EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of December ___,
2004, is entered into by and among ENHANCE BIOTECH, INC., a Delaware corporation
("Parent"), ARDENT ACQUISITION CORP., a North Carolina corporation and wholly
owned subsidiary of Parent ("Merger Sub") and ARDENT PHARMACEUTICALS, INC., a
North Carolina corporation ("Ardent").
W I T N E S S E T H:
WHEREAS, Parent, Merger Sub and Ardent have entered into that
certain Merger Agreement dated August 11, 2004, as amended as of November 20,
2004 (the "Merger Agreement"), pursuant to which Parent and Ardent have
consummated a business combination whereby Merger Sub merged with and into
Ardent and each outstanding security of Ardent was converted into the right to
receive the Merger Consideration;
WHEREAS, in connection with the conversion of Ardent securities into
the Merger Consideration, Parent has agreed to provide certain registration
rights pursuant to the terms of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein
that are defined in the Merger Agreement shall have the meaning ascribed to such
terms in the Merger Agreement. As used in this Agreement the following terms
shall have the following meanings:
1.1 "Commission" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
1.2 "Common Stock" shall mean shares of Parent's common stock, par
value $0.001 per share.
1.3 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute enacted hereafter, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect
from time to time.
1.4 "Filing Date" shall mean the date which is the earlier of the
following: (x) as soon as practicable after consummation of a Qualified
Financing; or (y) the date which is not more than the 150th day following the
Effective Date of the Merger.
1.5 "Form SB-2" means such form under the Securities Act as in
effect on the date hereof or any registration form under the Securities Act
subsequently adopted by the Commission which permits inclusion or incorporation
of substantial information by reference to other documents filed by Parent with
the Commission.
1.6 "Holder" shall mean any security holder of Ardent to whom
Registrable Securities are issued pursuant to the Merger Agreement.
1.7 "Person" shall mean any individual, firm, corporation,
partnership, trust, incorporated or unincorporated association, joint venture,
joint stock company, government (or an agency or political subdivision thereof)
or other entity of any kind.
1.8 "Prospectus" shall mean the prospectus included in the
Registration Statement, as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
1.9 "Qualified Financing" means an equity financing by Parent of at
least $10,000,000 with a minimum valuation of at least $1.50 per share of Common
Stock.
1.10 "Registration Statement" shall mean the registration statement
required to be filed hereunder, including the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.
1.11 "Registrable Securities" shall mean for each Holder, up to
30,000 shares of Common Stock issued to such Holder pursuant to the Merger
Agreement at the Effective Time; provided, however, that the shares of Common
Stock reserved pursuant to the Merger Agreement for issuance upon exercise or
conversion of Ardent stock options, warrants and convertible promissory notes
shall not be deemed "Registrable Securities" if such stock options and warrants
were not exercised prior to or at the Effective Time or if such convertible
promissory notes were not converted prior to or at the Effective Time; provided,
however, that the term "Registrable Securities" shall not include (i) any shares
of Common Stock that have been registered and sold pursuant to a registration,
or (ii) any shares of Common Stock that have been sold, or could then be sold
within any three (3) month period, pursuant to Rule 144 promulgated under the
Securities Act.
1.12 "Registration Expenses" shall mean all of Parent's expenses
relating to Parent's compliance with Sections 2 and 3 hereof, including, without
limitation, all SEC and "blue sky" registration and filing fees, printing
expenses, fees for listing on any national exchange on which Parent may list the
Registrable Shares, any transfer taxes applicable to the initial issuance of
Registrable Securities to each Holder, fees of any transfer agents and
registrars, fees and disbursements of Parent's counsel and independent public
accountants for
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Parent, including expenses incurred by Parent in connection with any special
audits incidental to or required by such registration. The term "Registration
Expenses" shall not include any of the following, which are sometimes
hereinafter referred to as "Individual Holder Expenses": underwriting fees,
discounts and expenses, if any, applicable to any Holder's Registrable
Securities; fees and disbursements of counsel or other professionals that any
Holder may choose to retain in connection with the registration statement filed
pursuant to this Agreement; selling commissions or stock transfer taxes
applicable to the Registrable Securities registered on behalf of any Holder; any
other expenses incurred by or on behalf of such Holder in connection with the
offer and sale of such Holder's Registrable Securities other than Registration
Expenses.
1.13 "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute enacted hereafter, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect
from time to time.
2. Registration. On or prior to the Filing Date, Parent shall prepare and
file with the Commission a registration statement on Form SB-2 (or, if such form
is unavailable for such a registration, on such other form as is available to
Parent for such a registration), covering the resale of all of the Registrable
Securities. Parent shall use its commercially reasonable best efforts to cause
the Registration Statement to be declared effective under the Securities Act as
promptly as practicable on or after the 180th day following the Effective Date
of the Merger. Parent shall use its commercially reasonable best efforts to keep
the Registration Statement continuously effective under the Securities Act
during the period from the Effective Date of the Merger until the first
anniversary of the Effective Date of the Merger (the "Effective Period").
