REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of August
19, 2005, is by and between VYTERIS HOLDINGS (NEVADA), INC., a Nevada
corporation (the "Company"), and each of the entities whose names appear on the
signature pages hereof. Such entities are each referred to herein as an
"Investor" and, collectively, as the "Investors".
The Company has agreed, on the terms and subject to the conditions set
forth in the Securities Purchase Agreement, dated as of August 19, 2005 (the
"Securities Purchase Agreement"), to issue and sell to each Investor named
therein (A) one or more Senior Secured Convertible Debentures in the form
attached to the Securities Purchase Agreement (each, a "Debenture" and,
collectively, the "Debentures") and (B) one or more Warrants in the respective
forms attached to the Securities Purchase Agreement (each, a "Warrant" and,
collectively, the "Warrants").
The Debentures are convertible into shares (the "Conversion Shares") of the
Company's common stock, par value $0.001 per share (the "Common Stock"). The
Warrants are exercisable into shares of Common Stock (the "Warrant Shares") in
accordance with their terms.
In order to induce each Investor to enter into the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended (the "Securities Act"), and under
applicable state securities laws.
In consideration of each Investor entering into the Securities Purchase
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the meanings
specified:
"Additional Registrable Shares" means the 700,000 shares of Common
Stock issuable by the Company due to certain registration defaults in
connection with the registration of securities pursuant to the Company's
Form SB-2 Registration Statement No. 333-120411.
"Amortization Stock Option Share" has the meaning specified in the
Debentures.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which the Commission is closed or on which banks in the City of New York
are authorized by law to be closed.
"Commission" means the Securities and Exchange Commission.
"Holder" means any person owning or having the right to acquire,
through conversion of the Debentures or exercise of the Warrants or
otherwise, Registrable Securities, including initially each Investor and
thereafter any permitted assignee thereof.
"Initial Debenture" means a Debenture issued at the Initial Closing.
"Initial Effective Date" means the date on which the Initial
Registration Statement is declared effective by the Commission.
"Initial Filing Deadline" means the sixtieth (60th) calendar day
following the Initial Closing Date.
"Initial Registration Deadline" means the earlier of (i) the one
hundred and twentieth (120th) calendar day following the Closing Date and
(ii) the fifth (5th) Business Day after the Company learns that no review
of the Registration Statement will be made by the staff of the Commission
or that the staff of the Commission has no further comments on the
Registration Statement.
"Initial Registration Statement" means the Registration Statement
filed by the Company pursuant to paragraph 2(a) hereof.
"Initial Warrant" means a Warrant issued at the Initial Closing.
"Interest Stock Option Share" has the meaning specified in the
Debentures.
"Option Debenture" means a Debenture issued at the Option Closing.
"Option Effective Date" means the date on which the Option
Registration Statement is declared effective by the Commission.
"Option Filing Deadline" means the thirtieth (30th) calendar day
following the Option Closing Date.
"Option Registration Deadline" means the earlier of (i) the ninetieth
(90th) calendar day following the Option Closing Date or, if the
Registration Statement is subject to a full review by the Commission, the
one hundred and twentieth (120th) calendar day following the Option Closing
Date and (ii) the fifth (5th) Business Day after the Company learns that no
review of the Registration Statement will be made by the staff of the
Commission or that the staff of the Commission has no further comments on
the Registration Statement.
"Option Registration Statement" means the Registration Statement filed
by the Company pursuant to paragraph 2(b) hereof.
"Option Warrant" means the Warrant issued at the Option Closing.
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"Registrable Securities" means the Conversion Shares, the Warrant
Shares, the Amortization Stock Option Shares and the Interest Stock Option
Shares, and any other shares of Common Stock issuable pursuant to the terms
of the Debenture or the Warrants, and any shares of capital stock issued or
issuable from time to time (with any adjustments) in replacement of, in
exchange for or otherwise in respect of the Conversion Shares, the Warrant
Shares, the Amortization Stock Option Shares and the Interest Stock Option
Shares.
