EXHIBIT 1
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of December
17, 1997, by and among Biofield Corp., a Delaware corporation, with headquarters
located at 0000 Xxxxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 (the
"Company"), and each of the investors set forth on the signature pages hereto
(the "Initial Investors").
WHEREAS:
A. In connection with the several Subscription Agreements of even date
herewith by and between each of the Initial Investors and the Company
(collectively, the "Subscription Agreements"), the Company has agreed, upon the
terms and subject to the conditions contained therein, to issue and sell to each
of the Initial Investors shares of the Company's common stock, par value $.001
per share (the "Common Stock").
B. To induce each of the Initial Investors to execute and deliver the
Subscription Agreements, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"1933 Act"), and applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. DEFINITIONS.
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a. As used in this Agreement, the following terms shall have the
following meanings:
(i) "Investors" means either Initial Investors or their
transferees or assignees who agree to be bound by the provisions of this
Agreement in accordance with Section 9 hereof.
(ii) "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement in
compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any
successor rule providing for offering securities on a continuous basis ("Rule
415"), and the declaration or ordering of effectiveness of such Registration
Statement by the United States Securities and Exchange Commission (the "SEC").
(iii) "Registrable Securities" means the shares of Common Stock
issued or issuable pursuant to the Subscription Agreements or Section 2(c)
hereof, or as a dividend on or in exchange for or otherwise with respect to any
of the foregoing which are held
by an Investor. As to any particular Registrable Securities, such securities
will cease to be Registrable Securities when they have been distributed to the
public pursuant to an offering registered under the 1933 Act or are eligible to
be sold by the holder thereof pursuant to Rule 144(k) under the 1933 Act (or any
similar rule then in force) or are sold in compliance with Rule 144.
(iv) "Registration Statement" means a registration statement of
the Company under the 1933 Act filed pursuant to Section 2(a) hereof.
b. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Subscription Agreements.
2. REGISTRATION.
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a. Mandatory Registration. The Company shall prepare and file with
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the SEC as soon as reasonably practicable after the date of this Agreement a
Registration Statement on Form S-3 (or, if Form S-3 is not then available, on
such form of Registration Statement as is then available to effect a
registration of the Registrable Securities) covering the resale of the
Registrable Securities and thereafter use its best efforts to cause such
Registration Statement to become effective as soon as reasonably practicable
and, in any event, within seventy five (75) days following the date of this
Agreement.
b. Underwritten Offering. Investors holding a majority-in-interest
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of the Registrable Securities being registered pursuant to Section 2(a) hereof
may determine to engage the services of an underwriter in connection with such
offering. If such offering is an underwritten offering, the Investors who hold a
majority-in-interest of the Registrable Securities subject to such underwritten
offering shall have the right to select one legal counsel and an investment
banker or bankers and manager or managers to administer the offering, which
investment banker or bankers or manager or managers shall be reasonably
satisfactory to the Company.
