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EXHIBIT 3
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated October 21,
1999, by and between FOCAL, INC., a Delaware corporation (the "Company"), and
GENZYME CORPORATION, a Massachusetts corporation (the "STOCKHOLDER").
In connection with the Stock Purchase Agreement, dated the date hereof (the
"STOCK PURCHASE AGREEMENT"), the Company has agreed, subject to the terms and
conditions set forth therein, to issue and sell to the Stockholder shares of the
Company's common stock, par value $.01 per share (the "COMMON STOCK"). In order
to induce the Stockholder to enter into the Stock Purchase Agreement, the
Company has agreed to provide certain registration rights under the Securities
Act of 1933, as amended (the "SECURITIES ACT"). Capitalized terms used herein
and not otherwise defined shall have the respective meanings set forth in the
Stock Purchase Agreement.
In consideration of the Stockholder entering into the Stock Purchase
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings specified:
(a) "HOLDER" means any person owning or having the right to acquire
Registrable Securities, including initially the Stockholder, and any permitted
assignee thereof; and
(b) "REGISTRABLE SECURITIES" means the Shares acquired at the Initial
Closing or at an Option Closing, and any securities issued or issuable from time
to time (with any adjustments) in replacement of, in exchange for or otherwise
in respect of the Shares provided however, that shares of Common Stock which are
Registrable Securities shall cease to be Registrable Securities upon (x) any
sale pursuant to (i) a registration statement filed by the Company with the
Securities and Exchange Commission for a public offering and sale of securities
of the Company or (ii) Rule 144 under the Securities Act or (y) any sale to a
person or entity in a manner which does not comply with Section 8(e) of this
Agreement.
(c) "REGISTRATION TERMINATION DATE" shall mean the date after which
the Company shall no longer be obligated to file a registration statement (a
"REGISTRATION STATEMENT") pursuant to Section 2, to maintain the effectiveness
of a Registration Statement filed pursuant to Section 2 or to include
Registrable Securities on any Registration Statement pursuant to Section 3, and
shall be the sixth anniversary of the Initial Closing Date.
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2. MANDATORY REGISTRATION.
(a) Subject to Section 4(a), from time to time on or after the date
90 days after the Initial Closing Date and prior to Registration Termination
Date, at the request of the Holder, the Company shall prepare and file with the
Securities and Exchange Commission (the "SEC") a Registration Statement on Form
S-3 (or, if Form S-3 is not available, on such form of Registration Statement as
is then available to effect a registration of the Registrable Securities,
subject to the consent of the Holder which consent will not be unreasonably
withheld, as a "shelf" registration statement under Rule 415 under the
Securities Act (or any successor or similar rule providing for an offering of
securities on a continuous basis)) covering the resale of all Registrable
Securities or such portion thereof as the Holder may request. The Registration
Statement shall state, to the extent permitted by Rule 416 under the Securities
Act, that it also covers such indeterminate number of shares of Common Stock as
may be required to prevent dilution resulting from stock splits, stock dividends
or similar events. The Company shall not be obligated pursuant to this Section 2
to cause more than four separate Registration Statements to be declared
effective.
(b) The Company shall, subject to Sections 4(h) and 4(i) hereof,
maintain the effectiveness of a Registration Statement filed pursuant to this
Section 2 from the effective date thereof until the earlier to occur of (i) the
date on which all of the Registrable Securities covered by the Registration
Statement have been sold and (ii) 180 days from the effective date of such
Registration Statement.
