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EXHIBIT 10(lxx)
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
March 17, 1999, is made and entered into between VIRAGEN, INC., a Delaware
corporation (the "Company"), and THE ISOSCELES FUND and CEFEO INVESTMENTS
LIMITED (the "Subscribers").
WHEREAS, the Company and the Subscribers have entered into a Purchase
Agreement, dated as of the date hereof (the "Purchase Agreement"), pursuant to
which the Company has issued to the Subscribers an aggregate of $2,000,000
principal amount of Redeemable Convertible Notes and Warrants, which Notes and
Warrants are convertible into or exercisable for common stock of the Company
(the "Registerable Securities");
WHEREAS, pursuant to the terms of, and in consideration for, the
Subscribers' agreement to enter into the Purchase Agreement, the Company has
agreed to provide the Subscribers with certain registration rights with respect
to the Registrable Securities;
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein and in the Purchase
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, intending to be legally bound
hereby, the parties hereto agree as follows (capitalized terms used herein and
not defined herein shall have the meaning ascribed to such terms in the Purchase
Agreement):
ARTICLE I
REGISTRATION RIGHTS
Section 1.1. REGISTRATION STATEMENT.
(a) FILING OF REGISTRATION STATEMENT. Subject to the terms and
conditions of this Agreement, the Company shall file with the SEC within 20 days
following the Initial Purchase Date a registration statement on Form S-3 under
the Securities Act for the registration of the Registerable Securities for
resale by the Subscribers to the public (each a "Registration Statement").
(b) FAILURE TO FILE REGISTRATION STATEMENT. In the event that a
Registration Statement is not filed within 20 days following each issuance of
the Redeemable Convertible Notes (the "Purchase Date"), the Company will pay a
penalty in cash pro rata to the Subscribers in the amount of two percent of the
Penalty Amount (as defined below) and an additional penalty of two percent in
cash at the end of each 30 day period thereafter until the Registration
Statement is filed with the SEC (pro-rated for each period less than 30 days).
(c) EFFECTIVENESS OF THE REGISTRATION STATEMENT. The Company shall use
its reasonable best efforts to have the Registration Statement declared
effective by the SEC by no
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later than 90 days following the Purchase Date, if there are no comments from
the SEC, and 105 days if there are comments from the SEC and to ensure that the
Registration Statement remains in effect throughout the term of this Agreement
as set forth in Section 11.2, subject to the terms and conditions of this
Agreement; PROVIDED, HOWEVER, that if the Purchase Agreement shall be terminated
in accordance with Section 4.2 thereof, the Company shall have no further
obligation to cause the Registration Statement to become effective.
(d) FAILURE TO HAVE REGISTRATION STATEMENT DECLARED EFFECTIVE. In the
event that the Registration Statement is not effective within 90 days after the
Purchase Date, if there are no comments from the SEC, and 105 days after the
Purchase Date if there are comments from the SEC (the "Registration Period"),
then the Company will pay a penalty pro rata to the Subscribers of two percent
of the Penalty Amount in cash and an additional penalty of two percent of the
Penalty Amount in cash at the end of each 30 day period thereafter (pro-rated
for each period less than 30 days).
(e) FAILURE TO MAINTAIN EFFECTIVENESS OF REGISTRATION STATEMENT OR
LISTING. In the event the Company fails to maintain the effectiveness of the
Registration Statement (or the underlying prospectus) throughout the period set
forth in Section 4.2, other than temporary suspensions as set forth in Section
2.1(i), and the Subscribers hold any Registrable Securities at any time during
the period of such ineffectiveness (an "Ineffective Period") or the Company
fails to maintain the listing of its Common Stock on NASDAQ, the Company shall
pay a penalty pro rata to the Subscribers of two percent of the Penalty Amount
in cash and an additional penalty of two percent of the Penalty Amount in cash
at the end of each 30 day period thereafter (pro-rated for each period less than
30 days).
