1
EXHIBIT 10.074
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of
September 2, 1999, by and among BioShield Technologies, Inc., a Georgia
corporation, with headquarters at 0000 Xxxxxxxxxxxxx Xxxx., Xxxxxxxx, Xxxxxxx
00000 (the "COMPANY"), and the undersigned buyers (the "BUYER").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and
among the parties of even date herewith (the "SECURITIES PURCHASE AGREEMENT"),
Allergy Xxxxxxxxxx.xxx, Inc ("ASC"), a subsidiary of the Company, has agreed,
upon the terms and subject to the conditions of the Securities Purchase
Agreement, (i) to issue and sell to the Buyers shares of ASC's common stock,
par value $0.001 per share (the "COMMON STOCK"), which, subject to certain
terms and conditions, will be exchangeable after September 2, 2000 (the
"EXCHANGE COMMENCEMENT DATE") into shares of the Company's common stock, no par
value per share (as converted, the "CONVERSION SHARES") in accordance with the
terms of the Securities Purchase Agreement; and
B. To induce the Buyer to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"1933 ACT"), and applicable state securities laws:
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Buyer hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
a. "INVESTOR" means the Buyer and any transferee or assignee
thereof to whom the Buyer assigns its rights under this Agreement and
who agrees to become bound by the provisions of this Agreement in
accordance with Section 9.
b. "PERSON" means a corporation, a limited liability company,
an association, a partnership, an organization, a business, an
individual, a governmental or political subdivision thereof or a
governmental agency.
c. "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415
under the 1933 Act or any successor rule providing for offering
securities on a continuous basis ("RULE 415"), and the declaration or
ordering of
2
effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").
d. REGISTRABLE SECURITIES" means exclusively the Conversion
Shares issued or issuable upon conversion of the Common Stock and any
shares of capital stock issued or issuable with respect to the
Conversion Shares or the Common Stock as a result of any stock split,
stock dividend, recapitalization, exchange or similar event.
e."REGISTRATION STATEMENT" means a registration statement of
the Company filed under the 1933 Act.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set for the in the Securities Purchase Agreement.
2. REGISTRATION.
a. Mandatory Registration. No later than December 31, 1999,
(the "FILING DEADLINE"), the Company shall prepare and file with the
SEC a Registration Statement or Registration Statements (as is
necessary) on Form S-3 (or, if such form is unavailable for such a
registration, on such other form as is available for such a
registration, subject to the consent of each Buyer and the provisions
of Section 2(e), which consent will not be unreasonably withheld),
covering the resale of all of the Registrable Securities and no other
Securities of any kind by any person or entity, which Registration
Statement(s) shall state that, in accordance with Rule 416 promulgated
under the 1933 Act, such Registration Statement(s) also covers such
indeterminate number of additional shares of Common Stock as may
become issuable to prevent dilution resulting from stock splits, stock
dividends or similar transactions. Such Registration Statement shall
initially register for resale 1,000,000 shares of Common Stock,
subject to adjustment as provided in Section 3(b), and such registered
shares of Common Stock shall be allocated among the Investors pro rata
based on the total number of Registrable Securities issued or issuable
as of each date that a Registration Statement, as amended, relating to
the resale of the Registrable Securities is declared effective by the
SEC. The Company shall use its best efforts to have the Registration
Statement declared effective by the SEC within one hundred and twenty
(120) days after the Filing Deadline (the "REGISTRATION DEADLINE").
The Company shall permit the registration statement to become
effective within five (5) business days after receipt of a "no review"
notice from the SEC. In the event that the Registration Statement is
not declared effective by the SEC by the Registration Deadline then
the Company shall pay a penalty to each Buyer equal to 2% of the
purchase price for Common Stock purchased by each Investor and still
held by each Buyer for each thirty (30) day period beyond the
Registration Deadline that the Registration Statement is not declared
effective by the SEC (the "REGISTRATION DEADLINE PENALTY"). The
Registration Deadline Penalty shall be immediately payable by the
Company on demand by the Investor in either cash or Common Stock of
the Company at the election of the Company upon delivery to the
Company of a notice of such default by the Investor.
