EXHIBIT 10.8
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Registration Rights Agreement
REGISTRATION RIGHTS AGREEMENT
WHEREAS, this Registration Rights Agreement (this "AGREEMENT")
is made and entered into as of September 29, 2004, by and among Treasure
Mountain Holdings, Inc., a Nevada corporation ("PUBCO"), Xxxxxxx Xxxxx Ventures,
Inc. ("Xxxxxxx Xxxxx"), Xxxxxx & Xxxxxxx, LLC ("R&R") and purchasers signatory
hereto (each a "Purchaser" and collectively, the "PURCHASERS"); and
WHEREAS, the Purchasers acquired from Vyteris, Inc. ("VYTERIS")
common stock and warrants to purchase shares of the common stock (collectively,
the "VYTERIS SECURITIES") in a private offering of its securities ("PRIVATE
OFFERING"), all upon the terms set forth in the Vyteris Confidential Private
Placement Memorandum dated, June 18, 2004, as amended or supplemented from time
to time, including all attachments, schedules and exhibits thereto (the
"MEMORANDUM"); and
WHEREAS, upon consummation of the merger of Vyteris with and
into Pubco (as described in the Memorandum), Pubco shall issue Common Stock and
Warrants to the Purchasers in exchange for the Vyteris Securities purchased by
such Purchasers in the Private Offering, all upon the terms set forth in that
certain Agreement and Plan of Merger entered into by and between Pubco, a wholly
owned subsidiary of Pubco and Vyteris, dated July 8, 2004 ("MERGER AGREEMENT").
NOW THEREFORE, Pubco and the Purchasers hereby agree as follows:
1. DEFINITIONS. Capitalized terms used and not otherwise defined
herein that are defined in the Merger Agreement shall have the meanings given
such terms in the Merger 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).
"CLOSING DATE" means the date of the closing of the Private
Offering.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means shares of Pubco common stock, $0.001 par
value per share, issued or issuable to Purchasers pursuant to the terms of the
Merger Agreement.
"EFFECTIVENESS DATE" means, with respect to the Registration
Statement required to be filed hereunder, the 150th calendar day following the
Closing Date.
"EFFECTIVENESS PERIOD" shall have the meaning set forth in
Section 2(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EVENT" shall have the meaning set froth in Section 2(b).
"EVENT DATE" shall have the meaning set forth in Section 2(b).
"FILING DATE" means, with respect to the Registration Statement
required to be filed hereunder, the 45th calendar day following the Closing
Date.
"HOLDER" or "HOLDERS" means the holder or holders, as the case
may be, from time to time of Registrable Securities, including, without
limitation, the Placement Agents and certain officers of Pubco (as further
described in the Merger Agreement).
"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).
"PERSON" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
"PLACEMENT AGENTS" means collectively, Xxxxxxx Xxxxx and R&R
individually.
"PROCEEDING" means an action, claim, suit, investigation, or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"PROSPECTUS" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any Prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
"REGISTRABLE SECURITIES" means (i) the Shares, (ii) the Warrant
Shares, (iii) the shares of Common Stock issuable upon exercise of warrants
issued to Xxxxxxx Xxxxx in connection with the Bridge Note financing (as
described in the Memorandum) (the "STV WARRANTS"), (iv) the shares of Common
Stock issuable upon exercise of the warrants issued to the Placement Agents or
their designees in connection the transactions contemplated by the Memorandum
and Merger Agreement (the "PLACEMENT AGENTS' WARRANTS"), (v) the shares of
Common Stock issuable upon the exercise of the Warrants to be issued to certain
officers of Pubco upon consummation of the Merger as contemplated by the Merger
Agreement (the "TM Management Warrants"), (vi) the shares of Common Stock issued
and issuable to X. Xxxxx Medical, Inc. (the "Xxxxx Shares") and (vii) together
with any shares of Common Stock issued or issuable upon any stock split,
dividend or other distribution, recapitalization or similar event
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with respect to the foregoing or in connection with any anti-dilution provisions
in the Warrants, the STV Warrants, the Placement Agents' Warrants, the TM
Management Warrants and the Xxxxx Shares.
"REGISTRATION STATEMENT" means the registration statements
required to be filed hereunder, including (in each case) the Prospectus,
amendments and supplements to the registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto, and all
material incorporated by reference or deemed to be incorporated by reference in
the registration statement.
