REGISTRATION RIGHTS AGREEMENT
EXHIBIT
4.3
This
REGISTRATION RIGHTS AGREEMENT (this “Agreement”),
dated
as of January 13, 2006, is made by and among Matritech, Inc., a corporation
organized under the laws of the State of Delaware (the “Company”),
and
the undersigned (together with their affiliates, the “Initial
Investors”).
BACKGROUND
A. In
connection with that certain Securities Purchase Agreement dated as of
January 13, 2006 by and among the Company and the Initial Investors (the
“Securities
Purchase Agreement”),
the
Company has agreed, upon the terms and subject to the conditions contained
therein, to issue and sell to the Initial Investors (i) senior secured
convertible promissory notes (the “Notes”)
that
are convertible into shares of the Company’s common stock, par value $0.01 per
share (the “Common
Stock”),
upon
the terms and subject to the limitations and conditions set forth in the Notes,
and (ii) warrants (the “Warrants”)
to
acquire shares of Common Stock. The shares of Common Stock issuable upon
conversion or amortization of the Notes, or otherwise pursuant to the Notes,
are
referred to herein as the “Conversion
Shares”
and
the
shares of Common Stock issuable upon exercise of or otherwise pursuant to the
Warrants are referred to herein as the “Warrant
Shares.”
B. To
induce
the Initial Investors to execute and deliver the Securities Purchase Agreement,
and to consummate the transactions contemplated thereby, the Company has agreed
to provide certain registration rights under the Securities Act of 1933, as
amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, the “Securities
Act”),
and
applicable state securities laws.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the Company and the Initial Investors, intending
to be legally bound, hereby agree as follows:
1. DEFINITIONS.
(a) As
used in
this Agreement, the following terms shall have the following
meanings:
(i) “Initial
Registrable Shares”
means
the number of Registrable Shares equal to the sum of (a) the number of
Conversion Shares issuable upon conversion of the Notes based upon the
Conversion Price (as defined in the Notes) as of the Closing Date (without
giving effect to any limitations on conversion contained in Article IX of the
Notes) and (b) the number of Warrant Shares issuable upon exercise of the
Warrants (without giving effect to any limitations on exercise contained in
Section 3(c) of the Warrants).
(ii) “Investor”
means
the Initial Investors and any transferees or assignees who agree to become
bound
by the provisions of this Agreement in accordance with Section 10
hereof.
(iii) “register,”
“registered,”
and
“registration”
refer
to
a registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities
on a
continuous basis (“Rule
415”),
and
the declaration or ordering of effectiveness of such Registration Statement
by
the United States Securities and Exchange Commission (the “SEC”).
(iv) “Registrable
Securities”
means
(a) the Conversion Shares, (b) the Warrant Shares, and (c) any shares of capital
stock issued or issuable, from time to time, as interest on or in exchange
for,
as payment for, or otherwise with respect to any of the foregoing (including
the
Notes and the Warrants), whether as default payments, on account of
anti-dilution or other adjustments or otherwise, provided, that, a security
shall cease to be a Registrable Security upon (A) sale pursuant to a
Registration Statement or Rule 144 under the Securities Act, or (B) such
security becoming eligible for sale by the Investors pursuant to Rule
144(k).
(v) “Registration
Statement”
means
a
registration statement of the Company under the Securities Act.
(b) Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Securities Purchase Agreement.
2. REGISTRATION.
(a) Mandatory
Registration.
The
Company shall prepare promptly and file with the SEC as soon as practicable,
but
in no event later than the forty-fifth (45th)
day
following the date hereof (the “Filing
Date”),
a
Registration Statement on Form S-3 (or, if Form S-3 is not then available,
on
such form of Registration Statement as is then available to effect a
registration of all of the Initial Registrable Securities, subject to the
consent of the Initial Investors) covering the resale of the Initial Registrable
Securities. The Registration Statement filed hereunder, to the extent allowable
under the Securities Act and the Rules promulgated thereunder (including Rule
416), shall state that such Registration Statement also covers such
indeterminate number of additional shares of Common Stock as may become issuable
upon conversion of the Notes and exercise of the Warrants to prevent dilution
resulting from stock splits, stock dividends or similar transactions. The
Registrable Securities included on the Registration Statement shall be allocated
among the Investors as set forth in Section 11(k) hereof. The Registration
Statement (and each amendment or supplement thereto, and each request for
acceleration of effectiveness thereof) shall be provided to (and subject to
the
approval of) the Required Holders (as defined in the Securities Purchase
Agreement) prior to its filing or other submission. For purposes of all
provisions of this Agreement, any document publicly available on the SEC’s XXXXX
system shall be considered to have been validly “furnished,” “delivered” or
“provided” to the Required Holders.
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(b) Payments
by the Company.
The
Company shall use its best efforts to cause the Registration Statement required
to be filed pursuant to Section 2(a) hereof to become effective as soon as
practicable, but in no event later than (i) the one hundred twentieth
(120th)
day
following the date hereof in the event that there is no SEC review of the
Registration Statement, or (ii) the one hundred fiftieth (150th)
day
following the date hereof in the event that the SEC reviews the Registration
Statement (such date, the “Registration
Deadline”).
