Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is made and entered into as
of 18th day of May, 2006 by and among FAMILY HOME HEALTH SERVICES INC., a
corporation organized and existing under the laws of the State of Nevada ("FYHH"
or the "COMPANY"), and ▇▇▇▇▇▇ Partners L.P., a Delaware limited partnership
(hereinafter referred to as the "INVESTOR"). Unless defined otherwise,
capitalized terms herein shall have the identical meaning as in the Preferred
Stock Purchase Agreement.
PRELIMINARY STATEMENT
WHEREAS, pursuant to the Preferred Stock Purchase Agreement, of even
date herewith, by and among the Company and the Investor, as part of the
consideration, Investor shall receive Preferred Stock and Warrants, which upon
conversion and exercise, in accordance with the terms of the Preferred Stock
Purchase Agreement and Warrant Agreement, entitle the Investor to receive Shares
of the Company; and
WHEREAS, the ability of the Investor to sell its Shares of Common Stock
is subject to certain restrictions under the 1933 Act; and
WHEREAS, as a condition to the Preferred Stock Purchase Agreement, the
Company has agreed to provide the Investor with a mechanism that will permit
such Investor to sell its Shares of Common Stock in the future.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements, and subject to the terms and conditions herein
contained, the parties hereto hereby agree as follows:
ARTICLE I
INCORPORATION BY REFERENCE, SUPERSEDER
1.1 INCORPORATION BY REFERENCE. The foregoing recitals and the Exhibits attached
hereto and referred to herein, are hereby acknowledged to be true and accurate,
and are incorporated herein by this reference.
1.2 SUPERSEDER. This Agreement, to the extent that it is inconsistent with any
other instrument or understanding among the parties governing the affairs of the
Company, shall supersede such instrument or understanding to the fullest extent
permitted by law. A copy of this Agreement shall be filed at the Company's
principal office.
ARTICLE II
DEMAND REGISTRATION RIGHTS
2.1 REGISTRABLE SECURITIES. Means and includes the Shares of the Company
underlying the Preferred Stock and Warrants issued pursuant to the Preferred
Stock Purchase Agreement and Warrant. As to any particular Registrable
Securities, such securities will cease to be Registrable Securities when (a)
they have been effectively registered under the 1933 Act and disposed of in
accordance with the registration statement covering them, (b) they are or may be
freely traded without registration pursuant to Rule 144(k) under the 1933 Act
(or any similar provisions that are then in effect), or (c) they have been
otherwise transferred and new certificates for them not bearing a restrictive
legend have been issued by the Company and the Company shall not have "stop
transfer" instructions against them. "SHARES" shall mean, collectively, the
shares of Common Stock of the Company issuable upon conversion of the Preferred
Stock and those shares of Common Stock of the Company issuable to the Investor
upon exercise of the Warrants.
2.2 REGISTRATION OF REGISTRABLE SECURITIES. The Company shall prepare and file
within Forty-Five (45) days following the Closing Date (the "FILING DATE") a
registration statement (the "REGISTRATION STATEMENT") covering the resale of
such number of Registrable Securities as the Investor shall elect by written
notice to the Company, and absent such election, covering the resale of all of
the Registrable Securities . The Company shall use its best efforts to cause the
Registration Statement to be declared effective by the SEC on the earlier of (i)
150 days following the Closing Date with respect to the Registration Statement,
(ii) ten (10) days following the receipt of a "No Review" or similar letter from
the SEC or (iii) the first business day following the day the SEC determines the
Registration Statement eligible to be declared effective (the "REQUIRED
EFFECTIVENESS DATE"). Nothing contained herein shall be deemed to limit the
number of Registrable Securities to be registered by the Company hereunder. As a
result, should the Registration Statement not relate to the maximum number of
Registrable Securities acquired by (or potentially acquirable by) the holders of
the Shares of the Company issued to the Investor pursuant to the Preferred Stock
Purchase Agreement, the Company shall be required to promptly file a separate
registration statement (utilizing Rule 462 promulgated under the 1933 Act, where
applicable) relating to such Registrable Securities which then remain
unregistered. The provisions of this Agreement shall relate to any such separate
registration statement as if it were an amendment to the Registration Statement.
