REGISTRATION RIGHTS AGREEMENT
Exhibit
10.2
This
Registration Rights Agreement (this “Agreement”) is
made and entered into as of May 26, 2005, among NovaDel Pharma Inc., a Delaware
corporation (the “Company”), and
the purchasers signatory hereto (each such purchaser is a “Purchaser” and
collectively, the “Purchasers”).
This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of May
26, 2005, among the Company and the Purchasers (the “Purchase
Agreement”).
The
Company and the Purchasers hereby agree as follows:
1. Definitions.
Capitalized
terms used and not otherwise defined herein that are defined in the Purchase
Agreement shall have the meanings given to such terms in the Purchase
Agreement. As used
in this Agreement, the following terms shall have the following
meanings:
“Advice” shall
have the meaning set forth in Section 6(c).
“Commission” means
the United States Securities and Exchange Commission.
“Effectiveness
Date” means,
(a) with respect to the initial Registration Statement required to be filed
hereunder, the 90th calendar
day following the date hereof (120th calendar
day in the event that the Commission reviews and provides written comments to
the Registration Statement), and (b) with respect to any additional Registration
Statements which may be required pursuant to Section 3(c), the 90th calendar
day following the date on which the Company first knows, or reasonably should
have known, that such additional Registration Statement is required hereunder
(120th calendar
day in the event that the Commission reviews and provides written comments to
any additional Registration Statement); provided,
however, in the
event the Company is notified by the Commission that one of the above
Registration Statements will not be reviewed or is no longer subject to further
review and comments, the Effectiveness Date as to such Registration Statement
shall be the fifth Trading Day following the date on which the Company is so
notified if such fifth Trading Date precedes the applicable date required above.
Notwithstanding the foregoing, if any day otherwise designated as an
“Effectiveness Date” pursuant to this definition falls on a day other than a
Trading Day, the Effectiveness Date shall be deemed to be the next Trading
Day.
“Effectiveness
Period” shall
have the meaning set forth in Section 2(a).
“Event” shall
have the meaning set forth in Section 2(b).
“Event
Date” shall
have the meaning set forth in Section 2(b).
“Filing
Date” means,
with respect to the initial Registration Statement required hereunder, the
45th calendar
day following the date hereof and with respect to any additional Registration
Statements which may be required pursuant to Section 3(c), the 45th day
following the date on which the Company first knows, or reasonably should have
known, that such additional Registration Statement is required hereunder.
Notwithstanding the foregoing, if any day otherwise designated as a “Filing
Date” pursuant to this definition falls on a day other than a Trading Day, the
Filing Date shall be deemed to be the next Trading Day.
1
“Holder” or
“Holders” means
the holder or holders, as the case may be, from time to time of Registrable
Securities.
“Indemnified
Party” shall
have the meaning set forth in Section 5(c).
“Indemnifying
Party” shall
have the meaning set forth in Section 5(c).
“Initial
Filing Date” means
the 45th calendar
day following the date hereof. Notwithstanding the foregoing, if the day
otherwise designated as the “Initial Filing Date” pursuant to this definition
falls on a day other than a Trading Day, the Initial Filing Date shall be deemed
to be the next Trading Day.
“Liquidated
Damages Payment Date” shall
have the meaning set forth in Section 2(b).
“Losses” shall
have the meaning set forth in Section 5(a).
“Person” means
an individual, corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.
“Plan
of Distribution” shall
have the meaning set forth in Section 2(a).
“Proceeding” means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Prospectus” means
the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Registration Statement, and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
“Registrable
Securities” means
(i) (A) all Shares and (B) all shares of Common Stock issuable upon exercise of
the Warrants and the Placement Warrants and (ii) any securities issued or
issuable upon any stock split, dividend or other distribution, recapitalization
or similar event with respect to the foregoing; provided,
however, that
Registrable Securities shall not include those securities that (a) have been
effectively registered under Section 5 of the Securities Act and disposed of
pursuant to a registration statement or (b) have been transferred pursuant to
Rule 144 promulgated under the Securities Act or any successor
rule.
