Exhibit 10.7
REGISTRATION RIGHTS AGREEMENT
FOR
SHAREHOLDERS OF
PAIN & REHABILITATION NETWORK, INC.
Effective December 1, 2002
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "`Agreement") is entered into
effective December 1, 2002, by and among PAINCARE HOLDINGS, INC., a Florida
corporation (the "Company") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, M.D. (the "Stockholder").
WHEREAS, the Company and Stockholder have entered into an Agreement and
Plan of Merger, dated as of the date hereof (the "Merger Agreement") pursuant to
which the Stockholder has acquired pursuant to the Merger Agreement and may
acquire an undetermined number of additional shares of common stock of the
Company, no par value (hereinafter, collectively the "Securities"); and
WHEREAS, it is a condition precedent to consummation of the Merger
Agreement that the Company provide certain registration rights to the
Stockholder with respect to the Securities.
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the adequacy and receipt of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1.
DEFINITIONS
SECTION 1.1 Definitions. The following terms shall have the meanings
ascribed to them below:
"Agreement" or "Merger Agreement" means that certain Merger Agreement by
and among the Company, Pain & Rehabilitation Network, Inc., and the Stockholder
of even date herewith, as amended, modified or supplemented from time to time
and all attachments hereto. "Business Day" means any day that is not a Saturday,
Sunday or a day on which banking institutions in New York, New York are
authorized or obligated by law, executive order or government decree to be
closed.
"Commission" means the United States Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Controlling Person" has the meaning ascribed thereto in Section 4.1.
"Delivered Securities" means only the Registrable Securities actually
delivered to the Stockholder pursuant to the Merger Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Holder" means any Person who now holds or shall hereafter acquire and hold
Registrable Securities. "Indemnified Party" means an Indemnified Party as
defined in Section 4.2.
"Indemnifying Party" means an Indemnifying Party as defined in Section 4.2.
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"Person" means any individual, entity or group, including without
limitation, any corporation, limited liability company, limited or general
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
"Piggy-Back Registration" has the meaning ascribed thereto in Section
2.1(a).
"Prospectus" means the prospectus included in any Registration Statement
(including with limitation, a prospectus that discloses information previously
omitted from a prospectus filed as part of an effective Registration Statement
in reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement with respect to the terms of the
offering of any portion of the securities covered by such Registration
Statement, and all other amendments and supplements to the prospectus, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such prospectus.
"Registrable Securities" means (i) Securities, and (ii) any other shares of
the Securities acquired as a result of stock splits, stock dividends,
reclassifications, recapitalizations, or similar events relating to the shares
described in clause (i) above, in such case until such time as (x) a
Registration Statement covering such shares of the Securities has been declared
effective by the Commission and such Securities have been disposed of pursuant
to such effective Registration Statement, or (y) such Securities would be
eligible for sale pursuant to Rule 144 under the Securities Act (or any similar
provisions then in force), without regard to the volume limitations set forth in
Rule 144(e) and not otherwise subject to transfer restrictions under agreements
with the Company, or (z) such Securities have been otherwise transferred and the
Company has delivered a new certificate or other evidence of ownership for such
Securities not bearing a restrictive legend and not subject to any stop transfer
or similar restrictive order and all of such Securities may be resold by the
Person receiving such certificate without complying with the registration
requirements of the Securities Act.
"Registration Statement" means any registration statement of the Company
which covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such registration statement.
"Securities" has the meaning ascribed thereto in the introduction hereof as
well as any additional shares of Company common stock or other securities
received pursuant to Agreement but excluding the options granted pursuant to the
Employment Agreements as defined in the Agreement.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Selling Holder" means a Holder who is or may be selling Registrable
Securities pursuant to a Registration Statement under the Securities Act.
"Selling Holders Counsel" means the counsel selected to represent the
Selling Holders as set forth in Section 3.1(c).
"Stockholder" has the meaning ascribed thereto in the introduction hereof.
