REGISTRATION RIGHTS AGREEMENT
Exhibit 2.7
EXECUTION COPY
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of
May 12, 2008 by and among SIMCERE PHARMACEUTICAL GROUP, a company with limited liability organized
under the laws of the Cayman Islands (the “Company”), and KING VIEW DEVELOPMENT
INTERNATIONAL LIMITED, a British Virgin Islands company (the “Purchaser”) and NEW GOOD
MANAGEMENT LIMITED, a British Virgin Islands limited liability company (“NGM”).
RECITALS
A. This Agreement is made in connection with that certain Restated Share Purchase Agreement
(the “Purchase Agreement”) dated as of April 26, 2008 by and between NGM and the Purchaser,
which provides for, among other things, the sale by NGM to the Purchaser of 11,820,000 of the
Company’s Ordinary Shares (the “Shares”) for an aggregate consideration of US$60,282,000.00
(the “Purchase Price”).
B. In satisfaction of a condition to the obligations of the Purchaser thereunder, the Company
agrees with the Purchaser, for the benefit of the Purchaser (including the Purchaser’s permitted
transferees, from time to time, collectively with the Purchaser, the “Holders”), as
follows:
SECTION 1 CERTAIN DEFINITIONS.
For purposes of this Registration Rights Agreement the following terms shall have the
following meanings:
1.1 “Affiliate” of any specified Person means an “affiliate,” as the term is
defined in Rule 405 under the Securities Act, of such Person.
1.2 “Agreement” means this Registration Rights Agreement, as the same may be
amended or restated from time to time pursuant to the terms hereof.
1.3 “Authorized Agent” has the meaning assigned thereto in Section 11.6.
1.4 “Blue Sky” means the statutes of any state regulating the sale of corporate
securities within that state.
1.5 “Business Day” means any day other than a Saturday, a Sunday, or a day on
which banking institutions in New York, New York, the People’s Republic of China or Hong
Kong are authorized or required by law or executive order to remain closed.
1.6 “Commission” means the Securities and Exchange Commission or any other
federal agency at the time administering the Exchange Act or the Securities Act, whichever
is the relevant statute for the particular purpose.
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1.7 “Company” has the meaning assigned thereto in the first paragraph of this
Agreement.
1.8
“Company Notice” has the meaning assigned thereto in Section 3.1.
1.9
“Deferral Notice” has the meaning assigned thereto in Section 4.2.
1.10
“Deferral Period” has the meaning assigned thereto in Section 4.2.
1.11
“Effective Period” has the meaning assigned thereto in Section 2.2.
1.12
“Eligibility Date” has the meaning assigned thereto in Section 2.1.
1.13 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
1.14 “Existing Registration Rights Agreement” means the Registration Rights
Agreement, dated as of November 20, 2006, by and among (i) the Company; (ii) NGM and (iii)
Assure Ahead Investments Limited as in effect on the date hereof.
1.15 “FINRA” means the Financial Industry Regulatory Authority, Inc.
1.16 “Free Writing Prospectus” means each free writing prospectus (as defined
in Rule 405 under the Securities Act) prepared by or on behalf of the Company or used or
referred to by the Company in connection with the sale of the Registrable Securities by the
Holders.
1.17 “Holder” has the meaning assigned thereto in the Recital.
1.18 “Holder Information” has the meaning assigned thereto in Section 7.1
hereof.
1.19 “Incidental Registration” means a registration required to be effected by
the Company pursuant to Section 3.
1.20 “Incidental Registration Statement” means the registration statement
referred to in Section 3(a), as amended or supplemented by any amendment or supplement,
including post-effective amendments, and all materials incorporated by reference or
explicitly deemed to be incorporated by reference in such registration statement.
1.21 “Majority Holders” shall mean, on any date, holders of the majority of the
Shares constituting Registrable Securities.
1.22 “Material Event” has the meaning assigned thereto in Section 4.1(4).
1.23 “Notice and Information Summary” means a written notice delivered to the
Company containing such information with respect to the Holder as is required to be included
in the Relevant Registration Statement and Prospectus in order to comply with
the Securities Act, which information shall be (i) the name and address of the Holder, (ii) the number of
Shares held by such Holder that it wishes to include in the Relevant Registration Statement
and Prospectus, (iii) the intended method of distribution and (iv) any other information
required to be disclosed under the Securities Act and, to the extent the Holder is not
represented by counsel, reasonably requested by the Company.
1.24 “Notice Holder” means, on any date, any Holder that has delivered items
(i) though (iii) of the Notice and Information Summary to the Company on or prior to such
date. The Notice and Information Summary shall be deemed as notice that a Holder wishes to
be included in the Relevant Registration Statement; provided that some or all of such
Holder’s Registrable Securities have not been sold in accordance with a Relevant
Registration Statement.
1.25 “Ordinary Shares” means the ordinary shares in the capital of the Company,
US$0.01 par value per share.
1.26 “Penalty Charge” has the meaning assigned thereto in Section 2.6.
1.27 “Penalty Charge Applicable Amount” has the meaning assigned thereto in
Section 2.6.
1.28 “Penalty Charge Payment Date” has the meaning assigned thereto in Section
2.6.
1.29 “Person” means a corporation, association, partnership, organization,
business, individual, government or political subdivision thereof or governmental agency.
1.30 “Prospectus” means each prospectus included in any Relevant Registration
Statement, including any preliminary prospectus, any such prospectus as amended or
supplemented by any amendment or prospectus supplement, including post-effective amendments
and all materials incorporated by reference or explicitly deemed to be incorporated by
reference in the foregoing.
1.31 “Purchase Agreement” has the meaning specified in the first paragraph of
this Agreement.
1.32 “Purchaser” has the meaning specified in the first paragraph of this
Agreement.
1.33 “Record Date” means, (i) January 11, with respect to a Penalty Charge
Payment Date that occurs on January 25 and (ii) July 11, with respect to a Penalty Charge
Payment Date that occurs on July 25.
1.34 “Record Holder” means, with respect to a Penalty Charge Payment Date
relating to the Registrable Securities for which any Penalty Charge has accrued, a Notice
Holder that was the holder of record of such Registrable Securities at the close of
business on the Record Date relating to such Penalty Charge Payment Date.
1.35 “Registrable Securities” means the Shares until the earlier of (i) their
effective registration under the Securities Act and the resale of all the Shares in
accordance with the Relevant Registration Statement or (ii) the date on which the Shares are
(A) sold pursuant to Rule 144 under circumstances in which any legend borne by any of the
Shares relating to restrictions on transferability thereof, under the Securities Act or
otherwise, is removed or (B) freely transferable without restriction under Rule 144.
1.36 “Registration Default” has the meaning assigned thereto in Section 2.6.
1.37 “Registration Expenses” has the meaning assigned thereto in Section 6.
1.38 “Relevant Registration Statement” means the Shelf Registration Statement
or the Incidental Registration Statement, as the context may require.
1.39 “Rule 144,” “Rule 405” and “Rule 415” mean, in each case,
such rule as promulgated under the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the Commission.
1.40 “Securities Act” means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
1.41 “Shares” has the meaning specified in the first paragraph of this
Agreement.
1.42 “Shelf Registration Statement” means the shelf registration statement
referred to in Section 2.1, as amended or supplemented by any amendment or supplement,
including post-effective amendments, and all materials incorporated by reference or
explicitly deemed to be incorporated by reference in such Shelf Registration Statement.
1.43 “Special Counsel” has the meaning assigned thereto in Section 6.
1.44 “Trigger Date” has the meaning assigned thereto in Section 2.6.
1.45 “Underwritten Offering” means a sale of securities of the Company to an
underwriter or underwriters for reoffering to the public.
