ACCESS PHARMACEUTICALS, INC.
REGISTRATION RIGHTS AGREEMENT
for 1999 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
1,500,000 and a maximum of 4,000,000 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 thirty (30) 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
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the 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 the
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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 20 day of July, 1999.
ACCESS PHARMACEUTICALS, INC.
By: /s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
President and Chief Executive Officer
