REGISTRATION RIGHTS AGREEMENT
Exhibit 10.20
THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made effective
as of ___________ __, 2007, by and among HemoBioTech, Inc., a Delaware
corporation (the “Company”), and the investors
signatory hereto (each a “Purchaser” and collectively,
the “Purchasers”).
RECITALS
A. Each
Purchaser has executed and delivered to the Company a Subscription Agreement
(the “Subscription
Agreement”) to purchase Units comprised of the Company’s Common Stock,
par value $.001 per share (the “Common Stock”) and Warrants
(the “Warrants”) to
purchase additional shares of Common Stock; and
B. As
a condition of the Subscription Agreement, the Company is required to execute
and deliver this Agreement to the Purchasers to provide for certain registration
rights with respect to Common Stock and shares of Common Stock underlying the
Warrants (“Warrant
Shares”) upon the terms and conditions set forth herein.
NOW,
THEREFORE, in consideration of these premises and the mutual promises and
covenants hereinafter set forth and of other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Definitions. In
addition to the terms defined elsewhere in this Agreement, the following
capitalized terms shall have the following meanings:
“Business Day” means any day
other than a Saturday, Sunday or legal holiday in the State of
Texas.
“Effectiveness Date” means,
with respect to the Registration Statement to be filed pursuant to Section 2(a), the
earlier of (a) the 90th business day from the date on which such Registration
Statement is filed, and (b) the date on which the SEC declares the Registration
Statement effective.
“Effectiveness Period” is
defined in Section 2(a).
“Exchange Act” means the
Securities Exchange Act of 1934, as amended.
“Filing Date” means, with
respect to the Registration Statement to be filed hereunder, the date that is
forty-five (45) business days from the date hereof.
“Holder” or “Holders” means the holder or
holders, as the case may be, from time to time of Registrable Securities
(including any permitted assignee).
“Holders’ Representative” means Xxxxxx
Associates, L.P., or any other person that has been appointed by the Holders of
a majority of the Registrable Securities to act as representative of the Holders
for purposes of this Agreement.
“Indemnified Party” is defined
in Section 5(c).
“Indemnifying Party” is defined
in Section 5(c).
“Losses” is defined in Section 5(a).
“Person” means an individual or
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind.
“Proceeding” means an action,
claim, suit, investigation or proceeding (including, without limitation, an
investigation or partial proceeding, such as a deposition), whether commenced or
threatened.
“Prospectus” means the
prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented
by any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by the Registration Statement, and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
“Registrable Securities” means
the shares of Common Stock sold pursuant to Subscription Agreements, Warrant
Shares issuable upon any exercise of Warrants, and any shares issued upon any
stock split, dividend or other distribution, recapitalization or similar event
with respect to the foregoing; provided, that the
Company shall have the right to reduce the number of Registrable Securities if
in the reasonable opinion of counsel to the Company, the Registration Statement
could not be declared effective by the SEC without such reduction as a result of
SEC guidance pursuant to Rule 415 promulgated under the Securities
Act. Any such reduction shall be pro rata among all
Holders.
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“Registration Statement” means the registration
statements required to be filed hereunder, including (in each case) the
Prospectus, amendments and supplements to the registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference in the registration statement.
“Rule 144” means Rule 144
promulgated by the SEC pursuant to the Securities Act, as such Rule may be
amended from time to time, or any similar Rule or regulation hereafter
adopted by the SEC having substantially the same effect as such
Rule.
“Rule 144(k)” means
Rule 144(k) promulgated by the SEC pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar Rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such Rule.
“Rule 415” means
Rule 415 promulgated by the SEC pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar Rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such Rule.
“Rule 424” means
Rule 424 promulgated by the SEC pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar Rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such Rule.
“SEC” means the U.S. Securities
and Exchange Commission.
“Securities Act” means the
Securities Act of 1933, as amended.
“Selling Shareholder
Questionnaire” is defined in Section
2(e).
“Trading Day” means (i) a day on which
Common Stock is traded or quoted on a Trading Market, or (ii) if Common Stock is
not traded or quoted on a Trading Market, a day on which Common Stock is quoted
in the over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding to its functions
of reporting price); provided, that in the event that Common Stock is not traded
or quoted as set forth in (i), and (ii) hereof, that Trading Day shall mean a
Business Day.