2
“Registration
Statement” means
any registration statement required to be filed hereunder and any additional
registration statements contemplated by Section 3(c), including (in each case)
the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
“Rule
415” means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same purpose and
effect as such Rule.
“Rule
424” means
Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same purpose and
effect as such Rule.
2. Shelf
Registration.
(a) On or
prior to the Initial Filing Date, the Company shall prepare and file with the
Commission a shelf Registration Statement covering the resale of all of the
Shares and the Registrable Securities underlying the Warrants and Placement
Warrants on such Filing Date for an offering to be made on a continuous basis
pursuant to Rule 415. The Registration Statement shall be on Form S-3 (except if
the Company is not then eligible to register for resale the Registrable
Securities on Form S-3, in which case such registration shall be on another
appropriate form in accordance herewith) and shall contain (unless otherwise
directed by the Holders holding a majority of the Registrable Securities to be
registered under the applicable Registration Statement) a “Plan
of Distribution” section
substantially in the form attached hereto as Annex
A. Subject
to the terms, conditions and limitations of this Agreement, the Company shall
use its commercially reasonable efforts to cause the Registration Statement to
be declared effective under the Securities Act as promptly as possible after the
filing thereof, but in any event prior to the applicable Effectiveness Date, and
shall use its commercially reasonable efforts to keep such Registration
Statement continuously effective under the Securities Act until the date on
which all of the Registrable Securities covered by such Registration Statement
have been sold or may be sold without volume restrictions pursuant to Rule
144(k) as determined by counsel to the Company pursuant to a written opinion
letter to such effect, addressed and acceptable to the Company’s transfer agent
and the affected Holders but in any event for no more than two years from the
date on which all of the shares of Common Stock issuable upon exercise of the
Warrants and Placement Warrants have been issued (the “Effectiveness
Period”). The
Company shall immediately notify the Holders (which may be via e-mail or
facsimile) of the effectiveness of the Registration Statement within the next
Trading Day following the day that the Company receives notification of the
effectiveness from the Commission. Failure to so notify the Holders within one
Trading Day of such notification shall be deemed an “Event” under Section
2(b).
(b) If: (i) a
Registration Statement is not filed on or prior to its Filing Date (if the
Company files a Registration Statement without affording the Holders the
opportunity to review and comment on the same as required by Section 3(a), the
Company shall not be deemed to have satisfied this clause (i); (ii) the Company
fails to file with the Commission a request for acceleration in accordance with
Rule 461 promulgated under the Securities Act, within five Trading Days of the
date that the Company is notified (orally or in writing, whichever is earlier)
3
by the
Commission that a Registration Statement will not be “reviewed,” or not subject
to further review; (iii) prior to its Effectiveness Date, the Company fails to
file a pre-effective amendment and otherwise respond in writing to comments made
by the Commission in respect of such Registration Statement within 15 Trading
Days after the receipt of written comments by or notice from the Commission that
such amendment is required in order for a Registration Statement to be declared
effective; (iv) a Registration Statement filed or required to be filed hereunder
is not declared effective by the Commission by its Effectiveness Date; or (v)
after the Effectiveness Date and during the Effectiveness Period, a Registration
Statement ceases for any reason to remain continuously effective as to all
Registrable Securities for which it is required to be effective and the Holders
are not permitted to utilize the Prospectus therein to resell such Registrable
Securities for 10 consecutive Trading Days but no more than an aggregate of 20
Trading Days during any 12-month period (which need not be consecutive Trading
Days); (any such failure or breach being referred to as an “Event”, and
for purposes of clause (i) or (iv) the date on which such Event occurs, or for
purposes of clause (ii) the date on which such five Trading Day period is
exceeded, or for purposes of clause (iii) the date which such 15 Trading Day
period is exceeded, or for purposes of clause (v) the date on which such 10 or
20 Trading Day period, as applicable, is exceeded being referred to as
“Event
Date”), then,
as long as such Holders shall have complied with their obligations hereunder, in
addition to any other rights the Holders may have hereunder or under applicable
law, on each such Event Date and on each monthly anniversary of each such Event
Date beginning with the first monthly anniversary of the applicable Event Date
