REGISTRATION RIGHTS AGREEMENT
Exhibit
10.3
This
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into
as of __________, __, 200__, by and between Rexahn Pharmaceuticals, Inc., a
Delaware corporation (the “Company”), and KT&G Corporation, a Korean
corporation (the “Purchaser”).
Recital
The
parties have agreed to enter into this Agreement in connection with, and as
a
condition to the Closing under, the Securities Purchase Agreement, dated as
of
November 19, 2007, by and between the Company and the Purchaser (the
“Purchase Agreement”).
Agreement
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and the Purchaser agree as
follows:
1.
Definitions. In addition to the terms defined
elsewhere in this Agreement, (a) capitalized terms that are not otherwise
defined herein have the meanings given to such terms in the Purchase Agreement,
and (b) the following terms have the meanings indicated:
“Actual
Minimum” means, as of any date, the maximum aggregate number of shares of
Common Stock then issued or potentially issuable in the future pursuant to
the
Transaction Documents, including Warrant Shares issuable upon exercise in full
of all Warrants.
“Effective
Date” means the date on which the Registration Statement is first declared
effective by the SEC.
“Filing
Date” means, with respect to the Registration Statement required to be filed
pursuant to Section 2, the 60th day following the date on which the
Common Stock is listed for trading on the American Stock Exchange.
“Holder”
means any holder, from time to time, of Registrable Securities.
“Post-Effective
Amendment” means a post-effective amendment to the Registration
Statement.
“Post-Effective
Amendment Filing Deadline” means the 10th Trading Day after the Registration
Statement ceases to be effective pursuant to the applicable securities laws
due
to the passage of time or the occurrence of an event requiring the Company
to
file a Post-Effective Amendment.
“Prospectus”
means the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the 1933 Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Securities covered by the Registration Statement, and all
other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
“Registrable
Securities” means any Common Stock (including Warrant Shares) issued or
issuable pursuant to the Transaction Documents, together with any securities
issued or issuable upon any stock split, dividend or other distribution,
recapitalization or similar event with respect to the foregoing; provided,
however, that any Common Stock will cease to be a Registrable Security when
(i) it has been sold under the Registration Statement, or (ii) it may be
transferred pursuant to Rule 144 under the 1933 Act.
“Registration
Statement” means the registration statement required to be filed hereunder,
including the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
“Required
Effectiveness Date” means, with respect to the Registration Statement
required to be filed hereunder, the 90th day (or the 120th day in the event
the
Company receives comments to the Registration Statement from the SEC) following
the Filing Date.
“Required
Holders” means the Holders of a majority of the Registrable
Securities.
“Rule
415,” “Rule 424” and “Rule 461” means Rule 415, Rule 424 and
Rule 461, respectively, promulgated by the SEC pursuant to the 1933 Act, as
such
Rules may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC having substantially the same effect as such
Rule.
List
of Additional Definitions. The following is a list of additional
terms used in this Agreement and a reference to the Section hereof in which
such
term is defined:
|
Term
|
Section
|
|
Advice
|
6
|
|
Effectiveness
Period
|
2(a)
|
|
Event
|
2(c)
|
|
Event
Date
|
2(c)
|
|
Indemnified
Party
|
5(c)
|
|
Indemnifying
Party
|
5(c)
|
|
Losses
|
5(a)
|
|
Purchaser
Counsel
|
3(a)
|
2
2.
Shelf Registration.
(a) On
or prior to the Filing Date, the Company shall prepare and file with the SEC
a
“Shelf” Registration Statement covering the resale of all Registrable Securities
eligible to be registered under the 1933 Act and rules and practices of the
SEC
for an offering to be made on a continuous basis pursuant to Rule
415. The Registration Statement shall be on Form SB-2 (or Form S-3 if
the Company is then eligible to use such Form) and shall contain (except if
otherwise directed by the Holders) the “Plan of Distribution” attached hereto as
Annex A. The Company shall use its best efforts to cause the
Registration Statement to be declared effective under the 1933 Act as promptly
as possible after the filing thereof, but in any event prior to the Required
Effectiveness Date, and shall use its best efforts to keep such Registration
Statement continuously effective under the 1933 Act until the earliest of (i)
the fifth anniversary of the Effective Date, (ii) when all Registrable
Securities are eligible for resale pursuant to subsection (k) of Rule 144 under
the 1933 Act, and (iii) when all Registrable Securities covered by such
Registration Statement have been sold (the “Effectiveness
Period”). The Company shall notify each Holder in writing
promptly (and in any event within one Business Day) after receiving notification
from the SEC that a Registration Statement has been declared
effective.