“Trading Market” means the
following markets or exchanges on which Common Stock is listed or quoted for
trading on the date in question: the NASDAQ Capital Market, the American Stock
Exchange, the New York Stock Exchange, the NASDAQ Global Market or the OTC
Bulletin Board.
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2. Registration.
(a) Required
Registration. No later than the Filing Date, the Company shall
prepare and file with the SEC the Registration Statement covering the resale of
all of the Registrable Securities which a Holder has requested to be included in
such Registration Statement (subject to the proviso set forth in the definition
of “Registrable Securities” above) and for which such Holder has provided the
Company with a completed Selling Shareholder Questionnaire, which offering shall
be made on a continuous basis pursuant to Rule 415. The Registration
Statement shall be on Form SB-2 (or other applicable form at the discretion of
the Company). The Registration Statement shall contain (except if otherwise
directed by the Holders) the “Plan of Distribution”
substantially in the form attached hereto as Annex A (which may be modified
as required by the Securities Act and the rules and regulations thereunder and
to respond to comments, if any, received from the SEC). The Company
shall cause the Registration Statement to be declared effective under the
Securities Act prior to the Effectiveness Date and shall use its commercially
reasonable efforts to keep the Registration Statement continuously effective
under the Securities Act until the date when all Registrable Securities covered
by the Registration Statement (a) have been sold pursuant to the Registration
Statement or an exemption from the registration requirements of the Securities
Act or (b) may be sold without any volume or other restrictions pursuant to
Rule 144(k) (the “Effectiveness
Period”).
(b) Liquidated
Damages. If:
(i) the Registration Statement is not filed on or prior to the Filing Date, or
(ii) the Company fails to file with the SEC a request for acceleration of the
Registration Statement in accordance with Rule 461 promulgated by the SEC
pursuant to the Securities Act, within ten (10) Trading Days of the date that
the Company is notified (orally or in writing, whichever is earlier) by the SEC
that the Registration Statement will not be “reviewed” or will not be subject to
further review, or (iii) prior to the effective date of the Registration
Statement, the Company fails to file a pre-effective amendment and otherwise
respond in writing to comments made by the SEC in respect of the Registration
Statement within thirty (30) Trading Days after the receipt of comments by or
notice from the SEC that such amendment is required in order for the
Registration Statement to be declared effective, or (iv) the Registration
Statement is not declared effective by the SEC by the Effectiveness Date (any
such failure or breach being referred to as an “Event”, and for purposes of
clauses (i) and (iv) the date on which such Event occurs, and for purpose of
clause (ii) the date on which such ten (10) Trading Day period is exceeded, and
for purpose of clause (iii) the date which such thirty (30) Trading Day period
is exceeded being referred to as “Event Date”), then, in
addition to any other rights the Holders may have hereunder or under applicable
law, on each such Event Date and on each monthly anniversary of each such Event
Date (if the applicable Event shall not have been cured by such date) until the
applicable Event is cured, the Company shall pay to each Holder an amount in
cash or Common Stock, or a combination thereof, as partial liquidated damages
and not as a penalty, equal to 2% of the aggregate purchase price paid by such
Holder pursuant to the Subscription Agreement for any unregistered Registrable
Securities then held by such Holder, which amount shall be payable on the first
monthly anniversary of each such Event Date and each monthly anniversary
thereafter (if the applicable Event shall not have been cured by such
date). The number of shares of Common Stock issuable in lieu of cash
hereunder shall be equal to A
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divided
by B, in which A equals the dollar amount of accrued and payable partial
liquidated damages to be paid in shares of Common Stock and B equals the average
of the closing price on the Trading Market for the ten (10) Trading Days
immediately preceding the date of payment of such partial liquidated
damages. The decision whether to pay partial liquidated damages
hereunder in shares of Common Stock or cash shall be at the discretion of the
Company. Except as otherwise provided herein, if at any time the
Company pays partial liquidated damages partially in cash and partially in
shares of Common Stock, then such payment shall be distributed ratably among the
Holders based upon the Subscription Amount paid by each Holder. The
parties agree that (1) the Company shall not be liable for liquidated damages
under this Agreement with respect to any Warrants or Warrant Shares and (2)
liquidated damages shall cease to accrue on the eight (8) month anniversary of
the Filing Date.