3. Registration Procedures; Condition to Parent's Obligations.
3.1 Parent will keep each Holder advised in writing as to the
initiation of the Registration Statement and as to the completion thereof and
will, at its expense:
(a) use its commercially reasonable best efforts to keep such
registration effective for the Effective Period;
(b) Prepare and file with the Commission such amendments and
supplements to the Registration Statement and the Prospectus as may be necessary
to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement;
(c) Furnish such number of Prospectuses and other documents
incident thereto, including any amendment of or supplement to the Prospectus, as
a Holder from time to time may reasonably request, but only while the Company
shall be required under the provisions hereof to cause the registration
statement to remain current;
(d) Notify each Holder of Registrable Securities covered by
the Registration Statement at any time when a Prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the Prospectus included in such 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 the light of the circumstances then
existing, and at the request of any such Holder, prepare and furnish to such
Holder a reasonable number of copies of a supplement to or an amendment of such
Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such shares, such Prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing;
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(e) Use its best efforts to cause all Registrable Securities
covered by such Registration Statement to be registered with or approved by such
other federal or state governmental agencies or authorities as may be necessary
in the opinion of counsel to Parent and counsel to the Holders of Registrable
Securities to enable the Holders thereof to consummate the disposition of such
Registrable Securities (provided, however, that Parent shall not be obligated to
qualify as a foreign corporation to do business under the laws of any
jurisdiction in which it is not then qualified), and maintain any such
registration or qualification current until the earlier of the sale of the
Registrable Securities so registered or until the expiration of the Effective
Period;
(f) List all such Registrable Securities registered in such
registration on each securities exchange or automated quotation system on which
the Common Stock of Parent is then listed;
(g) Provide a transfer agent and registrar for all Registrable
Securities and a CUSIP number for all such Registrable Securities, in each case
not later than the effective date of such registration;
(h) Prior to filing the registration statement covering the
Registrable Securities, make available for inspection at Parent's corporate
office in New York, New York upon reasonable request by any Holder of
Registrable Securities, any attorney, accountant or other agent retained by any
of the Holders, during normal business hours of Parent and without unreasonable
disruption of Parent's business or unreasonable expense to Parent and solely for
the purpose of due diligence with respect to the registration statement, all
publicly available, non-confidential financial and other records, including
without limitation pertinent corporate documents of Parent, and cause Parent's
officers, directors and employees to supply, at the requesting parties expense
and without unreasonable disruption of Parent's business or unreasonable expense
to parent and solely for the purpose of due diligence with respect to the
registration statement, all publicly available, non-confidential information
reasonably requested by the attorney, accountant or other agent of any of the
Holders;
3.2 It shall be a condition precedent to the obligations of Parent
to take any action pursuant to this Agreement that each of the Holders whose
Registrable Securities are to be registered pursuant to this Agreement shall
furnish the following to Parent prior to performance by Parent of its
obligations under this Agreement:
(a) written evidence reasonably satisfactory to Parent of each
such Holder's agreement to be bound by this Agreement;
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(b) information regarding each such Holder, the Registrable
Securities held by such Holder, and any additional information as Parent shall
reasonably request and as shall be required in connection with the action to be
taken by Parent;
(c) written evidence reasonably satisfactory to Parent of each
such Holder's agreement to provide customary indemnifications to Parent in
respect of information furnished by or on behalf of each Holder or actions taken
or omitted by each Holder (as consistent with the indemnification provisions of
this Agreement), and to pay the Individual Holder Expenses incurred by or on
behalf of each Holder which are not Registration Expenses required to be paid by
Parent hereunder, and to customary blackout periods in the event of material
corporate developments affecting Parent or its securities; and
(d) written evidence reasonably satisfactory to Parent of each
Holder's agreement that upon receipt of any written notice by Parent to
discontinue use of the registration statement or any prospectus or related
document until the same are supplemented or amended, that Holder will so refrain
and, if so directed by Parent, will deliver to Parent all copies, other than
permanent file copies, then in Holder's possession of such documents at the time
of receipt of such notice. Furthermore, each Holder shall agree that if such
Holder uses a prospectus in connection with the offering and sale of any of the
Registrable Securities, the Holder will use only the latest version of such
prospectus provided by Parent.
4. Expenses. All Registration Expenses incurred in connection with any
registration, qualification or compliance pursuant to Sections 2 and 3 of this
Agreement shall be borne by Parent.
