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EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of November 9,
1998, by and among ARIAD Pharmaceuticals, Inc., a Delaware corporation, with
headquarters located at 00 Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000
(the "COMPANY"), and the undersigned buyers (each, a "BUYER" and collectively,
the "BUYERS").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and among the
parties hereto of even date herewith (the "SECURITIES PURCHASE AGREEMENT"), the
Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to (i) issue and sell to the Buyers 5,000 shares
of the Company's Series C Convertible Preferred Stock (the "INITIAL PREFERRED
SHARES"), which will be convertible into shares (as converted, the "INITIAL
CONVERSION SHARES") of the Company's common stock, par value $.001 per share
(the "COMMON STOCK"), in accordance with the terms of the Company's Certificate
of Designations, Preferences and Rights of the Series C Convertible Preferred
Stock (the "CERTIFICATE OF DESIGNATIONS"), and (ii) issue and sell to the Buyers
up to 5,000 additional shares of the Company's Series C Convertible Preferred
Stock (the "MANDATORY PREFERRED SHARES"), which will be convertible into Common
Stock (as converted, the "MANDATORY CONVERSION SHARES") in accordance with the
Certificate of Designations;
B. In connection with the Securities Purchase Agreement, the Company may
have the right, upon the terms and subject to the conditions of the Securities
Purchase Agreement, to issue and sell to the Buyers up to 5,000 additional
shares of the Company's Series C Convertible Preferred Stock (the "PUT PREFERRED
SHARES"), which will be convertible into Common Stock (as converted, the "PUT
CONVERSION SHARES") in accordance with the Certificate of Designations;
C. In connection with the Securities Purchase Agreement, the Buyers may
have the right, upon the terms and subject to the conditions of the Securities
Purchase Agreement, to require the Company to issue and sell additional shares
of the Company's Series C Convertible Preferred Stock (the "ADDITIONAL PREFERRED
SHARES"), which will be convertible into Common Stock (as converted, the
"ADDITIONAL CONVERSION SHARES") in accordance with the Certificate of
Designations (the Initial Preferred Shares, the Mandatory Preferred Shares, the
Put Preferred Shares and the Additional Preferred Shares collectively are
referred to as the "PREFERRED SHARES" and the Initial Conversion Shares, the
Mandatory Conversion Shares, the Put Conversion Shares and the Additional
Conversion Shares collectively are referred to as the "CONVERSION SHARES");
D. To induce the Buyers to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as
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amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, the "1933 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 Buyers hereby
agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
a. "INVESTOR" means a Buyer, any transferee or assignee thereof to
whom a Buyer assigns its rights under this Agreement and who agrees to become
bound by the provisions of this Agreement in accordance with Section 9 and any
transferee or assignee thereof to whom a transferee or assignee assigns its
rights under this Agreement and who agrees to become bound by the provisions of
this Agreement in accordance with Section 9.
b. "PERSON" means a corporation, a limited liability company, an
association, a partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental agency.
c. "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant to
Rule 415 under the 1933 Act or any successor rule providing for offering
securities on a continuous or delayed basis ("RULE 415"), and the declaration or
ordering of effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").
d. "REGISTRABLE SECURITIES" means the Conversion Shares issued or
issuable upon conversion of the Preferred Shares and any shares of capital stock
issued or issuable with respect to the Conversion Shares or the Preferred Shares
as a result of any stock split, stock dividend, recapitalization, exchange or
similar event or otherwise, without regard to any limitations on conversions of
Preferred Shares; provided, however, that Registrable Securities shall not
include Conversion Shares and any shares of capital stock issued or issuable
with respect to the Conversion Shares which are sold pursuant to an effective
Registration Statement or under Rule 144.
e. "INITIAL REGISTRATION STATEMENT" means a registration statement
or registration statements of the Company filed under the 1933 Act covering
Registrable Securities relating to the Initial Preferred Shares.
f. "SECOND REGISTRATION STATEMENT" means a registration statement or
registration statements of the Company filed under the 1933 Act covering
Registrable Securities
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relating to the Mandatory Preferred Shares.
g. "PUT REGISTRATION STATEMENT" means a registration statement or
registration statements of the Company filed under the 1933 Act covering
Registrable Securities relating to the Put Preferred Shares.
h. "ADDITIONAL REGISTRATION STATEMENT" means a registration
statement or registration statements of the Company filed under the 1933 Act
covering Registrable Securities relating to the Additional Preferred Shares.
i. "REGISTRATION STATEMENT" means the Initial Registration
Statement, the Second Registration Statement, the Put Registration Statement and
the Additional Registration Statement.
m. "FILING DEADLINE" means the Initial Filing Deadline, the Second
Filing Deadline, the Put Filing Deadline or the Additional Filing Deadline, as
applicable.
o. "EFFECTIVENESS DEADLINE" means the Initial Effectiveness
Deadline, the Second Effectiveness Deadline, the Put Effectiveness Deadline or
the Additional Effectiveness Deadline, as applicable.
2. REGISTRATION.
a. MANDATORY REGISTRATION.
(i) INITIAL MANDATORY REGISTRATION. The Company shall prepare,
and, as soon as practicable but in no event later than 45 days after the Initial
Closing Date (as defined in the Securities Purchase Agreement) (the "INITIAL
FILING DEADLINE"), file with the SEC an Initial Registration Statement or
Initial Registration Statements (as necessary) on Form S-3 covering the resale
of all of the Registrable Securities relating to the Initial Preferred Shares
(the "INITIAL REGISTRABLE SECURITIES"). In the event that Form S-3 is
unavailable for such a registration, the Company shall use such other form as is
available for such a registration, subject to the provisions of Section 2(e).
Any initial Registration Statement prepared pursuant hereto shall register for
resale at least that number of shares of Common Stock equal to the product of
(x) 2.0 (provided, however, if despite the Company's best efforts the SEC will
not allow the registration of a number of Initial Registrable Securities based
on the multiple "2.0" set forth in this clause (x), then the Company shall
register a number of Initial Registrable Securities which as a result of the
Company's best efforts is based on the next highest multiple permitted by the
SEC, which multiple will in no event be less than "1.5") and (y) the number of
Initial Registrable Securities as of the date immediately preceding the date the
Registration Statement is initially filed with the SEC, subject to adjustment as
provided in Section 3(b). The Company shall use its best efforts to have the
Initial Registration Statement declared effective by the SEC as soon as
practicable, but in no event later than 120 days after the Initial Closing Date
(the "INITIAL EFFECTIVENESS DEADLINE").
