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EXHIBIT 10.34
REGISTRATION RIGHTS AGREEMENT
AGREEMENT made as of February 12, 1996 between Escalon Medical Corp.
(formerly Intelligent Surgical Lasers, Inc.) (the "Corporation"), a California
corporation; and EOI Corp. (formerly Escalon Ophthalmics, Inc.) (the "Security
Holder"), a Pennsylvania corporation.
RECITALS:
The Corporation and the Security Holder are parties to an Asset Sale
and Purchase Agreement (as amended, the "Purchase Agreement") dated as of
October 9, 1995, and amended as of December 19, 1995, pursuant to which the
Corporation has agreed to purchase substantially all of the assets and assume
certain liabilities of the Security Holder in consideration of the issuance by
the Corporation to the Security Holder of shares of the Corporation's Common
Stock representing 45% of the Corporation's total issued and outstanding Common
Stock on the closing date under the Purchase Agreement (the "Shares").
The Security Holder has requested and required, as a condition to
closing under the Purchase Agreement, and the Corporation wishes to afford the
Security Holder, certain registration rights with respect to the Shares.
NOW, THEREFORE, in consideration of the premises and covenants set
forth herein, and intending to be legally bound hereby, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement:
"Commission" shall mean the Securities and Exchange
Commission, or any other federal agency at the time administering the
Securities Act.
"Common Stock" shall mean the Corporation's no par value
Common Stock.
"Registrable Securities" shall mean the Shares of Common Stock
issued to the Security Holder under the Purchase Agreement or received as a
stock dividend or other distribution in respect to any such Shares.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
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"Shares" shall have the meaning set forth in the Recitals to
this Agreement.
2. REGISTRATION RIGHTS.
2.1. DEMAND REGISTRATION RIGHTS. If, at any time after the
date of this Agreement, the Security Holder requests the Corporation to effect
any registration (including, without limitation, any undertaking to file
post-effective amendments, appropriate qualification under applicable blue sky
or other state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act and any other governmental
requirements or regulations) under the Securities Act with respect to all or
part of the Registrable Securities, the Corporation shall thereupon promptly
use its best efforts to register under the Securities Act the number of shares
of Registrable Securities so requested to be registered by the Security Holder.
The Corporation is obligated to effect a maximum of three such demand
registrations. If the Corporation includes in any registration required under
this Section 2.1 a number of shares other than Registrable Securities that
exceeds the number of Registrable Securities to be registered, then such
registration shall be treated for all purposes as a registration under Section
2.2 instead of this Section 2.1. In all other cases where the Corporation
includes in such registration any shares of Common Stock other than Registrable
Securities, such registration shall remain subject to this Section 2.1 and the
inclusion of such shares shall not prevent the Security Holder from registering
all Registrable Securities requested by it.
2.2. PIGGYBACK REGISTRATION RIGHTS. Whenever the
Corporation proposes to register any Common Stock for its own or others'
account under the Securities Act for a public offering for cash, other than a
registration relating to (i) employee benefit plans or (ii) outstanding
warrants and options covered by a current registration statement, the
Corporation shall give the Security Holder prompt written notice of its intent
to do so. Upon the written request of the Security Holder given within 30 days
after receipt of such notice, the Corporation shall use its best efforts to
cause to be included in such registration (and any related qualification under
blue sky laws or other compliance) all of the Registrable Securities that the
Security Holder requests. If the Corporation is advised in writing in good
faith by any managing underwriter of the securities being offered pursuant to
any registration statement under this Section 2.2 that the number of shares to
be sold by persons other than the Corporation is greater than the number of
such shares that can be offered without adversely affecting the offering, the
Corporation may reduce the number of shares offered for the accounts of such
persons and the Security Holder to a number deemed satisfactory by such
managing underwriter; provided, however, that the number of shares to be
included in such registration statement by any such persons and the Security
Holder shall be reduced pro rata.