"RULE 144" means Rule 144 promulgated by the 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 effect as such Rule.
"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 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 effect as such Rule.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means the shares of Common Stock issued or issuable to
each Purchaser pursuant to the Merger Agreement.
"TRADING DAY" means (i) a day on which the Common Stock is
traded on a Trading Market on which it is listed, or (ii) if the Common Stock is
not listed on a Trading Market, a day on which the Common Stock is traded on the
over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if
trades of the Common Stock are not reported on the OTC Bulletin Board, a day on
which the Common Stock is quoted in the over-the-counter market as reported by
the National Quotation Bureau Incorporated (or any similar organization or
agency succeeding to its functions of reporting prices); provided, that in the
event that the Common Stock is not listed or quoted as set forth in (i), (ii)
and (iii) hereof, then Trading Day shall mean a Business Day.
"TRADING MARKET" means the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the date in question:
the American Stock Exchange, the New York Stock Exchange, the Nasdaq National
Market or the Nasdaq SmallCap Market.
"WARRANTS" means the Common Stock Purchase Warrants issued or
issuable to the Purchasers pursuant to the terms of the Merger Agreement.
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"WARRANT SHARES" means the shares of Common Stock issuable upon
exercise of the Warrants.
2. REGISTRATION.
(a) Pubco shall prepare, and shall use it best efforts to
file with the Commission on or before the Filing Date, the Registration
Statement covering the resale of all of the Registrable Securities for an
offering to be made on a continuous basis pursuant to Rule 415. The Registration
Statement required hereunder shall, at Pubco's election, be on Form SB-2 (except
if Pubco is not then eligible to register for resale the Registrable Securities
on Form SB-2, in which case the Registration Statement shall be on another
appropriate form in accordance herewith) or Form S-1. The Registration Statement
required hereunder shall contain (except if otherwise directed by the Holders)
the "PLAN OF DISTRIBUTION" attached hereto as ANNEX A. Pubco shall use its best
efforts to cause the Registration Statement to become effective and remain
effective as provided herein. Pubco shall use its best efforts to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as possible after the filing thereof, and shall use its best efforts to
keep the Registration Statement continuously effective under the Securities Act
until the earlier of (a) twenty-four months after the Effectiveness Date and (b)
such time when the Registrable Securities may be sold without volume
restrictions pursuant to Rule 144(k) as determined by the counsel to Pubco
pursuant to a written opinion letter to such effect, addressed and acceptable to
Pubco's transfer agent and the affected Holders (the "EFFECTIVENESS PERIOD").
(b) If: (i) a Registration Statement is not filed on or
prior to the Filing Date (if Pubco files a Registration Statement without
affording Holders the opportunity to review and comment on the same as required
by Section 3(a), Pubco shall not be deemed to have satisfied this clause (i));
or (ii) Pubco fails to file with the Commission a request for acceleration in
accordance with Rule 461 promulgated under the Securities Act, by the later of
(x) five Trading Days from the date that Pubco is notified (orally or in
writing, whichever is earlier) by the Commission that a Registration Statement
will not be "reviewed," or not subject to further review ("COMMISSION NOTICE")
and (y) ten Trading Days from the date that Pubco receives a Commission Notice
if (A) Pubco's Board of Directors determines in its good faith judgment that it
is advisable to delay the effectiveness of the Registration Statement, and (B)
Pubco provides each Holder with a certificate signed by the President or Chief
Executive Officer of the Company of such delay (not later than one day following
the receipt of notice from the Commission); or (iii) prior to the date when such
Registration Statement is first declared effective by the Commission, Pubco
fails to file a pre-effective amendment and otherwise respond in writing to
comments made by the Commission in respect of such Registration Statement within
ten Trading Days after the receipt of comments by or notice from the Commission
that such amendment is required in order for a Registration Statement to be
declared effective; or (iv) a Registration Statement filed or required to be
filed hereunder is not declared effective by the Commission on or before the
Effectiveness Date; or (v) after a Registration Statement is first declared
effective by the Commission, it ceases for any reason to remain continuously
effective as to all Registrable Securities for which it is required to be
effective, or the Holders are not permitted to utilize the Prospectus therein to
resell such Registrable Securities, for in any such cases twenty Trading Days
(which need not be
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consecutive days) in the aggregate during any 12-month period (any such failure
or breach being referred to as an "EVENT," and for purposes of clause (i) or
(iv) the date on which such Event occurs, or for purposes of clause (ii) the
date on which such five or ten Trading Day period, as applicable, is exceeded,
or for purposes of clauses (iii) the date which such ten Trading Day period is
exceeded, or for purposes of clause (v) the date on which such twenty Trading
Day period is exceeded being referred to as "EVENT DATE"), then in addition to