(if the applicable Event shall not have been cured by such date) until the
applicable Event is cured (each a “Liquidated
Damages Payment Date”), the
Company shall pay to each Holder an amount in cash, as partial liquidated
damages and not as a penalty, with respect to each Liquidated Damages Payment
Date, equal to 1% of the aggregate purchase price paid by such Holder pursuant
to the Purchase Agreement for any issued and outstanding unregistered
Registrable Securities then held by such Holder or issued and outstanding
Registrable Securities held by such Holder that are registered by a suspended
Registration Statement as applicable. If the Company fails to pay any partial
liquidated damages pursuant to this Section in full within seven calendar days
after the date payable, the Company will pay interest on such payment at a rate
equal to 10% per annum (or such lesser maximum amount that is permitted to be
paid by applicable law) to the Holder, accruing daily from the date such partial
liquidated damages are due until such amounts, plus all such interest thereon,
are paid in full. The partial liquidated damages pursuant to the terms hereof
shall apply on a daily pro-rata basis for any portion of a month prior to the
cure of an Event; provided, that
there shall be no penalty or damages in the event that the Company suspends the
use of the Registration Statement (or the Prospectus forming a part thereof) in
response to a request from the Commission for technical supplements to such
Registration Statement or if the Company suspends the use of the Registration
Statement in connection with a primary offering by the Company of equity
securities of the Company for a limited time preceding and including the date
such offering is declared effective by the Commission; and provided,
further, that it
shall not be deemed an “Event” if the Company files a Registration Statement (or
any amendment or supplement to a Registration Statement) by the applicable
Filing Date but such Registration Statement (or any amendment or supplement to a
Registration Statement) is not declared effective by the applicable
Effectiveness Date due to the Commission’s failure to respond within the
customary time period or if the delay in effectiveness is not reasonably
attributable to the Company and the Company has complied and continues to comply
with its obligation to use its commercially reasonable efforts to cause the
Registration Statement (or any amendment or supplement to a Registration
Statement) to become effective.
4
3. Registration
Procedures. In
connection with the Company’s registration obligations hereunder, the Company
shall:
(a) Not less
than five Trading Days prior to the filing of each Registration Statement or any
related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated or deemed to be incorporated therein by
reference), the Company shall (i) furnish to each Holder copies of all documents
proposed to be filed, (which may be delivered via e-mail or facsimile) which
documents (other than those incorporated or deemed to be incorporated by
reference) will be subject to the review of such Holders and (ii) cause its
officers and directors, counsel and independent registered public accounting
firm to respond to such inquiries as shall be necessary, in the reasonable
opinion of respective counsel to conduct a reasonable investigation within the
meaning of the Securities Act. The Company shall not file the Registration
Statement or any such Prospectus or any amendments or supplements thereto to
which the Holders holding a majority of the Registrable Securities proposed to
be registered under such Registration Statement shall reasonably object in good
faith; provided, that
the Company is notified of such objection in writing no later than three Trading
Days after the Holders have been so furnished copies (which may be delivered via
email or facsimile) of such documents.
(b) (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to a Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep a Registration Statement continuously
effective as to the applicable Registrable Securities for the Effectiveness
Period and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of the
Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement (subject to the terms of this
Agreement), and as so supplemented or amended to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably possible to any comments received from
the Commission with respect to a Registration Statement or any amendment thereto
and as promptly as reasonably possible provide the Holders true and complete
copies (which may be delivered via email or facsimile) of all material written
correspondence from and to the Commission relating to a Registration Statement;
and (iv) comply in all material respects with the provisions of the Securities
Act and the Exchange Act with respect to the disposition of all Registrable
Securities covered by a Registration Statement during the applicable period in
accordance with (subject to the terms of this Agreement) the intended methods of
disposition by the Holders thereof set forth in such Registration Statement as
so amended or in such Prospectus as so supplemented.
