REGISTRATION RIGHTS AGREEMENT
EXHIBIT
A
This
Registration Rights Agreement (this “Agreement”)
is
made and entered into as of October 16, 2006, among Lev Pharmaceuticals,
Inc., a
Delaware corporation (the “Company”),
and
the several purchasers signatory hereto (each such purchaser is a “Purchaser”
and
collectively, the “Purchasers”).
This
Agreement is made pursuant to the Securities Purchase Agreement, dated as
of the
date hereof between the Company and each Purchaser (the “Purchase
Agreement”).
The
Company and each Purchaser hereby agrees as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein that are defined
in the
Purchase Agreement shall have the meanings given such terms in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings:
“Advice”
shall
have the meaning set forth in Section 6(d).
“Effectiveness
Date”
means,
with respect to the initial Registration Statement required to be filed
hereunder, the 120th
calendar
day following the actual filing date of the Registration Statement (the
180th
calendar
day in the case of a “full review” by the Commission) and, with respect to any
additional Registration Statements which may be required pursuant to Section
3(c), the 90th calendar day following the date on which the Company first
knows,
or reasonably should have known, that such additional Registration Statement
is
required hereunder; provided,
however,
in the
event the Company is notified by the Commission that one of the above
Registration Statements will not be reviewed or is no longer subject to further
review and comments, the Effectiveness Date as to such Registration Statement
shall be the seventh Trading Day following the date on which the Company
is so
notified if such date precedes the dates required above and the Company shall
file an acceleration request with the Commission with 5 Trading Days from
such
date.
“Effectiveness
Period”
shall
have the meaning set forth in Section 2(a).
“Event”
shall
have the meaning set forth in Section 2(b).
“Event
Date”
shall
have the meaning set forth in Section 2(b).
“Filing
Date”
means,
with respect to the initial Registration Statement required hereunder, the
30th
calendar
day following the initial Closing Date and, with respect to any additional
Registration Statements which may be required pursuant to Section 3(c), the
30th
day
following the date on which the Company first knows, or reasonably should
have
known that such additional Registration Statement is required
hereunder.
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“Holder”
or
“Holders”
means
the holder or holders, as the case may be, from time to time of Registrable
Securities.
“Indemnified
Party”
shall
have the meaning set forth in Section 5(c).
“Indemnifying
Party”
shall
have the meaning set forth in Section 5(c).
“Losses”
shall
have the meaning set forth in Section 5(a).
“Plan
of Distribution”
shall
have the meaning set forth in Section 2(a).
“Prospectus”
means
the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted
from a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), as amended or supplemented
by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Registration Statement,
and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
“Registrable
Securities”
means
all of (i) the Shares issuable, (ii) the Warrant Shares issuable, (iii) any
additional shares issuable in connection with any anti-dilution provisions
in
the Warrants (without giving effect to any limitations on exercise set forth
in
the Warrant) and (iv) any shares of Common Stock issued or issuable upon
any
stock split, dividend or other distribution, recapitalization or similar
event
with respect to the foregoing.
“Registration
Statement”
means
the registration statements required to be filed hereunder and any additional
registration statements contemplated by Section 3(c), including (in each
case)
the Prospectus, amendments and supplements to such 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 such registration statement.
“Rule
415”
means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as
such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same purpose
and
effect as such Rule.
“Rule
424”
means
Rule 424 promulgated by the Commission pursuant to the Securities Act, as
such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same purpose
and
effect as such Rule.
“Selling
Shareholder Questionnaire”
shall
have the meaning set forth in Section 3(a).
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2. Shelf
Registration.
(a) On
or
prior to each Filing Date, the Company shall prepare and file with the
Commission a “Shelf” Registration Statement covering the resale of 130% of the
Registrable Securities on such Filing Date for an offering to be made on
a
continuous basis pursuant to Rule 415. The Registration Statement shall be
on
Form SB-2 (unless the Company is then eligible to register for resale the
Registrable Securities on Form S-3, in which case such registration shall
be on
Form S-3) and shall contain (unless otherwise directed by at least an 50.1%
majority in interest of the Holders or in accordance with comments from the
Commission or the NASD) substantially the “Plan
of Distribution”
attached hereto as Annex
A.