2.3. REGISTRATION PROCEDURES AND EXPENSES. In connection
with registrations under this Section 2, the Corporation shall (i) use its best
efforts to
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prepare and file with the Commission, as soon as reasonably practicable, a
registration statement with respect to the Registrable Securities and use its
best efforts to cause such registration to promptly become and remain effective
for a period of at least 180 days (or such shorter period during which the
Security Holder shall have sold all Registrable Securities which it requested
to be registered); (ii) use its best efforts to register and qualify the
Registrable Securities covered by such registration statement under applicable
state securities laws as the Security Holder shall reasonably request for the
distribution of the Registrable Securities; and (iii) take such other actions
as are reasonable and necessary to comply with the requirements of the
Securities Act and the regulations thereunder, or with the reasonable request
of the Security Holder, with respect to the registration and distribution of
the Registrable Securities. The Corporation is not obligated to effect
registration or qualification under this Section 2 in any jurisdiction
requiring it to qualify to do business (unless the Corporation is otherwise
required to be so qualified) or to execute a general consent to service of
process. All fees and expenses incident to the Corporation's performance of or
compliance under Section 2.1 of this Agreement (including, without limitation,
(i) all registration and filing fees including, without limitation, fees and
expenses (A) with respect to filings required to be made with the National
Association of Securities Dealers, Inc., and (B) of compliance with securities
or Blue Sky laws (including, without limitation, fees and disbursements of
counsel for the underwriters in connection with Blue Sky qualifications of the
Registrable Securities and determination of the eligibility of the Registrable
Securities for investment under the laws of such jurisdictions as the managing
underwriters or holders of a majority in number of the Registrable Securities
being sold may designate), (ii) printing expenses, (iii) messenger, telephone
and delivery expenses, (iv) fees and disbursements of counsel for the
Corporation, and Special Counsel or other counsel for the Security Holder, (v)
fees and disbursements of all independent certified public accountants
(including the expenses of any special audit and "cold comfort" letters
required by or incident to such performance), (vi) underwriters' fees,
expenses, commissions and discounts, (vii) Securities Act liability insurance
if the Corporation so desires such insurance, (viii) fees and expenses of all
other persons retained by the Corporation and (ix) fees and expenses incurred
in connection with the performance of any act contemplated by Sections 2.4, 2.6
or 2.7 of this Agreement ((i) through (ix) are hereinafter collectively and
individually referred to as "Registration Expenses")) shall be borne by the
Security Holder whether or not any Registration Statement become effective.
Registration Expenses incurred in connection with registrations under Section
2.2 of this Agreement shall be borne by the Corporation, except for
Registration Expenses applicable solely to the shares being sold by the
Security Holder, which Registration Expenses shall be borne by the Security
Holder.
2.4. UNDERWRITING ARRANGEMENT. In connection with each
registration pursuant to Section 2.1 or 2.2 above covering an underwritten
public offering, the Corporation and the Security Holder agree to enter into a
written agreement with the managing underwriter in such form and containing
such provisions as is then custom-
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ary in the securities business for such an arrangement between such
underwriter and companies of the Corporation's size and investment stature.
2.5. NOTIFICATION. The Corporation and the Security
Holder shall promptly notify each other of any event which results in the
prospectus included in the registration statement covering any Registrable
Securities, as then in effect, containing an untrue statement of a material
fact or omitting 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.
2.6. FURNISHING OF DOCUMENTS. In connection with each
registration pursuant to Section 2.1 or 2.2 above, at the request of the
Security Holder, the Corporation will furnish to each underwriter, if any, and
the Security Holder, a legal opinion of its counsel and a letter from its
independent certified public accountants, each in customary form and substance,
at such time or times as such documents are customarily provided in the type of
offering involved.
2.7. PREPARATION OF REGISTRATION STATEMENTS. Whenever the
Corporation is registering any Common Stock under the Securities Act and the
Security Holder is selling any securities under such registration or determines
that it may be a controlling person under the Securities Act, the Corporation
will allow the Security Holder to participate in the preparation of the
registration statement, will include in the registration statement such
information as the Security Holder may reasonably request and will take all
such other action as the Security Holder may reasonably request.
2.8. TRANSFERS NOT REQUIRING REGISTRATION.
Notwithstanding anything to the contrary set forth herein, the Corporation
shall not be obligated to file any registration statement pursuant to this
Section 2 if, in the opinion of counsel satisfactory to the Corporation and the
Security Holder, the proposed transfer may be effected without registration
under the Securities Act and any certificate evidencing the shares to be
transferred need not bear a restrictive legend.
3. INDEMNIFICATION.
3.1. INDEMNIFICATION BY THE CORPORATION. The Corporation
will indemnify and hold harmless the Security Holder and its officers,
directors, lawyers and accountants, and each underwriter of the Registrable
Securities being sold by the Security Holder, and each controlling person of
the Security Holder and underwriter, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any registration statement relating to such Registrable Securities (or in any
related registration statement, prospectus, amendment or supplement thereto,
notification or the like) or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements
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therein not misleading, or any violation by the Corporation of any rule or
regulation promulgated under the Securities Act applicable to the Corporation
and relating to action or inaction required of the Corporation in connection
with any such registration, qualification or compliance, and will enter into an
indemnification agreement with the Security Holder and underwriter containing
customary provisions, including provisions for contribution, as the Security
Holder or underwriter shall reasonably request; provided, however, that the
Corporation will not be liable in any such case to the extent that any such
claim, loss, damage or liability arises out of or is based on any untrue
statement or omission based upon and in conformity with information furnished
to the Corporation by the Security Holder or underwriter.
3.2. INDEMNIFICATION BY THE SECURITY HOLDER. In
connection with each registration pursuant to Section 2.1 or 2.2 hereof, the
Security Holder, if Registrable Securities held by the Security Holder are
included in the securities as to which such registration is being effected,
will indemnify and hold harmless the Corporation, and its directors, officers,
agents and each person, if any, who controls the Corporation within the meaning
of Section 15 of the Securities Act and underwriter against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement relating to the Registrable Securities
(or in any related registration statement, notification or the like) or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will enter into an indemnification agreement with the Corporation containing
customary provisions, including provisions for contribution, as the Corporation
or each such person shall reasonably request; provided, however, that the
Security Holder will not be liable in any such case except to the extent that
any such claim, loss, damage or liability arises out of or is based on any
untrue statement or omission based upon information furnished to the
Corporation by the Security Holder.