5. Indemnification.
5.1 Indemnification by Parent. To the full extent permitted by law,
Parent will indemnify each Holder, each of its officers, directors and
employees, and each person controlling a Holder within the meaning of the
Securities Act, with respect to which registration, qualification or compliance
has been effected pursuant to this Agreement against all claims, losses, damages
and liabilities (or actions, proceedings or settlements in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any violation by Parent of the Securities Act or any rule or regulation
thereunder applicable to Parent and relating to action or inaction required of
Parent in connection with any such registration, qualification or compliance,
and will reimburse each such Holder, each of its officers, directors and
partners, and each person controlling such Holder for any legal and any other
expenses reasonably incurred in connection with investigating and defending or
settling any such claim, loss, damage, liability or action, provided that Parent
will not be liable in any such case to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on any untrue statement
or omission made in reliance upon and based upon written information furnished
to Parent by or on behalf of such Holder for use therein.
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5.2 Indemnification by the Holders. Each Holder will, to the extent
Registrable Securities held by him or it are included in the Registration
Statement, indemnify Parent, each of its directors, officers and employees and
each other person, if any, who controls Parent within the meaning of the
Securities Act, against all claims, losses, damages, expenses and liabilities
(or actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any such
Registration Statement, Prospectus, offering circular or other document, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any violation by such Holder of the Securities Act or any rule or regulation
thereunder applicable to such Holder and relating to action or inaction required
of such Holder in connection with any such registration, qualification or
compliance, and will reimburse Parent, each of its directors, officers and
employees and each other person for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case with respect to any such alleged or
actual untrue statement of a material fact or alleged or actual omission to
state a material fact to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such Registration Statement, Prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to Parent by such Holder for use therein.
5.3 Notices of Claims, Procedures, etc. Each party entitled to
indemnification under this Section 5 (the "Indemnified Party") shall give notice
to the party required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought, and shall permit the Indemnifying Party to assume
the defense of any such claim or any litigation resulting therefrom, provided
that the Indemnified Party may participate in such defense at the Indemnified
Party's sole expense, and provided further that the failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its obligations under this Section 5 unless such failure is prejudicial to
the ability of Indemnifying Party to defend such claim or action.
Notwithstanding the foregoing, such Indemnified Party shall have the right to
employ its own counsel in any such litigation, proceeding or other action if (i)
the employment of such counsel has been authorized by the Indemnifying Party, in
its sole and absolute discretion, or (ii) the named parties in any such claims
(including any impleaded parties) include any such Indemnified Party and the
Indemnified Party and the Indemnifying Party shall have been advised in writing
(in suitable detail) by counsel to the Indemnified Party either (A) that there
may be one or more legal defenses available to such Indemnified Party which are
different from or additional to those available to the Indemnifying Party, or
(B) that there is a conflict of interest by virtue of the Indemnified Party and
the Indemnifying Parties having common counsel, in any of which events, the
reasonable legal fees and expenses of a single counsel for all Indemnified
Parties with respect to each such claim, defense thereof, or counterclaims
thereto shall be borne by Indemnifying Party. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, which consent shall not be unreasonably withheld, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. Each Indemnified Party shall cooperate to the extent reasonably
required and furnish such information regarding itself or the claim in question
as an Indemnifying Party may reasonably request in writing and as shall be
reasonably required in connection with defense of such claim and litigation
resulting therefrom.
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5.4 Contribution. If the indemnification provided for in this
Section 5 shall for any reason be held by a court to be unenforceable as a
matter of public policy with respect to an Indemnified Party in respect of any
loss, claim, damage, expense or liability, or any action in respect thereof,
then, in lieu of the amount paid or payable under Section 5.1 or Section 5.2,
the Indemnified Party and the Indemnifying Party under Section 5.1 or Section
5.2 shall contribute to the aggregate losses, claims, damages, expenses and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating the same), (a) in such proportion as is appropriate to
reflect the relative fault of the Indemnified Party and Indemnifying Party
covered by the registration statement which resulted in such loss, claim,
damage, expense or liability, or action or proceeding in respect thereof, with
respect to the statements or omissions which resulted in such loss, claim,
damage, expense or liability, or action or proceeding in respect thereof, as
well as any other relevant equitable considerations or (b) if the allocation
provided by clause (a) above is not permitted by applicable law, in such
proportion as shall be appropriate to reflect the relative benefits received by
the Indemnified Party and Indemnifying Party from the offering of the securities
covered by such registration statement; provided, that for purposes of this
clause (b), the relative benefits received by the prospective sellers shall be
deemed not to exceed the amount of proceeds received by such prospective
sellers. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. Such prospective
sellers' obligations to contribute as provided in this Section 5.4 are several
in proportion to the relative value of their respective Registrable Securities
covered by such registration statement and not joint. In addition, no person
shall be obligated to contribute hereunder any amounts in payment for any
settlement of any action or claim effected without such person's consent, which
consent shall not be unreasonably withheld.
