REGISTRATION RIGHTS AGREEMENT
Exhibit
4.1
This
Registration Rights Agreement (the “Agreement”)
is
made and entered into as of this 21st day of November, 2005 by and among Aeolus
Pharmaceuticals, Inc., a Delaware corporation (the “Company”),
and
the “Investors” named in that certain Purchase Agreement dated as of the date
hereof by and among the Company and the Investors (including any Investors
that
may hereafter become a party to the Purchase Agreement in accordance with its
terms) (the “Purchase
Agreement”).
Capitalized terms used but not otherwise defined in this Agreement shall have
the meanings set forth in the Purchase Agreement.
The
parties hereby agree as follows:
1. Certain
Definitions.
As
used
in this Agreement, the following terms shall have the following
meanings:
“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.
“Common
Stock”
shall
mean the Company’s common stock, par value $0.01 per share, and any securities
into which such shares may hereinafter be reclassified.
“Investors”
shall
mean the Investors identified in the Purchase Agreement and any Affiliate or
permitted transferee of any Investor who is a subsequent holder of any Shares,
Warrants or Registrable Securities.
“Lead
Series A Investors”
shall
mean each of Xmark Opportunity Fund, L.P. and Xmark Opportunity Fund,
Ltd.
“Preferred
Stock”
shall
mean the Company’s Series A Preferred Stock, par value $0.01 per
share.
“Prospectus”
shall
mean the prospectus included in any Registration Statement, 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 such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated
by
reference in such prospectus.
“Register,” “registered”
and
“registration”
refer
to a registration made by preparing and filing a Registration Statement or
similar document in compliance with the 1933 Act (as defined below), and the
declaration or ordering of effectiveness of such Registration Statement or
document.
“Registrable
Securities”
shall
mean the shares of Common Stock issuable (i) upon conversion of the Shares,
(ii)
as payment-in-kind dividends on the Shares pursuant to Section 3 of the
Certificate of Designations, (iii) upon exercise of the Warrants, and (iv)
any
other securities issued or issuable with respect to or in exchange for such
securities set forth in clause
(i),
(ii), and (iii) above; provided, that, a security shall cease to be a
Registrable Security upon sale pursuant to a Registration Statement or Rule
144.
“Registration
Statement”
shall
mean any registration statement of the Company filed under the 1933 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, including post-effective amendments, all exhibits and all material
incorporated by reference in such registration statement.
“Required
Investors”
means
the Investors holding a majority of the Registrable Securities, including each
Lead Series A Preferred Investor so long as such Lead Series A Preferred
Investor owns any Shares or Registrable Securities.
“Rule
144”
means
Rule 144 promulgated under the 1933 Act.
“SEC”
means
the U.S. Securities and Exchange Commission.
“Shares”
means
the shares of Preferred Stock issued or issuable (whether at the First Closing
or any Subsequent Closing) pursuant to the Purchase Agreement.
“Warrant
Shares”
means
the shares of Common Stock issuable upon the exercise of the
Warrants.
“Warrants”
means the warrants to purchase shares of Common Stock issued or issuable to
the
Investors (whether at the First Closing or any Subsequent Closing) pursuant
to
the Purchase Agreement.
“1933
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“1934
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
2. Registration.
(a) Registration
Statements.
(i) Promptly
following the First Closing but no later than ninety
(90)
days
after the First Closing (the “Filing
Deadline”),
the
Company shall prepare and file with the SEC one Registration Statement on Form
S-2 (or, if Form S-2 is not then available to the Company, on such form of
registration statement as is then available to effect a registration for resale
of the Registrable Securities, subject to the Required Investors’ consent)
covering the resale of the Registrable Securities
(the
“Initial Registration Statement”).
Such
Initial Registration Statement shall include a plan of distribution in
substantially the form attached hereto as Exhibit
A.
Such
Initial Registration Statement also shall cover, to the extent allowable under
the 1933 Act and the rules promulgated thereunder (including Rule 416), such
indeterminate number of additional shares of Common Stock resulting from stock
splits, stock dividends or similar transactions with respect to the Registrable
Securities. The Company shall use its commercially reasonable efforts to obtain
from each person who now has piggyback registration rights with respect to
any
Company securities a waiver of those rights with respect to the Initial
Registration Statement. The Initial Registration Statement (and each amendment
or supplement thereto, and each request for acceleration of effectiveness
thereof) shall be provided in accordance with Section 3(c) to the Investors
and
their counsel prior to its filing or other submission. If the Initial
Registration Statement covering the Registrable Securities is not filed with
the
SEC on or prior to the Filing Deadline, the Company will make pro rata payments
to each Investor, as liquidated damages and not as a penalty, in an amount
equal
to 1.0% of the aggregate amount invested by such Investor (for purposes of
this
Agreement, the amount invested by an Investor shall equal the aggregate purchase
price of the Shares and Warrants acquired by such Investor pursuant to the
Purchase Agreement) for each 30-day period or pro rata for any portion thereof
following the date by which such Initial Registration Statement should have
been
filed for which no Initial Registration Statement is filed with respect to
the
Registrable Securities. Such payments shall be in partial compensation to the
Investors, and shall not constitute the Investors’ exclusive remedy for such
events. Such payments shall be made to each Investor in cash or by check. The
amounts payable as liquidated damages pursuant to this paragraph shall be
payable in lawful money of the United States, and amounts payable as liquidated
damages shall be paid within three (3) Business Days of the last day of each
such 30-day period during which the Initial Registration Statement should have
been filed for which the Initial Registration Statement was not filed with
respect to the Registrable Securities.
