EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered
into this 3/rd/ day of December, 1999, by and among Medjet Inc., a Delaware
corporation (the "Company"), Adam Smith & Company, Inc. ("ASC"), and the
individuals and trusts whose names are set forth on the signature page(s) hereof
(as that term is defined in the next paragraph) (collectively, the
"Stockholders").
Background. The Company has entered into (i) a Subscription Agreement of
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even date herewith (as amended, the "Subscription Agreement") with the
Stockholders pursuant to which the Company will issue to the Stockholders an
aggregate of 16,000 Units, each consisting of one share of Series B Convertible
Preferred Stock of the Company and one hundred common stock purchase warrants
(each a "Unit Warrant"), each Unit Warrant entitling the holder thereof to
purchase one share of common stock; and (ii) an investment banking agreement
with ASC providing for, among other matters, the issuance of an additional
500,000 Warrants (the "ASC Warrants", and collectively with the Unit Warrants,
the "Warrants") to purchase up to 500,000 shares of common stock. An aggregate
of 1,600,000 authorized but unissued shares of common stock, $.01 par value per
share, of the Company ("Common Stock") are reserved for issuance upon conversion
of the Preferred Stock to be issued to the Stockholders under the Subscription
Agreement, and an aggregate of 2,100,000 authorized but unissued shares of
Common Stock are reserved for issuance upon exercise of the Warrants.
In consideration of the background transactions and the mutual covenants
and agreements herein set forth, the parties to this Agreement hereby agree,
effective at the Effective Date (as defined below), subject to the terms and
conditions hereinafter set forth, as follows:
1. Definitions. As used herein, unless the context otherwise requires,
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the following terms have the following respective meanings:
Agreement: As defined in the introductory paragraph of this Agreement.
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Commission: The U.S. Securities and Exchange Commission or any other
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governmental authority at the time administering the Securities Act or the
Exchange Act.
Common Stock: As defined in the paragraph of this Agreement entitled
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"Background."
Company: As defined in the introductory paragraph of this Agreement.
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Effective Date: The date on which Preferred Stock and Warrants are first
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issued to the Stockholders.
Exchange Act: The U.S. Securities Exchange Act of 1934, as amended, or any
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similar or successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time. Reference
to a particular section of the Exchange Act shall include a reference to the
comparable section, if any, of any such similar or successor federal statute.
Person: A corporation, an association, a partnership, a limited liability
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company, an individual, a joint venture, a trust or estate, an unincorporated
organization, or a government or any department or agency thereof.
Preferred Stock: As defined in the paragraph of this Agreement entitled
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"Background":
Registrable Securities: (a) Any shares of Common Stock issued or issuable
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upon conversion of any shares of Preferred Stock issued to the Stockholders
pursuant to the Subscription Agreement or upon exercise of the Warrants and (b)
any securities issued or issuable with respect to any Common Stock referred to
in the foregoing clauses 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, once issued, such securities shall cease to be Registrable
Securities when (v) they may be sold without restriction pursuant to Rule 144(k)
(or any successor provision) under the Securities Act, (w) a registration
statement with respect to the sale of such securities in the United States shall
have become effective under the Securities Act and such securities shall have
been disposed of in accordance with such registration statement, (x) they shall
have been transferred pursuant to Rule 144 (or any successor provision) under
the Securities Act, (y) they shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent disposition of them shall not
require registration or qualification under the Securities Act or any similar
state law then in force, or (z) they shall have ceased to be outstanding. While
the shares of Preferred Stock and the Warrants outstanding from time to time are
not Registrable Securities for the purpose of registration, holders of shares of
Preferred Stock and Warrants shall, for purposes of giving of notices or the
calculation of percentages of Registrable Securities, be treated as the holders
of the Registrable Securities issuable upon conversion of their shares of
Preferred Stock or upon exercise of their Warrants. In addition, for purposes of
calculation of percentages of Registrable Securities, all shares of Preferred
Stock shall be treated as the same number of shares of Common Stock into which
they are then convertible and all Warrants shall be treated as the same number
of shares of Common Stock which may be purchased upon exercise thereof.
Registration Expenses: All expenses incident to the Company's performance
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of or compliance with Section 2 of this Agreement, including, without
limitation, all registration, filing and listing or Nasdaq fees, all fees and
expenses of complying with securities or blue sky laws, all word processing,
duplicating and printing expenses, all messenger and delivery expenses, the fees
and disbursements of counsel for the Company and of its independent public
accountants, including without limitation the expenses of any special audits or
"cold comfort" letters required by or incident to such performance and
compliance, premiums and other costs of policies of insurance, if any, against
liabilities arising out of the public offering of the Registrable Securities
being registered, and any fees and disbursements of underwriters customarily
paid by issuers or sellers of securities, but excluding underwriting discounts
and commissions, transfer taxes, if any, and the fees and disbursements of any
counsel and accountants retained by the holder or holders of the Registrable
Securities being registered.