(f) REDEMPTION UPON FAILURE TO MAINTAIN EFFECTIVENESS. At any time
after 180 days following the Initial Purchase Date, provided that: (A) the
Registration Statement is not yet effective; or (B) the Registration Statement
ceases to be effective for 30 consecutive business days or a total of 60
business days during any 12 month period, the Subscribers will have the right to
require the Company within 30 days of a written notice from a Subscriber to the
Company to redeem all such Subscriber's Notes and Warrants and such Common Stock
as has been received upon conversion or exercise for a cash price equal to the
greater of: (A) "Parity" where Parity is defined as (A1) the number of shares
that the Notes and Warrants can be converted into plus the number of Common
Stock already so converted but not resold, multiplied by (A2) the high trade
price of the Company's Common Stock on the date of such notice; or (B) the sum
of (B1) 115% of the Penalty Amount (as defined below), and (B2) the amount of
all other penalties outstanding up to the date of the notice.
(g) LIQUIDATED DAMAGES. The parties hereto acknowledge and agree that
the sums payable under Sections 1(d),(e) and (f) above shall constitute
liquidated damages and not penalties. The parties further acknowledge that (a)
the amount of loss or damages likely to be incurred is incapable or is difficult
to precisely estimate, (b) the amounts specified in such Sections bear a
reasonable proportion and are not plainly or grossly disproportionate to the
probable loss likely to be incurred in connection with any failure by the
Company to obtain or maintain the effectiveness of a Registration Statement, (c)
one of the reasons for the parties reaching an agreement as to such amounts was
the uncertainty and cost of litigation regarding the
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question of actual damages, and (d) the parties are sophisticated business
parties and have been represented by legal and financial counsel and negotiated
this Agreement at arm's length.
(h) THE PENALTY AMOUNT. The Penalty Amount shall be (a) with respect to
any common stock converted from Notes, the principal amount of such converted
Notes, plus (b) with respect to common stock received upon exercise of Warrants,
the Closing Market Price relating to such Warrants and (c) the principal amount
of any outstanding and unconverted Notes; provided that no common stock sold by
such Subscriber shall be included in the Penalty Amount.
ARTICLE II
REGISTRATION PROCEDURES
Section 2.1. FILINGS; INFORMATION. The Company will effect the registration and
sale of the Registrable Securities in accordance with the intended methods of
disposition thereof. Without limiting the foregoing, the Company will do the
following as expeditiously as possible, but in no event later than the deadline,
if any, prescribed therefor in this Agreement:
(a) The Company shall (i) prepare and file with the SEC a Registration
Statement on Form S-3 (if use of such form is then available to the Company
pursuant to the rules of the SEC and, if not, on such other form promulgated by
the SEC for which the Company then qualifies and which counsel for the Company
shall deem appropriate and which form shall be available for the sale of the
Registrable Securities to be registered thereunder in accordance with the
provisions of this Agreement and in accordance with the intended method of
distribution of the Registrable Securities); (ii) use reasonable best efforts to
cause such filed Registration Statement to become and remain effective (pursuant
to Rule 415 under the Act or otherwise); (iii) prepare and file with the SEC
such amendments and supplements to the Registration Statement and the prospectus
used in connection therewith as may be necessary to keep the Registration
Statement effective for the time periods prescribed by Section 1.1(b); and (iv)
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by the Registration Statement during such period in
accordance with the intended methods of disposition by the Subscribers set forth
in the Registration Statement. The number of shares of Common Stock to be
registered shall be sufficient to cover the Company's obligations under the
Purchase Agreement and, in any case, shall be at least 10,844,661 shares of
Common Stock with respect to sales by the Subscribers.
(b) The Company shall file all necessary amendments to the Registration
Statement in order to effectuate the purpose of this Agreement and the Purchase
Agreement.
(c) If so requested by the managing underwriters, if any, or the
holders of a majority in aggregate principal amount of the Registrable
Securities being sold in connection with the filing of the Registration
Statement under the Securities Act for the offering on a continuous or delayed
basis in the future of all of the Registrable Securities (a "Shelf
Registration"), the Company shall (i) promptly incorporate in a prospectus
supplement or post-effective amendment such information as the managing
underwriters, if any, and such holders agree should be included therein, and
(ii) make all required filings of such prospectus
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supplement or post-effective amendment as soon as practicable after the Company
has received notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment; provided, however, that the Company
shall not be required to take any action pursuant to this Section 2.1(c)(ii)
that would, in the opinion of counsel for the Company, violate applicable law.