At the
time of effectiveness, the Company shall ensure that such Registration Statement
covers the Initial Registrable Securities, including, if necessary, by filing
an
amendment prior to the effective date of the Registration Statement to increase
the number of Registrable Securities covered thereby. If (i) (A) the
Registration Statement required to be filed pursuant to Section 2(a) hereof
is
not filed with the SEC prior to the Filing Date or declared effective by the
SEC
on or before the Registration Deadline or (B) any Registration Statement
required to be filed pursuant to Section 3(b) hereof is not declared effective
by the SEC on or before the sixtieth (60th)
day
following the applicable Registration Trigger Date (as defined in Section 3(b)
below), or (ii) if, after any such Registration Statement has been declared
effective by the SEC, sales of any of the Registrable Securities required to
be
covered by such Registration Statement (including any Registrable Securities
required to be registered pursuant to Section 3(b) hereof, (but specifically
excluding Warrant Shares) cannot be made pursuant to such Registration Statement
(by reason of a stop order or the Company’s failure to update the Registration
Statement or for any other reason outside the control of the Investors) and
such
failure is not cured by the Company within two (2) trading days after notice
thereof) or (iii) the Common Stock is not listed or included for quotation
on
the Nasdaq Capital Market (the “SmallCap
Market”),
the
Nasdaq National Market (the “National
Market”),
the
New York Stock Exchange (the “NYSE”)
or the
American Stock Exchange (the “AMEX”)
at any
time after the Registration Deadline hereunder, then the Company will make
payments to each Investor in such amounts and at such times as shall be
determined pursuant to this Section 2(b) as partial relief for the damages
to
the Investors by reason of any such delay in or reduction of their ability
to
sell the Registrable Securities (which remedy shall not be exclusive of any
other remedies available at law or in equity). In the event that any payment
becomes due from the Company under the preceding sentence, the Company shall
pay
to each Investor cash in the amount of (x) the aggregate principal balance
of
the Notes owned by such Investor then outstanding (including, for this purpose,
any principal balance of any Notes that have been converted into Conversion
Shares then held by such Investor as if such Notes had not been so converted),
multiplied by (y) fifteen thousandths (.015), for each 30 day period (or portion
thereof), (A) after the Filing Date and prior to the date the Registration
Statement is filed with the SEC pursuant to Section 2(a), (B) after the
Registration Deadline and prior to the date the Registration Statement filed
pursuant to Section 2(a) is declared effective by the SEC, (C) after the
sixtieth (60th)
day
following a Registration Trigger Date and prior to the date the Additional
Registration Statement (as hereinafter defined) or the Registration Statement
filed pursuant to Section 3(b) hereof is declared effective by the SEC, and
(D)
during which sales of any Registrable Securities (excluding the Warrant Shares)
cannot be made pursuant to any such Registration Statement after the
Registration Statement has been declared effective or the Common Stock is not
listed or included for quotation on the SmallCap Market, the National Market,
NYSE or AMEX; provided,
however,
that,
for purpose of calculating the payment amount owed to any given Investor, there
shall be excluded from each such period any delays which are solely attributable
to changes required by such Investor in the Additional Registration
3
Statement
or the Registration Statement with respect to information relating to such
Investor, including, without limitation, changes to the Plan of Distribution
(as
defined below), other than any corrections of Company mistakes with respect
to
information previously provided by such Investor. In the event that, after
a
Registration Statement covering the resale of the Warrant Shares has become
effective, such Registration Statement is no longer effective or the Common
Stock is not listed or included for quotation on the SmallCap Market, the
National Market, the NYSE or the AMEX, then (a) the Holder shall be entitled
to
use the cashless exercise provisions of the Warrants to exercise its Warrants
in
whole or in part, (b) no monetary penalty shall be payable pursuant to this
Section 2(b) with respect to the Warrants or the Warrant Shares, and (c) upon
a
Default Event (as defined in Section 11(i) of the Warrants) the Holder shall
have the rights set forth in Section 11(i) of the Warrants. Except for the
Additional Warrant Shares issuable to a Holder as set forth in Section 11(i)
of
the Warrants, all amounts required to be paid in cash hereunder shall be paid
within five days after the end of each period that gives rise to such
obligation, provided that, if any such period extends for more than thirty
(30)
days, interim payments shall be made for each such 30 day period.
(c) Eligibility
for Form S-3.
The
Company represents and warrants that it meets the requirements for the use
of
Form S-3 for registration of the resale by the Initial Investors and any other
Investor of the Registrable Securities and the Company shall file all reports
and statements required to be filed by the Company with the SEC in a timely
manner so as to thereafter maintain such eligibility for the use of Form
S-3.
3. OBLIGATIONS
OF THE COMPANY.
