REGISTRATION RIGHTS AGREEMENT
THIS
REGISTRATION RIGHTS AGREEMENT (this
“Agreement”) is made and entered into by and between Infobionics, Incorporated,
a Minnesota corporation, having an office at 000
Xxxxxxxx Xxxxxx, Xx. Xxxx, XX 00000 (the
“Company”) and ___________ (the “Holder”), an individual whose address is
__________________________________________________.
WHEREAS,
Holder
is the owner of units of the Company’s securities (the “Units”), each Unit
consisting of four (4) shares of common stock (the “Shares”), two (2) callable
common stock purchase warrants and two (2) non-callable common stock purchase
warrants. The callable and non-callable warrants are sometimes collectively
referred to herein as the “Warrants;”
WHEREAS,
in
accordance with the terms of the Securities Purchase Agreement pursuant to
which
the Holder acquired the Units, the Company has granted to Holder registration
rights for the Shares and the shares issuable upon exercise of the Warrants
(the
“Warrant Shares”);
WHEREAS,
this
Agreement sets for the specific terms and conditions of those registration
rights;
NOW,
THEREFORE,
in
consideration of the mutual promises, representations, warranties, covenants
and
conditions set forth in this Agreement, the parties agree as
follows:
1.
Registration.
(A) (i)
Mandatory
Registration. The
Company shall prepare and file with the Securities and Exchange Commission
(the
“Commission”)
within
six (6) months after the date on which a minimum of $4,000,000 has been raised
(the “Filing
Date”)
by the
Company in connection with that certain offering described in the Company’s
Confidential Offering Memorandum, dated as of October 10, 2006 and as amended
in
Amendment No. 1 to the Memorandum dated May 1, 2007 (“Amendment No. 1”),
Amendment No. 2 to the Memorandum dated October 1, 2007 (“Amendment No. 2”) and
Amendment No. 3 to the Memorandum dated November 1, 2007 which incorporates
the
information presented in Amendment No. 1 and Amendment No. 2 (the “Memorandum”),
a Resale Registration Statement on Form SB-2 (or, if Form SB-2 is not then
available, on such form of Registration Statement as is then available to effect
a registration of the Registrable Securities, subject to the consent of the
Holders, which consent will not be unreasonably withheld), which Resale
Registration Statement, to the extent allowable under the Securities Act of
1933, as amended (the “1933 Act”) and the rules and regulations promulgated
thereunder (including Rule 415), shall register the Shares,
the Warrant Shares, any shares issued to Xxxxxx Capital, Ltd. (the “Placement
Agent”) and any shares that are issuable to the Placement Agent upon exercise
the of Placement Warrants (the Shares, Warrant Shares and any shares issuable
to
the Placement Agent upon exercise of the Placement Warrants are hereinafter
collectively referred to as the “Registrable Securities”) and
such
Resale Registration Statement shall state that it also covers such indeterminate
number of additional shares of the Company’s common stock as may become issuable
upon the issuance of additional Units prior to the filing of the Resale
Registration Statement .
(ii)
Reduction
in Exercise Price of the Warrants.
The
Company and the Purchasers agree that the Holders will suffer damages if the
Resale Registration Statement is not filed on or prior to the Filing Date and
not declared effective by the Commission within six (6) months after the Resale
Registration Statement is filed (the “Effective Date”) or maintained in the
manner contemplated herein. The Company and the Holders further agree that
it
would not be feasible to ascertain the extent of such damages with precision.
Accordingly, (i) if the Resale Registration Statement is not filed by the Filing
Date, then the exercise price of the Callable Warrants and Non-Callable Warrants
shall be reduced by 25% and thereafter, 25% for each 30 day period or part
thereof that the Resale Registration Statement is not filed. For example, if
the
Resale Registration Statement is not filed by the filing date, the exercise
price of the Callable Warrants and Non-Callable Warrants shall be reduced to
$1.50 and $3.00 respectively. If the Registration Statement is not filed within
the first 30 day period, then the exercise price of the Callable Warrants and
Non Callable Warrants shall be reduced by an additional 25% to $1.12 and $2.25
respectively; and (ii) if after the Resale Registration Statement is filed,
the
Resale Registration Statement is not declared effective by the Effective Date,
the exercise price of the Warrants, as may have been adjusted by this Section
1(A)(ii), shall be reduced by an additional 25% for each 30 day period or part
thereof that the Resale Registration Statement is not declared effective by
the
SEC. The reduction in the exercise price of the Warrants shall be in accordance
with this Section 1(A)(ii) be as partial relief for the damages to the
Purchasers by reason of any such delay in their ability to sell the Registrable
Securities (which remedy shall not be exclusive of any other remedies available
at law or in equity).