2.3 DEMAND REGISTRATION. Subsequent to the date that is 150 days following the
Closing Date, at any time and from time to time, the Investor may request the
registration under the 1933 Act of all or not less than $1,000,000 in
anticipated aggregate offering price of the Registrable Securities then
outstanding (a "DEMAND REGISTRATION"). Subject to the conditions of Section 3,
the Company shall use its best efforts to file such registration statement under
the 1933 Act as promptly as practicable after the date any such request is
received by the Company and to cause such registration statement to be declared
effective. The Company shall notify the Investor promptly when any such
registration statement has been declared effective. If more than eighty percent
(80%) of the Shares issuable under the Preferred Stock Purchase Agreement have
been registered or sold, this provision shall expire.
Notwithstanding the foregoing, the Company shall not be required to
effect a registration pursuant to this Section 2.3:
(i) if the Registrable Securities requested to be registered
under this Section 2.3 are already included in a registration statement that is
effective or pending effectiveness pursuant to Section 2.2 or in any other form;
(ii) in any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, unless the Company is already subject to
service in such jurisdiction and except as may be required under the Act; or
(iii) after the Company has effected two (2) registrations
pursuant to this Section 2.3, and such registrations have been declared or
ordered effective; or
(iv) during the period starting with the date sixty (60) days
prior to the Company's good faith estimate of the date of the filing of and
ending on a date one hundred eighty (180) days following the effective date
of a Company-initiated registration subject to Section 1.3 below, provided
that the Company is actively employing in good faith all commercially
reasonable efforts to cause such registration statement to become effective;
or
(v) if the Investor proposes to dispose of Registrable
Securities that may be registered on Form S-3 ; or
(vi) if the Company shall furnish to the holders of
Registrable Securities a certificate signed by the Company's Chief Executive
Officer or Chairman of the Board 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 registration statement to be
effected at such time, in which event the Company shall have the right to
defer such filing for a period of not more than one hundred twenty (120)
days after receipt of the request of the initiating holders, provided that
such right shall be exercised by the Company not more than once in any
twelve (12)-month period and provided further that the Company shall not
register any securities for the account of itself or any other stockholder
during such one hundred twenty (120) day period (other than a registration
relating solely to the sale of securities of participants in a Company stock
plan, a registration relating to a corporate reorganization or transaction
under Rule 145 of the Act, a registration on any form that does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities, or a
registration in which the only Common Stock being registered is Common Stock
issuable upon conversion of debt securities that are also being registered).
2.4 REGISTRATION STATEMENT FORM. Registrations under Section 2.2 and Section 2.3
shall be on the appropriate registration form of the SEC as shall permit the
disposition of such Registrable Securities in accordance with the intended
method or methods of disposition specified in the Registration Statement;
provided, however, such intended method of disposition shall not include an
underwritten offering of the Registrable Securities.
2.5 EXPENSES. The Company will pay all Registration expenses in connection with
any registration required by Sections 2.2 and Section 2.3 herein other than
expenses attributable to sale of Shares by holders of Registrable Securities
pursuant to a registration hereunder, including
any underwriting discounts or commissions or any transfer taxes payable in
respect of the sale of Registrable Securities.
2.6 EFFECTIVE REGISTRATION STATEMENT. A registration requested pursuant to
Sections 2.2 and Section 2.3 shall not be deemed to have been effected (i)
unless a registration statement with respect thereto has become effective within
the time period specified herein, provided that a registration which does not
become effective after the Company filed a registration statement with respect
thereto solely by reason of the refusal to proceed of any holder of Registrable
Securities (other than a refusal to proceed based upon the advice of counsel in
the form of a letter signed by such counsel and provided to the Company relating
to a disclosure matter unrelated to such holder) shall be deemed to have been
effected by the Company unless the holders of the Registrable Securities shall
have elected to pay all registration expenses in connection with such
registration, (ii) if, after it has become effective, such registration becomes
subject to any stop order, injunction or other order or extraordinary
requirement of the SEC or other governmental agency or court for any reason or
(iii) if, after it has become effective, such registration ceases to be
effective for more than the allowable Black-Out Periods (as defined herein).
2.7 PLAN OF DISTRIBUTION. The Company hereby agrees that the Registration
Statement shall include a plan of distribution section reasonably acceptable to
the Investor; provided, however, such plan of distribution section shall be
modified by the Company so as to not provide for the disposition of the
Registrable Securities on the basis of an underwritten offering.