(c) Sufficient Number of Shares
Registered. In the event the number
of shares of Common Stock covered under a Registration Statement filed pursuant
to Section 2(a) is
insufficient to cover all of the Registrable Securities which such Registration
Statement is required to cover (subject to the proviso set forth in the
definition of “Registrable Securities” above), the Company shall use its best
efforts to amend the Registration Statement, or file a new Registration
Statement (on the short form available therefor, if applicable), or both, so as
to cover at least 100% of the Registrable Securities, in each case, as soon as
practicable. The Company shall use its commercially reasonable
efforts to cause such amendment and/or new Registration Statement to become
effective as soon as practicable following the filing thereof.
(d) Participation in
Underwritten Registrations. No Holder may participate in any
underwritten registration with respect to the Registrable Securities unless such
Holder completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements, lock-up letters and other documents
reasonably required under the terms of such underwriting
agreements.
(e) Other
Requirements. In connection with any Registration Statement
under Section
2(a), Holders whose Registrable Securities are included therein shall
provide such information and shall execute and deliver to the Company such
documents, including, but not limited to, a selling shareholder questionnaire in
customary form and substance reasonably satisfactory to the Company (“Selling Shareholder
Questionnaire”), as the Company may reasonably request in order to effect
such registration pursuant to this Agreement and in accordance with applicable
securities laws.
3. Registration
Procedures. In connection with the Company’s registration
obligations hereunder, the Company shall use commercially reasonable efforts
to:
(a) Not less
than three (3) Trading Days prior to the filing of the Registration Statement or
of any related Prospectus or any amendment or supplement thereto, (i) furnish to
the Holders’ Representative copies of all such documents substantially in the
form proposed to be filed (including documents incorporated or deemed
incorporated by reference to the extent requested by such Person) which
documents will be subject to the review of the Holders’ Representative, and (ii)
subject, if appropriate, to the execution of confidentiality agreements in form
acceptable to the Company, cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of respective counsel to conduct a
reasonable investigation within the meaning of the Securities Act.
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(b) (i)
Prepare and file with the SEC such amendments, including post-effective
amendments, to the Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep the Registration Statement continuously
effective as to the applicable Registrable Securities for the Effectiveness
Period; (ii) cause the related Prospectus to be amended or supplemented by any
required Prospectus supplement, and as so supplemented or amended to be filed
pursuant to Rule 424; and (iii) respond as promptly as reasonably
practicable to any comments received from the SEC with respect to the
Registration Statement or any amendment thereto and, as promptly as reasonably
practicable, upon request, provide the Holders’ Representative true and complete
copies of all correspondence from and to the SEC relating to
the Registration Statement (subject, if appropriate, to the execution of
confidentiality agreements in form acceptable to the Company).
(c) Notify
the Holders of Registrable Securities to be sold as promptly as reasonably
possible (and, in the case of (i)(A) below, not less than three (3) Trading Days
prior to such filing) and (if requested by any such Person) confirm such notice
in writing promptly following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to the Registration Statement is proposed
to be filed; (B) when the SEC notifies the Company whether there will be a
“review” of the Registration Statement and whenever the SEC comments in writing
on the Registration Statement (the Company shall upon request provide true and
complete copies thereof and all written responses thereto to the Holders’
Representative, subject, if appropriate, to the execution of confidentiality
agreements in form acceptable to the Company); and (C) with respect to the
Registration Statement or any post-effective amendment, when the same has become
effective; (ii) of any request by the SEC or any other federal or state
governmental authority during the period of effectiveness of the Registration
Statement for amendments or supplements to the Registration Statement or
Prospectus or for additional information; (iii) of the issuance by the SEC or
any other federal or state governmental authority of any stop order suspending
the effectiveness of the Registration Statement covering any or all of the
Registrable Securities or the initiation of any Proceedings for that purpose;
(iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; and (v) of the occurrence of any
event or passage of time that makes the financial statements included in the
Registration Statement ineligible for inclusion therein or any statement made in
the Registration Statement or Prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
(d) Avoid the
issuance of, or, if issued, obtain the withdrawal of (i) any order suspending
the effectiveness of the Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable
moment.