Unless the context otherwise requires, any reference herein to a “Section” or “clause” refers
to a Section or clause, as the case may be, of this Agreement, and the words “herein,” “hereof” and
“hereunder” and other words of similar import refer to this Agreement as a whole and not to any
particular Section or other subdivision. Unless the context otherwise requires, any reference to a
statute, rule or regulation refers to the same (including any successor statute, rule or regulation
thereto) as it may be amended from time to time.
SECTION 2 REGISTRATION UNDER THE SECURITIES ACT.
2.1 The Company agrees (and NGM agrees to cause the Company) to file under the Securities
Act as promptly as practicable but in any event no later than thirty (30)
days after the earlier of (i) June 30, 2008 and (ii) the date on which the Company files its Form 20-F for the fiscal
year ended December 31, 2007 with the Commission (such earlier date, the “Eligibility
Date”), a shelf registration statement (the “Shelf Registration Statement”) for an
offering to be made on a delayed or continuous basis pursuant to Rule 415 registering the resale
from time to time by Holders thereof of all of the Registrable Securities (or, if registration of
Registrable Securities not held by Notice Holders is not permitted by the rules and regulations
of the Commission, then registering the resale from time to time by Notice Holders of their
Registrable Securities). At least twenty (20) Business Days before the Company expects the Shelf
Registration Statement to become effective under the Securities Act (or if the Shelf Registration
Statement becomes effective on or before June 11, 2008, then fifteen (15) Business Days before
the Company expects the Shelf Registration Statement to become effective under the Securities
Act), the Company shall give notice thereof to each Holder who has provided the Company its
contact information (including the name of the contact person, telephone number and fax number of
such contact person). Within ten (10) Business Days (or if the Shelf Registration Statement
becomes effective on or before June 11, 2008, then five (5) Business Days) of receipt of such
notice from the Company, each Holder shall notify the Company if such Holder elects to be named
as a selling securityholder in the Shelf Registration Statement and the related Prospectus, and
deliver to the Company a Notice and Information Summary.
2.2 The Company agrees (and NGM agrees to cause the Company) to use its reasonable best
efforts to cause the Shelf Registration Statement to become effective under the Securities Act
within one hundred eighty (180) days after the Eligibility Date; provided, however, that the
Company may, upon written notice to all Holders, postpone having the Shelf Registration Statement
declared effective one time for a reasonable period not to exceed 30 consecutive days if the
Company possesses material non-public information, the disclosure of which would have a material
adverse effect on the Company and its subsidiaries taken as a whole. The Company shall (and NGM
agrees to cause the Company to) use its reasonable best efforts to keep such Shelf Registration
Statement continuously effective until the earliest of (x) the date that there are no longer any
Registrable Securities outstanding; (y) the expiration of the period referred to in Rule
144(d)(1) of the Securities Act with respect to all Registrable Securities held by Persons that
are not Affiliates of the Company; and (z) three years from the date such Shelf Registration
Statement is declared effective (such period, the “Effective Period”). Without prejudice
to any registration rights, existing as of the date hereof, held by the Company’s security
holders or NGM with respect to the Company’s securities, none of the Company’s securityholders
(including NGM), other than Holders of Registrable Securities, shall have the right to include
any of the Company’s securities in the Shelf Registration Statement.
2.3 The Company further agrees to cause (and NGM agrees to cause the Company to cause) the
Shelf Registration Statement and the related Prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration
Statement or such amendment or supplement, (i) to comply in all material respects with the
applicable requirements of the Securities Act and (ii) not to contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading, and the Company agrees to furnish to
the Holders of
the Registrable Securities, promptly upon request, copies of any supplement or amendment prior to its being used or promptly following its filing with the Commission; provided,
however, that the Company shall have no obligation to deliver to Holders of Registrable
Securities copies of any amendment consisting exclusively of an Exchange Act report or other
Exchange Act filing otherwise publicly available on the Company’s website. If the Shelf
Registration Statement, as amended or supplemented from time to time, ceases to be effective for
any reason at any time during the Effective Period (other than because all Registrable Securities
registered thereunder shall have been sold pursuant thereto or shall have otherwise ceased to be
Registrable Securities or as permitted under Section 4.2, but subject to the last sentence of
Section 4.2), the Company shall use its reasonable best efforts to cause such Shelf Registration
Statement to become effective under the Securities Act or to obtain the prompt withdrawal of any
order suspending the effectiveness of such Shelf Registration Statement for purposes contemplated
hereunder.
2.4 Each Holder of Registrable Securities agrees that if such Holder wishes to sell
Registrable Securities pursuant to the Shelf Registration Statement and related Prospectus, it
will do so only in accordance with Section 2.5 and Section 4.2. Each Holder of Registrable
Securities wishing to sell Registrable Securities pursuant to a Shelf Registration Statement and
related Prospectus agrees to deliver a completed and executed Notice and Information Summary to
the Company prior to any attempted or actual distribution of Registrable Securities under a Shelf
Registration Statement. The Company agrees to request any information from the Holders (other
than the name and address of the Holder, the number of Shares held by such Holder that it wishes
to include in the Relevant Registration Statement and Prospectus and the intended method of
distribution) that are required to be disclosed under the Securities Act or otherwise reasonably
requested by the Company immediately following such Holder’s request to include some or all of
the Registrable Securities it holds under a Shelf Registration Statement
2.5 If a Holder becomes a Notice Holder, the Company shall, as promptly as is practicable
after the date a Notice and Information Summary is delivered, and in any event within thirty (30)
days after the date of receipt of such Notice and Information Summary, or if the use of the
Prospectus has been suspended by the Company under Section 4.2 hereof at the time of receipt of
the Notice and Information Summary or is suspended within five (5) days after the date such
Notice and Information Summary is received, thirty (30) days after the expiration of the period
during which the use of the Prospectus is suspended:
(1) if required by applicable law, file with the Commission a post-effective amendment to the
Shelf Registration Statement or prepare and, if required by applicable law, file a supplement to
the related Prospectus or a supplement or amendment to any document incorporated therein by
reference or file any other required document so that the Holder delivering such Notice and Information Summary is named as a selling security holder in the
Shelf Registration Statement and the related Prospectus in such a manner as to permit such Holder
to deliver such Prospectus to purchasers of the Registrable Securities in accordance with
applicable law and, if the Company shall file a post-effective amendment to the Shelf Registration
Statement, use their reasonable efforts to cause such post-effective amendment to be declared or to
otherwise become effective under the Securities Act as promptly as is practicable.
Notwithstanding the foregoing, the Company shall not be required to file more than one (1) post-effective amendment
to the Shelf Registration Statement or supplement to the related Prospectus during any thirty (30)
day period;
(2) provide such Notice Holder, upon request, a reasonable number of copies of any documents
filed pursuant to Section 2.1; and
(3) notify such Holder as promptly as practicable after the effectiveness under the Securities
Act of any post-effective amendment filed pursuant to Section 2.5(1).
Notwithstanding anything contained herein to the contrary, the Company shall be under no
obligation to name any Holder that is not a Notice Holder as a selling securityholder in any Shelf
Registration Statement or related Prospectus; provided, however, that any Holder that becomes a
Notice Holder (regardless of when such Holder became a Notice Holder) shall be named as a selling
securityholder in a Shelf Registration Statement or related Prospectus in accordance with the
requirements of this Section 2.5 or Section 2.1, as applicable.