2.8 LIQUIDATED DAMAGES. If, after five (5) months from the date hereof, in the
event the Company does not register Registrable Securities pursuant to the
requirements of Section 2.2 herein, or if the Registration Statement filed
pursuant to Section 2.2 herein is not declared effective, or if the Registrable
Securities are registered pursuant to an effective Registration Statement and
such Registration Statement or other Registration Statement(s) demanded by
Investor including the Registrable Securities is not effective in the period
from five months from the date hereof through two years following the date
hereof, the Company shall, for each such day issue to the Investor, as
liquidated damages and not as a penalty, 2,283 shares of Preferred Stock for any
such day, such issuance shall be made no later than the tenth business day of
the calendar month next succeeding the month in which such day occurs. In
addition, if the Company has not filed a registration statement within the
forty-five day period after Closing as specified in Section 2.2, the Company
shall, for each such day after forty-five days from Closing and until the filing
of a registration statement or, if earlier, the date that is one hundred and
forty nine days from Closing, issue to the Purchaser, as liquidated damages and
not as a penalty, 2,283 shares of Preferred Stock and for any such day, such
payment shall be made no later than the tenth business day of the calendar month
next succeeding the month in which such day occurs. However, in no event shall
the Company be required to pay any liquidated damages under this Section 2.8 in
an amount exceeding 2,314,815 of the shares underlying the Preferred Stock in
the aggregate (as adjusted pursuant to the terms of the Certificate of
Designations) and the Company shall not be required to issue any fractional
shares.
The parties agree that the only damages payable for a violation of the terms of
this Agreement with respect to which liquidated damages are expressly provided
shall be such liquidated damages. Nothing shall preclude the Investor from
pursuing or obtaining specific performance or other equitable relief with
respect to this Agreement.
The parties hereto agree that the liquidated damages provided for in this
Section 2.8 constitute a reasonable estimate of the damages that may be incurred
by the Investor by reason of the failure of the Registration Statement(s) to be
filed or declared effective in accordance with the provisions hereof.
The obligation of the Company terminates when the holders of shares of
Registrable Securities no longer hold more than five percent (5%) of the shares
of Registrable Securities initially purchased by them.
ARTICLE III
INCIDENTAL REGISTRATION RIGHTS
3.1 RIGHT TO INCLUDE ("PIGGY-BACK") REGISTRABLE SECURITIES. Provided that the
Registrable Securities have not been registered, if at any time after the date
hereof but before the second anniversary of the date hereof, the Company
proposes to register any of its securities under the 1933 Act (other than by a
registration in connection with an acquisition in a manner which would not
permit registration of Registrable Securities for sale to the public, on Form
S-8, or any successor form thereto, on Form S-4, or any successor form thereto
and other than pursuant to Section 2, a registration on any form that does not
include substantially the same information as would be required to be included
in a registration statement covering the sale of the Registrable Securities, or
a registration in which the only Common Stock being registered is Common Stock
issuable upon conversion of debt securities that are also being registered), on
an underwritten basis (either best-efforts or firm-commitment), then, the
Company will each such time give prompt written notice to all holders of
Registrable Securities of its intention to do so and of such holders of
Registrable Securities' rights under this Section 3.1. Upon the written request
of any such holders of Registrable Securities made within ten (10) days after
the receipt of any such notice (which request shall specify the Registrable
Securities intended to be disposed of by such holders of Registrable Securities
and the intended method of disposition thereof), the Company will, subject to
the terms of this Agreement, use its commercially reasonable best efforts to
effect the registration under the 1933 Act of the Registrable Securities and any
shares issued as liquidated damages, to the extent requisite to permit the
disposition (in accordance with the intended methods thereof as aforesaid) of
such Registrable Securities and other such shares so to be registered, by
inclusion of such Registrable Securities and other such shares in the
registration statement which covers the securities which the Company proposes to
register, provided that if, at any time after 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 either not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each holder of Registrable Securities and, thereupon, (i) in
the case of a determination not to register, shall be relieved of this
obligation to register any Registrable Securities or other shares in connection
with such registration (but not from its obligation 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, and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable Securities
and other shares, for the same period as the delay in registering such other
securities. No registration effected under this Section 3.1 shall relieve the
Company of its obligation to effect any registration upon request under Section
2. The Company will pay all Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to this Section 3.1.
The right provided the holders of the Registrable Securities pursuant to this
Section shall be exercisable at their sole discretion and will in no way limit
any of the Company's obligations under this Agreement.