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(ii) Additional
Registrable Securities.
Upon
the written demand of any Investor following any change in the Warrant Price
(as
defined in the Warrants) or the Conversion Price (as defined in the Certificate
of Designations) such that additional shares of Common Stock become issuable
upon the exercise of the Warrants or conversion of the Shares, the Company
shall
(a) prepare and file with the SEC one or more Registration Statements on Form
S-2 (or, if Form S-2 is not then available to the Company, on such form of
Registration Statement as is then available (the “Additional
Registration Statement”),
or
(b) amend the Initial Registration Statement filed pursuant to clause (i) above,
if such Initial Registration Statement has not previously been declared
effective (the “Amended
Registration Statement”)
to
effect a registration for resale of such additional shares of Common Stock
(the
“Additional
Shares”),
subject to the Required Investors’ consent) covering the resale of the
Additional Shares, but only to the extent the Additional Shares are not at
the
time covered by an effective Registration Statement. Such Additional
Registration Statement or Amended Registration Statement also shall cover,
to
the extent allowable under the 1933 Act and the rules promulgated thereunder
(including Rule 416), such indeterminate number of additional shares of Common
Stock resulting from stock splits, stock dividends or similar transactions
with
respect to the Additional Shares. The Company shall use its commercially
reasonable efforts to obtain from each person who now has piggyback registration
rights with respect to any Company securities a waiver of those rights with
respect to such Additional Registration Statement or Amended Registration
Statement. The Additional Registration Statement or Amended Registration
Statement (and each amendment or supplement thereto, and each request for
acceleration of effectiveness thereof) shall be provided in accordance with
Section 3(c) to the Investors and their counsel prior to its filing or other
submission. If an Additional Registration Statement or Amended Registration
Statement covering the Additional Shares is required to be filed under this
Section 2(a)(ii) and is not filed with the SEC within twenty (20) Business
Days
of the request of any Investor,
or upon
the occurrence of any of the events specified in this Section 2(a)(ii), the
Company will make pro rata payments to each Investor, as liquidated damages
and
not as a penalty, in an amount equal to 1.0% of the aggregate amount invested
by
such Investor for each 30-day period or pro rata for any portion thereof
following the date by which such Additional Registration Statement
or
Amended Registration Statement should have been filed for which no Additional
Registration Statement or Amended Registration Statement is filed with respect
to the Additional Shares. Such payments shall be in partial compensation to
the
Investors, and shall not constitute the Investors’ exclusive remedy for such
events. Such payments shall be made to each Investor in cash or by check. The
amounts payable as liquidated damages pursuant to this paragraph shall be
payable in lawful money of the United States, and amounts payable as liquidated
damages shall be paid within five (5) Business Days of the last day of each
such
30-day period during which the Additional Registration Statement or Amended
Registration Statement should have been filed for which no Additional
Registration Statement or Amended Registration Statement was filed with respect
to the Additional Shares.
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(iii) Promptly
following the date (the “Qualification
Date”)
upon
which the Company becomes eligible to use a registration statement on Form
S-3
to register the Registrable Securities or Additional Shares, as applicable,
for
resale, but in no event more than thirty
(30)
days
after the Qualification Date (the “Qualification
Deadline”),
the
Company shall file an amendment to the Initial Registration Statement,
Additional Registration Statement or Amended Registration Statement, as
applicable, on Form S-3 covering the Registrable Securities or Additional
Shares, as applicable (or a post-effective amendment on Form S-3 to the Initial
Registration Statement, Additional Registration Statement or Amended
Registration Statement) (a “Shelf
Registration Statement”)
and
shall use commercially reasonable efforts to cause such Shelf Registration
Statement to be declared effective as promptly as practicable thereafter. If
a
Shelf Registration Statement covering the Registrable Securities is not filed
with the SEC on or prior to the Qualification Deadline, the Company will make
pro rata payments to each Investor, as liquidated damages and not as a penalty,
in an amount equal to 1.0% of the aggregate amount invested by such Investor
for
each 30-day period or pro rata for any portion thereof following the date by
which such Shelf Registration Statement should have been filed for which no
such
Shelf Registration Statement is filed with respect to the Registrable Securities
or Additional Shares, as applicable. Such payments shall be in partial
compensation to the Investors, and shall not constitute the Investors’ exclusive
remedy for such events. Such payments shall be made to each Investor in cash
or
by check. The amounts payable as liquidated damages pursuant to this paragraph
shall be payable in lawful money of the United States, and amounts payable
as
liquidated damages shall be paid within five (5) Business Days of the last
day
of each such 30-day period during which the Shelf Registration Statement should
have been filed for which no Shelf Registration Statement was
filed.
