Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of this 24th day of May, 2001 by and among FONAR CORPORATION, a Delaware
corporation (the "Company"), and the persons identified as Purchasers pursuant
to that certain Purchase Agreement of even date herewith by and among the
Company and such Purchasers (the "Purchase Agreement").
The parties hereby agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
"Additional Registrable Securities" shall mean any shares of Common Stock
which are included within the definition of Registrable Securities but not
included in any Registration Statement filed pursuant to Section 2(a)(i) below.
"Common Stock" shall mean the Company's Common Stock, $0.0001 par value per
share.
"Conversion Price" shall have the meaning set forth in the Debentures.
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement, with respect
to the terms of the offering of any portion of the Registrable Securities or
Additional Registrable Securities covered by such Registration Statement and by
all other amendments and supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such prospectus.
"Purchasers" shall mean the purchasers identified in the Purchase Agreement
and any subsequent holder of any Debentures, Warrants, Registrable Securities or
Additional Registrable Securities as a result of a permitted transfer (which
shall include without limitation any transfer to any affiliate of a Purchaser).
"Register," "registered" and "registration" refer to a registration made by
preparing and filing a registration statement or similar document in compliance
with the 1933 Act (as defined below), and the declaration or ordering of
effectiveness of such registration statement or document.
"Registrable Securities" shall mean (i) the Underlying Shares, the Warrant
Shares, and the shares of Common Stock issuable upon exercise of the RMI
Warrants, and the shares of Common Stock or other securities issued or issuable
to each Purchaser or its permitted transferee or designee (a) upon conversion
of, or payment of interest or repayment of principal under the Debentures and
upon the exercise of the Warrants, or (b) upon any distribution with respect to,
any exchange for or any replacement of such Debentures or Warrants, or (c) upon
any conversion, exercise or exchange of any securities issued in connection with
any such distribution, exchange or replacement; (ii) securities issued or
issuable upon any stock split, stock dividend, recapitalization or similar event
with respect to such shares of Common Stock; and (iii) any other security issued
as a dividend or other distribution with respect to, in exchange for, or in
replacement of, the securities referred to in the preceding clauses.
"Registration Statement" shall mean any registration statement of the
Company filed under the 1933 Act that covers the resale of any of the
Registrable Securities or Additional Registrable Securities pursuant to the
provisions of this Agreement, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and all material
incorporated by reference in such Registration Statement.
"SEC" means the U.S. Securities and Exchange Commission.
"1933 Act" means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
Capitalized terms used herein but not otherwise defined shall have the
meaning ascribed thereto in the Purchase Agreement.
2. Registration.
(a) Registration Statements.
(i) Registrable Securities. Promptly following the closing of the purchase and
sale of Debentures and Warrants contemplated by the Purchase Agreement (the
"Closing Date") (but no later than thirty (30) days after the Closing
Date), the Company shall prepare and file with the SEC one Registration
Statement on Form S-3 (or, if Form S-3 is not then available to the
Company, on such form of registration statement as is then available to
effect a registration for resale of the Registrable Securities, subject to
the Purchasers' consent), covering the resale of the Registrable Securities
in an amount equal to 200% of the number of Underlying Shares issuable upon
full conversion of the Debentures at the lower of the Conversion Price or
Market Price as of the filing date plus 100% of the number of shares of
Common Stock necessary to permit the exercise in full of the Warrants (in
each case without regard to any restrictions on beneficial ownership). Such
Registration Statement also shall cover, to the extent allowable under the
1933 Act and the Rules promulgated thereunder (including Rule 416), such
indeterminate number of additional shares of Common Stock resulting from
stock splits, stock dividends or similar transactions with respect to the
Registrable Securities. No securities shall be included in the Registration
Statement without the consent of the Purchasers other than the Registrable
Securities. The Registration Statement (and each amendment or supplement
thereto) shall be provided in accordance with Section 3(c) to the
Purchasers and their counsel prior to its filing or other submission.