"Registration Period" has the meaning set forth in paragraph 2(c)
below.
"Registration Statement" means a registration statement or statements
prepared in compliance with the Securities Act and pursuant to Rule 415
under the Securities Act ("Rule 415") or any successor rule providing for
the offering of securities on a continuous or delayed basis.
Capitalized terms used herein and not otherwise defined shall have the
respective meanings specified in the Securities Purchase Agreement.
2. REGISTRATION.
(a) Filing of Initial Registration Statement. On or before the Initial
Filing Deadline, the Company shall prepare and file with the Commission a
Registration Statement on Form SB-2 as a "shelf" registration statement under
Rule 415 covering the resale of a number of shares of Registrable Securities
equal to two hundred percent (200%) of the number of shares of Common Stock
issuable upon conversion of the Initial Debentures and exercise of the Initial
Warrants (such number to be determined without regard to any restriction on such
conversion or exercise). Such Registration Statement shall state, to the extent
permitted by Rule 416 under the Securities Act, that it also covers such
indeterminate number of additional shares of Common Stock as may become issuable
upon the conversion of the Initial Debentures and exercise of the Initial
Warrants in order to prevent dilution resulting from stock splits, stock
dividends or similar events.
(b) Filing of Option Registration Statement. On or before the Option
Filing Deadline, the Company shall prepare and file with the Commission a
Registration Statement on Form SB-2 as a "shelf" registration statement under
Rule 415 covering the resale of a number of shares of Registrable Securities
equal to the sum of (i) two hundred percent (200%) of the number of shares of
Common Stock issuable upon conversion of the Option Debentures and exercise of
the Option Warrants (such number to be determined without regard to any
restriction on such conversion or exercise) and (ii) the Additional Registrable
Securities. Such Registration Statement shall state, to the extent permitted by
Rule 416 under the Securities Act, that it also covers such indeterminate number
of additional shares of Common Stock as may become issuable upon the conversion
of the Option Debentures and exercise of the Option Warrants in order to prevent
dilution resulting from stock splits, stock dividends or similar events.
(c) S-3 Registration Statement. Notwithstanding the foregoing
paragraphs 2(a) and 2(b), if at the relevant filing deadline the Company does
not meet the eligibility requirements for filing a Registration Statement on
Form SB-2, then in each such case the Company shall instead
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prepare and file with the Commission a Registration Statement meeting the
foregoing requirements on Form S-1. In the event that the Company files a
Registration Statement on Form S-1 or Form SB-2, and thereafter meets the
eligibility requirements to use Form S-3 for the resale of Registrable
Securities by the Investor, the Company shall re-file such Registration
Statement, or file a new Registration Statement covering at least the number of
shares then registered on the existing Registration Statement(s) (and not
previously sold pursuant to an existing Registration Statement or pursuant to
Rule 144 under the Securities Act ("Rule 144")), on Form S-3 as promptly as
practicable (but in no event later than thirty (30) days) after the Company
meets such requirements.
(d) Effectiveness. The Company shall use reasonable best efforts to
cause the Registration Statement to become effective as soon as practicable
following the filing thereof, but in no event later than the Initial
Registration Deadline (in the case of the Initial Registration Statement) or the
Option Registration Deadline (in the case of the Option Registration Statement).
