Exhibit 10.4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT"), dated as of September
__, 2005, by and among Bionutrics, Inc., a Nevada corporation (the "COMPANY"),
Indigo Securities, LLC (the "PLACEMENT AGENT"), and the purchasers listed on
SCHEDULE 1 of the Securities, as defined below (each an "INVESTOR" or
collectively, the "INVESTORS")
WHEREAS, the Company and each of the Investors (i) have entered into a
Subscription Agreement dated the date hereof or (ii) in the case of Bridge Note
Investors have previously entered into a Subscription Agreement (each a
"SUBSCRIPTION AGREEMENT" and collectively, the "SUBSCRIPTION AGREEMENTS").
WHEREAS, to induce each Investors to execute and deliver a Subscription
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act, and the rules and regulations thereunder, or any similar
successor statute, as well as any applicable state securities laws.
NOW, THEREFORE, in consideration of the premises, representations,
warranties, and the mutual covenants and agreements contained herein, and in the
Subscription Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company, the
Placement Agent and the Investors, intending to be legally bound, hereby agree
as follows:
1. DEFINITIONS.
Capitalized terms defined in the Subscription Agreements shall have the
same meanings herein as are ascribed to them therein. In addition, as used in
this Agreement, the following terms shall have the following meanings ascribed
to them below:
"AFFILIATE" means any Person that has a relationship with a designated
Person whereby either of such Persons directly or indirectly controls or is
controlled by or is under common control with the other. For this purpose
"control" means the power, direct or indirect, of one Person to direct or cause
direction of the management and policies of another, or any act with respect to
the securities of the Company, whether by contract, through voting securities or
otherwise.
"BRIDGE NOTE INVESTORS" means Investors that purchased convertible
bridge notes and warrants of the Company in a closing held on September __,
2005.
"CLOSING" refers to that event which occurs when the Securities shall
have been subscribed for, the funds representing the sale of the Securities
shall have cleared, and the Company shall accept the subscriptions.
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"COMMON STOCK" shall be the Company's authorized common stock, as
constituted on the date of this Agreement, any stock into which such common
stock may thereafter be changed and any stock of the Company of any other class,
which is not preferred as to dividends or assets over any other class of stock
of the Company issued to the Investors of shares of such common stock upon any
re-classification thereof.
"COMPANY REGISTRATION EXPENSES" shall mean bills or invoices (other
than Selling Expenses) incident to the Company's performance of or compliance
with this Agreement including, without limitation, all registration, filing and
NASDR fees, fees and expenses of compliance with securities or blue sky laws,
word processing, duplicating and printing expenses, messenger and delivery
expenses, fees and disbursements of counsel for the Company and one counsel for
the Investors in connection with each registration and all independent public
accountants including the expenses of any audit and/or "cold comfort" letter,
all fees and expenses in connection with the Company's obligations under Section
3.1, if applicable, and other Persons retained by the Company.
"CONTROLLING PERSON" shall have the meaning set forth under Section 15
of the Securities Act.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCLUDED FORM" means a Form S-4 or Form S-8, pursuant to the
Securities Act or any similar or successor form then in effect.
"INVESTORS" means the Investors and any transferees or assignees who
agree to become bound by the provisions of this Agreement in accordance with
Section 9 hereof. Investors also refers to the Placement Agent and its assignees
when referring to the offer and sale of Registrable Securities and other rights
arising under Sections 2 and 3.
"NASDR" means the NASD Regulation, Inc.
"NOTEHOLDER WARRANTS" means the warrants to purchase shares of the
Company's common stock issued to the lenders providing acquisition financing for
the Company's purchase of Xxxx Pharmaceuticals on ________, 2005.
"OFFERING" means the solicitation by the Placement Agent of Subscribers
for the purchase of the Securities.
"ORIGINAL PURCHASE PRICE" means the purchase price for the Series A
Preferred Stock initially paid by the Subscribers.
"PERSON" means a corporation, an association, a partnership, a limited
liability company, a joint venture, a trust, an organization, a business, an
entity, an individual, a government or political subdivision thereof or a
governmental body.
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"PLACEMENT AGENT" shall mean Indigo Securities, LLC.
"PLACEMENT AGENT AGREEMENT" shall mean the placement agent agreement,
dated as of September 27, 2005, between the Placement Agent and the Company.
"PLACEMENT AGENT WARRANTS" shall mean the warrants to purchase shares
of Common Stock and Series A Preferred Stock issued to the Placement Agent
pursuant to the Placement Agent Agreement.
"PRIVATE PLACEMENT" shall mean the placement of the Securities by the
Company through the Placement Agent pursuant to the Placement Agent Agreement.
"REGISTER, REGISTERED and REGISTRATION" means a registration effected
by preparing and filing a Registration Statement on a form approved by the SEC
other than an Excluded Form in compliance with the Securities Act and the
declaration of effectiveness ordering the effectiveness of such Registration
Statement.
