Exhibit 10.22
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of the 15th day of July, 2005 (the "Effective Date") between
PharmaFrontiers Corp., a Texas corporation (the "Company"), and the parties set
forth on the signature pages and Exhibit A hereto (each, an "Investor" and
collectively, the "Investors"). The Company shall amend Exhibit A as necessary
to reflect new signatories hereto.
RECITALS:
A. The Investors have purchased shares of the Company's Common Stock
(as defined below) pursuant to Securities Purchase Agreements (each, a
"Securities Purchase Agreement" and collectively, the "Securities Purchase
Agreements") by and between the Company and each Investor.
B. In connection with their purchase of the Common Stock, the
Investors also received warrants (the "Investor Warrants") to purchase shares of
the Common Stock;
C. Between September 2004 and February 2005, the Company sold
convertible notes (the "Notes"), 612,486 shares ("Note Shares") of Common Stock
and warrants (the "Note Warrants") to purchase shares of Common Stock;
D. The Company previously entered into two Registration Rights
Agreements (the "Note Holders Registration Agreements") with the purchasers of
the Notes; one granting registration rights with respect to shares issued upon
conversion of the Notes and the other granting registration rights with respect
to the shares issued upon exercise of the Note Warrants;
E. The Company has also issued warrants (together with the Purchase
Warrants, the "Warrants") to purchase shares of the Company's common stock to
Xxxxxxx Xxxxxx Xxxxxx Inc., a Texas corporation (the "Placement Agent").
F. The Company, the Investors, and the Placement Agent desire to set
forth the registration rights to be granted by the Company to the Investors and
the Placement Agent.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants, and conditions set forth herein and in
the Securities Purchase Agreements, the parties mutually agree as follows:
AGREEMENT:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Approved Market" means the NASD OTC Bulletin Board, Nasdaq National
Market, the Nasdaq SmallCap Market, the New York Stock Exchange, Inc., or the
American Stock Exchange, Inc.
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"Blackout Period" means, with respect to a registration, a period in
each case commencing on the day immediately after the Company notifies the
Investors and the Placement Agent that it is required, pursuant to Section 4(h),
to suspend offers and sales of Registrable Securities during which the Company,
in the good faith judgment of its Board of Directors, determines (because of the
existence of, or in anticipation of, any acquisition, financing activity, or
other transaction involving the Company, or the unavailability for reasons
beyond the Company's control of any required financial statements, disclosure of
information which is in its best interest not to publicly disclose, or any other
event or condition of similar significance to the Company) that the registration
and distribution of the Registrable Securities to be covered by such
registration statement, if any, would be seriously detrimental to the Company
and its stockholders and ending on the earlier of (1) the date upon which the
material nonpublic information commencing the Blackout Period is disclosed to
the public or ceases to be material and (2) such time as the Company notifies
the selling Holders that the Company will no longer delay such filing of the
Registration Statement, recommence taking steps to make such Registration
Statement effective, or allow sales pursuant to such Registration Statement to
resume; provided, however, that the Company shall limit its use of Blackout
Periods, in the aggregate, to 20 Trading Days in any 12 month period.
"Business Day" means any day of the year, other than a Saturday,
Sunday, or other day on which the Commission is required or authorized to close.
"Closing Date" means the date on which the sale referred to in Recital
A above is closed.
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Common Stock" means the common stock, par value $0.05 per share, of
the Company and any and all shares of capital stock or other equity securities
of: (i) the Company which are added to or exchanged or substituted for the
Common Stock by reason of the declaration of any stock dividend or stock split,
the issuance of any distribution or the reclassification, readjustment,
recapitalization or other such modification of the capital structure of the
Company; and (ii) any other corporation, now or hereafter organized under the
laws of any state or other governmental authority, with which the Company is
merged, which results from any consolidation or reorganization to which the
Company is a party, or to which is sold all or substantially all of the shares
or assets of the Company, if immediately after such merger, consolidation,
reorganization or sale, the Company or the stockholders of the Company own
equity securities having in the aggregate more than 50% of the total voting
power of such other corporation.
"Effectiveness Date" means (a) with respect to the Registration
Statement required to be filed under Section 3(a)(i), the earlier of: (a)(i) the
90th day following the Closing Date, or 120th day following the Closing Date if
the SEC elects to review the Registration Statement, and (ii) the fifth Trading
Day following the date on which the Company is notified by the Commission that
the First Registration Statement will not be reviewed or is no longer subject to
further review and comments and (b) with respect to any additional Registration
Statements that may be required pursuant to Section 3(b)(ii), the earlier of (i)
the 90th day following (x) if such Registration Statement is required because
the Commission shall have notified the Company in writing that certain
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Registrable Securities were not eligible for inclusion on a previously filed
Registration Statement, the date or time on which the Commission shall indicate
as being the first date or time that such Registrable Securities may then be
included in a Registration Statement, or (y) if such Registration Statement is
required for a reason other than as described in (x) above, the date on which
the Company first knows, or reasonably should have known, that such additional
Registration Statement(s) is required, and (ii) the fifth Trading Day following
the date on which the Company is notified by the Commission that such additional
Registration Statement will not be reviewed or is no longer subject to further
review and comment.