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(e) Promptly
deliver to each Holder no later than five (5) business days after the
Effectiveness Date, without charge, two (2) copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto (and, upon the request of the Holder such additional copies
as such Persons may reasonably request in connection with resales by the Holder
of Registrable Securities). The Company hereby consents to the use of
such Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto, except after
the giving of any notice pursuant to Section 3(c)(ii)-(v).
(f) Prior to
any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders
in connection with the registration or qualification (or exemption from the
registration or qualification) of such Registrable Securities for the resale by
the Holder under the securities or Blue Sky laws of such jurisdictions
within the United States as any Holder reasonably requests in writing, to keep
such registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statement; provided, however, that the
Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so subject or file a
general consent to service of process in any such jurisdiction.
(g) If
requested by the Holders, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to the Registration Statement, which
certificates shall be free, to the extent permitted by the Subscription
Agreement, of all restrictive legends, and to enable such Registrable Securities
to be in such denominations and registered in such names as any such Holders may
request.
(h) Upon the
occurrence of any event contemplated by Section 3(c)(v),
as promptly as reasonably possible, prepare a supplement or amendment, including
a post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading.
(i) Comply in
all material respects with all applicable rules and regulations of the SEC
relating to the registration of the Registrable Securities pursuant to the
Registration Statement or otherwise.
(j) The
Company shall not be required to include in any Registration Statement the
Registrable Securities of any Holder that does not complete a Selling
Shareholder Questionnaire.
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(k) Make all
documents, files, books, records, officers, directors and employees of the
Company reasonably available to the Holders’ Representative, one legal counsel
to the Holders and one firm of accountants retained by the Holders
(collectively, the “Inspectors”), and make such
other accommodations as are reasonably necessary for the Inspectors, if any, to
perform a due diligence review of the Company; provided, however, that all
such information (“Confidential
Information”) will be kept confidential and not utilized by the
Inspectors except as contemplated herein and except as required by law or court
order. The term Confidential Information also includes any
information included in a draft Registration Statement or any related Prospectus
or any amendment or supplement thereto provided to a Holder pursuant to Section 3(a); for the
avoidance of doubt, however, the Company shall not furnish to Holders, without
their prior approval, any information that constitutes or might constitute
material, non-public information. The term Confidential Information
does not include information that (a) is already in possession of such
other party (other than that which is subject to another confidentiality
agreement or unless obtained from a third party where the receiving party knows
that the third party was subject to a confidentiality agreement),
(b) becomes generally available to the public other than by disclosure in
violation of this Agreement or any other agreement to which a Holder is a party,
or (c) becomes available on a non-confidential basis from a source other
than the Company unless obtained from a third party where the receiving party
knows that the third party was subject to a confidentiality
agreement. Each Holder agrees that it shall, upon learning that
disclosure of such Confidential Information 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 information deemed confidential.
(l) Hold in
confidence and not make any disclosure of information concerning any Holder
provided to the Company unless (a) such information is already in possession of
the Company, (b) such information becomes available to the Company on a
non-confidential basis from a person other than such Holder who is not known by
the Company to be otherwise bound by a confidentiality or comparable agreement
with such Holder, (c) disclosure of such information is necessary to comply
with federal or state securities laws, (d) the disclosure of such
information is necessary to avoid or correct a misstatement or omission in any
Registration Statement or Prospectus, (e) 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, (f) such information
has been made generally available to the public other than by disclosure in
violation of this Agreement or any other agreement to which the Company is a
party, or (g) such Holder consents to the form and content of any such
disclosure (the Holders shall be deemed to consent to the inclusion of any
information provided in the Selling Shareholder Questionnaire, in the
Registration Statement, any Prospectus related thereto, and any amendments or
supplements thereto). The Company agrees that it shall, upon learning
that disclosure of such information concerning any Holder is sought in or by a
court or governmental body of competent jurisdiction or through other means,
give prompt written notice to such Holder and allow such Holder, at the Holder’s
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
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(m) File the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder so long as the
Holders own any Registrable Securities, but in no event longer than two (2)
years; provided, however, the Company
may delay any such filing but only pursuant to Rule 12b-25 under the
Exchange Act, and the Company shall use commercially reasonable efforts to take
such further action as any Holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, or (b) any similar rule or regulation hereafter adopted by
the SEC. Upon the request of any Holder of Registrable Securities, the Company
will deliver to such Holder a written statement as to whether it has complied
with such requirements.