"REGISTRABLE SECURITIES" means Common Stock issued upon (i) conversion
of the Series A Preferred Stock issued at the Closing or obtained through the
exercise of Placement Agent Warrants, (ii) exercise of the Warrants, (iii)
exercise of the Placement Agent Warrants, (iv) exercise of the Noteholder
Warrants and (v) any securities issued upon the Series A Preferred Stock or such
Common Stock by way of stock dividend or stock split, penalty under Section
2.1.2 hereof, or in connection with a combination, recapitalization, share
exchange, consolidation or other reorganization of the Company. As to any
Registrable Securities, once issued, such securities shall cease to be
Registrable Securities when (i) a Registration Statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such Registration
Statement, (ii) they shall have been sold to the public pursuant to Rule 144 (or
any successor provision) under the Securities Act, (iii) they shall have been
otherwise transferred and the new certificates issued by the Company to the
transferee do not bear a legend restricting further transfer and subsequent
disposition of such shares shall not require registration or qualification under
the Securities Act or any similar state law then in force, or (iv) they shall
have ceased to be outstanding.
"REGISTRATION STATEMENT" means one or more registration statements of
the Company on Form S-3 under the Securities Act registering all of the
Registrable Securities, including any amendments or supplements thereto.
"SEC" means the Securities and Exchange Commission or any other
governmental body at the time administering the Securities Act.
"SECURITIES" means (i) [________](1) shares of Series A Preferred Stock
(subject to a 10% over allotment option in favor of the Placement Agent) and
(ii) warrants to purchase [__________](2) shares of Common Stock.
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(1) To be completed with actual share numbers at Closing.
(2) To be completed with actual share numbers at Closing.
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"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLING EXPENSES" shall mean all underwriting discounts, brokerage
fees and selling commissions applicable to the Registrable Securities
registered.
"SERIES A PREFERRED STOCK" means shares of Series A Convertible
Preferred Stock, par value $0.01 per share issued by the Company.
"SUBSCRIBER" means an "accredited investor" as defined under Rule 501
of the Securities Act, subscribing to purchase the Securities.
"WARRANTS" means the warrants to purchase up to [_________] shares of
Common Stock, granted by the Company on September ___, 2005 to Bridge Note
Investor or at the Closing to Investors in connection with the closing of the
Private Placement and the Noteholder Warrants.
2. REGISTRATION.
2.1 MANDATORY REGISTRATION.
2.1.1 The Company shall file with the SEC, promptly after
the Closing Date, a Registration Statement on Form S-3 (or, if Form S-3 is not
available, on such form of Registration Statement as is then available to effect
a registration of all of the Registrable Securities; provided, that the Company
shall convert such other form to Form S-3, or file a replacement registration
statement on Form S-3 promptly after the first date on which it meets such
requirement), covering the resale of 125% of the Registrable Securities, which
Registration Statement, to the extent allowable under the Securities Act and the
rules promulgated thereunder, shall state that such Registration Statement also
covers such indeterminate number of additional shares of Common Stock as may
become issuable upon conversion of the Series A Preferred Stock, exercise of the
Warrants or exercise of the Placement Agent Warrants pursuant to provisions to
prevent dilution resulting from stock splits, stock dividends or similar
transactions (the "MANDATORY REGISTRATION STATEMENT"). The Mandatory
Registration Statement shall contain, unless otherwise required by applicable
law or the SEC, the "SELLING SHAREHOLDERS" and "PLAN OF DISTRIBUTION" section of
the Prospectus in a form reasonably satisfactory to the Investors based upon
information provided by the selling shareholder. The Registrable Securities
included in the Mandatory Registration Statement shall be registered on behalf
of the Investors set forth on SCHEDULE 1 hereof. The Mandatory Registration
Statement (and each amendment or supplement thereto, and each request for
acceleration of effectiveness thereof) shall be provided to the Investors and
their counsel at least five (5) business days prior to its filing or other
submission; such notice to specify the securities to be registered, the proposed
numbers and amounts thereof and the date thereafter by which the Company must
receive the Investors' written indication if any Investor does not wish to
include their Registrable Securities in such Registration Statement and advising
the Investors of their rights under this Section 2. The Company shall file the
Mandatory Registration Statement and cause all of the Registrable Securities
(unless an Investor has indicated otherwise with respect to all or any portion
of such Investor's Registrable Securities pursuant to the preceding sentence) to
be registered under the Securities Act, in connection with the sale or other
disposition by the Investors of the Registrable Securities so registered. The
Company shall use its best efforts (i) to cause the Mandatory Registration
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Statement, as amended, to become effective as soon as practicable after the
filing thereof and (ii) to maintain the effectiveness of the Mandatory
Registration Statement for a period of two years from the date such registration
statement is initially declared effective..