6. [INTENTIONALLY OMITTED]
7. Exchange Act Compliance. While Parent is subject to the reporting
requirements of the Exchange Act, Parent shall make commercially reasonable best
efforts to file the reports required to be filed by it under the Securities Act
and the Exchange Act and the rules and regulations adopted by the Commission
thereunder, and to take all actions reasonably necessary to enable Holders of
Registrable Securities to sell such securities without registration under the
Securities Act within the limitation of the provisions of (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, (b) Rule 144A
under the Securities Act, as such Rule may be amended from time to time, if
applicable or (c) any similar rules or regulations hereunder adopted by the
Commission. Upon the request of any Holder of Registrable Securities, Parent
will deliver to such holder a written statement as to whether it has complied
with such requirements.
8. Specific Performance. The parties hereto acknowledge that there may be
no adequate remedy at law if any party fails to perform any of its obligations
hereunder and that each party may be irreparably harmed by any such failure, and
accordingly agree that each party, in addition to any other remedy to which it
may be entitled at law or in equity, shall be entitled to seek to compel
specific performance of the obligations of any other party under this Agreement
in accordance with the terms and conditions of this Agreement.
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9. No Registration Conflict. Parent has not previously entered into any
agreement granting any registration rights with respect to any of its securities
to any Person that has not been fully satisfied other than registration rights
granted in connection with warrants issued to Bioaccelerate, Inc. Parent shall
not after the date hereof enter into any agreement granting registration rights
with respect to any of its securities outstanding on the date hereof, except (i)
pursuant to the Merger Agreement, (ii) registration rights for Parent's existing
shareholders who do not have freely tradable shares on the date hereof as
contemplated by Section 2.1(j) of the Merger Agreement, or (iii) as may be
determined by Parent's Board of Directors (as constituted subsequent to the
Merger) in the exercise of their fiduciary responsibilities.
10. Benefits of Agreement; Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors and permitted assigns
of each of the parties and shall inure to the benefit of each Holder and each
Holder shall be an intended third party beneficiary under this Agreement.
Neither Parent nor any Holder may assign its rights or obligations hereunder.
11. Complete Agreement. This Agreement constitutes the complete
understanding among the parties with respect to its subject matter and
supersedes all existing agreements and understandings, whether oral or written,
among them. No alteration or modification of any provisions of this Agreement
shall be valid unless made in writing and signed, on the one hand, by the
Holders of a majority of the Registrable Securities then outstanding and, on the
other, by Parent.
12. Section Headings. The section headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13. Notices. All notices, offers, acceptances and other communications
required or permitted to be given or to otherwise be made to any party to this
Agreement shall be deemed to be sufficient if contained in a written instrument
delivered by hand, first class mail (registered or certified, return receipt
requested), telex, telecopier or overnight air courier guaranteeing next day
delivery, if to Parent, at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000,
Attention: Xxxxxx X. Xxxxxxxxx, and if to any Holder, at the address of such
Holder as set forth in the stock transfer books of Parent. All such notices and
communications shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; five business days after being deposited in the
United States mail, First Class postage prepaid, if mailed; when receipt
acknowledged, if telecopied (or on the next succeeding business day if such date
is not a business day; and the next business day after timely delivery to the
courier, if sent by overnight air courier guaranteeing next day delivery. For
purposes of this paragraph, a "business day" shall mean any day which is not a
Saturday, Sunday, or public holiday or a day on which commercial banks are
required or authorized by law to close in New York, New York. Any party may
change the address to which each such notice or communication shall be sent by
giving written notice to tie other parties of such new address in the manner
provided herein for giving notice.
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14. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware without giving
effect to the provisions, policies or principles thereof respecting conflict or
choice of laws.
15. Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original but all of which taken
together shall constitute one and the same agreement. A facsimile copy of a
signature page shall be deemed to be an original signature page.
16. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their reasonable best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties have signed this Agreement as of the date
first set forth above.
ENHANCE BIOTECH, INC.
By /s/ Xxxxxxxxxxx Every
--------------------------------
Name: Xxxxxxxxxxx Every
Title: President and CEO
ARDENT ACQUISITION CORP.
By /s/ Xxxxxxxxxxx Every
--------------------------------
Name: Xxxxxxxxxxx Every
Title: President and CEO
ARDENT PHARMACEUTICALS, INC.
By /s/ Kwen-Xxx Xxxxx
--------------------------------
Name: Kwen-Xxx Xxxxx
Title: President and CEO