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"Underwriter" means a securities dealer who purchases any Registrable
Securities as principal in an underwritten offering and not as part of such
dealer's market-making activities.
"Underwriter's Cutback" shall mean a reduction in the number of Registrable
Securities to be included in any underwritten offering as the result of receipt
of written notice from the representative of the Underwriters to the effect that
adverse marketing factors require a limitation on the number of Registrable
Securities to be underwritten.
"Underwriter's Lockup" shall mean the number of Registrable Securities for
which resale is prohibited by the Underwriter for such period as the Underwriter
deems appropriate.
ARTICLE 2.
REGISTRATION RIGHTS
SECTION 2.1. (a) Piggy-Back Registration. If at any time after the date
hereof the Company proposes to file a Registration Statement under the
Securities Act with respect to an offering by the Company for its own account or
for the account of any of its respective security holders other than a
Registration Statement on Form 10, S-4 or Form S-8 (or any substitute form that
may be adopted by the Commission) or on any other form inappropriate for an
underwritten public offering or related solely to securities to be issued in a
merger, acquisition of the stock or assets of another entity or in a similar
transaction, then the Company shall give written notice of such proposed filing
to the Holders as soon as practicable (but in no event less than 30 days before
the anticipated filing date), and such notice shall offer such Holders the
opportunity to register such number of Registrable Securities as each such
Holder may request (which request shall specify the number of shares and the
type of Registrable Securities intended to be disposed of by such Holder and
shall also state the firm intent of the Holder to offer Registrable Securities
for sale) (a "Piggy-Back Registration"). With respect to the foregoing
registration, the Company shall use its reasonable best efforts to cause the
managing Underwriter or Underwriters of a proposed underwritten offering to
permit the Registrable Securities requested to be included in a Piggy-Back
Registration on the same terms and conditions as any similar securities of the
Company or any other security holder included therein and to permit the sale or
other disposition of such Registrable Securities in accordance with the intended
method of distribution thereof. Any Holder shall have the right to withdraw its
request for inclusion of its Registrable Securities in any Registration
Statement pursuant to this Section 2.1 by giving written notice to the Company
of its request to withdraw.
(b) Notwithstanding any other provision of this Section 2.1, if the
Underwriter advises the Company in writing that, in such firm's opinion,
marketing factors prohibit or require a limitation of the number of shares to be
underwritten, the Underwriter or the Company may exclude the Registrable
Securities in the same proportion, as nearly as practicable, to other selling
shareholders of the Company or the Underwriter or the Company may limit the
number of Registrable Securities to be included in the registration and
underwriting to a specified percentage of the Registrable Securities to be
distributed through the underwriting in the same proportion, as nearly as
practicable, to other selling shareholders of the Company. The Company shall so
advise all Holders of Registrable Securities which would otherwise be registered
and underwritten under this subsection and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated among all Holders who hold those securities in proportion, as nearly
as practicable, to the respective amounts of Registrable Securities entitled to
inclusion in the registration held by such Holders at the time the registration
statement is filed.
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Any Holder disapproving of the terms of any such underwriting may elect to
withdraw from it by written notice to the Company and the Underwriter.
(c) Notwithstanding any other provision of this Agreement to the contrary,
the Company shall not be required to include any of the Registrable Securities
in a registration statement relating to an underwritten offering of the
Company's securities unless the Holders accept the terms of the underwriting as
agreed upon between the Company and the underwriters selected by it (provided
such terms are usual and customary for selling Stockholder), including, without
limitation, any Underwriter's Cutback and/or Lockup, and the Stockholder agrees
to promptly execute and/or deliver such documents in connection with such
registration as the Company or the managing underwriter may reasonably request.
(d) Notwithstanding any other provision of this Agreement to the contrary,
the Holder may not sell or otherwise transfer or dispose of any of the
Registrable Securities earned and delivered to the Stockholder in accordance
with the Merger Agreement unless otherwise agreed by the Company for a period of
one year from the Effective Date of the Merger Agreement or if requested in
writing by the Company and the Underwriter, the Holders shall agree not to sell
or otherwise transfer or dispose of any Registrable Securities held by the
Holders for a period set by the Underwriter following the effective date of a
registration statement of the Company filed under the Securities Act, provided
that officers and directors of the Company and other Stockholder of the Company
who are similarly situated to the Stockholder are subject to a similar Lock-up.