3.2 PRIORITY IN INCIDENTAL REGISTRATIONS. If the managing underwriter of the
underwritten offering contemplated by this Section 3 shall inform the Company
and holders of the Registrable Securities requesting such registration by letter
of its belief that the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering, then the
Company will include in such registration, then the Registrable Securities that
are included in such offering shall be apportioned pro rata among the selling
holders based on the number of Registrable Securities held by all selling
holders or in such other proportions as shall mutually be agreed to by all such
selling holders. Notwithstanding the foregoing, in no event shall the amount of
securities of the selling holders included in the offering be reduced below
thirty percent 30% of the total amount of securities included in such offering,
unless such offering is the initial public offering of the Company's securities,
in which case the selling holders may be excluded if the underwriters make the
determination described above and no other stockholder's securities are included
in such offering. For purposes of the preceding sentence concerning
apportionment, for any selling stockholder that is a holder of Registrable
Securities and that is a venture capital fund, partnership or corporation, the
affiliated venture capital funds, partners, retired partners and stockholders of
such holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "selling holder," and any pro rata reduction with respect
to such "selling holder" shall be based upon the aggregate amount of Registrable
Securities owned by all such related entities and individuals.
ARTICLE IV
REGISTRATION PROCEDURES
4.1 REGISTRATION PROCEDURES. If and whenever the Company is required to effect
the registration of any Registrable Securities under the 1933 Act as provided in
Section 2.2 and, as applicable, 2.3, the Company shall, as expeditiously as
possible:
(i) prepare and file with the SEC the Registration Statement, or
amendments thereto, to effect such registration (including such audited
financial statements as may be required by the 1933 Act or the rules and
regulations promulgated thereunder) and thereafter use its commercially
reasonable best efforts to cause such registration statement to be declared
effective by the SEC, as soon as practicable, but in any event no later than the
Required Effectiveness Date (with respect to a registration pursuant to Section
2.2); provided, however, that before filing such registration statement or any
amendments thereto, the Company will furnish to the counsel selected by the
holders of Registrable Securities which are to be included in such registration,
copies of all such documents proposed to be filed;
(ii) with respect to any registration statement pursuant to Section 2.2
or Section 2.3, prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective and to comply
with the provisions of the 1933 Act with respect to the disposition of all
Registrable Securities covered by such registration statement until the earlier
to occur of twenty-four (24) months after the date of this Agreement (subject to
the right of the Company to suspend the effectiveness thereof for not more than
10 consecutive Trading Days or an aggregate of 10 Trading Days during each year
(each a "BLACK-OUT PERIOD")) or such time as all of the securities which are the
subject of such registration statement cease to be Registrable Securities (such
period, in each case, the "REGISTRATION MAINTENANCE PERIOD"). The Company must
notify the Investor within twenty four (24) hours prior to any Black-Out Period;
(iii) furnish to each holder of Registrable Securities covered by such
registration statement 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 1933
Act, in conformity with the requirements of the 1933 Act, and such other
documents, as such holder of Registrable Securities and underwriter, if any, may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Securities owned by such holder of Registrable Securities;
(iv) use its commercially reasonable best efforts to register or
qualify all Registrable Securities and other securities covered by such
registration statement under such other U.S. federal or state securities laws or
U.S. state blue sky laws as any U.S. holder of Registrable Securities thereof
shall reasonably request, to keep such registrations or qualifications in effect
for so long as such registration statement remains in effect, and take any other
action which may be reasonably necessary to enable such holder of Registrable
Securities to consummate the disposition in such jurisdictions of the securities
owned by such holder of Registrable Securities, except 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 commercially reasonable best efforts to cause all
Registrable Securities covered by such registration statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to enable the U.S. holder of Registrable Securities thereof to
consummate the disposition of such Registrable Securities;
(vi) furnish to each holder of Registrable Securities a signed
counterpart, addressed to such holder of Registrable Securities, and the
underwriters, if any, of an opinion of counsel for the Company, dated the
effective date of such registration statement (or, if such registration includes
an underwritten public offering, an opinion dated the date of the closing under