2.1.2 If the Mandatory Registration Statement has not been
declared or ordered effective within one hundred twenty (120) days after the
Closing, the Company shall pay each Investor a fee equal to 1% of the purchase
price paid by such Investor for the Securities plus the aggregate exercise price
of the Warrants and the Placement Agent Warrants for the first two thirty (30)
day periods after such failure and 2.5% of such amount for each subsequent
thirty (30) day period (pro rata, in each case, for partial months), which
payments shall be payable at the end of each calendar month until the date upon
which the Mandatory Registration Statement is declared effective. This payment
may be made, at the election of the Company, in cash or in additional shares of
Series A Preferred Stock valued at the Original Purchase Price.
2.1.3 In the event that the Registration Statement is filed and
declared effective but, during the Registration Period (as defined in Section
3.1.2 below), shall thereafter cease to be effective or useable or the
prospectus included in the Registration Statement (the "PROSPECTUS", as amended
or supplemented by any prospectus supplement and by all other amendments thereto
and all material incorporated by reference in such Prospectus) ceases to be
usable (other than as a result of any act or omission by a holder of Registrable
Securities), in either case, in connection with resales of the Registrable
Securities, without such lapse being cured within ten (10) business days (the
"CURE PERIOD"), with the maximum number of days in any Cure Periods during any
365 day period not to exceed forty-five (45) business days, by a post-effective
amendment to the Registration Statement, a supplement to the Prospectus or a
report filed with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act that cures such lapse, then the Company shall pay to each Investor
(in addition to the rights and remedies available to each Investor under
applicable law and this Agreement), for the period from and including the first
day following the expiration of the Cure Period (or number of days in such Cure
Periods exceeding the aforementioned forty-five (45) days) until, but excluding,
the earlier of (i) the date on which such failure is cured and (ii) the date on
which the Registration Period expires, at a rate equal to two and one-half
percent (2.5%) for every thirty days after such failure (pro rata for partial
months) of the purchase price paid by such Investor for the Securities plus the
aggregate exercise price of the Warrants and the Placement Agent Warrants, which
payment shall be payable at the end of each calendar month. The Company shall
have the option to pay such amounts in cash or Common Stock as provided for in
Section 2.1.2 above.
2.2 DEMAND REGISTRATION
2.2.1 If the Mandatory Registration Statement shall not
have been declared or ordered effective and the Company shall receive a written
request no earlier than one hundred twenty (120) days following the Closing but
no later than 24 months after the Closing from Investors holding more than
$500,000 in value (based on the Original Purchase Price) of the Registrable
Securities then outstanding (the "INITIATING INVESTOR") that the Company file a
registration statement under the Securities Act covering the registration of the
Registrable Securities, then the Company shall, within thirty (30) days of the
receipt thereof, give written notice of such request to all Investors, and
subject to the limitations set forth herein, effect, as
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expeditiously as reasonably possible, the registration under the Securities Act
of all Registrable Securities that the Investors request to be registered.
2.2.2 The Company shall not be required to effect a
registration pursuant to this Section 2.2 if (i) the Mandatory Registration
Statement has been declared or ordered effective, whether or not one or more
holders of Registrable Securities elected not to register all of their
respective shares in the Mandatory Registration Statement (ii) the Company has
previously effected two registrations pursuant to this Section 2.2 and such
previous registrations has been declared or ordered effective or (iii) the
Registrable Securities not covered by registrations pursuant to this Section 2.2
may be sold pursuant to Rule 144(k) promulgated under the Securities Act or any
successor provision. Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered pursuant to this Section 2.2 as soon as
practicable after receipt of the request or requests of the Investors.
2.3 PIGGYBACK RIGHTS.
2.3.1 If the Company shall determine to prepare and file
with the SEC a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities (other than on an Excluded Form), then the Company shall send to each
Investor holding Registrable Securities that have not been covered by a
registration statement that has been declared or ordered effective (each, an
"ELIGIBLE INVESTOR"), written notice of such determination and if, within 15
business days after receipt of such notice any such Eligible Investor shall so
request in writing, the Company shall include in such registration statement the
Registrable Securities requested by the Eligible Investors to be so included.
Such written notice shall state the intended method of disposition of the
Registrable Securities by such Eligible Investor. If an Eligible Investor
decides not to include all of its Registrable Securities in any registration
statement thereafter filed by the Company, such Eligible Investor shall
nevertheless continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its securities, all upon the terms
and conditions set forth herein, to the extent all Registrable Securities held
by such Investor have not been covered by a registration statement that has been
declared or ordered effective by the time of such subsequent registration.
Notwithstanding any provision of this Agreement to the contrary, the Company
shall not file a registration statement for its account or the account of others
until the Mandatory Registration Statement or a Registration Statement pursuant
to Section 2.2 shall have been declared and ordered effective.