(e) The Holder understands that sales of large blocks of the Company's
securities could negatively impact the trading price of its stock. Accordingly
and notwithstanding any other provision of this Agreement to the contrary, the
Holder hereby agrees that for a period of two years from the Effective Date of
the Merger Agreement he/she will not, within any 30 day period, offer to sell,
contract to sell, hypothecate, negotiate, pledge, assign, encumber, loan,
pledge, grant any rights with respect to or otherwise dispose of, directly or
indirectly (collectively, a "Disposition"), of a number of shares of Company's
securities which exceeds 5 percent of the total average weekly trading volume
(which shall be calculated without the inclusion of any Disposition) of the
Company's securities for the four (4) calendar weeks preceding the date of any
such Disposition.
Such restrictions shall not apply with respect to a Disposition (i) to
other holders of the Company's securities who are bound by the terms of an
agreement containing the same terms and restrictions described herein, (ii) to
any donees who receive such shares of the Company's securities as a bona fide
gift and who are bound by the terms of this Agreement, (iii) with the prior
written consent of the Company, or (iv) pursuant to proportionate co-sale rights
with other officers and directors of the Company to the extent sales by such
officers and directors exceed the limitations imposed upon the Holder as
provided above.
The Holder acknowledges and agrees that the foregoing restrictions also
expressly preclude the Holder from engaging in any hedging or other transaction
which is designed to or reasonably expected to lead to or result in a
Disposition of shares of the Company's securities during the said restricted
sale period, even if such shares of the Company's securities would be disposed
of by someone other than the Holder. Such prohibited hedging or other
transactions would include, without limitation, any short sale (whether or not
against the box) or any purchase, sale, show of any shares or grant of any right
(including, without limitation, any put or call option) with respect to any
shares of the Company's securities or with respect to any security
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(other than a broad-based market basket or index) that includes, relates to or
derives any significant part of its value from the Company's securities.
The Holder agrees to submit each certificate for his shares of the Company's
securities now or hereafter owned by him to the Company for imprinting of the
following legends thereon:
"The sale, transfer, hypothecation, negotiation, pledge,
assignment, encumbrance or other disposition of this share
certificate and the shareholdings represented hereby are
subject to all of the terms, conditions and provisions of a
Registration Rights Agreement effective as of December 1,
2002, a copy of which may be obtained from the Secretary of
PainCare Holdings, Inc."
In furtherance of the foregoing, the Company and its transfer agent and
registrar are hereby authorized to decline to make any transfer of shares of the
Company's securities if such transfer would constitute a violation or breach of
this Agreement.
ARTICLE 3.
REGISTRATION PROCEDURES
SECTION 3.1. Filings; Information. Whenever the Company is required to
effect or cause the registration of Registrable Securities pursuant to Section
2.1 hereof, the Company will use its reasonable best efforts to effect the
registration of such Securities in accordance with the intended method(s) of
disposition thereof as quickly as practicable, and in connection with any such
request:
(a) The Company will prepare and file with the Commission a Registration
Statement with respect to the offer and sale of such securities and use its
reasonable best efforts to cause such Registration Statement to become and
remain effective until the completion of the distribution contemplated thereby;
provided, however, the Company shall not be required to keep such Registration
Statement effective for more than 12 months (or such shorter period which will
terminate when all Securities covered by such Registration have been sold, but
not prior to the expiration of the applicable period referred to in Section 4(3)
of the Securities Act and Rule 174 thereunder, if applicable).
