REGISTRATION RIGHTS AGREEMENT
This
REGISTRATION RIGHTS AGREEMENT (this “Agreement”)
is
made as of January __, 2008, by and among (i) XxxxxxXxxxx Pharmaceuticals,
Inc.,
a Delaware corporation (the “Company”),
(ii)
each person listed on Exhibit A
attached
hereto (collectively, the “Initial
Investors”
and
each individually, an “Initial
Investor”),
and
(iii) each person or entity that subsequently becomes a party to this Agreement
pursuant to, and in accordance with, the provisions of Section 12 hereof
(collectively, the “Investor
Permitted Transferees”
and
each individually an “Investor
Permitted Transferee”).
WHEREAS,
the Company has agreed to issue and sell to the Initial Investors, and the
Initial Investors have agreed to purchase from the Company, an aggregate of
approximately 8,750,000 shares (the “Purchased
Shares”)
of the
Company’s common stock, $0.01 par value per share (the “Common
Stock”),
and
warrants to purchase an aggregate of approximately 3,500,000 shares of Common
Stock (each a “Warrant”
and
together the “Warrants”),
all
upon the terms and conditions set forth in that certain Securities Purchase
Agreement, dated of even date herewith, between the Company and the Initial
Investors (the “Securities
Purchase Agreement”);
and
WHEREAS,
the terms of the Securities Purchase Agreement provide that it shall be a
condition precedent to the closing of the transactions thereunder, for the
Company and the Initial Investors to execute and deliver this
Agreement.
NOW,
THEREFORE, in consideration of the premises and mutual covenants contained
herein, the parties hereto hereby agree as follows:
1. DEFINITIONS.
The
following terms shall have the meanings provided therefor below or elsewhere
in
this Agreement as described below:
“Board”
shall
mean the board of directors of the Company.
“Closing”
and
“Closing
Dates”
shall
have the meanings ascribed to such terms in the Securities Purchase
Agreement.
“Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended, and all of the rules
and
regulations promulgated thereunder.
“Effectiveness
Date”
means,
with respect to the Initial Registration Statement, as soon as practicable,
but
in no event later than one hundred twenty (120) calendar days after the First
Closing (or one hundred fifty (150) calendar days if the Initial Registration
Statement is reviewed by the SEC) and, with respect to any additional
Registration Statements which may be required to be filed hereunder pursuant
to
Section 3(d) or otherwise, sixty (60) calendar days following the date on
which the additional Registration Statement is required to be filed hereunder
(or ninety (90) calendar days if such additional Registration Statement is
reviewed by the SEC); provided,
however,
that in
the event the Company is notified by the SEC that one of the above Registration
Statements will not be reviewed or is no longer subject to further review and
comments, the Effectiveness Date as to such Registration Statement shall be
the
fifth (5th)
Trading
Day following the date on which the Company is so notified if such date precedes
the dates required above.
-1-
“Filing
Date”
means,
with respect to the Initial Registration Statement, within five (5) business
days after the First Closing and, with respect to any additional Registration
Statements required to be filed hereunder pursuant to Section 3(d) or
otherwise, one hundred ninety (190) days after any preceding Registration
Statement is declared effective by the SEC or the earliest practicable date
thereafter on which the Company is permitted by SEC Guidance to file such
additional Registration Statement related to the Registrable
Securities.
“Initial
Registration Statement”
means
the initial Registration Statement filed pursuant to this
Agreement.
“Investors”
shall
mean, collectively, the Initial Investors and the Investor Permitted
Transferees; provided,
however,
that
the term “Investors”
shall
not include any of the Initial Investors or any of the Investor Permitted
Transferees that does not own or hold any Registrable Securities.
“Majority
Holders”
shall
mean, at the relevant time of reference thereto, those Investors holding more
than fifty percent (50%) of the Registrable Securities held by all of the
Investors.
“Registrable
Securities”
shall
mean the Purchased Shares and the Underlying Shares, provided,
however,
such
term shall not, after the Mandatory Registration Termination Date, include
any
of the Purchased Shares or Underlying Shares that become or have become eligible
for resale without restrictions or volume limitations pursuant to Rule 144
or
pursuant to Regulation S.
“Registration
Statement”
means any one or more registration statements filed with the SEC by the Company
on Form
S-3,
or
in the event the Company is not eligible to use Form S-3, on Form S-1,
for
the
purpose of registering under the Securities Act all of the Registrable
Securities for resale by, and for the account of, the Investors, including
the
Initial Registration Statement and any additional registration statements
required to be filed hereunder pursuant to Section 3(d) or otherwise,
including (in each case) the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference
or
deemed to be incorporated by reference in such registration statement.
“Rule
144”
shall
mean Rule 144 promulgated by the SEC pursuant to the Securities Act and any
successor or substitute rule, law or provision.
