MOBILE PET SYSTEMS, INC.
REGISTRATION RIGHTS AGREEMENT
JULY 31, 2002
TABLE OF CONTENTS
PAGE
1. DEFINITIONS..........................................................1
2. DEMAND REGISTRATIONS.................................................2
2.1. Requests for Registration...................................2
2.2. Limitations on Demand Registrations.........................3
2.3. Effective Registration Statement............................3
2.4. Priority on Demand Registrations............................4
2.5. Underwriting Requirements...................................4
2.6. Multiple Registrations......................................4
3. OTHER REGISTRATIONS..................................................4
3.1. Company Registration........................................4
3.2. Form S-3 Registration.......................................5
4. OBLIGATIONS OF THE COMPANY...........................................6
5. COVENANTS OF THE Holder..............................................8
6. EXPENSES OF DEMAND AND S-3 REGISTRATION..............................8
7. EXPENSES OF COMPANY REGISTRATION.....................................9
8. No Delay of Registration.............................................9
9. Indemnification......................................................9
10. REQUIRED REPORTS AND PUBLIC INFORMATION.............................12
11. Assignment of Registration Rights...................................12
12. Limitations on Subsequent Registration Rights.......................13
12.1. Termination of Registration Rights.........................13
13. MISCELLANEOUS.......................................................13
13.1. Further Assurances.........................................13
13.2. Aggregation of Stock.......................................13
13.3. Construction and Titles....................................13
13.4. Severability...............................................13
13.5. Notices....................................................14
13.6. Successors and Assigns.....................................15
13.7. Amendment..................................................15
13.8. Delays or Omissions........................................16
13.9. Governing Law..............................................16
13.10. Attorney's Fees............................................16
13.11. Counterparts...............................................16
13.12. Entire Agreement...........................................16
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MOBILE PET SYSTEMS, INC.
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
July 31, 2002 by and between Mobile PET Systems, Inc., a Delaware corporation
(the "Company"), and Dragon Nominees Limited, a United Kingdom Company with its
registered office at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (the "Investor").
Capitalized terms used and not otherwise defined herein shall have the
respective meanings ascribed thereto in Section 1.
RECITALS
--------
WHEREAS, pursuant to the Securities Purchase Agreement dated July 12,
2002 (the "Purchase Agreement"), the Investor is purchasing an aggregate of
10,000,000 shares of the Company's common stock, par value $0.0001 per share
(the "Common Stock") and warrants to purchase up to an additional 3,000,000
shares of Common Stock, subject to adjustment pursuant to the terms thereof, at
an exercise price of $0.448 per share (the "Warrants"); and
WHEREAS, it is a condition to the consummation of the transactions
contemplated by the Purchase Agreement that the Company and the Investor enter
into this Agreement whereby the Company shall grant, and the Investor shall
obtain, the rights relating to the registration of the Registrable Securities
under the Act, as set forth in this Agreement;
NOW, THEREFORE, the parties hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) The term "Act" shall mean the Securities Act of 1933, as
amended, or any similar successor federal statute, and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
(b) The term "Business Day" shall mean a day other than
Saturday, Sunday or any day on which banks in the State of New York are
authorized or obligated to close.
(c) The term "Demand Registrations" shall have the meaning set
forth in Section 2.1 hereof.
(d) The term "Form S-3" shall mean such form under the Act as
in effect on the date hereof or any successor registration form under the Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
(e) The term "Holder" or "Holders" shall mean any person owning
or having the right to acquire Registrable Securities or any assignee thereof in
accordance with Section 11.
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(f) The term "Investor" shall have the meaning set forth in the
first paragraph hereof.
(g) The term "1934 Act" shall mean the Securities Exchange Act
of 1934, as amended, or any similar successor federal statute, and the rules and
regulations thereunder, all as the same shall be in effect from time to time.
(h) The term "Person" shall mean any individual, corporation,
partnership, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
(i) The terms "register," "registered," and "registration"
shall mean and refer to a registration effected by preparing and filing a
registration statement, or similar document in compliance with the Act, and the
declaration or ordering of effectiveness of such registration statement or
document.
