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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.
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
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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.
a. Mandatory Registration. The Company shall prepare and
file with 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 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 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 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)
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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, 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 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 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 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 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.
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3. OBLIGATIONS OF THE COMPANY.
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 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
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in such jurisdictions; provided, however, that the Company shall not be 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.
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
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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,
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.
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
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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 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.
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4. OBLIGATIONS OF THE INVESTORS.
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 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).
5. EXPENSES OF REGISTRATION.
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,
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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.
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
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
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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, 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 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
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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 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 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.
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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.
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.
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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
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.
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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 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.
c. Remedies. Any person having rights under any
provision of this 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
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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 in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
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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.
* * * * *
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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.
/s/ Xxxxxxx X. Gaverchak
---------------------------------
By: Xxxxxxx X. Gaverchak
Its: Executive Vice President and
General Counsel
INVESTORS:
/s/
---------------------------------
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