2.6 If any of the following events (any such event a “Registration Default”) shall
occur, then a penalty charge (the “Penalty Charge”) shall become payable by NGM to the
Holders in respect of the Shares as follows:
(1) if the Company has not filed its Form 20-F for the fiscal year ended December 31, 2007
with the Commission on or prior to June, 30, 2008, the Penalty Charge shall accrue on the Purchase
Price at a rate of 5.0% per annum for the first 90 days following such date and at a rate of 10.0%
per annum thereafter; such amount as reduced by the amount of payment or payments actually made by
NGM to the Holders pursuant to Section 5.6 of the Purchase Agreement; or
(2) if the Shelf Registration Statement is not filed with the Commission within 30 days
following the Eligibility Date, then commencing on the 31st day after the Eligibility Date, the
Penalty Charge shall accrue on the Purchase Price at a rate of 0.5% per annum for the first 90 days
following such 31st day and at a rate of 1.0% per annum thereafter; or
(3) if the Shelf Registration Statement is not declared effective and does not otherwise
become effective within 180 days following the Eligibility Date, then commencing on the
181st day after the Eligibility Date, the Penalty Charge shall accrue on Purchase Price
at a rate of 0.5% per annum for the first 90 days following such 181st day and at a rate
of 1.0% per annum thereafter; or
(4) if the Shelf Registration Statement has been declared effective or has otherwise become
effective but such Shelf Registration Statement ceases to be effective at any time during the
Effective Period (without being succeeded immediately by a new Shelf Registration Statement that is
filed and immediately becomes effective under the Securities Act) for a period of time (including
the Deferral Periods) which shall exceed forth five (45) days in the aggregate in any six (6) month
period (such 46th day, the “Trigger Date”), except as
permitted under Section 4.2 (but subject to the last sentence of Section 4.2), then commencing on the Trigger Date, the
Penalty Charge shall accrue on a portion of the Purchase Price equal to the product of the Purchase
Price and a fraction, (x) the numerator of which shall be the number of Shares, of which the Record
Holders were holders of record at the close of business on the applicable Record Date and (y) the
denominator of which shall be the number of all the Shares (the “Penalty Charge Applicable
Amount”), at a rate of 0.5% per annum for the first 90 days following such date on which the
Shelf Registration Statement ceases to be effective and at a rate of 1.0% per annum thereafter.
The Penalty Charge on the Registrable Securities, if any, will be payable in cash on January
25 and July 25 of each year (the “Penalty Charge Payment Date”) to Notice Holders of record
of such Registrable Security at the close of each preceding January 11 and July 11, to the extent
of, for each such Penalty Charge Payment Date, the unpaid Penalty Charge that has accrued to (but
excluding) such Penalty Charge Payment Date (or, if the Penalty Charge accrual period shall have
ended prior to such Penalty Charge Payment Date, to, but excluding, the day immediately after the
last day of such Penalty Charge accrual period, as specified below).
On the day when the all Registration Defaults requiring the payment of the Penalty Charge to
the Holders of Shares that are Registrable Securities pursuant to this Section are cured, the
accrual of the Penalty Charge will cease (without in any way limiting the effect of any subsequent
Registration Default requiring the payment of the Penalty Charge). For the avoidance of doubt, the
accrual of the Penalty Charge due to a Registration Default as specified in clause (4) above will
cease upon the date on which the Shelf Registration Statement becomes effective and usable under
the Securities again or another Shelf Registration Statement is filed with the Commission and
becomes effective.
During any given period, in the event of the occurrence of multiple concurrent Registration
Defaults, the rate of accrual of the Penalty Charge for such period shall be the highest rate
provided for in this Section 2.6 applicable to the concurrent Registration Defaults.
A Shelf Registration Statement pursuant to this Section 2 will not be deemed to have become
effective unless it has been declared effective by the Commission or is automatically effective
upon filing with the Commission as provided by Rule 462 under the Securities Act.
SECTION 3 INCIDENTAL REGISTRATION.
3.1 If at any time from and after the date hereof, the Company proposes to register any of its
Ordinary Shares under the Securities Act (other than (A) any registration of public sales or
distributions solely by and for the account of the Company of securities issued (x) pursuant to any
employee benefit or similar plan or any dividend reinvestment plan or (y) in any acquisition of another entity by the Company, or (B) pursuant to Section 2 hereof), either in
connection with a primary offering for cash for the account of the Company or a secondary offering,
the Company shall, each time it intends to effect such a registration, (a) promptly give each
Holder written notice (the “Company Notice”) thereof (which shall include the list of
jurisdictions in which the Company intends to attempt to qualify those securities under the
applicable Blue Sky or other securities laws). Upon the written request of any Holder made
within twenty (20) days after the delivery of the Company Notice (which request shall specify the
Registrable Securities intended to be disposed of by such Holder or its transferees and, unless the
applicable registration is intended to effect a primary offering of Shares for cash for the account
of the Company, the intended method of distribution thereof), the Company will use its reasonable
best efforts to effect the registration under the Securities Act of all Registrable Securities
which the Company has been so requested to register by such Holders to the extent required to
permit the disposition (in accordance with the intended methods of distribution thereof or, in the
case of a registration which is intended to effect a primary offering for cash for the account of
the Company, in accordance with the Company’s intended method of distribution) of the Registrable
Securities so requested to be registered, including, if necessary, by filing with the Commission a
post-effective amendment or a supplement to the Incidental Registration Statement or the related
Prospectus or any document incorporated therein by reference or by filing any other required
document or otherwise supplementing or amending the Incidental Registration Statement, if required
by the rules, regulations or instructions applicable to the registration form used by the Company
for such Incidental Registration Statement or by the Securities Act, any Blue Sky or other state
securities laws, or any rules and regulations thereunder; provided, however, that if, at any time
after giving written notice of its intention to register any securities and prior to the effective
date of the Incidental Registration Statement filed in connection with such registration, the
Company shall determine for any reason not to register or to delay registration of such securities,
the Company may, at its election, give written notice of such determination to each Holder and,
thereupon, (A) in the case of a determination not to register, the Company shall be relieved of its
obligation to register any Registrable Securities in connection with such registration (but not
from its obligation to pay the Registration Expenses incurred in connection therewith), and (B) in
the case of a determination to delay such registration, the Company shall be permitted to delay
registration of any Registrable Securities requested to be included in such Incidental Registration
Statement for the same period as the delay in registering such other securities. The registration
rights granted pursuant to the provisions of this Section 3 shall be in addition to the
registration rights granted pursuant to the other provisions of this Agreement.
3.2 Amount of Inclusion. Subject to Section 4.2 of the Existing Registration Rights
Agreement, the Company shall be required to include in the Incidental Registration Registrable
Securities held by the Holders. The number of Registrable Securities to be included in the
Incidental Registration shall be allocated, subject to Section 4.2 of the Existing Registration
Rights Agreement, pro rata among the Holders thereof requesting inclusion in such Incidental
Registration on the basis of the number of Registrable Securities requested to be included by all
the Holders; provided, however, that in no event shall securities of the Purchaser be excluded from
any registration if securities of NGM or any of its Affiliates (other than the Company and holders
of registration rights granted pursuant to the Existing Registration Rights Agreement as in effect
on the date hereof) are included in such registration.
3.3 Underwriting in Incidental Registration.
(a) Notice of Underwriting in Incidental Registration. If the Incidental Registration is a an
Underwritten Offering, the Company shall so advise the Holders as a part of the written notice
given pursuant to Section 3.1. In this event, the right of any Holder to registration shall be
conditioned upon such Holder’s agreement to participate in the underwriting
and the inclusion of that Holder’s Registrable Securities in the underwriting, to the extent provided in this Section 3.
All Holders proposing to distribute their securities through such underwriting shall (together
with the Company and the other holders distributing their securities through the underwriting)
enter into an underwriting agreement in customary form with the underwriters’ representative for
such offering. The Holders shall have no right to participate in the selection of the underwriters
for an offering pursuant to this Section 3.