Securities Act: The U.S. Securities Act of 1933, as amended, or any similar
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or successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act shall include a reference to the
comparable section, if any, of any such similar or successor federal statute.
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Subscription Agreement: As defined in the paragraph of this Agreement
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entitled "Background."
Stockholders: As defined in the introductory paragraph of this Agreement.
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Warrants: As defined in the paragraph of this Agreement entitled
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"Background."
2. Registration under Securities Act
2.1. (a) Registration on Request. Upon the written request of ASC or the
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holder or holders of thirty percent (30%) or more of the Registrable Securities
that the Company effect the registration under the Securities Act in connection
with a sale of such shares in the United States of all or part of such holders,
Registrable Securities and specifying the intended method of disposition thereof
(including whether or not such disposition is intended to be effected as an
underwritten offering), the Company will promptly give written notice of such
requested registration to all other holders of Registrable Securities and
thereupon the Company will use its best efforts to effect the registration under
the Securities Act of:
(i) the Registrable Securities which the Company has been so
requested to register by the holder or holders submitting the request, and
(ii) all other Registrable Securities which the Company has
been requested to register by the holder or holders thereof by written
request given to the Company within fifteen (15) days after the giving of
such written notice by the Company (which request shall specify the
intended method of disposition of such Registrable Securities), all to the
extent requisite to permit the disposition (in accordance with the intended
methods thereof as aforesaid) of the Registrable Securities so to be
registered.
(b) Priority in Requested Registrations. If a requested registration
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pursuant to this Section 2.1 involves an underwritten offering, and the managing
underwriter shall advise the Company in writing (with a copy to each holder of
Registrable Securities requesting registration) that, in its opinion, the number
of Registrable Securities and other securities of the Company held by any other
party requested to be included in such registration exceeds the number which can
be sold in (or during the time of) such offering within a price range acceptable
to the holders of a majority (by number of shares) of the Registrable Securities
requested to be included in such registration, the Company will include in such
registration all Registrable Securities requested to be included in such
registration (unless the provisions of the following sentence apply) and will
include in such registration other securities of the Company (including any
securities proposed to be issued and sold by the Company) held by any other
party only to the extent that the number of shares which the Company is advised
can be so sold in (or during the time of) such offering exceeds the number of
Registrable Securities to be included in such registration. If a requested
registration pursuant to this Section 2.1 involves an underwritten offering, and
the managing underwriter shall advise the Company in writing (with a copy to
each holder of Registrable Securities requesting registration) that, in its
opinion, the number of Registrable Securities requested to be included in such
registration exceeds the number which can be sold in (or during the time of)
such offering within a price range acceptable to the holders of a majority (by
number of shares) of the Registrable Securities requested to be included in such
registration, the Company will include in such registration only Registrable
Securities requested to be included in
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such registration. In such event, such Registrable Securities will be included
in such registration only to the extent of the number of shares which the
Company is advised can be so sold in (or during the time of) such offering; the
Registrable Securities to be included in such registration shall be taken up pro
rata from the holders of Registrable Securities requesting such registration on
the basis of the percentage of Registrable Securities requested to be included
in such registration; and all shares proposed to be sold by the Company or any
other party shall be deleted from such registration prior to effecting any
reduction of Registrable Securities by the holders thereof under this paragraph
(b).
(c) Registration Statement Form. Registrations under this Section 2.1
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shall be on such appropriate registration form of the Commission (i) for which
the Company qualifies, and which the Company's counsel (after consultation with
counsel or counsels for the holders of the Registrable Securities) deems
appropriate, and (ii) as shall permit the disposition of such Registrable
Securities in accordance with the intended method or methods of disposition
specified in the request for such registration. The Company agrees to include in
any such registration statement all information as to the holders of the
Registrable Securities to be registered which the holders of the Registrable
Securities being registered shall reasonably request or which shall be required
by applicable law.
(d) Expenses. Except as provided in paragraph (g) of this Section
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2.1, the Company will pay all Registration Expenses incurred in connection with
any registration requested pursuant to this Section 2.1 which the Company is
obligated to effect, whether or not such registration is effected.
