EXHIBIT 10.12
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of October 6,
2004, by and among Elite Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), Indigo Securities, LLC (the "Placement Agent"), and the purchasers
listed on SCHEDULE 1 of the Securities, as defined below (each an "Investor" or
collectively, the "Investors")
WHEREAS, the Company and each of the Investors have entered into a
Subscription Agreement dated the date hereof (each a "Subscription Agreement"
and collectively, the "Subscription Agreements").
WHEREAS, to induce each Investors to execute and deliver a Subscription
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act, and the rules and regulations thereunder, or any similar
successor statute, as well as any applicable state securities laws.
NOW, THEREFORE, in consideration of the premises, representations,
warranties, and the mutual covenants and agreements contained herein, and in the
Subscription Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company, the
Placement Agent and the Investors, intending to be legally bound, hereby agree
as follows:
1. DEFINITIONS.
Capitalized terms defined in the Subscription Agreements shall have the
same meanings herein as are ascribed to them therein. In addition, as used in
this Agreement, the following terms shall have the following meanings ascribed
to them below:
"Affiliate" means any Person that has a relationship with a designated
Person whereby either of such Persons directly or indirectly controls or is
controlled by or is under common control with the other. For this purpose
"control" means the power, direct or indirect, of one Person to direct or cause
direction of the management and policies of another, or any act with respect to
the securities of the Company, whether by contract, through voting securities or
otherwise.
"Closing" refers to that event which occurs when the Securities shall
have been subscribed for, the funds representing the sale of the Securities
shall have cleared, and the Company shall accept the subscriptions.
"Common Stock" shall be the Company's authorized common stock, as
constituted on the date of this Agreement, any stock into which such common
stock may thereafter be changed and any stock of the Company of any other class,
which is not preferred as to dividends or assets
over any other class of stock of the Company issued to the Investors of shares
of such common stock upon any re-classification thereof.
"Company Registration Expenses" shall mean bills or invoices (other
than Selling Expenses) incident to the Company's performance of or compliance
with this Agreement including, without limitation, all registration, filing and
NASDR fees, fees and expenses of compliance with securities or blue sky laws,
word processing, duplicating and printing expenses, messenger and delivery
expenses, fees and disbursements of counsel for the Company and all independent
public accountants including the expenses of any audit and/or "cold comfort"
letter, all fees and expenses in connection with the Company's obligations under
Section 3.1, if applicable, and other Persons retained by the Company.
"Controlling Person" shall have the meaning set forth under Section 15
of the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Form" means a Form S-4 or Form S-8, pursuant to the
Securities Act or any similar or successor form then in effect.
"Investors" means the Investors and any transferees or assignees who
agree to become bound by the provisions of this Agreement in accordance with
Section 9 hereof. Investors also refers to the Placement Agent and its assignees
when referring to the offer and sale of Registrable Securities and other rights
arising under Sections 2 and 3.
"NASDR" means the NASD Regulation, Inc.
"Offering" means the solicitation by the Placement Agent of Subscribers
for the purchase of the Securities.
"Person" means a corporation, an association, a partnership, a limited
liability company, a joint venture, a trust, an organization, a business, an
entity, an individual, a government or political subdivision thereof or a
governmental body.
"Placement Agent" shall mean Indigo Securities, LLC.
"Placement Agent Agreement" shall mean the placement agent agreement,
dated as of August 12, 2004, between the Placement Agent and the Company.
"Placement Agent Warrants" shall mean the warrants to purchase shares
of Common Stock issued to the Placement Agent pursuant to the Placement Agent
Agreement.
"Private Placement" shall mean the placement of the Securities by the
Company through the Placement Agent pursuant to the Placement Agent Agreement.
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"Register, registered and registration" means a registration effected
by preparing and filing a Registration Statement on a form approved by the SEC
other than an Excluded Form in compliance with the Securities Act and the
declaration of effectiveness ordering the effectiveness of such Registration
Statement.
"Registrable Securities" means Common Stock issued upon (i) conversion
of the Series A Preferred Stock issued at the Closing, (ii) exercise of the
Warrants, (iii) exercise of the Placement Agent Warrants and (iv) any securities
issued upon the Series A Preferred Stock or such Common Stock by way of stock
dividend or stock split, penalty under Section 2.1.2 hereof, or in connection
with a combination, recapitalization, share exchange, consolidation or other
reorganization of the Company. As to any Registrable Securities, once issued,
such securities shall cease to be Registrable Securities when (i) a Registration
Statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such Registration Statement, (ii) they shall have been
sold to the public pursuant to Rule 144 (or any successor provision) under the
Securities Act, (iii) they shall have been otherwise transferred but new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent disposition of them shall not
require registration or qualification of them under the Securities Act or any
similar state law then in force, or (iv) they shall have ceased to be
outstanding.
"Registration Statement" means one or more registration statements of
the Company on Form S-3 under the Securities Act registering all of the
Registrable Securities, including any amendments or supplements thereto.