(b) Expenses.
The
Company will pay (a) all expenses associated with each registration, including
filing and printing fees, the Company’s counsel and accounting fees and
expenses, costs associated with clearing the Registrable Securities for sale
under applicable state securities laws, and listing fees, and (b) reasonable
fees and expenses of one counsel to the Investors and the Investors’ reasonable
expenses in connection with the registration, in the case of clause (b), in
an
amount not to exceed $35,000 (so long as there is no review of the applicable
Registration Statement, Additional Registration Statement or Amended
Registration Statement by the SEC) but excluding discounts, commissions, fees
of
underwriters, selling brokers, dealer managers or similar securities industry
professionals with respect to the Registrable Securities being
sold.
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(c) Effectiveness.
(i) The
Company shall use its commercially reasonable efforts to have each Registration
Statement declared effective as soon as practicable. The Company shall notify
the Investors by facsimile or e-mail as promptly as practicable, and in any
event, within twenty-four (24) hours, after any Registration Statement is
declared effective and shall simultaneously provide the Investors with copies
of
any related Prospectus to be used in connection with the sale or other
disposition of the securities covered thereby. If (A)(x) a Registration
Statement covering the Registrable Securities is not declared effective by
the
SEC by the earlier of (1) ninety (90) days after it
is
filed with the
SEC
or (2)
five (5) days following the Company’s receipt of a no-review letter from the SEC
relating to such Registration Statement (the “Effectiveness
Deadline”),
(y) a
Registration Statement covering Additional Shares is not declared effective
by
the SEC by the earlier of (1) ninety (90) days following the time such
Registration Statement was required to be filed pursuant to Section 2(a)(ii)
or
(2) five (5) days following the Company’s receipt of a no-review letter from the
SEC relating to such Registration Statement, or (z) a Shelf Registration
Statement is not declared effective by the SEC by the earlier of (1) ninety
(90)
days after the Qualification Deadline or (2) five (5) days following the
Company’s receipt of a no-review letter from the SEC relating to such Shelf
Registration Statement, or (B)
after
a Registration Statement has been declared effective by the SEC, sales cannot
be
made pursuant to such Registration Statement for any reason (including,
without limitation by reason of a stop order, or the Company’s failure to update
the Registration Statement),
but
excluding the inability of any Investor to sell the Registrable Securities
covered thereby due to market conditions and except as excused pursuant to
subparagraph (ii) below, then
the
Company will make pro rata payments to each Investor, as liquidated damages
and
not as a penalty, in an amount equal to 1.5% of the aggregate amount invested
by
such Investor for each 30-day period or pro rata for any portion thereof
following the date by which such Registration Statement should have been
effective (the “Blackout
Period”).
Such
payments shall be in partial compensation to the Investors, and shall not
constitute the Investors’ exclusive remedy for such events. The amounts payable
as liquidated damages pursuant to this paragraph shall be paid monthly within
three (3) Business Days of the last day of each month following the commencement
of the Blackout Period until the termination of the Blackout Period. Such
payments shall be made to each Investor in cash.
(ii) For
not
more than thirty (30) consecutive days or for a total of not more than sixty
(60) days in any twelve (12) month period, the Company may delay the disclosure
of material non-public information concerning the Company, by suspending the
use
of any Prospectus included in any registration contemplated by this Section
containing such information, the disclosure of which at the time is not, in
the
good faith opinion of the Company, in the best interests of the Company (an
“Allowed Delay”); provided, that the Company shall promptly (a) notify the
Investors in writing of the existence of (but in no event, without the prior
written consent of an Investor, shall the Company disclose to such Investor
any
of the facts or circumstances regarding) material non-public information giving
rise to an Allowed Delay, (b) advise the Investors in writing to cease all
sales
under the Registration Statement until the end of the Allowed Delay and (c)
use
commercially reasonable efforts to terminate an Allowed Delay as promptly as
practicable.