(b) The Company will prepare and file with the Commission such amendments
and post-effective amendments to the Registration Statement as may be necessary
to keep such Registration Statements effective for as long as such registration
is required to remain effective pursuant to the terms hereof; cause the
Prospectus to be supplemented by any required Prospectus supplement, and, as so
supplemented, to be filed pursuant to Rule 424 under the Securities Act; and
comply with the provisions of the Securities Act applicable to it with respect
to the disposition of all Registrable Securities covered by such Registration
Statement during the applicable period in accordance with the intended methods
of disposition by the Selling Holders set forth in such Registration Statement
or supplement to the Prospectus.
(c) The Company, at least ten (10) Business Days prior to filing a
Registration Statement or a Prospectus or any amendment or supplement to such
Registration Statement or Prospectus, will furnish to (i) each Selling Holder,
(ii) not more than one counsel representing all Selling Holders ("Selling
Holders Counsel"), to be selected by a majority-in-interest of such Selling
Holders, and (iii) each Underwriter, if any, of the Registrable Securities
covered by such
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Registration Statement, copies of such Registration Statement as proposed to be
filed, together with exhibits thereto (whether or not incorporated by reference
in such Registration Statement), which documents will be subject to review and
approval by each of the foregoing within ten (10) Business Days after delivery
(except that such review and approval of any Prospectus or any amendment or
supplement to such Registration Statement or Prospectus must be made within five
(5) Business Days after delivery), and thereafter, furnish to such Selling
Holders, Selling Holders' Counsel and Underwriters, if any, at the Company's
expense, such number of conformed copies of such Registration Statement, each
amendment and supplement thereto (in each case including all exhibits thereto
and documents incorporated by reference therein), the Prospectus included in
such Registration Statement (including each preliminary Prospectus) and such
other documents or information as such Selling Holders, Selling Holders' Counsel
or Underwriters may reasonably request in order to facilitate the disposition of
the Registrable Securities (it being understood that the Company consents to the
use of the Prospectus and any amendment or supplement thereto by each Selling
Holder and the Underwriters, if any, in connection with the offering and sale of
the Registrable Securities covered by such Prospectus or any amendment or
supplement thereto). The Company shall provide the Holders' counsel and each
Underwriter, if any, a copy of any and all transmittal letters or other
correspondence to, or received from, the Commission or any other governmental
body having jurisdiction relating to the offering.
(d) The Company will use its reasonable best efforts to prevent the entry
of any stop order or to remove it at the earliest possible moment if entered.
(e) [Section Reserved].
(f) The Company will promptly notify each Selling Holder, Selling Holders'
Counsel and any Underwriter in writing, (i) of any request by the Commission or
other regulatory body having jurisdiction over the Registration Statement for
any amendment or supplement to any Registration Statement or other document
relating to the offering and sale of the Registrable Securities, (ii) when a
Prospectus or any Prospectus supplement or post-effective amendment has been
filed and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of a Registration
Statement or the initiation or threatening of any proceedings for that purpose,
and (iv) of the happening of any event which makes any statements made in a
Registration Statement or related Prospectus or any document incorporated by
reference therein untrue in a material respect or which requires the making of
any changes in such Registration Statement, Prospectus or documents so that they
will not to the best of the Company's knowledge contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements in the Registration Statement and Prospectus
not misleading in light of the circumstances in which they were made; and, as
promptly as practicable thereafter, prepare and file with the Commission and
furnish a supplement or amendment to such Prospectus so that, as thereafter
deliverable to the buyers of such Registrable Securities, such Prospectus will
not to the best of the Company's knowledge contain any untrue statements of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, such amendment to be subject to the Holders' review under Section
3.1(c).
Each Selling Holder agrees that, upon receipt of any notice in writing from
the Company of the happening of any event of the kind described in Section
3.1(f) hereof, such Selling Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Selling Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3.1(f) hereof,
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and, if so directed by the Company, such Selling Holder will deliver to the
Company all copies, other than permanent file copies then in such Selling
Holder's possession, of the most recent Prospectus covering such Registrable
Securities at the time of receipt of such notice. In the event the Company shall
give such notice, the Company shall extend the period during which such
Registration Statement shall be maintained effective (including the period
referred to in Section 3.1(a) hereof) by the number of days during the period
from and including the date of the giving of notice pursuant to Section 3.1(f)
hereof to the date when the Company shall make available to the Selling Holders
covered by such Registration Statement a Prospectus supplemented or amended to
conform with the requirements of Section 3.1(f) hereof.
