ACCESS PHARMACEUTICALS, INC.
REGISTRATION RIGHTS AGREEMENT
for 2000 Private Placement
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made by
Access Pharmaceuticals, Inc., a corporation formed under the
laws of the State of Delaware (the "Company"), for the benefit
of the investors listed on Schedule I hereto (collectively, the
"Investors" and, individually, an "Investor").
RECITALS
A. The Investors desire to purchase from the Company, and the
Company desires to issue and sell to the Investors, a minimum
of 1,000,000 and a maximum of 4,800,000 shares ("Shares") of
common stock, $.01 par value per share (the "Common Stock"), in
a private placement (the "Private Placement"), conducted in
accordance with the Securities Act of 1933, as amended, and the
rules and regulations thereunder (collectively, the "Securities
Act").
B. As further inducement for the Investors to purchase the
Shares from the Company, the Company desires to undertake to
register under the Securities Act, the resale of the Shares, in
accordance with the terms hereof.
AGREEMENTS
The Company and the Investors covenant and agree as follows:
1. Definitions. For the purposes of this Agreement:
a) The terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing a
registration statement or statements or similar documents in
compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or
document by the Securities and Exchange Commission (the "SEC").
(b) The term "Registrable Securities" means (i) the
Investors' Shares, (ii) Shares, if any, issued to Sunrise
Securities Corp. in satisfaction of the selling commission and
expense allowance and (iii) any Shares issued as (or issuable
upon the conversion or exercise of any convertible security,
warrant, right or other security which is issued as) a dividend
or other distribution with respect to, or in exchange for or in
replacement of the Shares, including, but not limited to, the
shares underlying the Placement Agent's Warrants, and excluding
in all cases, however, any Registrable Securities sold by an
Investor in a transaction in which its registration rights
under this Agreement are not assigned pursuant to Section 9 of
this Agreement.
(c) The term "Investor" includes (i) each Investor (as
defined above) and (ii) each person who is a permitted
transferee or assignee of the Registrable Securities pursuant
to Section 9 of this Agreement.
2. Obligations of the Company. In connection with the
registration of the resale of Registrable Securities pursuant
to this Agreement, the Company shall, as expeditiously as
reasonably possible:
(a) Prepare and file with the SEC, within ninety (90) days
after the final closing of the Company's Private Placement, a
resale registration statement or registration statements (the
"Registration Statement") with respect to all Registrable
Securities included therein, and use its best efforts to cause
the Registration Statement to become effective as soon as
reasonably possible after such filing, and, with respect to any
registration that does not involve an underwriting, to keep the
Registration Statement effective pursuant to Rule 415 under the
Securities Act for a period of at least two years after the
final closing of the Company's Private Placement, or such
shorter period as prescribed by Rule 144 promulgated under the
Securities Act or during which the Registrable Securities are
sold, or until there are no more Registrable Securities, which
Registration Statement (including any amendments or supplements
thereto and prospectuses contained therein, subject to Section
2(f)) shall not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration
Statement and any prospectus used in connection with the
Registration Statement as may be necessary to keep the
Registration Statement effective (i) for such period as may be
required by the Securities Act with respect to an underwritten
offering and (ii) for at least two years after the final
closing of the Company's Private Placement, or such shorter
period as prescribed by Rule 144, or until there are no more
Registrable Securities, with respect to a non-underwritten
offering, and during such periods to comply with the provisions
of the Securities Act with respect to the disposition of all
securities covered by the Registration Statement.
(c) Furnish promptly to each Investor whose Registrable
Securities are included in the Registration Statement such
number of copies of a prospectus, including a preliminary
prospectus, and all amendments and supplements thereto, and of
such other documents as such Investor may reasonably request in
order to facilitate the disposition of Registrable Securities
owned by such Investor.