The Company shall respond promptly to any and all comments made by the staff of
the Commission on with respect to a Registration Statement, and shall submit to
the Commission, within two (2) Business Days after the Company learns that no
review of such Registration Statement will be made by the staff of the
Commission or that the staff of the Commission has no further comments on such
Registration Statement, as the case may be, a request for acceleration of the
effectiveness of such Registration Statement to a time and date not later than
two (2) Business Days after the submission of such request. The Company will
maintain the effectiveness of each Registration Statement filed pursuant to this
Agreement until the earliest to occur of (i) the date on which all of the
Registrable Securities eligible for resale thereunder have been publicly sold
pursuant to either the Registration Statement or Rule 144, (ii) the date on
which all of the Registrable Securities remaining to be sold under such
Registration Statement (in the reasonable opinion of counsel to the Company) may
be immediately sold to the public under Rule 144(k) under the Securities Act
("Rule 144(k)") or any successor provision and (iii) the date that is the second
(2nd) anniversary of the Effective Date (the period beginning on the Closing
Date and ending on the earliest to occur of (i), (ii) or (iii) above being
referred to herein as the "Registration Period").
(e) Registration Default. If (i) the Initial Registration Statement is
not filed on or before the Initial Filing Deadline or declared effective by the
Commission on or before the Initial Registration Deadline, (ii) the Option
Registration Statement is not filed on or before the Option Filing Deadline or
declared effective by the Commission on or before the Option Registration
Deadline, (iii) after a Registration Statement has been declared effective by
the Commission, sales of Registrable Securities (other than such Registrable
Securities as are then freely saleable pursuant to Rule 144(k)) cannot be made
by a Holder under a Registration Statement for any reason not within the
exclusive control of such Holder, or (iv) an amendment or supplement to a
Registration Statement, or a new registration statement, required to be filed
pursuant to the terms of paragraph 3(j) or 3(k) below, is not filed on or before
the date required by such paragraph (each of the foregoing clauses (i), (ii),
(iii) and (iv) being referred to herein as a "Registration Default"), the
Company shall make cash payments to each Holder equal to such Holder's pro rata
share (based on the aggregate number of Registrable Securities then held by or
issuable to such Holder as of the occurrence of a Registration Deadline) equal
to one percent (1%) of the aggregate Purchase Price paid by such Holder for such
Holder's Debenture and Warrants for each thirty (30) day period (pro rated for
partial periods) in which a Registration Default exists. Notwithstanding any
provision of this Agreement to the contrary, the Company shall be permitted to
suspend for one or more periods
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(provided that (i) the aggregate length of any one suspension period shall not
exceed ten (10) consecutive Business Days, (ii) the length of all suspension
periods in any 365 day period shall not exceed twenty (20) Business Days in the
aggregate, and (iii) there is not more than one suspension period in any thirty
calendar day period; provided further, however, that, until the Company meets
the eligibility requirements to use Form S-3, the first 30 calendar days (or the
first 45 calendar days if the Company is using its best efforts to cause the
effectiveness of the applicable post-effective amendment) of a suspension due to
a full review by the Commission of a post-effective amendment of a Registration
Statement shall not count towards the 10 and 20 Business Day limitations set
forth in the preceding clauses (i) and (ii), respectively) the actions required
under paragraph 2(a) of this Agreement to the extent that the Board of Directors
of the Company concludes reasonably and in good faith that the disclosure of
information in the prospectus is not in the best interest of the Company. Each
such payment required to be made under this paragraph 2(e) shall be made within
five (5) Business Days following the last day of each calendar month in which a
Registration Default exists. Any such payment shall be in addition to any other
remedies available to each Holder at law or in equity, whether pursuant to the
terms hereof, the Securities Purchase Agreement, the Debentures, or otherwise.
(f) Allocation of Conversion Shares and Warrant Shares. The initial
number of Conversion Shares and Warrant Shares included in any Registration
Statement and each increase in the number thereof included therein shall be
allocated pro rata among the Holders based on the aggregate number of
Registrable Securities issuable to each Holder at the time the Registration
Statement covering such initial number of Registrable Securities or increase
thereof is declared effective by the Commission (such number to be determined
using the Conversion Price or Exercise Price, as applicable, in effect at such
time and without regard to any restriction on the ability of a Holder to convert
such Holder's Debenture or exercise such Holder's Warrant as of such date). In
the event that a Holder sells or otherwise transfers any of such Holder's
Registrable Securities, each transferee shall be allocated the portion of the
then remaining number of Registrable Securities included in such Registration
Statement allocable to the transferor.