3. PIGGYBACK REGISTRATION.
If at any time after the first anniversary of the Initial Closing Date
and prior to the Registration Termination Date, (a) the Company proposes to
register shares of Common Stock and/or any securities issued in exchange for, in
replacement of or otherwise with respect to Common Stock under the Securities
Act (a "PROPOSED REGISTRATION") in connection with the public offering of such
shares or securities (other than a registration relating solely to the sale of
securities to participants in a Company stock plan or a registration on Form S-4
under the Securities Act or any successor or similar form registering stock
issuable upon a reclassification, a business combination involving an exchange
of securities or an exchange offer for securities of the issuer or another
entity) and (b) a Registration Statement covering the sale of all of the
Registrable Securities is not then effective and available for sales thereof by
the Holder, the Company shall, at such time, promptly give the Holder written
notice of such Proposed Registration. The Holder shall have twenty (20) days
from its receipt of such notice to deliver to the Company a written request
specifying the amount of Registrable Securities that the Holder intends to sell
and the Holder's intended method of distribution. Upon receipt of such request,
the Company shall use its best efforts to cause all Registrable Securities which
the Company has been requested to register to be registered under the Securities
Act to the extent necessary to permit their sale or other disposition in
accordance with the intended methods of distribution specified in the request of
the Holder; PROVIDED, HOWEVER, that the Company shall have the right, prior to
the date the applicable Registration Statement becomes effective, to postpone or
withdraw any Proposed Registration without obligation to the Holder. In
connection with any Proposed Registration involving an underwriting, the Company
shall not be required to include any Registrable Securities in such underwriting
unless the Holders accept customary terms of the
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underwriting as agreed upon between the Company and the underwriters selected by
it, and then only in such quantity as will not, in the opinion of the
underwriters, materially and adversely affect such public offering. In the event
of a reduction in the number of Shares to be included in an underwriting
pursuant to the previous sentence, the number of shares that may be included in
such Proposed Registration by the Holder and any other holders of securities of
the Company who are entitled, by contract with the Company, to have securities
included in such registration (the "OTHER REGISTRATION RIGHTS HOLDERS") and who
have requested such registration shall be allocated among the Holder and such
Other Registration Rights Holders in proportion, as nearly as practicable, to
the respective number of shares of Common Stock (on an as-converted basis) which
they held at the time the Company gave notice of the Proposed Registration. If
any Holder or Other Registration Rights Holders would thus be entitled to
include more securities than such holders requested to be registered, the excess
shall be allocated among the Holder and the Other Registration Rights Holders
pro rata in the manner described in the preceding sentence. The parties agree
that it is customary in an underwritten offering for the indemnification
obligation of a selling securityholder like the Stockholder to underwriters to
be several and not joint and limited to the net proceeds the selling
securityholder receives in the offering.
4. OBLIGATIONS OF THE COMPANY.
In connection with the registration of Registrable Securities pursuant
to this Agreement, the Company shall:
(a) (i) within 60 days of receipt of a request pursuant to Section 2,
prepare and file with the SEC a Registration Statement with respect to the
Registrable Securities which complies with the provisions of the Securities Act
and the rules and regulations of the SEC thereunder and (ii) use its best
efforts to cause such Registration Statement to become effective as soon as
possible thereafter and (iii) keep any Registration Statement covering
Registrable Securities effective until the earlier of (1) 180 days from the
effective date of such Registration Statement and (2) the sale of all
Registrable Securities covered by the Registration Statement; PROVIDED, HOWEVER,
if the Holder requests the Company to register Registrable Securities pursuant
to Section 2 and (A) at such time the Company is engaged in, or has a firm plan
to engage in, a primary offering of Common Stock which is expected to close
within 60 days of the date of the request or (B) is engaged in any other
activity which the Company's Board of Directors determines in good faith would
be materially and adversely affected by such requested registration, then the
Company, at its option and without prejudice to the Holder's rights under
Section 3, may delay the filing of the Registration Statement until 90 days
following the request and shall use its best efforts to cause such Registration
Statement to become effective as soon as possible after filing;
(b) prepare and file with the SEC such amendments and supplements to
any Registration Statement covering Registrable Securities and the prospectus
used in connection with such Registration Statement as may be necessary to
comply with the provisions of the Securities Act and the rules and regulations
thereunder to maintain the effectiveness of the Registration Statement, to
otherwise permit sales by the Holder under the Registration Statement, or as may
be reasonably requested by the Holder in order to incorporate information
concerning the Holder or the Holder's intended methods of distribution;
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(c) amend any Registration Statement covering Registrable Securities,
or file a new Registration Statement, or both, as necessary to cover all
securities issued in exchange for, in replacement of or otherwise with respect
to the Shares or any other securities previously issued with respect to the
Shares;
(d) secure the designation and quotation of the Registrable
Securities on the Nasdaq National Market or the stock exchange on which the
