Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
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This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
March 30, 2005, by and among (i) DOBI Medical International, Inc., a Delaware
corporation (the "Company"), (ii) each purchaser of Common Stock (as defined
below) pursuant to the Securities Purchase Agreement (as defined below)
(collectively, the "Investors" and each individually, an "Investor"), and (iii)
each person or entity that subsequently becomes a party to this Agreement
pursuant to, and in accordance with, the provisions of Section 12 hereof (each
an "Investor Permitted Transferee" and collectively, the "Investor Permitted
Transferees").
WHEREAS, the Company has agreed to issue and sell to the Investors, and
the Investors have agreed to purchase from the Company (i) up to an aggregate of
21,000,000 shares (the "Purchased Shares") of the Company's common stock, par
value $.0001 per share (the "Common Stock") and (ii) warrants to purchase an
aggregate of up to 10,500,000 shares of the Common Stock (the "Warrants"), all
upon the terms and conditions set forth in that certain Securities Purchase
Agreement, dated of even date herewith, between the Company and the Investors
(the "Securities Purchase Agreement"); and
WHEREAS, the terms of the Securities Purchase Agreement provide that it
shall be a condition precedent to the closing of the transactions thereunder,
for the Company and the Investors to execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:
1. Definitions. The following terms shall have the meanings provided
therefor below or elsewhere in this Agreement as described below:
"Affilate" of a party means any other Person controlling,
controlled by or under common control with the specified Person. For the
purposes of this definition, "control" means the power to direct the management
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise.
"Board" shall mean the board of directors of the Company.
"Closing" shall have the meaning ascribed to such term in the Securities
Purchase Agreement.
"Closing Date" shall have the meaning ascribed to such term in the
Securities Purchase Agreement.
"Effectiveness Deadline" shall be ninety (90) days after the
Closing Date or, in the event of a review of the Registration Statement by the
SEC, one hundred twenty (120) days after the Closing Date.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and all of the rules and regulations promulgated thereunder.
"Filing Date Deadline" shall be thirty (30) days after the Closing
Date.
"Investors" shall mean, collectively, the Investors and the
Investor Permitted Transferees; provided, however, that the term "Investors"
shall not include any of the Investors or any of the Investor Permitted
Transferees that ceases to own or hold any Purchased Shares.
"Majority Holders" shall mean, at the relevant time of reference
thereto, those Investors
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holding more than fifty percent (50%) of the Registrable Shares held by all of
the Investors.
"Person" shall mean an individual, corporation, company,
partnership, firm, association, joint venture, trust, unincorporated
organization, government, governmental body, agency, political subdivision or
other entity.
"Qualifying Holder" shall have the meaning ascribed thereto in
Section 12 hereof.
"Registrable Shares" shall mean (i) the Purchased Shares, (ii) any
shares of Common Stock issued pursuant to Section 3(d) or Section 3(e) hereof,
(iii) the Warrant Shares (including any shares of Common Stock issued or
issuable thereon upon any stock split, stock combination, stock dividend or the
like) and (iv) any shares of Common Stock issued as or issuable upon the
conversion or exercise of any warrant, right or other security that is issued as
a dividend or other distribution (including a stock split or reverse stock
split), or as a result of any anti-dilution adjustment under the Securitries
Purchase Agreement, with respect to, or in exchange for, or in replacement of,
the shares of Common Stock referred to in clause (i), (ii) or (iii) of this
definition.
"Rule 144" shall mean Rule 144 promulgated under the Securities
Act and any successor or substitute rule, law or provision.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and all of the rules and regulations promulgated thereunder.
"Warrant Shares" shall mean the shares of Common Stock issuable
upon the exercise of the Warrants.
2. Effectiveness; Termination. This Agreement shall become effective
and legally binding only if the Closing occurs. This Agreement shall terminate
and be of no further force or effect, automatically and without any action being
required of any party hereto, upon the termination of the Securities Purchase
Agreement pursuant to Section 7 thereof. Nothing contained herein or in any
agreement or document relating to this transaction, and no action taken by any
Investor, shall be deemed to constitute the Investors as, or to create any
presumption that the Investors are in any way acting in concert or as, a group
with respect to the obligations or transaction hereunder. Each Investor shall be
entitled to independently protect and enforce its rights hereunder.