Subject
to the terms of this Agreement, the Company shall use commercially reasonable
best efforts to cause a Registration Statement to be declared effective under
the Securities Act as promptly as possible after the filing thereof, but
in any
event prior to the applicable Effectiveness Date, and shall use its best
efforts
to keep such Registration Statement continuously effective under the Securities
Act until all Registrable Securities covered by such Registration Statement
have
been sold, or may be sold without volume restrictions pursuant to Rule 144(k),
as determined by the counsel to the Company pursuant to a written opinion
letter
to such effect, addressed and acceptable to the Company’s transfer agent and the
affected Holders (the “Effectiveness
Period”).
The
Company shall immediately notify the Holders via facsimile or e-mail of the
effectiveness of a Registration Statement on the same Trading Day that the
Company telephonically confirms effectiveness with the Commission, which
shall
be the date requested for effectiveness of a Registration Statement. The
Company
shall, by 9:30 am Eastern Time on the Trading Day after the Effective Date
(as
defined in the Purchase Agreement), file a final Prospectus with the Commission
as required by Rule 424.
(b) If
a
Registration Statement filed or required to be filed hereunder is not declared
effective by the Commission by its Effectiveness Date then in addition to
any
other rights the Holders may have hereunder or under applicable law, on such
Effectiveness Date, the Company shall issue to each Holder, as partial
liquidated damages and not as a penalty, such number of additional common
stock
purchase warrants as is equal to 3.0% of the aggregate purchase price paid
by
such Holder pursuant to the Purchase Agreement for any Registrable Securities
then held by such Holder, which warrants shall be exercisable for a period
of
five years from the Event Date at an exercise price of $0.01 per share. The
parties agree that the Company will not be liable for liquidated damages
under
this Section 2(b) in respect of the Warrants or the Warrant Shares.
3. Registration
Procedures
In
connection with the Company’s registration obligations hereunder, the Company
shall:
(a) Not
less
than five Trading Days prior to the filing of each Registration Statement
and
not less than 1 Trading Day prior to the filing of any related Prospectus
or any
amendment or supplement thereto, the Company shall, (i) furnish to each Holder
copies of all such documents proposed to be filed, which documents will be
subject to the review of such Holders (it
being
acknowledged and agreed that if a Holder does not object to or comment on
the
aforementioned documents within such five Trading Day period, then the Holder
shall be deemed to have consented to and approved the use of such documents),
and (ii) 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 each Holder to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall
not
file a Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holders of a majority of the Registrable
Securities shall reasonably object in good faith, provided that, the Company
is
notified of such objection in writing no later than 4 Trading Days after
the
Holders have been so furnished copies of a Registration Statement or 1 Trading
Day after the Holders have been so furnished copies of any related Prospectus
or
amendment or supplement thereto. Each Holder agrees to furnish to the Company
a
completed Questionnaire in the form attached to this Agreement as Annex B
(a
“Selling
Shareholder Questionnaire”)
not
less than two Trading Days prior to the Filing Date or by the end of the
fourth
Trading Day following the date on which such Holder receives draft materials
in
accordance with this Section. The Company shall not be required to include
the
Registrable Securities of a Holder in a Registration Statement and shall
not be
required to pay any liquidated or other damages under Section 2(b) to any
Holder
who fails to furnish to the Company a fully completed Selling Holder
Questionnaire at least two Trading Days prior to the Filing Date (subject
to the
requirements set forth in Section 3(a)).
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(b) (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to a Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep a Registration Statement continuously
effective as to the applicable Registrable Securities for the Effectiveness
Period and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of
the
Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement (subject to the terms
of this
Agreement), and as so supplemented or amended to be filed pursuant to Rule
424;
(iii) respond as promptly as reasonably possible to any comments received
from
the Commission with respect to a Registration Statement or any amendment
thereto
and as promptly as reasonably possible provide the Holders true and complete
copies of all correspondence from and to the Commission relating to a
Registration Statement that pertain to the Holders as Selling Shareholders
(provided that the Company may excise any information contained therein which
would constitute material non-public information as to any Holder which has
not
executed a confidentiality agreement with the Company); and (iv) comply in
all
material respects with the provisions of the Securities Act and the Exchange
Act
with respect to the disposition of all Registrable Securities covered by
a
Registration Statement during the applicable period in accordance (subject
to
the terms of this Agreement) with the intended methods of disposition by
the
Holders thereof set forth in such Registration Statement as so amended or
in
such Prospectus as so supplemented.
