall receive, at any time a
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written request from ▇▇▇▇▇▇▇ that the Company file a registration statement
under the Act covering the registration of Registrable Securities, then the
Company shall, within ten (10) days of the receipt thereof, give written notice
of such request to ▇▇▇▇▇▇▇ and shall, as soon as practicable and subject to the
terms of this Section 1.2, use its best efforts to effect such registration
(including, without limitation, appropriate registration under applicable blue
sky or other state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act and any other governmental
requirements or regulations) as may be so requested and as may be reasonably
required to permit or facilitate the sale and distribution of all of the
Registrable Securities as are owned by ▇▇▇▇▇▇▇ as of the date thereof.
(b) Limitations.
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(i) The Company shall be entitled to postpone for up to ninety (90)
days the commencement of any registration process (prior to effectiveness of the
related registration statement) pursuant to this Section 1.2 if the Board of
Directors of the Company determines, in its good faith reasonable judgment, it
would be seriously detrimental to the Company and its stockholders for such
registration statement to be effected at such time and the Company promptly
gives notice to ▇▇▇▇▇▇▇ of such determination, provided however, the Company may
not utilize this right more than once in any twelve (12) month period.
(ii) The Company shall not be obligated to effect, or to take any
action to effect, any registration pursuant to this Section 1.2 during the
period starting with the date sixty (60) days prior to the Company's good faith
estimate of the date of filing of, and ending on a date 180 days after the
effective date of, a registration subject to Section 1.3 hereof, provided that
the Company is actively employing in good faith all reasonable efforts to cause
such registration statement to become effective.
(c) Limitation on Number of Demand Registrations.
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(i) The Company shall not be obligated to effect more than one
registration pursuant to Section 1.2 (a "DEMAND SUBSECTION") on Form S-1 or
other applicable form as promulgated by the Commission.
(ii) A Demand Registration shall not be deemed to have been effected
unless (x) the registration statement in respect thereof has been declared
effective by the Commission and (y) such registration has not been terminated,
withdrawn or stopped and has not required amendment or supplementation as
contemplated by Section 1.5(a)(vi) or (ix), as the case may be; provided that a
Demand Registration shall not be deemed to be effected by the Company if, prior
to the date on which the related registration statement is declared effective by
the Commission, ▇▇▇▇▇▇▇ withdraws all securities to be sold by it and its
Affiliates therefrom, in which event the Company shall not be required to
continue the registration process unless (A) ▇▇▇▇▇▇▇, pursuant to another right
contained herein so requests that such registration be deemed initiated by it
under such Subsection or (B) the Company otherwise determines, in which event
such registration shall be deemed to be a piggy-back registration.
(d) Expenses. The Company shall bear and pay all Registration Expenses
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incurred in connection with any Demand Registration effected pursuant to this
Section 1.2.
(e) Priority in Demand Registration. If ▇▇▇▇▇▇▇ intends to distribute
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the Registrable Securities covered by its request by means of an underwriting,
it shall so advise the Company as a part of its request made pursuant to this
Section 1.2, and the Company shall include such information in the written
notice referred to in Section 1.2(a). In such event, the right of any other
Holder to include Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting. If the
managing underwriters shall give written advice to the Company that, in their
opinion, market conditions dictate that no more than a specified maximum number
of Registrable Securities could successfully (as to price and quantity) be
included in such registration, then the Company shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, first to ▇▇▇▇▇▇▇ and
then to all other Holders in proportion (as nearly as practicable) to the amount
of Registrable Securities owned by each Holder; provided, however, that the
number of Registrable Securities to be included in such underwriting shall not
be so reduced unless all other securities are first entirely excluded from the
underwriting.
1.3 INCIDENTAL REGISTRATION.
(a) Incidental Registration. If the Company for itself or any of
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its security holders shall at any time or times after the date hereof determine
to register under the Securities Act any shares of its capital stock or other
securities (other than: (i) the registration of an offer, sale or other
disposition of securities solely to employees of, or other persons providing
services to, the Company, or any subsidiary pursuant to an employee or similar
benefit plan; or (ii) relating to a merger, acquisition or other transaction of
the type described in Rule 145 under the Securities Act or a comparable or
successor rule, registered on Form S-4 or similar or successor forms), on each
such occasion the Company will notify each Holder of such determination at least
thirty (30) days prior to the filing of such Registration Statement, and upon
the request of ▇▇▇▇▇▇▇ given in writing within twenty (20) days after the
receipt of such notice, the Company will use its best efforts as soon as
practicable thereafter to cause any of the Registrable Securities specified by
▇▇▇▇▇▇▇ to be included in such Registration Statement to the extent such
registration is permissible under the Securities Act and subject to the
conditions of the Securities Act (an "INCIDENTAL REGISTRATION").
