REGISTRATION RIGHTS AGREEMENT
EXHIBIT
10.86
This
Registration Rights Agreement (this "Agreement") is
made and entered into as of February 28, 2005 by and between Solaris Opportunity
Fund, L.P. ("Purchaser"), and
Positron Corporation, a Texas corporation (the "Company").
R E C
I T A L S :
WHEREAS,
concurrent with the execution of this Agreement the Company and Purchaser are
entering into a Note Purchase Agreement (as defined below) pursuant to which
Purchaser will purchase from the Company Secured Convertible Promissory Notes in
the aggregate principal amount of $1,000,000 (the "Notes");
and
WHEREAS,
the Notes are convertible at the option of the holders into shares of the
Company's Series E Preferred Stock, $1.00 par value (the "Series
E Preferred Stock"), which
shares are in turn convertible into shares of the Company's Common Stock (the
"Common Stock").
NOW,
THEREFORE, in consideration of the mutual promises, representations, warranties
and conditions set forth in this Agreement, the parties hereto, intending to be
legally bound, hereby agree as follows:
A G R E E M E N T
:
1. Definitions. For
purposes of this Agreement, in addition to the definitions set forth above and
elsewhere herein, the following terms shall have the following respective
meanings:
"Acquisition
Shares" shall
mean the shares of Series E Preferred Stock and Common Stock which the Purchaser
will have a right to acquire upon the conversion of the Notes.
"Commission" shall
mean the United States Securities and Exchange Commission and any successor
agency.
"Demand
Date" shall
mean the date the Company receives the written request for registration of
Registrable Stock from Purchaser pursuant to Section 3 hereof.
"Exchange
Act" shall
mean the Securities Exchange Act of 1934, as amended, or any similar federal
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
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"Holder" shall
mean the Purchaser and all transferees or assignees thereof to whom the rights
under this Agreement are assigned in accordance with the provisions of
Section 8 hereof.
"Note
Purchase Agreement" shall
mean the Note Purchase Agreement between the Company and the Purchaser, dated
February 28, 2005.
"Person" shall
mean an individual, corporation, partnership, limited partnership, syndicate,
person (including, without limitation, a "person" as defined in
Section 13(d)(3) of the Exchange Act), trust, association or entity or
government, political subdivision, agency or instrumentality of a
government.
"Register,"
"registered" and
"registration" shall
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act and the
declaration or ordering of effectiveness of such registration statement or
document.
"Registrable
Stock" shall
mean (a) the Acquisition Shares, (b) any shares of Common Stock or
other capital stock issued as a dividend, or other distribution with respect to,
or in exchange for, or in replacement of, any of the Acquisition Shares and
(c) any shares of capital stock issued by way of a stock split of the
Acquisition Shares referred to in clause (a) above. For purposes of this
Agreement, any Registrable Stock shall cease to be Registrable Stock when
(i) a registration statement covering such Registrable Stock has been
declared effective and such Registrable Stock has been disposed of pursuant to
such effective registration statement, (ii) such Registrable Stock is sold
by a person in a transaction in which the rights under the provisions of this
Agreement are not assigned, or (iii) all such Registrable Stock may be sold
by any and all Holders pursuant to Rule 144(k) (or any similar provision then in
force, but not Rule 144A) under the Securities Act without registration
under the Securities Act.
"Securities
Act" shall
mean the Securities Act of 1933, as amended, or any similar federal statute, and
the rules and regulations of the Commission thereunder, all as the same shall be
in effect at the time.
2. Restrictive
Legend. Each
certificate representing Acquisition Shares shall, except as otherwise provided
in this Section 2, be stamped or otherwise imprinted with a legend
substantially in the form set forth in the Note Purchase Agreement. A
certificate shall not bear such legend if in the opinion of counsel satisfactory
to the Company or the Company shall determine that the securities being sold
thereby may be publicly sold without registration under the Securities Act or
the transfer of such securities is permitted under the provisions of Regulation
D, Rule 144(k) or Rule 144A (or any rule permitting public sale
without registration under the Securities Act).
3. Registration
Rights. Upon
the written request of Purchaser to the Company, the Company shall use its
reasonable best efforts to prepare and file with the Commission a registration
statement on an applicable form, signed, pursuant to Section 6(a) of the
Securities Act, by the officers and directors of the Company, with respect to
the Registrable Stock. If the Company shall fail to register the shares of
Registrable Stock, the Company shall deliver the unregistered shares of
Registrable Stock to the Purchaser and such shares may be sold pursuant to and
subject to the requirements of Rule 144 under the Securities Act. The Company's
delivery of the unregistered shares shall be the Purchaser's sole remedy for any
failure by the Company to register shares pursuant to this Section 3. In
connection with this Section 3, the Company shall:
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(a) cause
such registration statement to become effective on or before the three-month
anniversary of the Demand Date and to remain effective through and including the
earlier of (i) the time when all of the Registrable Stock has been sold
pursuant to such registration statement or (ii) the time when all of the
Holders of the Registrable Stock can sell all of the Registrable Stock pursuant
to Rule 144(k) (or any similar provision then in force, but not
Rule 144A) under the Securities Act without registration under the
Securities Act.
