REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made by Xxxxxx
Laboratories, Inc., a Maryland corporation (the "Company"), for the benefit of
the undersigned investor ("Investor", collectively, the "Investors"). This
Agreement shall become effective upon acceptance and closing in respect of the
related subscription for the Senior Secured Convertible Promissory Notes
("Notes") and the shares of common stock underlying the Notes, and the
associated warrants to purchase common stock of the Company ("Warrants"). The
Notes and the Warrants are collectively referred to herein as the "Securities."
The common stock of the Company into which the Notes are convertible and the
common stock issuable upon exercise of the Warrants shall be referred to herein
collectively as the "Underlying Stock."
R E C I T A L S
A. The Investors desire to purchase from the Company, and the Company
desires to issue and sell to the Investors, up to an aggregate of $1,200,000 in
face amount of Notes and associated Warrants as described in the Confidential
Offering Memorandum dated July 1, 1996 and all of the Exhibits thereto (the
"Offering Memorandum").
B. As further inducement for the Investors to purchase the Notes and
Warrants from the Company, the Company desires to undertake to register under
the Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the "Securities Act"), the Underlying Stock six months after the
Company effects a registration, on any applicable form, of newly issued common
stock at any time while the Investor holds the Notes, the Warrants, some or all
of the Underlying Stock. This Agreement sets forth the terms and conditions of
such undertaking.
The Company and the Investor agree as follows:
1. Definitions. For purposes of this Agreement:
(a) The terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement or statements or similar documents in compliance with the Securities
Act and pursuant to Rule 415 under the Securities Act or any successor rule
providing for offering securities on a continuous basis ("Rule 415"), and the
declaration or ordering of effectiveness of such registration statement or
document by the Securities and Exchange Commission (the "SEC");
(b) The term "Registerable Securities" means (i) the
Underlying Stock, and (ii) any common stock of the Company issued as (or
issuable upon the conversion or exercise of any convertible security, warrant,
right or other security which is issued as) a dividend or
other distribution with respect to, or in exchange for or in replacement of any
Note, Warrant, or any Underlying Stock, excluding in all cases, however, any
Registerable Securities sold by a holder of such Registerable Securities in a
transaction in which its registration rights under this Agreement are not
assigned.
(c) The Investors and assignees with registration rights
assigned to them pursuant to Section 8 of this Agreement may be referred to
herein collectively as "Holders" of Registerable Securities and each may be
referred to herein as a "Holder" of Registerable Securities.
2. Registration.
(a) Automatic Registration Right - (i) Subject to the
provisions of Section 3(a), below, not earlier than six months after the final
closing date (the "Closing Date") of a registered offering of the common stock
of the Company to the general public covered by a registration statement under
the Securities Act, the Company shall use its best efforts to effect the
registration under the Securities Act of all Registerable Securities; provided,
however, that a Holder of Registerable Securities may inform the Company in
writing that it wishes to exclude all or a portion of its Registerable
Securities from such registration and upon such notice, such Registerable
Securities shall be excluded from such registration.
(i) The holders of a majority in interest of the Registerable
Securities shall have the right to select the managing underwriters, if any, and
to approve the terms of the underwriting agreement in respect of such
registration, subject to the approval of the Company, which shall not be
unreasonably withheld.
(iii) The Company is obligated to use its best efforts to
effect only one such registration pursuant to this Section 2(a) of this
Agreement.
(b) Piggyback Registration - (i) On an unlimited number of
occasions, and subject to the terms of this Agreement, in the event the Company
decides to register any of its common stock (either for its own account or the
account of a security holder or holders, other than in connection with a
registration being effected pursuant to Section 2(a) above) on an SEC form
(other than S-4 or S-8) that would be suitable for a registration involving
Registerable Securities, the Company will: (x) promptly give each Holder of
Registerable Securities written notice thereof (which shall include a list of
jurisdictions in which the Company intends to qualify such securities under the
applicable Blue Sky or other state securities laws) and (y) include in such
registration (and in any related qualification under the Blue Sky laws or other
state securities laws), and in any underwriting involved therein, all the
Registerable Securities specified in a written request delivered to the Company
by any Holder of Registerable Securities within 20 days after delivery of such
written notice from
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the Company. Nothing contained in this Section 2(b) shall limit the ability of
the Company to withdraw a Registration Statement it has filed either before or
after effectiveness.