(d) In connection with the filing of a Shelf Registration, the Company
shall enter into such agreements and take all such other reasonable actions in
connection therewith (including those reasonably requested by the managing
underwriters, if any, or the holders of a majority in aggregate principal amount
of the Registrable Securities being sold) in order to expedite or facilitate the
disposition of the Registrable Securities, and in such connection, whether or
not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration, (i) make such representations and
warranties to the holders of the Registrable Securities and the underwriters, if
any, with respect to the business of the Company (including with respect to
businesses or assets acquired or to be acquired by the Company), and the
Registration Statement, prospectus and documents, if any, incorporated or deemed
to be incorporated by reference therein, in each case, in form, substance and
scope as are customarily made by issuers to underwriters in underwritten
offerings, and confirm such representations and warranties if and when
requested; (ii) if an underwriting agreement is entered into, the same shall
contain indemnification provision and procedures no less favorable to the
selling holders of the Registrable Securities and the underwriters, if any, than
those set forth herein (or such other provisions and procedures acceptable to
the holders of a majority in aggregate principal amount of Registrable
Securities covered by the Registration Statement and the managing underwriters,
if any); and (iii) deliver such documents and certificates as may be reasonably
requested by the holders of a majority in aggregate principal amount of the
Registrable Securities being sold, their counsel and the managing underwriters,
if any, to evidence the continued validity of their representations and
warranties made pursuant to clause (i) above and to evidence compliance with any
customary conditions contained in the underwriting agreement or other agreement
entered into by the Company.
(e) Five Business Days prior to filing the Registration Statement or
prospectus, or any amendment or supplement thereto (excluding amendments deemed
to result from the filing of documents incorporated by reference therein), the
Company shall deliver to the Subscribers and one firm of counsel representing
the Subscribers, in accordance with the notice provisions of Section 4.8, copies
of the Registration Statement as proposed to be filed, together with exhibits
thereto, which documents will be subject to review by such parties, and
thereafter deliver to the Subscribers and their counsel, in accordance with the
notice provisions of Section 4.8, copies of any correspondence with the SEC, and
further deliver such number of copies of the Registration Statement, each
amendment and supplement thereto (in each case including all exhibits thereto),
the prospectus included in the Registration Statement (including each
preliminary prospectus) and such other documents or information as the
Subscribers or counsel may reasonably request in order to facilitate the
disposition of the Registrable Securities.
(f) The Company shall deliver, in accordance with the notice provisions
of Section 4.8, to each seller of Registrable Securities covered by the
Registration Statement such number of conformed copies of the Registration
Statement and of each amendment and supplement thereto (in each case including
all exhibits and documents incorporated by
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reference), such number of copies of the prospectus contained in the
Registration Statement (including each preliminary prospectus and any summary
prospectus) and any other prospectus file under Rule 424 promulgated under the
Securities Act relating to such seller's Registrable Securities, and such other
documents, as such seller may reasonably request to facilitate the disposition
of its Registrable Securities.
(g) After the filing of the Registration Statement, the Company shall
promptly notify the Subscribers of any stop order issued or threatened by the
SEC in connection therewith and the resolution thereof and use its best efforts
to prevent the entry of such stop order or to remove it if entered.
(h) The Company shall (i) register or qualify the Registrable
Securities under such other securities or blue sky laws of such jurisdictions in
the United States as the Subscribers may reasonably (in light of their intended
plan of distribution) request, and (ii) cause the Registrable Securities to be
registered with or approved by such other governmental agencies or authorities
in the United States as may be necessary by virtue of the business and
operations of the Company and do any and all other acts and things that may be
reasonably necessary or advisable to enable the Subscribers to consummate the
disposition of the Registrable Securities; provided that the Company will not be
required to qualify generally to do business in any jurisdiction where it would
not otherwise be required to qualify but for this paragraph (h), subject itself
to taxation in any such jurisdiction, or consent or subject itself to general
service of process in any such jurisdiction.