“Rule 415”
means Rule 415 promulgated by the SEC 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 SEC having substantially the same purpose and effect
as
such Rule.
“Rule 424”
means Rule 424 promulgated by the SEC 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 SEC having substantially the same purpose and effect
as
such Rule.
“SEC”
shall
mean the Securities and Exchange Commission.
-2-
“SEC
Guidance”
means (i) any publicly-available written guidance, or rule of general
applicability of the SEC staff, or (ii) written comments, requirements or
requests of the SEC staff to the Company in connection with the review of a
Registration Statement.
“Securities”
shall
mean the Purchased Shares, the Warrants and the Underlying Shares.
“Securities
Act”
shall
mean the Securities Act of 1933, as amended, and all of the rules and
regulations promulgated thereunder.
“Trading
Day”
means
(a) if the Common Stock is listed or quoted on the NASDAQ Global Market, then
any day during which securities are generally eligible for trading on the NASDAQ
Global Market, or (b) if the Common Stock is not then listed or quoted and
traded on the NASDAQ Global Market, then any business day.
“Underlying
Shares”
shall
mean the shares of Common Stock issuable upon exercise of the
Warrants.
2. EFFECTIVENESS;
TERMINATION.
This
Agreement shall become effective and legally binding only if the First Closing
occurs. This Agreement shall terminate and be of no further force or effect,
automatically and without any action being required of any party hereto, upon
the termination of the Securities Purchase Agreement pursuant to Section 7
thereof.
3. MANDATORY
REGISTRATION.
(a) The
Company shall be required to file a Registration Statement on or prior to each
Filing Date until all of the Registrable Securities are registered for resale
by
the Investors as selling stockholders thereunder. On or prior to each Filing
Date, the Company shall prepare and file with the SEC a Registration Statement
for the purpose of registering under the Securities Act the resale of all,
or
such portion as permitted by SEC Guidance (provided that, the Company shall
use
commercially reasonable efforts to advocate with the SEC for the registration
of
all or the maximum number of the Registrable Securities as permitted by SEC
Guidance), of the Registrable Securities by, and for the account of, the
Investors as selling stockholders thereunder, that are not then registered
on an
effective Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415. Each Registration Statement shall contain
(unless otherwise directed by the Majority Holders) substantially the “Plan of
Distribution” in the Investor Questionnaire the form of which is attached to the
Securities Purchase Agreement as Appendix I. Subject to the terms of this
Agreement, the Company shall cause a Registration Statement to be declared
effective under the Securities Act as promptly as possible after the filing
thereof, but in any event on or prior to the applicable Effectiveness
Date.
(b) The
Company shall be required to keep a Registration Statement effective until
such
date that is the earlier of (i) the date as of which all of the Investors as
selling stockholders thereunder may sell all of the Registrable Securities
registered for resale thereon without restriction pursuant to Rule 144 (or
any
successor rule thereto) promulgated under the Securities Act or (ii) the date
when all of the Registrable Securities registered thereunder shall have been
sold (such date is referred to herein as the “Mandatory
Registration Termination Date”).
Thereafter, the Company shall be entitled to withdraw such Registration
Statement and the Investors shall have no further right to offer or sell any
of
the Registrable Securities registered for resale thereon pursuant to the
respective Registration Statement (or any prospectus relating thereto).
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(c) Notwithstanding
any other provision of this Agreement and subject to the payment of liquidated
damages in Section 4(a), if any SEC Guidance sets forth a limitation of the
number of Registrable Securities to be registered on a particular Registration
Statement (and notwithstanding that the Company used commercially reasonable
efforts to advocate with the SEC for the registration of all or a greater number
of Registrable Securities), unless otherwise directed in writing by an Investor
as to its Registrable Securities, the number of Registrable Securities to be
registered on such Registration Statement will first be reduced by Registrable
Securities represented by Underlying Shares (applied, in the case that some
Underlying Shares may be registered, to the Investors on a pro rata basis based
on the total number of unregistered Underlying Shares held by such Investors
on
a fully diluted basis), and second by Registrable Securities represented by
Purchased Shares (applied, in the case that some Purchased Shares may be
registered, to the Investors on a pro rata basis based on the total number
of
unregistered Purchased Shares held by such Investors).
(d) If
during
the Effectiveness Period, subject to Section 3(a), the number of
Registrable Securities at any time exceeds 100% of the number of Purchased
Shares then registered for resale in a Registration Statement, then the Company
shall file as soon as reasonably practicable an additional Registration
Statement covering the resale by the Investors of not less than the number
of
such Registrable Securities.
(e) The
offer
and sale of the Registrable Securities pursuant to any Registration Statement
shall not be underwritten.