the underwriting agreement), reasonably satisfactory in form and substance to
such holder of Registrable Securities) including that the prospectus and any
prospectus supplement forming a
part of the Registration Statement does not contain an untrue statement of a
material fact or omits a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, and
(vii) notify the Investor and its counsel promptly and confirm such
advice in writing promptly after the Company has knowledge thereof:
(a) when the Registration Statement, the prospectus or any
prospectus supplement related thereto or post-effective amendment to the
Registration Statement has been filed, and, with respect to the Registration
Statement or any post-effective amendment thereto, when the same has become
effective;
(b) of any request by the SEC for amendments or supplements to
the Registration Statement or the prospectus or for additional information;
(c) of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings by any Person for that purpose; and
(d) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable Securities for
sale under the securities or blue sky laws of any jurisdiction or the initiation
or threat of any proceeding for such purpose;
(viii) notify each holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the 1933 Act, upon discovery that, or upon the
happening of any event as a result of which, the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material facts required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing, and at the request of any such holder of
Registrable Securities promptly prepare and furnish to such holder of
Registrable Securities 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 then existing; use its best efforts
to obtain the withdrawal of any order suspending the effectiveness of the
Registration Statement at the earliest possible moment;
(ix) otherwise use its commercially reasonable best efforts to comply
with all applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, 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 1933 Act and Rule 158 thereunder;
(x) enter into such agreements and take such other actions as the
Investor shall reasonably request in writing (at the expense of the requesting
or benefiting Investor) in order to expedite or facilitate the disposition of
such Registrable Securities; and
(xi) use its commercially reasonable best 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.
The Company may require each holder of Registrable
Securities as to which any registration is being effected to furnish the Company
such information regarding such holder of Registrable Securities and the
distribution of such securities as the Company may from time to time reasonably
request in writing.
Notwithstanding the provisions of this Section 4.1, the Company shall be
entitled to postpone or suspend, for a reasonable period of time, the filing,
effectiveness or use of, or trading under, any registration statement if the
Company shall determine that any such filing or the sale of any securities
pursuant to such registration statement would in the good faith judgment of the
Board of Directors of the Company:
(a) materially impede, delay or interfere with any material
pending or proposed financing, acquisition, corporate reorganization or
other similar transaction involving the Company for which the Board of
Directors of the Company has authorized negotiations;
(b) materially adversely impair the consummation of any
pending or proposed material offering or sale of any class of securities by
the Company; or
(c) require disclosure of material nonpublic information
that, if disclosed at such time, would be materially harmful to the
interests of the Company and its stockholders; provided, however, that
during any such period all executive officers and directors of the Company
are also prohibited from selling securities of the Company (or any security
of any of the Company's subsidiaries or affiliates).
4.2 The Company will not file any registration statement pursuant to Section 2.2
or Section 2.3, or amendment thereto or any prospectus or any supplement thereto
to which the Investor shall reasonably object, provided that the Company may
file such documents in a form required by law or upon the advice of its counsel.
4.3 The Company represents and warrants to each holder of Registrable Securities
that it has obtained all necessary waivers, consents and authorizations
necessary to execute this Agreement and consummate the transactions contemplated
hereby other than such waivers, consents and/or authorizations specifically
contemplated by the Preferred Stock Purchase Agreement.
4.4 Each holder of Registrable Securities agrees that, upon receipt of any
notice from the Company of the occurrence of any event of the kind described in
subdivision (viii) of Section 4.1, such holder will forthwith discontinue such
holder of Registrable Securities' disposition of Registrable Securities pursuant
to the Registration Statement relating to such Registrable Securities until such
holder of Registrable Securities' receipt of the copies of the supplemented or
amended prospectus contemplated by subdivision (viii) of Section 4.1 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.
4.5 No holder of Registrable Securities shall have any right to obtain or seek
an injunction restraining or otherwise delaying any such registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 4.
