Document:

EXHIBIT 10.2

 

REGISTRATION RIGHTS AGREEMENT

 

Registration Rights Agreement (the “Agreement”), dated as of July 5, 2011, by and between SPO Medical, Inc., a corporation organized under the laws of Delaware, USA (the “Company”), and Dutchess Opportunity Fund, II, LP, a Delaware Limited Partnership (the “Investor”).

 

Whereas, in connection with the Investment Agreement by and between the Company and the Investor of this date (the “Investment Agreement”), the Company has agreed to issue and sell to the Investor up to 10,000,000 shares of the Company’s Common Stock, $0.01 par value per share (the “Common Stock”), to be purchased pursuant to the terms and subject to the conditions set forth in the Investment Agreement; and

 

Whereas, to induce the Investor to execute and deliver the Investment Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “1933 Act”), and applicable state securities laws, with respect to the shares of Common Stock issuable pursuant to the Investment Agreement.

 

Now therefore, in consideration of the foregoing promises and the mutual covenants contained hereinafter and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investor hereby agree as follows:

 

Section 1.              DEFINITIONS.

 

As used in this Agreement, the following terms shall have the following meanings:

 

“Execution Date” means the date of this Agreement set forth above.

 

“Person” means a corporation, a limited liability company, an association, a partnership, an organization, a business, an individual, a governmental or political subdivision thereof or a governmental agency.

 

“Principal Market” shall mean Nasdaq Capital Market, the NYSE Amex, the New York Stock Exchange, the Nasdaq Global Market, the Nasdaq Global Select Market or the OTC Bulletin Board, whichever is the principal market on which the Common Stock of the Company is listed.

 

“Register,” “Registered,” and “Registration” refer to the Registration effected by preparing and filing one (1) or more Registration Statements in compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous basis (“Rule 415”), and the declaration or ordering of effectiveness of such Registration Statement(s) by the United States Securities and Exchange Commission (the “SEC”).

 

“Registrable Securities” means (i) the shares of Common Stock issued or issuable pursuant to the Investment Agreement, and (ii) any shares of capital stock issued or issuable with respect to such shares of Common Stock, if any, as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise, which have not been (x) included in the Registration Statement that has been declared effective by the SEC, or (y) sold under circumstances meeting all of the applicable conditions of Rule 144 (or any similar provision then in force) under the 1933 Act.

 

SPO MEDICAL.RRA.JUNE.2011

 

  

  

  

 

“Registration Statement” means the registration statement or statements of the Company filed under the 1933 Act covering the Registrable Securities.

 

All capitalized terms used in this Agreement and not otherwise defined herein shall have the same meaning ascribed to them as in the Investment Agreement.

 

Section 2.              REGISTRATION.

 

(a)           Subject to Section 3(g), the Company shall, within sixty (60) days after the date of this Agreement, file with the SEC the Registration Statement or Registration Statements (as is necessary) on Form S-1 (or, if such form is unavailable for such a registration, on such other form as is available for such registration), covering the resale of all of the Registrable Securities, which Registration Statement(s) shall state that, in accordance with Rule 416 promulgated under the 1933 Act, such Registration Statement also covers such indeterminate number of additional shares of Common Stock as may become issuable upon stock splits, stock dividends or similar transactions.  The Company shall initially register for resale 10,000,000 shares of Common Stock, except to the extent that the SEC requires the share amount to be reduced as a condition of effectiveness.

 

(b)           Intentionally Omitted.

 

(c)           The Company agrees not to include any other securities in the Registration Statement covering the Registrable Securities without the Investor’s prior written consent which the Investor may withhold in its sole discretion. Furthermore, the Company agrees that it will not file any other Registration Statement for other securities, until thirty calendar days after the Registration Statement for the Registrable Securities is declared effective by the SEC.

 

Section 3.              RELATED OBLIGATIONS.

 

At such time as the Company is obligated to prepare and file the Registration Statement with the SEC pursuant to Section 2(a), the Company shall have the following obligations with respect to the Registration Statement:

 

(a)           The Company shall use all commercially reasonable efforts to cause such Registration Statement relating to the Registrable Securities to become effective within ninety (90) days after the date that the Registration Statement is filed and shall keep such Registration Statement effective until the earlier to occur of  the date on which (A) the Investor shall have sold all the Registrable Securities; or (B) the Company has no right to sell any additional shares of Common Stock under the Investment Agreement (the “Registration Period”).  The Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any 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 light of the circumstances in which they were made, not misleading. The Company shall use all commercially reasonable efforts to respond to all SEC comments within ten (10) business days from receipt of such comments by the Company. The Company shall use all commercially reasonable efforts to cause the Registration Statement relating to the Registrable Securities to become effective no later than five (5) business days after notice from the SEC that the Registration Statement may be declared effective.  The Investor agrees to provide all information which it is required by law to provide to the Company, including the intended method of disposition of the Registrable Securities, and the Company’s obligations set forth above shall be conditioned on the receipt of such information.