(g) The Company will make generally available an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act no later than
120 days after the end of the 12 month period beginning with the first day of
the Company's first fiscal quarter commencing after the effective date of a
Registration Statement, which earnings statement shall cover said 12 month
period, and which requirement will be deemed to be satisfied if the Company
files complete and accurate information on Forms 10-QSB, 10-KSB and 8-K under
the Exchange Act in accordance with the applicable time periods and extensions
provided by the Exchange Act and otherwise complies with Rule 158 under the
Securities Act.
(h) The Company will enter into customary agreements (including, if
applicable, an underwriting agreement in customary form and which is reasonably
satisfactory to the Company) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of such Registrable
Securities.
(i) The Company, during the period when the Prospectus is required to be
delivered under the Securities Act, will file all documents required to be filed
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act.
(j) The Company will use its reasonable best efforts to cause all such
Registrable Securities to be listed on each securities exchange or quoted on any
automated quotation system on which similar securities of the Company are then
listed or quoted and enter into customary agreements, including a listing
application in customary form; provided that the applicable listing requirements
are satisfied, and to provide a transfer agent and register for such Registrable
Securities covered by the Registration Statement no later than the effective
date of such Registration Statement.
(k) The Company will make available for inspection by any Holder of
Registrable Securities covered by the Registration Statement, any Underwriter
participating in any disposition pursuant to such Registration Statement, and
any attorney, accountant, or other agent retained by any such Holder or
underwriter (collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of the Company as such Inspector
shall deem necessary or desirable in order to permit it to conduct a reasonable
investigation within the meaning of Section 11 of the Securities Act and cause
the Company's officers, directors and employees to supply all information and
respond to all inquiries reasonably requested by any such Inspector in
connection with such Registration Statement. The rights granted to the
Inspectors in this Section 3(k) shall be conditioned upon the Inspectors
agreeing to sign confidentiality agreements prior to receiving information or
documentation from the Company.
(1) The Company will, to the extent required in connection with an
underwritten offering, (i) use its reasonable best efforts to furnish an opinion
of counsel for the Company addressed to the Underwriter and each Selling Holder
and dated the date of the closing under the
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underwriting agreement (if any) (or if such offering is not underwritten, dated
the effective date of the Registration Statement), and (ii) use its reasonable
best efforts to furnish a "cold comfort" letter addressed to each Selling
Holder, if permissible under applicable accounting practices, and signed by the
independent public accountants who have audited the Company's financial
statements included in such Registration Statement, in each such case covering
substantially the same matters with respect to such Registration Statement (and
the Prospectus included therein) as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to underwriters in
underwritten pubic offerings of securities and such other matters as the Selling
Holders may reasonably request and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements.
(m) The Company will, not later than the effective date of the Registration
Statement, provide a CUSIP number for all Registrable Securities, and provide
the applicable transfer agents with printed certificates for the Registrable
Securities, which are in a form eligible for deposit with The Depository Trust
Company.
SECTION 3.2. Registration Expenses. The Company shall pay all expenses in
connection with any Registration pursuant to Article 3 hereof or incident to the
Company's performance of or compliance with this Agreement including, without
limitation:
(i) all registration and filing fees,
(ii) the fees and expenses of compliance with the securities or blue sky
laws (including fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities),
(iii) all printing, messenger and delivery expenses, (iv) the Company's
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties),
(v) the fees and expenses incurred in connection with the listing or
quotation, as appropriate, of the Registrable Securities,
(vi) the fees and disbursements of counsel for the Company and the fees
and expenses for independent certified public accountants retained by the
Company (including the expenses of any special audit or cold comfort letter),
and
(vii) the fees and expenses of any special experts retained by the Company
in connection with such registration. Notwithstanding the foregoing, the Company
shall not be responsible for the payment of any legal expenses, brokerage
commissions or taxes incurred by the Selling Holders.