(j) The term "Registrable Securities" shall mean (i) any shares
of Common Stock purchased by the Investor pursuant to the Purchase Agreement,
(ii) any shares of Common Stock issued or issuable upon exercise of the Warrants
purchased by the Investor pursuant to the Purchase Agreement and (iii) any
securities issued or issuable with respect to the Common Stock referred to in
clause (i) or (ii) by way of stock dividend or stock split or in connection with
a combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Registrable Securities, such
securities will cease to be Registrable Securities when they have (x) been
effectively registered under the 1934 Act and disposed of in accordance with the
registration statement covering them or (y) been transferred pursuant to Rule
144 (or any similar rule then in force) under the Securities Act.
(k) The number of shares of "Registrable Securities then
outstanding" shall be the number of shares of Common Stock outstanding plus the
number of shares of Common Stock issuable pursuant to then exercisable or
convertible securities which are Registrable Securities.
(l) The term "SEC" shall mean the Securities and Exchange
Commission.
2. DEMAND REGISTRATIONS.
2.1. REQUESTS FOR REGISTRATION. Subject to Section 2.2, at any time
and from time to time on or after the date hereof, the Holders of at least 25%
of the Registrable Securities then outstanding may request registration under
the Act of all or part of their Registrable Securities on Form S-1 or any
similar long-form registration ("Demand Registrations"). Thereafter, the Company
will use its commercially reasonable best efforts to promptly effect the
registration of such Registrable Securities under the Act on the form requested
by the Holders making such registration request. Upon receipt of a request for a
Demand Registration, the Company will give prompt written notice (in any event
within three (3) Business Days after its receipt of such request) of the request
for a Demand Registration to all Holders of Registrable
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Securities not making such request and will include in such Demand Registration
all Registrable Securities with respect to which the Company has received
written requests for inclusion therein within ten (10) days after the receipt of
the Company's notice. The Holders of the Registrable Securities making any such
registration request may, at any time prior to the effective date of the
registration statement relating to any Demand Registration, revoke such Demand
Registration request by providing written notice to the Company.
2.2. LIMITATIONS ON DEMAND REGISTRATIONS. (a) The Holders of the
Registrable Securities shall be entitled to two Demand Registrations.
(b) The Company shall be entitled to postpone for a reasonable
period of time, not to exceed sixty (60) days, the declaration of effectiveness
by the SEC of any Demand Registration otherwise required to be prepared and
filed by the Company if, at the time it receives a Demand Registration request
or at any time during the process of registration, prior to being declared
effective by the SEC, the Company shall furnish to the Holders a certificate
signed by the Chief Executive Officer 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 Demand Registration to
be effected at such time. The Company shall be entitled to postpone filing of a
Demand Registration as provided in Section 4(a) below, provided, however, that
the Company shall not be entitled to postpone filing a registration statement in
response to a Demand Registration for the twelve (12) months following the
expiration of such sixty-day period; and provided further that should the
Company postpone the filing of a Registration Statement pursuant to Section 4(a)
hereof, the Company shall not be entitled to postpone effectiveness of such
Registration Statement pursuant to this Section 2.2(a). In the event the
effectiveness of any registration statement is postponed pursuant to this
paragraph, the holder or holders of the Registrable Securities making a
registration request shall have the right to withdraw such Demand Registration
request by giving written notice to the Company within twenty (20) days after
receipt of the notice of postponement (and, in the event of such withdrawal, the
right of the holders of the Registrable Securities to such Demand Registration
shall be reinstated).
2.3. EFFECTIVE REGISTRATION STATEMENT. (a) A Demand Registration
requested pursuant to Section 2.1 of this Agreement shall not be deemed to have
been effected (i) unless a registration statement with respect thereto has
become effective, (ii) if after it has become effective, such registration is
interfered with by any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court for any reason, and the
Registrable Securities covered thereby have not been sold, or (iii) if the
conditions to closing specified in the purchase agreement or underwriting
agreement entered into in connection with such registration are not satisfied by
reason of (x) a failure by or inability of the Company to satisfy any condition
thereof, or (y) the occurrence of an event outside the control of the Holders of
Registrable Securities.