  

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(b)           The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep such Registration Statement effective during the Registration Period, and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the Investor thereof as set forth in such Registration Statement.  In the event the number of shares of Common Stock covered by the Registration Statement filed pursuant to this Agreement is at any time insufficient to cover all of the Registrable Securities, the Company shall amend such Registration Statement, or file a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover all of the Registrable Securities, in each case, as soon as practicable, but in any event within thirty (30) calendar days after the necessity therefor arises (based on the then Purchase Price of the Common Stock and other relevant factors on which the Company reasonably elects to rely), assuming the Company has sufficient authorized shares at that time, and if it does not, within thirty (30) calendar days after such shares are authorized.  The Company shall use commercially reasonable efforts to cause such amendment and/or new Registration Statement to become effective as soon as practicable following the filing thereof.

 

(c)           The Company shall make available to the Investor whose Registrable Securities are included in any Registration Statement and its legal counsel without charge (i) if requested by the Investor, promptly after the same is prepared and filed with the SEC at least one (1) copy of such Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits, the prospectus included in such Registration Statement (including each preliminary prospectus) and, with regards to such Registration Statement(s), any correspondence by or on behalf of the Company to the SEC or the staff of the SEC and any correspondence from the SEC or the staff of the SEC to the Company or its representatives; and (ii) upon the effectiveness of any Registration Statement, the Company shall make available copies of the prospectus, via EDGAR, included in such Registration Statement and all amendments and supplements thereto.

 

(d)           The Company shall use commercially reasonable efforts to (i) register and qualify the Registrable Securities covered by the Registration Statement under such other securities or “blue sky” laws of such states in the United States as the Investor 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 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 (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), or (y) subject itself to general taxation in any such jurisdiction.  The Company shall promptly notify the Investor who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.

  

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(e)           As promptly as practicable after becoming aware of such event, the Company shall notify the Investor in writing of the happening of any event as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state 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 (“Registration Default”) and use all diligent efforts to promptly prepare a supplement or amendment to such Registration Statement and take any other necessary steps to cure the Registration Default (which, if such Registration Statement is on Form S-3, may consist of a document to be filed by the Company with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act (as defined below) and to be incorporated by reference in the prospectus) to correct such untrue statement or omission, and make available copies of such supplement or amendment to the Investor. The Company shall also promptly notify the Investor (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when the Registration Statement or any post-effective amendment has become effective; (ii) of any request by the SEC for amendments or supplements to the Registration Statement or related prospectus or related information, (iii) of the Company’s reasonable determination that a post-effective amendment to the Registration Statement would be appropriate, (iv) in the event the Registration Statement is no longer effective, or (v) if the Registration Statement is stale as a result of the Company’s failure to timely file its financials or otherwise. If a Registration Default occurs during the period commencing on the Put Notice Date and ending on the Closing Date, the Company acknowledges that its failure to cure such a Registration Default within ten (10) business days will cause the Investor to suffer damages in an amount that will be difficult to ascertain.

 

(f)           The Company shall use all commercially reasonable efforts to prevent the issuance of any stop order or other  suspension of effectiveness of the Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued,  to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify the Investor holding Registrable Securities being sold of the issuance of such order and the  resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding concerning the effectiveness of the Registration Statement.

 

(g)           The Company shall permit the Investor and one (1) legal counsel, designated by the Investor, to review and comment upon the Registration Statement and all amendments and supplements thereto at least one (1) calendar day prior to their filing with the SEC.  However, any postponement of a filing of a Registration Statement or any postponement of a request for acceleration or any postponement of the effective date or effectiveness of a Registration Statement by written request of the Investor (collectively, the "Investor's Delay") shall not act to trigger any penalty of any kind, or any cash amount due or any in-kind amount due the Investor from the Company under any and all agreements of any nature or kind between the Company and the Investor.  The event(s) of an Investor's Delay shall act to suspend all obligations of any kind or nature of the Company under any and all agreements of any nature or kind between the Company and the Investor.