3. Registration.
(a) As soon as practicable, but in no event later than the Filing
Date Deadline, the Company shall prepare and file with the SEC a registration
statement on Form SB-2 for the purpose of registering under the Securities Act
all of the Registrable Shares for resale by, and for the account of, the
Investors as selling stockholders thereunder (the "Registration Statement,"
which term, for purposes of Section 5 hereof, shall include each Piggyback
Registration Statement (as defined below)). The Registration Statement shall
permit the Investors to offer and sell, on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act, any or all of the Registrable
Shares. The Company shall use all commercially reasonable efforts to cause the
Registration Statement to be declared effective after 5:00 p.m. as promptly as
possible after filing, but in no event later than the Effectiveness Deadline,
and shall be required to keep the Registration Statement effective until such
date that is the earlier of (i) the second anniversary of the effective date of
such Registration Statement; and (ii) the date on which the Shares can be sold
by non-affiliates of the Company without registration under Rule 144(k)
promulgated under the Securities Act (the "Mandatory Registration Termination
Date"). Thereafter, the Company shall be entitled to withdraw the Registration
Statement and the Investors shall have no further right to offer or sell any of
the Registrable Shares pursuant to the Registration Statement (or any Prospectus
relating thereto). The Company will timely file a Form D in accordance with the
provisions of Regulation D
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promulgated by the SEC under the Securities Act with respect to the transactions
contemplated by Securities Purchase Agreement and this Agreement.
(b) Unless otherwise agreed to by the Company and the Investors,
the offer and sale of the Registrable Shares pursuant to the Registration
Statement shall not be underwritten.
(c) The Company represents and warrants that, as of the date of
this Agreement, it meets the requirements for the use of Form SB-2 for
registration of the resale by the Investors of the Registrable Shares, and it
will use its commercially reasonable efforts to continue to meet such
requirements during the period in which it takes to have the Registration
Statement declared effective.
(d) This Section 3(d) shall apply to the Company's obligation
under Section 3(a) hereof to file the Registration Statement with the SEC and to
cause such Registration Statement to become effective. Subject to the provisions
below, the Company and Investors agree that the Investors will suffer damages if
the Registration Statement is not declared effective by the SEC, subject to
receipt of the necessary information from the Investors, on or prior to the
Effectiveness Deadline. The Company and the Investors further agree that it
would not be feasible to ascertain the extent of such damages with precision.
Accordingly, if (i) the Registration Statement is not filed on or prior to the
Filing Date Deadline; or (ii) the Registration Statement is not declared
effective prior to the Effectiveness Deadline (unless, in each case, an Event
results, directly or indirectly, from any act of war or terrorism) (each of the
events listed in (i)-(ii) above being referred to as an "Event"), then the
Company shall pay to each Investor as liquidated damages for any such failure
and not as a penalty an amount equal to 1.0% of the purchase price for the
Shares and the Warrants purchased by such Investor pursuant to the Securities
Purchase Agreement for each full thirty (30) day period following an Event until
such Event has been cured. Such Liquidated Damages (as defined below) shall be
payable monthly, at the election of the Company, in (x) cash by wire transfer of
immediately available funds or (y) that number of shares of Common Stock equal
to (A) the amount owed to such Investor in Liquidated Damages pursuant to this
Section 3(d) divided by (B) $.50 (rounding down to the nearest whole share). If
the Company is required to issue any additional shares of Common Stock pursuant
to the foregoing, the Company shall include those shares in the Registration
Statement.
(e) Subject to the provisions below, and except for time periods
during which the effectiveness of the Registration Statement may be suspended as
provided in Section 11 hereof, should the effectiveness of the Registration
Statement or the Prospectus included therein (the "Prospectus") lapse for any
reason while the Company has any obligation to maintain such Registration
Statement and Prospectus or the Registration Statement or Prospectus ceases to
be usable for any reason, and the Company does not cure such lapse in
effectiveness or other reason, within fifteen (15) business days (the "Cure
Period") by a post-effective amendment to the Registration Statement, a
supplement to the Prospectus or a report filed pursuant to the Exchange Act that
cures such lapse, the Company shall pay each Investor damages from the period
from and including the first day following the expiration of the Cure Period
until, but excluding, the earlier of (1) the date in which such failure is cured
and (2) the date which is fifteen (15) months following the Closing Date, at a
rate equal to 1% per annum (pro rata on a 360 day basis) of the total purchase
price for the Purchased Shares and the Warrants purchased by each Investor
pursuant to the Securities Purchase Agreement. Such Liquidated Damages (as
defined below) shall be payable monthly, at the election of the Company, in (x)
cash by wire transfer of immediately available funds or (y) that number of
shares of Common Stock equal to (A) the amount owed to such Investor in
Liquidated Damages pursuant to this Section 3(e) divided by (B) $.50 (rounding
down to the nearest whole share).