(e) Effected Registration Statement. A registration requested
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pursuant to this Section 2.1 shall not be deemed to have been effected unless a
registration statement with respect thereto has become effective except: (i) if
the registration statement is withdrawn prior to its effectiveness pursuant to
the request of all of the holders of Registrable Securities who have requested
the inclusion in such registration statement of some or all of their Registrable
Securities and one or more of the holders of Registrable Securities have not
paid the Registration Expenses relating thereto in accordance with paragraph (g)
of this Section 2.1, (ii) if, after the registration statement has become
effective, such registration is interfered with by any stop order, injunction or
other order or requirement of the Commission or other governmental agency or
court for any reason, and such stop order, injunction or other order or
requirement results from any action or inaction of a holder or holders of
Registrable Securities, 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 due to a failure by a holder of Registrable
Securities to satisfy a condition required to be satisfied by such holder
pursuant to the purchase agreement or underwriting agreement and one or more of
the holders of Registrable Securities have not paid the Registration Expenses
relating thereto in accordance with paragraph (g) of this Section 2.1.
(f) Selection of Underwriter. If a requested registration pursuant to
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this Section 2.1 involves an underwritten offering, the underwriter or
underwriters thereof shall be, selected by the holders of a majority of the
Registrable Securities to be so registered, subject to the approval of the
Company, which approval shall not be unreasonably withheld.
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(g) Limitation on Registrations. The Company's obligations under
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Section 2.1(a) shall be limited to effecting two (2) registrations within the
meaning of paragraph (e) of this Section 2.1; provided, however, that (i) if all
of the holders who have requested the inclusion of Registrable Securities held
by them in a registration requested under this Section 2.1 withdraw such request
prior to the time the registration statement has become effective and any or all
of such persons pay all Registration Expenses relating thereto, such proposed
registration shall not count as one of the registrations provided for by this
Section 2.1; and (ii) if a registration is deemed to be effected pursuant to
paragraph (e) of this Section 2.1 because a condition to closing specified in
the purchase agreement or underwriting agreement entered into in connection with
such registration is not satisfied due to a failure by a holder of Registrable
Securities to satisfy a condition required to be satisfied by such holder
pursuant to such agreement and one or more of the holders of Registrable
Securities elects to pay (and shall actually have paid) all Registration
Expenses relating thereto, such registration shall not count as one of the
registrations provided for by this Section 2.1.
(h) Company's Right to Delay Registration. Notwithstanding the
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foregoing provisions of this Section 2.1, the Company shall not be obligated to
effect a registration pursuant to this Section 2.1 within a period of one (1)
year after the effective date of a registration statement previously filed as a
result of a request pursuant to this Section 2.1. In addition, if the Company
has issued and sold to the public, pursuant to a registration statement filed
under the Securities Act, any of its securities within three (3) months prior to
the date of its receipt of a request for registration pursuant to this Section
2.1 and the Company's investment banker has advised the Company in writing that
the registration of Registrable Securities would materially adversely affect the
market for the Common Stock, the Company shall have the right, which may not be
exercised more than once in a twelve month period, to delay the requested
registration of Registrable Securities for such period as the investment banker
may so advise, but no more than one hundred twenty (120) days after the date on
which such request was made.
(i) Limitation on Sales. Notwithstanding the foregoing provisions of
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this Section 2.1, no Registrable Securities may be sold pursuant to a
registration requested under this Section 2.1 until nine months after the date
of this Agreement.
2.2. Incidental Registration.
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(a) Right to Incidental Registration. If the Company at any time proposes
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to register any of its securities under the Securities Act (other than by a
registration on Form S-8 or Form S-4 or any successor or similar form and other
than pursuant to Section 2.1 of this Agreement), whether or not for sale for its
own account, it will each such time give prompt written notice to all holders of
Registrable Securities of its intention to do so and of such holders' rights
under this Section 2.2. Upon the written request of any such holder made within
fifteen (15) days after the receipt of any such notice (which request shall
specify the Registrable Securities intended to be disposed of by such holder and
the intended method of disposition thereof), the Company will use its best
efforts to effect the registration under the Securities Act in connection with a
sale of such shares in the United States of all Registrable Securities which the
Company has been so requested to register by the holders of Registrable
Securities, to the extent requisite to permit the disposition (in accordance
with the intended methods thereof as aforesaid) of the Registrable Securities so
to be registered, provided that if, at any time after giving written notice of
its intention to register any securities and prior to the effective date of the
registration statement
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filed in connection with such registration, the Company shall determine for any
reason, after consultation with the holders of Registrable Securities which have
requested inclusion in such registration, not to register or to delay such
registration, the Company may, at its election, give written notice of such
determination to each holder of Registrable Securities and, thereupon, (i) in
the case of a determination not to register, shall be relieved of its obligation
to register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith), without prejudice, however, to the rights of any holder or holders
of Registrable Securities entitled to do so to request that such registration be
effected as a registration under Section 2.1 above, and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities for the same period as the delay in registering such
other securities. No registration effected under this Section 2.2 shall relieve
the Company of its obligation to effect any registration upon request under
Section 2.1 above. The Company will pay all Registration Expenses in connection
with each registration of Registrable Securities requested pursuant to this
Section 2.2.