4. Registration
Expenses. All fees and expenses incident to the performance of
or compliance with this Agreement by the Company (including, without limitation,
fees and expenses of one counsel for the Holders’ Representative with respect to
the review of the Registration Statement, “Holders’ Representative Counsel”)
shall be borne by the Company whether or not any Registrable Securities are sold
pursuant to the Registration Statement, other than fees and expenses of counsel
(other than the Holder’s Representative Counsel referenced above) or any other
advisor retained by the Holders and discounts, fees and commissions with
respect to the sale of any Registrable Securities by the Holders. The fees and
expenses to referred to in the foregoing sentence to be borne by the Company
shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the Trading Market on which Common Stock is then listed
for trading, and (B) to effect compliance with applicable state securities or
Blue Sky laws), (ii) printing expenses (including, without limitation,
expenses of printing certificates for Registrable Securities and of printing
Prospectuses), (iii) fees and disbursements of counsel for the Company, (iv)
Securities Act liability insurance, if the Company so desires such insurance,
and (v) fees and expenses of all other Persons retained by the Company in
connection with the consummation of the transactions contemplated by this
Agreement. In addition, the Company shall be responsible for all of
its internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange or other trading market as required hereunder.
5. Indemnification
(a) Indemnification by the
Company. The Company shall, notwithstanding any termination of this
Agreement, indemnify and hold harmless each Holder, the officers, directors,
agents and employees of each of them, each Person who controls any such Holder
(within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the officers, directors, agents
and employees of each such controlling Person, to the fullest extent permitted
by applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable attorneys’ fees)
and expenses (including the cost (including without limitation, reasonable
attorneys’ fees) and expenses relating to an Indemnified Party’s actions to
enforce the provisions of this Section 5)
(collectively, “Losses”), as incurred, to the
extent arising out of or relating to any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, any Prospectus or any
form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein (in the case of any Prospectus or form of
prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, except to the
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extent,
but only to the extent, that (1) such untrue (or alleged untrue) statements or
omissions (or alleged omissions) are based solely upon information regarding
such Holder furnished (or in the case of an omission, results from the failure
of such Holder to fully or accurately complete the Selling Shareholder
Questionnaire) in writing to the Company by or on behalf of such Holder
expressly for use therein, or to the extent that such information relates to
such Holder or such Holder’s proposed method of distribution of Registrable
Securities and which proposed method was reviewed by such Holder expressly for
use in the Registration Statement, such Prospectus or such form of Prospectus or
in any amendment or supplement thereto (it being understood that the Holder has
reviewed Annex A hereto
for this purpose), (2) in the case of an occurrence of an event of the type
specified in Section 3(c)(ii)-(v),
the use by such Holder of an outdated or defective Prospectus after the Company
has notified such Holder in writing that the Prospectus is outdated or defective
and prior to the receipt by such Holder of the Advice contemplated in Section 6(c), or
(3) the failure of the Holder to deliver a Prospectus as amended or supplemented
prior to the confirmation of a sale. The Company shall notify the
Holders promptly of the institution, threat or assertion of any Proceeding of
which the Company is aware in connection with the transactions contemplated by
this Agreement.
