Execution Copy REGISTRATION RIGHTS AGREEMENT
Exhibit 4.2
Execution Copy
This Registration Rights Agreement (this “Agreement”) is made and entered into as of December
10, 2008, by and among Santarus, Inc., a Delaware corporation (the “Company”), and Cosmo
Technologies Limited, an Irish corporation (the “Investor”).
This Agreement is made pursuant to the Stock Issuance Agreement, dated as of the date hereof
between the Company and the Investor (the “Issuance Agreement”).
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged,
the Company and the Investor agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein that are
defined in the Issuance Agreement shall have the meanings given such terms in the Issuance
Agreement. As used in this Agreement, the following terms shall have the following meanings:
“Advice” shall have the meaning set forth in Section 6(c).
“Affiliate” means, with respect to any Person, any other Person which directly or indirectly
controls, is controlled by, or is under common control with, such Person.
“Business Day” means a day, other than a Saturday or Sunday, on which banks in New York City
are open for the general transaction of business.
“Commission” means the Securities and Exchange Commission.
“Common Stock” means the common stock of the Company, par value $0.0001 per share, and any
securities into which such common stock may hereinafter be reclassified.
“Effective Date” means the date that any Registration Statement filed pursuant to Section
2(a) is first declared effective by the Commission.
“Effectiveness Deadline” means the 90th calendar day following the date on which
the Initial Closing occurs (or, in the event the Commission reviews and has written comments to the
Registration Statement, the 120th calendar day following the date on which the Initial
Closing occurs); provided, however, that if the Effectiveness Deadline falls on a Saturday, Sunday
or other day that the Commission is closed for business, the Effectiveness Deadline shall be
extended to the next Business Day on which the Commission is open for business.
“Effectiveness Period” shall have the meaning set forth in Section 2(b).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“Filing Deadline” means the 45th calendar day following the date on which the
Initial Closing occurs, provided, however, that if the Filing Deadline falls on a Saturday, Sunday
or
other day that the Commission is closed for business, the Filing Deadline shall be extended to
the next business day on which the Commission is open for business.
“Holder” or “Holders” means the holder or holders, as the case may be, from time to time of
Registrable Securities.
“Indemnified Party” shall have the meaning set forth in Section 5(c).
“Indemnifying Party” shall have the meaning set forth in Section 5(c).
“Initial Closing” has the meaning set forth in the Issuance Agreement.
“Losses” shall have the meaning set forth in Section 5(a).
“Person” means an individual, corporation, partnership, firm, association, unincorporated
organization, joint venture, trust or other entity, and shall include any successor (by merger or
otherwise) of such entity, or any of the foregoing acting together as a group.
“Principal Market” means the Trading Market on which the Common Stock is primarily listed on
and quoted for trading, which, as of the Closing Date, shall be the Nasdaq Global Market.
“Proceeding” means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition), whether commenced or
threatened.
“Prospectus” means the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a prospectus filed
as part of an effective registration statement in reliance upon Rule 430A or Rule 430B promulgated
under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to
the terms of the offering of any portion of the Registrable Securities covered by a Registration
Statement, and all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
“Registrable Securities” means all of (i) the Shares and (ii) any securities issued or
issuable upon any stock split, dividend or other distribution, recapitalization or similar event
with respect to the foregoing; provided, however, that securities shall only be considered
Registrable Securities if and only for so long as they (A) have not been disposed of pursuant to a
Registration Statement declared effective by the Commission, or (B) have not been sold in a
transaction exempt from the registration and prospectus delivery requirements of the Securities Act
in which all transfer restrictions and restrictive legends with respect thereto are removed upon
the consummation of such sale.
“Registration Statement” means a registration statement of the Company filed under the
Securities Act that covers the resale of any of the Registrable Securities pursuant to the
provisions of this Agreement, amendments and supplements to such Registration Statement or
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Prospectus, including pre- and post-effective amendments, all exhibits and all material
incorporated by reference or deemed to be incorporated by reference in such Registration
Statements.
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by
the Commission having substantially the same effect as such Rule.
“Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by
the Commission having substantially the same effect as such Rule.
“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by
the Commission having substantially the same effect as such Rule.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Shares” means the shares of Common Stock issued or issuable to the Investor pursuant to the
Issuance Agreement.