c. Payments by the Company. If the Registration Statement is not
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declared effective by the SEC within seventy five (75) days after the date of
this Agreement (the "Pre-registration Period") or if, at any time after the
Registration Statement has been declared effective by the SEC, sales cannot be
made pursuant to the Registration Statement because of the issuance of a stop
order or other suspension of effectiveness of the Registration Statement, or if
the Investors are not permitted under Section 4(c) hereof to sell Registrable
Securities for a period of more than ten (10) consecutive business days, or the
Common Stock is not listed or included for quotation on the Nasdaq National
Market ("Nasdaq"), the New York Stock Exchange (the "NYSE") or the American
Stock Exchange (the "AMEX"), then the Company shall issue additional shares of
Common Stock to the Investors in such amounts and at such times as shall be
determined pursuant to this Section 2(c) as partial relief for the damages to
the
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Investors by reason of any such delay in or reduction of their ability to sell
the Registrable Securities (which remedy shall not be exclusive of any other
remedies that may otherwise be available at law or in equity). The number of
shares of Common Stock the Company shall issue pursuant to the preceding
sentence shall be equal to the product of (i) the number of shares of
Registrable Securities held by such Investor to be covered by the Registration
Statement; (ii) either (a) two hundredths (.02) if such penalty relates to the
one-hundred eighty (180) day period (the "First Payment Period") commencing
immediately upon the expiration of the Pre-registration Period, or (b) one
hundredth (.01) if such penalty relates to the period after the expiration of
the First Payment Period; and (iii) the sum of the following, provided, however,
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that the total number of months under this subsection (iii) shall not exceed
nine and one-half months: (x) the number of months (prorated for partial months)
after the end of the Pre-registration Period and prior to the date the
Registration Statement is declared effective by the SEC (the "Effective Date");
provided, however, that there shall be excluded from such period any delays
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which are solely attributable to changes required by the Investors in the
Registration Statement with respect to information relating to the Investors,
including, without limitation, changes to the plan of distribution, or to the
failure of the Investors to conduct their review of the Registration Statement
pursuant to Section 3(g) below in a reasonably prompt manner; (y) the number of
months (prorated for partial months) that sales cannot be made pursuant to the
Registration Statement during the Registration Period (as hereinafter defined)
because of the issuance of a stop order or other suspension of effectiveness of
the Registration Statement, or if the Investors are not permitted under Section
4(c) hereof to sell Registrable Securities for a period of more than ten (10)
consecutive business days; and (z) the number of months (prorated for partial
months) that the Common Stock is not listed or included for quotation on the
Nasdaq, NYSE or AMEX or that trading of the Common Stock thereon is halted
during the Registration Period (unless all trading on the Nasdaq, NYSE or AMEX,
as the case may be, is halted). (For example, if the Registration Statement
becomes effective one (1) month after the end of the Pre-registration Period,
the Company would be required to issue 2,000 additional shares of Common Stock
to the Investors for each 100,000 shares of Common Stock issued pursuant to the
Subscription Agreements. If thereafter, sales could not be made pursuant to the
Registration Statement for an additional period of fifteen (15) days subsequent
to the First Payment Period, the Company would be required to issue an
additional 500 shares of Common Stock to the Investors for each 100,000 shares
of Common Stock issued pursuant to the Subscription Agreements). Any shares of
Common Stock issued pursuant to this Section 2(c) shall be Registrable
Securities. The additional shares of Common Stock to be issued pursuant to this
Section 2(c) shall be issued to the Investors within five (5) days after the end
of each period that gives rise to such obligation; provided that if any such
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period extends for more than thirty (30) days, interim issuances of Common Stock
shall be made for each such 30-day period. If the provisions of this Section
2(c) would otherwise result in the issuance of fractional shares of Common Stock
to an Investor, the Company shall round the number of shares to be issued to
such Investor to the nearest whole share.
d. Eligibility for Form S-3. The Company represents and warrants
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that, as of the date hereof, it meets the registrant eligibility and transaction
requirements for the use of Form S-3 for registration of the sale of the
Registrable Securities by the Investors, and the
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Company shall file all reports required to be filed by the Company with the SEC
in a timely manner so as to maintain such eligibility for the use of Form S-3.
3. OBLIGATIONS OF THE COMPANY.
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In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
a. The Company shall prepare and file a Registration Statement and
use its best efforts to cause such Registration Statement to become effective,
all as provided in Section 2(a) hereof, and keep the Registration Statement
effective pursuant to Rule 415 at all times until such date as is the earlier of
(i) the date on which all of the Registrable Securities covered by the
Registration Statement have been sold by the Investors, or (ii) the date on
which all of the shares of Common Stock issued pursuant to the Subscription
Agreements or Section 2(c) hereof, or as a dividend on or in exchange for or
otherwise with respect to any of the foregoing, have ceased to be Registrable
Securities. The period from the filing of the Registration Statement until the
earlier of (i) or (ii) above shall be referred to herein as the "Registration
Period".