ARTICLE 4.
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1 Indemnification by the Company. The Company agrees to indemnify
and hold harmless, to the fullest extent permitted by law, each Selling Holder,
its general partners, limited partners, managers, officers, directors,
employees, advisors and agents, and each Person, if any, who controls, is
controlled by or is under common control with such Selling Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
together with the general partners, limited partners, managers, officers,
directors, employees, advisors and agents of such controlling Person
(collectively the "Controlling Persons"), from and against any loss, claim,
damage, liability, attorneys' fees, cost or expense and costs and expenses of
investigating and defending any such claim (collectively, the "Damages") and any
action in respect thereof to which such Selling Holder, its general partners,
managing partners, managers, officers, directors, employees, advisors and
agents, and any such Controlling Person may become subject under the Securities
Act, the Exchange Act, state blue sky laws, common laws or otherwise, insofar as
such Damages (or proceedings in respect thereof) arise out of, or are based
upon, (x) any untrue statement of a material fact contained in any Registration
Statement or Prospectus, or any amendment or supplement thereto, or any
preliminary or summary Prospectus, or in any document incorporated by reference
in such Registration Statement or Prospectus, any
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amendment or supplement thereto, or any preliminary or Summary Prospectus, (y)
any omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are based upon information furnished in writing to the Company by a Selling
Holder for use therein, or (z) any violation by the Company of any federal,
state or common law rule or regulation applicable to the Company and relating to
action required of or inaction by the Company in connection with any such
registration, and the Company shall reimburse each Selling Holder, its partners,
officers, directors, employees, advisors and agents, and each such Controlling
Person for any legal and other expenses reasonably incurred by that Selling
Holder, its partners, officers, directors, employees, advisors and agents, or
any such Controlling Person in investigating or defending or preparing to defend
against any such Damages or proceedings; provided, however, that the Company
shall not be liable to any Selling Holder or other indemnitee to the extent that
any such Damages arise out of or are based upon an untrue statement or omission
based solely upon information provided in writing to the Company by the Selling
Holder for inclusion in such Prospectus or Registration Statement. The Company
also agrees to indemnify any Underwriters of the Registrable Securities, their
officers and directors and each Person who controls such Underwriters on
substantially the same basis as that of the indemnification of the Selling
Holders provided in this Section 4.1. This indemnity will survive the transfer
of the Registrable Securities by the Holder thereof.
SECTION 4.2. Indemnification by Selling Holders. The Selling Stockholder
agrees, to jointly and severally with regard to the Stockholder (as defined in
the Merger Agreement) and severally but not jointly between the Stockholder
indemnify and hold harmless, the Company, its officers, directors, employees,
advisors and agents, and each Controlling Person of the Company, if any,
together with the partners, officers, directors, employees, advisors and agents
of such Controlling Person, from and against any Damages and any action in
respect thereof to which the Company and any such Controlling Person may become
subject under the Securities Act, the Exchange Act, state blue sky laws, common
laws or otherwise, insofar as such Damages (or proceedings in respect thereof)
arise out of, or are based upon, (x) any untrue statement of a material fact
contained in any Registration Statement or Prospectus or any preliminary or
summary Prospectus, or (y) any omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that such untrue statement of
material fact is contained in, or such material fact relating to the Selling
Holder is omitted from, information related to such Selling Holder, or its plan
of distribution, furnished in writing to the Company by such Selling Holder for
use in any Registration Statement or Prospectus, or any amendment or supplement
thereto, or any preliminary or summary Prospectus with the understanding that
the liability pursuant to this Section 4.2, except where the Selling Holders are
grossly negligent or engage in malfeasance or willful misconduct, shall not
exceed the amount of the proceeds received by the Selling Holders from the
Registrable Securities sold pursuant to such Registration Statement; provided,
however, that such Selling Holder shall not be liable in any such case to the
extent that prior to the filing of any such Registration Statement or Prospectus
or amendment or supplement thereto, such Selling Holder has furnished in writing
to the Company information for use in such Registration Statement or Prospectus
or any amendment or supplement thereto which corrected or made not misleading
information previously furnished to the Company. The Selling Holder shall
reimburse the Company and each such Controlling Person for any legal and other
expenses reasonably incurred by the Company or any such Controlling Person in
investigating or defending or preparing to defend against any such Damages or
proceedings.