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(ii) SECOND MANDATORY REGISTRATION. The Company shall prepare,
and, as soon as practicable but in no event later than 15 days after the
Mandatory Closing Date (as defined in the Securities Purchase Agreement) (the
"SECOND FILING DEADLINE"), file with the SEC a Second Registration Statement or
Second Registration Statements (as necessary) on Form S-3 covering the resale of
all of the Registrable Securities relating to the Mandatory Preferred Shares
(the "SECOND REGISTRABLE SECURITIES"). In the event that Form S-3 is unavailable
for such a registration, the Company shall use such other form as is available
for such a registration, subject to the provisions of Section 2(e). Any initial
Registration Statement prepared pursuant hereto shall register for resale at
least that number of shares of Common Stock equal to the product of (x) 2.0
(provided, however, if despite the Company's best efforts the SEC will not allow
the registration of a number of Second Registrable Securities based on the
multiple "2.0" set forth in this clause (x), then the Company shall register a
number of Second Registrable Securities which as a result of the Company's best
efforts is based on the next highest multiple permitted by the SEC, which
multiple will in no event be less than "1.5") and (y) the number of Second
Registrable Securities as of the date immediately preceding the date the
Registration Statement is initially filed with the SEC, subject to adjustment as
provided in Section 3(b). The Company shall use its best efforts to have the
Second Registration Statement declared effective by the SEC as soon as
practicable, but in no event later than 75 days after the Mandatory Closing Date
(the "SECOND EFFECTIVENESS DEADLINE").
(iii) PUT MANDATORY REGISTRATION. The Company shall prepare,
and, as soon as practicable but in no event later than 15 days after the Put
Closing Date (as defined in the Securities Purchase Agreement) (the "PUT FILING
DEADLINE"), file with the SEC a Put Registration Statement or Put Registration
Statements (as necessary) on Form S-3 covering the resale of all of the
Registrable Securities relating to the Put Preferred Shares (the "PUT
REGISTRABLE SECURITIES"). In the event that Form S-3 is unavailable for such a
registration, the Company shall use such other form as is available for such a
registration, subject to the provisions of Section 2(e). Any initial
Registration Statement prepared pursuant hereto shall register for resale at
least that number of shares of Common Stock equal to the product of (x) 2.0
(provided, however, if despite the Company's best efforts the SEC will not allow
the registration of a number of Put Registrable Securities based on the multiple
"2.0" set forth in this clause (x), then the Company shall register a number of
Put Registrable Securities which as a result of the Company's best efforts is
based on the next highest multiple permitted by the SEC, which multiple will in
no event be less than "1.5") and (y) the number of Put Registrable Securities as
of the date immediately preceding the date the Registration Statement is
initially filed with the SEC, subject to adjustment as provided in Section 3(b).
The Company shall use its best efforts to have the Put Registration Statement
declared effective by the SEC as soon as practicable, but in no event later than
75 days after the Put Closing Date (the "PUT EFFECTIVENESS DEADLINE").
(iv) ADDITIONAL MANDATORY REGISTRATION. The Company shall
prepare, and, as soon as practicable but in no event later than 45 days after
each Additional Closing Date (as defined in the Securities Purchase Agreement)
(the "ADDITIONAL FILING DEADLINE"), file with the SEC an Additional Registration
Statement or Additional Registration Statements (as
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necessary) on Form S-3 covering the resale of all of the Registrable Securities
relating to the Additional Preferred Shares which were issued on such Additional
Closing Date (collectively, the "ADDITIONAL REGISTRABLE SECURITIES"). In the
event that Form S-3 is unavailable for such a registration, the Company shall
use such other form as is available for such a registration, subject to the
provisions of Section 2(e). Any initial Registration Statement prepared pursuant
hereto shall register for resale at least that number of shares of Common Stock
equal to the product of (x) 2.0 (provided, however, if despite the Company's
best efforts the SEC will not allow the registration of a number of Additional
Registrable Securities based on the multiple "2.0" set forth in this clause (x),
then the Company shall register a number of Additional Registrable Securities
which as a result of the Company's best efforts is based on the next highest
multiple permitted by the SEC, which multiple will in no event be less than
"1.5") and (y) the number of Additional Registrable Securities, related to such
Additional Closing Date, as of the date immediately preceding the date the
Registration Statement is initially filed with the SEC, subject to adjustment as
provided in Section 3(b). The Company shall use its best efforts to have such
Additional Registration Statement declared effective by the SEC as soon as
practicable, but in no event later than 120 days after such Additional Closing
Date (the "THIRD EFFECTIVENESS DEADLINE").
b. PIGGY-BACK REGISTRATIONS. If at any time prior to the date on
which the Registration Period (as hereinafter defined) with respect to all
Registration Statements shall have expired and no Preferred Shares or
Registrable Securities remain outstanding, the number of shares of Common Stock
available for sale under the Registration Statements is insufficient to cover
all of the Registrable Securities and the Company proposes to file with the SEC
a Registration Statement relating to an offering for its own account or the
account of others under the 1933 Act of any of its securities (other than on
Form S-4 or Form S-8 (or their equivalents at such time) relating to securities
to be issued solely in connection with any acquisition of any entity or business
or equity securities issuable in connection with stock option or other employee
benefit plans), the Company shall promptly send to each Investor written notice
of the Company's intention to file a Registration Statement and of such
Investor's rights under this Section 2(b) and, if within seven (7) business days
after receipt of such notice, such Investor shall so request in writing, the
Company shall include in such Registration Statement all or any part of the
Registrable Securities such Investor requests to be registered, subject to the
priorities set forth below in this Section 2(b). No right to registration of
Registrable Securities under this Section 2(b) shall be construed to limit any
registration required under Section 2(a). The obligations of the Company under
this Section 2(b) may be waived by Investors holding a majority of the
Registrable Securities. If an offering in connection with which an Investor is
entitled to registration under this Section 2(b) is an underwritten offering,
then each Investor whose Registrable Securities are included in such
Registration Statement shall, unless otherwise agreed to by the Company, offer
and sell such Registrable Securities in an underwritten offering using the same
underwriter or underwriters and, subject to the provisions of this Agreement, on
the same terms and conditions as other shares of Common Stock included in such
underwritten offering. If a registration pursuant to this Section 2(b) is to be
an underwritten public offering and the managing underwriter(s) advise the
Company in writing, that in their reasonable good faith opinion, marketing or
other factors dictate that a limitation on the number of shares of
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Common Stock which may be included in the Registration Statement is advisable to
facilitate and not adversely affect the proposed offering, then the Company
shall include in such registration: (1) first, all securities the Company
proposes to sell for its own account, (2) second, up to the full number of
securities proposed to be registered for the account of the holders of
securities entitled to inclusion of their securities in the Registration
Statement by reason of demand registration rights, and (3) third, the securities
requested to be registered by the Investors and other holders of securities
entitled to participate in the registration, as of the date hereof, drawn from
them pro rata based on the number each has requested to be included in such
registration.