(c) If during
the Effectiveness Period, the number of Registrable Securities outstanding or
issuable at any time exceeds 100% of the number of shares of Common Stock then
registered in a Registration Statement, the Company shall file as soon as
reasonably practicable but in any case prior to the applicable Filing Date, an
additional Registration Statement covering the resale by the Holders of not less
than 120% of the number of Registrable Securities outstanding or issuable less
the number of shares of Common Stock then registered in a Registration Statement
or otherwise disposed of pursuant to a Registration Statement or an exemption
therefrom.
5
(d) Notify
the Holders of Registrable Securities to be sold (which notice shall, pursuant
to clauses (ii) through (vi) hereof, be accompanied by an instruction to suspend
the use of the Prospectus until the requisite changes have been made) as
promptly as reasonably possible (and, in the case of (i)(A) below, not less than
five Trading Days prior to such filing) and (if requested by any such Person)
confirm such notice in writing no later than one Trading Day following the day
(i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment to a Registration Statement is proposed to be filed; (B) when the
Commission notifies the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in writing on such
Registration Statement (the Company shall provide true and complete copies
(which may be delivered via e-mail or facsimile) thereof and all written
responses thereto to each of the Holders); and (C) with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective; (ii) of any request by the Commission or any other Federal or state
governmental authority for amendments or supplements to a Registration Statement
or Prospectus or for additional information; (iii) of the issuance by the
Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of a Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; (v) of the occurrence of any
event or passage of time that makes the financial statements included in a
Registration Statement ineligible for inclusion therein or any statement made in
a Registration Statement or Prospectus or any document incorporated or deemed to
be incorporated therein by reference untrue in any material respect or that
requires any revisions to a Registration Statement, Prospectus or other
documents so that, in the case of a Registration Statement or the Prospectus, as
the case may be, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; and (vi) the occurrence or existence of any pending
corporate development with respect to the Company that the Company believes may
be material and that, in the determination of the Company (which determination
shall be conclusive if made by the Company in good faith), makes it not in the
best interest of the Company to allow continued availability of the Registration
Statement or Prospectus; provided that any and all of such information shall
remain confidential to each Holder until such information otherwise becomes
public, unless disclosure by a Holder is required by law; provided,
further, that
notwithstanding each Holder’s agreement to keep such information confidential,
the Holders make no acknowledgement that any such information is material,
non-public information.
(e) Use its
commercially reasonable efforts to avoid the issuance of, or, if issued, obtain
the withdrawal of, (i) any order suspending the effectiveness of a Registration
Statement or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment.
(f) Furnish
to each Holder (upon the request of such Holder, without charge, which may be
delivered via e-mail or facsimile), at least one conformed copy of each such
Registration Statement and each amendment or supplement thereto, including
financial statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference to the extent requested by such Person, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission.
6
(g) Promptly
deliver to each Holder (upon the request of such Holder, without charge, which
may be delivered via email or facsimile), as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request in connection with
resales by the Holder of Registrable Securities. Subject to the terms of this
Agreement, the Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders in connection
with the offering and sale of the Registrable Securities covered by such
Prospectus and any amendment or supplement thereto, except after the giving on
any notice pursuant to Section 3(d).
(h) Prior to
any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders
in connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for the resale by
the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep each
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Registrable
Securities covered by each Registration Statement; provided, that
the Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified, subject itself to any material
tax in any such jurisdiction where it is not then so subject or file a general
consent to service of process in any such jurisdiction.
(i) If
requested by the Holders, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by applicable laws and
regulations, and the Purchase Agreement, of all restrictive legends, and to
enable such Registrable Securities to be in such denominations and registered in
such names as any such Holders may request. Each
Holder acknowledges and agrees that the Registrable Securities sold pursuant to
a Registration Statement are not transferable on the books of the Company unless
the stock certificate submitted to the transfer agent evidencing such
Registrable Securities is accompanied by a certificate reasonably satisfactory
to the Company to the effect that (i) the Registrable Securities have been sold
in accordance with such Registration Statement and (ii) the requirement of
delivering a current Prospectus has been satisfied.
(j) Upon the
occurrence of any event contemplated by Section 3(d)(ii)-(vi), as promptly as
reasonably possible under the circumstances taking into account the Company’s
good faith assessment of any adverse consequences to the Company and its
stockholders of the premature disclosure of such event, prepare a supplement or
amendment, including a post-effective amendment, to a Registration Statement or
a supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither a Registration Statement nor such
Prospectus will contain an 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 under which they were made,
not misleading. If the
Company notifies the Holders in accordance with Section 3(d)(ii)-(vi) to suspend
the use of any Prospectus until the requisite changes to such Prospectus have
been made, then the Holders shall suspend use of such Prospectus. The Company
shall use its commercially reasonable efforts to ensure that the use of the
Prospectus may be resumed as promptly as is practicable. The Company shall be
entitled to exercise its right under this Section 3(j) to suspend the
availability of a Registration Statement and Prospectus, subject to the payment
of partial liquidated damages pursuant to Section 2(b), if any, for a period not
to exceed 60 days (which need not be consecutive days) in any 12 month
period.
7
(k) The
Company may require each selling Holder, and each Holder hereby agrees, to
furnish to the Company a certified statement as to the number of Registrable
Securities beneficially owned by such Holder and other information relating to
such Holder (to the extent required for a Registration Statement), the
Registrable Securities it intends to sell and its plan of distribution, and, if
required by the Commission, the Person who has voting and dispositive control
over such Registrable Securities. It is a condition precedent to the Company’s
performance of its obligations under this Agreement that such Holder supplies
such requested information and during any periods that the Company is unable to
meet its obligations hereunder with respect to the registration of the
Registrable Securities solely because any Holder fails to furnish such
information within three Trading Days of the Company’s request, any liquidated
damages that are accruing at such time as to such Holder only shall be tolled
and any Event that may otherwise occur solely because of such delay shall be
suspended as to such Holder only, until such information is delivered to the
Company and such Holder shall be responsible for any additional reasonable
expenses incurred by the Company of said failure or delay; provided,
further, that
the Holders agree and acknowledge that the Company will not delay the filing of
a Registration Statement (or amendment or supplement to a Registration
Statement) due to the failure of any Holder to deliver the information required
hereby in accordance with the terms hereof and if a Registration Statement (or
amendment or supplement to a Registration Statement) is filed without any
Holder’s information, such Holder shall not have any right under this Agreement
to require the Company to file any additional Registration Statement (or
amendment or supplement to a Registration Statement) on behalf of such
Holder.
(l) Each
Holder agrees not to take any action with respect to any distribution deemed to
be made pursuant to such registration statement which would constitute a
violation of Regulation M under the Exchange Act or any other applicable rule,
regulation or law.
4. Registration
Expenses. All
fees and expenses incident to the performance of or compliance with this
Agreement by the Company shall be borne by the Company whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with the
Trading Market on which the Common Stock is then listed for trading and (B) in
compliance with applicable state securities or “blue sky” laws reasonably agreed
to by the Company in writing (including, without limitation, fees and
disbursements of counsel for the
8
Company
in connection with blue sky qualifications or exemptions of the Registrable
Securities and determination of the eligibility of the Registrable Securities
for investment under the laws of such jurisdictions as requested by the
Holders), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities and of printing prospectuses if
the printing of prospectuses is reasonably requested by the Holders of a
majority of the Registrable Securities included in a Registration Statement),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if the Company
so desires such insurance, and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement). In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. Notwithstanding the foregoing, in no
event shall the Company be responsible for any underwriters’ discount or broker
or similar commissions or, except to the extent provided for in the Transaction
Documents, any legal fees or other costs of the Holders.
