REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is entered into as of
November 30, 2006, by and between Scientific Industries, Inc., a
Delaware corporation (the "Company"), and Xxxxx Xxxxx, Xxxxxxx X.
Xxxxxx and Xxxxxxx X. Xxxxxxxx (collectively, the "Stockholders").
WHEREAS, a condition to the sale by the Stockholders to the Company of
the outstanding shares of the capital stock of Altamira Instruments
Inc., pursuant to the Agreement is that the Company provide certain
rights to register under the Securities Act, under certain conditions
the Common Shares received by the Stockholders as part of the sale
consideration,
NOW THEREFORE, IT IS HEREBY AGREED that:
1. Definitions.
As used herein, the following terms shall have the following meanings
ascribed to them below:
"Affiliate" means any Person that has a relationship with a designated
Person whereby either of such Persons directly or indirectly controls
or is controlled by or is under common control with the other. For
this purpose "control" means the power, direct or indirect, of one
Person to direct or cause direction of the management and policies of
another, or any act with respect to the securities of the
Company, whether by contract, through voting securities or otherwise.
"Agreement" means the Stock Purchase Agreement between the Company
and the Stockholders.
"Common Shares" shall mean the shares of Common Stock issued to the
Stockholders pursuant to the Agreement.
"Common Stock" shall be the Company's authorized common stock, as
constituted on the date of the Agreement, any stock into which such
common stock may thereafter be changed and any stock of the Company
of any other class, which is not preferred as to dividends or assets
over any other class of stock of the Company issued to the
Stockholders of shares of such common stock upon any re-
classification thereof.
"Company Registration Expenses" shall mean bills or invoices
(other than Selling Expenses) incident to the Company's performance
of or compliance with the Agreement including, without limitation,
all registration, filing and NASDR fees, fees and expenses of
compliance with securities or blue sky laws, word processing,
duplicating and printing expenses, messenger and delivery expenses,
fees and disbursements of counsel for the Company and all independent
public accountants including the expenses of any audit and/or
"cold comfort" letter, if applicable, and other Persons retained
by the Company.
"Controlling Person" shall have the meaning set forth under
Section 15 of the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Form" means a Form S-4 or Form S-8, pursuant to the
Securities Act or any similar or successor form then in effect.
"Indemnified Party" shall mean a party who is entitled to
indemnification under Section 8 of the Agreement and shall refer
either to (a) the Company, and (b) its directors, officers, agents,
counsel, advisors and Controlling Persons, if any.
"NASDR" means the NASD Regulation, Inc.
"Person" means a corporation, an association, a partnership, a limited
liability company, a joint venture, a trust, an organization, a business,
an entity, an individual, a government or political subdivision thereof
or a governmental body. "Register, registered and registration" means a
registration effected by preparing and filing a Registration Statement
on a form approved by the SEC other than an Excluded Form in compliance
with the Securities Act and the declaration of effectiveness ordering
the effectiveness of such Registration Statement.
"Registrable Securities" means the Common Shares and such additional
shares of Common Stock by way of stock dividend or stock split, or in
connection with a combination, recapitalization, share exchange,
consolidation or other reorganization of the Company. As to any
Registrable Securities, once issued, such securities shall cease to be
Registrable Securities when (i) a Registration Statement with respect
to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in
accordance with such Registration Statement, (ii) they shall have been
sold to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act, (iii) they shall have been otherwise
transferred but new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the
Company and subsequent disposition of them shall not require
registration or qualification of them under the Securities Act or
any similar state law then in force, or (iv) they shall have
ceased to be outstanding.
"Registration Statement" means one or more registration statements of the
Company on any form other than an Excluded Form under the Securities Act
registering all of the Registrable Securities, including any amendments or
supplements thereto.
"SEC" means the Securities and Exchange Commission or any other
governmental body at the time administering the Securities Act.