(c) If
during
the Effectiveness Period, the number of Registrable Securities at any time
exceeds 90% of the number of shares of Common Stock then registered in a
Registration Statement, then the Company shall file as soon as reasonably
practicable but in any case prior to the applicable Filing Date, an additional
Registration Statement covering the resale by the Holders of not less than
130%
of the number of such Registrable Securities.
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(d) Notify
the Holders of Registrable Securities to be sold (which notice shall, pursuant
to clauses (iii) through (vi) hereof, be accompanied by an instruction to
suspend the use of the Prospectus until the requisite changes have been made)
as
promptly as reasonably possible (and, in the case of (i)(A) below, not less
than
1 Trading Day prior to such filing) and (if requested by any such Person)
confirm such notice in writing no later than one Trading Day following the
day
(i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment to a Registration Statement is proposed to be filed; (B) when the
Commission notifies the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in writing on
such
Registration Statement; and (C) with respect to a Registration Statement
or any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
(or the NASD) for amendments or supplements to a Registration Statement or
Prospectus or for additional information; (iii) of the issuance by the
Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of a Registration Statement covering any
or
all of the Registrable Securities or the initiation of any Proceedings for
that
purpose; (iv) of the receipt by the Company of any notification with respect
to
the suspension of the qualification or exemption from qualification of any
of
the Registrable Securities for sale in any jurisdiction, or the initiation
or
threatening of any Proceeding for such purpose; and (v) of the occurrence
of any
event or passage of time that makes the financial statements included in
a
Registration Statement ineligible for inclusion therein or any statement
made in
a 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 a Registration Statement, Prospectus or other
documents so that, in the case of a 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.
(e) Use
its
commercially reasonable best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order suspending the effectiveness of a
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale
in
any jurisdiction, at the earliest practicable moment.
(f) If
requested by a Holder, furnish to such Holder, without charge, at least one
conformed copy of each such Registration Statement and each amendment thereto,
including financial statements and schedules, all documents incorporated
or
deemed to be incorporated therein by reference to the extent requested by
such
Person, and all exhibits to the extent requested by such Person (including
those
previously furnished or incorporated by reference) promptly after the filing
of
such documents with the Commission.
5
(g) Subject
to the terms of this Agreement, 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(d).
(h) If
NASDR
Rule 2710 requires any broker-dealer to make a filing prior to executing
a sale
by a Holder, the Company shall, at the request of one such broker-dealer
(i)
make an Issuer Filing with the NASDR, Inc. Corporate Financing Department
pursuant to proposed NASDR Rule 2710(b)(10)(A)(i), (ii) respond within five
Trading Days to any comments received from NASDR in connection therewith,
and
(iii) pay the filing fee required in connection therewith.
(i) Prior
to
any resale of Registrable Securities by a Holder, use its commercially
reasonable best efforts to register or qualify or cooperate with the selling
Holders in connection with the registration or qualification (or exemption
from
the Registration or qualification) of such Registrable Securities for the
resale
by the Holder under the securities or Blue Sky laws of such jurisdictions
within
the United States as any Holder reasonably requests in writing, to keep each
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 each Registration Statement; provided, that the Company
shall not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified, subject the Company to any material tax
in
any such jurisdiction where it is not then so subject or file a general consent
to service of process in any such jurisdiction.
(j) Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a transferee
pursuant to a Registration Statement, which certificates shall be free, to
the
extent permitted by the Purchase 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.
(k) Upon
the
occurrence of any event contemplated by this Section 3, as promptly as
reasonably possible under the circumstances taking into account the Company’s
good faith assessment of any adverse consequences to the Company and its
stockholders of the premature disclosure of such event, prepare a supplement
or
amendment, including a post-effective amendment, to a 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 a 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. If
the
Company notifies the Holders in accordance with clauses (iii) through (v)
of
Section 3(d) above to suspend the use of any Prospectus until the requisite
changes to such Prospectus have been made, then the Holders shall suspend
use of
such Prospectus. The Company will use, in good faith, its commercially
reasonable best efforts to ensure that the use of the Prospectus may be resumed
as promptly as is practicable. The Company shall be entitled to exercise
its
right under this Section 3(k) to suspend the availability of a Registration
Statement and Prospectus, subject to the payment of partial liquidated damages
pursuant to Section 2(b), for a period not to exceed 60 calendar days (which
need not be consecutive days) in any 12 month period.