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(d) Use its reasonable efforts to register and qualify the
Registrable Securities covered by the Registration Statement
under such other securities or Blue Sky laws of such
jurisdiction as shall be reasonably requested by the Investors
who hold a majority in interest of the Registrable Securities
covered by the Registration Statement and, with respect to a
non-underwritten offering, prepare and file in those
jurisdictions such amendments (including post-effective
amendments) and supplements and to take such other actions as
may be necessary to maintain such registration and
qualification in effect at all times for a period of at least
two years after the final closing of the Company's Private
Placement, or such shorter period as prescribed by Rule 144 or
during which the Registrable Securities are sold, or until
there are no more Registrable Securities, and to take all other
actions necessary or advisable to enable the disposition of
such securities in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as
a condition thereto to (i) qualify to do business, file a
general consent to service of process or subject itself to
general taxation in any such states or jurisdictions or (ii)
provide any undertaking or make any change in its Certificate
of Incorporation or bylaws.
(e) If the Registration Statement relates to an underwritten
offering, enter into and perform its obligations under an
underwriting agreement, in usual and customary form, including,
without limitation, customary indemnification and contribution
obligations, with the Underwriter's Representative.
(f) Notify the Investors who hold Registrable Securities
being sold (or in the event of an underwritten offering, the
Underwriter's Representative), at any time when a prospectus
relating to Registrable Securities covered by the Registration
Statement is required to be delivered under the Securities Act,
of the happening of any event as a result of which the
prospectus included in the Registration Statement, as then in
effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in
light of the circumstances then existing. The Company shall
use its best efforts promptly to amend or supplement the
Registration Statement to correct any such untrue statement or
omission. The Company may delay amending or supplementing the
prospectus for a period of up to 60 days if the Company is then
engaged in negotiations regarding a material transaction that
has not otherwise been publicly disclosed, and the Inventors
shall suspend their sale of Registrable Securities until an
appropriate supplement or prospectus has been forwarded to them
or the proposed transaction is abandoned.
(g) Notify the Investors who hold Registrable Securities
being sold (or in the event of an underwritten offering, the
Underwriter's Representative) of the issuance by the SEC of any
stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that
purpose. The Company will make every reasonable effort to
prevent the issuance of any stop order and, if any stop order
is issued, to obtain the lifting thereof at the earliest
possible time.
(h) Permit a single firm of counsel, designated as selling
shareholders' counsel by the holders of a majority in interest
of the Registrable Securities being sold, to review the
Registration Statement and all amendments and supplements
thereto a reasonable period of time prior to their filing, and
shall not file any document in a form to which such counsel
reasonably objects.
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(i) Make generally available to its security holders as soon
as practicable, but not later than forty five (45) days after
the close of the period covered thereby, an earnings statement
(in form complying with the provisions of Rule 158 under the
Securities Act) covering a twelve-month period beginning not
later than the first day of the Company's fiscal quarter next
following the effective date of the Registration Statement.
(j) At the request of the Investors who hold a majority in
interest of the Registrable Securities being sold, furnish to
the underwriters, if any, on the date that Registrable
Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Agreement (i)
an opinion, dated such date, of the counsel representing the
Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an
underwritten public offering, addressed to the underwriters,
and (ii) a letter, dated such date, from the independent
certified public accountants of the Company, in form and
substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public
offering, addressed to the underwriters.
(k) Make available for inspection by any underwriters
participating in the offering and the counsel, accountants or
other agents retained by such underwriter, all pertinent
financial and other records, corporate documents and properties
of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by
such underwriters in connection with the Registration
Statement.
(l) If the Shares are then listed on a national securities
exchange, use its best efforts to cause the Registrable
Securities to be listed on such exchange if the listing of such
Registrable Securities is then permitted under the rules of
such exchange, or if the Shares are not then listed on a
national securities exchange, use its best efforts to
facilitate the quotation of the Shares on NASDAQ, and use its
best efforts to cause continued listing of the Shares so long
as the Registration Statement is in effect under the Securities
Act.
(m) 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.