Anything
to the contrary in this Section 1(A)(ii) notwithstanding, the reduction in
the
exercise price of the Warrants shall equally apply to the Placement
Warrants.
(iii)
Waiver
of Penalty Provisions. Holder
hereby acknowledges that it has granted to the Placement Agent the right in
the
Securities Purchase Agreement to make good faith determinations that the Company
is working in a timely fashion to file the Resale Registration Statement with
the Commission and to cause the Resale Registration Statement to become
effective such that the Resale Registration Statement is filed by the Filing
Date and is declared effective by the Effective Date. Upon such good faith
determination(s) by the Placement Agent that the Company has acted in a timely
fashion, the Placement Agent shall waive the penalty provisions relating to
the
exercise price of the Warrants, and upon such waiver those penalty provisions
shall not apply. The Placement Agent shall make such determination(s) at
each time that the penalty provisions otherwise would apply, as applicable.
The
Placement Agent shall advise the Company and Holders in writing of its good
faith determination(s) no later than the date(s) on which the penalty provisions
otherwise first would apply.
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B.
(i)
Piggyback
Registration.
If at
any time or from time to time the Company shall determine to register under
the
1933 Act any of its securities, other than on Form S-4 or Form S-8 or their
then
equivalents, and providing that the Registrable Securities have not been
registered pursuant to the Mandatory Registration requirements of Section
1(A)(i) hereof, the Company will:
(a) give
to
Holder written notice thereof at least thirty (30) days prior to filing any
such
registration statement; and
(b) subject
to Section 1(b) below, include in such registration (and any related
qualification under blue sky laws or other compliance) and in any underwriting
involved therein, the Shares and Warrant Shares (collectively, the “Registrable
Securities”) requested by Holder to be included therein pursuant to a written
notice delivered by Holder to the Company within twenty (20) days after receipt
by Holder of the written notice referred to in clause (i) above. The term
Registrable Securities shall also mean (i) any common shares or other securities
of the Company issued or issuable with respect to, or in exchange for or in
replacement of the Shares or Warrant Shares and such additional or lesser amount
of shares upon any stock split, stock dividend, recapitalization, or similar
event; provided, however, that, notwithstanding any other provision in this
Section 1 or elsewhere in this Agreement, the Shares or the Warrant Shares
shall
only be treated as Registrable Securities for the purposes of this Section
1 to
the extent that they have not been, and may not be, sold pursuant to Rule 144
under the Securities Act.
(iii) Underwriting.
If the
registration is for a registered public offering involving an underwriting,
the
Company shall so advise Holder as a part of the written notice given pursuant
to
Section 1(a) hereof. In such event, the right of Holder to registration pursuant
to this Agreement shall not be conditioned upon Holder’s participation in such
underwriting and the inclusion of Registrable Securities in the underwriting.
If
Holder proposes to distribute Registrable Securities through such underwriting,
Holder shall (together with the Company) enter into an underwriting agreement
in
customary form with the managing underwriter selected for such underwriting
by
the Company. Notwithstanding any other provision of this Agreement, if the
managing underwriter determines that marketing factors require a limitation
of
the number of shares to be underwritten, the managing underwriter may totally
eliminate or partially limit the Registrable Securities and other securities
to
be distributed through such underwriting, for the account of Holder; provided,
that in such event, the registration statement shall not be deemed a
registration for purposes of Section 1(d) hereof.
(iv) Right
to Terminate Registration.
The
Company shall have the right to terminate or withdraw any registration initiated
by it under this Agreement prior to the effectiveness of such registration.
Any
registration terminated or withdrawn prior to the effectiveness of such
registration shall not be deemed a Registration for purposes of Section 1(d)
hereof. The Registration Expenses of such withdrawn registration shall be borne
by the Company in accordance with Section 2 hereof.
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(v) Number
of Registrations.
The
Company is obligated to effect only one (1) registration pursuant to this
Agreement.
2. Expenses
of Registration.