2.3.2 If the registration statement under which the Company
gives notice under this Section 2.3 is for an underwritten offering, the Company
shall so advise the Eligible Investors of Registrable Securities. In such event,
the right of any such Eligible Investor to be included in a registration
pursuant to this Section 2.3 shall be conditioned upon such Eligible Investor's
participation in such underwriting and the inclusion of such Eligible Investor's
Registrable Securities in the underwriting to the extent provided herein. All
Eligible Investors proposing to distribute their Registrable Securities through
such underwriting shall enter into an underwriting agreement in customary form
with the underwriter or underwriters selected for such underwriting by the
Company. Notwithstanding any other provision of the Agreement, if the
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underwriter determines in good faith that marketing factors require a limitation
of the number of shares to be underwritten, the number of shares that may be
included in the underwriting shall be allocated, first, to the Company; second,
to any selling shareholders that shall have exercised a demand registration
right; third, on a PRO RATA basis, to the Eligible Investors and any other
shareholders of the Company exercising incidental registration rights based on
the total number of Registrable Securities sought to be registered in such
registration by the Eligible Investors and such other shareholder of the
Company.
2.3.3 If any Eligible Investor disapproves of the terms of
any such underwriting, such Eligible Investor may elect to withdraw therefrom by
written notice to the Company and the underwriter, delivered at least ten (10)
business days prior to the effective date of the registration statement. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
excluded and withdrawn from the registration. For any Eligible Investor which is
a partnership, limited liability company, or corporation, the partners, retired
partners, members, retired members and shareholders of such Eligible Investor,
or the estates and family members of any such partners and retired partners and
any trusts for the benefit of any of the foregoing person shall be deemed to be
a single "Eligible Investor," and any PRO RATA reduction with respect to such
"Eligible Investor" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"Eligible Investor," as defined in this sentence.
2.3.4 The Company shall have the right to terminate or
withdraw any registration initiated by it under this Section 2.3 prior to the
effectiveness of such registration whether or not any Eligible Investor has
elected to include securities in such registration.
2.4 FORM S-3 REGISTRATION. In the event any Registrable Securities
shall not have been registered pursuant to Section 2.1, and if the Company is
eligible to use Form S-3 under the Securities Act (or any similar successor
form) and shall receive from a Investors or permitted transferees (the "S-3
INITIATING HOLDERS") a written request or requests that the Company effect a
registration on such Form S-3, including, without limitation, pursuant to Rule
415 of the Securities Act and any related qualification or compliance with
respect to all or part of the Registrable Securities owned by the S-3 Initiating
Holders or their permitted transferees (PROVIDED, THAT the S-3 Initiating
Holders registering Registrable Securities in such registration (together with
all other holders of Registrable Securities to be included in such registration)
propose to sell their Registrable Securities at an aggregate price (calculated
based upon the Market Price of the Registrable Securities on the date of filing
of the Form S-3 with respect to such Registrable Securities) to the public of no
less than the lesser of $1,000,000 or the remaining Registrable Securities), the
Company shall (i) promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other holders of Registrable
Securities; and (ii) as soon as practicable, use reasonable best efforts to file
and effect such registration and all such qualifications and compliances as may
be so requested and as would permit or facilitate the sale and distribution of
all or such portion of the Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of any
other holder in the group of holders joining in such request as is specified in
a written request given within fifteen (15) days after the holder's receipt of
such written notice from the Company.
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3. REGISTRATION PROCEDURES.
3.1 If and whenever the Company is required by the provisions
hereof to effect or cause the registration of any Registrable Securities under
the Securities Act as provided herein, the Company shall, as expeditiously as
possible:
3.1.1 prepare and file with the SEC, on or before the
Filing Deadline the Mandatory Registration Statement required by Section 2.1 or
a demand Registration Statement pursuant to Section 2.2 with respect to such
Registrable Securities and use its best efforts to cause such Registration
Statement to become and remain effective (pursuant to Rule 415 of the Securities
Act) as soon as practicable after such filing (provided that, before filing a
Registration Statement or prospectus or any amendments or supplements thereto,
the Company shall furnish to the Investors copies of all such documents proposed
to be filed);
3.1.2 prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to such Registration
Statement and the prospectus used in connection therewith as may be necessary to
keep such Registration Statement effective, true and correct during the
Registration Period. For purposes of this Agreement, "REGISTRATION PERIOD" means
the period commencing with the effective date and ending on the earlier of (i)
the sale of all Registrable Securities covered thereby, (ii) the date upon which
the Investors may sell the Registrable Securities pursuant to Rule 144(k)
promulgated under the Securities Act without regard to volume restrictions, or
(iii) the expiration of the 24 months after Closing or such shorter period as
shall be necessary to complete the distribution of the securities covered
thereby, and to comply with the provisions of the Securities Act with respect to
the sale or other disposition of all Registrable Securities covered by such
Registration Statement during such period in accordance with the intended
methods of disposition by the Investors in such Registration Statement;
3.1.3 permit the Investors and their counsel to review and
comment upon all Registration Statements at least five (5) business days prior
to its filing with the SEC and all amendments and supplements to all
Registration Statements (except for documents incorporated by reference therein)
within a reasonable number of days prior to their filing with the SEC;
3.1.4 submit to the SEC, within two (2) business days after
the Company learns that no review of the Registration Statement will be made by
the staff of the SEC (the "STAFF") or that the Staff has no further comments on
the Registration Statement, as the case may be, a request for acceleration of
effectiveness of the Registration Statement to a time and date not later than 48
hours after the submission of such request;
3.1.5 furnish to each Investor whose Registrable Securities
are included in the Registration Statement, and to the Placement Agent's counsel