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3. Company
Obligations. The Company will use commercially reasonable efforts to effect
the
registration of the Registrable Securities in accordance with the terms hereof,
and pursuant thereto the Company will, as expeditiously as
possible:
(a) use
commercially reasonable efforts to cause such Registration Statement to become
effective and to remain continuously effective for a period that will terminate
upon the earliest to occur of (i) the date on which all Registrable Securities
covered by such Registration Statement as amended from time to time, have been
sold pursuant thereto or under Rule 144, (ii) the date on which all Registrable
Securities held by and issuable to each Investor may be sold under Rule 144
during any 90-day period, or (iii) the third anniversary of the date of the
last
Closing (the “Effectiveness
Period”)
and
advise the Investors in writing when the Effectiveness Period has
expired;
(b) prepare
and file with the SEC such amendments and post-effective amendments to the
Registration Statement and the Prospectus as may be necessary to keep the
Registration Statement effective for the period specified in Section 3(a) and
to
comply with the provisions of the 1933 Act and the 1934 Act with respect to
the
distribution of all of the Registrable Securities covered thereby;
(c) provide
copies to and permit counsel designated by the Investors to review each
Registration Statement and all amendments and supplements thereto no fewer
than
five (5) days prior to their filing with the SEC and,
except
as required by law,
not file
any document to which such counsel reasonable objects;
(d) furnish
to the Investors and their legal counsel (i) promptly after the same is prepared
and publicly distributed, filed with the SEC, or received by the Company (but
not later than two (2) Business Days after the filing date, receipt date or
sending date, as the case may be), at least five (5) copies of any Registration
Statement and any amendment thereto, each preliminary prospectus and Prospectus
and each amendment or supplement thereto, and each letter written by or on
behalf of the Company to the SEC or the staff of the SEC, and each item of
correspondence from the SEC or the staff of the SEC, in each case relating
to
such Registration Statement (other than any portion of any thereof which
contains information for which the Company has sought confidential treatment),
and (ii) such number of copies of a Prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and such other documents
as each Investor may reasonably request in order to facilitate the disposition
of the Registrable Securities owned by such Investor that are covered by the
related Registration Statement;
(e) use
commercially reasonable efforts to (i) prevent the issuance of any stop order
or
other suspension of effectiveness and, (ii) if such order is issued, obtain
the
withdrawal of any such order at the earliest possible moment;
(f) prior
to
any public offering of Registrable Securities, use commercially reasonable
efforts to register or qualify or cooperate with the Investors and their counsel
in connection with the registration or qualification of such Registrable
Securities for offer and sale under the securities or blue sky laws of such
jurisdictions requested by the Investors and do any and all other commercially
reasonable acts or things necessary or advisable to enable the distribution
in
such jurisdictions of the Registrable Securities covered by the Registration
Statement;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (i) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(f), (ii) subject itself to general taxation in any jurisdiction where
it would not otherwise be so subject but for this Section 3(f), or (iii) file
a
general consent to service of process in any such jurisdiction;
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(g) use
commercially reasonable efforts to cause all Registrable Securities covered
by a
Registration Statement to be listed on each securities exchange, interdealer
quotation system or other market on which similar securities issued by the
Company are then listed;
(h) immediately
notify the Investors, at any time when a Prospectus relating to Registrable
Securities is required to be delivered under the 1933 Act, upon discovery that,
or upon the happening of any event as a result of which, the Prospectus included
in a Registration Statement, as then in effect, includes 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 in light
of
the circumstances then existing, and at the request of any such holder, promptly
prepare and furnish to such holder a reasonable number of copies of a supplement
to or an amendment of such Prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such Prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing;
(i) otherwise
use commercially reasonable efforts to comply with all applicable rules and
regulations of the SEC under the 1933 Act and the 1934 Act, take such other
actions as may be reasonably necessary to facilitate the registration of the
Registrable Securities hereunder; and make available to its security holders,
as
soon as reasonably practicable, but not later than the Availability Date (as
defined below), an earnings statement covering a period of at least twelve
(12)
months, beginning after the effective date of each Registration Statement,
which
earnings statement shall satisfy the provisions of Section 11(a) of the 1933
Act, including Rule 158 promulgated thereunder (for the purpose of this
subsection 3(i), “Availability
Date”
means
the 45th day following the end of the fourth fiscal quarter that includes the
effective date of such Registration Statement, except that, if such fourth
fiscal quarter is the last quarter of the Company’s fiscal year, “Availability
Date”
means
the 90th day after the end of such fourth fiscal quarter); and
(j) With
a
view to making available to the Investors the benefits of Rule 144 (or its
successor rule) and any other rule or regulation of the SEC that may at any
time
permit the Investors to sell shares of Common Stock to the public without
registration, the Company covenants and agrees to use commercially reasonable
efforts to: (i) make and keep public information available, as those terms
are
understood and defined in Rule 144, until such date as all of the Registrable
Securities shall have been resold; (ii) file with the SEC in a timely manner
all
reports and other documents required of the Company under the 1934 Act; and
(iii) furnish to each Investor upon request, as long as such Investor owns
any
Registrable Securities, (A) a written statement by the Company that it has
complied with the reporting requirements of the 1934 Act, (B) a copy of the
Company’s most recent Annual Report on Form 10-K or Quarterly Report on Form
10-Q, and (C) such other information as may be reasonably requested in order
to
avail such Investor of any rule or regulation of the SEC that permits the
selling of any such Registrable Securities without registration under the 1933
Act.
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4. Due
Diligence Review; Information. The Company shall make available, during normal
business hours, for inspection and review by the Investors, advisors to and
representatives of the Investors (who may or may not be affiliated with the
Investors and who are reasonably acceptable to the Company), all financial
and
other records, all SEC Filings and other filings with the SEC, and all other
corporate documents and properties of the Company as may be reasonably necessary
for the purpose of such review, and cause the Company’s officers, directors and
employees, within a reasonable time period, to supply all such information
reasonably requested by the Investors or any such representative, advisor or
underwriter in connection with such Registration Statement (including, without
limitation, in response to all questions and other inquiries reasonably made
or
submitted by any of them), prior to and from time to time after the filing
and
effectiveness of the Registration Statement for the sole purpose of enabling
the
Investors and such representatives, advisors and underwriters and their
respective accountants and attorneys to conduct initial and ongoing due
diligence with respect to the Company and the accuracy of such Registration
Statement; provided, however, that any such access shall be conducted at such
Investor’s, its advisors’ and representatives’ expense and in a manner not to
interfere with the normal operation of the business of the Company.