"Securities Act" means the Securities Act of 1933.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the Registrable Securities registered, all
fees and disbursements of counsel for the Stockholder and the expense
allowance payable or which is to be paid to any Placement Agent or
any of their respective Affiliates or associates pursuant to the
Placement Agent Agreement or to any underwriter of the Registrable
Securities.
"Stockholders" shall also include those persons who agree to become bound
by the provisions of the Agreement in accordance with Section 5 hereof.
2. Registration.
2.1. If the Company shall determine to prepare and file with the SEC a
registration statement relating to an offering to commence no earlier
than a date one year from the date hereof for its own account or the
account of others under the Securities Act of any of its equity
securities (other than a Registration Statement on an Excluded Form),
then the Company shall send to each Stockholder holding Registrable
Securities that have not been covered by a registration statement that
has been declared or ordered effective (each, an "Eligible Stockholder"),
written notice of such determination and if, within 15 business days
after receipt of such notice any such Eligible Stockholder shall so
request in writing, the Company shall include in such registration
statement the Registrable Securities requested by the Eligible
Stockholders to be so included. Such written notice shall state the
intended method of disposition of the Registrable Securities by such
Eligible Stockholder. If an Eligible Stockholder decides not to
include all of its Registrable Securities in any registration statement
thereafter filed by the Company, such Eligible Stockholder shall
nevertheless continue to have the right to include any Registrable
Securities in any subsequent registration statement or registration
statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth
herein, to the extent all Registrable Securities held by such
Stockholder have not been covered by a registration statement
that has been declared or ordered effective by the time of such
subsequent registration.
2.2 If the registration statement under which the Company gives
notice under this Section 2 is for an underwritten offering, the
Company shall so advise the Eligible Stockholders of Registrable
Securities. In such event, the right of any such Eligible
Stockholder to be included in a registration pursuant to this
Section 2 shall be conditioned upon such Eligible Stockholder's
participation in such underwriting and the inclusion of such
Eligible Stockholder's Registrable Securities in the underwriting
to the extent provided herein. All Eligible Stockholders proposing
to distribute their Registrable Securities through such
underwriting shall enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such
underwriting by the Company. Notwithstanding any other provision
of the Agreement, if the underwriter determines in good faith
that marketing factors require a limitation of the number
of shares to be underwritten, the number of shares that may be
included in the underwriting shall be allocated, first, to the
Company; and second on a pro rata basis, to the Eligible
Stockholders and any other shareholders of the Company
exercising registration rights based on the total number of
Registrable Securities sought to be registered in such
registration by the Eligible Stockholders and such
other shareholder of the Company.
2.3 If any Eligible Stockholder disapproves of the terms of
any such underwriting, such Eligible Stockholder may elect to
withdraw therefrom by written notice to the Company and the
underwriter, delivered at least ten (10) business days prior
to the effective date of the registration statement. Any
Registrable Securities excluded or withdrawn from such
underwriting shall be excluded and withdrawn from the
registration. The estate and family members of any Eligible
Stockholder and any trusts for the benefit of any of the
foregoing persons shall be deemed to be a single "Eligible
Stockholder," and any pro rata reduction with respect to
such "Eligible Stockholder" shall be based upon the
aggregate amount of shares carrying registration rights
owned by all individuals and trusts included in such
"Eligible Stockholder," as defined in this sentence.
2.4 The Company shall have the right to terminate or
withdraw any registration initiated by it under this
Section 2 prior to the effectiveness of such
registration whether or not any Eligible Stockholder has
elected to include
securities in such registration.
3. Registration Procedures.
3.1 If and whenever the Company is required by the provisions hereof to
effect or cause the registration of any Registrable Securities under the
Securities Act as provided herein, the Company shall, as expeditiously
as possible:
3.1.1 before filing a Registration Statement or prospectus or any
amendments or supplements thereto, the Company shall furnish to the
Stockholders copies of all such documents proposed to be filed.