and each underwriter of the securities being sold by the Investors such number
of copies of such Registration Statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number of copies
of the prospectus included in such Registration Statement (including each
preliminary prospectus), in conformity with the requirements of the Securities
Act, and such
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other documents, as such counsel and underwriter may reasonably request, in
substantially the form in which they are proposed to be filed with the SEC, in
order to facilitate the public sale or other disposition of the Registrable
Securities owned by the participating Investors. In the case of all Registration
Statements referred to in Section 2, the Company shall furnish to each Investor
which requests (i) a copy of any request to accelerate the effectiveness of any
Registration Statement or amendment thereto, (ii) on the date of effectiveness
of the Registration Statement or any amendment thereto, a notice stating that
the Registration Statement or amendment has been declared effective, and (iii)
such number of copies of a prospectus, including a preliminary prospectus, and
all amendments and supplements thereto and such other documents as such Investor
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Investor. In responding to comments from the staff of
the SEC, the Company shall cooperate with any Investor that notifies the Company
that it desires to be consulted with respect to such process. To the extent that
issues raised by the staff of the SEC have an impact primarily on any such
Investor rather than the Company, the Company shall give reasonable deference to
such Investor's requests with respect to the process and substance of responses
with respect to such issues;
3.1.6 use its best efforts to (i) register and qualify the
Registrable Securities covered by the Registration Statement under such other
securities or "blue sky" laws of such jurisdictions in the United States as each
Investor who holds Registrable Securities being offered reasonably requests,
(ii) prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be reasonably
necessary to maintain such registrations and qualifications in effect at all
times during the Registration Period, and (iv) take all other actions reasonably
necessary or advisable to qualify the Registrable Securities for sale in such
jurisdictions; PROVIDED, HOWEVER, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3.1.6;
3.17 subject to Section 3.1.6, use its best efforts to
cause such Registrable Securities covered by such Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be reasonably necessary to enable the participating Investors to
consummate the disposition of its Registrable Securities;
3.1.8 notify the participating Investors at any time when a
prospectus relating to its Registrable Securities is required to be delivered
under the Securities Act, of the Company's becoming aware that the prospectus
included in the related Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing, and promptly prepare and furnish to
the participating Investors and each underwriter a reasonable number of copies
of a prospectus supplemented or amended so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing;
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3.1.9 otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC;
3.1.10 if the Common Stock is listed on a national
securities exchange, or on the Nasdaq Stock Market, as the case may be, the
Company shall use its best efforts to cause all such Registrable Securities
covered by such Registration Statement to be listed on the national securities
exchange, or on the Nasdaq Stock Market, as the case may be (if such Registrable
Securities are not already so listed), if the listing of such Registrable
Securities is then permitted under the rules of such exchange or market;
3.1.11 provide a transfer agent and registrar, which may be
a single entity, for the Registrable Securities not later than the effective
date of the Registration Statement;
3.1.12 in the case of an underwritten offering, enable the
Registrable Securities to be in such denominations and registered in such names
as the underwriters may request at least two business days prior to the sale of
the Registrable Securities;
3.1.13 cooperate with the Investors who hold Registrable
Securities being offered to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
Investors may reasonably request and registered in such names as the Investors
may request;
3.1.14 notify the Investors of any stop order threatened, to
the knowledge of the Company, or issued by the SEC (and the Company shall notify
the Investors of the resolution of any issued stop order) and take all actions
reasonably necessary to prevent the entry of such stop order or to remove it if
entered;
3.1.15 make available for inspection the Investors and their
representatives and advisors (collectively, the "INSPECTORS") based on the
number of shares of Common Stock acquired by the Investors in the Private
Placement, pertinent financial and other records, and pertinent corporate
documents and properties of the Company, as shall be reasonably deemed necessary
by each Inspector to enable each Inspector to exercise its due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information which any Inspector may reasonably request for purposes
of such due diligence;
3.1.16 hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of such information is necessary to comply with federal or state securities
laws, (ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other order from a court
or governmental body of competent jurisdiction, (iv) such information has been
made generally available to the public other than by disclosure in violation of
this Agreement, or (v) such Investor consents to the form and content of any
such disclosure. The Company agrees that it shall, upon learning that disclosure
of such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to such
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Investor prior to making such disclosure, and allow the Investor, at its
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information;
3.1.17 instruct the Company's transfer agent to remove the
restrictive legend on the stock certificates after effectiveness of the
applicable Registration Statement and provide. with the cooperation of the
Investors, any required legal opinions at the Company's sole expense; and
3.1.18 use its commercially reasonable efforts to (subject
to applicable law), as soon as practicable, (A) incorporate in a prospectus
supplement or post-effective amendment the information provided by an Investor
pursuant to Section 3.2 relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being offered or sold, the purchase price being
paid therefor and any other terms of the offering of the Registrable Securities
to be sold in such offering, (B) make all required filings of such prospectus
supplement or post-effective amendment after being notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment and (C)
supplement or make amendments to any Registration Statement if reasonably
requested by an Investor holding any Registrable Securities as it relates to the
information provided by an Investor pursuant to Section 3.2 relating to the sale
and distribution of Registrable Securities.