(b) prepare
and file with the Commission such amendments and supplements to such
registration statement, signed, pursuant to Section 6(a) of the Securities
Act, by the officers and directors of the Company, and the prospectus used in
connection therewith as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Stock covered
by such registration statement;
(c) furnish
to the Holders such numbers of copies of the registration statement and the
prospectus included therein (including each preliminary prospectus and any
amendments or supplements thereto) in conformity with the requirements of the
Securities Act and such other documents and information as they may reasonably
request;
(d) use its
reasonable best efforts to register or qualify the Registrable Stock covered by
such registration statement under such other securities or blue sky laws of such
jurisdictions within the United States and Puerto Rico as required by law for
the distribution of the Registrable Stock covered by the registration statement;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business in or to file a
general consent to service of process in any jurisdiction wherein it would not
but for the requirements of this paragraph (d) be obligated to do so; and
provided, further, that the Company shall not be required to qualify such
Registrable Stock in any jurisdiction in which the securities regulatory
authority requires that any Holder submit any shares of its Registrable Stock to
the terms, provisions and restrictions of any escrow, lockup or similar
agreement(s) for consent to sell Registrable Stock in such jurisdiction unless
such Holder agrees to do so;
(e) promptly
notify each Holder for whom such Registrable Stock is covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which they
were made, and at the request of any such Holder promptly prepare and furnish to
such Holder a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to Holders
of such securities, such prospectus shall not include any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made;
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(f) enter
into customary agreements and take such other actions as are reasonably required
in order to expedite or facilitate the disposition of the Registrable Stock to
be so included in the registration statement;
(g) otherwise
use its reasonable best efforts to comply with all applicable rules and
regulations of the Commission;
(h) use its
reasonable best efforts to list the Registrable Stock covered by such
registration statement with any securities exchange on which Common Stock is
then listed; and
(i) after the
effectiveness of the registration statement, cooperate with the Holders to
facilitate the timely preparation and delivery of certificates representing the
Registrable Stock to be sold, which certificates shall not bear any restrictive
legends other than restrictive legends still required to be imposed by the Note
Purchase Agreement.
4. Suspension
of Trading.
Notwithstanding any other provision of this Agreement, the Company shall have
the right at any time to require that all Holders suspend further open market
offers and sales of Registrable Stock whenever, and for so long as, in the
reasonable judgment of the Company in good faith based upon the advice of
counsel satisfactory to the Holders of a majority of the Registrable Stock,
there is in existence material undisclosed information or events with respect to
the Company (the "Suspension
Right") such
that the registration statement would contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. In the event the Company exercises the
Suspension Right, such suspension will continue for such period of time
reasonably necessary for disclosure to occur at a time that is not materially
detrimental to the Company or until such time as the registration statement does
not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made,
each as determined in good faith by the Company. The Company will promptly give
the Holders notice, in a writing signed by an executive officer of the Company,
of any exercise of the Suspension Right. The Company agrees to notify the
Holders promptly upon termination of the Suspension Right. Notwithstanding the
foregoing, under no circumstances shall Holder be entitled to exercise the
Suspension Right for more than sixty calendar days in any twelve-month
period.
5. Furnish
Information. It
shall be a condition precedent to the obligations of the Company to take any
action pursuant to this Agreement that the Holders shall furnish to the Company
such information regarding themselves, the Registrable Stock held by them, and
the intended method of disposition of such securities as the Company shall
reasonably request and as shall be required in connection with the action to be
taken by the Company.