“Trading Day” means (i) a day on which the Common Stock is listed or quoted and traded on its
Principal Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed on
a Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is traded in
the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is
not quoted on any Trading Market, a day on which the Common Stock is quoted in the over-the-counter
market as reported in the “pink sheets” by Pink Sheets LLC (or any similar organization or agency
succeeding to its functions of reporting prices); provided, that in the event that the Common Stock
is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a
Business Day.
“Trading Market” means whichever of the New York Stock Exchange, the American Stock Exchange,
the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC
Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question.
2. Registration.
(a) On or prior to the Filing Deadline, the Company shall prepare and file with the Commission
a Registration Statement on Form S-3 covering the resale of up to an aggregate of ten million three
hundred thousand (10,300,000) Registrable Securities for an offering to be made on a continuous
basis pursuant to Rule 415. The Registration Statement shall be on Form S-3 (except if the Company
is not then eligible to register for resale the Registrable Securities on Form S-3, in which case
such registration shall be on another appropriate form in accordance with the Securities Act and
the Exchange Act and as consented to by the Investor).
(b) The Company shall use its best efforts to cause the Registration Statement to be declared
effective by the Commission no later than the Effectiveness Deadline. Thereafter, the
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Company shall use its best efforts to keep the Registration Statement continuously effective
under the Securities Act until the earlier of (i) such time as all of the Registrable Securities
covered by such Registration Statement have been publicly sold by the Holders or (ii) the date that
all Registrable Securities covered by such Registration Statement may be sold by all the Holders
without volume or manner of sale restrictions pursuant to Rule 144 (the “Effectiveness Period”).
The Company shall promptly notify the Investor via facsimile or electronic mail of the
effectiveness of a Registration Statement on or before the second Trading Day after the date that
the Company telephonically confirms effectiveness with the Commission.
(c) At least ten (10) Trading Days prior to the first anticipated filing date of a Registration
Statement for any registration under this Agreement, the Company will notify the Investor of the
information the Company requires from Investor, which shall be completed and delivered to the
Company promptly upon request and, in any event, within three (3) Trading Days prior to the
applicable anticipated filing date. Investor further agrees that it shall not be entitled to be
named as a selling securityholder in the Registration Statement or use the Prospectus for offers
and resales of Registrable Securities at any time, unless it has returned to the Company a response
to any requests for information as described in the previous sentence. Investor acknowledges and
agrees that the information as described in this Section 2(c) will be used by the Company in the
preparation of the Registration Statement and hereby consents to the inclusion of such information
in the Registration Statement.
3. Registration Procedures
In connection with the Company’s registration obligations hereunder, the Company shall:
(a) Not less than five (5) Trading Days prior to the filing of each Registration Statement and
not less than one (1) Trading Day prior to the filing of any related Prospectus or any amendment or
supplement thereto (except for Annual Reports on Form 10-K, and Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K and any similar or successor reports), (i) furnish to the Holder copies
of such Registration Statement, Prospectus or amendment or supplement thereto, as proposed to be
filed, which documents will be subject to the review of such Holder (it being acknowledged and
agreed that if a Holder does not object to or comment on the aforementioned documents within such
five (5) Trading Day or one (1) Trading Day period, as the case may be, then the Holder shall be
deemed to have consented to and approved the use of such documents), (ii) reflect in each such
document when so filed with the Commission such comments as the Investor may reasonably propose,
and (iii) use commercially reasonable efforts to cause its officers and directors, counsel and
independent registered public accountants to respond to such inquiries as shall be necessary, in
the reasonable opinion of counsel to the Investor, to conduct a reasonable investigation within the
meaning of the Securities Act. The Company shall not file any Registration Statement or amendment
or supplement thereto in a form to which a Holder reasonably objects in good faith, provided, that
the Company is notified of such objection in writing within the five (5) Trading Day or one (1)
Trading Day period described above, as applicable.