The
Company shall not disclose material nonpublic information to the Investors,
or
to advisors to or representatives of the Investors, unless prior to disclosure
of such information the Company identifies such information as being material
nonpublic information and provides the Investors, such advisors and
representatives with the opportunity to accept or refuse to accept such material
nonpublic information for review and any such Investor, advisor or
representative wishing to obtain such information enters into an appropriate
confidentiality agreement with the Company with respect thereto.
5. Obligations
of the Investors.
(a) Each
Investor shall furnish in writing to the Company such information regarding
itself, the Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it, as shall be reasonably
requested to effect the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company
may
reasonably request. At least ten (10) Business Days prior to the first
anticipated filing date of any Registration Statement, the Company shall notify
each Investor of the information the Company requires from such Investor if
such
Investor elects to have any of the Registrable Securities included in the
Registration Statement. An Investor shall provide such information to the
Company at least five (5) Business Days prior to the first anticipated filing
date of such Registration Statement if such Investor elects to have any of
the
Registrable Securities included in the Registration Statement.
(b) Each
Investor, by its acceptance of the Registrable Securities, agrees to cooperate
with the Company as reasonably requested by the Company in connection with
the
preparation and filing of a Registration Statement hereunder, unless such
Investor has notified the Company in writing of its election to exclude all
of
its Registrable Securities from such Registration Statement.
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(c) Each
Investor agrees that, upon receipt of any notice from the Company of either
(i)
the commencement of an Allowed Delay pursuant to Section 2(c)(ii) or (ii) the
happening of an event pursuant to Section 3(h) hereof, such Investor will
immediately discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities, until the
Investor’s receipt of the copies of the supplemented or amended prospectus filed
with the SEC and until any related post-effective amendment is declared
effective and, if so directed by the Company, the Investor shall deliver to
the
Company (at the expense of the Company) or destroy (and deliver to the Company
a
certificate of destruction) all copies in the Investor’s possession of the
Prospectus covering the Registrable Securities current at the time of receipt
of
such notice.
6. Indemnification.
(a) Indemnification
by the Company.
To the
extent permitted by the law, the Company will indemnify and hold harmless each
Investor and its officers, directors, managers, members, employees and agents,
successors and assigns, and each other person, if any, who controls such
Investor within the meaning of the 1933 Act, against any losses, claims, damages
or liabilities, joint or several, to which they may become subject under the
1933 Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of any material fact contained in any
Registration Statement, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof; (ii) any blue sky application
or other document executed by the Company specifically for that purpose or
based
upon written information furnished by the Company filed in any state or other
jurisdiction in order to qualify any or all of the Registrable Securities under
the securities laws thereof; (iii) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the
statements therein not misleading; (iv) any violation by the Company or its
agents of any rule or regulation promulgated under the 1933 Act applicable
to
the Company or its agents and relating to action or inaction required of the
Company in connection with such registration; or (v) any failure to register
or
qualify the Registrable Securities included in any such Registration Statement
in any state where the Company or its agents has affirmatively undertaken or
agreed in writing that the Company will undertake such registration or
qualification on an Investor’s behalf; and the Company will reimburse such
Investor, and each such officer, director, manager or member and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided,
however,
that
the Company will not be liable in any such case if and to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission (y) so
made in conformity with information furnished by such Investor or any such
controlling person in writing specifically for use in such Registration
Statement or Prospectus or preliminary prospectus or amendment or supplement,
or
(z) which was cured in an amendment or supplement to the Prospectus (or any
amendment or supplement thereto) delivered to the Investor on a timely basis
to
permit delivery thereof prior to the date on which the Shares were
sold.
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(b) Indemnification
by the Investors.
To the
extent permitted by law, each Investor agrees, severally but not jointly, to
indemnify and hold harmless, to the fullest extent permitted by law, the
Company, its directors, officers, employees, stockholders and each person who
controls the Company (within the meaning of the 0000 Xxx) against any losses,
claims, damages, liabilities and expense (including reasonable attorney fees)
resulting from any untrue statement of a material fact or any omission of a
material fact required to be stated in the Registration Statement or Prospectus
or preliminary prospectus or amendment or supplement thereto or necessary to
make the statements therein not misleading, to the extent, but only to the
extent that such untrue statement or omission is contained in any information
furnished in writing by such Investor to the Company specifically for inclusion
in such Registration Statement or Prospectus or amendment or supplement thereto.
In no event shall the liability of an Investor be greater in amount than the
dollar amount of the proceeds (net of all expense paid by such Investor in
connection with any claim relating to this Section 6 and the amount of any
damages such Investor has otherwise been required to pay by reason of such
untrue statement or omission) received by such Investor upon the sale of the
Registrable Securities included in the Registration Statement giving rise to
such indemnification obligation.
(c) Conduct
of Indemnification Proceedings.