4. PENALTIES/SUSPENSION
OF A REGISTRATION STATEMENT
(a) If:
(i) the Initial Registration Statement and any other Registration Statement
is not filed on or prior to its Filing Date or if the Company files the Initial
Registration Statement or any other Registration Statement without affording
the
Investors the opportunity to review and comment on the same, or (ii) the
Company fails to file with the SEC a request for acceleration in accordance
with
Rule 461 promulgated under the Securities Act, within five (5) Trading Days
of the date that the Company is notified (orally or in writing, whichever is
earlier) by the SEC that the Initial Registration Statement or any other
Registration Statement will not be “reviewed” or not be subject to further
review, or (iii) prior to the Effectiveness Date of the Initial
Registration Statement or any other Registration Statement, the Company fails
to
file a pre-effective amendment and otherwise respond in writing to comments
made
by the SEC in respect of such Initial Registration Statement or any other
Registration Statement within ten (10) calendar days after the receipt of
comments by or notice from the SEC that such amendment is required in order
for
such Initial Registration Statement or any other Registration Statement to
be
declared effective, or (iv) subject to the tolling provisions contained
herein, as to, in the aggregate among all Investors on a pro-rata basis based
on
their purchase of the Securities pursuant to the Securities Purchase Agreement,
the lesser of (A) all of the Registrable Securities constituting the
Securities and (B) the maximum number of Securities permitted by SEC
Guidance (collectively, the “Initial
Shares”),
a Registration Statement registering for resale all of the Initial Shares is
not
declared effective by the SEC by the Effectiveness Date of the Initial
Registration Statement, or (v) subject to the tolling provisions contained
herein, all of the Registrable Securities constituting the Securities other
than
the Initial Shares are not registered for resale pursuant to one or more
effective Registration Statements on or before October 31, 2008, or
(vi) after the Effectiveness Date of the Initial Registration Statement or
any other Registration Statement, such Initial Registration Statement or other
Registration Statement ceases for any reason to remain continuously effective
as
to all Registrable Securities included in such Initial Registration Statement
or
other Registration Statement, as applicable, or the Investors are otherwise
not
permitted to utilize the Prospectus therein to resell such Registrable
Securities, for more than ten (10) consecutive calendar days or more than an
aggregate of fifteen (15) calendar days during any twelve (12) month period
(which need not be consecutive calendar days), provided however that no such
payments shall be required in connection with a Suspension Period (as
hereinafter defined) (any such failure or breach being referred to as an
“Event”, and for purposes of clause (i), (iv) or (v) the date on which
such Event occurs, or for purposes of clause (ii) the date on which such
five (5) Trading Day period is exceeded, or for purposes of clause
(iii) the date which such ten (10) calendar day period is exceeded, or for
purposes of clause (vi) the date on which such ten (10) or fifteen (15)
calendar day period, as applicable, is exceeded being referred to as
“Event
Date”),
then, in addition to any other rights the Investors may have hereunder or under
applicable law, on each such Event Date and 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, the Company shall pay to each Investor
on a
monthly basis within three (3) business days of the end of the month an amount
in cash, as partial liquidated damages and not as a penalty, equal to 1% of
the
aggregate purchase price paid by such Investor pursuant to the Securities
Purchase Agreement for any Registrable Securities then held by such Investor
(as
applicable under clauses (iv) and (v)). The parties agree that the maximum
aggregate liquidated damages payable to a Investor under this Agreement shall
be
20% of the aggregate amount paid by such Investor for its respective Securities
pursuant to the Securities Purchase Agreement. If the Company fails to pay
any
partial liquidated damages pursuant to this Section in full within seven (7)
calendar days after the date payable, the Company will pay interest thereon
at a
rate of 18% per annum (or such lesser maximum amount that is required to be
paid
by applicable law) to the Investor, accruing daily from the date such partial
liquidated damages are due until such amounts, plus all such interest thereon,
are paid in full. The partial liquidated damages pursuant to the terms hereof
shall apply on a daily pro-rata basis for any portion of a month prior to the
cure of an Event.
-4-
(b) The
Company shall notify the Investors by facsimile or e-mail as promptly as
practicable, and in any event, within two (2) Trading Days, after a Registration
Statement is declared effective and shall simultaneously provide the Investors
with copies of any related prospectus to be used in connection with the sale
or
other disposition of the Securities covered thereby. Failure to notify the
Investors in accordance with this Section 4(b) shall be deemed an Event under
Section 4(a).
