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TECHNICLONE INTERNATIONAL: REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of
December , 1995, by and among Techniclone International Corporation, a
California corporation ("Company") Xxxxxx Investments, Inc., a Georgia
corporation ("Xxxxxx") and the subscribers ("Investors") to the Company's
offering ("Offering") of up to Ten Million Dollars U.S. ($10,000,000 U.S.) of
Class B Convertible Preferred Stock (the "Preferred Stock") pursuant to
Regulation S.
WHEREAS, Company desires to provide to Investors the right to obtain
unrestricted and unlegended shares of stock under limited circumstances if
Regulation S were to be deemed invalid or if for any reason Investor is
precluded from removing the Regulation S restrictive legend or converting,
selling or transferring its Preferred Stock after the forty 40 day Regulation S
restricted period, and immediately after the ninety (90) day contractual period
set forth in the Certificate of Determination governing the rights of the
Preferred Stock; and
WHEREAS, Investors desire the assurance that Company would take the
steps necessary to effectuate a registration in such limited circumstances;
THEREFORE, the parties agree to be bound by the following terms of this
Registration Rights Agreement.
1. DEFINITIONS. For purposes of this Agreement:
(a) The term "register", "registered," and "registration"
refers to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act of 1933 (the
"Act"), and the declaration or ordering of effectiveness of such registration
statement or document;
(b) The term "Shares" means the Common Stock of the Company
issuable or issued upon conversion of the Preferred Stock issued to Investors in
the Offering;
(c) The number of shares of "Shares Then Outstanding" shall be
determined by the number of shares of Common Stock which have been issued or are
issuable upon conversion of the Preferred Stock or upon exercise of the Warrant
at the time of such determination;
(d) The term "Holder" means any person owning or having the
right to acquire Shares or Warrant Shares, or any permitted assignee thereof;
(e) The term "Warrant" means the warrant granted to Xxxxxx
Investments in connection with the Offering; and
(f) The term "Warrant Shares" means the Common Stock of the
Company issued upon the exercise of the Warrant.
EXHIBIT 4.2
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2. REQUEST FOR REGISTRATION.
(a) If, Regulation S is deemed to be invalid or if for any
reason Holder is precluded from removing the Regulation S restrictive legend,
converting, selling or transferring its Preferred Stock and which precluded
removal of legend, conversion, sale or transfer would have otherwise been
allowed had Regulation S remained in full force and effect as it was on the date
of the last purchase and sale of Preferred Stock ("Last Closing"), and if such
change in law or the fact that Holder does not meet the requirements of another
exemption precludes Holder from obtaining Shares without the Regulation S
restrictive legend (set forth in Section 4.1(a) of the Subscription Agreement)
after the forty 40 day Regulation S restricted period, and if, at any time after
ninety 90 days after the Last Closing, the Company shall receive written
request(s) from the Holders of Shares obtained or obtainable upon conversion of
at least $1,000,000 of Preferred Stock (the "Initiating Holders"), for the
Company to file a registration statement under the Act covering the registration
of at least twenty percent (20%) of the number of Shares and Warrant Shares then
outstanding, then the Company shall, within ten (10) days of the receipt
thereof, give written notice of such request to all Holders and shall, subject
to the limitations of subsection 2(b), effect as soon as practicable, and in any
event within seventy-five 75 days of the receipt of such request, the
registration under the Act of all Shares and Warrant Shares which the Holders
request, by notice given to the Company within ten (10) days of receipt of the
Company's notice, to be registered as expeditiously as reasonably possible after
the mailing of such notice by the Company (a "Demand Registration").
(b) If the Initiating Holders intend to distribute the Shares
covered by their request by means of an underwriting, they shall so advise the
Company as a part of their request made pursuant to this Section 2 and the
Company shall include such information in the written notice referred to in
subsection 2(a). In such event, the right of any Holder to include his Shares
and Warrant Shares in such registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's Shares and
Warrant Shares in the underwriting (unless otherwise mutually agreed by a
majority in interest of the Initiating Holders and such Holder) to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall (together with the Company as provided in subsection
5(f)) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders, and reasonably acceptable to the Company.