(g) Registration of Other Securities. During the period beginning on
the date hereof and ending on the Effective Date, the Company shall refrain from
filing any registration statement (other than (i) a Registration Statement filed
hereunder, (ii) a registration statement on Form S-8 with respect to stock
option plans and agreements and stock plans currently in effect and disclosed in
the Securities Purchase Agreement or the schedules thereto, or (iii) a
registration statement on Form S-4 with respect to an acquisition or other
business combination involving the Company. In no event shall the Company
include any securities other than Registrable Securities and those securities
listed on Schedule 2(g) hereto on any Registration Statement filed by the
Company on behalf of the Holders pursuant to the terms hereof.
3. OBLIGATIONS OF THE COMPANY.
In addition to performing its obligations hereunder, including without
limitation those pursuant to Section 2 above, the Company shall, with respect to
each Registration Statement:
(a) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in connection
with such Registration Statement as may be necessary to comply with the
provisions of the Securities Act or to maintain the
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effectiveness of such Registration Statement during the Registration Period, or
as may be reasonably requested by a Holder in order to incorporate information
concerning such Holder or such Holder's intended method of distribution;
(b) at such time following the Closing that the Company is eligible to
do so, use commercially reasonable efforts to secure the listing on the
Principal Market of all Registrable Securities issuable upon conversion of the
Debentures and exercise of the Warrants, and at any Holder's request, provide
such Holder with reasonable evidence thereof;
(c) so long as a Registration Statement is effective covering the
resale of the applicable Registrable Securities owned by a Holder, furnish to
each Holder such number of copies of the prospectus included in such
Registration Statement, including a preliminary prospectus, in conformity with
the requirements of the Securities Act, and such other documents as such Holder
may reasonably request in order to facilitate the disposition of such Holder's
Registrable Securities;
(d) use commercially reasonable efforts to register or qualify the
Registrable Securities under the securities or "blue sky" laws of such
jurisdictions within the United States as shall be reasonably requested from
time to time by a Holder, and do any and all other acts or things which may
reasonably be necessary or advisable to enable such Holder to consummate the
public sale or other disposition of the Registrable Securities in such
jurisdictions; provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such jurisdiction;
(e) notify each Holder immediately after becoming aware of the
occurrence of any event (but shall not, without the prior written consent of
such Holder, disclose to such Holder any facts or circumstances constituting
material non-public information) as a result of which the prospectus included in
such Registration Statement, as then in effect, contains an untrue statement of
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and as promptly as practicable prepare and
file with the Commission and furnish to each Holder a reasonable number of
copies of a supplement or an amendment to such prospectus as may be necessary so
that such prospectus does not contain an untrue statement of material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then
existing;
(f) use commercially reasonable efforts to prevent the issuance of any
stop order or other order suspending the effectiveness of such Registration
Statement and, if such an order is issued, to use commercially reasonable
efforts obtain the withdrawal thereof at the earliest possible time and to
notify each Holder in writing of the issuance of such order and the resolution
thereof;
(g) furnish to each Holder, on the date that such Registration
Statement, or any successor registration statement, becomes effective, a letter,
dated such date, signed by an officer of or counsel to the Company and addressed
to such Holder, confirming such effectiveness and, to the knowledge of such
counsel, the absence of any stop order;
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(h) provide to each Holder and its representatives the reasonable
opportunity to conduct a reasonable inquiry of the Company's financial and other
records during normal business hours and make available during normal business