Any
person entitled to indemnification hereunder shall (i) give prompt notice to
the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) permit such indemnifying party to assume the defense of such claim
with
counsel reasonably satisfactory to the indemnified party; provided
that any
person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such person unless
(a)
the indemnifying party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such person or (c) in the reasonable
judgment of any such person, based upon written advice of its counsel, a
conflict of interest exists between such person and the indemnifying party
with
respect to such claims such that representation of both persons would be
inappropriate (in which case, if the person notifies the indemnifying party
in
writing that such person elects to employ separate counsel at the expense of
the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such claim on behalf of such person); and provided,
further,
that
the failure of any indemnified party to give notice as provided herein shall
not
relieve the indemnifying party of its obligations hereunder, except to the
extent that such failure to give notice shall materially adversely affect the
indemnifying party in the defense of any such claim or litigation. It is
understood that the indemnifying party shall not, in connection with any
proceeding in the same jurisdiction, be liable for fees or expenses of more
than
one separate firm of attorneys at any time for all such indemnified parties.
No
indemnifying party will, except with the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement that 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.
-10-
(d) Contribution.
If for
any reason the indemnification provided for in the preceding paragraphs (a)
and
(b) is unavailable to an indemnified party or insufficient to hold it harmless,
other than as expressly specified therein, then the indemnifying party, in
lieu
of indemnifying such indemnified party, to the extent permitted by applicable
law, shall contribute to the amount paid or payable by the indemnified party
as
a result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect the relative fault of the indemnified party and the
indemnifying party, as well as any other relevant equitable considerations.
The
relative fault of the indemnifying party and of the indemnified party shall
be
determined by a court of law by reference to, among other things, whether the
untrue or alleged untrue statement of material fact or the omission to state
a
material fact relates to information supplied by the indemnifying party or
indemnified party and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Notwithstanding the foregoing, no person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the 1933 Act shall be entitled to
contribution from any person not guilty of such fraudulent misrepresentation.
In
no event shall the contribution obligation of a holder of Registrable Securities
be greater in amount than the dollar amount of the proceeds (net of all expenses
paid by such holder in connection with any claim relating to this Section 6
and
the amount of any damages such holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission) received by it upon the sale of the Registrable Securities giving
rise
to such contribution obligation.
7. Miscellaneous.
(a) Amendments
and Waivers.
This
Agreement may be amended only by a writing signed by the Company and the
Required Investors. The Company may take any action herein prohibited, or omit
to perform any act herein required to be performed by it, only if the Company
shall have obtained the written consent to such amendment, action or omission
to
act, of the Required Investors.
(b) Notices.
All
notices and other communications provided for or permitted hereunder shall
be
made as set forth in Section 8.4 of the Purchase Agreement.
(c) Assignments
and Transfers by Investors.
The
provisions of this Agreement shall be binding upon and inure to the benefit
of
the Investors and their respective successors and assigns. An Investor may
transfer or assign, in whole or from time to time in part, to one or more
persons its rights hereunder in connection with the transfer of Registrable
Securities by such Investor to such person, provided that such Investor complies
with all laws applicable thereto and provides written notice of assignment
to
the Company promptly after such assignment is effected.
(d) Assignments
and Transfers by the Company.
This
Agreement may not be assigned by the Company (whether by operation of law or
otherwise) without the prior written consent of the Required Investors,
provided, however, that the Company shall assign its rights and delegate its
duties hereunder to any surviving or successor corporation in connection with
a
merger or consolidation of the Company with another corporation, or a sale,
transfer or other disposition of all or substantially all of the Company’s
assets to another corporation, without the prior written consent of the Required
Investors, after notice duly given by the Company to each Investor.
(e) Benefits
of the Agreement.
The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective permitted successors and assigns of the parties.
Nothing in this Agreement 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.
-11-
(f) Counterparts;
Faxes.
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. This Agreement may also be executed via facsimile, which shall
be
deemed an original.
(g) 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.
(h) Severability.
Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof but shall be interpreted as if it were written so as to be
enforceable to the maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law
which
renders any provisions hereof prohibited or unenforceable in any
respect.
(i) Further
Assurances.
The
parties shall execute and deliver all such further instruments and documents
and
take all such other actions as may reasonably be required to carry out the
transactions contemplated hereby and to evidence the fulfillment of the
agreements herein contained.
(j) Entire
Agreement.
Subject
to the terms of the Purchase Agreement, this Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
(k) Governing
Law; Consent to Jurisdiction; Waiver of Jury Trial.
This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York without regard to the choice of law principles
thereof. Each of the parties hereto irrevocably submits to the jurisdiction
of
the courts of the State of New York located in New York County and the United
States District Court for the Southern District of New York for the purpose
of
any suit, action, proceeding or judgment relating to or arising out of this
Agreement and the transactions contemplated hereby. Service of process in
connection with any such suit, action or proceeding may be served on each party
hereto anywhere in the world by the same methods as are specified for the giving
of notices under this Agreement. Each of the parties hereto irrevocably consents
to the jurisdiction of any such court in any such suit, action or proceeding
and
to the laying of venue in such court. Each party hereto irrevocably waives
any
objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action
or
proceeding brought in any such court has been brought in an inconvenient forum.
EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN
CONSULTED SPECIFICALLY AS TO THIS WAIVER.
-12-
IN
WITNESS WHEREOF, the parties have executed this Agreement or caused their duly
authorized officers to execute this Agreement as of the date first above
written.
| COMPANY: | ||
| |
|
|
| By: /s/ Xxxxxxx X. Xxxxxxx, Xx. | ||
|
Name:
Xxxxxxx
X. Xxxxxxx, Xx.
Title:
Chief
Executive Officer
|
||
| INVESTORS: | ||
| |
|
Xmark
Opportunity Fund, L.P.
|
| By: /s/ Xxxxxxxx X. Xxxx | ||
|
Name:
Xxxxxxxx X. Xxxx
Title:
C.I.O.
Address
for Notice:
000
Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxx,
XX 00000
Attn:
Xxxxxxxx Xxxx
Telephone:
000.000.0000
Facsimile:
203.653.2501
With
a Copy To:
Xxxxxxxxxx
Xxxxxxx PC
00
Xxxxxxxxxx Xxxxxx
Xxxxxxxx,
XX 00000
Attn:
Xxxxxx Xxxxxxx, Esq.
Telephone:
000.000.0000
Facsimile:
973.597.2400
|
||
[SIGNATURE
PAGE TO PURCHASE AGREEMENT]
-13-
| Xmark Opportunity Fund, Ltd. | ||
| |
|
|
| By: /s/ Xxxxxxxx X. Xxxx | ||
|
Name:
Xxxxxxxx X. Xxxx
Title:
C.I.O
Address
for Notice:
000
Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxx,
XX 00000
Attn:
Xxxxxxxx Xxxx
Telephone:
000.000.0000
Facsimile:
203.653.2501
With
a Copy To:
Xxxxxxxxxx
Xxxxxxx PC
00
Xxxxxxxxxx Xxxxxx
Xxxxxxxx,
XX 00000
Attn:
Xxxxxx Xxxxxxx, Esq.
Telephone:
000.000.0000
Facsimile:
973.597.2400
|
||
[SIGNATURE
PAGE TO PURCHASE AGREEMENT]
-14-
| Xmark JV Investment Partners, LLC | ||
| |
|
|
| By: /s/ Xxxxxxxx X. Xxxx | ||
|
Name:
Xxxxxxxx X. Xxxx
Title:
C.I.O.
Address
for Notice:
000
Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxx,
XX 00000
Attn:
Xxxxxxxx Xxxx
Telephone:
000.000.0000
Facsimile:
203.653.2501
With
a Copy To:
Xxxxxxxxxx
Xxxxxxx PC
00
Xxxxxxxxxx Xxxxxx
Xxxxxxxx,
XX 00000
Attn:
Xxxxxx Xxxxxxx, Esq.
Telephone:
000.000.0000
Facsimile:
973.597.2400
|
||
[SIGNATURE
PAGE TO PURCHASE AGREEMENT]
-15-
| Biotechnology Value Fund, L.P. | ||
| |
|
|
|
By:
BVF Partners L.P.
Its:
General Partner
|
||
|
By:
BVF Partners L.P.
Its:
General Partner By:
/s/ Xxxx Xxxxxxx
Name:
Xxxx Xxxxxxx
Title:
President
Address
for Notice:
000
X. Xxxxxxxx Xxx, Xxxxx 0000
Xxxxxxx
XX 00000
Telephone:
000.000.0000
Facsimile:
312.506.6888
|
||
| Biotechnology Value Fund II, L.P. | ||
| |
|
|
|
By:
BVF Partners L.P.
Its:
General Partner
|
||
|
By:
BVF Partners L.P.
Its:
General Partner By:
/s/ Xxxx Xxxxxxx
Name:
Xxxx Xxxxxxx
Title:
President
Address
for Notice:
000
X. Xxxxxxxx Xxx, Xxxxx 0000
Xxxxxxx
XX 00000
Telephone:
000.000.0000
Facsimile:
312.506.6888
|
||
[SIGNATURE
PAGE TO PURCHASE AGREEMENT]
-16-
| BVF Investments, L.L.C. | ||
| |
|
|
|
By:
BVF Partners L.P.
Its:
Managing Partner
|
||
|
By:
BVF, Inc.
Its:
General Partner By:
/s/ Xxxx Xxxxxxx
Name:
Xxxx Xxxxxxx
Title:
President
Address
for Notice:
000
X. Xxxxxxxx Xxx, Xxxxx 0000
Xxxxxxx
XX 00000
Telephone:
000.000.0000
Facsimile:
312.506.6888
|
||
| Investment 10 L.L.C. | ||
| |
|
|
|
By:
BVF Partners L.P.
Its:
Managing Partner
|
||
|
By:
BVF, Inc.