(b) A Demand Registration requested pursuant to Section 2.1 of
this Agreement shall not be deemed to have been effected if Holders of
Registrable Securities are not able to register and sell at least 66-2/3% of the
amount of Registrable Securities requested to be included in such registration.
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2.4. PRIORITY ON DEMAND REGISTRATIONS. The Company will not include
in any Demand Registration any securities which are not Registrable Securities
without the written consent of the Holders, not to be unreasonably withheld or
delayed; provided, however, that the Company shall be entitled to include in any
Demand Registration the securities identified in Exhibit A hereto, the holders
of which possess registration rights as set forth therein.
2.5. UNDERWRITING REQUIREMENTS. If the Holders intend to distribute
the Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
Section 2.1 and the Company shall include such information in the written notice
referred to in Section 2.1. The underwriter shall be selected by a majority in
interest of the Holders and shall be reasonably acceptable to the Company. In
such event, the right of any Holder to include its Registrable Securities in
such registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Holders, including such Holder) to the extent provided herein. All Holders and
other holders of securities of the Company proposing to distribute their
securities through such underwriting shall (together with the Company as
provided in Section 4(e)) enter into an underwriting agreement in customary form
with the underwriter or underwriters selected for such underwriting.
Notwithstanding any other provision of this Section 2.5, if the underwriter
advises the Company that marketing factors require a limitation of the number of
securities to be underwritten (including Registrable Securities) then the
Company shall so advise all Holders of Registrable Securities which would
otherwise be underwritten pursuant hereto, and the number of shares that may be
included in the underwriting shall be allocated among all Holders thereof in
proportion (as nearly as practical) to the amount of Registrable Securities
owned by each Holder; provided that the number of Registrable Securities to be
included in such underwriting shall not be reduced unless all other securities
sought to be included by the Company and held by all other holders are first
entirely excluded from such underwriting.
2.6. MULTIPLE REGISTRATIONS. Except for (a) registration statements
solely for the sale of securities to participants in a Company stock or option
plan or arrangement, (b) registrations relating to corporate reorganizations or
other transactions under Rule 145 of the Act, and (c) registration statements
filed by the Company at the request of Person(s) that possess the registration
rights identified in Exhibit A hereto, the Company will not, without the written
consent of the Holders, file any other registration statement under the Act with
respect to its securities, whether for its own account or that of other
stockholders, from the date of receipt of a notice from requesting Holders
pursuant to Section 2.1 until the completion of the period of distribution of
the registration contemplated thereby.
3. OTHER REGISTRATIONS.
3.1. COMPANY REGISTRATION.
(a) NOTICE. If the Company proposes to register (including for
this purpose a registration effected by the Company for stockholders other than
the Holders) any of its stock or other securities under the Act in connection
with the public offering of such securities
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(other than a registration relating solely to the sale of securities to
participants in a Company stock or option plan or arrangement or a registration
relating to a corporate reorganization or other transaction under Rule 145 of
the Act), the Company shall, at such time, promptly give each Holder written
notice of such registration. Upon the written request of each Holder given
within 20 days after mailing of such notice by the Company, the Company shall,
subject to the provisions of Section 3.1(b), cause to be registered under the
Act all of the Registrable Securities that each such Holder has requested to be
registered.
(b) UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under this Section 3.1 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters) and enter into an
underwriting agreement in customary form with such underwriters, and then only
in such quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
Registrable Securities requested by Holders to be included in such offering
exceeds the amount of securities sold other than by the Company that the
underwriters determine in their sole discretion is compatible with the success
of the offering in view of market conditions, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, that the underwriters determine in their sole discretion
will not jeopardize the success of the offering (the securities so included to
be apportioned pro rata among the selling stockholders, including the Holders,
according to the total amount of securities entitled to be included therein
owned by each selling stockholder or in such other proportions as shall mutually
be agreed to by such selling stockholders).