3.1.2 prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to such Registration Statement
and the prospectus used in connection therewith as may be necessary to
keep such Registration Statement effective, true and correct during the
Registration Period meaning the period commencing with the effective date
and ending on the earlier of (i) the sale of all Registrable Securities
covered thereby, (ii) the date upon which the Stockholders may sell the
Registrable Securities, without volume limitations, pursuant to Rule
144, or (iii) the expiration of 18 months after the effective date of
the Registration Statement or such shorter period as shall be necessary
to complete the distribution of the securities covered thereby, and to
comply with the provisions of the Securities Act with respect to the
sale or other disposition of all Registrable Securities covered by such
Registration Statement during such period in accordance with the
intended methods of disposition by the Stockholders in such
Registration Statement.
3.1.3 furnish to each Stockholder whose Registrable Securities are
included in the Registration Statement and each underwriter of the
securities being sold by the Stockholders such number of copies of such
Registration Statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus included in such Registration Statement (including each
preliminary prospectus), in conformity with the requirements of the
Securities Act, and such other documents, as such counsel and
underwriter may reasonably request, in substantially the form in which
they are proposed to be filed with the SEC, in order to facilitate the
public sale or other disposition of the Registrable Securities owned
by the participating Stockholders. The Company shall furnish to each
Stockholder which requests (i) a copy of any request to accelerate the
effectiveness of any Registration Statement or amendment
thereto, (ii) on the date of effectiveness of the Registration
Statement or any amendment thereto, a notice stating that the
Registration Statement or amendment has been declared effective,
and (iii) such number of copies of a prospectus, including a
preliminary prospectus, and all amendments and supplements thereto
and such other documents as such Stockholder may reasonably request
in order to facilitate the disposition of the Registrable Securities
owned by such Stockholder. 3.1.4 use its best 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 each
Stockholder who holds Registrable Securities being offered reasonably
requests, (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
reasonably 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 required in connection therewith or as a condition thereto
to qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3.1.4;
3.1.5 subject to Section 3.1.4, use its best efforts to cause such
Registrable Securities covered by such Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be reasonably necessary to enable the participating
Stockholders to consummate the disposition of its Registrable Securities;
3.1.6 notify the participating Stockholders at any time when a
prospectus relating to its Registrable Securities is required to be
delivered under the Securities Act, of the Company's becoming aware
that the prospectus included in the related 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 then existing, and promptly prepare and furnish to the
participating Stockholders and each underwriter a reasonable number of
copies of a prospectus supplemented or amended so that, as thereafter
delivered to the purchasers of such Registrable Securities, such
prospectus shall not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing;
3.1.7 otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC;
3.1.8 if the Common Stock is listed on the American Stock
Exchange, another national securities exchange, the Nasdaq Stock
Market, or on the NASD Over-the-Counter Bulletin Board, as the case
may be, the Company shall use its best efforts to cause all such
Registrable Securities covered by such
Registration Statement to be listed on the American Stock Exchange,
other national securities exchange, on the Nasdaq Stock Market, or
on the NASD Over-the-Counter Bulletin Board, as the case may be
(if such Registrable Securities are not already so listed), if the
listing of such Registrable Securities is then permitted
under the rules of such exchange or market;
3.1.9 in the case of an underwritten offering, enable the
Registrable Securities to be in such denominations and registered in
such names as the underwriters may request at least two business
days prior to the sale of the Registrable Securities;
3.1.10 cooperate with the Stockholders who hold
Registrable Securities being offered to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive
legends) representing Registrable Securities to be offered pursuant
to the Registration Statement and enable such certificates to
be in such denominations or amounts, as the case may be, as the
Stockholders may reasonably request and registered in such names as
the Stockholders may request;
3.1.11 notify the Stockholders of any stop order threatened,
to the knowledge of the Company, or issued by the SEC and take all
actions reasonably necessary to prevent the entry of such stop order
or to remove it if entered;
3.1.12 make available for inspection by one firm of attorneys and one
firm of accountants or other agents retained by the holders of a
majority of the Common Shares (collectively, the "Inspectors") based
on the number of shares of Common Stock owned by the Stockholders,
pertinent financial and other records, and pertinent corporate
documents and properties of the Company, as shall be reasonably
deemed necessary by each Inspector to enable each Inspector to
exercise its due diligence responsibility, 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;
3.1.13 instruct the Company's transfer agent to remove the
restrictive legend on the stock certificates after effectiveness
of the applicable Registration Statement and provide with the
cooperation of the Stockholders, any required legal opinions at the
Company's sole expense.