any other rights the Holders may have hereunder or under applicable law: (x) on
each such Event Date, Pubco shall pay to each Purchaser an amount in cash, as
partial liquidated damages and not as a penalty, equal to 1% of the aggregate
purchase price paid by such Purchaser for the Registrable Securities then held
by such Purchaser and (y) on each monthly anniversary of each such Event Date
(if the applicable Event shall not have been cured by such date) until the
applicable Event is cured, Pubco shall pay to each Purchaser an amount in cash,
as partial liquidated damages and not as a penalty, equal to 2% of the aggregate
purchase price paid by such Purchaser for the Registrable Securities then held
by such Holder: PROVIDED, HOWEVER, that notwithstanding any provision herein to
the contrary, Pubco shall not be required to make payments under this Section
2(b) in excess of 10% of the aggregate purchase price paid by the Purchasers for
the Registrable Securities. If Pubco fails to pay any partial liquidated damages
pursuant to this Section 2(b) in full within seven days of the date payable,
Pubco shall pay interest thereon at a rate of 18% per annum (or such lesser
maximum amount that is permitted to be paid by applicable law) to the
Purchasers, accruing daily from the date such partial liquidated damages are due
until such amounts, plus all such interest thereon, are paid in full. The
liquidated damages pursuant to the terms hereof shall apply on a pro-rata basis
for any portion of a month prior to the cure of an Event.
(c) If during the Effectiveness Period, the number of
Registrable Securities at any time exceeds 100% of the number of shares of
Common Stock then registered in a Registration Statement, then Pubco shall file
as soon as practicable, an additional Registration Statement (or, if permitted
by law, a post-effective amendment to such Registration Statement) covering the
resale of Common Stock by the Holders of not less than all of such Registrable
Securities, and Pubco shall use best efforts to cause such Registration
Statement to be declared effective as soon as practicable thereafter.
3. REGISTRATION PROCEDURES.
In connection with Pubco's registration obligations hereunder,
Pubco shall:
(a) Not less than three Trading Days prior to the filing of
the Registration Statement or any related Prospectus or any amendment or
supplement thereto, (i) furnish to the Holders copies of all such documents
proposed to be filed (including documents incorporated or deemed incorporated by
reference to the extent requested by such Person) which documents will be
subject to the review of such Holders, 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 Pubco's
counsel to conduct a reasonable investigation within the meaning of the
Securities Act. In the event a Holder fails to respond with three days of
receipt of the documents provided in accordance with (i) above, such Holder it
will be deemed to consent to the filing of the Registration Statement. Pubco
shall not file the Registration Statement or any
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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
within such three day period unless and until Pubco shall have reasonably
responded to such objections.
(b) (i) Prepare and file with the Commission such
amendments, including post-effective amendments, to the Registration Statement
and the Prospectus used in connection therewith as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period 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 or
Prospectus supplement, and as so supplemented or amended to be filed pursuant to
Rule 424; (iii) when the Commission notifies Pubco if there will be a "review"
of the Registration Statement and whenever the Commission comments in writing on
the Registration Statement, respond as promptly as possible to any comments
received from the Commission with respect to the Registration Statement or any
amendment thereto and, as promptly as possible, and in any event within five
Trading Days provide the Placement Agents' counsel with true and complete copies
of all correspondence from and to the Commission relating to the Registration
Statement; 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 the Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
Holders thereof set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented.
(c) Notify the Holders of Registrable Securities to be sold,
as promptly as reasonably possible (and, in the case of (i)(A) below, not less
than two Trading Days prior to such filing) and (if requested by any such
Person) confirm such notice in writing promptly following the day: (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment to the
Registration Statement is proposed to be filed; (B) with respect to the
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 during the period of effectiveness of the Registration
Statement for amendments or supplements to the Registration Statement or
Prospectus or for additional information; (iii) of the issuance by the
Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) of the receipt by Pubco 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 threat
in writing of any Proceeding for such purpose; and (v) of the occurrence of any
event or passage of time that makes the financial statements included in the
Registration Statement ineligible for inclusion therein or any statement made in
the Registration Statement or Prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
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(d) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of
the Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
(e) Furnish to each Holder, without charge, at least one
conformed copy of the 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, 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.
