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Exhibit 10.19
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made by and
among ZymeTx, Inc. (the "Company"), and the investors listed on Schedule I
hereto (collectively, the "Investors," each an "Investor"), each of whom has
executed a signature page hereto.
RECITALS
A. The Investors desire to purchase from the Company, and the
Company desires to issue and sell to the Investors up to an aggregate 69 Units
(including the Units available to cover over-subscriptions, if any), each Unit
consisting of 125,000 shares of the Company's Series A Convertible Preferred
Stock, par value $.001 per share (the "Preferred Stock"), all upon the terms
set forth in the Company's Confidential Private Placement Memorandum dated May
22, 1996 (the "Memorandum").
B. To induce Investors to purchase Units, the Company has
undertaken to register under the Securities Act of 1933, as amended, and the
rules and regulations thereunder (collectively, the "Securities Act"), the
common stock, par value $.001 per share (the "Common Stock"), underlying the
Preferred Stock contained in the Units to be purchased by the Investors. This
Agreement sets forth the terms and conditions of such undertaking.
AGREEMENTS
The Company and the Investors covenant and agree as follows:
1. Definitions. For purposes of this Agreement:
(a) The terms "register, "registered" and "registration" refer to
a registration effected by preparing and filing a registration statement or
statements or similar documents in compliance with the Securities Act and, when
applicable, the rules and regulations promulgated thereunder, and the
declaration or ordering of effectiveness of such registration statement or
statements or similar document by the Securities and Exchange Commission (the
"SEC");
(b) The term "Registrable Securities" means (i) the Common Stock
underlying the Preferred Stock contained in the Units purchased by the
Investors; and (ii) any Common Stock of the Company issued as a dividend or
other distribution with respect to, or in exchange for or in replacement of,
such Common Stock, excluding in all cases, however, any Registrable Securities
sold by an Investor in a transaction in which its registration rights under
this Agreement are not assigned; and
(c) Capitalized terms not defined herein shall have the meanings
set forth in the Memorandum.
2. Registration.
(a) In the event that the Company completes an initial public
offering of its securities prior to the second anniversary of the Final Closing
Date, the Company shall give notice in writing to such effect to the Holders
within 30 days after the effective date of the registration statement
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filed with respect thereto and will effect the registration under the
Securities Act of all Registrable Securities not later than 180 days after the
closing date of such initial public offering; provided, however, that a holder
of Registrable Securities (collectively, the "Holders" and each a "Holder") may
inform the Company in writing within 10 days after the receipt of notice from
the Company of the initial public offering that such Holder wishes to exclude
all or a portion of its Registrable Securities from such registration.
(b) In the event that the Company has not filed a registration
statement under the Securities Act prior to the third anniversary of the Final
Closing Date, the Company shall, upon the request of the Holders of a majority
in interest of the Registrable Securities, effect the registration under the
Securities Act of all Registrable Securities not later than 90 days after
receipt of such request. Any such request shall include a statement of such
Holder's intended method of distribution. The Company shall send prompt written
notice to all Holders of any request for registration received hereunder and
each such Holder shall have the right to include its Registrable Securities
therein by so requesting in writing within 15 days after receipt of such notice
from the Company. Any Holder not electing to include its Registrable Securities
in such registration will have no further rights to have such Registrable
Securities registered by the Company. The Company shall be entitled to postpone
for a reasonable period of time, not to exceed 90 days, after receipt of a
request hereunder to file a Registration Statement, the filing of any
Registration Statement otherwise required to be prepared and filed by it if, at
the time it receives a request for registration, the Company determines, in its
reasonable judgment, that such registration and offering would materially
interfere with any material transaction involving the Company or any of its
affiliates (as defined in Rule 405 of the Securities Act) and promptly gives
the Holders of Registrable Securities written notice of such determination.