"SEC" means the Securities and Exchange Commission or any other
governmental body at the time administering the Securities Act.
"Securities" means (i) up to 660,000 shares of Series A Preferred Stock
(which includes a 10% over allotment option in favor of the Placement Agent) and
(ii) warrants to purchase up to 5,950,000 shares of Common Stock.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Expenses" shall mean all underwriting discounts, brokerage
fees and selling commissions applicable to the Registrable Securities registered
and all fees and disbursements of counsel for the Investor.
"Series A Preferred Stock" means shares of Series A Preferred Stock,
par value $0.01 per share issued by the Company.
"Subscriber" means an "accredited investor" as defined under Rule 501
of the Securities Act, subscribing to purchase the Securities.
"Warrants" means the warrants to purchase up to 5,400,000 shares of
Common Stock, granted by the Company at the Closing to the Investors in
connection with the closing of the Private Placement.
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2. REGISTRATION.
2.1 MANDATORY REGISTRATION.
2.1.1 The Company shall file with the SEC, on the date which is on
or before forty-five (45) days after the Closing Date (the "Filing Deadline") a
Registration Statement on Form S-3 (or, if Form S-3 is not available, on such
form of Registration Statement as is then available to effect a registration of
all of the Registrable Securities; provided, that the Company shall convert such
other form to Form S-3, or file a replacement registration statement on Form S-3
promptly after the first date on which it meets such requirement), to enable the
resale of all of the Registrable Securities which Registration Statement, to the
extent allowable under the Securities Act and the rules promulgated thereunder
shall state that such Registration Statement also covers such indeterminate
number of additional shares of Common Stock as may become issuable upon
conversion of the Series A Preferred Stock or exercise of the Warrants pursuant
to provisions to prevent dilution resulting from stock splits, stock dividends
or similar transactions (the "Mandatory Registration Statement"). The Mandatory
Registration Statement shall contain, unless otherwise required by applicable
law or the SEC, the "Selling Shareholders" and "Plan of Distribution" section of
the Prospectus in a form reasonably satisfactory to the Investors based upon
information provided by the selling shareholder. The Registrable Securities
included in the Mandatory Registration Statement shall be registered on behalf
of the Investors set forth on Schedule 1 hereof. The Mandatory Registration
Statement (and each amendment or supplement thereto, and each request for
acceleration of effectiveness thereof) shall be provided to the Investors and
their counsel at least five (5) business days prior to its filing or other
submission; such notice to specify the securities to be registered, the proposed
numbers and amounts thereof and the date thereafter by which the Company must
receive the Investors' written indication if any Investor does not wish to
include their Registrable Securities in such Registration Statement and advising
the Investors of their rights under this Section 2. The Company shall file the
Mandatory Registration Statement and use its best efforts to cause all of the
Registrable Securities (unless an Investor has indicated otherwise with respect
to all or any portion of such Investor's Registrable Securities pursuant to the
preceding sentence) to be registered under the Securities Act, in connection
with the sale or other disposition by the Investors of the Registrable
Securities so registered. The Company shall use its best efforts to cause the
Mandatory Registration Statement, as amended, to become effective as soon as
practicable after the filing thereof. The Mandatory Registration Statement shall
only cover the Registrable Securities, the shares of Common Stock described in
Section 8(b)(iii) below and any stockholder of the Company that exercises any
existing piggy-back registration rights as set forth on Schedule 3.3 attached
hereto.
2.1.2 If the Mandatory Registration Statement has not been
declared or ordered effective within ninety (90) days after the Closing (the
"Three Month Period"), the Company shall pay each Investor a fee equal to 2% of
the purchase price paid by such Investor for the Securities for any thirty (30)
days after such failure (pro rata for partial months), which payments shall be
payable at the end of each calendar month until the date upon which the
Mandatory Registration Statement is declared effective, but not to exceed an
aggregate of 16%. This payment may be made, at the election of the Company, in
cash or in additional shares of Common Stock valued at the VWAP (as defined in
the Certificate of Designations, Preferences
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and Rights of Series A Preferred Stock of the Company) for such stock on the
date immediately prior to the date that the payment is made. Notwithstanding
anything set forth in this Section 2.1.2, if during the Three Month Period, the
SEC modifies or amends the rules with respect to Form S-3 (or any successor
form) to change the criteria for availability of Form S-3 (or any successor
form), the result of which makes Form S-3 (or any successor form) unavailable to
the Company (independent of any action or omission of the Company), the Three
Month Period for purposes of this Section 2.1.2 shall be reset and commence from
the effective date of such modification or amendment and, with the modification
of the period, all other provisions of this Section 2.1.2 shall reset and apply
from such date forward.