(ii) If the registration of which the Company gives notice
pursuant to Section 2(b)(i) is for a registered public offering involving an
underwriting, the Company shall so advise the Holders of Registerable Securities
as a part of the written notice given pursuant to Section 2(b)(i). In such event
the right of any Holder of Registerable Securities to registration shall be
conditioned upon such underwriting and the inclusion of such Holders'
Registerable Securities in such underwriting to the extent provided in this
Section 2(b). All Holders of Registerable Securities proposing to distribute
their securities through such an underwriting shall (together with the Company
and the other holders distributing their securities through such underwriting)
enter into an underwriting agreement with the Underwriter's representative for
such offering; provided that such holders shall have no right to participate in
the selection of the underwriters for an offering pursuant to this Section 2(b).
(iii) In the event the Underwriters' representative advises
the Holders of Registerable Securities seeking registration of Registerable
Securities pursuant to this Section 2(b) in writing that market factors
(including, without limitation, the aggregate number of shares of common stock
requested to be registered, the general condition of the market, and the status
of the persons proposing to sell securities pursuant to this registration)
require a limitation of the number of shares to be underwritten, the
Underwriter's representative may exclude some or all Registerable Securities
from such registration and underwriting. In such event, the Underwriters'
representative shall so advise all Holders of Registerable Securities of the
number of shares of Registerable Securities that may be included in such
registration and underwriting (if any), and the number of shares of Registerable
Securities that may be included in such registration and underwriting (if any)
shall be allocated among all holders seeking registration in proportion, as
nearly as practicable, to the number of shares proposed to be included in the
registration by the Holder. The number of shares of Registerable Securities to
be included in such underwriting shall not be reduced unless all other
securities (other than those sold by the Company) are similarly limited from the
underwriting. No Registerable Securities or other securities excluded from the
underwriting by reason of this Section 2(b) shall be included in such
Registration Statement.
(iv) If any Holder of Registerable Securities, or a holder of
other securities entitled (upon request) to be included in such registration,
disapproves of the terms of any underwriting, such Holder may elect to withdraw
therefrom by written notice to the Company delivered at least 20 days prior to
the effective date of the Registration Statement.
3. Obligations of the Company. When required under this Agreement
to effect the registration of the Registerable Securities, the Company shall, as
expeditiously as reasonably possible, use its best efforts to:
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(a) Prepare and file with the SEC a registration statement or
statements or similar documents (the "Registration Statement") with respect to
all Registerable Securities, other than any Registerable Securities excluded by
Holders of Registerable Securities pursuant to Section 2(a), cause the
Registration Statement to become effective not later than six months after the
closing date of the Company's Next Public Offering of common stock and keep the
Registration Statement effective pursuant to Rule 415 at all times until the
earlier of (i) the third anniversary of the final closing date of the Company's
offering of Notes and Warrants to the Investors, or (ii) the date on which all
Investors can sell any of the Registerable Securities pursuant to Rule 144 of
the Securities Act without restriction under Rule 144(e) thereof; provided,
however, that if a public offering of common stock by the Company is closed on a
date that is more than two years following the first date each Holder of
Registerable Securities held such Registerable Securities, the Company shall
have no obligation to file a Registration Statement in respect of such
registerable securities pursuant to this Agreement, except pursuant to Section
2(b).
