ACCESS PHARMACEUTICALS, INC.
REGISTRATION RIGHTS AGREEMENT
for 1998 Bridge Offering and Private Placement
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
by Access Pharmaceuticals, Inc., a corporation formed under the laws of the
State of Delaware (the "Company"), for the benefit of the investors listed on
Schedule I hereto (collectively, the "Investors" and, individually, an
"Investor").
RECITALS
A. The Investors desire to purchase from the Company, and the Company
desires to issue and sell to the Investors, a minimum of 16 and a maximum of
60 Units (the "Units"), each Unit consisting of 166,667 shares (the "Bridge
Offering Shares") of Common Stock, par value $.04 per share ("Common
Stock") and Warrants (the "Warrants") to purchase 166,667 shares (the
"Warrant Shares") in a bridge offering (the "Bridge Offering"), and a
minimum of 18,666,667 and a maximum of 52,000,000 shares (less the
number of shares sold in the Bridge Offering) (the "Primary Offering
Shares") of Common Stock in a private placement (the "Private Placement"),
both conducted in accordance with the Securities Act of 1933, as amended,
and the rules and regulations thereunder (collectively, the "Securities Act").
The Bridge Offering Shares, the Warrant Shares and the Primary Offering
Shares referenced in this Recital A are herein called the "Shares".
B. As further inducement for the Investors to purchase the Shares from the
Company, the Company desires to undertake to register under the Securities
Act, the resale of the Shares, in accordance with the terms hereof.
AGREEMENTS
The Company and the Investors covenant and agree as follows:
1. Definitions. For the purposes of this Agreement:
(a) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
statements or similar documents in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement or
document by the Securities and Exchange Commission (the "SEC").
(b) The term "Registrable Securities" means (i) the Investors' Shares, (ii)
Shares, if any, issued to Sunrise Securities Corp.
in satisfaction of the selling commission and expense
allowance and (iii) any Shares issued as (or issuable
upon the conversion or exercise of any convertible security, warrant, right or
other security which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of the Shares, including, but not
limited to, the shares underlying the Placement Agent's Warrants, and
excluding in all cases, however, any Registrable Securities sold by an Investor
in a transaction in which its registration rights under this Agreement are not
assigned pursuant to Section 9 of this Agreement.
(c) The term "Investor" includes (i) each Investor (as defined above) and
(ii) each person who is a permitted transferee or assignee of the Registrable
Securities pursuant to Section 9 of this Agreement.
2. Obligations of the Company. In connection with the registration of the
resale of Registrable Securities pursuant to this Agreement, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC, within thirty (30) days after (i) the close
of the Company's Private Placement, a resale registration statement or
registration statements (the "Registration Statement") with respect to all
Registrable Securities included therein, and use its best efforts to cause the
Registration Statement to become effective as soon as reasonably possible after
such filing, and, with respect to any registration that does not involve an
underwriting, to keep the Registration Statement effective pursuant to Rule 415
under the Securities Act for a period of at least seven years after the close of
the Company's Private Placement, or such shorter period as prescribed by
Rule 144 promulgated under the Securities Act or during which the Registrable
Securities are sold, or until there are no more Registrable Securities, which
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) 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, in light of the circumstances in
which they were made, not misleading.
(b) Prepare and file with the SEC such amendments (including post-
effective amendments) and supplements to the Registration Statement and any
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective (i) for such period as
may be required by the Securities Act with respect to an underwritten offering
and (ii) for at least seven years after the close of the Company's Private
Placement, or such shorter period as prescribed by Rule 144, or until there are
no more Registrable Securities, with respect to a non-underwritten offering,
and during such periods to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by the Registration
Statement
(c) Furnish promptly to each Investor whose Registrable Securities are
included in the Registration Statement such number of copies of a prospectus,
including a preliminary
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prospectus, and all amendments and supplements thereto, and of such other
documents as such Investor may reasonably request in order to facilitate the
disposition of Registrable Securities owned by such Investor.