3.2. FORM S-3 REGISTRATION. In case the Company is at the time
eligible for the use of Form S-3, and shall receive from the Holders a written
request or requests that the Company effect a registration on Form S-3 and any
related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holders, the Company shall:
(a) NOTICE. Promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders.
(b) QUALIFICATIONS. As soon as practicable, effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Holder's or Holders' Registrable Securities as are specified in
such request, together with all or such portion of the Registrable Securities of
any other Holder or Holders joining in such request as are specified in a
written request given within 20 days after receipt of such written notice from
the Company; provided that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 3.2:
(i) if Form S-3 is not available for such offering by the
Holders;
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(ii) if the Company shall furnish to the Holders a
certificate signed by the Chief Executive Officer 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 30 days after receipt of the request of the Holder or
Holders under this Section 3.2; provided that the Company shall not utilize this
right more than once in any twelve (12) month period.
(iii) if the Company has, within the 12 month period
preceding the date of such request, already effected one registration on Form
S-3 for the Holders pursuant to this Section 3.2;
(iv) 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,
unless the Company is already subject to service in such jurisdiction; or
(v) within 180 days after the effective date of a
registration statement previously filed by the Company, provided that the
Company shall use its reasonable best efforts to achieve effectiveness of a
registration requested hereunder promptly following such 180-day period if such
request is made during such 180-day period.
(c) REGISTRATION. Subject to the foregoing, the Company shall
file a registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as is reasonably practicable
after receipt of the request or requests of the Holders. Registrations effected
pursuant to this Section 3.2 shall not be counted as requests for registration
effected pursuant to Section 2.1.
4. OBLIGATIONS OF THE COMPANY. Whenever required under Sections 2 or 3
hereof to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) REGISTRATION STATEMENT. Prepare and file with the SEC as
expeditiously as possible and, in the case of a Demand Registration, within 30
days of receiving a request under Section 2, a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective as quickly as possible, and, upon the
request of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for a period of up to 180
days or until the distribution contemplated in the Registration Statement has
been completed, whichever is shorter; provided that such 180-day period shall be
extended for a period equal to the period the Holders refrain from selling any
securities included in such registration (i) at the request of an underwriter of
Common Stock (or other securities) of the Company or (ii) as a result of the
provisions of Section 5(b). Notwithstanding the preceding sentence, the Company
shall be entitled to postpone for a reasonable period of time, not to exceed
sixty (60) days, the filing of
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the Registration Statement with respect to the Registrable Securities, at the
time it receives a Demand Registration request or at any time prior to the
Registration Statement being filed with the SEC, the Company shall furnish to
the Holders a certificate signed by the Chief Executive Officer 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 registration statement to be filed at such time; provided, however,
that the Company shall not be entitled to postpone filing a registration
statement hereunder for the twelve (12) months following the expiration of such
sixty-day period; and provided further that should the Company postpone the
filing of a Registration Statement pursuant to this Section 4(a), the Company
shall not be entitled to postpone effectiveness of such Registration Statement
pursuant to Section 2.2(b).
(b) AMENDMENTS. Prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to keep such
registration statement effective for a period not in excess of 180 days and to
comply with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement.
(c) PROSPECTUS. Furnish to the Holders such numbers of copies
of a prospectus, including a prospectus subject to completion and all amendments
and supplements thereto, in conformity with the requirements of the Act, and
such other documents as they may reasonably request in order to facilitate the
disposition of Registrable Securities owned by them.
(d) BLUE SKY QUALIFICATIONS. Use its commercially reasonable
best efforts to register and qualify the securities covered by such registration
statement under such other securities or blue sky laws of such jurisdictions as
shall be reasonably requested by the Holders; provided that the Company shall
not be required in connection therewith or as a condition thereto to qualify to
do business or to file a general consent to service of process in any such
states or jurisdictions.
(e) UNDERWRITING AGREEMENT. In the event of any underwritten
public offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter of such
offering.
(f) DISCLOSURES. Notify each Holder of Registrable Securities
covered by such registration statement (i) at any time when a prospectus
relating thereto is required to be delivered under the Act or (ii) of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state 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.