(f) Promptly deliver to each Holder, without charge, as many
copies of the Prospectus or Prospectuses (including each form of prospectus) and
each amendment or supplement thereto as such Persons may reasonably request in
connection with resales by the Holder of Registrable Securities. Pubco 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 on any notice pursuant to Section
3(c).
(g) Prior to any resale of Registrable Securities by a
Holder, use its 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 such Registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or things reasonably necessary to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration
Statement; PROVIDED, that Pubco shall not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified, subject Pubco 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.
(h) If requested by the Holders, cooperate with the Holders
to facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be delivered to a transferee pursuant to the
Registration Statement, which certificates shall be free, to the extent
permitted by the Merger 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.
(i) Upon the occurrence of any event contemplated by Section
3(c)(v), as promptly as reasonably possible, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement or amendment to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, neither the Registration Statement
nor such Prospectus will contain an untrue statement of a material fact or omit
to state
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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 Pubco notifies the Holders in. accordance with clauses (ii)
through (v) of Section 3(c) 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. Pubco will use its best efforts to ensure that
the use of the Prospectus may be resumed as promptly as is practicable. Pubco
shall be entitled to exercise its right under this Section 3(i) to suspend the
availability of a Registration Statement and Prospectus, subject to the payment
of liquidated damages pursuant to Section 2(b), for a period not to exceed 90
days (which need not be consecutive days) in any twelve month period.
(j) Comply with all applicable rules and regulations of the
Commission.
(k) Pubco may require each Holder to furnish to Pubco a
certified statement as to (i) the number of shares of Common Stock beneficially
owned by such Holder, (ii) if required by the Commission, the holder thereof or
the person that has voting and dispositive control over such Shares, (iii) any
relationship between such Holder and Pubco and (iv) such other information
regarding such Holder as shall be required by the Commission. If any such Holder
fails to furnish such information within three Trading Days of Pubco's request,
Pubco shall furnish written notice of such non-compliance to such Holder, the
applicable Placement Agent and the applicable Placement's Agent's counsel. If,
for a period of two Trading Days after such notice is given, such Holder
continues to fail to furnish such information, then (i) Pubco shall no longer be
obligated to register any of such Holder's Registrable Securities as part of the
Registration Statement: PROVIDED, HOWEVER, in the event such Holder provides
such information to Pubco prior to the time when Pubco files a request for
effectiveness, Pubco shall register such Holder's Registrable Securities as part
of the Registration Statement and (ii) Pubco shall have no obligation to pay any
liquidated damages to such Holder with respect to any Event. In the event that
(i) the immediately preceding sentence applies, (ii) thereafter such Holder
provides such information to Pubco and (iii) thereafter Pubco files another
registration statement in which Pubco may include such Holder's securities
without significant cost to Pubco and with the consent of any applicable
underwriter, then Pubco shall use its best efforts to include such Holder's
Registrable Securities in such registration statement in accordance with
customary arrangements applicable to piggyback registration rights.
4. REGISTRATION EXPENSES. All fees and expenses incident to the
performance of or compliance with this Agreement by Pubco shall be borne by
Pubco whether or not any Registrable Securities are sold pursuant to the
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 the Trading Market on which the Common Stock is then
listed for trading, and (B) in compliance with applicable state securities or
Blue Sky laws), (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities and of printing prospectuses
if the printing of prospectuses is reasonably requested by the holders of a
majority of the Registrable Securities included in the Registration Statement)
in connection with the performance by Pubco of its obligations hereunder, (iii)
messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for Pubco, (v) Securities Act liability insurance, if Pubco so desires
such insurance, and (vi) fees and expenses of all other Persons retained by
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Pubco in connection with the consummation of the transactions contemplated by
this Agreement. In addition, Pubco 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),
and the expense of any annual audit. Pubco shall not be responsible for any
Holder's brokerage commissions or other underwriting discount paid by any Holder
in connection with the sale of any Registrable Securities.