hours and with reasonable advance notice its officers, directors and employees
for questions regarding information which such Holder may reasonably request in
order to fulfill any due diligence obligation on its part;
(i) permit counsel for each Holder to review such Registration
Statement and all amendments and supplements thereto, and any comments made by
the staff of the Commission concerning such Holder and/or the transactions
contemplated by the Transaction Documents and the Company's responses thereto,
within a reasonable period of time prior to the filing thereof with the
Commission (or, in the case of comments made by the staff of the Commission,
within a reasonable period of time following the receipt thereof by the
Company); and
(j) in the event that, at any time, the number of shares available
under the Initial Registration Statement is insufficient to cover one hundred
and fifty percent (150%) of the Registrable Securities issuable under the
Initial Debentures and Initial Warrants (such number to be determined using the
Conversion Price or Exercise Price, as applicable, in effect at such time and
without regard to any restriction on the ability of any Holder to convert such
Holder's Initial Debenture or exercise such Holder's Initial Warrant) the
Company shall promptly amend such Registration Statement or file a new
registration statement, in any event as soon as practicable, but not later than
the tenth (10th) day following notice from a Holder of the occurrence of such
event, so that such Registration Statement or such new registration statement,
or both, covers no less than two hundred percent (200%) of the Registrable
Securities eligible for resale thereunder and issuable under the Initial
Debentures and Initial Warrants (such number to be determined using the
Conversion Price or Exercise Price, as applicable, in effect at the time of such
amendment or filing and without regard to any restriction on the ability of any
Holder to convert such Holder's Initial Debenture or exercise such Holder's
Initial Warrant). The Company shall use its best efforts to cause such amendment
and/or new Registration Statement to become effective as soon as practicable
following the filing thereof. Any Registration Statement filed pursuant to this
paragraph 3(j) shall state that, to the extent permitted by Rule 416 under the
Securities Act, such Registration Statement also covers such indeterminate
number of additional shares of Common Stock as may become issuable upon
conversion of the Initial Debenture and exercise of the Initial Warrants in
order to prevent dilution resulting from stock splits, stock dividends or
similar events. Unless and until such amendment or new Registration Statement
becomes effective, each Holder shall have the rights described in paragraph 2(e)
above; and
(k) in the event that, at any time, the number of shares available
under the Option Registration Statement is insufficient to cover one hundred and
fifty percent (150%) of the Registrable Securities issuable under the Option
Debentures and Option Warrants (such number to be determined without regard to
any restriction on the ability of any Holder to convert such Holder's Option
Debenture or exercise such Holder's Option Warrant) the Company shall promptly
amend such Registration Statement or file a new registration statement, in any
event as soon as practicable, but not later than the tenth (10th) day following
notice from a Holder of the occurrence of such event, so that such Registration
Statement or such new registration statement, or both, covers no less than two
hundred percent (200%) of the Registrable Securities eligible for resale
thereunder and issuable under the Option Debentures and Option Warrants (such
number to be determined without
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regard to any restriction on such conversion or exercise). The Company shall use
its best efforts to cause such amendment and/or new Registration Statement to
become effective as soon as practicable following the filing thereof. Any
Registration Statement filed pursuant to this paragraph 3(k) shall state that,
to the extent permitted by Rule 416 under the Securities Act, such Registration
Statement also covers such indeterminate number of additional shares of Common
Stock as may become issuable upon conversion of the Option Debentures and
exercise of the Option Warrants in order to prevent dilution resulting from
stock splits, stock dividends or similar events. Unless and until such amendment
or new Registration Statement becomes effective, each Holder shall have the
rights described in paragraph 2(e) above.