(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
Prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times until the
earlier of (i) the third anniversary of the final closing date of the Company's
offering of the Notes and Warrants, or (ii) the date on which all Investors can
sell their respective shares of Registerable Securities pursuant to Rule 144 of
the Securities Act without restriction under Rule 144(e) thereof, and to comply
with the provisions of the Securities Act with respect to the disposition of all
securities covered by the Registration Statement.
(c) Furnish promptly to the Holders of Registerable Securities
such numbers of copies of a prospectus, including a preliminary prospectus, and
all amendments and supplements thereto, in conformity with the requirements of
the Securities Act, and such other documents as the Holders of Registerable
Securities may reasonably request in order to facilitate the disposition of
Registerable Securities.
(d) Register and qualify the securities covered by the
Registration Statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Investors and prepare and
file in those jurisdictions such amendments (including post-effective
amendments) and supplements and to take such other actions as may be necessary
to maintain such registration and qualification in effect at all times until the
earlier of (i) the third anniversary of the final closing date of the Company
offering of the Notes and Warrants, or (ii) the date on which all Investors can
sell their respective shares of Registerable Securities pursuant to Rule 144 of
the Securities Act with out restriction under Rule 144(e) thereof, and to take
all other actions necessary or advisable to enable the disposition of such
securities in such jurisdictions, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
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business or to file a general consent to service of process in any such states
or jurisdictions or to provide any undertaking or make any change in its charter
or bylaws which the Board of Directors determines to be contrary to the best
interest of the Company and its stockholders.
(e) In the event the holders of a majority in interest of the
Registerable Securities select underwriters for the offering, enter into and
perform its 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. The Investors shall
also enter into and perform their customary obligations under any such agreement
including, without limitation, customary indemnification and contribution
obligations.
(f) Notify the Holders of Registerable Securities, at any time
when a prospectus relating to Registerable Securities covered by the
Registration Statement is required to be delivered under the Securities Act, of
the happening of any event as a result of which the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing. The Company shall promptly amend or supplement the
Registration Statement to correct any such untrue statement or omission.
(g) Notify the Holders of Registerable Securities of the
issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for the purposes.
The Company will make every reasonable effort to prevent the issuance of any
stop order and, if any stop order is issued, to obtain the lifting thereof at
the earliest possible time.
(h) Permit a single firm of counsel designated as selling
stockholders' counsel by the holders of a majority in interest of the
Registerable Securities commencing at a reasonable period of time prior to their
filing, to review the Registration Statement and all amendments and supplements
thereto and shall not file any document in a form to which such counsel
reasonably objects.
(i) Make generally available to its security holders as soon
as practicable, but not later than 90 days after the close of the period covered
thereby, an earnings statement (in form complying with the provisions of Rule
158 under the Securities Act) covering a 12- month period beginning not later
than the first day of the Company's fiscal quarter next following the effective
date of the Registration Statement.
(j) At the request of the Holders of Registerable Securities,
furnish to the underwriters on the date that Registerable Securities are
delivered to the underwriters for sale
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in connection with a registration pursuant to this Agreement (i) an opinion,
dated such date, of the counsel representing the Company for the purposes of
such registration, in form and substance as is customarily given to underwriters
in an underwritten public offering, addressed to the underwriters, and (ii) a
letter dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters.
(k) Make available for inspection by the Holders of
Registerable Securities, any underwriters participating in the offering pursuant
to the registration and the counsel, accountants or other agents retained by the
Investors, all pertinent financial and other records, corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by the Investors in
connection with the registration.
(l) If the Common Stock is then listed on a national
securities exchange, cause the Registerable Securities to be listed on such
exchange. If the Common Stock is not then listed on a national securities
exchange, facilitate the reporting of the Common Stock on NASDAQ.
(m) Provide a transfer agent and registrar, which may be a
single entity, for the Registerable Securities not later than the effective date
of the Registration Statement.
(n) Take all actions necessary to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legend)
representing the Registerable Securities to be sold pursuant to the Registration
Statement and to enable such certificates to be in such denominations and
registered in such names as the Holders of such Registerable Securities or any
underwriters may reasonably request.