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective at all times
during the Registration Period, and, during such period, comply with the
provisions of the 1933 Act with respect to the disposition of all Registrable
Securities of the Company covered by the Registration Statement until such time
as all of such Registrable Securities have been disposed of in accordance with
the intended methods of disposition by the seller or sellers thereof as set
forth in the Registration Statement.
c. The Company shall furnish to each Investor (and the firm of legal
counsel designated pursuant to Section 3(g)) whose Registrable Securities are
included in the Registration Statement (i) promptly after the same is prepared
and publicly distributed and filed with the SEC, one copy of the Registration
Statement and any amendment thereto, each preliminary prospectus and prospectus
and each amendment and supplement thereto, and (ii) such number of copies of a
prospectus and all amendments and supplements thereto and such other documents
as such Investor may reasonably request in order to facilitate the disposition
of the Registrable Securities covered by the Registration Statement and owned by
such Investor. The Company shall immediately notify each Investor by facsimile
of the effectiveness of the Registration Statement or any post-effective
amendment.
d. The Company shall use reasonable efforts to (i) register and
qualify the Registrable Securities covered by the Registration Statement under
such other securities or "blue sky" laws of such jurisdictions in the United
States as the Investors who hold a majority-in-interest of the Registrable
Securities being offered reasonably request, (ii) prepare and file in those
jurisdictions such amendments (including post-effective amendments) and
supplements to
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such registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
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required in connection therewith or as a condition thereto to (a) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (b) subject itself to general taxation in any such
jurisdiction, or (c) file a general consent to service of process in any such
jurisdiction.
e. As promptly as practicable after becoming aware of such event,
the Company shall notify each Investor of the happening of any event of which
the Company has knowledge as a result of which the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and the Company shall use its best efforts
to promptly prepare a supplement or amendment to the Registration Statement to
correct such untrue statement or omission, and deliver such number of copies of
such supplement or amendment to each Investor as such Investor may reasonably
request.
f. The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of the Registration
Statement, and, if such an order is issued, to obtain the withdrawal of such
order at the earliest possible moment and to notify each Investor who holds
Registrable Securities being sold (or, in the event of an underwritten offering,
the managing underwriters) of the issuance of such order and the resolution
thereof.
g. The Company shall permit a single firm of legal counsel
designated by the Investors holding a majority-in-interest of the Registrable
Securities included in the Registration Statement to review the Registration
Statement and all amendments and supplements thereto (as well as all requests
for acceleration or effectiveness thereof) a reasonable period of time prior to
their filing with the SEC, and shall not file any document in a form to which
such counsel reasonably objects and will not request acceleration of the
Registration Statement without prior notice to such counsel. The sections of the
Registration Statement covering information with respect to the Investors, the
Investors' beneficial ownership of securities of the Company or the Investors'
intended method of disposition of Registrable Securities shall conform to the
information provided to the Company by each of the Investors.
h. The Company shall otherwise use its best efforts to comply with
all applicable rules and regulations of the SEC, and make generally available to
its security holders as soon as practical, but not later than ninety (90) days
after the close of the period covered thereby, an earnings statement (in form
complying with the provisions of Section 11(a) and Rule 158 under the 0000 Xxx)
covering a period of at least twelve-months beginning with the first day of the
Company's first full calendar quarter following the Effective Date.
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i. The Company shall make available for inspection, at the offices
where normally kept and during reasonable business hours, by (i) any Investor,
(ii) any underwriter participating in any disposition pursuant to the
Registration Statement, (iii) any firm of legal counsel and any firm of
accountants or other agents retained by any Investors holding Registrable
Securities included in such Registration Statement, and (iv) one firm of legal
counsel retained by all such underwriters (collectively, the "Inspectors"), all
pertinent financial and other records, corporate documents and properties of the
Company (collectively, the "Records"), as shall be reasonably requested by such
person in connection with such Registration Statement, and cause the Company's
officers, directors and employees to supply all information which any Inspector
may reasonably request for purposes of such due diligence; provided, however,
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that each Inspector shall hold in confidence and shall not make any disclosure
(except to an Investor or agents of the Company) of any Record or other
information obtained in connection with any such inspection, unless (a) the
disclosure of such Records is necessary in connection with the Inspectors' or
Investors' assertion of any claims or actions or with their establishment of any
defense in any pending administrative or judicial action or proceeding, (b) the
release of such Records is ordered pursuant to a subpoena or other order from a
court or government body of competent jurisdiction, or (c) the information in
such Records has been made generally available to the public other than by
disclosure in violation of this or any other agreement. Each Investor agrees
that it shall, and shall cause each of its Inspectors to, upon learning that
disclosure of such Records is sought in or by a court or governmental body of
competent jurisdiction or through other means, give notice of such request to
the Company.