 

(h)           Intentionally Omitted.

  

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(i)           The Company shall hold in confidence and not make any disclosure of information concerning the Investor 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 final, non-appealable 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 any other agreement, or (v) the Investor has consented to such disclosure.  The Company agrees that it shall, upon learning that disclosure of such information concerning the Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to the Investor and allow the Investor, at the Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order covering such information.

 

(j)           The Company shall use all commercially reasonable efforts to maintain designation and quotation of all the Registrable Securities covered by any Registration Statement on the Principal Market. The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 3(j).

 

(k)           Intentionally Omitted.

 

(l)           The Company shall provide a transfer agent for all the Registrable Securities not later than the effective date of the first Registration Statement filed pursuant hereto.

 

(m)          If requested by the Investor, the Company shall (i) as soon as reasonably practical incorporate in a prospectus supplement or post-effective amendment such information as the Investor reasonably determines should be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the offering of the Registrable Securities to be sold in such offering; (ii) make all required filings of such prospectus supplement or post-effective amendment as soon as reasonably possible after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or make amendments to any Registration Statement if reasonably requested by the Investor.

 

(n)           The Company shall use all commercially reasonable efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to facilitate the disposition of such Registrable Securities.

 

(o)           The Company shall otherwise use all commercially reasonable efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder.

 

(p)           Within one (1) business day after the Registration Statement which includes Registrable Securities is declared effective by the SEC, the Company shall deliver to the transfer agent for such Registrable Securities, with copies to the Investor, a written notification that such Registration Statement has been declared effective by the SEC.

  

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Section 4.             OBLIGATIONS OF THE INVESTOR.

 

(a)           At least five (5) calendar days prior to the first anticipated filing date of the Registration Statement the Company shall notify the Investor in writing of the information the Company requires from the Investor for the Registration Statement.  It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities and the Investor agrees to furnish to the Company that information regarding itself, the Registrable Securities and the intended method of disposition of the Registrable Securities as shall reasonably be required to effect the registration of the resale of such Registrable Securities and the Investor shall execute such documents in connection with such registration as the Company may reasonably request. The Investor covenants and agrees that, in connection with any sale of Registrable Securities by it pursuant to the Registration Statement, it shall comply with the “Plan of Distribution” section of the then current prospectus relating to such Registration Statement.

 

(b)           The Investor, by its acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Registration Statement hereunder.

 

(c)           The Investor agrees that, upon receipt of written notice from the Company of the happening of any event of the kind described in Section 3(f) or the first sentence of Section 3(e), the Investor will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering the resale of such Registrable Securities until the Investor’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(f) or the first sentence of Section 3(e).

 

Section 5.             EXPENSES OF REGISTRATION.

 

All reasonable expenses, other than underwriting discounts and commissions and other than as set forth in the Investment Agreement, incurred in connection with registrations including comments, filings or qualifications pursuant to Section 2 and Section 3, including, without limitation, all registration, listing and qualifications fees, printing and accounting fees, and fees and disbursements of counsel for the Company shall be paid by the Company.

 

Section 6.             INDEMNIFICATION.

 

In the event any Registrable Securities are included in the Registration Statement under this Agreement:

  

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(a)           To the fullest extent permitted by law, the Company, under this Agreement, will, and hereby does, indemnify, hold harmless and defend the Investor, the directors, officers, partners, employees, counsel, agents, representatives of, and each Person, if any, who controls, the Investor within the meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended (the “1934 Act”) (each, an “Indemnified Person”), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, attorneys’ fees, amounts paid in settlement or expenses, joint or several (collectively, “Claims”), incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto (“Indemnified Damages”), to which any of them may become subject insofar as such Claims (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 in the Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in which the Investor has requested in writing that the Company register or qualify the Shares (“Blue Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which the statements therein were made, not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in the final prospectus for the offer of the Registrable Securities (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, or (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to the Registration Statement (the matters in the foregoing clauses (i) through (iii) being, collectively, “Violations”). Subject to the restrictions set forth in Section 6(c) the Company shall reimburse each Indemnified Person, promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim arising out of or based upon a Violation which is due to the inclusion in the Registration Statement of the information furnished to the Company by any Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto; (ii) shall not be available to the extent such Claim is based on (A) a failure of the Investor to deliver or to cause to be delivered the prospectus made available by the Company; (B) the Indemnified Person’s use of an incorrect prospectus despite being promptly advised in advance by the Company in writing not to use such incorrect prospectus; (C) the manner of sale of the Registrable Securities by the Investor or of the Investor’s failure to register as a dealer under applicable securities laws; (D) any omission of the Investor to notify the Company of any material fact that should be stated in the Registration Statement or prospectus relating to the Investor or the manner of sale; and (E) any amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and  shall survive the resale of the Registrable Securities by the Investor pursuant to the Registration Statement; and (iii) shall not be available to the extent the Claim arises out of the gross negligence or willful misconduct of the Indemnified Person.