(b) The
Registration Statement to be filed hereunder shall cover the sale by the Holders
of 120% of the Actual Minimum number of shares of Common Stock issuable under
the Transaction Documents. As promptly as possible, and in any event
no later than the Post-Effective Amendment Filing Deadline, the Company shall
prepare and file with the SEC a Post-Effective Amendment, if required under
this
Agreement. The Company shall use its best efforts to cause the
Post-Effective Amendment to be declared effective by the SEC as promptly as
possible after the filing thereof, but in any event prior to the 15th Trading
Day after the Post-Effective Amendment Filing Deadline. The Company
shall notify the Purchaser in writing promptly (and in any event within one
Business Day) after receiving notification from the SEC that the Post-Effective
Amendment has been declared effective.
(c) If: (i)
the Registration Statement is not filed on or prior to the Filing Date (if
the
Company files such Registration Statement without affording the Purchaser the
opportunity to review and comment on the same as required by Section 3(a)
hereof, the Company shall not be deemed to have satisfied this clause (i)),
or
(ii) the Company fails to file with the SEC a request for acceleration in
accordance with Rule 461 promulgated under the 1933 Act, within five Trading
Days after the date that the Company is notified (orally or in writing,
whichever is earlier) by the SEC that a Registration Statement will not be
“reviewed,” or will not be subject to further review, or (iii) the Registration
Statement filed hereunder is not declared effective by the SEC by the Required
Effectiveness Date, or (iv) a Post-Effective Amendment is not filed on or prior
to the Post-Effective Amendment Filing Deadline or is not declared effective
on
or prior to the 15th Trading Day after the Post-Effective Amendment Filing
Deadline, or (v) the Common Stock is not listed or quoted, or is suspended
from
trading on an Eligible Market for a period of five consecutive Trading Days,
or
(vi) the Company fails for any reason to deliver a certificate evidencing any
Securities to the Purchaser within five Trading Days after delivery of such
certificate is required pursuant to any Transaction Document or the exercise
rights of the Purchaser pursuant to the Transaction Documents are otherwise
suspended for any reason (any such failure or breach being referred to as an
“Event,” and for purposes of clause (i), (iii) or (iv) the date on which
such Event occurs, or for purposes of clause (ii) and (vi) the date on which
such five Trading Day period is exceeded, or for purposes of clause (v) the
date
on which such three Trading Day period is exceeded, being referred to as
“Event Date”), then: (x) on each such Event Date the Company shall pay to
the Purchaser an amount in cash, as partial liquidated damages and not as a
penalty, equal to 2% of the aggregate purchase price paid by the Purchaser
pursuant to the Purchase Agreement; and (y) on each monthly anniversary of
each
such Event Date thereof (if the applicable Event shall not have been cured
by
such date) until the applicable Event is cured, the Company shall pay to the
Purchaser an amount in cash, as partial liquidated damages and not as a penalty,
equal to 2% of the aggregate purchase price paid by the Purchaser pursuant
to
the Purchase Agreement; provided, however, that the maximum amount of
such liquidated damages shall not exceed a total equal to 10% of the aggregate
purchase price paid by the Purchaser under the Purchase
Agreement. Such payments shall be in partial compensation to the
Purchaser and shall not constitute the Purchaser’s exclusive remedy for such
events. If the Company fails to pay any liquidated damages pursuant
to this Section 2 in full within seven days after the date payable, the
Company will pay interest thereon at a rate of 18% per annum (or such lesser
maximum amount that is permitted to be paid by applicable law) to the Purchaser,
accruing daily from the date such liquidated damages are due until such amounts,
plus all such interest thereon, are paid in full.