2.1.3 In the event that the Registration Statement is filed and
declared effective but, during the Registration Period (as defined in Section
3.1.2 below), shall thereafter cease to be effective or useable or the
prospectus included in the Registration Statement (the "Prospectus", as amended
or supplemented by any prospectus supplement and by all other amendments thereto
and all material incorporated by reference in such Prospectus) ceases to be
usable (other than as a result of any act or omission by a holder of Registrable
Securities), in either case, in connection with resales of the Registrable
Securities, without such lapse being cured within ten (10) business days (the
"Cure Period"), with the maximum number of days in any Cure Periods during any
365 day period not to exceed forty-five (45) business days, by a post-effective
amendment to the Registration Statement, a supplement to the Prospectus or a
report filed with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act that cures such lapse, then the Company shall pay to each Investor
(in addition to the rights and remedies available to each Investor under
applicable law and this Agreement), for the period from and including the first
day following the expiration of the Cure Period (or number of days in such Cure
Periods exceeding the aforementioned forty-five (45) days) until, but excluding,
the earlier of (i) the date on which such failure is cured and (ii) the date on
which the Registration Period expires, at a rate equal to two percent (2%) for
every thirty days after such failure (pro rata for partial months) of the
purchase price paid by such Investor for the Securities, which payment shall be
payable at the end of each calendar month. The Company shall have the option to
pay such amounts in cash or Common Stock as provided for in Section 2.1.2 above.
2.2 DEMAND REGISTRATION
2.2.1 If the Mandatory Registration Statement shall not have been
declared or ordered effective and the Company shall receive a written request no
earlier than ninety (90) days following the Closing but no later than 22 months
after the Closing from Investors holding more than $500,000 in value of the
Registrable Securities then outstanding (the "Initiating Investor") that the
Company file a registration statement under the Securities Act covering the
registration of the Registrable Securities, then the Company shall, within
thirty (30) days of the receipt thereof, give written notice of such request to
all Investors, and subject to the limitations set forth herein, effect, as
expeditiously as reasonably possible, the registration under the Securities Act
of all Registrable Securities that the Investors request to be registered.
2.2.2 The Company shall not be required to effect a registration
pursuant to this Section 2.2 if (i) the Mandatory Registration Statement has
been declared or ordered effective, whether or not one or more holders of
Registrable Securities elected not to register all of their
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respective shares in the Mandatory Registration Statement (ii) the Company has
previously effected two registrations pursuant to this Section 2.2 and such
previous registrations has been declared or ordered effective or (iii) the
Registrable Securities covered by registrations pursuant to this Section 2.2 may
be sold pursuant to Rule 144(k) promulgated under the Securities Act or any
successor provision. Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered pursuant to this Section 2.2 as soon as
practicable after receipt of the request or requests of the Investors.
2.3 PIGGYBACK RIGHTS.
2.3.1 If the Company shall determine to prepare and file with the
SEC a registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities
(other than on an Excluded Form), then the Company shall send to each Investor
holding Registrable Securities that have not been covered by a registration
statement that has been declared or ordered effective (each, an "Eligible
Investor"), written notice of such determination and if, within 15 business days
after receipt of such notice any such Eligible Investor shall so request in
writing, the Company shall include in such registration statement the
Registrable Securities requested by the Eligible Investors to be so included.
Such written notice shall state the intended method of disposition of the
Registrable Securities by such Eligible Investor. If an Eligible Investor
decides not to include all of its Registrable Securities in any registration
statement thereafter filed by the Company, such Eligible Investor shall
nevertheless continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its securities, all upon the terms
and conditions set forth herein, to the extent all Registrable Securities held
by such Investor have not been covered by a registration statement that has been
declared or ordered effective by the time of such subsequent registration.
Notwithstanding any provision of this Agreement to the contrary, the Company
shall not file a registration statement for its account or the account of others
until the Mandatory Registration Statement or a Registration Statement pursuant
to Section 2.2 shall have been declared and ordered effective.
2.3.2 If the registration statement under which the Company gives
notice under this Section 2.3 is for an underwritten offering, the Company shall
so advise the Eligible Investors of Registrable Securities. In such event, the
right of any such Eligible Investor to be included in a registration pursuant to
this Section 2.3 shall be conditioned upon such Eligible Investor's
participation in such underwriting and the inclusion of such Eligible Investor's
Registrable Securities in the underwriting to the extent provided herein. All
Eligible Investors proposing to distribute their Registrable Securities through
such underwriting shall enter into an underwriting agreement in customary form
with the underwriter or underwriters selected for such underwriting by the
Company. Notwithstanding any other provision of the Agreement, if the
underwriter determines in good faith that marketing factors require a limitation
of the number of shares to be underwritten, the number of shares that may be
included in the underwriting shall be allocated, first, to the Company; second,
to any selling shareholders that shall have exercised a demand registration
right; third, on a PRO RATA basis, to the Eligible Investors and any other
shareholders of the Company exercising incidental registration rights based on
the total number
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of Registrable Securities sought to be registered in such registration by the
Eligible Investors and such other shareholder of the Company.