(b) Expenses. The Company shall pay all Registration Expenses
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incurred in connection with any Incidental Registration effected pursuant to
this Section 1.3.
(c) Priority in Incidental Registration.
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(i) If an Incidental Registration is an underwritten registration, and
the managing underwriters shall give written advice to the Company that, in
their opinion, market conditions dictate that no more than a specified maximum
number of securities (the "UNDERWRITER'S MAXIMUM NUMBER") could successfully (as
to price and quantity) be included in such Incidental Registration, then subject
to Section 1.3(c)(ii) below: (A) the Company shall be entitled to include in
such registration that number of securities which the Company proposes to offer
and sell for its own account in such registration and which does not exceed the
Underwriter's Maximum Number; and (B) the Company will be obligated and required
to include in such registration that number of shares of Registrable Securities
which shall have been requested by ▇▇▇▇▇▇▇ which does not exceed the difference
between the Underwriter's Maximum Number and that number of securities which the
Company is entitled to include therein pursuant to clause (A) above. If less
than all of the Registrable Securities requested to be included in any such
registration by ▇▇▇▇▇▇▇ can be so included due to these priority requirements,
then ▇▇▇▇▇▇▇'▇ request shall be granted on an pro rata basis with the Company
and any other Holders having similar rights.
(ii) In all underwritten Incidental Registrations, the Company will be
obligated and required to include at least 25% of the shares of the Registrable
Securities of ▇▇▇▇▇▇▇, if requested, under this Section 1.3 (the "MINIMUM
PIGGYBACK AMOUNT"). To the extent the Minimum Piggyback Amount exceeds the
difference between the Underwriter's Maximum Number and that number of
securities which the Company proposes to offer and sell for its own account,
then the Company shall reduce the number of securities it proposes to offer and
sell for its own account by such excess amount.
(d) Withdrawal. Notwithstanding any other term or provision of this
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Agreement to the contrary, the Company shall at all times have the right to
withdraw, cancel or terminate any registration, to which the rights under this
Section 1.3 apply, at any time and for any reason in the Company's sole
discretion.
1.4 FORM S-3 REGISTRATION.
(a) S-3 Registration. If the Company shall receive a written request
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from ▇▇▇▇▇▇▇ that the Company effect a registration on Form S-3 covering the
registration of Registrable Securities, then the Company shall:
(i) promptly give written notice of the proposed registration, and any
related qualification or compliance, to all other Holders having registration
rights;
(ii) as soon as practicable, effect such registration and all such
qualifications and compliance as may be so requested and as would permit or
facilitate the sale and distribution of all or of the Registrable Securities as
are owned by ▇▇▇▇▇▇▇ as of the date thereof, together with all or such portion
of the Registrable Securities of any other Holders having rights to join in such
request as are specified in a written request given within thirty (30) days
after receipt of such written notice from the Company; provided, however, that
the Company shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this Section 1.4
(A) if Form S-3 is not available for such offering by ▇▇▇▇▇▇▇;
(B) if the Company shall furnish to ▇▇▇▇▇▇▇ a certificate signed by the
President of the Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company and
its stockholders for such Form S-3 registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than ninety (90) days after
receipt of the request of ▇▇▇▇▇▇▇ under this Section 1.4, provided, however,
that the Company shall not utilize this right more than once in any twelve (12)
month period;
(C) if the Company has effected two (2) S-3 registrations pursuant to
this Section 1.4 and such registrations have been declared or ordered effective;
or
(D) in any particular jurisdiction in which the Company would be
required to qualify to do business or to execute a general consent to service of
process in effecting such registration, qualification or compliance.
(b) Expenses, etc. The Company shall bear and pay all Registration
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Expenses incurred in connection with any registration effective pursuant to this
Section 1.4. Registrations effected pursuant to this Section 1.4 shall not be
counted as demands for registration or registrations pursuant to Sections 1.2 or
1.3.