6
(l) Cooperate
with any reasonable due diligence investigation undertaken by the Holders
in
connection with the sale of Registrable Securities, including, without
limitation, by making available any documents and information; provided
that the
Company will not deliver or make available to any Holder material, nonpublic
information unless such Holder specifically requests in advance to receive
material, nonpublic information in writing and, if requested by the Company,
such Holder agrees in writing to treat such information
confidentially.
(m) Comply
with all applicable rules and regulations of the Commission.
(n) The
Company may require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by
such
Holder and, if required by the Commission, the natural persons thereof that
have
voting and dispositive control over the Shares.
4. Registration
Expenses.
All
fees and expenses incident to the performance of or compliance with this
Agreement by the Company shall be borne by the Company whether or not any
Registrable Securities are sold pursuant to a Registration Statement. The
fees
and expenses referred to in the foregoing sentence 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 any
Trading Market on which the Common Stock is then listed for trading, (B)
in
compliance with applicable state securities or Blue Sky laws reasonably agreed
to by the Company in writing (including, without limitation, fees and
disbursements of counsel for the Company in connection with Blue Sky
qualifications or exemptions of the Registrable Securities) and (C) if not
previously paid by the Company in connection with an Issuer Filing, with
respect
to any filing that may be required to be made by any broker through which
a
Holder intends to make sales of Registrable Securities with NASD Regulation,
Inc. pursuant to the NASD Rule 2710, so long as the broker is receiving no
more
than a customary brokerage commission in connection with such sale, (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities, (iii) messenger, telephone and delivery
expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities
Act liability insurance, if the Company so desires such insurance, and (vi)
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 as required
hereunder. In no event shall the Company be responsible for any broker or
similar commissions of any Holder or, except to the extent provided for in
the
Transaction Documents, any legal fees or other costs of the
Holders.
7
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, members, partners, agents,
investment advisors and employees (and any other Persons with a functionally
equivalent role of a Person holding such titles, notwithstanding a lack of
such
title or any other title) 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, members, shareholders, partners,
agents and employees (and any other Persons with a functionally equivalent
role
of a Person holding such titles, notwithstanding a lack of such title or
any
other title)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 (collectively, “Losses”),
as
incurred, arising out of or relating to (1) any untrue or alleged untrue
statement of a material fact contained in a Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or
form
of prospectus or supplement thereto, in light of the circumstances under
which
they were made) not misleading, or (2) any violation or alleged violation
by the
Company of the Securities Act, Exchange Act or any state securities law,
or any
rule or regulation thereunder, in connection with the performance of its
obligations under this Agreement, except to the extent, but only to the extent,
that (i) such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information relates
to
such Holder or such Holder’s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in a Registration Statement, such Prospectus or such form
of
Prospectus or in any amendment or supplement thereto (it being understood
that
the Holder has approved Annex A hereto for this purpose) or (ii) in the case
of
an occurrence of an event of the type specified in Section 3(d)(iii)-(vi),
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(d).
The Company shall notify the Holders promptly of the institution, threat
or
assertion of any Proceeding arising from or in connection with the transactions
contemplated by this Agreement of which the Company is aware. The Holders
agree
that the indemnity agreement contained in this Section 5(a) shall not apply
to
amounts paid in settlement of any Losses if such settlement is effected without
the prior written consent of the Company, which consent shall not be
unreasonably withheld.
8
(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
solely 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 not misleading (i) to the extent, but only to the
extent,
that such untrue statement or omission is contained in any information so
furnished in writing by such Holder to the Company specifically for inclusion
in
such Registration Statement or such Prospectus or (ii) to the extent that
such
information relates to such Holder’s proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing
by
such Holder expressly for use in a Registration Statement (it being understood
that the Holder has approved Annex A hereto for this purpose), such Prospectus
or such form of Prospectus or in any amendment or supplement thereto or (iii)
in
the case of an occurrence of an event of the type specified in Section
3(d)(iii)-(vi), 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(d). In no event shall the liability of any selling
Holder hereunder be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities giving
rise
to such indemnification obligation. The Company agrees that the indemnity
agreement contained in this Section 5(b) shall not apply to amounts paid
in
settlement of any Losses if such settlement is effected without the prior
written consent of the Holder, which consent shall not be unreasonably
withheld.
(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 it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have prejudiced the Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any
such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees
and
expenses; (2) the Indemnifying Party shall have failed promptly to assume
the
defense of such Proceeding and to employ counsel reasonably satisfactory
to such
Indemnified Party in any such Proceeding; or (3) the named parties to any
such
Proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and counsel to the Indemnified Party shall
reasonably believe that a material conflict of interest is likely to exist
if
the same counsel were to represent such Indemnified Party and the Indemnifying
Party (in which case, if such Indemnified Party notifies the Indemnifying
Party
in writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and the reasonable fees and expenses of no more than
one
separate counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld or delayed. 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.