j. The Company shall hold in confidence and not make any disclosure
of information concerning an Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission of material fact in the Registration
Statement that directly relates to such Investor, (iii) the release of such
information is ordered pursuant to a subpoena or other order from a court or
governmental body of competent jurisdiction, or (iv) such information has been
made generally available to the public other than by disclosure in violation of
this or any other agreement. The Company agrees that it shall, upon learning
that disclosure of such information concerning an Investor is sought in or by a
court or governmental body of competent jurisdiction or through other means,
give notice of such request to such Investor.
k. The Company shall (i) cause all the Registrable Securities
covered by the Registration Statement to be listed on each national securities
exchange on which securities of the same class or series issued by the Company
are then listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, or (ii) secure the designation and
quotation of all the Registrable Securities covered by the Registration
Statement on Nasdaq.
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l. The Company shall provide a transfer agent and registrar, which
may be a single entity, for the Registrable Securities not later than the
Effective Date.
m. The Company shall enter into such customary agreements (including
underwriting agreements in customary form as are reasonably satisfactory to the
Company with customary indemnification and contribution obligations) and take
all such other appropriate actions as the holders of a majority-in-interest of
the Registrable Securities being sold or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities. The Investors holding Registrable Securities which are to be
distributed by such underwriters shall be parties to such underwriting agreement
and may, at their option, require that the Company make to and for the benefit
of such holders the representations, warranties and covenants of the Company
which are being made to and for the benefit of such underwriters and which are
of the type customarily provided to institutional investors in secondary
offerings.
n. The Company shall use it best efforts to obtain an opinion from
the Company's counsel and a "cold comfort" letter from the Company's independent
public accountants in customary form and covering such matters as are
customarily covered by such opinions and "cold comfort" letters delivered to
underwriters in underwritten public offerings, which opinion and letter shall be
reasonably satisfactory to the underwriter, if any, and to the Investors holding
a majority-in-interest of the Registrable Securities, and furnish to each
Investor participating in the offering and to each underwriter, if any, a copy
of such opinion and letter addressed to such Investor or underwriter.
o. The Company shall cooperate with the Investors holding
Registrable Securities and the managing underwriter, if any, to facilitate the
timely preparation and delivery of certificates not bearing any restrictive
legends representing the Registrable Securities to be sold, and cause such
Registrable Securities to be issued in such denominations and registered in such
names in accordance with the underwriting agreement prior to any sale of
Registrable Securities to the underwriters or, if not an underwritten offering,
in accordance with the instructions of the Investors holding Registrable
Securities at least three business days prior to any sale of Registrable
Securities and instruct any transfer agent and registrar of Registrable
Securities to release any stop transfer orders in respect thereof.
p. The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Investors of Registrable Securities
pursuant to the Registration Statement.
q. If any such registration statement or comparable statement under
"blue sky" laws refers to any Investor by name or otherwise as the holder of any
securities of the Company, then such Investor shall have the right to require
(i) the insertion therein of language, in form and substance satisfactory to
such Investor and the Company, to the effect that the holding by such Investor
of such securities is not to be construed as a recommendation by such Investor
of the investment quality of the Company's securities covered thereby and that
such holding does not imply that such Investor will assist in meeting any future
financial requirements of the Company, or (ii) in the event that such reference
to such Investor by name or otherwise is
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not in the judgment of the Company, as advised by counsel, required by the 1933
Act or any similar federal statute or any state "blue sky" or securities law
then in force, the deletion of the reference to such Investor.