2.3.3 If any Eligible Investor disapproves of the terms of any
such underwriting, such Eligible Investor may elect to withdraw therefrom by
written notice to the Company and the underwriter, delivered at least ten (10)
business days prior to the effective date of the registration statement. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
excluded and withdrawn from the registration. For any Eligible Investor which is
a partnership, limited liability company, or corporation, the partners, retired
partners, members, retired members and shareholders of such Eligible Investor,
or the estates and family members of any such partners and retired partners and
any trusts for the benefit of any of the foregoing person shall be deemed to be
a single "Eligible Investor," and any PRO RATA reduction with respect to such
"Eligible Investor" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"Eligible Investor," as defined in this sentence.
2.3.4 The Company shall have the right to terminate or withdraw
any registration initiated by it under this Section 2.3 prior to the
effectiveness of such registration whether or not any Eligible Investor has
elected to include securities in such registration.
3. REGISTRATION PROCEDURES.
3.1 If and whenever the Company is required by the provisions hereof to
effect or cause the registration of any Registrable Securities under the
Securities Act as provided herein, the Company shall, as expeditiously as
possible:
3.1.1 prepare and file with the SEC, on or before the Filing
Deadline the Mandatory Registration Statement required by Section 2.1 or a
demand Registration Statement pursuant to Section 2.2 with respect to such
Registrable Securities and use its best efforts to cause such Registration
Statement to become and remain effective (pursuant to Rule 415 of the Securities
Act) as soon as practicable after such filing (provided that, before filing a
Registration Statement or prospectus or any amendments or supplements thereto,
the Company shall furnish to the Investors copies of all such documents proposed
to be filed);
3.1.2 prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to such Registration Statement and
the prospectus used in connection therewith as may be necessary to keep such
Registration Statement effective, true and correct during the Registration
Period. For purposes of this Agreement, "Registration Period" means the period
commencing with the effective date and ending on the earlier of (i) the sale of
all Registrable Securities covered thereby, (ii) the date upon which the
Investors may sell the Registrable Securities pursuant to Rule 144(k)
promulgated under the Securities Act, or (iii) the expiration of the 24 months
after Closing or such shorter period as shall be necessary to complete the
distribution of the securities covered thereby so long as the Company has not
violated Section 7 below, and to comply with the provisions of the Securities
Act with respect to the sale or other disposition of all Registrable Securities
covered by such Registration Statement during
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such period in accordance with the intended methods of disposition by the
Investors in such Registration Statement;
3.1.3 permit the Investors and their counsel to review and comment
upon (which comments shall not be unreasonably withheld) all Registration
Statements at least five (5) business days prior to its filing with the SEC and
all amendments and supplements to all Registration Statements (except for
documents incorporated by reference therein) within a reasonable number of days
prior to their filing with the SEC;
3.1.4 submit to the SEC, within two (2) business days after the
Company learns that no review of the Registration Statement will be made by the
staff of the SEC (the "Staff") or that the Staff has no further comments on the
Registration Statement, as the case may be, a request for acceleration of
effectiveness of the Registration Statement to a time and date not later than 48
hours after the submission of such request;
3.1.5 furnish to each Investor whose Registrable Securities are
included in the Registration Statement, and to the Placement Agent's counsel and
each underwriter of the securities being sold by the Investors such number of
copies of such Registration Statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of the
prospectus included in such Registration Statement (including each preliminary
prospectus), in conformity with the requirements of the Securities Act, and such
other documents, as such counsel and underwriter may reasonably request, in
substantially the form in which they are proposed to be filed with the SEC, in
order to facilitate the public sale or other disposition of the Registrable
Securities owned by the participating Investors. In the case of all Registration
Statements referred to in Section 2, the Company shall furnish to each Investor
which requests (i) a copy of any request to accelerate the effectiveness of any
Registration Statement or amendment thereto, (ii) on the date of effectiveness
of the Registration Statement or any amendment thereto, a notice stating that
the Registration Statement or amendment has been declared effective, and (iii)
such number of copies of a prospectus, including a preliminary prospectus, and
all amendments and supplements thereto and such other documents as such Investor
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Investor. In responding to comments from the staff of
the SEC, the Company shall cooperate with any Investor that notifies the Company
that it desires to be consulted with respect to such process. To the extent that
issues raised by the staff of the SEC have an impact primarily on any such
Investor rather than the Company, the Company shall give reasonable deference to
such Investor's requests with respect to the process and substance of responses
with respect to such issues;
3.1.6 use its best efforts to (i) register and qualify the
Registrable Securities covered by the Registration Statement under such other
securities or "blue sky" laws of such jurisdictions in the United States as each
Investor who holds Registrable Securities being offered reasonably requests,
(ii) prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be reasonably
necessary to maintain such registrations and qualifications in effect at all
times during the Registration Period, and (iv) take all other actions reasonably
necessary or advisable to qualify the Registrable Securities for sale in such
jurisdictions;
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PROVIDED, HOWEVER, that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3.1.6;