SECTION 4.3. Conduct of Indemnification Proceedings. Promptly after receipt
by any Person in respect of which indemnity may be sought pursuant to Section
4.1 or 4.2 (an
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"Indemnified Party") of notice of any claim or the commencement of any action,
the Indemnified Party shall, if a claim in respect thereof is to be made against
the Person against whom such indemnity may be sought (an "Indemnifying Party"),
notify the Indemnifying Party in writing of the claim or the commencement of
such action; provided that the failure to notify the Indemnifying Party shall
not relieve it from any liability which it may have to an Indemnified Party
otherwise than under Section 4.1 or 4.2 except to the extent of any actual
prejudice resulting therefrom. If any such claim or action shall be brought
against an Indemnified Party, and it shall notify the Indemnifying Party
thereof, the Indemnifying Party shall be entitled to participate therein, and,
to the extent that it wishes, jointly with any other similarly notified
Indemnifying Party, to assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Party. After notice from the Indemnifying Party
to the Indemnified Party of its election to assume the defense of such claim or
action, the Indemnifying Party shall not be liable to the Indemnified Party for
any legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation; provided that the Indemnified Party shall have the right to
employ separate counsel to represent the Indemnified Party and its Controlling
Persons who may be subject to liability arising out of any claim in respect to
which indemnity may be sought by the Indemnified Party against the Indemnifying
Party, but the fees and expenses of such counsel shall be for the account of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) in the
opinion of counsel to such Indemnified Party, representation of both parties by
the same counsel would be inappropriate due to actual or potential conflicts of
interest between them, it being understood, however, that the Indemnifying Party
shall not, in connection with any one such claim or action or separate but
substantially similar or related claims or actions in the same jurisdiction
arising out of the same allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (together with local
counsel) at any time for all Indemnified Parties. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any claim or pending or threatened proceeding in respect of which
the Indemnified Party is or could have been a party and indemnity could have
been sought hereunder by such Indemnified Party, and such settlement includes an
unconditional release of such Indemnified Party from all liability arising out
of such claim or proceeding. Whether or not the defense of any claim or action
is assumed by the Indemnifying Party, such Indemnifying Party will not be
subject to any liability for any settlements made without its consent, which
consent will not be unreasonably withheld. In all instances, the Indemnified
Party shall cooperate fully with the Indemnifying Party or its counsel in the
defense of each claim or action.
ARTICLE 5.
MISCELLANEOUS
SECTION 5.1. Participation in Underwritten Registrations. No Person may
participate in any underwritten registration hereunder unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements, and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and these
registration rights.
SECTION 5.2. Rule 144. The Company covenants that it will use its
reasonable best efforts to file any reports required to be filed by it under the
Securities Act and the Exchange Act and that it will take such further action as
any Holder may reasonably request, all to the extent required from time to time
to enable Holders to sell Registrable Securities without registration
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under the Securities Act within the limitation of the exemptions provided by (a)
Rule 144 under the Securities Act, or (b) any other applicable exemption from
the registration requirements of the Securities Act adopted by the Commission.
Upon the request of any Holder, the Company will deliver to such Holder a
written statement as to whether it has complied with such requirements.