(b) (i) Prepare and file with the Commission such amendments (including post-effective
amendments) and supplements, to each Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep such Registration Statement continuously effective as to the
applicable Registrable Securities for its Effectiveness Period; (ii) cause the
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related Prospectus to be amended or supplemented by any required Prospectus supplement
(subject to the terms of this Agreement), and, as so supplemented or amended, to be filed pursuant
to Rule 424; (iii) respond as promptly as reasonably possible (and in any event within 15 Trading
Days) to any comments received from the Commission with respect to each Registration Statement or
any amendment thereto and, as promptly as reasonably possible, provide the Holders true and
complete copies of all correspondence from and to the Commission relating to such Registration
Statement that pertains to the Holders as “Selling Stockholders” but not any comments that would
result in the disclosure to the Holders of material non-public information concerning the Company;
and (iv) comply with the provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by a Registration Statement until such time as
all of such Registrable Securities shall have been disposed of (subject to the terms of this
Agreement) in accordance with the intended methods of disposition by the Holders thereof as set
forth in such Registration Statement as so amended or in such Prospectus as so supplemented;
provided, however, that the Investor shall be responsible for the delivery of the Prospectus to the
Persons to whom the Investor sells any of the Shares (including in accordance with Rule 172 under
the Securities Act), and the Investor agrees to dispose of Registrable Securities in compliance
with the plan of distribution described in the Registration Statement, and mutually agreed by the
Investor and the Company prior to the initial filing of the Registration Statement, and otherwise
in compliance with applicable federal and state securities laws. In the case of amendments and
supplements to a Registration Statement which are required to be filed pursuant to this Agreement
(including pursuant to this Section 3(b)) by reason of the Company filing a report on Form
10-K, Form 10-Q or Form 8-K or any analogous report under the Exchange Act, the Company shall have
incorporated such report by reference into such Registration Statement, if applicable, or shall
file such amendments or supplements with the Commission on the same day on which the Exchange Act
report which created the requirement for the Company to amend or supplement such Registration
Statement was filed.
(c) Notify the Holders (which notice shall, pursuant to clauses (iii) through (vi) hereof, be
accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have
been made) as promptly as reasonably possible (and, in the case of (i)(A) below, not less than one
Trading Day prior to such filing) and (if requested by any such Person) confirm such notice in
writing no later than one Trading Day following the day: (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to a Registration Statement is proposed to be filed; (B)
when the Commission notifies the Company whether there will be a “review” of such Registration
Statement and whenever the Commission comments in writing on any Registration Statement; and (C)
with respect to each Registration Statement or any post-effective amendment, when the same has
become effective; (ii) of any request by the Commission or any other Federal or state governmental
authority for amendments or supplements to a Registration Statement or Prospectus or for additional
information that pertains to the Holders as “Selling Stockholders” or the “Plan of Distribution”;
(iii) of the issuance by the Commission or any other federal or state governmental authority of any
stop order suspending the effectiveness of a Registration Statement covering any or all of the
Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the receipt
by the Company of any notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any Proceeding for such purpose; (v) of the occurrence of any event or
passage of time that makes the financial statements included or incorporated by reference in a
Registration Statement ineligible for inclusion or incorporation by
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reference therein or any statement made in such Registration Statement or Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue in any material
respect or that requires any revisions to such Registration Statement, Prospectus or other
documents so that, in the case of such Registration Statement or the Prospectus, as the case may
be, it will not contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein (in the case of any
Prospectus, form of prospectus or supplement thereto, in light of the circumstances under which
they were made), not misleading; and (vi) of the occurrence or existence of any pending corporate
development with respect to the Company that the Company believes may be material and that, in the
determination of the Company, makes it not in the best interest of the Company to allow continued
availability of a Registration Statement or Prospectus, provided, that any and all such information
shall remain confidential to each Holder until such information otherwise becomes public, unless
disclosure by a Holder is required by law; and provided, further, that notwithstanding each
Holder’s agreement to keep such information confidential, each such Holder makes no acknowledgement
that any such information is material, non-public information.
(d) Use best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any
order suspending the effectiveness of a Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, as soon as possible.
(e) If requested by a Holder, furnish to such Holder, without charge, at least one conformed
copy of each Registration Statement and each amendment thereto, including required financial
statements and schedules, and all exhibits to the extent requested by such Person (including those
previously furnished or incorporated by reference) promptly after the filing of such documents with
the Commission; provided, that the Company shall have no obligation to provide any document
pursuant to this clause that is available on the Commission’s XXXXX (or any successor) system.
(f) Subject to the limitations set forth in Section 3(a), promptly deliver to Investor,
without charge, a reasonable number of copies of the Prospectus or Prospectuses (including each
form of prospectus) and each amendment or supplement thereto as such Investor may reasonably
request. The Company hereby consents to the use of such Prospectus and each amendment or supplement
thereto by the Investor in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto to the extent permitted by
federal and state securities laws and regulations.