(c) No
Investor shall be entitled to a payment pursuant to this Section 4 if
effectiveness of a registration statement has been delayed or a prospectus
has
been unavailable as a result of (i) a failure by such Investor to promptly
provide on request by the Company the information required under the Securities
Purchase Agreement or this Agreement or requested by the SEC as a condition
to
effectiveness of a Registration Statement; (ii) the provision of inaccurate
or
incomplete information by such Investor; or (iii) a statement or determination
of the SEC that any provision of the rights of the Investor under this Agreement
are contrary to the provisions of the Securities Act.
-5-
5. OBLIGATIONS
OF THE COMPANY.
In
connection with the Company’s obligation under Section 3 hereof to file a
Registration Statement with the SEC and to use its commercially reasonable
efforts to cause a Registration Statement to become effective, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare
and file with the SEC such amendments and supplements to a Registration
Statement and the prospectus used in connection therewith as may be necessary
to
comply with the provisions of the Securities Act with respect to the disposition
of all Registrable Securities covered by a Registration Statement;
(b) Furnish
to the selling Investors such number of copies of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents (including, without limitation, prospectus
amendments and supplements as are prepared by the Company in accordance with
Section 5(a) above) as the selling Investors may reasonably request in order
to
facilitate the disposition of such selling Investors’ Registrable
Securities;
(c) Use
commercially reasonable efforts to comply with all applicable rules and
regulations of the SEC under the Securities Act and the Exchange Act, including,
without limitation, Rule 172 under the Securities Act, file any final
prospectus, including any supplement or amendment thereof, with the SEC pursuant
to Rule 424 under the Securities Act, promptly inform the Investors in writing
if, at any time during the Effectiveness Period, the Company does not satisfy
the conditions specified in Rule 172 and, as a result thereof, the Investors
are
required to deliver a prospectus in connection with any disposition of
Registrable Securities; notify the selling Investors of the happening of any
event as a result of which the prospectus included in or relating to a
Registration Statement contains an untrue statement of a material fact or omits
any fact necessary to make the statements therein not misleading; and,
thereafter, subject to Section 11 hereof, the Company will promptly prepare
(and, when completed, give notice and provide a copy thereof to each selling
Investor) a supplement or amendment to such prospectus so that such prospectus
will not contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading; provided
that
upon such notification by the Company (which shall be a Suspension pursuant
to
Section 11), the selling Investors will not offer or sell Registrable Securities
until the Company has notified the selling Investors that it has prepared a
supplement or amendment to such prospectus and filed it with the SEC or, if
the
Company does not then meet the conditions for the use of Rule 172, delivered
copies of such supplement or amendment to the selling Investors (it being
understood and agreed by the Company that the foregoing proviso shall in no
way
diminish or otherwise impair the Company’s obligation to promptly prepare a
prospectus amendment or supplement as above provided in this Section 5(c) and
deliver copies of same as above provided in Section 5(b) hereof);
and
(d) Use
commercially reasonable efforts to register and qualify the Registrable
Securities covered by a Registration Statement under such other securities
or
Blue Sky laws of such states as shall be reasonably appropriate in the opinion
of the Company, 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 states or jurisdictions, and provided
further
that
(notwithstanding anything in this Agreement to the contrary with respect to
the
bearing of expenses) if any jurisdiction in which any of such Registrable
Securities shall be qualified shall require that expenses incurred in connection
with the qualification therein of any such Registrable Securities be borne
by
the selling Investors, then the selling Investors shall, to the extent required
by such jurisdiction, pay their pro rata share of such qualification
expenses.
-6-
(e) Subject
to the terms and conditions of this Agreement, including Section 3 hereof,
the
Company shall use its commercially reasonable efforts to (i) prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction in the United States, and
(ii) if such an order or suspension is issued, obtain the withdrawal of such
order or suspension at the earliest practicable moment and notify each holder
of
Registrable Securities of the issuance of such order and the resolution thereof
or its receipt of notice of the initiation or threat of any proceeding such
purpose.
(f) The
Company shall (i) comply with all requirements of the National Association
of
Securities Dealers, Inc. with regard to the issuance of the Purchased Shares
and
the listing thereof on the NASDAQ Global Market and such other securities
exchange or automated quotation system, as applicable, and (ii) engage a
transfer agent and registrar to maintain the Company’s stock ledger for all
Registrable Securities covered by a Registration Statement not later than the
effective date of a Registration Statement.
(g) The
Company will notify the Investors of any pending proceeding against the Company
under Section 8A of the Securities Act in connection with the offering of the
Registrable Securities.
(h) The
Company will file a Registration Statement and all amendments and supplements
thereto electronically on XXXXX.
6. FURNISH
INFORMATION.
It
shall be a condition precedent to the obligations of the Company to take any
action pursuant to this Agreement that the selling Investors shall furnish
to
the Company such information regarding them and the securities held by them
as
the Company shall reasonably request and as shall be required in order to effect
any registration by the Company pursuant to this Agreement. Each Investor shall
promptly notify the Company of any changes in the information furnished to
the
Company.