(ii) Additional Registrable Securities. At any time and from time to time upon
the written demand of any Purchaser following the existence of any
Additional Registerable Securities, and in any event within thirty (30)
days following such demand, the Company shall prepare and file with the SEC
one Registration Statement on Form S-3 (or, if Form S-3 is not then
available to the Company, on such form of registration statement as is then
available to effect a registration for resale of the Additional Registrable
Securities) covering the resale of the Additional Registrable Securities in
an amount equal to the number of Additional Registrable Securities. Such
Registration Statement also shall cover, to the extent allowable under the
1933 Act and the rules promulgated thereunder (including Rule 416), such
indeterminate number of additional shares of Common Stock resulting from
stock splits, stock dividends or similar transactions with respect to the
Additional Registrable Securities. The Registration Statement (and each
amendment or supplement thereto) shall be provided in accordance with
Section 3(c) to the Purchaser and its counsel prior to its filing or other
submission.
(b) Expenses. The Company will pay all expenses associated with each
registration, including the Purchasers' reasonable expenses up to $5,000
for such Purchasers' expenses (including reasonable attorneys fees), in
connection with the registration but excluding discounts, commissions, fees
of underwriters, selling brokers, dealer managers or similar securities
industry professionals.
(c) Effectiveness.
(i) The Company shall use its best efforts to have each Registration Statement
declared effective as soon as practicable. If (A) the Registration
Statement covering Registrable Securities is not declared effective by the
SEC within two (2) months following the Closing Date, or the Registration
Statement covering Additional Registrable Securities is not declared
effective by the SEC within two (2) months following demand of a Purchaser
relating to the Additional Registrable Securities to be covered thereby,
provided that if either of such Registration Statements is subject to
review by the SEC staff (x) solely as a "plain English" or "screening"
review, then such effective date shall be within three (3) months following
the Closing Date or demand, as the case may be, and (y) for a regular SEC
review (which may include in part a "plain English" review), then such
effective date shall be within six (6) months following the Closing Date or
demand, as the case may be (each of the foregoing deadlines, a
"Registration Date"), (B) after a Registration Statement has been declared
effective by the SEC, sales cannot be made pursuant to such Registration
Statement for any reason (including without limitation by reason of a stop
order, or the Company's failure to update the Registration Statement) but
except as excused pursuant to subparagraph (ii) below, (C) the Common Stock
generally or the Registrable Securities (or Additional Registrable
Securities after issuance and registration) specifically are not listed or
included for quotation on the Nasdaq National Market System, the Nasdaq
Small Cap Market, the New York Stock Exchange or the American Stock
Exchange (each an "Approved Market") or trading of the Common Stock is
suspended or halted thereon, or (D) the Company fails, refuses or is
otherwise unable to timely issue Underlying Shares upon conversion of
Debentures or Warrant Shares upon exercise of the Warrants, in accordance
with the terms of the Debentures and Warrants, or unlegended certificates
as required under the Agreements, in each case within ten (10) days
following the Purchaser's written demand for issuance of such Underlying
Shares or Warrant Shares or certificates, then the Company will make
pro-rata payments to the Purchaser as liquidated damages and not as a
penalty, in an amount equal to 2% of the sum of the aggregate principal
amount then outstanding under the Debentures for each month (or portion
thereof) following the Registration Date during which any of the events
described in (A), (B), (C) or (D) above occurs and is continuing (the
"Blackout Period"). Each such payment shall be due and payable within five
(5) days of the end of each month (or ending portion thereof) of the
Blackout Period until the termination of the Blackout Period. Such payments
shall be in partial compensation to the Purchasers, and shall not
constitute the Purchasers' exclusive remedy for such events. The Blackout
Period shall terminate upon (w) the effectiveness of the applicable
Registration Statement in the case of (A) and (B) above; (x) listing or
inclusion and/or trading of the Common Stock on an Approved Market in the
case of (C) above; (y) delivery of such shares in the case of (D) above;
and (z) in the case of the events described in (A) or (B) above, the
earlier termination of the Registration Period (as defined in Section 3(a)
below). The amounts payable as liquidated damages pursuant to this
paragraph shall be payable, at the option of the Purchasers, in lawful
money of the United States or in shares of Common Stock at the lower of the
Conversion Price or Market Price, and amounts payable as liquidated damages
shall be paid monthly within five (5) business days of the last day of each
month following the commencement of the Blackout Period until the
termination of the Blackout Period. Amounts payable as liquidated damages
hereunder shall cease when a Purchaser no longer holds Debentures,
Warrants, Registrable Securities or Additional Registrable Securities, as
applicable.