(g) LISTING. Cause all such Registrable Securities registered
pursuant to this Agreement to be listed on each securities exchange or quotation
service, if any, on which similar securities issued by the Company are then
listed.
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(h) TRANSFER AGENT. Provide a transfer agent and registrar for
all Registrable Securities registered pursuant to this Agreement and a CUSIP
number for all such Registrable Securities, in each case not later than the
effective date of such registration.
(i) ADDITIONAL DELIVERIES. Furnish, at the request of any
Holder requesting registration of Registrable Securities pursuant to Sections 2
or 3 hereof, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to such
sections, if such securities are being sold through underwriters, or on the
effective date of the registration statement, if there are no underwriters, (1)
an opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in substantially the form as is customarily given
to the underwriters in a public offering, addressed to the underwriters, if any,
and to the Holders requesting registration of Registrable Securities and (2) a
"comfort" letter, dated such date, from the independent certified public
accountants of the Company, in substantially the form as is customarily given by
independent certified public accountants to underwriters in a public offering,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.
(j) ACCESS TO INFORMATION. Provide one representative of the
Holders of a majority of the Registrable Securities being sold, any underwriter
participating in any distribution pursuant to such registration statement, and
any attorney, accountant or other agent retained by such Holders or underwriter,
reasonable access to all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such seller, underwriter, attorney, accountant or agent in connection with such
registration statement.
5. COVENANTS OF THE HOLDER. (a) It shall be a condition precedent to
the obligations of the Company to take any action pursuant to Sections 2 and 3
hereof with respect to the Registrable Securities of any selling Holder that
such Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities.
(b) Upon receipt by a Holder of the notification from the
Company described in Section 4(f)(ii), such Holder will not proceed with any
sales of Registrable Securities covered by the prospectus described in such
notification pending an amendment or supplement to such prospectus, which
amendment or supplement will be filed by the Company with the SEC as quickly as
possible.
6. EXPENSES OF DEMAND AND S-3 REGISTRATION. All expenses other than
underwriting discounts and selling commissions incurred in connection with
registrations, filings or qualifications pursuant to Sections 2.1 and 3.2,
including, without limitation, all registration, filing and qualification fees,
state blue sky fees and expenses, printers' and accounting fees, fees and
disbursements of counsel for the Company and the reasonable fees and
disbursements of one counsel for the selling Holders selected by them shall be
borne by the Company; provided that the Company shall not be required to pay for
the fees and disbursements of Holders' counsel in connection with any
registration proceeding begun pursuant to Section 2.1
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if the registration request is subsequently withdrawn at the request of the
Holders (in which case all participating Holders shall bear such expenses),
unless, (i) the registration is withdrawn following any deferral of the
registration by the Company pursuant to Section 2.2(b); (ii) the Holders of a
majority of the Registrable Securities agree to forfeit their right to one
Demand Registration; or (iii) that if at the time of such withdrawal the Holders
have learned of a material adverse change in the business, condition or
prospects of the Company that was not known to the Holders at the time of their
initial request and have withdrawn the request with reasonable promptness
following disclosure by the Company of such change, then the Holders shall not
be required to pay any such expenses and shall retain their rights to such
registration (except as to clause (ii) above) pursuant to Section 2.1.
7. EXPENSES OF COMPANY REGISTRATION. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to the registrations pursuant to Section
3.1 for each Holder (which right may be assigned as provided in Section 11),
including (without limitation) all registration, filing, and qualification fees,
state blue sky fees and expenses, printers and accounting fees relating or
apportionable thereto and the reasonable fees and disbursements of counsel for
the Company and one counsel for the selling Holders selected by them, but
excluding underwriting discounts and selling commissions relating to Registrable
Securities; provided that the Company shall not be required to pay for the fees
and disbursements of Holders' counsel in connection with any registration
proceeding begun pursuant to Section 3.1 if a majority of the selling Holders
withdraw their Registrable Securities from such registration (in which case all
participating Holders shall bear such expenses), unless at the time of such
withdrawal the Holders have learned of a material adverse change in the
business, condition or prospects of the Company that was not known to the
Holders at the time of their initial receipt of notice from the Company pursuant
to Section 3.1 and have withdrawn the request with reasonable promptness
following disclosure by the Company of such change, then the Holders shall not
be required to pay any such expenses.