3.3. PROCEDURE FOR INDEMNIFICATION. Each party entitled
to indemnification under this Section 3 (the "Indemnified Party") shall give
notice to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting, provided that
counsel for the Indemnifying Party, who shall conduct the defense or such claim
or litigation, shall be approved by the Indemnified Party (whose approval shall
not unreasonably be withheld), and the Indemnified Party may participate in
such defense at such party's expense, and provided further that the failure of
any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 3. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving
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by the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.
4. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Security Holder the benefits of Rule 144 promulgated
under the Securities Act and any other rule or regulation of the Commission
that may at any time permit a holder to sell securities of the Corporation to
the public without registration or pursuant to a registration on Form S-3, the
Corporation agrees to use its best efforts to satisfy the requirements of all
such rules and regulations (including the requirements for public information,
registration under the Securities Exchange Act of 1934 and timely reporting to
the Commission) at the earliest possible date after its first registered public
offering.
5. HOLDBACK AGREEMENT. The Security Holder and each transferee
pursuant to Section 7 hereof agrees (but only if each officer, director,
shareholder owning beneficially 10% or more of the Corporation's equity
securities, and each shareholder selling shares in such offering, also agrees)
upon request of the Corporation or the underwriters managing any underwritten
offering of the Corporation's securities, not to sell, make any short sale of,
loan, grant any option for the purchase of, or otherwise dispose of any equity
securities of the Corporation (other than those included in the registration)
without the prior written consent of the Corporation or such underwriters, as
the case may be, for such period of time (not to exceed 180 days) from the
effective date of such registration as the Corporation or the underwriters may
specify.
6. COOPERATION OF THE SECURITY HOLDER. Upon proposing to sell
Registrable Securities registered or to be registered under any registration
hereunder, the Security Holder shall furnish to the Corporation such
information and execute such documents regarding the shares held by the
Security Holder and the intended method of disposition thereof as the
Corporation shall reasonably request in writing and as shall be required in
connection with the registration, qualification or compliance referred to in
this Agreement to be taken by the Corporation.
7. TRANSFER OF REGISTRATION RIGHTS. All covenants and agreements
contained in this Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not, provided that upon a transfer of
shares of Registrable Securities, the transferee shall send the Corporation
written notice setting forth its address and its agreement to be bound by the
terms of this Agreement. Without limiting the generality of the foregoing, the
registration rights conferred herein on the Security Holder shall inure to the
benefit of any and all subsequent holders from time to time of the Registrable
Securities.
8. CHANGES IN COMMON STOCK. If, and as often as, there are any
changes in the Common Stock by way of stock split, stock dividend, combination
or reclassification, or through merger, consolidation, reorganization or
recapitalization, or by any
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other means, appropriate adjustment shall be made in the provisions hereof, as
may be required, so that the rights and privileges granted hereby shall
continue with respect to the Common Stock as so changed.
9. NOTICES. Any notice provided for in this Agreement must be in
writing and must be mailed by certified mail, return receipt requested, or sent
via overnight delivery service or confirmed telecopy, to the recipient at the
address indicated below:
To the Corporation:
Escalon Medical Corp.
182 Tamarack Circle
Skillman, NJ 08558
Attention: President
To the Security Holder:
EOI Corp.
182 Tamarack Circle
Skillman, NJ 08558
Attention: President
To any subsequent holder of Registrable Securities, at such
address as may be furnished to the Corporation in writing by
such holder
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when received by
the party to whom it is addressed.
10. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision or any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
11. COUNTERPARTS. This Agreement may be executed on separate
counterparts, each of which is deemed to be an original and all of which taken
together shall constitute one and the same agreement.
12. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind
and inure to the benefit of and be enforceable by each of the parties hereto
and their respective heirs, personal representatives, successors and assigns.
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13. CHOICE OF LAW. All questions concerning the construction,
validity and interpretation of this Agreement shall be governed by the internal
law, and not the law of conflicts, of the Commonwealth of Pennsylvania.
14. SUPERSEDES OTHER AGREEMENTS. If this Agreement shall conflict
in any respect with all or any portion of any other agreement or instrument to
which any party hereto is a party, the provisions of this Agreement shall
supersede such conflicting agreement or instrument or portion thereof.
Notwithstanding anything to the contrary set forth in this Agreement, this
Agreement shall not be deemed to supersede the restrictions on transfer set
forth in the EO Lock-up Agreements (as defined in the Purchase Agreement).
15. AMENDMENTS AND WAIVERS. Changes in or additions to any
provision of this Agreement may be made or compliance with any term, covenant,
agreement, condition or provision set forth herein may be omitted or waived
(either generally or in a particular instance and either retroactively or
prospectively), upon written consent of the Corporation and the Security
Holder.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the day, month and year first above written.
ESCALON MEDICAL CORP.
By:___________________________________
Title:________________________________
EOI CORP.
By:___________________________________
Title:________________________________
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