"Effectiveness Period" shall have the meaning set forth in Section
3(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Family Member" means (a) with respect to any individual, such
individual's spouse, any descendants (whether natural or adopted), any trust all
of the beneficial interests of which are owned by any of such individuals or by
any of such individuals together with any organization described in Section
501(c)(3) of the Internal Revenue Code of 1986, as amended, the estate of any
such individual, and any corporation, association, partnership or limited
liability company all of the equity interests of which are owned by those above
described individuals, trusts or organizations and (b) with respect to any
trust, the owners of the beneficial interests of such trust.
"Holder" means each Investor, the Placement Agent, or any of such
Investor's respective successors and Permitted Assigns who acquire rights in
accordance with this Agreement with respect to the Registrable Securities
directly or indirectly from an Investor or the Placement Agent, including from
any Permitted Assignee.
"Inspector" means any attorney, accountant, or other agent retained by
an Investor for the purposes provided in Section 4(j).
"Majority Holders" means at any time Holders of a majority of the
Registrable Securities (assuming exercise of all the Warrants).
"Offering Price" means $1.50 per share of Company's Common Stock.
"Permitted Assignee" means (a) with respect to a partnership, its
partners or former partners in accordance with their partnership interests, (b)
with respect to a corporation, its stockholders in accordance with their
interest in the corporation, (c) with respect to a limited liability company,
its members or former members in accordance with their interest in the limited
liability company, (d) with respect to an individual party, any Family Member of
such party, (e) an entity that is controlled by, controls, or is under common
control with a transferor, or (f) a party to this Agreement.
"Purchased Shares" means the shares of the Company's Common Stock
purchased pursuant to the Securities Purchase Agreement.
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The terms "register," "registered," and "registration" refers to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registrable Securities" means shares of Common Stock (1) that
constitute Purchased Shares (2) are issuable upon exercise of any of the
Warrants and (3) that constitute Note Shares, but excluding (i) any otherwise
Registrable Securities that have been publicly sold or may be sold immediately
without registration or any other restriction under the Securities Act either
pursuant to Rule 144(k) of the Securities Act or otherwise; (ii) any otherwise
Registrable Securities sold by a person in a transaction pursuant to a
registration statement filed under the Securities Act; or (iii) any otherwise
Registrable Securities that are at the time subject to an effective registration
statement under the Securities Act.
"Registration Default Period" means the period during which any
Registration Event occurs and is continuing.
"Registration Event" means the occurrence of any of the following
events:
(a) the Company fails to file with the Commission a Registration
Statement on or before the applicable Registration Filing Date,
(b) the Company fails to file with the Commission a request for
acceleration in accordance with Rule 461 promulgated under the
Securities Act, within five Trading Days of the date that the Company
is notified (orally or in writing, whichever is earlier) by the
Commission that a Registration Statement will not be "reviewed," or
not subject to further review,
(c) prior to the SEC Effective Date, the Company fails to file a
pre-effective amendment and otherwise respond in writing to comments
made by the Commission in respect of such Registration Statement
within 15 calendar days after the receipt of comments by or notice
from the Commission that such amendment is required in order for a
Registration Statement to be declared effective,
(d) a Registration Statement covering Registrable Securities is
not declared effective by the Commission on or before the applicable
Effectiveness Date,
(e) after the SEC Effective Date, sales cannot be made pursuant
to the Registration Statement for any reason (including without
limitation by reason of a stop order, or the Company's failure to
update the Registration Statement) for more than an aggregate of 20
Trading Days in any 12 month period, or
(f) the Common Stock generally or the Registrable Securities
specifically are not listed or included for quotation on an Approved
Market, or trading of the Common Stock is suspended or halted on the
Approved Market, which at the time constitutes the principal market
for the Common Stock, for more than two full, consecutive Trading
Days; provided, however, a Registration Event shall not be deemed to
occur if all or substantially all trading in equity securities
(including the Common Stock) is suspended or halted on the Approved
Market for any length of time.
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"Registration Filing Date" means (a) with respect to the initial
Registration Statement required to be filed under Section 3(a)(i), the 30th day
following the Closing Date and (b) with respect to any additional Registration
Statements that may be required pursuant to Section 3(b)(ii), the 30th day
following (x) if such Registration Statement is required because the Commission
shall have notified the Company in writing that certain Registrable Securities
were not eligible for inclusion on a previously filed Registration Statement,
the date or time on which the Commission shall indicate as being the first date
or time that such Registrable Securities may then be included in a Registration
Statement, or (y) if such Registration Statement is required for a reason other
than as described in (x) above, the date on which the Company first knows or
reasonably should have known that such additional Registration Statement(s) is
required.
"Registration Statement" means the registration statement required to
be filed by the Company pursuant to Section 3(a).