(o) Take all other reasonable actions necessary to expedite
and facilitate disposition by the Investors of the Registerable Securities
pursuant to the Registration Statement.
4. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
respect to each Investor that such Investor shall furnish to the Company such
information regarding itself, the Registerable Securities held by it, and the
intended method of disposition of such securities as shall be reasonably
required to effect the registration of the Registerable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request.
5. Expenses of Registration. All expenses incurred in connection
with registration, filings or qualifications pursuant to Sections 2 and 3,
including without
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limitation, all registration, listing, filing and qualification fees, printers
and accounting fees, the fees and disbursements of counsel for the Company and
the reasonable fees and disbursements of one form of counsel for the Investors
shall be borne by the Company (except in the case of the automatic registration
pursuant to Section 2(a) for which underwriter discounts and commissions shall
not be borne by the Company).
6. Indemnification. In the event any Registerable Securities are
included in a Registration Statement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Investor, the directors, employees, agents and the
officers of the Company, each person who signs the Registration Statement, and
each person, if any, who controls any of them, any underwriter (as defined in
the Securities Act) for such Holders of Registerable Securities and each person,
if any, who controls any such underwriter within the meaning of the Securities
Act or the Securities Exchange Act of 1934, as amended (the "1934 Act"), against
any losses, claims, damages, expenses or liabilities (or actions or proceedings,
whether commenced or threatened, in respect thereof) arising out of or based
upon any of the following statements, omissions or violations (collectively, a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
or (iii) any violation or alleged violation by the Company of the Securities
Act, the 1934 Act, any state securities laws or any rule or regulation
promulgated under the Securities Act, the 1934 Act or any state securities laws;
and the Company will reimburse the Investors and each such underwriter or
controlling person, promptly as such expenses are incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding;
provided, however, that the indemnity agreement contained in this Section 6(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company, which consent shall not be unreasonably withheld, nor shall the Company
be liable in any such case for any such loss, claim, damage, liability, or
action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by the Investors or any
such underwriter or controlling person, as the case may be. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Investors or any such underwriter or controlling person and shall
survive the transfer of the Registerable Securities by the Holders of
Registerable Securities.
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(b) To the extent permitted by law, each Holder of
Registerable Securities, severally and not jointly, will indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, each person, if any, who controls the Company
within the meaning of the Securities Act or the 1934 Act, any underwriter and
any other stockholder selling securities pursuant to the Registration Statement
of any of its directors or officers or any person who controls such holder or
underwriter, against any losses, claims, damages of liabilities (joint or
several) to which any of them may become subject, under the Securities Act, the
1934 Act of other federal or state law, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) 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 by such Holder of Registerable Securities expressly for use in
connection with such registration; and such Holder of Registerable Securities
will reimburse any legal or other expenses reasonably incurred by any of them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 6(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of such Holder of Registerable Securities, which consent shall not
be unreasonably withheld; and provided, further, that the Investor shall be
liable under this paragraph for only that amount of losses, claims, damages and
liabilities as does not exceed the proceeds to such Investor as a result of the
sale of Registerable Securities pursuant to such registration.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, 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 parties; provided, however, than an 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
for the indemnifying party, representation of such indemnified party by the
counsel retained by the indemnifying party, would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall relieve such indemnifying party of any
liability to the indemnified party under this Section 6 only to the extent
prejudicial to its ability to defend such action, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 6.
The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during
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the course of the investigation or defense, promptly as such expense, loss,
damage or liability is incurred.
(d) 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 this Section 6 to the extent permitted by law, provided 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 this
Section 6, (ii) no seller of Registerable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any seller of Registerable Securities who
was not guilty of such fraudulent misrepresentation, and (iii) contribution by
any seller of Registerable Securities shall be limited in amount to the net
amount of proceeds received by such seller from the sale of such Registerable
Securities.