-2-
3
b. Underwritten Offering. If any offering pursuant to a
Registration Statement pursuant to Section 2(a) involves an
underwritten offering, the Buyers shall have the right to select one
legal counsel to represent their interests in the offering, the costs
of which shall be borne by the Investors.
c. Piggy-Back Registrations. If at any time after the
Exchange Commencement Date and prior to the expiration of the
Registration Period (as hereinafter defined) the Company proposes to
file with the SEC a Registration Statement relating to an offering for
its own account or the account of others under the 1933 Act of any of
its securities (other than on Form S-4 or Form S-8 or their then
equivalents relating to 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) the Company shall promptly send to each Investor who is
entitled to registration rights under this Section 2(c) written notice
of the Company's intention to file a Registration Statement and of
such Investor's rights under this Section 2(c) and, if within twenty
(20) days after receipt of such notice, such Investor shall so request
in writing, the Company shall include in such Registration Statement
all or any part of the Registrable Securities such Investor requests
to be registered, subject to the priorities set forth in Section 2(d)
below. No right to registration of Registrable Securities under this
Section 2(c) shall be construed to limit any registration required
under Section 2(a). The obligations of the Company under this Section
2(c) may be waived by Investors holding a majority of the Registrable
Securities. If an offering in connection with which an Investor is
entitled to registration under this Section 2(c) is an underwritten
offering, then each Investor whose Registrable Securities are included
in such Registration Statement shall, unless otherwise agreed by the
Company, offer and sell such Registrable Securities in an underwritten
offering using the same underwriter or underwriters and, subject to
the provisions of this Agreement, on the same terms and conditions as
other shares of Common Stock included in such underwritten offering.
d. Priority in Piggy-Back Registration Rights in connection
with Registrations or Company Account. If the registration referred to
in Section 2(c) is to be an underwritten public offering for the
account of the Company and the managing underwriter(s) advise the
Company in writing, that in their reasonable good faith opinion,
marketing or other factors dictate that a limitation on the number of
shares of Common Stock which may be included in the Registration
Statement is necessary to facilitate and not adversely affect the
proposed offering, then the Company shall include in such
registration: (1) first, all securities the Company proposes to sell
for its own account, (2) second, up to the full number of securities
proposed to be registered for the account of the holders of securities
entitled to inclusion of their securities in the Registration
Statement by reason of demand registration rights, and (3) third, the
securities requested to be registered by the Investors and other
holders of securities entitled to participate in the registration,
drawn from them pro rata based on the number each has requested to be
included in such registration.
-3-
4
3. RELATED OBLIGATIONS.
Whenever an Investor has requested that any Registrable Securities be
registered pursuant to Section 2(c) or at such time as the Company is obligated
to file a Registration Statement with the SEC pursuant to Section 2(a), the
Company will use its best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following obligations:
a. The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities (on
or prior to the Filing Deadline) for the registration of Registrable
Securities pursuant to Section 2(a)) and use its best efforts to cause
such Registration Statement(s) relating to Registrable Securities to
become effective as soon as possible after such filing (by the one
hundred and twentieth (120th) day following the issuance of the
relevant for the registration of Registrable Securities pursuant to
Section 2(a), and keep the Registration Statement(s) effective
pursuant to Rule 415 at all times until the later of (i) the date as
of which the Investors may sell all of the Registrable Securities
without restriction pursuant to Rule 144(k) promulgated under the 1933
Act (or successor thereto) or (ii) the date on which the Investors
shall have sold all the Registrable Securities (the "REGISTRATION
PERIOD"), which Registration Statement(s) (including any amendments or
supplements thereto and prospectuses contained therein) shall not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances in which they were
made, not misleading.
b. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to
the Registration Statement(s) and the prospectus(es) used in
connection with the Registration Statement(s), which prospectus(es)
are to be filed pursuant to Rule 424 promulgated under the 1933 Act,
as may be necessary to keep the Registration Statement(s) effective at
all times during the Registration Period, and, during such period,
comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by
the Registration Statement(s) until such time as all of such
Registrable Securities shall have been disposed of in accordance with
the intended methods of disposition by the seller or sellers thereof
as set forth in the Registration Statement(s). In the event the number
of shares available under a Registration Statement filed pursuant to
this Agreement is insufficient to cover all of the Registrable
Securities, the Company shall amend the Registration Statement, or
file a new Registration Statement (on the short form available
therefor, if applicable), or both, so as to cover all of the
Registrable Securities, in each case, as soon as practicable, but in
any event within thirty (30) days after the necessity therefor arises
(based on the market price of the Common Stock and other relevant
factors on which the Company reasonably elects to rely). The Company
shall use its best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as practicable
following the filing thereof. For purposes of the foregoing provision,
the number of shares available under a Registration Statement shall be
deemed "insufficient to cover all of the Registrable Securities" if at
any time the number of Registrable Securities issued or issuable upon
conversion of the Common Stock is greater than the quotient determined
by dividing (i) the number of Conversion Shares available for resale
under such Registration Statement by (ii)
-4-
5
1.0; provided that in the case of the initial registration of the
Registrable Securities pursuant to Section 2(a), the Company shall be
required to register for resale 1,000,000 shares of Common Stock.
c. The Company shall furnish to each Investor whose
Registrable Securities are included in the Registration Statement(s)
and its legal counsel without charge (i) promptly after the same is
prepared and filed with the SEC at least one copy of the Registration
Statement and any amendment thereto, including financial statements
and schedules, all documents incorporated therein by reference and all
exhibits, the prospectus(es) included in such Registration
Statement(s) (including each preliminary prospectus ) and, with
regards to the Registration Statement, any correspondence by or on
behalf of the Company to the SEC or the staff of the SEC and any
correspondence from the SEC or the staff of the SEC to the Company or
its representatives, (ii) upon the effectiveness of any Registration
Statement, ten (10) copies of the prospectus included in such
Registration Statement and all amendments and supplements thereto (or
such other number of copies as such Investor may reasonably request)
and (iii) such other documents, including any preliminary prospectus,
as such Investor may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Investor.
d. The Company shall use reasonable efforts to (i) register
and qualify the Registrable Securities covered by the Registration
Statement(s) under the securities or "blue sky" laws of such
jurisdictions in the United States as any Investor reasonably
requests, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to
such registrations and qualifications as may be necessary to maintain
the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations
and qualifications in effect at all times during the Registration
Period, and (iv) take all other actions reasonably necessary or
advisable to quality the Registrable Securities for sale in such
jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (a)
qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (b)
subject itself to general taxation in any such jurisdiction, or (c)
file a general consent to service of process in any such jurisdiction.
The Company shall promptly notify each Investor who holds Registrable
Securities of the receipt by the Company of any notification with
respect to the suspension of the registration or qualification of any
of the Registrable Securities for sale under the securities or "blue
sky" laws of any jurisdiction in the United States or its receipt of
actual notice of the initiation or threatening of any proceeding for
such purpose.
e. [LEFT INTENTIONALLY BLANK]
f. As promptly as practicable after becoming aware of such
event, the Company shall notify each Investor in writing of the
happening of any event, of which the Company has knowledge, 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
omission to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and promptly
prepare a supplement or amendment to the Registration Statement to
correct such untrue statement or
-5-
6
omission, and deliver ten (10) copies of such supplement or amendment
to each Investor (or such other number of copies as such Investor may
reasonably request). The Company shall also promptly notify each
Investor in writing (i) when a prospectus or any prospectus supplement
or post-effective amendment has been filed, and when a Registration
Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to each
Investor by facsimile on the same day of such effectiveness and by
overnight mail) (ii) of any request by the SEC for amendments or
supplements to a Registration Statement or related prospectus or
related information, (iii) of the Company's reasonable determination
that a post-effective amendment to a Registration Statement would be
appropriate.
g. The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any
of the Registrable Securities for sale in any jurisdiction and, if
such an order or suspension is issued, to obtain the withdrawal of
such order or suspension at the earliest possible moment and to notify
each Investor who holds Registrable Securities being sold (and, in the
event of an underwritten offering, the managing underwriters) of the
issuance of such order and the resolution thereof or its receipt of
actual notice of the initiation or threat of any proceeding for such
purpose.