5. Indemnification.
(a) Indemnification
by the Company. The
Company shall, notwithstanding any termination of this Agreement, indemnify and
hold harmless each Holder, the officers, directors, agents, investment advisors
and employees of each of them, each Person who controls any such Holder (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the officers, directors, agents and employees of each such controlling
Person, to the fullest extent permitted by applicable law, from and against any
and all losses, claims, damages, liabilities, costs (including, without
limitation, reasonable attorneys’ fees) and expenses (collectively,
“Losses”), as
incurred, arising out of or relating to any untrue or alleged untrue statement
of a material fact contained in a Registration Statement, any Prospectus or any
form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that (i) such
untrue statements or omissions are based solely upon information regarding such
Holder furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder’s proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in a
Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto (it being understood that the Holder has
approved Annex A hereto for this purpose) or (ii) such losses were caused by the
use by such Holder of a suspended, outdated or defective Prospectus after the
Company has notified such Holder in writing that such Prospectus is suspended,
outdated or defective and prior to the receipt by such Holder of the Advice
contemplated in Section 6(c). The Company shall notify the Holders promptly of
the institution, threat or assertion of any Proceeding arising from or in
connection with the transactions contemplated by this Agreement of which the
Company is aware.
9
(b) Indemnification
by Holders. Each
Holder shall, severally and not jointly, indemnify and hold harmless each other
Holder, the Company, its directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling Persons, to the fullest extent permitted by
applicable law, from and against all Losses, as incurred, to the extent arising
out of or based solely upon: (x) such Holder’s failure to comply with the
prospectus delivery requirements of the Securities Act or (y) any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, any Prospectus, or any form of prospectus, or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading (i) to
the extent, but only to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by such Holder to the
Company specifically for inclusion in such Registration Statement or such
Prospectus or (ii) to the extent that (1) such untrue statements or omissions
are based solely upon information regarding such Holder furnished in writing to
the Company by such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement (it
being understood that the Holder has approved Annex A hereto for this purpose),
such Prospectus or such form of Prospectus or in any amendment or supplement
thereto or (2) such losses were caused by the use by such Holder of an outdated
or defective Prospectus after the Company has notified such Holder in writing
that the Prospectus is outdated or defective and prior to the receipt by such
Holder of the Advice contemplated in Section 6(c). In no event shall the
liability of any selling Holder hereunder be greater in amount than the dollar
amount of the net proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification
obligation.
(c) Conduct
of Indemnification Proceedings. If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified
Party”), such
Indemnified Party shall promptly notify the Person from whom indemnity is sought
(the “Indemnifying
Party”) in
writing, and the Indemnifying Party shall have the right to assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all reasonable fees and expenses incurred
in connection with defense thereof; provided, that
the failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it shall be finally determined by a court
of competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have prejudiced the Indemnifying
Party.
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, in the reasonable written opinion of counsel
satisfactory to the Indemnifying
10
Party a
material conflict of interest under applicable rules of professional
responsibilities for attorneys is likely to exist if the same counsel were to
represent such Indemnified Party and the Indemnifying Party (in which case, if
such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
the reasonable fees and expenses of one separate counsel shall be at the expense
of the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such
Proceeding.
(d) Contribution. If the
indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
Party or insufficient to hold an Indemnified Party harmless for any Losses, then
each Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in this Agreement, any reasonable attorneys’ or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, except in the case of fraud by
such Holder.
The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties.
11
6. Miscellaneous.
(a) Remedies. In the
event of a breach by the Company or by a Holder, of any of their obligations
under this Agreement, each Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and each Holder
agree that monetary damages would not provide adequate compensation for any
losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
(b) Compliance. Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.
(c) Discontinued
Disposition. Each
Holder agrees by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of any event of the kind
described in Section 3(d)(ii)-(vi), such Holder will forthwith discontinue
disposition of such Registrable Securities under a Registration Statement until
such Holder’s receipt of the copies of the supplemented Prospectus and/or
amended Registration Statement, or until it is advised in writing (the
“Advice”) by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement. The Company will use its commercially reasonable efforts
to ensure that the use of the Prospectus may be resumed as promptly as it
practicable.