8. NO DELAY OF REGISTRATION. No Holder shall have any right to obtain
or seek an injunction restraining or otherwise delaying any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of Sections 2 or 3 hereof.
9. INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement pursuant to this Agreement:
(a) INDEMNIFICATION BY COMPANY. To the extent permitted by law,
the Company will indemnify and hold harmless each Holder, the officers,
directors, partners, members and stockholders of each Holder, legal counsel and
accountants for each Holder, any underwriter (as defined in the Act) for such
Holder and each Person, if any, who controls such Holder or underwriter within
the meaning of the Act or the 1934 Act, against any losses, claims, damages or
liabilities (joint or several) to which they may become subject under the Act,
the 1934 Act or other federal or state securities laws, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or
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alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, any offering circular or other
related registration statement or notification incident to any such
registration, (ii) the omission or alleged omission to state therein a material
fact required to be stated therein, or necessary to make the statements therein
not misleading, or (iii) any violation or alleged violation by the Company of
the Act, the 1934 Act, any state securities laws or any rule or regulation
promulgated under the Act, the 1934 Act or any state securities laws; and the
Company will pay, as incurred (subject to submission of supporting documentation
in reasonable detail), to each such Holder, the officers, directors, partners,
members and stockholders of such Holder, legal counsel (which shall be one
counsel for all such Holders absent a bona fide conflict of interest) and
accountants for each such Holder and each underwriter or controlling person, any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided that the indemnity agreement contained in this Section 9(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld), nor shall the Company be
liable in any such case for any such loss, claim, damage, liability or action to
the extent that it arises out of or is based upon a Violation that occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by any such Holder, underwriter or
controlling person; provided further, however, that the foregoing indemnity
agreement with respect to any preliminary prospectus shall not inure to the
benefit of any Holder or underwriter, or any person controlling such Holder or
underwriter, from whom the person asserting any such losses, claims, damages or
liabilities purchased shares in the offering, if a copy of the prospectus (as
then amended or supplemented if the Company shall have furnished any amendments
or supplements thereto) was not sent or given by or on behalf of such Holder or
underwriter to such person, if required by law to have been so delivered, at or
prior to the written confirmation of the sale of the shares to such person, and
if the prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage or liability.
(b) INDEMNIFICATION BY HOLDERS. To the extent permitted by law,
each selling Holder will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration statement, each
Person, if any, who controls the Company within the meaning of the Act, legal
counsel and accountants for the Company, any underwriter, any other Holder
selling securities in such registration statement and the officers, directors,
partners, members and stockholders of such Holder and any controlling person of
any such underwriter or other Holder, severally and not jointly, against any
losses, claims, damages or liabilities (joint or several) to which any of the
foregoing persons may become subject, under the Act, the 1934 Act or other
federal or state securities law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration;
and each such Holder will pay, as incurred, any legal or other expenses
reasonably incurred by any such person intended to be indemnified pursuant to
this Section 9(b) in connection with investigating or defending any such loss,
claim, damage, liability or action;
10
provided that the indemnity agreement contained in this subsection 9(b) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder (which consent shall not be unreasonably withheld); provided further that
the liability of each Holder hereunder shall be limited to the proportion of
such loss, claim, damage, liability or expense which is equal to the proportion
that the public offering price of the shares sold by such Holder under such
registration statement bears to the total public offering price of all
securities sold thereunder and, in no event shall any indemnity under this
subsection 9(b) exceed the net proceeds from the offering received by such
Holder.