ARTICLE V
UNDERWRITTEN OFFERINGS
5.1 INCIDENTAL UNDERWRITTEN OFFERINGS. If the Company at any time proposes to
register any of its securities under the 1933 Act as contemplated by Section 3.1
and such securities are to be distributed by or through one or more
underwriters, the Company will, if requested by any holder of Registrable
Securities as provided in Section 3.1 and subject to the provisions of Section
3.2, use its commercially reasonable best efforts to arrange for such
underwriters to include all the Registrable Securities to be offered and sold by
such holder among the securities to be distributed by such underwriters. In no
event shall any Investor be deemed an underwriter for purposes of this
Agreement.
5.2 PARTICIPATION IN UNDERWRITTEN OFFERINGS. No holder of Registrable Securities
may participate in any underwritten offering under Section 3.1 unless such
holder of Registrable Securities (i) agrees to sell such Person's securities on
the basis provided in any underwriting arrangements approved, subject to the
terms and conditions hereof, by the holders of a majority of Registrable
Securities to be included in such underwritten offering and (ii) completes and
executes all questionnaires, indemnities, underwriting agreements and other
documents (other than powers of attorney) required under the terms of such
underwriting arrangements. Notwithstanding the foregoing, no underwriting
agreement (or other agreement in connection with such offering) shall require
any holder of Registrable Securities to make a representation or warranty to or
agreements with the Company or the underwriters other than representations and
warranties contained in a writing furnished by such holder of Registrable
Securities expressly for use in the related registration statement or
representations, warranties or agreements regarding such holder of Registrable
Securities, such holder's Registrable Securities and such holder's intended
method of distribution and any other representation required by law.
5.3 PREPARATION; REASONABLE INVESTIGATION. In connection with the preparation
and filing of each registration statement under the 1933 Act pursuant to this
Agreement, the Company will give the holders of Registrable Securities
registered under such registration statement, 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 SEC,
and each amendment thereof or supplement thereto, 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, in the
reasonable opinion of such holders' and such underwriters' respective counsel,
to conduct a reasonable investigation within the meaning of the 1933 Act.
ARTICLE VI
INDEMNIFICATION
6.1 INDEMNIFICATION BY THE COMPANY. In the event of any registration of any
securities of the Company under the 1933 Act, the Company will, and hereby does
agree to indemnify and hold harmless the holder of any Registrable Securities
covered by such registration statement, its directors and officers, each other
Person who participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls such holder or any such
underwriter within the meaning of the 1933 Act against any losses, claims,
damages or liabilities, joint or several, to which such holder or any such
director or officer or underwriter or controlling person may become subject
under the 1933 Act or otherwise, insofar as such 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 1933 Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein, 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, and the Company will reimburse such holder
and each such director, officer, underwriter and controlling person 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 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 statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such holder or
underwriter stating that it is for use in the preparation thereof 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 to any other
Person, if any, who controls such underwriter within the meaning of the 1933
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, within the time required by the 1933 Act to the Person
asserting the existence of 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 or an amendment or supplement thereto. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such holder or any such director, officer, underwriter
or controlling person and shall survive the transfer of such securities by such
holder.
6.2 INDEMNIFICATION BY THE INVESTOR. The Company may require, as a condition to
including any Registrable Securities in any registration statement filed
pursuant to this Agreement, that the Company shall have received an undertaking
satisfactory to it from the prospective holder of such Registrable Securities,
to indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 6.1) the Company, each director of the Company, each officer of
the Company, each other Person, if any, who controls the Company within the
meaning of the 1933 Act, any underwriter, any other person selling securities in
such registration statement and any controlling person of any such underwriter
or such other person and legal counsel and accountants for the Company, 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 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 holder of Registrable
Securities specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement. Any 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 Investor. The indemnification by the
Investor shall not exceed $50,000 dollars.
6.3 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 Sections 6.1 and Section 6.2, such indemnified party will, if
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 that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under Sections 6.1 and Section
6.2, 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
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 the indemnifying party
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. No indemnifying party shall, without the
consent of the indemnified party, consent to entry of any judgment or enter into
any settlement of any such action 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, or a covenant not to ▇▇▇, in respect to such claim
or litigation. No indemnified party shall consent to entry of any judgment or
enter into any settlement of any such action the defense of which has been
assumed by an indemnifying party without the consent of such indemnifying party.
6.4 OTHER INDEMNIFICATION. Indemnification similar to that specified in Sections
6.1 and Section 6.2 (with appropriate modifications) shall be given by the
Company and each holder of Registrable Securities (but only if and to the extent
required pursuant to the terms herein) 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 1933 Act.