(b) Indemnification by
Holders. Each Holder shall, severally and not jointly, indemnify and hold
harmless the Company, its directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling Persons, to the fullest extent
permitted by applicable law, from and against all Losses, as incurred, to the
extent arising out of or based upon: (x) such Holder’s failure to comply with
the prospectus delivery requirements of the Securities Act or (y) any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, any Prospectus, or any form of prospectus, or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of the
Prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading (i) to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is contained in any information so furnished (or
in the case of an omission, results from the failure of such Holder to fully or
accurately complete the Selling Shareholder Questionnaire) in writing by or on
behalf of such Holder to the Company specifically for inclusion in the
Registration Statement or such Prospectus or (ii) to the extent that (1) such
untrue statements or omissions are based solely upon information regarding such
Holder furnished (or in the case of an omission, results from the failure of
such Holder to fully or accurately complete the Selling Shareholder
Questionnaire) in writing to the Company by or on behalf of such Holder
expressly for use therein, or to the extent that such information relates to
such Holder or such Holder’s proposed method of distribution of Registrable
Securities and which proposed method was reviewed by such Holder expressly for
use in the Registration Statement (it being understood that the Holder has
reviewed Annex A hereto
for this purpose), such Prospectus or such form of Prospectus or in any
amendment or supplement thereto, or (2) in the case of an occurrence of an event
of the type specified in Section 3(c)(ii)-(v),
the use by such Holder of an outdated or defective Prospectus after the Company
has notified such Holder in writing that the Prospectus is outdated or defective
and prior to the receipt by such Holder of the
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Advice
contemplated in Section 6(c), or
(3) the failure of the Holder to deliver a Prospectus as amended or supplemented
prior to the confirmation of a sale. In no event shall the liability of any
selling Holder hereunder be greater in amount than the gross proceeds received
or to be received by the Holder with respect to the sale of its Registrable
Securities.
(c) Conduct of Indemnification
Proceedings. If any Proceeding shall be brought or asserted against any
Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party shall promptly notify the Person from whom indemnity is sought
(the “Indemnifying
Party”) in
writing, and the Indemnifying Party shall have the right to assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the
failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that such failure shall have materially
prejudiced the Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in (but not control) the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Indemnified
Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay
such fees and expenses; (2) the Indemnifying Party shall have failed to assume
the defense of such Proceeding in a timely manner and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel in writing that a conflict
of interest would exist if the same counsel were to represent such Indemnified
Party and the Indemnifying Party (in which case, if such Indemnified Party
notifies the Indemnifying Party in writing that it elects to employ separate
counsel at the expense of the Indemnifying Party, the Indemnifying Party shall
not have the right to assume the defense thereof and the reasonable fees and
expenses of one separate counsel for all Indemnified Parties in any matters
related on a factual basis shall be at the expense of the Indemnifying Party).
The Indemnifying Party shall not be liable for any settlement of any such
Proceeding affected without its written consent. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.
All
reasonable fees and expenses of the Indemnified Party (including reasonable fees
and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within fifteen
(15) Business Days of written notice thereof to the Indemnifying Party; provided, that the
Indemnified Party shall promptly reimburse the Indemnifying Party for that
portion of such fees and expenses applicable to such actions for which such
Indemnified Party is not entitled to indemnification hereunder, determined based
upon the relative faults of the parties.
11
(d) Contribution. If a
claim for indemnification under Section 5(a) or
Section 5(b) is
unavailable to an Indemnified Party (by reason of public policy or otherwise),
then each Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such Losses, in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and Indemnified Party in connection
with the actions, statements or omissions that resulted in such Losses as well
as any other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 5(c),
any reasonable attorneys’ or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its
terms.
(e) The
parties hereto agree that it would not be just and equitable if contribution
pursuant to Section 5(d)
were determined by pro rata allocation or by any other method of allocation that
does not take into account the equitable considerations referred to in Section
5(d). Notwithstanding the provisions of Section 5(d), no
Holder shall be required to indemnify or contribute, in the aggregate, pursuant
to this Article
5, any amount in excess of the amount by which the proceeds actually
received by such Holder from the sale of the Registrable Securities subject to
the Proceeding exceeds the amount of any damages that such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission, except in the case of fraud by such Holder. The
indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties. No party guilty of fraudulent misrepresentation
pursuant to Section 11(f) of the Securities Act shall be entitled to
contribution from any other party.