(d) Use its reasonable efforts to register and qualify the Registrable
Securities covered by the Registration Statement under such other securities or
Blue Sky laws of such jurisdiction as shall be reasonably requested by the
Investors who hold a majority in interest of the Registrable Securities covered
by the Registration Statement and, with respect to a non-underwritten offering,
prepare and file in those jurisdictions such amendments (including post-
effective amendments) and supplements and to take such other actions as may
be necessary to maintain such registration and qualification in effect at all
times for a period of at least seven years after the close of the Company's
Private Placement, or such shorter period as prescribed by Rule 144 or during
which the Registrable Securities are sold, or until there are no more
Registrable Securities, and to take all other actions necessary or advisable to
enable the disposition of such securities in such jurisdictions; provided,
however, that the Company shall not be required in connection therewith or
as a condition thereto to (i) qualify to do business, file a general consent to
service of process or subject itself to general taxation in any such states or
jurisdictions or (ii) provide any undertaking or make any change in its
Certificate of Incorporation or bylaws.
(e) If the Registration Statement relates to an underwritten offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary indemnification and
contribution obligations, with the Underwriter's Representative.
(f) Notify the Investors who hold Registrable Securities being sold (or in
the event of an underwritten offering, the Underwriter's Representative), at
any time when a prospectus relating to Registrable Securities covered by the
Registration Statement is required to be delivered under the Securities Act, of
the happening of any event as a result of which the prospectus included in the
Registration Statement, 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 in light of the
circumstances then existing. The Company shall use its best efforts promptly
to amend or supplement the Registration Statement to correct any such untrue
statement or omission.
(g) Notify the Investors who hold Registrable Securities being sold (or in
the event of an underwritten offering, the Underwriter's Representative) of the
issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose.
The Company will make every reasonable effort to prevent the issuance of any
stop order and, if any stop order is issued, to obtain the lifting thereof at
the earliest possible time.
(h) Permit a single firm of counsel, designated as selling shareholders'
counsel by the holders of a majority in interest of the Registrable Securities
being sold, to review the Registration Statement and all amendments and
supplements thereto a reasonable period of time prior to their filing, and shall
not file any document in a form to which such counsel reasonably objects.
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(i) Make generally available to its security holders as soon as practicable,
but not later than forty five (45) 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.
(j) At the request of the Investors who hold a majority in interest of the
Registrable Securities being sold, furnish to the underwriters, if any, on the
date that Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Agreement (i) an opinion, dated
such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, and (ii) a
letter, dated such date, from the independent certified public accountants of
the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters.
(k) Make available for inspection by any underwriters participating in the
offering and the counsel, accountants or other agents retained by such
underwriter, all pertinent financial and other records, corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by such underwriters
in connection with the Registration Statement.
(l) If the Shares are then listed on a national securities exchange, use its
best efforts to cause the Registrable Securities to be listed on such exchange
if the listing of such Registrable Securities is then permitted under the rules
of such exchange, or if the Shares are not then listed on a national securities
exchange, use its best efforts to facilitate the quotation of the Shares on
NASDAQ, and use its best efforts to cause continued listing of the Shares so
long as the Registration Statement is in effect under the Securities Act.
(m) 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.
(n) Take all actions reasonably necessary to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legend)
representing the Registrable Securities sold pursuant to the Registration
Statement and to enable such certificates to be in such denominations and
registered in such names as the Investors or any underwriters may
reasonably request.
(o) Take all other actions reasonably necessary to expedite and facilitate
disposition by the Investors of the Registrable Securities pursuant to the
Registration Statement.
3. Obligations of the Investors. In connection with the registration of the
Registrable Securities pursuant to this Agreement, the Investors shall have the
following obligations:
(a) It shall be a condition precedent to the obligations of the Company to
take any action pursuant to this Agreement with respect to each Investor that
such Investor shall furnish to the Company in writing such information
regarding itself, the Registrable Securities held by it,
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and the intended methods of disposition of such securities as shall be
reasonably required to effect the registration of the Registrable Securities and
shall execute such documents in connection with such registration as the
Company may reasonably request. At least thirty (30) 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 "Requested Information") if it elects to have any of his
Registrable Securities included in the Registration Statement. If within seven
(7) business days of the filing date the Company has not received in writing
the Requested Information from an Investor (a "Non-Responsive Investor"),
then the Company may file the Registration Statement without including
Registrable Securities of such Non-Responsive Investor.