(b) Marketing Limitation in Incidental Registration. In the event the underwriters’
representative advises the Holders seeking registration of Registrable Securities pursuant to this
Section 3 in writing that market factors (including, without limitation, the aggregate number of
Ordinary Shares requested to be registered, the general condition of the market, and the status of
the Persons proposing to sell securities pursuant to the Incidental Registration) require a
limitation of the number of shares to be underwritten, the underwriters’ representative may limit
the number of Registrable Securities to be included in the Incidental Registration and underwriting
in accordance with Section 4.2(c) of the Existing Registration Rights Agreement; provided, however,
that in no event shall securities of the Purchaser be excluded from any registration if securities
of NGM or any of its Affiliates (other than the Company and holders of registration rights granted
pursuant to the Existing Registration Rights Agreement) are included in such registration.
(c) Withdrawal in Incidental Registration. If any Holder disapproves of the terms of any
underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the
underwriters’ representative delivered within fourteen (14) days after the Holder is notified of
the terms of any underwriting by the Company. Any Registrable Securities or other securities
excluded or withdrawn from the underwriting shall be withdrawn from the Incidental Registration.
SECTION 4 REGISTRATION PROCEDURES.
The following provisions shall apply to the Relevant Registration Statement filed pursuant to
Section 2 or Section 3, as the case may be.
4.1 The Company shall:
(1) prepare and file with the Commission a registration statement on any form which may be
utilized by the Company and which shall permit the disposition of the Registrable Securities in
accordance with the intended method or methods thereof, as specified in writing by the Holders of
the Registrable Securities, and use its reasonable efforts to cause such registration statement to
become effective in accordance with Section 2.1 or 3.1 above, as the case may be;
(2) before filing any Relevant Registration Statement or Prospectus or any amendments or
supplements thereto with the Commission, furnish to the Purchaser copies of all such documents
proposed to be filed and use reasonable consideration to any comments as the Purchaser shall
reasonably propose within three (3) Business Days of the delivery of such copies to the Purchaser;
(3) use its reasonable efforts to prepare and file with the Commission such amendments and
post-effective amendments to the Relevant Registration Statement and file with the Commission any
other required document as may be necessary to keep such Relevant Registration Statement
continuously effective until the expiration of the Effective Period (except to the extent permitted
under Section 4.2); cause the related Prospectus to be supplemented by any required prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then
in force) under the Securities Act; and comply with the provisions of the Securities Act applicable
to it with respect to the disposition of all Registrable Securities covered by such Relevant
Registration Statement during the Effective Period (except to the extent permitted under Section
4.2) in accordance with the intended methods of disposition by the sellers thereof set forth in
such Relevant Registration Statement as so amended or such Prospectus as so supplemented;
(4) promptly notify the Notice Holders of Registrable Securities (A) when such Relevant
Registration Statement or the Prospectus included therein or any amendment or supplement to the
Prospectus or post-effective amendment has been filed with the Commission, and, with respect to
such Relevant Registration Statement or any post-effective amendment, when the same has become
effective, (B) of any request, following the effectiveness of the Relevant Registration Statement,
by the Commission or any other Federal or state governmental authority for amendments or
supplements to the Relevant Registration Statement or related Prospectus or for additional
information, (C) of the issuance by the Commission of any stop order suspending the effectiveness
of such Relevant Registration Statement or the initiation or written threat of any proceedings for
that purpose, including the receipt by the Company of any notice of objection of the Commission to
the use of a Relevant Registration Statement or any post-effective amendment thereto pursuant to
Rule 401(g)(2) under the Securities Act, (D) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or written threat of any proceeding for such purpose, (E) of the
occurrence of (but not the nature of or details concerning) any material event or the existence of
any material fact (a “Material Event”) as a result of which any Relevant Registration
Statement shall 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, or any
Prospectus shall 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 (provided, however, that no notice by the
Company shall be required pursuant to this clause (E) in the event that the Company either promptly
files a prospectus supplement to update the Prospectus or a Form 6-K or other appropriate Exchange
Act report that is incorporated by reference into the Relevant Registration Statement, which, in
either case, contains the requisite information with respect to such Material Event that results in
such Relevant Registration Statement no longer containing any untrue statement of material fact or
omitting to state a material fact necessary to make the statements contained therein not
misleading) or (F) of the determination by the Company that a post-effective amendment to the Relevant Registration
Statement will be filed with the Commission, which notice may, at the discretion of the Company (or
as required pursuant to Section 4.2), state that it constitutes a Deferral Notice, in which event
the provisions of Section 4.2 shall apply;
(5) prior to any public offering of the Registrable Securities pursuant to the Relevant
Registration Statement, (i) use its reasonable best efforts to register or qualify or cooperate
with the Notice Holders in connection with the registration or qualification (or exemption from
such registration or qualification) of such Registrable Securities for offer and sale under the
securities or, if required, Blue Sky laws of such jurisdictions within the United States as any
Notice Holders reasonably requests in writing (which requests included in the Notice and
Information Summary), (ii) use its reasonable efforts to keep each such registration or
qualification (or exemption therefrom) effective during the Effective Period in connection with
such Notice Holder’s offer and sale of Registrable Securities pursuant to such registration or
qualification (or exemption therefrom) and (iii) do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of such Registrable Securities in the
manner set forth in the Relevant Registration Statement and the related Prospectus; provided that
the Company and NGM s will not be required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified or (ii) take any action which would subject it to
general service of process or to taxation in any such jurisdiction where it is not then so subject;
(6) use its reasonable best efforts to prevent the issuance of, and if issued, to obtain the
withdrawal of any order suspending the effectiveness of the Relevant Registration Statement or, in
the event of an objection of the Commission pursuant to Rule 401(g)(2), promptly file an amendment
to such Relevant Registration Statement on the proper form, and to obtain the lifting of any
suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction
in which they have been qualified for sale, in each case at the earliest practicable date;
(7) upon reasonable notice, for a reasonable period prior to the filing of the Relevant
Registration Statement, and throughout the Effective Period (i) make reasonably available for
inspection by a representative of, and Special Counsel acting for, Majority Holders of the
Registrable Securities being sold and any underwriter (if any) (and its counsel), participating in
any disposition of Registrable Securities pursuant to such Relevant Registration Statement, all
relevant financial and other records, pertinent corporate documents and properties of the Company
and its subsidiaries and (ii) use reasonable efforts to cause their officers, directors, employees,
accountants and counsel supply all relevant information reasonably requested by such
representative, Special Counsel or any such underwriter in connection with such Relevant
Registration Statement, in each case as is customary for similar “due diligence” examinations;
provided, however, that such persons shall first agree in writing with the Company that such person
will not engage in any transaction involving Company securities in violation of applicable law
(including without limitation federal securities laws prohibiting trading on the basis of material
non-public information) and that any information that is confidential at the time of delivery of
such information shall be kept confidential by such persons and shall be used solely for the
purposes of exercising rights under this Agreement, unless such records, information or documents
subsequently enter the public domain (other than as a consequence of the breach of this clause by
the Majority Holders); provided further, that the foregoing inspection
and information gathering shall, to the greatest extent possible, be coordinated on behalf of
all the Notice Holders and the other parties entitled thereto by the Special Counsel.