(c) The Company is obligated to effect only one Demand
Registration pursuant to Section 2 of this Agreement. Company agrees to include
all Shares and Warrant Shares held by all Holders (that are initiating Holders
or have notified the Company of their desire to be included in the registration
statement pursuant to 2(a) above) in such registration statement without cutback
or reduction. In the event the Company breaches its obligation of the preceding
sentences, any Holders of the Shares and Warrant Shares which were not included
in such registration statement shall be entitled to a second Demand Registration
for such excluded securities and shall keep the registration statement effective
as required by Section 5.
(d) If in the opinion of the Company's counsel registration
under the Act is not required, then the Company is not obligated to effect a
demand registration under this Section 2 unless the Initiating Holders engage
(1) at Company's sole expense, outside counsel, whose reputation and fee
structure shall be reasonably acceptable to Company, or (2) at their own
expense,
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outside counsel, whose reputation is reasonably acceptable to Company, who
opines that registration under the Act is required (i.e. there are no exemptions
from registration under the Act which are available to the Holders of the
Shares) for the immediate transfer of the Shares. Based on opinion of outside
counsel, Company shall begin the registration of the Shares in accordance with
Section 1(a) of this Agreement.
3. COMPANY REGISTRATION. If (but without any obligation to do so)
the Company proposes to register (including for this purpose a registration
effected by the Company for shareholders other than the Holders) any of its
Common Stock under the Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company stock plan or a registration on
Form S-4 promulgated under the Act or any successor or similar form registering
stock issuable upon a reclassification, upon a business combination involving an
exchange of securities or upon an exchange offer for securities of the issuer or
another entity), the Company shall, at such time, promptly give each Holder
written notice of such registration. Upon the written request of each Holder
given by fax within twenty (20) days after mailing of such notice by the
Company, which request shall state the intended method of disposition of such
Shares by such Holder, the Company shall cause to be registered under the Act
all of the Shares and Warrant Shares that each such Holder has requested to be
registered (a "Piggyback Registration").
4. LIMITATION ON OBLIGATIONS TO REGISTER.
In the case of a Piggyback Registration in an underwritten
public offering by the Company, if the managing underwriter determines and
advises in writing that the Shares and Warrant Shares to be included in such
offering would interfere with the successful marketing of the securities
proposed to be registered by the Company, then the number of such Shares and
Warrant Shares to be included in the registration statement shall be allocated
among all Holders who had requested Piggyback Registration, in the proportion
that the number of Shares and Warrant Shares which each such Holder [including
Xxxxxx Investments] seeks to register bears to the total number of Shares and
Warrant Shares sought to be included by all Holders [including Xxxxxx
Investments].
5. OBLIGATIONS OF THE COMPANY. Whenever required under this
Agreement to effect the registration of any Shares and Warrant Shares the
Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Shares and Warrant Shares and use its most reasonable business
efforts to cause such registration statement to become effective.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Use best efforts to keep such registration statement
effective for a period of at least two hundred seventy 270 days.
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(d) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Shares owned by them.
(e) Use its most reasonable business efforts to register and
qualify the Shares and Warrant Shares covered by such registration statement
under such other securities or Blue Sky laws of such jurisdictions as shall be
reasonably requested by the Holders of the Shares and Warrant Shares covered by
such registration statement, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
(f) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(g) At any time when a prospectus relating thereto is required
to be delivered under the Act, notify each Holder of Shares and Warrant Shares
covered by such registration statement of the happening of any event, the result
of which event, would cause the prospectus included in such registration
statement, as then in effect, to include 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.