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute promulgated in replacement thereof, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
"SEC Effective Date" means the date the Registration Statement is
declared effective by the Commission.
"Trading Day" means a day on which the OTC Bulletin Board, Nasdaq
SmallCap Market, American Stock Exchange or such other securities market, in any
such case which at the time constitutes the principal securities market for the
Common Stock, is open for general trading of securities.
"Warrants" has the meaning provided in the Recitals.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.
2. Term. This Agreement shall continue in full force and effect for a
period of three (3) years from the Effective Date, unless terminated sooner
hereunder.
3. Registration.
(a) Registration on Form SB-2.
(i) As promptly as reasonably practicable after the date
hereof, but in any event not later than 30 days after the Closing
Date (the "Registration Filing Date"), the Company shall file
with the Commission a shelf registration statement on Form SB-2
relating to the resale by the Holders of all of the Purchase
Shares and the Note Shares and the sale of the Warrant Shares
issued pursuant to the Warrants. The Company shall cause each
Registration Statement to be declared effective under the
Securities Act as soon as possible but, in any event, no later
than its Effectiveness Date, and, subject to Section 5 herein,
shall use its best efforts to keep each Registration Statement
continuously effective under the Securities Act until the second
year after the date that the Registration Statement is declared
effective by the Commission or such earlier date when all
Registrable Securities covered by the Registration Statement have
been sold or may be sold without volume restrictions pursuant to
Rule 144(k) as determined by the counsel to the Company pursuant
to a written opinion letter to such effect, addressed and
acceptable to the Company's transfer agent and the affected
Holders (the "Effectiveness Period").
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(ii) If (i) for any reason the Commission does not permit
all of the Registrable Securities to be included in the
Registration Statement filed pursuant to Section 3(a) or for any
other reason all such Registrable Securities are not then
included in an effective Registration Statement or (ii) from and
after the date such terms as the anti-dilution provisions of the
Warrants would alter the Exercise Price, thereby resulting in a
greater number of Registrable Securities being issuable to the
Holders, then the Company shall prepare and file as soon as
possible after the date on which the Commission shall indicate as
being the first date or time that such filing may be made, but in
any event by the Registration Filing Date therefor, an additional
Registration Statement covering the resale of all Registrable
Securities not already covered by an existing and effective
Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415, on Form SB-2 or Form S-3 (except if
the Company is not then eligible to register for resale the
Registrable Securities on Form SB-2 or Form S-3, in which case
such registration shall be on another appropriate form for such
purpose).
Each such Registration Statement shall contain (except if
otherwise required pursuant to written comments received from the
Commission upon a review of such Registration Statement) the
"Plan of Distribution" attached hereto as Annex A. The Company
shall cause each such Registration Statement to be declared
effective under the Securities Act as soon as possible but, in
any event, no later than its Effectiveness Date, and, subject to
Section 5 herein, shall use its best efforts to keep such
Registration Statement continuously effective under the
Securities Act during the entire Effectiveness Period.
(b) Piggyback Registration. If the registration required by 3(a)
is not effected and kept effective and the Company shall determine to
register for sale for cash any of its Common Stock, for its own
account or for the account of others (other than the Holders), other
than (i) a registration relating solely to employee benefit plans or
securities issued or issuable to employees, consultants (to the extent
the securities owned or to be owned by such consultants could be
registered on Form S-8) or any of their Family Members (including a
registration on Form S-8) or (ii) a registration relating solely to a
Commission Rule 145 transaction, a registration on Form S-4 in
connection with a merger, acquisition, divestiture, reorganization, or
similar event, the Company shall promptly give to the Holders written
notice thereof (and in no event shall such notice be given less than
twenty (20) calendar days prior to the filing of such registration
statement), and shall, subject to Section 3(c), include in such
registration (and any related qualification under blue sky laws or
other compliance) (a "Piggyback Registration"), all of the Registrable
Securities specified in a written request or requests, made within ten
(10) calendar days after receipt of such written notice from the
Company, by any Holder or Holders. However, the Company may, without
the consent of the Holders, withdraw such registration statement prior
to its becoming effective if the Company or such other stockholders
have elected to abandon the proposal to register the securities
proposed to be registered thereby.
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(c) Underwriting. If a Piggyback Registration is for a registered
public offering involving an underwriting, the Company shall so advise
the Holders in writing or as a part of the written notice given
pursuant to Section 3(b). In such event the right of any Holder to
registration pursuant to Section 3(b) shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent
provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company and any
other stockholders of the Company distributing their securities
through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company or selling stockholders, as applicable.