In
connection with the registration of the Registrable Securities, the Company
shall have the following obligations:
(a) The
Company shall respond promptly to any and all comments made by the staff of
the
SEC to any Registration Statement required to be filed hereunder, and shall
submit to the SEC, before the close of business on the business day immediately
following the business day on which the Company learns (either by telephone
or
in writing) that no review of such Registration Statement will be made by the
SEC or that the staff of the SEC has no further comments on such Registration
Statement, as the case may be, a request for acceleration of the effectiveness
of such Registration Statement to a time and date as soon as practicable. The
Company shall keep such Registration Statement effective pursuant to Rule 415
at
all times until such date as is the earlier of (i) the date on which all of
the
Registrable Securities have been sold and (ii) the date on which all of the
Registrable Securities may be immediately sold to the public without
registration or restriction pursuant to Rule 144(k) (assuming for this purpose
that the Warrants have been exercised pursuant to Section 3(d) (“cashless
exercise”) thereof ) under the Securities Act or any successor provision (the
“Registration
Period”),
which
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein and all documents incorporated by reference
therein) (A) shall comply in all material respects with the requirements of
the
Securities Act and the rules and regulations of the SEC promulgated thereunder
and (B) shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or necessary to make the
statements therein not misleading. The financial statements of the Company
included in any such Registration Statement or incorporated by
4
reference
therein (x) shall comply as to form in all material respects with the applicable
accounting requirements and the published rules and regulations of the SEC
applicable with respect thereto, (y) shall be prepared in accordance with U.S.
generally accepted accounting principles, consistently applied during the
periods involved (except as may be otherwise indicated in such financial
statements or the notes thereto or, in the case of unaudited interim statements,
to the extent they may not include footnotes or may be condensed on summary
statements) and (z) fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
immaterial year-end adjustments).
(b) The
Company shall (i) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to any Registration Statement
required to be filed hereunder and the prospectus used in connection with any
such Registration Statement as may be necessary to keep such Registration
Statement effective at all times during the Registration Period, (ii) file
such
additional registration statements (the "Additional
Registration Statements")
as may
be necessary to cover any Registrable Securities not included as Initial
Registrable Securities, and (iii) during the Registration Period, comply with
the provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by any such Registration Statement
until such time as all of such Registrable Securities have been disposed of
in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in such Registration Statement. Unless the context
otherwise requires, the term "Registration Statement" shall also be deemed
to
include "Additional Registration Statement". In the event that (i) the
Additional Registration Statements are not filed on or before the later of
(A)
in the case of the filing of an Additional Registration Statement being
triggered by approval by the Borrower’s stockholders of the Stockholders
Proposals (as defined in the Securities Purchase Agreement), five (5) trading
days or in the case of the filing of an Additional Registration Statement being
triggered by some other event, fifteen (15) trading days, or (B) 3 trading
days
after receipt of all information from the holders of Registrable Securities
required to be included in such Registration Statement or (ii) the number of
shares available under a Registration Statement filed pursuant to this Agreement
is, for any five (5) consecutive trading days (the last day of each of such
five
(5) trading days periods being the “Registration
Trigger Date”),
insufficient to cover the Registrable Securities then issued or issuable upon
conversion of the Notes (without giving effect to any limitations on conversion
contained in Article IX of the Notes) and exercise of the Warrants (without
giving effect to any limitations on exercise contained in Section 3(c) of the
Warrants), the Company shall provide each Investor written notice of such
Registration Trigger Date within three business days thereafter and shall amend
the Registration Statement, or file a new Registration Statement (on the short
form available therefor, if applicable), or both, so as to cover the Registrable
Securities issued or issuable upon conversion of the Notes (without giving
effect to any limitations on conversion contained in Article IX of the Notes)
or
exercise of the Warrants (without giving effect to any limitations on exercise
contained in Section 3(c) of the Warrants) as of the Registration Trigger Date,
in each case, as soon as practicable, but in any event within 15 days after
the
Registration Trigger Date, (or within five (5) trading days in the event the
Registration Trigger Date results from approval by the Borrower’s stockholders
of the Stockholder Proposals) or if later, within 3 trading days after receipt
of all information from the holders of Registrable Securities required to be
included
5
in
such
Registration Statement. The Company shall cause such amendment(s) and/or new
Registration Statement(s) to become effective as soon as practicable following
the filing thereof. In the event the Company fails to obtain the effectiveness
of any such Registration Statement within 60 days after a Registration Trigger
Date, each Investor shall thereafter have the option, exercisable in whole
or in
part at any time and from time to time by delivery
of a written notice to the Company (a “Mandatory
Repayment Notice”),
to
require the Company to repay in cash such portion of the principal balance,
plus
accrued interest, of such Investor’s Notes at a 15% premium over the portion of
the principal balance, plus accrued interest, being so repaid such that,
following such repayment, the total number of Registrable Securities included
on
the Registration Statement for resale by such Investor is at least equal to
the
Registrable Securities issued or issuable upon conversion of such Investor’s
Notes (without giving effect to any limitations on conversion contained in
the
Notes) and exercise of such Investor’s Warrants (without giving effect to any
limitation on exercise contained in the Warrants). If the Company fails to
repay
any of such Notes within five business days after its receipt of a Mandatory
Repayment Notice, then such Investor shall be entitled to the remedies provided
for an Event of Default in Article IV of the Notes.