9
Subject
to the terms of this Agreement, 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 twenty Trading 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 judicially determined to be not entitled to indemnification
hereunder.
(d) Contribution.
If the
indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
Party or insufficient to hold an Indemnified Party harmless for any Losses,
then
each Indemnifying Party shall contribute to the amount paid or payable by
such
Indemnified Party, 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 this Agreement, any reasonable attorneys’ or other fees or expenses incurred
by such party in connection with any Proceeding to the extent such party
would
have been indemnified for such fees or expenses if the indemnification provided
for in this Section was available to such party in accordance with its
terms.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by
any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which
the
net proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that
such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, except in the case of fraud
by
such Holder. No
person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of
the Securities Act) shall be entitled to contribution from any Person who
was
not guilty of such fraudulent misrepresentation.
10
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.
6. Miscellaneous
(a) Remedies.
In the
event of a breach by the Company or by a Holder, of any of their respective
obligations under this Agreement, each Holder or the Company, as the case
may
be, in addition to being entitled to exercise all rights granted by law and
under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and
each
Holder agree that monetary damages would not provide adequate compensation
for
any losses incurred by reason of a breach by it of any of the provisions
of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall not assert or shall
waive the defense that a remedy at law would be adequate.
(b) No
Piggyback on Registrations.
Except
as set forth on the disclosure schedule attached to the Purchase Agreement,
neither the Company nor any of its security holders (other than the Holders
in
such capacity pursuant hereto) may include securities of the Company in the
initial Registration Statement other than the Registrable Securities, and
the
Company shall not, during the period beginning on the date hereof and ending
on
the Trading Day immediately following the actual effective date of such initial
Registration Statement, enter into any agreement providing any such right
to any
of its security holders. Notwithstanding the foregoing, however, the Company
may
grant piggyback registration rights to third parties during the aforementioned
period provided, however, that such rights would expressly exclude the initial
Registration Statement contemplated by this Agreement. The Company shall
not
file any other registration statements until the initial Registration Statement
required hereunder is declared effective by the Commission (other than a
Registration Statement on Form S-8 relating to the Company’s stock option or
purchase plans), provided that this Section 6(b) shall not prohibit the Company
from filing amendments to registration statements already filed.
(c) 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 a Registration Statement.
(d) Discontinued
Disposition.
Each
Holder agrees by its acquisition of Registrable Securities that, upon receipt
of
a notice from the Company of the occurrence of any event of the kind described
in Section 3(d), such Holder will forthwith discontinue disposition of such
Registrable Securities under a Registration Statement until it is advised
in
writing (the “Advice”)
by the
Company that the use of the applicable Prospectus (as it may have been
supplemented or amended) may be resumed. The Company will use its commercially
reasonable best efforts to ensure that the use of the Prospectus may be resumed
as promptly as it practicable. The
Company agrees and acknowledges that any periods during which the Holder
is
required to discontinue the disposition of the Registrable Securities hereunder
shall be subject to the provisions of Section 2(b).
11
(e) Piggy-Back
Registrations.
If at
any time during the Effectiveness Period there is not an effective Registration
Statement covering all of the Registrable Securities and the Company shall
determine to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under
the
Securities Act of any of its equity securities, other than on Form S-4 or
Form
S-8 (each as promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with the stock option or other employee benefit plans, then the
Company shall send to each Holder a written notice of such determination
and, if
within fifteen days after the date of such notice, any such Holder shall
so
request in writing, the Company shall include in such registration statement
all
or any part of such Registrable Securities such Holder requests to be
registered, subject to customary underwriter cutbacks applicable to all holders
of registration rights on a pro rata basis,
provided
that if
at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement
filed
in connection with such registration, the Company shall determine for any
reason
not to register or to delay registration of such securities, the Company
may, at
its election, give written notice of such determination to such Holder and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with
such
registration (but not from its obligation to pay expenses in accordance with
Section 4 hereof), and (ii) in the case of a determination to delay registering,
shall be permitted to delay registering any Registrable Securities being
registered pursuant to this Section 6(e) for the same period as the delay
in
registering such other securities Notwithstanding the foregoing, the Company
shall not be required to register any Registrable Securities pursuant to
this
Section 6(e) that are eligible for resale pursuant to Rule 144(k) promulgated
under the Securities Act or that are the subject of a then effective
Registration Statement. Notwithstanding the foregoing, nothing herein shall
be
construed of
relieving the Company of its obligations under this Agreement.