4. OBLIGATIONS OF EACH HOLDER.
In connection with the registration of Registrable Securities pursuant to a
Registration Statement, each Holder shall:
(a) timely furnish to the Company (i) a completed Shareholder
Questionnaire and (ii) such information in writing regarding itself and the
intended method of disposition of such Registrable Securities as the Company
shall reasonably request in order to effect the registration thereof;
(b) upon receipt of any notice from the Company of the happening of
any event of the kind described in paragraphs 3(e) or 3(f), immediately
discontinue any sale or other disposition of such Registrable Securities
pursuant to such Registration Statement until the filing of an amendment or
supplement as described in paragraph 3(e) or withdrawal of the stop order
referred to in paragraph 3(f), and use commercially reasonable efforts to
maintain the confidentiality of such notice and its contents;
(c) to the extent required by applicable law, deliver a prospectus to
the purchaser of such Registrable Securities;
(d) notify the Company when it has sold all of the Registrable
Securities held by it; and
(e) notify the Company in the event that any information supplied by
such Holder in writing for inclusion in such Registration Statement or related
prospectus is untrue or omits to state a material fact required to be stated
therein or necessary to make such information not misleading in light of the
circumstances then existing; immediately discontinue any sale or other
disposition of such Registrable Securities pursuant to such Registration
Statement until the filing of an amendment or supplement to such prospectus as
may be necessary so that such prospectus does not contain an untrue statement of
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing; and use commercially reasonable efforts to assist
the Company as may be appropriate to make such amendment or supplement effective
for such purpose.
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5. INDEMNIFICATION.
In the event that any Registrable Securities are included in a Registration
Statement under this Agreement:
(a) To the extent permitted by law, the Company shall indemnify and
hold harmless each Holder, the officers, directors, employees, agents and
representatives of such Holder, and each person, if any, who controls such
Holder within the meaning of the Securities Act or the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), against any losses, claims, damages,
liabilities or reasonable out-of-pocket expenses (whether joint or several)
(collectively, including reasonable legal expenses or other expenses reasonably
incurred in connection with investigating or defending same, "Losses"), insofar
as any such Losses arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in such Registration
Statement under which such Registrable Securities were registered, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, or (ii) the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Subject to the provisions of paragraph 5(c) below, the Company
will reimburse such Holder, and each such officer, director, employee, agent,
representative or controlling person, for any reasonable legal expenses or other
out-of-pocket expenses as reasonably incurred by any such entity or person in
connection with investigating or defending any Loss; provided, however, that the
foregoing indemnity shall not apply to amounts paid in settlement of any Loss if
such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be obligated to
indemnify any person for any Loss to the extent that such Loss arises out of or
is based upon (i) any disclosure or any omission or alleged omission (to state a
material fact required to be stated therein or necessary to make statements
therein not misleading) that is based upon or in conformity with written
information furnished (or not furnished, in the case of an omission) by such
person expressly for use in such Registration Statement or (ii) a failure of
such person to deliver or cause to be delivered the final prospectus contained
in the Registration Statement and made available by the Company, if such
delivery is required by applicable law.
(b) To the extent permitted by law, each Holder who is named in such
Registration Statement as a selling shareholder, acting severally and not
jointly, shall indemnify and hold harmless the Company, the officers, directors,
employees, agents and representatives 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 to the extent (and only to the extent) that any
such Losses arise out of or are based upon (i) any disclosure or any omission or
alleged omission (to state a material fact required to be stated therein or
necessary to make statements therein not misleading) that is based upon or in
conformity with written information furnished (or not furnished, in the case of
an omission) by such person expressly for use in such Registration Statement, or
(ii) a failure of such Holder to deliver or cause to be delivered the final
prospectus contained in the Registration Statement and made available by the
Company, if such delivery is required under applicable law . Subject to the
provisions of paragraph 5(c) below, such Holder will reimburse any legal or
other expenses as reasonably incurred by the Company and any such officer,
director, employee, agent, representative, or controlling person, in connection
with investigating or defending any such Loss;
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provided, however, that the foregoing indemnity shall not apply to amounts paid
in settlement of any such Loss if such settlement is effected without the
consent of such Holder (which consent shall not be unreasonably withheld); and
provided, further, that, in no event shall any indemnity under this paragraph
5(b) exceed the net proceeds resulting from the sale of the Registrable
Securities sold by such Holder under such Registration Statement.