(f) For purposes of Section 3(d) and Section 3(e), the amounts
payable by the Company under this Agreement are referred to collectively herein
as "Liquidated Damages." In any event, no Liquidated Damages shall accrue after
the fifteen (15) month anniversary of the Closing Date. The parties agree that
the Liquidated Damages represent a reasonable estimate on the part of the
parties, as of the date of this Agreement, of the amount of damages that may be
incurred by the Investors if the Registration Statement is not filed on or prior
to the Filing Date Deadline or has not been declared
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effective by the SEC on or prior to the Effectiveness Deadline or if there is a
lapse in the effectiveness of the Registration Statement or Prospectus or if the
Registration Statement or Prospectus ceases to be usable.
4. "Piggyback" Registration Rights.
(a) If, at any time after the Mandatory Registration Termination
Date, the Company proposes to register any of its Common Stock under the
Securities Act, whether as a result of a primary or secondary offering of Common
Stock or pursuant to registration rights granted to holders of other securities
of the Company (but excluding in all cases any registrations to be effected on
Forms S-4 or S-8 or other applicable successor forms), the Company shall, each
such time, give to the Investors holding Registrable Shares written notice of
its intent to do so. Upon the written request of any such Investor given within
20 days after the giving of any such notice by the Company, the Company shall
use reasonable efforts to cause to be included in such registration the
Registrable Shares of such Investor, to the extent requested to be registered;
provided that (i) the number of Registrable Shares proposed to be sold by such
Investor is equal to at least twenty-five percent (25%) of the total number of
Registrable Shares then held by such participating Investor, (ii) such Investor
agrees to sell those of its Registrable Shares to be included in such
registration in the same manner and on the same terms and conditions as the
other shares of Common Stock which the Company proposes to register and (iii) if
the registration is to include shares of Common Stock to be sold for the account
of the Company or any party exercising demand registration rights pursuant to
any other agreement with the Company in an underwritten offering, the proposed
managing underwriter does not advise the Company that in its opinion the
inclusion of such Investor's Registrable Shares (without any reduction in the
number of shares to be sold for the account of the Company or such party
exercising demand registration rights) is likely to materially and adversely
affect the success of the offering or the price that would be received for any
shares of Common Stock offered, in which case the rights of such Investor shall
be a provided in Section 4(b) hereof.
(b) If a registration pursuant to Section 4(a) hereof involves an
underwritten offering and the managing underwriter shall advise the Company in
writing that, in its opinion, the number of Registrable Shares requested by the
Investors to be included in such registration is likely to materially and
adversely affect the success of the offering or the price that would be received
for any Registrable Shares offered in such offering, then, notwithstanding
anything in Section 4(a) to the contrary, the Company shall only be required to
include in such registration, to the extent of the number of Registrable Shares
which the Company is so advised can be sold in such offering, (i) first, the
number of Registrable Shares proposed to be included in such registration for
the account of the Company and/or any stockholders of the Company (other than
the Investors) that have exercised demand registration rights, in accordance
with the priorities, if any, then existing among the Company and/or such
stockholders of the Company with registration rights (other than the Investors),
and (ii) second, the Registrable Shares requested to be included in such
registration by all other stockholders of the Company who have piggyback
registration rights (including, without limitation, the Investors), pro rata
among such other stockholders (including, without limitation, the Investors) on
the basis of the number of Registrable Shares that each of them requested to be
included in such registration.
(c) In connection with any offering involving an underwriting of
shares under this Section 4, the Company shall not be required under this
Section 4 or otherwise to include the Registrable Shares of any Investor therein
unless such Investor accepts and agrees to the terms of the underwriting, which
shall be reasonable and customary, as agreed upon between the Company and the
underwriters selected by the Company.
5. Obligations of the Company. In connection with the Company's
obligation under Sections 3 and 4, the Company shall, as expeditiously as
reasonably possible:
(a) Prepare and file with the SEC such amendments and supplements
to the Registration Statement and the Prospectus as may be necessary to comply
with the provisions of the
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Securities Act with respect to the disposition of all Registrable Shares covered
by the Registration Statement; provided, however, that before filing a
registration statement or Prospectus or any amendments or supplements thereto,
or comparable statements under securities or blue sky laws of any jurisdiction,
the Company will furnish to one counsel to be designated by Investors
participating in the planned offering and/or to one additional counsel
designated by each Investor (each, a "Designated Counsel"), copies of the
"Selling Securityholder" and "Plan of Distribution" sections of such filings,
or, at the request of an Investor, of all such documents proposed to be filed
(including all exhibits thereto), which documents will be subject to the
reasonable review and reasonable comment of such counsel.