(c) If at any time the Company shall propose to file a
registration statement under the Securities Act in connection with the proposed
offer and sale by it of any of its equity securities (other than a registration
statement on a form, such as Form S-4 and Form S-8, that does not permit the
inclusion of shares by its security holders), the Company will give notice in
writing to such effect to the Holders at least 30 days prior to such filing,
and, at the written request of any such Holder made within 10 days after the
receipt of such notice, will include therein at the Company's cost and expense
(except for the fees and expenses of counsel to such Holders and underwriting
discounts, commissions and filing fees attributable to the Registrable
Securities included in such registration statement), such of the Registrable
Securities as the Holders thereof so request. Notwithstanding the foregoing:
(i) if the offering being registered by the Company is underwritten, and if in
the good faith judgment of the representative of the underwriters of such
offering, the inclusion therein of all or any of such Registrable Securities
would reduce the number of shares to be offered by the Company, the number of
Registrable Securities otherwise to be included in the underwritten public
offering may be reduced pro rata among the Holders thereof requesting such
registration and any other selling security holders having piggyback
registration rights; and (ii) if a registration statement is filed by the
Company by reason of a demand registration request made by the holders of other
securities, then the underwriter of such offering shall not reduce the number
of shares being offered by the holders of such other securities seeking such
registration by reason of the inclusion of any Registrable Securities in such
offering pursuant to the rights granted to the Holders by this Section 2(c).
(d) The Holders of a majority in interest of the Registrable
Securities shall have the right to select the managing underwriters, if any,
for any registration effected pursuant to Section 2(a) or 2(b) hereof, subject
to the approval of the Company, which shall not be unreasonably withheld.
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(e) The Company is obligated to effect only one registration
pursuant to Section 2(b) of this Agreement.
(f) In the event that the Company fails to fulfill its
registration responsibilities pursuant to Section 2(a), (b) or (c) hereof, the
Company agrees to repurchase the Registrable Securities from the Holders
thereof at the Fair Market Value (as defined below) of such Securities, to the
extent that the Company shall have funds legally available therefor. To the
extent that the Company shall not have funds legally available to repurchase
such Registrable Securities, the Holders thereof shall have the right to elect
a majority of the Board of Directors of the Company. The Fair Market Value of
the Registrable Securities shall be the sum of (i) the appraised value thereof
calculated by each of two independent appraisal firms selected by Xxxxxxx Xxxxx
Securities Inc. divided by (ii) two.
3. Obligation of the Company. When required under this Agreement to
effect the registration of the Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) In the case of a registration effected pursuant to Section
2(a) or 2(b) hereof, prepare and file with the SEC as soon as reasonably
practicable, a registration statement or similar documents (the "Registration
Statement" with respect to, in the case of Section 2(a), all Registrable
Securities and, in the case of Section 2(b), all Registrable Securities
requested to be registered by the Holders thereof, other than any Registrable
Securities excluded by Holders pursuant to Section 2(a) hereof, use its best
efforts to cause such Registration Statement to become effective not later than
45 days after the date of its initial filing, and keep the Registration
Statement effective for the longer of (i) a period of 120 days or (ii) until
the third anniversary of the Final Closing. The 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. Notwithstanding the foregoing or anything to the contrary contained
herein: (A) the Company shall not be required to undergo an audit other than in
the ordinary course of business; and (B) the Company may defer any demand for
registration for up to 90 days for valid business reasons.
(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and
the prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective for the period required
under Section 3(a) hereof in the case of a registration effected pursuant to
Section 2(a) hereof and, in the case of a registration effected pursuant to
Section 2(b) hereof, for a period of 120 days or until the underwriter and the
Holders have completed the distribution described in the registration
statement, whichever first occurs, and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by the
Registration Statement.
(c) Furnish promptly to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, and all amendments and
supplements thereto, in conformity with the requirements of the Securities Act,
and such other documents as the Holders may reasonably request in writing in
order to facilitate the disposition of Registrable Securities.
(d) Use its best efforts to register and qualify the securities
covered by the Registration Statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders, and
to prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements and to take such other actions as
may be necessary to
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maintain such registration and qualification in effect at all times required
hereunder and to take all other actions necessary or advisable to enable the
disposition of such securities in such jurisdictions, provided that the Company
shall not be required in connection therewith or as a condition thereto (i) to
qualify to do business or (ii) to provide any undertaking or make any change in
its charter or bylaws which the Board of Director determines to be contrary to
the best interests of the Company and it stockholders.
(e) In the event the Holders of a majority in interest of the
Registrable Securities select underwriters for the offering pursuant to Section
2(d) hereof, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without limitation,
customary indemnification and contribution obligations, with the managing
underwriter of such offering. The Holders hereby agree to enter into and
perform their customary obligations under any such agreement including, without
limitation, customary indemnification and contribution obligations.
(f) Notify the Holders, at any time when a prospectus relating to
Registrable Securities covered by the Registration Statement is required to be
delivered under the Securities Act, of the happening of any event as a result
of which the prospectus included in the Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing. The Company
shall promptly amend or supplement the Registration Statement to correct any
such untrue statement or omission.