4. OBLIGATIONS OF THE INVESTORS.
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In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:
a. It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to
the Registrable Securities of a particular Investor that such Investor furnish
to the Company such information regarding itself, the Registrable Securities
held by it and the intended method of disposition of the Registrable Securities
held by it as shall be reasonably required to effect the registration of such
Registrable Securities and as are customarily provided by selling stockholders
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and shall execute such documents in connection with such registration as the
Company may reasonably request and as are customarily executed by selling
stockholders; provided that any such information shall be used only in
connection with such registration. At least five (5) business days prior to the
first anticipated filing date of the Registration Statement, the Company shall
notify each Investor or its counsel of the information the Company requires from
each such Investor.
b. Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement, unless such Investor has notified the Company in writing of such
Investor's election to exclude all of such Investor's Registrable Securities
from the Registration Statement.
c. Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(e) or
3(f), such Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(e) or 3(f) and, if so directed by
the Company, such Investor shall, at its option, deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in such Investor's possession, of the prospectus
covering such Registrable Securities at the time of receipt of such notice.
d. No Investor may participate in any underwritten registration
hereunder unless such Investor (i) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting arrangements entered into
by the Company, (ii) completes and executes all questionnaires, indemnities,
underwriting agreements and other documents (other than powers of attorney)
reasonably required under the terms of such underwriting arrangements, and (iii)
agrees to pay its pro rata share of all underwriting discounts and commissions
and its own expenses (including, without limitation, counsel fees, except as
specifically provided herein).
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5. EXPENSES OF REGISTRATION.
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All expenses incident to the Company's performance of or compliance with
this Agreement, including, without limitation, all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, and fees and disbursements of counsel
for the Company and all independent certified public accountants, underwriters
(excluding underwriting discounts and commissions) and other persons retained by
the Company (all such expenses being herein called "Registration Expenses"),
will be borne by the Company. Additionally, the Company will reimburse the
holders of Registrable Securities covered by a Registration Statement for the
reasonable fees and disbursements of one counsel chosen by the holders of a
majority-in-interest of the Registrable Securities. Each Investor will, however,
bear any transfer taxes and underwriting discounts or commissions applicable to
the Registrable Securities sold by such Investor.
6. INDEMNIFICATION.
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In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the fullest extent permitted by law, the Company will, and
hereby agrees to, indemnify, hold harmless and defend (i) each Investor who
holds such Registrable Securities, (ii) the directors, officers, partners,
employees, agents and each person who controls any Investor within the meaning
of the 1933 Act or the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder, of any similar successor statute (the "1934
Act"), if any, (iii) any underwriter (as defined in the 0000 Xxx) for the
Investors, and (iv) the directors, officers, partners, employees and each person
who controls any such underwriter within the meaning of the 1933 Act or the 1934
Act, if any (each, an "Indemnified Person"), against any and all joint or
several losses, claims, damages, liabilities or expenses (collectively, together
with actions, proceedings or inquiries by any regulatory or self-regulatory
organization, whether commenced or threatened, in respect thereof, "Claims") to
which any of them may become subject insofar as such Claims arise out of or are
based upon: (i) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement or the omission or alleged omission to state
therein a material fact required to be stated or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to the
Effective Date, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading; or (iii) any violation
or alleged violation by the Company of the 1933 Act, the 1934 Act, any other
law, including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities (the matters in the foregoing clauses (i) through (iii) being,
collectively, "Violations"). Subject to the restrictions set forth in Section
6(c) hereof with respect to the retention of legal counsel by an Indemnified
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Person or Indemnified Party (as defined below), the Company shall reimburse the
Indemnified Person, promptly as such expenses are incurred and are due and
payable, for any reasonable legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (i) shall not apply to a Claim arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by or on behalf of any
Indemnified Person expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto, if
such prospectus was timely made available by the Company pursuant to Section
3(c) hereof; and (ii) with respect to any preliminary prospectus, shall not
inure to the benefit of any Indemnified Person if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus, as then amended or supplemented, such
corrected prospectus was timely made available by the Company pursuant to
Section 3(c) hereof, and the Investors were promptly advised in writing not to
use the incorrect prospectus prior to the use giving rise to a Violation and
such Indemnified Person, notwithstanding such advice, used it. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9 hereof.
b. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees severally and not jointly
to indemnify, hold harmless and defend, to the same extent and in the same
manner set forth in Section 6(a) hereof, the Company, each of its directors,
each of its officers who signs the Registration Statement, to the fullest extent
permitted by law, each person, if any, who controls the Company within the
meaning of the 1933 Act or the 1934 Act, any underwriter and any other
stockholder selling securities pursuant to the Registration Statement or any of
its directors, officers, agents or any person who controls such stockholder or
underwriter within the meaning of the 1933 Act or the 1934 Act (collectively and
together with an Indemnified Person, an "Indemnified Party"), against any Claim
to which any of them may become subject, under the 1933 Act, the 1934 Act or
otherwise, insofar as such Claim arises out of or is based upon any Violation by
such Investor, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in connection with
such Registration Statement; and subject to Section 6(c) hereof with respect to
the retention of legal counsel by an Indemnified Person or Indemnified Party,
such Investor will reimburse any legal or other expenses (promptly as such
expenses are incurred and are due and payable) reasonably incurred by them in
connection with investigating or defending any such Claim; provided, however,
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that the Investor shall be liable under this Agreement (including this Section
6(b) and Section 7 hereof) for only that amount as does not exceed the net
proceeds from the sale of Registrable Securities by such Investor pursuant to
such Registration Statement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such Indemnified
Party and shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 9 hereof. Notwithstanding anything herein to the
contrary, the indemnification agreement contained in this Section 6(b) with
respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue
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statement or omission of material fact contained in the preliminary prospectus
was corrected on a timely basis in the prospectus, as then amended or
supplemented.
c. Indemnification similar to that specified in the preceding
paragraphs (a) and (b) of this Section 6 (with appropriate modifications) shall
be given by the Company and each Investor selling Registrable Securities with
respect to any required registration or other qualification of securities under
any state securities and "blue sky" laws.
d. Any person entitled to indemnification under this Agreement shall
notify promptly the indemnifying party in writing of the commencement of any
action or proceeding with respect to which a claim for indemnification may be
made pursuant to this Section 6, but the failure of any indemnified party to
provide such notice shall not relieve the indemnifying party of its obligations
under the preceding paragraphs of this Section 6, except to the extent the
indemnifying party is materially prejudiced thereby and shall not relieve the
indemnifying party from any liability which it may have to any indemnified party
otherwise than under this Section 6. In case any action or proceeding is brought
against an indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, unless in the reasonable opinion of outside counsel to the
indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, to assume the defense
thereof jointly with any other indemnifying party similarly notified, to the
extent that it chooses, with counsel reasonably satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and after notice from the indemnifying party
to such indemnified party that it so chooses, the indemnifying party shall not
be liable to such indemnified party for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation; provided, however, that (i) if the
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indemnifying party fails to take reasonable steps necessary to defend diligently
the action or proceeding within 20 days after receiving notice from such
indemnified party that the indemnified party believes it has failed to do so;
(ii) if such indemnified party who is a defendant in any action or proceeding
which is also brought against the indemnifying party reasonably shall have
concluded that there may be one or more legal defenses available to such
indemnified party which are not available to the indemnifying party; or (iii) if
representation of both parties by the same counsel is otherwise inappropriate
under applicable standards of professional conduct, then, in any such case, the
indemnified party shall have the right to assume or continue its own defense as
set forth above (but with no more than one firm of counsel for all indemnified
parties in each jurisdiction, except to the extent any indemnified party or
parties reasonably shall have concluded that there may be legal defenses
available to such party or parties which are not available to the other
indemnified parties or to the extent representation of all indemnified parties
by the same counsel is otherwise inappropriate under applicable standards of
professional conduct) and the indemnifying party shall be liable for any
expenses therefor. No indemnifying party shall, without the written consent of
the indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to any pending or threatened action or claim
in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to such
action
11
or claim) unless such settlement, compromise or judgment (A) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim and (B) does not include a statement as to or an admission
of fault, culpability or a failure to act, by or on behalf of any indemnified
party.