(n) Take all actions reasonably necessary to facilitate the
timely preparation and delivery of certificates (not bearing
any restrictive legend) representing the Registrable Securities
sold pursuant to the Registration Statement and to enable such
certificates to be in such denominations and registered in such
names as the Investors or any underwriters may reasonably
request.
(o) Take all other actions reasonably necessary to expedite
and facilitate disposition by the Investors of the Registrable
Securities pursuant to the Registration Statement.
3. Obligations of the Investors. In connection with the
registration of the Registrable Securities pursuant to this
Agreement, the Investors shall have the following obligations:
(a) It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this Agreement with
respect to each Investor that such Investor shall furnish to
the Company in writing such information regarding itself, the
Registrable Securities held by it,
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and the intended methods of
disposition of such securities as shall be reasonably required
to effect the registration of the Registrable Securities and
shall execute such documents in connection with such
registration as the Company may reasonably request. At least
thirty (30) days prior to the first anticipated filing date of
the Registration Statement, the Company shall notify each
Investor or counsel for each investor, which may be counsel for
the Placement Agent, of the information the Company requires
from each such Investor (the "Requested Information") if it
elects to have any of his Registrable Securities included in
the Registration Statement. If within seven (7) business days
of the filing date the Company has not received in writing the
Requested Information from an Investor (a "Non-Responsive
Investor"), then the Company may file the Registration
Statement without including Registrable Securities of such Non-
Responsive Investor.
(b) Each Investor by his acceptance of the Registrable
Securities agrees to cooperate with the Company in connection
with the preparation and filing of any Registration Statement
hereunder, unless such Investor has notified the Company in
writing of its election to exclude all of its Registrable
Securities from the Registration Statement.
(c) In the event Investors holding a majority in interest of
the Registrable Securities select underwriters for the
offering, each Investor agrees to enter into and perform its
obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary
indemnification and contribution obligations and market stand-
off obligations, with the managing underwriter of such offering
and to take such other actions as are reasonably required in
order to expedite or facilitate the disposition of the
Registrable Securities, unless such Investor has notified the
Company in writing of its election to exclude all of his
Registrable Securities from the Registration Statement.
(d) Each Investor agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind
described in Section 2(f), such Investor will immediately
discontinue disposition of Registrable Securities pursuant to
the Registration Statement covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented
or amended prospectus contemplated by Section 2(f) and, if so
desired by the Company, such Investor shall deliver to the
Company (at the expense of the Company) or destroy (and deliver
to the Company a certificate of such destruction) all copies,
other than the permanent file copies then in such Investor's
possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.
(e) No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell
such Investor's Registrable Securities on the basis provided in
any underwriting arrangements approved by the Investors
entitled hereunder to approve such arrangements, (ii) completes
and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay such Investor's pro rata
portion of all underwriting discounts and commissions.
4. Expenses of Registration. All expenses, including,
without limitation, all registration, listing, filing and
qualification fees, printers and accounting fees, the fees and
disbursements of counsel for the Company and the reasonable
fees and disbursements of one firm of counsel for the Investors
shall be borne by the Company.
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5. Indemnification. In the event any Registrable Securities
are included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Investor, the directors, if
any, of such Investor, the officers, if any, of such Investor
who sign the Registration Statement, each person, if any, who
controls such Investor, any underwriter (as defined in the
Securities Act) for the Investors and each person, if any, who
controls any such underwriter within the meaning of the
Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), against any losses, claims,
damages, expenses or liabilities, joint or several) to which
any of them may become subject under the Securities Act, the
Exchange Act, other federal or state law or otherwise, insofar
as such losses, claims, damages, expenses or liabilities (or
actions or proceedings, whether commenced or threatened, in
respect thereof,) arise out of or are based upon any of the
following statements, omissions or violations (collectively, a
"Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration
Statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements
thereto, (ii) the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in
which they were made, not misleading or (iii) any violation or
alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange
Act or any state securities law. Subject to the restrictions
set forth in Section 5(c) with respect to the number of legal
counsel, the Company will reimburse the Investors and each such
underwriter or controlling person, promptly as such expenses
are incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending
any such loss, claim, damage, liability, action or proceeding.