(c) PROCEDURES. Promptly after receipt by an indemnified party
under this Section 9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided that an indemnified party (together with
all other indemnified parties that may be represented without conflict by one
counsel) shall have the right to retain one separate counsel, with the fees and
expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the indemnified party under
this Section 9 except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 9 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to herein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations; provided that in no event shall any Holder's cumulative,
aggregate liability under this Section 9(d), or under Section 9(b), or under
such Sections together, exceed the net proceeds from the offering received by
such Holder. Notwithstanding anything to the contrary herein, no party shall be
liable for contribution under this Section 9(d) except to the extent and under
the circumstances as such party would have been liable to indemnify under
Section 9(a) or Section 9(b), as the case may be, if such indemnification were
enforceable under applicable law. The relative fault of the indemnifying party
and of the indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission. In any event, no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of
11
the Act) will be entitled to contribution from any person or entity who was not
guilty of such fraudulent misrepresentation.
(e) CONFLICTS WITH UNDERWRITING AGREEMENT. Notwithstanding the
foregoing, to the extent that the provisions on indemnification and contribution
contained in the underwriting agreement entered into in connection with the
underwritten public offering are in conflict with the foregoing provisions, the
provisions in the underwriting agreement shall control.
(f) SURVIVAL. The obligations of the Company and Holders under
this Section 9 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Agreement, and otherwise.
10. REQUIRED REPORTS AND PUBLIC INFORMATION.
The Company covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder (or, if the Company is not required to
file such reports, it will, upon the request of any holder of Registrable
Securities, make publicly available other information), and it 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
shares of Registrable Securities without registration under the Securities Act
within the limitation of the exemption provided by (i) Rule 144 or Rule 144A
under the Securities Act, as such Rules may be amended from time to time, or
(ii) 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 such
requirements.
11. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company
to register Registrable Securities pursuant to this Agreement may be assigned
(but only with all related obligations) by a Holder to a transferee or assignee
of such securities that (i) is an "accredited investor" as defined in Rule
501(a) of Regulation D promulgated under the Securities Act, and (ii) that (A)
is a subsidiary, parent, affiliate (as that term is defined in Rule 405
promulgated by the SEC under the Act and which term shall be deemed to include
IHM or any affiliate of IHM), partner, limited partner, retired partner or
stockholder of a Holder, (B) is a Holder's family member or trust for the
benefit of an individual Holder or, (C) is a Holder, provided that: (a) the
Company is, within 30 days prior to 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; and (b) 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 Act. For the purposes of determining the number of shares
of Registrable Securities held by a transferee or assignee of a holder of
Registrable Securities (x) the holdings of affiliated partnerships, limited
liability companies, investment funds and other entities, and their current or
former constituent partners or members and any entities for which any such party
serves as general partner, and (y) the holdings of spouses, ancestors, lineal
descendants and siblings who acquire Registrable Securities by gift, will or
intestate succession, shall in each case be aggregated together.
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12. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of a majority of the Registrable Securities, not to be
unreasonably withheld or delayed, enter into any agreement with any holder or
prospective holder of any securities of the Company that would (i) allow such
holder or prospective holder to include such securities in any registration
filed under Section 2.1 hereof, unless under the terms of such agreement, such
holder or prospective holder may include such securities in any such
registration only to the extent that the inclusion of such securities will not
reduce the amount of the Registrable Securities of the Holders that are
included, (ii) allow such holder or prospective holder to demand registration of
their securities, or (iii) provide such holder or prospective holder with
registration rights pursuant to Section 3 hereof which are more favorable than,
or in any way conflict with, the rights of Holders hereunder; provided, that the
preceding provisions of this Section 12 shall not apply to registration rights,
if any, granted by the Company in connection with the repurchase transaction
contemplated by Section 5.01(c) of the Purchase Agreement.
12.1. TERMINATION OF REGISTRATION RIGHTS. The right of a Holder to
request any registration or inclusion pursuant to this Agreement shall
terminate, as to any Holder, at such time when all Registrable Securities held
by such Holder (and any affiliate of the Holder with whom such Holder must
aggregate its sales under Rule 144) can be sold in any three-month period
without registration pursuant to Rule 144 of the Act; provided that at such time
the Company's Common Stock is traded on the OTC Bulletin Board, the NASDAQ
National Market or a national securities exchange.