(f) 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 50% of the then outstanding
Registrable Securities. Notwithstanding the foregoing, a waiver or consent
to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders and that does not directly or indirectly
affect the rights of other Holders may be given by Holders of all of the
Registrable Securities to which such waiver or consent relates; provided,
however,
that
the provisions of this sentence may not be amended, modified, or supplemented
except in accordance with the provisions of the immediately preceding
sentence.
12
(g) Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be delivered as set forth in the Purchase
Agreement.
(h) Successors
and Assigns.
This
Agreement shall inure to the benefit of and be binding upon the successors
and
permitted assigns of each of the parties and shall inure to the benefit of
each
Holder. The Company may not assign its rights (except by merger) or obligations
hereunder without the prior written consent of all of the Holders of the
then-outstanding Registrable Securities. Each Holder may assign their respective
rights hereunder in the manner and to the Persons as permitted under the
Purchase Agreement.
(i) No
Inconsistent Agreements.
Neither
the Company nor any of its Subsidiaries has entered, as of the date hereof,
nor
shall the Company or any of its Subsidiaries, on or after the date of this
Agreement, enter into any agreement with respect to its securities, that
would
have the effect of impairing the rights granted to the Holders in this Agreement
or otherwise conflicts with the provisions hereof. Except as set forth on
Schedule
6(i),
neither
the Company nor any of its subsidiaries has previously entered into any
agreement granting any registration rights with respect to any of its securities
to any Person that have not been satisfied in full.
(j) Execution
and Counterparts.
This
Agreement may be executed in two or more counterparts, all of which when
taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered
to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on
whose
behalf such signature is executed) with the same force and effect as if such
facsimile or “.pdf” signature page were an original thereof.
(k) Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be determined in accordance with the provisions of
the
Purchase Agreement.
(l) Cumulative
Remedies.
The
remedies provided herein are cumulative and not exclusive of any other remedies
provided by law.
(m) 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
best 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.
13
(n) Headings.
The
headings in this Agreement are for convenience only, do not constitute a
part of
this Agreement, and shall not be deemed to limit or affect any of the provisions
hereof.
(o) Independent
Nature of Holders’ Obligations and Rights.
The
obligations of each Holder hereunder are several and not joint with the
obligations of any other Holder hereunder, and no Holder shall be responsible
in
any way for the performance of the obligations of any other Holder hereunder.
Nothing contained herein or in any other agreement or document delivered
at any
closing, and no action taken by any Holder pursuant hereto or thereto, shall
be
deemed to constitute the Holders as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Holders
are in any way acting in concert with respect to such obligations or the
transactions contemplated by this Agreement. Each Holder shall be entitled
to
protect and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other Holder
to be
joined as an additional party in any proceeding for such purpose.
*************************
14
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as
of the date first written above.
LEV
Pharmaceuticals, Inc.
|
||
| |
|
|
| Date: | By: | |
|
Name: |
||
| Title: | ||
[SIGNATURE
PAGE OF HOLDERS FOLLOWS]
15
[SIGNATURE
PAGE OF HOLDERS TO LEVP RRA]
| Name of Holder: | |||
| Signature of Authorized Signatory of Holder: | |||
| Name of Authorized Signatory: | |||
| Title of Authorized Signatory: |
[SIGNATURE
PAGES CONTINUE]
16
ANNEX
A
Plan
of Distribution
Each
Selling Stockholder (the “Selling
Stockholders”)
of the
common stock and any of their pledgees, assignees and successors-in-interest
may, from time to time, sell any or all of their shares of common stock on
the
[principal Trading Market] or any other stock exchange, market or trading
facility on which the shares are traded or in private transactions. These
sales
may be at fixed or negotiated prices. A Selling Stockholder may use any one
or
more of the following methods when selling shares:
| · |
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
| · |
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
| · |
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
| · |
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
| · |
privately
negotiated transactions;
|
| · |
settlement
of short sales entered into after the effective date of the registration
statement of which this prospectus is a
part;
|
| · |
broker-dealers
may agree with the Selling Stockholders to sell a specified number
of such
shares at a stipulated price per share;
|
| · |
through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;
|
| · |
a
combination of any such methods of sale;
or
|
| · |
any
other method permitted pursuant to applicable
law.
|
The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act of 1933, as amended (the “Securities
Act”),
if
available, rather than under this prospectus.
Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers
to
participate in sales. Broker-dealers may receive commissions or discounts
from
the Selling Stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated, but,
except as set forth in a supplement to this Prospectus, in the case of an
agency
transaction not in excess of a customary brokerage commission in compliance
with
NASDR Rule 2440; and in the case of a principal transaction a markup or markdown
in compliance with NASDR IM-2440.
17
In
connection with the sale of the common stock or interests therein, the Selling
Stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the Common
Stock in the course of hedging the positions they assume. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or
more
derivative securities which require the delivery to such broker-dealer or
other
financial institution of shares offered by this prospectus, which shares
such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction). The
Company
has advised each Selling Stockholder that it may not use shares registered
on
this Registration Statement to cover short sales of Common Stock made prior
to
the date on which this Registration Statement shall have been declared effective
by the Commission.
The
Selling Stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of
the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Each Selling Stockholder has informed
the
Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock. In
no
event shall any broker-dealer receive fees, commissions and markups which,
in
the aggregate, would exceed eight percent (8%).
The
Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the shares. The Company has agreed to indemnify
the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.
Because
Selling Stockholders may be deemed to be “underwriters” within the meaning of
the Securities Act, they will be subject to the prospectus delivery requirements
of the Securities Act including Rule 172 thereunder. In addition, any securities
covered by this prospectus which qualify for sale pursuant to Rule 144 under
the
Securities Act may be sold under Rule 144 rather than under this prospectus.
There is no underwriter or coordinating broker acting in connection with
the
proposed sale of the resale shares by the Selling Stockholders.
We
agreed
to keep this prospectus effective until the earlier of (i) the date on which
the
shares may be resold by the Selling Stockholders without registration and
without regard to any volume limitations by reason of Rule 144(k) under the
Securities Act or any other rule of similar effect or (ii) all of the shares
have been sold pursuant to this prospectus or Rule 144 under the Securities
Act
or any other rule of similar effect. The resale shares will be sold only
through
registered or licensed brokers or dealers if required under applicable state
securities laws. In addition, in certain states, the resale shares may not
be
sold unless they have been registered or qualified for sale in the applicable
state or an exemption from the registration or qualification requirement
is
available and is complied with.
18
Under
applicable rules and regulations under the Exchange Act, any person engaged
in
the distribution of the resale shares may not simultaneously engage in market
making activities with respect to the common stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the
distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases
and
sales of shares of the common stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale.
19
Annex
B
LEV
Pharmaceuticals, Inc.
Selling
Securityholder Notice and Questionnaire
The
undersigned beneficial owner of common stock (the “Common
Stock”),
of
Lev Pharmaceuticals, Inc., a Delaware corporation (the “Company”),
(the
“Registrable
Securities”)
understands that the Company has filed or intends to file with the Securities
and Exchange Commission (the “Commission”)
a
registration statement on Form SB-2 (the “Registration
Statement”)
for
the registration and resale under Rule 415 of the Securities Act of 1933,
as
amended (the “Securities
Act”),
of
the Registrable Securities, in accordance with the terms of the Registration
Rights Agreement, dated as of [__________, 2006 (the “Registration
Rights Agreement”),
among
the Company and the Purchasers named therein. A copy of the Registration
Rights
Agreement is available from the Company upon request at the address set forth
below. All capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto in the Registration Rights Agreement.
Certain
legal consequences arise from being named as a selling securityholder in
the
Registration Statement and the related prospectus. Accordingly, holders and
beneficial owners of Registrable Securities are advised to consult their
own
securities law counsel regarding the consequences of being named or not being
named as a selling securityholder in the Registration Statement and the related
prospectus.
NOTICE
The
undersigned beneficial owner (the “Selling
Securityholder”)
of
Registrable Securities hereby elects to include the Registrable Securities
owned
by it and listed below in Item 3 (unless otherwise specified under such Item
3)
in the Registration Statement.
20
The
undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:
QUESTIONNAIRE
1. Name.
|
(a)
|
Full
Legal Name of Selling Securityholder
|
|
(b)
|
Full
Legal Name of Registered Holder (if not the same as (a) above)
through
which Registrable Securities Listed in Item 3 below are
held:
|
|
(c)
|
Full
Legal Name of Natural Control Person (which means a natural person
who
directly or indirectly alone or with others has power to vote or
dispose
of the securities covered by the
questionnaire):
|
2.