6. Miscellaneous.
(a) Remedies. In
the event of a breach by the Company or by a Holder of any of their obligations
under this Agreement, each Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under this
Agreement will be entitled to specific performance of its rights under this
Agreement. The Company and each Holder agree that monetary damages
would not provide adequate compensation for any losses incurred by reason of a
breach by it of any of the provisions of this Agreement and hereby further
agrees that, in the event of any action for specific performance in respect of
such breach, it shall waive the defense that a remedy at law would be
adequate.
(b) Compliance. Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.
12
(c) Discontinued
Disposition. Each Holder agrees by its acquisition of such Registrable
Securities that, upon receipt of a notice from the Company of the occurrence of
any event of the kind described in Section 3(c)(ii)-(v),
such Holder will forthwith discontinue disposition of such Registrable
Securities under the Registration Statement until such Holder’s receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement or
until it is advised in writing (the “Advice”) by the Company that
the use of the applicable Prospectus may be resumed, and, in either case, has
received copies of any additional or supplemental filings that are incorporated
or deemed to be incorporated by reference in such Prospectus or Registration
Statement. The Company may provide appropriate stop orders to enforce
the provisions of this paragraph.
(d) Amendments and
Waivers. The provisions of this Agreement, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
same shall be in writing and signed by the Company and the Holders of at least
sixty-six percent (66%) of the then outstanding Registrable Securities (assuming
the exercise of all Warrants, whether exercised or not), whereupon such
amendment, modification, supplement or waiver shall be binding on all Holders;
provided, however, that no
consideration shall be offered or paid to any Holder to amend or consent to a
waiver or modification of any provision of this Agreement unless the same
consideration (on a pro-rata basis) is also offered to all of the Holders under
this Agreement.
(e) Notices. All notices
that are required or may be given pursuant to this Agreement must be in writing
and delivered personally, by a recognized courier service, by a recognized
overnight delivery service, or by registered or certified mail, postage prepaid,
to the parties at the following addresses (or to the attention of such other
person or such other address as any party may provide to the other parties by
notice in accordance with this section):
If to the Company:
0000
Xxxxxx Xxxxxx Xx.
Xxxxx
0000 - Xxxx
Xxxxxx,
Xxxxx 00000
Attention: Xx. Xxxxxx X.
Xxxxxx
Telephone: (000) 000-0000
With a copy to:
Xxxxxxxxx Traurig, LLP
Met Life Building
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx,
Esq.
Telephone: (000) 000-0000
If to a Purchaser:
At the address indicated on the
signature page for such Purchaser
Any such
notice or other communication will be deemed to have been given and received
(whether actually received or not) on the day it is personally delivered or
delivered by courier or overnight delivery service or, if mailed, when actually
received.
13
(f) Successors and
Assigns. This Agreement shall inure to the benefit of and be binding upon
each of the parties and their respective successors and permitted assigns.
(g) Execution and
Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.
(h) Governing Law. This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of Delaware without regard to the conflicts of laws principles
thereof. The parties hereto hereby irrevocably agree that any suit or proceeding
arising directly and/or indirectly pursuant to or under this Agreement, shall be
brought solely in the federal or state courts sitting in Delaware (collectively,
the “Courts”). By
its execution hereof, the parties hereby covenant and irrevocably submit to the
in personam
jurisdiction of the Courts and agree that any process in any such action may be
served upon any of them personally, or by certified mail or registered mail upon
them or their agent, return receipt requested, with the same full force and
effect as if personally served upon them in Delaware. The parties
hereto waive any claim that any such jurisdiction is not a convenient forum for
any such suit or proceeding and any defense or lack of in personam jurisdiction with
respect thereto.
(i) Cumulative
Remedies. Subject to the first sentence of Section 6(a), the remedies
provided herein are cumulative and not exclusive of any remedies provided by
law.
(j) Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(k) Interpretation. The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof. References to Sections
mean Sections of this Agreement unless otherwise stated. Any term
defined in this Agreement shall be deemed to include derivations of such term
(e.g., the term “Indemnified Party” shall include “Indemnified
Parties”).