(c) The
Company shall furnish to each Required Holder whose Registrable Securities
are
included in a Registration Statement and such Required Holder's legal counsel,
if identified to the Company as such (i) promptly after the same is prepared
and
publicly distributed, filed with the SEC or received by the Company, as
applicable, one copy of the Registration Statement and any amendment thereto,
each preliminary prospectus and prospectus and each amendment or supplement
thereto, and, in the case of the Registration Statement required to be filed
pursuant to Section 2(a), each letter written by or on behalf of the Company
to
the SEC or the staff of the SEC (including, without limitation, any request
to
accelerate the effectiveness of the Registration Statement or amendment
thereto), and each item of correspondence from the SEC or the staff of the
SEC,
in each case relating to the Registration Statement (other than any portion
thereof that contains information for which the Company has sought confidential
treatment), (ii) to each Investor whose Registrable Securities are included
in a
Registration Statement promptly after the date of effectiveness of the
Registration Statement or any amendment thereto, a notice stating that the
Registration Statement or amendment has been declared effective, and (iii)
to
each Investor whose Registrable Securities are included in a Registration
Statement such number of copies of a prospectus, including a preliminary
prospectus, all amendments and supplements thereto and all such other documents
as such Investor may reasonably request in order to facilitate the disposition
of the Registrable Securities owned by such Investor.
(d) The
Company shall use its best efforts to (i) register and qualify the Registrable
Securities covered by any Registration Statement under such other securities
or
“blue sky” laws of such jurisdictions in the United States as each Investor who
holds Registrable Securities being offered reasonably requests, (ii) prepare
and
file in those jurisdictions such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may
be
necessary to maintain the effectiveness thereof during the Registration Period,
(iii) take such other actions as may be necessary to maintain such registrations
and qualifications in effect at all times during the Registration Period, and
(iv) take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided,
however,
that the
Company shall not be required in connection therewith or as a
6
condition
thereto to (A) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (B) subject itself
to general taxation in any such jurisdiction, (C) file a general consent to
service of process in any such jurisdiction, (D) provide any undertakings that
cause the Company undue expense or burden, or (E) make any change in its
Certificate of Incorporation or Bylaws, which in each case the Board of
Directors of the Company determines to be contrary to the best interests of
the
Company and its stockholders.
(e) As
promptly as practicable after becoming aware of such event, the Company shall
(i) notify each Investor by telephone and facsimile of the happening of any
event, as a result of which the prospectus included in any Registration
Statement that includes Registrable Securities held by such Investor, as then
in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (ii) promptly prepare a supplement or amendment
to
such Registration Statement to correct such untrue statement or omission, and
deliver such number of copies of such supplement or amendment to each Investor
as such Investor may reasonably request.
(f) The
Company shall use its best efforts (i) to prevent the issuance of any stop
order
or other suspension of effectiveness of any Registration Statement that includes
Registrable Securities, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest practicable moment (including in each
case by amending or supplementing such Registration Statement), and (ii) to
notify each Investor who holds Registrable Securities being sold of the issuance
of such order and the resolution thereof (and if such Registration Statement
is
supplemented or amended, deliver such number of copies of such supplement or
amendment to each Investor as such Investor may reasonably
request).
(g) The
Company shall permit a single firm of counsel designated by the Initial
Investors to review any Registration Statement required to be filed hereunder
and all amendments and supplements thereto a reasonable period of time prior
to
its filing with the SEC, and not file any document in a form to which such
counsel reasonably objects.
(h) The
Company shall make generally available to its security holders as soon as
practicable, but in no event later than 90 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions
of
Rule 158 under the Securities Act) covering a twelve-month period beginning
not
later than the first day of the Company’s fiscal quarter next following the
effective date of the Registration Statement. The Company will be deemed to
have
complied with its obligations under this Section 3(h) upon the Company’s filing,
on an appropriate form, the appropriate report of the Company as required by
the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the “Exchange
Act”).
(i) The
Company shall hold in confidence and not make any disclosure of information
concerning an Investor provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws and
stock market rules, including formal or informal investigations or requests
from
regulators, (ii) the disclosure of such information is necessary to avoid or
correct a misstatement or omission in any Registration
7
Statement
that includes such Investor’s Registrable Securities, (iii) the release of such
information is ordered pursuant to a subpoena or other order from a court or
governmental body of competent jurisdiction, (iv) such information has been
made
generally available to the public other than by disclosure in violation of
this
or any other agreement, or (v) such Investor consents to the form and content
of
any such disclosure. The Company shall, upon learning that disclosure of any
information concerning an Investor is sought in or by a court or governmental
body of competent jurisdiction (other than the SEC, AMEX or other
self-regulatory body) or through other means, give prompt notice to such
Investor prior to making such disclosure, and cooperate with the Investor,
at
the Investor’s expense, in taking appropriate action to prevent disclosure of,
or to obtain a protective order for, such information.
(j) The
Company shall use its best efforts to promptly cause all of the Registrable
Securities covered by any Registration Statement to be listed or designated
for
quotation on the SmallCap Market, the National Market, the NYSE, the AMEX or
any
other national securities exchange or automated quotation system and on each
additional national securities exchange or automated quotation system on which
securities of the same class or series issued by the Company are then listed
or
quoted, if any, if the listing or quotation of such Registrable Securities
is
then permitted under the rules of such exchange or automated quotation
system.
(k) The
Company shall provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of
the
Registration Statement required to be filed pursuant to Section 2(a)
hereof.