6.5 INDEMNIFICATION PAYMENTS. The indemnification required by Sections 6.1 and
Section 6.2 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.
6.6 CONTRIBUTION. If the indemnification provided for in Sections 6.1 and
Section 6.2 is unavailable to an indemnified party in respect of any expense,
loss, claim, damage or liability referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such expense,
loss, claim, damage or liability (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
holder of Registrable Securities or underwriter, as the case may be, on the
other from the distribution of the Registrable Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and of the holder of Registrable Securities or underwriter, as the
case may be, on the other in connection with the statements or omissions which
resulted in such expense, loss, damage or liability, as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the holder of Registrable Securities or underwriter, as the
case may be, on the other in connection with the distribution of the Registrable
Securities shall be deemed to be in the same proportion as the total net
proceeds received by the Company from the initial sale of the Registrable
Securities by the Company to the purchasers bear to the gain, if any, realized
by all selling holders participating in such offering or the underwriting
discounts and commissions received by the underwriter, as the case may be. The
relative fault of the Company on the one hand and of the holder of Registrable
Securities or underwriter, as the case may be, on the other shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission to state a material fact relates to
information supplied by the Company, by the holder of Registrable Securities or
by the underwriter and the parties' relative intent, knowledge, access to
information supplied by the Company, by the holder of Registrable Securities or
by the underwriter and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission,
provided that the foregoing contribution agreement shall not inure to the
benefit of any indemnified party if indemnification would be unavailable to such
indemnified party by reason of the provisions contained herein, and in no event
shall the obligation of any indemnifying party to contribute under this Section
6.6 exceed the amount that such indemnifying party would have
been obligated to pay by way of indemnification if the indemnification provided
for hereunder had been available under the circumstances.
The Company and the holders of Registrable Securities agree that it
would not be just and equitable if contribution pursuant to this Section 6.6
were determined by pro rata allocation (even if the holders of Registrable
Securities and any underwriters were treated as one entity for such purpose) or
by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth herein, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6.6, no holder of
Registrable Securities or underwriter shall be required to contribute any amount
in excess of the amount by which (i) in the case of any such holder, the net
proceeds received by such holder from the sale of Registrable Securities in the
applicable Registration Statement or (ii) in the case of an underwriter, the
total price at which the Registrable Securities purchased by it and distributed
to the public were offered to the public exceeds, in any such case, the amount
of any damages that such holder or underwriter has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
ARTICLE VII
RULE 144
7.1 RULE 144. The Company shall file in a timely manner the reports required to
be filed by the Company under the 1933 Act and the 1934 Act (including but not
limited to the reports under Sections 13 and 15(d) of the Exchange Act referred
to in subparagraph (c) of Rule 144 adopted by the SEC under the ▇▇▇▇ ▇▇▇) and
the rules and regulations adopted by the SEC thereunder (or, if the Company is
not required to file such reports, will, upon the request of any holder of
Registrable Securities, make publicly available other information) and will take
such further action as any holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such holder to
sell Registrable Securities without registration under the 1933 Act within the
limitation of the exemptions provided by (a) Rule 144 under the 1933 Act, as
such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC. 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 the requirements of this Section
7.1.
ARTICLE VIII
MISCELLANEOUS
8.1 AMENDMENTS AND WAIVERS. This Agreement may be amended and the Company may
take any action herein prohibited, or omit to perform any act herein required to
be performed by it, only if the Company shall have obtained the written consent
to such amendment, action or omission to act, of the holder or holders of the
sum of the fifty-one percent (51%) or more of the shares of (i) Registrable
Securities issued and outstanding at such time, plus (ii) Registrable Securities
issuable upon exercise or conversion of the Securities then constituting
derivative securities (if such Securities were not fully exchanged or converted
in full as of the date such consent if sought). Each holder of any Registrable
Securities at the time or thereafter outstanding shall be bound by any consent
authorized by this Section 8.1, whether or not such Registrable Securities shall
have been marked to indicate such consent.
8.2 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, 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 of percentage of shares of Registrable Securities held by a 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 or such Registrable Securities.