Notwithstanding any other provision of this Section 3(c), if the
underwriter or the Company determines that marketing factors require a
limitation of the number of shares to be underwritten, the underwriter
may exclude some or all Registrable Securities from such registration
and underwriting. The Company shall so advise all Holders (except
those Holders who failed to timely elect to distribute their
Registrable Securities through such underwriting or have indicated to
the Company their decision not to do so), and the number of shares of
Registrable Securities that may be included in the registration and
underwriting, if any, shall be allocated among such Holders as
follows:
(i) In the event of a Piggyback Registration that is
initiated by the Company, the number of shares that may be
included in the registration and underwriting shall be allocated
first to the Company and then, subject to obligations and
commitments existing as of the date hereof, to all selling
stockholders, including the Holders, who have requested to sell
in the registration on a pro rata basis according to the number
of shares requested to be included; and
(ii) In the event of a Piggyback Registration that is
initiated by the exercise of demand registration rights by a
shareholder or stockholders of the Company (other than the
Holders), then the number of shares that may be included in the
registration and underwriting shall be allocated first to such
selling stockholders who exercised such demand and then, subject
to obligations and commitments existing as of the date hereof, to
all other selling stockholders, including the Holders, who have
requested to sell in the registration, on a pro rata basis
according to the number of shares requested to be included.
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No Registrable Securities excluded from the underwriting by
reason of the underwriter's marketing limitation shall be included in
such registration. If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by written
notice to the Company and the underwriter. The Registrable Securities
and/or other securities so withdrawn from such underwriting shall also
be withdrawn from such registration; provided, however, that, if by
the withdrawal of such Registrable Securities a greater number of
Registrable Securities held by other Holders may be included in such
registration (up to the maximum of any limitation imposed by the
underwriters), then the Company shall offer to all Holders who have
included Registrable Securities in the registration the right to
include additional Registrable Securities pursuant to the terms and
limitations set forth herein in the same proportion used above in
determining the underwriter limitation.
(d) Registration Defaults. If a Registration Event occurs, then
the Company will make payments to each Investor (a "Qualified
Investor"), as partial liquidated damages for the minimum amount of
damages to the Qualified Investor by reason thereof, and not as a
penalty, at a rate equal to one percent (1%) of the aggregate Offering
Price paid for the shares of Common Stock held by such Qualified
Investor per month, for the first calendar month of the Registration
Default Period (pro rated for any period less than 30 days) plus two
percent (2%) of the aggregate Offering Price paid for the shares of
Common Stock held by such Qualified Investor per month, for each
calendar month, after the first month, in the Registration Default
Period (pro rated for any period less than 30 days) with respect to
each Registration Event; provided, however, if a Registration Event
occurs (or is continuing) on a date more than two years after the
Qualified Investor acquired the Registrable Securities (and thus the
two-year holding period under Rule 144(k) has elapsed), liquidated
damages shall be paid only with respect to that portion of a Qualified
Investor's Registrable Securities that cannot then be immediately
resold without restriction in reliance on Rule 144(k). Each such
payment shall be due and payable within five days after the end of
each calendar month of the Registration Default Period until the
termination of the Registration Default Period and within five days
after such termination. Such payments shall be in partial compensation
to the Qualified Investor, and shall not constitute the Qualified
Investor's exclusive remedy for such events. The Registration Default
Period shall terminate upon (i) the filing of the Registration
Statement in the case of clause (a) of the definition of "Registration
Event," (ii) the SEC Effective Date in the case of clauses (b), (c) or
(d) of the definition of "Registration Event," (iii) the ability of
the Qualified Investor to effect sales pursuant to the Registration
Statement in the case of clause (e) of the definition of "Registration
Event," (iv) the listing or inclusion and/or trading of the Common
Stock on an Approved Market, as the case may be, in the case of clause
(f) of the definition of "Registration Event," and (v) in the case of
the events described in clauses (d) and (e) of the definition of
"Registration Event," the earlier termination of the Registration
Default Period. The amounts payable as partial liquidated damages
pursuant to this paragraph shall be payable in lawful money of the
United States. If the Company fails to pay any partial liquidated
damages pursuant to this Section in full within seven days after the
date payable, the Company will pay interest thereon at a rate of 9%
per annum (or such lesser maximum amount that is permitted to be paid
by applicable law) to the Holder, accruing daily from the date such
partial liquidated damages are due until such amounts, plus all such
interest thereon, are paid in full. The partial liquidated damages
pursuant to the terms hereof shall apply on a daily pro-rata basis for
any portion of a month prior to the cure of a Registration Event,
including in the case of the first Registration Event. Amounts payable
as partial liquidated damages to each Qualified Investor hereunder
with respect to each share of Registrable Securities shall cease
accruing (but shall still be payable in respect of prior periods,
together with interest thereon) following the expiration of the
Effectiveness Period.
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(e) Re-Register on Form S-3. For two years after the SEC
Effective Date, to the extent the registration of the Registrable
Securities pursuant to this Section 3 is not made on Form S-3, the
Company shall use reasonable efforts to re-register the Registrable
Securities on Form S-3 when the Company becomes eligible to register
such Registrable Securities thereon.