3.17 subject to Section 3.1.6, use its best efforts to cause such
Registrable Securities covered by such Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
reasonably necessary to enable the participating Investors to consummate the
disposition of its Registrable Securities;
3.1.8 notify the participating Investors at any time when a
prospectus relating to its Registrable Securities is required to be delivered
under the Securities Act, of the Company's becoming aware that the prospectus
included in the related Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing, and promptly prepare and furnish to
the participating Investors and each underwriter a reasonable number of copies
of a prospectus supplemented or amended so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing;
3.1.9 otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC;
3.1.10 if the Common Stock is listed on the American Stock
Exchange, another national securities exchange, or on the Nasdaq Stock Market,
as the case may be, the Company shall use its best efforts to cause all such
Registrable Securities covered by such Registration Statement to be listed on
the American Stock Exchange, other national securities exchange, or on the
Nasdaq Stock Market, as the case may be (if such Registrable Securities are not
already so listed), if the listing of such Registrable Securities is then
permitted under the rules of such exchange or market;
3.1.11 provide a transfer agent and registrar, which may be a
single entity, for the Registrable Securities not later than the effective date
of the Registration Statement;
3.1.12 in the case of an underwritten offering, enable the
Registrable Securities to be in such denominations and registered in such names
as the underwriters may request at least two business days prior to the sale of
the Registrable Securities;
3.1.13 cooperate with the Investors who hold Registrable
Securities being offered to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
Investors may reasonably request and registered in such names as the Investors
may request;
3.1.14 notify the Investors of any stop order threatened, to the
knowledge of the Company, or issued by the SEC (and the Company shall notify the
Investors of the resolution of
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any issued stop order) and take all actions reasonably necessary to prevent the
entry of such stop order or to remove it if entered;
3.1.15 make available for inspection the Investors and their
representatives and advisors (collectively, the "Inspectors") based on the
number of shares of Common Stock acquired by the Investors in the Private
Placement, pertinent financial and other records, and pertinent corporate
documents and properties of the Company, as shall be reasonably deemed necessary
by each Inspector to enable each Inspector to exercise its due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information which any Inspector may reasonably request for purposes
of such due diligence;
3.1.16 hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of such information is necessary to comply with federal or state securities
laws, (ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other order from a court
or governmental body of competent jurisdiction, (iv) such information has been
made generally available to the public other than by disclosure in violation of
this Agreement, or (v) such Investor consents to the form and content of any
such disclosure. The Company agrees that it shall, upon learning that disclosure
of such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to such Investor prior to making such disclosure, and allow the Investor,
at its expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, such information;
3.1.17 instruct the Company's transfer agent to remove the
restrictive legend on the stock certificates after effectiveness of the
applicable Registration Statement and provide. with the cooperation of the
Investors, any required legal opinions at the Company's sole expense; and
3.1.18 the Company shall use its commercially reasonable efforts
to (subject to applicable law), as soon as practicable, (A) incorporate in a
prospectus supplement or post-effective amendment the information provided by an
Investor pursuant to Section 3.2 relating to the sale and distribution of
Registrable Securities, including, without limitation, information with respect
to the number of Registrable Securities being offered or sold, the purchase
price being paid therefor and any other terms of the offering of the Registrable
Securities to be sold in such offering, (B) make all required filings of such
prospectus supplement or post-effective amendment after being notified of the
matters to be incorporated in such prospectus supplement or post-effective
amendment and (C) supplement or make amendments to any Registration Statement if
reasonably requested by an Investor holding any Registrable Securities as it
relates to the information provided by an Investor pursuant to Section 3.2
relating to the sale and distribution of Registrable Securities.
3.2 In connection with the registration of the Registrable Securities,
the Investors shall have the following obligations:
3.2.1 each participating Investor shall furnish to the Company in
writing such information and documents regarding it and the distribution of its
securities as may reasonably
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be required to be disclosed in the Registration Statement in question by the
rules and regulations under the Securities Act or under any other applicable
securities or blue sky laws of the jurisdictions referred to in Section 3.1.4
above, or as may otherwise be reasonably requested; and
3.2.2 if any such registration or comparable statement refers to
any participating Investor by name or otherwise as the Investor of any
securities of the Company, but such reference to such participating Investor by
name or otherwise is not required by the Securities Act or any similar federal
statute then in force, then such participating Investor shall have the right to
require the deletion of the reference to such participating Investor.
3.3 From and after the date of this Agreement, the Company shall not,
and shall not agree to, allow the holders of any securities of the Company to
include any of their securities in the Mandatory Registration Statement under
Section 2.1 hereof or any amendment or supplement thereto under Section 3.1.2
hereof without the consent of the Investors of a majority in interest (based
upon the dollars invested) of the Registrable Securities, except pursuant to
outstanding registration rights set forth on SCHEDULE 3.3 attached hereto.