8.3 NOTICES. Except as otherwise provided in this Agreement, all notices,
requests and other communications to any Person provided for hereunder shall be
in writing and shall be given to such Person (a) in the case of a party hereto
other than the Company, addressed to such party in the manner set forth in the
Preferred Stock Purchase Agreement or at such other address as such party shall
have furnished to the Company in writing, or (b) in the case of 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) in
the case of the Company, at the address set forth on the signature page hereto,
to the attention of its President, or at such other address, or to the attention
of such other officer, as the Company shall have furnished to each holder of
Registrable Securities at the time outstanding. Each such notice, request or
other communication shall be effective (i) if given by mail, 72 hours after such
communication is deposited in the mail with first class postage prepaid,
addressed as aforesaid or (ii) if given by any other means (including, without
limitation, by fax or air courier), when delivered at the address specified
above, provided that any such notice, request or communication shall not be
effective until received.
8.4 ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto. In addition, and whether or not any
express assignment shall have been made, the provisions of this Agreement which
are for the benefit of the parties hereto other than the Company shall also be
for the benefit of and enforceable by a transferee or assignee of such
securities that (a) is a subsidiary, parent, partner, limited partner, retired
partner
or stockholder of the Investor, (b) is a holder's family member or trust for the
benefit of an individual holder, or (c) after such assignment or transfer, holds
at least 50,000 shares of Registrable Securities (subject to appropriate
adjustment for stock splits, stock dividends, combinations or the like),
provided: (i) 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; (ii) such transferee or assignee agrees in writing to be bound
by and subject to the terms and conditions of this Agreement, including, without
limitation, the provisions of Section 5.4 hereof ; and (iii) such assignment
shall be effective only if immediately following such transfer the further
disposition of such securities by the transferee or assignee is restricted .
Each of the holders of the Registrable Securities agrees, by accepting any
portion of the Registrable Securities after the date hereof, to the provisions
of this Agreement including, without limitation, appointment of the Investors'
Representative to act on behalf of such holder pursuant to the terms hereof
which such actions shall be made in the good faith discretion of the Investors'
Representative and be binding on all persons for all purposes.
8.5 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.
8.6 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to
applicable principles of conflicts of law.
8.7 JURISDICTION. This Agreement shall be exclusively governed by and construed
in accordance with the laws of the State of New York. If any action is brought
among the parties with respect to this Agreement or otherwise, by way of a claim
or counterclaim, the parties agree that in any such action, and on all issues,
the parties irrevocably waive their right to a trial by jury. Exclusive
jurisdiction and venue for any such action shall be the State or Federal Courts
serving the State of New York. In the event suit or action is brought by any
party under this Agreement to enforce any of its terms, or in any appeal
therefrom, it is agreed that the prevailing party shall be entitled to
reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.
8.8 ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the Company and each other party hereto relating to the
subject matter hereof and supercedes all prior agreements and understandings
relating to such subject matter.
8.9 SEVERABILITY. If any provision of this Agreement, or the application of such
provisions to any Person or circumstance, shall be held invalid, the remainder
of this Agreement, or the application of such provision to Persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
8.10 BINDING EFFECT. All the terms and provisions of this Agreement whether so
expressed or not, shall be binding upon, inure to the benefit of, and be
enforceable by the parties and their respective administrators, executors, legal
representatives, heirs, successors and assignees.
8.11 PREPARATION OF AGREEMENT. This Agreement shall not be construed more
strongly against any party regardless of who is responsible for its preparation.
The parties acknowledge each contributed and is equally responsible for its
preparation.
8.12 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or delay
on the part of any party hereto in the exercise of any right hereunder shall
impair such right or be construed to be a waiver of, or acquiescence in, any
breach of any representation, warranty, covenant or agreement herein, nor shall
nay single or partial exercise of any such right preclude other or further
exercise thereof or of any other right. All rights and remedies existing under
this Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
8.13 COUNTERPARTS. This Agreement may be executed in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement. A facsimile transmission of this
signed Agreement shall be legal and binding on all parties hereto.
[SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the Investor and the Company have as of the date
first written above executed this Agreement.
FAMILY HOME HEALTH SERVICES INC.
____________________________________
By:_________________________________
Title:______________________________
INVESTOR
▇▇▇▇▇▇ PARTNERS LP
By: ▇▇▇▇▇▇ Capital Advisors, LLC, its General Partner
By:_________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
President
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