4. Registration Procedures. In the case of each registration,
qualification, or compliance effected by the Company pursuant to Section 3
hereof, the Company will keep each Holder reasonably advised in writing (which
may include e-mail) as to the initiation of each registration, qualification,
and compliance and as to the completion thereof. At its expense with respect to
any registration statement filed pursuant to Section 3, the Company will:
(a) prepare and file with the Commission with respect to such
Registrable Securities, a registration statement on Form SB-2 or any
other form for which the Company then qualifies or which counsel for
the Company shall deem appropriate, and which form shall be available
for the sale of the Registrable Securities in accordance with the
intended method(s) of distribution thereof, and use its commercially
reasonable efforts to cause such registration statement to become and
remain effective throughout the Effectiveness Period;
(b) if a registration statement is subject to review by the
Commission, promptly respond to all comments and diligently pursue
resolution of any comments to the satisfaction of the Commission;
(c) upon telephonically confirming with the Commission the
effectiveness of the Registration Statement, the Company shall
immediately and simultaneously notify all Holders via facsimile of the
effectiveness of the Registration Statement. The Company shall, by
9:30 am Eastern Time on the Trading Day after the Effectiveness, file
a Form 424(b)(5) with the Commission. Failure to so notify the Holder
within 1 Trading Day of such notification from the Commission of
effectiveness shall be deemed a Registration Event.
(d) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective during the Effectiveness Period;
(e) furnish, without charge, to each Holder of Registrable
Securities covered by such registration statement, by 9:00 a.m. (New
York City time) on the day following the Effective Date (i) a
reasonable number of copies of such registration statement (including
any exhibits thereto other than exhibits incorporated by reference),
each subsequent amendment and supplement thereto and such additional
copies as such Holder may reasonably request, (ii) a reasonable number
of copies of the prospectus included in such registration statement
(including each preliminary prospectus and any other prospectus filed
under Rule 424 under the Securities Act) and such additional copies as
such Holders may reasonably request, in conformity with the
requirements of the Securities Act, and (iii) such other documents as
such Holder may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Holder, but
only during the Effectiveness Period;
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(f) use its commercially reasonable best efforts to register or
qualify such Registrable Securities under such other applicable
securities or blue sky laws of such jurisdictions as any Holder of
Registrable Securities covered by such registration statement
reasonably requests as may be necessary for the marketability of the
Registrable Securities (such request to be made by the time the
applicable registration statement is deemed effective by the
Commission) and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder to consummate
the disposition in such jurisdictions of the Registrable Securities
owned by such Holder; provided that the Company shall not be required
to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph (e),
(ii) subject itself to taxation in any such jurisdiction, or (iii)
consent to general service of process in any such jurisdiction;
(g) as promptly as practicable after becoming aware of such
event, notify each Holder of such Registrable Securities at any time
when a prospectus relating thereto is required to be delivered under
the Securities Act of the happening of any event which comes to the
Company's attention if as a result of such event the prospectus
included in such registration statement contains an untrue statement
of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading and the Company shall promptly prepare and furnish to such
Holder a supplement or amendment to such prospectus (or prepare and
file appropriate reports under the Exchange Act) so that, as
thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not contain an 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, unless
suspension of the use of such prospectus otherwise is authorized
herein or in the event of an Blackout Period, in which case no
supplement or amendment need be furnished (or Exchange Act filing
made) until the termination of such suspension or Blackout Period;
(h) comply, and continue to comply during the period that such
registration statement is effective under the Securities Act, in all
material respects with the Securities Act and the Exchange Act and
with all applicable rules and regulations of the Commission with
respect to the disposition of all securities covered by such
registration statement;
(i) as promptly as practicable after becoming aware of such
event, notify each Holder of Registrable Securities being offered or
sold pursuant to the Registration Statement of the issuance by the
Commission of any stop order or other suspension of effectiveness of
the Registration Statement at the earliest possible time;
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(j) use its best efforts to cause all the Registrable Securities
covered by the Registration Statement to be quoted on the NASD OTC
Bulletin Board or such other principal securities market on which
securities of the same class or series issued by the Company are then
listed or traded;
(k) provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities at all times;
(l) cooperate with the Holders of Registrable Securities being
offered pursuant to the Registration Statement to issue and deliver
certificates (not bearing any restrictive legends) representing
Registrable Securities to be offered pursuant to the Registration
Statement within five Trading Days after delivery of certificates to
the Company and enable such certificates to be in such denominations
or amounts as the Holders may reasonably request and registered in
such names as the Holders may request;
(m) during the Effectiveness Period, refrain from bidding for or
purchasing any Common Stock or any right to purchase Common Stock or
attempting to induce any Person to purchase any such security or right
if such bid, purchase or attempt would in any way limit the right of
the Holders to sell Registrable Securities by reason of the
limitations set forth in Regulation M under the 1934 Act; and
(n) take all other reasonable actions necessary to expedite and
facilitate disposition by the Holders of the Registrable Securities
pursuant to the Registration Statement.