(8) if requested by the Majority Holders of the Registrable Securities being sold in an
underwriting, their Special Counsel or the managing underwriters (if any) in
connection with such Relevant Registration Statement, use its reasonable best efforts to cause (i) its counsel to
deliver an opinion relating to the Relevant Registration Statement and the Securities in customary
form, (ii) its officers to execute and deliver all customary documents and certificates requested
by the Majority Holders of the Securities being sold, their Special Counsel or the managing
underwriters (if any) and (iii) its independent registered public accounting firm to provide a
letter confirming that they are an independent registered public accounting firm within the rules
and regulations adopted by the Commission and the Public Accounting Oversight Board (United States)
and as required by the Securities Act with, in the case of an amendment or supplement that includes
audited financial information, such changes as may be necessary to reflect the amended or
supplemented financial information;
(9) if reasonably requested by the Purchaser or any Notice Holder in writing, incorporate in a
prospectus supplement or post-effective amendment to the Relevant Registration Statement such
information as the Purchaser or such Notice Holder shall, on the basis of a written opinion of
nationally-recognized counsel experienced in such matters, determine to be required to be included
therein by applicable law and, if the Company determines pursuant hereto to give effect to such
request, to make any required filings of such prospectus supplement or such post-effective
amendment; provided, that the Company shall not be required to take any actions under this Section
4.1(9) that are not, in the reasonable opinion of counsel for the Company, in compliance with
applicable law;
(10) promptly furnish to each Notice Holder and the Purchaser, upon their request and without
charge, at least one (1) conformed copy of the Relevant Registration Statement and any amendments
thereto, including financial statements but excluding schedules, all documents incorporated or
deemed to be incorporated therein by reference and all exhibits; provided, however, that the
Company shall have no obligation to deliver to Notice Holders or the Purchaser a copy of any
amendment consisting exclusively of an Exchange Act report or other Exchange Act filing otherwise
publicly available on the Company’s website;
(11) during the Effective Period, deliver to each Notice Holder in connection with any sale of
Registrable Securities pursuant to the Relevant Registration Statement, without charge, at least
one copy of the Prospectus relating to such Registrable Securities (including each preliminary
prospectus) and any amendment or supplement thereto; and the Company hereby consents (except during
such periods that a Deferral Notice is outstanding and has not been revoked) to the use of such
Prospectus or each amendment or supplement thereto by each Notice Holder in connection with any
offering and sale of the Registrable Securities covered by such Prospectus or any amendment or
supplement thereto in the manner set forth therein; and
(12) cooperate with the Notice Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to the Relevant Registration
Statement free of any restrictive legends and in such denominations and registered in such names as the Holders thereof may request in writing at least two (2)
Business Days prior to sales of Securities pursuant to such Relevant Registration Statement;
provided that nothing herein shall require the Company to deliver certificated Shares to any
beneficial holder of Shares.
4.2 Upon (A) the issuance by the Commission of a stop order suspending the effectiveness of
the Relevant Registration Statement or the initiation of proceedings with respect to the Relevant
Registration Statement under Section 8(d) or 8(e) of the Securities Act, (B) the occurrence or
the existence of any Material Event as a result of which any Relevant Registration Statement
shall 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, or any
Prospectus shall 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, or (C) the occurrence or existence
of any corporate development that, in the discretion of the Company, makes it appropriate to
suspend the availability of the Relevant Registration Statement and the related Prospectus, the
Company will (i) in the case of clause (B) or (C) above, subject to the third sentence of this
provision, as promptly as is practicable prepare and file a post-effective amendment to such
Relevant Registration Statement or a supplement to the related Prospectus or any document
incorporated therein by reference or file any other required document that would be incorporated
by reference into such Relevant Registration Statement and Prospectus so that such Relevant
Registration Statement does 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 such Prospectus does 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, as
thereafter delivered (or, to the extent permitted by law, made available) to the purchasers of
the Registrable Securities being sold thereunder (it being understood that the Company may rely
on information with respect to a Notice Holder provided by such Notice Holder to the Company for
use in such Prospectus, including, without limitation, the Holder Information), and, in the case
of a post-effective amendment to the Relevant Registration Statement, subject to the third
sentence of this provision, use reasonable efforts to cause it to be declared effective or
otherwise become effective as promptly as is practicable and (ii) give notice to the Notice
Holders that the availability of the Relevant Registration Statement is suspended (a
“Deferral Notice”). Upon receipt of any Deferral Notice, each Notice Holder agrees not
to sell any Registrable Securities pursuant to the Relevant Registration Statement until such
Notice Holder’s receipt of copies of the supplemented or amended Prospectus provided for in
clause (i) above, or until it is advised in writing by the Company that the Prospectus may be
used, and has received copies of any additional or supplemental filings that are incorporated or
deemed incorporated by reference in such Prospectus.
The Company will use its reasonable best efforts to ensure that the use of the Prospectus
may be resumed (x) in the case of clause (A) above, as promptly as is practicable, (y) in the
case of clause (B) above, as soon as, in the sole judgment of the Company, public disclosure of
such Material Event would not be prejudicial to or contrary to the interests of the Company or,
if necessary to avoid unreasonable burden or expense, as soon as practicable thereafter and (z)
in the case of clause (C) above, as soon as, in the discretion of the Company, such suspension is
no longer appropriate; provided that the period during which the availability of the Relevant
Registration Statement and any Prospectus is suspended (the “Deferral Period”), without the Company incurring any obligation to pay the Penalty
Charge pursuant to Section 2.6, shall not exceed 120 days in the aggregate in any 12 month
period.
4.3 Each Holder of Registrable Securities agrees that upon receipt of any Deferral Notice
from the Company, such Holder shall forthwith discontinue (and cause any placement or sales agent
or underwriters acting on their behalf to discontinue) the disposition of Registrable Securities
pursuant to the registration statement applicable to such Registrable Securities until such
Holder (i) shall have received copies of such amended or supplemented Prospectus and, if so
directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all
copies, other than permanent file copies, then in such Holder’s possession of the Prospectus
covering such Registrable Securities at the time of receipt of such notice or (ii) shall have
received notice from the Company that the disposition of Registrable Securities pursuant to the
Relevant Registration may continue.
4.4 The Company may requires each Holder of Registrable Securities as to which any
registration pursuant to Section 2.1 or 3.1, as the case may be, is being effected to furnish to
the Company such information regarding such Holder and such Holder’s intended method of
distribution of such Registrable Securities as the Company may from time to time reasonably
request in writing, but only to the extent that such information is required in order to comply
with the Securities Act. Each such Holder agrees to notify the Company as promptly as
practicable of any inaccuracy or change in information previously furnished by such Holder to the
Company or of the occurrence of any event in either case as a result of which any Prospectus
relating to such registration contains or would contain an untrue statement of a material fact
regarding such Holder or such Holder’s intended method of disposition of such Registrable
Securities or omits to state any material fact regarding such Holder or such Holder’s intended
method of disposition of such Registrable Securities required to be stated therein or necessary
to make the statements therein not misleading, and promptly to furnish to the Company any
additional information required to correct and update any previously furnished information or
required so that such Prospectus shall not contain, with respect to such Holder or the
disposition of such Registrable Securities, an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the statements therein
not misleading.
4.5 The Company shall comply with all applicable rules and regulations of the Commission to
the extent and so long as they are applicable to any Relevant Registration Statement.
4.6 The Company shall use its reasonable efforts to provide such information as is required
for any filings required to be made with the FINRA.
4.7 The Company shall enter into such customary and reasonable agreements and take all such
other necessary, reasonable and lawful actions in connection therewith (including those requested
by the Majority Holders of the Registrable Securities covered by the Relevant Registration
Statement) in order to expedite or facilitate disposition of such Registrable Securities.
SECTION 5 HOLDER’S OBLIGATIONS.
Each Holder agrees, by acquisition of the Registrable Securities, that no Holder of
Registrable Securities shall be entitled to sell any of such Registrable Securities pursuant to the
Shelf Registration Statement or to receive a Prospectus relating thereto, unless such Holder has
furnished the Company with a Notice and Information Summary as required pursuant to Sections 2.1
and 2.5 hereof (including the information required to be included in such Notice and Information
Summary) and the information set forth in the next sentence. Each Notice Holder agrees promptly to
furnish to the Company all information required to be disclosed in order to make the information
previously furnished to the Company by such Notice Holder not misleading and any other information
regarding such Notice Holder and the distribution of such Registrable Securities as may be required
to be disclosed in the Shelf Registration Statement under applicable law or pursuant to Commission
comments or as the Company may from time to time reasonably request. Each Holder agrees to keep
confidential the receipt of any Deferral Notice and the contents thereof, except as required
pursuant to applicable law.