(ii) For not more than five (5) consecutive trading days or for a total of not
more than twenty (20) trading days in any consecutive twelve (12) month
period, the Company may delay the disclosure of material non-public
information concerning the Company, by terminating or suspending
effectiveness of any registration contemplated by this Section, the
disclosure of which at the time is not, in the good faith opinion of the
Company, in the best interests of the Company (an "Allowed Delay");
provided, that the Company shall promptly (a) notify the Purchasers in
writing of the existence of (but in no event, without the prior written
consent of a Purchaser, shall the Company disclose to such Purchaser any of
the facts or circumstances regarding) material non-public information
giving rise to an Allowed Delay, and (b) advise the Purchasers in writing
to cease all sales under the Registration Statement until the end of the
Allowed Delay.
(d) Underwritten Offering. If any offering pursuant to a Registration Statement
pursuant to Section 2(a) hereof involves an underwritten offering, the
Company shall have the right to select an investment banker and manager to
administer the offering, which investment banker or manager shall be
reasonably satisfactory to the Purchasers.
3. Company Obligations. The Company will use its best efforts to effect the
registration of the Registrable Securities and Additional Registrable
Securities in accordance with the terms hereof, and pursuant thereto the
Company will, as expeditiously as possible:
(a) use its best efforts to cause such Registration Statement to become
effective and to remain continuously effective for a period (the
"Registration Period") that will terminate upon the earlier of (i) the date
on which all Registrable Securities or Additional Registrable Securities
have been sold (and no Debentures or Warrants remain outstanding), (ii) the
date on which all Registrable Securities or Additional Registrable
Securities, as the case may be, may be sold pursuant to Rule 144(k) (and no
Debentures or Warrants remain outstanding), and (iii) the fifth anniversary
of the Closing Date.
(b) prepare and file with the SEC such amendments and post-effective amendments
to the Registration Statement and the Prospectus as may be necessary to
keep the Registration Statement effective for the period specified in
Section 3(a) and to comply with the provisions of the 1933 Act and the 1934
Act with respect to the distribution of all Registrable Securities and
Additional Registrable Securities; provided that, at a time reasonably
prior to the filing of a Registration Statement or Prospectus, or any
amendments or supplements thereto, the Company will furnish to the
Purchasers copies of all documents proposed to be filed, which documents
will be subject to the comments of the Purchasers;
(c) permit counsel designated by the Purchasers to review each Registration
Statement and all amendments and supplements thereto no fewer than seven
(7) business days prior to their filing with the SEC and not file any
document to which such counsel reasonably objects;
(d) furnish to the Purchasers and their legal counsel (i) promptly after the
same is prepared and publicly distributed, filed with the SEC, or received
by the Company, one copy of any Registration Statement and any amendment
thereto, each preliminary prospectus and Prospectus and each amendment or
supplement thereto, and each letter written by or on behalf of the Company
to the SEC or the staff of the SEC, and each item of correspondence from
the SEC or the staff of the SEC, in each case relating to such Registration
Statement (other than any portion of any thereof which contains information
for which the Company has sought confidential treatment), and (ii) such
number of copies of a Prospectus, including a preliminary prospectus, and
all amendments and supplements thereto and such other documents as each
Purchaser may reasonably request in order to facilitate the disposition of
the Registrable Securities and Additional Registrable Securities owned by
such Purchaser;
(e) in the event the Company selects an underwriter for the offering, the
Company shall enter into and perform its reasonable obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with
the underwriter of such offering;
(f) if required by the underwriter, or if any Purchaser is described in the
Registration Statement as an underwriter, the Company shall furnish, on the
effective date of the Registration Statement, on the date that Registrable
Securities or Additional Registrable Securities, as applicable, are
delivered to an underwriter, if any, for sale in connection with the
Registration Statement and at periodic intervals thereafter from time to
time on request, (i) an opinion, dated as of such date, from independent