3
(d) During
the period subsequent to the Filing Date and prior to the Effective Date, the
Company shall not prepare and file with the SEC a registration statement
relating to an offering for its own account or the account of others under
the
1933 Act of any of its equity securities.
(e) Notwithstanding
anything in this Agreement to the contrary, after 60 consecutive Trading Days
of
continuous effectiveness of the Registration Statement filed and declared
effective pursuant to this Agreement, the Company may, by written notice to
the
Purchaser, suspend sales under a Registration Statement after the Effective
Date
thereof and/or require that the Purchaser immediately cease the sale of shares
of Common Stock pursuant thereto and/or defer the filing of any subsequent
Registration Statement if the Company is engaged in a material merger,
acquisition or sale and the Board of Directors determines in good faith, by
appropriate resolutions, that, as a result of such activity, (A) it would be
materially detrimental to the Company (other than as relating solely to the
price of the Common Stock) to file a Registration Statement at such time and
(B)
it is in the best interests of the Company to defer proceeding with such
registration at such time. Upon receipt of such notice, the Purchaser
shall immediately discontinue any sales of Registrable Securities pursuant
to
such registration until the Purchaser has received copies of a supplemented
or
amended Prospectus or until the Purchaser is advised in writing by the Company
that the then-current Prospectus may be used and has received copies of any
additional or supplemental filings that are incorporated or deemed incorporated
by reference in such Prospectus. In no event, however, shall this
right be exercised to suspend sales beyond the period during which (in the
good
faith determination of the Company’s Board of Directors) the failure to require
such suspension would be materially detrimental to the Company. The
Company’s rights, under this Section 2(e) may be exercised for a period
of no more than 45 days in the aggregate in any 12-moth period, of which no
more
than 20 days may be consecutive. Immediately after the end of any
suspension period under this Section 2(e), the Company shall take all
necessary actions (including filing any required supplemental prospectus) to
restore the effectiveness of the applicable Registration Statement and the
ability of the Purchaser to publicly resell their Registrable Securities
pursuant to such effective Registration Statement. The provisions of
Sections 3(b) and 3(d) hereof shall not be applicable during the
pendency of any suspension period under this Section 2(e).
4
(f) Rule
415 Limitations. Notwithstanding anything in this
Agreement to the contrary, if the SEC refuses to declare a registration
statement filed pursuant to this Agreement effective as a valid secondary
offering under Rule 415 promulgated under the 1933 Act due to the number of
Registrable Securities sought to be included in such registration statement
relative to the number of shares of Acquirer Common Stock outstanding or the
number of outstanding shares of Acquirer Common Stock held by non-affiliates
or
for any other reason, then, without any liability under this Agreement or any
further obligation to register such excess Registrable Securities, the Company
shall be permitted to reduce the number
of Registrable Securities included in such
registration statement to an amount that does
not exceed an amount that the SEC allows for the offering
thereunder to qualify as a valid secondary offering under Rule
415. The Company shall not be liable for damages under this Agreement
as to any Registrable Securities that are not
permitted by the SEC to
be included in a
registration statement due to SEC guidance relating to
Rule 415.
3.
Registration Procedures.
(a) Not
less than three days prior to the filing of a Registration Statement or any
related Prospectus or any amendment or supplement thereto, the Company shall
(i)
furnish to any counsel designated by the Purchaser (“Purchaser Counsel”)
copies of all such documents proposed to be filed, which documents (other than
those incorporated or deemed to be incorporated by reference) will be subject
to
the review of the Purchaser and Purchaser Counsel and (ii) cause its officers
and directors, counsel and independent certified public accountants to respond
to such inquiries as shall be necessary to conduct a reasonable investigation
within the meaning of the 1933 Act. The Company shall not file a
Registration Statement or any such Prospectus or any amendments or supplements
thereto to which the Required Holders shall reasonably object in writing in
their good faith within three days of receipt.