Each Holder further agrees not to sell any Registrable Securities pursuant to the Shelf
Registration Statement without delivering, or causing to be delivered, a Prospectus to the
purchaser thereof and, following termination of the Effective Period, to notify the Company, within
ten (10) Business Days of a request by the Company, of the amount of Registrable Securities sold
pursuant to the Shelf Registration Statement and, in the absence of a response, the Company may
assume that all of the Holder’s Registrable Securities were so sold.
SECTION 6 REGISTRATION EXPENSES.
NGM agrees to bear and to pay or cause to be paid promptly upon request being made therefor by
the Company all expenses incident to the performance by the Company of its obligations under this
Agreement or compliance with this Agreement, including, but not limited to, (a) all Commission and
any FINRA registration and filing fees and expenses, (b) all fees and expenses in connection with
the qualification of the Securities for offering and sale under the state securities and Blue Sky
laws referred to in Section 4.1(5) hereof, including reasonable fees and disbursements of one
counsel for the placement agent or underwriters, if any, in connection with such qualifications,
(c) all expenses relating to the preparation, printing, distribution and reproduction of the
Relevant Registration Statement, the related Prospectus and each amendment or supplement to each of
the foregoing, the certificates representing the Securities and all other documents relating
hereto, (d) fees, disbursements and expenses of counsel and independent certified public
accountants of the Company (including the expenses of any opinions or “cold comfort” letters
required by or incident to such performance and compliance) and (e) reasonable fees, disbursements
and expenses of not more than one counsel for the Holders of Registrable Securities retained in
connection with the Relevant Registration Statement, as selected by the Holders and consented to by
the Company, with consent shall not be unreasonably withheld (“Special Counsel”), and fees,
expenses and disbursements of any other Persons, including special experts, retained by the Company
in connection with such registration (collectively, the “Registration Expenses”). To the
extent that any Registration Expenses are incurred, assumed or paid by any Holder of Registrable
Securities or any underwriter or placement agent therefor, the Company shall reimburse such Person
for the full amount of the Registration Expenses so reasonably incurred, assumed or paid promptly after receipt of a documented request therefor.
Notwithstanding the foregoing, the Holders of the Registrable Securities participating in any
Underwritten Offering shall pay all underwriting discounts and commissions, placement agent fees,
brokerage fees and commissions and transfer taxes attributable to the sale or disposition of
such
Registrable Securities and the fees and disbursements of any counsel or other advisors or experts
retained by such Holders (severally or jointly).
SECTION 7 INDEMNIFICATION.
7.1 The Company and NGM shall jointly and severally indemnify and hold harmless each Holder
(including, without limitation, the Purchaser), its Affiliates, their respective officers,
directors, employees, representatives and agents, and each person, if any, who controls such
Holder within the meaning of the Securities Act or the Exchange Act (collectively referred to as
“Holder Indemnified Parties”) from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, relating to purchases and sales of
Registrable Securities and to which a Holder Indemnified Party may become subject to, whether
threatened or commenced, under the Securities Act, the Exchange Act, any Blue Sky laws or any
other federal or state statutory law or regulation, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in any such Relevant Registration Statement, Prospectus,
or issuer Free Writing Prospectus or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or, in the case of a Prospectus, necessary in order
to make the statements therein, in the light of the circumstances under which they were made, not
misleading, and shall reimburse each Holder Indemnified Party promptly upon demand for any legal
or other expenses reasonably incurred by that Holder Indemnified Party in connection with
investigating or defending or preparing to defend against or appearing as a third party witness
in connection with any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company and NGM shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of, or is based upon, an
untrue statement or alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with any information provided by or on behalf of a
Holder (including Purchaser) in writing to the Company expressly for use in the Relevant
Registration Statement, Prospectus, or Free Writing Prospectus (the “Holder
Information”), including, without limitation, information provided to the Company by such
Holder in a Notice and Information Summary; and provided, further, that with respect to any such
untrue statement in or omission from any related preliminary prospectus, the indemnity agreement
contained in this Section 7.1 shall not inure to the benefit of any Holder Indemnified Party from
whom the person asserting any such loss, claim, damage, liability or action received Securities
to the extent that such loss, claim, damage, liability or action of or with respect to such
Holder Indemnified Party results from the fact that both (A) a copy of the final prospectus was
not sent or given to such person at or prior to the written confirmation of the sale of such
Securities to such person and (B) the untrue statement in or omission from the related
preliminary prospectus was corrected in the final prospectus unless, in either case, such failure
to deliver the final Prospectus was a result of non-compliance by the Company and NGM with
Section 4. In addition, no Holder Indemnified Party (including Purchaser) shall be entitled to
this indemnity to the extent such loss, damage, expense, liability, claim or action arises out of
a disposition, pursuant to a Registration Statement, of Registrable Securities by such Holder during a Deferral Period,
provided such Holder received, prior to such disposition, a Deferral Notice with respect to such
Deferral Period. The Company or NGM will not be liable for any indemnity claims to any Holder
Indemnified Party hereunder in excess of the amount of net proceeds received by
such Holder from
the sale of Registrable Securities pursuant to such Relevant Registration Statement unless such
liability is the direct result of the Company or NGM ‘s gross negligence, willful misconduct or
fraud. This indemnity agreement shall be in addition to any liability that the Company and NGM
may otherwise have.
7.2 Each affiliated Holder shall, jointly and severally, and each non-affiliated Holder
shall, severally and not jointly, indemnify and hold harmless the Company, NGM, their Affiliates,
the officers, directors, employees, representatives and agents of each of the Company, NGM and
their Affiliates, and each person, if any, who controls the Company or NGM within the meaning of
the Securities Act or the Exchange Act (collectively referred to as the “Company Indemnified
Parties”), from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company Indemnified Party may become subject, under the
Securities Act, the Exchange Act, applicable Blue Sky laws or any other federal or state
statutory law or regulation, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (A) any untrue statement or alleged untrue statement of a material fact
contained in and in conformity with the Holder Information, or arises out of or is based upon any
omission or alleged omission to state a material fact in connection with such Holder Information,
which material fact was not contained in such Holder Information, and which material fact was
either reasonably requested by the Company and required to be stated in any Registration
Statement or Prospectus, or any amendment or supplement thereto, or necessary to make such Holder
Information not misleading, (B) a sale, by such Holder, pursuant to a Registration Statement, of
Registrable Securities during a Deferral Period, provided that the Company shall have theretofore
provided such Holder with a Deferral Notice with respect to such Deferral Period or (C) a public
sale of Registrable Securities by such Holder without delivery, if required by the Securities
Act, of the most recent applicable Prospectus provided to such Holder by the Company pursuant to
this Agreement; and, subject to the limitation set forth in the immediately preceding clause,
each Holder shall reimburse, as incurred, the Company Indemnified Party for any legal or other
expenses reasonably incurred by the Company Indemnified Party in connection with investigating or
defending or preparing to defend against or appearing as a third party witness in connection with
any such loss, claim, damage or liability, joint or several, or any action in respect thereof;
provided, however, that no such Holder shall be liable for any indemnity claims hereunder in
excess of the amount of net proceeds received by such Holder from the sale of Securities pursuant
to such Relevant Registration Statement unless such liability is the direct result of the
Holder’s gross negligence, willful misconduct or fraud. This indemnity agreement will be in
addition to any liability which any such Holder may otherwise have.