3.2 In connection with the registration of the Registrable Securities,
each participating Stockholder shall furnish to the Company in writing
such information and documents regarding it and the distribution of
its securities as may reasonably be required to be disclosed in the
Registration Statement in question by the rules and regulations under
the Securities Act or under any other applicable securities or
blue sky laws of the jurisdictions referred to in Section 3.1.4 above,
or as may otherwise be reasonably requested.
4. Registration Expenses.
In connection with any registration of Registrable Securities pursuant to
Section 2, the Company shall, whether or not any such registration
shall become effective, from time to time promptly pay all Company
Registration Expenses. Such expenses shall not include any Selling
Expenses other than reasonable fees and expenses of one counsel selected
by holders of a majority of the Eligible Securities included in the
Registration Statement.
5. Indemnification.
5.1 The Company shall, and hereby does, indemnify, to the extent
permitted by law, each Stockholder from and against all losses, claims,
damages, liabilities and expenses, joint or several, to which any such
Indemnified Party may become subject under the Securities Act, the
Exchange Act and all rules and regulations under each such Act, at common
law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions or proceedings, whether commenced or threatened,
in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement as contemplated hereby or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary, final or summary prospectus, together with the documents
incorporated by reference therein (as amended or supplemented if the
Company shall have filed with the SEC, any amendment thereof or
supplement thereto), or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary
n order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or (iii) any violation by
the Company of any federal, state or common law rule or regulation
applicable to the Company and relating to action of or inaction by
the Company in connection with any such registration including the
failure to deliver any document required herein to be delivered, to a
Stockholder; and in each such case, the Company shall reimburse each such
Indemnified Party for any reasonable legal or other expenses incurred by
any of them in connection with investigating or defending any such loss,
claim, damage, liability, expense, action or proceeding; provided,
however, that the Company shall not be liable to any such Indemnified
Party insofar as such losses, claims, damages, liabilities, expenses,
actions or proceedings are caused by any untrue statement or alleged
untrue statement or material omission made in reliance on or in
conformity with any information furnished under Section 5.2 to the
Company by or on behalf of any Indemnified Party or as a result of
the failure of the Indemnified Party to furnish a prospectus to a
purchaser.
5.2 In connection with any Registration Statement in which any
Stockholder is participating, such participating parties shall furnish
to the Company in writing such information as shall be reasonably
requested by the Company for use in any such Registration Statement
or prospectus and shall indemnify, to the extent permitted by law,
the Company, its officers and directors and each Person, if any,
who controls the Company within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages, liabilities,
expenses, actions or proceedings resulting from any untrue statement
or alleged untrue statement of a material fact or any omission or
alleged omission of a material fact with respect to information
expressly requested by the Company and required to be stated in the
Registration Statement or prospectus or preliminary prospectus or any
amendment thereof or supplement thereto, or necessary to make the
statements therein not misleading, but only to the extent that such
untrue statement or omission with respect to information expressly
requested by the Company is made in reliance on or in conformity
with any information so furnished in writing or to be furnished under
this Section 5.2 by such participating Stockholder expressly for
use therein.