(b) Furnish to the Investors such number of copies of the
Prospectus, including a preliminary Prospectus, in conformity with the
requirements of the Securities Act, and such other documents (including, without
limitation, Prospectus amendments and supplements as are prepared by the Company
in accordance with Section 5(a) above) as the Investors may reasonably request
in order to facilitate the disposition of such Investors' Registrable Shares.
(c) Promptly notify the Investors, at any time when the Prospectus
relating to the Registration Statement is required to be delivered under the
Securities Act, of the happening of any event (without disclosing the nature or
substance of such event) as a result of which the Prospectus included in or
relating to the Registration Statement contains an untrue statement of a
material fact or omits any fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; and,
thereafter, the Company will promptly prepare (and, when completed, give notice
to each Investor) a supplement or amendment to such Prospectus so that, as
thereafter delivered to the purchasers of such Registrable Shares pursuant to
the Registration Statement, such Prospectus will not contain an untrue statement
of a material fact or omit to state any fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided that upon such notification by the Company of the foregoing
and instructing each Investor to cease to offer and sell Registrable Shares,
each Investor will use commercially reasonable efforts to cease its offer and
sale of Registrable Shares until the Company has notified the Investors that it
has prepared a supplement or amendment to such Prospectus and delivered copies
of such supplement or amendment to the Investors (it being understood and agreed
by the Company that the foregoing proviso shall in no way diminish or otherwise
impair the Company's obligation to promptly prepare a Prospectus amendment or
supplement as above provided in this Section 5(c) and deliver copies of same as
above provided in Section 5(b) hereof).
(d) Use commercially reasonable efforts to register and qualify
the Registrable Shares covered by the Registration Statement under such other
securities or "blue sky" laws of such jurisdictions as shall be reasonably
appropriate in the opinion of the Company and the managing underwriters, if any,
or if reasonably requested by the Investors; provided that, or unless requested
by an Investor and consented to by the Company (which consent shall not be
unreasonably withheld), the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions; and
provided further that (notwithstanding anything in this Agreement to the
contrary with respect to the bearing of expenses) if any jurisdiction in which
any of such Registrable Shares shall be qualified shall require that expenses
incurred in connection with the qualification therein of any such Registrable
Shares be borne by the Investors, then the Investors shall, to the extent
required by such jurisdiction, pay their pro rata share of such qualification
expenses.
(e) Promptly notify (i) each Investor (A) any time when the
Registration Statement, the Prospectus or any Prospectus supplement related
thereto or post effective amendment has been filed, and with respect to the
Registration Statement or any post-effective amendment, when the same has become
effective, and with respect to the Registration Statement, provide each Investor
who has provided its current e-mail address to Counsel to the Company, a copy of
the Prospectus by electronic mail prior to the opening of trading of the
Company's Common Stock on the first business day following the date on which the
Registration Statement has become effective, (B) of the issuance of any stop
order by the SEC suspending the effectiveness of such Registration Statement or
the initiation of any proceedings by any
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person to such effect, and promptly use all commercially reasonable efforts to
obtain the release of such suspension, (C) of the receipt by the Company of any
notification with respect to the suspension of the qualification of any
Registrable Shares for sale under the securities or blue sky laws of any
jurisdiction or the initiation of any proceeding for such purpose, (D) when a
Prospectus relating to the registration of the Registrable Shares is required to
be delivered under the Securities Act, or (E) of the happening of any event as a
result of which the Prospectus included, as then in effect, includes any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing; and (ii) Designated Counsel of any
request by the SEC for amendments or supplements to the Registration Statement
or Prospectus or for additional information. If the notification relates to an
event described in Section 5(c), the Company shall in accordance with Section
5(a), promptly prepare and furnish to each Investor, if any, selling Registrable
Shares covered by such registration statement, a reasonable number of copies of
a Prospectus supplemented or amended so that, as thereafter delivered to the
purchasers of such Registrable Shares, 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 in the light of
the circumstances under which they were made not misleading.
(f) Cause all such Registrable Shares registered pursuant to this
Agreement to be quoted or listed on each securities exchange or market on which
similar securities issued by the Company are then quoted or listed.
(g) Provide a transfer agent and registrar for all Registrable
Shares registered pursuant to this Agreement and a CUSIP number for all such
Registrable Shares, in each case not later than the effective date of
registration and, at the time of the sale of the Registrable Shares pursuant to
an effective Registration Statement or in accordance with Section 6.3 of the
Securities Purchase Agreement, use commercially reasonable efforts to cause the
transfer agent to remove restrictive legends on the securities covered by such
Registration Statement.