Common Stock, or other securities of the Company issued in replacement of, in
exchange for, or otherwise in respect of the Shares, are then listed and
principally traded;
(e) furnish to the Holder such number of copies of the prospectus
included in a Registration Statement covering Registrable Securities, including
a preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as the Holder may reasonably request in order to
facilitate the disposition of the Holder's Registrable Securities;
(f) if the Registrable Securities cease to be "covered securities"
under Section 18(b)(1) of the Securities Act (or any successor thereto), use its
best efforts to register or qualify the Registrable Securities under the
securities or "blue sky" laws of such jurisdictions within the United States as
shall be reasonably requested from time to time by the Holder, and do any and
all other acts or things which may be necessary or advisable to enable the
Holder to consummate the public sale or other disposition of the Registrable
Securities in such jurisdictions; provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such
jurisdiction;
(g) in the event of an underwritten public offering of the
Registrable Securities, enter into an perform its obligations under an
underwriting agreement, in usual and customary form reasonably acceptable to the
Company, with the managing underwriter of such offering;
(h) notify the Holder immediately upon the occurrence of any event as
a result of which the prospectus included in a Registration Statement, as then
in effect, contains an untrue statement of material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and as
promptly as possible, prepare, file and furnish to the Holder a reasonable
number of copies of a supplement or an amendment to such prospectus as may be
necessary so that such prospectus does not contain an untrue statement of
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing; PROVIDED, HOWEVER, that the Company may delay
preparing, filing and distributing any such supplement or amendment if the Board
of Directors of the Company determines in good faith that such supplement or
amendment could, in its reasonable judgment, (i) interfere with or adversely
affect the negotiation or completion of a transaction that is being contemplated
by the Company or (ii) involve initial or continuing disclosure obligations that
are not in the best interests of the Company or the Company's stockholders at
such time; PROVIDED, FURTHER, that (1) the Company will give notice (a
"STANDSTILL NOTICE") of any such delay as promptly as practicable under the
circumstances, (2) such delay shall not extend for a period
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of more than 20 calendar days and (3) the Company may utilize such delay no more
than three times in any 365-day period;
(i) use its best efforts to prevent the issuance of any stop order or
other order suspending the effectiveness of a Registration Statement covering
Registrable Securities and, if such an order is issued, to obtain the withdrawal
thereof at the earliest possible time and to notify the Holder of the issuance
of such order and the resolution thereof;
(j) furnish to the Holder, on the date that a Registration Statement
covering Registrable Securities becomes effective, an opinion, dated such date,
of outside counsel representing the Company (and reasonably acceptable to the
Holder) addressed to the Holder and in form and substance as is customarily
given to underwriters in an underwritten public offering;
(k) provide the Holder and its representatives the opportunity to
conduct a reasonable inquiry of the Company's financial and other records during
normal business hours and make available its officers, directors and employees
for questions regarding information which the Holder may reasonably request in
order to conduct any due diligence;
(l) permit counsel for the Holder to review a Registration Statement
covering Registrable Securities and all amendments and supplements thereto a
reasonable period of time prior to the filing thereof with the SEC; and
(m) at the request of any Holder at any time after any Registrable
Securities held by such Holder become eligible for resale pursuant to Rule
144(k) under the Securities Act, deliver a letter to the Company's transfer
agent irrevocably instructing the transfer agent to remove any securities law
legend from any certificate representing such Registrable Securities which have
become eligible for the sale pursuant to Rule 144(k).
5. OBLIGATIONS OF HOLDER.
In connection with any registration of the Registrable Securities
pursuant to this Agreement, the Holder shall:
(a) furnish to the Company such information regarding itself and the
intended methods of disposition of Registrable Securities as the Company shall
reasonably request in order to effect the registration thereof;
(b) upon receipt of any Standstill Notice from the Company pursuant
to Section 4(h), immediately discontinue disposition of Registrable Securities
until the earlier of (i) the expiration of the period during which such
Standstill Notice is in effect or (ii) the date that such Holder is advised by
the Company that the then current prospectus may be used and has received copies
of any additional or supplemental filings that are incorporated or deemed
incorporated by reference into such prospectus;
(c) upon receipt of any notice from the Company of the issuance of a
stop order pursuant to Section 4(i), immediately discontinue disposition of
Registrable Securities pursuant to the applicable Registration Statement until
withdrawal of the stop order; and
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(d) if so requested by the Company, provided the Company is not at
such time in breach of this Agreement, not sell or otherwise transfer pursuant
to a Registration Statement or pursuant to Rule 144 under the Securities Act
("RULE 144") any Registrable Securities during the period beginning on the
second business day prior to the effective date of a registration statement
filed by the Company under the Securities Act in connection with a primary
offering underwritten on a firm commitment or best efforts basis, and ending, at
the managing underwriter's discretion, as late as the 90th calendar day
following such effective date.