  

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(b)           In connection with any Registration Statement in which the Investor is participating, the Investor agrees to severally and jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its  directors, officers, employees, counsel, agents and representatives and each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Party”), against any Claim or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation is due to (i) the inclusion in the Registration Statement of the written information furnished to the Company by the Investor expressly for use in connection with such Registration Statement; (ii) a failure of the Investor to deliver or to cause to be delivered the prospectus made available by the Company or the Investor’s use of an incorrect prospectus despite being timely advised by the Company in writing not to use such incorrect prospectus; (iii) the Investor’s failure to register as a dealer under applicable securities laws; (iv) the Investor’s gross negligence or willful misconduct; or (v) any omission of the Investor to notify the Company of any material fact that should be stated in the Registration Statement or prospectus relating to the Investor or the manner of sale; and, subject to Section 6(c), the Investor will reimburse any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Investor, which consent shall not be unreasonably withheld.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the resale of the Registrable Securities by the Investor pursuant to the Registration Statement.

 

(c)           Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party, as the case may be, shall have the right to retain its own counsel with the fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the Indemnified Person or Indemnified Party, the representation by counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding.  The indemnifying party shall pay for only one (1) separate legal counsel for the Indemnified Persons or the Indemnified Parties, as applicable, and such counsel shall be selected by the Investor, if the Investor is entitled to indemnification hereunder, or the Company, if the Company is entitled to indemnification hereunder, as applicable.  The Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or Claim.  The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding affected without its written consent; provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such Claim.  Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made.  The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action.

  

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(d)           The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.

 

Section 7.             CONTRIBUTION.

 

To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6; (ii) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities.

 

Section 8.             REPORTS UNDER THE 1934 ACT.

 

With a view to making available to the Investor the benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the Investor to sell securities of the Company to the public without registration (“Rule 144”), provided that the Investor holds any Registrable Securities which are eligible for resale under Rule 144 and such information is necessary in order for the Investor to sell such Securities pursuant to Rule 144, the Company agrees to:

 

(a)           make and keep public information available, as those terms are understood and defined in Rule 144;

 

(b)           file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such requirements (it being understood that nothing herein shall limit the Company’s obligations under Section 5(c) of the Investment Agreement) and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and

 

(c)           furnish to the Investor, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act applicable to the Company, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Investor to sell such securities pursuant to Rule 144 without registration.

 

Section 9.             NO ASSIGNMENT OF REGISTRATION RIGHTS.

 

This Agreement and the rights, agreements or obligations hereunder may not be assigned, by operation of law, merger or otherwise, and without the prior written consent of the other party hereto, and any purported assignment by a party without prior written consent of the other party will be null and void and not binding on such other party.  Subject to the preceding sentence, all of the terms, agreements, covenants, representations, warranties and conditions of this Agreement are binding upon, and inure to the benefit of and are enforceable by, the parties and their respective successors and assigns.

  

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Section 10.           AMENDMENT OF REGISTRATION RIGHTS.

 

The provisions of this Agreement may be amended only with the written consent of the Company and the Investor.

 

Section 11.           MISCELLANEOUS.

 

(a)           Any notices or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile or email with the signed document attached in PDF format (provided a confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:

 

If to the Company:

SPO Medical Inc.

3, Gavish Street

POB 2454

 Kfar Saba, Israel

Telephone: 972-9-966-2520

With a copy to (which shall not constitute notice):

Gerald Brounstein, Adv.

Aboudi & Brounstein

3 HaGavish Street

Kfar Saba, Israel

Telephone: +972-9-764-4833

Attention: Gerald Brounstein

 

If to the Investor:

 

Dutchess Opportunity Fund, II, LP

50 Commonwealth Ave, Suite 2

Boston, MA 02116

Telephone: (617) 301-4700

 

Each party shall provide five (5) business days prior notice to the other party of any change in address, phone number, facsimile number ore-mail address.