(h) Promptly deliver to Designated Counsel copies of all
correspondence between the SEC and the Company, its counsel or auditors and all
memoranda relating to discussions with the SEC or its staff with respect to the
registration statement, other than those portions of any such memoranda that
contain information subject to attorney client privilege with respect to the
Company, and, upon receipt of such confidentiality agreements as the Company may
reasonably request, make reasonably available for inspection by Designated
Counsel participating in any disposition to be effected pursuant to the
Registration Statement, all pertinent financial and other records, pertinent
corporate documents and properties of the Company, and cause all of the
Company's officers, directors and employees to supply all information reasonably
requested by Designated Counsel in connection with such Registration Statement.
(i) Use commercially reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of the Registration
Statement.
(j) Upon written request, furnish to each Investor participating
in the offering, without charge, at least one (1) conformed copy of the
Registration Statement and any post-effective amendments thereto, including
financial statements, all documents incorporated therein by reference and all
exhibits (including those incorporated by reference).
(k) Comply with all applicable rules and regulations of the SEC,
and make generally available to its security holders, as soon as reasonably
practicable after the effective date of the Registration Statement (and in any
event within sixteen (16) months thereafter), an earnings statement (which need
not be audited) covering the period of at least twelve (12) consecutive months
beginning with the first day of the Company's first calendar quarter after the
effective date of the Registration Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder.
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6. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement
(including, without limitation, to maintain the accuracy of any information
previously furnished by Investors for use in the Registration Statement) that
the Investors shall furnish to the Company such information regarding them and
the securities held by them as the Company shall reasonably request and as shall
be required by applicable securities laws in order to effect any registration by
the Company pursuant to this Agreement.
7. Expenses of Registration. All of the expenses incurred by the
Company in connection with the registration of the Registrable Shares pursuant
to this Agreement (excluding underwriting, brokerage and other selling
commissions and discounts), including without limitation, all registration,
qualification and filing fees, printing fees and fees and disbursements of its
counsel and one counsel to the Investors, shall be borne by the Company, whether
or not such Registration Statement becomes effective or remains effective for
the period contemplated hereby.
8. Delay of Registration. No Investor shall take any action to
restrain, enjoin or otherwise delay any registration as the result of any
controversy which might arise with respect to the interpretation or
implementation of this Agreement.
9. Indemnification. For the purposes of this Section 9 and Section
11, the term "Registration Statement" shall include any preliminary or final
Prospectus, exhibit, supplement or amendment included in or relating to, as the
case may be, the Registration Statement referred to in Section 3(a).
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Investor, its directors, officers, employees, fiduciaries,
members, managers, or general or limited partners (and the directors, officers,
employees and stockholders thereof), any broker/dealer acting on behalf of any
Investor and each officer and director of such Investor or broker/dealer and
each Person, if any, who controls such Investor or broker/dealer within the
meaning of the Securities Act (each, an "Investor Indemnified Person"), against
any losses, claims, damages or liabilities, joint or several, and expenses
(including reasonable counsel fees and disbursements, any amounts paid in any
settlement effected with the Company's prior written consent) to which they may
become subject under the Securities Act, the Exchange Act, state securities laws
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) arise out of or are based upon (i) any untrue
or alleged untrue statement of any material fact contained in the Registration
Statement or in any amendments or supplements to the Registration Statement or
any registration statement pursuant to which Registrable Shares are registered
pursuant to Section 4 hereof (including any preliminary prospectus or final
prospectus relating thereto, any amendments or supplements thereto and any
exhibits thereto, a "Piggyback Registration Statement") or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein in
light of the circumstance under which they were made not misleading or any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, state securities laws or any rule or regulation promulgated under
the Securities Act, the Exchange Act, state securities laws or Nasdaq or (ii)
any failure of the Company to fulfill any undertaking included in the
Registration Statement, or any Piggyback Registration Statement; and will
reimburse such Investor Indemnified Person for any expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability or action (including reasonable expenses of legal counsel);
provided, however, that the indemnity agreement contained in this Section 9(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, damage, liability or
action to the extent that it arises out of or is based upon an untrue statement
or alleged untrue statement or omission made in connection with the Registration
Statement or any Piggyback Registration Statement in reliance upon and in
conformity with written information furnished expressly for use in connection
with the Registration Statement or any Piggyback Registration Statement by the
Investors. Such indemnity and reimbursement of expenses shall remain in full
force and effect
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regardless of any investigation made by or on behalf of such Investor
Indemnified Person and shall survive the sale of such Registrable Shares by such
Investor.