c. ALLOCATION OF REGISTRABLE SECURITIES. The initial number of
Registrable Securities included in any Registration Statement and each increase
in the number of Registrable Securities included therein shall be allocated pro
rata among the Investors based on the number of Registrable Securities held by
each Investor at the time the Registration Statement covering such initial
number of Registrable Securities or increase thereof is declared effective by
the SEC. In the event that an Investor sells or otherwise transfers any of such
Person's Registrable Securities, each transferee shall be allocated a pro rata
portion of the then remaining number of Registrable Securities included in such
Registration Statement for such transferor. Any shares of Common Stock included
in a Registration Statement and which remain allocated to any Person which
ceases to hold any Registrable Securities shall be allocated to the remaining
Investors, pro rata based on the number of Registrable Securities then held by
such Investors.
d. LEGAL COUNSEL. Subject to Section 5 hereof, the Buyers holding a
majority of the Registrable Securities shall have the right to select one legal
counsel to review and oversee any offering pursuant to this Section 2 ("LEGAL
COUNSEL"), which shall be Xxxxxx Xxxxxx & Xxxxx or such other counsel as
thereafter designated by the holders of a majority of Registrable Securities.
The Company shall reasonably cooperate with Legal Counsel in performing the
Company's obligations under this Agreement.
e. INELIGIBILITY FOR FORM S-3. In the event that Form S-3 is not
available for any registration of Registrable Securities hereunder, the Company
shall (i) register the sale of the Registrable Securities on another appropriate
form reasonably acceptable to the holders of a majority of the Registrable
Securities and (ii) undertake to register the Registrable Securities on Form S-3
as soon as such form is available, provided that the Company shall maintain the
effectiveness of the Registration Statement then in effect until such time as a
Registration Statement on Form S-3 covering the Registrable Securities has been
declared effective by the SEC.
f. EFFECT OF FAILURE TO OBTAIN AND MAINTAIN EFFECTIVENESS OF
REGISTRATION STATEMENT. If (i) the Registration Statement covering all the
applicable Registrable Securities and required to be filed by the Company
pursuant to this Agreement is not (A) filed with the SEC on or before the
applicable Filing Deadline or (B) declared effective by the SEC on or before the
applicable Effectiveness Deadline or (ii) on any day after the Registration
Statement has been declared effective by the SEC, other than days during an
Allowable Grace Period (as defined in
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Section 3(u)), sales of all the Registrable Securities required to be
included on a Registration Statement cannot be made pursuant to the respective
Registration Statement (including, without limitation, because of a failure to
keep the Registration Statement effective, to disclose such information as is
necessary for sales to be made pursuant to the Registration Statement, to
register sufficient shares of Common Stock), then, as partial relief for the
damages to any holder by reason of any such delay in or reduction of its ability
to sell the underlying shares of Common Stock (which remedy shall not be
exclusive of any other remedies available at law or in equity), the Company
shall pay to each holder of Registrable Securities an amount in cash per
Registrable Security held equal to the product of (i) $1,000 multiplied by (ii)
the sum of (A) .02, if the Registration Statement is not filed by the Scheduled
Filing Date, plus (B) .02, if the Registration Statement is not declared
effective by the Scheduled Effective Date, plus (C) the product of (I) .0005
multiplied by (II) the sum of (x) the number of days after the Scheduled Filing
Date that such Registration Statement is not filed with the SEC, plus (y) the
number of days after the Scheduled Effective Date that the Registration
Statement is not declared effective by the SEC, plus (z) the number of days
(other than days during an Allowable Grace Period (as defined in Section 3(u))
that sales cannot be made pursuant to the Registration Statement after the
Registration Statement has been declared effective by the SEC. The payments to
which a holder shall be entitled pursuant to this Section 2(f) are referred to
herein as "REGISTRATION DELAY PAYMENTS." Registration Delay Payments shall be
paid on the earlier of (I) the last day of the calendar month during which such
Registration Delay Payments are incurred and (II) the third business day after
the event or failure giving rise to the Registration Delayed Payments is cured.
In the event the Company fails to make Registration Delay Payments in a timely
manner, such Registration Delay Payments shall bear interest at the rate of 2.0%
per month (prorated for partial months) until paid in full. If the Company fails
to pay the Registration Delay Payments, including any interest thereon, within
15 business days of the date such Registration Delay Payments are due, then the
holder entitled to such payments shall have the right at any time, so long as
the Company continues to fail to make such payments, to require the Company,
upon written notice, to immediately issue, in lieu of the Registration Delay
Payments, including any interest thereon, the number of shares of Common Stock
equal to the quotient of (X) the sum of the Registration Delay Payments and all
interest accrued thereon divided by (Y) the lowest Conversion Price in effect
during the period beginning on and including the date such written notice is
delivered to the Company and ending on and including the business day
immediately preceding the date such shares of Common Stock are received by the
holder entitled thereto.
g. SUFFICIENT NUMBER OF SHARES REGISTERED. In the event the number
of shares available under a Registration Statement filed pursuant to Section
2(a) is insufficient to cover all of the Registrable Securities which such
Registration Statement is required to cover or an Investor's allocated portion
of the Registrable Securities pursuant to Section 2(c), the Company 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 at least 200%
of such Registrable Securities (based on the market price of the Common Stock on
the trading day immediately preceding the date of filing of such amendment or
new Registration Statement), in each case, as soon as practicable, but in any
event not later than fifteen (15) days after the necessity therefor arises. The
Company shall use it best efforts to cause such amendment and/or
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new Registration Statement to become effective as soon as practicable following
the filing thereof. For purposes of the foregoing provision, the number of
shares available under a Registration Statement shall be deemed "insufficient to
cover all of the Registrable Securities" if at any time the number of
Registrable Securities issued or issuable upon conversion of the Preferred
Shares covered by such Registration Statement is greater than the quotient
determined by dividing (i) the number of shares of Common Stock available for
resale under such Registration Statement by (ii) 1.5. For purposes of the
calculation set forth in the foregoing sentence, any restrictions on the
convertibility of the Preferred Shares shall be disregarded and such calculation
shall assume that the Preferred Shares are then convertible into shares of
Common Stock at the then prevailing Conversion Rate (as defined in the Company's
Certificate of Designations).