(c) Promptly after receipt by an indemnified party under this Section
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 5, promptly 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 assume the
defense thereof with counsel selected by the indemnifying party and reasonably
acceptable to the indemnified party; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the reasonably
incurred fees and expenses of one such counsel for all indemnified parties to be
paid by the indemnifying party, if representation of such indemnified party by
the counsel retained by the indemnifying party would be inappropriate under
applicable standards of professional conduct due to actual or potential
conflicting interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the delivery of
notice of any such action, to the extent prejudicial to its ability to defend
such action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 5 with respect to such action, but the
omission so to deliver written notice to the indemnifying party will not relieve
it of any liability that it may have to any indemnified party otherwise than
under this Section 5 or with respect to any other action unless the indemnifying
party is materially prejudiced as a result of not receiving such notice.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 5 is unavailable or insufficient to hold harmless an indemnified
party for any reason, the Company and each Holder agree, severally and not
jointly, to contribute to the aggregate Losses to which the Company or such
Holder may be subject in such proportion as is appropriate to reflect the
relative fault of the Company and such Holder in connection with the statements
or omissions which resulted in such Losses; provided, however, that in no case
shall such Holder be responsible for any amount in excess of the net proceeds
resulting from the sale of the Registrable Securities sold by it under the
Registration Statement. Relative fault shall be determined by reference to
whether any alleged untrue statement or omission relates to information provided
by the Company or by such Holder. The Company and each Holder agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), 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 is not guilty of such fraudulent
misrepresentation. For purposes of this Section 5, each person who controls a
Holder within the meaning of either the Securities Act or the Exchange Act and
each officer, director, employee, agent or representative of such Holder shall
have the same rights to contribution as such Holder, and each person who
controls the Company within the meaning of either the Securities Act or the
Exchange Act and each officer, director, employee, agent or representative of
the Company shall have the same rights to contribution as the Company, subject
in each case to the applicable terms and conditions of this paragraph (d).
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(e) The obligations of the Company and each Holder under this Section
5 shall survive the conversion of the Debenture and exercise of the Warrants in
full, the completion of any offering or sale of Registrable Securities pursuant
to a Registration Statement under this Agreement, or otherwise.
6. REPORTS.
With a view to making available to each Holder the benefits of Rule 144 and
any other similar rule or regulation of the Commission that may at any time
permit such Holder to sell securities of the Company to the public without
registration, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Exchange Act; and
(c) furnish to such Holder, so long as such Holder owns any
Registrable Securities, promptly upon written request (i) a written statement by
the Company, if true, that it has complied with the reporting requirements of
Rule 144 and the Exchange Act, (ii) to the extent not publicly available through
the Commission's XXXXX database, a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company with the Commission, and (iii) such other information as may be
reasonably requested by such Holder in connection with such Holder's compliance
with any rule or regulation of the Commission which permits the selling of any
such securities without registration.
7. MISCELLANEOUS.
(a) Expenses of Registration. Except as otherwise provided in the
Securities Purchase Agreement, all reasonable expenses, other than underwriting
discounts and commissions and fees and expenses of counsel and other advisors to
each Holder, incurred in connection with the registrations, filings or
qualifications described herein, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, the
fees and disbursements of counsel for the Company, and the fees and
disbursements incurred in connection with the opinion and letter described in
paragraph 3(g) hereof, shall be borne by the Company.
(b) Amendment; Waiver. Except as expressly provided herein, neither
this Agreement nor any term hereof may be amended or waived except pursuant to a
written instrument executed by the Company and the Holders of at least
two-thirds (2/3) of the Registrable Securities into which all of the Debenture
and Warrants then outstanding are convertible or exercisable (without regard to
any limitation on such conversion or exercise). Any amendment or waiver effected
in accordance with this paragraph shall be binding upon each Holder, each future
Holder and the Company. The failure of any party to exercise any right or remedy
under this Agreement or otherwise, or the delay by any party in exercising such
right or remedy, shall not operate as a waiver thereof.