(b) Priority in Incidental Registrations. If (i) a registration pursuant to
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this Section 2.2 involves an underwritten offering of the securities so being
registered, whether or not for sale for the account of the Company, and (ii) the
managing underwriter of such underwritten offering shall inform the Company and
the holders of the Registrable Securities requesting such registration by letter
of its belief that the number of securities requested to be included in such
registration exceeds the number which can be sold in (or during the time of)
such offering, then (A) in the case of an offering for the account of the
Company, registration for the Registrable Securities shall be cut back such that
(i) no holder of Registrable Securities shall be entitled to participate in such
underwritten public offering unless all shares of Common Stock proposed to be
sold by the Company for its own account have been included in such underwritten
public offering, and (ii) after the Company has included its own shares of
Common Stock, the holders of Registrable Securities and the holders of other
securities as to which the Company has granted registration rights ("Other
Registrable Securities"), including incidental registration rights, shall be
entitled to include their Registrable Securities and Other Registrable
Securities in an amount up to the amount that such managing underwriter or
underwriters advise may be included therein (allocated among the holders of
Registrable Securities and the holders of other Registrable Securities pro rata
on the basis of the number of securities requested to be included therein by
each such holder) and (B) in the case of an offering that was commenced as a
result of the exercise of demand registration rights by Persons other than
Stockholders, the Persons commencing such registration and the holders of
Registrable Securities shall be entitled to include their Registrable Securities
and Other Registrable securities in an amount up to the amount such managing
underwriters or underwriters advise may be included therein (allocated among the
persons commencing such registration and the holders of Registrable Securities
pro rate on the basis of the number of securities requested to be so included
therein by each such person or holder). If, however, the registration was
initiated by the Company within one hundred twenty (120) days of a requested
registration and is in lieu thereof, then the Company shall include in the
registration all Registrable Securities requested to be included in such
registration and shall decrease the number of securities proposed to be sold by
the Company and to be included in such registration to the extent necessary to
reduce the number of securities to be included in the registration to the level
recommended by the managing underwriter.
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2.3. Registration Procedures. If and whenever the Company is required to
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use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Section 2.1 or 2.2 above, the Company
will, as expeditiously as possible:
(i) prepare and (as soon thereafter as possible or in any event
no later than seventy-five (75) days after the end of the period within
which requests for registration may be given to the Company (ninety (90)
days in the case of requests for registration made during the last quarter
of a fiscal year or the first fifteen (15) days of the first quarter of any
fiscal year) or such longer period as the Company shall in good faith
require to produce the financial statements required in connection with
such registration) file with the Commission the requisite registration
statement to effect such registration and thereafter use its best efforts
to cause such registration statement to become effective, provided that the
Company may discontinue any registration of its securities which are not
Registrable Securities (and, under the circumstances specified in Section
2.2(a) above, its securities which are Registrable Securities) at any time
prior to the effective date of the registration statement relating thereto;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement until such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof as set forth in such registration statement but
in no event for a period which would exceed one hundred twenty (120) days
from the date on which the registration statement became effective;
(iii) furnish to each seller of Registrable Securities covered by
such registration statement such number of conformed copies of such
registration statement and of each amendment and supplement thereto (in
each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary
prospectus and any summary prospectus) and any other prospectus filed under
Rule 424 under the Securities Act, in conformity with the requirements of
the Securities Act, and such other documents, as such seller may reasonably
request;
(iv) use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement
under such other securities or blue sky laws of such jurisdictions in the
United States as each seller thereof shall reasonably request, to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the securities owned by such seller,
except that the Company shall not for any such purpose be required to
either qualify generally to do business as a foreign corporation, or
subject itself to taxation or to general service of process in any
jurisdiction wherein it would not, but for the requirements of this clause
(iv), be obligated to be so qualified or subject to taxation or service of
process, other than as to matters and transactions related to such
registration or qualification;
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(v) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or approved by
such other United States governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities;
(vi) furnish to each seller of Registrable Securities a copy of
each of the following, if any, addressed to the underwriters:
(A) an opinion of counsel for the Company, dated the effective date
of such registration statement (and, if such registration includes an
underwritten public offering, dated the date of the closing under the
underwriting agreement) reasonably satisfactory in form and substance to
such seller; and
(B) a "comfort" letter, dated the effective date of such