3. RELATED OBLIGATIONS.
Whenever an Investor has requested that any Registrable Securities be
registered pursuant to Section 2(b) or at such time as the Company is obligated
to file a Registration Statement with the SEC pursuant to Sections 2(a) or 2(g),
the Company will use its best efforts to effect the registration of the
Registrable Securities in accordance with the intended method of disposition
thereof and, pursuant thereto, the Company shall have the following obligations:
a. The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities (on or prior
to the Filing Deadline) and use its best efforts to cause such Registration
Statement relating to the Registrable Securities to become effective as soon as
possible after such filing (but in no event later than the Effectiveness
Deadline). The Company shall keep each Registration Statement effective pursuant
to Rule 415 at all times until the earlier of (i) the date as of which the
Investors may sell all of the Registrable Securities covered by such
Registration Statement without restriction pursuant to Rule 144(k) promulgated
under the 1933 Act (or successor thereto) or (ii) the date on which the
Investors shall have sold all the Registrable Securities covered by such
Registration Statement (the "REGISTRATION PERIOD"), 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. The term "best efforts" shall mean, among other things, that the
Company shall submit to the SEC, within three business days after the Company
learns that no review of a particular Registration Statement will be made by the
staff of the SEC or that the staff has no further comments on the Registration
Statement, as the case may be, a request for acceleration of effectiveness of
such Registration Statement to a time and date not later than 48 hours after the
submission of such request; provided, however, that if the Company determines,
in good faith, that, despite learning that the SEC has no further comments on
the Registration Statement, an amendment to the Registration Statement is
necessary, such amendment shall be filed prior to the third business day
referred to above and when thereafter the Company again learns that no review of
a particular Registration Statement will be made by the staff of the SEC or that
the staff has no further comments on the Registration Statement, as the case may
be, the Company
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will again be required, within three business days, to make a request for
acceleration of effectiveness of such Registration Statement to a time and date
not later than 48 hours after the submission of such request.
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the 1933 Act with respect to the disposition of
all Registrable Securities of the Company covered by such Registration Statement
until such time as all of such Registrable Securities shall 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. In the case of
amendments and supplements to a Registration Statement which are required to be
filed pursuant to this Agreement (including pursuant to this Section 3(b)) by
reason of the Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any
analogous report under the Securities Exchange Act of 1934, as amended (the
"1934 ACT"), the Company shall have incorporated such report by reference into
the Registration Statement, if applicable, or shall file such amendments or
supplements with the SEC on the same day on which the 1934 Act report is filed
which created the requirement for the Company to amend or supplement the
Registration Statement.
c. The Company shall (a) permit Legal Counsel to review and comment
upon (i) the Initial Registration Statement and the Additional Registration
Statement at least seven (7) days prior to its filing with the SEC and (ii) all
other Registration Statements and all amendments and supplements to all
Registration Statements (except for Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K and any similar or
successor reports) within a reasonable number of days prior to the their filing
with the SEC and (b) not file any document in a form to which Legal Counsel
reasonably objects. The Company shall not submit a request for acceleration of
the effectiveness of a Registration Statement or any amendment or supplement
thereto without the prior approval of Legal Counsel, which consent shall not be
unreasonably withheld. The Company shall furnish to Legal Counsel, without
charge, (i) any correspondence from the SEC or the staff of the SEC to the
Company or its representatives relating to any Registration Statement, (ii)
promptly after the same is prepared and filed with the SEC, one copy of any
Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference and
all exhibits and (iii) upon the effectiveness of any Registration Statement, one
copy of the prospectus included in such Registration Statement and all
amendments and supplements thereto.
d. The Company shall furnish to each Investor whose Registrable
Securities are included in any Registration Statement, without charge, (i)
promptly after the same is prepared and filed with the SEC, at least one copy of
such Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference prior
to the date of the Registration Statement and requested by such
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Investor, all exhibits and each preliminary prospectus, (ii) upon the
effectiveness of any Registration Statement, ten (10) copies of the prospectus
included in such Registration Statement and all amendments and supplements
thereto (or such other number of copies as such Investor may reasonably request)
and (iii) such other documents, including copies of any preliminary or final
prospectus, as such Investor may reasonably request from time to time in order
to facilitate the disposition of the Registrable Securities owned by such
Investor.
e. The Company shall use reasonable efforts to (i) register and
qualify the Registrable Securities covered by a Registration Statement under
such other securities or "blue sky" laws of such jurisdictions in the United
States as Legal Counsel or any Investor 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 condition
thereto to (x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(e), (y) subject itself
to general taxation in any such jurisdiction, or (z) file a general consent to
service of process in any such jurisdiction. The Company shall promptly notify
Legal Counsel and each Investor who holds Registrable Securities of the receipt
by the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or "blue sky" laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threatening of any
proceeding for such purpose.
f. In the event Investors who hold a majority of the Registrable
Securities being offered in the offering select underwriters (which shall be
reasonably acceptable to the Company) for the offering, the Company shall enter
into and perform its obligations under a mutually acceptable underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the underwriters of such
offering.
g. As promptly as practicable after becoming aware of such event or
development, the Company shall notify Legal Counsel and each Investor in writing
of the happening of any event as a result of which the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission 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, and promptly prepare a supplement or
amendment to such Registration Statement to correct such untrue statement or
omission, and deliver ten (10) copies of such supplement or amendment to Legal
Counsel and each Investor (or such other number of copies as Legal Counsel or
such Investor may reasonably request). The Company shall also promptly notify
Legal Counsel and each Investor in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when a
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Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to Legal Counsel and each
Investor by facsimile on the same day of such effectiveness and by overnight
mail), (ii) of any request by the SEC for amendments or supplements to a
Registration Statement or related prospectus or related information, and (iii)
of the Company's reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.