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6. Expenses
of Registration. So long
as the Company has received at least $700,000 in principal under the Notes, all
expenses incurred in connection with the registration pursuant to this
Agreement, including without limitation all registration, filing and
qualification fees, word processing, duplicating, printers' and accounting fees
(including the expenses of any special audits or comfort letters required by or
incident to such performance and compliance), fees of the National Association
of Securities Dealers, Inc. or listing fees, messenger and delivery expenses,
all fees and expenses of complying with state securities or blue sky laws,
reasonable fees and disbursements of counsel for the Company (collectively, the
"Expenses"), shall
be paid by the Company. If the Company has not received at least $700,000 in
principal under the Notes and Purchaser has requested registration pursuant to
this Agreement, all Expenses shall be paid by Purchaser. In the event Expenses
are to be paid by Purchaser, such Expenses shall be prepaid by Purchaser to the
Company upon receipt of a reasonable estimate from the Company (the
"Expenses
Estimate"). To
extent the Expenses Estimate exceeds actual Expenses, Purchaser shall be
reimbursed within 30 days of the effective registration of the Registrable
Stock. To extent the Expenses Estimate is insufficient to cover total actual
Expenses, Purchaser shall reimburse the Company for such excess within 30 days
of receipt of an invoice for such excess Expenses. The parties agree that all
underwriting discounts and commissions shall be the responsibility of the
Holders.
7. Indemnification.
(a) To the
extent permitted by applicable law, the Company shall indemnify and hold
harmless each Holder, such Holder's directors and officers, any underwriter (as
defined in the Securities Act), and each person, if any, who controls such
Holder or underwriter within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which they may
become subject under the Securities Act or any other applicable state or federal
law, insofar as such losses, claims, damages or liabilities (or proceedings in
respect thereof) arise out of or are based on any untrue or alleged untrue
statement of any material fact contained in such registration statement on the
effective date thereof (including any prospectus filed under Rule 424 under
the Securities Act or any amendments or supplements thereto) or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and shall reimburse each such Holder, such Holder's directors and
officers, such underwriter or controlling person for any legal or other expenses
reasonably incurred by them (but not in excess of expenses incurred in respect
of one counsel and one local counsel for all of them unless, in the reasonable
judgment of an indemnified party there is potential conflict of interest between
any indemnified parties, which indemnified parties may be represented by
separate counsel and local counsel) in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this Section 7(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld); provided, further, that the Company
shall not be liable to any Holder, such Holder's directors and officers,
underwriter or controlling person in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in connection with such registration statement, preliminary prospectus,
final prospectus or amendments or supplements thereto, in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, such Holder's directors and officers,
underwriter or controlling person. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of any such Holder,
such Holder's directors and officers, underwriter or controlling person, and
shall survive the transfer of such securities by such Holder.
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(b) To the
extent permitted by applicable law, each Holder shall indemnify and hold
harmless the Company, each of its directors and officers, each person, if any,
who controls the Company within the meaning of the Securities Act, and any
underwriter (within the meaning of the Securities Act) for the Company against
any losses, claims, damages or liabilities, joint or several, to which the
Company or any such director, officer, controlling person or underwriter may
become subject, under the Securities Act or any other applicable state or
federal law, insofar as such losses, claims, damages or liabilities (or
proceedings in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement on the effective date thereof (including any prospectus
filed under Rule 424 under the Securities Act or any amendments or
supplements thereto) or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in such registration
statement in reliance upon and in conformity with written information furnished
expressly by or on behalf of such Holder for use in connection with such
registration; and each such Holder shall reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, controlling
person, agent or underwriter (but not in excess of expenses incurred in respect
of one counsel and one local counsel for all of them unless, in the reasonable
judgment to of an indemnified party, there is a conflict of interest between any
indemnified parties, which indemnified parties may be represented by separate
counsel and local counsel) in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 7(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of such Holder (which consent
shall not be unreasonably withheld), and provided, further, that the liability
of each Holder hereunder shall be limited to the proportion of any such loss,
claim, damage, liability or expense which is equal to the proportion that the
net proceeds from the sale of the shares sold by such Holder under any such
registration statement bears to the total net proceeds from the sale of all
securities sold thereunder, but not in any event to exceed the net proceeds
received by such Holder from the sale of Registrable Stock covered by such
registration statement.
(c) Promptly
after receipt by an indemnified party under this Section of notice of the
commencement of any action, such indemnified party shall, if a claim in respect
thereof is to be made against any indemnifying party under this Section, notify
the indemnifying party in writing of the commencement thereof and the
indemnifying party shall have the right to participate in and assume the defense
thereof with counsel selected by the indemnifying party and reasonably
satisfactory to the indemnified party; provided, however, that the exercise of
the foregoing right shall be conditioned upon the written acknowledgment of the
indemnifying party to the indemnified party of the indemnifying party's
obligation hereunder to indemnify the indemnified party for any losses arising
from such action; and provided further, that in such event, the indemnified
party shall have the right to retain its own counsel and local counsel, with all
fees and expenses thereof to be paid by such indemnified party, and to be
apprised of all progress in any proceeding the defense of which has been assumed
by the indemnifying party. The failure to notify an indemnifying party promptly
of the commencement of any such action, shall only release the indemnifying
party from any of its obligations under this Section 7(c) if, and only to
the extent that, such indemnifying party is materially prejudiced by such
failure, but the omission to so notify the indemnifying party will not relieve
it of any liability that it may have to any indemnified party otherwise than
under this Section.