5. Suspension of Offers and Sales. Each Holder of Registrable
Securities agrees that, upon receipt of any written notice from the Company of
the happening of any event of the kind described in Section 4(g) hereof or of
the commencement of any Blackout Period, such Holder shall discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 4(g) hereof or
notice of the end of the Blackout Period. In the event the Company shall give
any such notice, the Effectiveness Period shall be extended by the greater of
(i) ten business days or (ii) the number of days during the period from and
including the date of the giving of such notice pursuant to Section 4(f) hereof
to and including the date when each Holder of Registrable Securities covered by
such registration statement shall have received the copies of the supplemented
or amended prospectus contemplated by Section 4(g) hereof. The Company will use
its best efforts to ensure that the use of the Prospectus may be resumed as
promptly as is practicable. The Company agrees and acknowledges that any periods
during which the Holder is required to discontinue the disposition of the
Registrable Securities hereunder shall be subject to the provisions of Section
3(d).
6. Registration Expenses. The Company shall pay all expenses in
connection with any registration, including, without limitation, all
registration, filing, stock exchange fees, printing expenses, all fees and
expenses of complying with securities or blue sky laws, and the fees and
disbursements of counsel for the Company and of its independent accountants;
provided that, in any underwritten registration, each party shall pay for its
own underwriting discounts and commissions and transfer taxes. Except as
provided above in this Section 6 and Section 9, the Company shall not be
responsible for the expenses of any attorney or other advisor employed by a
Holder of Registrable Securities.
11
7. Assignment of Rights. No Holder may assign its rights under this
Agreement to any party without the prior written consent of the Company;
provided, however, that a Holder may assign its rights under this Agreement
without such restrictions to a Permitted Assignee as long as (a) such transfer
or assignment is effected in accordance with applicable securities laws; (b)
such transferee or assignee agrees in writing to become subject to the terms of
this Agreement; and (c) the Company is given written notice by such Holder of
such transfer or assignment, stating the name and address of the transferee or
assignee and identifying the Registrable Securities with respect to which such
rights are being transferred or assigned.
8. Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing.
9. Indemnification.
(a) In the event of the offer and sale of Registrable Securities
held by Holders under the Securities Act, the Company shall, and
hereby does, indemnify and hold harmless, to the fullest extent
permitted by law, each Holder, its directors, officers, partners, each
other person who participates as an underwriter in the offering or
sale of such securities, and each other person, if any, who controls
or is under common control with such Holder or any such underwriter
within the meaning of Section 15 of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, and expenses
to which the Holder or any such director, officer, partner or
underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such shares were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment
or supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein in light of the circumstances in which
they were made not misleading, and the Company shall reimburse the
Holder, and each such director, officer, partner, underwriter and
controlling person for any legal or any other expenses reasonably
incurred by them in connection with investigating, defending or
settling any such loss, claim, damage, liability, action or
proceeding; provided that the Company shall not be liable in any such
case (i) to the extent that any such loss, claim, damage, liability
(or action or proceeding in respect thereof) or expense arises out of
or is based upon an untrue statement or alleged untrue statement in or
omission or alleged omission from such registration statement, any
such preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance upon and in conformity with
written information furnished to the Company through an instrument
duly executed by or on behalf of such Holder specifically stating that
12
it is for use in the preparation thereof or (ii) if the person
asserting any such loss, claim, damage, liability (or action or
proceeding in respect thereof) who purchased the Registrable
Securities that are the subject thereof did not receive a copy of an
amended preliminary prospectus or the final prospectus (or the final
prospectus as amended or supplemented) at or prior to the written
confirmation of the sale of such Registrable Securities to such person
because of the failure of such Holder or underwriter to so provide
such amended preliminary or final prospectus and the untrue statement
or alleged untrue statement or omission or alleged omission of a
material fact made in such preliminary prospectus was corrected in the
amended preliminary or final prospectus (or the final prospectus as
amended or supplemented) and such amended preliminary or final
prospectus was furnished to the Holder in accordance with the terms of
this Agreement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Holders,
or any such director, officer, partner, underwriter or controlling
person and shall survive the transfer of such shares by the Holder.
(b) As a condition to including any Registrable Securities to be
offered by a Holder in any registration statement filed pursuant to
this Agreement, each such Holder agrees to be bound by the terms of
this Section 9 and to indemnify and hold harmless, to the fullest
extent permitted by law, the Company, its directors and officers, and
each other person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which the Company or any
such director or officer or controlling person may become subject
under the Securities Act or otherwise, to the extent that any such
losses, claims, damages or liabilities (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement in or
omission or alleged omission from such registration statement, any
preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, if such
statement or alleged statement or omission or alleged omission was
made in reliance upon and in conformity with written information about
such Holder as a Holder of the Company furnished to the Company, and
such Holder shall reimburse the Company, and each such director,
officer, and controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating,
defending, or settling and such loss, claim, damage, liability,
action, or proceeding; provided, however, that such indemnity
agreement found in this Section 9(b) shall in no event exceed the
gross proceeds from the offering received by such Holder. Such
indemnity shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Company or any such
director, officer or controlling person and shall survive the transfer
by any Holder of such shares.