All
Registration Expenses incurred in connection with registration pursuant to
Section 1 shall be borne by the Company. "Registration Expenses" shall mean
all
expenses, except underwriters or placement agent’s fees or discounts and except
as otherwise stated below, incurred by the Company in complying with this
Agreement, including, all registration, qualification and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company, blue
sky fees and expenses, fees to issue the Shares and Warrant Shares and the
expense of any special audits incident to or required by any such
registration.
3 Registration
Procedures. In
the
case of a registration effected by the Company pursuant to this Agreement,
the
Company will keep Holder advised in writing as to the initiation of the
registration and as to the completion thereof. At its expense, the Company
will:
(a) Prepare
and file with the Securities and Exchange Commission (the “SEC”) a registration
statement with respect to such securities and use its best efforts to cause
such
registration statement to become and remain effective until the distribution
described in the registration statement has been completed;
(b) Prepare
and file with the SEC during the period specified in Section 3(a) such
amendments and supplements to such registration statement and the prospectus
used in connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement; and
(c) Furnish
to Holder and to the underwriters of the securities being registered such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as Holder and such
underwriters may reasonably request in order to facilitate the public offering
of such securities;
4. Non-Transferable
Registration Rights.
The
rights to cause the Company to register securities granted Holder under this
Agreement may not be assigned.
5. Indemnification
for Registration.
4
(a) Holder
shall indemnify and hold harmless the Company, each of its directors and
officers, each underwriter, if any, of the Company’s securities covered by such
a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, against
all
claims, losses, damages and liabilities (or actions in respect thereof),
including any reasonable investigation, legal and other expenses incurred in
connection with, and any amounts paid in settlement of, any action, suit or
preceding or any claim asserted, arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document, or
any
omission (or alleged omission) to state therein a material fact required to
be
stated therein or necessary to make the statements therein not misleading,
and
will reimburse the Company and such directors, officers, underwriters or control
persons for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to the Company by Holder for purposes of including therein. Notwithstanding
the
foregoing, the liability of Holder under this subsection (a) shall be limited
to
the lesser of (i) the proportion that the public offering price of shares sold
by Holder under such registration statement bears to the total public offering
price of all securities sold thereunder, but not to exceed the net proceeds
received by Holder for the sale of Registrable Securities covered by such
registration statement and (ii) the amount of any damages which Holder would
have otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. Notwithstanding the foregoing, any
party guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act), shall not be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation and the limitation
set forth in the immediately preceding sentence shall not apply.
(b) In
connection with each registration statement relating to disposition of
Registrable Securities, the Company shall indemnify and hold harmless each
Holder and each underwriter of Registrable Securities and each person, as that
term is defined in the Act, if any, who controls such Holder or underwriter
(within the meaning of Section 15 of the Act or Section 20 of the Securities
and
Exchange Act of 1934, as amended (the “Exchange Act”) against any and all
losses, claims, damages and liabilities, joint or several (including any
reasonable investigation, legal and other expenses incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they, or any of them, may become subject under the
Act, the Exchange Act or other Federal or state law or regulation, at common
law
or otherwise, insofar as such losses, claims, damages or liabilities arise
out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto, or arise out of
or
are based upon 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; provided, however, that such indemnity shall not inure to the
benefit of any Holder or underwriter (or any person controlling such Holder
or
underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) on account of any losses, claims, damages or liabilities arising
from the sale of the Registrable Securities if such untrue statement or omission
was made in such registration statement, prospectus or preliminary prospectus,
or such amendment or supplement, in reliance upon and in conformity with
information furnished in writing to the Company by such Holder or underwriter
for purposes of including therein. The Company shall also indemnify selling
brokers, dealer managers and similar securities industry professionals
participating in the distribution, their officers and directors and each person
who controls such person (within the meaning of Section 15 of the Act or Section
20 of the Exchange Act) to the same extent as provided above with respect to
the
indemnification of the Holders of Registrable Securities, if requested. The
indemnity provisions set forth herein shall be in addition to any liability
which the Company may otherwise have.