 

(b)           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.

  

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(c)           This Agreement and the Investment Agreement 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.

 

(d)           This Agreement and the Investment Agreement supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof.

 

(e)           The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.  Whenever required by the context of this Agreement, the singular shall include the plural and masculine shall include the feminine.  This Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if all the parties had prepared the same.

 

(f)           This Agreement may be executed in two or more identical counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement.  This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission or by e-mail delivery of a PDF format of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

 

(g)           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.

 

(h)           In case any provision of this Agreement is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Agreement will not in any way be affected or impaired thereby.

 

Section 12.           DISPUTES SUBJECT TO ARBITRATION GOVERNED BY NEW YORK LAW.

 

All disputes arising under this agreement shall be governed by and interpreted in accordance with the laws of the State of New York, without regard to principles of conflict of laws.  The parties to this agreement will submit all disputes arising under this agreement to arbitration in New York City, New York before a single arbitrator of the American Arbitration Association (“AAA”).  The arbitrator shall be selected by application of the rules of the AAA, or by mutual agreement of the parties, except that such arbitrator shall be an attorney admitted to practice law in the State of New York.  No party to this agreement will challenge the jurisdiction or venue provisions as provided in this section. Nothing contained herein shall prevent the party from obtaining an injunction.

 

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SIGNATURE PAGE OF REGISTRATION RIGHTS AGREEMENT

 

Your signature on this Signature Page evidences your agreement to be bound by the terms and conditions of the Investment Agreement and the Registration Rights Agreement as of the date first written above.

 

The undersigned signatory hereby certifies that he has read and understands the Registration Rights Agreement, and the representations made by the undersigned in this Registration Rights Agreement are true and accurate, and agrees to be bound by its terms.

 

	  	
DUTCHESS OPPORTUNITY FUND, II, LP,

	  	  	  
	  	
By: 

	
/s/ Douglas H. Leighton

	  	  	
Douglas H. Leighton

	  	  	
Managing Member of:

	  	  	
Dutchess Capital Management, II, LLC

	  	  	
General Partner to:

	  	  	
Dutchess Opportunity Fund, II, LP

	  	  	  
	  	
SPO Medical, Inc.

	  	  	  
	  	
By:

	
/s/ Sidney Braun

	  	  	
Sidney Braun, Chairman, Director

	  	  	  
	  	
By:

	
/s/ Michael Braunold

	  	  	
Michael Braunold, President, Chief Executive

	  	  	
Officer & Director

 

Signature Page to Registration Rights AgreementExhibit No. 10.1

 

AMENDMENT TO EMPLOYMENT AGREEMENT

 

Amendment Number 1

 

THIS AMENDMENT NUMBER 1 TO EMPLOYMENT AGREEMENT (“Amendment Number 1”) effective as of July 11, 2011 (the “Effective Date”), is by and between INNODATA ISOGEN, INC., a Delaware corporation (the “Company”), and JACK S. ABUHOFF (the “Executive”).

 

WHEREAS, the Company and the Executive originally entered into an employment agreement effective as of February 1, 2009 (the “Employment Agreement”);

 

WHEREAS, Paragraph 14(c) of the Employment Agreement provides that the Employment Agreement may be amended by written agreement of both parties thereto; and

 

WHEREAS, the Company and the Executive now desire to amend the Employment Agreement solely for purposes of compliance with the tax law requirements imposed by Section 409A of the Internal Revenue Code and the regulations and other guidance issued thereunder, with respect to the timing of severance payments that are conditioned upon the execution of a general release;

 

NOW, THEREFORE, the Company and the Executive hereby agree as follows, effective as of the Effective Date:

 

	
1.

	
Paragraph 7(f)(i)(B) of the Employment Agreement is hereby amended to read in its entirety as follows:

 

“(B) Upon the termination of the Executive’s employment with the Company the Executive executes a separation agreement and general release substantially similar to the separation agreement and general release attached hereto as Exhibit “A” (the “Release”) within the consideration period set forth in the Release and does not revoke his acceptance within the revocation period set forth in the Release. In such event, the payments and benefits set forth in Paragraph 7(f)(iii) will commence on the first regularly scheduled payroll date of the Company occurring at least fifteen (15) days after the Company’s receipt of the executed Release and in no event more than sixty (60) days from the date of termination of the Executive’s employment with the Company; provided, however, that in the event such sixty (60) day period spans more than one (1) tax year of the Executive, such payments shall commence on the first applicable regularly scheduled payroll date of the Company occurring in the  latter of such tax years.”