7.3 Promptly after receipt by an indemnified party under this Section 7 of notice of any
claim or the commencement of any action, the indemnified party shall, if a claim in respect
thereof may be made against the indemnifying party pursuant to Section 7.1 or 7.2, promptly
notify the indemnifying party in writing of the claim or the commencement of that action and the
indemnifying person shall have the option to assume the defense of such claim or action,
including the employment of counsel reasonably satisfactory to the indemnified party and payment of all fees and expenses; provided, however, that the failure to notify
the indemnifying party shall not relieve it from any liability which it may have under this
Section 7 except to the extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and provided, further, that the failure to
notify
the indemnifying party shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 7. After notice from the indemnifying party
to the 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 under this Section 7 for any
legal or other expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than the reasonable costs of investigation; provided, however, that an
indemnified party shall have the right to employ its own counsel in any such action, but the
fees, expenses and other charges of such counsel for the indemnified party will be at the expense
of such indemnified party unless (1) the employment of counsel by the indemnified party has been
authorized in writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may be legal
defenses available to it or other indemnified parties that are different from or in addition to
those available to the indemnifying party, (3) a conflict or potential conflict exists (based
upon advice of counsel to the indemnified party) between the indemnified party and the
indemnifying party (in which case the indemnifying party will not have the right to direct the
defense of such action on behalf of the indemnified party) or (4) the indemnifying party has not
in fact employed counsel reasonably satisfactory to the indemnified party to assume the defense
of such action within a reasonable time after receiving notice of the commencement of the action,
in each of which cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the indemnifying party
or parties shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one
separate firm of attorneys (in addition to any local counsel) at any one time for all such
indemnified party or parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 7.1 and 7.2, shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No indemnifying party shall be
liable for any settlement of any such action effected without its written consent (which consent
shall not be unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party agrees to indemnify
and hold harmless any indemnified party from and against any loss or liability by reason of such
settlement or judgment or if (i) the indemnifying party has not paid the expenses and fees for
which it is liable thirty (30) days after notice by the indemnified party of request for
reimbursement and (ii) such indemnified party shall have given such indemnifying party at least
thirty (30) days’ prior notice of its intention to settle. No indemnifying party shall, without
the prior written consent of the indemnified party (which consent shall not be unreasonably
withheld), effect any settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement (i) includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of such proceeding and
(ii) does not include a statement or admission of fault, culpability or a failure to act, by or
on behalf of the indemnified party.
7.4 The provisions of this Section 7 and Section 8 shall remain in full force and effect,
regardless of any investigation made by or on behalf of any Holder, the Company, NGM, or any of
the indemnified Persons referred to in this Section 7 and Section 8, and shall survive the sale
by a Holder of securities covered by the Relevant Registration Statement.
7.5 Notwithstanding any other provisions in this Section 7 and Section 8, the indemnified
parties shall not be entitled to recover from the indemnifying parties for any losses, claims,
damages, liabilities or actions under this Section 7 and Section 8 unless and until the total
amount of all such losses, claims, damages, liabilities or actions indemnifiable hereunder
exceeds US$100,000, provided that when such amount is exceeded, the indemnifying parties shall be
liable for all amount in excess of the first US$100,000. In any event, the indemnifying parties’
total liability for any losses, claims, damages, liabilities or actions under this Section 7 and
Section 8 shall not exceed the Purchase Price allocable to the relevant Holders.
SECTION 8 CONTRIBUTION.
If the indemnification provided for in Section 7 is unavailable or insufficient to hold
harmless an indemnified party under Section 7.1 or 7.2, then each indemnifying party shall, in lieu
of indemnifying such indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received
by the Company and NGM from the offering and sale of the Company securities, on the one hand, and a
Holder with respect to the sale by such Holder of Registrable Securities, on the other, or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law or not applicable to
the situation, in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and NGM on the one hand
and such Holder (including the Purchaser) on the other with respect to the statements or omissions
that resulted in such loss, claim, damage or liability, or action in respect thereof, as well as
any other relevant equitable considerations. The relative benefits received by the Company and NGM
on the one hand and a Holder on the other with respect to such offering and such sale shall be
deemed to be in the same proportion as the total net proceeds from the offering of the Registrable
Securities (before deducting expenses) received by or on behalf of the Company and NGM, on the one
hand, and the total the total net proceeds from the sale of Registrable Securities by such Holder
on the other. The relative fault 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 the Company and NGM or information supplied by the Company and NGM
on the one hand, or to any information relates to the Holder or planned disposition of the
Registrable Securities or supplied by such Holder on the other, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent such untrue
statement or omission. The parties hereto agree that it would not be just and equitable if
contributions pursuant to this Section 8 were to be determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable considerations referred to
herein.
The amount paid or payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 8 shall be deemed to
include, for purposes of this Section 8, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending or preparing to defend any such
action or claim.
Notwithstanding the provisions of this Section 8, an indemnifying party that is a Holder of
Securities shall not be required to contribute any amount in excess of the amount by which the
total price at which the Securities sold by such indemnifying party to any purchaser exceeds the
amount of any damages which such indemnifying party has otherwise paid or become liable to pay by
reason of any untrue or alleged untrue statement or omission or alleged omission unless such party
is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities
Act) with respect to such statement or 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.
SECTION 9 RULE 144A AND RULE 144.
Before the end of the Effective Period, so long as any Registrable Securities remain
outstanding, the Company shall use its reasonable best efforts to file the reports required to be
filed by it under Rule 144A(d)(4) under the Securities Act and the Exchange Act in a timely manner
and, if at any time the Company is not required to file such reports under the Exchange Act, it
will, upon the reasonable written request of any Holder of Registrable Securities, make publicly
available other information so long as necessary to permit sales of such Holder’s securities
pursuant to Rules 144 and 144A and customarily required in connection with sales pursuant to such
exemptions. The Company covenants that it will take such further action as any Holder of
Registrable Securities may reasonably request, all to the extent required from time to time to
enable such Holder to sell Registrable Securities without registration under the Securities Act
within the limitation of the exemptions provided by Rules 144 and 144A (including, without
limitation, the requirements of Rule 144A(d)(4)) and customarily taken in connection with sales
pursuant to such exemptions. Upon the written request of any Holder of Registrable Securities, the
Company shall deliver to such Holder a written statement as to whether the Company has duly filed
all reports required to be filed by it under Section 13 or 15(d) of the Exchange Act during the
preceding twelve (12) months, unless such a statement has been included in the Company’s most
recent report filed with the Commission pursuant to Section 13 or Section 15(d) of the Exchange
Act. Notwithstanding the foregoing, nothing in this Section 9 shall be deemed to require the
Company to register any of its securities pursuant to the Exchange Act.
SECTION 10 UNDERWRITTEN REGISTRATIONS
Notwithstanding anything herein to the contrary, in no event shall Registrable Securities be
offered and sold pursuant hereto through a Shelf Registration Statement pursuant to an Underwritten
Offering without the prior written agreement of the Company. No Person may participate in any
underwritten registration hereunder unless such Person (i) agrees to sell such Person’s Registrable
Securities on the basis reasonably provided in any underwriting arrangements approved by the
Company and (ii) completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms of such
underwriting arrangements.
SECTION 11 MISCELLANEOUS.
11.1 Amendments and Waivers. The provisions of this Agreement 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 Majority Holders; provided,
however, that, no consent is necessary from any of the Holders in the event that this Agreement
is amended, modified or supplemented for the purpose of curing any ambiguity, defect or
inconsistency that does not adversely affect the rights of any Holders. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose Securities are being sold pursuant to the
Relevant Registration Statement and that does not directly or indirectly affect the rights of
other Holders may be given by Holders of a majority in aggregate amount of the Registrable
Securities being sold by such Holders pursuant to the Relevant Registration Statement. Each
Holder of Registrable Securities outstanding at the time of any such amendment, modification,
supplement, waiver or consent or thereafter shall be bound by any such amendment, modification,
supplement, waiver or consent effected pursuant to this Section 11.1, whether or not any notice,
writing or marking indicating such amendment, modification, supplement, waiver or consent appears
on the Registrable Securities or is delivered to such Holder.