3.2 In connection with the registration of the Registrable
Securities, the Investors shall have the following obligations:
3.2.1 each participating Investor shall furnish to the
Company in writing such information and documents regarding it and the
distribution of its securities as may reasonably be required to be disclosed in
the Registration Statement in question by the rules and regulations under the
Securities Act or under any other applicable securities or blue sky laws of the
jurisdictions referred to in Section 3.1.4 above, or as may otherwise be
reasonably requested; and
3.2.2 if any such registration or comparable statement
refers to any participating Investor by name or otherwise as the Investor of any
securities of the Company, but such reference to such participating Investor by
name or otherwise is not required by the Securities Act or any similar federal
statute then in force, then such participating Investor shall have the right to
require the deletion of the reference to such participating Investor.
3.3 From and after the date of this Agreement, the Company shall
not, and shall not agree to, allow the holders of any securities of the Company
to include any of their securities in the Mandatory Registration Statement under
Section 2.1 hereof or any amendment or supplement thereto under Section 3.1.2
hereof without the consent of the Investors of a majority in interest (based
upon the dollars invested) of the Registrable Securities.
4. REGISTRATION EXPENSES.
In connection with any registration of Registrable Securities pursuant
to Section 2, the Company shall, whether or not any such registration shall
become effective, from time to time promptly pay all Company Registration
Expenses. Such expenses shall not include any Selling
11
Expenses other than the reasonable fees and expenses of one counsel selected by
the Placement Agent.
5. INDEMNIFICATION.
5.1 The Company shall, and hereby does, indemnify and hold
harmless, to the fullest extent permitted by law, each Investor and each
Placement Agent (and their respective officers, directors, managers, members,
partners, stockholders, employees, agents and advisors) and each Person who
controls any Investor or Placement Agent within the meaning of the Securities
Act (each, an "INDEMNIFIED PARTY") from and against all losses, claims, damages,
liabilities and expenses, joint or several, to which any such Indemnified Party
may become subject under the Securities Act, the Exchange Act and all rules and
regulations under each such act, any other federal or state statute, law or
regulation at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement 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, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary, final or summary prospectus, together with the documents
incorporated by reference therein (as amended or supplemented if the Company
shall have filed with the SEC, any amendment thereof or supplement thereto), or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or (iii)
any violation by the Company of any federal, state or common law rule or
regulation applicable to the Company and relating to action of or inaction by
the Company in connection with any such registration including the failure to
deliver any document required herein to be delivered, to an Investor and a
Placement Agent; and in each such case, the Company shall reimburse each such
Indemnified Party for any reasonable legal or other expenses as such reasonable
expenses are incurred by any of them in connection with investigating,
defending, settling, compromising, proving or defending any such loss, claim,
damage, liability, expense, action or proceeding; PROVIDED, HOWEVER, that the
Company shall not be liable to any such Indemnified Party insofar as such
losses, claims, damages, liabilities, expenses, actions or proceedings are
caused by any untrue statement or material omission to provide information
pursuant to Section 5.2 made in reliance on and in conformity with any written
information furnished to the Company by or on behalf of any Indemnified Party to
be furnished under the Section 5.2 or as a result of the failure of the
Indemnified Party to furnish a prospectus to a purchaser which the Company
previously furnished to Indemnified Party in a timely manner.
5.2 In connection with any Registration Statement in which any
Investor and the Placement Agent is participating, such participating parties
shall furnish to the Company in writing such information as shall be reasonably
requested by the Company for use in any such Registration Statement or
prospectus and shall indemnify and hold harmless, severally and not jointly, to
the extent permitted by law, the Company, its officers, directors, employees,
agents, advisors and each Person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, against any losses, claims,
damages, liabilities, expenses, actions or proceedings resulting from any untrue
statement of a material fact or any omission of a material
12
fact with respect to information expressly requested by the Company and required
to be stated in the Registration Statement or prospectus or preliminary
prospectus or any amendment thereof or supplement thereto, or necessary to make
the statements therein in the light of the circumstance under which they were
made (in the case of a prospectus) not misleading, in each case to the extent,
but only to the extent, that such untrue statement or omission with respect to
information expressly requested by the Company is made in reliance on and in
conformity with any information so furnished in writing or to be furnished under
this Section 5.2 by such participating Investor expressly for use therein.
Notwithstanding the provisions of this Section 5.2, the Investors and the
Placement Agent shall not be liable for any indemnification obligation under
this Agreement in excess of the aggregate amount of net proceeds received by
such persons from the sale of the Registrable Securities pursuant to the
applicable Registration Statement.