h. The Company shall permit each Investor at such Investors
expense a single firm of counsel or such other counsel as thereafter
designated as selling stockholders' counsel by the Investors who hold
a majority of the Registrable Securities being sold, to review and
comment upon the Registration Statement(s) and all amendments and
supplements thereto at least seven (7) days prior to their filing with
the SEC.
i. At the request of the Investors who hold a majority of the
Registrable Securities being sold, the Company shall furnish, on the
date that Registrable Securities are delivered to an underwriter, if
any, for sale in connection with the Registration Statement (i) if
required by an underwriter, a letter, dated such date, from the
Company's independent certified public accountants in form and
substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering,
addressed to the underwriters, and (ii) an opinion, dated as of such
date, of counsel representing the Company for purposes of such
Registration Statement, in form, scope and substance as is customarily
given in an underwritten public offering, addressed to the
underwriters and the Investors.
j. The Company shall make available for inspection by (i) any
Investor, (ii) any underwriter participating in any disposition
pursuant to a Registration Statement, (iii) one firm of attorneys and
one firm of accountants or other agents retained by the Investors, and
(iv) one firm of attorneys retained by all such underwriters
(collectively, the "INSPECTORS") all pertinent financial and other
records, and pertinent corporate documents and properties of the
Company (collectively, the "RECORDS"), as shall be reasonably deemed
necessary by each Inspector to enable each Inspector to exercise its
due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information which any Inspector
may reasonably request for purposes of such due diligence provided,
however, that each Inspector shall hold in strict confidence and shall
not make any disclosure (except to
-6-
7
an Investor) or use of any Record or other information which the
Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the
disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement or is otherwise
required under the 1933 Act, (b) the release of such Records is
ordered pursuant to a final, non-appealable subpoena or order from a
court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the
public other than by disclosure in violation of this or any other
agreement. Each Investor agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential. All fees, costs
and expenses of the foregoing shall be borne by the Investors.
k. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the
Company unless (i) disclosure of such information is necessary to
comply with federal or state securities laws, (ii) the disclosure of
such information is necessary to avoid or correct a misstatement or
omission in any Registration Statement, (iii) the release of such
information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this
or any other agreement. The Company agrees that it shall, upon
learning that disclosure of such information concerning an Investor is
sought in or by a court or governmental body of competent jurisdiction
or through other means, give prompt written notice to such Investor
and allow such Investor, at the Investor's expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective
order for, such information.
l. The Company shall use reasonable efforts either to (i)
cause all the Registrable Securities covered by a Registration
Statement to be listed on each national securities exchange on which
securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, (ii) to secure designation
and quotation of all the Registrable Securities covered by the
Registration Statement on the Nasdaq National Market System, (iii) if,
despite the Company's reasonable efforts to satisfy the preceding
clause (i) or (ii), the Company is unsuccessful in satisfying the
preceding clause (i) or (ii) to secure the inclusion for quotation on
the Nasdaq SmallCap Market for such Registrable Securities or, (iv)
if, despite the Company's reasonable efforts to satisfy the preceding
clause (iii), the Company is unsuccessful in satisfying the preceding
clause (iii), to secure the inclusion for quotation on the
over-the-counter market for such Registrable Securities, and, without
limiting the generality of the foregoing, in the case of clause (iii)
or (iv), to arrange for at least two market makers to register with
the National Association of Securities Dealers, Inc. ("NASD") as such
with respect to such Registrable Securities. The Company shall pay all
fees and expenses in connection with satisfying its obligation under
this Section 3(l).
m. The Company shall cooperate with the Investors who hold
Registrable Securities being offered and, to the extent applicable,
any managing underwriter or
-7-
8
underwriters, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration
Statement and enable such certificates to be in such denominations or
amounts, as the case may be, as the managing underwriter or
underwriters, if any, or, if there is no managing underwriter or
underwriters, the Investors may reasonably request and registered in
such names as the managing underwriter or underwriters, if any, or the
Investors may request. Not later than the date on which any
Registration Statement registering the resale of Registrable Securities
is declared effective, the Company shall deliver to its transfer agent
instructions, accompanied by any reasonably required opinion of
counsel, that permit sales of unlegended securities in a timely fashion
that complies with then mandated securities settlement procedures for
regular way market transactions.