registration statement (and, if such registration includes an
underwritten public offering, dated the date of the closing under the
underwriting agreement), signed by the independent public accountants
who have certified the Company's financial statements included in such
registration statement, covering substantially the same matters with
respect to such registration statement (and the prospectus included
therein) and, in the case of the accountants' letter, with respect to
events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in
accountants' letters delivered to the underwriters in underwritten
public offerings of securities and, in the case of the accountants'
letter, such other financial matters, and, in the case of the legal
opinion, such other legal matters, as such seller (or the
underwriters, if any) may reasonably request;
(vii) (A) notify each seller of Registrable Securities covered by
such registration statement, their counsel and the managing underwriters,
if any, promptly, and (if requested in writing by any such Person), confirm
such notice in writing: (1) when a registration statement or any amendment
thereto has been filed, and, with respect to a registration statement or
any post-effective amendment, when the same has become effective, (2) of
any request by the Commission or any other Federal or state governmental
authority for amendments or supplements to a registration statement or
related prospectus or for additional information, (3) of the issuance by
the Commission of any stop order suspending the effectiveness of a
registration statement or the initiation of any proceedings for that
purpose, (4) if at any time the representations and warranties of the
Company contained in any agreement (including any underwriting agreement)
contemplated by this Section 2 cease to be true and correct, (5) of the
receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose, and (6) of the happening of
any event that makes any statement made in such registration statement or
related prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires the making of any changes to such registration statement,
prospectus or documents so that, in the case of the registration statement,
it will not 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
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therein, not misleading, and that in the case of the prospectus, it will
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, and (B)at
the request of any such seller promptly prepare and furnish to such seller
a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary (and a post-effective amendment to such
registration statement as may be necessary in connection therewith) so
that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made;
(viii) Use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of a registration statement, or the lifting of
any suspension of the qualification (or exemption from qualification) of
any of the Registrable Securities for sale in any jurisdiction;
(ix) If requested by the managing underwriters, if any, or the
Holders of a majority in interest of the Registrable Securities being sold
in connection with an underwritten offering, promptly include in a
prospectus supplement or post-effective amendment such information as the
managing underwriters, if any, and such Holders may reasonably request in
order to permit the intended method of distribution of such securities and
make all required filings of such prospectus supplement or such post-
effective amendment as soon as practicable after the Company has received
such request;
(x) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, a historical earnings statement
covering the period of at least twelve (12) months, but not more than
eighteen (18) months, beginning with the first month of the first full
fiscal quarter after the effective date of such registration statement,
which earnings statement shall satisfy the provisions of Section 11 (a) of
the Securities Act, and will furnish to each such seller at least five
business days prior to the filing thereof a copy of any amendment or
supplement to such registration statement or prospectus and shall not file
any thereof to which any such seller shall have reasonably objected on the
grounds that such amendment or supplement does not comply in all material
respects with the requirements of the Securities Act or the rules or
regulations thereunder;
(xi) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such
registration statement;
(xii) use its best efforts to list all Registrable Securities
covered by such registration statement on any securities exchange or
trading system on which any of the Common Stock is then listed;
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(xiii) Cooperate with the selling holders of Registrable
Securities and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold, which certificates shall be in a form eligible for
deposit with The Depository Trust Company; and enable such Registrable
Securities to be in such denominations and registered in such names as the
managing underwriters, if any, or holders may request in writing at least
two (2) business days prior to any sale of Registrable Securities;
(xiv) Make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of any registration statement at the
earliest possible moment; and
(xv) Cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation by
any underwriter (including any "qualified independent underwriter" that is
required to be retained in accordance with the rules and regulations of the
NASD).
The Company may require each seller of Registrable Securities as to which
any registration is being effected to furnish the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing.
Each holder of Registrable Securities agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
clause (vii) (3) or (6) of this Section 2.3, such holder will forthwith
discontinue such holder's disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities until such
holder's receipt of the copies of the supplemented or amended prospectus
contemplated by clause (vii) of this Section 2.3 and, if so directed by the
Company, will deliver to the Company (at the Company's expense) all copies,
other than permanent file Copies, then in such holder's possession of the
prospectus relating to such Registrable Securities current at the time of
receipt of such notice.