(i) The Company shall immediately notify the Subscribers upon the
occurrence of any of the following events in respect of a Registration Statement
or related prospectus in respect of an offering of Registrable Securities: (i)
receipt of any request for additional information by the SEC or any other
federal or state governmental authority during the period of effectiveness of
the Registration Statement for additional information, amendments or supplements
to the Registration Statement or related prospectus; (ii) the issuance by the
SEC or any other federal or state governmental authority of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose; (iii) receipt of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the happening of any event
that makes any statement made in the Registration Statement or related
prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in the Registration Statement, related prospectus or documents so that,
in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; (v) the Company's
reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate; and the Company will promptly make available to
the Subscribers any such supplement or amendment to the related prospectus and
(vi) the Effective Date of such Registration Statement (such notification to be
made by facsimile) with a copy to any other parties set forth in Section 4.8
below.
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(j) The Company shall enter into customary agreements and take such
other actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities (whereupon the Subscribers may, at
their option, require that any or all of the representations, warranties and
covenants of the Company also be made to and for the benefit of the
Subscribers).
(k) The Company shall make available to the Subscribers (and will
deliver to Subscribers' counsel), subject to restrictions imposed by the United
States federal government or any agency or instrumentality thereof, copies of
all correspondence between the SEC and the Company, its counsel or auditors and
will also make available for inspection by the Subscribers and any attorney,
accountant or other professional retained by the Subscribers (collectively, the
"Inspectors"), all financial and other records, pertinent corporate documents
and properties of the Company (collectively, the "Records") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers and employees to supply all
information reasonably requested by any Inspectors in connection with the
Registration Statement. Records that the Company determines, in good faith, to
be confidential and which it notifies the Inspectors are confidential shall not
be disclosed by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in the Registration
Statement or (ii) the disclosure or release of such Records is requested or
required pursuant to oral questions, interrogatories, requests for information
or documents or a subpoena or other order from a court of competent jurisdiction
or other process; provided that prior to any disclosure or release pursuant to
clause (ii), the Inspectors shall provide the Company with prompt notice of any
such request or requirement so that the Company may seek an appropriate
protective order or waive such Inspectors' obligation not to disclose such
Records; and, provided further, that if failing the entry of a protective order
or the waiver by the Company permitting the disclosure or release of such
Records, the Inspectors, upon advice of counsel, are compelled to disclose such
Records, the Inspectors may disclose that portion of the Records which counsel
has advised the Inspectors that the Inspectors are compelled to disclose. The
Subscribers agree that information obtained by them solely as a result of such
inspections (not including any information obtained from a third party who,
insofar as is known to the Subscribers after reasonable inquiry, is not
prohibited from providing such information by a contractual, legal or fiduciary
obligation to the Company) shall be deemed confidential and shall not be used by
it as the basis for any market transactions in the securities of the Company or
its affiliates unless and until such information is made generally available to
the public. The Subscribers further agree that they will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction, give
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of the Records deemed confidential.
(l) The Company shall deliver, in accordance with the notice provisions
of Section 4.8, to the Subscribers a signed counterpart, addressed to each
Subscriber, of (1) an opinion or opinions of counsel to the Company, and (2) to
the extent required by law or reasonably necessary to effect a sale of
Registrable Securities in accordance with prevailing business practices at the
time of any sale of Registrable Securities pursuant to a Registration Statement,
a comfort letter or comfort letters from the Company's independent public
accountants, each in customary form and covering such matters of the type
customarily covered
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by opinions or comfort letters, as the case may be, as the Subscribers therefor
reasonably requests.
(m) The Company shall otherwise comply with all applicable rules and
regulations of the SEC, including, without limitation, compliance with
applicable reporting requirements under the Exchange Act.
(n) The Company shall appoint a transfer agent and registrar for all
Registrable Securities covered by a Registration Statement not later than the
effective date of the Registration Statement.
(o) The Company may require the Subscribers to promptly furnish in
writing to the Company such information as may be legally required in connection
with the registration including, without limitation, all such information as may
be requested by the SEC or the National Association of Securities Dealers. The
Subscribers agree to provide such information requested in connection with the
registration within ten business days after receiving such written request and
the Company shall not be responsible for any delays in obtaining or maintaining
the effectiveness of the Registration Statement caused by the Subscribers'
failure to timely provide such information.