(b) (i) The
Company shall prepare and file with the SEC such amendments, including
post-effective amendments, to each Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep the Registration
Statement continuously effective as to the applicable Registrable Securities
for
the Effectiveness Period and prepare and file with the SEC such additional
Registration Statements in order to register for resale under the 1933 Act
all
of the Registrable Securities; (ii) cause the related Prospectus to be amended
or supplemented by any required Prospectus supplement, and as so supplemented
or
amended to be filed pursuant to Rule 424; (iii) respond as promptly as
reasonably possible, and in any event within ten business days to comments
received from the SEC with respect to the Registration Statement or any
amendment thereto and, as promptly as reasonably possible, upon request, provide
the Purchaser with true and complete copies of all correspondence from and
to
the SEC relating to the Registration Statement; and (iv) comply in all material
respects, to the extent applicable to the Company, with the provisions of the
1933 Act and the 1934 Act with respect to the disposition of all Registrable
Securities covered by the Registration Statement during the applicable period
in
accordance with the intended methods of disposition by the Purchaser thereof
set
forth in the Registration Statement as so amended or in such Prospectus as
so
supplemented.
5
(c) The
Company shall notify Purchaser Counsel as promptly as reasonably possible,
and
(if requested by any such Person) confirm such notice in writing no later than
one Trading Day thereafter, of any of the following events: (i) the SEC notifies
the Company whether there will be a “review” of any Registration Statement; (ii)
the SEC comments in writing on any Registration Statement; (iii) any
Registration Statement or any Post-Effective Amendment is declared effective;
(iv) the SEC or any other Federal or state governmental authority requests
any
amendment or supplement to any Registration Statement or Prospectus or requests
additional information related thereto; (v) the SEC issues any stop order
suspending the effectiveness of any Registration Statement or initiates any
proceedings for that purpose; (vi) the Company receives notice of any suspension
of the qualification or exemption from qualification of any Registrable
Securities for sale in any jurisdiction, or the initiation or threat of any
proceeding for such purpose; or (vii) an event has occurred which requires
a
post-effective amendment to the Registration Statement or a supplement to the
prospectus included therein.
(d) The
Company shall use its best efforts to avoid the issuance of or, if issued,
to
obtain the withdrawal of (i) any order suspending the effectiveness of any
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale
in
any jurisdiction, as soon as possible.
(e) The
Company shall promptly deliver to Purchaser Counsel, without charge, an
electronic copy of the Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such Persons may
reasonably request. The Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by the Purchaser in
connection with the offering and sale of the Registrable Securities covered
by
such Prospectus and any amendment or supplement thereto.
(f) The
Company shall promptly deliver to the Purchaser and Purchaser Counsel, without
charge, as many copies of the Prospectus or Prospectuses (including each form
of
prospectus) and each amendment or supplement thereto as such Persons may
reasonably request. The Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by the Purchaser in
connection with the offering and sale of the Registrable Securities covered
by
such Prospectus and any amendment or supplement thereto.
(g) (i) In
the time and manner required by each Trading Market, the Company shall prepare
and file with such Trading Market an additional shares listing application
covering all of the Registrable Securities; (ii) take all steps necessary to
cause such Registrable Securities to be approved for listing on each Trading
Market as soon as possible thereafter; (iii) provide to the Purchaser evidence
of such listing; and (iv) maintain the listing of such Registrable Securities
on
each such Trading Market or another Eligible Market.
(h) Prior
to any public offering of Registrable Securities, the Company shall use its
best
efforts to register or qualify or cooperate with the selling Purchaser and
Purchaser Counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as the Purchaser reasonably requests
in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all
other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration
Statement.
6
(i) Subject
to compliance by the Purchaser with Section 6 hereof, the Company shall
cooperate with the Purchaser to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be delivered to a
transferee pursuant to a Registration Statement, which certificates shall be
free, to the extent permitted by this Agreement, of all restrictive legends,
and
to enable such Registrable Securities to be in such denominations and registered
in such names as the Purchaser may request.
(j) Upon
the occurrence of any event described in Section 3(c)(vii), as promptly
as reasonably possible, the Company shall prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed
to
be incorporated therein by reference, and file such supplement, amendment or
any
other document as may be required so that, as thereafter delivered, neither
the
Registration Statement nor such Prospectus shall contain an untrue statement
of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under
which they were made, not misleading.
(k) If
Holders of a majority of the Registrable Securities being offered pursuant
to a
Registration Statement select underwriters for the offering, the Company shall
enter into and perform its obligations under an underwriting agreement, in
usual
and customary form, including, without limitation, by providing customary legal
opinions, comfort letters and indemnification and contribution
obligations.