SECTION 5.3. Amendment and Modification. Any provision of this Agreement
may be waived, provided that such waiver is set forth in a writing executed by
the party against whom the enforcement of such waiver is sought. This Agreement
may not be amended, modified or supplemented other than by a written instrument
signed by the holders of at least a majority of the Registrable Securities
(calculated on an as converted basis). No course of dealing between or among any
Persons having any interest in this Agreement will be deemed effective to
modify, amend or discharge any part of this Agreement or any rights or
obligations of any Person under or by reason of this Agreement.
SECTION 5.4. Successors and Assigns; Third Party Beneficiaries. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto, each subsequent Holder and their respective
successors and assigns and executors, administrators and heirs. Holders are
intended third party beneficiaries of this Agreement and this Agreement may be
enforced by such Holders.
SECTION 5.5. Entire Agreement. This Agreement sets forth the entire
agreement and understanding between the parties as to the subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them.
SECTION 5.6. Headings. Subject headings are included for convenience only
and shall not affect the interpretation of any provisions of this Agreement.
SECTION 5.7. Notices. Any notice, demand, request, waiver, or other
communication under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if personally served or sent by
confirmed telecopy, on the Business Day after notice is delivered to a courier
or mailed by express mail if sent by courier delivery service or express mail
for next day delivery and on the third day after mailing if mailed to the party
to whom notice is to be given, by first class mail, registered, return receipt
requested, postage prepaid and addressed to the following:
If to the Company: PainCare Holdings, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, CEO
If to Stockholder: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, M.D.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 5.8. Governing Law: Forum: Process. This Agreement shall be
governed by and construed in accordance with the laws of the State of Florida,
without regard to any choice-of-law principles thereof.
SECTION 5.9. Consent to Jurisdiction, Waiver of Immunities. Subject to the
provisions of Section 5.8 hereof, (i) if the Holders commence any legal
proceedings arising out of or relating
11
to this Agreement, the Holders hereby submit to the exclusive jurisdiction of
the United States District Courts for the Middle District of Florida, Orlando
Division and of any Florida State court sitting in Orlando, Florida, for
purposes of such legal proceedings, and (ii) if the Company commences any legal
proceedings arising out of or relating to this Agreement, the Company hereby
submits to the exclusive jurisdiction of the United States District Courts for
the Middle District of Florida, Orlando Division and of any Florida State court
sitting in Orlando, Florida, for purposes of such legal proceedings. Each party
to this Agreement hereby irrevocably waives, to the fullest extent permitted by
law, any objections which it may now or hereafter have to the laying of the
venue of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
SECTION 5.10 Recapitalization, etc. In the event that any securities are
issued in respect of, in exchange for, or in substitution of, any Registrable
Securities by reason of any reorganization, reclassification, merger,
consolidation, spin-off, partial or complete liquidation, stock dividend, stock
split, sale of assets, distribution to Stockholder or combination of the shares
of Registrable Securities or any other change in the Company's capital
structure, appropriate adjustments shall be made in the percentages specified
herein so as to fairly and equitably preserve as far as practicable, the
original rights and obligations of the parties hereto under this Agreement, all
in accordance with the terms and conditions set forth in the Agreement.
SECTION 5.11. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which taken together shall
constitute one and the same agreement.
SECTION 5.12. Severability. In the event that any one or more of the
immaterial provisions contained in this Agreement shall for any reason be held
to be invalid, illegal or unenforceable, the same shall not affect any other
provision of this Agreement, but this Agreement shall be construed in a manner
which, as nearly as possible, reflects the original intent of the parties.
SECTION 5.13. No Prejudice. The terms of this Agreement shall not be
construed in favor of or against any party on account of its participation in
the preparation hereof.
SECTION 5.14. Words in Singular and Plural Form. Words used in the singular
form in this Agreement shall be deemed to import the plural, and vise versa, as
the sense may require.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the date set forth above.
WITNESSES: PAINCARE HOLDINGS, INC.
-------------------------------- By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Print Name: -------------------------------
--------------------- ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, CEO
STOCKHOLDER
-------------------------------- /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Print Name: ----------------------------------
--------------------- ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, M.D.
13