(p) The Company shall hold in confidence and not make any disclosure of
information concerning the Subscribers provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities law, (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, or (iv) such
information has been made generally available to the public other than by
disclosure in violation of this or any other agreement. The Company agrees that
it shall, upon learning that disclosure of such information concerning a
Subscriber 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 such Subscriber, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for,such information.
(q) The Company shall ensure the continued quotation of the Registrable
Securities on NASDAQ and the coverage of the Registrable Securities by at least
two market makers.
(r) The Company shall cooperate with the Subscribers and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, as the managing underwriter or underwriters, if any, or the Subscribers may
reasonably request and register in such names as the managing underwriter or
underwriters, if any, or the Subscribers may request, and the Company shall
deliver to the transfer agent for the Registrable Securities (with copies to the
Subscribers) an instruction in the form attached as Exhibit F to the Purchase
Agreement in the period specified therein.
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(s) 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 any
Registration Statement under Section 2(a) hereof or any amendment or supplement
thereto without the consent of the holders of a majority-in-interest of the
Registrable Securities.
(t) The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Subscibers of Registrable Securities
pursuant to a Registration Statement.
Section 2.2. REGISTRATION EXPENSES. In connection with each Registration
Statement, the Company shall pay all registration expenses incurred in
connection with the registration thereunder (the "Registration Expenses"),
including, without limitation: (i) all registration, filing, securities exchange
listing and fees required by the National Association of Securities Dealers,
(ii) all registration, filing, qualification and other fees and expenses of
compliance with securities or blue sky laws (including reasonable fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities), (iii) all word processing, duplicating, printing,
messenger and delivery expenses, (iv) the Company's internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), (v) the fees and expenses
incurred in connection with the listing of the Registrable Securities, (vi)
reasonable fees and disbursements of counsel for the Company and customary fees
and expenses for independent certified public accountants retained by the
Company (including the expenses of any special audits or comfort letters or
costs associated with the delivery by independent certified public accountants
of such special audit(s) or comfort letter(s) requested pursuant to Section
2.1(l) hereof), (vii) the fees and expenses of any special experts retained by
the Company in connection with the registration, (viii) all reasonable fees and
expenses of one firm of counsel for the Subscribers retained as the Subscribers'
counsel with respect to the Registration Statement up to an amount of $5,000,
unless a greater amount is required due the nature of the review performed by
Subscribers' counsel (an estimate of such greater fees and expenses of such firm
of counsel to be provided to the Company prior to the undertaking of such
counsel's review), (ix) premiums and other costs of policies of insurance
obtained at the discretion of the Company against liabilities arising out of any
public offering of the Registrable Securities being registered, and (x) any fees
and disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting fees, discounts, transfer taxes or
commissions, if any, attributable to the sale of Registrable Securities, which
shall be payable by each holder of Registrable Securities pro rata on the basis
of the number of Registrable Securities of each such holder that are included in
a registration under this Agreement.
ARTICLE III
INDEMNIFICATION AND CONTRIBUTION
Section 3.1. INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and
hold harmless each Subscriber, its partners, affiliates, officers, directors,
employees and duly authorized agents, and each Person or entity, if any, who
controls the Subscriber within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, together with the partners, Affiliates,
officers, directors, employees and duly authorized agents of such controlling
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Person or entity (collectively, the "Controlling Persons"), from and against any
loss, claim, damage, liability, costs and expenses (including, without
limitation, reasonable attorneys' fees and disbursements and costs and expenses
of investigating and defending any such claim) (collectively, "Damages"), joint
or several, and any action or proceeding in respect thereof to which the
Subscriber, its partners, affiliates, officers, directors, employees and duly
authorized agents, and any such Controlling Person may become subject under the
Securities Act or otherwise as incurred and, insofar as such Damages (or actions
or proceedings in respect thereof) arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or prospectus relating to the Registrable Securities or
any preliminary prospectus, or arises out of, or are based upon, 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, except insofar as
the same are based upon information furnished in writing to the Company by such
Subscriber expressly for use therein, and shall reimburse each Subscriber, its
partners, affiliates, officers, directors, employees and duly authorized agents,
and each such Controlling Person for any legal and other expenses reasonably
incurred by the Subscriber, its partners, affiliates, officers, directors,
employees and duly authorized agents, or any such Controlling Person, as
incurred, in investigating or defending or preparing to defend against any such
Damages or actions or proceedings; provided, however, that the Company shall not
be liable to a Subscriber to the extent that any such Damages arise out of or
are based upon an untrue statement or omission made in any preliminary
prospectus if (i) the Subscriber failed to send or deliver a copy of the final
prospectus delivered by the Company to the Subscriber with or prior to the
delivery of written confirmation of the sale by the Subscriber to the Person
asserting the claim from which such Damages arise, and (ii) the final prospectus
would have corrected such untrue statement or alleged untrue statement or such
omission or alleged omission and the Indemnified Person was promptly advised in
writing not to use the incorrect prospectus prior to the use giving rise to a
Violation and such Indemnified Person, notwithstanding such advice, used it.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Subscribers.