 

	
2.

	
Exhibit “A” to the Employment Agreement is hereby amended and restated in its entirety and attached hereto an Appendix 1.

 

Except as expressly modified by this Amendment Number 1, all other terms and conditions of the Employment Agreement shall remain unchanged and in full force and effect. In the event of any inconsistency between the terms and conditions of this Amendment Number 1 and the terms and conditions of the Employment Agreement, the terms and conditions of this Amendment Number 1 will govern and control.

 

  

  

  

 

IN WITNESS WHEREOF, the Company and the Executive have executed this Agreement on the date indicated below.

 

	
Innodata Isogen, Inc.

	  	Jack S. Abuhoff	 
	  	  	  	 	  	 
	
By:

	
/s/ Amy R. Agress

	  	/s/ Jack Abuhoff	 
	
Name:

	
Amy Agress

	  	Date: 	
July 12, 2011

	 
	
Title:

	
VP and General Counsel

	  	 	  	 
	
Date:

	
July 12, 2011

	  	 	  	 

 

  

  

  

 

Appendix 1

 

Exhibit “A”

AGREEMENT AND GENERAL RELEASE

INNODATA ISOGEN, INC.  ("Employer")  [Address] and Jack Abuhoff [Address], his heirs, executors, administrators, successors, and assigns (collectively referred to throughout this Agreement and General Release as "Executive"), agree that:

1. Last Day of Employment. Executive's last day of employment with Employer is/was ___________________ (the "Termination Date"). Without regard to whether Executive executes this Agreement and General Release, in accordance with the terms of the Employment Agreement between Executive and Employer dated as of ________________ (the "Employment Agreement"), Executive shall be paid, or shall have been paid, by no later than the next regularly-scheduled pay period following the Termination Date, all Base Salary (as defined in the Employment Agreement) accrued through the Termination Date, accrued but unused vacation days through the Termination Date and business expenses incurred through the Termination Date. In accordance with the terms of the Employment Agreement, Executive shall be paid, or shall have been paid all Bonus (as defined in the Employment Agreement) accrued through the Termination Date, in accordance with the general policies and procedures for payment of incentive compensation to senior executive personnel of Employer, without regard to whether Executive executes this Agreement and General Release. [May be modified to reflect any additional benefits or monies owed to Executive as of the Termination Date.]

2. Consideration. In accordance with the terms of the Employment Agreement and as consideration for this Agreement and General Release and Executive's compliance with Paragraphs 8, 9, 10 and 12 of the Employment Agreement, Employer agrees:

a. to provide Executive with the monies and benefits set forth in Paragraph 7(f)(iii) of the Employment Agreement; and

b. [other consideration, if any].

3. No Consideration Absent Execution of this Agreement. Executive understands and agrees that he would not receive the monies and/or benefits specified in Section 2 above, except for his execution of this Agreement and General Release and the fulfillment of the promises contained herein and in Paragraphs 8, 9, 10 and 12 of the Employment Agreement. Employer reserves the right to commence litigation to enforce Executive's compliance with Paragraphs 8, 9, 10 and 12 of the Employment Agreement, in addition to Executive's compliance with the promises set forth in this Agreement and General Release.

4. General Release of Claims. Executive knowingly and voluntarily releases and forever discharges, to the full extent permitted by law, Employer, its parent corporation, affiliates, subsidiaries, divisions, predecessors, successors and assigns and the current and former employees, officers, directors and agents thereof, individually and in their corporate capacities, and their employee benefit plans and programs and their administrators and fiduciaries (collectively referred to throughout the remainder of this Agreement and General Release as "Releasees"), of and from any and all claims, known and unknown, asserted and unasserted, Executive has or may have against Releasees as of the date of execution of this Agreement and General Release arising out of his employment or the termination of his employment with Employer, including, but not limited to, any alleged violation of:

  

  