e. If for any reason the foregoing indemnity is unavailable or is
insufficient to hold harmless an indemnified party under Sections 6(a), (b) or
(c), then each indemnifying party shall contribute to the amount paid or payable
by such indemnified party as a result of any Claim in such proportion as is
appropriate to reflect the relative fault of the indemnifying party, on the one
hand, and the indemnified party, on the other hand, with respect to such
offering of securities. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or the indemnified party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. If, however, the
allocation provided in the second preceding sentence is not permitted by
applicable law, then each indemnifying party shall contribute to the amount paid
or payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative faults but also the relative benefits of the
indemnifying party and the indemnified party as well as any other relevant
equitable considerations. The parties hereto agree that it would not be just and
equitable if contributions pursuant to this Section 6(e) were to be determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the preceding sentences
of this Section 6(e). The amount paid or payable in respect of any Claim shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such Claim.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 0000 Xxx) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Notwithstanding anything in
this Section 6(e) to the contrary, no indemnifying party (other than the
Company) shall be required pursuant to this Section 6(e) to contribute any
amount in excess of the net proceeds received by such indemnifying party from
the sale of Registrable Securities in the offering to which the losses, claims,
damages or liabilities of the indemnified parties relate, less the amount of any
indemnification payment made pursuant to Sections 6(b) and (c).
f. The indemnity agreements contained herein shall be in addition to
any other rights to indemnification or contribution which any indemnified party
may have pursuant to law or contract and shall remain operative and in full
force and effect regardless of any investigation made or omitted by or on behalf
of any indemnified party and shall survive the transfer of the Registrable
Securities by any such party.
g. The indemnification and contribution required by this Section 6
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
7. NO OBLIGATION TO SELL.
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12
Nothing in this Agreement shall be deemed to create an independent
obligation on the part of any Investor to sell any Registrable Securities
pursuant to any effective registration statement.
8. REPORTS UNDER THE 1934 ACT.
--------------------------
With a view to making available to the Investors the benefits of Rule
144 promulgated under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time permit the investors to sell securities of the
Company to the public without registration ("Rule 144"), the Company agrees,
during the term of this Agreement, to:
a. make and keep public information available, as those terms are
understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements and the filing of such reports
and other documents is required for the applicable provisions of Rule 144; and
c. furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon written request, (i) a written statement
by the Company as to whether or not it has complied with the reporting
requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested to permit the Investors to sell such securities pursuant to
Rule 144 without registration.
9. ASSIGNMENT.
----------
The rights under this Agreement may be assigned by the Investors to any
transferee of all or any portion of Registrable Securities if the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
contained herein (such agreement being evidenced by the execution of a
Counterpart and Acknowledgement substantially in the form attached hereto as
Exhibit A). Subject to the requirements of this Section 9, this Agreement shall
---------
inure to the benefit of and be binding upon the successors and assigns of each
of the parties hereto.
10. AMENDMENT.
---------
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with written consent of the Company and
Investors who hold a majority-in-interest of the Registrable Securities;
provided, however, that no Investor who purchases $1 million or more of Common
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13
Stock pursuant to the Subscription Agreements shall be bound by any such
amendment or waiver without such Investor's written consent. Any amendment or
waiver effected in accordance with this Section 10 shall be binding upon each
Investor and the Company.