5.3 Any Person entitled to indemnification under the provisions of
this Section 5 shall (i) give prompt notice to the indemnifying party of any
claim with respect to which it seeks indemnification but the omission to so
notify the indemnifying party will not relieve the indemnifying party from any
liability which it may have pursuant to this Section 5 to the extent it is not
materially prejudiced as a result of such failure, and (ii) unless in the
reasonable judgment of counsel for such indemnified party a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim, permit such indemnifying party to assume the defense of such claim, with
counsel reasonably satisfactory to the indemnified party; and if such defense is
so assumed, such indemnifying party shall not enter into any settlement without
the consent of the indemnified party if such settlement attributes liability to
the indemnified party and such indemnifying party shall not be subject to any
liability for any settlement made without its consent. In the event an
indemnifying party shall not be entitled, or elects not, to assume the defense
of a claim, such indemnifying party shall not be obligated to pay the fees and
expenses of more than one law firm for all parties indemnified by such
indemnifying party hereunder in respect of such claim, unless in the reasonable
judgment of any such counsel a conflict of interest may exist between such
indemnified party and any other of such indemnified parties in respect to such
claim. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any indemnified party and shall survive
the transfer of such securities by such indemnified party.
5.4 If for any reason the foregoing indemnity is unavailable, then
the indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and the indemnified party as well as any other relevant
equitable considerations in accordance with Section 6 below. Notwithstanding the
foregoing, each of the Investors and the Placement Agent shall not be required
to contribute any amount in excess of the amount such Investor or Placement
Agent would have been required to pay to an indemnified party if the indemnity
under Section 5.2 was available. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
5.5 An indemnifying party shall make payments of all amounts
required to be made pursuant to the foregoing provisions of this Section 5 to or
for the account of the indemnified
13
party from time to time promptly upon receipt of bills or invoices relating
thereto or when otherwise due and payable.
6. CONTRIBUTION.
To provide for just and equitable contribution, if (i) an Indemnified
Party makes a claim for indemnification pursuant to Section 5 but it is found in
a final judicial determination, not subject to further appeal, that such
indemnification may not be enforced in such case, even though this Agreement
expressly provides indemnification in such case, or (ii) any indemnified party
or indemnifying party seeks contribution under the Securities Act, the Exchange
Act, or otherwise, then the Company (including for this purpose any contribution
made by or on behalf of any officer, director, employee or agent for the
Company, or any Controlling Person of the Company), on the one hand, and the
indemnified party, on the other hand, shall contribute to the losses,
liabilities, claims, damages, and expenses whatsoever to which any of them may
be subject, in such proportions as are appropriate to reflect the relative
benefits received by the Company, on the one hand, and the indemnified party, on
the other hand; PROVIDED, HOWEVER, that if applicable law does not permit such
allocation, then other relevant equitable considerations such as the relative
fault of the Company and the indemnified party in connection with the facts
which resulted in such losses, liabilities, claims, damages, and expenses shall
also be considered. No Person liable for a fraudulent misrepresentation shall be
entitled to contribution from any person who is not liable for such fraudulent
misrepresentation. Anything in this Section 6 to the contrary notwithstanding,
no party shall be liable for contribution with respect to the settlement of any
claim or action effected without its written consent. This Section 6 is intended
to supersede any right to contribution under the Securities Act, the Exchange
Act, or otherwise unless such statute makes such right exclusive. The Company,
the Investors and the Placement Agent agree that it would not be just and
equitable if contribution pursuant to this Section 6 were determined solely by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in this Section 6.
Notwithstanding the provisions of this Section 6, each of the Investors and the
Placement Agent shall not be required to contribute any amount in excess of the
amount such Investor or Placement Agent would have been required to pay to an
indemnified party if the indemnity under Section 5.2 was available. The
Investors' and the Placement Agent's obligations to contribute pursuant to this
Section 6 are several and not joint.
7. RULE 144.
The Company covenants that it shall file the reports required to be
filed under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder (or, in the event that the Company is
not required to file such reports, it shall make publicly available information
as set forth in Rule 144(c)(2) promulgated under the Securities Act), or to the
extent required from time to time to enable the Investors and the Placement
Agent to sell their Registrable Securities without registration under the
Securities Act within the limitation of the exemption provided by (i) Rule 144
under the Securities Act, as such Rule may be amended from time to time, or (ii)
any similar rule or regulation hereafter adopted by the SEC (collectively, "RULE
144").
14
8. REGISTRATION RIGHTS OF OTHERS.
If the Company shall at any time hereafter provide any Person any
rights with respect to the registration of any securities of the Company under
the Securities Act, such rights shall not permit any such securities to become
registered during the period between Closing and the date that is 180 days after
the Mandatory Registration Statement becomes effective or, in any other manner,
be superior to the rights provided herein to the Investors and the Placement
Agent.