(g) Notify the Holders of the issuance by the SEC of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible time.
(h) Permit a single firm of counsel designated as selling
stockholders' counsel by the Holders of a majority in interest of the
Registrable Securities to review the Registration Statement and all amendments
and supplements thereto for a reasonable period of time prior to their filing,
and shall not file any document in a form to which such counsel reasonably
objects.
(i) Make generally available to its security holders as soon as
practicable, 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 Securities Act) covering the 12-month period beginning not later
than the first day of the Company's next fiscal quarter following the effective
date of the Registration Statement.
(j) At the request of the Holders, furnish on the date that
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Agreement (i) an opinion addressed to the
underwriters, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwrites
and (ii) a letter dated such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters.
(k) Make available for inspection by the Holders, any underwriters
participating in the offering pursuant to the registration and the counsel,
accountants or other agents retained by the Holders
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or any such underwriter, all pertinent financial and other records, corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by the
Holders or any such underwriters in connection with the registration.
(l) If the Common Stock is listed on a national securities
exchange, use its best efforts to cause the Registrable Securities to be listed
on such exchange. If the Common Stock is not listed on a national securities
exchange, use its best efforts to facilitate the quotation of the Registrable
Securities on The Nasdaq Stock Market, Inc.
(m) Provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of the
Registration Statement.
(n) Take all actions reasonably necessary to facilitate the timely
preparation and delivery of certificates (not bearing any legend restricting
the sale or transfer of such securities) representing the Registrable
Securities to be sold pursuant to the Registration Statement and to enable such
certificates to be in such denominations and registered in such names as the
Holders or any underwriters may reasonably request.
(o) Take all other reasonable actions necessary to expedite and
facilitate the registration of the Registrable Securities pursuant to the
Registration Statement.
4. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
respect to each Holder that such Holder shall furnish to the Company such
information regarding itself, the Registrable Securities held by it, and the
intended method of disposition of such securities as shall be reasonably
required to effect the registration of the Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request.
5. Expenses of Registration. All expenses other than underwriting
discounts and commissions incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3 hereof, including, without
limitation, all registration, listing, filing and qualification fees, printers
and accounting fees, the fees and disbursements of counsel for the Company and
the reasonable fees and disbursements of one firm of counsel for the Holders
shall be borne by the Company.
6. Indemnification. In the event any Registrable Securities are included
in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the directors, if any, of such Holder, the officers,
if any, of such Holder who sign the Registration Statement, each person, if
any, who controls such Holder, any underwriter (as defined in the Securities
Act) for the Holders and each person, if any, who controls any such underwriter
within the meaning of the Securities Act or the Securities Exchange Act of 1934
(the "Exchange Act"), against, and pay or reimburse any such persons for, any
losses, claims, damages, expenses or liabilities (joint or several) to which
any of them may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages, expenses or liabilities (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively, a "Violation") (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement,
including any preliminary
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prospectus or final prospectus contained therein or any amendments or
supplements thereof, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading or (iii) any Violation or alleged" Violation by the Company of the
Securities Act, the Exchange Act, any state securities law or any rule or
regulation promulgated thereunder, and the Company will reimburse the Holders
and each such underwriter or controlling persons, promptly as such expenses are
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding; provided, however, that the indemnity
agreement contained in this Section 6(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company, which consent shall
not be unreasonably withheld, nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by the Holders, directors or officers of the Holders or
any such underwriter or controlling person, as the case may be. Such indemnity
shall remain in full force and effect regardless of any investigation made by
or on behalf of the Holders or any such underwAter or controlling person or the
Company and shall survive the transfer of the Registrable Securities by
Holders.