(c) Promptly after receipt by an indemnified party of notice of
the commencement of any action or proceeding involving a claim
referred to in Section 9(a) or (b) hereof (including any governmental
action), such indemnified party shall, if a claim in respect thereof
is to be made against an indemnifying party, give written notice to
the indemnifying party of the commencement of such action; provided
that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations
under Section 9(a) or (b) hereof, except to the extent that the
13
indemnifying party is actually prejudiced by such failure to give
notice. In case any such action is brought against an indemnified
party, unless in the reasonable judgment of counsel to such
indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist or the indemnified party may have
defenses not available to the indemnifying party in respect of such
claim, the indemnifying party shall be entitled to participate in and
to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party and, after notice from the indemnifying party
to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof, unless
in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties arises in respect of
such claim after the assumption of the defenses thereof or the
indemnifying party fails to defend such claim in a diligent manner,
other than reasonable costs of investigation. Neither an indemnified
nor an indemnifying party shall be liable for any settlement of any
action or proceeding effected without its consent. No indemnifying
party shall, without the consent of the indemnified party, consent to
entry of any judgment or enter into any settlement, which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in
respect of such claim or litigation. Notwithstanding anything to the
contrary set forth herein, and without limiting any of the rights set
forth above, in any event any party shall have the right to retain, at
its own expense, counsel with respect to the defense of a claim.
(d) In the event that an indemnifying party does or is not
permitted to assume the defense of an action pursuant to Section 9(c)
or in the case of the expense reimbursement obligation set forth in
Section 9(a) and (b), the indemnification required by Section 9(a) and
(b) hereof shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills
received or expenses, losses, damages, or liabilities are incurred.
(e) If the indemnification provided for in this Section 9 is held
by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage
or expense referred to herein, the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall (i) contribute to
the amount paid or payable by such indemnified party as a result of
such loss, liability, claim, damage or expense as is appropriate to
reflect the proportionate relative fault of the indemnifying party on
the one hand and the indemnified party on the other (determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission relates to information
supplied by the indemnifying party or the indemnified party and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission),
or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, not only the
proportionate relative fault of the indemnifying party and the
indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the
other, as well as any other relevant equitable considerations. No
indemnified party guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any indemnifying party who was not guilty of such
fraudulent misrepresentation.
14
(f) Other Indemnification. Indemnification similar to that
specified in the preceding subsections of this Section 9 (with
appropriate modifications) shall be given by the Company and each
Holder of Registrable Securities with respect to any required
registration or other qualification of securities under any federal or
state law or regulation or governmental authority other than the
Securities Act.
10. Rule 144. Following the Closing Date, the Company will use its
commercially reasonable best efforts (a) to timely file all reports required to
be filed by the Company after the date hereof under the Securities Act and the
Exchange Act (including the reports pursuant to Section 13(a) or 15(d) of the
Exchange Act referred to in subparagraph (c)( 1) of Rule 144) and the rules and
regulations adopted by the Commission thereunder), (b) if the Company is not
required to file reports pursuant to such sections, it will prepare and furnish
to the Investors and make publicly available in accordance with Rule 144(c) such
information as is required for the Investors to sell shares of Common Stock
under Rule 144, and (c) to take such further action as any holder of shares of
Common Stock may reasonably request, all to the extent required from time to
time to enable the Investors to sell shares of Common Stock without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144, including causing its attorneys to issue and deliver any appropriate
legal opinion required to permit an Investor to sell shares of Common Stock
under Rule 144 upon receipt of appropriate documentation relating to such sale.
11. Independent Nature of Each Investor's Obligations and Rights. The
obligations of each Investor under this Agreement are several and not joint with
the obligations of any other Investor, and each Investor shall not be
responsible in any way for the performance of the obligations of any other
Investor under this Agreement. The decision of each Investor to purchase Common
Stock and enter into this Agreement has been made by each Investor independently
of any other Investor. Nothing contained herein and no action taken by any
Investor pursuant hereto, shall be deemed to constitute such Investors as a
partnership, an association, a joint venture, or any other kind of entity, or
create a presumption that the Investors are in any way acting in concert or as a
group with respect to such obligations or the transactions contemplated by this
Agreement. Each Investor acknowledges that no other Investor has acted as agent
for the Investor in connection with making its investment in Common Stock and
that no other Investor will be acting as agent of the Investor in connection
with monitoring its investment in the Common Stock or enforcing its rights under
this Agreement. Each Investor shall be entitled to independently protect and
enforce its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Investor to be joined as
an additional party in any proceeding for such purpose.
12. No Piggyback on Registrations. Except as set forth in Schedule 12,
neither the Company nor any of its security holders (other than the Holders in
such capacity pursuant hereto) may include securities of the Company in a
Registration Statement other than the Registrable Securities, and the Company
shall not during the Registration Period enter into any agreement providing any
such right to any of its security holders.
15
13. Miscellaneous.
(a) Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be
determined in accordance with the provisions of the Securities
Purchase Agreement.