(l) The
Company shall cooperate with any Investor who holds Registrable Securities
being
offered to facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legends) representing Registrable Securities to be
offered pursuant to any Registration Statement and enable such certificates
to
be in such denominations or amounts, as the case may be, and registered in
such
names, as such Investor may reasonably request. Without limiting the generality
of the foregoing, within three business days after any Registration Statement
that includes Registrable Securities is declared effective by the SEC, the
Company shall cause any shares sold pursuant to such Registration Statement
to
be covered by a legal opinion to the transfer agent for the Registrable
Securities to the effect that when sold pursuant to, and in accordance with
the
plan of distribution set forth on Exhibit
A
hereto,
any certificate representing such shares may be issued by the transfer agent
to
the purchaser without a federal securities law restrictive legend.
(m) At
the
request of any Investor, the Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to any
Registration Statement required to be filed hereunder and the prospectus used
in
connection with such Registration Statement as may be necessary in order to
change the plan of distribution set forth in such Registration
Statement.
(n) The
Company shall comply with all applicable laws related to a Registration
Statement and offering and sale of securities and all applicable rules and
regulations of governmental authorities in connection therewith (including,
without limitation, the Securities Act and the Exchange Act and the rules and
regulations thereunder promulgated by the SEC.)
8
(o) From
and
after the date of this Agreement, the Company shall not, and shall not agree
to,
allow the holders of any securities of the Company to include any of their
securities which are not Registrable Securities in the Registration Statement
required to be filed pursuant to Section 2(a) or 3(b) hereof without the consent
of the holders of a majority in interest of the Registrable Securities;
provided, however, that up to an additional 1,350,000 shares of Common Stock
issued to holders of the Company's securities previously identified by the
Company to the Required Holders may be included only in the Registration
Statement filed with respect to the Initial Registrable Securities.
(p) The
Company shall make available for inspection by (i) each Investor and (ii) one
firm of attorneys and one firm of accountants or other agents retained by the
Investors (collectively, the “Inspectors”)
all
pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the “Records”),
as
shall be reasonably deemed necessary by each Inspector to enable such Inspector
to exercise its due diligence responsibility, and cause the Company’s officers,
directors and employees to supply all information which any Inspector may
reasonably request for purposes of such due diligence; provided,
however,
that
each Inspector shall hold in confidence and shall not make any disclosure
(except to an Investor) of any Record or other information which the Company
determines in good faith to be confidential, and of which determination the
Inspectors are so notified, unless (A) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement, (B) the release of such Records is ordered pursuant to a subpoena
or
other order from a court or government body of competent jurisdiction, or (C)
the information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement. Nothing
herein shall be deemed to limit any Investor’s ability to sell Registrable
Securities in a manner that is otherwise consistent with applicable laws and
regulations.
4. OBLIGATIONS
OF THE INVESTORS.
In
connection with the registration of the Registrable Securities, each Investor
shall have the following obligations:
(a) It
shall
be a condition precedent to the obligations of the Company to effect the
registration pursuant to this Agreement with respect to the Registrable
Securities of a particular Investor that such Investor shall furnish to the
Company such information regarding itself, the Registrable Securities held
by it
and the intended method of disposition of the Registrable Securities held by
it
as shall be reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such registration
as the Company may reasonably request. At least seven (7) trading days prior
to
the first anticipated filing date of the Registration Statement, the Company
shall notify each Investor of the information the Company requires from each
such Investor. The Company hereby agrees to use the plan of distribution
(the “Plan
of Distribution”)
set
forth on Exhibit
A
hereto as
the plan of distribution to be used in the Registration Statement.
(b) Each
Investor, by such Investor’s acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement required to be
filed hereunder, unless such
9
Investor
has notified the Company in writing of such Investor’s election to exclude all
of such Investor’s Registrable Securities from such Registration
Statement.
(c) Upon
receipt of any notice from the Company of the happening of any event of the
kind
described in Section 3(e) or 3(f) with respect to any Registration Statement
including Registrable Securities, each Investor shall immediately discontinue
disposition of Registrable Securities pursuant to such Registration Statement
until such Investor’s receipt of the copies of the supplemented or amended
prospectus contemplated by Sections 3(e) or 3(f), as applicable, and, if so
directed by the Company, such Investor shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate
of
destruction) all copies in such Investor’s possession of the prospectus covering
such Registrable Securities current at the time of receipt of such notice.
Notwithstanding the foregoing or anything to the contrary in this Agreement,
but
subject to compliance with applicable laws, the Company shall cause the transfer
agent for the Registrable Securities to deliver unlegended shares of Common
Stock to a transferee of an Investor in accordance with the terms of the Notes
and Warrants, the Securities Purchase Agreement and this Agreement in connection
with any sale of Registrable Securities with respect to which any such Investor
has entered into a contract for sale prior to receipt of such notice and for
which any such Investor has not yet settled.
5. EXPENSES
OF REGISTRATION.
All
expenses incurred by the Company or the Investors in connection with
registrations, filings or qualifications pursuant to Sections 2 and 3 above
(including, without limitation, all registration, listing and qualification
fees, printers and accounting fees, the fees and disbursements of counsel for
the Company and the fees and disbursements of one counsel selected by the
Investors (which counsel shall be Drinker Xxxxxx & Xxxxx LLP)) shall be
borne by the Company; provided,
however,
that all
such expenses shall be limited to $5,000. In addition, the Company shall pay
each Investor’s costs and expenses (including legal fees) incurred in connection
with the enforcement of the rights of such Investor hereunder.