(b) To the extent permitted by law, each Holder whose Registrable
Securities are included in a Registration Statement, severally and not jointly,
will indemnify and hold harmless the Company, each of its directors, each of
its officers who have signed the Registration Statement, each person, if any,
who controls the Company within the meaning of the Securities Act or the
Exchange Act, any underwriter and any other stockholder selling securities
pursuant to the Registration Statement or any of its directors or officers or
any person who controls such holder or underwriter, against, and pay or
reimburse any of such persons for, any losses, claims, damages or liabilities
(joint or several) to which any of them may become subject, under the
Securities Act, the Exchange Act or any state securities law or any rule or
regulation promulgated thereunder, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such
registration; and such Holder will reimburse any legal or other expense
reasonably incurred by any of them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this Section 6(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of such Holder, which
consent shall not be unreasonably withheld, conditioned or delayed.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action, proceeding or
investigation, such indemnified party, if a claim in respect thereof is to be
made against the indemnifying party under this Section 6, will notify the
indemnifying party of the commencement thereof, but the omission to so notify
the indemnifying party will not relieve it from any liability which it may have
to any indemnified party under this Section 6 unless the indemnifying party has
been substantially prejudiced by such omission. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party, to assume the defense thereof subject to the provisions
herein stated, with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party of its
election so to assure the defense thereof, then
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notwithstanding anything to the contrary contained herein, the indemnifying
party will not be liable under this Section 6 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. The indemnified party
will have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
will not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party. No settlement of any action against an indemnified party
will be made without the consent of the indemnifying party and the indemnified
party, which consent shall not be unreasonably withheld or delayed in light of
all factors of importance to such party and no indemnifying party shall be
liable to indemnify any person for any settlement of any such claim effected
without such indemnifying party's consent.
(d) To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under this Section 6 to the extent permitted by law, provided that (i) no
contribution shall be made under circumstances where the maker would not have
been liable for indemnification under the fault standards set forth in this
Section 6, (ii) no seller of registrable securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any seller of Registrable Securities who
was not guilty of such fraudulent misrepresentation and (iii) contribution by
any seller of Registrable Securities shall be limited in amount to the next
amount of proceeds received by such seller from the sale of such registrable
Securities.
7. Reports Under Securities Exchange Act of 1934. With a view to making
available to the Holders the benefits of Rule 144 promulgated under the
Securities Act or any other rule or regulation of the SEC that may at anytime
permit the Holders to sell securities of the Company to the public without
registration, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144, at all times for 90 days after the date the
first registration statement by the Company under Section 2 of this agreement
is declared effective of the offering of its securities to the general public;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange
Act; and
(c) furnish to each Holder, so long as such Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144 (at
any time for 90 days after the effective date of the first registration
statement filed by the Company under Section 2 of this Agreement), the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed
by the Company and (iii) such information as may be reasonably requested in
availing the Holders of any rule or regulation of the SEC which permits the
selling of any such securities without registration.
8. Assignment of Registration Rights. The rights to have the Company
register Registrable Securities pursuant to this Agreement may be assigned by
the Holders to transferees or assignees of such securities; provided, however,
that the Company must be, within a reasonable time after such transfers,
furnished with written notice of the name and address of such transferee or
assignee and the securities
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with respect to which such registration rights are being assigned; and,
provided, further, that such assignment shall be effective only if immediately
following such transfer the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act. The term
"Holders" as used in this agreement shall include permitted assignees.
9. Miscellaneous.
(a) Notices required or permitted to be given hereunder shall be
in writing and shall be deemed to be received when personally delivered or sent
by overnight courier or registered mail, return receipt requested, addressed
(i) if to the Company, at ZymeTx, Inc., 000 Xxxxxxxx Xxxxxxx, Xxxxxxxx Xxxx,
Xxxxxxxx 00000, Attention: President and (ii) if to a Holder, at the address
set forth under its name on the signature page hereto, or at such other address
as each party furnishes by notice given in accordance with this Section 9(a).
(b) Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, will not operate as a waiver thereof. No waiver will be effective
unless and until it is in writing and signed by the party giving the waiver.
(c) This Agreement shall be enforced, governed and construed in
all respects in accordance with the laws of the State of New York, as such laws
are applied by New York courts to agreements entered into and to be performed
in New York by and between residents of New York. In the event that any
provision of this agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to conform
with any such statute or rule of law. any provision hereof which may prove
invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision hereof.
(d) This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and may be amended
only by a writing executed by the Company and the Holders of a majority
interest of the Registrable Securities.
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SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned has executed this Registration Rights
Agreement this ____ day of ______________, 1996.
If the Holder is an INDIVIDUAL:
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Print Name
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Signature of Purchaser
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Address
If the Holder is a PARTNERSHIP, CORPORATION OR TRUST:
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Name of Partnership, Corporation or
Trust
By:
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Name:
Title:
------------------------------------------
Address
ACCEPTED AND AGREED
this __ day of , 1996
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ZYMETX, INC.
By:
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Name:
Title:
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