5.3 Any Person entitled to indemnification under the provisions of
this Section 5 shall (i) give prompt notice to the Indemnifying Party
of any claim with respect to which it seeks indemnification, and (ii)
unless in the reasonable judgment of counsel for such Indemnified
Party a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, permit such Indemnifying
Party to assume the defense of such claim, with counsel reasonably
satisfactory to the Indemnified Party; and if such defense is so assumed,
such Indemnifying Party shall not enter into any settlement without the
consent of the Indemnified Party if such settlement attributes
liability to the Indemnified Party and such Indemnifying Party shall not
be subject to any liability for any settlement made without its consent.
In the event an Indemnifying Party shall not be entitled, or elects not,
to assume the defense of a claim, such Indemnifying Party shall not
be obligated to pay the fees and expenses of more than one law firm
for all parties indemnified by such Indemnifying Party hereunder in
respect of such claim, unless in the reasonable judgment of any such
counsel a conflict of interest may exist between such Indemnified
Party and any other of such Indemnified Parties in respect to such
claim. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of any
Indemnified Party and shall survive the transfer of such securities
by such Indemnified Party. 5.4 If for any reason the foregoing
indemnity is unavailable, then the Indemnifying Party shall contribute
to the amount paid or payable by the Indemnified Party as a result of
such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and the Indemnified Party as well as any other
relevant equitable considerations. Notwithstanding the foregoing,
no Stockholder shall be required to contribute any amount in excess
of the amount such Stockholder would have been required to pay to an
Indemnified Party if the indemnity under Section 5.2 was available.
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.
5.5 An Indemnifying Party shall make payments of all amounts required
to be made pursuant to the foregoing provisions of this Section 5 to or
for the account of the Indemnified Party from time to time promptly
upon receipt of bills
or invoices relating thereto or when otherwise due and payable.
6. Transfer of Registration Rights.
If and to the extent that any Stockholder sells or otherwise disposes of
Registrable Securities in any transaction that does not require
registration under the Securities Act (other than a transaction exempt
under Rule 144), the rights of the Stockholder hereunder with respect
to such Registrable Securities shall be assignable to any transferee
of such Registrable Securities; provided, however, that such transferee
agrees in writing to be bound by all the terms and conditions of the
Agreement.
7. Miscellaneous.
7.1 The registration rights provided to the Stockholders of
Registrable Securities hereunder shall terminate on the date there
shall no longer be any outstanding Registrable Securities; provided,
however that the provisions of Section 5 hereof shall survive any
termination of the Agreement.
7.2 All notices, offers, acceptance and any other acts
under the Agreement shall be in writing, and shall be sufficiently
given if delivered to the addressees in person, by Federal Express
or similar receipted overnight delivery, or by facsimile or
e-mail delivery followed by a copy sent by Federal Express or
similar receipted overnight delivery, as follows:
If to the Company: Scientific Industries, Inc.
00 Xxxxxxx Xxxxx.
Xxxxxxx, Xxx Xxxx 00000
Facsimile No.: 000-000-0000
Attention: Xx. Xxxxxx X. Xxxxxx
Chief Executive Officer
With a copy to: Reitler Xxxxx & Xxxxxxxxxx LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxx Xxxxxxxxxxx, Esq.
If to a Stockholder, at such address as such Stockholder shall have
provided in writing to the Company or such other address as such
Stockholder furnishes by notice given in accordance with this
Section 7.2.
7.3 The rights and obligations herein shall inure to the
benefit of and be binding upon the successors and assigns of each
of the parties hereto.
7.4 This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the parties hereto have executed this
Registration Rights Agreement as of the date first set forth above.
COMPANY:
SCIENTIFIC INDUSTRIES, INC.
By: /s/Xxxxxx X. Xxxxxx
________________________________
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
STOCKHOLDERS:
By: /s/ Xxxxx Xxxxx
________________________________
Xxxxx Xxxxx
By: /s/ Xxxxxxx X. Xxxxxx
________________________________
Xxxxxxx X. Xxxxxx
By: /s/ Xxxxxxx X. Xxxxxxxx
________________________________
Xxxxxxx X. Xxxxxxxx