11.2 Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail, telecopier or air courier
guaranteeing next-day delivery:
(1) If to the Company, to:
Simcere Pharmaceutical Group
No. 699-18 Xxxx Xx Avenue,
Xxxx Xx District, Nanjing
Jiangsu Province 210042
People’s Republic of China
Attention: Xx. Xxxxxxx Xxx
Company Counsel
Telephone Number: 00 (00) 0000 0000 Ext 8810
Fax Number: 00(00) 0000 0000
No. 699-18 Xxxx Xx Avenue,
Xxxx Xx District, Nanjing
Jiangsu Province 210042
People’s Republic of China
Attention: Xx. Xxxxxxx Xxx
Company Counsel
Telephone Number: 00 (00) 0000 0000 Ext 8810
Fax Number: 00(00) 0000 0000
(2) If to NGM, initially at the address set forth in the Purchase Agreement;
(3) If to the Purchaser, initially at its address set forth in the Purchase Agreement; and
(4) If to a Holder, to the address of such Holder set forth in the security register, the
Notice and Information Summary or other records of the Company.
All such notices and communications shall be deemed to have been duly given: when delivered by
hand, if personally delivered; one Business Day after being delivered to a next-day air courier;
five (5) Business Days after being deposited in the mail; and when receipt is acknowledged by the
recipient’s telecopier machine, if sent by telecopier.
11.3 Successors and Assigns. This Agreement shall be binding upon the parties
hereto and their respective successors and assigns. Unless otherwise provided herein, the
Purchaser may assign its rights and obligations hereunder to any of its Affiliates;
provided 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; and provided,
further, that such assignment shall be effective only if the transferee agrees to be
bound by this Agreement and immediately following such transfer, the further disposition of such
securities by the transferee or assignee is restricted under the Securities Act.
11.4 Subsequent Registration Rights. After the date of this Agreement, the Company
shall not, without the prior written consent of the Holders of 60% of the Registrable Securities
enter into any agreement with any holder or prospective holder of Company securities that would
grant such holder registration rights senior to or equal to those granted to the Holders under
this Agreement; provided that this Section 11.4 shall not apply if all the Holders’ Registrable
Securities have been registered in accordance with this Agreement.
11.5 Counterparts. This Agreement may be executed in any number of counterparts
(which may be delivered in original form or by telecopier) and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
11.6 Headings. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
11.7 Governing Law, Jurisdiction and Service of Process. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
(1) The Company and NGM irrevocably consent to the jurisdiction of the courts of the State of
New York and the courts of the United States of America located in the Borough of Manhattan, City
and State of New York over any suit, action or proceeding with respect to this Agreement or the
transactions contemplated hereby. The Company and NGM waive any objection that they may have to the
venue of any suit, action or proceeding with respect to this Agreement or the transactions
contemplated hereby in the courts of the State of New York or the courts of the United States of
America, in each case, located in the Borough of Manhattan, City and State of New York, or that
such suit, action or proceeding brought in the courts of the State of New York or the United States
of America, in each case, located in the Borough of Manhattan, City and State of New York was
brought in an inconvenient court and agrees not to plead or claim the same.
(2) To the extent that the Company or NGM has or hereafter may acquire any immunity (sovereign
or otherwise) from any legal action, suit or proceeding, from jurisdiction of any court or from
set-off or any legal process (whether service or notice, attachment in aid or otherwise) with respect to itself or any of its property, each of the Company and NGM hereby
irrevocably waives and agrees not to plead or claim such immunity in respect of its obligations
under this Agreement.
(3) The Company and NGM irrevocably appoint CT Corporation System acting through its office at
000 Xxxxxx Xxxxxx, Xxx Xxxx, XX 00000, X.X.X. (or its successors as agent for service of process)
as their authorized agent (the “Authorized Agent”) in the Borough of Manhattan in the city
of New York upon which process may be served in any law suit or proceeding, and agree that service
of process upon such agent, and written notice of said service to the Company and NGM , as the case
may be, by the person serving the same to the address provided for in Section 10.2 of this
Agreement, shall be deemed in every respect effective service of process upon the Company and NGM,
as the case may be, in any such suit or proceeding. If for any reason CT Corporation System ceases
to be able to act as the Authorized Agent of the Company and NGM or ceases to have an address in
the Borough of Manhattan, the city of New York, the Company and NGM will appoint a successor
Authorized Agent in accordance with the preceding sentence. Should the Company or NGM fail to
appoint and/or maintain an agent for service of process, the Purchaser shall be entitled to appoint
one for the Company and/or NGM (as the case may be), at the Company’s or NGM’s cost.
11.8 Remedies. In the event of a breach by the Company or NGM or by any Holder of
any of their respective obligations under this Agreement, each Holder or the Company or NGM , as
the case may be, in addition to being entitled to exercise all rights granted by law, including
recovery of damages (other than the recovery of damages for a breach by the Company or NGM of
their obligations under Section 2 hereof for which Penalty Charge have been paid pursuant to
Section 2.6 hereof), will be entitled to specific performance of its rights under this Agreement.
The Company, NGM and each Holder agree that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of any of the provisions of this Agreement and
hereby further agree that, in the event of any action for specific performance in respect of such
breach, it shall waive the defense that a remedy at law would be adequate.
11.9 No Inconsistent Agreements. Each of the Company and NGM represents, warrants
and agrees that it shall not, on or after the date of this Agreement, enter into any agreement
that is inconsistent with the rights granted to the Holders in this Agreement or otherwise
conflicts with the provisions hereof.
11.10 No Piggyback on Registrations. None of the Company, NGM or any of their
respective Affiliates or security holders (other than the Holders of Registrable Securities in
such capacity and the holders of registration rights on the date hereof granted pursuant to the
Existing Registration Rights Agreement) shall have the right to include any securities of the
Company in the Relevant Registration Statement other than Registrable Securities.
11.11 Severability. The remedies provided herein are cumulative and not exclusive
of any remedies provided by law. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their reasonable best efforts to find and
employ an alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the remaining terms,
provisions,
covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.
11.12 Survival. This Agreement and the obligations of the parties hereunder shall
terminate upon the end of the Effective Period, except for any liabilities or obligations under
Section 5, Section 6, Section 7 or Section 8 hereof, which shall terminate upon the one year
anniversary of the end of the Effective Period. Notwithstanding the above, the obligations to
make payments of and provide for Penalty Charge under Section 2.6 hereof to the extent such
Penalty Charge accrued prior to the end of the Effective Period shall remain in effect in
accordance with its terms.
11.13 Securities Held by the Company, etc. Whenever the consent or approval of
Holders of a specified percentage of Securities is required hereunder, Securities held by the
Company or its Affiliates (other than subsequent Holders of Securities if such subsequent Holders
are deemed to be Affiliates solely by reason of their holdings of such Securities) shall not be
counted in determining whether such consent or approval was given by the Holders of such required
percentage.
[Signature Page(s) to Follow]
EXECUTION COPY
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written
above.
| SIMCERE PHARMACEUTICAL GROUP |
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| By: | /s/ Xxxxxxxx Xxx | |||
| Name: | Xxxxxxxx Xxx | |||
| Title: | Chief Executive Officer | |||
| NEW GOOD MANAGEMENT LIMITED |
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| By: | /s/ Xxxxxxx Xxx | |||
| Name: | Xxxxxxx Xxx | |||
| Title: | Director | |||
| KING VIEW DEVELOPMENT INTERNATIONAL LIMITED |
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| By: | /s/ Xxxxxx Xx | |||
| Name: | Xxxxxx Xx | |||
| Capacity: Authorized Representative | ||||