(h) At the request of any Holder requesting registration of
Shares and Warrant Shares pursuant to this Agreement, on the date that such
Shares and Warrant Shares are delivered to the underwriters for sale in
connection with a registration pursuant to this Agreement, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) in the event of any underwritten
public offering, furnish an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Shares and Warrant Shares; and, in the event of a public
offering without an underwriter, an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, to the effect
that the registration statement has been declared effective, the Shares and
Warrant Shares of the applicable Holders have been included, and such Holders
may sell the Shares and Warrant Shares so covered by the registration statement
(ii) in the event of any underwritten public offering, 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
and to the Holders requesting registration of Shares and Warrant Shares.
(i) Company shall be obligated to allow a Holder the right to
conduct at Holder's expense a reasonable due diligence inquiry in connection
with any offering conducted pursuant to this Agreement, Company further agrees
to provide to Holder copies of the registration statement prior to its filing
with the SEC.
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6. FURNISH INFORMATION. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Agreement
that the selling Holders shall furnish to the Company such information regarding
themselves, the Shares or Warrant Shares held by them, and the intended method
of disposition of such securities as shall be required to effect the
registration of their Shares or Warrant Shares or to determine that registration
is not required pursuant to Regulation S, or other applicable provisions of the
Act.
7. EXPENSES OF DEMAND REGISTRATION. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 2, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company and
including the reasonable fees and disbursements incurred of only one counsel (up
to a maximum of $5,000 for such counsel fees and disbursements), for the selling
Holders, shall be borne by the Company; provided, however, that the Company
shall not be required to pay for any expenses of any registration proceeding
begun pursuant to Section 2 if the registration request is subsequently
withdrawn at the request of the Holders of a majority of the Shares and Warrant
Shares to be registered (in which case all Holders who had requested such
registration shall bear such expenses); provided further, however, that if at
the time of such withdrawal, the Holders have learned of a material adverse
change in the condition, business, or prospects of the Company from that known
to the Holders at the time of their request, then the Holders shall not be
required to pay any of such expenses and shall retain their rights pursuant to
Section 2.
8. EXPENSES OF COMPANY REGISTRATION. The Company shall bear and
pay all expenses incurred in connection with any registration, filing or
qualification of Shares and Warrant Shares with respect to the registrations
pursuant to Section 3 for each Holder, including (without limitation) all
registration fees, filing and qualification fees, printing fees and accounting
fees relating or apportionable thereto (and including the reasonable fees and
disbursements incurred of only one counsel for the selling Holders selected by
them, up to a maximum of $5,000 for such counsel fees), but excluding
underwriting discounts and commissions relating to Shares.
9. INDEMNIFICATION. In the event any Shares and Warrant Shares
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 officers and directors of each Holder, any
underwriter (as defined in the Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the Act or the
Securities Exchange Act of 1934, as amended (the "1934 Act"), against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions 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 untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or violation
by the Company of the Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the Act, the 1934 Act or any state securities law;
and the Company will reimburse each such Holder, officer or director,
underwriter or controlling person for any legal or other expenses
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reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 9(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 any such Holder, officer, director, underwriter or
controlling person.
(b) To the extent permitted by law, each selling Holder 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 Act, any underwriter and any
other Holder selling securities in such registration statement or any of its
directors or officers or any person who controls such Holder, against any
losses, claims, damages, or liabilities (joint or several) to which the Company
or any such director, officer, controlling person, or underwriter or controlling
person, or other such Holder or director, officer or controlling person may
become subject, under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereto) 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 each such Holder will reimburse
any legal or other expenses reasonably incurred by the Company and any such
director, officer, controlling person, underwriter or controlling person, other
Holder, officer, director, or controlling person in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
9(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 the Holder, which consent shall not be unreasonably withheld; provided, that,
in no event shall any indemnity under this subsection 9(b) exceed the gross
proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 9, 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 the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that all indemnified parties
shall have the right to retain their own counsel, who shall represent all such
indemnified parties and who shall be reasonably acceptable to the indemnifying
party, with the reasonably incurred fees and expenses to be paid by the
indemnifying party, if representation of such indemnified parties by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between any indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 9, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 9.
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(d) The obligations of the Company and Holders under this
Section 9 shall survive the redemption and conversion, if any, of the Preferred
Stock, the completion of any offering of Shares and Warrant Shares in a
registration statement under this Agreement, and otherwise.
10. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view
to making available to the Holders the benefits of Rule 144 promulgated under
the Act and any other rule or regulation of the SEC that may at any time permit
a Holder 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 SEC Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any
Shares, forthwith upon request (i) a written statement by the Company, if true,
that it has complied with the reporting requirements of SEC Rule 144 (at any
time after ninety (90) days after the effective date of the first registration
statement filed by the Company), the Act and the 1934 Act (at any time after it
has become subject to such reporting requirements), (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested in availing any Holder of any rule or regulation of the SEC
which permits the selling of any such securities without registration.
11. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Shares. Any amendment or waiver effected in accordance with
this paragraph shall be binding upon each Holder, each future Holder, and the
Company.
12. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement among the
parties with regard to the subjects hereof. The terms and conditions of this
Agreement shall inure to the benefit of, and be binding upon, the respective
successors and assigns of the parties. Nothing in this Agreement is intended to
confer on any third party any rights, liabilities or obligations, except as
specifically provided.
(b) The titles and subtitles used in this Agreement are for
convenience only and are not to be used in construing or interpreting the
Agreement.
13. NOTICES. All notices required or permitted under this
Agreement shall be made in writing signed by the party making the same, shall
specify the section under this agreement pursuant to which it is given, and
shall be addressed to (i) The Company Attn: President, 00000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000, Telephone No. (000) 000-0000, Telecopy No. (000) 000-0000, and
(ii) the Holder at their respective last address as the party shall have
furnished in writing as a new address to be entered on such register. Any
notice, except as otherwise provided in this Agreement, shall be made by fax an
shall be deemed given at the time of transmission of such fax.
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14. TERMINATION. This Agreement shall terminate on the date
that is three years from the date of this Agreement; but without
prejudice to (i) the parties' rights and obligations arising for breaches of
this Agreement occurring prior to such termination or (ii) other indemnification
obligation under this Agreement.
15. ASSIGNMENT. No assignment, transfer or delegation, whether
by operation of law or otherwise, of any rights or obligations under this
Agreement by the Company or any Holder respectively, shall be made without the
prior written consent of the majority in interest of the Holders or the Company,
respectively; provided that the rights of a Holder may be transferred to a
subsequent holder of the Holder's Shares and Warrant Shares (provided such
transferee shall provide to the Company, together with or prior to such
transferee's request to have such Shares and Warrant Share included in a Demand
Registration or Piggyback Registration, a writing executed by such transfers
agreeing to be bound as a Holder by the terms of this Agreement); and provided
further that the Company may transfer its rights and obligations under this
Agreement to a purchaser of all or substantial portion of its business if the
obligations of the Company under this Agreement are assume in connection with
such transfer, either by merger or other operation of law (which may include
without limitation a transaction whereby the Shares and Warrant Shares are
converted into securities of the successor in interest) or by specific
assumption executed by the transferee.
16. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, U.S.A.
applicable to agreements made in and wholly to be performed in that
jurisdiction, except for matters arising under the Act or the Securities
Exchange Act of 1934, which matters shall be construed and interpreted in
accordance with such laws. Any action brought to enforce, or otherwise arising
out of, this Agreement shall be heard an determined only in either a federal or
state court sitting in the county of Orange in the State of California, U.S.A.
IN WITNESS WHEREOF, the undersigned have executed this Registration
Rights Agreement as of the date first above written.
COMPANY INVESTOR(S)
TECHNICLONE INTERNATIONAL
CORPORATION
-------------------------------
(Print Investor's Name)
By: By:
--------------------------------- ----------------------------
Xxx Xxxxx (Signature)
President and CEO
Address: Address:
00000 Xxxxxxxx Xxxxxx ----------------------------
Xxxxxx, XX 00000 ----------------------------
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Telephone No. (000) 000-0000 ----------------------------
Telecopy No. (000) 000-0000 ----------------------------
Telephone No. ( )
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Telecopy No. ( )
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