h. Subject to Section 3(u), the Company shall use its best efforts
to prevent the issuance of any stop order or other suspension of effectiveness
of a Registration Statement, or the suspension of the qualification of any of
the Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify Legal Counsel and each Investor who
holds Registrable Securities being sold (and, in the event of an underwritten
offering, the managing underwriters) of the issuance of such order and the
resolution thereof or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose.
i. At the request of any Investor, the Company shall furnish to such
Investor, on the date of the effectiveness of the Registration Statement and
thereafter from time to time on such dates as an Investor may request (i) a
letter, dated such date, from the Company's independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
and (ii) an opinion, dated as of such date, of counsel representing the Company
for purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
Investors; provided, however, that subject to the receipt of reasonable
supporting documentation, such Investor shall reimburse the Company for the
reasonable fees and expenses of counsel and/or of accountants actually incurred
pursuant to this Section 3(i).
j. The Company shall make available for inspection by (i) any
Investor, (ii) Legal Counsel, (iii) any underwriter participating in any
disposition pursuant to a Registration Statement, (iv) one firm of accountants
or other agents retained by the Investors, and (v) one firm of attorneys
retained by such underwriters (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, and cause the Company's officers, directors and
employees to supply all information which any Inspector may reasonably request;
provided, however, that each Inspector shall agree in writing, and each Investor
hereby agrees, to hold in strict confidence and shall not make any disclosure
(except to an Investor) or use 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 release of such Records is
ordered pursuant to a final, non-appealable subpoena or order from a court or
government body of competent jurisdiction or (b) 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 of which the Inspector has knowledge.
Each Investor agrees that it shall, upon learning that disclosure of such
Records is sought in or by a court or governmental
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body of competent jurisdiction or through other means, give prompt written
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential.
k. 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, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investor and allow such Investor, at the Investor's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
l. The Company shall use its best efforts either to (i) cause all
the Registrable Securities covered by a Registration Statement to be listed on
each securities exchange on which securities of the same class or series issued
by the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) secure
designation and quotation of all the Registrable Securities covered by the
Registration Statement on the Nasdaq National Market or, if, despite the
Company's best efforts to satisfy the preceding clause (i) or (ii), the Company
is unsuccessful in satisfying the preceding clause (i) or (ii), to secure the
inclusion for quotation on The Nasdaq SmallCap Market for such Registrable
Securities and, without limiting the generality of the foregoing, to arrange for
at least two market makers to register with the National Association of
Securities Dealers, Inc. ("NASD") as such with respect to such Registrable
Securities. The Company shall pay all fees and expenses in connection with
satisfying its obligation under this Section 3(l).
m. The Company shall cooperate with the Investors who hold
Registrable Securities being offered and, to the extent applicable, any managing
underwriter or underwriters, to facilitate the timely preparation and delivery
of certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, as the managing underwriter or underwriters, if any, or, if there is no
managing underwriter or underwriters, the Investors may reasonably request and
registered in such names as the managing underwriter or underwriters, if any, or
the Investors may request. Nothing in this Agreement shall affect in any way
each Investor's obligation to comply with all applicable prospectus delivery
requirements, if any, upon resale of the Securities.
n. The Company shall provide a transfer agent and registrar of all
such Registrable Securities not later than the effective date of such
Registration Statement.
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o. If requested by the managing underwriters or an Investor, the
Company shall (i) as soon as practicable incorporate in a prospectus supplement
or post-effective amendment such information as the managing underwriters or the
Investors agree should be included therein relating to the sale and distribution
of Registrable Securities, including, without limitation, information with
respect to the number of Registrable Securities being sold to such underwriters,
the purchase price being paid therefor by such underwriters and any other terms
of the underwritten (or best efforts underwritten) offering of the Registrable
Securities to be sold in such offering; (ii) as soon as practicable make all
required filings of such prospectus supplement or post-effective amendment after
being notified of the matters to be incorporated in such prospectus supplement
or post-effective amendment; and (iii) supplement or make amendments to any
Registration Statement if reasonably requested by an Investor or any underwriter
of such Registrable Securities.
p. The Company shall use its best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to consummate the disposition of such Registrable Securities;
provided, however, the Company shall not be required to register the Registrable
Securities with any governmental agencies or authorities outside the United
States of America.
q. The Company shall make generally available to its security
holders as soon as practical, but not 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 0000 Xxx) 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.
r. The Company shall otherwise use its best efforts to comply with
all applicable rules and regulations of the SEC in connection with any
registration hereunder.
s. Within two (2) business days after a Registration Statement which
covers applicable Registrable Securities is ordered effective by the SEC, the
Company shall deliver, and shall cause legal counsel for the Company to deliver,
to the transfer agent for such Registrable Securities (with copies to the
Investors whose Registrable Securities are included in such Registration
Statement) confirmation that such Registration Statement has been declared
effective by the SEC in the form attached hereto as EXHIBIT A.
t. The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Investors of Registrable Securities
pursuant to a Registration Statement.
u. Notwithstanding anything to the contrary in Section 3(g), at any
time after the applicable Registration Statement has been declared effective by
the SEC, the Company may delay the disclosure of material non-public information
concerning the Company the disclosure of which at the time is not, in the good
faith opinion of the Board of Directors of the Company
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and its counsel, in the best interest of the Company and, in the opinion of
counsel to the Company, otherwise required (a "GRACE PERIOD"); provided, that
the Company shall promptly (i) notify the Investors in writing of the existence
of material non-public information giving rise to a Grace Period (provided that
in each notice the Company will not disclose the content of such material
non-public information to the Investors) and the date on which the Grace Period
will begin, and (ii) notify the Investors in writing of the date on which the
Grace Period ends; and, provided further, that all Grace Periods shall not
exceed an aggregate of 30 days in any consecutive 365 day period and during any
consecutive 365 day period, there shall be an aggregate of not more than two
Grace Periods (an "ALLOWABLE GRACE PERIOD"). For purposes of determining the
length of a Grace Period above, the Grace Period shall begin on and include the
date the holders receive the notice referred to in clause (i) and shall end on
and include the later of the date the holders receive the notice referred to in
clause (ii) and the date referred to in such notice. The provisions of Sections
2(f) and 3(h) hereof shall not be applicable during the period of any Allowable
Grace Period. Upon expiration of the Grace Period, the Company shall again be
bound by the first sentence of Section 3(g) with respect to the information
giving rise thereto unless such material non-public information is no longer
applicable. In the event there is a Grace Period, the Maturity Date (as defined
in the Certificate of Designations) shall be delayed by one and one-half (12)
days for each day in the Grace Period as provided in Section 2(g) of the
Certificate of Designations.