2.4. Underwritten Offerings. (a) Cooperation; Underwriting Agreements. If
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requested by the underwriters for any underwritten offering by holders of
Registrable Securities pursuant to a registration requested under Section 2.1
above, the Company will enter into an underwriting agreement with such
underwriters for such offering, such agreement to contain such representations
and warranties by the Company and such other terms as are generally prevailing
in agreements of this type, including, without limitation, indemnities to the
effect and to the extent provided in Section 2.6 below. The holders of the
Registrable Securities will reasonably cooperate with the Company in the
negotiation of the underwriting agreement, provided that nothing herein
contained shall diminish the foregoing obligations of the Company. The holders
of Registrable Securities to be distributed by such underwriters shall be
parties to such underwriting agreement and any necessary or appropriate custody
agreements and execute appropriate powers of attorney, and may, at their option,
require that any or all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of
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such holders of Registrable Securities. Any such holder of Registrable
Securities shall not be required to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such holder, such holder's Registrable
Securities and such holder's intended method of distribution and any other
representation required by law.
(b) Incidental Underwritten Offerings. If the Company at any time
---------------------------------
proposes to register any of its securities under the Securities Act, as
contemplated by Section 2.2 above, and such securities are to be distributed by
or through one or more underwriters, the Company will, if requested by any
holder of Registrable Securities as provided in said Section 2.2 and subject to
the provisions of Section 2.2(b), arrange for such underwriters to include all
the Registrable Securities to be offered and sold by such holder among the
securities to be distributed by such underwriters. The holders of Registrable
Securities to be distributed by such underwriters shall be parties to the
underwriting agreement between the Company and such underwriters and any
necessary or appropriate custody agreements and execute appropriate powers of
attorney, and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. Any such holder of Registrable Securities
shall not be required to make any representations or warranties to or agreements
with the Company or the underwriters other than representations, warranties or
agreements regarding such holder, such holder's Registrable Securities and such
holder's intended method of distribution and any other representation required
by law.
2.5. Preparation; Reasonable Investigation. In connection with the
-------------------------------------
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, the underwriters, if
any, and their respective counsel and accountants, the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers and the independent public accountants who have certified its financial
statements as shall be necessary, in the opinion of such holders, and such
underwriters, respective counsel, to conduct a reasonable investigation within
the meaning of the Securities Act.
2.6. Indemnification. (a) Indemnification by the Company. In the event of
--------------- ------------------------------
any registration of any securities of the Company under the Securities Act, the
Company will, and hereby does, indemnify and hold harmless the seller of any
Registrable Securities covered by such registration statement, its directors and
officers, each other Person who participates as an underwriter in the offering
or sale of such securities and each other Person, if any, who controls such
seller or any such underwriter within the meaning of the Securities Act, against
any losses, claims, damages or liabilities, joint or several, to which such
seller or any such director or officer or underwriter or controlling Person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such
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securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Company will reimburse such seller and each such
director, officer, underwriter and controlling Person for any legal or any other
expenses incurred by them in connection with investigating or defending any such
loss, claim, liability, action or proceeding; provided that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon an untrue statement or omission made in such registration
statement, any such preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement in reliance upon and in conformity with
written information furnished to the Company through an instrument duly executed
by such seller specifically stating that it is for use in the preparation
thereof and, provided further that the Company shall not be liable to any Person
who participates as an underwriter in the offering or sale of Registrable
Securities or any other Person, if any, who controls such underwriter within the
meaning of the Securities Act, in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of such Person's failure to send or give a copy of the final
prospectus, as the same may be then supplemented or amended, to the Person
asserting an untrue statement or alleged untrue statement or omission or alleged
omission at or prior to the written confirmation of the sale of Registrable
Securities to such Person if such statement or omission was corrected in such
final prospectus. Such indemnity shall remain in full force and effect,
regardless of any investigation made by or on behalf of such seller or any such
director, officer, underwriter or controlling Person and shall survive the
transfer of such securities by such seller and the termination or expiration of
this Agreement.