5. INDEMNIFICATION
(a) INDEMNIFICATION BY PUBCO. Pubco shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, agents and employees of each of them, each Person who
controls any such Holder (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable attorneys' fees)
and expenses (collectively, "Losses"), as incurred, to the extent arising out of
or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that (1) such
untrue statements or omissions are based solely upon information regarding such
Holder furnished in writing to Pubco 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 the
Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto (it being understood that each Holder has
approved ANNEX A hereto for this purpose) or (2) in the case of an occurrence of
an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder
of an outdated or defective Prospectus after Pubco 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). Pubco shall notify the
Holders promptly of the institution, threat or assertion of any Proceeding of
which Pubco is aware in connection with the transactions contemplated by this
Agreement.
(b) INDEMNIFICATION BY HOLDERS. Each Holder shall, severally
and not jointly, indemnify and hold harmless Pubco, its directors, officers,
agents and employees, each Person who controls Pubco (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, to the extent arising out of or based upon: (x) such Holder's failure
to comply with the prospectus delivery requirements of the Securities Act or (y)
any untrue or alleged untrue statement of a material fact contained in any
Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or
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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 Pubco
specifically for inclusion in the Registration Statement or such Prospectus or
(ii) to the extent that (1) such untrue statements or omissions are based solely
upon information regarding such Holder furnished in writing to Pubco 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 the Registration Statement (it being understood that each
Holder has approved ANNEX A hereto for this purpose), such Prospectus or such
form of Prospectus or in any amendment or supplement thereto or (2) in the case
of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the
use by such Holder of an outdated or defective Prospectus after Pubco 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.
(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 the
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: (i) the Indemnifying Party has agreed in
writing to pay such fees and expenses; (ii) 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
(iii) the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a 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 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. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any
10
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.
All reasonable fees and expenses of the Indemnified Party
(including reasonable fees and expenses to the extent incurred in connection
with investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section 5) shall be paid to the Indemnified Party, as
incurred, within ten 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 not entitled to indemnification
hereunder, determined based upon the relative faults of the parties.
(d) CONTRIBUTION. If a claim for indemnification under
Section 5(a) or 5(b) is unavailable to an Indemnified Party (by reason of public
policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.
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
proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, except in the case of fraud by
such Holder. The indemnity and contribution agreements contained in this Section
5 are in addition to any liability that the Indemnifying Parties may have to the
other Indemnified Parties.
11
6. MISCELLANEOUS
(a) REMEDIES. In the event of a breach by Pubco or by a
Holder, of any of their obligations under this Agreement, each Holder or Pubco,
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. Each of Pubco and
each Holder agrees that monetary damages would not provide adequate compensation
for any losses incurred by reason of a breach by it of any of the provisions of
this Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
(b) NO PIGGYBACK ON REGISTRATIONS. Neither Pubco nor any of
its security holders (other than the Holders in such capacity pursuant hereto)
may include securities of Pubco in the Registration Statement other than the
Registrable Securities, and Pubco shall not after the date hereof enter into any
agreement providing any rights to be included with the Registration Statement to
any of its security holders. Pubco shall not file any other registration
statement until after the Effective Date other than any Registration Statement
(i) that may be required to be filed in connection with the reincorporation of
Pubco as a Delaware corporation and (ii) covering the registration requirements
of Pubco described in the Memorandum, other than with respect to the Restricted
Securities..
(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
the Registration Statement.
(d) DISCONTINUED DISPOSITION. Each Holder agrees by its
acquisition of such Registrable Securities that, upon receipt of a notice from
Pubco of the occurrence of any event of the kind described in Section 3(c), such
Holder will forthwith discontinue disposition of such Registrable Securities
under the Registration Statement until such Holder's receipt of the copies of
the supplemented Prospectus and/or amended Registration Statement or until it is
advised in writing (the "ADVICE") by Pubco that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. Pubco
may provide appropriate stop orders to enforce the provisions of this paragraph.
Pubco agrees and acknowledges that any period during which the Holder is
required to discontinue the disposition of the Registered Securities hereunder
shall be subject to the provisions of Section 2(b).
(e) PIGGYBACK REGISTRATIONS. If at any time during the
Effectiveness Period there is not an effective Registration Statement covering
all of the Registrable Securities and Pubco 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
12
option or other employee benefit plans, then Pubco 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, Pubco 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.
(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 Pubco and a majority in interest of the Holders of the then
outstanding Registrable Securities.