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(d) To the
extent any indemnification by an indemnifying party is prohibited or limited by
law, the indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and
indemnified party in connection with the actions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of material
fact or omission or alleged omission to state a material fact, has been made by,
or relates to information supplied by, such indemnifying party or indemnified
party, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or payable by a
party as a result of the losses, claims, damages or liabilities referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or
proceeding.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 7(d) were 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 immediately preceding paragraph. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
8. Transfer
of Registration Rights. Subject
to any transfer restrictions set forth in the Note Purchase Agreement or the
Notes the rights of any Holder under this Agreement with respect to any
Registrable Stock may be transferred to any transferee of such Registrable
Stock; provided, however, that (i) the transferring Holder shall give the
Company written notice at or prior to the time of such transfer stating the name
and address of the transferee and identifying the securities with respect to
which the rights under this Agreement are being transferred; (ii) such
transferee shall agree in writing, in form and substance reasonably satisfactory
to the Company, to be bound as a Holder by the provisions of this Agreement; and
(iii) immediately following such transfer the further disposition of such
securities by such transferee is restricted under the Securities Act. Except as
set forth in this Section 8, no transfer of Registrable Stock shall cause
such Registrable Stock to lose such status.
9. Successors
and Assigns. Except
as otherwise expressly provided herein, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties hereto. Except as expressly provided in
this Agreement, nothing in this Agreement, express or implied, is intended to
confer upon any person other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement.
10. Counterparts;
Titles. This
Agreement may be executed and delivered (including by facsimile transmission) in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement. The titles of the
Sections of this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
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11. Notices. Any
notice required or permitted hereunder shall be given in writing and shall be
conclusively deemed effectively given upon personal delivery or delivery by
courier, or on the first business day after transmission if sent by confirmed
facsimile transmission or electronic mail transmission, or five days after
deposit in the United States mail, by registered or certified mail, postage
prepaid, addressed (i) if to the Company, as set forth below the Company's name
on the signature page of this Agreement, and (ii) if to an Investor, at such
Investor's address as set forth on the Signature page of this Agreement, or at
such other address as the Company or such Investor may designate by 10 days'
advance written notice to the other parties hereto.
12. Amendments
and Waivers. Any
provision of this Agreement may be amended and the observance of any provision
of this Agreement may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of the
Company and the Holders of at least 50% of the Registrable Stock then
outstanding. Any amendment or waiver effected in accordance with this
Section 12 shall be binding upon each Holder of any securities subject to
this Agreement at the time outstanding (including securities into which such
securities are convertible), each future Holder and all such securities, and the
Company. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
13. Severability;
Entire Agreement. If one
or more provisions of this Agreement are held to be unenforceable under
applicable law, such provisions shall be excluded from this Agreement and the
balance of this Agreement shall be interpreted as if such provisions were so
excluded and shall be enforceable in accordance with its terms. All prior
agreements of the parties concerning the subject matter of this Agreement are
expressly superseded by this Agreement. This Agreement contains the entire
Agreement of the parties concerning the subject matter hereof. Any oral
representations or modifications of this Agreement shall be of no
effect.
14. Governing
Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas without regard to conflicts of law principles.
15. Forum;
Waiver of Jury Trial.
(a) All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined in the Texas Superior Court or the United States Superior
Court located in the City of Houston, Texas. The parties hereto hereby
(i) submit to the exclusive jurisdiction of the Texas Superior Court or the
United States Superior Court located in the City of Houston, Texas for the
purpose of any action or proceeding arising out of or relating to this Agreement
brought by any party hereto, and (ii) waive, and agree not to assert by way
of motion, defense, or otherwise, in any such action, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that the action or
proceeding is brought in an inconvenient forum, that the venue of the action or
proceeding is improper, or that this Agreement may not be enforced in or by any
of the above-named courts.
(b) EACH OF
THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTIONS OR
PROCEEDINGS DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
[Remainder
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.
| POSITRON CORPORATION, a Texas corporation | SOLARIS OPPORTUNITY FUND, L.P., | ||
| By: | /s/ | ||
|
|
| ||
|
Xxxx X. Xxxxxx,
President
Address:
0000 Xxxxxxx Xxxxx Xxxxx, #000, Xxxxxxx, Xxxxx 00000 |
Name_________________________________
Title__________________________________ Address: 000 Xxxxxxxx Xxxxx Xxx Xxxxx, XX 00000 |
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