6. INDEMNIFICATION.
In the event that any Registrable Securities are included in a
Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company shall indemnify and
hold harmless the Holder, the officers, directors, employees, agents and
representatives of the Holder, and each person, if any, who controls the Holder
within the meaning of the Securities Act or the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), against any losses, claims, damages,
liabilities or reasonable out-of-pocket expenses (whether joint or several)
(collectively, including legal or other expenses incurred in connection with
investigating or defending same, "LOSSES"), insofar as any such Losses arise out
of or are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Company will reimburse the Holder, and each such officer,
director, employee, agent, representative or controlling person for any legal or
other expenses as reasonably incurred by any such entity or person in connection
with investigating or defending any Loss; PROVIDED, HOWEVER, that the foregoing
indemnity shall not apply to amounts paid in settlement of any Loss if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be obligated to indemnify
any person for any Loss to the extent that such Loss arises out of or is based
upon and in conformity with written information furnished by such person
expressly for use in such Registration Statement; and PROVIDED, FURTHER, that
the Company shall not be required to indemnify any person to the extent that any
Loss results from such person selling Registrable Securities to a person to whom
there was not sent or given, at or prior to the written confirmation of the sale
of such securities, a copy of the prospectus, as most recently amended or
supplemented, if the Company had a reasonable time prior to the sale furnished
to the Holder sufficient copies thereof.
(b) To the extent permitted by law, the Holder shall indemnify and
hold harmless the Company, the officers, directors, employees, agents and
representatives of the Company, and each person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act, against
any Losses to the extent (and only to the extent) that such Losses are based
upon (i) any untrue statement or alleged untrue statement of a material fact
contained in a Registration Statement, including any preliminary prospectus or
final prospectus contained therein or any amendments or supplements thereto or
(ii) the omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the
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statements therein, in light of the circumstances under which they were made,
not misleading, if and only to the extent that the statement or omission was
made in reliance upon or in conformity with written information furnished by the
Holder expressly for use in such Registration Statement; and the Holder will
reimburse any legal or other expenses as reasonably incurred by the Company and
any such officer, director, employee, agent, representative, or controlling
person, in connection with investigating or defending any such Loss; AND FURTHER
PROVIDED, that the foregoing indemnity shall not apply to amounts paid in
settlement of any such Loss if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld; PROVIDED,
HOWEVER, that, in no event shall any indemnity under this subsection 6(b) exceed
the net sale price of securities sold by the Holder under the Registration
Statement.
(c) Promptly after receipt by an indemnified party under this Section
6 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in and to assume the
defense thereof with counsel mutually satisfactory to the parties; PROVIDED,
HOWEVER, that an indemnified party shall have the right to retain its own
counsel, with the reasonably incurred fees and expenses of one such counsel to
be paid by the indemnifying party, if there are actual or potential conflicting
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall relieve such indemnifying party of any liability to the indemnified
party under this Section 6 with respect to such action to the extent such
failure prejudices to its ability to defend such action, but the omission so to
deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 6 or with respect to any other action.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 6 is unavailable or insufficient to hold harmless an indemnified
party for any reason, the Company and the Holder agree to contribute to the
aggregate Losses to which the Company or the Holder may be subject in such
proportion as is appropriate to reflect the relative fault of the Company and
the Holder in connection with the statements or omissions which resulted in such
Losses; PROVIDED, HOWEVER, that in no case shall the Holder be responsible for
any amount in excess of the net sale price of securities sold by it under the
Registration Statement. Relative fault shall be determined by reference to
whether any alleged untrue statement or omission relates to information provided
by the Company or by the Holder. The Company and the Holder agree that it would
not be just and equitable if contribution were determined by pro rata allocation
or any other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 6, each person who controls the
Holder within the meaning of either the Securities Act or the Exchange Act and
each officer, director, employee, agent or representative of the Holder shall
have the same rights to contribution as the Holder, and each person who controls
the Company within the meaning of either the Securities Act or the Exchange Act
and each officer, director, employee, agent or representative of the
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Company shall have the same rights to contribution as the Company, subject
in each case to the applicable terms and conditions of this paragraph (d).