Notwithstanding anything contained in this Agreement to the
contrary, the indemnity agreement contained above in this
Section 5(a): (I) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such
settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld, (II)
shall not apply to any such case for any such loss, claim,
damage, liability or action arising out of or based upon a
Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection
with such registration by the Investors or any such underwriter
or controlling person, as the case may be, (III) with respect
to any preliminary prospectus, shall not inure to the benefit
of any person from whom the person asserting any such claim
purchased the Registrable Securities that are the subject
thereof (or to the benefit of any person controlling such
person) if the untrue statement or omission of material fact
contained the preliminary prospectus was corrected in the
prospectus, as then amended or supplemented, and (IV) shall
not apply with respect to any Violation contained in a
prospectus that the Company has notified the Investors contains
a Violation pursuant to Section 2(f) above. Such indemnity
shall remain in full force and effect regardless of any
investigation made by or on behalf of the Investors or any such
underwriter or controlling person and shall survive the
transfer of the Registrable Securities by an Investor pursuant
to Section 7.
(b) To the extent permitted by law, each Investor, severally
and not jointly, will indemnify and hold harmless, to the same
extent and in the same manner set forth in Section 5(a), the
Company, each of its directors, each of its officers who have
signed the Registration Statement, each person, if any, who
controls the Company within the meaning of the Securities Act
or the Exchange Act, any underwriter and any other stockholder
selling securities pursuant to the
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Registration Statement or
any of its directors or officers or any person who controls
such holder or underwriter, against any losses, claims, damages
or liabilities, joint or several) to which any of them may
become subject, under the Securities Act, the Exchange Act,
other federal or state law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any Violation, in each
case to the extent (and only to the extent) that such Violation
occurs in reliance upon and in conformity with written
information furnished by such Investor expressly for use in
connection with such registration; and such Investor will
reimburse any legal or other expenses reasonably incurred by
any of them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided,
however, that the Investor shall be liable under this Section
5(b) for only that amount of losses, claims, damages and
liabilities as does not exceed the proceeds to such Investor as
a result of the sale of Registrable Securities pursuant to such
registration. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of
such indemnified party and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 7.
The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the
distribution, to the same extent as provided above, with
respect to information about such persons so furnished in
writing by such persons expressly for inclusion in the
Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 5 of notice of the commencement of any action
(including any governmental action), such indemnified party
will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 5, deliver to the
indemnifying party a written notice of the commencement
thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly
noticed, to assume control of the defense thereof with counsel
satisfactory to the indemnifying party; provided, however, that
an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel
for the indemnifying party, representation of such indemnified
party by the counsel retained by the indemnifying party would
be inappropriate due to actual or potential differing interests
between such indemnified party and any other party represented
by such counsel in such proceeding. The Company shall pay for
only one legal counsel for the Investors. Such legal counsel
shall be selected by the Investors holding a majority in
interest of the Registrable Securities. The failure to deliver
written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall relieve such
indemnifying party of any liability to the indemnified party
under this Section 5 only to the extent prejudicial to its
ability to defend such action, but the omission so to deliver
written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party
otherwise than under section 5. The indemnification required
by this Section 5 shall be made by periodic payments of the
amount thereof during the course of the investigation or
defense, promptly as such expense, loss, damage or liability is
incurred and is due and payable.
(d) To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any
amounts for which it would otherwise be liable under this
Section 5 to the extent permitted by law; provided, however,
that (i) no contribution shall be made under circumstances
where the maker would not have been liable for indemnification
under the fault standards set forth in this Section 5, (ii) no
seller of Registrable Securities guilty of fraudulent
misrepresentation (within
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the meaning of Section 11 of the
Securities Act) shall be entitled to contribution from any
seller of Registrable Securities who was not guilty of such
fraudulent misrepresentation, and (iii) contribution by any
seller of Registrable Securities shall be limited in amount to
the amount of proceeds received by such seller from the sale of
such Registrable Securities.