(b) To the extent permitted by law, each Investor will severally,
and not jointly, indemnify and hold harmless the Company, each of its directors,
each of its officers who have signed the Registration Statement, or any
Piggyback Registration Statement, each person, if any, who controls the Company
within the meaning of the Securities Act, or any broker/dealer acting on behalf
of the Company (a "Company Indemnified Person") against any losses, claims,
damages or liabilities to which the Company or any such director, officer,
controlling person, or broker/dealer may become subject to, under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any untrue or alleged
untrue statement of any material fact contained in the Registration Statement or
any Piggyback Registration Statement or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, in each case to the
extent and only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration Statement
or any Piggyback Registration Statement, in reliance upon and in conformity with
written information furnished by such Investor expressly for use in connection
with the Registration Statement or any Piggyback Registration Statement; and
such Investor will reimburse any expenses reasonably incurred by a Company
Indemnified Person in connection with investigating or defending any such loss,
claim, damage, liability or action (including reasonable counsel fees and
disbursements); provided, however, that the liability of each Investor hereunder
shall be limited to the proceeds (net of underwriting discounts and commissions,
if any) received by such Investor from the sale of Registrable Shares covered by
the Registration Statement or Piggyback Registration Statement; as the case may
be; and provided, further, however, that the indemnity agreement contained in
this Section 9(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of those Investor(s) against which the request for indemnity is
being made (which consent shall not be unreasonably withheld). Such indemnity
and reimbursement of expenses shall remain in full force and effect regardless
of any investigation made by or on behalf of such Company Indemnified Person
and, as relevant, shall survive the sale of such Registrable Shares by any
Investor.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party
under this Section 9, notify the indemnifying party in writing of the
commencement thereof and the indemnifying party shall have the right to
participate in and, to the extent the indemnifying party desires, jointly with
any other indemnifying party similarly noticed, to assume at its expense the
defense thereof with counsel mutually satisfactory to the indemnifying parties
with the consent of the indemnified party (which consent will not be
unreasonably withheld, conditioned or delayed). In the event that the
indemnifying party assumes any such defense, the indemnified party may
participate in such defense with its own counsel and at its own expense;
provided, however, that the counsel for the indemnifying party shall act as lead
counsel in all matters pertaining to such defense or settlement of such claim
and the indemnifying party shall only pay for such indemnified party's expenses
for the period prior to the date of its participation on such defense.
(d) If the indemnification provided for in this Section 9 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, claim, damage, liability or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, or expense 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 loss, claim, damage, liability or
expense as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties relative intent, knowledge, access to
8
information, and opportunity to correct or prevent such statement or omission.
If, however, the allocation provided in the first sentence of this paragraph is
not permitted by applicable law, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative faults but also the relative
benefits of the indemnifying party and the indemnified party as well as any
other relevant equitable considerations. The parties hereto agree that it would
not be just and equitable if contributions pursuant to this Section 9(d) were to
be determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
preceding sentences of this Section 9(d). The amount paid or payable in respect
of any claim shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
such loss, claim, damage or liability. 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. Notwithstanding anything in this Section 9(d) to
the contrary, no Investor shall be required pursuant to this Section 9(d) to
contribute any amount in excess of the net proceeds received by such Investor
from the sale of Registrable Shares in the offering to which the loss, claims,
damage or liability relates, less the amount of any indemnification payment
previously made by such indemnifying party pursuant to Section 9(b).
(e) The obligations of the Company and the Investors under this
Section 9 shall survive the completion of any offering of Registrable Shares
pursuant to a Registration Statement or any Piggyback Registration Statement.
(f) Notwithstanding anything to the contrary herein, the
indemnifying party shall not be entitled to settle any claim, suit or proceeding
unless in connection with such settlement the indemnified party receives an
unconditional release with respect to the subject matter of such claim, suit or
proceeding and such settlement does not contain any admission of fault by the
indemnified party.
10. Reports under the Exchange Act. With a view to making available to
the Investors the benefits of Rule 144 and any other rule or regulation of the
SEC that may at any time permit the Investors to sell the Purchased Shares to
the public without registration, the Company agrees to use commercially
reasonable efforts: (i) to make and keep public information available, as those
terms are understood and defined in the General Instructions to Form SB-2, or
any successor or substitute form, and in Rule 144; (ii) to file with the SEC in
a timely manner all reports and other documents required to be filed by an
issuer of securities registered under the Securities Act or the Exchange Act;
(iii) as long as any Investor owns any Purchased Shares, to furnish in writing
upon such Investor's request a written statement by the Company that it has
complied with the reporting requirements of Rule 144 and of the Securities Act
and the Exchange Act, and to furnish to such Investor a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
so filed by the Company as may be reasonably requested in availing such Investor
of any rule or regulation of the SEC permitting the selling of any such
Purchased Shares without registration; and (iv) undertake any additional actions
reasonably necessary to maintain the availability of the Registration Statement
or the use of Rule 144.