7. Reports Under Securities Exchange Act of 1934. With a view to making
available to the Holders of Registerable Securities the benefits of SEC Rule 144
promulgated under the Securities Act and any other 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, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times;
(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the 1934
Act; and
(c) furnish to each Holder of Registerable Securities, so long
as such Holder of Registerable Securities owns any Registerable Securities,
forthwith upon request (i) a written statement by the Company that it has
complied with the reporting requirements of SEC Rule 144, the Securities 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 in availing the Investors
of any rule or regulation of the SEC which permits the selling of any such
securities without registration.
8. Assignment of Registration Rights. The rights to have the Company
register Registerable Securities pursuant to this Agreement may be assigned by
the Holders of Registerable Securities, subject to the Holders of such
Registerable Securities and such assignment being in compliance with the terms
of this Agreement and any agreements incorporated herein, and subject to such
assignment being in conformity with federal and state securities law, rules and
regulations, unless exempt therefrom; to transferees or
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assignees, of such securities provided such transferee or assignee within a
reasonable time after such transfer, furnishes the Company written notice of the
name and address of such transferee or assignee and the securities with respect
to which such registration rights are being assigned; provided, further, that
such assignment shall be effective only if immediately following such transfer
the further disposition of such securities by the transferee or assignee is
restricted under the Securities Act. The term "Investor" as used in this
Agreement shall include permitted assignees.
9. Miscellaneous.
(a) Notices required or permitted to be given hereunder shall
be in writing and shall be deemed to be sufficiently given when personally
delivered or sent by registered mail, return-receipt request, addressed (i) if
to the Company at Xxxxxx Laboratories, Inc. c/o Xxxxxxxxx Xxxxxx, PhD., Chairman
of the Board and Chief Executive Office at 00000-X Xxx Xxxxxxxx Xxxx, Xxxxxxxx,
Xxxxxxxx 00000-0000, and (ii) if to an Investor, at the address set forth under
his name in the Subscription Agreement, or at such other address as each such
party shall furnish by notice given in accordance with this Section 9(a).
(b) Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right to
remedy, will not operate as a waiver thereof. No waiver will be effective unless
and until it is in writing and signed by the party giving the waiver.
(c) The Agreement shall be enforced, governed and construed in
all respects in accordance with the laws of the State of Maryland, as such laws
are applied by Maryland courts to agreements entered into and to be performed in
Maryland by and between residents of Maryland. In the event that any provision
of this Agreement is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any provision hereof which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision hereof.
(d) The Company will not, after the date of this Agreement,
enter into any agreement with respect to its securities which is inconsistent
with the rights granted to the Holders of Registerable Securities in this
Agreement or otherwise conflicts with the provisions hereof.
(e) 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
Company has obtained the written consent of holders of at least a majority of
shares of the Registerable Securities.
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Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof with respect to a matter which relates exclusively to the
rights of Holders of Registerable Securities whose securities are being sold
pursuant to a Registration Statement and which does not directly or indirectly
affect the rights of other Holders of Registerable Securities may be given by
the holders of a majority of the shares of the Registerable Securities being
sold by such holders, provided that the provisions of this sentence may not be
amended, modified, or supplemented except in accordance with the provisions of
the immediately preceding sentence.
(f) Subject to Section 8 hereof, this Agreement shall inure to
the benefit of and be binding upon the successors and permitted assigns of each
of the parties, including without limitation and without the need for an express
assignment, subsequent holders of Registerable Securities.
(g) This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts and by facsimile
signatures, 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.
(h) This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the securities sold in connection with the Offering. This Agreement supersedes
all prior agreements and understanding between the parties with respect to such
subject matters.
Dated this ____ day of July, 1996.
INVESTOR: XXXXXX LABORATORIES, INC.
______________________________ By: ____________________________
Signature
______________________________ Title: ____________________________
Printed Name
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