7. EXPENSES
OF REGISTRATION.
Except
as set forth in Section 5(d), all expenses incurred in connection with the
registration of the Registrable Securities pursuant to this Agreement (excluding
underwriting, brokerage and other selling commissions and discounts), including
without limitation all registration and qualification and filing fees, printing,
and fees and disbursements of counsel for the Company, shall be borne by the
Company; provided however that the Investors shall be required to pay the
expenses of counsel and any other advisors for the Investors and any brokerage
or other selling discounts or commissions and any other expenses incurred by
the
Investors for their own account.
-7-
8. DELAY
OF REGISTRATION.
The
Investors shall not take any action to restrain, enjoin or otherwise delay
any
registration as the result of any controversy which might arise with respect
to
the interpretation or implementation of this Agreement.
9. INDEMNIFICATION.
(a) To
the
extent permitted by law, the Company will indemnify and hold harmless each
selling Investor, and each officer and director of such selling Investor and
each person, if any, who controls such selling Investor, within the meaning
of
the Securities Act, against any losses, claims, damages or liabilities, joint
or
several, to which they may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) any untrue or alleged untrue
statement of any material fact contained in a Registration Statement, in any
preliminary prospectus or final prospectus relating thereto or in any amendments
or supplements to a Registration Statement or any such preliminary prospectus
or
final prospectus, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading and (ii) (ii) any blue
sky application or other document executed by the Company specifically for
that
purpose or based upon written information furnished by the Company filed in
any
state or other jurisdiction in order to qualify any or all of the Registrable
Securities under the securities laws thereof (any such application, document
or
information herein called a “Blue Sky Application”); (iii) the omission or
alleged omission to state in a Blue Sky Application a material fact required
to
be stated therein or necessary to make the statements therein not misleading;
(iv) any violation by the Company or its agents of any rule or regulation
promulgated under the Securities Act applicable to the Company or its agents
and
relating to action or inaction required of the Company in connection with such
registration; or (v) any failure to register or qualify the Registrable
Securities included in any such Registration Statement in any state where the
Company or its agents has affirmatively undertaken or agreed in writing that
the
Company will undertake such registration or qualification on an Investor’s
behalf; and will reimburse such selling Investor, or such officer, director
or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided,
however,
that
the indemnity agreement contained in this Section 9(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any
such
case for any such loss, damage, liability or action to the extent that it arises
out of or is based upon (i) an untrue statement or alleged untrue statement
or
omission made in connection with a Registration Statement, any preliminary
prospectus or final prospectus relating thereto or any amendments or supplements
to a Registration Statement or any such preliminary prospectus or final
prospectus, in reliance upon and in conformity with written information
furnished expressly for use in connection with a Registration Statement or
any
such preliminary prospectus or final prospectus by the selling Investors or
(ii)
at any time when the Company has advised the Investor in writing that the
Company does not meet the conditions for use of Rule 172 and as a result that
the Investor is required to deliver a current prospectus in connection with
any
disposition of Registrable Securities, an untrue statement or alleged untrue
statement or omission in a prospectus that is (whether preliminary or final)
corrected in any subsequent amendment or supplement to such prospectus that
was
delivered to the selling Investor before the pertinent sale or sales by the
selling Investor.
-8-
(b) To
the
extent permitted by law, each selling Investor will severally and not jointly
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed a Registration Statement, each person, if any, who
controls the Company within the meaning of the Securities Act, against any
losses, claims, damages or liabilities to which the Company or any such
director, officer, controlling person, may become subject to, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon
any
untrue or alleged untrue statement of any material fact contained in a
Registration Statement or any preliminary prospectus or final prospectus,
relating thereto or in any amendments or supplements to a Registration Statement
or any such preliminary prospectus or final prospectus, or arise out of or
are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent and only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission (i) was
made in a Registration Statement, in any preliminary prospectus or final
prospectus relating thereto or in any amendments or supplements to a
Registration Statement or any such preliminary prospectus or final prospectus,
in reliance upon and in conformity with written information furnished by the
selling Investor expressly for use in connection with a Registration Statement,
or any preliminary prospectus or final prospectus or (ii) at any time when
the
Company has advised the Investor in writing that the Company does not meet
the
conditions for use of Rule 172 and as a result that the Investor is required
to
deliver a current prospectus in connection with any disposition of Registrable
Securities, was corrected in any subsequent amendment or supplement to such
prospectus that was delivered to the selling Investor before the pertinent
sale
or sales by the selling Investor; and such selling Investor will reimburse
any
legal or other expenses reasonably incurred by the Company or any such director,
officer, controlling person, or other selling Investor in connection with
investigating or defending any such loss, claim, damage, liability or action,
provided,
however,
that
the liability of each selling Investor hereunder shall be limited to the net
proceeds (net of underwriting discounts and commissions, if any) received by
such selling Investor from the sale of Registrable Securities giving rise to
such liability, and provided,
further,
however,
that
the indemnity agreement contained in this Section 9(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of those selling Investor(s)
against which the request for indemnity is being made (which consent shall
not
be unreasonably withheld).