6. INDEMNIFICATION.
In
the
event any Registrable Securities are included in a Registration Statement under
this Agreement:
(a) To
the
extent permitted by law, the Company shall indemnify, hold harmless and defend
(i) each Investor who holds such Registrable Securities, and (ii) the
directors, officers, partners, members, employees and agents (including, without
limitation, legal counsel) of each such Investor and each person, if any, who
controls each such Investor within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act (each, an “Investor
Indemnified Person”),
against any joint or several losses, claims, damages, liabilities or expenses
(collectively, together with actions, proceedings or inquiries by any regulatory
or self-regulatory organization, whether commenced or threatened, in respect
thereof, “Claims”)
to
which any of them may become subject insofar as such Claims arise out of or
are
based upon: (A) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement or the omission or alleged omission to state
therein a material fact required to be stated
10
or
necessary to make the statements therein not misleading, (B) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented,
if
the Company files any amendment thereof or supplement thereto with the SEC)
or
the omission or alleged omission to state therein any material fact necessary
to
make the statements made therein, in light of the circumstances under which
the
statements therein were made, not misleading, or (C) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act or any other
law (including, without limitation, any state securities law), rule or
regulation relating to the offer or sale of the Registrable Securities (the
matters in the foregoing clauses (A) through (C), collectively, “Violations”).
Subject to the restrictions set forth in Section 6(c) with respect to the number
of legal counsel, the Company shall reimburse each Investor and each other
Investor Indemnified Person, promptly as such expenses are incurred and are
due
and payable, for any reasonable legal fees or other reasonable expenses incurred
by them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (x) shall not apply to a Claim arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Investor
Indemnified Person expressly for use in the Registration Statement or any such
amendment thereof or supplement thereto; (y) shall not apply to amounts paid
in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld; and
(z) with respect to any preliminary prospectus, shall not inure to the benefit
of any Investor Indemnified Person if the untrue statement or omission of
material fact contained in the preliminary prospectus was corrected on a timely
basis in the prospectus, as then amended or supplemented, if such corrected
prospectus was timely made available by the Company pursuant to Section 3(c)
hereof, and the Investor Indemnified Person was promptly advised in writing
not
to use the incorrect prospectus prior to the use giving rise to a Violation
and
such Investor Indemnified Person, notwithstanding such advice, used it. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Investor Indemnified Person and shall survive the
transfer of the Registrable Securities by the Investors pursuant to Section
9
hereof.
(b) In
connection with any Registration Statement in which an Investor is
participating, (i) each such Investor shall, severally and not jointly,
indemnify, hold harmless and defend, to the same extent and in the same manner
set forth in Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement, its employees and each person,
if
any, who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, and any other stockholder selling
securities pursuant to the Registration Statement or any of its directors or
officers or any person who controls such stockholder within the meaning of
the
Securities Act or the Exchange Act (each, a “Company
Indemnified Person”),
against any Claims to which any of them may become subject insofar as such
Claims arise out of or are based upon any Violation, in each case to the extent
(and only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement; and (ii)
subject to the restrictions set forth in Section 6(c), such Investor shall
reimburse the Company Indemnified Persons, promptly as such expenses are
incurred and are due and payable, for any legal fees or other reasonable
expenses incurred by
11
them
in
connection with investigating or defending any such Claim; provided,
however,
that the
indemnification obligations contained in this Section 6(b) shall not apply
to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of such Investor, which consent shall not be
unreasonably withheld; and provided,
further,
that the
Investor shall be liable under this Agreement (including this Section 6(b)
and
Section 7) for only that amount as does not exceed the net proceeds actually
received by such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Company Indemnified Person and shall survive the transfer of the Registrable
Securities by the Investor pursuant to Section 9 hereof. Notwithstanding
anything to the contrary contained herein, the indemnification obligations
contained in this Section 6(b) with respect to any preliminary prospectus shall
not inure to the benefit of any Company Indemnified Person if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected on a timely basis in the prospectus, as then amended or
supplemented.
(c) Promptly
after receipt by any party entitled to indemnification under this Section 6
of
notice of the commencement of any action (including any governmental action),
such indemnified party shall, if a Claim in respect thereof is to 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 the extent the indemnifying party
so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the indemnified party; provided,
however,
that
such indemnifying party shall not be entitled to assume such defense and an
indemnified party shall have the right to retain its own counsel with the fees
and expenses to be paid by the indemnifying party, if, in the reasonable opinion
of counsel retained by the indemnifying party, the representation by such
counsel of the indemnified party and the indemnifying party would be
inappropriate due to actual or potential conflicts of interest between such
indemnified party and any other party represented by such counsel in such
proceeding or the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and any
such indemnified party reasonably determines that there may be legal defenses
available to such indemnified party that are in conflict with those available
to
such indemnifying party. The indemnifying party shall pay for only one separate
legal counsel for the indemnified parties, and such legal counsel shall be
selected by Investors holding a majority in interest of the Registrable
Securities included in the Registration Statement to which the Claim relates
(if
the parties entitled to indemnification hereunder are Investor Indemnified
Persons) or by the Company (if the parties entitled to indemnification hereunder
are Company Indemnified Persons). The failure to deliver written notice to
the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
indemnified party under this Section 6, except to the extent that the
indemnifying party is actually prejudiced in its ability to defend such action.