legal counsel representing the Company for purposes of such Registration
Statement, in form, scope and substance as is customarily given in an
underwritten public offering, addressed to the underwriter and any such
Purchaser and (ii) a letter, dated such date, from the Company's
independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the
underwriter and any such Purchaser;
(g) make effort to prevent the issuance of any stop order or other suspension
of effectiveness and, if such order is issued, obtain the withdrawal of any
such order at the earliest possible moment;
(h) furnish to each Purchaser at least five copies of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules by air mail or reputable courier within three (3)
business days of the effective date thereof;
(i) prior to any public offering of Registrable Securities or Additional
Registrable Securities, use its best efforts to register or qualify or
cooperate with the Purchasers and their counsel in connection with the
registration or qualification of such Registrable Securities or Additional
Registrable Securities, as applicable, for offer and sale under the
securities or blue sky laws of such jurisdictions requested by the
Purchaser and do any and all other reasonable acts or things necessary or
advisable to enable the distribution in such jurisdictions of the
Registrable Securities or Additional Registrable Securities covered by the
Registration Statement;
(j) cause all Registrable Securities or Additional Registrable Securities
covered by a Registration Statement to be listed on each securities
exchange, interdealer quotation system or other market on which similar
securities issued by the Company are then listed;
(k) immediately notify the Purchasers, at any time when a Prospectus relating
to the Registrable Securities or Additional Registrable Securities is
required to be delivered under the 1933 Act, upon discovery that, or upon
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 the light of the circumstances then existing, 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 the
purchasers of such Registrable Securities or Additional Registrable
Securities, as applicable, 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; and
(l) otherwise use its best efforts to comply with all applicable rules and
regulations of the SEC under the 1933 Act and the 1934 Act, take such other
actions as may be reasonably necessary to facilitate the registration of
the Registrable Securities and Additional Registrable Securities, if
applicable, hereunder; and make available to its security holders, as soon
as reasonably practicable, but not later than the Availability Date (as
defined below), an earnings statement covering a period of at least twelve
months, beginning after the effective date of each Registration Statement,
which earnings statement shall satisfy the provisions of Section 11(a) of
the 1933 Act (for the purpose of this subsection 3(l), "Availability Date"
means the 45th day following the end of the fourth fiscal quarter that
includes the effective date of such Registration Statement, except that, if
such fourth fiscal quarter is the last quarter of the Company's fiscal
year, "Availability Date" means the 90th day after the end of such fourth
fiscal quarter).
4. Due Diligence Review; Information. The Company shall make available, during
normal business hours, for inspection and review by the Purchasers who may
be deemed an underwriter, advisors to and representatives of such
Purchasers (who may or may not be affiliated with the Purchasers and who
are reasonably acceptable to the Company), and any underwriter
participating in any disposition of Common Stock on behalf of the
Purchasers pursuant to the Registration Statement or amendments or
supplements thereto or any blue sky, NASD or other filing, all financial
and other records, all SEC Documents and other filings with the SEC, and
all other corporate documents and properties of the Company as may be
reasonably necessary for the purpose of establishing a due diligence
defense under applicable securities laws and such other reasonable
purposes, and cause the Company's officers, directors and employees, within
a reasonable time period, to supply all such information reasonably
requested by such Purchasers or any such representative, advisor or
underwriter in connection with such Registration Statement (including,
without limitation, in response to all questions and other inquiries
reasonably made or submitted by any of them), prior to and from time to
time after the filing and effectiveness of the Registration Statement for
the sole purpose of enabling such Purchasers and such representatives,
advisors and underwriters and their respective accountants and attorneys to
conduct initial and ongoing due diligence with respect to the Company and
the accuracy of the Registration Statement.