(b) Indemnification by the Sellers. The Company may require, as a condition
------------------------------
to including any Registrable Securities in any registration statement filed
pursuant to Section 2.3 above, that the Company shall have received an
undertaking reasonably satisfactory to it from the prospective seller of such
securities, to indemnify and hold harmless (in the same manner and to the same
extent as set forth in subparagraph (a) of this Section 2.6) the Company, each
director of the Company, each officer of the Company and each other Person, if
any, who controls the Company within the meaning of the Securities Act, with
respect to any statement or alleged statement in or omission or alleged omission
from such registration statement, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or supplement thereto,
if such statement or alleged statement or omission or alleged omission was made
in. reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such seller specifically stating
that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement. Such indemnity shall remain in full force and effect, regardless of
any investigation made by or on behalf of the Company or any such director,
officer or controlling Person and shall survive the transfer of such securities
by such seller and the termination or expiration of this Agreement. The
obligations of any seller under this subparagraph (b) shall be limited to the
net proceeds to such seller of the Registrable Securities sold pursuant to the
registration statement to which the loss, claim, damage, judgment, expense or
liability relates.
(c) Contribution. If the indemnification provided for in
------------
subparagraphs (a) and (b) above for any reason is held by a court of competent
jurisdiction to be unavailable to an
-12-
indemnified party in respect of any losses, claims, damages, judgments, expenses
or liabilities referred to therein, then each indemnifying party under such
paragraph, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, judgments, expenses or liabilities in such
proportion as is appropriate to reflect the relative fault, if any, of the
Company and the other selling holders in connection with the statements or
omissions which resulted in such losses, claims, damages, expenses or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company and the selling holders shall be determined by
reference to, among other things, whether the untrue statement or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or the selling
holders and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company, the
holders, and the underwriters agree that it would not be just and equitable if
contribution pursuant to this subparagraph (c) were determined by pro rata or
per capita allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
sentence. The obligations of any seller under this subparagraph (c) are several,
not joint, and shall be limited to an amount equal to the net proceeds to such
seller of Registrable Securities sold pursuant to the registration statement to
which the loss, claim, damage, judgment expense or liability relates. No person
found guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(d) Notices of Claims and Procedures. Promptly after receipt by an
--------------------------------
indemnified Person of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subparagraphs of this Section
2.6, such indemnified Person will, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the latter of the
commencement of such action, provided that the failure of any indemnified Person
to give notice as provided herein shall not relieve the indemnifying party of
his, her or its obligations under the preceding subparagraphs of this Section
2.6, except to the extent that the indemnifying party is actually prejudiced by
such failure to give notice. In case any such action is brought against an
indemnified Person, unless in such indemnified Person's reasonable judgment a
conflict of interest between such indemnified Person and such indemnifying party
may exist in respect of such claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified Person, and after notice
from the indemnifying party to such indemnified Person of its election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified Person for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the consent of the
indemnified Person, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified Person of a release from all
liability in respect to such claim or litigation and otherwise in form and
substance reasonably satisfactory to the indemnified Person.
(e) Indemnification Payments. The indemnification required by this Section
------------------------
2.6 shall be made by prompt payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
-13-
(f) Not Exclusive. The indemnification and contribution provisions of
-------------
Section 2.6 are in addition to any other rights to indemnification or
contribution that an indemnified party may have under law or contract.
2.7. Adjustments Affecting Registrable Securities. The Company will not
--------------------------------------------
effect or permit to occur any combination or subdivision of shares which would
materially adversely affect the ability of the holders of Registrable Securities
to include such Registrable Securities in any registration of its securities
contemplated by this Section 2 or the marketability of such Registrable
Securities under any such registration.
3. Rules 144 and 144A. The Company 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 Commission thereunder (or, if the Company is not
required to file such reports, the Company will, upon the request of any holder
of Registrable Securities, make publicly available other information) and will
take such further action as any holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such holder to
sell Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rules 144 and 144A under the
Securities Act, as such Rules may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the Commission. 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.
4. Amendments and Waivers. This Agreement may be amended and the Company
----------------------
may take any action herein prohibited or omit to perform any act herein required
to be performed by it, only if the Company shall have obtained the written
consent to such amendment, action or omission to act, of the holder or holders
of eighty percent (80%) or more of the Registrable Securities at the time
outstanding. Each holder of Registrable Securities at the time or thereafter
outstanding shall be bound by a consent authorized by this Section 4.
5. Nominees for Beneficial Owners. In the event that any Registrable
------------------------------
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at his, her or its election, be treated as the
holder of such Registrable Securities for purposes of any request or other
action by any holder or holders of Registrable Securities pursuant to this
Agreement or any determination of any number or percentage of shares of
Registrable Securities held by any holder or holders of Registrable Securities
contemplated by this Agreement. If the beneficial owner of any Registrable
Securities so elects, the Company may require assurances reasonably satisfactory
to it of such owner's beneficial ownership of such Registrable Securities.