9. REPORTING STATUS AND LISTING.
(a) Until the date on which the Investors shall have sold all of
their Registrable Securities, the Company shall file all reports required to be
filed with the SEC pursuant to the Exchange Act, and the Company shall not
terminate its status as an issuer required to file reports under the Exchange
Act even if the Exchange Act or the rules and regulations thereunder would
otherwise permit such termination.
(b) The Company shall maintain the eligibility for quotation of
the Common Stock on the OTC BB market (other than any criteria of eligibility
that is beyond the Company's control, such as its stock price). Subject to
applicable law, neither the Company nor any of its Subsidiaries shall take any
action which would be reasonably expected to result in the delisting or
suspension of the Common Stock on the OTC BB market. The Company shall pay all
fees and expenses in connection with satisfying its obligations under this
section.
10. TRANSFER OF REGISTRATION RIGHTS.
If and to the extent that any Investor or the Placement Agent sells or
otherwise disposes of Registrable Securities or warrants exercisable for
Registrable Securities in any transaction that does not require registration
under the Securities Act (other than a transaction exempt under Rule 144), the
rights of the Investor or the Placement Agent hereunder with respect to such
Registrable Securities shall be assignable to any transferee of such Registrable
Securities; PROVIDED, HOWEVER, that such transferee agrees in writing to be
bound by all the terms and conditions of this Agreement.
11. MISCELLANEOUS.
11.1 The registration rights provided to the Investors of
Registrable Securities shall be in effect whenever such Person owns of record
such Registrable Securities; PROVIDED, HOWEVER that the Company shall act upon
the basis of this Agreement.
11.2 A Person is deemed to be an Investor in Registrable Securities
whenever such Person owns of record such Registrable Securities. If the Company
receives conflicting instructions, notices or elections from two or more Persons
with respect to the same Registrable Securities, the Company shall act upon the
basis of instructions, notice or election received from the registered owner of
such Registrable Securities.
11.3 All notices, offers, acceptance and any other acts under this
Agreement shall be in writing, and shall be sufficiently given if delivered to
the addressees in person, by Federal Express
15
or similar receipted overnight delivery, or by facsimile or e-mail delivery
followed by a copy sent by Federal Express or similar receipted overnight
delivery, as follows:
If to the Company: Bionutrics, Inc.
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx, Ph.D., President
With a copy to: Reitler Xxxxx & Xxxxxxxxxx LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: [ ]
If to an Investor, at such address as such Investor shall have provided in
writing to the Company or such other address as such Investor furnishes by
notice given in accordance with this Section 12.3, with a copy to:
Indigo Securities, LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxxxxxxx
With a Copy to: Xxxxxxxx Xxxxx & Deutsch LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Deutsch, Esq.
11.4 Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
11.5 This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed in the State of New York.
11.6 Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in Manhattan, New
York. Each party hereto hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in Manhattan, New York for the
adjudication of any dispute hereunder or in
16
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement hereof). Each party agrees not
to commence a claim or proceeding hereunder in a court other than a state court
or federal court sitting in Manhattan, New York, except (i) if required as a
mandatory counterclaim or cross-claim in a proceeding commenced by a Person in a
different jurisdiction or (ii) if such party has first brought such claim or
proceeding in such court sitting in Manhattan, New York and both the state
courts and the federal courts sitting in Manhattan, New York have denied
jurisdiction over such claim or proceeding. Each party hereto hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto (including
its affiliates, agents, officers, directors and employees) hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby.
11.7 This Agreement, the Subscription Agreement and the Placement
Agent Agreement (including all schedules and exhibits thereto) constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein. This
Agreement, the Subscription Agreement and the Placement Agent Agreement
supersede all prior agreements and understandings among the parties hereto and
thereto with respect to the subject matter hereof and thereof.
11.8 Subject to the requirements of Section 10 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
11.9 The headings in this Agreement are for convenience of
reference only and shall not form part of or effect the interpretation of this
Agreement.
11.10 This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument. The execution of this Agreement may be
by actual or facsimile signature.
11.11 Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
11.12 Except as otherwise set forth herein, all consents, approvals
and other determinations to be made by the Investors pursuant to this Agreement
shall be made by the Investors holding more than 66 2/3% of the Registrable
Securities then held by all Investors.
17
11.13 If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
11.14 This Agreement is intended for the benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by any other Person.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK.]
18
BIONUTRICS, INC.
By:_______________________________
Name: Xxxxxx X. Xxxx, Ph.D.
Title: President
PLACEMENT AGENT:
INDIGO SECURITIES, LLC
By:_______________________________
Name: Xxxx Xxxxxxxxx
Title: Managing Member
INVESTORS:
[ADDITIONAL SIGNATURE PAGES ATTACHED]
19
SCHEDULE 1
----------
TO
REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
BIONUTRICS, INC.
AND THE FOLLOWING INVESTORS:
NO OF
-----
NAME ADDRESS STATE SECURITIES
---- ------- ----- ----------
$