(c) Priority in Registration. If ▇▇▇▇▇▇▇, pursuant to Section 1.4,
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intends to distribute the Registrable Securities covered by its request by means
of an underwriting, it shall so advise the Company as a part of its request made
pursuant to this Section 1.4, and the Company shall include such information in
the written notice referred to in Section 1.4(a). In such event, the right, if
any, of any other Holder to include Registrable Securities in such registration
shall be conditioned upon such Holder's participation in such underwriting. If
the managing underwriters shall give written advice to the Company that, in
their opinion, market conditions dictate that no more than a specified maximum
number of Registrable Securities could successfully be included in such
registration, then the Company shall so advise all Holders of Registrable
Securities which would otherwise be underwritten pursuant hereto, and the number
of shares of Registrable Securities that may be included in the underwriting
shall be allocated first to ▇▇▇▇▇▇▇, and then among all other Holders having
rights to participate therein, in proportion (as nearly as practicable) to the
amount of Registrable Securities owned by each such Holder; provided, however,
that the number of Registrable Securities to be included in such underwriting
shall not be so reduced unless all other securities are first entirely excluded
from the underwriting.
1.5 REGISTRATION PROCEDURES.
(a) If and whenever the Company undertakes to effect the registration
of any Registrable Securities under the Securities Act as provided in Sections
1.2, 1.3 or 1.4, the Company, as expeditiously as practical and subject to the
terms and conditions of Sections 1.2, 1.3 or 1.4, including the Company's right
under Section 1.3(d), will:
(i) prepare and file with the Commission the requisite Registration
Statement to effect such registration and use reasonable efforts to cause such
registration to become and remain effective for up to 180 days (or such shorter
period of time as the underwriters need to complete the distribution of the
registered offering, or one year in the case of a "shelf" Registration Statement
on Form S-3), and from time to time will amend or supplement such Registration
Statement and the prospectus contained therein to the extent necessary to comply
with the Securities Act and any applicable state securities statute or
regulation;
(ii) permit any Holder (including ▇▇▇▇▇▇▇) which, in the reasonable
judgment of the Holder (or ▇▇▇▇▇▇▇), might be deemed to be an underwriter or a
controlling person of the Company, to participate in the preparation of such
Registration Statement and to require the insertion therein of material,
furnished to the Company in writing, which in the reasonable judgment of such
Holder and its counsel should be included;
(iii) furnish to ▇▇▇▇▇▇▇ and the other participating Holders 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 ▇▇▇▇▇▇▇ or any
other Holder of Registrable Securities to be sold under such Registration
Statement may reasonably request;
(iv) use reasonable efforts to register or qualify all Registrable
Securities covered by such Registration Statement under such other United States
and state securities or blue sky laws of such jurisdictions as ▇▇▇▇▇▇▇ or any
Holder of Registrable Securities to be sold under such Registration Statement
shall reasonably request, to keep such registration or qualification in effect
for so long as such registration remains in effect, and take any other action
which may be reasonably necessary or advisable to enable ▇▇▇▇▇▇▇ or the Holder
of Registrable Securities to be sold under such Registration Statement to
consummate the disposition in such jurisdictions of the securities owned by
▇▇▇▇▇▇▇ or such Holder, except that the Company shall not for any such purpose
be required to (a) 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 (b) subject itself to
taxation in any such jurisdiction;
(v) use reasonable efforts to cause all Registrable Securities covered
by such Registration Statement to be registered with or approved by such other
United States and state governmental agencies or authorities as may be necessary
to enable ▇▇▇▇▇▇▇ or the Holder of Registrable Securities to be sold under such
Registration Statement to consummate the intended disposition of such
Registrable Securities;
(vi) in the event of the issuance of any stop order suspending the
effectiveness of the Registration Statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Registrable Securities included in such Registration Statement for sale in
any jurisdiction, the Company shall use its best efforts promptly to obtain the
withdrawal of such order;
(vii) use reasonable efforts to furnish to ▇▇▇▇▇▇▇ and the Holders of
Registrable Securities to be sold under such Registration Statement a letter,
dated the effective date of the Registration Statement, from the independent
certified public accountants of the Company, addressed to the underwriters, if
any, and to the Holders making such request, 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;
(viii) use reasonable efforts to furnish to ▇▇▇▇▇▇▇ and the Holders of
Registrable Securities to be sold under such Registration Statement the opinion
of counsel to the Company, addressed to the underwriters, if any, and covering
such matters as are customarily the subject of such opinion;
(ix) immediately notify ▇▇▇▇▇▇▇ and the Holders of Registrable
Securities included in such Registration Statement at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event as result of which the prospectus included in such
Registration Statement, as then in effect, includes an untrue statement of
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 ▇▇▇▇▇▇▇ or the
Holders of Registrable Securities promptly prepare and furnish to ▇▇▇▇▇▇▇ and
such Holders 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 the
light of the circumstances under which they were made;
(x) provide a transfer agent for all Registrable Securities covered by
such Registration Statement and a CUSIP number for all such Registrable
Securities not later than the effective date of such Registration Statement;
(xi) use reasonable efforts to list all Registrable Securities covered
by such Registration Statement on any securities exchange on which any of the
Registrable Securities are then listed; and
(xii) issue (or cause the transfer agent of the Company to issue) to
the purchasers of such Registrable Securities, a certificate representing such
shares purchased.