n. The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by the Investors of
Registrable Securities pursuant to a Registration Statement.
o. The Company shall provide a transfer agent and registrar
of all such Registrable Securities not later than the effective date
of such Registration Statement.
p. If requested by the managing underwriters of an Investor,
the Company shall immediately incorporate in a prospectus supplement
or post-effective amendment such information as the managing
underwriters and the Investors agree should be included therein
relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the number
of Registrable Securities being sold to such underwriters, the
purchase price being paid therefor by such underwriters and with
respect to any other terms of the underwritten (or best efforts
underwritten) offering of the Registrable Securities to be sold in
such offering; make all required filings of such prospectus supplement
or post-effective amendment as soon as notified of the matters to be
incorporated in such prospectus supplement or post-effective
amendment; and supplement or make amendments to any Registration
Statement if requested by a shareholder or any underwriter of such
Registrable Securities. The costs of preparation and filing of any
such post-effective amendments and supplements shall be borne by the
Investors.
q. The Company shall use its best efforts to cause the
Registrable Securities covered by the applicable Registration
Statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to consummate the
disposition of such Registrable Securities.
r. The Company shall otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC in connection
with any registration hereunder.
4. OBLIGATIONS OF THE INVESTORS.
a. At least seven (7) days prior to the first anticipated
filing date of the Registration Statement, the Company shall notify
each Investor in writing of the information the Company requires from
each such Investor if such Investor elects to have any of such
Investor's Registrable Securities included in the Registration
Statement. It shall be a
-8-
9
condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor
shall furnish 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 required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.
b. Each Investor by such Investor's 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 the Registration Statement(s) hereunder, unless such
Investor has notified the Company in writing of such Investor's
election to exclude all of such Investor's Registrable Securities from
the Registration Statement.
c. Each Investor agrees to enter into and perform such
Investor's obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing
underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of the Registrable Securities, unless such Investor notifies the
Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration Statement(s).
d. Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in
Section 3(g) or the first sentence of 3(f), such Investor will
immediately discontinue disposition of Registrable Securities pursuant
to the Registration Statement(s) covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(g) or the first sentence
of 3(f) and, if so directed by the Company, such Investor shall
deliver to the Company (at the expense of the Company) or destroy all
copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
e. No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell such
Investor's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Investors entitled hereunder
to approve such arrangements, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of
such underwriting arrangements, and (iii) agrees to pay its pro rata
share of all underwriting discounts and commissions.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees,
and fees and disbursements of counsel for the Company shall be borne by the
Company except as otherwise specifically provided herein.
-9-
10
6. INDEMNIFICATION
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the fullest extent permitted by law, the Company will,
and hereby does, indemnify, hold harmless and defend each Investor who
holds such Registrable Securities, the directors, officers, partners,
employees, agents and each Person, if any, who controls any Investor
within the meaning of the 1933 Act or the Securities Exchange Act of
1934, as amended (the "1934 ACT"), and any underwriter (as defined in
the 0000 Xxx) for the Investors, and the directors and officers of,
and each Person, if any, who controls, any such underwriter within the
meaning of the 1933 Act or the 1934 Act (each, an "INDEMNIFIED
PERSON"), against any losses, claims, damages, liabilities, judgments,
fines, penalties, charges, costs, attorneys' fees, amounts paid in
settlement or expenses, joint or several, (collectively, "CLAIMS")
incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative or
other regulatory agency, body or the SEC, whether pending or
threatened, whether or not an indemnified party is or may be a party
thereto ("INDEMNIFIED DAMAGES"), to which any of them may become
subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based
upon: (i) any untrue statement or alleged untrue statement of a
material fact in a Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the
qualification of the offering under the securities or other "blue sky"
laws of any jurisdiction in which Registrable Securities are offered
("BLUE SKY FILING"), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which the
statements therein were made, not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in
any preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as
amended or supplemented, if the Company files any amendment thereof or
supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements
made therein, in light of the circumstances under which the statements
therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule
or regulation thereunder relating to the offer or sale of the
Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being,
collectively, "VIOLATIONS"). Subject to the restrictions set forth in
Section 6(d) with respect to the number of legal counsel, the Company