Section 3.2. CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after receipt by
any person or entity in respect of which indemnity may be sought pursuant to
Section 3.1 (an "Indemnified Party") of notice of any claim or the commencement
of any action, the Indemnified Party shall, if a claim in respect thereof is to
be made against the person or entity against whom such indemnity may be sought
(the "Indemnifying Party"), notify the Indemnifying Party in writing of the
claim or the commencement of such action; in the event an Indemnified Party
shall fail to give such notice as provided in this Section 3.2 and the
Indemnifying Party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was materially prejudiced by the
failure to give such notice, the indemnification provided for in Section 3.1
shall be reduced to the extent of any actual prejudice resulting from such
failure to so notify the Indemnifying Party; provided, that the failure to
notify the Indemnifying Party shall not relieve the Indemnifying Party from any
liability that it may have to an Indemnified Party otherwise than under Section
3.1. If any such claim or action shall be brought against an Indemnified Party,
and it shall notify the Indemnifying Party thereof, the Indemnifying Party shall
be entitled to participate therein, and, to the extent that it wishes, jointly
with any other similarly notified Indemnifying Party, to assume the defense
thereof with counsel reasonably satisfactory to the Indemnified Party. After
notice from the Indemnifying Party to the
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Indemnified Party of its election to assume the defense of such claim or action,
the Indemnifying Party shall not be liable to the Indemnified Party for any
legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation; provided that the Indemnified Party shall have the right to
employ separate counsel to represent the Indemnified Party and its Controlling
Persons who may be subject to liability arising out of any claim in respect of
which indemnity may be sought by the Indemnified Party against the Indemnifying
Party, but the fees and expenses of such counsel shall be for the account of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) in the
reasonable judgment of the Company and such Indemnified Party, representation of
both parties by the same counsel would be inappropriate due to actual or
potential conflicts of interest between them, it being understood, however, that
the Indemnifying Party shall not, in connection with any one such claim or
action or separate but substantially similar or related claims or actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for all Indemnified
Parties, or for fees and expenses that are not reasonable. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect any
settlement of any claim or pending or threatened proceeding in respect of which
the Indemnified Party is or could have been a party and indemnity could have
been sought hereunder by such Indemnified Party, unless such settlement includes
an unconditional release of such Indemnified Party from all liability arising
out of such claim or proceeding. Whether or not the defense of any claim or
action is assumed by the Indemnifying Party, such Indemnifying Party will not be
subject to any liability for any settlement made without its consent, which
consent will not be unreasonably withheld.
Section 3.3. OTHER INDEMNIFICATION. Indemnification similar to that specified in
the preceding paragraphs of this Article 3 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration or other qualification of securities under
any federal or state law or regulation of any governmental authority other than
the Securities Act. The provisions of this Article III shall be in addition to
any other rights to indemnification, contribution or other remedies which an
Indemnified Party may have pursuant to law, equity, contract or otherwise.
Section 3.4. CONTRIBUTION. If the indemnification provided for in this Article
III is unavailable to the Indemnified Parties in respect of any Damages referred
to herein, then the 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 Damages as between the Company on the one hand and the
relevant Subscriber on the other, in such proportion as is appropriate to
reflect the relative fault of the Company and of such Subscriber in connection
with such statements or omissions, as well as other equitable considerations.