(b) The Company may require ▇▇▇▇▇▇▇ and each Holder of Registrable
Securities to be sold under such Registration Statement, at the Company's
expense, to furnish the Company with such information and undertakings as it may
reasonably request regarding ▇▇▇▇▇▇▇ and such Holders and the distribution of
such securities as the Company may from time to time reasonably request in
writing.
(c) ▇▇▇▇▇▇▇ and Each Holder of Registrable Securities, by execution of
this Agreement, agrees (A) that upon receipt of any notice of the Company of the
happening of any event of the kind described in Section 1.5(a)(ix), ▇▇▇▇▇▇▇ and
such Holder will forthwith discontinue its disposition of Registrable Securities
pursuant to the Registration Statement relating to such Registrable Securities
until the receipt by ▇▇▇▇▇▇▇ and such Holder of the copies of the supplemented
or amended prospectus contemplated by Section 1.5(a)(ix) and, if so directed by
the Company, will deliver to the Company all copies other than permanent file
copies, then in possession of ▇▇▇▇▇▇▇ and the Holders of the prospectus relating
to such Registrable Securities current at the time of receipt of such notice and
(B) that it will immediately notify the Company, at any time when a prospectus
relating to the registration of such Registrable Securities is required to be
delivered under the Securities Act, of the happening of any event as a result of
which information previously furnished by ▇▇▇▇▇▇▇ or such Holder to the Company
for inclusion in such prospectus contains 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. In the event the Company, ▇▇▇▇▇▇▇ or any such
Holder shall give any such notice, the period referred to in Section 1.5(a)(i)
shall be extended by a number of days equal to the number of days during the
period from and including the giving of notice pursuant to subdivision Section
1.5(a)(ix) to and including the date when such Holder shall have received the
copies of the supplemented or amended prospectus contemplated by Section
1.5(a)(ix).
1.6 UNDERWRITTEN OFFERINGS.
In connection with any underwritten offering pursuant to a registration
requested under Sections 1.2, 1.3 or 1.4, the Company will enter into an
underwriting agreement with the underwriters, reasonably acceptable to ▇▇▇▇▇▇▇,
for such offering, such agreement (subject to the following sentence) to contain
such representations and warranties by the Company and such other terms as are
customarily contained in agreements of that type. ▇▇▇▇▇▇▇ and any participating
Holder of Registrable Securities must execute such underwriting agreement;
provided that ▇▇▇▇▇▇▇ and no Holder of Registrable Securities executing any
underwriting agreement shall be required to make any representations or
warranties to the Company or the underwriters (other than representations and
warranties regarding ▇▇▇▇▇▇▇, or such Holder, or the Registrable Securities and
the intended method of distribution, and any other representations and
warranties agreed upon by ▇▇▇▇▇▇▇ included in such offering) or to undertake any
indemnification obligations to the Company or the underwriters with respect
thereto, except as otherwise provided in Section 1.8 hereof or as otherwise may
be agreed upon by ▇▇▇▇▇▇▇; provided, however, that the Company shall not be
liable for any breach of this Agreement if ▇▇▇▇▇▇▇ declines to enter into an
underwriting agreement which varies the terms hereof.
1.7 PREPARATION, REASONABLE INVESTIGATION.
In connection with the preparation and filing of each Registration
Statement under the Securities Act, the Company will give ▇▇▇▇▇▇▇ and any of the
Holders of Registrable Securities to be sold under such Registration Statement,
the underwriters, if any, and their respective counsel and accountants, drafts
and final copies of such Registration Statement, each prospectus included
therein or filed with the Commission and each amendment thereof or supplement
thereto, at least five (5) business days prior to the filing thereof with the
Commission, and will give each of them such access to its books and records 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 prior to the filing of the Registration Statement, in the
reasonable opinion of such Holders and such underwriters' respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act.