13. MISCELLANEOUS.
13.1. FURTHER ASSURANCES. Each of the parties hereto shall execute
and deliver such instruments and take such other actions as the other parties
may reasonably request in order to carry out the intent of this Agreement.
13.2. AGGREGATION OF STOCK. All shares of capital stock held or
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
13.3. CONSTRUCTION AND TITLES. This Agreement has been negotiated
between the parties hereto, and the language hereof shall not be construed for
or against any party. The titles and subtitles used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting
this Agreement. A reference herein to any section shall be deemed to include a
reference to every subsection thereof. All pronouns contained herein, and any
variations thereof, shall be deemed to refer to the masculine, feminine or
neuter, singular or plural, as to the identity of the parties hereto may
require.
13.4. SEVERABILITY. If any provision of this Agreement is held to
be unenforceable under applicable law, it shall be interpreted, to the extent
possible, to enhance its enforceability in order to achieve the intent of the
parties to this Agreement. If no reasonable construction would save the
provision, the parties agree to renegotiate such provision in good faith. In the
event that the parties cannot reach a mutually agreeable and enforceable
replacement for such
13
provision, its invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement; rather this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had never been contained
herein; provided that no such severability shall be effective if it materially
changes the economic benefit of this Agreement to any party. The invalidity of
any provision of this Agreement as applied to certain circumstances shall not
affect the validity or enforceability of such provision as applied to other
circumstances or any other provisions of this Agreement.
13.5. NOTICES. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:
If to the Company, to:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Fax number: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax number: ▇▇▇-▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax number: ▇▇▇-▇▇▇-▇▇▇▇
if to the Investor, to:
Beechwood Hall
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Fax number: ▇▇▇-▇▇-▇▇▇▇▇ 560056
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with a copy to:
Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇, Esq.
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
and
Macfarlanes
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax number: ▇▇▇-▇▇-▇▇▇-▇▇▇-▇▇▇▇
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other Person to whom a
copy of such notice, request or other communication is to be delivered pursuant
to this Section). Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by giving
notice specifying such change to the other party hereto.
13.6. SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties (including transferees of any shares of
Registrable Securities), except as expressly limited in this Agreement. Nothing
in this Agreement, express or implied, is intended to confer upon any party
other than the parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
13.7. AMENDMENT. Unless otherwise specified in a particular
section, any provision of this Agreement may be amended or the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively) by the written consent of the Company and the
Holders of a majority of the Registrable Securities then outstanding. Any
amendment or waiver effected in accordance with this Section 13.7 shall be
binding upon each Holder and the Company; provided that no amendment of this
Agreement shall materially and adversely affect the rights of a Holder in a
manner that discriminates against a Holder vis a vis other holders of the same
class or series of stock, without such Holder's written consent. By acceptance
of any benefits under this Agreement, all parties to this Agreement
15
hereby agree to be bound by the provisions of this Agreement as the same may be
hereafter amended or waived pursuant to this Section 13.7.
13.8. DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any party under this Agreement, upon any
breach or default of any other party under this Agreement, shall impair any such
right, power or remedy of such non-breaching or non-defaulting party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
13.9. GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto are to be
governed by and construed and enforced in accordance with the laws of
California, without giving effect to any of its choice of law rules. Section
7.10 of the Purchase Agreement is incorporated by reference herein and made
applicable hereto.
13.10. ATTORNEY'S FEES. If any action at law or in equity is
instituted to enforce or interpret the terms of the Agreements, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
13.11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, including by facsimile, each of which shall be deemed an original
and all of which together shall constitute one and the same instrument.
13.12. ENTIRE AGREEMENT. This Agreement, and the documents referred
to herein constitute the entire agreement between the parties hereto pertaining
to the subject matter hereof, and any and all other written or oral agreements
relating to the subject matter hereof existing between the parties hereto are
expressly canceled.
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The parties have executed this Registration Rights Agreement as of the
date first written above by the undersigned, who have been duly authorized to do
so.
MOBILE PET SYSTEMS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name:
Title:
DRAGON NOMINEES LIMITED
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name:
Title:
Address:
17
EXHIBIT A
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REGISTRATION RIGHTS
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