4. REGISTRATION EXPENSES.
In connection with any registration of Registrable Securities pursuant
to Section 2, the Company shall, whether or not any such registration shall
become effective, from time to time promptly pay all Company Registration
Expenses. Such expenses shall not include any Selling Expenses other than up to
$10,000 of reasonable fees and expenses of one counsel selected by a majority of
the Investors solely with respect to the Mandatory Registration Statement.
5. INDEMNIFICATION.
5.1 The Company shall, and hereby does, indemnify and hold harmless, to
the fullest extent permitted by law, each Investor and each Placement Agent (and
their respective officers, directors, managers, members, partners, stockholders,
employees, agents and advisors) and each Person who controls any Investor or
Placement Agent within the meaning of the Securities Act (each, an "Indemnified
Party") from and against all losses, claims, damages, liabilities and expenses,
joint or several, to which any such Indemnified Party may become subject under
the Securities Act, the Exchange Act and all rules and regulations under each
such act, any other federal or state statute, law or regulation at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or any
amendment or supplement thereto or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary, final or summary
prospectus, together with the documents incorporated by reference therein (as
amended or supplemented if the Company shall have filed with the SEC, any
amendment thereof or supplement thereto), or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or (iii) any violation by the Company of
any federal, state or common law rule or regulation applicable to the Company
and
11
relating to action of or inaction by the Company in connection with any such
registration including the failure to deliver any document required herein to be
delivered, to an Investor and a Placement Agent; and in each such case, the
Company shall reimburse each such Indemnified Party for any reasonable legal or
other expenses as such reasonable expenses are incurred by any of them in
connection with investigating, defending, settling, compromising, proving or
defending any such loss, claim, damage, liability, expense, action or
proceeding; PROVIDED, HOWEVER, that the Company shall not be liable to any such
Indemnified Party insofar as such losses, claims, damages, liabilities,
expenses, actions or proceedings are caused by any untrue statement or alleged
untrue statement or material omission to provide information pursuant to Section
5.2 made in reliance on and in conformity with any written information furnished
to the Company by or on behalf of any Indemnified Party to be furnished under
the Section 5.2 or as a result of the failure of the Indemnified Party to
furnish a prospectus to a purchaser.
5.2 In connection with any Registration Statement in which any Investor
and the Placement Agent is participating, such participating parties shall
furnish to the Company in writing such information as shall be reasonably
requested by the Company for use in any such Registration Statement or
prospectus and shall indemnify and hold harmless, severally and not jointly, to
the extent permitted by law, the Company, its officers, directors, employees,
agents, advisors and each Person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, against any losses, claims,
damages, liabilities, expenses, actions or proceedings resulting from any untrue
statement or alleged untrue statement of a material fact or any omission or
alleged omission of a material fact with respect to information expressly
requested by the Company and required to be stated in the Registration Statement
or prospectus or preliminary prospectus or any amendment thereof or supplement
thereto, or necessary to make the statements therein in the light of the
circumstance under which they were made (in the case of a prospectus) not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or omission with respect to information expressly requested by the
Company is made in reliance on and in conformity with any information so
furnished in writing or to be furnished under this Section 5.2 by such
participating Investor expressly for use therein. Notwithstanding the provisions
of this Section 5.2, each Investor shall not be liable for any indemnification
obligation under this Agreement in excess of the aggregate amount of net
proceeds received by such Investor from the sale of the Registrable Securities
pursuant to the applicable Registration Statement. In no case shall the
Placement Agent be liable for any indemnification obligation under this
Agreement in excess of the compensation received by it pursuant to the Placement
Agent Agreement.
5.3 Any Person entitled to indemnification under the provisions of this
Section 5 shall (i) give prompt notice to the indemnifying party of any claim
with respect to which it seeks indemnification but the omission to so notify the
indemnifying party will not relieve the indemnifying party from any liability
which it may have pursuant to this Section 5 to the extent it is not materially
prejudiced as a result of such failure, and (ii) unless in the reasonable
judgment of counsel for such indemnified party a conflict of interest between
such indemnified and indemnifying parties may exist in respect of such claim,
permit such indemnifying party to assume the defense of such claim, with counsel
reasonably satisfactory to the indemnified party; and if such defense is so
assumed, such indemnifying party shall not enter into any settlement without the
consent of the indemnified party if such settlement attributes liability to the
indemnified party and such indemnifying party shall not be subject to any
liability for any
12
settlement made without its consent. In the event an indemnifying party shall
not be entitled, or elects not, to assume the defense of a claim, such
indemnifying party shall not be obligated to pay the fees and expenses of more
than one law firm for all parties indemnified by such indemnifying party
hereunder in respect of such claim, unless in the reasonable judgment of any
such counsel a conflict of interest may exist between such indemnified party and
any other of such indemnified parties in respect to such claim. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of any indemnified party and shall survive the transfer of such
securities by such indemnified party.