(c) Promptly
after receipt by an indemnified party under this Section 9 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 9,
notify the indemnifying party in writing of the commencement thereof and the
indemnifying party shall have the right to participate in and, to the extent
the
indemnifying party desires, jointly with any other indemnifying party similarly
noticed, to assume at its expense the defense thereof with counsel satisfactory
to the indemnifying party or indemnifying parties,
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party for contribution or
otherwise under the indemnity agreement contained in this Section 9 (except
to
the extent that such omission materially and adversely affects the indemnifying
person’s ability to defend such action).
In the
event that the indemnifying party assumes any such defense, the indemnified
party may participate in such defense with its own counsel and at its own
expense,
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded, based on an opinion of counsel reasonably
satisfactory to the indemnifying party, that there may be a conflict of interest
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf
of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 9 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless the indemnified party shall have employed such
counsel in connection with the assumption of legal defenses in accordance with
the proviso to the preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel and one local counsel, reasonably satisfactory to such
indemnifying party, representing all of the indemnified parties who are parties
to such action in which case the reasonable fees and expenses of counsel shall
be at the expense of the indemnifying party.
-9-
(d) Notwithstanding
anything to the contrary herein, the indemnifying party shall not be entitled
to
settle any claim, suit or proceeding unless in connection with such settlement
the indemnified party receives an unconditional release with respect to the
subject matter of such claim, suit or proceeding and such settlement does not
contain any admission of fault by the indemnified party.
(e) If
the
indemnification provided for in this Section 9 is unavailable to or insufficient
to hold harmless an indemnified party under subsection (a) or (b) above in
respect of any losses, claims, damages or liabilities (or actions or proceedings
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative fault of the
Company on the one hand and the Investors on the other in connection with the
statements or omissions or other matters which resulted in such losses, claims,
damages or liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, in the case of an untrue statement, whether
the untrue statement relates to information supplied by the Company on the
one
hand or an Investor on the other and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement. The Company and the Investors agree that it would not be just and
equitable if contribution pursuant to this subsection (e) were determined by
pro
rata allocation (even if the Investors were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to above in this subsection (e). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above
in this subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Investors’ obligations in this subsection to
contribute are several in proportion to their sales of Registrable Securities
to
which such loss relates and not joint. In no event shall the contribution
obligation of an Investor be greater in amount than the dollar amount of the
net
proceeds (net of all expenses paid by such Investor in connection with any
claim
relating to this Section 9 and the amount of any damages such Investor has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission) received by it upon the sale of
the
Registrable Securities giving rise to such contribution obligation.
-10-
(f) The
parties to this Agreement hereby acknowledge that they are sophisticated
business persons who were represented by counsel during the negotiations
regarding the provisions hereof including, without limitation, the provisions
of
this Section 9, and are fully informed regarding said provisions. They further
acknowledge that the provisions of this Section 9 fairly allocate the risks
in
light of the ability of the parties to investigate the Company and its business
in order to assure that adequate disclosure is made in a Registration Statement
as required by the Securities Act and the Exchange Act.
10. REPORTS
UNDER THE EXCHANGE ACT.
With a
view to making available to the Investors the benefits of Rule 144 and any
other
rule or regulation of the SEC that may at any time permit the Investors to
sell
the Purchased Shares to the public without registration, the Company agrees
to
use commercially reasonable efforts: (i) to make and keep public information
available as those terms are understood in Rule 144, (ii) to file with the
SEC
in a timely manner all reports and other documents required to be filed by
an
issuer of securities registered under the Securities Act or the Exchange Act
pursuant to Rule 144, (iii) as long as any Investor owns any Purchased Shares,
to furnish in writing upon such Investor’s request a written statement by the
Company that it has complied with the reporting requirements of Rule 144 and
of
the Securities Act and the Exchange Act, and to furnish to such Investor a
copy
of the most recent annual or quarterly report of the Company, and such other
reports and documents so filed by the Company as may be reasonably requested
in
availing such Investor of any rule or regulation of the SEC permitting the
selling of any such Purchased Shares without registration and (iv) undertake
any
additional actions reasonably necessary to maintain the availability of a
Registration Statement or the use of Rule 144.