(l) The
Company shall comply with all applicable rules and regulations of the
SEC.
4.
Registration Expenses. The Company
shall pay all fees and expenses incident to the performance of or compliance
with this Agreement by the Company, including without limitation (a) all
registration and filing fees and expenses, including without limitation those
related to filings with the SEC, any Trading Market and in connection with
applicable state securities or Blue Sky laws, (b) printing expenses (including
without limitation expenses of printing certificates for Registrable Securities
and of printing prospectuses requested by the Purchaser), (c) messenger,
telephone and delivery expenses, (d) fees and disbursements of counsel for
the
Company, (e) fees and expenses of all other Persons retained by the Company
in
connection with the consummation of the transactions contemplated by this
Agreement and (f) all listing fees to be paid by the Company to the Trading
Market.
5.
Indemnification.
(a) Indemnification
by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless the Purchaser, and
its officers, directors, partners, members, agents, investment advisors and
employees, each Person who controls the Purchaser (within the meaning of Section
15 of the 1933 Act or Section 20 of the 0000 Xxx) and the officers, directors,
partners, members, agents and employees of each such controlling Person, to
the
fullest extent permitted by applicable law, from and against any and all losses,
claims, damages, liabilities, settlement costs and expenses, including without
limitation costs of preparation of legal action and reasonable attorneys’ fees
(collectively, “Losses”), as incurred, arising out of or based upon any
untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising
out
of or based upon any omission or alleged omission of a material fact required
to
be stated therein or necessary to make the statements therein (in the case
of
any Prospectus or form of prospectus or supplement thereto, in the light of
the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that (i) such untrue statements, alleged untrue
statements, omissions or alleged omissions are based solely upon information
regarding the Purchaser furnished in writing to the Company by the Purchaser
or
its counsel or other Person acting on behalf of the Purchaser expressly for
use
therein, or to the extent that such information relates to the Purchaser or
the
Purchaser’s proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by the Purchaser or its counsel
or
other Person acting on behalf of the Purchaser expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto or (ii) in the case of an occurrence of an
event
of the type specified in Section 3(c)(v)-(vii), the use by the Purchaser
of an outdated or defective Prospectus after the Company has notified the
Purchaser in writing that the Prospectus is outdated or defective and prior
to
the receipt by the Purchaser of the Advice contemplated in Section
6. The Company shall notify the Purchaser promptly of the
institution, threat or assertion of any proceeding of which the Company is
aware
in connection with the transactions contemplated by this Agreement.
7
(b) Indemnification
by the Purchaser. The Purchaser shall indemnify and hold harmless
the Company, its directors, officers, agents and employees, each Person who
controls the Company (within the meaning of Section 15 of the 1933 Act and
Section 20 of the 1934 Act), and the directors, officers, agents or employees
of
such controlling Persons, to the fullest extent permitted by applicable law,
from and against all Losses arising solely out of or based solely upon any
untrue statement of a material fact contained in the Registration Statement,
any
Prospectus, or any form of prospectus, or in any amendment or supplement
thereto, or arising solely out of or based solely upon any omission of a
material fact required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or form of prospectus or supplement
thereto, in the light of the circumstances under which they were made) not
misleading to the extent, but only to the extent, that such untrue statement
or
omission is contained in any information so furnished in writing by the
Purchaser to the Company specifically for inclusion in such Registration
Statement or such Prospectus or to the extent that (i) such untrue statements
or
omissions are based solely upon information regarding the Purchaser furnished
in
writing to the Company by the Purchaser expressly for use therein, or to the
extent that such information relates to the Purchaser or the Purchaser’s
proposed method of distribution of Registrable Securities and was reviewed
and
expressly approved in writing by the Purchaser or its counsel or other person
acting on behalf of the Purchaser expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any amendment or
supplement thereto or (ii) in the case of an occurrence of an event of the
type
specified in Section 3(c)(v)-(vii), the use by the Purchaser of an
outdated or defective Prospectus after the Company has notified the Purchaser
in
writing that the Prospectus is outdated or defective and prior to the receipt
by
the Purchaser of the Advice contemplated in Section 6. In no
event shall the liability of any selling Purchaser hereunder be greater in
amount than the dollar amount of the net proceeds received by the Purchaser
upon
the sale of the Registrable Securities giving rise to such indemnification
obligation.