(g) (i) Prepare and file with such Trading Market an additional shares listing application
covering all of the Registrable Securities; (ii) take all steps necessary to cause such Registrable
Securities to be approved for listing on each Trading Market as soon as possible thereafter; (iii)
provide to the Investor evidence of such listing; and (iv) except as a result of the Excluded
Events, during the Effectiveness Period, maintain the listing of such Registrable Securities on a
Trading Market.
(h) Prior to any resale of Registrable Securities by a Holder, use its best efforts to
register or qualify or cooperate with the selling Holders in connection with the registration or
qualification (or exemption from the registration or qualification) of such Registrable Securities
for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the
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United States as any Holder reasonably requests in writing, to keep each registration or
qualification (or exemption therefrom) effective for so long as required, but not to exceed the
duration of the Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by
each Registration Statement; provided, that the Company shall not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so subject or file a general consent to
service of process in any such jurisdiction.
(i) If requested by a Holder, cooperate with such Holder to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be delivered to a transferee
pursuant to the Registration Statement, which certificates shall be free, to the extent permitted
by the Issuance Agreement and under law, of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any such Holders may
reasonably request.
(j) Following the occurrence of any event contemplated by Section 3(c), as promptly as
reasonably possible (taking into account the Company’s good faith assessment of any adverse
consequences to the Company and its stockholders of the premature disclosure of such event),
prepare a supplement or amendment, including a post-effective amendment, to the affected
Registration Statements or a supplement to the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, and file any other required document so that, as
thereafter delivered, no Registration Statement nor any Prospectus will contain 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 (in the case of any Prospectus, form of prospectus or supplement
thereto, in light of the circumstances under which they were made), not misleading. If the Company
notifies the Holders in accordance with clauses (iii) through (vi) of Section 3(c) above to
suspend the use of any Prospectus until the requisite changes to such Prospectus have been made,
then the Holders shall suspend use of such Prospectus. The Company will use its commercially
reasonable efforts to ensure that the use of the Prospectus may be resumed as promptly as is
possible. The Company shall be entitled to exercise its right under this Section 3(h) to
suspend the availability of a Registration Statement and Prospectus for a period not to exceed 30
calendar days (which need not be consecutive days) in any 12-month period.
(k) The Company may require each selling Holder to furnish to the Company a certified
statement as to (i) the number of shares of Common Stock beneficially owned by such Holder and any
Affiliate thereof, (ii) any Financial Industry Regulatory Authority (“FINRA”) affiliations, (iii)
any natural persons who have the power to vote or dispose of the common stock and (iv) any other
information as may be requested by the Commission, FINRA or any state securities commission.
(l) The Company shall cooperate with any registered broker through which a Holder proposes to
resell its Registrable Securities in effecting a filing with FINRA pursuant to NASD Rule 2710 as
reasonably requested by any such Holder, and the Company shall pay the filing fee required for the
first such filing within five (5) Business Days of the request therefor.
(m) Shall, if at any time during the Effectiveness Period there is not an effective
Registration Statement covering all of the Registrable Securities and the Company determines to
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prepare and file with the Commission a registration statement relating to an offering for its
own account or the account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then
equivalents relating to equity securities to be issued solely in connection with any acquisition of
any entity or business or equity securities issuable in connection with stock option or other
employee benefit plans, send to the Investor written notice of such determination and if, within
ten days after receipt of such notice, the Investor shall so request in writing, the Company shall
include in such registration statement all or any part of such Registrable Securities the Investor
requests to be registered.
4. Registration Expenses. All fees and expenses incident to the Company’s performance
of or compliance with its obligations under this Agreement (excluding any underwriting discounts
and selling commissions and all legal fees and expenses of legal counsel for any Holder) shall be
borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration
Statement.