11. SUSPENSION.
Notwithstanding anything in this Agreement to the contrary, in the event (i)
of
any request by the SEC or any other federal or state governmental authority
during the period of effectiveness of a Registration Statement for amendments
or
supplements to a Registration Statement or related prospectus or for additional
information; (ii) of the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose;
(iii) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation of any
proceeding for such purpose; (iv) of any event or circumstance which
necessitates the making of any changes in a Registration Statement or related
prospectus, or any document incorporated or deemed to be incorporated therein
by
reference, so that, in the case of a Registration Statement, it will not contain
any untrue statement of a material fact or any omission to state a material
fact
required to be stated therein or necessary to make the statements therein not
misleading, and that in the case of the prospectus, it will not contain any
untrue statement of a material fact or any omission to state a material fact
required to be stated therein or necessary to make the statements therein,
in
the light of the circumstances under which they were made, not misleading;
or
(v) that the Board has made the good faith determination (A) that continued
use
by the selling Investors of a Registration Statement for purposes of effecting
offers or sales of Registrable Securities pursuant thereto would require, under
the Securities Act, premature disclosure in a Registration Statement (or the
prospectus relating thereto) of material, nonpublic information concerning
the
Company, its business or prospects or any proposed material transaction
involving the Company, (B) that such premature disclosure would be materially
adverse to the Company, its business or prospects or any such proposed material
transaction or would make the successful consummation by the Company of any
such
material transaction significantly less likely and (C) that it is therefore
essential to suspend the use by the Investors of such Registration Statement
(and the prospectus relating thereto) for purposes of effecting offers or sales
of Registrable Securities pursuant thereto, then the Company shall furnish
to
the selling Investors a certificate signed by the President or Chief Executive
Officer of the Company setting forth one or more of the above described
circumstances, and the right of the selling Investors to use a Registration
Statement (and the prospectus relating thereto) shall be suspended for a period
(the “Suspension
Period”)
of not
more than forty-five (45) days after delivery by the Company of the certificate
referred to above in this Section 11; provided that
the
Company shall be entitled to no more than two such Suspension Periods during
the
twelve (12) month period commencing on the First Closing and during each
subsequent twelve (12) month period until the Mandatory Registration Termination
Date (including any extension thereto). During the Suspension Period, none
of
the Investors shall offer or sell any Registrable Securities pursuant to or
in
reliance upon a Registration Statement (or the prospectus relating thereto)
and
each of the Investors shall keep the fact of the above described certificate
and
its contents confidential. The Company shall use commercially reasonable efforts
to terminate any Suspension Period as promptly as practicable.
-11-
12. TRANSFER
OF REGISTRATION RIGHTS.
An
Investor may transfer or assign, in whole or from time to time in part, to
one
or more persons its rights hereunder in connection with the transfer of
Registrable Securities by such Investor to such person, provided that such
Investor complies with all laws applicable thereto and provides written notice
of assignment to the Company promptly after such assignment is effected and,
provided, further that such person agrees to become a party to, and bound by,
all of the terms and conditions of, this Agreement by duly executing and
delivering to the Company an Instrument of Adherence in the form attached as
Exhibit B
hereto.
13. ENTIRE
AGREEMENT.
This
Agreement, the Warrant and the Securities Purchase Agreement constitute and
contain the entire agreement and understanding of the parties with respect
to
the subject matter hereof, and supersede any and all prior negotiations,
correspondence, agreements or understandings with respect to the subject matter
hereof.
-12-
14. MISCELLANEOUS.
(a) This
Agreement may not be amended, modified or terminated, and no rights or
provisions may be waived, except with the written consent of the Majority
Holders and the Company.
(b) This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the State of New York and without regard to any conflicts of laws
concepts which would apply the substantive law of some other jurisdiction,
and
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors or assigns, provided
that, to
the extent applicable, the terms and conditions of Section 12 hereof are
satisfied. This Agreement shall also be binding upon and inure to the benefit
of
any transferee of any of the Purchased Shares provided
that the
terms and conditions of Section 12 hereof are satisfied. Notwithstanding
anything in this Agreement to the contrary, if at any time any Investor shall
cease to own any Registrable Securities, all of such Investor’s rights under
this Agreement shall immediately terminate.
(c) Each
of
the parties hereto irrevocably submits to the exclusive jurisdiction of the
courts of the State of New York located in New York County and the United States
District Court for the Southern District of New York for the purpose of any
suit, action, proceeding or judgment relating to or arising out of this
Agreement and the transactions contemplated hereby. Service of process in
connection with any such suit, action or proceeding may be served on each party
hereto anywhere in the world by the same methods as are specified for the giving
of notices under this Agreement. Each of the parties hereto irrevocably consents
to the jurisdiction of any such court in any such suit, action or proceeding
and
to the laying of venue in such court. Each party hereto irrevocably waives
any
objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action
or
proceeding brought in any such court has been brought in an inconvenient forum.