8
(c) Conduct
of Indemnification Proceedings. (i) If any proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an “Indemnified Party”), such Indemnified Party shall promptly notify
the Person from whom indemnity is sought (the “Indemnifying Party”) in
writing, and the Indemnifying Party shall be entitled to assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, however, that the failure of
any Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations or liabilities pursuant to this Agreement, except
(and
only) to the extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or further review)
that such failure shall have proximately and materially adversely prejudiced
the
Indemnifying Party.
(ii) An
Indemnified Party shall have the right to employ separate counsel in any such
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (i) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (ii) the Indemnifying Party shall have failed promptly
to
assume the defense of such proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such proceeding; or (iii) the
named parties to any such proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party, and a conflict of
interest is likely to exist if the same counsel were to represent such
Indemnified Party and the Indemnifying Party (in which case, if such Indemnified
Party notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense thereof and such counsel
shall be at the expense of the Indemnifying Party). The Indemnifying
Party shall not be liable for any settlement of any such proceeding effected
without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
proceeding in respect of which any Indemnified Party is a party, unless (i)
a
conflict of interest exists between the Indemnified Party and the Indemnifying
Party or (ii) such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter
of
such proceeding.
(iii) All
reasonable fees and expenses of the Indemnified Party (including reasonable
fees
and expenses to the extent incurred in connection with investigating or
preparing to defend such proceeding in a manner not inconsistent with this
Section 5) shall be paid to the Indemnified Party, as incurred, within
ten Trading Days of written notice thereof to the Indemnifying Party (regardless
of whether it is ultimately determined that an Indemnified Party is not entitled
to indemnification hereunder; provided, however, that the Indemnifying
Party shall reimburse all such fees and expenses to the extent it is finally
judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).
(d) Contribution. (i) If
a claim for indemnification under Section 5(a) or (b) is
unavailable to an Indemnified Party (by reason of public policy or otherwise),
then each Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as
a
result of such Losses, in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and Indemnified Party in connection
with the actions, statements or omissions that resulted in such Losses as well
as any other relevant equitable considerations. The relative fault of
such Indemnifying Party and Indemnified Party shall be determined by reference
to, among other things, whether any action in question, including any untrue
or
alleged untrue statement of a material fact or omission or alleged omission
of a
material fact, has been taken or made by, or relates to information supplied
by,
such Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party
as a result of any Losses shall be deemed to include, subject to the limitations
set forth in Section 5(c), any reasonable attorneys’ or other reasonable
fees or expenses incurred by such party in connection with any proceeding to
the
extent such party would have been indemnified for such fees or expenses if
the
indemnification provided for in this Section 5 was available to such
party in accordance with its terms.
9
(ii) The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or
by any other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section
5(d), the Purchaser shall not be required to contribute, in the aggregate,
any amount in excess of the amount by which the net proceeds actually received
by the Purchaser from the sale of the Registrable Securities subject to the
proceeding exceeds the amount of any damages that the Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) shall
be
entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation.
6.
Dispositions. The Purchaser agrees that it
will comply with the prospectus delivery requirements of the 1933 Act as
applicable to it in connection with sales of Registrable Securities pursuant
to
the Registration Statement. The Purchaser further agrees that, upon
receipt of a notice from the Company of the occurrence of any event of the
kind
described in Sections 2(f) or 3(c)(v), (vi) or
(vii), the Purchaser will discontinue disposition
of such Registrable
Securities under the Registration Statement until the Purchaser’s receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(j), or until it is advised in writing (the
“Advice”) by the Company that the use of the applicable Prospectus
may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement. The Company
may provide appropriate stop orders to enforce the provisions of this
paragraph.
7.
Miscellaneous.
(a) Remedies. In
the event of a breach by the Company or by a Holder of any of their obligations
under this Agreement, each Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under
this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and each
Holder agree that monetary damages would not provide adequate compensation
for
any losses incurred by reason of a breach by it of any of the provisions of
this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense
that
a remedy at law would be adequate.