The Company shall not disclose material nonpublic information to the
Purchasers, or to advisors to or representatives of the Purchasers, unless prior
to disclosure of such information the Company identifies such information as
being material nonpublic information and provides the Purchasers, such advisors
and representatives with the opportunity to accept or refuse to accept such
material nonpublic information for review. The Company may, as a condition to
disclosing any material nonpublic information hereunder, require the Purchasers'
advisors and representatives to enter into a confidentiality agreement
(including an agreement with such advisors and representatives prohibiting them
from trading in Common Stock during such period of time as they are in
possession of material nonpublic information) in form reasonably satisfactory to
the Company and the Purchasers. Nothing herein shall require the Company to
disclose material nonpublic information to the Purchasers or their advisors or
representatives.
5. Obligations of the Purchasers.
(a) Each Purchaser shall furnish in writing to the Company such information
regarding itself, the Registrable Securities or Additional Registrable
Securities, as applicable, held by it and the intended method of
disposition of the Registrable Securities or Additional Registrable
Securities, as applicable, held by it, as shall be reasonably required to
effect the registration of such Registrable Securities or Additional
Registrable Securities, as applicable, and shall execute such documents in
connection with such registration as the Company may reasonably request. At
least fifteen (15) business days prior to the first anticipated filing date
of any Registration Statement, the Company shall notify each Purchaser of
the information the Company requires from such Purchaser if such Purchaser
elects to have any of the Registrable Securities or Additional Registrable
Securities included in the Registration Statement.
(b) Each Purchaser, by its acceptance of the Registrable Securities and
Additional Registrable Securities, if any, agrees to cooperate with the
Company as reasonably requested by the Company in connection with the
preparation and filing of a Registration Statement hereunder, unless such
Purchaser has notified the Company in writing of its election to exclude
all of its Registrable Securities or Additional Registrable Securities, as
applicable, from the Registration Statement. Each Purchaser agrees to
comply with the applicable prospectus delivery requirements under the 1933
Act in connection with any resales of Registrable Securities pursuant to
the Registration Statement.
(c) In the event the Company determines to engage the services of an
underwriter which engagement is reasonably acceptable to the Purchasers,
each Purchaser agrees to enter into and perform its obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with
the managing underwriter of such offering and take such other actions as
are reasonably required in order to expedite or facilitate the dispositions
of the Registrable Securities or Additional Registrable Securities, as
applicable.
(d) Each Purchaser agrees that, upon receipt of any notice from the Company of
the happening of any event rendering a Registration Statement no longer
effective, such Purchaser will immediately discontinue disposition of
Registrable Securities or Additional Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities or Additional
Registrable Securities, until the Purchaser's receipt of the copies of the
supplemented or amended prospectus filed with the SEC and declared
effective and, if so directed by the Company, the Purchaser shall deliver
to the Company (at the expense of the Company) or destroy all copies in the
Purchaser's possession of the prospectus covering the Registrable
Securities or Additional Registrable Securities, as applicable, current at
the time of receipt of such notice.
(e) No Purchaser may participate in any third party underwritten registration
hereunder unless it (i) agrees to sell the Registrable Securities or
Additional Registrable Securities, as applicable, on the basis provided in
any underwriting arrangements in usual and customary form entered into by
the Company, (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents
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 any expenses in excess of those payable by the Company
pursuant to the terms of this Agreement.