Address for Notices to Selling Securityholder:
| Telephone: | |
| Fax: | |
| Contact Person: | |
3.
Beneficial Ownership of Registrable Securities:
|
(a)
|
Type
and Number of Registrable Securities beneficially owned (including
the
Registrable Securities that are issuable pursuant to the Purchase
Agreement):
|
21
4.
Broker-Dealer Status:
|
(a)
|
Are
you a broker-dealer?
|
| Yes o | No o |
|
(b)
|
If
“yes” to Section 4(a), did you receive your Registrable Securities as
compensation for investment banking services to the
Company.
|
|
Yes
o
|
No
o
|
|
Note:
|
If
no, the Commission’s staff has indicated that you should be identified as
an underwriter in the Registration
Statement.
|
|
(c)
|
Are
you an affiliate of a
broker-dealer?
|
|
Yes
o
|
No
o
|
|
(d)
|
If
you are an affiliate of a broker-dealer, do you certify that you
bought
the Registrable Securities in the ordinary course of business,
and at the
time of the purchase of the Registrable Securities to be resold,
you had
no agreements or understandings, directly or indirectly, with any
person
to distribute the Registrable
Securities?
|
|
Yes
o
|
No
o
|
|
Note:
|
If
no, the Commission’s staff has indicated that you should be identified as
an underwriter in the Registration
Statement.
|
5.
Beneficial Ownership of Other Securities of the Company Owned by the Selling
Securityholder.
Except
as set forth below in this Item 5, the undersigned is not the beneficial
or
registered owner of any securities of the Company other than the Registrable
Securities listed above in Item 3.
|
(a)
|
Type
and Amount of Other Securities beneficially owned by the Selling
Securityholder (please include any warrants, options or other convertible
securities that you own which may be exercised or exchanged for
or
converted into shares of Common Stock of the Company within 60
days from
the date hereof):
|
22
6.
Relationships with the Company:
Except
as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or has had
any
other material relationship with the Company (or its predecessors or affiliates)
during the past three years.
State
any
exceptions here:
7. Legal
Proceedings with the Company:
Is
the
Company a party in any pending legal proceeding in which you are named as
an
adverse party?
|
Yes
o
|
No
o
|
State
any
exceptions here:
The
undersigned hereby acknowledges and is advised of the following Interpretation
A.65 of the July 1997 SEC Manual of Publicly Available Telephone Interpretations
regarding short selling:
“An
Issuer filed a Form S-3 registration statement for a secondary offering of
common stock which is not yet effective. One of the selling shareholders
wanted
to do a short sale of common stock “against the box” and cover the short sale
with registered shares after the effective date. The issuer was advised that
the
short sale could not be made before the registration statement become effective,
because the shares underlying the short sale are deemed to be sold at the
time
such sale is made. There would, therefore, be a violation of Section 5 if
the
shares were effectively sold prior to the effective date.”
By
returning this Questionnaire, the undersigned will be deemed to be aware
of the
foregoing interpretation.
In
the
event that the Company is required to file a new or additional registration
statement to register shares of Common Stock beneficially owned by the
undersigned, the undersigned hereby agrees to complete and return to the
Company, upon the request of the Company, a new Questionnaire (in a form
substantially similar to this Questionnaire).
In
the
event that the undersigned transfers all or any portion of the Company’s Common
Stock or Warrants after the date on which the information in this Questionnaire
is provided to the Company, the undersigned agrees to notify the transferee(s)
at the time of transfer of its rights and obligations hereunder.
23
By
signing below, the undersigned represents that the information provided herein
is accurate and complete. The undersigned agrees to promptly notify the Company
of any inaccuracies or changes in the information provided herein that may
occur
subsequent to the date hereof at any time while the Registration Statement
remains effective.
By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 6 and the inclusion of
such
information in the Registration Statement and the related prospectus and
any
amendments or supplements thereto. The undersigned understands that such
information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
prospectus.
IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Notice
and Questionnaire to be executed and delivered either in person or by its
duly
authorized agent.
| Dated: ______________________ | Beneficial Owner: __________________________________________ | |
| By: _____________________________________________________ | ||
| Name: | ||
| Title: | ||
PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
THE ORIGINAL BY OVERNIGHT MAIL, TO:
24