10
(b) Amendments
and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented,
and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and the Required
Holders.
(c) No
Inconsistent Agreements. Neither the Company nor any of its
subsidiaries has entered, as of the date hereof, nor shall the Company or any
of
its subsidiaries, on or after the date of this Agreement, enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. Except as and to the extent specified in the
applicable schedule to the Purchase Agreement, neither the Company nor any
Subsidiary has previously entered into any agreement granting any registration
rights with respect to any of its securities to any Person that have not been
satisfied in full.
(d) No
Piggyback on Registrations. Neither the Company nor any of its
security holders (other than the Holders in such capacity pursuant hereto)
may
include securities of the Company in the Registration Statement other than
the
Registrable Securities, and the Company shall not after the date hereof enter
into any agreement providing any such right to any of its security holders
other
than upon written consent of the Required Holders, unless the rights so granted
are subject in all respects to the prior rights in full of the Holders set
forth
herein and are not otherwise in conflict with the provisions of this
Agreement.
(e) Shareholder
Obligations. The selling Holders shall furnish to the Company
such information regarding themselves and the Registrable Securities held by
them as shall be required to effect the registration of their Registrable
Securities, and the Company may exclude from the registration statement the
shares of any Holder that does not do so on a timely basis.
(f) Piggy-Back
Registrations. If at any time during the Effectiveness Period
there is not an effective Registration Statement covering all of the Registrable
Securities and 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 1933 Act of any of its equity securities, other
than
on Form S-4 or Form S-8 (each as promulgated under the 0000 Xxx) or their then
equivalents relating to equity securities to be issued solely in connection
with
any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, then the Company
shall send to each Holder written notice of such determination and, if within
fifteen days after receipt of such notice, any such Holder shall so request
in
writing, the Company shall include in such registration statement all or any
part of such Registrable Securities such holder requests to be
registered. The selling Holders shall enter into and timely perform
their obligations under the underwriting agreement, if any, and shall execute
other customary agreements necessary or appropriate to facilitate the offering,
including without limitation custody agreements and powers of
attorney.
11
(g) Notices. Any
and all notices or other communications or deliveries required or permitted
to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section 7(g) prior to 18:30 (New York City time) on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified in this Agreement on a day that is not a Trading Day or later
than 18:30 (New York City time) and earlier than 24:00 (New York City time)
on
any Trading Day, (c) the Trading Day following the date of mailing, if sent
by
U.S. nationally recognized overnight courier service, or (d) upon actual receipt
by the party to whom such notice is required to be given. The address
for such notices and communications shall be as set forth in the Purchase
Agreement.
(h) Successors
and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and
shall inure to the benefit of each Holder. The Company may not assign
its rights or obligations hereunder without the prior written consent of each
Holder. The Purchaser may assign its rights and obligations hereunder
to a transferee or assignee of Registrable Securities in the manner and to
the
extent permitted under the Purchase Agreement.
(i) Assignment
of Registration Rights. The rights of each Holder hereunder,
including the right to have the Company register for resale Registrable
Securities in accordance with the terms of this Agreement, shall be
automatically assignable by each Holder to any Affiliate of such Holder or
any
other Holder or Affiliate of any other Holder of all or a portion of the
Preferred Stock or the Registrable Securities if: (i) the Holder
agrees in writing with the transferee or assignee to assign such assignment,
(ii) the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee
or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned, (iii) following such transfer or assignment
the further disposition of such securities by the transferee or assignees is
restricted under the 1933 Act and applicable state securities laws, (iv) at
or
before the time the Company receives the written notice contemplated by clause
(ii) of this Section 7(i), the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions of this Agreement, (v)
such transfer shall have been made in accordance with the applicable
requirements of the Purchase Agreement, and (vi) at least 80,000 shares of
Registrable Securities (appropriately adjusted for any stock dividend, split
or
combination of the Common Stock) are being transferred to such transferee or
assignee in connection with such assignment of rights. In addition,
each Holder shall have the right to assign its rights hereunder to any other
Person who is a transferee of Registrable Securities with the prior written
consent of the Company, which consent shall not be unreasonably
withheld. The rights to assignment shall apply to the Holders (and to
subsequent) successors and assigns.