11. Deferral and Lock-Up. Notwithstanding anything in this Agreement
to the contrary, if the Company shall furnish to the Investors a certificate
signed by the President or Chief Executive Officer of the Company stating that
the Board of Directors of the Company has made the good faith determination (i)
that continued use by the Investors of the Registration Statement, or any
Piggyback Registration Statement, for purposes of effecting offers or sales of
Registrable Shares pursuant thereto would require, under the Securities Act,
premature disclosure in the Registration Statement, or any Piggyback
Registration Statement of material, nonpublic information concerning the
Company, its business or prospects or any proposed material transaction
involving the Company, (ii) that such premature disclosure would be materially
adverse to the Company, its business or prospects or any such proposed material
transaction or would make the successful consummation by the Company of any such
material transaction significantly less likely and (iii) that it is therefore
essential to suspend the use by the Investors of such Registration Statement, or
any Piggyback Registration Statement for purposes of effecting offers or sales
of Registrable Shares pursuant thereto, then the right of the Investors to use
the
9
Registration Statement, or any Piggyback Registration Statement for purposes of
effecting offers or sales of Registrable Shares pursuant thereto shall be
suspended for not more than thirty (30) days at one time and on no more than two
occasions in the aggregate (the "Suspension Period(s)") after delivery by the
Company of the certificate referred to above in this Section 11. Such 30-day
periods shall be at least two business days apart. In no event, however, will
any suspension be any longer than is reasonably necessary to avoid the adverse
effect. During any Suspension Period, none of the Investors shall offer or sell
any Registrable Shares publicly pursuant to or in reliance upon the Registration
Statement, or the Prospectus, or any Piggyback Registration Statement (or the
prospectus relating thereto).
12. Transfer of Registration Rights. None of the rights of any
Investor under this Agreement shall be transferred or assigned to any person
unless (i) such person is a Qualifying Holder (as defined below), and (ii) such
person agrees to become a party to, and bound by, all of the terms and
conditions of, this Agreement by duly executing and delivering to the Company an
Instrument of Adherence in the form attached as Exhibit B hereto. For purposes
of this Section 12, the term "Qualifying Holder" shall mean, with respect to any
Investor, (i) any Affiliate of an Investor, or (ii) any other direct transferee
from an Investor of at least 100,000 Purchased Shares that are held on the date
hereof by such Investor. None of the rights of any Investor under this Agreement
shall be transferred or assigned to any person (including, without limitation, a
Qualifying Holder) that acquires Registrable Shares in the event that and to the
extent that such person is eligible to resell such Registrable Shares pursuant
to Rule 144(k) of the Securities Act or may otherwise resell such Registrable
Shares pursuant to an exemption from the registration provisions of the
Securities Act.
13. Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of the Majority Holders, enter into any agreement with any holder or prospective
holder of any securities of the Company that would allow such holder or
prospective holder to include such securities in any Piggyback Registration
Statement unless under the terms of such agreement, such holder or prospective
holder may include such securities in any such registration only to the extent
that the inclusion of the securities of such holder or prospective holder will
not reduce the amount of the Registrable Shares which the Investors wish to
include in such Registration Statement.
14. No Required Sale. Nothing in this Agreement shall be deemed to
create an independent obligation on the part of any Investor to sell any
Registrable Shares pursuant to any effective registration statement.
15. Nominees for Beneficial Owners. If Registrable Shares are held by
a nominee for the beneficial owner thereof, the beneficial owner thereof may, at
its option, be treated as the holder of such Registrable Shares for purposes of
any request or other action by any Investor pursuant to this Agreement (or any
determination of any number or percentage of shares constituting Registrable
Shares held by any Investor contemplated by this Agreement); provided that the
Company shall have received assurances reasonably satisfactory to it of such
beneficial ownership.
16. Entire Agreement. This Agreement and exhibits attached hereto and
incorporated herewith constitute and contain the entire agreement and
understanding of the parties with respect to the subject matter hereof, and
supersedes any and all prior negotiations, correspondence, agreements or
understandings with respect to the subject matter hereof and supercedes all
prior agreements, negotiations, understandings, representations and statements
respecting the subject matter hereof, whether oral or written.