The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due
and
payable.
12
7. CONTRIBUTION.
To
the
extent any indemnification by an indemnifying party is prohibited or limited
by
law, the indemnifying party shall make the maximum contribution with respect
to
any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law as is appropriate to reflect the relative fault
of the indemnifying party, on the one hand, and the indemnified party, on the
other hand, with respect to the Violation giving rise to the applicable Claim;
provided,
however,
that (a)
no contribution shall be made under circumstances where the maker would not
have
been liable for indemnification under the fault standards set forth in Section
6, (b) no person guilty of fraudulent misrepresentation (within the meaning
of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any
seller of Registrable Securities who was not guilty of such fraudulent
misrepresentation, and (c) contribution (together with any indemnification
or
other obligations under this Agreement) by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
8. REPORTS
UNDER THE EXCHANGE ACT.
With
a
view to making available to the Investors the benefits of Rule 144 promulgated
under the Securities Act or any other similar rule or regulation of the SEC
that
may at any time permit the Investors to sell securities of the Company to the
public without registration (“Rule
144”),
the
Company agrees to:
(a) file
with
the SEC in a timely manner and make and keep available all reports and other
documents required of the Company under the Securities Act and the Exchange
Act
so long as the Company remains subject to such requirements and the filing
and
availability of such reports and other documents is required for the applicable
provisions of Rule 144; and
(b) furnish
to
each Investor so long as such Investor holds Notes, Warrants or Registrable
Securities, promptly upon request, (i) a written statement by the Company 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 such other reports and documents so filed by the Company,
and
(iii) such other information as may be reasonably requested to permit such
Investor to sell such securities under Rule 144 without
registration.
9. ASSIGNMENT
OF REGISTRATION RIGHTS.
The
rights
of the Investors hereunder, including the right to have the Company register
Registrable Securities pursuant to this Agreement, shall be automatically
assignable by each Investor to any transferee of all or any portion of the
Notes, the Warrants or the Registrable Securities if: (a) the Investor agrees
in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company after such assignment, (b) the
Company is furnished with written notice of (i) the name and address of such
transferee or assignee, and (ii) the securities with respect to which such
registration rights are being transferred or assigned, (c) following such
transfer or assignment, the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act and applicable
state
13
securities
laws, (d) the transferee or assignee agrees in writing for the benefit of the
Company to be bound by all of the provisions contained herein, and (e) such
transfer shall have been made in accordance with the applicable requirements
of
the Securities Purchase Agreement, the Notes and the Warrants, as applicable.
In
addition, and notwithstanding anything to the contrary contained in this
Agreement, the Securities Purchase Agreement, the Notes or the Warrants, the
Securities (as defined in the Securities Purchase Agreement) may be pledged,
and
all rights of the Investor under this Agreement or any other agreement or
document related to the transactions contemplated hereby may be assigned,
without further consent of the Company, to a bona fide pledgee in connection
with an Investor’s margin or brokerage account.
10. AMENDMENT
OF REGISTRATION RIGHTS.
Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with written consent of the Company and the Investor(s)
who
hold a majority in interest of the Registrable Securities or, in the case of
a
waiver, with the written consent of the party charged with the enforcement
of
any such provision; provided,
however,
that (a)
no consideration shall be paid to an Investor by the Company in connection
with
an amendment hereto unless each Investor similarly affected by such amendment
receives a pro rata amount of consideration from the Company; and (b) unless
an
Investor otherwise agrees, each amendment hereto must similarly affect each
Investor. Any amendment or waiver effected in accordance with this Section
10
shall be binding upon each Investor and the Company.
11. MISCELLANEOUS.
(a) A
person
or entity is deemed to be a holder of Registrable Securities whenever such
person or entity owns of record such Registrable Securities. If the Company
receives conflicting instructions, notices or elections from two or more persons
or entities with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.
(b) Any
notices required or permitted to be given under the terms of this Agreement
shall be in writing and sent by certified or registered mail (return receipt
requested) or delivered personally, by nationally recognized overnight carrier
or by confirmed facsimile transmission, and shall be effective five days after
being placed in the mail, if mailed, or upon receipt or refusal of receipt,
if
delivered personally or by nationally recognized overnight carrier or confirmed
facsimile transmission, in each case addressed to a party as provided herein.
The initial addresses for such communications shall be as follows, and each
party shall provide notice to the other parties of any change in such party’s
address:
(i) If
to the
Company:
Matritech,
Inc.
000
Xxxxxx
Xxxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
14
Attention:
Chief Executive Officer
with
a
copy simultaneously transmitted by like means (which transmittal
shall
not
constitute notice hereunder) to:
Xxxxxxx
Procter LLP
Exchange
Place
00
Xxxxx
Xxxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attention:
Xxxxx X. Xxxx
(ii) If
to any
Investor, to such address as such Investor shall have provided in writing to
the
Company.
(c) Failure
of
any party to exercise any right or remedy under this Agreement or otherwise,
or
delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof.