5.4 If for any reason the foregoing indemnity is unavailable, then the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and the indemnified party as well as any other relevant
equitable considerations in accordance with Section 6 below. NOTWITHSTANDING THE
FOREGOING, each of the Investors and the Placement Agent shall not be required
to contribute any amount in excess of the amount such Investor or Placement
Agent would have been required to pay to an indemnified party if the indemnity
under Section 5.2 was available. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
5.5 An indemnifying party shall make payments of all amounts required
to be made pursuant to the foregoing provisions of this Section 5 to or for the
account of the indemnified party from time to time promptly upon receipt of
bills or invoices relating thereto or when otherwise due and payable.
6. CONTRIBUTION.
To provide for just and equitable contribution, if (i) an Indemnified
Party makes a claim for indemnification pursuant to Section 5 but it is found in
a final judicial determination, not subject to further appeal, that such
indemnification may not be enforced in such case, even though this Agreement
expressly provides indemnification in such case, or (ii) any indemnified party
or indemnifying party seeks contribution under the Securities Act, the Exchange
Act, or otherwise, then the Company (including for this purpose any contribution
made by or on behalf of any officer, director, employee or agent for the
Company, or any Controlling Person of the Company), on the one hand, and the
indemnified party, on the other hand, shall contribute to the losses,
liabilities, claims, damages, and expenses whatsoever to which any of them may
be subject, in such proportions as are appropriate to reflect the relative
benefits received by the Company, on the one hand, and the indemnified party, on
the other hand; PROVIDED, HOWEVER, that if applicable law does not permit such
allocation, then other relevant equitable considerations such as the relative
fault of the Company and the indemnified party in connection with the facts
which resulted in such losses, liabilities, claims, damages, and expenses shall
also be considered. No Person liable for a fraudulent misrepresentation shall be
entitled to contribution from any person who is not liable for such fraudulent
misrepresentation. Anything in this Section 6 to the contrary notwithstanding,
no party shall be liable for contribution with respect to the settlement of any
claim or action effected without its written consent. This Section 6 is intended
to supersede any right to contribution under the Securities Act, the Exchange
Act, or otherwise unless such statute makes such right exclusive.
13
The Company, the Investors and the Placement Agent agree that it would not be
just and equitable if contribution pursuant to this Section 6 were determined
solely by pro rata allocation or by any other method of allocation which does
not take account of the equitable considerations referred to in this Section 6.
Notwithstanding the provisions of this Section 6, each of the Investors and the
Placement Agent shall not be required to contribute any amount in excess of the
amount such Investor or Placement Agent would have been required to pay to an
indemnified party if the indemnity under Section 5.2 was available. The
Investors' and the Placement Agent's obligations to contribute pursuant to this
Section 6 are several and not joint.
7. RULE 144.
The Company covenants that it shall file the reports required to be
filed under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder (or, in the event that the Company is
not required to file such reports, it shall make publicly available information
as set forth in Rule 144(c)(2) promulgated under the Securities Act), or to the
extent required from time to time to enable the Investors and the Placement
Agent to sell their Registrable Securities without registration under the
Securities Act within the limitation of the exemption provided by (i) Rule 144
under the Securities Act, as such Rule may be amended from time to time, or (ii)
any similar rule or regulation hereafter adopted by the SEC (collectively, "Rule
144").
8. REGISTRATION RIGHTS OF OTHERS.
(a) Subject to Section 8(b) hereof, if the Company shall at any time
hereafter provide any Person any rights with respect to the registration of any
securities of the Company under the Securities Act, such rights shall not permit
any such securities to become registered during the period between Closing and
the date that is 180 days after the Mandatory Registration Statement becomes
effective or, in any other manner, be superior to the rights provided herein to
the Investors and the Placement Agent.
(b) The Investors and Placement Agent acknowledge: (i) the existence of
the registration rights previously granted by the Company as set forth on
SCHEDULE 8 attached hereto, (ii) that the covenant set forth in Section 8(a)
shall not be breached or violated by the granting to, or the exercise by such
holders of the rights set forth on SCHEDULE 8, and (iii) up to 1,3650,200 shares
of Common Stock, currently held by Xx. Xxxx Xxxxx and his Affiliates (the "Mehta
Holders"), may be included in the Mandatory Registration Statement if some or
all of such shares are purchased from the Mehta Holders by third parties.
Subject to the time restrictions in Section 8(a), the granting of demand rights
to other parties shall not be deemed an impairment of the Investors' and the
Placement Agent's rights hereunder.
9. REPORTING STATUS AND LISTING.
(a) Until the date on which the Investors shall have sold all of their
Registrable Securities, the Company shall file all reports required to be filed
with the SEC pursuant to the Exchange Act, and the Company shall not terminate
its status as an issuer required to file reports
14
under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would otherwise permit such termination.