(j) Counterparts. This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any
signature is delivered by facsimile transmission, such signature shall create
a
valid binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.
12
(k) GOVERNING
LAW; VENUE; WAIVER OF JURY TRIAL. ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
REPUBLIC OF KOREA WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO
THE EXCLUSIVE JURISDICTION OF THE SEOUL CENTRAL DISTRICT COURT OF THE
REPUBLIC OF KOREA, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED
HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION
DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY
SUIT,
ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER. EACH PARTY 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 WARRANT 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. THE COMPANY AND THE PURCHASER HEREBY
WAIVE ALL RIGHTS TO A TRIAL BY JURY.
(l) Cumulative
Remedies. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.
(m) Severability. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be
hereafter declared invalid, illegal, void or unenforceable.
(n) Headings. The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
[Signature
page follows]
13
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as
of the date first written above.
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
|
KT&G
CORPORATION
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
[Signature
page to Registration Rights Agreement]
14
Annex
A
Plan
of Distribution
The
selling stockholders may, from time to time, sell any or all of their shares
of
common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. The selling stockholders may use any one
or more of the following methods when selling shares:
|
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits Purchaser;
|
|
|
·
|
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
|
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
|
·
|
privately
negotiated transactions;
|
|
|
·
|
short
sales;
|
|
|
·
|
broker-dealers
may agree with the selling stockholders to sell a specified number
of such
shares at a stipulated price per
share;
|
|
|
·
|
a
combination of any such methods of sale;
and
|
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
The
selling stockholders may also sell shares under Rule 144 under the 1933 Act,
if
available, rather than under this prospectus.
The
selling stockholders may also engage in short sales against the box, puts and
calls and other transactions in our securities or derivatives of our securities
and may sell or deliver shares in connection with these trades.
Broker-dealers
engaged by the selling stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or
discounts from the selling stockholders (or, if any broker-dealer acts as agent
for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions
and discounts to exceed what is customary in the types of transactions
involved. Any profits on the resale of shares of common stock by a
broker-dealer acting as principal might be deemed to be underwriting discounts
or commissions under the 1933 Act. Discounts, concessions,
commissions and similar selling expenses, if any, attributable to the sale
of
shares will be borne by a selling stockholder. The selling
stockholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares if liabilities are
imposed on that person under the 1933 Act.
The
selling stockholders may from time to time pledge or grant a security interest
in some or all of the shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock from time to time under this
prospectus after we have filed an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the 1933 Act amending the list of
selling stockholders to include the pledgee, transferee or other successors
in
interest as selling stockholders under this prospectus.
The
selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors
in
interest will be the selling beneficial owners for purposes of this prospectus
and may sell the shares of common stock from time to time under this prospectus
after we have filed an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the 1933 Act amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest
as selling stockholders under this prospectus.
The
selling stockholders and any broker-dealers or agents that are involved in
selling the shares of common stock may be deemed to be “underwriters” within the
meaning of the 1933 Act in connection with such sales. In such event,
any commissions received by such broker-dealers or agents and any profit on
the
resale of the shares of common stock purchased by them may be deemed to be
underwriting commissions or discounts under the 1933 Act.
We
are
required to pay all fees and expenses incident to the registration of the shares
of common stock, including the fees and disbursements of counsel to the selling
stockholders. We have agreed to indemnify the selling stockholders
against certain losses, claims, damages and liabilities, including liabilities
under the 0000 Xxx.
The
selling stockholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock, nor is there
an underwriter or coordinating broker acting in connection with a proposed
sale
of shares of common stock by any selling stockholder. If we are
notified by any selling stockholder that any material arrangement has been
entered into with a broker-dealer for the sale of shares of common stock, if
required, we will file a supplement to this prospectus. We have
advised each Selling Stockholder that it may not use shares registered on this
Registration Statement to cover short sales made prior to the date on which
this
Registration Statement shall have been declared effective by the
Commission. If the selling stockholders use this prospectus for any
sale of the shares of common stock, they will be subject to the prospectus
delivery requirements of the 0000 Xxx.
The
anti-manipulation rules of Regulation M under the 1934 Act may apply to sales
of
our common stock and activities of the selling stockholders.