4. OBLIGATIONS OF THE INVESTORS.
a. At least seven (7) days (or three (3) business days in the case
of a Second Registration Statement or Additional Registration Statement) prior
to the first anticipated filing date of the Registration Statement, the Company
shall notify each Investor in writing of the information the Company requires
from each such Investor if such Investor elects to have any of such Investor's
Registrable Securities included in such Registration Statement. It shall be a
condition precedent to the obligations of the Company to complete 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. If on the day before the Company is
required to file a Registration Statement the Company has not received the
information requested (in accordance with this Section 4(a)) from an Investor (a
"NON-RESPONSIVE INVESTOR"), then the Company may file the Registration Statement
without including Registrable Securities of such Non-Responsive Investor but the
Company shall not be relieved of its obligation to file a Registration Statement
for any Investor which shall provide the requested information. Upon a
Non-Responsive Investor providing the Company with the requested information,
the Company shall either (i) if such information is provided prior to the
Company requesting acceleration of effectiveness of the Registration Statement
in which such Non-Responsive Investor's Registrable Securities would have been
included but for such Investor's lack of response, file an amendment to the
Registration Statement to include such Investor's Registrable Securities or (ii)
otherwise, file a new
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Registration Statement covering the Registrable Securities as provided by this
Registration Rights Agreement as if (for the purposes of filing, effectiveness
and associated Registration Delay Payments) the date on which such
Non-Responsive Investor supplied the requested information was the issuance date
of the relevant Preferred Shares. No Registration Delay Payments relating to the
filing and effectiveness of a Registration Statement shall accrue to any
Non-Responsive Investor until such time as the information is supplied to the
Company and the Company fails with the provisions of this Section 4(a). If the
Company has to file an additional Registration Statement to register the
Registrable Securities of a Non-Responsive Investor due solely to such
Investor's failure to provide information reasonably requested by the Company,
such Investor shall pay the reasonable out-of-pocket expenses actually incurred
by the Company in connection with such Registration Statement other than filing
fees.
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 hereunder, unless such 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. In the event any Investor elects to participate in an
underwritten public offering pursuant to Section 2, each such Investor agrees to
enter into and perform such Investor's obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing underwriter of
such offering and take such other actions as are reasonably required in order to
expedite or facilitate the disposition of the Registrable Securities.
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 3(h), the
first sentence of 3(g) or 3(u), such Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until such Investor's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3(h) or the
first sentence of 3(g) or receipt of notice that no supplement or amendment is
required.
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 its pro rata share of all
underwriting discounts and commissions.
f. Each Investor agrees not to take any action to cause such
Investor to become a registered broker dealer as defined under the 1934 Act or
to effect any change to such Investor's status that would preclude the Company
from using Form S-3 for the Registration Statement.
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g. Each Investor agrees to comply with the applicable provisions, if
any, of Regulation M promulgated under the 1933 Act with respect to its sale of
Registrable Securities under the applicable Registration Statement.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees
shall be paid by the Company. In addition, subject to the receipt of reasonable
supporting documentation, the Company shall reimburse the Investors for the
reasonable fees and disbursements of Legal Counsel in connection with
registrations, filings or qualifications pursuant to Sections 2 and 3 of this
Agreement, provided that the Company shall only reimburse that amount, if any,
equal to the difference between (i) $50,000 minus (ii) the amount of
reimbursement paid to the Buyers under Section 4(i) of the Securities Purchase
Agreement. Subject to Section 8 of the Securities Purchase Agreement and
Sections 6 and 7 of this Agreement, the Company shall not be required to pay, or
otherwise be responsible for, the fees and disbursements of Legal Counsel in
connection with registrations, filings or qualifications pursuant to Sections 2
and 3 of this Agreement in excess of the foregoing, all of which excess shall be
paid by the Investors, and in no event shall the Company be required to
reimburse the Investors more than $50,000 in the aggregate pursuant to Section
4(i) of the Securities Purchase Agreement and this Section 5.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each Investor who has or had
Registrable Securities covered by a Registration Statement, the directors,
officers, partners, employees, agents, representatives of, and each Person, if
any, who controls any Investor within the meaning of the 1933 Act or the
Securities Exchange Act of 1934, as amended (the "1934 ACT"), and any
underwriter (as defined in the 0000 Xxx) for the Investors, and the directors
and officers of, and each Person, if any, who controls, any such underwriter
within the meaning of the 1933 Act or the 1934 Act (each, an "INDEMNIFIED
PERSON"), against any losses, claims, damages, liabilities, judgments, fines,
penalties, charges, costs, reasonable attorneys' fees, amounts paid in
settlement or expenses, joint or several, (collectively, "CLAIMS") incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party is or
may be a party thereto ("INDEMNIFIED DAMAGES"), to which any of them may become
subject insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof)
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arise out of or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact in such Registration Statement or any
post-effective amendment thereto or in any filing made in connection with the
qualification of the offering under the securities or other "blue sky" laws of
any jurisdiction in which Registrable Securities are offered ("BLUE SKY
FILING"), or the omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
(ii) 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,
(iii) any violation or alleged violation by the Company of the 1933 Act, the
1934 Act, any other law, including, without limitation, any state securities
law, or any rule or regulation thereunder relating to the offer or sale of the
Registrable Securities pursuant to such Registration Statement or (iv) any
material violation of this Agreement (the matters in the foregoing clauses (i)
through (iv) being, collectively, "VIOLATIONS"). The Company shall reimburse the
Investors and each such underwriter or controlling 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): (i) shall
not apply to a Claim by an Indemnified Person 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 Indemnified Person or underwriter
for such Indemnified Person expressly for use in connection with the preparation
of the Registration Statement or any such amendment thereof or supplement
thereto, if such prospectus was timely made available by the Company pursuant to
Section 3(d); (ii) with respect to any preliminary prospectus, shall not inure
to the benefit of any such 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 in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company pursuant to Section 3(d), and the
Indemnified Person was promptly advised in writing not to use the incorrect
prospectus prior to the use giving rise to a violation and such Indemnified
Person, notwithstanding such advice, used it; (iii) shall not be available to
the extent such Claim is based on a failure of the Investor to deliver or to
cause to be delivered the prospectus made available by the Company, if such
prospectus was timely made available by the Company pursuant to Section 3(d);
and (iv) 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. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the transfer of the Registrable Securities
by the Investors pursuant to Section 9.
b. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to severally and not
jointly indemnify, hold harmless and
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defend, to the same extent and in the same manner as is set forth in Section
6(a), the Company, each of its directors, each of its officers who signs the
Registration Statement, each Person, if any, who controls the Company within the
meaning of the 1933 Act or the 1934 Act, each of its employees, agents and
representatives and in the event that an underwritten offering in compliance
with Section 3(f) hereof or pursuant to an underwritten offering for which the
Investors exercise their rights pursuant to Section 2(b) hereof, the
underwriters (each an "INDEMNIFIED PARTY"), against any Claim or Indemnified
Damages to which any of them may become subject, under the 1933 Act, the 1934
Act or otherwise, insofar as such Claim or Indemnified Damages 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, subject to Section 6(d),
such Investor will reimburse any reasonable legal or other expenses reasonably
incurred by them in connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in this Section 6(b)
and the agreement with respect to contribution contained in Section 7 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; provided, further, however, that the Investor shall be
liable under this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to 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 Indemnified Party and shall survive the transfer of
the Registrable Securities by the Investors pursuant to Section 9.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(b) with respect to any preliminary
prospectus shall not inure to the benefit of any Indemnified Party 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. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in any distribution, to the same extent as provided
above, with respect to information such persons so furnished in writing
expressly for inclusion in the Registration Statement.
d. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a Claim,
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to 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 Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses of not more than one counsel for such
Indemnified Persons or Indemnified
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Parties 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 Person or Indemnified Party and the indemnifying party would
be inappropriate due to actual or potential conflicting interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. In the case of Indemnified Persons, legal counsel
referred to in the immediately preceding sentence shall be selected by (i) HFTP
Investment L.L.C. ("HFTP"), if HFTP or an affiliate of HFTP is one of such
Indemnified Persons or (ii) the Investors holding a majority in interest of the
Registrable Securities included in the Registration Statement to which the Claim
relates, if HFTP or one of its affiliates is not one of such Indemnified
Persons. The Indemnified Party or Indemnified Person shall cooperate fully with
the indemnifying party in connection with any negotiation or defense of any such
action or claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Indemnified Party or
Indemnified Person which relates to such action or claim. The indemnifying party
shall keep the Indemnified Party or Indemnified Person fully apprised at all
times as to the status of the defense or any settlement negotiations with
respect thereto. No indemnifying party shall be liable for any settlement of any
action, claim or proceeding effected without its prior written consent,
provided, however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent. No indemnifying party shall, without the prior
written consent of the Indemnified Party or Indemnified Person, consent to entry
of any judgment or enter into any settlement or other compromise which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party or Indemnified Person of a release from all liability
in respect to such claim or litigation. Following indemnification as provided
for hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made.
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 Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.
e. 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 and when bills are received or Indemnified Damages are incurred.
f. The indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.
7. CONTRIBUTION.
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
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any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that: (i) no seller of
Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution from
any seller of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) contribution 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 1934 ACT.
With a view to making available to the Investors the benefits of Rule
144 promulgated under the 1933 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. make and keep public information available, as those terms are
understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements (it being understood that
nothing herein shall limit the Company's obligations under Section 4(c) of the
Securities Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and
c. furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
1933 Act and the 1934 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 the investors to sell such securities pursuant to Rule 144 without
registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights under this Agreement shall be automatically assignable by
the Investors to any transferee of all or any portion of Registrable Securities
if: (i) 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 within
three (3) business days after such assignment; (ii) the Company is, within three
(3) business days after such transfer or assignment, furnished with written
notice of (a) the name and address of such transferee or assignee, and (b) the
securities with respect to which such registration rights are being transferred
or assigned; (iii) immediately following such transfer or assignment the further
disposition of such securities by the transferee or assignee is restricted under
the 1933 Act and applicable state securities laws; (iv) at or before the time
the Company receives the written notice contemplated by clause (ii) of this
sentence the transferee or assignee agrees in writing with the Company to be
bound by all of the provisions contained
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herein; and (v) such transfer shall have been made in accordance with the
applicable requirements of the Securities Purchase Agreement.
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 the written consent of the Company,
the Investors who then hold a majority of the Registrable Securities and the
holders of the rights to acquire a majority of the Preferred Shares which the
Investors have a right to acquire under the Securities Purchase Agreement,
provided that if the right to acquire relates to the Put Preferred Shares (as
defined in the Securities Purchase Agreement) and the Company has irrevocably
waived its right to deliver a Put Share Notice (as defined in the Securities
Purchase Agreement) then the rights to acquire the Put Preferred Shares shall be
excluded for the purpose of the clause immediately preceding this proviso. Any
amendment or waiver effected in accordance with this Section 10 shall be binding
upon each Investor and the Company. No such amendment shall be effective to the
extent that it applies to less than all of the holders of the Registrable
Securities. No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of this Agreement
unless the same consideration also is offered to all of the parties to this
Agreement.
11. MISCELLANEOUS.
a. A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more Persons 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, consents, waivers or other communications required
or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one business day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
ARIAD Pharmaceuticals, Inc.
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
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Attention: Xxx X. XxXxxxxx
With a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 617-542-2241
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
If to Legal Counsel:
Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Telephone: 000-000-0000
Facsimile: 312-902-1061
Attention: Xxxxxx X. Xxxxxxxx, Esq.
If to a Buyer, to its address and facsimile number on the Schedule of Buyers
attached hereto, with copies to such Buyer's representatives as set forth on the
Schedule of Buyers or to such other address and/or facsimile number and/or to
the attention of such other person as the recipient party has specified by
written notice given to each other party five days prior to the effectiveness of
such change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically generated by
the sender's facsimile machine containing the time, date, recipient facsimile
number and an image of such transmission or (C) provided by a courier or
overnight courier service shall be rebuttable evidence of personal service,
overnight or courier delivery or transmission by facsimile in accordance with
clause (i), (ii) or (iii) above, respectively.
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. The corporate laws of the State of Delaware shall govern all
issues concerning the relative rights of the Company and the Buyers as its
stockholders. All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. Each party hereby irrevocably
submits to the non-exclusive jurisdiction of the state and federal courts
sitting the City of New York, for the adjudication of any dispute
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hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
e. This Agreement, the Securities Purchase Agreement and the
Certificate of Designations 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, the Securities Purchase
Agreement and the Certificate of Designations 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, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto.