5
(c) Any
party
that proposes to assert the right to be indemnified hereunder will, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect of which a claim is to be made against an
indemnifying party or parties under this Section, notify each such indemnifying
party of the commencement of such action, suit or proceeding, enclosing a copy
of all papers served. No indemnification provided for in Section 5(a) or 5(b)
shall be available to any party who shall fail to give notice as provided in
this Section 5(c) if the party to whom notice was not given was unaware of
the
proceeding to which such notice would have related and was prejudiced by the
failure to give such notice, but the omission so to notify such indemnifying
party of any such action, suit or proceeding shall not relieve it from any
liability that it may have to any indemnified party for contribution otherwise
than under this Section. In case any such action, suit or proceeding shall
be
brought against any indemnified party and it shall notify the indemnifying
party
of the commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, and after notice
from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof and the approval by the indemnified party of such counsel,
the indemnifying party shall not be liable to such indemnified party for any
legal or other expenses, except as provided below. The indemnified party shall
have the right to employ its counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the employment of counsel by such indemnified party has been
authorized in writing by the indemnifying parties, (ii) it shall have been
reasonably concluded that there may be a conflict of interest between the
indemnifying parties and the indemnified party in the conduct of the defense
of
such action (in which case the indemnifying parties shall not have the right
to
direct the defense of such action on behalf of the indemnified party; it being
understood, however, that the Company shall not be liable for the fees and
expenses of more than one separate counsel representing the indemnified parties)
or (iii) the indemnifying parties shall not have employed counsel to assume
the
defense of such action within a reasonable time after notice of the commencement
thereof, in each of which cases the reasonable fees and expenses of counsel
shall be at the expense of the indemnifying parties. An indemnified party shall
not be liable for any settlement of any action, suit, proceeding or claim
effected without its written consent.
6
(d) In
connection with each registration statement relating to the disposition of
Registrable Securities, if the indemnification provided for in subsection (a)
or
(b) of this Section 5.3 is unavailable to an indemnified party thereunder in
respect to any losses, claims, damages or liabilities referred to therein,
then
the indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities
referred to in subsections (a) or (b) of this Section 5.3 in such proportion
as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, or actions in respect thereof, as well as any other relevant
equitable considerations. 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.
(e) Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement (if any) entered into
in
connection with an underwritten public offering of the Registrable Securities
are in conflict with the foregoing provisions, the provisions in such
underwriting agreement shall control.
6. Information
by Holder. Holder
shall furnish to the Company such information regarding Holder, the Registrable
Securities held by him and the distribution proposed by Holder in connection
with an underwriting (if any) as the Company may reasonably request in writing
and as shall be required in connection with any registration, qualification
or
compliance in connection with a registration.
7. Miscellaneous.
(a)
If
one or
more of the provisions contained herein shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or
unenforceability shall not affect any other provisions hereof, and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
(b) Waiver
of
any default shall not constitute waiver of any other or subsequent
default.
(c) Except
as
otherwise expressly set forth herein, any notice, request or other communication
required or permitted hereunder shall be in writing and shall be deemed to
have
been duly given if personally delivered or mailed by registered or certified
mail or by courier, to the respective addresses of the parties as first set
forth above. Any party hereto may by notice so given change its address for
future notice hereunder. Notice shall conclusively be deemed to have been given
when personally delivered, or when deposited in the mail in the manner set
forth
above and shall be deemed to have been received when delivered.
7
(d) This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original, but all of which together shall constitute one and
the
same instrument.
(e) No
amendment to this Agreement will be valid or binding unless set forth in writing
and duly executed by all of the parties hereto. No waiver of any breach of
any
provision of this Agreement will be effective or binding unless made in writing
and signed by the party purporting to give the same and, unless otherwise
provided in the written waiver, will be limited to the specific breach
waived.
(f) The
division of this Agreement into Articles and Sections and the insertion of
headings are for the convenience of reference only and will not affect the
construction or interpretation of this Agreement.
(g) This
agreement shall be construed, enforced, and administered in accordance with
the
laws of the State of New York, under the jurisdiction of the State of New York,
without giving effect to any provision thereof that would compel the application
of the substantive laws of any other jurisdiction and without regard to the
conflicts of law provisions. The parties consent to the jurisdiction of the
federal and state courts located in the State of New York regarding all matters
under this Agreement.
(h)
This
Agreement constitutes the entire agreement between the parties with respect
to
the subject matter hereof and cancels and supersedes any prior understandings
and agreements between the parties. There are no representations, warranties,
forms, conditions, undertakings or collateral agreements, express, implied
or
statutory between the parties other than as expressly set forth in this
Agreement.
IN
WITNESS WHEREOF,
this
Agreement has been executed as of the ____ day of _______, 2007.
| By: | |||
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Xxxx Xxxxxxxx, President and CEO |
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|
Signature of Holder |
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|
(Print
Name of Holder)
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