11. MISCELLANEOUS.
-------------
a. Definition of Holder of Registrable Securities. A person or
----------------------------------------------
entity is deemed to be the holder of Registrable Securities owned by such person
and its affiliates. If Registrable Securities are held by a nominee for the
beneficial owner thereof, the beneficial owner thereof may, at its option, 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
constituting Registrable Securities held by any holder or holders of Registrable
Securities contemplated by this Agreement); provided that the Company shall have
received assurances reasonably satisfactory to it of such beneficial ownership.
b. Notices. Any notices required or permitted to be given under the
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terms hereof shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier (including a nationally
recognized overnight delivery service) or by facsimile and shall be effective
five days after being placed in the mail, if mailed by regular U.S. mail, or
upon receipt, if delivered personally or by courier (including a nationally
recognized overnight delivery service) or by facsimile, in each case addressed
to a party. The addresses for such communications shall be:
If to the Company:
Biofield Corp.
0000 Xxxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
With copy to:
Squadron, Ellenoff, Plesent & Xxxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxx, Esq.
Facsimile: (000) 000-0000
If to an Investor: to the address set forth immediately below such Investor's
name on the signature pages to the Subscription Agreements.
14
c. Remedies. Any person having rights under any provision of this
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Agreement shall be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
d. Governing Law; Severability. This Agreement shall be enforced,
---------------------------
governed by and construed in accordance with the laws of New York applicable to
agreements made and to be performed entirely within such State. In the event
that any provision of this Agreement is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any provision hereof which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision hereof. The parties hereto hereby
submit to the exclusive jurisdiction of the United States Federal Courts located
in New York with respect to any dispute arising under this Agreement or the
transactions contemplated hereby.
e. Merger Clause. This Agreement and the Subscription Agreements
-------------
(including all schedules and exhibits thereto) constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof.
There are no restrictions, promises, warranties or undertakings other than those
set forth or referred to herein and therein. This Agreement and the Subscription
Agreements supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof and thereof. Notwithstanding
the foregoing, this Agreement shall have no effect on any other registration
rights agreement to which any Investor and the Company are a party.
f. Descriptive Headings. The headings in this Agreement are for
--------------------
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
g. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered to any other party hereto by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this
Agreement.
h. Further Acts. Each party shall do and perform, or cause to be
------------
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request
15
in order to carry out the intent and accomplish the purposes of this Agreement
and the consummation of the transactions contemplated hereby.
i. Consents. Except as otherwise provided herein, all consents and
--------
other determinations to be made by the Investors pursuant to this Agreement
shall be made by Investors holding a majority-in-interest of the Registrable
Securities.
j. Construction. The language used in this Agreement will be deemed
------------
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
* * * * *
16
IN WITNESS WHEREOF, the Company and the undersigned Initial Investors have
caused this Agreement to be duly executed as of the date first above written.
BIOFIELD CORP.
--------------------------
By:
-----------------------
Its:
-----------------------
INVESTORS:
--------------------------
By:
-----------------------
Its:
----------------------
Address:
------------------
--------------------------
--------------------------
Facsimile:
----------------
--------------------------
By:
-----------------------
Its:
----------------------
Address:
------------------
--------------------------
--------------------------
Facsimile:
----------------
--------------------------
By:
-----------------------
Its:
----------------------
Address:
------------------
--------------------------
--------------------------
Facsimile:
----------------
17
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
COUNTERPART AND ACKNOWLEDGEMENT
-------------------------------
TO: BIOFIELD CORP.
RE: The Registration Rights Agreement (the "Agreement") dated as of
__________ __, 1997, by and among Biofield Corp. and the Initial
Investors (as defined in the Agreement)
The undersigned hereby agrees to be bound by the terms of the Agreement
as a party to the Agreement, and shall be entitled to all benefits of an
Investor (as defined in the Agreement) pursuant to the Agreement, as fully and
effectively as though the undersigned had executed a counterpart of the
Agreement together with the other parties to the Agreement. The undersigned
hereby acknowledges having received and reviewed a copy of the Agreement.
DATED this _____ day of ____________, 199_.
INVESTOR
--------------------------
By:
-----------------------
Its:
----------------------
Address:
------------------
--------------------------
--------------------------
Facsimile:
----------------
Number of
Shares of
Registrable Securities:
---
18