Its:
Attorney-in-fact By:
/s/ Xxxx Xxxxxxx
Name:
Xxxx Xxxxxxx
Title:
President
Address
for Notice:
000
X. Xxxxxxxx Xxx, Xxxxx 0000
Xxxxxxx
XX 00000
Telephone:
000.000.0000
Facsimile:
312.506.6888
|
||
[SIGNATURE
PAGE TO PURCHASE AGREEMENT]
-17-
| Biomedical Offshore Value Fund, Ltd. | ||
|
|
||
|
|
||
|
By:
/s/ Xxxxx X. Xxxxxx
Name:
Xxxxx X. Xxxxxx
Title:
Chief Financial Officer
Address
for Notice:
0
Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx,
XX 00000
Telephone:
000.000.0000
Facsimile:
203.971.3320
|
||
[SIGNATURE
PAGE TO PURCHASE AGREEMENT]
-18-
Exhibit
A
Plan
of Distribution
The
selling stockholders, which as used herein includes donees, pledgees,
transferees or other successors-in-interest selling shares of common stock
or
interests in shares of common stock received after the date of this prospectus
from a selling stockholder as a gift, pledge, partnership distribution or other
transfer, may, from time to time, sell, transfer or otherwise dispose of any
or
all of their shares of common stock or interests in shares of common stock
on
any stock exchange, market or trading facility on which the shares are traded
or
in private transactions. These dispositions may be at fixed prices, at
prevailing market prices at the time of sale, at prices related to the
prevailing market price, at varying prices determined at the time of sale,
or at
negotiated prices.
The
selling stockholders may use any one or more of the following methods when
disposing of shares or interests therein:
-
ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
-
block
trades in which the broker-dealer will attempt to sell the shares as agent,
but
may position and resell a portion of the block as principal to facilitate the
transaction;
-
purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;
-
an
exchange distribution in accordance with the rules of the applicable
exchange;
-
privately negotiated transactions;
-
short
sales effected after the date of this Prospectus;
-
through
the writing or settlement of options or other hedging transactions, whether
through an options exchange or otherwise;
-
broker-dealers may agree with the selling stockholders to sell a specified
number of such shares at a stipulated price per share;
-
a
combination of any such methods of sale; and
-
any
other method permitted pursuant to applicable law.
The
selling stockholders may, from time to time, pledge or grant a security interest
in some or all of the shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock, from time to time, under this
prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest
as selling stockholders under this prospectus. The selling stockholders also
may
transfer the shares of common stock in other circumstances, in which case the
transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus.
-19-
In
connection with the sale of our common stock or interests therein, the selling
stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the common
stock in the course of hedging the positions they assume. The selling
stockholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The selling
stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such
transaction).
The
aggregate proceeds to the selling stockholders from the sale of the common
stock
offered by them will be the purchase price of the common stock less discounts
or
commissions, if any. Each of the selling stockholders reserves the right to
accept and, together with their agents from time to time, to reject, in whole
or
in part, any proposed purchase of common stock to be made directly or through
agents. We will not receive any of the proceeds from this offering. Upon any
exercise of the warrants by payment of cash, however, we will receive the
exercise price of the warrants.
The
selling stockholders also may resell all or a portion of the shares in open
market transactions in reliance upon Rule 144 under the Securities Act of 1933,
provided that they meet the criteria and conform to the requirements of that
rule.
The
selling stockholders and any underwriters, broker-dealers or agents that
participate in the sale of the common stock or interests therein may be
"underwriters" within the meaning of Section 2(11) of the Securities Act. Any
discounts, commissions, concessions or profit they earn on any resale of the
shares may be underwriting discounts and commissions under the Securities Act.
Selling stockholders who are "underwriters" within the meaning of Section 2(11)
of the Securities Act will be subject to the prospectus delivery requirements
of
the Securities Act.
To
the
extent required, the shares of our common stock to be sold, the names of the
selling stockholders, the respective purchase prices and public offering prices,
the names of any agents, dealer or underwriter, any applicable commissions
or
discounts with respect to a particular offer will be set forth in an
accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this
prospectus.
In
order
to comply with the securities laws of some states, if applicable, the common
stock may be sold in these jurisdictions only through registered or licensed
brokers or dealers. In addition, in some states the common stock may not be
sold
unless it has been registered or qualified for sale or an exemption from
registration or qualification requirements is available and is complied
with.
-20-
We
have
advised the selling stockholders that the anti-manipulation rules of Regulation
M under the Exchange Act may apply to sales of shares in the market and to
the
activities of the selling stockholders and their affiliates. In addition, we
will make copies of this prospectus (as it may be supplemented or amended from
time to time) available to the selling stockholders for the purpose of
satisfying the prospectus delivery requirements of the Securities Act. The
selling stockholders may indemnify any broker-dealer that participates in
transactions involving the sale of the shares against certain liabilities,
including liabilities arising under the Securities Act.
We
have
agreed to indemnify the selling stockholders against liabilities, including
liabilities under the Securities Act and state securities laws, relating to
the
registration of the shares offered by this prospectus.
We
have
agreed with the selling stockholders to keep the registration statement of
which
this prospectus constitutes a part effective until such time as all of the
shares covered by this prospectus have been disposed of pursuant to and in
accordance with the registration statement.
-21-