(g) NOTICES. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested, or delivered against receipt to the
party to whom it is to be given (i) if to Pubco, to Vyteris, Inc., 00-00 Xxxxxxx
Xxxxx, Xxxxxxxx, Xxx Xxxxxx 00000, Attention: Xxxxxxx X. XxXxxxxx, Ph.D, Telefax
number (000) 000-0000, with a copy to Xxxxxxxxxx Xxxxxxx P.C., 00 Xxxxxxxxxx
Xxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000, Attention: Xxxxx X. Xxxxxxxxx, Esq., Telefax
number (973) 597-2351or (ii) if to the Purchaser, at the address set forth in
Pubco's records (or, in either case, to such other address as the party shall
have furnished in writing in accordance with the provisions of this Section
6(g)). Any notice or other communication given by certified mail shall be deemed
given at the time of certification thereof, except for a notice changing a
party's address which shall be deemed given at the time of receipt thereof.
(h) SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of each of the
parties and shall inure to the benefit of each Holder.
(i) EXECUTION AND COUNTERPARTS. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and, all of which taken together shall constitute one
and the same Agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding obligation
of the party executing (or on whose behalf such signature is executed) the same
with the same force and effect as if such facsimile signature were the original
thereof.
(j) GOVERNING LAW. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by and construed and enforced in accordance with the internal laws
of the State of Delaware, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the City of New
York, New York. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
New York for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with
respect to the enforcement
13
of this Agreement), and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by delivering a copy thereof via overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence an action or
proceeding to enforce any provisions of this Agreement, then the prevailing
party in such action or proceeding shall be reimbursed by the other party for
its attorneys fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.
(k) CUMULATIVE REMEDIES. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(1) SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(m) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(n) INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND
RIGHTS. The obligations of each Purchaser hereunder is several and not joint
with the obligations of any other Purchaser hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.
14
(o) FORM S-3 ELIGIBILITY. In the event that Pubco becomes
eligible to include the Registrable Securities on a registration statement on
Form S-3 and is able to do so in a manner which will not cause there to be any
lack of effective registration statement covering Registrable Securities, Pubco
shall be permitted to amend the exiting Registration Statement by a
post-effective amendment on Form S-3 (if permitted by the rules and regulations
of the Commission and under applicable law) or utilize a registration statement
on Form S-3 covering the Registrable Securities.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
15
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
TREASURE MOUNTAIN HOLDINGS, INC.
By: /s/ Xxxxxxx XxXxxxxxxx
--------------------------------------------
Name: Xxxxxxx XxXxxxxxxx
Title: CFO
[PURCHASER'S SIGNATURE PAGE TO PUBCO RRA]
PURCHASER
See Omnibus Signature Page for Purchaser's Signature
--------------------------------------------
[PLACEMENT AGENTS' SIGNATURE TO PUBCO RAA]
XXXXXXX XXXXX VENTURES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President
XXXXXX & XXXXXXX, LLC
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer
[TM MANAGEMENT SIGNATURES TO THE RRA]
/s/ Xxxx Xxxxxxxx
--------------------------------------------
Name: Xxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxx
--------------------------------------------
Xxxxxx Xxxxxx
16
[X. XXXXX SIGNATURE TO THE RRA]
X. XXXXX MEDICAL, INC.
By:
-----------------------------------------
Name:
Title:
17
ANNEX A
PLAN OF DISTRIBUTION
The Selling Stockholders (the "SELLING STOCKHOLDERS") and any of their
pledgees, donees, assignees and successors-in-interest may, from time to time,
sell any or all of their shares of Common Stock on any stock exchange, market or
trading facility on which the shares arc traded or in private transactions.
These sales may be at fixed or negotiated prices. The Selling Stockholders may
use any one or more of the following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o 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;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o settlement of short sales;
o broker-dealers may agree with the Selling Stockholders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144, if
available, rather than under this Prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for other
broker-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. The Selling Stockholders do not expect these commissions and
discounts relating to its sales of shares to exceed what is customary in the
types of transactions involved.
The Selling Stockholders may from time to time pledge or grant a
security interest in some or all of the Common Stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of Common Stock from time to time under
this Prospectus, or under an amendment to this Prospectus under Rule 424(b)(3)
or other applicable provision of the Securities Act.
18
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. The Selling Stockholders have
informed Pubco that it does not have any agreement or understanding, directly or
indirectly, with any person to distribute the Common Stock.
Pubco is required to pay all fees and expenses incurred by Pubco
incident to the registration of the shares. Pubco has agreed to indemnify the
Selling Stockholders against certain losses, claims, damages and liabilities,
including liabilities under the Securities Act.
19