  

o     Title VII of the Civil Rights Act of 1964, as amended;

o     The Civil Rights Act of 1991;

o     Sections 1981 through 1988 of Title 42 of the United States Code, as amended;

o     The Employee Retirement Income Security Act of 1974, as amended;

o     The Immigration Reform and Control Act, as amended;

o     The Americans with Disabilities Act of 1990, as amended;

o     The Age Discrimination in Employment Act of 1967, as amended;

o     The Workers Adjustment and Retraining Notification Act, as amended;

o     The Occupational Safety and Health Act, as amended;

o     The Sarbanes-Oxley Act of 2002;

o     the New York State Constitution and amendments thereto;

o     the New York State Human Rights Law;

o     the New York Executive Law, Art. 15 ss. 290 et seq.;

o     the New York Minimum Wage Law;

o     the New York Labor Law, Art. 19, ss. 657 et seq.;

o     the New York Wage and Hour Laws and the New York Wage Payment Laws;

o     the New York Labor Laws, Art. 6, ss.ss. 190-199 et seq.;

o     the New York City Human Rights Law;

o     the New York City Admin. Code ss. 8-101 et seq.;

o     the New York City Civil Rights Act;

o     the New York Non-Discrimination for Legal Activities Law;

o     the New York Labor Law ss. 201-d;

o     the New York Whistleblower Law, Labor Law ss. 740, et seq.;

o     the New York Occupational Safety and Health Laws;

o     the New York Workers' Compensation Laws;

  

  

  

o     New Jersey Law Against Discrimination - N.J. Rev. Stat. ss.10:5-1 et seq.;

o     New Jersey Statutory Provision Regarding  Retaliation/Discrimination for  Filing  a Workers'   Compensation  Claim  -  N.J.  Rev.  Stat.  ss.34:15-39.1 et seq.;

o     New Jersey Family Leave Act - N.J. Rev. Stat. ss.34:11B-1 et seq.;

o     New Jersey Smokers' Rights Law - N.J. Rev. Stat. ss.34:6B-1 et seq.;

o     New Jersey Equal Pay Act - N.J. Rev. Stat. ss.34:11-56.1 et seq.;

o     New Jersey Genetic  Privacy Act - N.J. Rev.  Stat.  Title 10, Ch. 5, ss.10:5-43 et seq.;

o     New Jersey  Conscientious  Employee  Protection  Act  (Whistleblower Protection) - N.J. Stat. Ann. ss.34:19-3 et seq.;

o     The New Jersey Wage Payment and Work Hour Laws;

o     The New Jersey Public Employees' Occupational Safety and Health Act- N.J. Stat. Ann. ss.34:6A-25 et seq.;

o     New Jersey Fair Credit Reporting Act;

o     New Jersey laws  regarding  Political  Activities of Employees,  Lie Detector   Tests,   Jury   Duty,   Employment  Protection,  and Discrimination;

o     Any other  federal,  state or local civil or human rights law or any other local, state or federal law, regulation or ordinance;

o     Any public policy, contract, tort, or common law; or

o     Any claim for costs,  fees, or other expenses  including  attorneys' fees.

Nothing herein shall prevent Employee from seeking to enforce the terms of the Employment Agreement or this Agreement and General Release or from seeking to obtain benefits to which he is lawfully entitled under the terms of any Employer benefit plan of which he is a participant.  This Agreement and General Release shall not constitute a waiver of rights to the extent such waiver is prohibited by law.

[If base salary, bonus, vacation pay, expense reimbursement and workplace injury/leave issues are not in dispute, Innodata Isogen will seek affirmations from Executive relating to these issues.]

5. Non-Disparagement.

(a) Executive agrees not to defame, disparage or demean Employer, its officers and directors, in any manner whatsoever, provided that nothing contained herein shall prevent Executive from providing truthful information about the Company in connection with any legal proceeding or to the extent compelled to do so by law.

(b) Employer's officers and directors agree not to defame, disparage or demean Executive in any manner whatsoever, provided that nothing contained herein shall prevent Employer from providing truthful information about Executive in connection with any legal proceeding or to the extent compelled to do so by law.

  

  

  

6. Confidentiality. Executive agrees not to disclose any information concerning the consideration being paid to him under Section 2 hereof, except to his immediate family members, tax advisor, financial advisor and attorneys.

7. Governing Law and Interpretation. This Agreement and General Release shall be governed and conformed in accordance with the laws of the state in which Executive was employed at the time of his last day of employment without regard to its conflict of laws provision. In the event the Executive or Employer breaches any provision of this Agreement and General Release, Executive and Employer affirm that either may institute an action to specifically enforce any term or terms of this Agreement and General Release. Should any provision of this Agreement and General Release be declared illegal or unenforceable by any court of competent jurisdiction and cannot be modified to be enforceable, excluding the general release language, such provision shall immediately become null and void, leaving the remainder of this Agreement and General Release in full force and effect.