5. Indemnification.
(a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify, defend and hold harmless each Holder, the officers,
directors, agents, partners, members, managers, stockholders, Affiliates and employees of each of
them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) and the officers, directors, partners, members, managers,
stockholders, agents and employees of each such controlling Person, to the fullest extent permitted
by applicable law, from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, reasonable costs of preparation and investigation and reasonable
attorneys’ fees) and expenses (collectively, “Losses”), as incurred, that arise out of or relating
to or are based upon (i) any untrue or alleged untrue statement of a material fact contained in any
Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading or (ii) any violation or alleged violation
by the Company of the Securities Act, Exchange Act, any state securities law, any “blue sky” laws
of any jurisdiction in which Registrable Securities are offered or any rule or regulation
thereunder relating to the offer or sale of the Registrable Securities pursuant to the Registration
Statement or any violation of this Agreement, except (A) to the extent that such untrue statements,
alleged untrue statements, omissions or alleged omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder expressly for use therein,
or to the extent that such information relates to such Holder or such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and approved in writing by such Holder
expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in
any amendment or supplement thereto, (B) in the case of an occurrence of an event of the type
specified in Section 3(c)(iii)-(vi), related to the use by a Holder of an outdated or
defective Prospectus after the Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the Advice contemplated and
defined in Section 6(d) below, to the extent that following the receipt of the Advice the
misstatement or omission giving rise to such Loss
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would have been corrected, or (C) to the extent that any such Losses arise out of the
Investor’s (or any other indemnified Person’s) failure to send or give a copy of the Prospectus or
supplement (as then amended or supplemented), if required pursuant to Rule 172 under the Securities
Act (or any successor rule), to the Persons asserting an untrue statement or alleged untrue
statement or alleged untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such statement or omission was
corrected in such Prospectus or supplement. The Company shall notify the Holders promptly of the
institution, threat or assertion of any Proceeding arising from or in connection with the
transactions contemplated by this Agreement of which the Company is aware. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on behalf of an
Indemnified Party (as defined in Section 5(c)) and shall survive the transfer of the
Registrable Securities by the Holders.
(b) Indemnification by Holders. Each Holder shall, notwithstanding any termination of
this Agreement, severally and not jointly, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person who controls the Company (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents
or employees of such controlling Persons, to the fullest extent permitted by applicable law, from
and against all Losses, as incurred, arising out of or are based solely upon any untrue or alleged
untrue statement of a material fact contained in any Registration Statement, any Prospectus, or any
form of prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or
arising out of or relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any Prospectus, or any
form of prospectus or supplement thereto, in light of the circumstances under which they were made)
not misleading to the extent, but only to the extent that (i) such untrue statements or omissions
are based solely upon information regarding such Holder furnished in writing to the Company by such
Holder expressly for use therein or (ii) such information relates to such Holder or such Holder’s
proposed method of distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in a Registration Statement, such Prospectus or such
form of Prospectus or in any amendment or supplement thereto or (iii) in the case of an occurrence
of an event of the type specified in Section 3(c)(iii)-(vi), to the extent related to the
use by such Holder of an outdated or defective Prospectus after the Company has notified such
Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such
Holder of the Advice contemplated in Section 6(c). In no event shall the liability of
Investor hereunder be greater in amount than the dollar amount of the net proceeds received by
Investor upon the sale of the Registrable Securities giving rise to such indemnification
obligation, except in the event of fraud by Investor and such fraud gave rise in whole or in part
to such Losses. Notwithstanding the foregoing, Investor shall not be liable under this Section
5(b) to the extent that Losses giving rise to such indemnification obligation are the result of
fraud committed by the Company.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying
Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all reasonable fees and expenses incurred in connection with defense thereof; provided,
that the failure of any Indemnified Party to give such notice shall not relieve the
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Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and
only) to the extent that it shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal or further review) that such failure shall have materially
and adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in
writing to pay such fees and expenses, (ii) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding after prompt notice of such proceeding pursuant to the
preceding paragraph; or (iii) the named parties to any such Proceeding (including any impleaded
parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that a conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate
counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right
to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party);
provided, that the Indemnifying Party shall not, in connection with any one such Proceeding be
liable for the fees and expenses of more than one separate firm of attorneys at any time for all
Indemnified Parties. The Indemnifying Party shall not be liable for any settlement of any such
Proceeding effected without its written consent, which consent shall not be unreasonably withheld,
delayed or conditioned. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of such Proceeding.
Subject to the terms of this Agreement, all fees and expenses of the Indemnified Party
(including reasonable fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid
to the Indemnified Party, as incurred, within 20 Trading Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is
not entitled to indemnification hereunder; provided, that the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such
actions for which such Indemnified Party is finally judicially determined to not be entitled to
indemnification hereunder). The failure to deliver written notice to the Indemnifying Party within
a reasonable time of the commencement of any such action shall not relieve such Indemnifying Party
of any liability to the Indemnified Party under this Section 5, except to the extent that
the Indemnifying Party is materially and adversely prejudiced in its ability to defend such action.