11
(c) Notices. Any notice, demand or request required or permitted to be
given by the Company or a Holder pursuant to the terms of this Agreement shall
be in writing and shall be deemed delivered (i) when delivered personally or by
verifiable facsimile transmission, unless such delivery is made on a day that is
not a Business Day, in which case such delivery will be deemed to be made on the
next succeeding Business Day and (ii) on the next Business Day after timely
delivery to a reputable overnight courier, addressed as follows:
If to the Company:
Vyteris Holdings (Nevada), Inc.
00-00 Xxxxxxx Xxxxx
Xxxx Xxxx, XX 00000
Attn: Chief Financial Officer
Tel: 000-000-0000
Fax: 000-000-0000
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
Tel: 000-000-0000
Fax: 000-000-0000
and if to a Holder, to such address as shall be designated by such Holder in
writing to the Company.
(d) Assignment. Upon the transfer of any Debenture, Warrants or
Registrable Securities by a Holder, the rights of such Holder hereunder with
respect to such securities so transferred shall be assigned automatically to the
transferee thereof, and such transferee shall thereupon be deemed to be a
"Holder" for purposes of this Agreement, as long as: (i) the Company is, within
a reasonable period of time following such transfer, furnished with written
notice of the name and address of such transferee, (ii) the transferee agrees in
writing with the Company to be bound by all of the provisions hereof, and (iii)
such transfer is made in accordance with the applicable requirements of the
Securities Purchase Agreement, the Debentures or the Warrants, as applicable.
(e) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which together shall be deemed
one and the same instrument. This Agreement, once executed by a party, may be
delivered to any other party hereto by facsimile transmission.
(f) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed entirely within the State of New York.
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(g) Holder of Record. A person is deemed to be a Holder whenever such
person owns or is deemed to own of record such Registrable Securities. If the
Company receives conflicting instructions, notices or elections from two or more
persons with respect to the same Registrable Securities, the Company shall act
upon the basis of instructions, notice or election received from the record
owner of such Registrable Securities.
(h) Entire Agreement. This Agreement and the other Transaction
Documents constitute the entire agreement among the parties hereto with respect
to the subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement and the other Transaction Documents supersede all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.
(i) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(j) Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
[Signature Pages to Follow]
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IN WITNESS WHEREOF, the undersigned have executed this Registration Rights
Agreement as of the date first-above written.
VYTERIS HOLDINGS (NEVADA), INC.
By: /s/ Xxxxxxx XxXxxxxxxx
--------------------------------
Name: Xxxxxxx XxXxxxxxxx
Title: Chief Financial Officer
SATELLITE STRATEGIC FINANCE ASSOCIATES, LLC
By: Satellite Asset Management, L.P., its Manager
By: /s/ Authorized Person
--------------------------------
SATELLITE STRATEGIC FINANCE PARTNERS, LTD.
By: Satellite Asset Management, L.P., its Manager
By: /s/ Authorized Person
--------------------------------
IN WITNESS WHEREOF, the undersigned have executed this Registration Rights
Agreement as of the date first-above written.
VYTERIS HOLDINGS (NEVADA), INC.
By: /s/ Xxxxxxx XxXxxxxxxx
--------------------------------
Name: Xxxxxxx XxXxxxxxxx
Title: Chief Financial Officer
PALISADES MASTER FUND, L.P.
By: /s/ Authorized Person
--------------------------------
IN WITNESS WHEREOF, the undersigned have executed this Registration Rights
Agreement as of the date first-above written.
VYTERIS HOLDINGS (NEVADA), INC.
By: /s/ Xxxxxxx XxXxxxxxxx
--------------------------------
Name: Xxxxxxx XxXxxxxxxx
Title: Chief Financial Officer
QUBIT HOLDINGS LLC
By: /s/ Authorized Person
--------------------------------