(e) The obligations of the Company and the Holder under this Section
6 shall survive the completion of any offering of Registrable Securities
pursuant to a Registration Statement under this Agreement, or otherwise.
7. REPORTS.
With a view to making available to the Holder the benefits of Rule 144
and any other rule or regulation of the SEC that may at any time permit the
Holder to sell securities of the Company to the public without registration, the
Company agrees that so long as it is subject to the reporting requirements under
the Exchange Act, it will:
(a) make and keep current public information about the Company
available, as those terms are understood and defined in Rule 144;
(b) use its best efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act; and
(c) furnish to the Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company, if
true, that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual or
quarterly report of the Company and (iii) such other reports and documents filed
by the Company and such other information as may be reasonably requested in
availing the Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration.
8. MISCELLANEOUS.
(a) EXPENSES OF REGISTRATION. All expenses, other than underwriting
discounts and commissions payable with respect to Registrable Securities sold by
the Holder and the expenses of counsel for the Holder, incurred in connection
with the registrations, filings or qualifications described herein, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, the fees and disbursements of counsel for the Company in
connection with the opinion described in Section 4(j) hereof shall be borne by
the Company.
(b) AMENDMENT; WAIVER. Any provisions of this Agreement may be
amended only pursuant to a written instrument executed by the Company and the
Holder. Any waiver of the provision of this Agreement may be made only pursuant
to a written instrument executed in accordance with this paragraph shall be
binding upon the Holder, each future Holder, and the Company.
(c) NOTICES. Any notice, demand, request or delivery required or
permitted to be given by the Company or the Holder pursuant to the terms of this
Agreement shall be in writing and shall be deemed given (i) when delivered
personally or when sent by verifiable facsimile transmission (with a hard copy
to follow), (ii) on the next business day after timely
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delivery to an overnight courier and (iii) on the third business day after
deposit in the U.S. mail (certified or registered mail, return receipt
requested, postage prepaid), addressed to the parties as follows:
If to the Company, to:
Focal, Inc.
0 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: President
Telecopier: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxx & Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
if to the Stockholder, to:
Genzyme Corporation
Xxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Chief Corporate Officer
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx & Dodge LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
and if to any other Holder, at such Holder's address as such Holder shall have
furnished the Company in writing.
(d) TERMINATION. The obligations under Sections 2, 3, 4 and 5 of this
Agreement shall terminate on the Registration Termination Date, but any such
termination shall be without prejudice to (i) the parties' rights and
obligations arising from breaches of this Agreement occurring prior to such
termination and (ii) the indemnification and contribution obligations under this
Agreement. The indemnification and contribution provisions shall survive
indefinitely. The obligations under Section 7 shall survive for as long as the
Holder owns or has the right to acquire any Registrable Securities.
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(e) ASSIGNMENT. The rights of the Holder hereunder shall be assigned
automatically to any transferee of Registrable Securities, as long as: (i) the
Company is, within a reasonable period of time following such transfer,
furnished with written notice of the name and address of such transferee, (ii)
immediately following such transfer, the further disposition of Registrable
Securities is restricted under the Securities Act or under state securities
laws, (iii) the transferee agrees in writing with the Company to be bound by all
of the provisions hereof and (iv) such rights of the Holder may not be
transferred to more than 5 persons (excluding for this purpose Affiliates of the
Stockholder, to whom such rights may be transferred in any case provided that
the conditions in clauses (i) through (iii) are satisfied). If the Stockholder
transfers any portion of its Registrable Securities to another Holder, the
respective obligations of the Stockholder and such Holder under this Agreement,
including without limitation the obligations under Sections 5 and 7, shall be
several and not joint in all instances.
(f) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts.
(g) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be considered one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first-above written.
FOCAL, INC.
By:/s/ Xxxxx Xxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxx
Title: Chief Executive Officer
GENZYME CORPORATION
By: /s/ Xxxx X. Xxxxxxx, Xx.
---------------------------------
Name: Xxxx X. Xxxxxxx, Xx.
Title: Executive Vice President
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