The relative fault of the Company on the one hand and of the Subscriber on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
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The Company and the Subscribers agree that it would not be just and equitable if
contribution pursuant to this Section 3.4 were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Party as a result of the Damages referred to
in the immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably incurred
by such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 3.4, the
Subscribers shall in no event be required to contribute any amount in excess of
the amount by which the total price at which the Registrable Securities of each
Subscriber were sold to the public (less underwriting discounts and commissions)
exceeds the amount of any damages which the Subscriber 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 Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
ARTICLE IV
MISCELLANEOUS
Section 4.1. NO OUTSTANDING REGISTRATION RIGHTS. The Company represents and
warrants to the Subscribers that there is not in effect on the date hereof any
agreement by the Company pursuant to which any holders of securities of the
Company have a right to cause the Company to register or qualify such securities
under the Securities Act or any securities or blue sky laws of any jurisdiction
that would conflict or be inconsistent with any provision of this Agreement or
the Purchase Agreement.
Section 4.2. TERM. The registration rights provided to the holders of
Registrable Securities hereunder shall terminate at such time as all Purchased
Shares (i) have been disposed of pursuant to the Registration Statement, (ii)
have been sold under circumstances under which all of the applicable conditions
of Rule 144 (or any similar provision then in force) under the Securities Act
("Rule 144") are met, (iii) have been otherwise transferred to holders who may
trade such shares without restriction under the Securities Act, and the Company
has delivered a new certificate or other evidence of ownership for such
securities not bearing a restrictive legend, or (iv) may be sold without any
time, volume or manner limitations pursuant to Rule 144(k) (or any similar
provision then in effect) under the Securities Act in the opinion of counsel to
the Company, which counsel shall be reasonably acceptable to the Subscribers;
PROVIDED, HOWEVER, that the registration rights shall not terminate sooner than
two years following the Subscription Date. Notwithstanding the foregoing,
paragraphs (d) and (e) of Section 1.1, Article III, Section 4.8, and Section 4.9
shall survive the termination of this Agreement.
Section 4.3. RULE 144. The Company covenants that it will file all reports
required to be filed by it under the Act and the Exchange Act and that it will
take such further action as holders of Registrable Securities may reasonably
request, all to the extent required from time to time to enable the Subscribers
to sell Registrable Securities without registration under the Act within the
limitation of the exemptions provided by (a) Rule 144, as such Rule may be
amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the SEC. If at any time the
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Company is not required to file such reports, it will, upon the request of any
holder of Registrable Securities, make publicly available other information so
long as necessary to permit sales pursuant to Rule 144. Upon the request of the
Subscribers, the Company will deliver to the Subscribers a written statement as
to whether it has complied with such requirements.
Section 4.4. CERTIFICATE. The Company will, at its expense, forthwith upon the
request of any holder of Registrable Securities, deliver to such holder a
certificate, signed by the Company's principal financial officer, stating (a)
the Company's name, address and telephone number (including area code), (b) the
Company's Internal Revenue Service identification number, (c) the Company's
Commission file number, (d) the number of shares of each class of Stock
outstanding as shown by the most recent report or statement published by the
Company, and (e) whether the Company has filed the reports required to be filed
under the Exchange Act for a period of at least 90 days prior to the date of
such certificate and in addition has filed the most recent annual report
required to be filed thereunder.
Section 4.5. AMENDMENT AND MODIFICATION. Any provision of this Agreement may be
waived, provided that such waiver is set forth in a writing executed by both
parties to this Agreement. 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 Company has obtained the written consent of the holders of a majority
of the then outstanding Registrable Securities. Notwithstanding the foregoing,
the waiver of any provision hereof with respect to a matter that relates
exclusively to the rights of holders of Registrable Securities whose securities
are being sold pursuant to a Registration Statement and does not directly or
indirectly affect the rights of other holders of Registrable Securities may be
given by holders of at least a majority of the Registrable Securities being sold
by such holders; provided that the provisions of this sentence may not be
amended, modified or supplemented except in accordance with the provisions of
the immediately preceding sentence. No course of dealing between or among any
Person having any interest in this Agreement will be deemed effective to modify,
amend or discharge any part of this Agreement or any rights or obligations of
any person under or by reason of this Agreement.