shall reimburse the Investors and each such underwriter or controlling
person, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished
in writing to the Company by any Indemnified Person or underwriter for
such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment
thereof or supplement thereto, if such prospectus was timely made
-10-
11
available by the Company pursuant to Section 3(c); (ii) with respect
to any preliminary prospectus, shall not inure to the benefit of any
such person from whom the person asserting any such Claim purchased
the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement
or mission of material fact contained in the preliminary prospectus
was corrected in the prospectus, as then amended or supplemented, if
such prospectus was timely made available by the Company pursuant to
Section 3(c), and the Indemnified Person was promptly advised in
writing not to use the incorrect prospectus prior to the use giving
rise to a violation and such Indemnified Person, notwithstanding such
advice, used it; (iii) shall not be available to the extent such Claim
is based on a failure of the Investor to deliver or to cause to be
delivered the prospectus made available by the Company; and (iv) shall
not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall
survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9 for a period of three (3) years from the Filing
Deadline.
b. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to severally and
not jointly indemnify, hold harmless and defend, to the same extent
and in the same manner as is set forth in Section 6(a), the Company,
each of its directors, each of its officers who signs the Registration
Statement, each Person, if any, who controls the Company within the
meaning of the 1933 Act or the 1934 Act (collectively and together
with an Indemnified Person, an "INDEMNIFIED PARTY"), against any Claim
or Indemnified Damages to which any of them may become subject, under
the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or are based upon any Violation, in
each case to the extent, and only to the extent, that such Violation
occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in
connection with such Registration Statement; and, subject to Section
6(d), such Investor will reimburse any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and Section 7 shall not apply
to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Investor, which
consent shall not be unreasonably withheld. Such indemnity shall
remain in full force and effect regardless of any investigation made
by or on behalf of such Indemnified Party and shall survive the
transfer of the Registrable Securities by the Investors pursuant to
Section 9. Notwithstanding anything to the contrary contained herein,
the indemnification agreement contained in this Section 6(b) with
respect to any preliminary prospectus shall not inure to the benefit
of any Indemnified Party if the untrue statement or omission of
material fact contained in the preliminary prospectus was corrected on
a timely basis in the prospectus, as then amended or supplemented.
c. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in any distribution, to the same
extent as provided above, with respect to information such persons so
furnished in writing expressly for inclusion in the Registration
Statement.
-11-
12
d. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement
of any action or proceeding (including any governmental action or
proceeding) involving a Claim such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying
party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense
thereof with counsel mutually satisfactory to the indemnifying party
and the Indemnified Person or the Indemnified Party, as the case may
be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and
expenses to be paid by the indemnifying party, if, in the reasonable
opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party
represented by such counsel in such proceeding. The Company shall pay
reasonable fees for only one separate legal counsel for the Investors,
and such legal counsel shall be selected by the Investors holding a
majority in interest of the Registrable Securities included in the
Registration Statement to which the Claim relates. The Indemnified
Party or Indemnified Person shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of
any such action or claim by the indemnifying party and shall furnish
to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action
or claim. The indemnifying party shall keep the Indemnified Party or
Indemnified Person fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action,
claim or proceeding effected without its written consent, provided,
however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent. No indemnifying party shall, without
the consent of the Indemnified Party or Indemnified Person, consent to
entry of any judgment or enter into any settlement or other compromise
which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified
Person of a release from all liability in respect to such claim or
litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third
parties, firms or corporations relating to the matter for which
indemnification has been made. 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 Person or Indemnified Party under this
Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.
e. The indemnification required by this Section 6 shall be
made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or
Indemnified Damages are incurred.
f. The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar right of the
Indemnified Party or Indemnified Person against the
-12-
13
indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however,
that: (i) no contribution shall be made under circumstances where the maker
would not have been liable for indemnification under the fault standards set
forth in Section 6; (ii) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of fraudulent misrepresentation; and (iii)
contribution by any seller of Registrable Securities shall be limited in amount
to the net amount of proceeds received by such seller from the sale of such
Registrable Securities.