(d) Contribution. If a claim for indemnification under Section 5(a) or
5(b) is unavailable to an Indemnified Party (by reason of public policy or otherwise) or
insufficient to hold an Indemnified Party harmless for any Losses, then each Indemnifying Party, in
lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other relevant equitable
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considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged omission of a material
fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such action, statement or omission. The amount paid or payable
by a party as a result of any Losses shall be deemed to include, subject to the limitations set
forth in this Agreement, any reasonable attorneys’ or other reasonable fees or expenses incurred by
such party in connection with any Proceeding to the extent such party would have been indemnified
for such fees or expenses if the indemnification provided for in this Section was available to such
party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if contribution pursuant to
this Section 5(d) were determined by pro rata allocation or by any other method of
allocation that does not take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), (A)
no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by
which the net proceeds actually received by such Holder from the sale of the Registrable Securities
subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission or alleged
omission and (B) no contribution will be made under circumstances where the maker of such
contribution would not have been required to indemnify the Indemnified Party under the fault
standards set forth in this Section 5. 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.
The indemnity and contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties and are not in
diminution or limitation of the indemnification provisions under the Issuance Agreement.
6. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a Holder of any of their
obligations under this Agreement, each Holder or the Company, as the case may be, in addition to
being entitled to exercise all rights granted by law and under this Agreement, including recovery
of damages, will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate compensation for any
losses 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.
(b) Compliance. Each Holder covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it (unless an exemption
therefrom is available) in connection with sales of Registrable Securities pursuant to the
Registration Statement and shall sell the Registrable Securities only in accordance with a method
of distribution described in the Registration Statement
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(c) Discontinued Disposition. By its acquisition of Registrable Securities, each
Holder agrees that, upon receipt of a notice from the Company of the occurrence of any event of the
kind described in Section 3(c)(iii)-(vi), such Holder will forthwith discontinue
disposition of such Registrable Securities under a Registration Statement until the Investor’s
receipt of the copies of the supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(j) or until it is advised in writing (the “Advice”) by the Company that
the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed.
The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as
promptly as is possible. The Company may provide appropriate stop orders to enforce the provisions
of this paragraph.
(d) Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively but only if so expressly stated), only with the
written consent of the Company and Investor. Any amendment or waiver effected in accordance with
this paragraph shall be binding upon each holder of any securities purchased under this Agreement
at the time outstanding, each future holder of all such securities, and the Company.
(e) Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be delivered as set forth in the Issuance Agreement.
(f) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and shall inure to the
benefit of each Holder. Nothing in this Agreement, express or implied, is intended to confer upon
any party other than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement. The Company may not assign its rights (except by merger or in
connection with another entity acquiring all or substantially all of the Company’s assets) or
obligations hereunder without the prior written consent of all the Holders of the then outstanding
Registrable Securities. Each Holder may assign its respective rights hereunder in the manner and
to the Persons as permitted under the Issuance Agreement; provided, in each case that (i) the
Holder agrees in writing with the transferee or assignee to assign such rights and related
obligations under this Agreement, and for the transferee or assignee to assume such obligations,
and a copy of such agreement is furnished to the Company within a reasonable time after such
assignment, (ii) the Company is, within a reasonable time after such transfer or assignment,
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 transferred or assigned,
(iii) at or before the time the Company received the written notice contemplated by clause (ii) of
this sentence, the transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein and (iv) the transferee is an “accredited investor,” as that term
is defined in Rule 501 of Regulation D.
(g) Execution and Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(h) Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be determined in accordance with the provisions of the
Issuance Agreement.
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(i) Cumulative Remedies. Except as provided herein, the remedies provided herein are
cumulative and not exclusive of any other remedies provided by law.
(j) Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this Agreement and the
balance of the Agreement shall be interpreted as if such provisions were so excluded and shall be
enforceable in accordance with its terms.
(k) Titles and Subtitles. The titles and subtitles used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting this Agreement.
IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the
date first written above.
| SANTARUS, INC. |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | President & CEO | |||
| COSMO TECHNOLOGIES LIMITED |
||||
| By: | /s/ Xxxxxxxx Xxxxxxxx | |||
| Name: | Xxxxxxxx Xxxxxxxx | |||
| Title: | CEO | |||
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