Section 4.6. SUCCESSORS AND ASSIGNS; ENTIRE AGREEMENT. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. The Subscribers may
assign their rights under this Agreement to any subsequent holder or holders of
the Registrable Securities, provided that the Company shall have the right to
require any holder of Registrable Securities to execute a counterpart of this
Agreement as a condition to such holder's claim to any rights hereunder;
provided further that such holder is an "accredited investor" as defined in Rule
501 of Regulation D of the Securities Act. This Agreement, together with the
Purchase Agreement the terms of the Notes and the Warrants sets forth the entire
agreement and understanding between the parties as to the subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them.
Section 4.7. SEPARABILITY In the event that any provision of this Agreement or
the application of any provision hereof is declared to be illegal, invalid or
otherwise unenforceable by a court of competent jurisdiction, the remainder of
this Agreement shall not be affected except to the extent necessary to delete
such illegal, invalid or unenforceable provision unless that
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provision held invalid shall substantially impair the benefits of the remaining
portions of this Agreement.
Section 4.8. NOTICES. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and
shall be (i) personally served, (ii) deposited in the mail, registered or
certified, return receipt requested, postage prepaid, (iii) delivered by
reputable air courier service with charges prepaid, or (iv) transmitted by hand
delivery, telegram or facsimile, addressed as set forth below or to such other
address as such party shall have specified most recently by written notice. Any
notice or other communication required or permitted to be given hereunder shall
be deemed effective (a) upon hand delivery or delivery by facsimile, with
accurate confirmation generated by the transmitting facsimile machine, at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second
business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be:
If to Viragen, Inc.:
Xxxxxx X. Xxxxxx
Chief Financial Officer
Viragen, Inc.
000 XX 00xx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to (which communication shall not constitute notice):
Xxxxx Xxxxxxxxx, Esq.
Atlas, Xxxxxxxx, Trop & Borkson
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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If to The Isosceles Fund Limited:
The Isosceles Fund Limited
c/o Citco Fund Services Ltd.
Bahamas Financial Centre, 3rd Floor
Xxxxxxx & Xxxxxxxxx Xxxxxxx
X.X. Xxx XX 00000
Xxxxxx, Bahamas
Attention Xxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with copies to (which communication shall not constitute notice):
Xxxxxxxx Xxxxxx
c/o Manzur Associates Ltd.
Witan Court, 270 Witan Gate Xxxx
Xxxxxx Xxxxxx, XX0 0XX
Xxxxxx Xxxxxxx
Telephone: + 00-0000-000-000
Facsimile: + 44-1908-231-006
Xxxx Xxxxx, Esq.
Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Cefeo Investments Limited:
Xxxxx Xxxxxxxxxxx Xxxxxxx
0000 Xxxxxx
Xxxxxxxxxxx
Attn: Xx. Xxxx Xxxxxxxxx
Telephone: + 00-00-000-0000
Facsimile: + 00-00-000-0000 (fax)
Either party hereto may from time to time change its address or facsimile number
for notices under this Section 4.8 by giving at least ten days' prior written
notice of such changed address or facsimile number to the other party hereto.
Section 4.9. GOVERNING LAW. This Agreement shall be construed under the laws of
the State of New York.
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Section 4.10. HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement, nor shall they
affect their meaning, construction or effect.
Section 4.11. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original instrument and all
of which together shall constitute one and the same instrument.
Section 4.12. FURTHER ASSURANCES. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
Section 4.13. REMEDIES. In the event of a breach or a threatened breach by any
party to this Agreement of its obligations under this Agreement, any party
injured or to be injured by such breach will be entitled to specific performance
of its rights under this Agreement or to injunctive relief, in addition to being
entitled to exercise all rights provided in this Agreement and granted by law.
The parties agree that the provisions of this Agreement shall be specifically
enforceable, it being agreed by the parties that the remedy at law, including
monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense or objection in any action for
specific performance or injunctive relief that a remedy at law would be adequate
is waived.
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be executed by the undersigned, thereunto duly authorized,
as of the date first set forth above.
VIRAGEN, INC.
By:
----------------------------------------
Xxxxxx X. Xxxxxx
Chief Financial Officer
THE ISOSCELES FUND
By:
----------------------------------------
Name:
Title:
CEFEO INVESTMENTS LIMITED
By:
----------------------------------------
Name:
Title:
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