(b) The Company shall use its best efforts to maintain the eligibility
for quotation of the Common Stock on the American Stock Exchange. Subject to
applicable law, neither the Company nor any of its Subsidiaries shall take any
action which would be reasonably expected to result in the delisting or
suspension of the Common Stock on the American Stock Exchange. The Company shall
pay all fees and expenses in connection with satisfying its obligations under
this section.
10. TRANSFER OF REGISTRATION RIGHTS.
If and to the extent that any Investor or the Placement Agent sells or
otherwise disposes of Registrable Securities or warrants exercisable for
Registrable Securities in any transaction that does not require registration
under the Securities Act (other than a transaction exempt under Rule 144), the
rights of the Investor or the Placement Agent hereunder with respect to such
Registrable Securities shall be assignable to any transferee of such Registrable
Securities; PROVIDED, HOWEVER, that such transferee agrees in writing to be
bound by all the terms and conditions of this Agreement.
11. MISCELLANEOUS.
11.1 The registration rights provided to the Investors of Registrable
Securities hereunder shall terminate on the date there shall no longer be any
outstanding Registrable Securities; PROVIDED, HOWEVER that the provisions of
Section 5 hereof shall survive any termination of this Agreement.
11.2 A Person is deemed to be an Investor of Registrable Securities
whenever such Person owns of record such Registrable Securities. If the Company
receives conflicting instructions, notices or elections from two or more Persons
with respect to the same Registrable Securities, the Company shall act upon the
basis of instructions, notice or election received from the registered owner of
such Registrable Securities.
11.3 All notices, offers, acceptance and any other acts under this
Agreement shall be in writing, and shall be sufficiently given if delivered to
the addressees in person, by Federal Express or similar receipted overnight
delivery, or by facsimile or e-mail delivery followed by a copy sent by Federal
Express or similar receipted overnight delivery, as follows:
If to the Company: Elite Pharmaceuticals, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xx. Xxxxxxx Xxxx
Chief Executive Officer
15
With a copy to: Reitler Xxxxx & Xxxxxxxxxx LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxxx, Esq.
If to an Investor, at such address as such Investor shall have provided in
writing to the Company or such other address as such Investor furnishes by
notice given in accordance with this Section 11.3, with a copy to:
Indigo Securities, LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxxxxxxx
With a Copy to: Xxxxxxxx Xxxxx & Deutsch LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Deutsch, Esq.
11.4 Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
11.5 This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed in the State of New York.
11.6 Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in Manhattan, New
York. Each party hereto hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in Manhattan, New York for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement hereof). Each party agrees not to commence a claim or proceeding
hereunder in a court other than a state court or federal court sitting in
Manhattan, New York, except (i) if required as a mandatory counterclaim or
cross-claim in a proceeding commenced by a Person in a different jurisdiction or
(ii) if such party has first brought such claim or proceeding in such court
sitting in Manhattan, New York and both the state courts and the federal courts
sitting in Manhattan, New York have denied jurisdiction over such claim or
proceeding. Each party hereto hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at
16
the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto (including
its affiliates, agents, officers, directors and employees) hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby.
11.7 This Agreement, the Subscription Agreement and the Placement Agent
Agreement (including all schedules and exhibits thereto) constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein. This Agreement, the
Subscription Agreement and the Placement Agent Agreement supersede all prior
agreements and understandings among the parties hereto and thereto with respect
to the subject matter hereof and thereof.
11.8 Subject to the requirements of Section 10 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
11.9 The headings in this Agreement are for convenience of reference
only and shall not form part of or effect the interpretation of this Agreement.
11.10 This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument. The execution of this Agreement may be by actual or
facsimile signature.
11.11 Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
11.12 Except as otherwise set forth herein, all consents, approvals and
other determinations to be made by the Investors pursuant to this Agreement
shall be made by the Investors holding more than 66 2/3% of the Registrable
Securities then held by all Investors.
11.13 If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
11.14 This Agreement is intended for the benefit of the parties hereto
and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by any other Person.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK.]
17
IN WITNESS WHEREOF, the parties have set their hands and seals the date
and year first above written.
ELITE PHARMACEUTICALS, INC.
By:
-------------------------------------------
Xxxxxxx Xxxx, Chief Executive Officer
INVESTORS:
INDIGO SECURITIES, LLC
By:
-------------------------------------------
Xxxx Xxxxxxxxx, Managing Partner
[ADDITIONAL SIGNATURE PAGES ATTACHED]
18
INDIVIDUAL:
Dated: __________________ ________________________
Name of Individual:
Address:
________________________
________________________
________________________
________________________
Facsimile: ____________
Dated: __________________ NON-INDIVIDUAL:
________________________
Name of Entity
By:_____________________
Name:
Title:
Address:
________________________
________________________
________________________
________________________
Facsimile: ____________
19
SCHEDULE 1
TO
REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
ELITE PHARMACEUTICALS, INC.
AND THE FOLLOWING INVESTORS:
