EXHIBIT 10.28
VISIBLE GENETICS INC.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("REGISTRATION RIGHTS AGREEMENT")
is entered into as of December 24, 2001, by and among VISIBLE GENETICS INC., an
Ontario corporation (the "COMPANY"), and the purchasers of common shares,
without par value, of the Company (the "SHARES") who are identified as
"Investors" in that certain Common Shares Purchase Agreement of even date
herewith (the "PURCHASE AGREEMENT") and whose signatures appear on the execution
pages hereof. The purchasers of the Shares shall be referred to hereinafter
collectively as the "Investors" and each individually as an "Investor."
RECITALS
WHEREAS, the Company proposes to sell the Shares pursuant to the
Purchase Agreement;
WHEREAS, as a condition of entering into the Purchase Agreement, the
Investors have requested that the Company extend to them certain registration
rights and other rights as set forth below.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Registration Rights Agreement and in the Purchase Agreement, the parties
mutually agree as follows:
1. DEFINITIONS
As used in this Registration Rights Agreement the following terms
shall have the following respective meanings:
"CLOSING" has the meaning ascribed thereto under the Purchase
Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FORM F-3" means such form under the Securities Act as in effect on
the date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
"HOLDER" means any Investor or assignee permitted in accordance with
Section 5.3 hereof owning of record Registrable Securities that have not been
sold to the public.
"REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document.
"REGISTRABLE SECURITIES" means the Shares or any common shares of the
Company which may be issued with respect to or in substitution for such Shares
by reason of dividend, stock split, combination of shares, recapitalization,
reclassification or reorganization.
"REGISTRATION STATEMENT" means any registration statement of the
Company that covers the Shares and lists holders thereof as selling shareholders
pursuant to the provisions of this Registration Rights Agreement, including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference or deemed to be incorporated by reference therein.
"SEC" or "COMMISSION" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
2. REGISTRATION OF SHARES
2.1 REGISTRATION STATEMENT. Within 45 calendar days after the
date hereof, the Company shall prepare and file with the Commission a
Registration Statement on Form F-3 pursuant to Rule 415 under the Securities Act
covering the resale of the Registrable Securities. In addition, the Company
shall:
(a) Use its best efforts to cause such Registration
Statement to become effective as promptly as possible, and in any event within
120 calendar days after the date hereof, and to keep such Registration Statement
continuously effective until the earlier of (i) such time as all of the
Registrable Securities covered by the Registration Statement have been sold or
(ii) such time as all Registrable Securities covered by the Registration
Statement may be sold during any 90 day period without registration under the
Securities Act pursuant to the exemptions provided by Rule 144 under the
Securities Act (the "REGISTRATION PERIOD"). Notwithstanding anything herein to
the contrary, the Company may take, or refrain from taking, any action that
results in Holders not being able to sell such Registrable Securities pursuant
to applicable securities laws during the Registration Period (including, but not
limited to, refraining from amending or supplementing the Registration
Statement) and/or suspend the effectiveness of the Registration Statement if
updating or otherwise amending the Registration Statement, or taking or
refraining from taking any other action and/or maintaining the effectiveness of
the Registration Statement would require the Company to disclose any material
corporate development which disclosure may have a materially adverse affect on
the Company ("SUSPENSION RIGHT"). The Suspension Right may not extend for more
than 45 consecutive days for any single suspension event, and may not be
exercised more than once during any twelve-month period.
(b) Prepare and file with the SEC such pre-effective and
post-effective amendments and supplements to such Registration Statement and the
prospectus used in connection with such Registration Statement as may be
necessary to cause the Registration Statement to become effective, to keep the
Registration Statement continuously effective during the Registration Period and
not misleading, and as may otherwise be required or applicable
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under, and to comply with the provisions of, the Securities Act with respect to
the disposition of all securities covered by such Registration Statement during
the Registration Period.
(c) Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, and each amendment or supplement
thereto, in conformity with the requirements of the Securities Act, and such
other documents as they may reasonably request in order to facilitate the
disposition of Registrable Securities owned by them, and correct any deficiency
between the preliminary prospectus and the final prospectus, and pay any
expenses associated with the recirculation of the final prospectus following the
correction of such deficiency unless such deficiency is primarily the result of
information provided by one or more Holders or one or more underwriters or any
of their respective representatives, in which event the Holders whose shares are
included in such Registration Statement shall bear the expense of recirculation.
(d) Use its best efforts to register and qualify the
securities covered by such Registration Statement under such other securities or
Blue Sky laws of such jurisdictions as shall be necessary to permit the sale of
the Registrable Securities; provided, however, that the Company shall not be
required to register or qualify any securities in any jurisdiction in which the
Company would be required as a result of such registration or qualification to
(i) execute a general consent to service of process which it would not otherwise
be required to execute; (ii) qualify generally to do business where it would not
otherwise be required to so qualify; or (iii) subject itself to taxation where
it would not otherwise be subject to taxation.
(e) Notify promptly the Holders of Registrable Securities
to be sold (and in any event within three (3) business days after) and (if
requested by any such Person) confirm such notice in writing, (i) (A) when a
prospectus or any prospectus supplement or post-effective amendment is proposed
to be filed, and, (B) with respect to a Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of any
request by the SEC or any other federal, Canadian, state or provincial
governmental authority for amendments or supplements to a Registration Statement
or related prospectus or for additional information, (iii) of the issuance by
the SEC of any stop order suspending the effectiveness of a Registration
Statement 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 happening of any event that makes
any statement made in such Registration Statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in such
Registration Statement, prospectus or documents so that, in the case of the
Registration Statement, 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, not misleading, and that in the case
of the prospectus, 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.
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(f) Use its reasonable best efforts to avoid the issuance
of, or, if issued, obtain the withdrawal of, any order suspending the
effectiveness of a Registration Statement, or the lifting of 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.
(g) If requested by the Holders of a majority of the
Registrable Securities being sold in connection with such offering, (i) promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the Holders reasonably request should be included therein
regarding such Holders or the plan of distribution of the Registrable
Securities, and (ii) make all required filings of the prospectus supplement or
such post-effective amendment as soon as practicable after the Company has
received notification of such matters to be incorporated in such prospectus
supplement or post-effective amendment; provided, however, that the Company
shall not be required to take any action pursuant to this Section 2.1(g) that
would, in the opinion of outside counsel for the Company, violate applicable
law.
(h) Upon the occurrence of any event contemplated by
Section 2.1(e)(v), as promptly as practicable, prepare a supplement or
amendment, including a post-effective amendment, to each 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, such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(i) Use its reasonable best efforts to cause all
Registrable Securities relating to such Registration Statement to be listed on
each securities exchange or automated quotation system, if any, on which
securities of the same class issued by the Company are then listed, and if the
Registrable Securities are of a class of securities that is listed on a national
securities exchange, file copies of any prospectus with such exchange in
compliance with Rule 153 under the Securities Act so that the holders of
Registrable Securities benefit from the prospectus delivery procedures described
therein.
(j) In the event of any underwritten public offering
requested by the Holders of a majority of the Shares covered by the Registration
Statement with an underwriter reasonably acceptable to the Company:
(i) enter into and perform its obligations under an
underwriting agreement, in usual and customary form, with the managing
underwriter(s) of such offering, and furnish, at the request of Holders who own
a majority of the Shares covered by such Registration Statement, on the date
that such Registrable Securities are delivered to the underwriters for sale (A)
an opinion, dated as of 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 each
underwriter and to each Holder requesting registration of Registrable
Securities, and (B) a "comfort" letter dated as of such date, from the
independent certified public accountants of the Company, in form and
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substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to each underwriter
and to each Holder requesting registration of Registrable Securities;
(ii) if requested by the managing underwriter or
underwriters (if any), any selling Holder, or such selling Holder's counsel,
promptly incorporate into a prospectus supplement or post-effective amendment
such information as such Person reasonably requests to be included therein with
respect to the securities being sold by such selling Holder to such underwriter
or underwriters, the purchase price being paid therefor by such underwriter or
underwriters and any other terms of an underwritten offering of the securities
to be sold in such offering, and promptly make all required filings of such
prospectus supplement or post-effective amendment;
(iii) make available to one representative of the
selling Holders, the lead managing underwriter, and one attorney and accountant
for the selling Holders and the managing underwriter (collectively, the
"INSPECTORS"), such financial and other records, pertinent corporate documents
and properties of the Company (collectively, the "RECORDS") reasonably necessary
to enable them to exercise their due diligence responsibility under the
Securities Act and Exchange Act, and cause the Company's officers, directors and
employees to supply such information as may reasonably be requested by any such
Inspector in connection with such registration statement;
(iv) participate, to the extent reasonably requested
by the lead managing underwriter for the offering, in customary reasonable
efforts to sell the securities being offered, and cause such steps to be taken
as to ensure such good faith participation of senior management officers of the
Company in "road shows" as is customary; and
(v) cooperate with the lead managing underwriter
participating in the disposition of Registrable Securities and its counsel in
connection with any filings required to be made with the National Association of
Securities Dealers, Inc. ("NASD"), including, if appropriate, the pre-filing of
a prospectus as part of a shelf registration statement in advance of an
underwritten offering.
(k) As soon as practicable, the Company will make generally
available to its shareholders an earnings statement (which need not be audited)
covering the twelve-month period beginning with the first month after the
effective date of the Registration Statement that satisfies the provisions of
Section 11(a) of the Securities Act.
(l) During the period when the prospectus is required to be
delivered under the Securities Act, promptly file all documents required to be
filed with the Commission, including pursuant to Sections 13(a), 13(c), 14, or
15(d) of the Exchange Act.
(m) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case no later than the effective date of
such registration.
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2.2 SELLER INFORMATION. (a) The Company may require each selling
Holder of Registrable Securities as to which any registration is being effected
to furnish to the Company such information regarding such Holder, such Holder's
Registrable Securities and such Holder's intended method of disposition as the
Company may from time to time reasonably request; provided that such information
shall be used only in connection with such registration.
(b) (i) If the Registration Statement refers to any Holder
by name or otherwise as the Holder of any securities of the Company, then such
Holder shall promptly (i) notify the Company and its counsel of the existence of
any fact of which such Holder becomes aware and the happening of any event which
relates to Holder or the distribution of the securities owned by such Holder
which results in the Registration Statement containing an untrue statement of
material fact or omitting to state a material fact required to be stated therein
or necessary to make any statements therein not misleading, or the Prospectus
included in such Registration Statement containing an untrue statement of
material fact or omitting to state a material fact required to be stated therein
or necessary to make any statements therein, in light of the circumstances under
which they were made, not misleading, and (ii) provide to the Company such
information which relates to Holder or the distribution of the securities owned
by such Holder as shall be necessary to enable the Company to prepare a
supplement or post-effective amendment to such Registration Statement or related
Prospectus or any document incorporated therein by reference or file any other
documents required so that such Registration Statement will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and such Prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(ii) If the Registration Statement refers to any
Holder by name or otherwise as the holder of any securities of the Company, then
such Holder shall have the right to require in the event that such reference to
such Holder by name or otherwise is not required by the Securities Act or any
similar Federal or state securities or "blue sky" statute and the rules and
regulations thereunder then in force, deletion of the reference to such Holder.
2.3 NOTICE TO DISCONTINUE. Each holder of Registrable Securities
agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 2.1(e)(ii) through (v) or Section
2.2(b)(i), such Holder shall forthwith discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 2.1(h) or Section 2.2(b)(ii) and, if
so directed by the Company, such Holder shall deliver to the Company all copies,
other than permanent file copies, then in such Holder's possession of the
Prospectus covering such Registrable Securities which is current at the time of
receipt of such notice. If the Company shall give any such notice pursuant to
Section 2.1, the Company shall extend the period during which such Registration
Statement shall be maintained effective pursuant to this Registration Rights
Agreement by the number of days in excess of ten (10) business days during the
period from and including the date
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of the giving of such notice pursuant to Section 2.1(e) to and including the
date when the Holder shall have received the copies of the supplemented or
amended prospectus.
2.4 EXPENSES OF REGISTRATION. Except only as specifically
provided herein, all expenses incident to the performance of compliance with
this Registration Rights Agreement by the Company shall be borne by the Company,
regardless of whether the Registration Statement becomes effective, including,
without limitation, (i) all registration and filing fees and expenses (including
filings made with the National Association of Securities Dealers ("NASD"), if
applicable); (ii) fees and expenses (including fees and expenses of counsel) of
compliance with federal securities and state Blue Sky and other Canadian,
provincial or other securities laws; (iii) expenses of printing, messenger and
delivery services, duplication, word processing and telephone incurred by the
Company (but not by the holders of Registrable Securities); (iv) fees and
disbursements of counsel for the Company; (v) all application and filing fees in
connection with listing Common Shares on a national securities exchange or
automated quotation system pursuant to the requirements hereof; and (vi) all
fees and disbursements of independent certified public accountants of the
Company (including the expenses of any special audit and "cold comfort" letters
required by or incident to such performance). The Company will, in any event,
bear its own internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expenses of any annual audit and the fees and expenses of any person,
including special experts, retained by the Company. The Investors will bear
their own expenses not described above in connection with or arising out of the
registration of their Shares except that the Company will pay the reasonable
fees and expenses of one legal counsel for all Investors in connection with the
registration of the Shares pursuant to this Agreement; PROVIDED, THAT, the
maximum aggregate amount of all fees and expenses of counsel to the Investor
required to be paid by the Company under this Agreement (other than pursuant to
Section 2.5) and under the Purchase Agreement shall not exceed $25,000.
2.5 INDEMNIFICATION.
(a) INDEMNIFICATION BY COMPANY. To the extent permitted by
law, the Company will indemnify and hold harmless each Holder and each
underwriter, and each of their respective officers, directors, affiliates,
advisors, stockholders, members, partners, agents and employees and each person,
if any, who controls such Holder or underwriter within the meaning of the
Securities Act or the Exchange Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal, Canadian, provincial or state
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon or related to any of the
following statements, omissions or violations (collectively a "VIOLATION") by
the Company: (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or any amendments or supplements
thereto, or the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement of a material
fact contained in the Prospectus (including any preliminary, final or summary
prospectus, amendment or supplement thereto) included in such Registration
Statement or any
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omission or alleged omission to state a material fact required to be stated
therein or necessary to make any statement therein, in light of the
circumstances under which they were made, not misleading, or (iii) any violation
or alleged violation of the Securities Act, the Exchange Act, any Canadian,
provincial or state securities law or any rule or regulation promulgated under
the Securities Act, the Exchange Act or any Canadian, provincial or state
securities law in connection with the offering covered by the Registration
Statement; PROVIDED, HOWEVER, that the Company will not be liable for
indemnification in any such case to the extent that any losses, claims, damages
or liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact or omission or alleged omission of a
material fact so made in reliance upon and in conformity with written
information furnished to the Company by such Holder; and PROVIDED, FURTHER, that
with respect to any preliminary prospectus, the foregoing indemnity agreement
shall not apply or inure to the benefit of any selling Holder or underwriter
from whom the person asserting any loss, claim, damage, liability or expense
purchased Shares, or any person controlling such selling Holder or underwriter
or any of their respective officers, directors, affiliates, advisors,
stockholders, members, partners, agents or employees, if copies of the
prospectus were timely delivered to the Holder selling the Shares or the
underwriter and a copy of the prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not sent
or given by or on behalf of such Holder selling the Shares or the underwriter to
such person, if required by law so to have been delivered, and if the prospectus
(as so amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage, liability or expense. Subject to Section 2.5(c), the
Company will pay to each such Holder, officer, director, affiliate, advisor,
underwriter or controlling person any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred.
(b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. To
the extent permitted by law, each Holder will, if Registrable Securities held by
such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify and hold harmless the
Company, the officers, directors, affiliates, advisors and underwriters of the
Company and each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act against any losses, claims, damages or
liabilities (joint or several) to which the Company or any such officer,
director, affiliate, advisor, underwriter or controlling person may become
subject under the Securities Act, the Exchange Act or other federal, Canadian,
provincial or state law, insofar as such losses, claims, damages or liabilities
(or actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs as a
result of reliance by the Company upon and in conformity with written
information furnished by such Holder under an instrument duly executed by such
Holder and stated to be specifically for use in connection with such
registration. Subject to Section 2.5(c), each such Holder will pay to the
Company, or any such officer, director, affiliate, advisor, underwriter or
controlling person any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action if it is judicially determined that there was such a
Violation; PROVIDED, HOWEVER, that in no event shall any indemnity under this
Section 2.5(b) exceed the dollar amount of net proceeds from the offering
received by such Holder.
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(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after
receipt by an indemnified party under this Section 2.5 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 2.5, 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 the defense
thereof with counsel mutually satisfactory to the parties; PROVIDED, HOWEVER,
that 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, (i) in the
reasonable judgment of any such indemnified party, based upon advice of counsel,
a conflict of interest exists between such indemnified party and the
indemnifying party with respect to such claims or (ii) the indemnifying party
has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action or has
failed to employ counsel reasonably satisfactory to such indemnified party (in
which case, if the 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 of
such claim on behalf of such indemnified party; provided, however, that the
indemnified party shall be entitled to elect only one counsel in the United
States (and, if necessary, one counsel in Canada) at the expense of the
indemnifying party and such counsel shall be reasonably acceptable to the
indemnifying party). All such fees, disbursements and other charges shall be
reimbursed by the indemnifying party promptly as they are incurred. The failure
to deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action, if it is finally determined in a court of
competent jurisdiction (which determination is not subject to appeal) that such
failure is materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 2.5, 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 2.5. No indemnifying party
shall be liable for any settlement of any claim or action effected by an
indemnified party without its written consent, which consent shall not be
unreasonably withheld.
(d) CONTRIBUTION. (i) If the indemnification provided for
in this Section 2.5 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any losses, claims, damages
or liabilities referred to herein, the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall to the extent permitted by
applicable law contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
Violation(s) that resulted in such loss, claim, damage or liability, as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by a court
of law by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
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(ii) The Company and the Holders agree that it would
not be just and equitable if contribution pursuant to this Section were
determined by a method of allocation that does not take account the equitable
considerations referred to in the immediately preceding paragraph, provided that
a Holder of Registrable Securities shall not be required to contribute under
this Section 2.5 in excess of the lesser of (A) that proportion of the total
liability indemnified against equal to the proportion of the total Registrable
Securities sold under such registration statement by such Holder and (B) the net
proceeds received by such Holder from its sale of Registrable Securities under
such Registration Statement. No person found guilty of fraudulent representation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person not found guilty of such fraudulent
misrepresentation
(e) SURVIVAL; SETTLEMENT. The obligations of the Company
and Holders under this Section 2.5 shall survive completion of any offering of
Registrable Securities in a registration statement, the termination of this
Registration Rights Agreement and any sale by the Holders of Registrable
Securities. No indemnifying party, in the defense of any such claim or
litigation, shall, except with the written consent of each indemnified party in
such claim or litigation, consent to entry of any judgment or enter into any
settlement which consent shall not be unreasonably withheld, unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising or that may arise out of such
claim, action or proceeding, (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of any
indemnified party and (iii) does not commit the indemnified party to take, or to
forbear to take, any action.
2.6 TERMINATION OF REGISTRATION RIGHTS. Notwithstanding anything
herein to the contrary, a Holder shall not be entitled to any registration
rights, rights to liquidated damages or other rights hereunder (a) if all of the
Registrable Securities covered by the Registration Statement have been sold or
(b) if all Registrable Securities covered by the Registration Statement may be
sold during any 90 day period without registration under the Securities Act
pursuant to the exemptions provided by Rule 144 under the Securities Act
("TERMINATION EVENT"); PROVIDED, HOWEVER, that any right to liquidated damages,
indemnification or any other right that had accrued to the benefit of such
Holder prior to the Termination Event but had not been satisfied as of the
Termination Event, shall remain in effect after the Termination Event until
satisfied.
3. INTENTIONALLY LEFT BLANK
4. LIQUIDATED DAMAGES
(a) (i) The Company acknowledges and agrees that the
Holders of Registrable Securities will suffer damages, and that it would not be
feasible to ascertain the extent of such damages with precision, if the Company
fails to fulfill certain of its obligations hereunder. Accordingly, if the
Registration Statement has not been declared effective by the Commission within
120 days after the Closing, the Company agrees to pay liquidated damages (for
loss of benefit of a bargain and not as a penalty) to each Holder of Registrable
Securities in an amount equal to .5% of the dollar amount of such Holder's
investment in the Registrable Securities for each month until the Registration
Statement is
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declared effective, or until 180 days after the Closing, whichever occurs first.
Commencing on the 181st day of the Closing, if the Registration Default
persists, the foregoing required percentage payment by the Company for each
month shall increase to .75% until the Registration Statement is declared
effective. To the extent applicable, payment of accrued liquidated damages shall
be payable monthly in advance with the first payment being due on the 121st day
following Closing and additional payments, if any, being due every 30 days
thereafter until the Registration Statement is declared effective.
(ii) If the Registration Statement is declared
effective but shall thereafter cease to be effective without being succeeded
within 30 days (or within 45 days in the event that the Company exercises its
Suspension Right) by any additional Registration Statement filed and declared
effective, the Company agrees to pay liquidated damages (for loss of benefit of
a bargain and not as a penalty) to each Holder of Registrable Securities for
each month that the Registration Statement is not effective in an amount equal
to .5% of the dollar amount of such Holder's investment in Registrable
Securities then held by such Holder. To the extent applicable, payment of
accrued liquidated damages shall be payable monthly in advance with the first
payment being due on the 31st day (or 46th day in the event the Company
exercises its Suspension Right) after such Registration Statement ceases to be
effective without being succeeded by a successor Registration Statement, and
additional payments, if any, being due every 30 days thereafter until a
successor Registration Statement is filed and declared effective.
(b) All accrued liquidated damages shall be paid to Holders
by the Company by wire transfer of immediately available funds or by federal
funds check by the Company. Following the cure of a registration default
described in Section 4(a)(i) or (ii), the accrual of liquidated damages will
cease to accrue with respect to such default.
(c) All of the obligations of the Company set forth in this
Section 4 that are outstanding with respect to any Registrable Security at the
time such security ceases to be a Registrable Security shall survive until such
time as all such obligations with respect to such security shall have been
satisfied in full.
(d) So long as the Company is using best efforts to file
and have the Registration Statement (or if applicable, a successor Registration
Statement) declared effective, the remedies set forth in this Section 4 shall be
the sole and exclusive remedies available to any Holder for failure of the
Company to comply with its obligation to file the Registration Statement, have
the Registration Statement declared effective or maintain the effectiveness of
the Registration Statement under this Agreement. However, if the Company is not
using such best efforts, the Holders shall have the right to pursue all
available remedies at law or in equity for a breach of such Company obligations.
5. MISCELLANEOUS
5.1 GOVERNING LAW; EXCLUSIVE JURISDICTION. This Registration
Rights Agreement shall be governed by and construed in accordance with the laws
of the State of New York as applied to contracts entered into and performed
entirely in New York by New York
11
residents, without regard to conflicts of law principles. The parties hereto (a)
agree that any suit, action or other proceeding arising out of this Agreement
shall be brought only in the courts of the State of New York or the courts of
the United States located within the State of New York, in each case in the
County of New York, (b) consent and submit to the exclusive jurisdiction of each
such court in any such suit, action or proceeding and (c) waive any objection
which they, or any of them, may have to personal jurisdiction or the laying of
venue of any such suit, action or proceeding in any of such courts, and agree
not to seek to change venue.
5.2 SURVIVAL. The representations, warranties, covenants, and
agreements made herein shall survive any investigation made by any Holder and
the closing of the transactions contemplated hereby.
5.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors, and administrators of
the parties hereto and shall inure to the benefit of and be enforceable by each
Permitted Assignee of Registrable Securities from time to time. A "PERMITTED
ASSIGNEE" shall mean with respect to any Investor, any other person directly or
indirectly controlling or controlled by or under direct or indirect, common
control with such Investor.
5.4 ENTIRE AGREEMENT. This Registration Rights Agreement,
including any exhibits hereto, the Purchase Agreement and the other documents
delivered pursuant thereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and no party
shall be liable or bound to any other in any manner by any representations,
warranties, covenants and agreements except as specifically set forth herein and
therein.
5.5 SEVERABILITY. In case any provision of the Agreement shall
be invalid, illegal, or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
5.6 AMENDMENT AND WAIVER. The provisions of this Registration
Rights 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 the then outstanding Registrable
Securities; PROVIDED, HOWEVER, that Sections 2.1 and 2.5 shall not be amended,
modified or supplemented, and waivers or consents to departures from this
proviso may not be given, unless the Company has obtained the written consent of
each Holder of the then outstanding Registrable Securities.
5.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission
to exercise any right, power or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Registration Rights Agreement
shall impair any such right, power or remedy, nor shall it be construed to be a
waiver of any such breach, default or noncompliance, or any acquiescence
therein, or of any similar breach, default or noncompliance thereafter
occurring. It is further agreed that any waiver, permit, consent or approval of
any kind
12
or character of any breach, default or noncompliance under the Agreement or any
waiver of any provisions or conditions of this Registration Rights Agreement
must be in writing and shall be effective only to the extent specifically set
forth in such writing by the waiving party.