17. Agreement with Respect to Sales of Common Stock. Each Investor
will not, and will cause each of its affiliates and any person acting on its or
their behalf not to, directly or indirectly, offer, sell, pledge, transfer or
otherwise dispose of (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of) any of the shares of Common Stock, except in
compliance with the Securities Act, applicable state securities laws and the
respective rules and regulations promulgated thereunder.
10
18. Miscellaneous.
(a) Amendment. No amendment, modification, alteration, waiver or
change in any of the terms of this Agreement shall be valid or binding upon the
parties hereto unless made in writing and duly executed by the Company and the
holders of at least 66-2/3% of the Registrable Shares held by all of the
Investors; provided, however, that in each case, no such amendment shall
increase the obligations of any Investor without such Investor's written
consent.
(b) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to any conflicts of laws concepts that would apply the laws
of another jurisdiction.
(c) Assignment. The rights and obligations of the parties hereto
shall inure to the benefit of, and shall be binding upon the authorized
successors and permitted assigns of each party; provided that the terms and
conditions of Section 12 hereof are satisfied. This Agreement shall also be
binding upon and inure to the benefit of any transferee of any of the Purchased
Shares; provided the terms and conditions of Section 12 hereof are satisfied.
Notwithstanding anything in this Agreement to the contrary, if at any time any
Investor shall cease to own any Registrable Shares, all of such Investor's
rights under this Agreement shall immediately terminate; provided, however, that
if such Investor ceases to own Registrable Shares because all or a portion of
such shares were sold pursuant to the Registration Statement or a Piggyback
Registration Statement, then such Investor shall continue to have the rights and
obligations set forth in Section 9 hereof, as provided in Section 9(e) hereof.
In the event of any assignment by an Investor in accordance with the terms of
this Agreement, the assignee shall specifically assume and be bound by the
provisions of the Agreement by executing the Instrument of Adherence attached
hereto as Exhibit B.
(d) Specific Performance. Each of the parties hereto acknowledges
and agrees that damages will not be an adequate remedy for any material breach
or violation of this Agreement if such material breach or violation would cause
immediate and irreparable harm (an "Irreparable Breach"). Accordingly, in the
event of a threatened or ongoing Irreparable Breach, each party hereto shall be
entitled to seek, in any state or federal court in the State of New York,
equitable relief of a kind appropriate in light of the nature of the ongoing or
threatened Irreparable Breach, which relief may include, without limitation,
specific performance or injunctive relief; provided, however, that if the party
bringing such action is unsuccessful in obtaining the relief sought, the moving
party shall pay the non-moving party's costs, including actual attorney's fees,
incurred in connection with defending such action. Such remedies shall not be
the parties' exclusive remedies, but shall be in addition to all other remedies
provided in this Agreement.
(e) Notice. Any notices, reports or other correspondence
(hereinafter collectively referred to as "Correspondence") required or permitted
to be given hereunder shall be sent by courier (overnight or same day) or
facsimile or delivered by hand to the party to whom such correspondence is
required or permitted to be given hereunder. The date of giving any notice shall
be the date of its actual receipt.
(i) All Correspondence to the Company shall be addressed as
follows:
DOBI Medical International, Inc.
0000 XxxXxxxxx Xxxx.
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxx
General Counsel and Secretary
Facsimile: (000) 000-0000
with a copy to:
11
Xxxxxxxxx Traurig, LLP
MetLife Building
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
(ii) All Correspondence to any Investor shall be sent to such
Investor at the address set forth in Exhibit A.
(iii) Any Person may change the address to which
correspondence to it is to be addressed by notification as provided for herein.
(f) Waiver. No waiver of any term, provision or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or be construed as, a further or continuing waiver of any such
term, provision or condition or as a waiver of any other term, provision or
condition of this Agreement.
(g) 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.
(THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK; SIGNATURE PAGE
FOLLOWS)
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IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date and year first above written.
DOBI MEDICAL INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------
Xxxxxxx X. Xxxxxx
Chief Executive Officer
[Investor signature pages follow.]
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INVESTOR SIGNATURE PAGE
DOBI MEDICAL INTERNATIONAL, INC.
REGISTRATION RIGHTS AGREEMENT
The undersigned hereby executes and delivers the Registration Rights
Agreement (the "Agreement") to which this signature page is attached, which,
together with all counterparts of the Agreement and signature pages of the other
parties named in the Agreement, shall constitute one and the same document in
accordance with the terms of the Agreement.
Print Name:
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By:
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Name:
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Title:
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Address:
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Telephone:
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Facsimile:
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E-mail:
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SSN/EIN#:
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