(d) Piggy-Back
Registrations. If at
any time during the Effectiveness Period there is not an effective Registration
Statement covering all of the Registrable Securities and the Company shall
determine to prepare and file with the Commission a registration statement
relating to an offering for the account of others under the Securities Act of
any of its equity securities, other than on Form S-4 or Form S-8 (each as
promulgated under the Securities Act) or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of any
entity or business or equity securities issuable in connection with the stock
option or other employee benefit plans, then the Company shall send to each
Holder a written notice of such determination and, if within fifteen days after
the date of such notice, any such Holder shall so request in writing, the
Company shall include in such registration statement all or any part of such
Registrable Securities such Holder requests to be registered; provided, that,
the Company shall not be required to register any Registrable Securities
pursuant to this Section 6(d) that are eligible for resale pursuant to Rule
144(k) promulgated under the Securities Act or that are the subject of a then
effective registration statement.
(e) Amendments
and Waivers. The
provisions of this Agreement, including the provisions of this sentence, may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the same shall be in writing and
signed by the Company and the Holders holding 75% of Registrable Securities.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of a
Holders and that does not directly or indirectly affect the rights of other
Holders may be given by the Holder(s) of all of the Registrable Securities to
which such waiver or consent relates; provided,
however, that
the provisions of this sentence may not be amended, modified or supplemented
except in accordance with the provisions of the immediately preceding sentence.
12
(f) Notices. Any and
all notices or other communications or deliveries required or permitted to be
provided hereunder shall be delivered as set forth in the Purchase Agreement.
(g) Successors
and Assigns. This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of each of the parties and shall inure to the benefit of each
Holder. The right
to cause the Company to register Registrable Securities granted to the Holders
by the Company under this Agreement may be assigned in full by a Holder in
connection with a transfer by such Holder of its Registrable Securities, but
only if: (i) such transfer may otherwise be effected in accordance with
applicable securities laws; (ii) such Holder gives written notice of the
proposed transfer to the Company including the name and address of such
transferee and a copy of the transfer documents and agreements; and (iii) such
transfer is otherwise in compliance with this Agreement. Except as specifically
permitted by this Section 6(g), the rights of a Holder with respect to
Registrable Securities as set out herein shall not be transferable to any other
Person, the Company may impose stop transfer orders with respect to any such
transfer or attempted transfer, and any such transfer or attempted transfer
shall be null and void.
(h) No
Inconsistent Agreements. Neither
the Company nor any of its subsidiaries has entered, as of the date hereof, nor
shall the Company or any of its subsidiaries, during the period beginning on the
date of this Agreement and ending at the end of the Effectiveness Period, enter
into any agreement with respect to its securities, that would have the effect of
impairing the rights granted to the Holders in this Agreement or that otherwise
conflicts with the provisions hereof. Except as set forth on Schedule
6(h), neither
the Company nor any of its subsidiaries has previously entered into any
agreement granting any registration rights with respect to any of its securities
to any Person that have not been satisfied in full.
(i) Execution
and Counterparts. This
Agreement may be executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.
(j) Governing
Law. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be determined in accordance with the governing law
provisions set forth in the Purchase Agreement.
(k) Cumulative
Remedies. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
13
(l) Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(m) Headings. The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.
(n) Independent
Nature of Holders’ Obligations and Rights. The
obligations of each Holder hereunder are several and not joint with the
obligations of any other Holder hereunder, and no Holder shall be responsible in
any way for the performance of the obligations of any other Holder hereunder.
Nothing contained herein or in any other agreement or document delivered at any
closing, and no action taken by any Holder pursuant hereto or thereto, shall be
deemed to constitute the Holders as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Holders
are in any way acting in concert with respect to such obligations or the
transactions contemplated by this Agreement. Each Holder shall be entitled to
protect and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other Holder to be
joined as an additional party in any Proceeding for such purpose.
********************
14
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as
of the date first written above.
| NOVADEL PHARMA INC. | ||
| |
|
|
| By: | ||
|
| ||
|
Name:
Title: | ||
15
[SIGNATURE
PAGE OF HOLDERS FOLLOWS]
[SIGNATURE
PAGE OF HOLDERS TO NOVADEL PHARMA INC.]
Name of
Holder: __________________________
Signature
of Authorized Signatory of Holder:
__________________________
Name of
Authorized Signatory: _________________________
Title of
Authorized Signatory: __________________________
Facsimile
Number: __________________________
Email
Address: __________________________
[SIGNATURE
PAGES CONTINUE]
16