6. Reports Under Securities Exchange Act of 1934. With a
view to making available to the Investors the benefits of Rule
144 and any other rule or regulation of the SEC that may at any
time permit the Investors to sell securities of the Company to
the public without registration, the Company agrees to:
(a) Make and keep public information available, as those
terms are understood and defined in Rule 144, at all times
after ninety (90) days after the effective date of the first
registration statement filed by the Company for the offering of
its securities to the general public.
(b) File with the SEC in a timely manner all reports and
other documents required of the Company under the Securities
Act and the Exchange Act.
(c) Furnish to each Investor, so long as such Investor owns
any Registrable Securities, forthwith upon request (i) a
written statement by the Company that it has complied with the
reporting requirements of Rule 144 (at any time after 90 days
after the effective date of the first registration statement
filed by the Company), the Securities Act and the Exchange Act
(at any time after it has become subject to such reporting
requirements), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other
information as may be reasonably requested in availing the
Investors of any rule or regulation of the SEC which permits
the selling of any such securities without registration.
7. Assignments of Registration Rights. The rights to have
the Company register securities pursuant to this Agreement may
be assigned by the Investors to transferees or assignees of
such securities provided that (i) the Company is, within a
reasonable time after such transfer, furnished with written
notice of the name and address of such transferee or assignee
and the securities with respect to which such registration
rights are being assigned, (ii) such assignment is in
accordance with and permitted by all other agreements between
the Company and the transferor or assignor, and (iii) such
assignments shall be effective only if immediately following
such transfer the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act.
The term "Investors" as used in this Agreement shall include
permitted assignees.
8. Miscellaneous.
(a) Notices required or permitted to be given hereunder shall
be in writing and shall be deemed to be sufficiently given when
personally delivered or sent by registered mail, return receipt
requested, addressed (i) if to the Company, Access
Pharmaceuticals, Inc., 0000 Xxxxxxxx Xxxxxxx, Xxxxx 000,
Xxxxxx, Xxxxx 00000, Attention: President, with a copy to Xxxx
Xxxxxxxxx, Esq. of Xxxxxxx Xxxx LLP, 000 Xxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, and (ii) if to an Investor, at the
address set forth under his or her name in the subscription
agreement executed by such Investor in connection with its
investment, or at such other address as each such party
furnishes by notice given in accordance with this Section 8(a).
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(b) Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in
exercising such right or remedy, will not operate as a waiver
thereof. No waiver will be effective unless and until it is in
writing and signed by the party giving the waiver.
(c) This Agreement shall be enforced, governed and construed
in all respects in accordance with the laws of the State of New
York, as such laws are applied by New York courts to agreements
entered into and to be performed in New York by and between
residents of New York. This Agreement shall be binding upon
each Investor and its heirs, estate, legal representatives,
successors and permitted assignees and shall inure to the
benefit of the Company and its successors and assigns. In the
event that any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to
conform with such statute or rule of law. Any provision hereof
which may prove invalid or unenforceable under any law shall
not affect the validity or enforceability of any other
provision hereof.
(d) This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof.
Any provision of this Agreement may be amended and the
observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively),
only by a writing executed by the Company and Investors who
hold a majority in interest of the Registrable Securities. Any
amendment or waiver effected in accordance with this Section
8(d) shall be binding upon such Investor and the Company.
(e) Any such person is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or
entities with respect to the same Registrable Securities, then
the Company shall be entitled to act upon the basis of the
instructions, notice or election received from the registered
owner of such Registrable Securities.
Dated this 29 day of February, 2000.
ACCESS PHARMACEUTICALS, INC.
By: /s/ Xxxxx X. Xxxx
-------------------
Xxxxx X. Xxxx
President and Chief Executive Officer
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