1.8 INDEMNIFICATION AND CONTRIBUTION.
(a) Indemnification by the Company. In the event of any registration
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under the Securities Act pursuant to Sections 1.2, 1.3 or 1.4 of any Registrable
Securities covered by such registration, the Company will, and hereby does,
indemnify and hold harmless ▇▇▇▇▇▇▇ and each Holder of Registrable Securities to
be sold under such Registration Statement, each other Person who participates as
an underwriter in the offering or sale of such securities (if so required by
such underwriter as a condition to including the Registrable Securities of
▇▇▇▇▇▇▇ and the Holders in such registration) and each other person, if any, who
controls ▇▇▇▇▇▇▇ or any such Holder or any such underwriter within the meaning
of the Securities Act (collectively, the "INDEMNIFIED PARTIES"), against any
losses, claims, damages or liabilities, joint or several, to which ▇▇▇▇▇▇▇ or
the Holders or underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities, jointly or severally, (or actions or proceedings, whether commenced
or threatened, in respect thereof) which 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 document incorporated therein by reference,
or any amendment or supplement thereto, or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or which arise out of any violation by
the Company of any rule or regulation promulgated under the Securities Act or
state securities law applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration, and
the Company will reimburse the Indemnified Parties for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding; provided,
however, that the Company shall not be liable to any Indemnified Party 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 any
untrue statement or alleged untrue statement or omission or alleged omission
made in such Registration Statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration to the Company by such Indemnified Party.
(b) Indemnification by ▇▇▇▇▇▇▇ and the Holders. The Company may
-----------------------------------------------
require, as a condition to including any Registrable Securities of any person or
entity in any Registration Statement filed pursuant to Section 1.2, that the
Company shall have received an undertaking reasonably satisfactory to it from
such person or entity to indemnify and hold harmless (in the same manner and to
the same extent as set forth in subdivision (a) of this Section 1.8) the
Company, ▇▇▇▇▇▇▇, and the other Holders, each 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 such Registration
Statement, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, if, and only if, such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with information furnished in writing to the
Company directly by such person or entity specifically for use therein;
provided, however, that the obligation of ▇▇▇▇▇▇▇ or any Holder under this
Section 1.8 shall be limited to an amount equal to the net proceeds received by
▇▇▇▇▇▇▇ or such Holder upon the sale of Registrable Securities sold in the
offering covered by such registration.
(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 1.8, such
Indemnified Party will, if a claim in respect thereof is to be made against a
party required to provide indemnification (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 obligation under the
preceding subdivisions of this Section 1.8, 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 may exist (a "CONFLICT OF INTEREST") in
respect of such claim (in which case that Indemnified Party shall have the right
to retain one separate counsel, with the reasonable fees and expenses to be paid
by the Indemnifying Party), 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 (except to the extent that a Conflict of Interest exists) in connection
with the defense thereof other than reasonable costs of investigation. No
Indemnifying Party shall consent to entry of any judgment or enter into any
settlement, without the consent of the Indemnified Party, 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 to such claim
or litigation.
(d) Other Indemnification. Indemnification similar to that specified
----------------------
in the preceding subdivisions of this Section 1.8 (with appropriate
modifications) shall be given by the Company and each Holder of Registrable
Securities included in any Registration Statement 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.
(e) Indemnification Payment. The indemnification required by this
------------------------
Section 1.8 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.
(f) Survival of Obligations. The obligations of the Company, ▇▇▇▇▇▇▇
-------------------------
and of the Holders of Registrable Securities under this Section 1.8 shall
survive the completion of any offering of Registrable Securities under this
Agreement.
(g) Contribution. If the indemnification provided for in this Section
------------
1.8 is unavailable or insufficient to hold harmless an Indemnified Party, then
each Indemnifying Party shall contribute to the amount paid or payable to such
Indemnified Party as a result of the losses, claims, damages or liabilities
referred to in this Section 1.8 an amount or additional amount, as the case may
be, in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party or parties on the one hand and the Indemnified Party on the
other in connection with the statements or omissions which resulted in such
losses, claims, demands or liabilities as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Indemnifying Party or parties on the one hand or the
Indemnified Party on the other and the parties' relative, intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. Notwithstanding the foregoing, no Holder of Registrable
Securities who is an Indemnifying Party shall be obligated to contribute any
amount pursuant to this Section 1.8(g) to the extent that the amount to be
contributed, when taken together with amounts payable by such Holder under
Section 1.8(b), would exceed the net proceeds received by such Holder upon the
sale of the Registrable Securities sold in the offering covered by such
registration. The amount paid to an Indemnified Party as a result of the
losses, claims, damages or liabilities referred to in the first sentence of this
Section 1.8(g) shall include any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any action
or claim which is the subject of this Section
(h) Excluded Persons. 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.
1.9 COVENANTS RELATING TO RULE 144.
With a view to making available the benefits of certain rules and
regulations of the Commission which may at any time permit the sale of
securities of the Company to the public without registration after such time as
a public market exists for the Common Stock of the Company, the Company agrees:
(a) to make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date of the first registration under the Securities Act filed by
the Company for an offering of its securities to the general public;
(b) to use its best efforts to then file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act, as amended (at any time after it has become
subject to such reporting requirements); and
(c) so long as the Warrant is outstanding or ▇▇▇▇▇▇▇ owns shares of
Common Stock, to furnish to ▇▇▇▇▇▇▇ forthwith upon request a written statement
by the Company as to its compliance with the reporting requirements of said Rule
144 (at any time after ninety (90) days after the effective date of the first
Registration Statement filed by the Company for an offering of its securities to
the general public), and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements) a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company as ▇▇▇▇▇▇▇ may reasonably request in availing itself of
any rule or regulation of the Commission allowing a Holder to sell any such
securities without registration.
1.10 "MARKET STAND-OFF" AGREEMENT.
(a) ▇▇▇▇▇▇▇ hereby agrees that, during the period of duration specified
by the managing underwriter of Common Stock of the Company, prior to and
following the effective date of a registration statement of the Company filed
under the Act, it shall not, to the extent requested by the Company and such
underwriter, directly or indirectly sell, offer to sell, contract to sell
(including, without limitation, any short sale), grant any option to purchase or
otherwise transfer or dispose of (other than to donees who agree to be similarly
bound) any securities of the Company held by it at any time during such period
except Common Stock included in such registration; provided, however, that:
(i) in the case of a Company-initiated registration, the Company, to
the extent it is not proposing to sell shares during any such underwriting, all
directors and officers of the Company, Holders of one percent (1%) or more of
the Company's Common Stock on a fully diluted basis, and all other persons with
registrations rights with respect the Company's securities (whether or not
pursuant to this Agreement) shall enter into similar market-standoff agreements;
(ii) the Company shall require all future purchasers of the Company's
securities prior to the Company's initial public offering to execute similar
agreement; and
(iii) such market stand-off time period shall not exceed seven (7) days
prior to and one hundred eighty (180) days following the effective date of the
registration statement.
(b) In order to enforce the covenant contained in Section 1.10, the
Company may impose stop-transfer instructions with respect to the Registrable
Securities of each Holder (and the shares or securities of every other person
subject to the foregoing restriction) until the end of such period.
(c) In the event the Company waives any of its rights pursuant to this
Market-Standoff Agreement with respect to any shares of Common Stock or Common
Stock Equivalents (the "RELEASED SHARES"), ▇▇▇▇▇▇▇ shall be deemed released from
its obligations under this Market-Standoff Agreement with respect to the
Released Shares to the extent of the number of Released Shares multiplied by a
fraction, the numerator of which shall equal the number of Fully-Diluted Shares
held and issuable to ▇▇▇▇▇▇▇, and the denominator of which shall equal the
number of all Fully Diluted Shares.
(d) In the event that the Company receives a request for the filing of
a registration statement of the Company pursuant to Section 1.2 of this
Agreement, and the Company does not exercise its rights under Section 1.2(b),
then the Company shall not, during the period specified by ▇▇▇▇▇▇▇, prior to and
following the effective date of such registration statement, to the extent
requested by ▇▇▇▇▇▇▇, directly or indirectly sell, offer to sell, contract to
sell (including, without limitation, any short sale), grant any option to
purchase or otherwise transfer or dispose of any securities of the Company at
any time during such period except Common Stock included in such registration;
provided, however, that such market stand-off time period shall not exceed seven
(7) days prior to and one hundred eighty (180) days following the effective date
of the registration statement. The Company shall use its best efforts to ensure
that all directors and officers of the Company, and all Holders (whether or not
such Holders are participating in the registration), and all other persons with
registration rights with respect the Company's securities (whether or not
pursuant to this Agreement) enter into similar market-standoff agreements during
such period.
1.11 TERMINATION OF REGISTRATION RIGHTS.
▇▇▇▇▇▇▇ shall not be entitled to exercise any right provided for in this
Article 1 after ten (10) years following the Effective Date.
1.12 NO ADDITIONAL RIGHTS.
Nothing contained herein shall be deemed as granting to the Holders any
registration rights to which they are not entitled to as of the Effective Date
of this Agreement. Any reference to the rights of Holders to obtain
registration of shares held by such Holder shall be determined by reference to
any agreement in existence as of the Effective date; provided, however, that any
such agreement shall be deemed modified by this Agreement to provide that any
such pre-existing rights shall be subject and subordinate to ▇▇▇▇▇▇▇'▇ rights
hereunder.
ARTICLE 2
ASSIGNMENT OF RIGHTS
2.1 TRANSFERABILITY OF RIGHTS.
Subject to the limitations set forth below, the registration rights granted
herein may be assigned (but only with all related obligations) by ▇▇▇▇▇▇▇ to a
transferee or assignee who, after such assignment or transfer, holds at least
100,000 shares of Registrable Securities and who agrees in writing to be bound
by all of the terms and provisions of this Agreement, provided:
(a) the Company is, within a reasonable time after such transfer,
furnished with written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights are
being assigned;
(b) such transferee or assignee agrees in writing to be bound by an
subject to the terms and conditions of this Agreement, including without
limitation the provisions of Section 1.10 above;
(c) such assignment shall be effective only if immediately following
such transfer the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act; and
(d) such transfer or assignment of rights hereunder to an affiliate,
partner or member of a Holder will be without restriction as to number of shares
of Registrable Securities transferred.
2.2 NUMBER OF SHARES OF TRANSFEREE.
For the purposes of determining the number of shares of Registrable
Securities held by a transferee or assignee, the holdings of transferees and
assignees of a partnership who are partners or retired partners of such
partnership (including spouses and ancestors, lineal descendants and siblings or
such partners or spouses who acquire Registrable Securities by gift, will or
intestate succession) shall be aggregated together; provided that all assignees
and transferees who would not qualify individually for assignment of
registration rights shall have a single attorney-in-fact for the purposes of
exercising any rights, receiving notices or taking any action under this Article
2.
ARTICLE 3
OBSERVATION AND VOTING RIGHTS
3.1 OBSERVATION RIGHTS.
So long as the Loan or any other obligation to ▇▇▇▇▇▇▇ under the
Transaction Agreements remains outstanding, ▇▇▇▇▇▇▇ shall have full observation
rights for two representatives to attend all meetings of the Board of Directors
of Company, Executive Committee, Audit Committee, and Finance Committee, if any,
or any other committee which has the authority to act for and bind the Company.
Company shall reimburse Lender for travel expenses incurred for attendance at
all such meetings. In lieu of physical presence at such meeting, the meetings
may be conducted by conference telephone equipment in which all parties may hear
each other. During this same period, the Company shall take no action by
unanimous written consent of its Board of Directors or unanimous written consent
of its shareholders (or majority written consent if authorized to act in such
manner) without first providing notice of such action to ▇▇▇▇▇▇▇. The Company
shall give such representative copies of all notices, minutes, consents, and
other material that it provides to its directors. Such representative may
participate in discussions of matters brought to the Board.
3.2 RIGHT TO BOARD REPRESENTATION UPON AN EVENT OF DEFAULT.
Immediately upon the occurrence of an Event of Default, as defined in the
Transaction Agreements, ▇▇▇▇▇▇▇ shall have the right to immediately elect (or
otherwise have serve as) a majority of the Board of Directors and to continue to
elect (or serve as) a majority of the Board of Directors until the earlier of
such time as the Event of Default is cured or such time as all amounts
outstanding under the Loan have been paid. In accordance with the rights set
forth in this Section 3.2, immediately after the occurrence of such Event of
Default:
(a) the Company shall immediately cause the size of the Board of
Directors to be increased to a number of directors such the number of vacancies
created by such increase constitutes a majority of the Board of Directors and
shall then cause persons designated by ▇▇▇▇▇▇▇ to be appointed as directors to
fill such newly created vacancies on the Board of Directors; and
(b) the Holders hereby agree to vote their shares of voting stock, and
take such other actions as shall be necessary for ▇▇▇▇▇▇▇'▇ representatives to
constitute a majority of to Board of Directors in accordance with this
provision, and to refrain from taking any other action that conflicts with
▇▇▇▇▇▇▇'▇ rights hereunder.
3.3 RIGHT TO CONSENT.
So long as there is any amount due and outstanding to ▇▇▇▇▇▇▇ by the
Company, the Company shall not amend its Certificate of Incorporation and/or
Certificate of Designation to issue any class of securities that are senior to
the Company's Common Stock, without the prior consent of ▇▇▇▇▇▇▇.
ARTICLE 4
MISCELLANEOUS
4.1 SPECIFIC PERFORMANCE.
The parties hereto acknowledge that there may be no adequate remedy at law
if any party fails to perform any of its obligations hereunder and that each
party may be irreparably harmed by any such failure, and accordingly agree that
each party, in addition to any other remedy to which it may be entitled at law
or in equity, shall be entitled to compel specific performance of the
obligations of any other party under this Agreement in accordance with the terms
and conditions of this Agreement.
4.2 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS.
From and after the date of this Agreement, the Company shall not, without
the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇ to any Person any registration rights
equal to or more favorable than those granted herein to ▇▇▇▇▇▇▇.
4.3 GOVERNING LAW.
This Agreement shall be construed in accordance with and governed by the
laws of the State of New Jersey (without giving effect to any conflicts or
choice of laws provisions which would cause the application of the domestic
substantive laws of any other jurisdiction).
4.4 HEADINGS.
The descriptive headings of the several sections and paragraphs of this
Agreement are inserted for convenience only, and do not constitute a part of
this Agreement and shall not affect in any way the meaning or interpretation of
this Agreement.
4.5 NOTICES.
All demands, notices, requests, consents and other communications required
or permitted under this Agreement shall be in writing and shall be personally
delivered or sent by facsimile machine (with a confirmation copy sent by one of
the other methods authorized in this Section), or by commercial overnight
delivery service (including FedEx but excluding the U.S. Postal Service), as set
forth below:
(a) If to the Company, addressed to:
Worldwide Medical Corporation
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President, CEO and Co-Chairman of the Board
Fax: ( )
with a copy to:
The Lebrecht Group, APLC
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to ▇▇▇▇▇▇▇, addressed to:
▇▇▇▇▇▇▇ Healthcare Fund I, LP
c/▇ ▇▇▇▇▇▇▇ Healthcare Capital, LLC
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Green, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to the Holders, to their addresses contained in the records of
the Company.
Notices shall be deemed given upon the earliest to occur of (i) receipt by the
party to whom such notice is directed, if hand delivered; (ii) if sent by
facsimile machine, on the day (other than a Saturday, Sunday or legal holiday in
the jurisdiction to which such notice is directed) such notice is sent if sent
(as evidenced by the facsimile confirmed receipt) prior to 5:00 p.m. Eastern
Time and, if sent after 5:00 p.m. Eastern Time, on the day (other than a
Saturday, Sunday or legal holiday in the jurisdiction to which such notice is
directed) after which such notice is sent; or (iii) on the first business day
(other than a Saturday, Sunday or legal holiday in the jurisdiction to which
such notice is directed) following the day the same is deposited with the
commercial carrier if sent by commercial overnight delivery service. Each
party, by notice duly given in accordance therewith may specify a different
address for the giving of any notice hereunder.
4.6 ENTIRE AGREEMENT; AMENDMENTS.
This Agreement, the Transaction Agreements and the other writings referred
to herein or delivered pursuant hereto which form a part hereof contain the
entire understanding of the parties with respect to its subject matter. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to its subject matter (except for the Transaction Agreements).
This Agreement may be amended and the observance of any term of this Agreement
may be waived (either generally or in a particular instance and either
retroactively or prospectively) only by a written instrument duly executed by
the Company, ▇▇▇▇▇▇▇ and those Holders holding at least a majority of the stock
represented by all Holders. Each Holder at the time or thereafter outstanding
shall be bound by an amendment or waiver authorized by this Section 4.6, whether
or not any such Registrable Securities shall have been marked to indicate such
consent.
4.7 ASSIGNABILITY.
This Agreement and all of the provisions hereof will be assigned, without
the consent of the Company, by ▇▇▇▇▇▇▇ or any Holder to, and shall inure to the
benefit of, any purchaser, transferee or assignee of any Registrable Securities
held by ▇▇▇▇▇▇▇, but only if (i) the terms and conditions of Article 2 of this
Agreement have been met, (ii) such purchaser, transferee or assignee becomes the
holder of record of Registrable Securities, (iii) the Company receives written
notice of such purchase, transfer or assignment, and (iv) such purchaser,
transferee or assignee agrees in writing to be bound by this Agreement.
4.8 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
WORLDWIDE MEDICAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_____________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇ HEALTHCARE FUND I, LP
By: /s ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
__________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Member
HOLDERS OF REGISTRABLE SECURITIES
See attached counterpart
signature pages
COUNTERPART SIGNATURE PAGE
TO RIGHTS AGREEMENT
by and among Worldwide Medical Corporation
▇▇▇▇▇▇▇ Healthcare Fund I, LP
and the Holder whose name appears below
By execution of this Counterpart Signature Page, the undersigned agrees to
become a party to and be bound by the terms of the Rights Agreement.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
______________________________
Signature
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
______________________________
Print Name
Its: President
EXHIBIT A
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Holders
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