5.8 NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed effectively
given: (a) upon personal delivery to the party to be notified, (b) when sent by
confirmed facsimile if sent during normal business hours of the recipient; if
not, then on the next business day, (c) upon receipt or refusal of receipt when
sent by first-class registered or certified mail, return receipt requested,
postage prepaid, or (d) upon receipt or refusal of receipt after deposit with a
nationally recognized overnight express courier, postage prepaid, specifying
next day delivery with written verification of receipt. All communications shall
be sent to the party to be notified at the address as set forth below or at such
other address as such party may designate by ten (10) days advance written
notice to the other party. All communications shall be addressed as follows:
(a) if to the Company, to:
VISIBLE GENETICS INC.
000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
with a copy so mailed to:
XXXX MARKS & XXXXX LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxxxx
(b) if to the Investors, at the address as set forth on the
Counterpart Execution Page of this Registration Rights Agreement, with a copy to
Xxxxxxx Procter LLP, Exchange Place, 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000 Ph
000-000-0000, fax 000-000-0000 Attn: Xxxxx X. Xxxxxx Xxxxxx, P.C.
5.9 SECURITIES HELD BY THE COMPANY OR ITS AFFILIATES. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its affiliates (as such term is defined in Rule 405 under the Securities Act)
(other than the Holders or subsequent Holders of Registrable Securities if such
Holders or subsequent Holders are deemed to be such affiliates solely by reason
of their holdings of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
13
5.10 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Registration Rights Agreement are for convenience of
reference only and are not to be considered in construing this Registration
Rights Agreement.
5.11 COUNTERPARTS. This Registration Rights Agreement may be
executed in any number of counterparts, each of which shall be an original, but
all of which together shall constitute one instrument.
If this Registration Rights Agreement is satisfactory to you, please
so indicate by signing a counterpart execution page to this Registration Rights
Agreement and a Registration Statement Questionnaire and return such counterpart
and questionnaire to the Company whereupon subject to the Company's acceptance
of your subscription, this Registration Rights Agreement will become binding
between us in accordance with its terms.
VISIBLE GENETICS INC.
By:
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
By:
------------------------------------
Name: Xxxxxxxxxx Xxxxxx
Title: General Counsel
14
REGISTRATION RIGHTS AGREEMENT
COUNTERPART EXECUTION PAGE
By signing below, the undersigned agrees to the terms of the Visible
Genetics Inc. Registration Rights Agreement.
INVESTOR:
By:
------------------------------------
Name:
Title:
Address:
----------------------------
----------------------------
----------------------------
Facsimile:
-----------------------------
Appendix I
VISIBLE GENETICS INC.
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement,
please provide us with the following information:
(i) Please state your or your organization's name
exactly as it should appear in the Registration Statement: _____________________
_______________________________
(ii) Please provide the following information, as of
December __, 2001:
a) Number of Shares that you are purchasing:
b) Number of Shares that you seek to include in the
Registration Statement:
c) Number of Common Shares that you already beneficially own:
d) Number of any other securities of the Company that you
already beneficially own (please specify the class or type):
e) Total Number of Securities that you already beneficially
own:
(iii) Please indicate the name of any person or entity
who has voting or other dispositive power over the shares of Visible Genetics
Inc. which you beneficially own. Please indicate for each such person whether
the power is held solely by that person or is shared with other persons and, if
shared, name all such other persons.
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(iv) If voting or dispositive power is held by an
entity, please indicate the identity of the persons who have ultimate voting
and/or dispositive power over such entity as it relates to the shares of Visible
Genetics Inc., and whether such voting or dispositive power is shared with other
persons, and if shared, name all such other persons.
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(v) Have you or your organization had any position,
office or other material relationship within the past three years with the
Company or its affiliates other than as disclosed in the Company's 2000 Annual
Report on Form 20-F? Yes_____ No_____
If yes, please indicate the nature of any such relationships:_________
(vi) Please describe your Plan of Distribution for the
shares you wish to sell:
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INVESTOR:
By:
------------------------------------
Print Name:
Title:
The foregoing constitutes the only information furnished to the
Company for inclusion in the Registration Statement for purposes of Section
2.5(b) of the Registration Rights Agreement.