(b) Each Investor by his acceptance of the Registrable Securities agrees to
cooperate with the Company in connection with the preparation and filing of
any Registration Statement hereunder, unless such Investor has notified the
Company in writing of its election to exclude all of its Registrable Securities
from the Registration Statement.
(c) In the event Investors holding a majority in interest of the Registrable
Securities select underwriters for the offering, each Investor agrees to enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary indemnification and
contribution obligations and market stand-off obligations, with the managing
underwriter of such offering and to take such other actions as are reasonably
required in order to expedite or facilitate the disposition of the Registrable
Securities, unless such Investor has notified the Company in writing of its
election to exclude all of his Registrable Securities from the Registration
Statement.
(d) Each Investor agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 2(f), such
Investor will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 2(f) and, if so desired 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 such destruction) all
copies, other than the permanent file copies then in such Investor's possession,
of the prospectus covering such Registrable Securities current at the time of
receipt of such notice.
(e) No Investor may participate in any underwritten registration hereunder
unless such Investor (i) agrees to sell such Investor's Registrable Securities
on the basis provided in any underwriting arrangements approved by the Investors
entitled hereunder to approve such arrangements, (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay such Investor's pro rata portion of all
underwriting discounts and commissions.
4. Expenses of Registration. All expenses, including, without limitation,
all registration, listing, filing and qualification fees, printers and
accounting fees, the fees and disbursements of counsel for the Company and the
reasonable fees and disbursements of one firm of counsel for the Investors
shall be borne by the Company.
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5. 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 will indemnify and hold
harmless each Investor, the directors, if any, of such Investor, the officers,
if any, of such Investor who sign the Registration Statement, each person, if
any, who controls such Investor, any underwriter (as defined in the Securities
Act) for the Investors and each person,
if any, who controls any such underwriter
within the meaning of the Securities Act or the Securities Exchange Act of
1934, as amended (the "Exchange Act"), against any losses, claims, damages,
expenses or liabilities, joint or several) to which any of them may become
subject under the Securities Act, the Exchange Act, other federal or state law
or otherwise, insofar as such losses, claims, damages, expenses or liabilities
(or actions or proceedings, whether commenced or threatened, in respect
thereof, arise out of or are based upon any of the following statements,
omissions or violations (collectively, a "Violation"): (i) any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (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 in
which they were made, not misleading or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law. Subject to the restrictions set
forth in Section 5(c) with respect to the number of legal counsel, the Company
will reimburse the Investors and each such underwriter or controlling person,
promptly as such expenses are incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, action or proceeding. Notwithstanding
anything contained in this Agreement to the contrary, the indemnity agreement
contained above in this Section 5(a): (I) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld, (II) shall not apply to any such
case for any such loss, claim, damage, liability or action arising out of or
based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by the Investors or any such underwriter or controlling person, as
the case may be, and (III) with respect to any preliminary prospectus, shall not
inure to the benefit of any person from whom the person asserting any such
claim purchased the Registrable Securities that are the subject thereof (or to
the benefit of any person controlling such person) if the untrue statement or
omission of material fact contained the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Investors or any such underwriter or controlling person and shall
survive the transfer of the Registrable Securities by an Investor pursuant to
Section 7.
(b) To the extent permitted by law, each Investor, severally and not jointly,
will indemnify and hold harmless, to the same extent and in the same manner
set forth in Section 5(a), the Company, each of its directors, each of its
officers who have signed the Registration Statement, each person, if any, who
controls the Company within the meaning of the Securities Act or the
Exchange Act, any underwriter and any other stockholder selling securities
pursuant to the Registration Statement or any of its directors or officers or
any person who controls such holder or underwriter, against any losses, claims,
damages or liabilities, joint or several) to which any of
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them may become subject, under the Securities Act, the Exchange Act, other
federal or state law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) 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 by such Investor expressly for use in connection with such
registration; and such Investor will reimburse any legal or other expenses
reasonably incurred by any of them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Investor shall be liable under this Section 5(b) for only that
amount of losses, claims, damages and liabilities as does not exceed the
proceeds to such Investor as a result of the sale of Registrable Securities
pursuant to such registration. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such indemnified
party and shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 7. The Company shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, to the same
extent as provided above, with respect to information about such persons so
furnished in writing by such persons expressly for inclusion in the Registration
Statement
(c) Promptly after receipt by an indemnified party under this Section 5 of
notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 5, 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
satisfactory to the indemnifying party; provided, however, that 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
for the indemnifying party, representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and any
other party represented by such counsel in such proceeding. The Company
shall pay for only one legal counsel for the Investors.