6. Notices. All notices and other communications required or permitted
-------
hereunder shall be in writing, and shall be deemed to have been delivered on the
date delivered by hand, telegram, facsimile or by similar means, on the third
(3rd) day following the day when sent by recognized courier or overnight
delivery service (fees prepaid), or on the fifth (5th) day following the day
when deposited in the mail, registered or certified (postage prepaid), addressed
(a) if to Stockholders, to the attention of each Person at the address set forth
on Exhibit 3 of the Subscription Agreement (ASC has the same address as Adam
Smith Investment Partners, L.P.), in the stock records of the Company or such
address, or to the attention of such other Person or Persons, as a Stockholder
shall have furnished to the Company in writing, or (b) if to the Company, Medjet
Inc., 1090 King George Post Road, Edison, New Jersey 08837, Attention:
-14-
Chariman, fax: (732) 738-3984 with a copy to __________________________, or such
other address, or to the attention of such other Person or Persons, as the
Company shall have furnished to each holder of Registrable Securities at the
time outstanding; provided, however, that any such communication to the Company
may also, at the option of Stockholders, be delivered to any officer of the
Company.
7. Assignment. This Agreement shall be binding upon and inure to the
----------
benefit of and be enforceable by the parties hereto and their respective
successors and assigns. In addition, and whether or not any express assignment
shall have been made, the provisions of this Agreement which are for the benefit
of Stockholders shall also be for the benefit of and enforceable by any
subsequent holder of any Registrable Securities who has executed a copy of this
Agreement or otherwise indicated its agreement to be bound hereby, subject to
the provisions respecting the minimum numbers or percentages of shares of
Registrable Securities required in order to be entitled to certain rights or
take certain actions contained herein. The Company acknowledges that ASC or any
Stockholder may, at any time, transfer any of the Registrable Securities which
they may own, beneficially or of record, to (a) their Affiliates, or (b) their
partner(s), investor(s), security holder(s) or beneficial holder(s) pursuant to
their organization documents or other agreements, and that, upon the
consummation of any such transfer, the provisions of this Agreement shall be
binding upon and inure to the benefit of each transferee of such Registrable
Securities.
8. Descriptive Headings. The descriptive headings of the several sections
--------------------
and paragraphs of this Agreement are inserted for reference only and shall not
limit or otherwise affect the meaning hereof.
9. Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with, and the rights of the parties shall be governed by, the laws of
the State of New York, U.S.A., without regard to principles of conflicts of
laws.
10. Counterparts. This Agreement may be executed simultaneously in any
------------
number of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
11. Termination. This Agreement shall terminate only upon approval of the
-----------
Company and the holders of a majority of the Registrable Securities.
12. Other Registration Rights. The Company shall not at any time from and
-------------------------
after the date of this Agreement grant registration rights to any holder of
shares of the Company's capital stock (other than the rights granted to the
Stockholders under this Agreement) which are equal to or more favorable to such
holders than the rights set forth in this Agreement.
-15-
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement,
or have caused this Agreement to be executed and delivered by their respective
duly authorized officers, on the date first above written.
MEDJET INC.
By: /s/ Eugene Gordon
-----------------------------------------
Name: Eugene Gordon
Title: Chairman of the Board and Chief
Executive Officer
ADAM SMITH & COMPANY, INC.
By: /s/ Richard Grossman
____________________________
Name: Richad Grossman
Title: Managing Director
ADAM SMITH INVESTMENT PARTNERS, L.P.
By: ADAM SMITH CAPITAL MANAGEMENT, L.L.C.,
General Partner
By: /s/ Richard Grossman
_________________________________
Name: Richard Grossman
Title: Manager
ADAM SMITH INVESTMENTS, LTD.
By: F.M.C. Limited
By: /s/ Anna Carrington
_________________________________
Name: Anna Carrington
Title:
RICHARD AND ANA GROSSMAN JTWROS
By: /s/ Richard and Ana Grossman
-----------------------------------------
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/s/ Orin Hirschman
-------------------------------------
Orin Hirschman
/s/ Paul Packer
-------------------------------------
Paul Packer
ADAM-JACK M. DODICK, MD GENERAL PARTNERSHIP
By: Adam Smith Capital Management, L.L.C.,
General Partner
By: /s/ Richard Grossman
__________________________________
Name: Richard Grossman
Title: Manager
/s/ Hershel P. Berkowitz
-------------------------------------
Hershel P. Berkowitz
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