8.  Nonadmission of Wrongdoing.  The parties agree that neither this Agreement and General Release nor the furnishing of the consideration for this Release shall be deemed or construed at anytime for any purpose as an admission by either party of any liability or unlawful conduct of any kind.

9.  Amendment.  This Agreement and General Release may not be modified, altered or changed except upon express written consent of both parties wherein specific reference is made to this Agreement and General Release.

10. Revocation. Executive may revoke this Agreement and General Release for a period of seven (7) calendar days following the day he executes this Agreement and General Release. Any revocation within this period must be submitted, in writing, to ____________ [Identify Company representative] and state, "I hereby revoke my acceptance of our Agreement and General Release." The revocation must be personally delivered to _________________ [Identify Company representative] or his designee, or mailed to ____________________ [Identify Company representative] and postmarked within seven (7) calendar days of execution of this Agreement and General Release. This Agreement and General Release shall not become effective or enforceable until the revocation period has expired. If the last day of the revocation period is a Saturday, Sunday, or legal holiday in the state in which Executive was employed at the time of his last day of employment, then the revocation period shall not expire until the next following day which is not a Saturday, Sunday, or legal holiday.

11. Entire Agreement. This Agreement and General Release sets forth the entire agreement between the parties hereto with regard to the subject matter hereof. Notwithstanding this Section, Paragraphs 8, 9, 10, 11, 12 and 14 of the Employment Agreement, as well as Paragraph 7 to the extent that payments to Executive have not been made in accordance with Section 2 of this Agreement and General Release, shall remain in full force and effect pursuant to Paragraph 14(i) of the Employment Agreement. Executive acknowledges that he has not relied on any representations, promises, or agreements of any kind made to him in connection with his decision to accept this Agreement and General Release, except for those set forth in the Employment Agreement and this Agreement and

General Release.

12. Facsimile/Photocopy. A signed facsimile or photocopy of this Agreement and General Release shall have the same force and effect as an original.

  

  

  

EXECUTIVE IS HEREBY ADVISED THAT HE HAS UP TO TWENTY-ONE (21) CALENDAR DAYS TO REVIEW THIS AGREEMENT AND GENERAL RELEASE AND TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTION OF THIS AGREEMENT AND GENERAL RELEASE.

EXECUTIVE AGREES THAT ANY MODIFICATIONS, MATERIAL OR OTHERWISE, MADE TO THIS AGREEMENT AND GENERAL RELEASE DO NOT RESTART OR AFFECT IN ANY MANNER THE ORIGINAL TWENTY-ONE (21) CALENDAR DAY CONSIDERATION PERIOD.

HAVING ELECTED TO EXECUTE THIS AGREEMENT AND GENERAL RELEASE, TO FULFILL THE PROMISES AND TO RECEIVE THE SUMS AND BENEFITS IN PARAGRAPH "2" ABOVE, EXECUTIVE FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION, ENTERS INTO THIS AGREEMENT AND GENERAL RELEASE INTENDING TO WAIVE, SETTLE AND RELEASE ALL CLAIMS HE HAS OR MIGHT HAVE AGAINST RELEASEES.

IN WITNESS WHEREOF, the parties hereto knowingly and voluntarily executed this Agreement and General Release as of the date set forth below:

	
EXECUTIVE

	 	
INNODATA ISOGEN, INC.

	 
	  	 	 	  	  	 
	  	 	
By:

	  	 
	
JACK ABUHOFF

	 	  	  	 
	  	 	 	  	
[Name and Title of Person Signing]

	 
	  	 	 	  	  	 
	
Date:

	 	 	
Date:

	
  

	 

  

  

  

Jack Abuhoff

[address]

Re: Agreement and General Release

Dear Mr. Abuhoff:

This letter  confirms  that on  ________________  [date], I personally delivered  to you the enclosed Agreement  and General  Release.  You have until _______________  [21 days after receipt by employee. Add extra days if the 21st day ends on a non-business day] to consider this Agreement and General Release, in which you waive important   rights, including those under the Age Discrimination in Employment Act of 1967. To this end, we advise you to consult with an attorney of your choosing  prior to executing this Agreement and General Release.

	  	
Very truly yours,

	 
	  	  	 
	  	
INNODATA ISOGEN, INC.

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