Such legal counsel shall be selected by the Investors holding a majority
in interest of the Registrable Securities. 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 5 only to
the extent prejudicial 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 section 5. The indemnification required by this Section 5 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, promptly as such expense, loss, damage or liability
is incurred and is due and payable.
(d) To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would
otherwise be liable under this Section 5 to the extent permitted by law;
provided, however, that (i) no contribution shall be made under circumstances
where the maker would not have been liable for indemnification under the fault
standards set forth in this Section 5, (ii) no seller of Registrable Securities
guilty of fraudulent misrepresentation (within the meaning of Section 11 of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of such fraudulent misrepresentation, and (iii)
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contribution by any seller of Registrable Securities shall be limited in amount
to the amount of proceeds received by such seller from the sale of such
Registrable Securities.
6. Reports Under Securities Exchange Act of 1934. 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
securities of the Company to the public without registration, the Company
agrees to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144, at all times after ninety (90) days after
the effective date of the first registration statement filed by the Company for
the offering of its securities to the general public.
(b) 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.
(c) Furnish to each Investor, so long as such Investor owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144 (at any time after
90 days after the effective date of the first registration statement filed by
the Company), the Securities Act and the Exchange Act (at any time after it has
become subject to such reporting requirements), (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 in availing the Investors of any rule or regulation of
the SEC which permits the selling of any such securities without registration.
7. Assignments of Registration Rights. The rights to have the Company
register securities pursuant to this Agreement may be assigned by the Investors
to transferees or assignees of such securities provided that (i) the Company is,
within a reasonable time after such transfer, furnished with written notice of
the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned, (ii) such
assignment is in accordance with and permitted by all other agreements
between the Company and the transferor or assignor, and (iii) such
assignments shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Securities Act. The term "Investors" as used in this
Agreement shall include permitted assignees.
8. Miscellaneous.
(a) Notices required or permitted to be given hereunder shall be in writing
and shall be deemed to be sufficiently given when personally delivered or sent
by registered mail, return receipt requested, addressed (i) if to the Company,
Access Pharmaceuticals, Inc., 0000 Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx,
Xxxxx 00000, Attention: President, with a copy to Xxxx Xxxxxxxxx, Esq. of
Xxxxxxx Xxxx LLP, 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, and
(ii) if to an Investor, at the address set forth under his or her name in the
subscription agreement executed by such Investor in connection with its
investment, or at such other address as each such party furnishes by notice
given in accordance with this Section 8(a).
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(b) 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, will not operate as a waiver thereof. No waiver will be effective
unless and until it is in writing and signed by the party giving the waiver.
(c) This Agreement shall be enforced, governed and construed in all
respects in accordance with the laws of the State of New York, as such laws
are applied by New York courts to agreements entered into and to be
performed in New York by and between residents of New York. This
Agreement shall be binding upon each Investor and its heirs, estate, legal
representatives, successors and permitted assignees and shall inure to the
benefit of the Company and its successors and assigns. In the event that any
provision of this Agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any provision hereof which may prove
invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision hereof.
(d) This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof. Any provision 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 by a writing executed by the Company and Investors who
hold a majority in interest of the Registrable Securities. Any amendment or
waiver effected in accordance with this Section 8(d) shall be binding upon
such Investor and the Company.
(e) Any such person 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,
then the Company shall be entitled to act upon the basis of the instructions,
notice or election received from the registered owner of such Registrable
Securities.
Dated this 18 day of June, 1998.
---- ACCESS PHARMACEUTICALS, INC.
By: /s/ Xxxxx X. Xxxx
-------------------
Xxxxx X. Xxxx
President and Chief Executive Officer
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