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors the benefits of Rule
144 promulgated under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time permit the investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees,
to:
a. make and keep public information available, as those terms
are understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act
so long as the Company remains subject to such requirements (it being
understood that nothing herein shall limit the Company's obligations
under Section 4(c) of the Securities Purchase Agreement) and the
filing of such reports and other documents is required for the
applicable provisions of Rule 144; and
c. furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement
by the Company that it has complied with the reporting requirements of
Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the investors to
sell such securities pursuant to Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights to have the Company register Registrable Securities
pursuant to this Agreement shall be automatically assignable by the Investors
to any transferee of all or any portion of Registrable Securities if: (i) the
Investor agrees in writing with the transferee or assignee to assign such
rights, 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,
-13-
14
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned; (iii) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the 1933 Act and applicable state securities laws;
(iv) at or before the time the Company receives 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; (v)
such transfer shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement; (vi) such transferee shall
be an "ACCREDITED INVESTOR" as that term is defined in Rule 501 of Regulation D
promulgated under the 1933 Act; and (vii) in the event the assignment occurs
subsequent to the date of effectiveness of the Registration Statement required
to be filed pursuant to Section 2(a), the transferee agrees to pay all
reasonable expenses of amending or supplementing such Registration Statement to
reflect such assignment.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investors who hold two-thirds of the Registrable Securities. Any amendment
or waiver effected in accordance with this Section 10 shall be binding upon
each Investor and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or
entities with respect to the same Registrable Securities, the Company
shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.
b. Any notices consents, waivers or other communications
required or permitted to be given under the terms of this Agreement
must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile, provided a copy is mailed by U.S. certified mail, return
receipt requested; (iii) three (3) days after being sent by U.S.
certified mail, return receipt requested, or (d) one (1) day after
deposit with a nationally recognized overnight delivery service, in
each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
If to the Company:
BioShield Technologies, Inc.
Suite B109
0000 Xxxxxxxxxxxxx Xxxx.
Xxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
-14-
15
with a copy (which shall not constitute notice) to:
Xxxx Xxxx Xxxxx & Xxxxx LLP
0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxx, Esq.
If to a Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to such Buyer's counsel as set forth on the Schedule of
Buyers. Each party shall provide five (5) days' prior written notice to the
other party of any change in address or facsimile number.
c. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
d. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Georgia without regard to the
principles of conflict of laws. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other
jurisdiction.
e. This Agreement and the Securities Purchase Agreement
constitute the entire agreement among the parties hereto with respect
to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or
referred to herein and therein. This Agreement and the Securities
Purchase Agreement supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and
thereof.
f. Subject to the requirements of Section 9, this Agreement
shall inure to the benefit and of and be binding upon the permitted
successors and assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
h. This Agreement may be executed in two or more identical
counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same agreement. This Agreement,
once executed by a party, may be delivered to the other party hereto
by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
i. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
-15-
16
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY: BUYERS:
BIOSHIELD TECHNOLOGIES, INC. ATLANTIS CAPITAL FUND LTD.
By: By:
------------------------------- --------------------------------
Name: Name:
Its: Its:
-16-
17
SCHEDULE OF BUYERS
--------------------------------------------------------------------------------------------------------------------
ADDRESS AND FACSIMILE NUMBER OF NUMBER OF SHARES OF NUMBER OF
BUYER'S NAME BUYER COMMON STOCK WARRANTS
---------------------- ----------------------------------------------- -------------------------- ------------------
c/o Citco Fund Services, Ltd. 85,653 8,000
Atlantis Capital Bahamas Financial Center
Fund Limited Xxxxxxx & Xxxxxxxxx Xxxxxxx
X.X. Xxx XX00000
Xxxxxx, Xxxxxxx
facsimile: 000-000-0000
---------------------- ----------------------------------------------- -------------------------- ------------------