14
(l) Independent Nature of
Purchasers’ Obligations and
Rights. The obligations of each Purchaser hereunder is several and not
joint with the obligations of any other Purchaser hereunder, and no Purchaser
shall be responsible in any way for the performance of the obligations of any
other Purchaser hereunder. Nothing contained herein or in any other
agreement or document delivered at any closing, and no action taken by any
Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in
concert with respect to such obligations or the transactions contemplated by
this Agreement. Each Purchaser shall be entitled to independently protect and
enforce its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Purchaser to be joined as
an additional party in any proceeding for such purpose. EACH
PURCHASER REPRESENTS THAT IS HAS BEEN REPRESENTED BY ITS OWN SEPARATE LEGAL
COUNSEL IN ITS REVIEW AND NEGOTIATION OF THIS AGREEMENT. The Company
has elected to provide all Purchasers with the same terms and documents for the
convenience of the Company and not because it was required to do so by the
Purchasers.
(m) Assignment of Registration
Rights. The rights of any Holder under this Agreement shall be
automatically assignable by such Holder to any transferee of all or any portion
of Registrable Securities (other than pursuant to a public sale or Rule 144) if:
(1) such Holder agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company
promptly after such assignment; (2) the Company is, promptly after such
transfer or assignment, furnished with written notice of (i) the name and
address of such transferee or assignee, and (ii) the securities with
respect to which such registration rights are being transferred or assigned; and
(3) at or before the time the Company receives the written notice
contemplated by clause (2) of this sentence the transferee or assignee
agrees in writing with the Company to be bound by all of the provisions
contained herein.
(n) Deferral
Period. With respect to any Registration Statement filed or to
be filed pursuant to Section 2, if the
Company determines that, in its good faith judgment, it would (because of the
existence of, or in reasonable anticipation of, any acquisition or corporate
reorganization or other transaction, financing activity, stock repurchase or
other material development involving the Company or any subsidiary, or the
unavailability for reasons beyond the Company’s control of any required
financial statements or other material information, or any other event or
condition material to the Company or any subsidiary) be materially
disadvantageous to the Company to proceed with such Registration Statement or
that the Company is required by applicable law, rules or regulations not to
proceed with the Registration Statement (a “Material Development
Condition”), then the Company shall, notwithstanding any other provisions
of this Agreement, be entitled, upon the giving of a written notice that a
Material Development Condition has occurred (a “Delay Notice”) from an officer
of the Company to the Holders’ Representative, as the representative of the
Purchasers, (i) to cause sales of Registrable Securities by the Purchasers
pursuant to such Registration Statement to cease, (ii) to cause such
Registration Statement to be withdrawn and the effectiveness of such
Registration Statement suspended, or (iii) in the event no such Registration
Statement has yet been filed or declared effective, to delay filing or
effectiveness of any such Registration Statement until, in the good faith
judgment of the Company, such Material Development Condition shall be disclosed
or no longer exists (notice of which the Company shall promptly deliver to the
Holders’ Representative, as the representative of the
Purchasers). Notwithstanding the foregoing provisions of this Section 6(n), in the
event a Registration Statement is filed and subsequently withdrawn by reason of
any existing or anticipated Material Development Condition as provided
15
above,
the Company shall use commercially reasonable efforts to cause a new
Registration Statement covering the Registrable Securities to be filed with the
SEC as soon as reasonably practicable after such Material Development Condition
ceases to exist or, if sooner, as soon as practicable after the expiration of
such ninety (90) day period.
(o) Entire
Agreement. This Agreement, any annexes hereto and any writings
incorporated herein by reference set forth the entire understanding of the
parties hereto with respect to the subject matter hereof. The recitals hereto
are a material part of this Agreement and are incorporated in this Agreement by
reference as if fully set forth herein.
[Signatures
follow]
16
IN WITNESS WHEREOF, the
parties have executed this Registration Rights Agreement as of the date first
written above.
By: _____________________________________
Xx. Xxxxxx X. Xxxxxx, Ph.D.
Chief Executive Officer
(PURCHASER’S
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)
INDIVIDUALS:
Signature:_______________________________________
Print
Name:______________________________________
Signature:_______________________________________
Print
Name:______________________________________
ENTITY:
By:____________________________________________
Name:
Title:
ADDRESS:
Attention:______________________________________
Telephone:_____________________________________