6. Indemnification.
(a) Indemnification by Company. The Company agrees to indemnify and hold
harmless, to the fullest extent permitted by law, the Purchasers, each of
their officers, directors, partners and employees and each person who
controls the Purchasers (within the meaning of the 0000 Xxx) against all
losses, claims, damages, liabilities, costs (including, without limitation,
reasonable attorney's fees) and expenses imposed on such person caused by
(i) any untrue or alleged untrue statement of a material fact contained in
any Registration Statement, Prospectus or any preliminary prospectus or any
amendment or supplement thereto 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, except insofar as the same are
based upon any information furnished in writing to the Company by such
Purchasers, expressly for use therein, or (ii) any violation by the Company
of any federal, state or common law, rule or regulation applicable to the
Company in connection with any Registration Statement, Prospectus or any
preliminary prospectus, or any amendment or supplement thereto, and shall
reimburse in accordance with subparagraph (c) below, each of the foregoing
persons for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claims. The foregoing
is subject to the condition that, insofar as the foregoing indemnities
relate to any untrue statement, alleged untrue statement, omission or
alleged omission made in any preliminary prospectus or Prospectus that is
eliminated or remedied in any Prospectus or amendment or supplement
thereto, the above indemnity obligations of the Company shall not inure to
the benefit of any indemnified party if a copy of such corrected Prospectus
or amendment or supplement thereto had been provided to such indemnified
party and was not sent or given by such indemnified party at or prior to
the time such action was required of such indemnified party by the 1933 Act
and if delivery of such Prospectus or amendment or supplement thereto would
have eliminated (or been a sufficient defense to) any liability of such
indemnified party with respect to such statement or omission. Indemnity
under this Section 5(a) shall remain in full force and effect regardless of
any investigation made by or on behalf of any indemnified party and shall
survive the permitted transfer of the Registrable Securities and Additional
Registrable Securities.
(b) Indemnification by Holder. In connection with any registration pursuant to
the terms of this Agreement, each Purchaser will furnish to the Company in
writing such information as the Company reasonably requests concerning the
holders of Registrable Securities and Additional Registrable Securities or
the proposed manner of distribution for use in connection with any
Registration Statement or Prospectus and agrees, severally but not jointly,
to indemnify and hold harmless, to the fullest extent permitted by law, the
Company, its directors, officers, employees, stockholders and each person
who controls the Company (within the meaning of the 0000 Xxx) against any
losses, claims, damages, liabilities and expense (including reasonable
attorney's fees) resulting from any untrue statement of a material fact or
any omission of a material fact required to be stated in the Registration
Statement or Prospectus or preliminary prospectus or amendment or
supplement thereto or necessary to make the statements therein not
misleading, to the extent, but only to the extent that such untrue
statement or omission is contained in any information furnished in writing
by such Purchaser to the Company specifically for inclusion in such
Registration Statement or Prospectus or amendment or supplement thereto and
that such information was substantially relied upon by the Company in
preparation of the Registration Statement or Prospectus or any amendment or
supplement thereto. In no event shall the liability of a Purchaser be
greater in amount than the dollar amount of the proceeds (net of all
expenses paid by such Purchaser and the amount of any damages such holder
has otherwise been required to pay by reason of such untrue statement or
omission) received by such Purchaser upon the sale of the Registrable
Securities or Additional Registrable Securities included in the
Registration Statement giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder shall (i) give prompt notice to the indemnifying
party of any claim with respect to which it seeks indemnification and (ii)
permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party; provided that any
person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the
fees and expenses of such counsel shall be at the expense of such person
unless (a) the indemnifying party has agreed to pay such fees or expenses,
or (b) the indemnifying party shall have failed to assume the defense of
such claim and employ counsel reasonably satisfactory to such person or (c)
in the reasonable judgment of any such person, based upon written advice of
its counsel, a conflict of interest exists between such person and the
indemnifying party with respect to such claims (in which case, if the
person notifies the indemnifying party in writing that such person elects
to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such
claim on behalf of such person); and provided, further, that the failure of
any indemnified party to give notice as provided herein shall not relieve
the indemnifying party of its obligations hereunder, except to the extent
that such failure to give notice shall materially adversely affect the
indemnifying party in the defense of any such claim or litigation. It is
understood that the indemnifying party shall not, in connection with any
proceeding in the same jurisdiction, be liable for fees or expenses of more
than one separate firm of attorneys at any time for all such indemnified
parties. No indemnifying party will, except with the consent of the
indemnified party, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release
from all liability in respect of such claim or litigation.