(b) Successors and Assigns. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, Permitted Assigns, executors and administrators
of the parties hereto. In the event the Company merges with, or is
otherwise acquired by, a direct or indirect subsidiary of a publicly
traded company, the Company shall condition the merger or acquisition
on the assumption by such parent company of the Company's obligations
under this Agreement.
(c) Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to
the subjects hereof.
(d) Notices, etc. All notices or other communications which are
required or permitted under this Agreement shall be in writing and
sufficient if delivered by hand, by facsimile transmission, by
registered or certified mail, postage pre-paid, by electronic mail, or
by courier or overnight carrier, to the persons at the addresses set
forth below (or at such other address as may be provided hereunder),
and shall be deemed to have been delivered as of the date so
delivered:
If to the Company: PharmaFrontiers Corp.
0000 Xxxxxxxxxx Xxxxx, Xxxxx X-0
Xxx Xxxxxxxxx, Xxxxx 00000
Attention: President
Facsimile: (000) 000-0000
e-mail: xxxxxxxxxxx@xxxxxxxxxxxxxxx.xxx
with a copy to: Xxxxxx & Xxxxxx LLP
0000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Email: xxxxxxx@xxxxx.xxx
If to the Investors: To each Investor at the address
set forth on Exhibit A
or at such other address as any party shall have furnished to the
other parties in writing.
(e) Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any Holder of any Registrable
Securities, upon any breach or default of the Company under this
Agreement, shall impair any such right, power or remedy of such Holder
nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or
default thereunder occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any Holder of any
breach or default under this Agreement, or any waiver on the part of
any Holder of any provisions or conditions of this Agreement, must be
in writing and shall be effective only to the extent specifically set
forth in such writing. All remedies, either under this Agreement, or
by law or otherwise afforded to any holder, shall be cumulative and
not alternative.
16
(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties
actually executing such counterparts, and all of which together shall
constitute one instrument.
(g) Severability. In the case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
(h) Amendments. The provisions of this Agreement may be amended
at any time and from time to time, and particular provisions of this
Agreement may be waived, with and only with an agreement or consent in
writing signed by the Company and Holders holding a majority of the
then outstanding Registrable Securities. Notwithstanding the
foregoing, the following provisions may not be amended except in a
writing signed by the party against which enforcement of the amendment
is sought: Section 3, Paragraph 13(h) and any provisions herein that
specify liquidated damages or penalties.
(i) Registration Rights Granted To Others. After the date of this
Agreement, the Company shall not, without the prior written consent of
a Holder enter into any agreement with any holder or prospective
holder of any securities of the Company that would grant such holder
registration rights, with respect to shares of Common Stock, senior to
those granted to the Holder hereunder.
(j) Addition of Note Holders. The registration statement filed
for the Registrable Securities hereunder may also include any or all
of the shares of Common Stock issued or issuable to the Note holders
including those subject to the Note holders Registration Agreements.
Further any or all of the Note holders may become a party to this
Agreement as an "Investor" by executing a counterpart of this
Agreement. Upon such execution by a Note holder the Note holder shall
be an "Investor" hereunder and the shares of Common Stock issued or
issuable to the Note holder, in connection with the issuance or
conversion of the Note or the exercise of the Note Warrants, shall
become "Registrable Securities" hereunder and such Note holder's Note
Warrants shall become "Warrants" hereunder.
[Signatures on following page]
17
This Registration Rights Agreement is hereby executed as of the date
first above written.
COMPANY:
PHARMAFRONTIERS CORP.
By: /s/ Xxxxx X. XxXxxxxxxx
-----------------------------------------
Xxxxx X. XxXxxxxxxx, President
INVESTOR:
------------------------------------------------
------------------------------------------------
(PRINT NAME)
By: /s/
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
SCHEDULE 12
-----------
To The PharmaFrontiers Corp. Registration Rights Agreement
----------------------------------------------------------
Shares That May Be Included In A Registration Statement
-------------------------------------------------------
1. Shares issued to holders ("Noteholders") of 15% Convertible Notes (the
"Notes") at the time of the purchase of the Notes and shares issuable to the
Noteholders upon conversion of the notes.
2. Shares issued upon exercise of warrants issued to the Noteholders at the time
of the purchase of the Notes, and shares, if any, issued to the Noteholders as
part of an exchange for such warrants.
3. Shares, and shares issuable upon exercise of warrants, issued to the
placement agents and consultants in connection with the sale of the Notes and
the sale of securities pursuant to the Securities Purchase Agreement.
4. Shares issued to Xxxxxxx Xxxxxx Xxxxxx pursuant to the Company's engagement
letter and Placement Agent Agreement.
5. Shares issued to the University of Chicago pursuant to an Amended and
Restated License Agreement dated December 30, 2004.
6. Up to approximately 1,812,000 shares held by Xx. Xxxxxx Xxxxxxx and Xxxxxx &
Xxxxxxxxx PC.
7. Shares issued to purchasers in a Second Offering as provided for in the
Securities Purchase Agreement including shares issuable to such purchasers upon
exercise of Warrants issued in the Second Offering.