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 identical 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. All consents and other determinations to be made by the Investors
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pursuant to this Agreement shall be made, unless otherwise specified in this
Agreement, by Investors holding a majority of the Registrable Securities,
determined as if all of the Preferred Shares then outstanding have been
converted into or exercised for Registrable Securities without regard to any
limitation on conversions of the Preferred Shares; provided, however, that for
the purpose of this Section 11(j) only, the term Registrable Securities shall
not include any securities which may be sold without restriction pursuant to
Rule 144(k) of the 1933 Act.
k. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party.
l. This Agreement is intended for the benefit of the parties hereto
and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.
* * * * * *
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IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY: BUYERS:
ARIAD PHARMACEUTICALS, INC. HFTP INVESTMENT L.L.C.
By: Promethean Investment Group L.L.C.
Its: Managing Member
By: /s/ Xxx X. XxXxxxxx By: /s/ Xxxxx X. X'Xxxxx, Xx.
-------------------------- -----------------------------------
Name: Xxx X. XxXxxxxx Name: Xxxxx X. X'Xxxxx, Xx.
Its: Executive Vice President Its: President
XXXXX XXXXXXX STRATEGIC
GROWTH FUND, LTD.
By: /s/ Xxxxxxxx X. Xxxx
-----------------------------------
Name: Xxxxxxxx X. Xxxx
Its: Member
XXXXX XXXXXXX STRATEGIC
GROWTH FUND, L.P.
By: /s/ Xxxxxxxx X. Xxxx
-----------------------------------
Name: Xxxxxxxx X. Xxxx
Its: Member
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SCHEDULE OF BUYERS
INVESTOR ADDRESS INVESTOR'S REPRESENTATIVES' ADDRESS
INVESTOR NAME AND FACSIMILE NUMBER AND FACSIMILE NUMBER
----------------------- --------------------------------------- --------------------------------------
HFTP Investment L.L.C. c/o Promethean Investment Group, L.L.C. Promethean Investment Group, L.L.C.
00 Xxxx 00xx Xxxxxx, Xxxxx 0000 00 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 10019 Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. X'Xxxxx, Xx. Attn: Xxxxx X. X'Xxxxx, Xx.
Facsimile: 000-000-0000 Xxxxxx Xxxxxxx
Facsimile: 000-000-0000
Xxxxxx Xxxxxx & Xxxxx
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: 312-902-1061
Xxxxx Xxxxxxx Strategic 000 Xxxx 00xx Xxxxxx, 00xx Floor Xxxxx Xxxxxxx Asset Management, L.L.C.
Growth Fund, Ltd. Xxx Xxxx, Xxx Xxxx 00000 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Attn: Xxxxxxxx Xxxx Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 212-247-1329 Attn: Xxxxxxxx Xxxx
Residence: Cayman Islands Facsimile 212-247-1329
Akin Gump Xxxxxxx Xxxxx & Xxxx, L.L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxx
Facsimile: 000-000-0000
Xxxxx Xxxxxxx Strategic 000 Xxxx 00xx Xxxxxx, 00xx Floor Xxxxx Xxxxxxx Asset Management, L.L.C.
Growth Fund, L.P. Xxx Xxxx, Xxx Xxxx 00000 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Attn: Xxxxxxxx Xxxx Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 212-247-1329 Attn: Xxxxxxxx Xxxx
Residence: New York Facsimile 212-247-1329
Akin Gump Xxxxxxx Xxxxx & Xxxx, L.L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxx
Facsimile: 000-000-0000
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EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
Boston EquiServe
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
ATTN: MS. XXXXXXXX XXXXXX
Re: ARIAD PHARMACEUTICALS, INC.
Ladies and Gentlemen:
Reference is made to that certain Securities Purchase Agreement dated
November __, 1998 by and among ARIAD Pharmaceuticals, Inc., a Delaware
corporation (the "COMPANY"), and the buyers named therein (collectively, the
"HOLDERS") pursuant to which the Company is issuing to the Holders shares of its
Series C Convertible Preferred Stock, par value $.01 per share (the "PREFERRED
SHARES") that are convertible into shares of the Company's common stock, par
value $.001 per share (the "COMMON STOCK"). This letter shall serve as our
irrevocable authorization and direction to you (provided that you are the
transfer agent of the Company at such time) to issue shares of Common Stock upon
conversion of the Preferred Shares (the "CONVERSION SHARES") to or upon the
order of a Holder from time to time upon surrender to you of (i) a completed and
duly executed Conversion Notice in the form attached hereto as EXHIBIT I which
has been acknowledged by the Company as indicated by the signature of a duly
authorized officer of the Company thereon, and (ii) certificates representing
Preferred Shares being converted (or an indemnification undertaking with respect
to such share certificates in the case of their loss, theft or destruction). So
long as you have previously received (x) written confirmation from counsel to
the Company that a registration statement covering resales of the Conversion
Shares has been declared effective by the Securities and Exchange Commission
(the "SEC") under the Securities Act of 1933, as amended (the "1933 ACT"), and
(y) a copy of such registration statement, certificates representing the
Conversion Shares shall not bear any legend restricting transfer of the
Conversion Shares thereby and should not be subject to any stop-transfer
restriction. Provided, however, that if you have not previously received (i)
written confirmation from counsel to the Company that a registration statement
covering resales of the Conversion Shares has been declared effective by the SEC
under the 1933 Act, and (ii) a copy of such registration statement, then the
certificates for the Conversion Shares shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN
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THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE
COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT."
and, provided further, that the Company may from time to time notify you to
place stop-transfer restrictions on the certificates for the Conversion Shares
in the event a registration statement covering the Conversion Shares is subject
to amendment for events then current.
A form of written confirmation from counsel to the Company that a
registration statement covering resales of the Conversion Shares has been
declared effective by the SEC under the 1933 Act is attached hereto as EXHIBIT
II.
Please be advised that the Holders are relying upon this letter as an
inducement to enter into the Securities Purchase Agreement and, accordingly,
each Holder is a third party beneficiary to these instructions.
Please execute this letter in the space indicated to acknowledge your
agreement to act in accordance with these instructions. Should you have any
questions concerning this matter, please contact me at (000) 000-0000.
Very truly yours,
[ISSUER'S COUNSEL]
By: __________________________________
cc: [LIST NAMES OF HOLDERS]
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