(d) Contribution. If for any reason the indemnification provided for in the
preceding paragraphs (a) and (b) is unavailable to an indemnified party or
insufficient to hold it harmless, other than as expressly specified
therein, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative
fault of the indemnified party and the indemnifying party, as well as any
other relevant equitable considerations. No person guilty of fraudulent
misrepresentation within the meaning of Section 11(f) of the 1933 Act shall
be entitled to contribution from any person not guilty of such fraudulent
misrepresentation. In no event shall the contribution obligation of a
holder of Registrable Securities or Additional Registrable Securities be
greater in amount than the dollar amount of the proceeds (net of all
expenses paid by such holder and the amount of any damages such holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission) received by it upon the sale of
the Registrable Securities or Additional Registrable Securities giving rise
to such contribution obligation.
7. Miscellaneous.
(a) Amendments and Waivers. This Agreement may be amended only by a writing
signed by the parties hereto. The Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by
it, only if the Company shall have obtained the written consent to such
amendment, action or omission to act, of the Purchasers affected by such
amendment, action or omission to act.
(b) Notices. All notices and other communications provided for or permitted
hereunder shall be made as set forth in Section 9.4 of the Purchase
Agreement.
(c) Assignments and Transfers by Purchasers. This Agreement and all the rights
and obligations of any Purchaser hereunder may be assigned or transferred
to any transferee or assignee of the Debentures, Warrants or Registrable
Securities, except as set forth herein. A Purchaser may make such
assignment or transfer to any transferee or assignee of any Debenture,
Warrant, Registrable Securities or Additional Registrable Securities,
provided that (i) such transfer is made expressly subject to this Agreement
and the transferee agrees in writing to be bound by the terms and
conditions hereof, (ii) the Company is provided with written notice of such
assignment, and (iii) such transfer is to an affiliate of a Purchaser or
such transfer is otherwise approved by the Company (not to be unreasonably
withheld).
(d) Assignments and Transfers by the Company. This Agreement may not be
assigned by the Company without the prior written consent of the
Purchasers, but after notice duly given, the Company shall assign its
rights and delegate its duties hereunder to any successor-in-interest
corporation, and such successor-in-interest shall assume such rights and
duties, in the event of a merger or consolidation of the Company with or
into another corporation or the sale of all or substantially all of the
Company's assets (and it shall be a condition to any such merger,
consolidation or sale that such successor-in-interest assume in writing all
obligations hereunder).
(e) Benefits of the Agreement. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective permitted
successors and assigns of the parties. Nothing in this Agreement, express
or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
(f) Counterparts. 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.
(g) Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
(h) Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with
its terms to the fullest extent permitted by law.
(i) Further Assurances. The parties shall execute and deliver all such further
instruments and documents and take all such other actions as may reasonably
be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.
(j) Entire Agreement. This Agreement, together with the Purchase Agreement,
Debentures and Warrants and documents contemplated thereby, is intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. This
Agreement, together with the Purchase Agreement, Debentures and Warrants
and documents contemplated thereby, supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
(k) Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to
principles of conflicts of law.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
THE COMPANY:
FONAR CORPORATION
By:/s/
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Name:
-----------------------
Title:
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THE PURCHASER:
THE TAIL WIND FUND, LTD.
By:/s/
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Name:
-----------------------
Title:
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PLACEMENT AGENT:
XXXX XXXXXX INC.
By:/s/
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Name:
-----------------------
Title:
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