(d) This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Delaware applicable to contracts made and to be performed in the State
of Delaware. The Company and each Investor irrevocably consent to the exclusive
jurisdiction of the United States federal courts and the state courts located
in
the County of New Castle, State of Delaware, in any suit or proceeding based
on
or arising under this Agreement or the transactions contemplated hereby and
irrevocably agree that all claims between the parties in respect of such suit
or
proceeding may be determined in such courts. The Company and each Investor
irrevocably waive the defense of an inconvenient forum to the maintenance of
such suit or proceeding in such forum. The Company and each Investor further
agree that service of process upon the Company or any Investor mailed by first
class mail shall be deemed in every respect effective service of process upon
the Company or such Investor, as the case may be, in any such suit or
proceeding. Nothing herein shall affect the right of the Company or any Investor
to serve process in any other manner permitted by law. The Company and each
Investor agree that a final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
(e) This
Agreement and the other Transaction Documents (including any schedules and
exhibits hereto and thereto) constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein. This Agreement and the other Transaction
Documents supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof and thereof.
(f) Subject
to
the requirements of Section 9 hereof, this Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties
hereto.
15
(g) The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
(h) This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original but all of which shall constitute one and the same agreement.
This Agreement, once executed by a party, may be delivered to the other party
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
(i) Each
party
shall do and perform, or cause to be done and performed, all such further acts
and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
(j) Unless
other expressly provided herein, all consents, approvals and other
determinations to be made by the Investors pursuant to this Agreement shall
be
made by the Investors holding a majority in interest of the Registrable
Securities (determined as if all Notes and Warrants then outstanding had been
converted into or exercised for Registrable Securities) held by all
Investors.
(k) The
initial number of Registrable Securities included on any Registration Statement
filed pursuant to Section 2(a) or 3(b), and each increase to the number of
Registrable Securities included thereon, shall be allocated pro rata among
the
Investors based on the number of Registrable Securities held by each Investor
at
the time of such establishment or increase, as the case may be. In the event
an
Investor shall sell or otherwise transfer any of such holder’s Registrable
Securities, each transferee shall be allocated a pro rata portion of the number
of Registrable Securities included on a Registration Statement for such
transferor. Any shares of Common Stock included on a Registration Statement
and
which remain allocated to any person or entity which does not hold any
Registrable Securities shall be allocated to the remaining Investors, pro rata
based on the number of shares of Registrable Securities then held by such
Investors. For the avoidance of doubt, the number of Registrable Securities
held
by any Investor shall be determined as if all Notes and Warrants then
outstanding were converted into or exercised for Registrable
Securities.
(l) Each
party
to this Agreement has participated in the negotiation and drafting of this
Agreement. As such, the language used herein shall be deemed to be the language
chosen by the parties hereto to express their mutual intent, and no rule of
strict construction will be applied against any party to this
Agreement.
(m) For
purposes of this Agreement, the term “business day” means any day other than a
Saturday or Sunday or a day on which banking institutions in the State of New
York are authorized or obligated by law, regulation or executive order to close,
and the term “trading day” means any day on which the AMEX or, if the Common
Stock is not then traded on the AMEX, the principal national securities
exchange, automated quotation system or other trading market where the Common
Stock is then listed, quoted or traded, is open for trading.
[REMAINDER
OF PAGE LEFT BLANK INTENTIONALLY]
16
IN
WITNESS
WHEREOF, the undersigned Initial Investor and the Company have caused this
Agreement to be duly executed as of the date first above written.
MATRITECH,
INC.
By:____________________________
Name:
Title:
INITIAL
INVESTOR:
(Print
or
Type Name of Investor)
By:____________________________
Name:
Title:
17
EXHIBIT
A
PLAN
OF DISTRIBUTION
The
Selling Stockholders and any of their pledgees, assignees, transferees, donees
and successors-in-interest may, from time to time, sell any or all of their
Shares on any stock exchange, market or trading facility on which the Common
Stock is traded or in private transactions. These sales may be at fixed or
negotiated prices. Each Selling Stockholder will act independently in making
decisions with respect to the timing, manner and size of each sale of the Shares
covered in this Prospectus. The Selling Stockholders may use any one or more
of
the following methods when selling Shares:
- ordinary
brokerage transactions and transactions in which the broker-dealer solicits
purchasers, which may include long sales and short sales effected after the
effective date of the Registration Statement;
- 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;
- purchases
by a broker-dealer as principal and resale by the broker-dealer for its account
pursuant to this Prospectus;
- “at
the
market” to or through market makers or into an existing market for the
Shares;
- an
exchange distribution in accordance with the rules of the applicable
exchange;
- in
other
ways not involving market makers or established trading markets, including
direct sales to purchasers, sales effected through agents or other privately
negotiated transactions;
- settlement
of short sales;
- broker-dealers
may agree with the Selling Stockholders to sell a specified number of Shares
at
a stipulated price per share;
- through
transactions in options, swaps or other derivative securities (whether
exchange-listed or otherwise);
- a
combination of any the foregoing methods of sale; and
- any
other
method permitted by applicable law.
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 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.
We
are
required to pay all fees and expenses incident to the registration of the
Shares, including certain fees and disbursements of counsel to the Selling
Stockholders. We have agreed to indemnify the Selling Stockholders against
certain losses, claims, damages and liabilities, including liabilities under
the
Securities Act.
-2-