EACH
OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN
CONSULTED SPECIFICALLY AS TO THIS WAIVER.
(d) Any
notices, reports or other correspondence (hereinafter collectively referred
to
as “correspondence”) required or permitted to be given hereunder shall be in
writing and shall be sent by postage prepaid first class mail, courier or
telecopy or delivered by hand to the party to whom such correspondence is
required or permitted to be given hereunder, and shall be deemed sufficient
upon
receipt when delivered personally or by courier, overnight delivery service
or
confirmed facsimile, or three (3) business days after being deposited in the
regular mail as certified or registered mail (airmail if sent internationally)
with postage prepaid, if such notice is addressed to the party to be notified
at
such party’s address or facsimile number as set forth below:
-13-
(i)
All
correspondence to the Company shall be addressed as follows:
00000
Xxxxxx Xxxxxxx Xxxxxxx
Xxxxxxxxxx,
Xxxxxxxx 00000
| Attention: |
Xxxxxx
X. Xxxxxx, Ph.D.
|
| President and Chief Executive Officer |
| Facsimile: | (000) 000-0000 |
with
a
copy to:
Xxxxx
Xxxxxxxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
| Attention: |
Xxxxxxxxx
X. Xxxxxx, Esq.
|
| Facsimile: | (000) 000-0000 |
(ii)
All
correspondence to any Investor shall be sent to such Investor at the address
set
forth in Exhibit A.
(iii)
Any
entity may change the address to which correspondence to it is to be addressed
by written notification as provided for herein.
(e) The
parties acknowledge and agree that in the event of any breach of this Agreement,
remedies at law may be inadequate, and each of the parties hereto shall be
entitled to seek specific performance of the obligations of the other parties
hereto and such appropriate injunctive relief as may be granted by a court
of
competent jurisdiction.
(f) Should
any part or provision of this Agreement be held unenforceable or in conflict
with the applicable laws or regulations of any jurisdiction, the invalid or
unenforceable part or provisions shall be replaced with a provision which
accomplishes, to the extent possible, the original business purpose of such
part
or provision in a valid and enforceable manner, and the remainder of this
Agreement shall remain binding upon the parties hereto.
(g) This
Agreement may be executed in a number of counterparts, any of which together
shall for all purposes constitute one Agreement, binding on all the parties
hereto notwithstanding that all such parties have not signed the same
counterpart.
[Signature
Page to Follow]
-14-
IN
WITNESS WHEREOF, the parties hereto have executed this Registration Rights
Agreement as of the date and year first above written.
| XXXXXXXXXXX PHARMACEUTICALS, INC. | ||
| |
|
|
| By: | /s/ Xxxxxx X. Xxxxxx, Ph.D. | |
| Name: |
Xxxxxx X. Xxxxxx, Ph.D. |
|
| Title: | President and Chief Executive Officer | |
THE
INITIAL INVESTOR’S SIGNATURE TO THE INVESTOR QUESTIONNAIRE DATED OF EVEN DATE
HEREWITH SHALL CONSTITUTE THE INITIAL INVESTOR’S SIGNATURE TO THIS REGISTRATION
RIGHTS AGREEMENT.
EXHIBIT
A
Investor
Name and Address
A-1
EXHIBIT
B
Instrument
of Adherence
Reference
is hereby made to that certain Registration Rights Agreement, dated as of
April __, 2007, among XxxxxxXxxxx Pharmaceuticals, Inc., a Delaware
corporation (the “Company”),
the
Initial Investors and the Investor Permitted Transferees, as amended and in
effect from time to time (the “Registration
Rights Agreement”).
Capitalized terms used herein without definition shall have the respective
meanings ascribed thereto in the Registration Rights Agreement.
The
undersigned, in order to become the owner or holder of [___________] shares
of
common stock, par value $0.01 per share (the “Common
Stock”),
of
the Company, or a Warrant or Warrants to purchase [_______] Underlying Shares,
hereby agrees that, from and after the date hereof, the undersigned has become
a
party to the Registration Rights Agreement in the capacity of an Investor
Permitted Transferee, and is entitled to all of the benefits under, and is
subject to all of the obligations, restrictions and limitations set forth in,
the Registration Rights Agreement that are applicable to Investor Permitted
Transferees. This Instrument of Adherence shall take effect and shall become
a
part of the Registration Rights Agreement immediately upon
execution.
Executed
as of the date set forth below under the laws of the State of New
York.
| |
|
|
| Signature: | ||
|
Name: |
||
| Title: | ||
| Accepted: | ||||
| [___________________] | ||||
| By: | ||||
|
Name: |
||||
| Title: | ||||
Date:
_________, 200__
B-1
